Understanding century 21 - IT, Globalization and urban-urban migration

In the 90s the world kind of made sense. Since then, not so much. I don’t know if teens truly are experiencing an anxiety epidemic, but any American growing up in the new millennium has reason to be anxious.

I think the root causes of our disruption are globalization (China and India) and information technology (AI, robots, advertising supported web, etc) leading to peak human/mass disability and the collapse of the GOP.

I’m now considering a third factor — namely urban-urban migration (though it may be a consequence of globalization and IT rather than a root cause). The population required to sustain a viable local economy keeps increasing; this is absolutely not what we expected when the net was young. Once a city of 10,000 was viable, then a city of 50,000, then a few hundred thousand. We seem too heading towards a million as baseline.

This is politically potent here because the structure of American government gives disproportionate power to low population density regions. The pain of these communities is politically consequential. This is usually described as a “rural” crisis, but these aren’t “rural” in the traditional sense. They are regions around large towns and small cities that are no longer economically viable.

I was a family medicine resident and a young physician in communities like these. Recent stories feel familiar — they remind me of my desolate drives along the Erie Canal and the IT driven end of the mill town. It’s a worldwide thing.

Humans have been migrating from rural areas to cities for centuries. It’s often been socially disruptive. It still is, particularly because of the way American government works. The dying regions have power, and as they lose their cognitive elite they are ever more desperate and easier to deceive.

See also

• Gordon’s Notes: Crisis-T: What’s special about rural? 2016. Similar ideas from a year ago.

A variant of English optimized for machine translation to Chinese

A Jonathon Duerig comment on App.net reminded me of an old idea that still hasn't come to pass.

It should be possible to define a style of English expression, including vocabulary and grammar, that lends itself to machine translation, particularly translation to Chinese. It would likely resemble the language we are learning to use with Siri. We can call it TransEnglish.

With the technology we now use to correct grammar and spelling, and predict text entry, we could do dynamic rewriting -- identifying or rewriting ambiguous phrases, substituting more specific words, revising complex tense structures.

A test harness would machine translate to Chinese then back again, then identify and close divergences. A nice exercise for neural network tools.

I expect after a few weeks of use an English writer would quickly learn how to write translatable text naturally.

Similarly, I'd love to follow some Chinese authored blogs that were written in a similar machine-translation friendly flavor of Chinese - TransChinese. (Indeed, the resulting English output might well be of the same form as TransEnglish.)

Beijing Genomics Institute - the second coming of eugenics

Via Funny Times [1], I came across allegations of a confident eugenics program (emphases mine):

NEWS of the WEIRD - Current News

Beijing Genomics Institute scientists are closing in on a technology to allow parents to choose, from several embryos, the one most likely to yield the smartest offspring. London’s Daily Mail (in January, referencing recent work in Wired, The Wall Street Journal and The New Yorker) explained that BGI will have identified high-potential mathematics genes (by mapping the cells of geniuses) so that researchers can search for those among a couple’s array of embryos...

… One Chinese researcher acknowledged the “controversial" nature of the work, "especially in the West," but added, "That's not the case in China."

Eugenics is more accepted in Asia and Eastern Europe than in the west, but eugenics acceptance is growing quickly here. On the other hand, “Funny Times” and “News of the Weird” are not exactly the New York Times.

Tracing the sources I came across an article I read a year ago on Zhao Bowen, a young genius who dropped out to join China’s prestigious Beijing Genomics Institute (BGI)…

Why Are Some People So Smart? The Answer Could Spawn a Generation of Superbabies | Science | WIRED

… Zhao’s goal is to use those machines to examine the genetic underpinnings of genius like his own. He wants nothing less than to crack the code for intelligence by studying the genomes of thousands of prodigies, not just from China but around the world. He and his collaborators, a transnational group of intelligence researchers, fully expect they will succeed in identifying a genetic basis for IQ. They also expect that within a decade their research will be used to screen embryos during in vitro fertilization, boosting the IQ of unborn children by up to 20 points. In theory, that’s the difference between a kid who struggles through high school and one who sails into college….

Hmmm. I suppose “closing in” is only a bit of a stretch on “within a decade” - within allowable parameters of a comic news site. So it’s not surprising the BGI web site doesn’t yet have an explicit page on embryo selection (termination of the inadequate) for higher IQ.

It’s an interesting site to browse though. The English and Japanese pages feature Euro models — including an array of Aryan blondes. (They don’t know you’re not supposed to use blondes in eugenics programs.) I couldn’t find any retail services on the Chinese site — that’s curious. Maybe wealthy Chinese like to use English language web sites?

BGI does market one screening test that sounds ominous on first glance …

Genetic Testing for Reproductive Health | BGI Health

… Hearing impairment is a common disease in which the congenital form accounts for approximately 60% of the cases. Conventional hearing tests exhibit low coverage and low accuracy. Genetic Testing for hearing impairment allows timely and accurate identification of newborns or adults carrying the susceptibility genes of hearing impairment and late-onset hearing loss…

Except they claim this is “neonatal” testing. China might be (for the moment) good with selective abortion, but infanticide is another matter.  Their most suspicious publicly available page shows in my browser with an IP address rather than a text url:

Preimplantation Genetic Screening/Diagnosis (PGS/PGD) | BGI Health

… Preimplantation genetic diagnosis (PGD) detects and avoids the transfer of embryos with genetic abnormalities with the aim of increasing the IVF pregnancy and delivery rates…

… reduce the risk of miscarriage increasing the likelihood of success which benefits the patients emotionally and can help them to avoid costly efforts for repeat in vitro fertilization attempts should failure occur

…. Rigghhhtt. This one is winking so hard it’s gonna sprain an eyelid.

