Will the world’s middle classes rise up, in a “Helvetian War”?

 My 1989 novel Earth is credited with a fairly high predictive score.  In fact, fans maintain a wiki to track its successful “hits” – including little things like the World Wide Web and wearable augmented reality “google goggles.”

(They also track some embarrassing “misses”… ah well.)

Set in the year 2038, Earth portrays citizens in that near-future era looking back upon a brutal struggle that took place in the 2020s.  The Helvetian War was unlike anything we’ve seen since the French or Russian Revolutions. A radical rising by a fed-up world middle class, pushed against the wall by cynics and the corrupt connivers.

What they seek – and attain – is not socialism, a discredited foolishness that arose out of silly abstractions that bore no relationship at all to real human nature. Market economies have out-performed socialist or communist or oligarchic ones so overwhelmingly that only delusional fools – or would-be oligarchs – should prefer top-down, bureaucratic control instead of the fluid productivity that we get out of creative competition. (Does that make me sound like a right-winger? Silly.  Broaden your memes.)

No, the new radicalism that may be demanded in the 2020s — especially by emerging middle classes in the developing world — is to give all people a chance to compete fairly, free from parasitism by their homegrown kleptocrats and from the rising global variety. Free from the secret, conspiring control of a caste that Adam Smith himself called the oppressors of freedom and market economics across 6000 years.

“All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” –Adam Smith, in The Wealth of Nations

Now, in that context, consider this headline. $21 Trillion hoard hidden offshore by global elite.

Yes that is a “T” and not a “B.” Just sit there and consider that number.  Then think about my prediction that the world’s middle classes will become radicalized, perhaps in the 2020s, or even sooner.

The study in question estimates the staggering size of the offshore economy and how private banks help the wealthiest to move cash into overseas havens. Russian, Saudi and Nigerian oil barons top the list, followed by US and British bankers and then drug lords and other criminal enterprises.  The totals amount to as much as the American and Japanese GDPs put together.

With US tax rates at their lowest levels in 60 years, and taxes on the rich at their lowest levels since 1920, it would seem that they still aren’t low enough for today’s super wealthy.  Consider the GOP’s potemkin rally in Tampa, in this context.

See also this angle: This hidden wealth costs western democracy governments $280 billion a  year in lost tax revenue. That’s annual.  An amount so huge that infrastructure repair and boosted science could coincide with cuts in the actual tax rates for law-abiders who aren’t part of the secret Lords Economy.

Want to see where this might lead?  Try reading Earth.

== Is a World Middle Class Even Possible?

In fact, it is more than possible. If by “middle class” you mean having a clean home with electricity and sanitation, a washing machine and access to transporation, plus kids who are in school with adequate food, clothing and books, then that already includes two thirds of the Earth’s human population, a fact that is seldom mentioned by either left or right.

Why is this good news ignored? Because of the Paradox of Progress.  It’s all a matter of deep personality. The reflex of folks on the right is to avert the gaze from problems to be solved and to resent nagging to solve them. The reflex of the far-left is hypersensitivity to perceived problems. To rail for solutions – but to deny that any past attempts at improvement ever worked! The right is suspicious toward the whole notion of “improvability” of either humans or society. The left wants improvability, passionately, but insists it has never happened yet.

Both extremes are – in effect, completely crazy.

Amid ongoing debates over progress, there is a third group. Those who seek to improve the human condition and who admit that steady improvements have already taken place.  These are called “liberals” – a very different breed than leftists – and to them the question of whether development has taken place inevitably gives way to practical discussions.  How to foster a speedup of already ongoing progress.   Pragmatic progressivism eschews dogma in favor of asking: what has worked and what hasn’t?

What’s becoming clear is that some parts of the world are doing better than others.  In 1970, South Korea had a lower per capita GDP than Ghana.  Today, all the nations of East Asia have left all African nations in a cloud of dust, and that includes China, which had a thirty year hiatus under Maoism.  Today, Latin America has large areas that are burgeoning — e.g. Brazil — and sub-Saharan Africa is experiencing its most rapid rate of growth (outside of certain hell-holes) since colonial kleptocrats gave way to local kleptocracies in the 1960s.

Still, the African acceleration is only impressive compared to previous stagnation. And some regions that have tried — under pressure or tutelage from international development agencies — to reform their laws and civil society, have failed to make them sufficiently competition-friendly to invite much new investment, or to give vibrant locals a level playing field against conniving local elites.

== What do the professionals say? ==

Two interesting perspectives offer a glimpse at just how difficult the problem can be.

In a fascinating and vivid audio-visual presentation, Owen Barder explores the implications of complexity theory for development policy. He explains how traditional economic models have tried and failed to understand why some countries have managed to improve living standards while other countries have not. Using complexity theory, he shows that development is a property of a system, not the sum of what happens to the people within it.

While Barder is both interesting and informative and is on-target in his range of criticisms – (do watch the video!) – in the end he winds up sounding like a lot of “complexity” fans.  Okay, so the problem is complex.  Thanks for telling us that.

For balance, have a glimpse at an interesting, if a bit depressing, appraisal of the likelihood that creative-competitive capitalism can ever take root in MENA — the Middle East and North Africa — despite formal legal reforms.  The problem is an ancient one… oligarchies of a few at the top, engaging in what Adam Smith called “rent-seeking,” using informal connections and conniving to bypass the new “civil society reforms” and still maintain their advantages, thus repelling or driving out investment in new competitive enterprises.

It is a standard pattern that this World Bank report deems fairly hopeless to overcome in this region, though others are doing better… while the United States slips ever deeper into the classic oligarchic pattern that Adam Smith loathed.

So, shall we commit seppuku and give up?  Of course not.  There is enough light erupting all over the Earth to encourage belief in progress, not only that it can happen, but that it has.  And that tech-driven transparency will help, when citizens can record and expose local corruption with the touch of a cell phone.  And that — far better than chiding — is good enough reason to persevere.

== So, will the world’s new middle classes rise up? ==

As I portrayed in EARTH… and explore a bit in EXISTENCE… there are two types of uber-rich.  Those who are loyal to the Enlightenment Experiment that empowered their rise and (in effect) gave them everything they have… a diamond shaped social structure in which even with their billions, they – and their children – will keep facing fresh competition from a lively, vibrant population of educated and confident citizens…

…versus a portion of the new-aristocracy that simply does not get it.  Who think – as oligarchs did in 99% of past human cultures – that they are superior NOT because of this year’s latest goods and services, but because wealth inherently means lordly merit.  Such folks aren’t at fault for having this reflex.  We are all descended from the harems of guys who pursued power tenaciously and darwinistically.  The reflex is in our genes.

But it’s a poison. Our Enlightenment Experiment achieved more human progress in just four generations than all the preceding feudal societies combined.  Its founders, like Adam Smith, recognized the oligarchic tendency and denounced it.  They knew that the foolish “uber” types would keep trying to pound our diamond shaped society back into a pyramid, promoting “rent-seeking” income (like dividends and capital gains) ahead of the wages earned by creative and hardworking people with their hands.

Inevitably (and history bears me out) all this conniving will have just three possible outcomes.

1- They succeed.  The Enlightenment Experiment comes to an end. (In Existence I explore the rationalizations they might give, to excuse such a backward shift, some of them very clever!)

2- The middle classes – uniting in common cause with knowledge professions like science – could enact yet another mild, moderate, incremental, American-style revolution, of which 1776 was only one example. So was the first U.S. Civil War and Teddy Roosevelt’s progressive era, and FDR’s New Deal, in which oligarchy gets stymied just enough to keep freedom and creative competition and entrepreneurial markets and  transparency and divided power and opportunity and social mobility going, while maintaining the allure of competitively-earned wealth as a reward for delivering cool things into the world.

3- Paris… 1789.

