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The Wrongologist

Geopolitics, Power and Political Economy

Are Smartphones Destroying Teens?

The Daily Escape:

Sunset, September 2017, near Granite Bay CA – photo by David Dodd

The Atlantic’s article, “Have Smartphones Destroyed a Generation?” makes the point that teens today are:

…less likely to date. The initial stage of courtship, which Gen Xers called “liking” (as in “Ooh, he likes you!”), kids now call “talking”—an ironic choice for a generation that prefers texting to actual conversation. After two teens have “talked” for a while, they might start dating. But only about 56% of high-school seniors in 2015 went out on dates; for Boomers and Gen Xers, the number was about 85%.

The decline in dating tracks with a decline in sexual activity. Fewer teens having sex has contributed to what many see as one of the most positive youth trends in recent years: The teen birth rate hit an all-time low in 2016, down 67% since its modern peak, in 1991.

The article was written by Jean M. Twenge, a professor of psychology at San Diego State University. The article can be summarized as these teens are more comfortable online than out partying, but they’re on the brink of a mental-health crisis.

More from Dr. Twenge:

Even driving, a symbol of adolescent freedom inscribed in American popular culture…has lost its appeal for today’s teens. Nearly all Boomer high-school students had their driver’s license by the spring of their senior year; more than one in four teens today still lack one at the end of high school…In conversation after conversation, teens described getting their license as something to be nagged into by their parents—a notion that would have been unthinkable to previous generations.

Quite a difference from Wrongo’s growing up in pre-boomer times. The idea of having your mom drive you to an event was as close to being humiliated in front of your friends as you ever wanted to be, so everyone got a driver’s license as soon as possible.

But today’s teens are less likely to leave the house to see friends. Twenge says that the shift is stunning: 12th-graders in 2015 were going out less often than eighth-graders did as recently as 2009.

We have seen this kind of alienation in Japan, where these people are called hikikomori, a term the Japanese use to define those who haven’t left their homes or physically interacted with others for at least six months. Japan has virtual high schools for teens who can’t leave home. Virtual high school is a thing in the US as well.

Add smartphones and video games together, and you can slow or pause social development and engagement with the real world. The real trouble is in the separation of virtual from lived experience that becomes physical separation and alienation.

No doubt there is a large group of teens who seem to live primarily through social media, some in Wrongo’s own family. Smartphones have made social media much more accessible, but are smartphones in and of themselves the causal factor? Hard to say. Wrongo has had a smart phone for a long time, still sees friends and family, and gets things done.

And the current crop of teens have the tools to be the best informed generation yet. OTOH, they have to be curious enough to perform in-depth search on those smartphones.

So, blaming the smartphone is using correlation to indicate causality.

In fact, this article may describe primarily an upper middle class phenomenon, not something that is society-wide. The kids being coddled are from families with enough money to do it. The intelligent ones among them are opportunistic harvesters of their parents’ resources, and perfectly capable of adaptation.

The genuinely alienated kids exist, but probably not in any larger numbers than the problem kids of earlier generations. But their problems manifest differently than in earlier generations.

If we believe our kids and grandkids are not prepared to face the reality of life, the fault lies with us, as it is our job to prepare them. The responsibility of any parent is to figure out how the world works, and to teach their children how to survive in it – this is true for all mammals.

BTW, today’s photo was shot by Wrongo’s grandson on his smartphone, on the way to his job, after his day at college.

Here is the Who doing “The Kids Are All Right” from their 1965 album, “My Generation”:

 

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Silicon Valley Will Escape the Revolution

The Daily Escape:

Waterfall Jumping Competition (from 69 feet up), Bosnia, August 5th – photo by Amel Emric

Antonio Garcia Martinez:

Every time I meet someone from outside Silicon Valley – a normy – I can think of 10 companies that are working madly to put that person out of a job…

Well, that makes most of us “normies”. In context, we are the people who do not work in Silicon Valley. We are the people who use technology, rather than invent technology, and many of us ought to see technology as a threat to our jobs and our place in society.

We are not in the beautiful peoples’ club. Our names are not on the list. We’re not software engineers who work just to pay the taxes on their company stock.

And who is this Martinez guy? From Mashable:

He’d sold his online ad company to Twitter for a small fortune, and was working as a senior exec at Facebook (an experience he wrote up in his best-selling book, Chaos Monkeys). But at some point in 2015, he looked into the not-too-distant future and saw a very bleak world, one that was nothing like the polished utopia of connectivity and total information promised by his colleagues.

