I’d rather drive cross-country in my ancient pickup truck than try flying with Homeland Insecurity setting standards

Guido Menzio

On Thursday evening, a 40-year-old man — with dark, curly hair, olive skin and an exotic foreign accent — boarded a plane. It was a regional jet making a short, uneventful hop from Philadelphia to nearby Syracuse.

Or so dozens of unsuspecting passengers thought.

The curly-haired man tried to keep to himself, intently if inscrutably scribbling on a notepad he’d brought aboard. His seatmate…looked him over…something about him didn’t seem right to her…

Is Syracuse home? She asked.

No, he replied curtly.

He similarly deflected further questions. He appeared laser-focused — perhaps too laser-focused — on the task at hand, those strange scribblings.

Rebuffed, the woman began reading her book. Or pretending to read, anyway. Shortly after boarding had finished, she flagged down a flight attendant and handed that crew-member a note…

Then the passengers waited, and waited, and waited for the flight to take off. After they’d sat on the tarmac for about half an hour, the flight attendant approached the female passenger again and asked if she now felt okay to fly, or if she was “too sick.”…American Airlines flight 3950 remained grounded.

Then, for unknown reasons, the plane turned around and headed back to the gate. The woman was soon escorted off the plane…The wait continued.

Finally the pilot came by, and approached the real culprit behind the delay: that darkly-complected foreign man. He was now escorted off the plane, too, and taken to meet some sort of agent…

And then the big reveal: The woman wasn’t really sick at all! Instead this quick-thinking traveler had Seen Something, and so she had Said Something.

That Something she’d seen had been her seatmate’s cryptic notes, scrawled in a script she didn’t recognize. Maybe it was code, or some foreign lettering…The curly-haired man was, the agent informed him politely, suspected of terrorism.

The curly-haired man laughed.

He laughed because those scribbles weren’t Arabic, or another foreign language, or even some special secret terrorist code. They were math…A differential equation, to be exact…

Guido Menzio showed the authorities his calculations and was allowed to return to his seat, he told me by email. He said the pilot seemed embarrassed. Soon after, the flight finally took off, more than two hours after its scheduled departure time for what would be just a 41-minute trip in the air, according to flight-tracking data.

The woman never reboarded to the flight.

Menzio for his part says he was “treated respectfully throughout,” though he remains baffled and frustrated by a “broken system that does not collect information efficiently.” He is troubled by the ignorance of his fellow passenger, as well as “A security protocol that is too rigid – in the sense that once the whistle is blown everything stops without checks – and relies on the input of people who may be completely clueless.”

I wonder what would have happened if the young economist constructing exactly the same equations was of Middle Eastern ethnicity and perhaps (gasp) a Muslim? Would American Airlines have shown as much reason over a 2-hour delay? Would he have been allowed to return to his flight?

The two questions we get to examine most often about American politics are (1) are people simply ignorant or (2) are they stupid?

Or both?

Heard on the trail in South Carolina

Government by the people

❝ “Is Jeb Bush related to George W. Bush?”

The most-asked question about Jeb in South Carolina during the Republican debate, according to Google Trends…

Adviser of the week

❝ “I’m not an expert in a lot of things, but I’m pretty knowledgeable about what it takes to be a president, since I were one.”

George W. Bush backs Jeb! Fox News

The South will rise again

❝ “38% of Trump voters…wish the South had won the civil war to only 24% glad the North won and 38% who aren’t sure.”

Public Policy Polling in South Carolina.


❝ “It’s a horrible topic, but they say they found a pillow on his face, which is a pretty unusual place to find a pillow. I can’t give you an answer.”

Mr Trump considers whether Antonin Scalia was murdered. “The Savage Nation”

RTFA. There’s more.

Yes, the usual question applies: Are these people ignorant or stupid?

Thanks, Helen

Fix economic inequality? — Yes, we can.

If there’s one thing Joseph Stiglitz wants to say about inequality, it’s that it has been a choice, not an unexpected, unfortunate economic outcome. That’s unnerving, but it also means that citizens and politicians have the opportunity to fix the problem before it gets worse.

In his new book, Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity, Stiglitz, a Nobel-prize winning economist, professor at Columbia University, and the chief economist at the Roosevelt Institute, asks the question “Can the rules of America’s economy be rewritten to benefit everyone—not just the wealthy?” The answer, he insists, is yes.

Stiglitz describes the current situation as “a stark picture of a world gone wrong”: He notes that 91 percent of all income growth between 2009 and 2012 was enjoyed by the wealthiest 1 percent of Americans. In the first half of the book, Stiglitz focuses on the practices and policies that have gotten the country to this point. It is a familiar story: The demise of labor unions, the increasing financialization of the economy, and the lack of wealth-building opportunities in minority communities have made the rich richer while leaving everyone else to flounder. He lists off a bevy of other contributors too: weak wages, ineffective regulation and federal oversight, and a focus on short-term versus long-term growth, which embodies a preference for rewarding shareholders over workers and consumers.

