Book Review: We Were Eight Years in Power

This book is an amalgamation of the articles written by the author for The Atlantic Magazine. Its eight thematic articles covering an overarching argument of race and political leadership in the United States during the presidency of Barrack Obama. I considered myself a student of the history of democratic governments that included the United States but the eloquence and clarity of the author's arguments profoundly affected me. The author traces the rise of the various flavors black nationalism and what motivated their leaders, some of whom advised preposterously that "Negro" development was dependent on the acceptance of subservience.

I do not subscribe to the most aggressive interpretations about the deliberate design of the United States as a racial country but still, concede that the enduring effects of slavery subsist. But the most important lesson for me is that these approaches and assumptions about race capabilities and proclivities are embedded in discourse and state operations even today. I

In general, the author concludes that Obama was a special individual, undeniably capable and an outstandingly clean governor but had to consciously calibrate his utterances and screen against those that would offend racial groups, while being particularly stern in adressing black youth and men.

By far, the best chapter is when this writer makes a very detailed case for reparations in Chapter 6. I read the magazine version of the article but the reiteration here has impressed me even as a student of economics. The level of systematic predation against black families after the civil war extended to the second half of the new century and had devastating effects on black ability to build and transfer physical capital across generations. While the author doesn't resolve the question of the quantum but fairly records the discussion with President Obama who quickly and sensibly responded by highlighting difficulties in estimating quantum in addition to government distribution of that "entitlement" (my words).

I found this paragraph on page 200 profoundly provocative
    "To celebrate freedom and democracy while forgetting America's origins in a slavery economy is patriotism à la carte." Ta- Nehisi Coates
  

Rendition of the Declaration of Independence

Today is the 4th of July and the United States of America marks the 237th Anniversary of its independence. While I am not a citizen of the US, I remain impressed by the enormous and unmatched progress that a nation started by men determined to secure their freedom has become. Bearing in mind that this is a union  built of a bold declaration recited above, it speaks for itself and demonstrates why, within limits, this nation is a beacon for democracy, represented in freedom for its citizens. This rendition is dramatized by citizens of that nation who represent the deep labours that the successors of the founders endured and contested among themselves and with others. May it continue to inspire well-meaning human beings for many more centuries.

Big Data is Big But is Not Everything

I still consider myself a keen student of statistics and the use of quantitative approaches to understanding reality or events. For that reason, I am particularly keen to read and understand the claims being made by the "Big Data" movement that digitization of transactions and availability of high powered chips makes it possible today to obtain large data sets for analysis. The claim proceeds to state that big data is now the future and that the availability of information will make all of us very smart and create a deeper understanding of commercial, social and other transactions of life.

Like all claims that come with conventional wisdom, I am suspicious of the unquestioned exuberance over the possibilities created by "Big data". And yet the strength of this narrative is such that few people question it especially as it is now the loudly proclaimed by governments and large management and business firms that are leaders in providing policy and business advise.

David Brooks, writing in the NYT here, provides an incisive view of the "Big Data" movement and dissects the claims being made about it. He raises two important points, the first being that there are certain areas of individual life in which subjective preferences are still dominant and so it is important for "Big data" enthusiasts to be alert to the limits of this movement. To my mind, the most important refutation in the article is the push back against the claim that the surfeit of data obviates the need to create theories because correlations and other statistical techniques will reveal connections between variables.

This preposterous claim by the "Big Data" fundamentalists that theory is obsolete is rightly questioned by the author. In addition, Nate Silver, who himself is a very creative and competent statistician, tackles the claim in this book. Those who make the claim that the mere existence of large troves of data makes theory building unnecessary are overstating the case because any attempt to review and determine the degree of connection between two variables means that a theory exists about their connection. of significance too is that prediction and establishing linkages between phenomenon is not poor because of the absence of data but because of the inability of most professionals to distinguish between the signals and noise. In other words, a spurious connection may exists but unless a plausible theory is used to examine the claim, then big data will find all manner of connections that are just noises.  

Just because more data will be conveniently available does not mean that statistical ken will develop in proportion to it. Indeed, my guess and expectation is that the supply of poor statistical reasoning will rise. Society will still need to find good quantitative thinkers among the volume of "Big Data" crowd. 

