Email domains in the non-geek world

There are 14 non-employer email addresses in my son's baseball team roster:

• AOL: 2
• Yahoo: 4
• Comcast: 4
• Hotmail/MSN: 3
• Gmail: 1 (me)

Not the domains geeks tend to think about!

Strongest sign of economic recovery

The mass flow "investor" is buying gold ... Worried About Their Dollars, More Are Turning to Gold - NYTimes.com.

Forget every other indicator. This one rules. The recovery is on.

Why dog haters should love prosecution of animal cruelty

Unsurprisingly, people who abuse animals are also dangerous to humans ...

The Animal-Cruelty Syndrome - NYTimes.com:

... significant reason for the increased attention to animal cruelty is a mounting body of evidence about the link between such acts and serious crimes of more narrowly human concern, including illegal firearms possession, drug trafficking, gambling, spousal and child abuse, rape and homicide...

... In his famous series of 1751 engravings, “The Four Stages of Cruelty,” William Hogarth traced the life path of the fictional Tom Nero: Stage 1 depicts Tom as a boy, torturing a dog; Stage 4 shows Tom’s body, fresh from the gallows where he was hanged for murder, being dissected in an anatomical theater. And animal cruelty has long been recognized as a signature pathology of the most serious violent offenders. As a boy, Jeffrey Dahmer impaled the heads of cats and dogs on sticks; Theodore Bundy, implicated in the murders of some three dozen people, told of watching his grandfather torture animals; David Berkowitz, the “Son of Sam,” poisoned his mother’s parakeet....

I am surprised this hasn't gotten more formal research attention attention in the past. Perhaps scholars assumed it was self-evident? Formal investigations are now confirming long held beliefs. That's good research -- not all long held beliefs are empirically supported.

Not everyone loves dogs and cats. Maybe they have something against brood parasites. Even so, these dog-dislikers have good reason to favor aggressive investigation and prosecution of animal cruelty. My dog is their canary.

Low vision iPad: Make the iPhone UI an option

I've been configuring an iPad for my low vision 80yo mother. It's not all it could be, but it's conceivable that it might work. One significant annoyance is that not all web UIs can be pinch-zoomed.

Ironically, unoptimized iPhone apps are an improvement over native iPad apps. Their UI is simple, and with a tap of a button they double size to fill the larger screen. Low vision users may wish to install an iPhone app version rather than the richer iPad app version.

Some vendors may bundle both iPhone and iPad UIs into a single package. If they do, it would be rather nice if they provided a settings option to use the iPhone version on the iPad...

What would make Krugman wrong about spending?

A few weeks ago I submitted a comment on Krugman's blog. I'm a fan, so it was intended to be a gracious question. I don't believe it ever appeared, but I suspect a technical problem more than rejection (lots of seriously obnoxious comments get routinely posted).

I asked Professor Krugman to invent a rational reason for reducing government spending and/or increasing interest rates.

Ok, so that is a bit of weird request. Krugman, after all, has been shredding the feeble arguments of economists (Sachs, etc) calling for deficit management in the teeth of the Great Recession and the zero-bound. He makes a persuasive case, based on the best of modern economics, that this is a time to spend for future growth.

And yet there is an emergent global consensus to reduce spending. How could that make sense?

That's the challenge. How could it make sense? Under what extraordinary conditions would it be right to be wrong?

Maybe there is no plausible rationale. Maybe it's all human nuttiness. Certainly we're prone to it. Maybe, but I've seen this sort of thing before. Sometimes mass movements are batty, but sometimes there is an emergent understanding -- even if it's only dimly sensed and not articulated. Sometimes all the raging arguments skirt that rationale -- because it's one that nobody dares express.

I wanted Paul Krugman to try to imagine what that rationale might be. Reading him today, I wonder if he's beginning to try... (Perhaps due to the influence of Brad DeLong, who I think is also trying this exercise. Emphasis mine.)

Strange Arguments For Higher Rates - Paul Krugman Blog - NYTimes.com

... My take on the current economic situation is quite simple, and I would have thought corresponds to standard economics. Right now, we clearly don’t have enough demand to make full use of the economy’s productive capacity. This means that the real interest rate is too high. And so the “natural” thing is for the real rate to fall. Yes, that would mean a negative real rate. So?