Here is the chief difference between the good/smart/tech billionaires and the fools who now use Fox News to push an idolatry of property that has always, always, always been the enemy of competition.  The smart guys — the billionaires in Silicon Valley for example, or Warren Buffett and Bill Gates — want option number two. If need be, they will join the world’s middle classes and help keep our looming “helvetian wars” mild.

In sharp contrast, the ones who are pushing the United States into Culture War… indeed, the lastest phase of the American civil war … actually think they are very smart.  But their efforts, if successful, will only lead to outcome#3.

They aren’t as smart as they think they are.

Who is worse? Those who think progress will be easy? Or those who deny progress at all?

== Grouches versus Pollyannas… spare us! ==

Economics-pundit Niall Ferguson has weighed in again.  This  time, in Don’t Believe the Techno-Utopian Hype, he rails against the super-optimists — those who believe that eternal rapid progress will be the natural, even teleologically ordained, result of ever-rising information technology and connectivity.

That movement — variously called transhumanist or singularitarian, extropian and so on — has its world capital in Silicon Valley, home of Singularity University, where zealots claim the future can, must and automatically will be bright.  Reacting with a grouchiness that has political-wing predictability, Ferguson joins Francis Fukayama, Peter Thiel, Bill Joy, Nicholas Carr and others in disdaining the florid forecasts of those I call “techno-transcendentalists.”

Much of what Ferguson says about this movement is true, as far as it goes, so go ahead and read his essay before coming back here. I’ll wait…

Indeed, emotionally, many transhumanists differ little from millennia after millennia of priests and shamans, who promised to lead every generation of our ancestors toward bright horizons, shucking off the limits of this gritty, morbid, moribund reality. The chief difference nowadays is that our 21st Century transcendentalists have split into two factions.

An old fashioned variety are repelled by technology and continue to offer skyward redemption  via the standard methods.  Whether it’s Old-Time religion or New Age mysticism, the underlying trait remains the same. Offer folks a doorway to a better world via non-physical, non-verifiable abstractions — e.g. prayer, incantation or secret concoctions

The newer type of transcendentalist preachers seem to have the same basic personality and need to promise a better world, only with one crucial difference. Tech-educated and tech-confident, they veer away from belief in incantations toward faith in the unlimited transformative power of Moore’s Law.

== In defense of dreamers ==

Whenever I’m around singularity guys, I become the grouch in the room, and not just because I am “contrary.”  Only followers of Fox News seem to have less grasp of history than the singularity zealots, who proclaim that Marx-like technological teleology will glide us all into godhood, within a decade or two. Both groups ignore the many ways that freedom and creative markets and other enlightenment miracles were quashed, in 99% of human cultures.

On the other hand, it rankles me to see them dissed by pundits whose depth of insight would not get your toes wet. Niall Ferguson, especially — a glib lightweight who flounders in the shallow end of the idea pool — is superficial to a degree that should win him a nice, cushy sinecure at Fox.

For example, Ferguson uses today’s parochial social/economic concerns as proof of some grand, generalized, spenglerian decline-of-the-west, and this “demonstrates” that technology-propeled progress is not only a vain hope, but intrinsically impossible.

But while the middle class may have stagnated for a time in the U.S. – (what do you expect, when a vast portion of their wealth is siphoned by a neo-feudal oligarchy?) — Ferguson ignores far more significant news. The stunningly rapid rise of middle classes in developing nations.

Neither the left nor the right has any interest in acknowledging good news — and complicit mass media find even the possibility absolutely allergenic. So, we hardly ever hear about the rapid decline in violence, each decade since 1945, that Professor Steven Pinker documents in his  book, Better Angels of Our Nature: Why Violence Has Declined. Nor the rate at which new generations are becoming more educated and technologically empowered in China, India and even Africa…

…a vast social leap that has been propelled largely by the American consumer and WalMart.  Probably the greatest phenomenon of the last 60 years, and the direct outcome of deliberate policies first put in place by George Marshall, Dean Acheson, Harry Truman and Dwight Eisenhower, this process of uplift through trade is barely acknowledged anywhere, even by the brightest observers, like Paul Krugman.  It is the chief achievement of Pax Americana.  And future generations will call it miraculous.

True, this fantastically effective “aid program” could be better managed. For example, the US and the west should act more decisively to defend their crown jewels, the intellectual property and fruits of creativity that allow the western goose to continue laying Golden Eggs for the rest of the world. Corporate China, in particular, would seem eager to kill and eat the goose, proof they are not yet wise enough to replace the American Pax.

Still, the bigger picture is vast and fascinating and overwhelmingly positive, overall. The slight declines in America that Niall Ferguson cites — and that were wrought almost completely by his side in culture war — are still just surface blips in a trend whose epochal plus sides are beyond the comprehension of myopes like Ferguson.

 Let me reiterate this point, since no one ever seems to grok it. A century from now, the way that U.S. consumers uplifted most of the planet will be viewed as one of the great accomplishments of our age.  Perhaps the greatest. Out of 1945′s depth of despair, brilliant leaders like Marshall set up the world game so that its overall sum has become overwhelmingly positive. Moreover, any “economist” who ignores this yang side of the picture is simply a fool.

== Will it be a world for grouches?  Or Transcendentalists? ==

Neither.  In my new novel - EXISTENCE – I portray what is likely.  A grinding-ahead of progress that the wise investment seer John Mauldin calls “muddling through.” We will accomplish a great deal of what the transhumanists envision, though it will be grittier and more complicated, with lots more irritations than we are assured. There will never be a point when we declare: “oh wow, we are gods now!”

In other words, it will be like the huge progress that we’ve achieved already.  And there will still be those of the so-called right and left and mystical fringe – dopes who deserve no credibility at any level, like Niall Ferguson – who deny that progress happened at all.

In fact, we may have a chance to create a fantastic new civilization on this planet, by returning to and enhancing the Enlightenment methods that brought us to this party.  Methods like transparency and reciprocal accountability and divided power and pragmatic negotiation that have nothing whatsoever to do with “left” or “right” but that are deeply threatened by one side in our current culture war.

If we restore our fervent, even militant fealty to those methods, then this pax will continue to generate vast, positive-sum miracles. But it won’t be easy or fore-ordained.  If it were, the sky would already be filled with the alien starships from countless other civilizations who found it easy before us.  That empty sky tells us a lot.  It is gonna be hard.

We can reach for a bright horizon. But only if we ignore the grouches… then sigh and slog past the lovable dopes who say it will come as a gift, as natural as sunrise.

Romney’s “13%” solution

Mitt Willard Romney now informs us that he did pay taxes during the last ten years.

Thus he attempts to staunch – despite his own refusal to provide proof in the form of tax returns – the assertion of critics like Democratic senator Harry Reid that Romney paid no taxes at all, across some of that decade. “Every year, I’ve paid at least 13 percent,” Romney said, apparently referring to his effective federal income tax rate. 

Now let’s do the unusual and actually parse it out. There are more aspects to all of this than you could shake a schtick at:

#1 First off — please read between the lines.  In effect, Mitt Romney is only saying “for the years in question, I paid at least 13% on the final NET taxable income that appeared on line 43 of my form 1040.” He said nothing about how large or small that final net taxable income was. Nor how much tax he actually paid.   All that his recent statement claims is that the amounts weren’t zero, in years when he made between twenty and forty million dollars in gross income.

Consider, carefully. It’s not 13% of his gross income, but of the final net taxable income after most income has been removed by shelters and dodges. Thirteen percent… on what was LEFT after sheltering most of it from ever appearing on line 43… and this should impress us?

In a Washington Post article, Ezra Klein lays this out carefully: ‘“Adjusted gross income” (AGI) is pretty close to what you think about when you think about income. “Taxable income” is what you’re left with after accounting for deductions like the home mortgage interest deduction.’  (Or the myriad other deductions and shelters available to the uber-rich.)

‘Daniel Shaviro, a professor of tax policy at NYU, made the same point. “The key question here is 13.9 % of what. We know he paid zero tax at the capital gains rate in 2009, since he had loss carryovers for 2010.  So he may have had ridiculously low adjusted gross income (AGI), relative to his economic income for the year.”

