Links 8/23/10

Alien hunters ‘should look for artificial intelligence’ BBC. In other words, it occurred to someone that the Singularity is already on, somewhere else. But our notion of corporeal life is awfully limited.

Chiefs are not allowed to spy on toilets Der Spiegel (hat tip Slashdot). Be warned, this is the Google Translate rendition. Germany is proposing to give employees the right to privacy at work.

Peruvian hallucinogen ayahuasca draws tourists seeking transforming experience Washington Post. Huh? I heard about ayahuasca at least ten years ago.

Is concern for the environment a luxury good? Evidence from Google searches Matthew E. Kahn, Matthew J. Kotchen, VoxEU

Management Consulting Myths James Kwak. The real issue is more critics of management consulting miss the real problem with consulting: the consulting firm is typically hired by the problem, and the most profitable form of consulting is propping up diseased management (McKinsey was at GM for years, for instance)

Dallas’ Wyly brothers break silence, deny charges in SEC fraud allegations Dallas News (hat tip reader John M)

Disincentivizing greed Nick Gabler, Los Angeles Times (hat tip reader John M)

Debt’s Deadly Grip Gretchen Morgenson, New York Times

The consensus in favour of Swedish thinking Ralph Atkins, Financial Times

Facing Budget Gaps, Cities Sell Parking, Airports, Zoo Wall Street Journal

5 most (and least) affordable housing markets Housing Wire

Income distribution matters for effective fiscal policy billy blog

They Still Don’t Get It Elliot Spitzer, Slate (hat tip reader Foghorn Leghorn)

The Chimerical Cost Savings of Outsourcing David Isenberg, Huffington Post. Today’s must read.

A reminder to Manhattan-based readers: I’ll be at Cafe Centro (45th Street between Lex and Vanderbilt, the north side of Grand Central Terminal), in the outdoor seating area starting at 6:30 PM if you want to stop by and join me for a coffee or a drink (or have me sign your copy of ECONNED).

Picture 14

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  1. Petey

    “A reminder to Manhattan-based readers: I’ll be at Cafe Centro (45th Street between Lex and Vanderbilt, the north side of Grand Central Terminal), in the outdoor seating area starting at 6:30 PM if you want to stop by and join me for a coffee or a drink (or have me sign your copy of ECONNED).”

    Can’t make it, but I’ll toast a Campari and soda in your honor early this evening. Cheers.

    And fewgawdsakes, if you do one of these again, locate it between Canal and 14th street. There are areas of Manhattan that are actually civilized…

  2. MyLessThanPrimeBeef

    How about outsourcing city mayor- and administrator-jobs to cheaper countries instead of selling airports?

  3. attempter

    Re Morgenson piece includes a calculation of how much wealth the Bailout is redistributing from savers to banksters:

    Here’s how Mr. Petzel calculated the amount that savers are losing: Some $14 trillion in debt issued by the Treasury, federal agencies and municipalities is held by investors here and overseas. Rates are currently near zero on short-term Treasuries, compared with an average of 3 percent over time. Therefore, Mr. Petzel says, it is reasonable to estimate that rates are too low by 2.5 percentage points. On $14 trillion, that’s $350 billion a year in lost income.

    Yes, we’re talking real money. It’s more than 2 percent of gross domestic product and almost 3 percent of disposable personal income, Mr. Petzel noted.

    So there’s another count for the capital robbery indictment.

    1. craazyman

      And everyone thought I was kidding about the Fed as Montezuma Aztec sacrifice analogy.

      Oooooh Nooooo I wasn’t.

      Psychopaths petitioning sky god with offerings of money blood of sacrificed peasant savers who denied the divinity of the god of debt accumulation. The high priests mumble in ritual incantations of equations while they slice the wealth-heart out of the body on the alter in the inner sactum of the temple banks, to keep the world alive, in their delusional theology.

      Not sure why it’s taken this long to have an article like that in the MSM. Or maybe I haven’t noticed one, because I don’t read the MSM. I just watch the NFL. ha ha ha ha. Always have to wonder about your sample set. Mine is pretty small when it comes to this sort of thing. LOL. Channeling is easier and I’m really really lazy.

    2. MichaelC

      I’m not sure if this is right,so shoot away if I’m wrong,

      Since the 14 trillion has been sold, doesn’t that tell us that savers, read surplus nations, are willing to accept the 250bp spread ‘loss’ to avoid a (much) greater than 250bp spread loss that would need to be realized if the if the US gov’t wasn’t issuing (and the Fed wasn’t buying) the additional paper.

