The Internet of Silly Things

If you’re interested in an Internet-connected cup, fork, toothbrush or pacifier you might want to check this article out. As it turned out the Internet-connected toilet mentioned in the article was hackable with predictable results.

That’s the problem I have with the Internet of Things. I strongly suspect it will be inherently insecure.


Lights! Action! Madness!

There has been an interesting psychological study done in Finland. Researchers were able to distinguish psychosis patients from normal individuals based on their responses to the Disney movie Alice in Wonderland:

Using a 3-Tesla MRI device, they scanned the brains of 46 first-episode psychotic patients (meaning that they had only had one psychotic event) and 32 healthy controls, while watching the movie. The researchers found that significant differences could be seen in the precuneus region of the brain, which is an area associated with memory, visuospatial awareness, self-awareness, and aspects of consciousness.

Asked by the ECNP, lead researcher, Eva Rikandi (Aalto University, Helsinki, Finland) said:

‘In this work, we attempted to determine whether a person is a first-episode psychosis patient or a healthy control subject just by looking at their brain activity recorded during movie viewing. We found, that by monitoring activity in a region known as the precuneus we were able to distinguish patients from control subjects especially well. This would mean that the precuneus, a central hub for the integration of self- and episodic-memory-related information, plays an important role in this kind of information processing of psychotic patients.

She continued:

We were able to achieve almost 80% classification accuracy using these methods. This is the first study which directly associates the beginnings of psychosis with the precuneus, so it is now important that much more research is done in this area’. The researchers hope that this approach can feed into earlier screening and better diagnosis of at-risk populations.

It’s early days for this study, of course. It’s got to be repeatable (keep in mind the high rate of unrepeatability in psychological studies that has been found). It’s a relatively small sample.

I note that another researcher had exactly the same response to the study that I did. I wonder whether people respond the same way to exaggerated fantasy (like Alice in Wonderland) that they do to other sorts of movies?


Wes Craven, 1939-2015

There’s a good retrospective on youth horror film creator and director Wes Craven at The Hollywood Reporter. Mr. Craven died yesterday, August 30, at the age of 76.


Downsizing Cities

Impelled by a comment left by one of the regular commenters here I began thinking about the situation in which many American cities find themselves. My researches revealed something interesting: all major U. S. cities north of the Mason-Dixon line and east of the Mississippi have decreased in population from their peaks nearly 60 years ago. See the table below to get some idea of the scope of the change.

City Population at peak Population now (est.) Percentage difference
Baltimore 949.708 622,793 34.4%
Boston 801,444 655,884 18.2%
Buffalo 580,132 258,703 55.4%
Chicago 3,620,962 2,722,309 24.8%
Cincinnati 503,998 298,165 40.8%
Cleveland 914,808 389,521 57.4%
Detroit 1,849,568 680,250 63.2%
Minneapolis 521,718 407,207 21.9%
Newark 438,776 280,579 36.1%
Philadelphia 2,071,605 1,560,797 24.7%
St. Louis 821,960 317,419 61.4%

Yes, neither St. Louis nor Minneapolis are east of the Mississippi but they follow the pattern of the Eastern cities. There appear to be two exceptions to that pattern: New York City and state capitals. In general the date of peak population for these cities was 1950 but in the case of St. Louis it was 1930.

There are all sorts of reasons for this startling transformation of American cities including

  • Suburbanization
  • De-industrialization
  • Lifestyle reasons impelling people to move south or west
  • Economic reasons impelling people to move south or west
  • Cities just aren’t as necessary as they used to be
  • Incompetent city governments
  • Predatory state governments
  • The interstate highway system

If you had the choice between living in Detroit and living in San Francisco which would you choose?

This dwindling in population has taken place even as the total population of the United States has doubled. Given the length of time over which urban populations have declined, it’s clearly a long-term trend. Rather than dwelling on measures to reverse the trend I believe it’s time to adjust to it.

Sharply smaller populations pose serious problems for cities. City revenues increase as their populations increase and decrease as their populations decrease but cities’ expenses don’t decrease nearly as quickly as revenues do when a city’s population decreases. A city block in which two hundred people live and one in which two people live both need sanitation, police, fire, and other city services but it’s a lot easier to distribute the cost of those services among two hundred people than it is between two.

