Electron Drift and Murder Rates

     I have met with a lot of criticism for my posts on income inequality and muder rates (e.g. here). The primary criticism is that people are far more complex than my posts might suggest and that it is not abstract notions such as 'income inequality' that determine a person's actions but rather their personal history. As a result I am compelled to respond.

     To do so I begin with an (classical) analogy from physics; the notion of drift velocity. Electrons in a conducting wire tend to'wander' about in random directions at approximately 1570 km/s. This random movement is akin to the complex lives of individuals. Impossible to describe and predict, it accounts for most of the movement of the electrons. Likewise, individual events in our lives account for our characters and habits.
     Now, what occurs when we apply an electric field to our copper wire. The electrons dash off! Well........at a speed of the order of roughly one metre per hour (in the wiki example of 1mm diameter copper wire with a current of 3 amps). Clearly this 'drift velocity' is swamped by the random motion of the electron (illustrated well here). In this case the applied field acts as the 'environment' or 'backdrop' for the charges.
       In a similar vein, income inequality forms the backdrop and environment for members of a society. The slow drift of the electrons is comparable to the increase in murder rates. While it is the individual's life and circumstances that determine whether or not they will murder, certain conditions (be they economic or otherwise) tend to make certain experiences, certain viewpoints, certain actions more likely. So to claim that high levels of income inequality affect the homicide rate is not to make a deterministic statement and the remarks "Oh I grew up in such a neighbourhood and yet I'm not a murderer!' miss the point entirely. It is simply the case that certain conditions make certain results more likely. In any case, I strongly recommend reading some papers about income inequality and homicide rates. (A very nice example can be found here).

The Borders of Absurdity

   The inanity of U.S. politics has never ceased to me amaze me but two incidents as of late leave me somewhat stunned. First we have the crashing of a U.S. spy-drone in Iran. While in itself not hugely exciting, what is interesting is the U.S. response, to ask for the drone back. Only in a completely topsy-turvy world could someone ask for a crashed spy-drone back and yet in mainstream media in the U.S. the outrage is over Iran's refusal to return the drone. Even comedians have lashed out at Iran's intransigence. For me this is a symptom of how nonsensical U.S. discourse has become. Consider the contrary situation, an Iranian spy-drone crashes in the U.S. and the Iranian government asks for it back. What would be the likely response? It would receive howls of laughter from the press, it would serve as yet another example of Iran's disconnect with reality.
   The second example I'll give concerns Newt Gingrich's comments about making poor children work as janitors in order to pay for their education. In any reasonable world this should have resulted in his immediate disqualification for office, the newspapers would read "Child Labour Scandal: Gingrich resigns amid howls of fury" (throw a pun in and you might get closer to today's newspapers). In the mad world that is U.S. politics however this comment had little or no impact on Gingrich's election chances. There has been no real media outcry, there has been no backlash.
   These incidents are by no means isolated but rather are indicative of a trend in U.S. (and to a much lesser extent, World) politics. What facilitates this madness however? The psychology is simple. When one encounters an unfamiliar scenario one tends to take their cue from those around them. This effect is well studied and applies across society whether it involves etiquette in a fancy restaurant or whether or not to give to the homeless man ahead. In the case of novel political events or policies the public tends to be primed by the media and tends to judge the outrageousness of any statement based on the outrage expressed in the media. If the media presents such positions as acceptable then the public at large presumes they must be.
     This feeds in to the increasingly absurd and extreme positions held by many candidates, particularly those in the Republican primaries as of late. Interestingly, none of the candidates that have fallen in popularity have done so due to policy positions. Indeed Perry fell not because he wanted to annihilate the Department of Education (surely an extreme position) but instead he fell in the polls due to not being able to remember which departments he would get rid of. Likewise, Cain and Bachmann lost top spot due to gaffes and scandal rather than (in my view) the insanity of the policy positions which they were actually able to communicate.
    We live in a world where increasingly bizarre positions are glossed over by a press which instead concentrates on gaffes. There is no outrage over the idea of getting rid of the Department of Education, instead the outrage is expressed over a bad memory. With this sleight of hand the position becomes legitimised and there is no real examination of the policy itself. In this fashion any position can be made to seem reasonable and can be presented to the public by focusing on trivial points related to it. In this fashion ideas such as child labour, abolishing the Department of Education and the returning of crashed spy-drones all stow their way into public discourse as reasonable ideas, indeed as non-controversial ideas. What do you think?

Where are the protests?

       With unemployment standing at 14.4% and rising, and with the economy still contracting (GNP down by 2.2% last quarter), why on Earth are the the people of Ireland not taking to the streets like their counterparts in countries like Greece and Spain? While some grumble about the poor weather I am inclined to see emigration as the primary dampener, not the rain. Emigration is rather high in Ireland in comparison to the size of the population and has been rising throughout the recession. Furthermore many of these emigrants are young. January to April this year saw a 45% increase on last year with 33,100 emigrants in the 15-24 age group and 34,400 in the 24-44 age group and only 7,200 who were above 44.
   
        Given that the average instigator of a riot tends to be a newly graduated unemployed male it is unsurprising that the high levels of emigrating have, in effect, prevented large scale protest. Not only does the high level of emigrating reduce the overall unemployment rate (thus leaving those who stay less affected) it also saps the country of the energetic and angry youths who would be on the streets in Spain or Greece, or indeed the Arab world. This high level of emigration seems integral to the Taoiseach Kenny's strategy. Not only does it prevent any major protest against his punitive budget cuts but it also leaves an Ireland with a much older population and given that older people tend to vote for Fine Gael that can't be a bad thing in his eyes.

