Thursday, February 03, 2011

Economics of POW Camp - whatever happened to R. A. Radford?

The conclusion of an essay beloved to Krugman and many other economists ...
Economics of POW Camp, R.A. Radford 1945
.... In January, 1945, supplies of Red Cross cigarettes ran out: and prices slumped still further: in February the supplies of food parcels were exhausted and the depression became a blizzard. Food, itself scarce, was almost given away in order to meet the non-monetary demand for cigarettes. Laundries ceased to operate, or worked for £s or RMk.s: food and cigarettes sold for fancy prices in £s, hitherto unheard of. The Restaurant was a memory and the BMk. a joke. The Shop was empty and the Exchange and Mart notices were full of unaccepted offers for cigarettes. Barter increased in volume, becoming a larger proportion of a smaller volume of trade. Thus, the first serious and prolonged food shortage in the writer's experience, caused the price structure to change again, partly because German rations were not easily divisible. A margarine ration gradually sank in value until it exchanged directly for a treacle ration. Sugar slumped sadly. Only bread retained its value. Several thousand cigarettes, the capital of the Shop, were distributed without any noticeable effect. A few fractional parcel and cigarette issues, such as one-sixth of a parcel and twelve cigarettes each, led to monetary price recoveries and feverish trade, especially when they coincided with good news from the Western Front, but the general position remained unaltered.

By April, 1945, chaos had replaced order in the economic sphere: sales were difficult, prices lacked stability. Economics has been defined as the science of distributing limited means among unlimited and competing ends. On 12th April, with the arrival of elements of the 30th U.S. Infantry Division, the ushering in of an age of plenty demonstrated the hypothesis that with infinite means economic organization and activity would be redundant, as every want could be satisfied without effort.
The essay has a very English style. Radford's upper lip was rock solid.
A Caracas Chronicles 2002 post has a bit of background and some analysis of the article ...
In 1941, a British officer by the name of R.A. Radford was captured by the Nazis and confined to a POW camp. At the camp, Radford and 2400 other inmates were forced to live on meager rations delivered by the Red Cross. The rations issued to each prisoner contained a bit of bread, some sugar, biscuits, jam, margarine, tea and chocolate bars, with small rations of canned meat sporadically made available. They also included 25 cigarettes per prisoner per week. Radford, who had been trained in economics before the war, noticed how even in the extreme conditions of a Nazi prison camp, a rudimentary market system developed as prisoners traded with one another to maximize their satisfaction. The British army's Gurkahs, for instance were eager to trade their meat for other foods, since as Hindus they were strict vegetarians. Prisoners who didn’t smoke were eager to trade their cigarettes for food. At first, each of these trades was a simple barter. But soon enough, the inmates realized the need for a more sophisticated system of exchange. Lacking money, they started using cigarrettes as prison currency. A ration of margarine might be bought for seven cigarrettes, which could then be used to buy one and a half chocolate bars, and so on.
Soon after his release, Radford described the system that developed in a classic paper entitled “The Economic Organization of a POW Camp,” a write-up that's much appreciated by undergraduates everywhere for its skill at explaining the mysteries of monetary systems. What interested Radford the most was the way that cigarrettes, as a means of exchange, were subject to all of the fluctuations of normal currency. So long as there was a roughly steady relationship between the number of cigarettes in circulation and the goods those cigarettes could be traded for, “prices” in terms of cigarettes remained more or less stable. But when a shipment of cigarrettes unexpectedly arrived, an inflationary spiral was set in motion. With the camp suddenly awash in “unbacked cigarettes” (additional cigarettes that circulated without a corresponding increase in the amount of other goods they could buy) prisoners would demand more and more of them in exchange for other goods. Alternatively, when cigarettes failed to arrive for one reason or another (an allied bombing raid, for instance,) a liquidity crunch took hold of the camp. These currency shortfalls would actually lead to recessions at the camp: with inmates eager to hang on to their scarce cigarettes, it became more and more difficult to find people to trade with.
So what happened to Radford after the war? There's no Wikipedia entry for him, and I couldn't find a biography or a reference to anything but his 1945 publication. I couldn't even find out what the initials "R.A." stood for.

It is a mystery.

