Recession Economics

The Doctor speaks in propria persona


Academic/technical writing is a time-consuming, meticulous process; and, two years ago declining health forced a decision concerning which papers I would complete and release for publication.

The following excerpts are drawn from my workup notes for the unpublished paper “Parasitic Capitalism and the Death of Markets.”[]  Readers are advised that — as an example of my real  work — there is neither humor nor entertainment to be found on this page. I am releasing these brief, incomplete, and largely unsupported excerpts in the hope that my thinking may be of some benefit to the public at large.[]

I watched the developing economic crisis with both resignation and dismay; but, anticipating events, I have not been significantly affected. That said, I hope some of the following will provide at least a few answers to The Question Which May Not Be Asked :  how, exactly, did you  get us into this mess.
(For the benefit of the lazy and the simple-minded,) Both the proximate problem and its immediate solution can be briefly summarized: major U.S. banks and financial institutions grew too large, accumulated too much wealth and power, and bought off necessary regulation; and, therefore, the solution is to enforce the anti-trust laws and break up financial entities that are ‘too big to fail.’  And then we can all relax and wait for the  next crisis.  . . . Because the world is not simple, and "the Devil is in the details" — which follow.

Philosophy, Language, and Public Policy
A basic understanding of logical thought is necessary to have a useful and reasonable  debate on public policy; but, since most people seem to consider logic an inherent or inborn skill, they don't spend a great deal of time learning to think clearly.()  But logic is  a learned skill, much like cooking: all of us have an appetite, and most of us like to eat; but, few of us have spent the time to learn how to cook, and fewer still spend enough time in the kitchen to achieve any real skill.

There are nine logical fallacies commonly listed as frequently (ab)used in public discourse (although, as an authoritative critic has pointed out, “there are in fact dozens of logical fallacies…[:] Aristotle mentions over a dozen fallacies, or what he calls "false enthymemes"…[and m]ore are being coined all the time” a ), among which are ad hominum,  non sequitur,  and  post hoc, ergo propter hoc : some have Latin names because they have been known since Greco-Roman times, and understanding them will go a long way toward clarifying contemporary political debate.
a [While Aristotle's logic goes a long way toward debugging a number of common errors (both inadvertent and deliberately perpetrated), not all of his thinking has held up to modern semantic and mathematical analysis:1, 2  see Korzybski, Hayakawa, and Russell for (a great deal) more on this topic.]
One (and far more immediately relevant) logical fallacy is depending on information from sources whose expertise is – at best – dubious. We are all familiar with political issues raised by rabble-rousing talk-show hosts, vapid pronouncements on current events by Hollywood "personalities," and hysterical demonstrations of pseudo-logic from various conspiracy theorists. However, I must also point out that, in releasing these notes in in complete and (more importantly) largely un supported form, this page – in its entirety – falls into the same category:[]  for this reason, I have left in a handful of offline (mostly book) source references and (some) personal notes directed to online research. But, I cannot logically  defend the opinions expressed herein; and, if there is any benefit whatever to found in this discussion, it will be because you, the reader, care enough to follow up on the necessary research documentation to establish any given point as intellectually valid.

In democratic systems, public policy is determined through periodic elections; and, therefore, debate is always, of necessity, focussed on elections, because this is when we as a people make policy decisions. But, in temporal terms, that focus is very narrow indeed; and, I would argue, it is sometimes much too closely focussed to allow pragmatic, cost-effective action: in the midst of immediate and pressing problems, the question of who will do the long-term planning all too often becomes moot. But long-range planning must be done; and, because administrations are, by definition, elected to administer  policy, the responsibility for long-term planning ultimately belongs to the voters.

The bubble in home prices is usually cited as one of the causes of the current recession; but, the property bubble in California began long before the dates publicly propounded by recession analysts. The (beloved or notorious — to ideological taste) property tax limits imposed by Proposition 13 were originally intended (among other, still hotly debated points) to insulate low- and fixed-income property owners from double-digit increases in the valuation of their homes: from one year to the next, many seniors, disabled, and lower-middle class homeowners saw their tax bills double or triple; and, before the proposition passed, many had lost their homes.
The point here is the seemingly-abstract philosophical concept of the popular perception of time — what, exactly, is "long term:" six months, two years, five years, a decade?  Regarding several crucial issues — among them economic reforms and global climate change — a number of commentators have used the metaphor of turning a ship: once the rudder has turned, it is still a long, slow process before the ship is headed in a new direction.
The metaphor is a good one, and I would therefore suggest a focus of 50 years; but, while this would certainly give more stable direction to society, it does not consider the interests of businesses, advertisers, or politicians. For business and the advertising industry that promotes its products and services, the focus is on today's sales()  and, after today, tomorrow's new possibilities: the furthest ahead that businesses can reasonably be expected to plan is the quarterly report.  And, we elect politicians to deal with immediate issues and problems: it is unrealistic at best (and, arguably, poor utilization of administrative time) to expect our elected officials to consider issues affecting an administration that will be elected by their children or grandchildren.
But, I would also suggest that it is in our  interest as citizens to do seriously long-term planning, if only because solutions to many of our biggest problems will be easier — and much, much cheaper. That type of thinking, however, means tuning out the constant, distracting chatter of Big Media's promotion of its latest soi-disant  artistic discovery, next fall's TV lineup, and next season's Oscars; and, (more difficult) tuning out the incessant bombardment of commercial advertisements hyping this week's sale, this season's fashions, and this year's Christmas toys.1, 2, [3]

Formal, rhetorical logic is concerned with language; and, although language models reality, “the map is not the territory” [A. E. van Vogt, The World of Ā ]: this is a profound (and largely ignored) intellectual problem affecting all  democratically structured social systems.()

Working knowledge of a foreign language — especially to the level of fluency — provides a different logical map, with a differing view of reality and differing insights;

    [Many idioms cannot be translated at all, and some words lose subtle distinctions — for example, the German word Weltanschauung, meaning (literally) world-view. It is a fusion of two words (which is legal in German) Welt – world, and anschauung – to look at. Point of view is implicit in the word — it is not an abstract, philosophic or objective view of reality; it is my  view of reality: the world-view from behind my  eyes.]
but, this cuts both ways: multiple language groups within a single geopolitical venue may lead to Balkanization of the culture; and, while this can (and sometimes does) enrich the dominent culture, it may also lead to ethnic violence and civil war.

Cultural unifying forces: religion (state religion), State (government: Austro-Hungarian Empire and WWI), State-defined social culture (Stalin/USSR; China and the Cultural Revolution), tribal/racial (Japan and 2nd-3rd generation Korean immigrants; Africa, Rwanda; Afghanistan). Of all of these unifying forces, language is the least socially repressive.
Balkan war: Bosnian Serbs vs. Muslims/Croats; exacerbated by religious issues.  Lebanon (cultural/religious).  Sudan: tribal, religious – also Rwanda, Afghanistan.
Citizenship: democratic process (informed vote)
English only issues; immersion programs: Santa Barbara (Latino college admissions stats), DLI
Difficulties of non-Romance language groups much greater, especially Chinese/Japanese and Arabic
Historic first generation linguistic problems: German, Pennsylvania Dutch, Italian examples; WWI/II immigration

This point is supported by many centuries of historical record; and, sadly, not only 19th and 20th century history in the Balkans (which gave us the word Balkanization), but going back at least as far as ancient Greek culture, which gave us the word barbarian — a person who did not speak Attic Greek.

The mathematical concept of modelling is critical to understanding language as a system of communication using agreed-upon symbols.()  The symbols may or may not denote or describe anything (cap-R) Real or tangible,[]  but unless the 'values' they represent have agreed-upon meanings, communication is impossible.

Like all other flavors of formal logic, this is a lot trickier than it sounds because words have both denotative and connotative meanings.  For example, the connotative differences between dog, hound, mutt, mongrel, canine  and cur  are obvious to most readers [which, parenthetically is why serious writers use dictionaries and not thesauruses].
Likewise, sentences have internal, syntatical rules of construction that vary from language to language.(1, 2)  English speakers are familiar with the passive voice, most commonly encountered in the notorious political cop-out phrase “mistakes were made” (which implies that ‘mistakes’ somehow occurred spontaneously, absolving everyone from any blame in the matter under discussion), but even seemingly simple conjunctive constructions can be logical traps.  For example, however (which clearly implies that what follows will somehow contradict the first clause) and therefore (which denotes a logical conclusion from the premises of the preceding clause) are quite straightforward. But the seemingly-innocuous and  causes a lot of grief because it implies a logical equivalence between the subjects which may not, in fact, exist — as, for example, in the common phrases science and technology, research and development, and (perhaps the saddest of the lot) arts and entertainment.

In addition, a given linguistic structure — the syntax of a sentence — may or may not be a valid model of (external) (non-linguistic) Reality; however, since the end of the nineteenth century, debugging the structures of verbal logic has been simplified by mathematical logic (variously, Boolean algebra, symbolic logic, or the logic of sets).[]

    [One of the pioneers in the field of mathematical logic, Charles Dodgson (Lewis Carroll), created a number of soriteses as examples in “Symbolic Logic ” (available from Dover, bound with “The Game of Logic;” ISBN 0-486-20492-8). These are loads of fun: they are carefully constructed statement-sets with (demonstrably) perfectly logical conclusions; but, the variable/premises are filled in with Carroll's delightful nonsense.]

For example, all paradoxes (regardless of language) are a result of logical errors in otherwise-valid syntactical structures;

and, all can be resolved (i.e., the error can be demonstrated) using mathematical tools.

Make no mistake: if you want to think with clarity, you will have to spend time learning how, and considerably more time practicing if you want to do so effectively.

In addition to avoiding elementary logical errors, there are a few rules of political debate that can go a long way toward generating light instead of heat.
Rules of Debate
  1. Do your homework: know what you're talking about.
  2. Be sure your numbers are real: use valid statistics.(1 & 2)
  3. Be prepared to compromise.
  4. If you're getting angry, step back and let someone else have the floor.
  5. Remember that your opponents are not  ignorant, foolish, malicious, or mislead: they are people of knowledge, integrity, and good will — they simply disagree with you.
    [Unfortunately, with some opponents this last is not the case, but it is the politic thing to do.]

Moreover, it is in no one's interest to teach you : among those whose immediate, personal interests will be adversely impacted are all politicians; all advertisers and marketing people;()  all preachers, parsons, pastors, rabbis, mullahs, shamans, and practicing theologians; and, all business interests, both large and small.

[References: logical fallacies, rhetoric, logic (1) and (2)]

A basic understanding of mathematics is also necessary to have a reasoned debate on many public policy issues.1 ff.; [2]  The issue of global warming is a cogent case in point: there is (quite surprisingly) general consensus in the scientific community that the net amount of heat trapped in the Earth's atmosphere has increased; and, moreover, that the increase has happened in an unusually short period of time (geologically). Paradoxically, at the same time that the scientific consensus is supporting political action, the public belief in global warming is actually declining [stats; link to study] because of massive advertising campaigns mounted by interested parties, including the coal and electricity industries.1, (2 ff.)

Solar energy (heat) in the atmosphere is what drives the weather: if there is more energy available to drive winds and storms, climactic extremes will become exaggerated; and, as predicted, the effects of global warming and the increased amounts of energy can be seen in a number of objective measurements, including glacial melting and weather-related insurance statistics going back to the 1980's.
  • By the time the Clinton administration took office, a consortium of European insurance companies had already raised rates because of storm-related damage claims. [get date/link]
  • Shipping losses in [get date - 2004?]: for the first time in XX, Lloyds of London lost money; and, its [gentlemen? (get correct term)] were forced to make up the difference.
  • Devastating floods in the American Midwest (Red River) in 2008 and, in September of 2009, widespread floods in the state of Georgia.
  • Typhoons and floods in Japan, Taiwan, and the Phillipines in 2009 (with Manila particularly hard-hit by the worst flooding in 40 years).
  • Drought and fires in both California and Australia in 2009 (with debris flows to follow in California); and severe multi-year droughts affecting food supplies in India, Iraq and East Africa.
  • 2009 rainy-season flooding caused by the El Niño weather pattern is anticipated in Ethiopia, Sudan and other parts of East Africa, exacerbating both already-critical food shortages (above) and regional political instability.1 ff.; [2]
  • Drought and devastating wildfires in Arizona (2011), Texas and Colorado (2012) made international headlines; and — establishing a causal link with global warming — a British study published in 2012 showed that the Texas drought was twenty times more likely to occur during a La Niña event than in 1960 and an extreme heat event in London was sixty  times more likely to occur after 1960 than in the previous 350 years. (For the benefit of climate-change skeptics, the same study failed to show a causal link with the terrible floods in Thailand, which are now attributed to land-use mismanagement.)
  • The Antarctic and Greenland ice sheets are melting: according to a study by the University of Utrecht in the Netherlands, the Greenland ice sheet has lost 1.5 trillion tons since the year 2000; and the rate of loss is increasing by a factor of two each year. If the whole ice sheet should melt, worldwide sea levels would rise by approximately seven meters (23 feet), resulting in coastal flooding worldwide. [GET .GIF/MAP; use red inset table]
    [These numbers represent the mean ocean levels: in many locales the effect of tides and storm surge would be far greater;(1 ff.)  and, the study did not include Antarctica, which has an ice sheet ten times the size of Greenland's. Other studies indicate the western edge of the Antarctic ice sheet is also melting, "undermined" by ocean currents that are (now) warmer than previously measured. It is also troubling that the polar ice melts are happening forty years before  the date predicted by the best available climate models.()]
    Both Costa Rica and some south Pacific islands are already impacted by the combination of sea-level rises and increased hurricane/typhoon activity; and, major first-world cities (including some in the U.S.) as well as some of the world's most overpopulated regions (e.g. Bangladesh - sp?) will experience widespread coastal flooding in 30 years or less: this is of particular concern since coastal regions have historically seen population growth and commercial development since the days of sail.
  • Drought and world food production: India and East Africa are affected which increases regional (political) instability;(1, 2) and, in India the problem is exacerbated by reductions in the Himalayan snowpack and melting of the glaciers feeding the Ganges.
    According to OxFam [sp.?] starvation (again) threatens Ethiopia: “Droughts which used to happen every ten years now happen every year or every other year. ...There are two rainy in the Spring and one in Fall...and the Spring rains are the ones affected. ...In effect, Ethiopia has lost one of its two rainy seasons...and the problem also affects...Kenya and...Sudan.” {; 20 October 2009}  And in South America, Lake Titicaca (Peru) is at its lowest level in 80 years, affecting drinking water and irrigation for regional food production.
    In addition to political instability, decreased food production worldwide also increases the incidence of disease, including TB [op. cit. Garrett]; and, children will be particulary hard-hit: [get infant mortality stats].
  • Ocean chemistry: 500 billion metric tons of carbon has been absorbed by the world's oceans, enough to cause a measurable change in the pH: the acidity of the oceans has tripled over the last (20?) years — a net 30% increase since the industrial revolution; and, as the ocean warms, its ability to soak up CO2 declines. Since over two-thirds of the world's free oxygen comes from the oceans, this is a sobering thought. [Link to study; Science ?]: This may mean that even if we can muster the political will to do something effective about global warming,  it may already be too late: there is so much carbon in the oceans that it would take 4 – 5 centuries  before mitigation of greenhouse gas production would have any effects on global climate.
  • Another troubling issue is that we simply don't know enough about ocean currents to determine the ultimate climactic impacts of global warming; and changes in ocean currents can have radical, immediate impacts on weather patterns. El Niño/La Niña impacts on the U.S., South America, and East Africa.  In a recent study [from M.I.T.?] (in correctly cited by those opposed to legislation mitigating global warming; link/quote interview with the author), the warming effects of greenhouse gas emissions on worldwide temperature readings over the last (twenty years?) have been masked by changes in ocean currents; however, the problem is so complex, we literally have no models that can predict the impact on local weather and (ultimately) climactic conditions. [For more than forty years the largest computers in the world have been used by NOAA to do weather modelling; and, while this has resulted in better and more accurate forecasting, it is still far from a precise science.]

But, if it is, in fact, even possible  to do something to alleviate global warming, remediation will be politically intrusive, economically disruptive, and very, very expensive. Estimated cost stats, differences in first/third world national income; developing nations. Energy production and corporate (lobby) interests;  unsustainable consumer lifestyle.(1, 2)

Even with broad public support, convincing world governments to take such unprecedented actions based on abstract, mathematical models may, in the end, prove impossible; but, history has provided some sober reminders of the price exacted by ignorance: although it was located further south than the colonists' original home in England, the Massachusetts Bay colony was almost wiped out during its first, brutal winter in 16XX because no one understood ocean currents; and, the combination of Bush administration wartime budget deficits, lawmakers' inability to grasp engineering models, and Hurricane Katrina resulted in the large-scale destruction of one of America's premier cities.1, [2 ff.]  And, unlike the southeast Asia-Pacific earthquake tsunami, the disaster in New Orleans was not only predictable, it was predicted.

 The Cassandra Disaster: Hurricane Katrina 
Math models were available over a decade earlier (during the Clinton Administration) [find Eichorn's first public report/warning]; but, Clinton policies were affected by legacy Gulf War budget deficits.  By the time Bush II took office, the Army Corps of Engineers had modelled the effect of a Category 5 storm on New Orleans; and, on the basis of these models, FEMA issued a public warning on [date, 2001].
    “FEMA warning quotes ”
But, after 9/11 the Bush administration also had budget deficits, and fixing the problems of subsidence, coastal erosion, and levee repair/enhancement in New Orleans were again postponed;1, [2] so, despite repeated warnings, the scenario played out exactly  as predicted.

The problem was outlined in an article titled “Drowning New Orleans ” published in the October 2001 issue of Scientific American :

“A major hurricane could swamp New Orleans under 20 feet of water…, and now only massive reengineering of southeastern Louisiana can save the city. …If a big…hurricane crossed the Gulf of Mexico on the right track, it would drive a sea surge that would drown New Orleans… .
The city lies below sea level, in a bowl bordered by levees that fend off Lake Pontchartrain to the north and the Mississippi River to the south and west…[a]nd the city is sinking further… . The low-lying Mississippi Delta, which buffers the city from the gulf, is…disappearing… . An acre disappears every 24 minutes. Each loss gives a storm surge a clearer path to wash over the delta and pour into the bowl… . At fault are natural processes that have been artificially accelerated by human tinkering—levying rivers, draining wetlands, dredging channels and cutting canals through marshes.()
…The Mississippi River built the delta plain…by depositing vast quantities of sediment every year during spring floods. …Since 1879, however, the Corps of Engineers…has progressively lined the river with levees to prevent floods from damaging towns and industry. …As a result, the plain just subsides below the encroaching ocean. …A hurricane's storm surge can reach heights of over 20 feet, but every four miles of marsh…knock it down by one foot.
…[I]n Port Fourchon, where…oil and natural-gas pipelines converge from hundreds of offshore wellheads…companies have dredged hundreds of miles of navigation channels and pipeline canals… . Each cut removes land, and boat traffic and tides steadily erode the banks. The average U.S. beach erodes about two feet a year…but Port Fourchon loses 40 to 50 feet a year… . The network of canals also gives saltwater easy access to interior marshes…killing the grasses and bottomwood forests… .()
With the marsh disappearing, the delta's only remaining defense is…barrier islands…[but] Louisiana's barrier islands are eroding… . Millions of tons of sediment used to exit the Mississippi River's mouth every year and be dragged by longshore currents to the islands… . But…because levees and dredging prevent the river's last miles from meandering naturally, the mouth has telescoped out to the continental shelf. The sediment just drops…into the deep ocean.
…[O]ther human activities have made matters worse. …[T]he earth beneath the delta consists of…a wet peat several hundred feet deep… . As the Corps [of Engineers] leveed the river, the city and industry drained large marshes… .()  Stopping the floods and draining surface water lowered the water table, allowing the top mucks to dry, consolidate and subside, hastening the city's drop below sea level… .
As the bowl became deeper, it would flood during routine rainstorms.()  So the Corps…began digging…canals to collect rainwater. The only place to send it was Lake Pontchartrain. But because the lake's mean elevation is one foot, [they] had to build pumping stations…to push the…runoff uphill into the lake. …Because the canals are basically ditches, groundwater seeps into them… . But if they are full, they can't take on water during a storm. So the the city runs the pumps regularly to expel seepage…, which draws even more water from the ground, leading to further…subsidence.  …[T]he Corps is building more canals and enlarging pumping stations, because the lower the city sinks, the more it floods…[and] the parishes…bordering the city…are digging drainage canals as they become more populated.”

However, well before 2001, remediation discussions had already repeatedly foundered on the rock of Federal budget deficits:

  • (1), from hearings of the House Committee on Transportation and Infrastructure, pg. 354 – 355; 1996:
    “Mr. TAUZIN.   Randy Newman wrote a great song… . It goes, Louisiana, they're trying to wash us away… . It's a great song, because it's true. …I know some of you get 4 inches, you think that's a lot, we get 20 in an afternoon in my district occasionally. And on top of that, the sea is encroaching. We're losing about 30 to 40 square miles a year of land in my district.()  …I need help to save my district,…[a]nd so I want to mention a few projects that we've recommended…and urge your consideration of them. The first is the West Bank Hurricane Protection Levee. If you know New Orleans, you know it's…protected on one side with levees around Lake Pontchartrain and Lake Borgne, and it's not protected on the west bank, wide open to the Gulf. You go down to the west bank FEMA office, you find out they're predicting 27 feet of water in New Orleans…where a million people live…in a category four storm, that comes up through Battatary Bay… . We're desperately rushing to build protection for those folks and the West Bank Hurricane Protection Levee is a key part of it.”
    and, from above, pg. 358:
    “Mr. PALLONE.   Let me talk about three issues… . The second issue is the Army Corps policy with respect to shore protection, flood control, navigational dredging. I'm sure you're aware…[of] the [Clinton] Administration's continued efforts to curb the Army Corps' role in these functions. And I of course totally oppose what the President has proposed in his budget once again, which is to essentially get the Federal Government out of this, or at least diminish the Federal role. Congress defeated a similar proposal last year by passing the Energy and Water Development Appropriations bill. …I strongly believe that without continued Federal participation in these projects, they're simply not going to be done. And I think it makes no sense to suggest that somehow the states are going to have the expertise or engineering design otherwise, or the funding, as has been proposed by the President in his budget.”