Christina Romer Explains the Minimum Wage

Christina Romer presents a most coherent piece in the NYT that explains the effects of a minimum wage in terms of distribution effects. Apart from showing that the quest to improve income for poorer workers may be valid, the article shows that the distributional effects makes the overall effects more complicated than is immediately apparent. To start with, it is clear that the enhancement of wages may not all be appropriated by the poorest workers because some of the raise will be taken by younger workers who are residents of higher income households. In effect, as argued, raising the minimum wage in the US would also result in gains for those who work in minimum wage jobs but are not necessarily the most indigent workers in the US.

Equally profound is that the income gains may be real but that because poorer workers do not work on a full time basis, the policy change will not result in substantial economic effect relative to the US economy. Added to this point is that the consumption patterns of the lower income individuals suggest that most of that gain in establishments that employ the very individuals who are on a minimum wage. Understandably therefore, the price rise based on higher wages paid is absorbed disproportionately by this increase. Christina alludes to studies that show that a  minimum wage policy may have a negligible effect on overall employment but this possibly compensated for by the gains in productivity caused by the lower labour turnover.

In all, the analysis shows that the policy intent of the minimum wage policy is clear and perhaps morally defensible but the effect of instituting it is not necessarily positive for the people it is expected to assist. To my mind, the author states convincingly that by raising the minimum wage, the administration has left on the table more feasible alternatives.

Debating the Limits to Money Transactions

One of the most frustrating arguments that libertarians face is the seemingly sensible claim that society should proscribe certain things especially because there is unequal access to them or that their consumption and distribution may offend morality. Among the most erudite scholars posing this question is Michael Sandel in his book published last year called, What Money Cant Buy: The Moral Limits of Markets. reading that book last year, I deferred to the author's depth in the inquiry but was also frustrated with the view that moral categories must be imposed on all irrespective of the fact that no harm is caused in allowing a poorer person to sell a kidney to a wealthier person in need of it. It is true that in creating a price on organs, society accepts that there will be unequal access will occur.

In an article in late December, John Kay illustrates the absurdity of imposing uniformity by alluding to his payment of €12 to purchase the right to priority boarding on a flight. My view is that paying for kidneys does not of necessity put society on  a slippery path towards slavery because in the latter case, no contracts are willingly executed. there are certainly limits to what money can buy but most democratic societies are hardly close to the limits. As a libertarian, it is clear to me that few markets would survive for a long time if they were completely repugnant to free participants. Thus a market for kidneys and other organs is not the worst thing that could afflict society today. that some markets are not available today is due to lack of innovation and respect for individual freedom and not because of the possibility of exploitation of the powerless or fear of exceeding moral limits.    

Isn't Armstrong's Apology Enough?

When I learned that Lance Armstrong would be having a discussion with Oprah Winfrey, I worried that there would be cynics who would accuse him of trying to use Oprah's profile to wipe out his alleged transgressions. And yet even before that interview was broadcast, it became clear that he would neither find forgiveness nor any understanding from a section of viewers whose minds were made up. And yet I thought that the published commentaries such as this about the discussion with Oprah were dominated by the unproven view that the confessor was not entirely contrite.

Tim Black's article in Spiked-online reflects the fact that the responses to Armstrong are that he did not react in the way that the apologies industry expected him to. To my mind, here is the illustration of the fact that an apology is often demanded for misdemeanor and yet it is never enough. So yes, this man made many grave errors and was very deceitful and unkind to many people but dispassionate people must detest the fact that there are people who seem to enjoy kicking him while he is down. To me, this episode proves that those in positions of power and leadership should be more circumspect and less vulnerable to hubris. And that includes  journalists, warriors for morality and the rest of us. This is not the moment to be fastidious because Armstrong has given his apology. To me, that is acceptable and enough. 

More Abuse of Evolution to Explain Social Behavior

During a friendly discussion with a a friend with whom I attended college a while ago, I argued that it can be stated unequivocally that the degree of scientific literacy on the part of the public has risen remarkably both in the place of my residence and in world populations at large. Implicit in my argument was that the sheer number of articles being published that address scientific principles has most definitely raised the appreciation of science.