Update 10/21/2011: Mystery solved in a comment on this post. R stood for Richard, he moved to the US to work for the IMF. See: http://faculty.csusb.edu/urmann/POW_Article.pdf

Tuesday, February 01, 2011

Google Art Project

Google Art Project hosts seventeen museums worth of paintings with gigapixel imaging - including Rembrandt's Night Watch...

Screen shot 2011-02-01 at 10.10.40 PM.png

Yes, it's Flash based. More's the pity. Churlish to complain though.

This is a glorious marvel. Most of these paintings can be seen only at a distance. Now you can put your eye next to them.

Google moves into positive Kharma territory with this one.

From the FAQ ...

Why is there a difference between the museums in terms of the number of galleries, artworks and related information?

Google approached the museum partners without any curatorial direction, and each museum was able to chose the number of galleries, artwork and information they wanted to include, based on reasons specific to them. All content in the information panel pertaining to individual artworks was also provided by the museums.

Why are some areas or specific paintings in the museum Street View imagery blurred?

Some of the paintings and features captured with Street View were required to be blurred by the museums for reasons pertaining to copyrights.

Are the images on the Art Project site copyright protected?

Yes. The high resolution imagery of artworks featured on the art project site are owned by the museums, and these images are protected by copyright laws around the world. The Street View imagery is owned by Google. All of the imagery on this site is provided for the sole purpose of enabling you to use and enjoy the benefit of the art project site, in the manner permitted by Google’s Terms of Service.

Update: Unsurprisingly, given the use of Flash, it's buggy on a Mac. I had more luck using Chrome for OS X than using Safari. I created a shareable collection but it took a few tries to get it saved. Doubtless a part of Google Social to be. Did I mention Flash sucks?

Sunday, January 30, 2011

Unemployment and the great stagnation

In the past week or so I wrote a summary post on how the people I read think about unemployment and the new American economy.

I also wrote a related post on how little medicine has progressed over the past 27 years. That lack of progress has a lot to do with why health care costs have risen faster than GDP. In the absence of substantial innovation the only way to improve outcomes is to spend more.

These memes are in the air. Two days ago Paul Krugman claimed that the large surge in US productivity from 1995 to 2004 was largely due to Walmart-style retail innovation (which, of course, required advanced IT support).

Yesterday Sewell Chan tagged the financialization [1] of the US economy as big contributor to the (second)  great crash of '09 (emphases mine) ...

Looking for a Legacy of the Financial Crisis Inquiry - NYTimes.com

... Greta R. Krippner, a University of Michigan sociologist whose book “Capitalizing on Crisis: The Political Origins of the Rise of Finance” (Harvard University Press) comes out next month.

“The report reinforces the view that financial activities should serve the nonfinancial economy, rather than the other way around, as has been the case in the U.S. economy over the last several decades,” she said.

That orientation toward finance — rather than the deregulation and avarice — is the real source of instability, according to Judith Stein, a historian at the City University of New York Graduate Center and the author of “Pivotal Decade: How the United States Traded Factories for Finance in the ’70s,” published last year by Yale University Press.

“Low wages, low interest rates to encourage consumption, and too much investment in housing and financial services because of the decline in manufacturing and other tradable goods – those are the underlying causes.”

That same day Tyler Cowen tied some threads, while plugging his Great Stagnation book in the NYT (emphases mine) ...

Incomes Are Stuck on Technology’s Plateau - Tyler Cown NYTimes.com

... From 1947 to 1973 — a period of just 26 years — inflation-adjusted median income in the United States more than doubled. But in the 31 years from 1973 to 2004, it rose only 22 percent. And, over the last decade, it actually declined.

Most well-off countries have experienced income growth slowdowns since the early 1970s, so it would seem that a single cause is transcending national borders: the reaching of a technological plateau. The numbers suggest that for almost 40 years, we’ve had near-universal dissemination of the major innovations stemming from the Industrial Revolution, many of which combined efficient machines with potent fossil fuels. Today, no huge improvement for the automobile or airplane is in sight, and the major struggle is to limit their pollution, not to vastly improve their capabilities.

Although America produces plenty of innovations, most are not geared toward significantly raising the average standard of living. It seems that we are coming up with ideas that benefit relatively small numbers of people, compared with the broad-based advances of earlier decades, when the modern world was put into place. If pre-1973 growth rates had continued, for example, median family income in the United States would now be more than $90,000, as opposed to its current range of around $50,000.