The 2001 FEMA warning triggered a broader public discussion of the issues; but, because the basic intellectual disconnect between those who defined the problem in terms of mathematical models and those who were grappling with political solutions remained, most of the cogent presentations were regional.1, [2, 3]

  • (2), from “KEEPING ITS HEAD ABOVE WATER: New Orleans faces doomsday scenario;” Houston Chronicle, 1 December 2001:
    “New Orleans is sinking. And its main buffer from a hurricane, the protective Mississippi River delta, is quickly eroding away, leaving the historic city perilously close to disaster:  so vulnerable, in fact, that earlier this year the Federal Emergency Management Agency ranked the potential damage to New Orleans as among the three likeliest, most castastrophic disasters facing this country… . In the face of an approaching storm, scientists say, the city's less-than-adequate evacuation routes would strand 250,000 people or more, and probably kill one of 10 left behind as the city drowned under 20 feet of water. Thousands of refugees could land in Houston… .
    [Tropical storm Allison] dumped a mere 5 inches on New Orleans, nearly overwhelming the city's pump system.()  If an Allison-type storm were to strike New Orleans, or a Category 3 storm or greater with at least 111 mph winds, the results would be cataclysmic, New Orleans planners said… . New Orleans is essentially a bowl ringed by levees that protect the city from the Mississippi River to its south and Lake Pontchartrain to the north. The bottom of the bowl is 14 feet below sea level, and efforts to keep it dry are only digging a deeper hole. During routine rainfalls the city's dozens of pumps push water uphill into the lake. This, in turn, draws water from the ground, further drying the ground and sinking it deeper, a problem known as subsidence… .1, 2  For New Orleans, eliminating pumping during a rainfall is not an option, so the city continues to sink.
    A big storm, scientists said, would likely block four of five evacuation routes long before it hit. Those left behind would have no power or transportation, and little food or medicine, and no prospects for a return to normal any time soon. "The bowl would be full," Levitan said. "There's simply no place for the water to drain." Estimates for pumping the city dry after a huge storm vary from six to 16 weeks. Hundreds of thousands would be homeless, their residences destroyed.”
  • (3a, pg. 1 of 3), from The Times-Picayune  Special Edition, 2003:
    “A major hurricane could decimate the region...It's just a matter of time.  "A catastrophic hurricane represents 10 or 15 atomic bombs in terms of the energy it releases," said Joseph Suhayda, a Louisiana State University engineer...who has developed a computer simulation of the flooding from such a storm. "The worst case is a hurricane moving in from due south of the city... ."
    The scene has been played out for years in computer models and emergency-operations simulations... . Ninety percent of the structures in the city are likely to be destroyed by the combination of water and wind accompanying a Category 5 storm, said Robert Eichorn, former director of the New Orleans Office of Emergency Preparedness. ...Amid this maelstrom, the estimated 200,000 or more people left behind in an evacuation will be struggling to survive. Some will be housed at the Superdome, the designated shelter in New Orleans for people too sick or infirm to leave the city. ...Survivors will end up trapped on roofs, in buildings or on high ground surrounded by water, with no means of escape and little food or fresh water, perhaps for several days. ...But just getting into the city will be a problem for rescuers. Approaches by road may be washed out.
    ...Stranded survivors will have a dangerous wait even after the storm passes. Emergency officials worry...that the floodwater could become contaminated with sewage and with toxic chemicals from industrial plants and backyard sheds. Gasoline, diesel fuel and oil leaking from underground storage tanks at service stations may also become a problem ... .”

    (3b, pg. 2 of 3), from The Times-Picayune :
    “It probably will be at least four days after the hurricane before the corps attempts to begin removing water from the city... . Pumping won't be an option. Swamped existing pumping systems in Orleans and Jefferson will be useless. Pumps can be brought in, but their capacity is limited. ...It will take six months to pump out Jefferson Parish...[b]ut at that point, areas of New Orleans will probably still be underwater and may take many more months to empty.
    ...With few homes left undamaged, Red Cross and FEMA officials will have to find property for long-term temporary housing for a possible 1 million refugees. After Hurricane Andrew, some of the 250,000 residents of south Miami-Dade County forced to find temporary housing remained in federally financed mobile homes for 2½ years.”

  • (4), FEMA's "Hurricane Pam" exercise; 23 July 2004:
    “Hurricane Pam brought sustained winds of 120 mph, up to 20 inches of rain in parts of southeast Louisiana and storm surge that topped levees in the New Orleans area. More than one million residents evacuated and Hurricane Pam destroyed 500,000–600,000 buildings. Emergency officials from 50 parish, state, federal and volunteer organizations faced this scenario during a five-day exercise held this week at the State Emergency Operations Center in Baton Rouge.
    The exercise used realistic weather and damage information developed by the National Weather Service, the U.S. Army Corps of Engineers, the LSU Hurricane Center and other state and federal agencies to help officials develop joint response plans for a catastrophic hurricane in Louisiana… . A partial summary…follows:

    • The debris team estimates that a storm like Hurricane Pam would result in 30 million cubic yards of debris and 237,000 cubic yards of household hazardous waste.
    • The interagency shelter group identified the need for about 1,000 shelters for a catastrophic disaster. …In a storm like Hurricane Pam, shelters will likely remain open for 100 days. …State resources are adequate to operate shelters for the first 3–5 days.
    • The search and rescue group developed a transportation plan for getting stranded residents out of harm's way…and established a command structure that will include four areas with up to 800 searchers.
    • The medical care group…determined how to implement existing immunization plans rapidly for tetanus, influenza and other diseases likely to be present after a major hurricane[; and,] …how to re-supply hospitals around the state that would face heavy patient loads. …The medical action plan includes patient movement details and identifies probable locations, such as state university campuses, where individuals would receive care and then be transported to hospitals, special needs shelters or regular shelters as necessary.
    • The school group determined that 13,000–15,000 teachers and administrators would be needed to support affected schools… . Staffing strategies include the use of displaced teachers, retired teachers, emergency certified teachers and others eligible for emergency certification… . The group discussed facility options for increasing student population at undamaged schools and prioritizing repairs to buildings with less damage to assist in normalizing operations…[and] for placement or development of temporary schools near temporary housing communities built for hurricane victims.
    The Hurricane Pam scenario focused on 13 parishes in southeast Louisiana — Ascension, Assumption, Jefferson, Lafourche, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John, St. Tammany Tangipahoa, Terrebonne. Representatives from outside the primary parishes participated since hurricane evacuation and sheltering involve communities throughout the state and into Arkansas, Mississippi and Texas.”

  • (5), reprint of a National Geographic  article from October 2004:
    “ "The killer for Louisiana is a Category Three storm at 72 hours before landfall that becomes a Category Four at 48 hours and a Category Five at 24 hours – coming from the worst direction," says Joe Suhayda, a retired coastal engineer at Louisiana State University who has spent 30 years studying the coast.  ...The chances of such a storm hitting New Orleans in any given year are slight, but the danger is growing. Climatologists predict that powerful storms may occur more frequently this century, while rising sea level from global warming is putting low-lying coasts at greater risk.1, 2
    ...Yet just as the risks of a killer storm are rising, the city's natural defenses are quietly melting away. From the Mississippi border to the Texas state line, Louisiana is losing its protective fringe of marshes and barrier islands faster than any place in the U.S.1, 2  Since the 1930s some 1,900 square miles (4,900 square kilometers) of coastal wetlands — a swath nearly the size of Delaware or almost twice that of Luxembourg — have vanished beneath the Gulf of Mexico...[and] the state continues to lose about 25 square miles (65 square kilometers) of land each year, roughly one acre every 33 minutes. ...Delta soils naturally compact and sink over time, eventually giving way to open water unless fresh layers of sediment offset the subsidence.  The Mississippi's spring floods once maintained that balance, but the annual deluges were often disastrous. After a devastating flood in 1927, levees were raised along the river and lined with concrete, effectively funneling the marsh-building sediments to the deep waters of the Gulf.
    ...Such high stakes compelled a host of unlikely bedfellows — scientists, environmental groups, business leaders, and the U.S. Army Corps of Engineers — to forge a radical plan to protect what's left. Drafted by the Corps a year ago [2003], the Louisiana Coastal Area (LCA) project was initially estimated to cost up to 14 billion dollars over 30 years, almost twice as much as current efforts to save the Everglades. But the Bush Administration balked at the price tag, supporting instead a plan to spend up to two billion dollars over the next ten years to fund the most promising projects.”

  • (6), reprint from an article published in Der Spiegel  on September 1, 2005 [after the disaster]:
    “In 2001, FEMA warned that a hurricane striking New Orleans was one of the three most likely disasters in the U.S. But the Bush administration cut New Orleans flood control funding by 44 percent to pay for the Iraq war… .
    A year ago [2004] the U.S. Army Corps of Engineers proposed to study how New Orleans could be protected from a catastrophic hurricane, but the Bush administration ordered that the research not be undertaken. After a flood killed six people in 1995, Congress created the Southeast Louisiana Urban Flood Control Project, in which the Corps of Engineers strengthened and renovated levees and pumping stations.()  In early 2001 [before the terrorist attacks of 9/11], the Federal Emergency Management Agency issued a report stating that a hurricane striking New Orleans was one of the three most likely disasters in the U.S., including a terrorist attack on New York City. But by 2003 the federal funding for the flood control project essentially dried up as it was drained into the Iraq war. In 2004, the Bush administration cut funding requested by the New Orleans district of the U.S. Army Corps of Engineers for holding back the waters of Lake Pontchartrain by more than 80 percent.  Additional cuts at the beginning of this year [2005] (for a total reduction in funding of 44.2 percent since 2001) forced the New Orleans district of the Corps to impose a hiring freeze. The Senate had debated adding funds for fixing New Orleans' levees, but it was too late.”

[From my ‘Cassandra Disaster’ workup files, with thanks to Kathy Epling for downloading most of the primary documentation: without her assistance, creating the timeline above would have been impossible.]


If you don't understand mathematics, you are at the mercy of those who do.

(You will also miss many of the good jokes. For example, a spokesman from The Economist  was asked why, when unemployment was increasing, the Dow was going up. “Although unemployment is still increasing, the rate  of increase has slowed,” he replied, “and traders have taken this for a positive sign.” After a pause, he continued “These people are so desperate for good news that they are watching the second derivative.”  And, I might add, with unemployment edging 10% and still increasing, and the Dow again playing footsie with ten thousand, they still are.)

For example, if you don't understand what a "statistically valid sample" means or the difference between the three types of average,

you should expect to be played for a sucker and to have your pocket picked on a regular basis; because, both politicians and advertisers routinely use misleading statistics(1, 2) — an example of Twain's line “Figures don't lie, but liars can figure.”[]
    There is an entertaining(!) way to learn how bogus statistics are used in politics and advertising: I recommend you buy a copy of How To Lie With Statistics  by Darrell Huff  [see (1) and (2)].

But, on the issue of mathematical literacy, the numbers are dismal: (statistically) almost half of American consumers don't understand compound interest, a fact cogently demonstrated by their use of credit cards.1, [2]

The State of South Dakota places no limits on credit-card interest rates, and, for this reason, a number of credit card companies have chosen it for their national headquarters. Among these is [Premier?], which offers a card with an A.P.R. (Annual Percentage Rate) of 79.9% (!), a fact which leaves one hard pressed to choose among appalling conclusions:
1) that, in the absence of legal sanction, usury becomes an acceptable business practice;
2) that Premier would not offer a card with a 79.9% interest rate unless there was some consumer demand for it;  and,
3) that Premier card-holders seem unaware they could get better rates from Mafia loan-sharks.
But even that appalling A.P.R. pales in comparison to the rates charged by some "payday loan" businesses: in those states where the industry is still allowed to function, borrowers may be charged an annualized rate as high as 450%. In the end, I can only quote Brecht: “Bank robbery is strictly amature stuff.  Professionals run banks.”
Compound interest is also the central political/economic issue surrounding both the market consolidation in the 1980's and ’90's (when many of the buyouts — especially the hostile takeovers — were financed by junk bonds) and the rising national debt (with its impact on national security).[1, 2]

But we have come to depend on borrowing to sustain our economic growth; as a result, our economy has been functioning with numbers that can't and don't work. Using the most conservative statistical studies, over 98% of the money is held by less than 2% of the people; yet, over 67% of the economy is dependent on consumer spending: we have accepted as functional a model where more than two-thirds of the enconomy depends on the spending of people who have less than five percent of the money.

As a personal, philosophic observation . . .
 . . .I tend to divide peoples' thinking into two broad categories: the mathematical and the theologic. The mathematical mind holds all truths tenatively, prefers statistics, values proofs, and — in the absence of demonstration — does not give a great deal of weight to statements from established authorities. The theological mind, on the other hand, prefers tradition, values statements from established authorities, and holds certain truths as absolute. There is, of course, considerable overlap in these ways of thinking; but, on many crucial issues — especially those where no absolute proof is possible — political/social debate becomes moot, because compromise is effectively impossible. With age, I've found that Mencken's observations on the value of debate have become, though no less comfortable, increasingly cogent.

In Capital,  Marx made what is arguably the most trenchant, historical analysis of early-industrial Capitalism that has ever been undertaken; and, in so doing, he demonstrated the powerful influence of economics on what may be termed ‘the politics of history.’

Like Kant, Schopenhauer and Hegel, Marx was attempting to create a philosophic model of history — to find "laws" of history (analogous to the laws of physics) that could ultimately be used to predict the future. While none of these efforts were successful, each attempt has provided useful insights into differing historic forces.
That said, the predictive-historic model of Marx and Engels has not proven accurate: according to Communist theory, the flaws in Industrial Capitalism would force workers to mount a revolution against the State. However, contrary to theory, the Communist revolutions of the 19th and 20th centuries were mounted by rural, agrarian peasants; and, the closest the United States ever came to a Marxist Crisis was the Great Depression, when, by electing Franklin Roosevelt, voters chose to modify the system rather than to overthrow it.(1)

Later, during the Red Scare of the 1950's "Communism" and "Capitalism" ceased to have an economic meaning and became, instead, essentially expressions of religious faith.[]  This had, in the kindest of terms, a detrimental effect on political and social policy; and, the same thing is now happening to economic arguments about "regulated"  vs. "free" markets — arguments made, curiously or ominously, by some of the same interests.
Also, according to classic Marxist theory, if people are appropriately educated, they will accept the primacy of social interests when these conflict with their own individual, personal interests; whereas, Capitalism assumes people will usually act in their own immediate, economic interest. Both models are sometimes  correct: we all support issues that may not necessarily be in our own, immediate interests;(2)  and, we all sometimes ignore social demands (i.e., the NIMBY factor).
My own (unsupported) theories give a great deal more weight to market forces that are not  primarily economic as, for example, advertising and human psychology; so, if I have to lay a bet, I'll put my money on good, old-fashioned (small f ) free market greed. To quote an economist from a recent BBC discussion of the global recession, “you may not need to dust off your copies of Marx and Engels; but, you should probably expect to dust off your copy of Keynes.”

(1) It may come as a surprise to Reagan Republicans, but what is now described as the "social safety net" (Federal support for the unemployed, elderly and disabled) is not an example of ‘creeping Socialism’ invented by F.D.R.: the basic concepts date to the late 19th century and were first advanced as formal state policy by arch-conservative Otto von Bismarck (Chancellor to Kaiser Wilhelm II). In esse, Bismarck's argument was that, with the rise of industrialism, agrarian peasants had become factory workers; and, when there was no work during (periodic) market recessions,(1 ff.; 2) workers thus displaced to the cities and divorced from their land could not feed themselves. Likewise, because factory workers no longer owned their means of production (the family farm), those who became too old or ill to work would not be supported as a matter of course by younger, hale members of their own families. Starving workers had literally nothing to lose and, in desperation, might well mount a revolution against the State.[]
(2) At about the same time as the above — and also in Germany — another approach to solving the same problem was implemented by the Krupps, who took responsibility for housing their workers and supporting those who had become too old to work. There are also other examples of late 19th/early 20th century paternalistic Capitalism practiced in England (where Cadbury, the largest chocolate manufacturer, built a model village for their workers) and in the United States by, among others, the Ford Motor Company.

Although the Marxist–Leninist models have failed in a global context, it were foolish in the extreme to ignore the social and historic impact of economics on politics.

Money doesn't talk  it screams.”
  — Dylan
The major financial services entities — large investment banks, stock and commodity exchanges, credit-rating agencies and insurance companies — have become effectively independent global powers, and — because this is (historically speaking) a new economic development — neither nation-states nor international political organizations are legally structured to control or regulate them.

  • Currency traders destabilized the economies [hyperinflation] of several southeast Asian countries in the late 1990s, and at the time of this writing [November 2010] — as stock and bond investments seem increasingly problematic — traders have again begun pouring money into Asian currency markets: both Thailand (one of the original victims) and China have taken action to protect their currencies; and, the Japanese government has expressed official concern that the monetary influx may push their fragile economy back into stagnation.(1)
  • At the November 2010 meeting of the G-20, Brazil complained that recent action by the U.S. Federal Reserve ["quantitative easing":  pumping billions of dollars into the economy by buying Treasury bonds — in effect, creating "new" money] has kept interest rates so low that major investment banks looking for greater returns are flooding their (already) rapidly-developing economy with so much foreign capital that they fear the creation of economic bubbles.(1), 2

  • Goldman-Sachs was involved in selling derivatives to the government of Greece which, when they went bad, triggered a financial crisis in the value of the euro [see also below].  And in 2010 they made a billion pounds [one billion, six hundred million dollars (give or take a couple hundred million)] trading in agricultural commodities,  a practice which, by running up the price of staple foods, contributes to both world hunger and (at least arguably) to political instability in states dependent on food imports.(1, 2 ff.)

  • Moody's action downgrading bond ratings triggered economic crises in Greece, France, and Spain; downgraded bond ratings caused interest rates to soar to over 6% when the government of Ireland refinanced its short-term debt;(2) and, cuts to government spending demanded by credit-rating agencies have resulted in wide-spread strikes and street protest actions in Greece and France. (As of this writing, it is far from certain that the present French government will survive — similar pension reforms brought down a previous government.)

  • When Standard and Poore's notified the Federal government that — for the first time in history — it was planning to downgrade the U.S. credit rating [from  AAA  to  AA+], it cited the ballooning budget deficit and a breakdown in the political process needed to address it. When the Administration pointed out a two trillion dollar error in  S&P's math, the agency proceeded with the downgrade but omitted the budget deficit figures in its public announcement.

    Although an evaluation of essential governmental stability is one variable used by credit-rating agencies in determining the risk of default when rating sovereign debt, downgrading the debt of a stable, first world government — and the world's largest economy — for essentially political reasons is (and remains) unprecedented. [The downgrading of various EU member-states was done for financial  reasons.]
    Further, the credit-rating agencies do not have a sterling track record in evaluating risk: S&P (along with Moody's and the other major credit-rating agencies) gave a triple-A rating to Enron (before its collapse), Lehman Brothers (before its collapse), as well as a large number of the now-notorious mortgage-backed securities [derivatives or, as they are (now) commonly described, "toxic assets"]. In addition, agencies are paid for their ratings by the businesses and governments issuing  the bonds instead of the investors who buy  the bonds (a change that occurred in the 1970s), and many critics contend this payment model creates a fundamental conflict of interest.
    [Also, and for the benefit of those who collect conspiracy theories:]  (1) None of the other major credit-rating agencies downgraded the U.S. debt, although Moody's announced that it was placing the United States on a "watch list."
    (2) S&P is owned by Rupert Murdock,[1, 2] and the downgrade occurred shortly after the FBI announced an investigation into NewsCorp's alleged bribing of police in Great Britain, which could — if proven — expose the company to hefty fines [it is illegal for a U.S.-based company to bribe officials of foreign goverments].

  • When Great Britain imposed a one-time tax on banks, many of the major players threatened to move offshore; and, similar threats were made to the U.S. government when banking reform and legislative tax-code changes were proposed in response to the economic meltdown.

  • The major financial service businessesnot  the governments — control the world's economy because, while there is no intrinsic, underlying value to capital instruments, only five percent of the world's money is “tied to trade or production;” the rest “is purely speculative.” [1 ff.]  [Dr. David Graeber, author of  Debt: The First 5,000 Years]

When the decisions taken by boards of directors of private corporations can wreck the economies and dictate political policy to nominally independent nation-states regardless of the will of their citizens, I will argue that these corporations are no longer just businesses, but (functionally) political states in their own right. And these new quasi-states are not  democracies, either: their controlling structures are analogous to 18th-century monarchies, with the CEO (as king) and the nobles (board of directors) holding power unless and until overthrown by a revolution (of stockholders).
Further, I will extend the argument and contend that today — far from being "the world's only remaining superpower" — the government of the United States has less  effective ability to project its power globally than Goldman-Sachs, Moody's or Standard and Poors, because maintaining military readiness and prosecuting military actions are both damnably expensive.()

(1) Since the Bush(minor) Administration instituted the TARP policy, the Federal Reserve has been pumping money into the banking sector, with the result that the banks are “awash in money” [NPR, Morning Edition 10.11.10] and interest rates remain at an all-time low. The hope  was that the recover(ing/ed) banks would loosen credit to consumers (creating more consumer spending), businesses (who would respond to more consumer spending by hiring more workers, thus lowering the unemployment rate), and both present and potential homeowners (since mortgage interest rates, reflecting the prime, are also at an all-time low) to "revive" the housing market.[1 ff.]
Unfortunately, it hasn't quite worked out as planned: taking advantage of changes in accounting rules, the recover(ing/ed) banks have not  written down their "toxic assets" or loosened credit, but instead declared record profits and paid the [all-too-] usual astronomical bonuses to their top executives.()  And prototypical "nervous investors" have been moving the new money into commodities like gold (which reached yet another new price high of over $1400/oz. in November of 2010), oil and wheat.1, [2, 3 ff.]