The trouble is that getting that negative real rate isn’t easy, because the nominal rate can’t go below zero [jg: zero bound], and there’s no easy way to create expected inflation. If you ask what would happen if prices were completely flexible, the answer, as I figured out long ago, is that prices would fall so far now that people would expect them to rise in the future, creating expected inflation. But prices aren’t that flexible, which is why we turn to quantitative easing, fiscal policy, and more.

Surely, though, we want to get rates as close to their appropriate level as possible — which means a zero nominal rate. There’s nothing “unnatural” about it. On the contrary, the “natural rate of interest”, as Wicksell defined it, is clearly negative right now.

So why does Rajan feel that there must be something wrong with low rates (and he’s not alone)? I think his language, with its odd moral tone, is the giveaway: it’s the sense that economic policy is supposed to involve being tough on people, not giving money away cheap.

I actually understand the seductiveness of that posture; I can sort of understand how economists succumb to it. But right now, with the world desperately in need of clear thinking, is no time to give in to the subtle allure of inflicting economic pain.

Well, I didn't say he was trying hard. Maybe he's just warming up.

So I'll give it a go. Maybe Brad can refine my speculations (I think they are his as well) and then ease Paul into thinking about this differently.

If classical economics works at all, then there may not be a rational reason to worry about deficits or raise interest rates. What if, however, we're in a world where classical economics doesn't work any more? Maybe in a normal laminar flow world we can use models and make predictions that don't work in a whitewater world where crazy things are everyday events that go almost unnoticed.

Maybe we've truly moved outside the bounds where the models work -- and we're going to stay there for a while.

Just consider the short list of possible disaster we need to dodge over the next decade. Iran could nuke Israel, and the Middle East would go down forever - along with the world's oil supplies. North Korea could go bonkers tomorrow. Pakistan is always on a precipice. China's bubble is going to blow -- maybe this month, maybe this year. Maybe we've run the American economic engine too hard, too fast, too long -- and the economy is really going to melt down. Maybe 'Peak Oil' really is five years away. Maybe the Atlantic warm currents really are unstable, or that Kurzweil was right and Aaronson and I are wrong.

It's quite a list really. I don't think we'll dodge them all, not to mention those I haven't listed (terrorist bioweapons etc). I'd bet money on China's bubble blowing for example, and, despite the current price and the impact of a crashing world economy, I'm still a Peak Oiler. (Though if China really fell hard Peak Oil would move out at least 5 years.)

These aren't the sorts of things scholars and leaders can come out and talk about. Obama can't go on Fox News and say -- "We need to keep our powder dry because we expect unemployment and US based terrorism to get worse, then China's economy will crater and we're going to have fight a really big war in Pakistan and we need to get ready for $8/gallon gasoline and ..."

Yeah, you see what I mean. That would not fly.

Let's assume that there's a lot of bad news ahead. News every bit as bad as the collapse of the US real estate market. If we assume that kind of trouble lies ahead, does it make sense to prepare for the worst now? Is that what people are unconsciously reacting to?

Update 6/14/2010: Here's a better example of why Krugman might be wrong. It's not a matter of economics, it's a matter of craziness. The US has lots of money, and lots of powerful whackos. (I do love the word "whacko" by the way -- it doesn't have the association with either mental illness or cognitive disability. Whackos are perfectly smart people with extraordinarily poor judgment.)

Update 6/15/2010: Another example. There are a lot of poorly understood constraint and linkages in our new financial world. It's somewhat remote from the world of actual work, and it demonstrates hysteresis -- it doesn't adjust quickly. What works in the world of logical economics may not work in this world. Also, my comment on Krugmans June 14 post has still not been published - there are only 19 comments posted. I don' think I've been blacklisted, but I do think it's pointless to comment on his blog.

The Afghan war - year 10

Kudos to Bob Herbert for actually paying attention to our soldiers in Afghanistan.