... there have certainly been gains in medical treatment, we may be overvaluing them. In education, we are spending more each year, but test scores have stagnated for decades, graduation rates are down and America’s worst schools are disasters.

There is an even broader problem. When it comes to measuring national income, we’re generally valuing expenditures at cost, rather than tracking productivity in terms of results. In other words, our statistics may be deceiving us — by accepting, say, our health care and educational expenditures at face value. This theme has been emphasized by the PayPal co-founder Peter Thiel in his public talks and by the economist Michael Mandel in his writings. And I’ve stressed it in a recent e-book, “The Great Stagnation.”

Sooner or later, new technological revolutions will occur, perhaps in the biosciences, through genome sequencing, or in energy production, through viable solar power, for example. But these transformations won’t come overnight, and we’ll have to make do in the meantime. Instead of facing up to this scarcity, politicians promote tax cuts and income redistribution policies to benefit favored constituencies. Yet these are one-off adjustments and, over time, they cannot undo the slower rate of growth in average living standards...

Cowen is infected with the Marketarian meme [3]. Since the Market is divine, the failure must be in innovation. Even so, I think he has some important things right.

He is too tentative though when he questions how much progress medicine has really made over the pasts quarter century. If we went back in time, and told doctors of 1984 what medicine  in 2011 was like, they would weep. "Surely", they would protest, "we must at least have beaten something like Rheumatoid arthritis or Multiple sclerosis".

On the other hand, I think Cowen (and, for that matter, Krugman), are missing the enormous impacts of IT innovation. Our Finance innovations were IT enabled, and our disastrous inability to measure and manage them arose in part from our inability to understand the systems we'd created.

So we've had three new additions to my summary article in one week. I think we're closing in on what whacked America between 1999 and 2011. Congress may again need four tries to get it right [2], but we are making progress. Once we understand what the heck happened, we have a start at recovering.

- fn --

[1] I point to the "virtual economy", more in my summary post. The rise of Finance was driven by both IT innovations and the rise of the vast manufacturing powers of China, Brazil and India.

[2] Washington’s Financial Disaster - Frank Portnoy - NYTimes.com - "Few people remember that the early investigations of the 1929 crash also failed due to political battles and ambiguous missions. Ferdinand Pecora was Congress’s fourth chief counsel, not its first, and he did not complete his work until five years after the crisis. Congress should try again."

[3] He is in denial about the extent of income skew vs. income growth. For example.

See also

Dilbert shout out

Dilbert 1/30/11 - "Option two: I could lie, and tell you that everything is perfect". Perfect.

Scott Adams has been at this for 22 years. Some years he does better than others, but in the past six months he's hit the spot more often than not. Nice to see a veteran in good form.

Saturday, January 29, 2011

Teaching science - how to improve

I have children in public schools in grades 3 through 8. This isn't surprising ...

Minn. science proficiency results called a shock | StarTribune.com

... national tests given in 2009, showed that 40 percent of Minnesota eighth-graders and 43 percent of fourth-graders were either 'proficient' or 'advanced' in science."...

In other words, 60% failed.

I'm not concerned about science teaching in grades 1 to 4. Maybe someday, but not today. We do have a problem with teaching science in Minnesota's public schools between grades 5 and 8.

So what should we do about it?

We need old, cynical, hard bitten teachers nearing retirement to tell us what needs to change. I can only suggest a solution based on what I know about doctors. Since doctors and teachers have a lot in common, this may be relevant.

I was a real family doc once. I switched careers about fifteen years ago, but my wife still sees patients. There are a lot of superb family physicians, particularly in rural America but also in urban settings. On the other hand, radiologists make far more money for less work. The gap has grown over the past decades. Since most radiologists would be lousy family physicians, and most family physicians would die of boredom doing radiology, the impact isn't as large as it might be. Still, it's real. If you want to get more quality family physicians (or pediatricians, internists, etc), the cheapest solution is to pay radiologists less [1].

I suspect the same is true in teaching. Science teachers and reading teachers draw from somewhat similar candidate pools. The quality of science teaching will depend on the relative prestige and rewards between one domain and the other. If we want better science teaching in America, we need to make teaching science relatively more attractive than the alternatives.

Any comments from those who teach young students?