Oligopolisticexpialidocious or The Case for a Minimum Wage

     Technically the title should read Oligopsonisticexpialidocious but it doesn't quite have the same ring. In any case, what the hell does it mean? Well, an Oligopoly is a market which consists of a small number of large firms (similar to a monopoly which only has one). And an Oligopsony is a market which consists of a small number of powerful buyers (it might be better to read about the similar monopsony).  Now, you're probably asking what it has to do with the minimum wage. It is an interesting relationship which I chose to bring up because of the constant rhetoric about how minimum wages destroy jobs. Now, notwithstanding the fact that the minimum wage has declined in real terms since the 70's, what the hell does the minimum wage have to do
unemployment?
     The argument is rather straightforward. If there is a minimum wage then any worker who produces less value than the minimum wage will be fired as they cost more than they are worth, this will inevitably lead to unemployment (I have simplified it slightly). The argument holds and is the basis of almost all opposition to minimum wages. Indeed one has to ask why anyone supports the minimum wage if it leads to unemployment, well the answer is it doesn't, not necessarily.
     Hang on a sec! You just said it did! Well, let's go back to our previous argument and ask what if people are not being paid an amount equal to the extra value they add (marginal revenue product/MRP)? Under a perfectly competitive system this wouldn't be the case, markets would clear until the wage equal the MRP of the worker. However, do we have a perfectly competitive market? The answer is no, well kinda.

     Under perfect conditions, there is no cost to the worker in changing job and any cut in wage means they will simply move company. It also assumes that workers are indifferent between jobs (clearly not the case). These conditions (among others) result in a measure of market power moving towards the employer.  As a result we see less people employed than in a competitive system and these people are employed at a lower wage than would prevail under competitive conditions. The graph from wiki illustrates this well (but it is somewhat complicated).

     -The axes L and w refer to the quantity of labour employed and the wage paid (respectively).
    -The red line is the marginal revenue product of an extra worker. (i.e. the extra value an additional worker would add to the firm).
   - The blue line is the supply of labour. (i.e. the amount of labour forthcoming at each wage level).
   -The green line is the marginal cost of labour (how much it costs the firm to hire an additional person).

    Now under a perfectly competitive system we expect the firm to produce at level C with wages w' and L' labour employed. At this point the wage of the employee is equal to the MRP (as mentioned above). If however the employer enjoys some monopsonistic (or oligopsonistic) power then this is not the case. Instead the firm does not have to worry about workers being siphoned away by competition and so does not have to raise wages to keep employees. In this case the firm maximises its profits by employing more labour until MC (the extra cost of a worker) is equal to MRP (the extra value of a worker). This occurs at point A and leads to a wage w and employment L. Both w and L are below the equilibrium in the competitive system. i.e. less people and lower wages.

    Now, back to the minimum wage. Under these conditions a minimum wage set between w and w' above not only leads to an increase in wages but also an increase in employment! This is an amazing result and can actually be used to test the prevelance of monopsony in a market. Now, if there does exist monopsony (due to a lack of knowledge, job-search frictions etc.) then there certainly is a case for the minimum wage. As to what it should be set at? That is a difficult question and must rely on emprical observation. The main thing is however, that the minimum does not always lead to unemployment and may in fact increase both employment and wages. For anyone interested in this, I strongly recommend this paper. It is reader-friendly and explains the whole situation far better than I can.

Federal Taxes In Perspective

   There has been an irritating new propaganda trick from the Right in America (pushed by groups such as the Heritage Foundation). Well, I say new but it has been around for a while. It essentially runs as follows: The top 1% pays X% in income taxes, while the bottom 50% pays Y% (with Y<<X). For example:


"Top 1% pay more income tax than bottom 90%!"


"The top 1 percent of tax returns paid 38 percent of all federal income taxes"


"Top 0.1 Percent pays more income tax than bottom 80 percent"

   
    Well....you get the idea. While I do not question the accuracy of these figures (I will take them as true) I will endeavour to put them into context. First off, let's compare what these tax figures are like compared to incomes (right).
    Now, it seems that much of the difference in tax paid is accounted for by income differences but it still seems that the federal income tax is reasonably progressive (not a bad thing). So it would seem the right has a point, however the point is exaggerated due to the fact they don't mention shares of income and that progressive taxes are not necessarily a bad thing.

     You might suspect there is more however (you'd be right). Let's have a look at ALL taxes not just federal income taxes. Other taxes (e.g. sales taxes) tend to be much more regressive (poorer people spend a higher percentage on goods/services), so how do they change the picture. Well, here are the figures:

    

    
     As you can see they paint an interesting picture. The total tax liability of each income groups is roughly identical to their income share with some element of progressiveness. This radically changes the policy implications however. If we were to change the federal tax system (as is suggested by the right) then we may very well end up with a system that is regressive (not a good thing at all). The point to take away from this is (apart from the data manipulation of the right) is the fact that the tax system is not highly 'unfair' to the rich.

For completion I also include the total effective tax rates of income groups (right). For more info I recommend Citizens for Tax Justice and in particular this report which has more up to date figures which show much the same picture.

The Poor and Democracy

   Given the constant tripe espoused by the right-wing in America about the poor voting for benefits. I thought it was time to hit back. What pushed me was this recent article "Registering the Poor to vote is Un-American" which contains a choice quote:

  "Why are left-wing activist groups so keen on 
registering the poor to vote?

Because they know the poor can be counted on

to vote themselves more benefits by electing

redistributionist politicians.  Welfare recipients are

particularly open to demagoguery and bribery."

This essentially sums up the Republican attitude to the poor and democracy. Given that it is a particular talking point and given that it is true that poorer demographics vote for less right-wing candidates (I am loathe to call the Democrats left-wing as, at best, they approach centre), it would make for an interesting investigation to determine whether or not this position is true. Well first off the figures on welfare and its effectiveness in America are telling. It is not, however, what I want to focus on and so I'll just give you the figure above which is a chart showing average monthly welfare benefits in 2006 dollars.

     Instead I want to ask whether or not the poor, by weight of numbers, have a strong influence on policy decisions and despite the nominal notion of democracy the answer would seem to be no. I refer the reader to this paper by Martin Gilens of Princeton University: Inequality and Democratic Reponsiveness in the United States.

Abstract:

"In this paper, I examine the extent to which the link between public preferences and government policy is biased toward the preferences of high-income Americans. Using an original data set of almost 2,000 survey questions on proposed policy changes between 1981 and 2002, I find a moderately strong relationship between what the public wants and what the government does, albeit with a strong bias toward the status quo. But I also find that when Americans with different income levels differ in their policy preferences, actual policy outcomes strongly reflect the preferences of the most affluent but bear little relationship to the preferences of poor or middle income Americans....."