Bob Herbert - The Courage to Leave Afghanistan - NYTimes.com

.... What’s happening in Afghanistan is not only tragic, it’s embarrassing. The American troops will fight, but the Afghan troops who are supposed to be their allies are a lost cause. The government of President Hamid Karzai is breathtakingly corrupt and incompetent — and widely unpopular to boot. And now, as The Times’s Dexter Filkins is reporting, the erratic Mr. Karzai seems to be giving up hope that the U.S. can prevail in the war and is making nice with the Taliban.

There is no overall game plan, no real strategy or coherent goals, to guide the fighting of U.S. forces. It’s just a mind-numbing, soul-chilling, body-destroying slog, month after month, year after pointless year. The 18-year-olds fighting (and, increasingly, dying) in Afghanistan now were just 9 or 10 when the World Trade Center and Pentagon were attacked in 2001...

We may be in the all too common situation where, if there is any game plan, it's not one that can be spoken. For example, our game plan might be to divide Afghanistan into feudal baronies, and make each Baron responsible for their domain. Keep things quiet, or get a missile through the castle window. Not necessarily a bad idea, but not one that Obama can verbalize.

AT&T’s secret Nov 2009 mobile contract change – Elegant Evil

[Note - see the updates on this one. AT&T is falling victim to its own complexity.]

The Devil is usually an elegant gentleman. Makes sense, doesn’t it? There’s a certain elegance to the best devilishness. Tobacco industries once had that knack, but today AT&T excels.

I just learned of a small contract change AT&T made in November 2009 – eight months ago. It doesn’t impact us yet, but it will when we get our new phones and new contracts. It’s a beauty.

Before I explain what changed, let me describe what was once possible. I’ll use my son as an example – call him “John”.

John is on our family plan. We pay $10 a month for that. He had my old Nokia (out of contract), so he’s not on a subsidized phone contract. A neighbor gave him an old Samsung Blackjack (Windows Mobile); he likes the keypad so we switched SIM cards. No contract, no data plan.

Of course if he fired up a browser, on the old Nokia or the old WinMobile Blackjack the data would flow. Sprint allows customers to disable data flow on a browser-equipped phone, but AT&T does not. In this case John is enrolled in a “smart wireless” plan where I’ve set his data flow to zero (costs $5/month).

What we’d like, of course, is for him to have a phone with WiFi services – like my old iPhone. Similar to the the Blackjack, but data when WiFi is available. That’s what we were planning on.

Ok, now here’s where things get really evil.

If you have a post 11/09 contract, there’s fine print that says that if AT&T considers your phone a “smart phone”, it must have a data plan even if the phone is fully paid for and has no ongoing subsidy. If you put your SIM card in one of those phones, AT&T will detect it and automatically enroll the subscriber in a data plan. (Supposedly the least costly plan.)

A data plan, by the way, that’s pure profit for AT&T. The money is not being used to pay off a subsidized phone, and it’s not going to, say, Apple. It’s pure AT&T profit.

Old WiFi equipped smart phones (RIM, iPhone, some Samsung) etc just got a lot less valuable. If a customer is going to get dinged for data services anyway, why not get a new phone and a contract?

Wow. Philip Morris would be proud of AT&T. This is high grade evil. AT&T is still a master of the complexity attack.

See also:

• Gordon's scale of corporate evil (AT&T is up there)
• John's head explodes: AT&T rebate paid with an AT&T debit card
• Head still exploding: The AT&T mobile phone rebate card scam
• Google good, AT&T and old FCC evil
• Mobile phone fraud - The accidental data charge and other scams (includes 10 mobile phone scams)
• AT&T is a partner to phone scams that target the vulnerable elderly
• AT&T sends more SMS Spam, locusts infest exec underwear
• Annals of idiocy - AT&T spams customers about a TV show
• A deal with the Devil: We move from Sprint to AT&T and towards an iPhone (I didn't realize HOW devilish!)

Update: As noted in comments AT&T is catching up with Verizon, just as when they recently doubled or tripled the penalty for early contract termination. Those two are Scylla and Charybdis.

Update 6/11/10: It occurs to me that one of my state Senators is Al Franken, and that in Obama administration consumer protection isn’t a joke. I’ll write his office. Who knows, maybe he’s ready to take on the mobile phone companies (though he does have his hands full these days)…

Update 6/17/10: I ask the same question at an AT&T retail store and get a quite different answer (new contracts only).