Martinez pointed out that there are enough guns for every man, woman and child in this country, and they’re in the hands of people who would be hurt most by automation:

You don’t realize it but we’re in a race between technology and politics, and technologists are winning…

Martinez worries about how the combination of automation and artificial intelligence will develop faster than we expect, and that the consequences are lost jobs.

Martinez’s response was to become a tech prepper, another rich guy who buys an escape pod somewhere off the grid, where he thinks he will be safe from the revolution that he helped bring about. More from Mashable: (brackets by the Wrongologist)

So, just passing [after turning] 40, Antonio decided he needed some form of getaway, a place to escape if things turn sour. He now lives most of his life on a small Island called Orcas off the coast of Washington State, on five Walt Whitman acres that are only accessible by 4×4 via a bumpy dirt path that…cuts through densely packed trees.

He’s not alone. Reid Hoffman, co-founder of LinkedIn told The New Yorker earlier this year that around half of Silicon Valley billionaires have some degree of “apocalypse insurance.” Pay-Pal co-founder and venture capitalist Peter Thiel recently bought a 477-acre escape hatch in New Zealand, and became a Kiwi. Other techies are getting together on secret Facebook groups to discuss survivalist tactics.

We’ve got to expect that with AI and automation, our economy will change dramatically. We will see both economic and social disruption until we achieve some form of new equilibrium in 30 years or so.

It will be a world where either you work for the machines, or the machines work for you.

Robert Shiller, of the famous Case-Shiller Index, wrote in the NYT about the changing meaning of the “American Dream” from the 1930s where it meant:

…ideals rather than material goods, [where]…life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement…It is not a dream of motor cars and high wages merely, but a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable…

That dream has left the building, replaced by this:

Forbes Magazine started what it calls the “American Dream Index.” It is based on seven statistical measures of material prosperity: bankruptcies, building permits, entrepreneurship, goods-producing employment, labor participation rate, layoffs and unemployment claims. This kind of characterization is commonplace today, and very different from the original spirit of the American dream.

How will the “Normies” survive in a society that doesn’t care if you have a job? That refuses to provide a safety net precisely when it celebrates the progress of technology that costs jobs?

The Silicon Valley survivalists understand that, when this happens, people will look for scapegoats. And we just might decide that the techies are it.

Today’s music is “Guest List” by the Eels from the 1996 album “Beautiful Freak”:

 Takeaway Lyric:

Are you one of the beautiful people
Is my name on the list
Wanna be one of the beautiful people
Wanna feel like I’m missed

Are you one of the beautiful people
Am I on the wrong track
Sometimes it feels like I’m made of eggshell
And it feels like I’m gonna crack

Those who read the Wrongologist in email can view the video here.

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Our Election System Is Under Threat

The Daily Escape:

The Dark Hedges near Ballymoney, County Antrim, Northern Ireland. (Featured in the Game of Thrones as the King’s Road) – photo by Colin Park

America is also walking down a dark path. We need to work on the integrity of our election process. From the WSJ:

To understand the scale of the hacking attempts against election systems in the 2016 presidential election, consider South Carolina. On Election Day alone, there were nearly 150,000 attempts to penetrate the state’s voter-registration system, according to a postelection report by the South Carolina State Election Commission.

If hackers were that persistent against a state that President Donald Trump won with 54.9% of the vote, what did they try to do in the states that were in play? Quite a bit, it turns out. More from the WSJ: (emphasis by the Wrongologist)

In harder-fought Illinois, for instance, hackers were hitting the State Board of Elections “5 times per second, 24 hours per day” from late June until Aug. 12, 2016, when the attacks ceased for unknown reasons, according to an Aug. 26, 2016, report by the state’s computer staff. Hackers ultimately accessed approximately 90,000 voter records, the State Board of Elections said.

The next day, Illinois temporarily took its voter-registration database and public-facing website offline. No records were altered, according to the state, and the issue was resolved before Election Day. The hackers haven’t been identified.

Many hackers, including state-sponsored ones, use automated programs to target hundreds or even thousands of computers to check for vulnerabilities. All of this is done by bots. This happens to ALL websites, (including Wrongo’s) not just to election systems. Confirming intrusions can be difficult, even if intrusion detection technology is deployed. But many municipalities and counties have not deployed it, since it can be very expensive.

Time Magazine reported that the number of actual successful intrusions in the 2016 election cycle, where hackers gained sufficient access to attempt to alter, delete or download any information, was “fewer than a dozen”.