      Seems like 250 basis points for extend and pretend insurance isn’t such a bad deal for major savers as we muddle through this phase of the musical chairs charade.

      I’m not really too upset that Chinese ‘savers’ are losing a risk free spread, since that spread figures into China’s industrial/currency policy mix.

      I’m sure the NYT article was intended as a populist bone tossed to their coupon clipping readership, but Petzel does seem to be missing something. Or maybe I am.

      1. attempter

        Well, your “coupon clipper” sneer certainly shows where you’re at, but yes, I couldn’t care less about the calculations of “major savers”. I’m just a filthy little peasant who does indeed clip coupons sometimes, and I care about the effects on what meager savings options we have.

        And although not a pensioner, being human I also care about people restricted to pension income to live, even though they’re just coupon clippers too.

        I’d say a basic measure of being human is looking at any of these things from the point of view of their effects on the great majority of the non-rich. (Especially in a “country” which in spite of all the wealth which the banks destroyed is still very rich, with ALL of that wealth having been produced by those who WORK.)

        But of course that’s never a consideration among the elites. On that contrary, that’s just childish “populism”, not to be taken seriously among Serious People.

        By “Serious People” I of course mean criminal parasites.

  4. Ina Deaver

    RE: most and least affordable housing markets

    Do they seriously expect us to swallow, as a PR piece, that housing is now fantastically affordable in Detroit? You bet it is! There are whole neighborhoods where every house is empty – you can take your pick and squat there for free. Sure, there are no stores, schools, jobs. . .roads and sewage systems breaking down – but CLEARLY those things don’t go into this cute little metric.

    Do the lobbying/PR wings of the associations write these things with a straight face? I’m just curious.

    1. Bates

      Natl Association of Realtors is not a biased organization. Santa Claus is real. The government is promoting a strong dollar policy. The sun will rise tomorrow.

      Which of the above statements is true?

      1. MyLessThanPrimeBeef

        I will give my favorite answer – that one that I used successful in my SAT test a long time ago – all of the above?

  5. Dirk

    Re: Chimerical Costs of Outsourcing. I would have thought these views would be well known by now, at least inside the Beltway. The incentive for any government employee is to expand their empire as much as possible (ever tried to fire a gov employee?) and deal with the politics. Getting anything done is for any time left over. The incentive for contractors is to game the system to make as much easy money as possible and that includes hiring lobbyists to preserve and expand their empire. Government is by nature inefficient and that’s just the way it is. There is a reason communism didn’t work. Government has proper functions and for those this “inefficiency” should be tolerated to some degree. A better question is the eternal, but always relevant: what should be the proper functions of government?

    1. Bates

      Dirk… Exactly right. My question is why “Chimerical Costs of Outsourcing” is a ‘must read’?

      How about this one… “U.S. RECESSION NEVER ENDED; GDP TO CONTRACT IN Q3” from ‘Breakfast With Dave’ (Dave Rosenberg)

      The NBER has not said the recession is over…Drinking the kool aid has caused some to over look that fact.

    2. Sundog

      An interactive game in the exhibit suggests that humans will continue to adapt to climate change in the future. People may build “underground cities,” developing “short, compact bodies” or “curved spines,” so that “moving around in tight spaces will be no problem.”

      Jane Mayer hits another one out of the park, this time on the Koch brothers. Cheers to the New Yorker for not only publishing long-form journalism but putting this up on the web.

      Jane Mayer, “Covert Operations”

      Mayer’s book “The Dark Side” is essential reading on national security and accountability, and provides essential context for discussions of privatized security services (internal or external).

      Also, today via Ezra Klein’s blog:

      [Arizona’s] cost study showed that it’s often more expensive to incarcerate inmates in private prisons than in state-run facilities, despite the savings that private operators typically promise. “The cost of housing a medium-security inmate is $3 to $8 more per day in a private prison, depending on what assumptions are made about overhead costs to the state,” according to the story [in Phoenix’s Arizona Republic newspaper].

      How could that possibly be?

      According to some observers, it’s because private operators often low-ball their operating costs when presenting their case to the state.

      Suzy Khimm, “Are private prisons worth the cost?”

  6. Cassandra

    When will morale improve? Dr. Krugman tolls for the end of the American experiment more vigorously with each column .