Deepwater Horizon - what Obama should understand

I didn't think I had much to say about the Deepwater Horizon oil spill. My one insight was that Google could, as a public service, assemble a team to deploy disaster-specific search engines. Google librarians and researchers are well suited to continuously enhance a custom search engine that will facilitate research and discovery at the time of catastrophe. These future disaster search tools would be paired with custom Google Maps services.

I'm surprised Google hasn't done this yet. I hope they'll do it for all our many disasters to come.

That was my one insight -- until tonight. Now I have something to say to my (much appreciated) President.

I got the idea when Emily compared my personal stories of corporate euphemisms to BP's spin. In a forehead smacking moment I realized BP is probably no more or less clever than the vast publicly traded company I work for. That means that Obama's team is dealing with EVPs -- people whose great skill is the ability to thrive in the bowels of a typically dysfunctional publicly traded company. They can tell a good story, but they really don't know what's going on and they don't know they don't know.

There are likely engineers in BP who do know what's going on, but they've been locked away in dark rooms and surrounded by corporate security. They'll never be allowed contact with the outside world. Most of them aren't comfortable in that role anyway.

Too bad. Team Obama has to track these people down. They won't be VPs or EVPs. They're probably not even managers. They're individual contributors who've been at BP for ten years or more. They know what's going on. It might take the NSA and the CIA to track these people down, but it has to be done. They have to be dragged kicking and screaming from the bowels of BP. In softly lit rooms they can be slipped a few million dollars -- since once they talk they'll never work in the industry again. Then ply them with beer until they open up.

Take notes.

Safari Reader is sweet - my brain on computers

I visited this breathless NYT business article and clicked the Safari 5 "Reader" button ...

Your Brain on Computers - Attached to Technology and Paying a Price - NYTimes.com

Sweet. Great font, highly readable, multiple pages in one place. Much faster to read. No ads.

My brain on computers is faster than ever. (No comment on the article, it's not worth the bother.)

Update 6/9/10: Tyler Cowen has expressed my opinions on the NYT computer-brain article.

To be sure, I expect our tools (books, clocks, measurement devices) alter our brains and minds. Brains are what allow long lived organisms to adapt to rapidly changing environments, and computation is increasingly our environment. So we expect our brains to be altered. We also expect that in a new environment formerly maladaptive traits may become adaptive, and adaptive traits may become maladaptive. That's 2nd tier natural selection in action.

I'm unimpressed, however, with the quality of the research and even less impressed with the quality of the discussions.

I, Robot. The alternative to Foxconn.

Foxconn, a Taiwanese corporation, is giving its Chinese (mainland) workers 30% pay raises and it wants governments to take over its company towns (presumably they'll pay the rent?).

Sounds good. Some device prices will rise, some margins will be squeezed, Foxconn employees will have more disposable income.

Or maybe not ...

... The chairman of Foxconn, Terry Gou, told the Taipei shareholders’ meeting that the company was looking to shift some unspecified production from China to automated plants in Taiwan, Reuters reported..

The alternative to the Foxconn employee is the robot. Every year the robot gets cheaper. Every year Foxconn employees become more expensive.

Long ago, when China was still emerging from Emperor Mao, a Chinese-Canadian friend and I debated the future of China. He argued all manufacturing would go to China (where he lives now). I agreed, but then I said it would go to the robots.

It's going to go to the robots.

We are in the world of white water economics. In ten years the Great Recession may be remembered largely as the time we went over the waterfall ...

AT&T's new data plan - the bright side

As expected, AT&T has dropped their unlimited data plan. I love the Orwellian spin - "to Make Mobile Internet More Affordable to More People".

This appears to apply to all phones, not just the iPad/iPhone. They have also, as expected, introduced a tethering option. The tethering option is very limited however; it appears to have a 2GB limit.

So in the old days $30 got you unlimited data, but now $45 gets you data, tethering and a 2GB limit. Forget watching YouTube on the AT&T network.

There's no word yet on whether Apple will introduce some smart metering features to help track usage with OS 4. I hope they will. AT&T will send out text message notifications.

Everything about this announcement is exactly as expected -- including the fairly onerous pricing with tethering (I'd have been very impressed if they'd gone to tiered data plans and made the tethering free -- it's just data. This is AT&T however.)