Looking through this article by dDan Slater in the NYT and an early blog post here leads me to consider that I may have made my point with more confidence than is warranted. To begin with, the NYT article states that while some evidence for evolution is sound, it is often wound together with other theories to explain human behavior in ways that are not defensible. As the story states, Charles Darwin too extrapolated from evolution to explain the reproductive choices of male and female human beings in ways that are not defensible and amount to pure speculation. As Slater argues, behavioral scientists pick up sensible but unproven hypothesis and assumptions then proceed to gather evidence as proof of those assumptions. As he continues, many scientists have beguin to dispute the theories that have emerged from speculation dressed up as science.

This situation is highlighted by the blog post that I refer to in the preceding paragraph. Back then, I was arguing that many students of economicssts are dressing up their theories in evolutionary language. tThere is very little evidence that evolution supplied humanity with pre-programmed behavior and it is time for a push-back against these interesting hypotheses and they must headers to article be called out for what they are- entertaining guesses.   

France's Moment To Think Clearly

Readers of this blog may recall this blog post last year in which I discussed the ridiculous policy idea by the new government in France. In a move whose motive is clear but whose logic is just absurd, the government of France initiated to tax citizens for overtime tax. At that same time, there were discussions on further tax policy measures intended to raise the marginal tax rates on individuals whose income passed a certain threshold. Unbelievable as it is, the idea by President Hollande is to raise the marginal tax rates to 75%.

Gerard Depardieu, a very famous and wealthy citizen of France announced that he would take residence in Belgium but denied here that this was driven by this increment in the marginal tax rates. During the last weekend, the same actor received a Russian passport from none other than Vladimir Putin of Russia in an obvious rebuff to the French government.

To my mind, the government of France ought to be take to some reflection if a citizen who has paid substantial taxes over decades is suddenly showing preference for Citizenship in Russia. And I am sure that the differences between France and Russia do not rest with marginal tax rates and so perhaps Depardieu is right that calculations on tax liability is not the reason at all for this change. In spite of that, France's government should consider why a leading citizen is so happy to become Putin's buddy. Part of the answer is that both political and economic freedoms matter and citizenship can be cheapened with poor economic thinking manifest in ridiculously high and oppressive tax rates.  

Update: I have to state that the government of France was stopped from raising the marginal tax rate to 75% by a court decision. For that reason, the rise has not occurred but it is clear that the administration is determined to raise it and will maneuver around the court's decision. 

Policeman Helps Homeless Man

I am the first to admit the the internet is among the most interesting creations of the human mind. That notwithstanding, I am less sanguine about the fact that all that it contains is necessarily of value or worthy of review. And yet what that means is that individuals ought to be a lot more discrete about what we appreciate and try to circulate by any means that the internet allows. I am glad to flag and mention the photo that has been spread profusely on the internet because it captured a policeman in New York showing uncharacteristic kindness to an unshod and homeless man. the background to the picture is covered here by David Goodman of the NYT.

I fully understand the cynicism expressed by people who think that this possibly a plan for this young officer to gain personal fame and perhaps set himself up for other opportunities. To my mind, the guy helped beyond the strict call of his duty and in the most effective way for the person in need. So all the cynics should hold their breath and use it to preach some good. The young officer's kindness stands out in my view because it illustrates that there are people who face hard times even in the world's most prosperous county.

Post-Elections Analysis 2012

A number of columns and purported analyses have been written already about what determined the outcome of the US presidential elections which president B. Obama handily won. Again, I am not a US Citizens but I had some understanding of the race by following more closely the various contentions between the two candidates. The outcome of the race confirms to me that as stated before, most political, like economic commentators and pundits do not know what they speak about. Not only was the conventional wisdom that the race was a statistical dead heat untrue, but many people opted to go for the pundits on TV with known ideological and party biases, while ignoring both Intrade and Nate Silver's blog which both suggested that Romney had made gains in the last month but was still an underdog late in the game. 

To my own disappointment too, many libertarians and market friendly commentators stuck to a very ignorant mantra that Romney had a momentum after the first debate and would win. Their reasoning was that the endorsement of the Tea Party on one side and the stellar record in corporate reengineering was enough. Sorry, it was not purely because the president was not really as weak as it was thought. And it was only a single comment in the Samizdata blog where there was the caution that the celebrations were unjustified because the information markets still firmly predicted an Obama win. 

