Saturday, July 27, 2013

Two American Families: Complexity At Work?

It’s a central premise of the American dream: If you’re willing to work hard, you’ll be able to make a living and build a better life for your children. But what if working hard isn’t enough to ensure success — or even the basic necessities of daily life?

FRONTLINE’s Two American Families follows two ordinary families who have spent the past 20 years in an extraordinary battle to keep from sliding into poverty.

The film, a collaboration with veteran PBS journalist Bill Moyers, who has followed the Stanleys and the Neumanns over the years, raises unsettling questions about the changing nature of the American economy and the fate of a declining middle class.

“He will not be able to see the retirement, you know, that he probably would hope for when he was working at A.O. Smith,” say Keith Stanley, the son of Claude Stanley who was laid off from a steady, good paying job in the early ’90s. “That’s just not a reality. My heart goes out to that generation that was promised something from America, by America, that they would have a better life and that’s not the case anymore.”

Here's my comments on the structural change and the implications if the system that changed is a complex system in a critical state. Click to listen.

Wednesday, July 24, 2013

The American Economy Is Eroding the American Job

"Left to its own devices, the American economy is eroding the American job. Hours decline, dragging take-home pay down with them. The identity of the boss becomes mystified, much to the boss’s advantage. A government commitment to full employment, backed up by the public investment required to create it, would bolster not just the quantity but also the quality of our jobs. Republicans are dead set against that, however, and most Democrats appear to have abandoned the fight. So much for the American job." Harold Meyerson

Monday, July 22, 2013

The State of America's Middle Class

 The following was taken from "The State of America's Middle Class in Eight Charts" by Jason Breslow and Evan Wexler, Frontline, PBS. Click here for charts and article.

Wages are down

Middle class incomes have shrunk 8.5 percent since 2000, after enjoying mostly steady growth during the previous decade. In 2011, the average income for the middle 60 percent of households stood at $53,042, down from $58,009 at the start of the millennium.

Less income for the middle class

Partly as a result of lower pay, the middle class’s share of the nation’s total income has been falling. In 1980, the middle 60 percent of households accounted for 51.7 of the country’s income. By 2011, they were less than half. Meanwhile, the top fifth of households saw their slice of the national income grow 16 percent, to 51.1 percent from 44.1 percent.

Union positions are shrinking

One factor behind the decline in income has been a drop-off in the number of workers earning union salaries. In 2012, the median salary for a unionized worker stood at roughly $49,000. The median pay for their non-union counterparts was just shy of $39,000. Since 1983, however, the share of the population belonging to a labor union has gone from one-in-five workers to just over one-in-ten.

More workers stuck in part-time jobs

A second factor weighing down pay is the rise in the number of Americans stuck in part-time jobs. In 2012, more than 2.5 million Americans worked part-time jobs because they could not find a full-time position, the most since 1993.

Fewer jobs from U.S.-based multinationals

Part of the challenge for job seekers is that U.S. multinational corporations having been hiring less at home. These large, brand-name firms employ roughly a fifth of American workers, but from 1999 to 2008 they shed 2.1 million jobs in the U.S. while adding more than 2.2 million positions abroad.

Rising debt

Predictably, the economic pressures facing the middle class have left families deeper in debt. . In 1992, the median level of debt for the middle third of families stood at $32,200. By 2010, that figure had swelled to $84,000, an increase of 161 percent.

Families are saving less

The rise in debt has meant fewer families have the ability to put away money for things like retirement or a child’s tuition bills. In 2001, more than two-thirds of middle class families said they were able to save money in the preceding year. By 2010, that figure was below 55 percent.

Net worth has plunged

The impact on family net worth — the amount by which assets exceed liabilities — has been painful. In 2007, median net worth peaked at $120, 600. Then came the financial crisis, which pushed millions of Americans into joblessness and home foreclosure. By 2010, net worth had plummeted 36 percent, to $77,300.

Friday, July 19, 2013

First Democracy

I really enjoyed this book, and I want to thank Paul Woodruff for making this academic research accessible. I think we need a lot more of this right now. We are in a time period of radical change, when much of what we accepted as “truth” is shifting out from under our feet. During times of great change, it’s wise to relearn the basics. Who are we? What are we all about? And, where do we want to go?

Woodruff opens his introduction with, “Democracy is a beautiful idea – government by and for the people. Democracy promises us the freedom to exercise out highest capacities while it protects us from our worst tendencies. In democracy as it ought to be, all adults are free to chime in, to join the conversation on how they should arrange their life together. And no one is left free to enjoy the unchecked power that leads to arrogance and abuse.

Like many beautiful ideas, however, democracy travels through our minds shadowed by its doubles – bad ideas that are close enough to easily mistaken for the real thing. Democracy has many doubles, but the most seductive is majority rule, and this is not democracy. It is merely government by and for the majority.”

So Woodruff goes back to the first democracy – the ancient Athenians. He traces the development of the first democracy and describes its principles. Voting, majority rule, and elected representatives are generally accepted ideas in American democracy, but they were not part of the first democracy.