(2) The Irish financial crisis provides both uncomfortable parallels to the situation in the United States and a troubling demonstration of the power of the major investment banks.
As the repercussions of the U.S. banking collapse spread, Ireland's development boom [read ‘bubble ’] came to an abrupt end and its largest bank became insolvent.[1, 2]  In response to the imminent collapse of a financial institution that was ‘too big to fail,’ the Irish government bought the bank outright (at two-thirds of its nominal value), financing the purchase with short-term government bonds. As the banking collapse spread, the government was again forced to step in to ‘rescue troubled banks;’ and, in the end, wound up completely taking over the three largest banks and owning a controlling interest in two others. In addition to a high rate of return, investors demanded that the Irish government institute stringent austerity measures, and the government complied. When the bonds fell due, bondholders, feeling the Irish government had paid too much for the banks and worried about the government's ongoing budget deficits, forced the refinancing rate to over 6% — an almost unheard-of rate schedule for a stable, first-world government.
In November of 2010 — after the initial bond sale was successfully concluded — one of the largest banks in the E.U. (still worried about the security of their investments despite the Irish government's austerity measures) abruptly dumped its Irish bonds, forcing the bond price down in less than a week  to a point where most economists felt the Central Bank would be forced to step in to provide a Greek-style bailout.

In the first two weeks of November 2010, the interest rate on Irish bonds rose to almost 8% and the the banks continued hemorrhaging money: the Irish National Bank — Ireland's largest, now wholly government-owned — had, as economists describe it, a 14 billion dollar ‘outflow’ and the Irish government, with a budget deficit estimated between 70 and 100 billion dollars in a country with a population of 4 1/2 million people, had a ‘sovereign debt crisis.’
At first, wishing to preserve its ‘economic sovereignty,’ the Irish government resisted pressure from both the E.U. and the IMF for an emergency bailout, pointing out (correctly) that it had sufficient funds from its last bond sale to assure its solvency well into next year. But, fearing the ‘contagion in the [private, corporate] bond market’ would spread to other countries (most notably Spain and Portugal) once again endangering the value of the euro, finance ministers from Brussels and IMF officials flew to Dublin, and in less than a week “the Irish government was forced to capitulate.”  In the words of one local resident, “we have handed over — literally — our economic sovreignty to the IMF and [European] Central Bank.”
“The bailout comes at a price: …the IMF is expected to impose stringent austerity measures,” including tax increases and (even larger) cutbacks to social services and government pensions because [EU] authorities are worried that “the bond markets may bring pressure to bear on Portugal or its larger neighbor, Spain.”  [BBC, 22.11.2010]

In a troubling update, the bond markets did indeed “bring pressure to bear” on Portugal and  “its larger neighbor, Spain;” and, by August of 2011 the crisis spread to Italy and markets began to express concern about French banks as well. But, in an emergency meeting between the President of France and the Prime Minister of Germany, EU leaders proved politically incapable of effective action.
The problem had always been the sheer size of the Italian economy and the amount of its debt; and, it was generally understood that the only effective, long-term solution to the spreading crisis would be fiscal union: instead of EU member nations issuing their own bonds (with the weaker, less solvent states being 'picked off' one-by-one by the credit-rating agencies and the bond markets), there would have to be EU bonds guaranteed by all  the member-states.
But, between large holdings in Italian bonds, their own sovereign debt, and emergency loans to the EU Central Bank for the Greek, Irish, and Portugese bailouts, French banks were overextended; and, because only days prior to the summit figures were released indicating that the German economy had stalled (zero growth during the preceding quarter), thrifty German taxpayers were in no mood to provide the needed cash.
And the United States is not immune to the EU debt crisis: the U.S. owns an estimated 36 billion dollars worth of Spanish and Italian bonds, some held by the Federal Reserve and the rest by various private banks.
But U.S. banks and pension funds also hold a whopping half-trillion in shares of large EU banks and (because the market is neither tracked nor regulated ) an unknown amount in credit-default swaps ; so, were any of the major EU banks to collapse, the total loss to the U.S. would be at least  a half-trillion dollars and could easily be several times higher: and a loss on this scale would likely push the nation into a full-scale depression.

In addition, whenever one of the major credit-rating agencies downgrades a nation's sovereign debt, the crisis also affects capital markets around the world, often creating wild swings in the major indices:

It should be noted that a credit downgrade only (initially) affects capital markets: stock markets may plunge by 5% in a single day (as happened in August of 2011), but the dollar value of (for example) a nation's exports remains the same.[1, 2 Unfortunately, the "ripple effect" of a collapse in capital markets is not confined to the value of corporate paper and eventually spreads to embrace entire economies.

this was seen on a relatively small scale when the Greek and Irish debt was downgraded, and again — but on a major scale [3–5%] — when the crisis spread to Spain and Italy.
So we are living in an economic reality where, if a private corporation has enough capital value (e.g. Lehman Brothers) or enough influence (e.g. Moody's or Standard and Poore's), decisions taken by its board of directors can, at the very least, determine the financial policies of nominally independent nation-states,1, (2) and — in a worst-case scenario — might easily lead to a complete collapse of world financial markets.
And, as the capital value of corporations has increased and markets have become more tightly integrated over the last few centuries, history provides us neither present comfort nor future reassurance. 
In support of the argument made above,1, 2  please note the terms of discussion (not  chosen by me)  sovereign debt crisis,  the Irish government was forced to capitulate,  economic sovereignty,  the IMF is expected to impose...austerity measures,  and  bond markets may bring pressure to bear on Portugal or...Spain.  Or consider the market swings in August of 2011 (after the S&P downgrade), when stocks plunged 5% in a single trading session; the interest on U.S. bonds fell to below 2%; and the price of gold rose (at one point) to $1,850/ounce.

For an uncomfortable and timely example, Obama's National Security Advisor listed the recession as the most important risk factor affecting the security of the nation.

The primary risk to the nation's security is both simple and obvious: it takes money to wage war;()  but, there are also significant implications for the U.S. world-wide projection of power: according to one European economist, “the United States' continued hegemony on the world stage” may be called into question because the U.S. role as a world leader has been “supported by borrowed money.” []  The Federal stimulus package [ref. Keynes], corporate bailouts, and on-going wars in the Middle East all enlarge Federal deficits, which are funded by U.S. Treasury bonds.1, [2]  Until November of 2008, Japan was the leading buyer of U.S. bonds, closely followed by China. After November of 2008, China took the lead with Japan in second place; and, it takes little imagination to understand the profound foreign policy implications of this position.[]
There are also national security concerns involving international trade and access to raw materials — including oil. In late 2010 China caused consternation in both Japan and the U.S. by raising prices and placing restrictions on the export of rare earths vital to high-tech manufacturing; and, by January of 2011 loans to third-world countries from the Chinese Development Bank (which has an official mandate to execute governmental policy) had surpassed investments from the World Bank for the first time (exceeding 100 billion dollars, half of it in Chinese currency), a move widely seen as an attempt by the Chinese government to secure raw materials for its expanding domestic economy.
And the global recession has broader implications for U.S. security as well: there have already been significant reductions of aid to the third world from both international and private donors, which will not  increase political or social stability in some of the world's most problematic regions (e.g. Somalia and Sudan); U.S. deficits have led Russia and China to suggest creating a "neutral" currency to replace the dollar as the world reserve currency; and, driven by ever-increasing doubts in the stability of stock markets, investors have been moving money into commodities futures, driving up the price of oil and wheat.1, (2 ff.)

Likewise, a broad knowledge of history and a skeptical eye cast on current events will frequently yield cogent results. For example, beginning in the 1980's I noticed striking similarities to the Gilded Age

the rise of monopolies, resulting in corporate entities like Standard Oil, A. T. & T. and Bell Telephone (Ma Bell) “consolidation in the <fill in the blank> sector,” resulting in corporate entities like Enron, WorldCom, and CitiGroup
[see the sh  Passport Risks database for information on Microsoft's abuse of its “dominant market share” ]
the abuses of the Robber Barons, like Rockefeller I the abuses of modern Robber Barons, like Ken Leigh (sp.?)
unregulated markets allowed the creation of bubbles like the South Sea Bubble() unregulated markets allowed the creation of bubbles like the DotCom Bubble1, (2)
manipulation of capital markets by men like Jay Gould manipulation of capital markets by men like Michael Milken()
the creation of news/media "empires" by men like William Randolph Hearst, which corrupted the political process in the United States (contributing to, among other things, the Spanish-American War) the creation of news/media "empires" by men like Rupert Murdock, which corrupted the political process in the Great Britain and [arguably] the United States (with Fox News contributing to a confrontational and dysfunctional style of national political debate) [1 ff.; 2]
outright fraud in capital markets (for example [check: Stavisky may have to move here] [or] by selling phony oil stocks) outright fraud in capital markets (for example by Bernie Madoff)
corporate money corrupting the political process, like the (notorious) suitcase of money paid to Congressional members by the builders of the transcontintal railroad resulting in the granting of a 100-mile wide right-of-way across the entire nation corporate money corrupting the political process, like the (notorious) campaign contributions paid to Congressional members by the entertainment and software industries resulting in the Digital Millennium Copyright Act
corporate abuses following beneficial legislation: for example, the railroads demanded money from local communities for routing and train stations; and, those towns that didn't pony up were bypassed
[see the recently published book  Railroaded for more on this topic ]
corporate abuses following beneficial legislation: for example, the entertainment industry used the DMCA to sue parents of teenagers who downloaded songs[]
[see  (1 ff.),  (2), and  (3) for more on the DMCA]

which — in a singularly misfortunate contemporary parallel — ended with the Great Depression. As the old saw has it, “those who do not study history are condemned to repeat it;”  to which may be added, “and they will drag the rest of us along for the ride.”

If you use a computer that is not crippled with Internet Exploiter 7+ [it doesn't support web standards, so you can't access FTP sites], try searching Project Gutenberg for an online copy of Adam Smith's Wealth of Nations: search for the section that discusses what happens when capital accumulations are re-invested in capital instruments ignoring [keyword] “cultivation.”

Referring to the history of 1890  1939 is admittedly depressing, and to Smith's book (published in 1776) even more so. But it may help you manage your affairs during an economic situation that is both frustratingly and dangerously familiar.

[References: Heilbroner, The Worldly Philosophers;  Russell, A History of Western Philosophy;  behavioral economics]

In the Great Game of Politics, everyone  is a "special interest:"  on every publicly debated issue, know who wins and who loses; and, who gets paid and how much. (For the benefit of those too young to remember Watergate, “follow the money.” )  Since issue-advocates will, by definition, only present arguments in their own interest, you will have to do your own, independent research if the arguments on both sides seem compelling. I suggest finding and reading the actual text of (proposed) laws; and, you should always  check statistics, especially when the (unqualified) word ‘average ’ appears.()

I would further suggest regarding all media punditry with a profoundly skeptical attitude,(1, 2)  because many examples of smoke-and-mirrors political/economic discourse abound.  These include

  • all the brouhaha about "market forces."  According to the interests using the term, this usually means the law of supply and demand,()  which ignores other  market forces including advertising, centripetalism, multiplication of entities, growth pressures,()  bell-curve demographic shifts, and "Pentagon accounting". It also ignores markets that are not controlled by the law of supply and demand.
  • (Politically) Unacceptable Market Forces

    Among the market forces you will not  hear discussed are

    1. Centripetalism
      Centripetalism is the tendency of mature market economies toward ‘consolidation.’  The impacts and (negative) effects are exactly those of monopolies or vertically-integrated cartels; but, the causes result from different market pressures.

      Competition: The Big Lie
      In a pious invocation of the law of supply and demand, businesses often cite increased competition as an argument for deregulation.1, (2 ff.)  This is, to quote the late Susi Cleis, bullshit.[]  Moreover, it is bullshit of the highest order. Competition is never  in the interest of business, since losing customers and/or reducing prices reduces profits: competition (an open market) is in the interest of consumers.1, [2]
      ComCast, as one example, was recently cited for reducing the internet bandwidth [slowing the speed] of competing media streams, including HBO's Showtime and Public Broadcasting channels;(1 ff.; 2) and, its recently announced acquisition of media content sources (including a movie studio and a network TV channel broadcasting both news and entertainment) is a classic example of vertical integration.[1 ff.]  Intel (with a 70% market share) has been sued by both the E.U. and (most recently) the U.S. Department of Justice for raising the price of its chips to manufacturers who (also) buy chips from other vendors [HP and Dell, among others, were cited as injured parties in the action]; and, it is not at all difficult to find numerous other examples of anti-competitive practices — most notably in the hostile takeovers (mergers and acquisitions) common in a mature market:(1, 2)  Exxon-Mobil is using its windfall profits from the runup in oil prices to buy the largest natural gas supplier in the U.S. (for over $40 billion);[1 ff.]  in addition to buying the MCI/WorldCom revenant and striking a deal with Microsoft for (default) Messenger phone service [see Note 56 in the sh  Passport Risks database], Verizon has been buying up its wireless competitors;[]  and, 2009 has seen several mergers in the pharmaceutical industry, a market already benefiting from corporate-sponsored anti-competitive legislation.[1, 2]
      Centripetalism and Mature Markets
      In nascent markets, competition is often in terms of product, less frequently service; and, demand usually leads supply. Monopolistic pressures result from attempts to "corner the market:" to take greater control of a market by driving competitors out.
      In a mature market, competition is usually in terms of service; and, supply exceeds demand. Centripetal pressures result from attempts to "grow the business:" to gain a greater market share by offering better service or a cheaper price to the competitor's customers and inducing them to switch.
      As an hypothetical example: when widgets first came on the market, there were only a few manufacturers, so production was limited and prices were high. Good profits created more competition: some made generic widgets; some made customized widgets; some made very inexpensive widgets; and, with greater supply, prices declined. After a time, everyone had a widget and the market became saturated. But market pressures on manufacturers to continually increase their sales volume did not abate while, at the same time, the market was moving from selling new  widgets to selling replacement  widgets. To gain an increased market share in a smaller-volume market, each vendor had to convince customers buying replacement widgets to buy their particular brand: they had to keep the customers they had, and get new customers who switched from a different brand. Vendors competed for greater market share by advertising, offering discount prices or special incentives; or, increasingly, by offering to provide an associated service.
      Eventually, the only way to get a significant number of new customers is to take over the competitor's business completely: the larger, wealthier business buys out a smaller competitor. Over time, this happens with increasing frequency: it becomes "consolidation in the <fill in the blank> sector."  Sometimes the buyout is cash; sometimes it is cash and stock (of the buyer or of the newly-merged entity); and, sometimes the cash is raised by selling high-risk securities — the now-classic leveraged buyout using junk bonds. Sometimes the larger company offers to buy stock directly from the stockholders, bypassing a recalcitrant board of directors in a ‘hostile takeover.’ ()  But the economic pressure is the pressure to grow, not by opening a new market or enlarging an existing one, but by taking market share from a competitor.(1 ff.)
      One significant effect of this soi-disant  “consolidation” is the loss of jobs, as workers are laid off from the newly-merged entity (typically described as “increasing efficiency” by “downsizing” the company). Over time this amounts to a significant number of unemployed (former) employees, not all of whom can find similar work and not all of whom can be effectively re-trained for new positions, with older workers, lower-skilled workers, and workers without degree credentials among the most vulnerable. These displaced workers represent a twofold economic loss, both as added expense borne by the social safety net and a net loss of consumer buying power.
      See also [1],  [2 and 3],  [4], and  [5 and 6]  for more information related to this topic.
      Instead of products, a considerable market advantage also accrues to services and to intangibles like information and entertainment (which, after the initial cost of production, can be replicated and sold repeatedly). This type of market I call a mature market. It is not entirely an information or service-based market; but, over time, those sectors do evolve an increasingly dominant market position.

    2. Multiplication of entities 
      This means increasing the number of middlemen/vendors between a source-supplier and the end-user; and, it is a common side-effect of deregulation. For example, when electric utilities were deregulated, each component service was separated and each is now billed separately. Instead of one entity delivering the service at a fixed margin of profit, there is one company generating power, another controlling and maintaining the distribution lines, and yet another providing local metering and billing services to the customer. The generator sells power (with a margin of profit determined by the market) to the company that maintains the regional grid; that company re-sells the power (also with a margin of profit determined by the market) to the company that reads the meters and bills consumers (again, with an added margin of profit); so, the consumer is now paying for the profits of all three. No single entity is overcharging for their service, but the poor sod at the end of the food chain is getting royally screwed.1, [2]

    3. Pentagon accounting
      ‘Pentagon accounting’ is my term for an accounting technique in which prices are determined using detailed, itemized cost-plus margins of profit instead of a global percentage.  Its effects on the final (consumer) price are analogous to those of multiplied entities (above): end-user prices skyrocket (the DoD's $600 toilet seats being a notorious example); however, in this case, the multiplication of profits occurs inside  a single entity instead of between or among several.
      Outside of Pentagon suppliers, this type of accounting is most frequently encountered in billing for professional services. For example, a lawyer will charge for his time at a set, hourly amount; but, the costs of everything from filing papers to telephone calls and photostats will be itemized and charged separately.

      Another area where "Pentagon accounting" is endemic is health care, where the practice is described as ‘fee for service.’  [get/link itemized hospital bill example]
      Currently [2009], there is considerable political discussion about reforms to control costs in the health-care delivery system. The only demonstrably effective cost-control mechanisms all address the issue of "Pentagon accounting:"  MediCare sets prices on a regionally-adjusted global margin of profit basis; and, doctors who accept MediCare agree to be bound by its fee schedules.()  Likewise, non-profit health insurance/providers like Kaiser Permanente control costs by paying doctors a salary, instead of itemizing services. In each case, costs are controlled on the supply side, since demand cannot  impose effective cost-control mechanisms.

    4. Paper (commodity) trades 
      The market in commodities futures was originally devised to raise money for businesses producing commodities such as food or raw materials. In order to raise the capital needed to produce the commodity, producers would contract their future  output or product for sale at a fixed price. Buyers would purchase these contracts, gambling that the market price of the commodity would be higher when it was actually available for sale; but, grotesque distortions in market prices occurred when traders bought and sold futures (paper contracts) without taking delivery of the commodities they represent (which at least suggests a fix), as exemplified by the world-wide rise in oil prices between 200(1? - date of Chevron/Texaco merger) and 2008. [timeline stats]

      The deleterious effects of paper trades can be seen in the price of oil on the world market: since the middle of 2007, Trilby Lundberg [sp?] has publicly stated that the rising price of gasoline is not  related to increased demand. Instead, prices were driven up to a high of over $145/barrel because oil futures became an investment surrogate for stocks:[1, 2] the financial markets were showing signs of strain caused by trading in derivatives (whose value was based on dubious mortgages1, 2); and, (rightly or wrongly) commodities traders felt that oil futures (backed by a tangible, saleable  product) were a more secure investment.[1, 2 ff.]
      As market demand for gasoline fell in response to the price increases, crude oil was stored awaiting a price rebound — creating an artificial shortage — and, when onshore storage facilities filled (and the storage price went up), tankers filled with crude were actually "parked" in ports and rivers around the world. [get stats and river "parking" ex. - Scotland?]
      [N.B.:  Although most consumers are (painfully) aware of gasoline prices, in broader economic terms the price of gasoline is relatively unimportant: what you need to watch is the price of diesel.]

      The problem of "trading paper" also adversely impacts other commodities: like the New York (Wall Street) stock and commodities markets, a market for agricultural futures was established in Chicago (the Chicago Mercantile Exchange); and, paper trades became one factor leading to the rise of "corporate farming," influencing both the price and quality of food [get timeline stats].[1, 2]  With the deepening recession, “traders moving money based on…the value of the dollar or the price of oil” into agricultural commodity futures have also had a significant impact on the price of food on the world market;(1 ff.; 2) and, unlike the tightly controlled stock markets (which require membership), “anyone with an Internet connection can trade [in commodities]” — you don't even need a computer, because there is a mobile phone app.

      Market-driven increases in the price of staple foods like cooking oil, corn, wheat, sorghum, rice and soybeans increases starvation among vulnerable third-world populations

      (Because of its use as animal feed, increases in the price of corn are particularly problematic, driving up hog, cattle and chicken prices which, in turn, impacts protein consumption among the poor. At the same time, corn prices are also driven by the ever-increasing demand for ethanol, as – to a lesser extent – is the price of cooking oil used for biofuel.
      {In an unhappy update, by August of 2011 over five times as many futures contracts were being written as before the recession began, and corn prices “doubled over the last 15 months” [NPR/ATC 24 August 2011]; while, at the same time, the world population grew to 7 billion — and 1 billion of them [14%, more than one in ten] were hungry.}
      Issues of adequate dietary protein also become more acute as a combination of over-fishing and global warming reduce the formerly dependable bounty of the seas.)
      and (even ignoring the ethical and humanitarian issues) exacerbated by the impacts of global warming on world food supplies will also raise increasingly serious problems affecting international security.1, [2]  [The latter has also been the case historically: Marie Antoinette's famous remark (“Let them eat cake ”) that triggered the French Revolution was made in response to civic unrest caused by a sharp increase in the price of bread.]

      In 2007 and 2008, a spike in the price of staple foods partly caused by traders moving money into agricultural commodities as a result of the recession and exacerbated by increased transportation costs caused by high oil prices led to food riots in thirty countries, including Algeria, Morocco and Thailand.
      In 2010 a jump of 40% in the price of rice caused Vietnam (a major exporter) to tighten export controls in order to stabilize prices for its domestic population and — to prevent inflation of its currency — to place restrictions on speculation in gold.(1, 2)
      In January of 2011 the FAO warned of international repercussions resulting from another spike in the cost of staple foods [prices went up over 20%, leading to the highest prices ever recorded] caused by a “perfect storm of weather-related problems in several food producing regions…and increased demand [from the emerging economies of countries like India and China]  which was further exacerbated by commodity traders.(1, 2)  Less than a week later — although the price of food was only one issue — the government of Tunisia fell: in response, the Jordanian government slapped price controls on staple foods and other north African Arab governments – including Algeria – braced themselves for possible food riots.