  The graphs alone are most telling of the impact of wealth on democratic power:

     The 10th percentile (those richer than or equal to exactly 10 percent of people) have essentially no influence on democratic decisions whereas the 90th percentile (those richer than or equal to 90 percent of people) can greatly impact policy decisions. Even the 50th percentile (those richer than 50 percent of people) have nowhere near the influence of the top 10 percent. Now that we have tested this empirically (something Republicans loath) the evidence is fairly clear, the idea that the poor have a disproportionate impact on democracy due to weight of numbers is clearly incorrect and instead we see that the idea that big business and the wealthy having an unfair stake in democracy is true.

  Can we expect the Republicans, among others, to drop this notion of 'mob rule' and voting for benefits? Not very likely. It makes for good (if wholly incorrect) politics. The only time the poor have any reasonable say (in proportion to their numbers) is when the issues are of high salience (or the rich agree).

   Unfortunately I don't think that this political sleight of hand and its accompanying red scare elements (highly evident in the American Thinker article) will be leaving American politics anytime soon. Instead, I imagine it will be used as a stick to beat the poor and reduce their power even further, both through technocratic developments and by using this idea of the poor voting for money as a rhetorical device. Time will tell.

The London Riots Revisted

     I wanted to revisit an earlier post of mine: A Predictable Mess. Essentially, I was tying together the rising income inequality and austerity in Britain to the London Riots. Two articles in the Guardian aroused my interest. First was this piece: England Rioters: Young, Poor and Unemployed. Which has some interesting information on the demographics of the rioters (as suggested by the headline). Of worth was the following:

"A Liverpool University urban planning lecturer, Alex Singleton, analysed the Guardian's preliminary data by overlaying the addresses of defendants with the poverty indicators mapped by England's Indices of Multiple Deprivation, which breaks the country into small geographical areas.

   He found that the majority of people who have appeared in court live in poor neighbourhoods, with 41% of suspects living in one of the top 10% of most deprived places in the country. The data also shows that 66% of neighbourhoods where the accused live got poorer between 2007 and 2010."

Another article: England's rioters: did many 'pillars of the community' take part? has perhaps the most shocking statistic:

"Only a small proportion of people appearing in court charged with offences committed during the riots are listed as being in work or in full-time education, according to an analysis of most of the defendants whose cases have been heard so far. Research carried out by the Guardian of around 1,000 cases going through the magistrates courts shows that just 8.6% of defendants have jobs or are students." [Emphasis mine]


Meanwhile, as Cameron talks of 'zero tolerance', it would be useful to check some of the research on this question. I refer the reader to one paper Redistribution and Civil Unrest.

Abstract:

"Recurrent episodes of civil unrest significantly reduce the potential for economic growth and poverty reduction. Yet the economics literature offers little understanding on what triggers social unrest and how to prevent it. We analyse theoretically the merits of redistributive policies in the onset and reduction of civil unrest and compare it with more direct policies such as the use of police. We present empirical evidence for a panel of Indian states, where conflict, redistributive policies and policing are treated as endogenous variables. Our empirical results show, in the medium-term, redistributive policies are an effective means to reduce civil unrest, as they affect directly important causes of social conflict, notably poverty. Policing is at best a short-term strategy. In the long-term, it may trigger further social discontent."

It seems we never learn....or at least the Conservatives don't.....assuming, that is, they genuinely want to solve the problems.

The Fallacy of the Broken Window Fallacy (Or as it is used on Mises)

    I was perusing the interwebs recently when I stumbled across this article on Mises: The Broken-Window Fallacy by Robert P. Murphy. Now I tend to avoid Mises.org and similar sites due to their general dogmatic propaganda but occasionally I like to see what particular mistakes they are peddling. This article struck me as worthy of a response because of how stunning the sleight of hand really is. I ask the reader to read the parable of the broken window either here or in Murphy's article.

     It all  seems reasonable enough until one thinks "wait! What does it mean if the shopkeeper were not going to spend those six francs!" Is there now an economic benefit because there are six francs more being spent than otherwise would be? Well, let us see what Murphy has to say on this matter:

"Specifically, Bastiat assumes that the shopkeeper would have spent his six francs somehow, and that the boy has merely forced him to spend the money on repairing the broken window. It is wrong to view the employment of the glazier as a net gain to the economy, because the shopkeeper (in the absence of the broken window) might have spent that six francs getting his shoes repaired, for example. In that case, the glazier's gain is exactly counterbalanced by the cobbler's loss.
Thus, if we assume that the workers in the community would have been "fully employed" had the boy not broken the window, then it's clear that the boy isn't "creating jobs" or "boosting total income." All he's done is to give more work/income to the glazier, at the expense of work/income for some other people in the community."

What I have underlined says it all really. So, Krugman (who I'm not overly fond of) argues that a destructive act will benefit the economy due to unemployed resources (capital and labour) and Murphy responds by saying that Krugman is wrong if we assume full employment. Did you get that? He assumed the argument away! Krugman's whole point was that there were unemployed resources which could be employed due to disaster and the response is to assume there are no unemployed resources??

Krugman: If and only if A then B.
Murphy: Not A therefore not B.

Did he miss the word 'if'? And if he did has he not seen the unemployment figures? And the cash at hand in major companies? (Apple has more cash at hand than the U.S. government).

Am I missing something here? Let us read on. Murphy moves on to make a reasonable point regarding the decrease in total wealth (which I will return to) and then quotes Krugman. Hurrying past this we find the next reference to idle/unemployed resources:

"One of [the Keynesian's] responses is to claim that the conservative/libertarian critics are ignoring the distinction between wealth and employment, and that they are unwittingly assuming that there is full employment (i.e., that there are no "idle resources")....

At this stage of the argument, I think there are two main answers. In the first place, we have to inquire why there are so many "idle resources" lying around? If it turns out that destructive government and central-bank policies are to blame — and not a sudden unwillingness for people to "spend enough" — then forced expenditures (due to a natural disaster or terrorist attack) won't actually fix the labor market. Mysteriously, the economy will suddenly become "worse than we realized," so that even in light of the new spending, unemployment is still too high. (This is what happened with the Obama stimulus package.) "


 So, now we have moved from assuming that there are no idle resources to assuming that if there are they must be a result of non-market forces. Now he does provide a link for this assertion but I've had my fill of rubbish today and may pick it up some other time.