The tally of hacking (or attempted hacking) into state election databases was widespread in the 2016 election. Jeanette Manfra, acting deputy undersecretary for cyber-security and communications at the Department of Homeland Security, said at a Senate Intelligence Committee hearing last month:

There is evidence that 21 states were targeted by hackers

From the NYT:

By 2020, cyberattacks could try to alter or erase voter registration databases…or do something else to interfere with actual voting on Election Day…public confidence in the fairness of our electoral process could decrease further, even if the hacks are unsuccessful, as incendiary and unsupported claims about voter fraud, cheating and altered vote totals spread via social media.

America needs to start from the premise that one state’s (any state’s) insufficient protections against hacking in presidential elections affects us all. Protecting government databases is critical and needs to be done yesterday. From Wrongo’s experience as a former provider of outsourced services to both state and federal governments, it is clear that the IT staff at many government agencies lack the expertise or budgets to harden the electoral system against attacks.

We have been discussing the hacking of the voter databases, not vote results. These databases have little to do with the actual vote tallies in a given election. But if the US developed one giant database that recorded everyone’s votes along with names, addresses, and SSNs, people’s identities could be stolen.

Unfortunately, that’s exactly what Trump’s Presidential Advisory Commission on Election Integrity plans to build. Nearly all states have said that they will not comply with the commission’s request for voter data. When the winners of one election cycle try to pick the rules, referees and judges for the next cycle, it’s clearly a system at risk of shutting out true democratic input.

The story of possible Russian hacking in our 2016 election, and the possible Trump family involvement in the Russian efforts diverts our attention from the real story, which is that cyber security in the US is a gaping vulnerability.

It threatens our security, our economy and our democracy.

We need a musical break. Over the weekend, there was a two-day Rock concert at Dodger Stadium in Los Angeles called “Classic West”. Many old groups performed over two days. Here, we focus on the Eagles, who played with the son of the late Eagle, Glenn Frey. His 23 year-old son Deacon Frey stood in for his legend of a father, in front of 50k fans, who accepted him as part of the family. It was a fitting tribute. The Eagles also added Vince Gill, who sang “Take It to the Limit”, and “Lyin’ Eyes”. But here is Deacon Frey delivering an emotional moment on “Take It Easy”:

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – May 6, 2017

The Daily Escape:

Tulips, Lisse Netherlands, April 2017 – photo by Peter Dejong

We ended the week with Republicans in the House passing the latest version of Trumpcare by a vote of 217-213. All Democrats voted against it, with 20 Republican members defecting to join them. The changes Republicans made to get this version of bill through the House will not be what passes in the Senate. It’s up to Mitch McConnell to craft a bill that can get through the Senate using the budget reconciliation process, which will require 51 votes to pass.

That will most likely be the “real” bill, and then the negotiations between the House and Senate versions will begin.

The problem for America is that the Senate has to pass something awful enough that the House will still vote for it. We are a long way from replacing Obamacare, but Republicans now own the process whereby tens of millions of Americans losing health insurance.

If that isn’t enough to worry about, Buzzfeed has a long read about tiny drones that can be used in a swarm to kill people:

A very, very small quadcopter, one inch in diameter can carry a one- or two-gram shaped charge. You can order them from a drone manufacturer in China…A one-gram shaped charge can punch a hole in nine millimeters of steel…You can fit about three million of those in a semi-tractor-trailer. You can drive up I-95 with three trucks and have 10 million weapons attacking New York City. They don’t have to be very effective, only 5 or 10% of them have to find the target.

The concept is achievable, while the potential consequences are unthinkable:

There will be manufacturers producing millions of these weapons that people will be able to buy just like you can buy guns now, except millions of guns don’t matter unless you have a million soldiers. You need only three guys to write the program and launch them. So you can just imagine that in many parts of the world humans will be hunted…This is the ever-present cloud of lethal autonomous weapons.

They could be here in two to three years.

— Stuart Russell, professor of computer science at the University of California Berkeley

They are called lethal autonomous weapons systems (LAWS); weapons that have the ability to independently select and engage targets once a human releases the machine to perform: no supervision, no recall, and no stop function.

Can we prevent them? Nope, they already exist. Many countries including the US already have (much larger) systems with autonomous modes that can select and attack targets without human intervention: Israel’s Harpy and second-generation Harop, can enter an area, hunt for enemy radar, and kamikaze into it, regardless of where they are set up, as long as the radars are operating.