    In today’s piece, he notes the hypocrisy of the Repubs/Dems in Congress pushing for an extension of the Bush tax cuts which would cost an estimated $680 billion over the next 10 years while voting down any spending for the other 99%. The flip-flop concern of lawmakers for the “budget deficit” is like the polygraph results of a perp with a guilty conscience.

    In our fact free dog whistle nation, there’s not much accelerant. The arguments aren’t merely disingenuous, they represent a bigger problem. Quoth the Dr.:

    [I]t’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.

    So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future.

    We will continue to get used to the “new normal” until we hit banana republic. But, hey, that’s me talking.

  7. zephyrum

    Regarding Kwak’s management consulting essay, his argument is that because management consulting has–at least a few times–provided value, the field is largely a net benefit to its customers. This is a fallacious argument.

    The real test is cost-benefit, taking into account the downside risk of following bad advice. Check out the McKinsey price list (from a commenter at his site) at . These guys are *expensive*.

    A further fallacy is the assumption that the consulting teams provide value because they are composed of top graduates of top schools. Using the school people attended as the measure of their value is a horrific mistake. Sociopaths know they can get an MBA from a top school and then graze upon the sheep with impunity. If you’ve worked in this environment you’ve seen these people and you know what I mean.

    Business leaders today, when they are not telling each other IBGYBG, are trumpeting their intelligence and the intelligence of their people. The “put a bunch of smart guys in a room and they’ll do everything right” fallacy. Intelligence is important, but judgment born of experience, point of view, and character are essential–if your goal is long-term success.

    1. craazyman

      this is what happens when well educated people who can count rapidly with the left side of their head go “wilding”. bowhaha

      yes I’ve seen “those people”

      in the cartography of the demonic realms they are a few hell circles up from the banksters, sort of assistant-banksters, but it’s still pretty damn hot where they are.

    2. JTFaraday

      Kwak is a status quo apologist. I can’t even figure out why he’s wasting his time online.

      I got my full share of him the second he started shilling for Obamacare.

  8. frosty zoom

    this is very, very sad:

    “I guarantee you they’ll come pick that up,” Craig says angrily, mocking BP. Given that there is boom washed ashore and oiled PVC pipes around much of the island, it’s clear that BP is aware of the island being hit by oil. It is also clear that nobody has been back to check on it for a very long time.

    We offload from the boat and step ashore. Oil-soaked marsh abounds, and the island smells like a gas station. Noxious fumes infiltrate my nose, causing me to cough. Piles of oiled oysters rest on the tide line.

  9. KFritz

    The observations on the Kwak article + the article juxtapose nicely w/ the HuffPo article on outsourcing. Hiring someone else to do what one can do well for oneself not often a great idea.

    1. MyLessThanPrimeBeef

      If we can only outsource thinking, we wouldn’t have so many people sick with headache.

      That’s something to look forward – a better tomorrow, brought to you by logic, science and technology…and greed (I almost forgot).

    2. KFritz

      To reply to my own Comment:

      Yesterday, I sent Kwak’s article to a friend w/ lots of cred/experience on this subject. She demurred, critical of consultants.

      Today I sent my friend Ms. Smith’s comment & she endorsed it enthusiastically.

  10. MyLessThanPrimeBeef

    I know a lot of people complain about the high unemployment.

    I have a modest proposal.

    Why don’t we use psy-ops to discourage people from seeking jobs? That way, they will not have to be counted. And if we can get all of them to submit to the influence, we will soon have zero unemployment and the Fed will be scared into raising rates while millions and millions of zombie out-of-workers sit at home watching day-time TV.

  11. i on the ball patriot

    Something to discuss at Cafe Centro …

    “All the bloggers holed up in basements in the City of Brotherly Love and trying to survive off of Google AdSense revenue may be out of luck. The Philadelphia City Paper printed an article last week that revealed the sob stories of part-time freelance writers and bloggers who, despite making minuscule amounts per year through advertising, are still being forced to pay an annual $50 “privilege license” in accordance with the Business Privilege Tax. The city treats self-employed writers as “businesses” as long as their blog has the potential to make a profit. So, when those in charge of under-the-radar sites received a letter from the city last May asking them to pay either a onetime $300 fee or $50 per year, many were less than pleased.

    Barry’s music-oriented blog, Circle of Fits, is hosted on Blogspot; as of this writing, its home page has two ads on it, but because he gets only a fraction of the already low ad revenue — the rest goes to Blogspot — it’s far from lucrative.

    “Personally, I don’t think Circle of Fits is a business,” says Barry. “It might be someday if I start selling coffee mugs, key chains or locks of my hair to my fans. I don’t think blogs should be taxed unless they are making an immense profit.”