The second eugenics age is well underway.

[1] Comic relief for commie collectivists. It’s always funnier when the GOP is in power.

How China might play the Koreas

Even by China's standards, North Korea is a hideous place.

Why does China keep it going then? Is it merely for cheap labor? A way to keep America busy? Fear that a free North Korea would inspire the Chinese people?

Or do China's rulers have another game in mind ...

Top South Korean Aide Steps Down Over Pact With Japan

... It quickly became apparent, however, that the government had underestimated South Koreans’ misgivings about cooperating militarily with Japan. Mr. Lee’s political opponents quickly seized on that disquiet to begin an election-year offensive, accusing Mr. Lee of kowtowing to Washington and, with various civic groups, likening the conservative governing camp to the past Korean “traitors” who secretly cooperated with Japan’s annexation of the Korean Peninsula in 1910...

...  he could not withstand the furor over reports that he played an important role in negotiating the pact with Japan, a country most South Koreans still view with animosity because of its often-brutal colonial rule in the early 20th century and its territorial claim to a set of islets administered by South Korea.

After the Lee government announced the deal last Thursday, accusations flew that the government was “pro-Japanese,” a far worse charge in South Korea than being “pro-North Korean.” ...

Hmm. Sounds like a country that could be turned.

Perhaps the prize in this game is separating South Korea from the West, either as a democracy or as an authoritarian oligarchy. Preferably the latter.

The prize for neutrality, or for alliance, would be unification on South Korean terms.

I wonder if NK's military leaders think this too.  I doubt they like the idea. They should be working hard to keep South Korea allied with the US.

Escape from North Korea's Camp 14

Life in the empire of the Kims:

How one man escaped from a North Korean prison camp | Books | The Guardian

... The South Korean government estimates there are about 154,000 prisoners in North Korea's labour camps, while the US state department puts the number as high as 200,000. The biggest is 31 miles long and 25 miles wide, an area larger than the city of Los Angeles. Numbers 15 and 18 have re-education zones where detainees receive remedial instruction in the teachings of Kim Jong-il and Kim Il-sung, and are sometimes released. The remaining camps are "complete control districts" where "irredeemables" are worked to death...

... One day, Shin joined his mother at work, planting rice. When she fell behind, a guard made her kneel in the hot sun with her arms in the air until she passed out...

.. in June 1989, Shin's teacher, a guard who wore a uniform and a pistol on his hip, sprang a surprise search of the six-year-olds. When it was over, he held five kernels of corn. They all belonged to a slight girl Shin remembers as exceptionally pretty. The teacher ordered the girl to the front of the class and told her to kneel. Swinging his wooden pointer, he struck her on the head again and again. As Shin and his classmates watched in silence, lumps puffed up on her skull, blood leaked from her nose and she toppled over on to the concrete floor. Shin and his classmates carried her home. Later that night, she died...

... Trust among friends was poisoned by constant competition. Trying to win extra food rations, children told guards what their neighbours were eating, wearing and saying...

... On the morning after he betrayed his mother and brother, uniformed men came to the schoolyard for Shin. He was handcuffed, blindfolded and driven in silence to an underground prison...

... chief's lieutenants pulled off Shin's clothes and trussed him up. When they were finished, his body formed a U, his face and feet toward the ceiling, his bare back toward the floor. The chief interrogator shouted more questions. A tub of burning charcoal was dragged beneath Shin, then the winch lowered towards the flames. Crazed with pain and smelling his burning flesh, Shin twisted away. One of the guards grabbed a hook and pierced the boy in the abdomen, holding him over the fire until he lost consciousness....

... Uncle nursed Shin, rubbing salty cabbage soup into his wounds as a disinfectant and massaging Shin's arms and legs so his muscles would not atrophy. "Kid, you have a lot of days to live," Uncle said. "They say the sun shines even on mouse holes."...

... The new teacher sometimes sneaked food to Shin. He also assigned him less arduous work and stopped the bullying. Shin put on some weight. The burns healed. Why the new teacher made the effort, Shin never knew...

... In the summer of 2004, while he was carrying one of these cast-iron machines, it slipped and broke beyond repair. Sewing machines were considered more valuable than prisoners: the chief foreman grabbed Shin's right hand and hacked off his middle finger just above the first knuckle...

... In December 2004, Shin began thinking about escape. Park's spirit, his dignity and his incendiary information gave Shin a way to dream about the future. He suddenly understood where he was and what he was missing. Camp 14 was no longer home; it was a cage. And Shin now had a well-travelled friend to help him get out...

... Without hesitation, Shin crawled over his friend's body. He was nearly through when his legs slipped off Park's torso and came into contact with the wire....

... Shallow and frozen, the river here was about a hundred yards wide. He began to walk. Halfway across, he broke through and icy water soaked his shoes. He crawled the rest of the way to China.

Within two years, he was in South Korea. Within four, he was living in southern California, an ambassador for Liberty in North Korea (LiNK), an American human rights group.

His name is now Shin Dong-hyuk. His overall physical health is excellent. His body, though, is a roadmap of the hardships of growing up in a labour camp that the North Korean government insists does not exist. Stunted by malnutrition, he is short and slight – 5ft 6in and about 120lb (8.5 stone). His arms are bowed from childhood labour. His lower back and buttocks are covered with scars. His ankles are disfigured by shackles. His right middle finger is missing. His shins are mutilated by burns from the fence that failed to keep him inside Camp 14.