      Following the collapse of the Tunisian regime, popular unrest spread to Egypt and Yemen, both of whose governments had been recently forced to cut back on wheat subsidies; and, at this time [28 January 2011], widespread riots in Egypt threaten to topple the ruling party: and Egypt — in addition to being the oldest Arab government recognizing the state of Israel — owns the Suez Canal which, with 10% of all  world shipping traffic (including two million barrels a day of Mideast oil), provides a vital link for international trade.
      As with Tunisia, both Egypt and Yemen are long-standing, autocratic governments with relatively large populations of young, well-educated unemployed, so food price increases are, at best, a contributing factor to the civic unrest. Nevertheless, Egypt is (statistically) the world's largest importer of wheat, and the WTO is already discussing blocking international commodity trading in wheat futures.
      Looking forward in the new decade, world-wide "food insecurity" is certain to increase: the FAO's “perfect storm” includes devastating floods in the food-producing regions of Pakistan, reductions in the wheat harvest in both Australia (resulting from a decade's drought followed by floods in Queensland and Victoria) and Russia (caused by range fires), and a smaller than predicted corn harvest in the United States (also caused by “imperfect weather” ) which will drive up the price of hogs, chicken, and cattle as feed stocks are increasingly diverted to ethanol production.()
      And, while paper trading in commodities is only one cause of famine, it is perhaps the one easiest to remedy:[]  led (if that is the correct term) by the U.S. and China, the complete failure of global climate change talks – at least to date – certainly provides little hope that the causes underlying the “perfect storm of weather-related problems in…food producing regions” will see any timely or effective remediation.(1, 2 ff.)
      [Statistics and quotations are taken from the BBC world news service 13–15 January of 2011, especially the “One Planet” program broadcast on 15 January. Implications, deductions, errors, and gloomy prognostications are, of course, from the author.]

      Other markets adversely affected by paper trading include stocks, where corporate value is determined by the price of its stock, not  by its earnings (dividends);1, (2 ff.)

      In the Bad Old Days — back when our rude ancestors hewed the first chips from silicon using crude stone tools — stocks were considered a risky investment. [For this reason, pension funds were – by law – forbidden to invest in the stock market.]  Investors were expected to study companies extensively (history, earnings, management structure, current and projected future market demand for the company's product or service, etc.) before  investing their money; and, they were also expected to determine (based on their own financial situation) how much risk they were willing to accept: the higher the risk, the higher the (hoped-for) return. If the businesses in which they invested prospered, they expected to reap the rewards as those businesses paid dividends; and, the rule-of-thumb for a "blue chip" stock investment was a  price:earnings ratio of  6:1.
      Today, investors expect to make money as the price of their stock goes up; and, except as it affects the stock price, the market has become almost completely divorced from company earnings. This can be seen most clearly in the dotCom Bubble, where many companies involved had no earnings at all.1, (2)

      the real estate mortgage market, where paper trading led to the bubble in financial markets;1, (2)  and, the international currency market, where traders have created "instant" hyper-inflation, completely destabilizing the economies in some Asian-Pacific countries [examples/dates].

    5. Growth
      Commentators, analysts, and economists tend to agree that ever-increasing growth is built into the economic system: statements like “Capitalism is all about growth,”  and [capital] markets tend to punish businesses that don't grow” are typical. However, in terms of current Free Market economic theory, growth in the value of a business is defined as growth in the price of its stock (capital gains) — not  in the growth of shareholder dividends (earned income).1 ff.; [2]  Executive pay and bonuses are also tied to capital growth, so the entire economic focus of both business management and capital markets becomes the quarterly earnings reports;[]  and, this largely determines the direction of the entire economy: according to Simon Johnson of M.I.T.'s Sloan School of Management, financial sector profits in the early 2000's amounted to almost 40% of U.S. GDP [BBC interview in 'Business Daily' 19 September 09].

      This economic model — traditional, unregulated Capitalism — evolved with the rise of the mercantile classes in the 1600's and the beginnings of industrialism in the early 1700's; however, even in the earliest stages of capital market expansion, there were problems associated with boom-and-bust business cycles.1, (2 ff.)  Historically, capital markets have functioned well: they have led to the greatest increase in average individual wealth ever seen. But they have not  functioned smoothly, and a significant part of the wealth created has proven evanescent.[1, 2]
      I have made the argument [above] that — at this point in time, more than 400 years later — the entire nature of markets has changed; and that the traditional view of capital growth is no longer either valid or sustainable.[]  Unlike early-industrial Capitalism, our (mature) markets depend on growth in demand for goods and services provided to individuals  — which is a very different type of growth from the provision of goods and services to governments (for the development of infrastructure, like roads and water systems) and businesses (to build machines and factories) typical of nascent capital markets. And, as consumers "max out" on their (actual/real) need for goods and services, the "natural" increase in demand for both goods and services becomes (largely) dependent on population growth;[]  but, the built-in capital market pressures to grow are purely internal and unrelated to factors such as population growth and "natural" consumer demand. Since there is less "real" demand, consumption is driven by advertising,1, 2, [3]  with profoundly deleterious effects both economically [even ignoring the essentially parasitic nature of advertising] and socially.1, [2]

    6. Bell-curve demographic shifts 
      Like all biological factors, basic human abilities can be displayed graphically as a standard bell curve. When the intellectual abilities of a given population group is measured, there will be a rough cut-off line on the left denoting those whose abilities are too low to find jobs in a given economic structure. Since the advent of industrialization, this line has been slowly shifting to the right; and, with the rise of post-industrial economies based primarily on information and services, the drift has accelerated. Quite simply, there are an increasing number of people for whom — through no fault of their own — there are no jobs available within their abilities.  This is a long-term problem which neither the capitalist economic model (representing the transition from agricultural economies to early industrialism) nor the socialist model (representing industrial economies) addresses: both models concern themselves with markets and workers; but, neither considers the ever-growing problem of people for whom there are simply no jobs at all.[]
    The law of supply and demand actually works fairly well, and it usually works in the consumer's interest; but, because it does not  always work in the interests of business, caveat emptor  is still the only rule that applies to the rest of us.(1, 2)

  • applying the law of supply and demand to markets that are, in fact, not  controlled by either supply (such as monopolies) or demand.1, 2  Supply only works where there is competition:()  if people have no effective choices, there is no market regulation on the supply side; and, where external forces drive market prices, demand is not a determining factor.
  • Public utilities are a case in point: any household or business receiving service from – for example – the electric grid, the telephone system, or the cable system will have one  set of service wires: so, whoever owns the wires has a monopoly, and the market is not controlled by supply-side competition.
    Other examples include automobile insurance, health care and the price of oil, where (for differing reasons) the market is not controlled by demand.

  • the idea that consumers can exercise informed choice when they don't understand the choices they are offered. Health care is an example of this: few of us know enough medicine to judge whether we are receiving cost-effective care; and, none of us goes comparison-shopping when we are sick.
  • the oft-repeated claim that “small mom-and-pop businesses are the engine that drives the local economy.” Since this is statistically demonstrable, it has great appeal as a political catch-phrase; but, like a chameleon's color, its validity is dependent on background details that are less-frequently mentioned.   [This terminology got a Dr. DB Award for Rhetoric in 2004.]

    As is usually the case, "the Devil is in the details," which include some (incovenient) thin, fine lines:
    1. Many small businesses are locally-owned franchises  of national or multi-national corporations: they distribute  their merchandise and advertising locally, but neither are locally produced.
    2. Some businesses are regional chains: their headquarters are not necessarily located in the same city or state as any given outlet; their owners are usually not "mom and pop" living next door; and, the bulk of their profits do not usually stay in the immediate, local community.
    3. Small businesses — especially startups — usually do not own their facilities: they rent. And, in most cities, the malls, strip-malls and business parks are built by large, national development entities.
    4. Few franchise outlets offer substantial employee benefits: the costs of, for example, health care are shifted to the local tax base.1, [2]

  • the use of [politely] questionable statistics. Among these are the LIBOR rate, the Dow-Jones average, the core rate of inflation, and the definition of durable goods.

    In mid-October of 2009 the Dow crossed 10,000.()  Again. This salutory evidence of economic recovery happened despite the fact that, in an economy where over two-thirds of the G.D.P. is driven by consumer spending,1, [2, 3 ff.]  (1) both consumers and small businesses continued to have problems obtaining credit; (2) the national unemployment rate was at 9.8% and (if all the numbers are included) still rising;1, [2]  (3) home foreclosures were at record levels and continuing to rise; (4) business and commercial property foreclosures were increasing; (5) personal and (major) corporate bankruptcies were at record levels (with more anticipated); (6) no banking or financial reform legislation had been passed; (7) no substantial changes to financial regulatory agencies or practices had been made; (8) major investment banks still had all of the soi-disant  "toxic assets" on their books;

    According to the most recent statistics, “25% of all mortgages are upside-down” — in other words, homeowners and businesses owe more to the bank than their properties are currently worth — and over 10% of these are expected to default.  Thus, one-fourth of the paper assets held by the banks are worth significantly less than the face value, and one-tenth of that paper is completely worthless.1, [2]  Only the bookkeeping rules have changed: the new standards allow banks to postpone declaring the current market value of these "toxic assets" on their balance sheets, in hopes that more mortgagees will pay off their mortgages as the economy recovers.()
    (9) so many banks had failed (with more failures anticpated) that the FDIC had to demand more money from insured financial institutions to cover the losses; and, (10) with the exception of China,[]  none of the G–20 economies affected by the world-wide recession showed any real (statistically valid) signs of recovery.
    The most that could be said by optimists is that the bad-news numbers weren't getting worse quite as quickly, although even that required some fancy fudging: the consumer-sales figures for September were up slightly, as long as auto sales were excluded. (The rationale — if that's the right word — is that the 'Cash for Clunkers' program ended in August; and, people who would otherwise have bought cars in September bought them in August, instead. Those who prefer reason to rationale simply observe that if you throw out all the bad numbers, the results will usually look a whole lot better.)

    In October 2010, elections were impending and the Dow was playing footsie with 11,000; so, perforce, politicians were speaking of a slow/limited "economic recovery."  But the Dow-Jones average ceased to be, even vaguely, an economic statistic over a decade ago: it is now something between an economic Rorschach and an expression of religious faith.[]

    The Dow-Jones average is based on 30 stocks — most emphatically not  a statistically valid sample; moreover, those 30 stocks are selected on the basis of performance.
    The same day the Dow reached almost 11,000 (a new high since last May), the price of gold reached $1,347/oz. – an all-time  high. In addition, buyers were taking delivery, not trading contracts: J.P. Morgan had to open a vault that had been closed for decades to store its bullion.
    The rule is: those who think that markets will go up buy stocks; those who think markets will go down buy bonds; and, those who think that markets are in danger of complete collapse (endangering the value of paper money) buy gold.(1)
    (Caveat emptor.)

    The flaky nature of the Dow as an indicator of economic health is summarized by the oft-quoted observation that “[it] has correctly predicted nine of the last five recessions;” and, not surprisingly, the wisdom of compulsive market-watchers is all-too-frequently equally bogus.
    In fact, common sense observation of mundane realities can often provide more cogent insights into the current state of the nation's economy — as, for example, a laundromat owner's remark that he is seeing a lot of silver quarters
    [Some people routinely save their change by tossing it in large jars; then, when times are hard, they begin to spend their stash. But it's been quite a while since quarters were made of silver, so it takes a long  recession before folks get down to the silver ones.]
    or when the clerk running a market checkout register carefully scrutinized the five-dollar bill I offered in payment.  (This, BTW, has become my favorite doom-and-gloom indicator: someone is counterfeiting fives ...)

    Another prominent economic metric that has been called into question is the G.D.P. (Gross Domestic Product) — the aggregate value of goods and services sold in a given year expressed as a percentage of the total economy;

    The G.D.P. was originally created to measure the output production of war matériel as the nation entered the Second World War, but economists have recently questioned its essential validity as a measure of economic growth in a peacetime setting. For example, Hurricane Katrina (which required the extensive rebuilding of New Orleans) and the AIDS crisis (which demanded enormous and costly increases in prescription drugs and medical care) both gave a significant (and, in the case of the AIDS epidemic, ongoing) boost to the G.D.P. figures, but few would argue that the overall wealth of the nation was enhanced by either.
    Recently, some economists have been attempting to (re)define a metric that will exclude (essentially) socially negative economic activity and include economic activities that enhance the citizens' overall quality of life, such as monies spent to build parks or reduce air pollution. But adding up the dollars is the easy part: the problem is defining which economic activities are socially beneficial (as the British government can attest, having no greater success in defining their new "Happiness Index").

    and, if all the dubious metrics were not enough to confuse the political debate,[1, 2]  there are also bogus accounting practices, such as the notorious (and all-too-quickly forgotten) gimmicks Arthur Andersen used to enhance the value of Enron's largely non-existent assets; Ernst & Young's tacit approval of the (now defunct) Lehman Brothers' gussied-up balance sheet; and the change in accounting rules allowing banks to divert TARP bailout money from liquidating their "toxic assets" to enhancing their quarterly profits.1, (2)

    In a demonstration of some truly innovative political cost-accounting, Bush II instituted a major across-the-board tax cut, added a prescription drug benefit to MediCare, and ran two  wars off-budget (!); nevertheless, there is still not as much "waste, fraud and abuse" in the system as, among others, Jimmy Carter, Ronald Reagan, George Bush I, Bill Clinton, and George Bush II would have wished.

    The misuse of public funds is not peculiar to American politics;
      In a recent British scandal, Liberal M.P.'s were claiming inappropriate expenses for maintaining separate residences in London and in their home district: cleaning a moat was one of the more flagrant abuses cited.
      [For the first time in 300 years, the Speaker of Parliament resigned (the traditional method of changing Speakers was to behead the old one); and it looks like the Conservatives will have a majority after the next election.]
    and, in any political debate, there is always an arguable line separating judicious practice and outright abuse of funds.[]  For example, Congressional ‘earmarks’ are based on the idea that representatives know the priorities and needs of their own districts [e.g., (1) and (2)], and both M.P.'s and members of the U.S. Congress must, like those they represent, live near their jobs.

    So far, despite a great deal of fanfare, the current administration also hasn't found a great deal to pare: they've trumpeted their outrage over abuses amounting to less than 20 million dollars, but this is a very tiny fraction of the budget. No administration can save enough money this way to make a difference, so these are all just P.R. moves to show willing. Real savings are going to be hard: there will have to be a valid (logical and reasoned) political dialog using statistically valid numbers.()

  • "hidden" costs, including unfunded mandates and cost-shifting.

    The final costs of these practices can be significant.
    • Like automobile insurance, having your vehicle's emissions tested is mandated by state law; but, the state doesn't pay for it. In California, testing is done every time title is transferred; and, in Arizona it is based on the age of the car and done when the registration is renewed. In California, the tests are administered by independent mechanics and auto service centers, with an average cost of  $79 – $89. In Arizona, the tests are performed at Motor Vehicle Department facilities, costing both the State and the motorist  $12.25 .
    • For a three-day surgical stay, one private hospital submitted a bill amounting to over $17,700. The hospital received $5,000 from a private insurer, and billed MediCare for the rest. MediCare ruled that the $5,000 was excessive payment, denied the request, and waived the patient's $750 co-payment.

  • discussions ignoring underlying market structures that force prices up (e.g. [1],  [2], and  [3 a]).

  • the unspoken and erroneous assumption that consumers will always act in their own best economic interests. This completely ignores the impact of advertising and other psychological forces.1, (2, 3)
    [Cross-disciplinary academics have now begun to address this issue: see behavioral economics, and the recently published books Predictably Irrational, Freakonomics, and Superfreakonomics.(1, 2)]

  • confusing the difference between "change"  and  "progress."
  • Comforting but illogical illusions described by popular aphorisms such as “The march of progress”  and  “New is better” are encouraged by advertising.  After all, wouldn't you be more inclined to buy something if it were more serviceable than the item you currently own?  But here, as in so many other areas where the admakers hold sway, the truth is more often “It ain't necessarily so.”  An excellent example of retrograde evolution is computer software — (emphatically) including the Windows operating system(s).
    Older software is better.  Period.  With the passage of time, security holes, logic bugs, platform incompatibilities and software conflicts are found and fixed, so the software becomes more stable, secure and reliable; and, since users' knowledge and experience grows, their productivity increases. For these reasons, more sophisticated users usually prefer open-source freeware.[1, 2]  But vendors make their money by selling new, proprietary software, not by distributing freeware or supporting legacy versions; and, where they have a dominant market position, they often disable or "break" older versions to force users to "upgrade." Two cogent examples of this are the Nero CD/DVD-burning software, where new versions do not allow users to add files to (open) CDs made on earlier versions; and, the Windows® operating system(s), where each new version not only breaks older vendor software, but introduces so many security bugs that it has, on occasion, endangered the national information infrastructure [see Note 22 (5) and Note 66 in the sh  Passport Risks database].

  • failure to question the long-term sustainability of a consumer-driven economy.  By the most conservative statistics, “consumer demand fuels more than two-thirds of U.S.  G.D.P;” over half of all consumers carry a revolving balance on their credit cards1, (2 ff.) (at 10% or more, and — if they've missed a payment — over 20%); and, in 2008 the U.S. savings rate was  5%: in the long run, these numbers don't work;1, [2]  and, the numbers have become even more dismal since the recession increased the (Federally defined) poverty rate to almost 15%.  [ADD yellow inset-row/bookmark below listing sample Federal dollar-income poverty levels for 2006 and (if changed) for 2010.]

    Infinite Growth and the Waste-Stream Economy
    The pressure to grow exists independently of market demand.(1, 2 ff.) To the mathematically-inclined mind, the concept of ever-increasing economic growth driven by consumer spending is patently insane: it assumes infinite capital, infinite raw materials and infinite land-fill space; and, anyone who has studied calculus has a particular, mathematical appreciation of the concept of "infinity." []

    Use it up, wear it out.  Make it do, or do without. 
      — trad.
    Matter cannot be created: consumer goods must be made out of something; and, there is only so much something  available on the planet. Likewise, the consumer must consume  a product before a vendor can sell him another; and, since matter cannot be destroyed, that discarded product must go somewhere — and our landfills are filling up everywhere. Although increasingly touted by both environmentalists and business concerns, recycling is simply not a viable solution: even assuming perfect consumer-level recycling, there remains the (market) problem of the difference between recyclable  and recycled — a difference often amounting to 40  85+ percent.[1 ff.]
    The current, politically-acceptable answer is to substitute services and information for tangible, material products. But here, again, the concept of infinite growth runs into an inarguable mathematical barrier: the need for infinite capital to sustain growth in a mature market, as businesses go into debt (leverage their assets) to increase their market share;[1 ff.]  consumers go into debt to finance their purchases;1, (2) and, the nation as a whole goes into to debt to foreign suppliers (trade deficits).1 ff.
    But, capital is not  infinite: sooner or later, there are no more tangible, salable assets to secure capital instruments; so, capital instruments are used to secure other capital instruments, and a (classic) market bubble develops.[1, 2]

    Creating demand in a mature market by advertising also leads to ever-increasing debt loads; and, except for the financial services sector, the interest becomes a drag on overall economic activity, since there is less cash for either capital investment or further consumer purchases.

    G.M. invented both the engineering concept and the marketing term "planned obsolescence," regularly offering new models in different colors; and, it also ‘pioneered’ auto financing (at compound interest).()  [Ford, on the other hand, offered a single model, in black, and their dealers offered customers a layaway plan: car buyers could make weekly or monthly payments, and take delivery of their Model A when it was paid for — so there were no interest charges to the customer and no default risk to Ford.]
    At this point, "planned obsolescence" and consumer debt have become such un remarkable practices that most people (including a CPA of my acquaintance) haven't noticed that the durable goods statistic has been steadily shrinking.

    Thus, political rhetoric suggesting that the only way to end the recession is to "grow the economy" so consumers increase their spending is not merely snake oil: it is analogous to helping an alcoholic by giving him a good, stiff drink.

    (The politically savvy will note a social subtext here: population growth is in the interest of businesses; and, their lobbying efforts on issues ranging from land use to global warming reflects this.(1 ff.)  But, Malthus always has the last laugh, although the survivors usually find little humor in the ultimate outcome.[] )

    Governments are also subject to pressures encouraging economic growth because they depend on growth-based revenue increases — corporate and personal income taxes, property taxes, sales taxes, and income generated by taxing international sales of local goods and services.

    Encouraging (effectively) unrestrained growth is also good politics: revenues increase without increasing tax rates, and the increased economic activity is reflected in the G.D.P.(1 ff.) — both of which make excellent talking points during re-election campaigns.
    Thus, government policies tend to encourage economic growth even after the cash runs out because, from a governmental viewpoint, revenues will increase regardless of whether the underlying economic activity is paid for in cash or funded by debt.

    On an international level: balance of trade and the national debt; monetary policy and current value of the dollar vs. yen, pound, euro, and yuan;

    Admitting China to the WTO was a very  bad idea propounded by businesses that wanted to expand by selling goods and services in China: but unfair competition is implicit in the huge Chinese working population coupled with a command economy (state-run banking and monetary policies), all of which automatically gives China an (uncompetitive) advantage in world trade.  [One of the more acerbic discussions at the November 2010 meeting of the G-20 involved Chinese monetary policy: the value of the yuan has been set by government fiat — not by market forces — to maintain their international trading advantages and to continue the growth necessary (as they see it) to maintain "public order."]
    Also, misfortunately for economic theory, the Chinese aren't buying U.S. goods and services as predicted: out of approximately 400 billion in trade, the Chinese are buying less than one hundred billion from the U.S. — and with China's centrally controlled economy, it is hard to accept this as happening either by chance or as a result of "market forces."
    NAFTA; outsourcing of jobs (who buys all the consumer goods when people don't have jobs?);
    At the November 2010 meeting of the G-20, Germany protested strongly against U.S. pressure encouraging greater German consumption to benefit U.S. exporters (pointing out the hypocrisy of the U.S. criticism of Chinese monetary policy after the Federal Reserve pumped billions of dollars into the U.S. economy by buying Treasury bonds  — in effect, accomplishing the same end: lowering the value of the dollar relative to other currencies) and warned of currency/trade wars.
    decline of the pound as England's worldwide influence declined parallels the decline of the dollar (currently [January 2011]  $1.45± to the euro).(1, 2 ff.)  [Timeline, 1950 – present: value of the dollar against the pound ($1.60± to the pound in mid January 2011), yen, yuan, mark/euro]

    On a state level, dependence on (increasing) sales taxes to fund increasing services for an increasing population created recession problems in California and Arizona. The sales tax is the easiest tax to pass, and also the most regressive: it impacts (in order)  1) local startup businesses (who don't have an established customer base — i.e., assured sales — and also do not benefit from economies of scale);  2) people with incomes below the regional median — and the lower the income, the bigger the bite; and,  3) established local business (not  locally owned franchises(1, 2) — in local [small] business the amount of money that stays in the community is roughly 60%, as opposed to national/regional chains and franchises, where only about 20% of the money remains in the local community.)