The Pentagon now is testing drone swarm technology: Weapons moving in large formations with one controller somewhere far away on the ground clicking computer keys. Think hundreds of small drones moving as one, like a lethal flock of bees. You can see a YouTube video of a US drone swarm test here. 103 mini drones were released from two US fighter jets during the test. The drones operate autonomously and share a distributed brain. These drones will make it economical to target people (troops?) in other countries, en masse, without having to send in our own soldiers, or declare war.

Why are we wasting even more human potential devising even more ways to kill each another?

Sorry, this story adds to your stress levels after a tough week, but Wrongo thought you should know. OTOH, with all that is going on, you really need soothing. Wrongo is going for some Stumptown Colombia El Admirador coffee and a listen to “Spring”, from Vivaldi’s Four Seasons, arranged for four pianos.

The pianos are played by Yuja Wang, Emanuel Ax, Nelson Goerner, and Julien Quentin. The performance was recorded at the Salle Médran in Verbier, Switzerland, in 2009:

Those who read the Wrongologist in email can view the video here.

Bonus video in honor of Trumpcare: Jimmy Reed singing “Get Your Insurance” from 1959:

Those who read in email can view the video here.

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Is Taxing Robots a Solution to Fewer Jobs?

The Daily Escape:

(Slot canyon with dust devil – photo by Angiolo Manetti)

Yesterday, the Dutch voted in an election pitting mainstream parties against Geert Wilders, a hard-right, anti-Islam nationalist whose popularity is seen as a threat to politics-as-usual across Europe, and possibly, as an existential threat to the EU.

Wilders, who wants to “de-Islamicize” the Netherlands and pull out of the EU, has little chance of governing, as all of the mainstream parties have already said they won’t work with him. Given Holland’s complicated form of proportional representation, up to 15 parties could win seats in parliament, and none are expected to win even 20% of the vote. OTOH, polls show that four in 10 of the Netherlands’ 13 million eligible voters were undecided a day before voting, and there is just 5 percentage points separating the top four parties, so Wilders could surprise everyone.

As Wrongo writes this, the Dutch election results are not known, but PBS NewsHour coverage on Tuesday surfaced a thought about taxing robots. PBS correspondent Malcolm Brabant was interviewing workers in Rotterdam:

Niek Stam claims to be the country’s most militant labor union organizer. He says the working class feel insecure about their prospects because of relentless automation and a constant drive to be competitive. The union is campaigning for robots to be taxed.

Brabant then interviewed a worker:

Robots do not buy cars. Neither do they shop for groceries, which leads to a fundamental question: Who’s going to buy all these products when up to 40% of present jobs vanish?

This isn’t an entirely new idea. Silvia Merler, blogging at Bruegel, says:

In a recent interview, Bill Gates discussed the option of a tax on robots. He argued that if today human workers’ income is taxed, and then a robot comes in to do the same thing, it seems logical to think that we would tax the robot at a similar level. While the form of such taxation is not entirely clear, Gates suggested that some of it could come from the profits that are generated by the labor-saving efficiency…and some could come directly in some type of a robot tax.

The main argument against taxing robots is made by corporations and some economists (Larry Summers), who argue that it impedes innovation. Stagnating productivity in rich countries, combined with falling business investment, suggests that adoption of new technology is currently too slow rather than too fast, and taxing new technology could exacerbate the slowdown.

It can be argued that robots are property, and property is already taxed by local governments via the property tax. It might be possible to create an additional value-added tax for robots, since an income tax wouldn’t work, as most robots are not capable of producing income by themselves.

Noah Smith at Bloomberg argues that the problem with Gates’ basic proposal is that it is very hard to tell the difference between new technology that complements human work, and new technology that replaces them. Shorter Noah Smith: Taxation is so hard!

Why are Western economies stagnant? Why has wage growth lagged GDP growth? Automation is certainly a key factor, but rather than point the finger at the corporations who continually benefit from government tax policies, let’s just assign blame to an object, a strawbot, if you will. That way, we won’t look too carefully at the real problem: The continuing concentration of economic and political power in the hands of fewer and fewer corporations.

Automation isn’t the issue, tax laws that allow economic treason by corporations in their home countries are the issue.

Why is nationalism on the march across the globe? Because fed-up workers see it as possibly the only answer to the neoliberal order that is destroying the middle class in Western democracies.

Let’s find a way to tax robots. Something has to offset Trump’s tax breaks for the rich.