Yes it is obscure… and yet important.  Let’s hope the real lesson of all this comes across.

#2. Mitt Romney did provide 20 years of tax returns to John McCain, back in 2008, when he was being considered for the VP slot. If McCain deserved to see them at that time, as Romney’s prospective ‘boss,’ then what are we? Chopped liver?  Aren’t we the real bosses, deserving all information about the executive we’re meant to hire? Similarly, Romney demanded tax returns from his prospective vice presidential candidates.

On this aspect, blogmunity member L. Lyons proposed: “Four years ago in the depths of the largest recession since the ’30′s John McCain and his campaign team vetted Mitt Romney as a potential VP candidate. Part of the vetting was to look at 20 years of IRS returns. Remember this was in 2008 with the economy nearly in freefall. They looked at Romney’s tax returns, and chose Sarah Palin.”

#3. In any event,  Mitt Romney knew he would face this issue in 2012. Indeed, he’s been running for president for most of the last two decades.  And the GOP tradition held once again – that the nomination always goes (in order of priority) to (i) a sitting GOP president, (ii) a sitting GOP vice president, or – barring those being available – the fellow whose turn it is.  That is what has happened every single election year since 1960.  Barring situations (i) and (ii), the nominee is the fellow who came in second for the nomination last time.

Hence, Mitt knew the nomination would likely fall in his lap in 2012 – as it has – so why did he not get ready, so that at least 4 years of tax records would be pristine and ready for public scrutiny?  Isn’t the presidency worth sacrificing some tasty tax dodges? Given all that, if there are any embarrassments in those returns, what does that say about the intelligence and foresight of a man who is urging us to “make me commander in chief”?

Frankly, I’d prefer the notion of a Dan Rather Gotcha to the idea that we’d let anywhere near the presidency a man too stupid to clean up his finances before running for the top job.

#4.   Is Mitt simply delaying in order to get nominated, and then let whatever S#!^! hit the fan? Less than 2 weeks and counting, then at least he gets to be in history books, even if the party dumps him (unlikely) in October.  Ah, but follow that musing for a bit! Suppose six-term Congressman Paul Ryan inherited the top slot, simply because one man picked him for ticket-balancing reasons? What would that say about our crazy party system?

Heck, what does it say that a party would aim to vest full executive power over Pax Americana in a pair of men with zero foreign policy experience whatsoever and a combined total of less than twenty years in public office? And zero at a top national level?

#5. Going back to Harry Reid, the most senior Mormon official in the United States, who hopes to stay that way. I have one piece of advice for Reid that he should carefully consider. I suspect the possibility of a Dan Rather lure… Harry Reid has pounced on an apparent weakness (claiming a Bain investor told him that Romney paid no taxes for ten years.) But remember the Swift Boaters. Reid may have been fed a “reliable” rumor deliberately, in order to draw him onto a branch that could be cut  off.  You can be sure that tactic will be used at some point, even if it wasn’t on this occasion. Double check your sources. And don’t be too shocked if, suddenly, at an opportune moment, Mitt opens up a dozen tax returns and there’s nothing noteworthy. I don’t deem it likely, but it’s better  than scenario #3 (above)..

And finally:  From the same article we offered in lead-off position, lower down. “We pay our taxes,” Ann Romney said. “We are absolutely — beyond paying our taxes, we also give 10 percent of our income to charity, so that you know, we have no issues that way and the only reason we don’t disclose any more is, you know, we just become a bigger target.”

Hm. As faithful and obedient Mormons, they are  obliged to tithe 10% of their income to their church.  It is pretty much automatic. That is the “charity” of which Mrs. Romney speaks… and it implies that this very very rich couple doesn’t give hardly anything beyond that. Nothing at all to what the rest of us would call voluntary generosity.

What? I am hoping she rounded-down! But why would she?  Jumping jiminy, even the Koch brothers give something to acceptably rightist charitable causes.

In fact, let’s withhold judgement as this is damnation on very slim evidence (then show us the returns!) But on the face of it, this sniffs like aristocrats who cannot be bothered to pay back or pay forward, lifting even a finger to help their nation, or to make a better world.

On the Transparency Front… Secrecy, Drones and War

Since 9/11 the budget for Special Ops has quadrupled. Under President Obama, the forces of the Special Operations Command (USSOCOM), which includes the Green Berets, Navy SEALS and Army Rangers, have been granted more latitude and greater autonomy, engaged in counter-terrorism, surveillance and reconnaissance in as many as 120 countries around the world. According to an appraisal published in Mother Jones, America’s Rising Shadow Wars: “They are displacing conventional forces, becoming the “force of choice” in operations with far less civilian oversight, accountability or control — i.e. no Congressional approval or consultation necessary, no press coverage, their operating budget a black book…”

Hm. Well now… as “Mr. Transparency” I naturally feel my hackles rise over any systematic increase in secrecy.  It’s not that secrecy in military operations and intelligence matters cannot be justified – I am actually quite moderate about that.  It is the fact that such secrecy should always face demands for justification.  It should bear a burden of proof, or else a “ratchet effect” will carry us down an ever deeper pit of unaccountable obscurity.  That’s simply human nature and, across the last 6000 years, we’ve seen where that leads.

But, having said that, there is the other side to all of this.  The clear and blatant fact that there is a profound, staggeringly clear difference between Democratic and Republican styles of waging war.

Now, let’s put aside the fact that large democratic constituencies have always despised war in principle and have given the party a reputation for pacifist leanings.  In fact, that reputation seems rather undeserved, if you scan history.  Indeed, across the last 100 years, democrats were ready and willing to confront militarism in 1917 Germany, and then Hitler and Imperial Japan, then the communists, far more than the isolationist republicans of those eras.

But Democrats, going back to JFK, have always favored special forces.  “Surgical” responses. And, after the fiasco of Vietnam, their record in that department is pretty strong.  Both positive (e.g. from the Balkans and Libya to the killing of Osama bin Laden and today’s search for Joseph Kony) and negative (e.g. Somalia), it is the preferred approach of Democratic presidents.

In rather sharp contrast, Republicans go for heavy firepower, tens of thousands of boots and treads on the ground.  Toe-to toe battle! Armies in motion and flag pins stuck into a map. For example Grenada, Panama, both Iraq Wars and and the endless, interminable quagmire attrition of Afghanistan.

(Note: Afghanistan actually had two phases.  Phase one, right after 9/11, was undertaken swiftly, with minimal presidential meddling, and followed Clintonian military doctrines, even though the President who said “go!” was George W. Bush.  That first part, toppling the Taliban, used mostly special ops and air power and worked with savage effectiveness. But the decision to stay and occupy with a massive army for 12 years? That was phase II and entirely Bush’s decision.

I will write more on this, over the summer.

==More on Transparency==

Speaking of transparency, Wired Magazine has published a map showing 64 locations where the US government maintains drones on American soil.  Creepy signs of Big Brother? Wellllll… I am always more concerned about things we don’t see, or efforts to prevent us from performing sousveillance or looking back.  (Of which the Wired article is an example.)  I’ll be furious if the government winds up with a monopoly on look-down vision.  See Existence for a number of scenes that lay out some interesting possibilities.

And what happens if and when they get drones?

