Wealth Inequality is Inherent in Markets

A recent Scientific American article, The Inescapable Casino, discusses models of wealth flow in markets. Depending on the model the results vary from significantly different from reality to amazingly close to exact reality over at least the last 30 years. The results have important implications for both political policy and political ideologies.

For all tested models, accurate or not, wealth invariably flows to a top few, with most people winding up with less or even in poverty unless government steps in and diverts wealth flow to the top. What wealth distribution models finally show depends on what assumptions are built into them. The accurate models give a very good measure of (1) current wealth inequality, (2) the reasons for the degree of inequality and (3) the chances of winding up at the top or bottom. The fundamental insight is this: Markets are like casinos that we cannot leave and it is a proven fact that the longer a person stays and plays in a casino, the higher their chances of losing. That is the reality of market economies for everyone.

The basic wealth flow model points to a situation where, for each economic transaction a person, company, group or nation makes, both parties to the transaction are equal in all respects, including power, knowledge, ability, intelligence, social situation and everything else. Obviously that does not come close to reflecting reality, e.g., poor people have less power and usually less information than most or nearly all companies and rich people. The end result of the pristine "libertarian" model (my term, not anyone else's) is pure oligarchy where rich people have almost all the wealth and power. That seems to accord with semi-current (2010) data.

Refined market models & three truths about them

The researchers refined their model by incrementally including three factors. Including each factor one at a time made the models outputs more and more accurate until they were essentially the same as reality. That is about as good as it can get for models of reality.[1]

If you add to the model three factors, it predicts reality about as close as mathematical models can get. The three factors account for:

1. Taxes, subsidies and inherent advantages that wealthy people and entities have over regular people, e.g., lower cost of borrowing and more knowledge for wealthy people and legal entities compared to regular people;

2. Initial wealth advantage, e.g. a person inherits at least $400 million from dad or any other source; and

3. Negative wealth, which reflects the drag on upward economic mobility from a person owing more than their assets are worth.

With all three factors in the model, the researchers describe their results like this:

Moreover, only a carefully designed mechanism for redistribution can compensate for the natural tendency of wealth to flow from the poor to the rich in a market economy. Redistribution is often confused with taxes, but the two concepts ought to be kept quite separate. Taxes flow from people to their governments to finance those governments' activities. Redistribution, in contrast, may be implemented by governments, but it is best thought of as a flow of wealth from people to people to compensate for the unfairness inherent in market economics. ..... Any single agent in this economy could have become the oligarch—in fact, all had equal odds if they began with equal wealth. In that sense, there was equality of opportunity. But only one of them did become the oligarch, and all the others saw their average wealth decrease toward zero as they conducted more and more transactions. To add insult to injury, the lower someone's wealth ranking, the faster the decrease. ..... In the long run, all participants in this economy except for the very richest one will see their wealth decay exponentially. ..... In fact, these mathematical models demonstrate that far from wealth trickling down to the poor, the natural inclination of wealth is to flow upward, so that the “natural” wealth distribution in a free-market economy is one of complete oligarchy. It is only redistribution that sets limits on inequality. The mathematical models also call attention to the enormous extent to which wealth distribution is caused by symmetry breaking, chance and early advantage (from, for example, inheritance).

If the models are correct, wealth tends to trickle up and various factors weigh against against most people, including being born poor, i.e., markets are not fair, and success is not based on just hard work. 

That raises questions: 
1. Are the models just baloney and of no relevance to the real world, e.g., increasing wealth of rich people and entities does not necessarily cause wealth to trickle down?
2. If the models are right, should government help to distribute wealth down to counteract it's innate mathematical tendency to trickle up?
3. Are the scientists right that it is only redistribution by government that sets limits on inequality, or would wealthy interests limit inequality on their own, e.g., in the name of fairness and/or something else?

Footnote:

1. In real life, there's usually or always a caveat(s) or exception(s). In this case, the caveat is the fact markets are a complex adaptive system, discussed here before. That means there necessarily is inherent unpredictability and even models that give great results now can, and must be, be wrong sometime in the future. That does not negate all of the value of (a) short-term predictions, or (b) modeling of data based on the past.  It just injects some caution.

Shifting With the Landscape

Most of our political system is beyond our direct control, so while we might exert some small influence on it, it's usually drowned out overall.

Sure we can vote, but the impact is limited. We can campaign, but it's the same problem: It's bloody difficult to get enough people to agree with much less commit to a thing.

As it happens, our most effective options tend to be right in front of us.

The trick is to play the field. First, use the system rather than trying to change it and you'll often get more mileage out of your effort.