Looking now at the result, it is clear that there will be many books and tracts trying to explain the manner of Obama's win. Starting with this piece in the NYT, there is emerging evidence that president  Obama's campaign team worked with a "Dream team" of academics on the cutting edge of research, but also employed sophisticated data analysis that informed both media buying and face to face outreach. Noting also that both campaigns had professionals advising them, it is essential to compare one set against the other in order to determine how one side bested the other.  

A Journalist Compares US and European Incomes

Reading this article by Remi Adekoya of the Guardian newspaper reminds me of two things that many people take for granted about comparing income across countries. The author is right that notwithstanding the focus on its problems and the unyielding crisis, the European continent still provides the highest standards to living that can be found on the planet today. To be clear, I am less convinced that this is proof that the welfare state as understood in the continent is the only reason for this. Instead, it is more defensible for me to state that this high standard of life for its citizens is underpinned by the fact that by a correspondingly large number of businesses and productive workers. Indeed, the allusion to competitiveness shows that European countries provide opportunity for enterprises to grow and their ranking in the various leagues confirms that.   

In comparing the income of Europeans to that of the United States, it is clear that the United States has chosen a different way of organizing economic activity and its government is less directly involved in large welfare programmes comparable to those in Europe. Comparing incomes by alluding to the average is troublesome but it is not right to therefore dismiss higher incomes in the United States by alluding to the fact that extremely wealthy people such as Warren Buffet raise the average substantially. This article shows the difficulty of comparing incomes across nations with different economic and political structures but does not erase the fact that on the whole, total income is a very potent measure of human well being. In that respect, the United States is still a special nation.

What Next for Elephant Conservation?

Illegal trade in ivory has been a main driver of the high mortality of elephants in the African continent for several decades now. For most of that time, the approach has involved using legal instruments at the international level to reduce trade in ivory either by getting rid of existing ivory stocks or by banning trade altogether. The result has been that in most of east, west and central Africa, the elephant populations have continued to fall because the price of ivory has kept rising with increased incomes from China and other Asian nations.

In a very poignant story from the NYT here, Jeffery Gettleman ties the rise in elephant poaching to organized crime and civil wars in parts of the continent of Africa. The most plausible part of his argument is that large and poorly governed territories of Africa leave some opportunities for fighting units to fund their war operations through killing of elephants and trade in ivory. In addition, he states that the rising demand for ivory has made turned armies of the Democratic Republic of Congo and its neighboring countries into organized poaching units who use sophisticated aerial surveillance and choppers to find herds of elephants.

That the populations of the African elephant in the central and eastern African regions are in danger is indubitable. Still, I find that the story is written as if the poaching mechanisms are so sophisticated that the elephant populations throughout the continent are doomed. The connection between state weakness and inability to enforce law is well made but it is clear that not all elephant populations are doomed and neither is every conservation effort failing. What I am less convinced of is the nebulous story tying US government funding to elephant deaths. It is perhaps an attempt to awaken US citizens to pressure their government to give this matter more support in reviewing existing conservation policy.    

Doctors Calls for Testing in Medicine

It takes several years of training and practice for any individual to begin to dispense medicine and care for patients. With this in mind, many patients who receive advise from a physician or a surgeon are bound to believe that that professional makes decisions and chooses the most effective methods for treatment that are available to the doctor. H. Gilbert Welch is far more modest by stating that the practice of medicine today is so complex that sometimes medical professionals choose options but are not certain that they are the most cost effective or even the most useful for patients.

Writing this article in the NYT, H. Gilbert Welch goes through a number of treatment options that doctors have dispensed in good faith but whose overall efficacy was not tested as rigorously as required. he now recommends that the ability to step back and conduct evaluation of one treatment option against another in order to determine relative effectiveness is necessary. One method of going through this is to integrate randomized evaluations as a critical part of decision-making by the profession. This call for more research is interesting because it is not intended to find out new methods and drugs but rather to focus on what works in the repertoire of treatments offered today.

This doctor highlights an important but hardly emphasized factor in innovation and knowledge today. Human welfare could be improved substantially by exploring the utility of existing treatments and knowledge but this is often surrendered to the quest for the new. And if that is applicable in a cutting-edge profession like medicine, one wonders how much so in other areas.               