In the last half of 2011, Google received over 1,000 official requests to remove content from its search results or YouTube videos. Google denounced what it calls an alarming trend — but it complied with 65% of court orders and 47% of informal requests to remove content. And yet, Google has not complied with Spanish regulators who asked Google to remove links to blogs and articles criticizing public figures, mayors and public prosecutors. In some countries, Google submits to such requests, because certain types of political speech are unlawful. For example, in Germany, references to Nazis are banned, so Google removes such videos from YouTube. And then there are issues of pornography and copyright…

The following item isn’t as bad as it first appears… but still it is disturbing: “The NYPD has created a “wanted” poster for a Harlem couple who films cops conducting stop-and-frisks (posting the videos on YouTube). The poster brands them “professional agitators” who portray cops in a bad light — and lists their home address.”  Not as bad as it first appears?  Well, this was an internal flyer, posted on a few precinct bulletin boards, not in public or on the web.  And I guess cops have a right to tell each other “watch yourselves around these vexatious citizens.” Still, it’s offensive, probably illegal, and certainly the sort of thing that could easily get out of hand.  But in any event, note this: light did shine on this event. The ones who posted it now probably regret it. The next such flyer will be more cautiously worded, knowing it, too, will leak.

Space Resources: Re-igniting a can-do spirit of ambition

It appears that a small cabal of  billionaires — those who got rich through innovation and who feel loyal to the future — are about to to fund a new effort worth some excitement and attention. It aims at transforming not just our Earth — but the whole solar system. And, along the way, this endeavor may help bootstrap us back into our natural condition… a species, nation and civilization that believes (again) in can-do ambition.

Can that be achieved – while making us all rich – through asteroid mining? 

In its Tuesday announcement, Space exploration company Planetary Resources will claim a goal to “create a new industry and a new definition of ‘natural resources.’… adding trillions of dollars to the global GDP.”

Resources from space? It’s not a wholly new concept.  Way back in the 1980s, in his prophetic book - Mining The Sky: Untold Riches From The Asteroids, Comets, And Planets, my friend and colleague John S. Lewis explored in detail the range of minerals, volatiles and other useful materials to be found in all the different types of small bodies we know to be drifting about the solar system, from carbonaceous chondrites to stony or iron meteoroids, to dormant comets which (according to my doctoral thesis) may make up to a third of the asteroids we find out there.*

Back then, as a young fellow at the California Space Institute, I recall many long conversations with John and the few others working in the field, striving to come up with ways to get some movement in this area. Before it became clear that the Space Shuttle would suck up every gram of funding or attention.

 What makes this new effort unique is its high-profile support group. The venture is backed by Google executives Larry Page and Eric Schmidt, film director James Cameron, and politician Ross Perot’s son, among others.  Moreover, I am pleased to note that John Lewis is, indeed, one of the major advisors for this new company, along with his former students, noted planetary scientists Chris Lewicki and Tom Jones.

The founders apparently did their homework. (A Cameron trademark.)  They apparently mean business.

== A Long and Hard Road ==

But what kind of business? Is such a grand project feasible? As I see it, there are a several distinct general problem domains.

1) Prioritizing asteroidal science.  Naturally, as an astronomer who specialized in small solar system bodies, I approve of this phase one. (My wife, Cheryl, also did her doctoral work in this area – we’re neighbors in the solar system.) 

It also correlates well with President Obama’s wise decision to abandon a fruitless return to the sterile Moon, in favor of studying objects that might make us all rich.

In fact, this seems an excellent time for private funding to make a big difference. New thresholds have been reached. The technologies needed for inexpensive asteroid rendezvous missions are coming to fruition rapidly, as we saw at the recent NASA NIAC meeting.  Some, in fact, are downright amazing, opening the potential for missions that cost mere tens of millions, rather than billions of dollars, confirming and characterizing these fascinating – and possibly lucrative – bodies.

2) Shepherding and changing the trajectories of small meteoroids and asteroids.  There are several techniques on the table.  Some of them surprisingly simple, using solar sails.  We might as well get started! And if these guys can give the technologies a boost, more power to them.

3) Legal, safety and environmental impact considerations. Is it even permissible to grab and “own” space resources? The pertinent treaties were left deliberately vague and it may be time to update them, so that investors in wealth-generating processes can be sure of decent return.

Of much more public concern – and sure to dominate the headlines – will be the image of deliberately moving asteroidal bodies toward the Earth. That’s sure to prompt a lot of fretting and talk of lurid disaster scenarios. Oh, we’ll start small and aim them toward the Moon or Lagrangian Points (e.g. L5), giving plenty of time to discuss issues of law and care in space. But these fellows need to come up with just the right tone of prudence, avoiding the kinds of lines spoken by Michael Crichton’s science-hubris villains.  Like: “all contingencies are accounted for – there’s no cause for concern!”

Worth pondering on the up-side: these same technologies might someday prove very useful, if we spot something dangerous, on a long-warning collision course toward Earth.  If done right, this is a potential world-saver, not world-killer.

4) Mining, disassembly, smelting and refining in space.  Here we’re still in a very tentative, sketching phase. Most concepts involve using large mirrors to concentrate sunlight and process the raw materials. Or else solar energy to drive heat and electro-mechanical processes indirectly. If this can be done robotically and efficiently, all the way off in L1 or Lunar Orbit, then much smaller masses of refined substance could be transported down to GEO… where electrodynamic tugs might bring it to LEO… where cheap, asteroid-made braking shells would deliver the goods safely to collection points on Earth.

5)  Or, better yet, much of the iron and nickel and such could be used up there in orbit to make more cool things and reduce the burden of launching bulk material out of our planet’s deep gravity well.  Certainly, storing the volatile like water and carbon and nitrogen compounds in orbit-made tanks will be a major side-benefit, providing the materials needed most for both life support and rocket fuel. To derive those benefits would entail learning to do many other things in space. Larger habitats and radiation shielding. Possibly solar energy collectors of massive scale, beaming power 24/7 to Earth. Or grand vessels to explore the planets.

6) Economics. It’s a lot more complicated than the first calculations might make you imagine. In Mining The Sky, John Lewis calculates that even just one asteroid a kilometer across – of a certain type – might (if smelted down) produce the world’s entire steel production for 10 years!  

It gets better. Try the entire world’s gold and silver production for 100 years!  That plus a thousand year’s production of platinum-group elements.

The good news?  We would be unleashed to do a myriad things with cheap raw materials, while cutting way back on wasteful, inefficient and polluting processes to mine and process the stuff here on Earth.  Much less digging, grinding and greenhouse gas emissions. All that wealth, generated with solar mirrors melting rocks way out in space.  Talk about improving the balance of payments….

One reality check?  Downstream, after this ball gets fully rolling and initial R&D costs are paid off, you can expect the prices of gold and platinum to plummet.  That’s a good thing, overall! We have much better uses for gold than leering gleefully over stupid coins and bars. Still, bear this in mind when you start rubbing your hands over how rich you’ll get from asteroid mining.

You won’t be rich enough to own the world.  Sorry.  Just very very very rich, from doing a whole heap-loads lot of good for us all.

7) Which brings us to the final benefit of all this. We’ll all benefit.  But the top fellows who are taking the risks, who will reap a lot of the rewards, happen also to be the good billionaires. Archetypes of how capitalism ought to work.  Self-made moguls who got wealthy by helping engender new-better products and services, not by means that Adam Smith himself derided as parasitism.  These guys have proved, time and again, their loyalty to the positive-sum process that raises all boats.  This is the kind of endeavor that will keep them up there as role models, instead of the new feudalists.

It’s certainly how I plan to get rich.  By delivering magnificent, daring products that help take us to the stars.

== NOTES ==

*  A little colorful aside:

In our 1984 novel Heart of the Comet (soon to be re-released) Gregory Benford and I portrayed a dramatized effort to harvest space resources, by sending a human crewed mission to Halley’s Comet in 2065, intending to use the controlled evaporation of the comet’s own material (an effect long-known) to divert it into orbit near the Earth.

A bit extravagant in its action-adventure aspects (though based on my doctoral work), the book still conveys the best science known about these mysterious and wonderful bodies, including the main process by which some of them evolve into dormant asteroids.

.