I'll give you some examples:

I'm trans. In my state there have been protections on the books for people like me since 2006. However, starting in 2015 people have been attempting to roll those back. One of the issues is laws around restroom usage. I got my birth certificate changed so any such law would force me into the women's restroom. Given that most people perceive me as a woman, regardless of me being male, this solves the problem for me in perpetuity. I no longer have to worry about such laws.

I'm queer, and I am concerned about the expansion of religion into government, especially with men like Mike Pence so close to the levers of power. One option in front of me is to start a church for queer folx, and lobby for rights using the very same "religious freedom" laws that are used to cast us out.

I don't like paying taxes toward endless wars and enriching the very wealthy. My options are (aside from running afoul of the IRS) to be very rich, or very poor. Very poor is easy enough if you can be comfortable with what you have and you're not inclined to want.

What other ways can you use the existing system in order to get what you want, despite the law?

Any ideas?

Climate Change Today: Not a Natural Cycle

One of the arguments that many climate science deniers use to deny that modern climate change is a man-made problem is to characterize it as just a natural cycle. That argument helps maintain the veneer climate science deniers need to reject or downplay climate change as a serious problem. In a short article, Climate Clincher, Scientific American summarized a paper published in July showing that current climate change is not part of a natural cycle.

Researchers analyzed 210 data sets of various ways to measure temperatures such as lake sediments and glacier ice for the last 2000 years. The results show that the current warming is unlike every past period of warming and cooling because all data sets show warming now everywhere on Earth. In past warming or cooling periods, there were always some indicators showing warming and some showing cooling. The current data shows only warming almost everywhere on Earth’s surface with few areas of cooling. That is unprecedented for the last 2000 years. It constitutes evidence that this period of warming is not part of a natural cycle.

Despite the Climate Clincher title, this data is unlikely to change many, if any, climate science denier minds. This topic is impervious to evidence or logic for people inclined to reject the political implications of anthropogenic climate change. Just as satellite data analysis showed warming to a high degree of confidence changed few or no minds, this new analysis is unlikely to make any noticeable difference in terms of government attitudes or policy. That data showed there is only about a 1-in-3.5 million chance (a ‘five sigma’ level of confidence) that the warming currently observed is due to random chance instead of human activity. That standard of confidence is what physicists require to accept as real a fundamental new finding such as the Higgs boson.

This new data analysis will not turn out to be a climate clincher for people who deny climate science. Nonetheless, for people with the moral courage to actually face reality for what it is, it doesn't hurt to have another bit of evidence that climate science is not making a huge mistake.

Separation of powers requires impeachment's separation from politics

House Democrats are taking a politically obvious, but constitutionally oblivious, approach to impeachment. Make no mistake, they are perfectly within their rights to proceed; however, how they proceed is crucial to preserving the importance of this monumental undertaking. As the framers knew, impeachment uniquely violates the separation of powers upon which the Constitution rests. An act of such magnitude demands full admission to the people and explicit imprimatur from their representatives, the House of Representatives, to proceed. 

Despite having begun de facto impeachment inquiries in several committees several months ago, Democrats have yet to take the formal step of a House vote to begin the official process. House Democrats recently reaffirmed that decision. The reason is clear: It would be bad politics for vulnerable Democrats – especially those in Trump districts – and leaders know this. 

Currently, Democrats can generate headlines without political headaches. Their approach as selective detectives – partial revelation without full responsibility – offers reward without risk. The problem is that while it makes for good politics, it is bad for the Constitution. 

How divergent this political approach is from the constitutional one taken by the framers is clear from a review of the 1787 Convention. The framers went to great lengths to circumscribe our government’s reach. Their framework, our Constitution, is remarkably brief because the government was not intended to be expansive. 

Even when power is allocated to the government, it is further checked by a separation. Descriptions of the Convention’s debates over the of separation of legislative, executive and judicial functions demonstrates the seriousness and length the framers went to achieve this. 

Amidst this circumscription and separation of power stands the anomaly of impeachment. Matching its overall brevity, the Constitution is similarly laconic on impeachment. 

What makes impeachment stand out is its unique contradiction of the separation of power. During the Convention, James Madison recorded Virginia’s elder statesman George Mason’s seriousness: “No point is of more importance than that the right of impeachment should be continued.” The legislative branch alone has the power to remove members of the other two branches. 

The process of this removal is equally telling of the framers’ intent to incorporate the powers into this abridgment of their separation. The process begins with the people’s direct representatives, the House, which passes articles of impeachment. It moves to the states’ representatives, the Senate (which was originally elected by the state legislatures and still retains equal state representation). The Senate serves as jury, with the Supreme Court’s chief justice presiding over the trial, and cannot convict the president without two-thirds voting for it. 

Despite this meticulous incorporation of all powers, impeachment cannot alter its contradiction. It remains a removal of the executive by the legislative presided over by the judicial. Impeachment is nothing short of an awesome, contradictory and ultimate power under our Constitution. 