I don't generally think that Hell is a good idea, but it is tempting to make an exception for the Kims.

North Korea is China's great shame. In a just world, for the sin of North Korea alone, China's leaders would join Dick Cheney in prison.

See also:

• You too can visit North Korea 1/2010
• The harshness of mortal life - hidden refugees from North Korea 3/2005
• North Korea 2/2011

Foxconn vs. Apple?

A copyright troll claims ownership in China of a brand Apple thought it had bought from the original company ... in Taiwan. Chinese IP law allows litigants to block export outside China as well as sales within China ...

Second City in China Halts Sales of Apple iPads - NYTimes.com 

... the tablet computers are under “temporary impoundment” from retailers in Xuzhou, a city of 1.8 million people in coastal Jiangsu Province, Ma Dongxiao, a lawyer for Proview’s creditors and the company, said by telephone. State-owned CCTV television confirmed the seizures in Xuzhou. 

News reports Monday said that about 45 iPads had been confiscated from outlets in Shijiazhuang, the capital of Hebei Province, about 265 kilometers, or 165 miles, southwest of Beijing. Reports on the Chinese microblogging service Sina Weibo said that other retailers had removed iPads from displays, though some were selling them under the counter... 

... court in Shenzhen, China, acting in a legal dispute between the two firms, dismissed Apple’s contention that it owned the iPad name in China ... 

... Proview has also made a filing with the General Administration of Customs in China, he said, putting Apple on notice that the company could seek to block the export of iPads, should Proview’s ownership claims be upheld... . 

.. Proview, based in Hong Kong, was once one of the world’s biggest makers of computer displays. But it fell into financial difficulties and was delisted by the Hong Kong stock exchange in 2010. The company trademarked the name IPAD in several countries in 2000, intending to use it for a Web-capable hand-held device, but the project was scrapped, said Mr. Ma, the lawyer for the company. Apple bought the rights to the name from a subsidiary in Taiwan in 2009. 

Proview now contends that that sale did not cover its Shenzhen subsidiary, which had registered the trademark in China. The Shenzhen court rejected Apple’s argument against that in December, but Apple is appealing that ruling. Proview has filed another lawsuit in Shanghai; arguments in that case will be heard this month, Mr. Ma said.

China can be a rough place for US citizens with Chinese features, but this moves things up a notch -- particularly because of the ability to block iPad exports (else Apple would probably rename the device in China).

China being what it is, I wonder if the courts would rule this way if Foxconn had Apple's back. I've been wondering about Foxconn ever since I saw pictures of their MacBook clones a few months ago.

If Foxconn has decided they no longer need Apple, then Apple will find their cash reserves handy. I wonder if the big boys are betting on a stock fall.

GOP 2.0: What rational climate change politics might look like

"With great power comes great responsibility." Gingrich's inner geek smiled at that one. Certainly they had the power. The Democrats had been crushed by the 2012 elections. President Romney now controlled the House, the Senate and the Supreme Court -- and the filibuster had been eliminated in early 2013.

Gingrich was philosophical about the Vice Presidency; Cheney had taught him what could be done. Romney was happy enough to hand off the big one to him.

Not health care of course. That had been a trivial problem; it took only a few months to tweak ObamaCare, throw in some vouchers and a few distractions, and launch RomneyCare. The GOP base was fine with rebranding, and the dispirited remnant of the Democrats saw little real change.

No, the big one was climate change. Romney and Gingrich had never truly doubted that human CO2 emissions were driving global climate change, but pivoting the base took a bit of work. They'd begun with ritual purges; Hansen was quickly exiled to the lecture circuit. Then came the American Commission on Truth in Science. There wasn't even much tormenting of old enemies; the size of the GOP victory had taken the fun out of that. In short order the "weak mindedness" of the Democrats was exposed and the "honest and rigorous" examination of the Romney administration was completed. It was time, Murdoch's empire declared, for strong minded Americans to face hard (but not inconvenient) facts.

The hardest challenge came from a contingent that felt global warming was a good thing, even God's plan. American drought was weakening that group, but they were a constant headache.

Now though it was time for policy, and Gingrich couldn't be happier. He'd been meeting with Bill Clinton of course; the two rogues loved the evening debates. Clinton's engagement wasn't just for fun, despite the GOP's dominance there was still room for politics. America's wealthy had been irrationally terrified of Obama, but they were also afraid of runaway warming -- and they had considerable power. Trillions of dollars were at stake in any real attack on global warming, and every corporation in America was at the door. The Military was pushing for aggressive management. Lastly, Gingrich knew that power can shift. He'd seen it before.

He wrote out the options, and labeled them by their natural political base ...

• Climate engineering: solar radiation reduction, massive sequestration projects (R)
• CO2 pricing (by hook or crook) (R/D - political debate is how revenues are used)
• Subsidies for public transit (D)
• Urban planning measures (D)
• Military strategy to manage anticipated collapse of African nations (R)
• Military strategy to manage anticipated climate engineering conflicts with China (climate wars) (R)
• Tariff's on Chinese imports to charge China for their CO2 emissions (R/D - but probably tied to American CO2 pricing)
• Massive investments in solar power and conservation technologies (D)
• Massive investments in fusion power (R)

The Climate Wars were particularly troublesome. There were simple things China could do, like pump massive amounts of sulfuric acid, that would alleviate the disaster their scientists had predicted. These measures, however, would be disastrous for the US. On the other hand, war with China was unthinkable.