== And Now…Some Science Potpourri ==

Our Interstellar cousins?  Researchers have found two promising stars, called HIP 87382 and HIP 47399, that had the same metal content and were at the same evolutionary stage as the sun, with similar galactic radial velocities, suggesting that they just might have been formed in the same nursery cloud, over four billion years ago.  If so, the idea is that perhaps planets in that cloud cross-fed each other life (due to meteoroid impacts). Possible places to find cousins and compare genealogies in a Galactic 23&Me?  I’m a bit dubious. That is sixteen galactic rotations ago!  A lot of time for smearing.  Still… kind of a cool notion to mull over.

George Dvorsky writes – perhaps a bit too optimistically – about how the project to disassemble Mercury into a Dyson Shell of orbiting solar collectors might be do-able within the lifespan of some kid alive today.

A mushroom that can eat plastic! Even at the airless bottom of landfills! cool stuff.

The Nikon Small World competition offers startling, beautiful and fascinating glimpses of the sub-microscopic world.

Printable robots?  Or… robots making robots?  As in Stargate?

Who Is Insulting the Middle Class?

A deep irony, underlying our political season, is that the U.S. middle class…the biggest victims of the first decade of this century, are also being slandered relentlessly. The ongoing campaign of propaganda that democracy can’t work and we should turn to oligarchy has many threads. May I take you on a tour of some of the nastiest and most repulsive component memes?

One of the oldest is a nostrum that under a democracy the people will inevitably drain the public treasury by demanding more spending than taxes. The theory is that citizens who get more than they pay for will vote for politicians who promise to increase spending.

This is often called the “Largesse Canard” — an outright fantasy that was first fabricated by Plato, in order to demean the Athenian democracy, and that more recently was expressed in an oft-quoted aphorism, supposedly by Alexander Tytler: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.

“Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.”

Among those who have carelessly bandied this smugly cynical assertion has been sci fi author Jerry Pournelle, along with many of his more right wing colleagues. It circulates widely among the dour Rothbardians and Randites who dominate today’s warped version of the libertarian movement….

…and it is a damned lie.

Remember the 1990s?  When Bill Clinton ran budget surpluses and wanted to spend the black ink buying down  public debt, instead of frittering it on short term “largesse”?  Nearly all of his support came from the middle class. By huge majorities, those working Americans polled their preference for debt buy-down. So why did it instead get flushed down the toilet of Supply-Side (voodoo) tax gifts for the rich?

Because (duh) the aristocracy – supposedly wise and far-seeing – rationalized a demand for instant gratification, instead of reduced debt which (ironically) would have lowered commercial borrowing costs overall and led to the very scenario that they were supposed to be after in the first place! In other words, U.S. federal debt pay-down would have engendered far more new business activity than opening our veins for the wide-open maws of plutocrat vampires.

History shows that it is always the aristocracy that behaves in spendthrift ways, not the middle class.  (Oh but they do like to invest lavishly in “think tanks” and media empires, ordering them to spread calumnies against citizenship. Propaganda like the Largesse Canard.)

Now a new twist. Dean P. Lacy, a professor of political science at Dartmouth College, has identified a theme in American politics over the last generation. Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.

Conversely, states that pay more in taxes than they receive in benefits tend to support Democratic candidates. And Professor Lacy found that the pattern could not be explained by demographics or social issues.” See a map showing the geography of government benefits.

The full article is six pages, a typical New York Times in-depth Sunday magazine drill-down.

Seriously, read up on this.  You need to be armed against these insults to the people who actually create the wealth in our civilization.

Unscientific America — Denying Science at Our Peril

Increasingly, scientific consensus is failing to influence public policy. Facts, statistics and data appear insufficient to change highly politicized minds… and science has started scrutinizing why.

Alas now, this topic inevitably devolves down to our screwy American politics. And while (as I avow repeatedly) every political wing has its anti-science flakes, growing mountains of evidence suggest that one wing has gone especially frenzied in an anti-scientific snit. Or else (as that wing contends) science itself has become corrupted, top to bottom, rendering “evidence” suspect or moot. Let’s examine both possibilities.

Chris Mooney, author of Unscientific America: How Scientific Illiteracy Threatens our Future, has a new book, The Republican Brain: The Science of Why They Don’t Believe in Science, in which he describes how firmly some of our neighbors – even moderately well-educated ones – now cling to aphorisms, assertions and just-so stories in order to clutch a politically motivated view – or mis-view – of scientific data.  Misinformation persists – and propagates – about the dangers of vaccinations, the hazards of nuclear energy, the credibility of creation vs. evolution, and the preponderance of data supporting global warming. In case after politically-redolent case, we find that evidence has a limited power to persuade on hot button issues where deep emotions are involved.

I agree with Mooney that this delusion-conviction effect has done grievous harm to our once-scientific and rational nation. And anyone would have to be deaf, blind, and in hysterical denial not to see these trends operating, in tsunami proportions, among our Republican neighbors.

Mooney describes in detail how bad it is – that millions of our neighbors deem facts to be malleably ignorable. Though soundly refuted by scientific studies, angry parents continue to believe their children acquired autism through vaccinations: “Where do they get their ‘science’ from? From the Internet, celebrities, other frantic-angry parents, and a few non-mainstream researchers and doctors who continue to challenge the scientific consensus, all of which forms a self-reinforcing echo chamber of misinformation,” writes Mooney, noting that for every five hours of cable news, just one minute is devoted to science. In 2009, 15 year old U.S. students ranked 17th out of 34 developed countries in science. A firm foundation in science is fundamental to modern citizenship as well as our ability to innovate and succeed in a global economy.

In fact, the “war on science” has ballooned long past any mere attack upon the credibility of researchers and professors.  It now manifests as a general “war on all knowledge castes” — including teachers, economists, journalists, civil servants, medical doctors, skilled labor, judges, diplomats… everyone (in other words) who actually knows a lot. All are routinely attacked on you-know-which-murdochian-”news”-network.

Science itself is turning attention to this problem and things are not looking good.  According to one study (via Mooney): “The result was stunning and alarming. The standard view that knowing more science, or being better at mathematical reasoning, ought to make you more accepting of mainstream climate science simply crashed and burned.” It was found that conservatives who knew more tended to dig in their heels against new facts or budging their views, using what they already knew as bulwarks against changing their minds. But this did not hold for the other side. Educated liberals who were pre-disposed to be suspicious toward nuclear power nevertheless were adaptable when shown clear scientific data assuaging their fears.

Mooney concludes that even education fails to serve as “antidote to politically biased reasoning.”

Take a look at this excerpt of Mooney’s latest book, The Republican Brain: The Science of Why They Deny Science—and Reality (due out in April). It shows that our current Culture War is not about left vs right at all.  It is about two very different sets of personalities and worldviews.

== It’s not all bad news ==

Oh, heck, want a positive note? It may be possible to overcome this sickness, enflamed deliberately by Roger Ailes and his crew. Stanford Prof. James Fishkin and his colleagues ran an experiment in which a full spectrum of Californians were brought together and asked to soberly deliberate on state problems, negotiating a range of solutions. With their minds focused by sober responsibility, rabid partisans suddenly displayed flexibility, curiosity, willingness to learn and … (yes even the Republicans)… a readiness to negotiate with their opposing neighbors, without calling them satanic.

Fishkin and his colleague, Bruce Ackerman, call for a new holiday, Deliberation Day each Presidential election year, when “people throughout the country will meet in public spaces and engage in structured debates about issues…” to revitalize a spirit of open communication and negotiation in democracy.

== But the bad is still plenty bad ==

All too often politicians use bad science to justify their political agenda. Both right and left have favorite conspiracy theories about Global Climate Change (which I’ve discussed in Climate Skeptics and Climate Deniers). On global warming, Rick Santorum said, “I for one never bought the hoax.”  But consider…which is more likely: A massive conspiracy involving 90% of scientists worldwide — or oil companies spending vast sums to sway opinion, and influence public policy to protect their profits? Decide for yourself.

In any case, most of the methods for reducing greenhouse gas emissions involve increasing our energy efficiency and stimulating development of new forms of energy — things we ought to be doing anyway to remain competitive and current in an ever-changing global economy.