Now, a musical moment. Did you know that “pre-St. Patrick’s Day” was a thing? Apparently, some dedicated celebrators prepare for the day itself by raising hell for up to a week beforehand. With that in mind, here is some pre-St. Pat’s Irish music, with Ed Sheeran singing “Nancy Mulligan” a love song about his grandparent’s marriage during WWII, against the wishes of her parents, and despite their Catholic/Protestant differences:

Those who read the Wrongologist in email can view the video here.

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New FCC Chair Guts Net Neutrality

Today we premiere a new feature, the “Daily Escape”, a photo that hopefully will take you away from all that is wrong just now. Some photos will be by Wrongo, but most will be from professionals. They will not have any particular relevance to the topic of the day. They are here to help you pause for a moment, and go to a different place.

Today’s Daily Escape: George Peabody Library, Johns Hopkins University

Now, on to what’s wrong…

The principle that all Internet content should be treated equally as it flows to consumers is called “net neutrality”. Net neutrality looks all but dead under Trump’s new head of the FCC. From the NYT:

In his first days as President Trump’s pick to lead the Federal Communications Commission, Ajit Pai has aggressively moved to roll back consumer protection regulations created during the Obama presidency.

Mr. Pai took a first swipe at net neutrality rules designed to ensure equal access to content on the internet. He stopped nine companies from providing discounted high-speed internet service to low-income individuals. He withdrew an effort to keep prison phone rates down, and he scrapped a proposal to open the cable box market to competition.

Before he became FCC Chair, Pai served as an FCC commissioner, one of the Republican minority under the Obama administration. In that role, he opposed reclassifying broadband providers as common carriers, which allows the agency to regulate them like utility companies, a necessary step if the FCC was to enforce net neutrality rules. That reclassification might be next to go.

Today consumers can pay Internet service providers for a higher-speed Internet connection, but regardless of the download speed they choose, under new Chair Pai’s plan, they might get some content faster, depending on how much their content provider has paid the service provider.

Tim Wu at the New Yorker offered some insight: (emphasis by the Wrongologist)

With broadband, there is no such thing as accelerating some traffic without degrading other traffic. We take it for granted that bloggers, start-ups, or nonprofits on an open Internet reach their audiences roughly the same way as everyone else. Now they won’t. They’ll be behind in the queue, watching as companies that can pay tolls to the cable companies’ speed ahead

The new rule gives broadband providers what they’ve wanted for about a decade: the right to speed up some traffic at the expense of others. The motivation is not complicated. The broadband carriers want to make more money for doing what they already do. Never mind that American carriers already charge some of the world’s highest prices for a service that costs less than $5/month to provide.

In the large-scale server market, Internet traffic is nearly free. In that market, a terabyte of data costs about $1/month. That’s 1000 gigabytes/month, if you are not familiar with usage of that size.  The home user pays 10x to as much as 1000x more than that per month; $100 for 100 gigabytes of traffic is not uncommon. A recent offer from AT&T for 45 M/bit internet is $30/month, which includes 1TB of data/mo. So 1000 gigabytes costs $30, or $1 per 33 gigabytes, but, if you exceed ATT’s limit, the price goes up dramatically: You would have to pay $10 per each additional 50 GB.

No volume discount for you, but Netflix will get one.

Requiring access fees for faster service will be good for Netflix, since it won’t have to worry as much about competitive traffic, particularly from small companies. The ultimate result will be to lock in the current set of incumbents who control the internet, ushering in the era of big, fat, (and possibly) inefficient monopolies.

Republicans and big corporations like to say that they are against regulation because the free market should rule. That economic efficiency brings lower prices.

It is always a lie.

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Monday Wake Up Call – Russian Hacking Edition, January 9, 2017

“A great deal of intelligence can be invested in ignorance when the need for illusion is deep.” Saul Bellow

Trump had his briefing last Friday by the Intelligence Community (IC), about the Russian hacking. He then released this statement:

I had a constructive meeting and conversation with the leaders of the Intelligence Community this afternoon. I have tremendous respect for the work and service done by the men and women of this community to our great nation.

While Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organizations including the Democratic National Committee, there was absolutely no effect on the outcome of the election including the fact that there was no tampering whatsoever with voting machines…

Whether it is our government, organizations, associations or businesses we need to aggressively combat and stop cyberattacks. I will appoint a team to give me a plan within 90 days of taking office. The methods, tools and tactics we use to keep America safe should not be a public discussion that will benefit those who seek to do us harm. Two weeks from today I will take the oath of office and America’s safety and security will be my number one priority.