[1] You'll know you're paying too little when it becomes hard to read MRIs or get an interventional procedure performed. I suspect that would take a vast reduction in income.

Friday, January 28, 2011

Administrivia: return of the captcha

Google's spam comment detection isn't good enough. After a one month test I've given up and restored a captcha function (yech) for Gordon's Notes comments.

Sorry.

Turbulent world, rigid software

One of the fringe benefits of playing professor is that I can insert my idiosyncratic observations into relatively innocent minds.

Last night, during a health informatics lecture, I described the remarkable rigidities in an intersecting set of vertical software systems I know well. Some of the applications are older than the younger students, others are just maturing. They're all strung together by a rickety set of interfaces and interdependencies; even routine data configuration is problematic. It's an interlocking and rigid system of brittleware. When business conditions change, brittleware breaks.

That's not unusual. We see it even on solitary desktop applications. PowerPoint 2007 is clearly senile; it needs a long cruise on a railing-free ship. Brittleware is everywhere.

Problem is, the world changes. Of course that's not new; the 20th century was packed with change. For most of that time, however, we used people and paper. People and paper are relatively easy to change. Even hardware is easy to change. Software though, software is hard.

So what impact does rigid software have on the ability of businesses to adopt to changing conditions? Does it become a true impediment to adaptation?

Sunday, January 23, 2011

Things that stopped progressing: medicine and theoretical physics

I'm surprised more people haven't noticed that medical progress slowed way down after 1984.

It's not just medical science that's hit a wall. Lee Smolin's 2004 The Trouble With Physics claims physics has been frozen for decades. (At least physics has a book on this. I think physicians are in denial.)

What other sciences have stopped making progress? Biology seems to be very healthy ...

School segregation - by class

Americans are used to schools being by race. It seems we accept it and expect it...

Marginal Revolution: U.S. fact of the day

... American schools are more segregated by race and class today than they were on the day Martin Luther King, Jr. was killed, 43 years ago. The average white child in America attends a school that is 77 percent white, and where just 32 percent of the student body lives in poverty. The average black child attends a school that is 59 percent poor but only 29 percent white. The typical Latino kid is similarly segregated; his school is 57 percent poor and 27 percent white. Overall, a third of all black and Latino children sit every day in classrooms that are 90 to 100 percent black and Latino...

I'm interested in how segregated schools are by class -- including private schools. I'm not sure how to measure it, but my suspicion is that the kids of the top 5% no longer mix with the bottom 95%.

In a related vein, one of the great scandals of American society is that most public schools are funded by local taxation. It's appalling, but Americans seems to accept it without question.

Saturday, January 22, 2011

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 ...

Some relevant old posts of mine

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

Friday, January 21, 2011

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 ...

Screen shot 2011-01-21 at 9.35.38 PM.png

"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.

Wednesday, January 19, 2011

Dog 2.0

A randomly selected purebred border collie associates sounds with objects, and perhaps sound permutations with objects and actions.

There are mid-sized dog breeds that live as long as 25 years. Given low cost whole genome sequencing, we could create a dog breed a 25 year lifespan and enhanced communication skills.

To develop greater language skills within a short time period would probably take some germline engineering. Maybe in 10 years we'll be able to do the germline engineering.

So does dog 2.0 get to vote in 2060?

See also:

Monday, January 17, 2011

Beyond America - Google world editions with Google Reader and Google Share

Google News Editions

This morning, thinking of Brazil I wrote ...

I just wish I, and we, had a better way to share and understand the fascinating and terrible world that we live in. We see only slices and shards of it. My hope is that even though today's machine translation only works  for very closely related languages (ex: English, French, German) that it will improve dramatically in the next decade. When that time comes Google News (or the future equivalent) may reveal the invisible world. Maybe, one day, even Chicago.

This morning, reading the NYT on my iPhone's NYT.app, I was again annoyed by my inability to easily share my thoughts on what I read there. I want to create Google Reader Shared item notes on my shared item page/feed (and twitter reflection [2]), but that's not a NYT option. [1]. Google News gave me the same feeling a bit later. I wished I could read and share using Reeder.app with superb new "readability" integration.

This afternoon I realized I can take a step now towards all of these objectives.

Most of the NYT articles I'm interested in show up in Google News. Google News has editions for many nations (left). Each Google news edition or section has a unique feed.