    On a local level, sales tax addons are a regressive force, adversely impacting small, local businesses (as above); and, value-based property taxes subject working- and lower middle-class homeowners to bubble-dependent tax increases that can easily become unsupportable.1, [2]  In addition, continuous "economic growth" means more people need more jobs and more places to live, resulting in crowding, loss of open space, environmental pollution (especially air and light pollution), increased traffic congestion and commuting time, and (arguably) a general decline in the local "quality of life." []
    Further, an ever-increasing need for more local jobs also fails to consider the demographic shifts in a mature economy:(1, 2 ff.) there are a (proportionately) small number of highly-skilled jobs at the top (most requiring ever-more-costly advanced degrees: for example, undergraduate fees at U.C. now run about $10,000 a year) with low-skill minimum wage service jobs at the bottom (jobs with few benefits, shifting costs for things like health care to the local tax base  and, in many regions, increasingly filled by illegal migrants), but fewer and fewer jobs in the middle-income brackets with the salaries required to pay a typical home mortgage.[]  Reagan/Bush Free Market economic reforms have increased the gap between rich and poor until, at present, over 98% of the nation's wealth belongs to less than 2% of its population [get exact stats (they're gorier) and link to source]; and, while sociologists may (and do) debate the impacts of this disparity, history suggests that its effects are, in the long run, destabilizing.[]

    [References: Malthus; The Coming Plague,  by Laurie Garrett (1, 2)]

This does not mean that business interests are the "bad guys," nor that the personal relationships are, in any sense, hostile. But, since this is  a zero-sum game, customer–vendor economic interests are in direct opposition: there are no "win-win" political or policy answers; and, you should bear this in mind when you shop and when you vote.

[For a deeper analysis of some of these issues (and one with with more statistical support), readers are referred to the newly-released book Zombie Economics.]

Get real: paraphrasing Heinlein's famous words, there is no such thing as a free lunch. This includes free Internet services,

    [Anyone who thinks, for example, that Hotmail is free should ask themselves: who is paying for the servers; and — more significantly — who pays the salaries of the people who program and administer them on an ongoing basis.1 ff.; (2)]
free software,[1 ff.]  supermarket "Buy one, get one free" offers and coupons,
    [If the product was being offered at a significant discount, vendors would (and usually do) advertise its actual price.]
and everything  else that is described or advertised as "free."

There are a lot websites, services and software that are, indeed, truly free — to you;  but, be assured, someone is paying the costs. For example,
  • Bruce Schneier's Crypto-Gram  newsletter:  Mr. Schneier is founder and CTO of Counterpane Internet Security Inc., creator of the Blowfish and Twofish cryptographic algorithms, and the author of numerous books, including Applied Cryptography.
  • software from SourceForge:  many of the individual projects ask for donations; and, the site itself is primarily funded by online advertising.
  • Peter Gutmann's website:  Mr. Gutmann teaches at the University of Auckland in New Zealand.
  • the wealth of information on privacy and spyware at  CEXX depends on donations from users.
  • the free software at  Mr. Gibson is an indpendent software developer whose credits include the Win32 SpinRite device driver created for Microsoft and the Patchwork NT/2K server vulnerability/worm penetration scanner developed for the FBI.
  • this page:  Emerald Technologies hosts the Dr. DB website; and, your tax dollars underwrite the disability insurance that pays me  (which is why none of my work is under copyright, so you can freely copy or share it).
The fact that nothing is truly "free" is also true in a broader, philosophic sense: for example, all medical treatments have risks (side effects); and, the use of cell phones while driving leads to traffic accidents [as does the disturbance in the body's clock for the first few days following the Spring time change].
An examination of unconsidered costs — in the broadest sense of the word — forms the essence of many of the discussion points in this paper [e.g. (1 and 2 ff.),  (3 ff.),  or (4,  5, and 6)], including costs that may be the indirect consequences of policies like deregulation with unexpected economic impacts [e.g. (7)] or unintended social implications [such as  (8 ff.) and  (9), resulting from property development in response to population growth].

[References: TANSTAAFL (from Robert A. Heinlein's The Moon is a Harsh Mistress), Passport Risks]

Anything that seems too good to be true, is. This is especially true if it requires no effort or expense on your part. A lot of ignorant people lost a great deal of money in the stock market by simply assuming stock prices would always go up, and the same thing happened in the housing market.1, [2]  Few of these folks bothered with the years of boring study required to understand either market, and all of them assumed that double-digit annual returns were both natural and inevitable.

Unfortunately, there is no effective substitute for "doing your homework." As a consumer, one of the most elementary choices you make is determining the price-to-value of goods and services: is the product worth the price. But, most people have abrogated that responsibility — usually to advertisers, salesmen and market-managers — and often with disasterously expensive results.

There are two basic market mechanisms for determining price: willing buyer and cost-plus margin of profit.
  1. Willing buyer
    The "willing buyer" model is the most commonly cited (and most dearly beloved by Free Market advocates). Basically, the price is determined by buyers who are willing to pay it. Unfortunately, this completely decouples the whole issue of costs: if buyers are willing to pay a 10,000% markup for something, well...that's the market price. (This is the basic mechanism underlying bubbles in capital markets.1, [2] )
  2. Margin of profit 
    Prices are set by calculating the ongoing costs of doing business plus a reasonable margin of profit. This model was most commonly used to set prices for regulated public utilities, where an independent regulatory agency would set the "reasonable margin of profit." In the absence of regulation the model is theoretically subject to abuse; but, even in a regulated market, if the profit margin is itemized rather than global, this can easily lead to absurdly high prices. (This is the basic mechanism underlying price inflation in Pentagon procurement.)
Of course, both mechanisms play an important day-to-day part in determining prices; but, the price set by willing buyers in – for example – the housing market is usually significantly higher than the price determined on a cost-plus margin of profit basis.
[For a more detailed and scholarly discussion of pricing, see the recently published book The Price of Everything.]
I have long felt that the larger the difference between these prices becomes, the more unstable the market is; but, that goes directly back to the point about doing your homework: you  must determine if the price is fair; and, moreover, if paying it is reasonable in your particular circumstances.(1, 2)
As an example, the following is my own method of evaluating property prices.
  1. Locate the property on a map. Take a compass and draw two circles centered on the property: the first represents one hour driving time on surface roads; the second (larger) represents one hour driving time on freeways/interstates.  [You can't do this if you don't know the neighborhood, the roads, and the daily traffic patterns.]
  2. Take the asking price of the property and subtract 10%: use this as the actual, negotiated purchase price. Assume you have 20% cash down and will finance the balance with a 30-year fixed-rate mortgage at the current interest rates. Calculate the total  monthly payment: this includes principal and interest on the loan, and  pro-rated taxes and insurance.  [For my own use, I also add estimated utility bills, using midsummer/midwinter maximums.]
  3. Conservatively, you should be paying no more  than 30% of your monthly income on housing. (If you have children, I suggest using 20%.) Using the monthly payment above, calculate the minimum necessary monthly income to buy the home; then multiply by 12 and add the extra income deducted from paychecks for Federal and state income taxes. This figure will show the gross annual salary needed for the purchase.
  4. Using your map, you can now estimate the potential market for the property:  i.e., how many jobs within a one-hour drive will pay enough to buy the home.  [You won't know this unless you are familiar with the economics of the area: local economic trends, major industries and employers, and job availability.]
    If you multiply this by the number of other, similarly-priced nearby homes, you will have a useful insight on whether local properties are overvalued.
Please note: this model uses "best case," conservative numbers; see below before ‘buying’ newfangled mortgage ‘products.’  [You will not get an affordable mortgage loan unless you read the fine print. All  of it — and there will be a 3–4 inch stack of paper to wade through.]

 Part  II:  Media,  Money  and  Mind Control 
Current  political squabbling about the reasons for the world-wide economic collapse and, even more acerbically, what to do about it is an essentially philosophic debate,(1 ff.)

The two philosophic systems in collision are those of John Maynard Keynes (Keynesian economics) and Milton Friedman (supply-side economics). And, while both theories concern themselves with supply and demand, they represent very different models of how market forces function, especially regarding periodic recessions.
Both models recognize that, for various reasons, markets regularly go through recessionary periods;(12 ff.) and, whenever this occurs, the lack of liquid capital results in a dropoff in demand: people have less money to spend and they buy less, so businesses sell fewer products and services and have lower profits. This process tends to become a self-reinforcing downward spiral because, since they are making less money, businesses will, in turn, reduce overhead expenses by buying fewer goods and services from their suppliers, laying off workers, or both; so, considering the economy as a whole, there is a general lowering of demand for goods and services and less economic activity.
To remedy this situation, Keynes suggested that the government become the "buyer of last resort:"  even if banks won't lend to individuals and corporations, governments can still borrow money by issuing bonds and, substituting for both businesses and average worker-consumers who aren't buying enough, temporarily replace the missing economic demand, usually by large-scale spending on things like infrastructure (roads, public buildings, schools, etc.).
The problem with the Keynesian solution is that when a government borrows, it pays interest on the debt; and, if the economy doesn't recover quickly enough, tax revenues won't increase enough to fund both ongoing governmental services and to service (and eventually retire) the debt, leading to yet more borrowing to pay for increased governmental 'safety net' services like unemployment insurance, (sometimes) for increased economic stimulus, and to service the existing debt. If the recession is both deep and extended, this can lead to a sovereign debt spiral that can wreck the national or (in some historic instances) the world economy.[1 ff.]
About forty years ago the noted economist Milton Friedman proposed a different market model: according to his theory, markets are almost entirely self-regulating unless something interferes with the normal functioning of the law of supply and demand. Since businesses want to make profits and must buy (wholesale) goods and services in order to do so, they will continue to spend money as long as they have any to spend; so, what triggers a recession is something that reduces (liquid) business capital and thus their ability to deliver goods and services: in other words, some economic force outside the otherwise self-regulating market must be either increasing (wholesale) costs, reducing profits, or both; and, since it is the single greatest force outside  the market (which includes things like inflation), the likely culprit is governmental interference in the form of regulations (which add to overhead costs), taxes (which reduce profits), or both. The solution to a recession thus becomes reducing or removing governmental interference that interferes with the supply  of goods and services (hence the term supply-side economics) and allowing the law of supply and demand to function "normally."
Among the political problems with this model is that it largely ignores the historic fact that for over 400 years Capitalist economies have had periodic recessions,(12) and it also disregards all market forces except  the law of supply and demand,(3 ff.) resulting in political and economic in action and reducing government income (taxes) at a time when government expeditures (unemployment insurance and other 'safety net' programs) increase.[4]
But the fundamental philosophic  problem with the model is that it almost completely decouples demand from the economic model and, in so doing, removes the market mechanism that controls prices,
In order to function at all, markets [supply-side] must set prices: businesses that don't turn a profit fail and disappear. Likewise, businesses have both market (competition) and legal (obligations to shareholders) incentives to raise prices and maximize their profits, so the natural tendency of unregulated markets is to continuously increase prices until goods and services stop selling: in other words, [supply-side] prices will rise until stopped by falling demand.
which can be easily seen in markets that are not  inherently subject to demand-side control.[56 Moreover, when the only factor controlling price is the "willing buyer" – i.e., when there is no external  regulation — there is a tendency for capital (as opposed to consumer) markets to develop bubbles[7 ff.] which inevitably burst [in more sanitized terminology, "market corrections occur"] creating recessions. 
Historically, the supply-side economic model was embraced in England by Margaret Thatcher and in the U.S. by Ronald Reagan, where it became known as 'Reaganomics.'  At first everything went largely according to theory: reducing taxes and removing governmental regulations stimulated markets, and wealth increased. But the newly-created wealth didn't  (as advertised) "trickle down" into the economy as a whole — the rich got richer and the poor got poorer[12] — and instead fueled ever-larger market bubbles,(12) which were followed in due course by increasingly severe recessions.[]  At this point in time, even the primary Reagan-era apostle of supply-side economics, Alan Greenspan, has admitted that the theory is flawed.12
If there is a lessson to be learned from the current crisis, it is that Capitalist economies suffer periodic recessions and unregulated Capitalist economies suffer worse ones; and, if the above discussion seems to indicate that neither Keynesian nor supply-side economic theories are working to remediate the current recession, it's because that is most unfortunately the case.  So, if there is a moral to be drawn, it is that — failing a statistically demonstrable fix — politicians should avoid dogmatic and inflexible insistence on implementing their own pet theories: "if it ain't broke, don't fix it;"  but, if it is  broken, acknowledge the fact — and if one fix doesn't work, move on and try another.

but — not too surprisingly — it is not framed that way: the "average voter," for all the reasons listed above,(1 ff.) is neither intellectually nor temperamentally equipped to consider issues in those terms. The public at large has been taught, mostly by the mass media, that economics is boring  [“the Dismal Science”]; that there is a quick, easy fix for every problem if only The Other Side would recognize it;(12) and, perhaps the most damaging delusion, that they needn't pay attention to details — in short, that they, as voters, can learn what they need to know quickly, easily, and without any effort.[]

The typical Hollywood movie runs for 90 minutes, the Good Guys usually win and — even if they don't — we at least know who the Bad Guys are. We don't let our kids watch movies where there are no Good Guys; where the Bad Guys are a lot smarter and more successful than the Good Guys; where the Bad Guys sometimes wear the face we see in mirrors; and where nobody  wins.  And we usually don't watch them ourselves, either.
Television presents an even more distorted point of view: few shows run for more than an hour with fewer still discussing a single topic in depth, and many are interrupted every seven minutes or so for a commercial. Nevertheless, in a participatory democracy and in the age of the 30-second sound bite, most children spend more time viewing media television than they do in school and (statistically) most adults spend almost as much time watching TV as they do at work — so it should come as no surprise that the most important lessons people learn are those they get from TV: that if not happiness at least satisfaction is determined by choosing the right things to buy; that most problems are simple and can be explained in (at most) a few minutes; that many problems are caused by people who are either foolish or willfully evil and can be solved by either showing the Bad Guys they're wrong or killing them; that all problems have solutions and that there are no situations where all  the fixes are bad ones; and — worst of all — that people of good heart will always triumph over adversity, usually quickly and without much struggle.
While you, we consciously  understand that television and movie scripts aren't true or real — that problems are complicated and solutions both few and ambiguous — subjective years of pop-media "lesson-examples" have created a subconscious expectation that the reality in which we live is at least similar to the the fictions we watch for entertainment. Then some of us (at least) go out and vote for the Good Guys — the honest politicians who stand for the Good, the True, and the Just — and hey, surprise!  — things don't always turn out so well.
And the truth of the matter — the really, really  bad news — isn't that  ‘the System’ is broken and the politicians are a bunch of crooks.  It isn't even that Reality is cold, cruel, and uncaring.  It's much worse: Reality just is, and what we make of it is up to us.

Unfortunately, none of this is true;() so, our problems have become systemic and — in the broadest sense — problems of education.(1 ff.)  But education, in all senses, is only one element in the socio-cultural matrix: it does not stand alone and it by no means stands apart from economic forces and interests.  And economic interests have, indeed, "educated" the public in their own  interest and to an extent that few realize — and they've done it with advertising.

Advertising is not  intended to provide information to consumers — it is designed to influence behavior:1, 2  marketers want you to buy something, and they have neither your interests nor the interests of society as a whole at heart.  For example, you have probably heard the phrase "customer loyalty" (or "brand loyalty"). This is an advertising/marketing term; and, as such, it is completely misleading.

In reality, the customer–vendor relationship is inherently adversarial. The vendor has fixed (overhead) expenses: labor, facilities, energy, advertising, etc. These expenses exist whether or not you buy their goods or service. In a like manner, you have fixed expenses — rent/mortgage, food, energy, clothing, etc.
If you save a penny when you buy something, the business must still meet its overhead: the penny comes from its net profit margin. Likewise, you must still pay your own fixed expenses whether or not you make a purchase; so, if you save a penny, that penny goes directly into your pocket where it becomes "discretionary income" — money you can either save or spend on something you may want.

Since the early 1950's, the advertising industry has employed the bulk of Ph.D. graduates in psychology;()  so, every significant national ad campaign for the last 50 years has, in effect, been an enormous, carefully-monitored social experiment yielding statistically valid results. As a result, the industry has an immense knowledge-base of working technique amounting almost to the level of mind-control;

Advertisements that have been professionally crafted to appeal to our subconscious mind are so pervasive a recent [October 2010] study has shown that — because most consumers are making product and service choices for un conscious reasons — market survey/research questionnaires are no longer providing useful or valid information to businesses: average/typical consumers literally do not know and cannot articulate the reasons why they buy what they do, reducing the economic concept of "consumer choice" to an empty phrase.1, [2]
[Those familiar with computer security will find this uncomfortably similar to the behavior of a zombied machine.]
Likewise (but from a broader perspective), a cultural leitmotiv  can be found in George Orwell's “Politics and the English Language,” Vance Packard's “The Hidden Persuaders ” and William Tenn's “The Servant Problem,” with the publication dates providing an ironic counterpoint.

and, this has distorted both capital and consumer markets, as well as the political process itself.[]

Market Impacts
Advertising always distorts and, in many instances, completely overrides the law of supply and demand: the best products and services delivered with the greatest efficiency and at the best price do not necessarily dominate the market. Instead, market share goes to the products and services with the best advertising campaigns; and, this will always favor established businesses over new startups, and large corporations over small, local businesses.
An immediate and cogent example is provided by Bank of America — one of the largest institutions in the United States and a recipient of Federal TARP (taxpayer bailout) funds.[1 ff.]  As late as [month] 2009 Bank of America had only made 98 permanent loan modifications out of over 100,000 applications from holders of its upside-down/"toxic" mortgages — the worst record in the industry — substituting a widespread advertising blitz for substantive action:1, [2]  for example, an ‘underwriting spot’ on NPR proudly announces that over the next ten years the bank has made a “commitment” to make billions of dollars in loans available to “qualified businesses and consumers;” ()  and, should anyone doubt its bona fides, they have set up a website so potential customers can see for themselves. At the same time, B of A also changed its credit-card policies: those prudent and responsible cardholders who pay off their balance each month — i.e., those who do not  spend more than they earn — will now be charged an annual fee.[1, 2]

In addition, the cost of advertising causes increases in market prices for both goods and services without adding value; and, make no mistake: you  are paying the cost in increased prices — an aggregate cost amounting to more than a hundred billion dollars a year.1, [2, 3]
For example, the average American is exposed to an estimated 3,000 advertisements per day  [NPR's 'On the Media;' 27 September 2009]; and, radio and televison advertising (not  including newspaper, magazine, billboard or internet ads) amounted to over 70 billion dollars in 2008 or, expressed on a per capita  basis, more than $205 for every man, woman, and child in the U.S. — a figure that rose to over 55 billion in the first half of 2011 (although, to be fair, that included print, internet and media ads). Moreover, since advertising is part of the overhead cost of doing business, it is not directly passed through to consumers, instead becoming part of the calculated profit margin (in effect being "marked up") in the price you actually pay.  [See 50's stats from Hidden Persuaders, and stats for 1965?, '75, '85, '95, and (2007/pre-recession) for timeline.]
Misfortunately, there are also significant secondary costs to unregulated advertising: for example, the lost time (productivity) from employees managing inbox spam directly costs American businesses billions of dollars a year [get stats; link to study], as well as secondary (administration and repair) costs from spammers hacking PC's to send their email ads;  and, junk mail now amounts to well over half the mail handled by the U.S. Postal Service, which — in addition to raising postal system costs — also presents issues of trash disposal.1, [2]
In brief, it is difficult to make an economic case for  advertising; and, the industry seems to be, at least in economic terms, essentially parasitic.