He denied nothing that the IC presented, and agreed with several points. His bottom line, that the hacking did not affect the outcome of the election, is important: Trump is all about meme creation and meme destruction. His goal is to prevent the “Russians elected Trump” meme from becoming the next birther movement. If his tweets stay on message, he’ll get by this moment.

For what it is worth, hacking isn’t noteworthy; it’s been going on for years, by the Russians, the Chinese, the US and just about everyone else. There is way more hacking now, since most management systems are online, and few corporations are willing to invest enough to insure real protection from it.

OTOH, disinformation is a big deal. Social media makes Russia potentially a potent force in opinion control in the US and Europe. Hacked information can now be fed into the disinformation machine to great effect. We ignore Russia’s ability to influence US public opinion at our own risk.

Trump’s reaction to the IC briefing is comforting, since there was no histrionics or name calling. He said in this tweet that he will continue to push for a good relationship with Russia:

Having a good relationship with Russia is a good thing, not a bad thing. Only “stupid” people, or fools, would think that it is bad!

This makes him seem reasonable, so he can get on with the work of NOT going to war with Russia over the hack of the DNC.

When you look at the IC Report, it looks like Russian hackers were responsible for the phishing attack against John Podesta. The same accounts were used to hack into the DNC.

The next thing to know is whether it was the Russian hackers who shared this information with WikiLeaks. That appears to be the case, although we are taking it on faith, since the IC hasn’t shown us their work:

US intelligence has identified the go-betweens the Russians used to provide stolen emails to WikiLeaks, according to US officials familiar with the classified intelligence report that was presented to President Barack Obama on Thursday.

We may never see more on how they identified them, since it may be a little too sensitive to divulge.

It pains Wrongo to say this, as a lifelong Democrat, but if Trump manages to beat back the neocon/pro-New Cold War crowd and work cooperatively with the Russians, the world will be a safer place.

Hillary would never had gone there as president.

This is perhaps the silver lining to a Trump presidency, possibly avoiding what looked to be a showdown with Russia and potentially, WWIII.

From a domestic policy perspective, however, the odds have increased that we tear this country apart by 2020.

So, today everybody needs a Wake-Up. The hacking didn’t change the election result, instead, we got this outcome as the result of a successful campaign strategy by Trump, and a failed campaign strategy by Clinton.

No music today, instead, we will watch a short clip from the 1983 movie, “War Games”. Matthew Broderick hacks into a Pentagon computer, assisted by his sidekick, Ally Sheedy. He then plays “Global Thermonuclear War” with the computer, except it isn’t a game. Broderick plays the Russians and the computer plays the USA. Ultimately, the world is saved:

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How Do You Solve a Problem Like Ohio?

Our industrial heartland has withered away, in that there are fewer manufacturing jobs than ever, while manufacturing revenues have never been higher. Forty years of promises by politicians have come to nothing: These people are victims of a world order in which corporations have either exported or automated those jobs, with no responsibility to workers. It is left to the towns of Middle America and the federal government to clean up their mess.

This world order we live in today was born in 1980, with Thatcher and Reagan. According to Ian Welsh, the world order made a few core promises:

If the rich have more money, they will create more jobs.

Lower taxes will lead to more prosperity.

Increases in housing and stock market prices will increase prosperity for everyone.

Trade deals and globalization will make everyone better off.

Those promises were not kept, and in America’s Midwest, economic stress is now the order of the day. That stress has contributed to rising rates of drug addiction and falling life expectancy.

Understandably frustrated, Ohioans and other Midwesterners gave Donald Trump a victory in November. His win has refocused attention by pundits and pols on the plight of our failing de-industrialized areas. While we have economic growth, we also have growing inequality. Here is a graphic illustration of the problem, comparing the US with the EU:

The Economist reports that from 1880 to 1980, the incomes of poorer and richer American states tended to converge, at a rate of nearly 2% per year. The chart above shows that the pattern no longer exists. This causes us to ask if the shift of resources and people from places in decline to places that are growing is simply taking longer to adjust, or has the current world order failed our people? In econo-speak, the gains in some regions should compensate those regions and towns harmed by the shift, leaving everyone better off.

But that is a political and financial lie promulgated by the very corporations that benefited, and by their political and economist cheerleaders.

With economic decline, some towns and cities became poverty traps. A shrinking tax base means deterioration in local services (think Detroit). Public education that might provide the young with new skills and thus opportunities, fails. Those that remain are on government subsidies or hold low-wage service jobs, or both. It is impossible to tell these citizens that the decay of their home town is an acceptable cost of the rough-and-tumble of the global economy.