“These three doubles are not democracy. Voting is not, by itself, democratic. Majority rule is positively undemocratic. And, elected representation makes for serious problems in democracy. I have begun to say what democracy is not. Can I give a positive account?

Democracy is government by and for the people. That is hardly a definition, but it will do for a start. As a next step, I shall propose that a government is a democracy insofar as it tries to express the seven ideas of this book: freedom from tyranny, harmony, the rule of law, natural equality, citizen wisdom, reasoning without knowledge, and general education.”

The tools of the first democracy are unique to the time, culture and size of Athens:

Legal system: No professional judges or prosecutors. Any citizen could bring charges against another, and any citizen could serve on panels of judges that correspond to both our judges and juries.

Governing body: The Assembly consisted of the first 6,000 men to arrive at the Pnyx (a hillside not far from the Acropolis)

Checks on majority rule: The powers of the assembly were limited by law.

Lottery: The lottery, chosen equally fro the ten tribes, was used for juries, for Council of the 500, and for the legislative panel.

Elections: Some important positions were filled by election, especially those that required expert knowledge in military or financial affairs.

Accountability: On leaving office, a magistrate would have his record examined in a process called euthunai (setting things straight)

Woodruff describes the progression of ideas that preceded the Athenian democracy. Then he devotes a chapter to each of principles of the first democracy:

Freedom from Tyranny: “Tyrant (tyrannos) was not always a fearful word, and freedom (eleutheria) was not always associated with democracy. The two shifts in ideas were gradual and simultaneous. By the time democracy was mature, Athenians at least knew what they meant by tyranny – a kind of rule to be avoided at all costs. And, in contract to that, they knew what they meant by freedom. These two ideas we have inherited. And they are priceless.” Woodruff writes. “No one sleeps well in tyranny,” he continues. “Because the tyrant knows no law, he is a terror to his people. And, he lives in terror of his people, because he has taught them to be lawless. The fear he instills in others is close cousin to the fear he must live with himself, for the violence by which he rules could easily be turned against him.” He warns that democracy itself can be come tyrannical, the tyranny of the majority, “…democracy could be come a tyranny of hoi polloi, literally, of the many.” In Athens this became to mean the poor who banded together, acting as tyrants, supporting the interests of the poor over the rich. This led to a two party system, as the rich banded together to form the party of the few (hoi oligoi), the oligarchs. “If the people’s party went too far towards tyranny, then the oligarchs plotted civil war. If the oligarchs succeeded in gaining power, then, the people’s party would withdraw to plot their own violent return.” The Athenians recognized this oscillation and came to agreements to limit the rise of tyranny.

Harmony: “Without harmony there is no democracy.” Woodson comments. “What would government FOR the people mean if the people are so badly divided that there is nothing they want together? Without harmony the government rules in the interests of one group at the expense of another. If harmony fails, many people have no reason to take part in government; others conclude that they must achieve their goals outside of democratic politics altogether; or, violence, or even the threat of terror.”
The Rule of Law (Nomos): “When law is the ruler, no one is above the law. This seems like an idea that everyone would welcome, but in truth if has had many enemies, and still does. Individuals are always looking for ways to put themselves or their government above the law. Big business seeks endless protections against the law, world leaders scoff at international law, and ordinary citizens see nothing wrong with obstructing justice.”

Natural Equality: “James Madison did not believe in the equality of the rich and poor, and so he and other founders of the United States Constitution made sure that the rich would have greater power than the poor. Voters would have to show that they enjoyed a certain level of wealth. Not so in democratic Athens. Penniless citizens – and there were many of these – insisted that they should be free to take part in their government. They went to battle for this. And they won.”

Citizen Wisdom: “In First Democracy, ordinary people were asked to use their wisdom to pass judgment on their leaders.” Woodruff concludes, “…the heart of democracy is the idea that ordinary people have the wisdom to govern themselves.”

Reasoning Without Knowledge: “Reasoning without knowledge is essential in government,” he writes. “Doing it well requires open debate. Doing it poorly is the fault of leaders who silence opposition, conceal the basis of their reasoning, or pretend to an authority that does not belong to them.”

Education (Paideia): “Paideia is the lifeblood of democracy,” he writes. “…paideia should give a citizen the wisdom to judge what he is told by people who do claim to be experts. So we should call it super-expert-education.”

Woodruff concludes the book with an afterword entitled Are Americans Ready for Domocracy? wherein he takes each of the principles and asks questions about the present state of democracy in America. He ends the book with, “Are we ready to shake off the idea that we are already a perfect exemplar of democracy? Are we ready to put the goals of democracy foremost in our political minds, as many Athenians did? Are we ready to admit our mistakes and learn from them, as they did? Most important, are we ready to keep the great dream alive, the dream of a government of the people, by the people and for the people?”