So what's the bright side?

AT&T has been selling capacity they didn't have. I'd love to see a zillion dollar fraud prosecution. Now, finally, that stops. They will be aligning their pricing with their network capacity. There's now hope, for the first time, that we'll get reasonable voice service on the iPhone.

It's also good that we have more price transparency -- we are more likely to get what we pay for, and see what it costs. If we don't like the price we can .... ummm ..... uhhhh .. stop watching videos on the AT&T network. (Note VOIP services use far less bandwidth than video. I wonder about dropping our family plan to the rock bottom minimum and using Skype to call Canada. I tried their online usage calculator, and, as expected, with no video use, I still need the $25 plan.)

Overall, this is good. Painful, but good. Now about my share of the class action lawsuit for AT&T's fraudulent overselling of their capacity ...

Update: AT&T's tethering pricing is pretty nasty, but there's some good news on pricing details that resemble the iPad 3G plan:

... AT&T has also overhauled their data overage structure, giving DataPlus subscribers and additional 200MB as needed for $15, while DataPro users get extra data at $10 a gigabyte... if you’re either over-using or under-using your plan, AT&T’s going to be extremely flexible about letting switch back and forth between DataPlus and DataPro. You can call and have your plan changed at the next billing cycle, have it prorated immediately, or - hold on to your seats - have the plan retroactively applied to the entire current billing cycle...

The $10/GB rate makes the tethering more practical. Definitely more complex, but I wouldn't be surprised if AT&T's accounting system can't support a finer grained process. If Apple bundles a good metering app with OS 4 this new plan would be an improvement for my family. (I wonder if Apple/AT&T will consider selling an iPhone without a data plan ...)

Also, there's rumor that AT&T has said that current users can keep unlimited data when they get a new phone and new contract. I find that hard to believe.

Update 6/10/2010: The new contracts come with a secret 8 month old catch. Ohhhh, AT&T is evil-incarnate.

Memphis mortgages, complexity attacks and long term consequences

Times are bad in the subprime mortgage neighborhoods of Memphis, home to recession wracked FedEx...

The black men and women interviewed by the NYT seem remarkably stoic about it all. Two aspects of one story caught my attention ...

... To turn into Tyrone Banks’s subdivision in Hickory Ridge is to find his dream in seeming bloom. Stone lions guard his door, the bushes are trimmed and a freshly waxed sport utility vehicle sits in his driveway.

For years, Mr. Banks was assiduous about paying down his debt: he stayed two months ahead on his mortgage, and he helped pay off his mother’s mortgage.

Two years ago, his doorbell rang, and two men from Wells Fargo offered to consolidate his consumer loans into a low-cost mortgage.

“I thought, ‘This is great! ’ ” Mr. Banks says. “When you have four kids, college expenses, you look for any savings.”

What those men did not tell Mr. Banks, he says (and Ms. Thomas, who studied his case, confirms), is that his new mortgage had an adjustable rate. When it reset last year, his payment jumped to $1,700 from $1,200.

Months later, he ruptured his Achilles tendon playing basketball*, hindering his work as a janitor. And he lost his job at FedEx. Now foreclosure looms....

Mr. Banks leveraged the real estate bubble to pay off the costs of the the higher education bubble. The real estate bubble burst, leaving him underwater. Now the higher education bubble is bursting, leaving him with high tuition loans for a product of declining value.

Harsh.

We might ask, however, how the heck Mr. Banks didn't realize he'd changed to an adjustable rate mortgage. I can't tell from the brief story, but I suspect that minor detail was omitted from the phone sales spiel. Later, when he signed the papers, he might have spotted it -- but by then he was well along the commitment path. It can be hard to back out then.

I'm betting he fell victim to a form of complexity attack, the same form of emergent fraud that defeated my family when assessing our health insurance options [2]. The resources of banks, mobile service providers and insurance companies ensure information asymmetry -- they can play the game much better than we can.

Complexity attacks have obvious direct costs to the "Marks" (which, in the GR, was most everyone). They also have less obvious long term effects that may be underappreciated.