As a politically immediate example, advertising is one of the forces driving the cost of prescription drugs in the United States. According to the Nielsen rating service, there are an average of 80 television ads per hour for pharmaceutical  drugs — drugs that are not available without a doctor's prescription. When Big Pharma was marketing to doctors, the average American received 8 prescriptions per year; but, after the drug companies began marketing directly to consumers, the average increased to 12 prescriptions per year. The first prescription drug marketed directly to prospective users was an antihistimine/decongestant: its primary virtue compared to inexpensive generics was that it did not make most users drowsy. Prior to the ad campaign, the company had annual sales of $37 million; and, after the ads, sales increased to $800 million annually. And these are just the monetary costs. All drugs have side effects, and, in some patients, severe side effects; and, these costs — in both additional treatment and human suffering — are, by any measurement, substantial.
[Since the costs are passed on to the consumer, I have always used advertising as a negative  indicator of competitve pricing: I don't buy goods or services that are heavily advertised, and I've almost always found the savings to be susbstantial — and I've usually gotten better service, as well.1, 2]

 Socio-Political Impacts I: The Fusion of Advertising and Lobbying 
The ever-increasing influence of lobbying must also be considered among the more pernicious influences of unregulated advertising, because lobbying is essentially one-on-one targeted marketing directed at legislators: a soi-disant  ‘focus group’ is nothing more than a test-market for ideas and (what is worse) political catch-phrases; and, politicians and issues are now sold to the public like laundry detergent.(1, 2)  Congress is subject to a two-pronged pressure campaign on every major political debate affecting business interests: the corporate lobbyists of Gucci Gulch and a coordinated national advertising blitz aimed at voters.()
One immediate and cogent example is the lobbying of Congress on the issue of electricity generation and climate change:[1 ff.; 2]  at this point, fossil-fuel alternatives cannot meet more than a tiny percentage of current baseline demand; so, the most effective and immediate remediation efforts must center around transition technologies. As demonstrated decades ago in California (where the issue was air quality), the cleanest fossil fuel used for generating electricity is natural gas. But, for a long time, North American supplies were limited and gas was primarily used for heating and cooking; so, increasing the use of gas in generating facilities raised issues of consumer prices (driving up home heating costs) and the environmental impacts of LNG imports (a serious physical risk to nearby population centers in the event of an accident).
Recently, however, it has become possible to extract gas from widespread U.S. shale deposits; and, many (mostly small) suppliers have been drilling wells and successfully (i.e., profitably) marketing their products. There are issues of transport (the environmental impact of pipelines, and safety concerns for LNG shipments by rail or truck), but the overall supply is considered to be significantly larger than coal reserves [stats: NPR 'Morning Report,' week of 21–25 September]. But natural gas was not considered in the energy legislation recently passed by the House: the natural gas industry spent $310,000 dollars lobbying Congress, while the coal [and electricity?] companies spent 78 million [op. cit. 24 September].
(Another discomfortably related bit of news that deserves attention is the Supreme Court's decision to rehear a campaign-finance case: the Court's language (directed to the litigants) and its pre-season scheduling of the hearing have suggested that it may well reverse a [1909?] decision establishing a legal differentiation between personal and commercial speech, effectively overturning almost all limitations on corporate campaign finance contributions.)

 Socio-Political Impacts II: Ad-Driven Media and the Political Process 
Effective democratic political processes have always been dependent on informed  voters, a fact which was well understood by the framers of the Constitution and the reasoning supporting both the First Amendment and the original copyright laws;1, (2 ff.) and, it was also assumed that legislators would represent the immediate interests of the voters who elected them. But those were simpler days, and there were a lot fewer voters: even politicians running for national office could depend on speaking directly to voters at campaign rallies and other public events. Now, with population growth, candidates are dependent on mass media to present their issues to the voting public; the mass media outlets are funded by advertising; and, media neutrality on issues affecting their sponsors presents an inevitable, ongoing conflict of interest.1, (2)
Most voters do not have the time or resources to carefully investigate each item on the ballot at every election: for the political system to function, they must depend on free access to unbiased information; but, this is increasingly difficult to find. News on television is paid for by sponsor advertising; sponsors pay on the basis of the number viewers; and so, not surprisingly, television news has been increasingly tasked with distributing "info-tainment" to the detriment of information that is necessary for understanding critical poltical, economic, and social issues (which is often far more complicated, time consuming, and less appealing).

The contentious issue of reforming campaign finance[] actually has a fairly straightforward (albeit completely impossible) resolution, because all forms of broadcast media are regulated by the Federal Communications Commission; and, part of the F.C.C. mandate is that broadcast spectrum granted to licensees must be used in the public interest.
Whereas the major media outlets have (traditionally) interpreted this as granting free air-time for public service announcements (usually after midnight) and carefully censoring both ideas and speech during prime time ("protecting children"), there is no reason whatever that it cannot be extended to providing a free forum for candidates during elections.
Indeed, I would argue that it would be overwhelmingly in the public interest to require that two or even three hours of prime time be given to all  qualified candidates (i.e., all who qualify for inclusion on the ballot) on an equal-time, non-partisan basis. We  are the public; we  grant the licenses; and, because it is in our interests as citizens and as voters, we are legally empowered to take back the airwaves.
Unfortunately, however, Big Media and the commercial interests that sponsor it have the floor, and — failing some type of grass-roots campaign — this modest proposal could never be implemented.  [See below for more of my pragmatic but impossible ideas.]

In addition, it is a rare broadcaster indeed who will do an exposé affecting a major sponsor; and, while newspapers have been more active in this arena, they, too, have conflict of interest issues: most newspapers have traditionally gotten 80% of their operating funds from advertising, and only 20% from reader subscriptions [NPR's 'On the Media;' 27 September 2009].

Yet another example of advertising impacting informational media is the slow decline of news quality on National Public Radio after passage of the Digital Millennium Copyright Act,[]  as both the Corporation for Public Broadcasting (an entity created by Congressional free-market advocates during the Reagan administration) and local stations were forced to raise additional money from ‘underwriters’ (i.e., national corporate and local business advertiser-sponsors) to pay for their media streams:  Microsoft, ADM, Bank of America, Hollywood studios plugging major pop album and movie releases, and even spammers (ConstantContact) have appeared nationwide as underwriters.

The problem of paying for the rights to digital content that stations are streaming on the Internet is not trivial: if the terms of the DMCA had applied to analog broadcasting, none of the broadcast radio music stations we all remember would have existed. Where radio stations had previously paid a blanket fee to ASCAP and other copyright holders for the rights to broadcast music, they must now pay a royalty for each, individual selection they use.
As one example of DMCA cost impacts, in 2003 WCPE (Raleigh-Durham, NC) — one of the few remaining totally  member-supported classical radio stations (not affiliated with a college or university and receiving no public funding whatever) — was forced to join the Corporation for Public Broadcasting since they could not otherwise afford the copyright royalties on their media stream. As Deborah S. Proctor (WCPE General Manager) said in the Fall 2003 Program Guide, “[W]e had…to join the Corporation for Public Broadcasting for coverage under its blanket agreement…to cure the royalty problem created by the Digital Millennium Copyright Act… .”
The dilemma is clear: to compete in a digital age, stations must have an internet media presence, but the increased expenses are not covered by existing revenue streams. And, while this may be a relatively minor problem in terms of entertainment, it becomes a critical social issue when it affects the news and information necessary for an informed vote.

By the spring of 2009, recession funding problems turned what had been a gradual decline in public broadcasting into a plunge down an intellectual hole; and, along with staff reductions, on-air quality became degraded as enormous amounts of time were wasted on what is (at best) highbrow info-tainment and (at worst) outright tabloid journalism. For example:
  • For several days, almost a quarter of the on-air news time was devoted to stories about and relating to the death of Michael Jackson.
  • Discussions of a major studio children's cartoon-movie were featured as full-length items on both morning and evening news, in addition to the on-air reviews and another feature discussing its appearance at a film festival; people involved in its production were featured on two separate interview programs (one of which repeated the segment on its weekend summary); and, it was a topic on one of the NPR call-in discussion programs. [See "product placement" for more on this type of media practice.]
  • Currently, [September 2009] there is a weekly news segment on high school football. This is not  discussing issues of school funding; concerns about sports injuries to children (some of which will cause problems in later life); problems of steroid use in children's athletics; or any other socially relevant issue. It is "aren't-they-cute,"  feel-good journalism, and — considering the ongoing recession; the upcoming Copenhagen summit and issues of global climate change; and the (acerbic) ongoing debates on health care forms, delivery systems, insurance, and costs — this seems, at best, a questionable use of air time.
  • Critical news stories, including reporting on the recession, have been 'cut to fit' pre-determined (timed) segment-blocks; and, authoritative sources (e.g. Congressman Barney Frank) have been abruptly cut off in the midst of explaining the issues. [It is noteworthy that, when an interviewer "called time," Frank remarked that explaining the problem of the recession, its cause, and (proposed banking) regulations to prevent a recurrance were “not simple.” ]
  • Instead of developing stories and airing important interviews in full (e.g., above) as was previously done, the 'full version' is now provided online; and, some important stories – especially breaking news – is only  available online.()  [BTW, this is official policy: “Some stories cannot be aired in full; but, if you go to our website you will find a link to a media stream.”]
  • Important technical issues with profound impacts on social and political structures are "dumbed down" for popular consumption: instead of providing authoritative information — which demands extra air time to educate listeners — stories are covered by journalist-commentators who often lack the necessary (formal) technical background.()
    For example, 90's discussions of economic policy often included lengthy commentary from (among others) Alan Greenspan (long before he became chairman of the Federal Reserve), Robert Reich, and even socialist Michael [Kennedy? - check] (whose book Poverty in America  influenced Johnson administration social policies); but, regular commentary is now provided by journalists from the New York Times  and the Washington Post.
  • A more cogent (and less debatable) issue involves computer technology: when vulnerabilities in the newly-released Windows XP affected millions of users (some catastrophically), analysis and commentary was provided by interviews with acknowledged technical experts including – among others – Bruce Schneier.()  In contrast, there were no  comparable stories on privacy and vulnerability issues with Windows Vista; but, there is  a regular, weekly segment on "technology culture" featuring a reporter from the Austin-American Statesman — a highly skilled journalist, not  a technical expert.
  • For several days loss of privacy issues[]  were a special feature in the regular news segment; however, no  specific mention was made of personal encryption programs,(1 ff.)  local proxies (web filters), or blockfiles.1, 2  When a listener sent in an email pointing out that the NPR website placed cookies from — among others — Doubleclick, the response was a carefully-hedged explanation of cookies as text files that are intended to allow servers to "personalize" pages (correct), that NPR cookies are not used to track users (also correct), and that users can, if they wish, disable cookies (also correct). What was not  said, however, is that Doubleclick is the most notorious of the online advertising profilers,(1, 2)  that Doubleclick cookies (which are placed by offsite Doubleclick servers) are  designed to track users, and no description was given of how to disable their cookies.()
For those seeking the kind of news programming that – quite literally – informs  their vote, this is a sad state of affairs.()

In the long run, passage of the Digital Millennium Copyright Act may well prove to be one of the worst pieces of special-interest legislation of the late 20th century. Its passage was sponsored by an unholy alliance between Big Media (Hollywood movie/television studios and the pop-music recording industry) and the Business Software Alliance (representing the interests of software developers like Adobe, Microsoft and NAI); but, because the issues are complex and the details technically demanding, the DMCA was ignored by the public at large, allowing members of Congress co-opted by corporate lobbyists to (conveniently and profitably) forget what the Founding Fathers understood: that free, open access to information is necessary for a healthy democratic system.

“Copyright has always been intended as a balancing act between the rights of authors/publishers and the rights of consumers. Technical advances are making it possible for publishers to take away technically what they would have a hard time justifying legally or morally. And unfortunately, in a misguided attempt to address copyright issues in the digital age, the U.S. government has given legal backing to the technical means through the DMCA, outlawing attempts at circumventing these technical protections. In effect, this gives publishers full and complete control over copyright issues, without the annoyance of actually having to go through the usual legislative debate and judicial review. As a shock to no one, the publishing industry (particularly the MPAA and RIAA) have used the DMCA as a bludgeon to attack anyone who suggests that consumers and citizens have rights too.”
From Mad as Hell about the DMCA by “Beale Screamer,”  taken from the author's proof-of-concept software archive "breaking" Microsoft's DRM version 2 technology, downloaded from an article link in The Register, October 2001.
In un doing the original intent of copyright law under the slogan of updating it, you, ladies and gentlemen, have been had; and, we will all be paying the costs in terms of software (security, privacy, price and efficiency), scientific research (free exchange of information and peer review), health care (genetic medicine), democratic governmental process (access to on- and off-line news1, 2), and individual rights (fair use and open access to information[1 ff.] ) for decades to come.
This is only one of many political issues raised by the Digital Revolution;[] and, since the law is far from settled, voters should stay tuned.

More on the DMCA may be found in the sh  Passport Risks database in
       /Passport_Risks1.1A/comments.html#DMCA_1 ,
with further details in Passport Risks version 2 (on the sh  Miscellaneous Files CD-R) in
       /Passport_Risks2.0/98_Passport/apostrophe.html#DMCA_media  ff.;
and, its effects on public radio are documented in greater detail in the timeline (green table-section) entry for 2003 in
       /Passport_Risks2.0/98_Passport/apostrophe.html#media_inset .
See also  Business Software Alliance,  the Digital Millennium Copyright Act, What's Wrong With Copy Protection,”  the ‘Copyright and DMCA’ topic at the Chilling Effects Clearinghouse, and Google for more (introductory) details.

An essential conflict of interest has always existed in the profit-driven/advertising-supported dissemination of political news; and, in this broader context, the fiscal restrictions on digital news and information streams imposed by the DMCA represent merely an escalation in an already troubling state of affairs.(1, 2)  Both the profit-driven corporate (U.S.) model and the tax-financed (BBC) model depend upon a strong journalistic ethic to furnish a broad spectrum of valid, factual information to potential voters; but, since "he who pays the piper calls the tune," the argument may be made that — in the interest of the democratic process itself — a source of funding largely independent of the political process  is preferable to private funding with a profit-driven agenda.1, [2]

The BBC is funded by a yearly license fee on radio and television receivers which, for the average household, amounts to about half that of a year's subscription to a U.S. cable TV or digital satellite service. Since the license fee is not part of the Crown's annual (discretionary) budget, it gives the broadcast service a great deal of (necessary) political independence.
[While that last point is, of course, open to debate, since 1932 both Liberal and Tory governments have had profoundly unhappy experiences with what Members have (quite vocally) found to be "irresponsibly" unfettered political reporting from the BBC.]
However, since changes in media delivery caused the BBC to discontinue its short-wave broadcasts to North America in the mid '90s, the only remaining English-language source for its substantive and relevant political reportage is now the online service,[]  which is available in a number of G3 and media-stream formats.

The role of public funding (if any) and the objectivity of the news media (if it in fact exists) is a long-standing and ongoing matter of debate. But the ineluctable fact remains: there is an unreconcilable legal conflict between defining information as a commodity (in which case the creator/owners have clear rights under established property law), and the free access to information necessary for an informed vote under a democratic system of government. However, a recently proposed rule change by the FCC preventing ComCast, A.T. & T. and Verizon from reducing their competitors' online media-stream bandwidth [slowing the speed] (1, 2)  may be considered a hopeful sign for the open access to news and information that is essential to the democratic political process.

 Advertising in the New Millennium 
 The future won't just happen: it will sneak up on you one day at a time. 

Consumer Profiling: Welcome to the Fish Bowl
Although it may seem slightly counter-intuitive, in the United States you don't actually own your personal information, including your name, address, marital status, and — despite the fact you (usually) pay a monthly fee for them — your telephone number and email address: the information belongs to whomever collects and collates it;1, (2, 3) and, in most instances, the (new) owner is under no legal obligation to obtain your consent before collecting and disseminating it, either.[]  (See the EPIC page on consumer profiling for more information on the extent of this practice.)

(1)  Internet Tracking: The Spies Among Us
Online techniques for invisibly tracking and monitoring your Internet use include cookies, web bugs, and javascripts; as well as default connection information like the referer field and network trouble-shooting tools like reverse DNS lookups.

The Javascript programming language includes a number of mouse-sensitive commands such as onmouseclick (which — not surprisingly — can be used to record each time you click on an ad). It also has detailed commands that capture dates and times [often combining date and time as (new Date()).getTime()], so web page scripts routinely record how long you spend on a page.
The mouse and time commands can also be combined to record your actions if you rest your cursor on certain parts of the page (onmouseover) for a specified length of time, as online behaviorial studies have shown most people do when reading something.  (The referenced study, by the way, was funded by the advertising industry in an attempt to improve their online profiling techniques.1, 2)

These are all part of the pages you view; and, unless you take specific actions to prevent it, they will automatically  return information to their creators. The information will be entered into a dossier with a unique ID (called a profile); and, over time, a substantial body of information about your online actions will accumulate: which pages you view, in what order, and how long you spend on each page; the date and time you were at each page, what ads you saw, and whether you clicked on them; which page you saw before you arrived (the referer) and where you went when you left. That information will be collated and sold to advertising and marketing entities for both online ("targeted" banner ads, email solicitations) and offline use (junk mail, telemarketing).
Furthermore, the businesses who are collecting your personal information are specialists: with the exception of default connection information, the data are not  being sent to the page (server) you are visiting. Online profiling companies like DoubleClick, Bfast, and AvenueA (to name only a few) have a "presence" (often as a banner ad) on hundreds of thousands of sites around the world, while other online tracking firms like BurstNet specialize in popup or multi-media ads.
Other profilers, including Aureate/Radiate provide spyware that is bundled with programs; cable ISP's like ComCast and Cox include spyware in the (nominally) "free software" packages they supply; some browsers (most notoriously Internet Explorer) automatically install website spyware (termed a "drive-by install"), usually as browser toolbars;[1, 2]  almost all P2P file-sharing programs have embedded spyware (often more than one app), most notoriously KaZaA (which had so many spyware apps that it would overload and crash dialup connections); some computer hardware vendors, including Western Digital (hard drives) and SoundBlaster (sound cards) add spyware "support" to their driver packages; and, many multi-media software packages (including AudioGalaxy and emphatically  including Windows Media Player and RealPlayer) are primarily designed to control your access to media content and monitor your preferences[1 ff.; 2] (the actual playback/display is incidental). To (sadly) name but a few...
Outside the technical community, few people really understand just how fast  computers are and, consequently, how much information they can process and store. To better understand the issues, I suggest you read the Privacy and Consumer Profiling” page for a comprehensive analysis of the type of information that is being collected and how extensive the practice has become, then check out the  spyware database for an eye-opening look at some of the online forms. In addition, the sh  Passport Risks database has a great deal of information about user tracking built into Microsoft Windows;  [1],  [2 and 3], and (with some duplicate links) [4] will provide more information; and, you can find freeware Win32 spyware detection and removal programs at [5 and 6] to help you take control of your computer — and your own, personal data.  [See also Dr. DB's blockfile supplements, which has links to some primary internet blockfiles in differing formats.]

(2)  Online Vendors, Free Services, and Social Networks: Milking the Rubes
Registration information voluntarily supplied to Facebook, Twitter, Hotmail, and other nominally "free" services;[1, 2]  customer browsing and order information that is owned by Amazon; registration information provided when downloading "free" software; purchasing behavior in online "communities" like Gaia and Farmville; social behavior in fantasy games like EverQuest; and Google tracking cookies from their ubiquitous online ads and search boxes[]  are all used to create personal profiles that have one purpose: to sell you  to advertisers.

Since the beginnings of mass-media advertising, the biggest problem for the ad-makers has been the poor rate of response (with junk-mail ads, for example, less than 1% of the ads sent actually result in a sale), so the industry's Holy Grail has been to somehow find out enough information about prospective buyers to "target" their ads.

The aggregate revenue from online advertising — revenue in the billions — pays for these websites: the sale of your personal information is, in fact, paying for much of the Internet; but, who is paying you ?  The admakers have always claimed that people don't object to targeted ads ("behavioral marketing") because they are seeing ads for products they might actually want to buy; but, a recent study by the University of Pennsylvania and U.C. Berkeley discovered that almost two-thirds of people polled object to online tracking. And the digitalization of information also allows offline databases (such as supermarket discount cards) to be cross-linked with online profiles — whether you or your children like it or not.1, 2

Collecting marketing information — especially information about future  consumers — has, in fact, been going on for a long time: Fischer, for example, sponsored high school auto body-design contests in the ’50's; but, although the payment was (in a global sense) trivial, Fischer was, at least, offering college scholarships to participating student winners.[]  But broadband access to the Internet is now considered (rightly, in my opinion) critical to education; which, when coupled with gigahertz computing speeds and cheap high-volume storage, allows historically unprecedented collection of user data.  And, with the baby-boomers aging (and, as a result, buying less) tracking and profiling of children has become a primary industry objective: any parents who may doubt this should read the actual text of the (horribly mis-named) Children's Online Privacy Protection Act of 1998 (COPPA). [There is also a detailed analysis in the sh  Passport Risks database of both COPPA (Note 74) and Microsoft's (ab)use of the law in its ‘Kids Passport’ (Notes 67 – 73).]
The (mostly) youthful users of the soi-disant  “social media” should be aware that the online business community regards them as cash cows — and not particularly savvy cows, at that. There are several meta-businesses that specialize in providing social media services to businesses: some of these provide training to corporate IT departments in how to utilize social media to best sell their products and services; others — perhaps more ominously — provide services designed to manipulate social media for their clients'  benefit.
An example of this last received some attention recently when Bank of America discovered that some of their internal emails were scheduled for revelation on WikiLeaks: they hired a company to set up fake Facebook accounts to make flagrantly false statements claiming to be from WikiLeaks sources to try and discredit the website.
Similarly, corporations may buy (limited) rights on Twitter to keyword phrases ['hash tags'] related to their marketing campaigns; media portal-potties have hired college students to write fast-and-dirty news articles whose only purpose is to generate links that increase their Google ranking; many advertising companies have designed ad-videos for YouTube hoping for free viral publicity; and some vendors give free products to selected Facebook users to "review" — not all of whom disclose their corporate connections.
(Caveat emptor.)