    Bloggers are also required to pay the appropriate taxes on their income, regardless of how little money they made. Barry, for instance, made only $11 over the course of two years.

    The most painless solution may be for bloggers to resign themselves to fate and abandon Google AdSense or other ad services. Yes, the minimal profits that once came rolling in will dry up, but the self-satisfaction of refusing to give the city that hard-earned blog revenue will be preserved.”

    More here …

    Good times to you all!

    Deception is the strongest political force on the planet.

  12. ds

    Gretchen Morgenson’s piece falls prey to the oft-repeated myth that the low interest rate environment is “punishing” savers and investors.

    Her piece cites supposed-experts who mistakenly conflate savers with investors. Investors are people who take out loans and pay people money to produce goods to be sold at some later date. Because the goods are produced first and then sold later, the income received by the factors of production is thus saved. The reality is thus that investment causes savings – not the other way around.

    Higher interest rates, cet. par, mean lower demand for investment. In the aggregate, a lower rate of investment means less income to the factors of production and thus less savings.

    This is a classic fallacy of composition. Higher interest rates might encourage people to save more *out of a given income*, but higher interest rates will reduce the *level* of income in the first place, which lowers the aggregate level of savings.

    This stuff is over 80 years old and is straight out of Keynes’ General Theory. I am surprised that there are still so many people pushing the obviously flawed idea that Bernanke is “punishing savers”. Although I do think monetary policy is ineffective, the worst move possible right now would be to raise rates in the name of encouraging saving.

  13. propertius

    I believe the monkey on the right is from Goldman, and is attempting to corner the market in snow.

    1. Ricky

      No doubt his analysts are suggesting it’s different this time. Only unserious people are suggesting that the snow will melt.

  14. anon48

    @ They Still Don’t Get It- Elliot Spitzer, Slate

    Perfect example as to why I cancelled my WSJ subscription after 25 years of subscriptions (paper and online).

  15. rd

    I think the article on Google searches for “global warming” and environmental concern is missing a key point.

    Global warming is literally a global phenomena that is generally poorly understood and vague and has become a cause celebre the way “world peace” used to be.

    I think the recession has gotten people much more focused on environmental issues in their own backyard like the Gulf oil spill and hydrofracturing for gas exploration. These environmental issues are not on any public opinion back burner at this time. USEPa has had to postpone meetings on hydrofracturing in NYS because of the number of people planning to attend along with the announced protests that would occur. This hardly sounds like an apathetic population on environmental issues.

  16. rd

    On the outsourcing issue, one of the costs that comes with government employees is that they are effectively employees for life. Once federal government employees are hired, they are generally on the public payroll for 30 years or more and are almost impossible to fire or lay off.

    As a result, outsourcing makes a lot of sense for individual projects with defined endings where it may be difficult to reallocate the government employees afterwards, particularly if specialty skills are required. Engineering and manufacturing are two things that come to mond for this. Hiring a permanent government employee makes sense for functions that have undefined durations that will likely be a long time.

  17. rd

    I live in this year’s “most affordable city”, Syracuse or more accurately in the metro area, Onondaga County. It is difficult to find houses over $500k, even in the wealthier suburbs. The newspaper house closing info will sometimes go several weeks without a single sale over $500k. $250k gets you a 2,500 sf modern house with a half-acre lot 20 minutes from downtown in a very good school district.

    Our big recession in this region was the 1990s. That is when many of the major plants closed and people left the area. New companies have been starting up over the past two decades and we have a relatively diverse economy. The plants and stores that closed in the 90s are now filling up with small businesses.

    We have been living Pimco’s “New Normal” for the past 20 years. House prices have been generally flat for the past two decades but that also means that there have been few foreclsoures. Unemployment has only risen to about 7.5% in this recession. As a professional, it has been unusual for me to hear about somebody getting laid off. “Now hiring” signs are popping up in a number of stores and businesses.

    We have had new restaurants and hotels opening up over the past few years after a couple of decades of little growth in those areas. With the exception of the new partially built vacant space at Carousel Mall or “Destiny USA,” the shopping centers appear to have less empty space than several years ago.

    Based on what I have seen in Upstate NY over the past couple of decades, it is likely that many parts of the country that are suffering through the housing crash and major plant closures will take a decade or more to recover. Good state government would help a lot in speeding up the process. Unfortunately, NYS has not provided that to this area.

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