Putting impeachment in its true constitutional context illustrates why the House must formally vote to begin it. The House votes on everything. It cannot so much as name a post office without a vote. If the House cannot transact the most trivial of business without a vote, how is it to be presumed it could undertake the most portentous business the Constitution permits? 

Without a vote, the question arises by what authority the House acts on this the most authoritative of business. The framers knew well when they included this ultimate lever that the carefully crafted separation of powers could also yield an impasse, whereby the powers could reach crisis and an inability to function. An ability to override this separation was included and given to the legislative branch to resolve this. 

This most monumental of powers was given to the legislature for a reason. It’s a power that could as easily have been placed at the disposal of the other two branches. But the idea was that the people were to hold that power through their representatives in Congress. They were to initiate it and determine its outcome. Such a careful procedure for so momentous a step demands deliberate action concurred in by the full will of the House to begin.

House Democratic leaders’ desire not to hold a vote to initiate impeachment proceedings is politically understandable. The problem is that it makes it no less constitutionally untenable. The Constitution’s separation of powers demands impeachment’s separation from politics.

J.T. Young served under President George W. Bush as the director of communications in the Office of Management and Budget and as deputy assistant secretary in legislative affairs for tax and budget at the Treasury Department. He served as a congressional staffer from 1987-2000. 

https://thehill.com/opinion/civil-rights/466917-separation-of-powers-requires-impeachments-separation-from-politics

Book Review: Talking to Strangers

Malcolm Gladwell’s 2019 book, Talking to Strangers: What We Should Know About People We Don't Know, deals with the human condition in the face of deceit. Gladwell is a non-fiction writer who tends to write about topics in sociology, psychology, and social psychology. The book’s main point is that strangers, some of who are liars, deceivers or criminals, are treated in a default mode of trust. We believe strangers as the default mindset. Getting out of default trust mode usually takes a lot of evidence before the trusting mind flips into distrust mode.

Gladwell convincingly argues that if humans evolved with a default distrust mode mindset, civilization would probably not have arisen to an advanced state. For humans to accomplish complicated things, they must cooperate. That requires a non-trivial level of trust. Intuitively, that makes sense. Gladwell argues that if everyone always had to take time to vet a stranger’s intentions, an awful lot of time would be spent doing that instead of doing more useful things.

Looking into their eyes to see their soul makes things worse

Gladwell describes research where some computer scientists and an economist got together and built a computer algorithm to assess people for receiving bail for various infractions of law. They ran about 550,000 cases through their program and compared the results with how things turned out when judges either allowed bail or denied it and kept a suspect in jail to await trial. Although the amount of data fed into the algorithm was much less than the data the judges had access to, including directly looking at the defendant from a few feet away, the algorithm made 25% fewer mistakes based on how bail decisions actually turned out. Despite the populations of people they deal with, judges operate in a default trust mode. Looking at a person’s physical appearance and demeanor is not helpful. It seems to make things worse.

Gladwell describes other instances of the same thing. That includes Neville Chamberlain, who concluded from in-person meetings with Hitler that Hitler was a rational and trustworthy guy who wanted to avoid war. Other people, some of whom who did not meet Hitler, e.g., Winston Churchill, came to the opposite conclusion that he was a “duplicitous thug.” Chamberlain took the time to meet Hitler on several occasions to judge for himself whether he could be trusted or not and decided he was trustworthy. We all know how that turned out.

Another example that Gladwell describes is the Bernie Madoff ponzi scheme saga. No one would believe that Madoff was running a ponzi scheme. That included the Securities and Exchange Commission (SEC) who was responsible for finding and shutting people like Madoff down before they could cause a lot of harm. That included on at least four separate occasions when the SEC was handed all the evidence they needed to arrest Madoff. Despite being in law enforcement, the SEC simply could not look at the objective evidence of massive crime as see it for what it was. They were in default trust mode and could not be snapped out of it by mere proof of crimes.

Another deeply troubling story is how amazingly and thoroughly the CIA had been deceived and used by Cuba and East Germany during the cold war. There were not many (or any) CIA spies in Cuba or East Germany that operated without being known as CIA agents. Cuba recruited and planted a spy in the CIA and she was not detected even after one CIA agent got suspicious and reported her to senior spy catchers in the CIA. The amount of evidence it took to flip the CIA from trust to distrust was astonishing. It took years before all the evidence snapped into focus and the CIA realized they had been deceived in a massive way by a rather inept Cuban spy. One last piddly little piece of evidence, a trip to Cuba years before by the Cuban spy, was all it took for the CIA’s spycatcher to finally go “oh shit” after the light bulb finally turned on.

That is the truth mode in operation.