And those interlinked, collated databases about your  behavior, tastes, internet browsing, and supermarket purchases will present a tempting target for anyone (including blackhat hackers) and for any purpose — including use by government agencies.[1 ff.; 2]

Night Thoughts I: TIA
Even if you are among the one-third of people surveyed who aren't concerned about the admakers' information collections, there are other players at the table who are  interested: in response to the 9/11 terrorist attacks, the Department of Defense instituted the TIA program.
Total Information Awareness ("TIA") is a government data-mining project designed and managed by John Poindexter, one of the architects of the Iran-Contra affair. TIA is a division of the Defense [Advanced] Research Projects Agency ("DARPA"), which has three components: the machine translation of languages; data search and pattern recognition; and advanced decision support. Its goal is to identify terrorists and prevent terrorist attacks by creating the tools that would allow analysts to "data-mine an indefinitely expandable universe of databases."  While some have questioned whether it is even possible for TIA to meet its ambitious technological goals, certainly the scope of this data-mining enterprise raises major privacy questions. First, it authorizes the creation by the government of vast dossiers on innocent citizens, and second, risks misidentifying large numbers of innocent individuals as potential terrorists.
…While the stated goal of TIA is to "detect, classify and identify foreign terrorists" to "defeat terrorist acts," as with any data-mining regime, absent controls TIA profiles can be used for whatever purpose the government might devise. And in light of the abuses of the 1960s and 1970s, when civil rights and anti-war groups were a focus of the FBI's counterintelligence program, this broad expansion of government power must give one pause.” 
[See also Privacy, Trust, and Public Policy: Communication technology and the Bill of Rights ”]
Because that "universe of databases" included all governmental databases — State, Federal, and local — as well as private (corporate sales and marketing) ones, Congress stepped in and the project was halted; and, some will find comfort in that fact.
But, I've read the historic Congressional debates about Social Security expressing concerns that the Social Security number would become a citizen I.D. number, and the reassurances that the number would be a sort of little secret between each citizen and their benevolent government. Except for, later, the banks and the IRS.  And, now, the many businesses (including the telecoms) who routinely demand it.[]
And I've also read of the internment of the Nisei at the start of the Second World War — who were identified using private, protected and secured information from the U.S. census.  And I am not  reassured.()
Night Thoughts II: TIA Revivere
As originally envisioned by John Poindexter, TIA had stringent privacy and access controls: database information was encrypted to military standards, and access was on a tiered, carefully restricted "need to know" basis. But neither the NSA nor the FBI was willing to relinquish a long-sought intelligence-gathering tool, and the 9/11 attacks provided a potent argument in favor of its continued development: in information that has recently become public, when Congress – in response to public outrage – killed the funding for the original TIA program, parts of it were moved to the NSA, where its funding became part of the Top Secret intelligence budget. And, while carefully selected ranking members of the Congressional Intelligence Oversight Committee are briefed about the size  of the annual appropriations for secret intelligence projects, they are not  given itemized control of how the monies are spent; and, when the NSA took over the project, the data collection and correlation parts of the project were retained, but the privacy and access safeguards were discarded.

Orwell modelled his famous novel 1984  on Stalin's dictatorship, but he could not foresee that Big Brother's constituents would someday buy, install, and maintain the surveillance cameras themselves: move over Uncle Joe — here comes B.B.D. & O.
See also  Dr. DB's consumer tips for information on some marketing hustles and scams; the (supplemental) Dr. DB consumer page for tips on shopping online and a brief list of the Doctor's recommended vendors; Dr. DB's Download page for additional privacy information; and the sh CD-ROM databases for information and software that will help you secure your data and take control of your computer and your internet connection.

You Can Run But You Can't Hide: And We're Talking to You, Friend 
What was formerly a reasonable modicum of peace and quiet will be another casualty of the Hyper-Connected Millennium, as new communication media provide advertisers with unlimited access to potential customers. The inclusion of GPS technology into soi-disant  "smart phones" was sold to consumers as a safety feature: should you have to call 911 and you don't know where you are, the built-in location technology can provide that critical information to emergency responders. Leaving aside the social utility of rescuing folks who are wandering around without knowing where they are, the possibilities of targeting consumers based on their location has been greedily eyed by the advertising industry.  Just think of it: as you are walking down the street, nearby shops can beam sales adverts to your cell phone; as you pass a local burger outlet, you can receive important messages about today's discounts on greaseburgers; and — using technology that is already deployed in Great Britain — "smart" billboards can send their advertiser's message to your "smart" phone during your commute.
       [Or maybe, on second thought, don't  think about it ...]
In addition to boosting sales of smaller, slower, less versatile computers with fewer system resources, the new ad-driven push to notebook computers and G3/G4 cell phone technology also removes almost all of the user's system control options: tiny operating systems designed to connect to the Cloud won't give you the option to block connections to websites; and, there aren't enough system resources to use web-filtering software, either.(1 ff.; 2)  Further, your plaintext email will also be "in the Cloud," where the service providers can easily (and legally) sell keyword search-access to marketing profilers; and, the record of existing, (nominally) free web-based email providers in respect to both security and privacy ranges from abysmal to terrifying.  [See the sh  Passport Risks database for some gory details about Microsoft's Hotmail.]

Bioscience: The (Scary) New Frontier 
Researchers have identified genetic markers indicating a predisposition to both physical conditions (for example, Huntington's chorea, diabetes, and breast cancer) and what have been traditionally categorized as mental illnesses (including alcoholism, autism, and depression). And, while there is a Federal law that prevents employers and insurance companies from using information garnered by genetic testing to discriminate among potential employees or customers, patient medical information is going online — and between hacked sites, bribed employees, and pressure from the advertisers who provide website funding, companies have a very poor track record protecting customer information. Further, with many physicians already using email services to send prescriptions directly to pharmacies (and aside from issues like the open nature of unencrypted mail [e.g. ECHELON and cloud-based mail] and the recent Supreme Court decision allowing data-mining of pharmacy records), it is hard to imagine any  interested parties not gaining access to this information for marketing — or any other — purposes.
FMRI (Functional Magnetic Resonance Imaging) allows real-time brain-function scans, and the technology is already being used to determine how we react – biologically – to advertising [described as “neural marketing”].[12]  More troubling, researchers have already identified certain facial structures that suggest (reflexively — without thought or evidence) the person is trustworthy and honest: computer-generated "neutral" faces (mixtures of differing ages, racial types, and facial bone structures with the muscles completely relaxed to present as close to a "blank" expression as possible) were shown to test subjects for a few fractions of a second; and, with certain faces, the researchers noted activity in regions of the brain associated with positive/pleasurable emotion. The test subjects were then given psychological tests (similar to the Rorschach) using the same set of faces; and, the results clearly indicated a predilection to trust the same faces that had elicited a positive response on the "flash" test. [link/quote study]  Like focus group studies of political issues, this technology will undoubtedly be used to screen political candidates,[] which suggests worrisome answers to two rhetorical questions from the ’60's counterculture:
      “Are we having fun yet?”
      Ans.:  (Emphatically) yes — whether you know it or not (we've detected it on your brain scan);  and,
      (From a Nixon poster) “Would you buy a used war from this man?”
      Ans.:  Will you have any choice ?

The problem of advertising impacts and influences most of the issues outlined above; and solving it will not be easy because,  (1) the ad industry shapes and controls the political dialogue (both with lobbying and with advertising in its own interest);(1 ff.)  and,  (2) any controls will involve freedom of speech issues which are central to our democratic system of government — and legal mistakes could easily interfere with legitimate political debate.1, (2)

That advertising represents a truly new, unconsidered market force is one of the core theses of the paper “Parasitic Capitalism and the Death of Markets ” [above]; but, as a concession to both the hosting website (Emerald Technologies) and the urgency of current events, these workup notes have been published with a primary focus on the current recession. As originally envisioned, however, the paper would be structured as a carefully documented timeline/statistical update to The Hidden Persuaders (below); but, this would require at least two years to properly develop and document, and I have other, more urgent demands on my time.
That said, in my opinion the advertising/marketing industry bears a great deal of responsibility for the current recession; and, the most significant negative effect of advertising results from its synergistic support of the consumer waste-stream economy. Growth pressures in mature markets require that people buy goods and services they simply don't need:(1, 2 ff.)  businesses, instead of "finding a need and filling it," must create  a need, and — even more damaging in the long run — an ever-increasing need.[1, 2]  Considered as either verbal logic or public policy, the concepts underlying the marketing term "creating demand " are obscene.1, (2)

Primary source references: persons interested in the evolution of advertising and its social impacts should try and locate a copy of Vance Packard's seminal studies The Hidden Persuaders  (bearing in mind that the trends outlined have evolved – in my opinion, pathologically – since its mid-'50s publication date1, 2), and The Naked Society (1964).  Whitfield Diffie and Susan Landau's, Privacy on the Line: The Politics of Wiretapping and Encryption  [The MIT Press, 1998.  ISBN 0–262–04167–7] — a brilliant and cogent summary of recent historical developments and current law regarding the domestic use of SIGINT (SIGnals INTelligence) surveillance of private citizens — is also highly recommended, especially for thoughtful voters [see (1) and (2)].  Also, (#10) below lists some of my own approaches to controlling advertising. 

 Summary and Conclusion 
Many contemporary forces  acting on markets are not new: they are historic, well understood, and – in many instances – remediations and regulations are already in place. Perhaps the best example is centripetalism, which is simply the old tendency to monopoly re-cast in terms of a mature market.(1 ff.)  In my opinion, the only truly new force influencing capital markets is advertising: its scientific underpinning,[]  ubiquitous presence, enormous cost and market influence are new; and, as outlined above, regulation will be difficult, at best.1, (2)

In unregulated, mature capital markets, advertising in tandem with other market forces (including the political/economic influences outlined in  [1 ff.]  above) will cause ever-increasing trade in capital instruments (e.g. [1 ff.] and [2] ): in effect, capital is feeding on itself. I describe this as ‘parasitic Capitalism’. The only structurally inherent controls provide positive feedback:  as long as capital instruments sell, the market is profitable; so, it produces and sells yet more.(1 ff.)  But, as Robert Heinlein pointed out, when positive feedback is used to control systems, they tend to oscillate.[]

Further, there is no intrinsic, underlying value to capital instruments,[]  but only five percent of the world's money is “tied to trade or production;” the rest “is purely speculative.”  [Dr. David Graeber, author of  Debt: The First 5,000 Years]

When the dotCom bubble burst, analysts and investors bemoaned the "disappearance" of over 8 billion dollars.  But money doesn't just disappear: there is an enormous infrastructure employing millions of people — including banks, savings and loans, and credit unions; bookkeepers, auditors, and CPA's; regulatory and supervisory boards, agencies and commissions; and Federal, state, and local Treasury and taxing agencies — all of whom keep track of money. Even where there are highly paid, skilled professionals trying  to make money disappear — as with Mafia money-launderers and wealthy tax-evaders with clandestine, off-shore bank accounts — they rarely succeed for long.
So, what happened?
Basically, the money never existed in the first place:  stock (paper secured by a business) would go up in value; then, both businesses and investors would use the new, increased stock value to secure (borrow money to buy) investments in other capital (paper) instruments.()  Paper would secure paper in an ever-rising cycle of value; and, each turn of the merry-go-round would get further and further away from any tangible, salable asset: when investors finally lost faith in the value of the paper, there was nothing  to sell.[]  But – for a while – it was “a helluva ride for a quarter.”

Much the same thing happened (on a much larger scale) with the financial market's investments in derivatives. Here the problems began when mortgages (paper secured by real property) became securities with a value
  1. in and of themselves. The mortgages  became the assets that secured the derivative: paper secured paper.(1, 2, 3)
  2. that was not necessarily appropriate for the properties securing the original mortgages. Real-estate agents working on commission had an incentive to maximize the value of properties; and, since lenders knew at the outset that there were buyers waiting before the mortgages closed, the market pressure was to make the loan: close the deal, sell the product, and any risks would be assumed by the buyers.
  3. that was largely impossible to determine. During consolidation in the banking sector, buyout deals were made using a mixture of cash and stock or (sometimes) for stock alone. But, the value of stock varies: if the stock goes up, the relative amount of capital represented by the newly-acquired asset decreases proportionately, and all is well. But, if the value of the stock goes down, the relative amount of capital represented by the asset in creases. Multiply this effect by hundreds of mortgages from hundreds of different mortgage lenders and  several mergers and acquisitions, and it is not too surprising that those holding the derivatives cannot accurately determine their value: as was frequently stated after the recession became official, banks simply did not know exactly how much their "toxic assets" were worth; and, you can't sell something when no one knows its value.
Closing the Circle
Our economic problems do not exist in splendid isolation, but if I had to lay blame on any one, proximate causal issue, I would point to an underlying logical error in the use of language: we confuse symbols with reality.1, [2]  To quote A.E. Van Vogt [from The World of Ā ] “the map is not the territory;”  but, we continue to regard capital instruments — stocks, commodity futures, and mortgages — as assets themselves instead of merely the symbols  of assets.
The most common argument evinced against this position is that the dollar is also ‘just a piece of paper.’  But the dollar is backed by the “full faith and credit of the United States government;” and, the problematic toxic/troubled assets are market-based capital instruments backed by bundled mortgages, many of which were originally created by sub-prime lenders.1, 2, (3)
That I am far from alone in these opinions is demonstrated by the price of gold on the world market: as recently as October of 2010 it reached over $1,300/oz.  The basic rule is that those who believe the economy will perform well invest in stocks; those who believe the economy will do poorly invest in bonds; and, those who doubt the security, integrity and value of the monetary system itself invest in gold.
Realistically, however, driven by advertising, wishful thinking and outright greed, our tendencies to transact with internalized social-intellectual constructs will no doubt continue — until brutal, self-demonstrating reality – “das Ding an sich ” – brings us up short.

The argument is thus adduced that Capitalist market systems are more efficient and productive than Socialist sytems; but, that unregulated  capital markets are inherently unstable.

On the anniversary (if that's the right word) of the Lehman Brothers demise, Alan Greenspan acknowledged that world financial markets would periodically collapse: after a lengthy time of sustained growth, it is “human nature to assume that growth will continue;” and, this “unwarranted optimism” will lead to [my term, not his ] wild speculation.1, [2]

And, while there is broad agreement that the natural tendencies of unregulated capital markets will lead to cycles of booms and busts,()  economists are (generally) divided on whether this is an attribute or a problem and (bitterly) divided on specific remedies (if any) that should be applied.

Speaking to the BBC on the anniversary of the Lehman Brothers collapse, Alan Greenspan — a Free Market advocate — accepted the inevitability of market cycles (above).1, [2]  But Mr. Greenspan also pointed out that the “robust growth of global markets” would not be possible with restrictive national and international regulation; and, he was again correct: sustained market growth created both unprecedented personal and national wealth, not only in the U.S., but also in many markets around the world — and many of the tangible (infrastructure) investments will remain [the Internet and resulting world-wide access to information is a cogent example].
On the other hand, two days later a former Goldman banker defined the problem pithily as “a Free Market failure,” caused by too many big banks and investment companies who “paid too much money” in lobbying and campaign contributions to Congress. In effect, “government regulators were paid to stand down.” 1, [2, 3 ff.]
And, in a recent [2010] somewhat mind-boggling (and typically cryptic) statement, even Alan Greenspan has cautiously admitted the need for market regulation since (paraphrasing loosely) the free-market economic theorists simply never considered that the major banks and investment houses would take such enormous risks with their capital investments.[1, 2]

As this debate plays out, it should be most carefully noted by the rest of us — the innocent bystander-victims — that, in tandem with the United States, Great Britain deregulated its banking sector in the 1980's; and, also in tandem with the U.S., the collapse of its financial sector precipitated the world-wide economic crisis.
But, the picture in Canada is very different: although – like the U.S. – Canada deregulated its banks allowing investment banking and its banks are also allowed to compete nationally, Canadian banks are smaller and more diverse.[1, 2]  More significantly however, Canada does not allow tax deductions on mortgage interest, so Canadians, on average, bought smaller homes, did not see double-digit appreciation of home values, and did not have the same incentive to re-finance their homes to fund consumer debt.1, (2 ff.)  As a result, Canada did not develop a ("toxic") mortgage  bubble in its financial markets,()  did not have to bail out banking and other corporate giants that were “too big to fail,”  and today has a relatively healthy economy where the primary impacts of the global recession have come from the economic woes of its foreign trading partners.
However, like most complex, (quite literally) debatable issues, market regulation will, in the end, come down to social and political choices; because, you can't have the benefits of the booms without the pain of the busts.  Is the glass half empty or half full ?  And, what do you want ?

In my opinion, unless considered, effective regulation is imposed on unwilling markets, people will eventually demand political changes that may, indeed, destroy the productivity, innovation, and efficiencies of capital markets: the mature, unregulated market will feed on itself until it has consumed its own capital substance, and the injured masses — through their elected leaders — will demand radical and ill-considered intervention, effectively ‘throwing out the baby with the bath water.’  In short, allowing the unregulated growth of markets may well end — not in a Marxist crisis and revolutionary imposition of a Communist state — but, in the legal, evolutionary, and democratic crippling of capital markets: parasitic Capitalism may indeed lead to the death of markets.() 

 Appendix:  Opinions, Solutions and Rants 
At this point, someone usually raises the point about un constructive criticism. Without savaging the logical fallacy involved in that point of view,[]  and for the benefit of your  children, here are some of my suggested solutions.

If you want to be really  unpopular, you are welcome to the following ideas. They are logical, reasonable, and (except for #9) impossible to realize: there is too much money, too much social indifference, and too much self-interest for any of them to matter.  So, help yourself: just don't use my name.

  1. Controlling Market Consolidation (Centripetalism)
    Since open markets and competition work in the interest of consumers,(1, 2)  one of the most basic and effective economic remedies is to aggressively  enforce the Sherman and Clayton Anti-Trust Acts. Most members of the Clinton administration were not true believers in anti-trust enforcement, and the Bush(minor) administration was actively hostile. Dominant market entities that should be (at least) investigated and (probably) broken up include: all financial institutions that are ‘too big to fail’ (with the obvious argument that this is in the national interest), including A.I.G., Bank of America, CitiGroup, J.P. Morgan-Chase, Goldman-Sachs, and any other Wall Street institutions that required a Federal bailout;1, (2)  bloated communications sector entities, including Verizon, Viacom and ComCast;()  oil and gas companies (where the mergers should never have been allowed in the first place) like Exxon-Mobil, Chevron-Texaco, and BP/Conoco-Phillips;[]  computer/internet companies with uncompetitive market shares, including Microsoft, Cisco, Intel, and Earthlink; and, food giants like Kraft, Tyson, Cargill, Con-agra, and ADM.()
    [Do feel free to add your own least-favorite mega-corporations: “you can put 'em on the list, and they'll none of them be missed;”  however, in reality, few (if any) of these monsters will be challenged. But you can  ‘vote with your feet:’ you can boycott their products and services.]
  2. Eliminating Junk Mail 
    As a privacy advocate, my name is not on junk-mail lists; nevertheless, I receive over two and a half pounds  of trash a week, all of it sent to "Occupant,"  "Resident," and (by profound error) "Our Friends At."  I also pay the going rate for postage when I need to mail bill payments or write to friends — and I resent it. So, I suggest we eliminate bulk-rate mail completely. In its place would be a type of mail I call "contract mail."
    The postal requirements for contract mail would be the same as for the current bulk-rate mail (pre-sorted and bundled by zip code, etc.) and senders would be charged the same rate. The difference is that recipients would contract  to receive it. For example,
    horizontal_spacer• When you subscribe to a newspaper or magazine, you contract  to receive it.
    horizontal_spacer• If you use public utilities (electricity, water, gas), you contract  to receive the bills.
    horizontal_spacer• If you sign up to receive ads from a local store (e.g., a supermarket) or
    horizontal_spacer  request a catalog from a vendor, you have contracted  to receive it.
    All other mail would travel first class. This would benefit the environment, reduce the garbage-flow through the postal system, and provide vendors with a self-selected, targeted mailing list.
  3. Overdevelopment and Overpopulation Issues 
    Overdevelopment can be defined as overpopulation in a specific area or region; and, since it is a special, limited case, it is easier to find local or regional solutions.[]  The following example is a case in point, applying to the southwest desert regions of the U.S.
    The housing bubble resulted from growth pressures that were only partially market-based.1, [2]  I prefer a more considered approach, beginning with examining the "carrying capacity" of the land itself. Of the three necessities for life — air, water, and food (in that order) — water is the limiting factor in desert regions; so, if water can be allocated fairly, it will provide natural controls on development. Therefore, as part of the permitting process, I suggest that developers be required to locate and develop  a water supply sufficient to completely supply their proposed project; and, that the water be connected (at the devlopers' expense) to the inputs of the city/regional water supply. Homes and businesses in the proposed project could then be connected to municipal water supplies without burdening taxpayers (who, after all, are not profiting from the development).
    For example, a developer wishes to build 400 4-bedroom homes: on average, these would each accomodate two adults and three children. As part of the political process, we would determine a reasonable, daily water use for such a family (i.e., drinking, bathing, and a modest yard; but — again, part of the political process — probably excluding swimming pools and hot tubs). To insure fairness to all parties, consider the following three scenarios:
    1. There is no water found on the land: all trial well-bores come up dry.
      With permitting regulations in place, developers would, as a matter of prudent business practice, include a requirement for (at least) an hydrologist's report or (usually) a proven water supply as part of any offer to buy land. If there is no water to be found, they might not buy the parcel(s); and, they would be out only a few thousand dollars for the report and/or trial wells. (Developers and landowners might also choose to negotiate the percentages each will pay for trial wells on the basis of whether water reports are made part of the public record.)
    2. There is only enough water to supply 200 4-bedroom homes.
      At this point, the developers and landowners may re-negotiate a lower selling price for the parcel, or the deal may fall through completely.
      If developers close on the land purchase, they would have the option of building only 200 homes, perhaps increasing the size of the lots to make the unit sales price higher; reducing the size of some or all of the homes (to reduce the water needed), which would allow them to build a few more; or, building only 200 of their planned 400, and using the extra space for public amenities (like parks), which would also increase the value of homes in the subdivision.
      Even if developers withdraw from the (proposed) sale, the market value of the land has increased  substantially, because it now has a proven water supply.
    3. The developers hit the jackpot: there is enough water to supply 800 4-bedroom homes.
      The devlopers might choose to reduce the lot size and add more homes; they might decide to add multiple-unit structures (duplexes, apartment/condos) to their plans; they might do both the foregoing and also add public improvments (like swimming pools) which would increase the value of the homes.
      However, if there was (as is likely), "left-over" water, the city or regional municipality would be required to buy the excess capacity at the going, wholesale rate.  Developers could negotiate a one-time sales price with the municipality, elect to receive regular payments (which, over decades would amount to a substantial sum), or some combination (perhaps a sale, with some ongoing payments going to maintenance of a park or public pool). But, the critical part is the developers — who took the capital risks — would be paid for the "extra" water.
    As a bonus, this will also (automatically) dictate open space without additional, restrictive one-size-fits-all regulation. An additional, more abstract advantage, is that critical civic infrastructures are less fragile. For example, Los Angeles gets a large amount of water from the Central Valley: it is pumped over the mountains through three enormous pipelines that can be seen near the foot of the Grapevine. A catastrophic failure of either these pipes (from material failure, earthquake damage, or terrorist attack) or the pumps (equipment failure or damage to/failure of the electrical grid) would create an immediate crisis affecting millions.