Once buyers become aware of complexity attacks, they become far less trusting. Modern markets run on trust; when trust is lost markets suffer. Our bank recently hounded us to sign up for a lower fixed rate mortgage that should save us tens of thousands of dollars. As best we can tell this is motivated by a federal program; they need us in a bundle they can sell to the feds (we're "low risk"). It seems a no-brainer, but we delayed our decision because of deep distrust. Finally, when the Euro crisis dropped rates even further, we signed up [3]. We still wonder what the catch is.

The Great Recession will linger for a very long time. That is ... assuming it's really over ...

[1] If he was taking a quinolone at the time he might want to sign up with one of the class action suits.
[2] My brightness might be debatable, but I know some brilliant folk. None of the very smartest claim to understand our coprorate health insurance options.
[3] The bank wanted us to commit over the phone lest we lose the "incredibly low rates". We refused of course, which was easy since we know Greece isn't getting better any time soon. When we got the paper work it was remarkably clear and simple -- far more straightforward than the near-market-peak paperwork we completed when our home was rather more expensive than it is now.

Update 6/30/10: I wrote about our "no-brainer" refinance option. Even though it seemed simple, we were suspicious. Justifiably as it turned out. After our initial paperwork we received much more, then they bungled a prepayment of ours, then they stopped returning calls. Based on their recent share price, I'm guessing their coming apart. So we may still refinance, but probably with a different bank.

From the archives - Sanford Weill before and after the crash

Before the Great Recession, times were good for some. No, not like Clinton's glory days of 1995 or so -- those times were good for most everyone. From Bush's 2004 to 2007 the times were good for the very rich.

Back then The Economist was launching a "lifestyle magazine" (it failed) and William McGuire of UnitedHealth Group had just received a $125 million paycheck. In those days the NYT wrote a paeon to Citigroup's Sanford Weill (which I just found in my archives, hence this post). It makes quite interesting reading now (emphases mine). In those days Citi traded for $55 a share. In Jan 2010 it was $3 a share ...

The Richest of the Rich, Proud of a New Gilded Age - New York Times July 15, 2007

By LOUIS UCHITELLE

The tributes to Sanford I. Weill line the walls of the carpeted hallway that leads to his skyscraper office, with its panoramic view of Central Park. A dozen framed magazine covers, their colors as vivid as an Andy Warhol painting, are the most arresting. Each heralds Mr. Weill’s genius in assembling Citigroup into the most powerful financial institution since the House of Morgan a century ago.

His achievement required political clout, and that, too, is on display. Soon after he formed Citigroup, Congress repealed a Depression-era law that prohibited goliaths like the one Mr. Weill had just put together anyway, combining commercial and investment banking, insurance and stock brokerage operations. A trophy from the victory — a pen that President Bill Clinton used to sign the repeal — hangs, framed, near the magazine covers...

That repealed Depression-era law was Glass-Steagall. The law designed to prevent the crash of 2007 and the subsequent the Great Recession. To continue ...

These days, Mr. Weill and many of the nation’s very wealthy chief executives, entrepreneurs and financiers echo an earlier era — the Gilded Age before World War I — when powerful enterprises, dominated by men who grew immensely rich, ushered in the industrialization of the United States. The new titans often see themselves as pillars of a similarly prosperous and expansive age, one in which their successes and their philanthropy have made government less important than it once was.

“People can look at the last 25 years and say this is an incredibly unique period of time,” Mr. Weill said. “We didn’t rely on somebody else to build what we built, and we shouldn’t rely on somebody else to provide all the services our society needs.”

Cough. Yes, we bailed out Citigroup.

... Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution — currently, the almost 15,000 families with incomes of $9.5 million or more a year, according to an analysis of tax returns by the economists Emmanuel Saez at the University of California, Berkeley and Thomas Piketty at the Paris School of Economics.

Such concentration at the very top occurred in 1915 and 1916, as the Gilded Age was ending, and again briefly in the late 1920s, before the stock market crash. Now it is back, and Mr. Weill is prominent among the new titans. His net worth exceeds $1 billion, not counting the $500 million he says he has already given away, in the open-handed style of Andrew Carnegie and the other great philanthropists of the earlier age...

The NYT returned to Mr Weill after the Crash ...