Politicians are short on solutions. Since housing costs have risen sharply in towns and cities that are growing, underemployed Americans are less likely to move, and those who do, are less likely to head for richer places. Enrico Moretti of the University of California, Berkeley and Chang-tai Hsieh of the University of Chicago argue that our GDP could be 13.5% higher if this wasn’t the situation in America.

But if moving isn’t an option, what can be done to improve the outlook for those who are left behind?

Would more government subsidies help? Prosperous tax payers already support poorer ones. Subsidies for health insurance costs with Obamacare, as well as industrial tax incentives provide some cushion, but they are not likely to deliver long-run economic recovery, and they have not stemmed the growth of populist political sentiment.

To be fair, many people in Ohio and elsewhere want good jobs, but without having to move too far to get them. That may be impossible.

In the 19th century, the federal government gave land to states, which they could sell to raise proceeds for “land-grant universities”. Those universities, including some that are among our finest, were given a practical task: to develop and disseminate new techniques in agriculture and engineering. They went on to become centers of advanced research and, in some cases, hubs of local innovation and economic growth.

Politicians and academic economists might disdain a modern-day version of the program, one that would train workers, foster new ideas, and strengthen weakened regional economies.

But if our politicians do not provide answers, our populist insurgents will.

Time for a Christmas song. Here is Elvis with “Santa Claus Is Back in Town & Blue Christmas”, from his comeback special on NBC. This was recorded over six days in June, 1968 and aired on December 1, 1968. Elvis flubs “Santa Claus is Back in Town”:

Despite his flub, he does get this line right:

You don’t see me comin in no big black Cadillac

Kind of like out-of-work Ohioans.

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Capitalism Is Past Its Sell-By Date

“This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations…” Rutherford B. Hayes (March, 1888)

Nearly 130 years ago at the height of the Gilded Age, President Hayes had it right. Capitalism then was an economic free-for-all. Today, capitalism again is rewarding too few people. And data show that the problem is worse than we thought. The WSJ reported on a study by economists from Stanford, Harvard and the University of California that found:

Barely half of 30-year-olds earn more than their parents did at a similar age, a research team found, an enormous decline from the early 1970s when the incomes of nearly all offspring outpaced their parents.

Using tax and census data, they identified the income of 30-year-olds starting in 1970, and compared it with the earnings of their parents when they were about the same age. In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age. By 2014, that number fell to 51%. Here is a chart showing the results:

wsj-30-year-olds-make-less

And we know that real median household income in the US today is basically the same as in 1989. The paper doesn’t provide specific reasons for the decline in incomes for younger Americans, but it generally blames slower economic growth and, especially, the rapidly widening income gap between the top 20% and the rest of society.

They found that the inability of children to out-earn their parents is greatest in the Midwest. This underlines that those who voted for Trump have a point: The Midwest has been hit harder by import competition, especially from Japan and China, and by technological changes, than other regions of the US.

When looking only at males nationally, the decline is even starker: In 2014, only 41% of 30-year-old men earned more than their fathers at a similar age.

There are some issues with the study worth mentioning: Most kids born in the 1940s did well in their thirties, maybe because their parents were 30 during the Depression and WWII. By the 1960s, an industrialized economy brought significantly higher wages to 30 year olds. A high denominator in the ratio of parent’s income to child’s income (compared to the past) made it more difficult for succeeding generations to exceed their parents’ incomes.

The economy also has shifted in the past 30 years and is now service-based, as factories moved overseas, and automation became prevalent. This change swapped higher wage manufacturing jobs for mostly lower wage service jobs. That alone could make it all but impossible for young adults to hit the ratios that their parents did relative to their grandparents.

Maybe the American Dream didn’t die; it just never really existed in the sense of broadly-based income mobility. Have another look at the chart, upward mobility (as measured by making more than your parents) has been declining since the mid-1940s.

Why? Between rising globalization and rapid advances in automation, we now have more people than jobs. And no matter whom we elect, this trend will continue. Those manufacturing jobs are never coming back. Even in China, robots are now displacing workers in factories.

We don’t need “good paying manufacturing jobs”; we need good paying jobs.

This is the most serious challenge capitalism has faced in the US. Without improving personal income, there will be fewer who can afford college, or afford to buy the things that capitalism produces. Low personal income growth puts sand in the gears of our economy.