Oh, please… you Brits over there… nail those guys who have done so much harm to America. Whose family name reminds one of the underground-dwelling cannibals of Wells’s novel The Time Machine.

==Campaign Finance: Follow the Money==

Talking Points Memo

Compare numbers of campaign donations under $200 and those over $200 between Obama, Paul and Romney. Who has a broad range of support? Who is the populist candidate?  A fascinating comparison… especially when you add in super-pacs, whose average contributors (for Romney) have been in the $100,000 range.  Citizens United, anyone?

Do you think we’ve been exaggerating the degree that the super-uber-rich are buying influence in politics?  Just one small group of immensely wealthy GOP donors…almost all of whom attend twice-yearly secret meetings hosted by the billionaire Koch Brothers — have already sent gushers of cash to Super-Pacs supporting Romney, Gingrich and even Ron Paul. We’re talking upwards of One Hundred Million Dollars... and it is only March.  Tell me… is there any red line that even your fox-crazy uncle must decide is intolerable?  Can we stop this?

WhoWhatWhy reports that that Saudi prince Walid bin Talal – Rupert Murdoch’s top partner at Fox – has invested heavily in Twitter.  An event coinciding with Twitter’s recent announcement that it would cooperate with censorship of any content deemed “illegal” in any country, whatsoever.  WhoWhatWhy can get a bit “over-eager” but these facts speak for themselves.

Iceland shows the way. If the European (and American) debt crises seem endless, with Big Banks the only relentless winners, then read up about Iceland, given up for dead after their foolish bankers (who called themselves “geniuses”) leveraged the country into tsunamis of red ink.  What this article doesn’t talk about is the “gender aspect”.  In effect,, the women of Iceland simply took over.  Grabbed the reins of politics and finance out of the hands of their “genius” husbands and sent them back to the fishing boats, where they belonged.

Following those rumors of a brokered GOP convention?  A lot of simmering talk about drafting… Jeb Bush.  This survey of Bush Family “coincidences” may be a little biased… but the facts do speak.

Tax Inequity and the Middle Class – Top Issue in 2012

In an earlier political posting I pointed out that the top federal income tax rate – for earned income – has seldom been lower than it is right now.. and the rate that Mitt Romney pays on dividends is half of that.  Federal taxes, in general, are at one of the lowest points since 1912… suggesting that our current national argument about taxes ought to at least feature commensurately lower rates of anger.  Sure, let’s negotiate how to simplify the system and make it more fair. But can we tone down the rage a little?

(Oh, but indignant fury is the whole point.  If it isn’t taxes, it will be something else.)

Above all, effective tax rates on the very wealthy are at their lowest since Teddy Roosevelt was president.

One response was sent in “That’s federal taxes! But state rates have gone up.”  Well, it’s a point that merits answering. So consider: (1) states vary a great deal, hence you are free to move to a low-tax state and I know many folks who have.  (2) Have a look at the Wiki site for “Tax Freedom Day.”

Tax Freedom Day 1971 to 2011 Source: Tax Foundation

Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden. It is annually calculated in the United States by the Tax Foundation—a Washington, D.C.-based tax research organization that is far, far from lefty, let’s say. Every dollar that is officially considered income by the government is counted, and every payment to the government that is officially considered a tax is counted.

Taxes at all levels of government—local, state and federal—are included.  Have a look at the site.  Even taking all state and local taxes into account and averaged, the US falls way toward the bottom of tax rates for industrialized nations.  And at rather low rates compared to American history.

Only now have a look at the deadline for a fix that looms ahead of us in January 2013.  The Bush era tax cuts, that were supposed to result in vanished deficits (via Supply Side magic) have instead simply vanished revenue while inflating asset bubbles and rewarding passive types of parasitic income,  Do, by all means, actually read this article in the New York Times.

“We are at a revenue level that is almost the lowest in 60 years as a share of national income, too low to fund the things that are required,” Mr. Conrad said.

In 2011, federal tax revenue as a percentage of the gross domestic product stood at 15.4 percent, the Congressional Budget Office said in January. That is up slightly from the previous two years, but otherwise is the lowest percentage since 1950. Federal spending last year, at 24.1 percent of gross domestic product, was on a par with 2009, but to see such levels before the recent recession, you have to go back to 1946 and the winding-down of World War II.

…and this, from later in the article:

“The Bush tax cuts, which totaled nearly $2 trillion over their first decade, remain highly controversial. Tax cuts in 2001 lowered income tax rates at all levels, to 35 percent from 39.6 percent for the highest income earners, and to 10 percent from 15 percent for the lowest bracket. They also doubled the size of the child tax credit and made it refundable for the working poor, while phasing out the tax on inherited estates and allowing affluent taxpayers to take more deductions and credits. Even Mr. Hubbard acknowledges that in some ways the cuts made the tax code more complex.

Another round of tax cuts in 2003 reduced most capital gains tax rates to 15 percent from 20 percent, while also taxing dividends at 15 percent. Before, dividends were taxed as ordinary income, meaning a 39.6 percent rate for affluent investors.

Mr. Conrad calls the tax cuts “a profound mistake for the country on almost every level.” Still, 2001 started as a heady year, with the Congressional Budget Office projecting a federal budget surplus for the coming decade totaling $5.6 trillion. Alan Greenspan, then the chairman of the Federal Reserve, worried that the federal debt would be eliminated too quickly, leaving the world with nothing to benchmark interest rates against because Treasury bonds would cease to exist.”

Really?  How charmingly naive and quaint.  And dismally stupid and an utter repudiation that such people should ever again be listened-to or allowed anywhere near power.

Read the article… and the suggested “reforms” that are being discussed. I am seriously unimpressed with most of them.  See my own suggestion on how the tax code can inarguably be simplified while avoiding the usual political wrangling. My “no losers” approach separates simplification from tax “policy” or who should pay more!  If we did this first, we’d have a sleek, sensible system in no time, and could then make policy adjustments that made sense.

Oh… but it gets worse, way worse.  See these charts revealing the “knee-capping of the U.S. middle class.”  And yes, this will be the issue, for the rest of 2012.  Above all, as I suggested last time, use all this as a basis for making real-money wagers with your tea party uncles.  But get them to write it down, first.

== Ultrafast Stock Trading ==

Following up another past-posting, where I touted a Transaction Fee as a way to let humans regain some footing in stock market trading… here’s a relevant recent study. “

Ultrafast Trades Trigger Black Swan Events Every Day, say Econophysicists. The US financial markets have suffered over 18,000 extreme price changes caused by ultrafast trading, according to a new study of market data between 2006 and 2011“

But nothing will convince the mutants of the City and Wall Street. Listen to these religious fanatics spouting fervent and totally un-based incantations about “market efficiency” and “hyper-liquidity” and denouncing “friction”…  then look at the bitter fruit of their tenure at the helm of our economy.  They are mad.  Eloquent!  But loony priesthoods often are. In fact, they are out of their cotton pickin’ minds… and sucking at our necks like lampreys. They are the worst enemies of true capitalism.

==  Political Miscellany ==

Get to know Rick Santorum. People look at this. Oh, seriously. I am glad he’s doing what he’s doing because it may finally make ten million sane-conservative “ostriches” lift their heads. But remember Nehemia Scudder.

An interesting… pessimistic… interpretation of why Americans are using a whole lot less gasoline than they used to.

But let’s finish with some optimism! My friend Peter Diamandis has an essay in Forbes, foretelling that science, entrepreneurial markets, innovation, startups, amateur enterprise and stunning breakthroughs in technology may soon unleash a tsunami of Abundance on the world, erasing poverty and helping to heal the planet, too!  Peter discusses why we are biologically programmed to view the would through a filter of anxiety, when, in fact:

“What does the world really look like? Turns out it’s not the nightmare most suspect. Violence is at an alltime low, personal freedom at a historic high. During the past century child mortality decreased by 90%, while average human life span increased by 100%. Food is cheaper and more plentiful than ever (groceries cost 13 times less today than in 1870). Poverty has declined more in the past 50 years than the previous 500. In fact, adjusted for inflation, incomes have tripled in the past 50 years. Even Americans living under the poverty line today have access to a telephone, toilet, television, running water, air-conditioning and a car. Go back 150 years and the richest robber barons could have never dreamed of such wealth.”