Stiglitz also notes that despite advancements in technology, which should — in theory — increase efficiency and lower costs, consumers are paying more in fees for financial services, which enriches big banks and companies while siphoning money out of the middle class. All of these things, he says, have created a society with a gaping hole, not only in its economic makeup, but in its morality.

Stiglitz spends the latter portion of the book laying out how to fix things. Like his primer on how inequality came to be, the solutions cover everything from fiscal policy to corporate boardrooms to retirement savings. His overview doesn’t prioritize pragmatism: A solution that only involves overhauling the few things that everyone agrees need to be overhauled is no solution at all, he argues.

Instead, he swings for the fences, suggesting a massive revision in the way the U.S. economy does business. First up is the attempt to tame what is called rent-seeking—the practice of increasing wealth by taking it from others rather than generating any actual economic activity. Lobbying, for example, allows large companies to spend money influencing laws and regulations in their favor, but lobbying itself isn’t helpful for the economy besides creating a small number of jobs in Washington; it produces nothing but helps an already rich and influential group grow more rich and more influential. Stiglitz suggests that reducing rent-seeking is critical to reining in inequality, especially when it comes to complex issues such as housing prices, patents, and the power that large corporations wield.

RTFA for an outline of recommendations from Joe Stiglitz. Nothing you haven’t heard of – or who is affected the most. The rich and powerful who own Congress and your state government.

Read his book. Get your butt in gear to avail yourself of what little political power you have. It’s sad that our only choice – at the moment – is removing power from the evil of two lessers. Kick Republicans and Blue Dog Democrats out of office. Elect liberal and progressive Democrats. Fight to get them to adopt an electoral platform based on a complete overhaul of our tax system, a reform of our education system focussed on standards from students to teachers and administrators, rejuvenating infrastructure.

It ain’t going to happen from the top down. That will be the promise from both political parties. Crap propaganda. We need to shovel away the opportunists who chose political life for profit and power. That’s as much hard work as anything else.

Military might

Click to enlarge

Global defence spending fell by 0.5% to $1.75 trillion last year. This is the first annual decline since 1998, according to new data from the Stockholm International Peace Research Institute, a think-tank. Although America still spends the biggest chunk of the world total, and 69% more in real terms than it did in 2001, its share has fallen below 40% for the first time since 1991.

Indeed, since the recession in 2008, spending has fallen by 10% in 20 of the 37 countries in western and central Europe. By contrast Russia increased spending by 16% in 2012 and further rises are planned to 2015. Russia and America each spent the equivalent of 4.4% of GDP, considerably higher than the global average of 2.5%, but much lower than that of Saudia Arabia, at 8.9%.

Over the past decade China’s military budget has risen by 175%, the largest increase of any of the countries shown in the chart, though this still represents only around 2% of GDP.

The chart speaks for itself. Our government – regardless of blather about pivots, peace initiatives, the dangers of small countries getting big guns and big bombs – still maintains the greatest capacity to destroy the whole planet and all life.

And whines about the possibility of diminishing that danger by a fraction of a percent.

Thanks, Barry Ritholtz

Lessons for an unequal America – from Singapore

Inequality has been rising in most countries around the world, but it has played out in different ways across countries and regions. The United States, it is increasingly recognized, has the sad distinction of being the most unequal advanced country, though the income gap has also widened to a lesser extent, in Britain, Japan, Canada and Germany. Of course, the situation is even worse in Russia, and some developing countries in Latin America and Africa. But this is a club of which we should not be proud to be a member…

Singapore has had the distinction of having prioritized social and economic equity while achieving very high rates of growth over the past 30 years — an example par excellence that inequality is not just a matter of social justice but of economic performance. Societies with fewer economic disparities perform better — not just for those at the bottom or the middle, but over all.

It’s hard to believe how far this city-state has come in the half-century since it attained independence from Britain, in 1963…Around the time of independence, a quarter of Singapore’s work force was unemployed or underemployed. Its per-capita income (adjusted for inflation) was less than a tenth of what it is today…

There are at least four distinctive aspects of the Singaporean model, and they are more applicable to the United States than a skeptical American observer might imagine.

First, individuals were compelled to take responsibility for their own needs. For example, through the required savings in their provident fund, around 90 percent of Singaporeans became homeowners, compared to about 65 percent in the United States since the housing bubble burst in 2007.