 Other Points (Some Nitpicking)

For another point which I felt needed mentioning, I refer to this paragraph:

"At this point, one might think that the whole episode is a wash. Sure, the boy's vandalism doesn't help, but how does it hurt things? Is Bastiat implicitly arguing that it's better to give business to the cobbler, rather than the glazier? Where does he get off making that judgment?
 The answer involves the distinction between wealth versus income or employment. Just because "total income," or "total employment," or "total GDP" hasn't been changed by the boy's action — it's just that the composition has been rearranged — nonetheless the hooligan lad has objectively made the community poorer."

 This seems a more reasonable proposition. It is however odd in light of Austrian economics. Notice the phrase "nonetheless the hooligan lad has objectively made the community poorer". Objectively? Given that the Austrian school relies on 'revealed preference' and the subjectivity of utility in its every analysis, I find it odd to see the word objectively sneaked in here. How does the Austrian suppose to measure the utility gained or lost due to this act? Given that their analysis almost entirely relies on this utility or preference having to be 'revealed'. How do we know that the utility of the Glazer or indeed the utility of the new pane to the shopkeeper is lower than that which would have been otherwise? This is even more so the case if we assume that there are unemployed resources. Murphy refers in his article to the disutility of work: "Work is a necessary evil, not an end in itself." and later on at the end of an example where he states  "Sure, Jim caused some physical destruction of wealth, and that is a bad thing; however, let's not lose sight of the upside: the neighbor used more of his labor than would otherwise have been the case"?.  If we do indeed assume that there are no unemployed resources then his argument seems to hold up but if there are unemployed resources then we immediately see that his argument no longer holds. Furthermore, given the massively negative effects of long-term unemployment (this paper for example) this 'unecessary evil' is hardly so . Even though I could go on, I think I will wrap it up here as I have ranted for too long already.

The Interconnectedness of Business

    I stumbled across an interesting paper recently entitled The Network Of Global Corporate Control. It is concerned with the various links of ownership in transnationals. Here's the abstract:

Abstract:

"The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers."

The paper is a bit heavy but worth the read. I intend to print it off tomorrow to give it a proper read as I hate reading off computers. What aroused my interest in this was its implications for crises. If firms are so interconnected we can expect the economy to be less stable due to wealth concentration and we also have to contend with the influence of oligoply neverminding the bargaining power this gives companies when trashing out deals with states. It also brought to mind a previous study I read comparing the spread of economic crises to the spread of diseases: Worldwide Spreading Of Economic Crises.

Abstract:
"We model the spreading of a crisis by constructing a global economic network and
applying the Susceptible-Infected-Recovered (SIR) epidemic model with a variable
probability of infection. The probability of infection depends on the strength of eco-
nomic relations between the pair of countries, and the strength of the target country.
It is expected that a crisis which originates in a large country, such as the USA,
has the potential to spread globally, like the recent crisis. Surprisingly we show that
also countries with much lower GDP, such as Belgium, are able to initiate a global
crisis. Using the k-shell decomposition method to quantify the spreading power (of
a node), we obtain a measure of \centrality" as a spreader of each country in the
economic network. We thus rank the dierent countries according to the shell they
belong to, and nd the 12 most central countries. These countries are the most likely
to spread a crisis globally. Of these 12 only six are large economies, while the other
six are medium/small ones, a result that could not have been otherwise anticipated.
Furthermore, we use our model to predict the crisis spreading potential of countries
belonging to different shells according to the crisis magnitude."

Both papers have implications for the study of economic crises and are worth the read. We see that TNC's and links between various companies can have massive implications. I'm a bit pushed for time and so can't post more but I will have a post about tax shares relative to income shares soon.

Authoritarianism and Neoliberalism

     One of the great ironies of Neoliberalism is the fact that in order to provide freedom and economic progress it has to use increased authoritarianism in order to put down those who don't share in the economic progress (i.e. much of the population).

     This has been a constant theme throughout the Neoliberalist world and it is by no means a coincidence that the first Neoliberal experiment required the dictator Pinochet in Chile. Across Latin America, Neoliberal regimes were lead by dictators who ruthlessly crushed opposition to their plans. In countries like Mexico and Columbia, the war on drugs is the front under which opposition is fought, a great irony considered the explosion in the drug trade was a result of Neoliberalism The same was occuring across the world in Indonesia under General Suharto and South-East Asia in general. Even in Iraq, the invasion has lead to the crushing of trade unions and a Neoliberal constitution.

    The Developed World fares no differently in this repect. In the U.S., the poor were criminalised, again under the pretext of a war on Drugs. This gave both an ideological and practical way of dismissing the concerns of the poor. Throw them in prison, they're just drug addicts. This lead to the explosion of prison populations in the U.S., a country that accounts for 5% of the world's population accounts for 25% of the world's prison population. We have seen the same trend in the U.K.

Now, why is this relevant? Well, today Cameron is aboutfacing on his cuts to the police. Was this predictable? Well personally, I was surprised when I heard that he was cutting the police in the first place. That said, when nothing happened I thought I was perhaps mistaken. In the wake of the riots however it seems that Neoliberalism does indeed lead to increased authoritarianism in order to crush any opposition or discontent.


We should probably look back to the Queen of Neoliberalism, a Miss Margaret Thatcher who set the ball rolling in the U.K.. What did Thatcher do in terms of police spending? Well, she increased police numbers in England and Wales from 89,226 in 1979 to over 93,000 in 1981, spending on the police increased rapidly, going from £1,035 million in 1978 to more than double that amount by 1982-3 and up again to £3,825 million by 1988-9. [Source: R Reiner and M Cross (eds), Beyond Law and Order: Criminal Justice Policy and Politics into the 1990s (Macmillan, 1991).].Cameron should have learned from this as it allowed Thatcher to enjoy the support of the police in the crushing of the Miner's strike and other protests against her rule. Today he is seeing the mistake of his overconfidence in his abilities and will attempt to regain the confidence that the police have lost in him.


What will Cameron do now? It seems he may have to call on the old reserves of Neoliberalism, patriotism and fear. In yet another irony, Neoliberalism which is supposed to end the idea of nation-states and terror often requires nationalistic fervour and fear to maintain support. Whether it was the Soviets for Reagan, the Falklands and the IRA for Thatcher, The War on Terror for Bush and Blair it is a constant trend in Neoliberalism, fear and patriotism. It remains to be seen whether or not Cameron will be able to whip up nationalist fervour in the wake of the riots, if not he may have to declar a war, perhaps on some new aspect of terrorism (maybe an IRA resurgence) or some small-time dictator. These remain unlikely however as declaring war on dictators is becoming more and more unpopular and the IRA don't seem to be giving him anything. 