Peter goes on to describe tech wonders looming on the horizon.  I make many of them vivid in Existence (coming in June.) But I think he leaves out one reason for our frenzied waves of anger and fear, nowadays… because rage feels great!  Sanctimony and Self-righteousness are drug highs. They can have their uses.  But when they prevent our fellow citizens from even detecting good news? Or worse, when they turn our neighbors into active obstacles to progress?  Then these sick habits are worse than heroin.

Are Taxes Historically High or Low? Chilling Secrecy, Clint Eastwood and the Rise of Common Sense

Okay, so it’s 2012 and you can expect a regular rhythm of postings that are… well… political.

== THE GREAT FURY OVER TAXES ==

To listen to Republicans, you would think we have the most oppressive tax rates ever, with the federal government hogging ever larger portions of the national economy.  Ever hear of Orwellian anti-truth?  That is where you repeat the exact opposite of the truth and people start believing it.

Top Federal Marginal Income Tax Rate From 1913 to 2011

But drop by and look at the actual facts. See this compilation of income tax rates.. Tax rates are at historic lows. And  this is for earned income. Rates for dividends and capital gains are even lower – by half - than what you see in the figure!

In the 99 years that we have had the income tax, rates for top earners were lower than they are today only twice: 

1)  during the 5 years before the US entry into the First World War in 1917, and

2) during the brief stretch from 1925 through 1930… when a massive asset value bubble pumped the economy into the Great Depression.

Also note this. They are LOWER for the middle class, under Obama, than they were under Bush. The “Obama tax hikes” are purely mythical.

That’s it. Today’s top rates are currently lower than at any time since 1930… and ironically that includes half of the HOOVER Administration preceding FDR. In other words, the hiking upward was first done by the same 1930 Republican Congress that brought us the Smoot-Hawley Tariffs!

Just to make this clear, so you rub it in your crazy-as-Fox uncle, income tax rates are lower than at any time in 80 years.

The other big fact is the fraction of U.S. national GDP taken by the federal government.  Fox’s uncles swear that this is at an all-time high. In fact, the federal share of GDP is at its lowest since 1950.

Be entrepreneurial.  Make Adam Smith proud and use all this to make money. Seriously. Lure your nearest Tea Partier to make grand declarations about the oppressiveness of recent tax rates and the growing federal share of the economy and then demand a wager!  Only… get it in writing.

== Chilling Effects ==

What exactly are your online rights? What protections are offered under the First Amendment and intellectual property laws? Here are details expanding on last time:  Chilling Effects offers an extensive database of info about copyright and trademark infringement, fan fiction, cease and desist notices, issues of anonymity and freedom of expression. A joint project of the Electronic Frontier Foundation and Law Schools at Harvard, Stanford, …Berkeley and the George Washington School of Law, Chilling Effects is a first stop to determine your legal rights in the on hot issues in the ever-evolving online world.

I’ve been known to differ over matters of emphasis with my friends at EFF. I am far less worried about what governments and the mighty “see” about me — and history shows little hope of stopping them — while I am more vexed and angry over government and the mighty hiding from citizen supervision. Still this is a good and important move and I am glad these folks are doing things like this!

Most civil servants… and even a lot of politicians… are sincere. They believe they are protecting us and/or defending freedom. The problem (for now) is that they can be counted on – via human nature – to have the inherent reflex of rationalizing how they must wield power for the greater good and must evade (some) accountability of the kind that might hamper them in doing their jobs.

1) They (and we) must be convinced that what’s important is to defend and promote… the secular trend toward a more open world. The reason is clear and it goes beyond mere “goodness” of openness. It is the simple fact that our type of society is invigorated by the effects of transparency (though individual leaders are often severely inconvenienced) while all the cultures that oppose our way suffer from severe-to-lethal damage when washed in light. That is too great an advantage to ignore, even if you are a realpolitik-cynic.

2) Given that this secular trend is essential… and that human nature works against it… are there forms of sousveillance – or shining light upward – that can be applied to our own elites that will still leave them unimpeded in the practical fulfilling of their duties? Short term tactical secrecy is still vital for the effectiveness of military, police and Homeland Security functions, among others.

In EARTH I portray the legal sequestration of information being limited to short, 5 year terms unless a longer term is purchased at considerable dollar cost. In other words, there is a built-in bite and disincentive to claiming longer periods of secrecy, and with most secrets kept at the shorter, 5 year term, you have a reflex to say “I’d better behave generally well… or at least well enough to be forgiven… since this will all come out.”

3) As it happens, there are some lovely potential innovations that could increase our confidence in supervision while ensuring minimal interference in day-to-day operations. I talk about some of them elsewhere. 

== Clint Eastwood… Democrat? Or American? ==

Has there begun a jobs renaissance in America, especially in manufacturing?  There are definite signs of “in-sourcing” taking place.

Oh but that segues into Clint Eastwood’s Superbowl Chrysler commercial… and the subsequent Republican fire storm against him, by Karl Rove and others, for daring to suggest that the “bailout” of Detroit was actually a resounding success. 

Rove sniped “… Chicago-style politics, and the President of the United States and his political minions are, in essence, using our tax dollars to buy corporate advertising and the best-wishes of the management which is benefited by getting a bunch of our money that they’ll never pay back.”

Say what? Except that we’re getting every single penny back. Plus many millions more in taxes on now-profitable American companies that Rove and his ilk wanted to let go belly up? (After they did urge much bigger bailouts for their Wall Street friends.) Refusal to admit that the automaker loans were anything other than a towering, spectacular, 200% success is the act of a deranged mind.

Oh… BTW. Clint has said “I don’t recall ever voting for a democrat.” If a man like that has switched sides, it is because he has sanely realized that the GOP has “left him.”

== Some Fascinating Political Miscellany ==

Here’s a fascinating one: “The lesson of the Great Crash was that unequal enrichment provokes asset bubbles, excessive demand for debt and, finally, economic failure. Now we are painfully learning that again.”  Read the whole article by Stewart Lansley.  But a key point.  The massive wealth that has been redistributed upward to a thousand or so billionaires and top corporations is not generating jobs or economic activity at anywhere near the same pace as the same wealth would have, if it remained with the middle class. Those “job creators are mostly sitting on mountains of cash.  Banks, flush with reserves, are lending very little. Cash-rich companies are neither building productive capital (supply-side’s justification) nor doing much hiring.

Sign the petition offered by Senator Bernie Sanders, for a Constitutional Amendment that declares that Corporations are not the same as people and can be regulated by Congress and the States.  I also recommend Kent Pitman’s blog on this topic.  

On the lighter side…. In New Hampshire there was an event carried on C-Span… the “lesser candidates’ forum” featuring 13 Democrats running against President Obama (all it takes is $1000 in NH) and 25 or so lesser known Fepublicans. See an article… but it pales next to the videos, including one of the “very silly party” candidate wearing a boot on his head, named “Vermin” who promises every American a pony.

Look at how a transparency (and tech-empowered) citizen hero caught villains with his flying drone. Snapping aerial photos of an illegal river of blood pouring from a slaughterhouse into a river.   Exactly what I spoke of in The Transparent Society  and especially the citizen action smart mobs I portray in my next novel!  

Recall my earlier blog urging the establishment — or rather RE-establishment — of the 90 year old transaction fee for financial trades?  At 0.1% per trade, this would scarcely be noticed by you or I, but would lessen the huge advantage grabbed by giant Wall Street houses through massive computerized trading systems.  Well, things are moving fast.  The French are now siding with the Germans in enacting such a fee.  The British conservative government, protecting the “City” bankers who got western civilization into this fine mess, are balking hard.