Gingrich new he had to put a price on Carbon and he had to get China to avoid the most dangerous (for the US) forms of climate engineering. The rest was in play. This was what Great Men were made for ...

See also:

Gordon's Notes

• Why is the modern GOP crazy? 7/2011
• Denialists in favor of a warmer earth 6/2011: This is a common GOP position now - Climate change is not due to humans, it's a good thing, and God approves.
• Global warming: Doonesbury and China 9/11 - another GOP position variant, warming is relatively bad for China, relatively good for the US. This is probably true.
• Global Warming: We're scr***d. 8/2006 - it's too late anyway. Another GOP position, also partly true.
• The rational basis for climate change denialism 20/2010 - God made the earth for us, so the climate is His.
• Greece, America and GOP 2.0 12/2011
• Global climate change: it's time to think radical 9/2006 - climate engineering is coming.
• UnReason: The Republican War on Reason 2/2011
• We're crazy now. We were crazier forty years ago - 9/2010 by historic standards, we're not as crazy as we fear
• Birthers, Deathers and Truthers - the reason behind the madness 9/2009 - maybe the GOP is now in recovery?
• America 2011: exploring the boundaries of democracy and capitalism 1/2011: Democracy is not robust
• Keystone XL, carbon sequestration, and the tax in the closet 11/2011
• A taxonomy of American politics 2/2011 - where values differ, how democracy would work if the GOP recovers
• Climate Change and the Black Plague 5/2007 - disease changes will be disruptive
• Climate Change 2010: Plan B 11/2010 - a Carbon Tariff on China
• Why you should vote for the Tea Party’s coven in the century of the fruitbat 10/2010 - maybe only the GOP can tackle climate issues
• Separated at birth: alternative medicine and climate change denial 5/2011 - Old discussions resurface.
• Thai floods - microcosm of global climate change 11/2011 - the early and biggest impacts are outside of the US and Canada
• Science, the media and the Himalayan glacier. What's wrong? 11/2011 - scientists are cowed
• Tornados and global warming - how do we judge predictions? 5/2011 - Bayes and climate. Evidence is always probabilistic.

Others

• Shibboleths — Crooked Timber 2/2011
• The Republican War on Science by Chris Mooney - 2011 book
• Existential threats - Charlie's Diary 6/2011 - fun Stross post on existential threats. Climate change is fairly low in this ranking.
• Some things are just really hard to believe: more on choosing your facts. « Statistical Modeling, Causal Inference, and Social Science - 8/2010 - Why some things are hard to believe (roots of denialism)
• Weather as a weapon: The troubling history of geoengineering. - Slate Magazine 9/2010

Mass disability goes mainstream: disequilibria and RCIIT

I've been chattering for a few years about the rise of mass disability and the role of RCIIT (India, China, computers, networks) in the Lesser Depression. This has taken me a bit out of the Krugman camp, which means I'm probably wrong.

Yes, I accept Krugman's thesis that the proximal cause of depression is a collapse in demand combined with the zero-bound problem. Hard to argue with arithmetic.

I think there's more going on though. Some secular trends that will be with us even if followed Krugman's wise advice. In fact, under the surface, I suspect Krugman and DeLong believe this as well. I've read Krugman for years, and he was once more worried about the impact of globalization and IT than he's now willing to admit. Sometimes he has to simplify.

For example, fraud has always been with us -- but something happened to make traditional fraud for more effective over the past thirteen years. I think that "something" was the rise of information technology and associated complexity; a technology that allowed financiers to appear to be contributing value even though their primary role was parasitic.

Similarly, the rise of China and India is, in the long run, good for the entire world. In the near future, however, it's very hard for world economies to adjust. Income shifts to a tiny fraction of Americans, many jobs are disrupted, people have to move, to change careers, etc. It takes time for new tax structures to be accepted, for new work to emerge. IT has the same disruptive effect. AI and communication networks will further limit the jobs we can take where our economic returns are equal or greater than the minimum wage.

I think these ideas are starting to get traction. Today Herman Gans is writing in the NYT about the age of the superfluous worker. A few days ago The Economist reviewed a book about disequlibria and IT

Economics Focus: Marathon machine | The Economist

... Erik Brynjolfsson, an economist, and Andrew McAfee, a technology expert, argue in their new e-book, “Race Against the Machine”, that too much innovation is the bane of struggling workers. Progress in information and communication technology (ICT) may be occurring too fast for labour markets to keep up. Such a revolution ought to be obvious enough to dissuade others from writing about stagnation. But Messrs Brynjolfsson and McAfee argue that because the growth is exponential, it is deceptive in its pace...

... Progress in many areas of ICT follows Moore’s law, they write, which suggests that circuit performance should double every 1-2 years. In the early years of the ICT revolution, during the flat part of the exponential curve, progress seemed interesting but limited in its applications. As doublings accumulate, however, and technology moves into the steep part of the exponential curve, great leaps become possible. Technological feats such as self-driving cars and voice-recognition and translation programmes, not long ago a distant hope, are now realities. Further progress may generate profound economic change, they say. ICT is a “general purpose technology”, like steam-power or electrification, able to affect businesses in all industries...