    Cameron could attempt to build up fear regarding a collapse of moral society but this runs the risk of causing it to become true and may cause a strengthening of class differences. All in all, Cameron's best target is the EU. He can paint the EU as the external enemy, the problem, and he can use the recent riots to help. He will probably propose tough measures and then when these contradict EU laws he will use that as a platform to launch a general attack on British involvement in the EU. Other than that, only an attack on British soil will help Cameron create a mood of nationalism and fear.

A Predictable Mess

Anyone who is in anyway familiar with my posts will know I tend to concentrate a lot on income inequalities in the First World and how they affect society.

In particular I have often highlighted the fact that homicide rates (a proxy for measuring total crime) are most affected by income inequality:

People would also know that the U.K. has some of the worst income inequality and social mobility levels in the developed world. I have often pointed out that social mobility in the U.K. has collapsed. In the wake of the riots I can't help but feel vindicated.

Now, a disclaimer. I am not making any comment on whether or not the rioters should or should not have rioted. I am not questioning whether or not this was the 'right' response to income inequalities or anything else. It remains criminal behaviour.

What I am saying however is that certain economic conditions result in predictable effects. In this case, income inequality and low social mobility result in an underclass which is waiting to explode. The spark in this instance was the shooting of Mark Duggan but that was by no means the gunpowder that has steadily accumulated over the past few decades.

   In this case there are two solutions to the problem. The first is increasing authoritarianism and the second is economic and social reform. Given that neoliberal policies that have dominated since the 80s and given the watchword 'austerity' it seems we will find ourselves moving towards authoritarian policies rather than reform. We have seen the same in the U.S. where incarceration rates have increased dramatically since Reagan.

  More police and tougher sentences is the easy and comfortable response, it appeases the masses and it fits nicely with Conservative thought. Already the recent cuts to the police are being reconsidered.
    In direct contrast, the cuts to the social services in these areas are being flatly ignored. There has been no talk of acutally solving these issues (Cameron's 'big society' apart). It seems the vested interests and prevailing dogma won't allow for this problem to actually be solved. Sigh.....

Number of Wars Increasing

Recently I stumbled across this article which surprised me as I had thought that the prevailing opinion (a reduction in wars) was correct.

http://www.world-science.net/othernews/110630_war.htm

"Military conflicts between states have been increasing in frequency from 1870 to 2001—even without counting the best-known conflagrations such as the world wars and American interventions, a study has found.

The survey of conflict counted everything from all-out shooting wars and uses of military force to displays of force such as sending warships and closing borders. This doesn’t measure the intensity of violence, researchers said, but does capture governments’ readiness to settle disputes by force. Only conflicts between states, not civil wars, were counted.

Identifiable factors behind the increase—two percent more wars each year, on average—are that there are more borders and weapons are cheaper, according to the investigators. By their count, the total number of nations rose from 47 in 1870 to 187 on the eve of the World Trade Center attacks."

I think the primary cause was the dismantling of Empires and the establishment of Africa states which now fight due to the poor idea of arbitrarily dividing up states. This is an interesting question. In Marxist thought it is believed that the number of wars would increase due to competition between nation states on behalf of their respective captialist elements. Neoliberalism and other such theories argue that peace is more likely as countries benefit from trade. The second theory lead to the McDonald's Theory of War which is the statement that no two countries with McDonald's have ever gone to war with each other. This was violated in 2008 when Russia waltzed into Georgia or the 2006 war Israel waged on Lebanon.

  Either way it seems to easy to tell given the explosion in the number of countries. Also, many would argue that there will be peace during times of plenty and growth but that as soon as things begin to turn sour (as in the present day) then warmongers once again find a voice.

I can vouch for this!

Narcissists Need No Reality Check:

"Narcissists make spectacles of their supposedly awesome selves, but they don’t see the world entirely through rose-colored glasses.

These sultans of self-regard accurately appraise their own personalities and reputations, say psychologist Erika Carlson of Washington University in St. Louis and her colleagues. Carlson’s team unexpectedly finds that narcissists acknowledge their own narcissism and assume that their arrogant strut gets frowned on by others."

Leaving aside this paper (that was about me).  I want to bring up the question of free-will. I have always contended that we are far more affected by subconscious impulses than we tend to recognise (and so I tend to oppose extensive advertising). This article New Questions About Free Will seems to run in favour of that view.

 "The sci­en­tists cit­ed work by re­search­ers such as John Bargh at Yale Uni­vers­ity and Pe­ter Goll­witzer at New York Uni­vers­ity start­ing in 2001. Bargh and col­leagues showed how mo­tiva­t­ion to­ward a goal could arise with­out con­scious aware­ness, Cus­ter and Aarts wrote. “S­tu­dents were seated at a ta­ble to work on two seem­ingly un­re­lat­ed lan­guage puz­zles. For some stu­dents, the first puz­zle in­clud­ed words re­lat­ed to achieve­ment (such as win or achieve), and for oth­ers it did not. Stu­dents who were ex­posed to achieve­ment words were found to out­per­form the oth­ers on the sec­ond puz­zle.”"

"Ear­lier re­search has shown that ac­tion goals, such as mov­ing a fin­ger, that were in­i­tially con­sciously set are un­con­sciously pre­pared be­fore they are acted on,” they wrote. “The lit­er­a­ture re­viewed here sug­gests that the un­con­scious na­ture of the will has an even more per­va­sive im­pact on our life. Goals far more com­plex than fin­ger move­ments, can guide be­hav­ior with­out be­ing con­sciously set first, when they them­selves are ac­ti­vat­ed out­side con­scious aware­ness."

 I find this question regarding free will (and by extension questions regarding the influence of subconscious factors on both our decisions and our values) to be one of the most pertinent. If it is the case that factors such as advertising and large levels of income inequality do massively alter subconscious values (and hence decisions) and if this is particularly true of children then we will have to reconsider the role of these conditions.  