Mitt Mixes His Facts and Numbers

There have been predictable reactions to Mitt Romney's claim that the difference between Israel and its neighbors is because the former has a better culture. Jared Diamond, who wrote the book Guns, Germs and Steel, dissects the claim in this NYT piece. That piece aside, many people asked about whether it was appropriate to make that claim given the different circumstances in which the two nations live. Still, this matter is worthy of consideration because there are differences between Israel and Egypt, Syria or other closer countries that do not live under the same political constraints of Palestine.

My view is that Mitt Romney may really believe in the argument that culture is a determinant of economic success. More surprising to me is that he and his team make quotes and attribute certain findings to Jared Diamond and other authors when these are not correct. Its clear that as the article by Jared Diamond states, this candidate for the presidency has most probably not read the book that he quotes liberally from and seems to be less concerned with differences between these countries. In spite of his support for "superior cultures", one would expect him to note that an income per capita of US$ 10,000 that he attributes to Palestine would still make it a mid-income country. An undeniably good business head should not show such ignorance about the economy. Its a plain fail for the campaign research team.   

Let Plumbers Take Pay in Cash

Faucet 2 clipart
from Clker.com

I consider it sensible economic policy for every government to levy taxes on goods, services or income only where it can collect a majority of those taxes. Therefore, while I am not of the view that payment of taxes is equivalent to slavery, I think that a government ought not to announce a tax rate and then further burden the citizen with the duty to ensure that that tax is collected as conveniently and promptly as is possible. With those views in mind, I am not as sympathetic to the near demand by the Secretary of the Exchequer of the UK government in his preposterous claim here that citizens who pay plumbers in cash are engaged in immoral acts because it makes it easier for the latter to evade or avoid tax payments. 

More recently, governments have been correctly concerned with the operations of tax havens which may support practices that are illegal in terms of tax evasion. That aside, most tax evasion occurs simply because of unduly complex characterization of what is taxable and what is exempt in addition to trying to capture transactions for which the existing tax collection model is a poor fit. despite my real sympathy with the need to collect taxes to cover deficits and close up the debt position, I am reluctant to accept this ranting by public sector officials that all citizens should bear the burden of ensuring that the revenue service catch every penny.

To my mind, citizens should not be forced to write cheques and avoid the convenience of legitimate cash transactions in order to ensure traceability for the revenue services. Perhaps its just time to ask that governments should discuss plainly whether levying a tax that is this difficult to collect is good use of the legislative authority. The remedy comes back to creating moderate tax rates and simplifying the tax system and ensuring that government is run from the resulting revenues. Its not too clever to levy taxes and ask citizens to help with the thinking about ensuring absolute compliance. Just simplify the tax code.

  

A Survey of Rio+20

The Rio+20 Conference ended over the last weekend and many reports suggest that this meeting achieved nothing partly because the expectations were too high, views so far apart and the real expectations not clearly spelt out. In this piece, Jagdish Bhagwati states that he is unsurprised because of many reasons starting with the emptiness of the phrase "sustainable development". Not only has this term of reference become cliche' but it also illustrates why those who insist on it as a precondition for development are oblivious of the real tradeoffs that poor people need. In the short essay, he also states how matters unconnected to the environment are allowed onto the agenda and become part of the declarations in a way that shows the inability to focus on small and smart solutions.

Unlike Jagdish, I have no problem with any self-appointed group of activists trying to hoist their pet policy solutions on the rest of us. I would rather that they understood much better that multilateral institutions that take on every agenda are the best candidates for failure on all of them. And as a person who attends smaller conferences on select trade and regulatory matters, I think that a conference dedicated to global growth would be far more useful than Rio+40. The environment is certainly important but all who come for the conference must recall that this was about the environment and that the train can only pull in so much. The framing of global problems is one of the skills that today's society lacks.  

Promise of National ID Sytems

Soon after reading the book Imagining India by Nandan Nilekani, one of the founders of Infosys, I learned that the author's proposal for a form of identification mechanism for individual citizens had been accepted by the government. In the book, he mentions that the absence of an identification document for most Indian citizens leads to a lot of fraud in government assistance for social programmes. It is understandable that a technology solution to this would reduce cost and ensure cost effective delivery of the services to deserving people. While reading that book, it immediately came to my mind that the retention of all sets of data on individuals has implications for their rights and their relationship to governments.