... There will also be growing pains. Technology allows firms to offshore back-office tasks, for instance, or replace cashiers with automated kiosks. Powerful new systems may threaten the jobs of those who felt safe from technology. Pattern-recognition software is used to do work previously accomplished by teams of lawyers. Programmes can do a passable job writing up baseball games, and may soon fill parts of newspaper sections (those not sunk by free online competition). Workers are displaced, but businesses are proving slow to find new uses for the labour made available. Those left unemployed or underemployed are struggling to retrain and catch up with the new economy’s needs.

As a result, the labour force is polarising. Many of those once employed as semi-skilled workers are now fighting for low-wage jobs. Change has been good for those at the very top. Whereas real wages have been falling or flat for most workers, they have increased for those who have advanced degrees. Owners of capital have also benefited. They have enjoyed big gains from the increased returns on investments in equipment. Technology is allowing the best performers in many fields, such as superstar entertainers, to dominate global markets, crowding out those even slightly less skilled. And technology has yet to cut costs for health care, or education. Much of the rich world’s workforce has been squeezed on two sides, by stagnant wages and rising costs.

In time the economy will adjust  -- unless exponential IT transformation actually continues [1]. Alas, the AI revolution well is underway and technology cycles are still brutally short.  I don't see adjustment happening within the next six years. The whitewater isn't calming.

[1] That is, of course, the Singularity premise, as previously reviewed in The Economist.

Update 12/3/2011: And how does the great stagnation play into this - Gordon's Notes: Ants, corporations and the great stagnation?

The state of blogging - dead or alive?

Today one of the quality bloggers I read declared blogging is dying. Two weeks ago, Brent Simmons, an early sub/pub (RSS, Atom) adopter tacked the RSS is dead meme. Today I discovered Google Plus Circles don't have readable feeds.

Perhaps worst of all, Google Reader, one of Google's best apps, is getting no Plus love at all -- and nobody seems upset. The only reference I could find shows in an Amil Dash post...

The Sparks feature, like a topic-based feed reader for keyword search results, is the least developed part of the site so far. Google Reader is so good, this can't possibly stay so bad for too long ...

That's a lot of crepe. It's not new however. I've been reading about the death of blogging for at least five years.

Against that I was so impressed with a recent blog post that I yesterday raved about terrific quality of the blogs I read.

So what's going on? I think Brent Simmons has the best state-of-the-art review. I say that because, of course, he lines up pretty well with my own opinions. (Brent has a bit more credibility I admit).

This is what I think is happening ...

• We all hate the word Blog. Geeks should not name things.
• The people I read are compulsive communicators. Brad, Charlie, Felix, Paul and many less famous names. They can't stop. Krugman is the most influential columnist in the US, but he's not paid for his non-stop NYT blog. Even when he declares he'll be absolutely offline he still posts.
• Subscription and notification is absolutely not going away. Whether it's "RSS" (which is now a label for a variety of subscription technology standards) or Facebook's internal proprietary system there will be a form of sub/pub/notify. There are lots of interesting sub/notification projects starting up.
• Nobody has been able to monetize the RSS/Atom/Feed infrastructure. Partial posts that redirect to ad-laden sites rarely work. (A few have figured out how to do this, but it's tricky.)
• Blogs have enemies with significant economic and political power. That has an opportunity cost for developers of pub/sub solutions and it removes a potential source of innovation and communication.
• Normal humans (aka civilians) do not use dedicated feed readers. That was a bridge too far. They don't use Twitter either btw and are really struggling with email.
• Even for geeks, standalone feed readers on the desktop were killed by Google Reader. Standalone readers do persist on intermittently disconnected devices (aka smartphones).
• Blog comments have failed miserably. The original backlink model, was killed by spam. (Bits of Google Reader Share and Buzz point the way to making this work, but Google seems to be unable to figure this out.)
• The quality of what I read is, if anything, improving. i can't comment on overall volume, since I don't care about that. I have enough to read. It is true that some of my favorites go quiet for a while, but they often return.

Short version - it's a murky mixed bag. The good news is that pub/sub/notify is not going away, and that compulsive communicators will write even if they have to pay for the privilege. The bad news is that we're probably in for some turbulent transitions towards a world where someone can monetize the infostream.

Uncertainty and Long Depression II

Today's DeLong is about bond prices, and, in part, about the effect of uncertainty on savings decisions (emphases mine) ...

Hoisted from the Archives: If You Are Looking for a Monument to John Hicks, Look Around You - Grasping Reality with Both Hands

... Let me give you the Hicksian argument about what happens in a financial crisis--a sudden flight to safety that greatly raises interest rate spreads, and as a result diminishes firms' desires to sell bonds to raise capital for expansion and at the same time leads individuals to wish to save more and spend less on consumer goods as they, too, try to hunker down...

The economic event currently known as the "Great Recession" started and ended within the past 3-4 years. The period of economic uncertainty for many of us is older than that ...

Manufacturing collapse - Karl Smith - The Washington Post

... manufacturing did collapse. Yet, it’s hard not to look at the graph above and think that the real manufacturing recession began in 1999 and simply never stopped. What’s amazing is that we had any recovery at all....

I'm in the business of producing software; I believe for the purpose of US statistics I'm in manufacturing (we can capitalize production for example). For my sector the 1990s were a golden era. Since the 1990s things have been ... different.

The times have not necessarily been bad at leasts in terms of work income [1]. Many of us have similar or even higher incomes than we had ten years ago, even adjusting for inflation. The times have not been bad, but they have been turbulent. Close calls are frequent. Even if yearly winnowings have been modest, employment options have been comparably modest. "Lean" investments means there are no reserves, no excess capacity. Business infrastructure is shaky; IT departments are cut to the bone. Predictable small disruptions have major impacts on a weakened enterprise. Projects go slowly, and are easily derailed. Productivity falls.