How Wealth Accumulation Can Promote Cooperation

So I can't be accused of being completely biased in all my posts, I offer this paper for consumption:

How Wealth Cooperation Can Promote Cooperation

Abstract:

"Explaining the emergence and stability of cooperation has been a central challenge in biology, economics and sociology. Unfortunately, the mechanisms known to promote it either require elaborate strategies or hold only under restrictive conditions. Here, we report the emergence, survival, and frequent domination of cooperation in a world characterized by selfishness and a strong temptation to defect, when individuals can accumulate wealth. In particular, we study games with local adaptation such as the prisoner's dilemma, to which we add heterogeneity in payoffs. In our model, agents accumulate wealth and invest some of it in their interactions. The larger the investment, the more can potentially be gained or lost, so that present gains affect future payoffs. We find that cooperation survives for a far wider range of parameters than without wealth accumulation and, even more strikingly, that it often dominates defection. This is in stark contrast to the traditional evolutionary prisoner's dilemma in particular, in which cooperation rarely survives and almost never thrives. With the inequality we introduce, on the contrary, cooperators do better than defectors, even without any strategic behavior or exogenously imposed strategies. These results have important consequences for our understanding of the type of social and economic arrangements that are optimal and efficient."

There are however some caveats I would add (in addition to those examined by the authors). The main one is the desire for relative wealth over absolute wealth. In the stock market (in particular) it is how much money one has relative to one's peers that is often the guiding force, this may increase temporary defections. It also fails to examine more complex strategies (such as Tit-For-Tat as they mention) and particularly strategies that would arise if an 'eliminating' element was added. If it were the case that competitors can be eliminated if they face a large loss. Obviously the elimination of competitors is an element in the economy and even cooperative oligopolistic arrangements don't stray away from this.


    There may also be problems relating to kabals, where cooperating groups operate at the expense of other elements of society (again oligopolies). One should also note that the gini coefficient tends to rise drastically in this set up (approaching 1) and this leads to ill-effects as examined in previous threads, including the undermining of trust that is essential to cooperative strategies.

Thoughts Blogosphere? 

"We must give them reform or they will give us revolution."

     These words were uttered by Conservative MP Quintin Hogg in 1943 and essentially summarised prevailing wisdom at the time. The idea of a stable society wherein the worst excesses of capitalism would be tempered by social programs was embraced in the democracies of the day. The state had a role in regulating capitalism and preventing recessions or at least mitigating the worst effects. This state of affairs would last until the late 70's.


    Roll on to the present day. We face the biggest downturn since the the Great Depression which sparked the whole idea of a regulatory state.  Income inequality is as high as it was prior to 1929 and social mobility has collapsed. Did this happen overnight? No, since the 1980's neoliberalism and the neoliberalist policies that have been the mainstay of all major political parties (whether it be the Conservatives and New Labour in the U.K. or the Democrats and the Republicans in the U.S.). These policies have lead to a slow stagnation in growth coupled by sporadic financial crises. Many preferred to see these financial crises in terms of the death throes of social democracy and so on the back of this more 'shock therapy' and more restructuring was demanded by bodies such as the World Bank and the IMF. Schumpter used the term creative destruction to refer to a similar aspect of the economy wherein the rise and fall of individual companies leads to creativity and progress. Nowadays, neoliberals use the term to refer to the regeneration that occurs after times of collapse. 


    While it has not been expressly articulated (to my knowledge) this idea of creative destruction (collapse followed by rebirth) is an admission of the failure of a stable capitalism using neoliberal (rather than Keynesian) methods. Recessions and financial crashes are now not ust inevitable but necassary for growth. Despite this growth rates have fallen since the hey-day of the 50's and 60's and the decline in social mobility and the restoration of class power (well documented in David Harvey's A Brief History of Neoliberalism) have created new class tensions.


   It is these tensions that we see boiling over in the U.S. and most recently in the riots in the U.K. over the past few days.While these individual riots were sparked by the killing of Mark Duggan, this spark was by no means the gunpowder that has been steadily building over the past few decades in the poorest sections of society. These tensions can be tackled in two ways. One is by actually addressing the issues of unemployment, underemployment, massive income inequality and stagnating social mobility that is to give them reform before they give us revolution. This will not come to be anytime soon, too many vested interests and powers-that-be have too much to lose and prevailing dogma tends towards that dreaded word 'austerity'. 


   Given this it seems inevitable that we will see the authoritarian side of neoliberalism. Instead of addressing problems this will be tackled as a criminal problem with no social roots. We will see increased police presence and increasingly authoritarian practices, not only in the riots today but also into the near future. It is the great irony of neoliberalism that in order to create freedom and wealth it must use authoritarianism to subdue the poor.

Entrepreneurs, Chance, and the Deterministic Concentration of Wealth

While there are many factors that coalesce to determine an individual's wealth it is more often than not assumed that chance is irrelevant. Any good luck should be cancelled by bad luck, or is unimportant on the aggregate of all individuals. Here is a study which models an economy of complete chance Entrepreneurs, Chance, and the Deterministic Concentration of Wealth.

       Abstract:
"In many economies, wealth is strikingly concentrated. Entrepreneurs–individuals with ownership in for-profit enterprises–comprise a large portion of the wealthiest individuals, and their behavior may help explain patterns in the national distribution of wealth. Entrepreneurs are less diversified and more heavily invested in their own companies than is commonly assumed in economic models. We present an intentionally simplified individual-based model of wealth generation among entrepreneurs to assess the role of chance and determinism in the distribution of wealth. We demonstrate that chance alone, combined with the deterministic effects of compounding returns, can lead to unlimited concentration of wealth, such that the percentage of all wealth owned by a few entrepreneurs eventually approaches 100%. Specifically, concentration of wealth results when the rate of return on investment varies by entrepreneur and by time. This result is robust to inclusion of realities such as differing skill among entrepreneurs. The most likely overall growth rate of the economy decreases as businesses become less diverse, suggesting that high concentrations of wealth may adversely affect a country's economic growth. We show that a tax on large inherited fortunes, applied to a small portion of the most fortunate in the population, can efficiently arrest the concentration of wealth at intermediate levels."

        While there are obviously more factors to the economy than chance (I would particularly include the effects of income inequalities, poverty and low social mobility on motivation etc.) this study demonstrates the compounding effect of wealth even in the absence of real skill. So while nowhere near a real model of an economy it does serve a useless purpose. I am interested in your thoughts blogosphere!