    Overdevelopment, however, is only a small part of the more general (and more difficult) problem of overpopulation: world population has now grown to an extent that, even if a cost-free, perfect system of distribution existed, there would still not be enough food for everyone to have a recommended minimum diet. One way to discourage overpopulation would be to restructure state and Federal tax deductions for children: for the first child, parents would qualify for the current deduction; but, they would not  receive a deduction for a second child. If they had a third child, they would lose the deduction entirely; and, for each additional child, they would be assessed a penalty equal to the deduction for the first child.
    [In several senses, the above suggestions are very modest proposals; but, in the long run, I believe that there is no  effective method of managing population growth: since reproduction is a biological imperative, I can only assume a Malthusian solution.  And those who collect night thoughts should also remember that all  major cities world-wide — not just in the U.S. — are “too big to fail:”  in a major disaster or catastrophic failure of civic infrastructures, evacuation is effectively impossible.()]
  4. Managing Paper Commodity Trades 
    Return the commodities market to its original (important and useful) purpose: require traders/contract holders to actually take delivery of commodities. This eliminates both the paper trades [e. g., (1)] and the (unnecessary) middlemen, while still allowing vendors to buy commodity futures at a discount and providing production capital to suppliers.
  5. Fixing Anti-Smoking Legislation 
    For individuals, the primary impacts of smoking are in terms of personal health; but, the only state  interest is the cost of providing health care for smokers.[]  Therefore, the most cost-effective, least intrusive method of managing this would be to
    (i) have larger and more comprehensive warning labels on all tobacco products: I suggest the type be no more than two points smaller than the brand name.
    (ii) provide state funding for registered, medical anti-smoking programs. I suggest that these programs require at least a 10% co-pay, which will provide the smoker an incentive to adhere to the prescribed regimen.
    (iii) pass legislation that no public funds whatever  will be provided for treating smoking-related illnesses; and, should tests demonstrate the patient is indeed a smoker, that the illness be assumed to be caused by smoking. If someone wishes to smoke, it is assumed he or she is also prepared to pay for private health insurance.
    (iv) repeal all second-hand smoke regulations after a suitable transition period (perhaps five years). If, for example, people apply for a job in a bar that allows smoking, they do so knowing the risk. Likewise, if a bar or restaurant does not provide a suitable non-smoking area, they will lose custom.
    (Second-hand smoking issues have led the health-Nazis to pass some of the silliest and most intrusive legislation in the public arena: for example, in Arizona people are not allowed to smoke at outdoor  concert venues; and, a bill to outlaw smoking in automobiles when children are present was barely defeated.)
    Declaration of personal interest: since I have a mild allergic reaction to nicotine, I do not smoke.
  6. Managing Public Utilities 
    I've made the argument that — from the consumer's viewpoint — there is no real competition for the delivery of public utilities;  and, also from the consumer's viewpoint, both publicly owned electric utilities (like the ones in Sacramento and Los Angeles, California) and utilities that are owned and managed by strictly regulated, publicly-held (stock) corporations (like P. G. & E. in northern California) provide functional models that are reliable and cost-effective. The only model that demonstrably doesn't  work well is the deregulated, corporate model.[]
    A combination of Wall Street greed and political ideology drove deregulation — not because the regulated utilities failed to return a profit (which was guaranteed), nor because shareholders failed to receive dividends (which were so reliable that most of P. G. & E.'s stock was owned by its employees, purchased to provide the assured dividend income for their retirement years before  the 401K plan was put into place by the Federal government), but because speculators could not get double-digit returns on increases in the stock price: since the profits were fixed, the stock price was stable.(1 ff.)
    In addition to (consumer) cost increases, other problems created by applying Free Market economic theories to a market that is not controlled by the law of supply and demand1, (2)  include issues of system overhead and grid reliability, the failure to build new generating capacity, and shifting both low-income assistance and funding for energy conservation — formerly wrapped into the (regulated) profit margin — to the citizen-taxpayers as a whole.
    All sections of the grid are designed with excess carrying capacity: when a large load is switched in, the grid must be able to deliver the necessary power; otherwise, the overload will trip circuit breakers in the same way as an excess load will trip the breakers in your home. But there is no storage capacity in the grid: any kilowatt that is not used at the exact moment of its generation  (i.e., does not have a buyer) represents not only lost profit, but also lost operating capital: the overhead costs of fuel, plant maintenance, worker salaries, etc. Thus, the question becomes "How much excess capacity is enough;" and, the answer from an auditor/bookkeeper whose interest is maximizing investor returns and a system engineer whose (regulated) corporation is guaranteed a fixed margin of profit regardless of the overhead expense will tend to be different.
    Exacerbating the problem, more than two decades ago [get exact date], the Rocky Mountain Institute did an engineering cost-analysis study of the price of building new generating plants. Surprisingly, when all the costs were tabulated [environmental studies, permitting, public political/legal requirements (public discussions and the NIMBY factor), construction, and operation], it was shown that companies actually lost money by building more plants and selling more electricity: there were (mathematically) demonstrably greater profits in getting customers to conserve electricity than in building new plants and selling them more. This report changed the way the entire industry did business: the emphasis shifted from consumption (the all-electric home of the ’50's and ’60's) to conservation (using the Rocky Mountain Institute's unit of electricty not  generated, the negawatt ); and, this is reflected in everything from local building permit requirements to billing practices (usage tiers) and the conservation flyers and low-interest home energy-conservation (retrofit) loan offers that come with your utility bills.
    Thus, normal (profit-driven) market pressures tend to significantly increase electricity rates for the consumer while, at the same time, reducing excess system carrying capacity (overhead) and preventing the creation of new generating capacity — both of which decrease the reliability of the grid.
    [You've probably experienced a power outage at least once recently; and, it is easy to discern the difference between a grid (capacity) failure and physical damage (a downed power line): when part of the grid is temporarily overloaded, the circuit automatically switches attempting to balance the load, and — if it fails — switches out. In this type of outage the lights will flicker and then (usually) abruptly flick off for 5 – 40 minutes. When a power line goes down, the lights usually flicker, then come back on either much brighter or much dimmer than before (depending on where the short/downed line is relative to your home); and, the lights remain on for a few seconds before going off for good. This type of failure usually takes two to five hours (minimum) to fix; however, in some cases, linemen will route around the failure and restore service, replace the broken line, then shut the circuit down again and remove the bypass. In this latter event, the power will go down as previously described, come back on in about 45 minutes, and then go off abruptly for 15 – 20 minutes about 3 to 4 hours later (when the bypass is removed). In both types of failure there will be a (line) switching voltage surge when the power is restored, and you are well advised to turn off and disconnect surge-sensitive equipment — especially (transistorized) electronics and fluorescent lights: remember that all remote-controlled appliances (like TV's and VCR's), "soft-on" (touch-button) controlled appliances and computers, and things with digital clocks (like microwave ovens) are drawing power unless physically disconnected.]
    But, in the end, decisions on the management of civic services are political; and, without a lengthy, reasoned public dialog and debate on what are the legitimate functions of government, and — more importantly — what we are willing to pay for, about all consumers can do is protest when confronted with lower-quality services and inflated utility rates.[1, 2]
  7. Environmental Issues: A Market Approach 
    In terms of market economics, the least intrusive and most effective method of managing environmental issues is to use the market itself: carefully  crafted taxation can assure that environmental costs will be borne by those who profit from deleterious practices, rather than (as is currently done) shifting costs to the public at large. The widespread use of petroleum-based plastics (which do not naturally rot) provide some cogent examples.
    Plastic packaging is environmentally disasterous: if all plastic packaging was assessed the full price of collection (including litter pickup, public waste containers, and city trash recycling pickup) and disposal (i.e., the appropriate percentage of maintaining city landfills and public plastic recycling), the resulting price increases would force alternatives; and, where alternatives were not used, the public at large would, at least, not be stuck paying the costs.[]
    (i) Milk and soft drink bottles make an excellent example: less than 50 years ago both were sold in glass bottles, and the bottles had a substantial deposit (in some cases the deposit added more than 50% to the product cost) which was collected at the point of sale. Deposits were refunded when the containers were returned; and the fees generated paid the cost of returning the bottles to manufacturers for re-use. Supermarket ex. – Big Milk vs. local dairies;(1, 2)  vending machines; service station/convenience store ex.; littering: substantial deposit is an incentive for buyers to return, and homeless pick up street litter for cash.
    (ii) Plastic films: u.v. polymer breakdown and the Pacific Ocean "plastic sargasso" [link to study]; cellophane (synergistic recycling, since it is made from, among other things, corn stalks).
    In a like manner, other uses of petroleum-based plastics should be examined in light of their total  (rather than immediate) costs:
    (iii) Plastic fibers: nylon clothes (not cost-effective);  nylon rugs (only wear vs. cotton is cost-effective; office: static/computers; see also [1]);  dyes (I.G. Farbenindustrie, coal tar, toxicity; see also Fox Fibre);  recycling cotton (it takes more pesticides to grow cotton than any other crop): it rots, high-quality [rag] paper vs. wood-fiber paper (deforestation).
    (iv) Flooring: vinyl tile vs. linoleum (lin – linseed; oleum – oil); other impacts: vinyl chloride is a potent carcinogen; release in manufacturing; outgassing in commercial products and "sick buildings."
    But, as long as it is cheaper for manufacturers and vendors to use plastics — or, in other words, as long as we all pay the environmental and disposal costs — there is no market-based incentive to change.
    [With a bit of imagination, this type of market-based solution can be extended to health issues()  — e.g. taxing fat and sugar content in junk foods, much as we tax alcohol content in beverages — and social problems like cell-phone use while driving (if there were a legal presumption of fault when a driver involved in an accident was talking on a cell phone — like the presumption of fault by a driver who rear-ends another car — auto insurance rates would quickly ameliorate the problem without the necessity and expense of either government regulation or enforcement).]
    [See The Ecology of Commerce by Paul Hawkins for a related economic discussion; More Other Homes and Garbage, by Jim Leckie, Gil Masters, Harry Whitehouse, and Lily Young for one of the most useful single-volume engineering references on “designs for self-sufficient living;” and the Rocky Mountain Institute (inventors of the negawatt ) for information on energy conservation and passive solar home design.]
  8. School Funding Issues 
    (a) Be certain that any proposed programs benefit society as a whole – not just your own children – before you demand tax money for the schools. For example, it is in my interest as a citizen that your kids know enough history to avoid repeating past mistakes; that they know enough mathematics to understand technology and (by extension) the social issues it presents; and, that they understand English well enough to think clearly and vote in an informed manner. On the other hand, I don't personally give a damn about their self-esteem, ethnic heritage, or whether they eat lunch.
    (b) Having kids is your decision, and raising them is your responsibility: teachers can and should be expected to educate your children; but, teachers and schools cannot be expected to socialize them. Anthropology suggests that children need at least one full-time adult caregiver: that's you. If both parents must work to make ends meet, or if you are a single parent, then we need to have a serious discussion about the basic economic structures of society. But to dump the responsibilities for everything from vaccinations to day care onto the schools and  expect them to provide a quality education at the same time is both unreasonable and unaffordable.[]
    [I am not  dismissing the issue of latchkey kids: it is a serious social problem; but, I think it can only be solved through political discussions that address the problem directly — and that is an unrelated (and far more difficult and contentious) topic.]
    (c) Children are not miniature adults: they don't know what is in their best interests; they do not have a fully-developed sense of responsibility (which we recognize by not holding them responsible for their actions under law); and, they should not be expected or allowed to decide their own educational needs.
    (Elementary levels of most disciplines are tedious, and these courses will not necessarily be "fun" — but children still need to learn them. For example, learning calculus is like listening to a perfectly-structured fugue, but arithmetic is a thumping bore.)
    You should expect schools to provide a high-quality education: you should not demand that they entertain children, as well. As a citizen-taxpayer, I am willing to pay for the mathematics and history, but not for the arts  or sports programs.
    Declaration of personal interest: I am a passionate lover of classical music.
    (d) Advanced courses are structured on the functional and reasonable assumption that children have already mastered lower-level skills: where this is not the case, they should fail. Period. There should be no arithmetic or "bonehead English" courses offered in publicly-funded colleges.
     School sports are, by definition, extracurricular  activities. Coaches in publicly-funded institutions should be paid no more than teachers in other departments; and, fans should pay for all auxiliary costs, including insurance, uniforms, stadiums (maintenance, security, and janitorial services), medical services, etc. No publicly-funded scholarships should be provided for ‘student-athletes:’ one does not study  sport; one does  sport.
    [As currently practiced, the worst abuses exist in the basketball and football programs; and, since both the NFL and the NBA are extremely  profitable entities, I see no reason why they cannot use the same model as baseball, by underwriting professional minor leagues to develop future players. Please note the ‘professional ’ in the previous statement: this would also be more equitable for the players — they would be paid.]
  9. Managing Personal Debt 
    (a) Credit cards are money, not magic: if you carry a monthly balance on your credit card (or, worse, on several cards), you don't understand compound interest.()  See one of your local real estate brokers (or do an online search for software  [1], [2]) and generate a loan amortization table: use the outstanding balance on (each) card as the loan amount, the listed minimum as the monthly payment, and the current interest rate for the card as your parameters. The resulting table will show you how much of each month's payment will go toward interest, how much will go toward the principle, how many months it will take to repay the loan, and the total amount you will pay. This is a best-case scenario: it assumes that you will not add to the balance on the card.
    (b) Don't spend more than you earn: if you can't afford to pay cash for something, you can't afford to buy it.  Period. The only  exception to this is buying a home; and, there you should have a minimum  of 20% cash down payment; and, the combined monthly payments (principle, interest, pro-rated taxes and insurance) should be no more than 30% of your income[] — and no more than 20% if you have children. These numbers are brutal — but they work.
  10. Minimizing the Influence of Advertising 
    The admakers are very  good at their trade:  even with a background in formal [rhetorical and mathematical] logic, there is no effective way to reduce the intellectual impact of advertising without minimizing exposure.  From personal experience, some of the more practical techniques for managing the ad bombardment include
    (i) avoiding commercial media wherever possible:[]  turn off the Idiot Box and read a book (if you can't manage this for yourself, at least consider it as a policy for your kids);
    (ii) learning about the issues and protecing your privacy (see [1 a],  [2], and [3] for a start);
    (iii) controlling and aggressively  filtering your internet connection (see [1],  [2],  [3],  [4],  [5 , 6], and [7] for technical support; and [8] for a detailed examination of Windows' network privacy issues);
    (iv) knowing the law and using it to protect your (real) identity: few of the businesses that want to see your driver's license need it (unless you are paying by check),  and almost none of the businesses who ask for your Social Security number are legally entitled to it;
    Your Social Security number is your primary, nationally-recognized proof of identity: only financial institutions (banks, mortgage lenders) and the I.R.S. are legally entitled to demand it. But, I've been asked by such entities as utility sales reps, telecoms, rental agencies, and physicians (even when I offer to pre-pay for the visit with cash); and, I once watched in mind-boggled amazement when a woman in a supermarket checkout line [Fry's (Kroger), to name the guilty party] wanted to pay by check, needed two forms of I.D. (her driver's license wasn't sufficient), and the sales clerk said "if you give me your Social Security number it [the sale] will go through [the computer]."  And she did. (!)
    (v) not giving away your personal information unnecessarily: for example, requests at point of sale (e.g. Radio Shack) and registration cards that come with merchandise (these usually imply that the information is necessary for warranty purposes which, in most states, is not true);
    (vi) exercising care when ordering from catalogs and online vendors: make sure you opt out of any "sharing" of personal information;
    and, as a way of minimizing advertising generally,
    (vii) publicly voicing your opinions: for example, if you don't like listening to ads on the supermarket PA system, cut your shopping short — and tell the store manager on your way out;
    (viii) making the advertising as un profitable as possible by boycotting businesses with overly aggressive or overly prominent ad campaigns: never  respond to junk mail; never  click on an online ad; never  buy anything advertised on a billboard; never  voluntarily supply any (real) personal information to snoopy vendors;
    [But do have fun: my supermarket cards, for example, are often issued to Hugo Buggeroff, who lives at 123 Hike; and, I change them (= "lose" the old one) regularly, too. When one of these snoops wanted to see my I.D. to verify the info, I responded that I was not required by law to show it, and demanded to see the manager: they (wisely) backed down. (Had they not done so, it would have made a splendid "Letter to the Editor" in the local paper.)]
    and, never do business with firms whose ads appear more than twice a month on national radio or TV.
  11. Taxes: The Impossible Solution 
    One global method of controlling the growth of "paper profits" without restructuring the economic system would be a graduated system of capital gains taxation coupled with a reduction in earned-income tax rates. If, for example, capital gains above the annual rate of inflation  were to be taxed at a rate of 35 – 45%, it would have several salutory effects on the market:
    (i) the brutal and acerbic political debate over what, exactly is  the actual rate of inflation would tend to derogate bogus statistics like the ‘core rate of inflation.’ 1, [2 ff.]
    (ii) since dividends are based on net corporate income, the tax would tend to restore a greater emphasis on actual earnings (i.e., dividends) by mitigating excess profits made purely from "paper trades" such as changes in the value of stocks.1, 2
    (iii) if your money is made from dividends, you need to know a great deal about a business to invest wisely. (One of the causes of the Great Depression that is receiving little attention today is the overall ignorance of many investors participating in the stock market.)
    (iv) by treating profits that exceed the actual rate of inflation as (effectively) windfall profits, it would tend to slow or stop the creation of market bubbles.()
    (v) the overall effects of (ii), (iii), and (iv) above would tend to mitigate market pressures emphasising growth, increasing the stability of capital markets by removing investors' illusions about infinite growth and ever-increasing market profits.1, [2, 3]
    But, the very fairness of this — the fact that it would impact everyone from homeowners to small businesses to venture capitalists — insures that this is the most impossible of all remediations: since everyone's  ox would be gored, it would be political suicide to even raise the issue.
  12. Finding New Models: The Final Solution 
    As mentioned in the summary, the proximate cause of the current recession is, in my opinion, the confusion of symbols with reality in financial markets;  but, since it suggests regulatory solutions, that is a deceptively rose-colored view of the underlying issue facing mature capital markets. To quote one prominent commentator, “Capitalism is all about growth.” 1, (2)  And so it is.  And so it has been, since the beginnings of capital markets. But, infinite growth is – in the long run – impossible;(1, 2 ff.)  so, the final  cause of the recession presents, in a very real sense, an insoluble problem.
    What is needed is a new model for mature capital markets: a model that does not depend on growth. And that model will, necessarily, be a work of genius; but, misfortunately, genius is not a commodity that can be commanded — regardless of critical necessity. Nor does history provide any sanguine reassurances that a transition will occur smoothly and happily before catastrophic events intervene: in cold fact, the grim laws of biology — the growth and collapse of populations ranging from yeast to rabbits — suggest otherwise. Failing that undependable creation of genius, the inexorable collision between the forces of physics and biology so brutally delineated by Malthus may well provide a final solution indeed.

As a final, purely philosophic observation . . .
 . . .All law is state-mandated compulsion: it is defined by the use or threat of force by the State against individuals — indeed, we even use the phrase ‘force of law.’  In my own thinking, I divide law into two class/categories — private and public, each with very different standards: private law is that which affects individuals  within their own businesses, homes, and families; and, public law affects the interactions of classes and groups in social settings. I feel that there must be an immediate, demonstrable, and overwhelming social necessity  before the state is justified in reaching into private homes and businesses to compel individual behavior; and, further, that such a level of necessity is very rarely met (e.g., 5, above). In an increasingly overcrowded and very diverse world, I have long thought that a reasonable modicum of indifference toward the lives of our fellow men goes a long way in fostering a stable society; so, to bleeding-heart liberals, to social conservatives, and to the self-appointed spokespersons for the various gods, prophets, Forces and Powers, I would simply say “mind your own business.”  I think we could all  get along a bit better that way.

I decline all responsibility for the ideas set forth in this section

(or, for that matter, anywhere else on the site).

If you take any of the above to heart, stay informed,  think for yourself, and vote.[1, 2]

Ignorance is the inherent weakness in any democratic system: the vote of a fool and a wise man are numerically equivalent; and, there is no effective, fair way to remedy this fault.
I apprehend no danger to our country from a foreign foe.  …Our destruction, should it come at all, will be from another quarter.  From the inattention of the people to the concerns of their government, from their carelessness and negligence, I must confess that I do apprehend some danger.
[Daniel Webster, 1837] 

For my own use, I prefer publicly-funded (non-commercial) news sources, e.g. [1  (a, b)] and (with increasingly strong reservations )  [2], since I feel there is less ad-driven bias in the reporting.1, 2, (3)
Accordingly, primary sources include both NPR and the BBC, with special reference to the BBC business and (for information on global warming and sustainability1, 2, 3) “One Planet” programs; but, correlations, interpretations, and errors of both fact and citation are, of course, my own.

Remember, your voice will be heard most clearly closer to home: local elections are more important than state or national elections; and, you cast a vote with every dollar you spend.[1, 2 ff.]  [For a more detailed discussion of the latter point, you should ask Emerald Technologies for a copy of the  sh  file “The Power of NO! ”.]

In loving memory of Susanne Cleis, who never lived to write ‘Real Economics for Real People’ — ave, old friend!
This is not the book she would have written, nor is it the work I intended to write: but we do as we can or as we must, and only rarely as we will.



To repeat, for the benefit of the inattentive:  these are in complete, un supported excerpts  from workup notes  for an unpublished paper, “Parasitic Capitalism and the Death of Markets.”  If the paper is ever completed and released, a copy will be posted on Dr. DB's Download page.

For a more lighthearted discussion of the Dismal Science, see “A Child's Garden of Recession Economics,” elsewhere on this site.


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