So I've added a representative sample of Google News English language editions to my Google Reader feeds. Certainly Canada (my birthplace) and the US, but also India (english version) and Southeast Asia. I've grouped them in a single "folder" so I can easily mark the entire collection as read (this is a high volume collection).

I'll be tweaking the set, and sharing from this set.

Of course what I really want is integrated machine translation for Chinese sources, but we're not there yet. Machine translation barely works for closely related languages and it's computationally intensive.

-- fn -

[1] I've tried workarounds such as email to a hidden blog that I follow in Reeder, and sharing from there, but it's too tedious. There might be something I could do using Yahoo! Pipes, but, frankly, I'd forgotten about them.
[2] I'm seriously tired of Twitter's string length limits. It's darkly funny that some consider this a feature.

See also:

Brazil

Chicago is the invisible city. Massive. Wealthy. Complex. But invisible. Chicago is America's third most populous city and third largest metropolitan area, but we read far more about puny, dying Detroit. Even Obama's Presidency hasn't exposed Chicago. [1]

Brazil is, for Americans, the invisible nation. There are 190 million Brazilians; it's the world's fifth largest country and, by GDP, eight largest economy and growing fast. I'd love to visit Brazil [2].

Brazil is also nation where survivors of mudslides are walking out from a natural disaster ...

In Brazil, Mudslide Survivors Walk Miles for Aid - NYTimes.com

Thousands of traumatized mudslide survivors navigated steep, slippery jungle paths Saturday to find food, water and medicine as they slowly gave up hope that government rescuers would reach them anytime soon.

Those who escaped the slides that killed nearly 600 people over four days ferried bottles of water and sacks of groceries on their backs after trekking five miles to the center of this mountain town north of Rio de Janeiro.

Wanderson Ferreira de Carvalho, 27, lost 23 members of his family, including his father, his wife and 2-year-old son. He trudged up a path to his neighborhood, carrying supplies.

“We have to help those who are alive,” he said. “I’ve cried a lot and sometimes my mind goes blank, and I almost forget what happened. But we have to do what we must to help the living.”

Local and state fire departments said they had deployed 2,500 rescuers, while 225 federal policeman were in the area to maintain order. The federal government has been trying to fly in 11 helicopters to remote areas, but has found it hard because of poor weather conditions.

That's the full text of the entire NYT article.

Terosopolis isn't, on a map, that far from Rio ...

Screen shot 2011-01-17 at 8.54.33 AM.png

Rio is to the left of the great bay, Teresopolis is the A icon. Terosopolis is within 250 (spectacular looking) kilometers of the city.

I'm not moralizing about Brazil. America is far wealthier than Brazil, but we struggled to manage Katrina. (The stories of the Coast Guard response to Katrina, incidentally, are awe inspiring).

I just wish I, and we, had a better way to share and understand the fascinating and terrible world that we live in. We see only slices and shards of it. My hope is that even though today's machine translation only works  for very closely related languages (ex: English, French, German) that it will improve dramatically in the next decade. When that time comes Google News (or the future equivalent) may reveal the invisible world. Maybe, one day, even Chicago.

[1] Of course, it may also be that Chicago is grumpily dull. It's a corrupt old city, but it's been more corrupt in the past. It mostly seems to work. The weather is miserable, worse in its own way than Minneapolis, but the regional population is stable. Of course if it turns into Detroit then it will get a bit of attention.
[2] I roamed once. That was a prior life. I hope to have a few more lives yet.

Saturday, January 15, 2011

What will be unacceptable in 50 years?

Ta-Nehisi Coates has been trying to imagine how, about 150 years ago, an American culture could celebrate the ownership of humans. That is unacceptable in America today. Times change.

Assuming we continued the historic trends of the past hundred years [1], what will be unacceptable fifty years from now?

I listed three ideas in a comment ...

Grappling With Genosha - Ta-Nehisi Coates - Personal - The Atlantic

.... What things do we love that will be despised in fifty years?

I eat pigs. I think that will be unacceptable in fifty years.

Coates loves football, a sport where brain damage is a normal outcome. I think that will be unacceptable sooner than fifty years from now.

We imprison and kill people with disabled brains. I think that will be unacceptable fifty years from now...

Any others?

[1] Of course this is simply a thought experiment. If the trends of the past century continue, humans will not be defining acceptability.