The left offers a critique of contemporary global capitalism but no real practical alternative. Neither does the right, but their memes of America First, nostalgia for a golden (gilded?) age, and more tax cuts seem like less of a stretch than a Bernie Sanders-like frontal assault on capitalism.

No one in either party has a plan for a world in which robots displace the demand for labor on a large scale. And the under-30 cohort is now spending at least 4 times more (in the case of Wrongo’s university, 10 times) for a college education than what their parents paid, and they are earning less.

If people matter at all to our leaders, and if 90+% of them lack the means to live without working, America must make employment our top priority, despite the fact that many have been deemed redundant by capitalists in the private sector.

Surplus labor drives the price of labor down; allowing the employer class to afford a pool boy, or a nanny, or another cook.

And it makes the waiters more attentive to Mr. Trump.

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What’s JOE – 2035?

Haven’t heard of JOE- 35? Not surprising, since it is very difficult to find any mention of it in any major media news outlet. Google JOE- 35, and you get a series of links for a cast stone fire pit that is 35” in diameter.

Wrong. It refers to the “Joint Operating Environment 2035” [pdf] (JOE – 35), issued in July by the Joint Chiefs of Staff. It lays out the environment that the military and the nation will be facing 20 years from now. It is written as a guide to how the Defense Department should be spending resources today in order to protect against tomorrow’s threats. They identify six broad geopolitical challenges the US Military will have to deal with in 20 years:

  • Violent Ideological Competition: irreconcilable ideas communicated and promoted by identity networks through violence. That is, states and non-state actors alike will pursue their goals by spreading ideologies hostile to US interests and encouraging violent acts to promote those ideologies.
  • Threatened US Territory and Sovereignty: encroachment, erosion, or disregard of US sovereignty and the freedom of its citizens.
  • Antagonistic Geopolitical Balancing: increasingly ambitious adversaries maximizing their own influence while actively limiting US influence. That is, rival powers will pursue their own interests in conflict with those of the United States. Think China in the Philippines.
  • Disrupted Global Commons: denial or compulsion in spaces and places available to all but owned by none. Think that the US will no longer be able to count on unimpeded access to the oceans, the air, space, or the electromagnetic spectrum in the pursuit of its interests.
  • A Contest for Cyberspace: a struggle to define and credibly protect sovereignty in cyberspace. That is, US cyberwarfare measures will increasingly face effective defenses and US cyberspace assets will increasingly face effective hostile incursions.
  • Shattered and Reordered Regions: states increasingly unable to cope with internal political fractures, environmental stress, or deliberate external interference. That means states will continue to be threatened by increasingly harsh pressures on national survival, and the failed states and stateless zones will continue to spawn insurgencies and non-state actors hostile to the US.

The report also warns that the rise of non-state actors such as ISIS, described in the report as “privatized violence“, will continue, as will the rapidity by which those groups form and adapt. The spread of 3D-printing technologies and readily available commercial technology such as drones, means those groups can be increasingly effective against a fully equipped and highly technological US military.

The study says:

Transnational criminal organizations, terrorist groups, and other irregular threats are likely to exploit the rapid spread of advanced technologies to design, resource, and execute complex attacks and combine many complex attacks into larger, more sustained campaigns…

John Michael Greer has a review of JOE-35 that is worth reading in its entirety. His criticism of the report is that:

Apparently nobody at the Pentagon noticed one distinctly odd thing about this outline of the future context of American military operations: it’s not an outline of the future at all. It’s an outline of the present. Every one of these trends is a major factor shaping political and military action around the world right now.

Like so many things in our current politics, the JOE projections are mostly about justifying current procurement/pork barreling by a linear extrapolation of today’s threats. That, and the institutional blindness that sets in when there have been no real challenges to the established groupthink, and the professional consequences of failure in the military are near-zero.

The JOE list may not be imaginative or fully predictive, but that doesn’t make it wrong. None of the problems they forecast are going away. For instance, the use of ideology to win and shore up support from potential fighters and allies is as old as ancient times, so why would ideological conflict NOT be an issue in 2035?

Threats to US sovereignty and territory go along with the Joint Chiefs’ recognition that the US is an empire most likely on a downward curve, unless there is great change in our policies, domestic and foreign.

In this sense, the report is quietly critical of our politicians.

The admission in the JOE report that we will be actively required to defend our home ground by 2035 is a mark of just how much our geopolitical environment has changed since 9/11.

It is indeed worth your time to read both the JOE report, and that of John Michael Greer very carefully.

Both will make you smarter than reading about the latest Trump outrage.

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