I suspect most sectors of the US economy have had similar experiences, even in years of relatively good GDP growth. Even growth sectors, like healthcare, face enormous regulatory uncertainty.

Uncertainty has become endemic, and the outcome is, of course, that households spend less, save more, and save more as cash. Instead of being able to go for 6 months without income, we aim for 1-2 years. When millions of us reduce consumption, the economy shrinks.

What could the US do to reverse these trends, and climb out of Long Depression II?

The US could do a lot. Health care cost and access is a major contributor to economic anxiety. Obama's ACA is better than nothing, but it left coverage tied to employment in general, and employment with large corporations in particular. This was a necessary political compromise, but it has hobbled the ACA and made it easier for the GOP to sabotage America's future.

Beyond health care, economists like DeLong, Krugman and Jared Bernstein have a wide range of ideas.

Unfortunately, nothing will happen as long as the GOP can paralyze the US government [2]. The bursting of China's bubble and the Euro crisis will make things particularly interesting leading up to Nov 2012.

See also:

• Long Depression - Wikipedia, the free encyclopedia
• Third Depression Watch - Krugman 5/25/11
• Gordon's Notes: Causes of the Great Recession: China, GPSII and RCIIIT. Now for Act III. (4/2010)
• Gordon's Notes: Employment in the Great Stagnation (8/2010)
• Gordon's Notes: Whitewater world - the insane numbers of iOS and Android (8/2010)

[1] Investments have been utterly lousy however -- and we avoided all but the real estate crash. The reason we were relatively lucky, however, is due to uncertainty making us more conservative.
[2] Though it's certainly unjust, given the sheer wrongheadedness of today's GOP it's entirely possible that a Romney or Huntsman would be able to do more than Obama -- simply because they're only pretending idiocy and today's Dems are far higher quality than today's GOP.

Get your international transpant with MedToGo

It occurred to me that a custom Google news section would help me track the worldwide retail organ business.

The results were more impressive than I'd expected.

Here's one ...

Desperate Americans Buy Kidneys From Peru Poor in Fatal Trade - Bloomberg

... Medical tourism company MedToGo LLC, based in Tempe, Arizona, says it will offer kidney transplants in Mexico and Costa Rica for about $50,000, a fifth of the cost in the U.S...

MedToGo has an agreeable web site. Owned and operated by US physicians, who are facilitating trafficking in the organs of the poor. I wonder; are there any state licensing board issues?

The organ trade is one of those curious stories that get little press attention.

Update 5/19/11: MedToGo's CEO wrote to object to the way they were portrayed in the Bloomberg article. They say they provide access to transplants performed in Mexico to Americans and Canadians, but only with American and Canadian donors. I am curious how that can be done, since I am sure they are bypassing North American transplant boards. They also say they do not pay donors, but they do not say the donors are unpaid. Based on MedToGo's response I've modified my post title and content as above.

See also:

• Organlegging Neuromancer style – China’s liver trade 5/10
• Enlightenment 2.0 and a Hong Kong student post on the Chinese organ trade (5/07)
• Niven scores: The organ trade grows (4/06)

Unemployment and the new American economy - with some fixes

The thinkers I follow [2] have been struggling to understand why America's unemployment is so high. Productivity is rising, the economy is growing, but workers are not in demand. Obama has hired Jeffrey Immelt to help, which is either clever politics or a sign that Obama's not as smart as I thought he was.

There's too much to say here. So I'll drop seven bullet points and a set of the best links. This is what I think is happening ...

• The Great Recession has exposed structural unemployment that otherwise would have become evident around 2015.
• The digital economy (IT) impacts predicted in the 1970s have come about thirty years later than expected. [3]
• The extremely rapid industrialization and post-industrialization of about 3 billion people is incredibly destabilizing. It is a testament to the power of civilization that we're not yet living in caves.
• In a virtualized economy workers with average analytic and social IQ less than 125 are increasingly disabled. Since this average falls with age the rate of disability is rising as the we boomers accumulate entropy. Experience counts for less.
• America is the world's most virtualized economy. We have invested more intellectual capital in Finance, entertainment and software than any other nation. We are also aging, though less quickly than many. We are the harbinger.
• China is going to hit the wall between 2011 and 2012.
• Peak Oil is here, soon and then later. Oil prices will rise until China's 2012 recession, then fall, then rise again.

Here is what I think we need to do ...

• Institute a Carbon Tax with a component that drops as supply decreases to both decrease carbon emissions and stabilize energy prices. We need a predictable rise to help us with extensive adaptations. Whether this is revenue neutral or not depends on politics. Global warming is real.
• Prepare for China's coming recession. The world needs a health, wealthy China. There are things we can say and do that will help China pass through these times and recover.
• Slow the progress of economic virtualization over the next five years[4]. I think this is going to happen anyway, but we need to encourage and support diversion to an economy with more employment niches. Throwing sand in the gears of Finance is a good idea. One way to do that would be to give Goldman Sachs more competition. Regulation, taxation, and, paradoxically, reducing barriers to entry into the Finance market are all important.
• Start applying the lessons learned from providing employment to cognitively impaired adults to the entire US population. The US is a world leader (yes, this shocks me [1]) in the integration and support of adults with disabilities. Might as well learn something.