An interesting – if biased in-favor – article about President Obama does clarify matters as to whether he has either been a “socialist” or “betrayed liberals.”

And again…. Nehemia Scudder supporters! Order your bumper sticker!  Seriously, get people talking. It is a meme worth spreading. 

==For more on the Economy: Past, Present and Future

Must the Rich be Lured into Investing? Who are the Real “Job Creators?”

Why should Mitt Romney and the fabled “one-percent”  pay only a 15% marginal tax on investment income … half the rate charged to a dentist or auto mechanic on wages earned from work?  This was not the case until recent Republican Congresses slashed taxes on passive, unearned dividends and capital gains.

The rationale for that immense tax cut for (mostly) rich investors was simple and alluring – that super-low rates would entice more of the rich to invest in companies within the U.S., helping them to increase their productive capacity and hire more workers. Moreover, the resulting boom in economic activity would then result in so much new tax revenue, even at low rates, that deficits would disappear.

Let’s put this in context with a term you may have heard. “Supply side” economic theory maintained that this flow of investment capital would pump up the factory end of things, increasing the supply of goods and services, offering them cheaper, thus stimulating demand.

In contrast, the standard Keynsian “demand side” model was to fight recession by ensuring that poor and middle class folks had enough cash (“high-velocity” money) in their pockets to buy – or “demand” – goods and services. Whereupon producers would be drawn into greater production.

For a more detailed description of the differences between these two economic models, see my earlier missive  A Primer on Supply-Side vs Demand-Side Economics. (It really is one of the top issues of our day and an informed citizen should know about it.) Here in this place, I’ll try to be brief.

Who was right? Blatantly, the Keynsian approach worked in the 1940s, when massive government spending on WWII resulted in a boom that ended the Great Depression.  A boom that then continued for 30 years, till Vietnam crushed it against a wall. Throughout that period, high tax rates and stimulative spending seemed to work, whenever the economy needed a little help. Moreover, during that era, a very flat social structure – (CEOs earned only a few times what factory workers did) – combined with the most rapid growth of the middle class and the most vibrant era of startup capitalism in human history.

That does not make Keynsianism perfect! Critics like Friedrich Hayek, have indeed exposed some faults and blunders that later Keynsians, like Paul Krugman, openly admit and have striven to correct. Still, the Demand Side approach can point to many clearcut successes.

In particular, it is plain that during recessions, when economic activity lags and deflation looms, what you want is “high velocity” money in circulation – money that will pass from buyer to seller and then to another seller and so on.  Not money that just sits.

Does Supply Side have a similar track record? Not even remotely.  Not even once. Simple charts – and hard conclusions from the Congressional Research Service – show that the Supply Side assertion was… and is… utter mythology.  None of its predicted effects ever happened.  And let me reiterate.  Not ever, even once.

Specifically, cuts in tax rates for dividends and capital gains have never had any long-term effects upon capital investment, since records were kept in the United States.  (See this cogent article putting the myth to rest, once and for all. Also my article: A Primer on Supply-Side vs. Demand-Side Economics.)

In fact, this is no surprise, for several reasons:

1) Supply Side assumes that the rich have a zillion other uses for their cash and thus have to be lured into investing it!  Now ponder that nonsense statement. Roll it around and try to imagine it making a scintilla of sense! Try actually asking a very rich person.  Once you have a few mansions and their contents and cars and boats and such, actually spending it all holds little attraction.  Rather, the next step is using the extra to become even richer. Naturally, you invest it.  Whatever the tax rates, you invest it, seeking maximum return.

Instead of enticing the rich to invest, these super low dividend and capital gains rates simply used money taxed from middle class wage earners to give bonuses for speculations wealthy folks were doing anyway.  If anything, the only major effect, other than budget deficits, was a pumping up of asset value bubbles.

2) Now to be sure, some of the rich … a few… put a fair amount of their wealth into truly bold and risky new enterprises.  I know such men and women, who engage in Venture Capitalism or starting up creative new enterprises. And just so you know that I’m no socialist I believe this kind of investment truly should be encouraged by taxing it at a very low rate!  Not only because of the risk, but also because equity shares that are bought de novo directly from a new firm actually deliver nearly all of that value directly into capitalization and company development.

In contrast, most exchanges through the NYSE or NASDAQ are purchases from other stock-owners who happen to disagree with you about prospects for future capital gains and dividends. It is just as much a betting/gambling system as any Vegas casino, Your trades may marginally raise or lower the posted price, allowing the company to raise a little capital on the side, but almost nothing from your stock transaction actually goes to the company itself, or into new products or plants and equipment.

(Hence, that kind of investing – by far the largest portion – helps industry only at appallingly low levels of efficiency, but diverts management into spending nearly all its time trying to bribe stockholders with short term benefits, ignoring long-term company health.)

No wonder Adam Smith himself expressed contempt for passive investments that he called “rents”… compared to investments in which the owner actually gets involved in starting up or entrepreneurial development of long term company or enterprise health.

3) So what about “targeted investing”?  The towering hypocrisy of supply side tax cuts for the rich is that they are claimed (without a scintilla of evidence) to help create jobs. But then, why treat investments overseas equally to those made in domestic companies? President Obama proposes narrowing the super-low rates to U.S. companies that are (a) startups, or (b) demonstrably adding jobs, or (c) investing directly in new equipment or R&D.  For this he is derided for “picking winners and losers”… even though the list of targeted tax breaks for GOP-favored industries like coal and oil are myriad. (and outrageous.)

4) In fact, we spoke earlier about how stock and equities markets have lately become the tail wagging the dog.  Instead of serving the capital needs of companies, firms like Mitt Romney’s Bain Capital show that productive corporations making goods and services are now like cattle, farmed by Wall Street, to be bled or dissected at whim.  Nor is the whim even human anymore! Most trades are now propelled by hyper-aggressive, parasitical “flash trading” computer programs that vastly amplify volatility, sap investor earning potential, and threaten our entire economic system in a dozen ways.

5) The reduction of dividend and capital gains tax rates almost to zero has coincided with the rapid ending of the relatively flat social structure that we inherited from the Greatest Generation of the 1950s and 1960s.  Back then, the rich managers of major corporations earned only ten or twenty times what factory workers got, a situation that still exists in Japan. Only now, American wealth disparities are approaching levels not seen since the American Revolution.

The last thing that the GOP or Fox wants you to do is look across the last 6000 years.  The class that they call “job creators” used to have another name. Lords.

6) The outrageous inherent unfairness of passive dividend-clipping getting far better tax treatment than earned wages is inherently suspect.  It is exactly what you would expect rich and powerful men to lobby for, whether or not their supply side rationalizations were true!  It should be no surprise that, in our money-drenched political system, those with such power and influence have benefited immensely.

But are the arguments and rationalizations valid at all?  At minimum, supply-siders should bear some burden of proof.  Their experiment has been run, now, for more than three decades, and never once has their core predication come true… that cutting taxes on the rich will result in increased overall revenues and a vanishing federal deficit.  The results are utterly conclusive.

Supply side is disproved, top to bottom.

What we need in this depression – and by most of the metrics it has been a depression, not a recession* – what’s needed is what ended the last one. The circulation of high velocity money that goes hand to hand very quickly, generating economic activity with every transaction. Not the exact opposite, money that sits in portfolios, not helping capitalize industry but simply fostering the aggrandizement of a parasitic caste.  One the the founding father of free enterprise – Adam Smith himself – quite despised.

“All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons.”

Smith is not talking about charity, but the vigor of trade.  In this case, we “share” by buying from one another.  The middle class is very good at that.  It is the middle class that – assisted prodigiously by technology and science – propelled our economy to be the wonder of the world.

It is the middle class who should get whatever tax benefits can be doled out.  They’ll use it to make small startups.  They’ll use it to educate bright, competitive kids.  They’ll spend it!

They are the real “job creators.”