Citi’s Creator, Sandy Weill, Alone With His Regrets - NYTimes.com Jan 2010

THIS is my final annual meeting as chairman,” says Sandy Weill, standing near the window of his office, peering at a grainy photograph of him and his wife on stage at Carnegie Hall more than three years ago. They are smiling broadly, and behind them is a packed house of cheering Citigroup shareholders. A huge banner dangling from the balcony reads “Thank You Sandy.”

On that day, April 18, 2006, Citi’s share price was $48.48. After studying the photo for a few moments, Mr. Weill says quietly, “I thought the company was impregnable.”...

... Over the last two years, Mr. Weill has watched Citi — a company he built brick by brick during the final act of a 50-year career — nearly fall apart. Although every taxpayer in the country has paid for Citi’s outsize mistakes, for Mr. Weill the bank’s myriad woes are a commentary on his life’s work.

.... Mr. Weill’s legacy has taken on a darker hue. Though he was once viewed as a brilliant dealmaker, some critics now cast him as the architect of a shoddily constructed, unmanageable financial supermarket whose troubles have sideswiped investors, employees and average citizens nationwide.

“The dream, the mirage has always been the global supermarket, but the reality is that it was a shopping mall,” says Chris Whalen, editor of The Institutional Risk Analyst, of Citi’s evolution over the last decade. “You can talk about synergies all day long. It never happened.”

Citi’s troubles are well chronicled: a failure to integrate its disparate parts worldwide or to keep tabs on risky investments and free-wheeling operations. These lapses led to billions of dollars in losses and multiple bailouts, and the government now owns a quarter of the company. Citi’s shares fell from a high of $55.12 in 2007 to about a dollar early last spring, and now trade at $3.31....

... Sitting in his office on the 46th floor of the General Motors building in Manhattan, he is surrounded by reminders of a lifetime on Wall Street. The space is breathtaking with floor-to-ceiling windows and views stretching out over Central Park. One wall is devoted to framed magazine and newspaper articles chronicling his career. A Fortune magazine clipping from 2001 declares Citi one of its “10 Most Admired Companies.”

On another wall hangs a hunk of wood — at least 4 feet wide — etched with his portrait and the words “The Shatterer of Glass-Steagall.” The memento is a reference to the repeal in 1999 of Depression-era legislation; the repeal overturned core financial regulations, allowed for the creation of Citi and helped feed the Wall Street boom...

Remember this story next time you read the praises of the Captains of Industry.

Post-industrial employment: adjusting to a new world

Six years ago I wrote a review of Robert Reich's book Reason. Reason was a reaction to the GOP's loony rule, but Reich was also very concerned about the fate of the middle class. He was worried that only knowledge workers were going to have work. His answer was better education.

I disagreed. I thought knowledge workers were very much at risk in a "winner take all" world, and I was skeptical that education was really a universal solution (emphases added now)...

... Reich is persisting in the 19th century belief that humans are fundamentally malleable -- at least when young.

Most of the research of the past 10-20 years points to a more complex picture...

... the evidence is strong that humans are not endlessly malleable. This is an increasing problem, because 21st century America rewards a fairly narrow range of workers. In the new-world, many of the old-middle class may not have a happy home -- no matter how hard they retrain. In a fundamental way, many Americans may be "disabled" for the modern workplace.

Reich should not be so quick to write-off redistributive solutions. We will need some creative thinking to produce a healthy American when the true "disability" rate starts to top 30%.

I think the world is coming around to my perspective. For example (undated articles are recent):

• The New Poor - In Job Market Shift, Some Workers are Left Behind - Catherine Rampell
• Plan B - Skip College - Jacques Steinberg - NYT
• The Way We Live Now - Students of the Great Recession - David Leonhardt - NYT
• Your Money - Another Debt Crisis Is Brewing, This One in Student Loans - Ron Lieber - NYT
• College Education, Good Jobs: Why Degrees Are Overrated - TIME (Feb 2010)
• The paradox of 21st century prosperity (Reich, 2009)
• Gordon's Notes: Why your daughters should be roofers -- not architects (3/23/2004)
• In the Basement of the Ivory Tower - The Atlantic (2008) - college as a waste of time for some
• Krugman on globalization: how to manage the losers - Krugman -NYT (2007)
• Where has the money gone? To the very American oligarchy - Krugman - NYT (2006)
• The day of the American engineer has passed (2005)
• Shaken and Stirred - DeLong and Cohen - The Atlantic (2005)
• The New Feudalism: Return of the Trades (2004)
• On redistribution (2004 - Baumol's Disease)
• Jared Bernstein & Brad DeLong on "Outsourcing": a dialog with interesting discussions (2004)