The Republic of South Africa has also commenced a citizen registration system mentioned here by its Minister for Home Affairs. In that piece, it is argued that there is the need to consolidate all registration and identification documents in the form of a smart card that would enable citizens to be registered for voting, driving and other interactions with the state. Needless to mention, my libertarian instincts tell me that this endeavor is not only bad for liberty but also technically unsound. To start with, the consolidation of all forms of identification under a single smart card may seem smart but simply shows that an individual is more vulnerable because a large amount of data is available in one place. Secondly, I see the tendency for well-meaning state officials to overstate the power of technology in the statement that this card is absolutely secure and cannot be breached. To my mind, that is such a preposterous statement that can only have been made up or used by the firm that is marketing this system to governments that would not care to audit that system.  

So to add my conclusion, I am certain that the quest to make identification of individuals may have some social value. What I am less certain of is whether it needs to be in form of governments collecting and maintaining a lot of data for individuals in one place. Now, the technology savvy thief knows which database to breach and find out more than they should about some citizens.    

Latin American Leaders Start Assessment of Drugs War

For a whole generation, the world has concentrated on a law and order approach to the control and eradication of production and transportation of narcotics and other drugs. It is clear that this so-called war has been fought with public support and hard military responses but has not yielded acceptable results. The state of affairs in Latin America alone today's shows that there is need to accept that the approach has been unsuccessful. It is encouraging that in spite of the fact that the public in many countries are not naturally drawn to legalization and regulation, it is possible to form a persuasive case that the "War on Drugs" has failed.

Jamie Doward captures the frustrations of Otto Perez Mollina of Guatemala who hopes to convince his colleagues at an upcoming summit to consider a new approach. To my mind, this conversation is required even if the results of the discussion would be difficult to sell as apolitical decision. I applaud this because many other leaders in the neighborhood have been making similar declarations in light of the toll on human life. the political risks to the leaders attending the conference are real but there is no greater evidence than four decades of a well-articulated approach that has created insecurity and militarized drug trade and production.  This fresh approach alerts one to the idea that ideology is sometimes responsible for demonstrably poor public policy.

  

Minimum Alcohol Pricing Policy

In my view, one of the paradoxes in the control of substances harmful to health and with adverse effects is the differential policy options taken in respect of alcohol, tobacco and narcotics. Many times, sensible policy dialogue is carried out as if it is a given that narcotics are more harmful relative to alcohol. More importantly, it is often unacknowledged that price mechanism could be used as part of policy for alcohol and health policy. As this article in the Guardian states, the government of the United Kingdom is considering the introduction of a minimum price policy for alcoholic beverages in order to reduce binge consumption and effects on other people.

The details state that the policy would establish a price floor of 40 pence for every unit of alcohol and that this would reduce crimes and accidents. Understandably, the retailers argue that this policy would affect income groups differently because it would raise the costs of consumption disproportionately for poorer individuals. As described in the story, this effect would almost certainly be the case. To my mind, it is also the lower income people who are most vulnerable to the adverse effects of alcohol consumption.

Should We be Freed From Passwords?

It took me a while to realize that security in the Internet and related gadgets in use today is an arms race that will keep security consultants perpetually at work. This stance came to me after reading the analytical model that Bruce Schneier adopts to discussions on security. That notwithstanding, I was impressed with the idea expressed in this article by Randall Stross of the NYT. It correctly identifies that most people use very sloppy passwords by not giving much thought to it in addition to the fact that really strong passwords will be difficult to remember. In recognition of this human weakness, the Defense Advanced Research Projects Agency (DARPA) has commenced thinking to go beyond passwords as known today.

This project seeks to design a mechanism that allows for use of a a connected device by detection of an individuals' user signature, which he calls "Cognitive Signature". This means that access and use of computers and devices will be left to software that has the ability to detect the individual's unique interaction pattern with the keyboard. "Keystroke Dynamics" are actions that are undertaken repeatedly and therefore not subject to deliberate thought. I sense that they would build a profile which will authenticate the user of the device. 

This is without doubt an extremely clever approach as the tests show that it is very difficult to consciously bypass. This will raise the threshold for those who would breach security but it also means that it will be difficult to log in people who are authorized to share a machine unless their "Keystroke Dynamics" is embedded in the system. Unlike Randall Stross who speaks of the password free environment as providing a near perfect environment,  I remain less sanguine. The requirement for simplicity of systems is part of the reason why securing computer systems remains difficult. I do not see how this password-free system makes it disappear.