Cold War Paranoia

   In the 1970's Team B was set up, after being heavily pushed for by a younger Donald Rumsfeld. It served as an ideological weapon with which the Neoconservatives would drum fear into the American people and so pave way for their election (in the form of Ronald Reagan with his missile gap).
    One of the most disgraceful pieces of distortion was with regard to anti-submarine warfare. The CIA believed that the Soviets were not putting large amounts of resources into a submarine detection system. Team B in an incredible leap of paranoid logic took the same facts and concluded the following - the fact that the evidence was lacking was evidence in itself!
   The reasoning? Clearly if there were no clear signs of a submarine detection system it meant that the Soviets had developed a system completely indetectable to the U.S.! This reminds me of a wonderful scene in the fantastic book A Scanner Darkly by Philip K. Dick when the main character and his friends return home, paranoid about whether or not their home was broken into in their absence.

    "When they rolled to a stop in the driveway, parked , and walked warily toward the front door, they found Barris's note and the door unlocked, but when they cautiously opened the door everything appeared as it had been when they left.
     Barris's suspicions surfaced instantly. "Ah," he murmered, entering. He swiftly reached to the top of the bookshelf by the door and brought down his .22 pistol, which he gripped as the other men moved about. The animals approached them as usual, clamoring to be fed.

    "Well, Barris," Luckman said, "I can see you're right. There definitely was someone here, because you see—you see, too, don't you, Bob?—the scrupulous covering-over of all the signs they would otherwise left testifies to their—""

    In precisely the same fashion as the paranoid drug addicts above, for the Neoconservative, a lack of evidence is evidence of a still greater crime. One has to wonder how much this influenced Rumsfeld and Bush when they considered WMDs in Iraq. And as they sought to instil fear in the American people as Reagan did with his missile gap.

Flat Earth News

    The recent scandals regarding the News of The World reminded me of a book Flat Earth News by Nick Davies. The book concerns systematic problems in the U.K. press by drawing on the author's personal experiences in the industry as well as various scandals. The book does contain some interesting facts about the rise of Murdoch and makes for a very good read.
  All this got me to thinking about self-censorship and systematic press failures, as well as the problems associated with the centralisation of ownership. I am considering buying Chomsky's Manufacturing Consent or a similar book dealing with similar themes. Well, that's it, a poor book recommendation.......

Conservative Denialism

     We often see, from the right (particularly in the U.S. and U.K.), the notion of personal responsibility. The remedy to any social problem such as unemployment, crime, teenage pregnancies etc. is supposedly the individual in question making the right choice and to stop making the choices that lead to this position. This approach has meet with major successes in both the U.K. and the U.S. mainly in religious communities. This post will examine the problems with this one size fits all tonic.
       It really boils down to a question of denialism. It is a well-observed fact that bringing people up in particular environments makes it statistically likely that they will exhibit certain behaviours. If one continually places people in position A and is faced with these people making choice X then it becomes the height of denial to insist that should these individuals change their behaviours the problem wouldn't exist. The conservative in this respect is similar to a scientist putting water in an environment below 0 degrees Celsius and then rebuking the molecules for forming ice. If a certain environment leads to certain behaviours then it is sheer denial to insist that these behaviours are not somewhat determined by said environment.
    The conservative position is perfectly sound with impeccable logic, if drug addicts chose not to use drugs they would be no longer drug addicts. Despite the soundness of this reasoning it is evidently moronic. While fully accepting the role of choice and not attempting to diminish responsibility we must ask what factors influence choices?
    If we can answer this question, i.e. what factors influence choices? Then we are most of the way there. If we can show that prevalent levels of income inequality lead to a greater homicide rate (mentioned in my previous post) then we cannot simply sit back and demand that these people choose differently. This approach is naught but denial at can be incredibly dangerous. We are faced with an ultimatum, either we do not try to solve the problem and deal with the increasing crime through prisons (the current approach) or we attempt to solve the problem. It cannot do to claim the problem does not exist.

Libertarianism and the Maximisation of Liberty

       In a similar vein to my previous post on Jevon's paradox I now ask about another seeming paradox. Libertarians often propose an 'objectively' derived system based on the maximisation of liberty. Leaving aside my initial objections with regard to the value judgements in play here, let's examine their claim.
     At first glance, the system libertarians propose does indeed seem to maximise liberty however as we know from Jevon, first glances may be deceptive. It very well may be that the libertarian system is indeed the one that maximises liberty but does follow 'objectively' (even allowing for the nonsenses inherent in that term)? I think not. The libertarian reasoning here is naive.
    To illustrate the point I offer an example. Suppose we wished to reduce alcohol consumption, the most logical method would be to ban alcohol consumption, no? Of course anyone with half an understanding of history or how people work would know that this is perhaps the worst way of going about it. The law of unintended consequences is at work here. Prohibition leads to an explosion of organised crime, murder and doesn't stop alcohol consumption.
   Given that the naive approach does not necassarily work then can we just assume that the naive libertarian approach works? I argue not. It may well be that libertarianism is the system that maximises liberty but the reasoning employed is horribly wrong. To offer a single example I point to how increasing income inequality results in increasing homicide.

Income inequality and homicide rates in Canada and the United States

   These considerations do enter into libertarianism but only lightly. For example, murder is curtailed as the liberty to murder reduces net liberty (for those killed mainly). Do other considerations apply? Does the curtailment of liberty entailed by taxation (and its expenditure on certain items) lead to a net increase or decrease of liberty if this tax is used to prevent muder and the like? These are questions libertarians must answer if they are to escape from their current naive position, and while it may be that they find in the end that their initial position was right then all the better for them. Their first hurdle will be to find a method to compare degrees of liberty, I very much feel this is where they will fall.