See also

What I've been reading lately ...

• Why is the U.S. so awful at job creation? - How the World Works - Andrew Leonard, 1/18/2011. The US is unusual - in a bad way.
• The Age-Income Profile Is Less Steeply Sloped than I Had Thought It Was - DeLong 1/21/2011. Income basically peaks at 35, flatlines to 54, then falls quickly. This is important.
• Why Might There Be High Unemployment? DeLong commenting on WCI's ZMP post. Zero Marginal Product (ZMP) is the economic term for disability. WCI writes: "It is possible that some potential workers, perhaps because of severe disabilities, simply cannot produce anything useful, even in a perfectly functioning economy... They have a Zero Value Marginal Product. There's no coordination failure. The problem simply can't be solved, given existing technology, tastes, and resources.". This is what I call "mass disability". Disability, remember, is a relative term. I would be disabled in much of pre-industrial history.
• Nancy Folbre: Borderless Economy, Jobless Prosperity - Nancy Folbre, NYT 1/2011. Corporate incentives, and the incentives of the investors (I claim these aren't the same thing), no long align with American society. She includes a wide review of recent discussions.
• What Have We Unlearned from Our Great Recession? DeLong 1/15/2011
• William PFAFF-Are We Committing Economic Suicide?: This isn't terribly useful, but it's a common meme. Our problem isn't money. We are doing well by skimming the wealth of India and China. The problem is that we're now living in Goldman Sachs plantation.
• A radical pessimist's guide to the next 10 years - The Globe and Mail 10/8/2010. He makes me seem like a bundle of cheer. I admit though, we could be kin.

Some relevant old posts of mine

• Causes of the Great Recession: China, GPSII and RCIIIT. Now for Act III. IT and the rise of the world means whitewater economics.
• Mass disability and Great Depression 2.0 3/2008
• Post-industrial employment: adjusting to a new world 5/2010
• Civilization is stronger than we think: Structural deficits and complex adaptive systems 5/2010
• Why your daughters should be roofers -- not architects 3/2004
• Krugman on globalization: how to manage the losers 12/2007 - I think he still believes this, but it's not politic to say it
• 2011: The year American life changes: 7/2007. I predicted then that gas prices would hit $5/gallon in the US in 2011. I didn't expect the Great Recession, but I'll stand by this prediction. Note gas hit $3.60 in Chicago in 5/2007, we're heading back to that this May.
• Deficits, climate, BP and immigration: Saving America is suspiciously easy. 7/2007. Our problems are fixable. And ... American crisis – imagining a way out 2/2010.
• Retiring at 70? Don't legalize marijuana. 7/2010. Raising the retirement age is spitting in the hurricane.
• What would make Krugman wrong about spending? 6/2010. Not entirely successful post, but there's something there.
• Gasoline prices: refining or secular trend - the 11 year chart: 5/2007. I need to redo this now.
• Employment in the Great Stagnation: 8/2010. Remembering the Zero Sum Society.
• Peak Oil? Hell, yes. 10/2008, after pump prices cratered in the Great Recession. See also The three meanings of peak light sweet oil and praise for rational speculation and Oil price speculation: is it rational investment or a bubble? 3/2008
• My Peak Oil Call 8/2008. I make my call. Then the Great Recession hit and prices fell. Funny.
• When the market is your deity, there is no such thing as corruption 7/2009 - why the GOP can't help
• Welcome to the wild times... 5/2010. Don't believe in predictions, including these.

- fn --

[1] The ADA was enacted in 1990 under Bush I (!).
[2] Beyond my own stuff, I'm a DeLongian. DeLongian's are closely aligned with Krumanians, but are less constrained by the conventions of polemical discourse. I suspect, for example, that, in his heart, Krugman believes a lot of what I've written above. It's just not something he dares to say just now.
[3] Gibson's Neuromancer, written in 1984 and influenced by the memes of the late 70s and early 80s deserves a re-read.
[4] I'm being terse by necessity. The thesis is that virtual economies are winner-take-all; effectively, they create mass disability. We need to shift to an economy that has more diverse employment niches -- effectively lowering disability.

Update 1/30/11: Gordon's Notes: Unemployment and the great stagnation - this meme is in the air.

Suzhou

A student of mine grew up in Suzhou, China; she left about six years ago. It was, she said, an  hour west of Shanghai, and had a population of about 1 million.

Today it has a population of about 6 million. By way of comparison, Chicago has a population of about 2.9 million.

Google Earth still shows a gap of green between Suzhou and Shanghai, but that will not last long.

When I asked how her home differed from a city like Houston, she said it was much more compact, and that it was a continuous landscape of towers - "downtown" everywhere. I imagined something like downtown Chicago, but more widespread.

I imagined wrong. This is a random grab from Google Earth ...

"Downtown everywhere" was probably a language limitation. From Google Earth photos I see that each building brick is a multi-story apartment building. Many thousands of them, each holding hundreds to thousands of people. Much of Suzhou is now a continuous landscape of identical residential multi-story housing units.