First Democracy: the Challenge of an Ancient Idea, Paul Woodruff, Oxford University Press, 2005

Tuesday, July 9, 2013

Snowden, Polling and Critical Thinking

As you know from things I wrote before, I’m becoming increasing wary of public opinion polls and the people who write about them. Mark Mellman’s blog post, “Have We Been Snowdened?” raised my curiosity on the subject. Below is a summary of the data he writes about in his column. And, as a full disclosure comment, I’m aware, and you should be also, by summarizing the data as I did I’m altering exactly what each survey reported.

The person who leaked information about this secret program did a good thing in informing the American public or a bad thing
ABC/Washington Post
The NSA surveillance program was classified as secret, and was made public by a former government contractor named Edward Snowden
Snowden leaked information to the press about NSA’s monitoring of phone and Internet usage
Releasing the top secret information about government surveillance programs was the right thing or wrong thing to do

First, I couldn’t verify all of the data he reported, specifically the YouGov poll. And, when I went to look for this poll’s data (because Mellman changed the format of how he chose to report the results) I found even more polls on the subject. In browsing some of the poll data, I found that it makes a big difference whether you ask a question about Snowden, his actions, or what NSA is doing. I also have no guarantee that the sampling is valid in any of the polls, or whether the statistics employed is valid because of complex system effects. Moreover, the results depend upon when the poll was taken.

I’m not so interested in the results of these polls that I’ll invest the research and critical thinking time to find out what the public may think about this issue. However, look at the word usage in the polls – “leaked” and “secret” in the Time poll; “surveillance”, “NSA” and “government contractor” in the ABC poll; “leaked”, “press”, and “NSA” in the Reuters poll, the only one to mention “Phone” and “Internet”; “top secret”, “government” and ”surveillance” in the YouGov poll. These are all words likely to shift a person’s response to the statement.

My sole reason for writing this is just to alert you to critically examine any polling important to you. There are many ways to alter the response, or to “skin a cat” as the old saying goes[1].

[1] “Mark Twain used your version in A Connecticut Yankee in King Arthur’s Court in 1889: “she was wise, subtle, and knew more than one way to skin a cat”, that is, more than one way to get what she wanted.”

Monday, July 1, 2013

How the Case for Austerity Has Crumbled

by Paul Krugman
The New York Review of Books, June 6, 2013

"In normal times, an arithmetic mistake in an economics paper would be a complete nonevent as far as the wider world was concerned. But in April 2013, the discovery of such a mistake—actually, a coding error in a spreadsheet, coupled with several other flaws in the analysis—not only became the talk of the economics profession, but made headlines. Looking back, we might even conclude that it changed the course of policy.

Why? Because the paper in question, “Growth in a Time of Debt,” by the Harvard economists Carmen Reinhart and Kenneth Rogoff, had acquired touchstone status in the debate over economic policy. Ever since the paper was first circulated, austerians—advocates of fiscal austerity, of immediate sharp cuts in government spending—had cited its alleged findings to defend their position and attack their critics. Again and again, suggestions that, as John Maynard Keynes once argued, “the boom, not the slump, is the right time for austerity”—that cuts should wait until economies were stronger—were met with declarations that Reinhart and Rogoff had shown that waiting would be disastrous, that economies fall off a cliff once government debt exceeds 90 percent of GDP.

Indeed, Reinhart-Rogoff may have had more immediate influence on public debate than any previous paper in the history of economics. The 90 percent claim was cited as the decisive argument for austerity by figures ranging from Paul Ryan, the former vice-presidential candidate who chairs the House budget committee, to Olli Rehn, the top economic official at the European Commission, to the editorial board of The Washington Post. So the revelation that the supposed 90 percent threshold was an artifact of programming mistakes, data omissions, and peculiar statistical techniques suddenly made a remarkable number of prominent people look foolish."

Read the article, click here

This is a very good case history of critical thinking in the field of economics. False statements that were not subjected to critical thinking resulted in bad economic policies with large negative impacts on people.

But even after this and other critical thinking essays have been published, the policies resist change.

 I consider Krugman to be one of the most level headed, critical thinkers in economics who has a broad public audience. But, even he seems to despair. The closing paragraph of this artilce was like a dagger. If he can't affect policy, who can? And, what's my roles?

"The Reinhart-Rogoff debacle has raised some hopes among the critics that logic and evidence are finally beginning to matter. But the truth is that it’s too soon to tell whether the grip of austerity economics on policy will relax significantly in the face of these revelations. For now, the broader message of the past few years remains just how little good comes from understanding."

Critical Thinking and Justice

According to Wikipedia, "Since the 15th century, Lady Justice has often been depicted wearing a blindfold. The blindfold represents objectivity, in that justice is or should be meted out objectively, without fear or favour, regardless of identity, money, power, or weakness; blind justice and impartiality."

Isn't it curious that Lady Justice was always a woman, and that the first woman justice of the US Supreme Court was Sandra Day O'Connor in  1981?

I view this description of Lady Justice as a representation of critical thinking.

But, if I look at the recent rulings of the US Supreme Court, I do not see evidence of critical thinking. I see two voting blocks with one judge moving between the two blocks. Is this really justice?