Income Inequality and the Great Recession

It has always been a contention of mine that massive income inequalities and the resulting wealth polarisation leads to an excess of available capital in relation to the available investment opportunities leading to stagnation and collapse. I recently stumbled across a report: Income Inequality and the Great Recession by the U.S. Congress Joint Economic Committee which seems to roughly corroborate my views. I recommend reading it, but I'll put out a few choice snippets:

 "Income inequality may be part of the root cause of the Great Recession. Stagnant
incomes for all but the wealthiest Americans meant an increased demand for credit,
fueling the growth of an unsustainable credit bubble. Bank deregulation allowed
financial institutions to create new exotic products in which the ever‐richer rich could
invest. The result was a bubble‐based economy that came crashing down in late 2007"

"Income inequality may be part of the root cause of the Great Recession. Stagnant
incomes for all but the wealthiest Americans meant an increased demand for credit,
fueling the growth of an unsustainable credit bubble. Bank deregulation allowed
financial institutions to create new exotic products in which the ever‐richer rich could
invest. The result was a bubble‐based economy that came crashing down in late 2007"

The graphs alone are worth viewing. Over and out.

Zeno's Dichotomy Paradox

    There is a famous paradox originating from ancient Greece known as Zeno's Dichotomy Paradox after the Greek Philospher Zeno of Elea. Essentially the argument is as follows. In order to travel any distant (say 1 metre) once must first travel 1/2 metre, however, before travelling 1/2 metre one must travel 1/4 of a metre and so on. The argument concludes that this represents an infinite number of tasks and so cannot be completed in a finite amount of time.
    Now, clearly this argument is wrong as we can move and so we must ask what exactly is wrong with the argument? The paradox is most often approached in terms of the convergence of infinite sums. This approach has its merits but in some respects dodges the question asked so instead I will approach it differently.
    I contend that one of the initial assumptions is wrong. I say that distance cannot be infinitely subdivided into smaller and smaller pieces. This contention is, however, at odds with the real number system we use for measuring things such as distance. I approach this question using the notion of the Planck length. The Planck length (or distance) is a term stemming from Quantum mechanics (see the wiki page). I don't pretend that the argument I present is in any way tight in terms of formal logic or physics but I propose a solution based on the idea that the Planck length is a possible basic unit of distance meaning that any length (such as a metre) is a multiple of a large but ultimately finite number of Planck lengths. This would mean that the number of tasks is not infinite and so motion is not an impossibility. I leave the argument as it stands -just the bare bones- and leave it to any readers to flesh it out.

A Beautiful Video

   A beautiful video from youtube user UppruniTegundanna that I stumbled across today:

I particularly love the hands at 1:07 (although according to wiki the hands are actually younger than 9,300 years old and date from around 550 BC and 180 BC). It is videos like this that make me wonder about our own future. Will our graffiti delight distant generations of paleontologists? Will they reflect on our short 80 year lifespans? The power of science is amazing. It also makes me wonder, if a nuclear war breaks out and humanity is brought to its knees what books will constitute the new bible? Will these scattered peoples find tracts of the ancient book 'Harry Potter' dating from before the 'Fall'? Will they interpret religious meanings to the scientific texts of those days? One can only wonder and hope such a situation never occurs/

Jevon's Paradox: Consumption and Resources

           In today's society we often hear about climate change and the need to reduce consumption. This post is about an often overlooked element of the debate about energy conservation and the need to control consumption. This post is not about whether or not climate change is happening (I am of the opinion that it most certainly is), instead it is about what we need to do if it is.
         It is often said that we need to combat climate change with a dramatic reduction in consumption. This argument is often countered by people concerned about the economic impacts of consumption reduction by the following argument; it is not necassary to reduce consumption as technological advances will increase efficiency dramatically. I will make the argument that this alone is not enough.
       When efficiency (say in energy production) is increased it is observed that consumption, likewise, increases. This has been noted since 1865 in 'The Coal Question' a book by William Stanley Jevons and is called 'Jevon's Paradox'. Jevons noted that the increases in the efficiency of the steam engine in his time did not lead to a reduction in coal consumption. Instead due to the decreased cost of running a steam engine the demand for steam engines increased and resulted in demand for coal also increasing.
       Now, fast-forward to the modern day and the concerns of climate change and these arguments are being put forward by the likes of Jared Diamond in his book 'Collapse'. It is often touted that the increase in efficieny in the future will lead to a reduction in oil consumption and in pollution due to less oil and other materials being required to maintain current consumption levels. This however assumes that consumption levels will remain the same or are not affected by the increased efficieny. This assumption is, however, wrong. To give an example, if it costs me 50 euro a month less to fill up my car then the odds are that I will spend that extra 50 euro on some other good (or service), a good most likely produced using oil or at the very least transported using oil.
        As a result we as humanity cannot rely on increased efficiencies to stave off the very real threat of climate change. What is required is a reduction of consumption or an increase in efficiency coupled with constant consumption levels. A practical example in terms of oil would be a green tax on petrol to ensure that even if oil production becomes more efficient the prices do not fall for the consumer (although such a situation is unlikely to occur). Also, even if we tax pollution and things are produced more cleanly it might not mean a reduction in pollution if more goods are produced following an increase in 'cleanliness'. These are just some issues with regard to consumption and climate change that we face in our modern world.

An Evil Deity

   I put this question out to the blogosphere about God, Yahweh, Allah [insert deity here] etc. (I will refer to all of the above as 'God'). The question is how do you know God is good? Now to qualify this I'm going to put out a few caveats.

First off, I care little for the semantic "God is defined as good". So, in order to eradicate this pointlessness, I am going to define good in the colloqial sense e.g. not killing is good. In another sense the question could be couched in terms of suffering, how do you know God wants to 'save' us and is not merely revelling in our suffering?

With that out of the way, I will address the next point. Many theists will be reaching for their holy book at this stage and pointing to where it says God is merciful, God is good etc. so I'm going to ask would an evil God not write that he was good? Would an evil God not get his kicks from convincing his hapless creations that he was their route to being 'saved'? Would he not relish in creating a false hope in order to crush it later? Would it not please such a being to see people worship the very cause of their misfortune?

 Now, the next objection is generally "why would an evil God even create a universe?". Well, to torture the inhabitants obviously. Indeed, why would any God (whether good or evil) create a universe?

Finally, the theist will say "what about all the good in the world?" Well, as we know, God works in mysterious ways and any seeming kindness is merely part of God's greater (evil) plan.

So, this is the question I put to theists. Many atheists are probably eager to point out the incredible number of atrocities in the Bible (or Qu'ran etc.) but I must ask them to hold. Instead I want to ask the theists how (even if the Bible was squeeky clean) do they know that God is good rather than evil. 'Personal revelation' won't cut it either.