What China's rulers fear today

Blood and Treasure, one of my favorite blogs, suggests a leaked document as a guide to the current fears of China's leadership --  A General Notice from the Central Propaganda Bureau Regarding News and Propaganda in 2011. In bullet form, they are (emphases mine):

• income distribution, the stock and real-estate markets, employment and social security, education and health, and safety in manufacturing.
• reports on disasters and extreme incidents.  They "cannot include interviews or supervision from non-local areas".
• reports on the requisition of land and forcible demolition, especially report on incidents of violent demolition or “suicides, self-mutilation, or collective action”
• public selection of news, people, or events [jg: I think this refers to social reporting, public selection of topics]
• incidents of collective action ... prevent reports on collective action from pointing towards and focusing on the party and the government.
• anti-corruption cases ... Do not use the term “civil society” (gongmin shehui).
• Do not conduct questionnaires or on-line surveys on housing prices.
• instances of using a residential construction foundation to change a residential permit
• problems related to Spring Festival travel, such as “difficulties in obtaining even one ticket.”

For China in 2011 it's all about real estate and land seizures. Yes, they have a housing bubble too, and it's going to blow soon. I am really tired of "interesting times".

XMind: Software made in China for OS X and Windows

I am a niche market; I need software that few people care about.

For example, I need software to dynamically manage concepts (ex: “ideas”), concept properties (“attributes”) and relationships. These products are usually marketed as “mind map” or “outliner” or (less often) concept mapping tools.

Even though this is a niche market where good software goes to die, geek developers cannot resist it. So they create beautiful products with relatively short lifespans. Past examples include Symantec’s MORE 3.1 (my all-time favorite), Ecco Professional, Lotus Agenda, Symantec’s GrandView, and Inspiration [1] (Mac, Windows, Palm!). There are many other examples.

Current examples include MindManager ($$$), FreeMind, Freeplane and OmniOutliner (OS X, outliner only). There are many others, the Freemind wiki has two pages describing Freemind’s alternatives.

One of those alternatives is XMind. There’s something special about XMind. XMind has been made in Shenzhen China since 2006. It’s currently available for Windows and OS X. It is the only multinational consumer-oriented Windows  productivity software I’ve come across that is made in China; I don’t know of any OS X productivity software made in China.

This is an intriguing, even historic, development. [2]

[1] Didn’t exactly die, went to a school-only market.
[2] I don’t recommend the software though. The churn in this market and the costs of data lock mean I wouldn’t consider any product that used a proprietary file format. The XMind file format is proprietary. Even with open source products you need to evaluate the data store strategy.

Who’s betting on China’s bubble blowout?

China will be the third great bubble blowout in a bit over ten years, following the .com and leverage bubbles. The world, of course, will go back into yet another great recession (YAGR).

What a way to start a millenium!

When will China’s bubble blow? I’m guessing within the next 12 months, but since I usually guess early a more likely answer is 18 months from now.

That much is obvious. What I want to know is how the Lords of Finance are placing their bets. I assume the big money will be in currency shifts.

When China’s bubble collapses the remninbi will drop compared to the US dollar. So I’m assuming those with money will bet using a convoluted and indirect equivalent of buying the right to exchange renminbi for dollars in 2012 at today’s exchange rates. Since it’s widely assumed that the renminbi will rise over the next few years those contracts may discounted.

So here’s the assignment for an ambitious journalist. Figure out how the bet will be made, then look for evidence that billions of dollars are already on the sidelines.

I suspect Soros has something on the line …

wikileaks: An unstable China

Reuters' hit list of this week's top WikiLeaks was remarkably uninteresting except for this one ...

Factbox: WikiLeaks cables offer inside peek at global crises | Reuters

... China's Politburo directed the intrusion into Google's computer systems in that country, a Chinese contact told the U.S. Embassy in January, as part of a computer sabotage campaign carried out by government operatives, private experts and Internet outlaws recruited by the Chinese government. They have broken into U.S. government computers and those of Western allies, the Dalai Lama and American businesses since 2002, cables said."...

This confirmation is relatively newsworthy; it's consistent with China's rare earth embargo and China's support for North Korea's shelling of a South Korean island. China is less stable than most imagine.

Update 12/1/10: Subsequent leaks portray China's leadership much more favorably. In particular, they are portrayed as more sane about North Korea and Iran than I expected.

US 2003 and China 2010 – Nations on meth

The NYT is reporting that China is limiting the export of “rare earth” minerals to the US and Europe (and Canada too I’d assume). China did the same thing to Japan a few weeks ago. This is alleged to be a response to threats of tariffs on imported goods made in China.

This is a parenting moment. This is the time when the 16 yo steals the keys, goes for a ride, and puts a nice dent in the front fender. Time to count to ten, and repeat ten times. Then remember what is a stake, and what the long game is.

If you were a reasonably mature and sane nation in 2003, such as Norway, you’d look at 2003 America and draw some conclusions. You’d decide that America was in much worse emotional shape than you’d thought in the Clinton years. You might guess that America had an unsuspected substance problem. The best response would be calm engagement, while also making wise preparations for American derailment.

That’s what we should be thinking about China. China is a critical component of world civilization, and, if this story is accurate, she’s in much worse emotional shape than we thought. We thought she was a smart but rowdy striver, but now we learn she’s snorting meth. This is a problem for China, and for the family of nations. We’re all in this together.

In the meanwhile there are obvious things to do. We have a strategic petroleum reserve. We will tax all rare earth import and production (not just China’s) to build a rare earth strategic reserve. All nations will do the same thing. That will give time for nations like Canada, Australia and throughout Africa to increase production.

More importantly, we need to think differently about China, just as all nations had to think differently about the US after 2003. The world needs a healthy, stable, rational China. We’re going to have to do a lot of counting to 10, even as China works through her own issues, and even as we prepare for the worst.

Maybe the US and China can join a rehab program together.