I hope you've taken the time to scan at least a few of the above (esp. Rampell, Steinberg and the discussion of Baumol's Disease). Taken together they reflect a consensus that's emerged over the past six years. I'd summarize it this way:

1. College has become insanely expensive. (The College Industry will be the next bubble to burst.)
2. There's a growing disconnect between the costs of college and the value delivered.
3. Many students would be better served by skills ("vocational") training rather than traditional scholarship.
4. Technology and globalization have eliminated large numbers of office jobs and made some old skills obsolete. Many of the middle-aged middle-class people who lost their jobs in the Great Recession won't work again.
5. In an age of outsourcing, knowledge work may be no more secure than factory work.

Ok, so the last isn't part of the consensus ... yet. It's still mostly a suspicion of mine.

So if we really are entering a world where many formerly middle-class adults won't be able to find stable employment, simply because they lack the skills for the jobs that do exist, what should we do?

College is probably not the answer. In 2007 and 2004 I suggested:

• universal health care (astoundingly, this might happen!)
• separate benefits from employment
• intelligent retraining programs - based on individual skills assessments and locally available employment
• As part of social security reform, eliminate the idea of age-specific retirement. Income has mandatory contributions to tax-deferred funds and non-work (study, vacation, job seeking, whatever) draws from those funds*.
• rethink the meaning of disability in a post-industrial society

The last will be the hardest, but I think we'll get to all of these in time. Civilization is stronger than we think. One way or another, we'll figure this one out - including finding a future for those who don't seem to have a place in the modern economy.

* I first proposed something like this in a 1977 Women's Studies course essay. I just remembered that ...

Update 6/2/10: Robert Reich on "Entrepreneur or Employed". Excellent summary. The modern 50+ knowledge worker is not "unemployed" s/he is "self-employed". S/he is a masterless, "Ronin" contract worker. Reich's recommendations are very close to what I wrote above. There's one in particular I like: "... Since they can no longer depend on tax-free corporate matches to their 401(k)’s or I.R.A.’s, they should be entitled to tax credits that match them". This is one measure Obama might be able to squeak by the GOP loons in Congress.

Obama and the Gulf: Why I remain grateful - and puzzled

We're a long way from knowing what went wrong in the Gulf. It does appear, however, that we don't have the technology to cost-effectively extract this kind of oil (assuming cost includes environmental and commercial damages from accidents). So it makes sense to stop all further exploration and drilling while we reassess our true capabilities.

I like to think that's a common-sense observation. The astounding thing, for those of us who remember GWB, is that my President is saying the same thing ...

Obama Restates Need for More Oil Before U.S. Uses Less - Dot Earth Blog - NYTimes.com

... So the overall framework, which is to say domestic oil production should be part of our overall energy mix, I think continues to be the right one. Where I was wrong was in my belief that the oil companies had their act together when it came to worst-case scenarios.

Now, that wasn’t based on just my blind acceptance of their statements. Oil drilling has been going on in the Gulf, including deep water, for quite some time. And the record of accidents like this we hadn’t seen before. But it just takes one for us to have a wake-up call and recognize that claims that fail-safe procedures were in place, or that blowout preventers would function properly, or that valves would switch on and shut things off, that — whether it’s because of human error, because of the technology was faulty, because when you’re operating at these depths you can’t anticipate exactly what happens — those assumptions proved to be incorrect...

I don't think Obama is Saint. We know he has to have a galactic ego, and we assume he lies about his smoking addiction.

Even so, I almost tear up when I read him saying this stuff. He makes sense. He's not insane, he's not frothing, he is a clear thinker. It's mind-boggling to have a President who's not a whack job.

We had Cheney/Bush. We could have had Palin/McCain. We got Obama.

That still puzzles me.

How the heck did we get Obama? We're not that smart ...