Second, Singaporean leaders realized they had to break the pernicious, self-sustaining cycle of inequality that has characterized so much of the West. Government programs were universal but progressive: while everyone contributed, those who were well off contributed more to help those at the bottom, to make sure that everyone could live a decent life, as defined by what Singaporean society, at each stage of its development, could afford. Not only did those at the top pay their share of the public investments, they were asked to contribute even more to helping the neediest.

Third, the government intervened in the distribution of pretax income — to help those at the bottom, rather than, as in the United States, those at the top. It weighed in, gently, on the bargaining between workers and firms, tilting the balance toward the group with less economic power — in sharp contrast to the United States, where the rules of the game have shifted power away from labor and toward capital, especially during the past three decades.

Fourth, Singapore realized that the key to future success was heavy investment in education — and more recently, scientific research — and that national advancement would mean that all citizens — not just the children of the rich — would need access to the best education for which they were qualified…

Singapore’s success is reflected in other indicators, as well. Life expectancy is 82 years, compared with 78 in the United States. Student scores on math, science and reading tests are among the highest in the world — well above the average for the Organization of Economic Cooperation and Development, the world’s club of rich nations, and well ahead of the United States…

Joe Stiglitz comes to conclusions I would expect from someone well versed in the history of political economy. Democracy is more than periodic votes for a limited number of candidates. Democracy must include an economic component, a righting of past wrongs.

That last sentence includes two qualities our nation still denies. The racism central to our Civil War is still denied by most of the population. Economic democracy hasn’t been a programmatic part of the two parties we’re allowed since before World War 2.

The Political Economy of 2013


Watching America’s leaders scramble in the closing days of 2012 to avoid a “fiscal cliff” that would plunge the economy into recession was yet another illustration of an inconvenient truth: messy politics remains a major driver of economic developments.

In some cases during 2012, politics was a force for good: consider Prime Minister Mario Monti’s ability to pull Italy back from the brink of financial turmoil. But, in other cases, like Greece, political dysfunction aggravated economic problems.

Close and defining linkages between politics and economics are likely to persist in 2013. Having said this, we should also expect much greater segmentation in terms of impact – and that the consequences will affect both individual countries and the global system as a whole.

In some countries – for example, Italy, Japan, and the United States – politics will remain the primary driver of economic-policy approaches. But elsewhere – China, Egypt, Germany, and Greece come to mind – the reverse will be true, with economics becoming a key determinant of political outcomes.

This duality in causation speaks to a world that will become more heterogeneous in 2013 – and in at least two ways: it will lack unifying political themes, and it will be subject to multi-speed growth and financial dynamics that imply a range of possible scenarios for multilateral policy interactions…

How politics and economics interact nationally and globally is one of the important questions for 2013 and beyond. There are three scenarios: good economics and effective politics provide the basis for a growing and more cooperative global economy; bad economics interact with dysfunctional politics to ruin the day; or the world muddles through, increasingly unstable, as a tug of war between economics and politics plays out, with no clear result or direction.

Part of the answer depends on what happens in three countries in particular – China, Germany, and the US. Their economic and political stability is essential to the well-being of a world economy that has yet to recover fully from the 2008 global financial crisis.

Current indications, albeit incomplete, suggest that the three will continue to anchor the global economy in 2013. That is the good news. The bad news is that their anchor may remain both tentative and insufficient to restore the level of growth and financial stability to which billions of people aspire.

Mohamed El-Erian pretty much speaks in moderate terms even when discussing immoderate and opportunist politicians. He’s a nice guy. Even for a NY Jets fan.

He’s worth listening to if for nothing else his experience within and without the boundaries of international economics. Between the IMF and PIMCO, politicians stand in line asking him to run for elective office. But, then, he’d have to spend even more time with politicians. Most of whom – I’m afraid – aren’t any better than the hyenas we have in Congress.

Best place to be born in 2013 — Switzerland

Switzerland is the best country for a baby to be born in 2013, according to a new study by the Economist Intelligence Unit, which is based on both subjective and objective quality of life factors.

The variables include life expectancy, gender equality, political freedoms, and even climate, but because the study looks at where “to be born” not “where to live,” some of the factors look at what life will be like in those countries in 2030, when children born in 2013 reach adulthood.

Rounding out the top 10 are:

2. Australia
3. Norway
4. Sweden
5. Denmark
6. Singapore
7. New Zealand
8. Netherlands
9. Canada
10. Hong Kong

The report authors write:

Being rich helps more than anything else, but it is not all that counts; things like crime, trust in public institutions and the health of family life matter too. In all, the index takes 11 statistically significant indicators into account.

The United States didn’t crack the top 10 this year, because American “babies will inherit the large debts of the boomer generation,” the researchers write. Could have included mediocre education, crumbling infrastructure in that same sentence.