Gladwell discusses a common belief that people can distinguish a liar from an honest person based on how they act. The belief is false. Good liars can often convince most people they are honest. Bad liars usually do not fool most people because they act like they are lying. On the other hand, sometimes innocent people act like they are guilty or lying. Their ‘guilty’ actions can arise from factors like nervousness or confusion. Gladwell discusses the case of a young American woman vacationing in Italy, who was wrongly convicted in Italy of a murder based on the way she spoke and acted. There was no physical evidence that she committed the murder, but prosecutors were certain of her guilt based on her behavior. She really did act and speak like she was guilty. She did that she was scared and freaked out, not because she committed any crime.

That is another example of people believing they can judge someone by looking at and listening to them. Sometimes you can and sometimes you can’t.

Trust is better than distrust

Gladwell concludes that our default to trust mindset sometimes allows bad people to do and get away with bad things. But overall, default to trust is much better for society than default to distrust. Citing 400,000 police records from North Carolina where police were aggressive about not trusting people and hassling them for trivial things, the hassling turned up 17 instances of illegal activity. In return for 17 hits, 399,983 people were alienated and angered for nothing in return.

Another example of the damage that default to distrust can inflict on people was the sad story of Harry Markopulos, the guy who easily figured out that Bernie Madoff was a crook running a massive ponzi scheme. Markopulos was a financial trader and forensic analyst with a chronically distrusting mind. He trusted almost no one about almost everything. He could not figure out how Madoff was making his money.

Madoff claimed he was heavy into certain kinds of financial transactions and this was where much of his returns kept coming from. Markopulos contacted the main players in the instruments that Madoff claimed to be trading in. None of them ever did business with Madoff. From that, Markopulos correctly concluded that Madoff was a crook. Markopulos then collected evidence that Madoff was a crook and gave it to the SEC. Over the years, Markopulos collected more evidence and gave that to the SEC on several occasions. When the SEC finally realized that he was a crook after Madoff turned himself in.

After the Madoff arrest, Markopulos concluded that because so many wealthy and powerful people had been hurt or humiliated that some of them, or the SEC itself out of embarrassment, would come to kill him. Markopulos bought a gun and lots of ammo and waited for his door to be broken down as his killers came for him. That is what irrational distrust can do to a person.

Weird, cops keep getting caught doing racist shit in private

Fri, Aug 9, 2019

Ok - this article is a bit dated, but we need to pay attention to this kind of thing:


 A framed Ku Klux Klan application form was left displayed in the house of a white Michigan police officer while a Black man was there with a real estate agent.


"Some of those who work forces are the same who burn crosses," Rage Against the Machine famously said on its searing 1991 debut single "Killing in the Name," and many cops have pretty much been doing a terrible job of refuting that accusation ever since.

A Michigan cop is now being investigated after a framed Ku Klux Klan application form was found displayed in his house while a Black man and his family were inside on a real estate walk-through.

The Black man, Rob Mathis, took to social media to share his disgust in a viral Facebook post on Wednesday, adding that the house also had multiple Confederate flags on display.

"I feel sick to my stomach knowing that I walk to the home of one of the most racist people in Muskegon hiding behind his uniform and possibly harassing people of color and different nationalities," he wrote.

"To the officer, I know who you are and I will be looking at resources to expose your prejudice," he added. "As for now pictures speak 1000 words."

The officer, who was later identified as 48-year-old Charles Anderson of the Muskegon Police Department, had been previously cleared of fatally shooting 23-year-old Julius Johnson, a Black man, following a 2009 traffic stop. At the time Muskegon County Prosecutor Tony Tague ruled the shooting was in self-defense, with Anderson testifying that Johnson had beat him with his own baton during a struggle.

Eric Hood, the president of the Muskegon County chapter of the NAACP, has called for a comprehensive look at Anderson’s dealings with people of color, telling WOOD-TV, "We want a thorough investigation to be sure that when he goes out there and puts on that uniform and performs his duties as an officer that he’s being fair and impartial."

The City of Muskegon released a statement saying Anderson has been placed on administrative leave while an investigation is conducted. Both Anderson and his wife have declined comment to other outlets, saying they have been told to stay silent during the investigation.

It's the latest headline about law enforcement officers getting caught doing racist shit while off the clock. In July, Citylab published The Plain View Project, which uncovered more than 5,000 racist and sexist Facebook posts and comments made by members of law enforcement. That same month, ProPublica published posts from a secret Facebook group for border patrol agents, where agents joked about the deaths of migrants and posted sexist memes about Latina lawmakers.

As a direct result of The Plain View Project, the Philadelphia Police Department announced it would fire 13 officers following an investigation. Later in July, two Louisiana police officers were fired for a Facebook post that suggested that Rep. Alexandria Ocasio-Cortez should be shot.