In the 1988 survey, the United States came in first, followed closely by mostly European countries and several high-performing Asian ones, such as South Korea and Japan…

Now, Japan and South Korea rank 25 and 19, respectively, perhaps because their economies have become more troubled in recent years.

Europe has also slipped in the rankings because the ongoing euro-zone crisis there has caused severe unemployment and “eroded both family and community life,” the authors write…Germany has dropped to 16 – a tie with the United States.

Disagree with the list? The full methodology can be found here.

The Economist is a magazine grounded in conservative economics. That’s conservative in the traditional sense, rather like the term used to be in the United States before today’s Republican Party started their outreach policy for governance by homophobes, religious nutballs, various and sundry bigots.

So, the list will be accused of being part of a mythic liberal conspiracy – regardless of credentials.

Presidential election sets a new low for China bashing

As America’s election season nears its finish, the debate seems to have come unhinged. Nowhere is that more evident than in the fixation on China – singled out by both President Barack Obama and his Republican challenger, Mitt Romney, as a major source of pressure bearing down on American workers and their families. Get tough with China, both stressed in the presidential debates, and the pain will ease.

Nothing could be further from the truth. Consider the following charges:

Currency manipulation. Since China reformed its exchange-rate regime in July 2005, the renminbi has risen 32% relative to the dollar and about 30% in inflation-adjusted terms against a broad basket of currencies. These are hardly trivial amounts, and more renminbi appreciation can be expected in the years to come.

Unlike Japan, which was pressured by the West into a large yen revaluation in 1985 (the “Plaza Accord”), the Chinese have opted to move gradually and deliberately. American officials call this “manipulation,” arguing that market forces would have resulted in a sharper renminbi appreciation than has occurred. Fixated on stability – a concept alien to US politicians and policymakers – the Chinese prefer, instead, to play a more active role in managing the adjustment of their currency. I call that prudence – perhaps even wisdom. Two lost decades later, the guinea pig, Japan, might have a view on which approach works best.

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Muhammad Yunus loses battle with bureaucrats, political hacks

Daylife/Getty Images used by permission

Muhammad Yunus, the Nobel prize-winning development economist, appears to have lost his bitter battle with the Bangladeshi government for control of the pioneering microlender Grameen Bank, which he founded nearly three decades ago.

Bangladesh’s chief justice, ABM Khairul Haque, ruled out an appeal by Yunus against a decision last month by the central bank to ban him from continuing as a managing director, a post he has held since 2000…

Yunus, 70, did not appear in court but his legal team said they were surprised by the decision…

Despite the apparently final nature of the ruling against Yunus, his team told the Guardian they still hoped to find a legal avenue to continue the fight.

The decision was the climax of a long battle between the Grameen Bank’s founder and the Bangladeshi government which has triggered statements of concern from diplomats and a range of international personalities including Mary Robinson, the former Irish president, and the American senator John Kerry.

Supporters claim the respected economist, who founded the Grameen Bank in 1983 after witnessing the suffering of rural people in a series of famines, is the victim of a political vendetta.

An outspoken government critic, Yunus has long had frosty relations with the prime minister, Sheikh Hasina. Reportedly angered by Yunus’s attempt in 2007 to form his own political party, Hasina has accused Grameen Bank and other microfinance institutions of charging high interest rates and “sucking blood from the poor borrowers”…

Small-minded politicians, bureaucrats, seem to devote most of their energies to guaranteeing the people of their nation remain a “little people” – while they profit as much as possible themselves.

Bangladesh appears to be no different from so many of their peers – from Sudan to Iran.

Top financial diplomat confirmed 78-19 after a year of “NO”

Democracy manages to slip into the U.S. Senate

Lael Brainard won Senate confirmation today as the Treasury Department’s top financial diplomat, giving her a key role in U.S. efforts to persuade China to adopt a more flexible currency.

The Senate approved President Barack Obama’s nominee in a bipartisan 78-19 vote that was stalled more than a year by Republican concerns over Brainard’s tax payments.

That’s a year of stalling, hemming and hawing by crap moralists like Jim Bunning of Kentucky. One of the Republican thugs who specialized in blocking unemployment checks.

Nineteen Senate Republicans joined 57 Democrats and two independents in confirming Brainard Treasury Department under secretary for international affairs…

The timing of the confirmation vote is significant as it occurs before meetings this week of the Group of 20, the smaller Group of Seven and the International Monetary Fund and World Bank…

As well as holding a key position in talks with China, Brainard would help shepherd U.S. official positions through the global lending agencies that are being urged to take on a stronger role in monitoring global currency policies.

The Party of NO continues their favorite folk dance – Blocking the Road.