Decreasing city populations make commitments for future payments like municipal bonds or city workers’ pensions significantly more difficult to satisfy. I don’t know what roll declining population has on the crisis in public workers’ pensions but it can’t be inconsequential.

Typically cities don’t have either the power or the will to, as me auld mither used to say, grasp the nettle and shrink the borders that made sense when the cities were 10% or 20% or, in some cases, 60% more populous than they are now and states must step in. It’s high time for states to start taking the task of downsizing cities seriously.


Katrina, Ten Years Later

The editors of the Wall Street Journal commemorate the tenth anniversary of the devastation wrought by Hurricane Katrina on the city of New Orleans:

Hurricane Katrina was a disaster of nature and of government, and President Obama and George W. Bush—who are in New Orleans this week to observe the storm’s tenth anniversary—would probably disagree on which force deserves more blame. Our view is that while nature’s fury is eternal, the Gulf Coast’s remarkable recovery shows that government can change, and better outcomes are possible with the right reforms.

So far, so good. I take exception with their next paragraph:

Katrina was the most ruinous natural disaster in American history, and still its scale manages to astonish. The Category-3 storm at landfall featured winds as high as 145 miles an hour and was fronted by a surge of water as high as 27 feet that breached the levees of New Orleans. Roughly 80% of this city below sea level was flooded, and the larger damage was spread over nearly 93,000 square miles in Louisiana, Mississippi and Alabama, an area the size of the United Kingdom.

which is misleading in parts and in others just plain wrong. I’ll put my criticisms into the form of questions.

Was the devastation in New Orleans a natural disaster?

The jury is still out on this question. Yes, the hurricane was natural. But by most accounts it was no longer a Category 3 storm when it reached New Orleans and the evidence is mounting that the actual culprit was the Army Corps of Engineers:

That the catastrophic flooding of this city was caused not merely by a powerful storm but primarily by fatal engineering flaws in the city’s flood protection system has been proved by experts, acknowledged by the United States Army Corps of Engineers and underscored by residents here to anyone who might suggest otherwise.

Did Hurricane Katrina make landfall as a Category 3 storm?

Hurricane Katrina first made landfall as a Category 1 storm in Florida. It then went back out to sea, gained strength, and when it made landfall again in Mississippi and adjacent Louisiana it was a Category 3 storm. By the time it reached New Orleans is had probably fallen below Category 3 intensity.

Was Katrina the most ruinous disaster in American history

Not by a long shot. There have been any number of more ruinous natural catastrophes in American history. Many more people died in the San Francisco Earthquake of 1906, the Johnstown Flood of 1889, or the Galveston Hurricane of 1900. The real damage from the San Francisco earthquake was at least $8 trillion (in today’s dollars). The real damage from the Chicago Fire (it is unknown whether the Chicago Fire was a manmade or a natural disaster) was at least $4 trillion. Katrina’s damage is estimated at around $150 billion.

The area of devastation of the New Madrid Earthquake of 1811 was more than twice as large as Katrina’s.

Katrina did have the greatest damage in nominal dollars of any natural disaster in American history (nominal dollars is a lousy yardstick) and it was undoubtedly the most publicized natural disaster in American history. The speed with which the hurricane was turned into a club to beat over the head of the Bush Administration was pretty darned impressive.

I’m not trying to diminish it. Yes, it was a disaster. However, it was definitely not the most ruinous which emphasizes the human failure in the aftermath of the earthquake even more.

Ten Years Later

In the immediate aftermath of Katrina I posted a lot about it and I’m proud of what I wrote.

In this post I suggested that we might think about our strategy on military base closure taking natural disasters into account.

In this post I wrote about the rush to assign blame too narrowly.

I consider this post, “Learning from history: the relief and rebuilding of New Orleans”, one of my best. The cities I mention in the post—San Francisco, Galveston, and Chicago—had all re-built themselves completely within five years of the disaster. Below, courtesy of Google Maps, is a satellite photo of the Lower Ninth Ward of New Orleans. I encourage you to go to the link and zoom in. There are signs of life here and there but New Orleans has not been re-built.


Is Marcus Ridin’?

Speaking of things you don’t see every day, Ruth Marcus urges Joe Biden to run for president:

He should run as Biden Unbound. He can, pardon the phrase, trump concerns about age by announcing that he’ll seek just a single term — and picking a strong, preferably female, running mate. (Elizabeth Warren would be a tempting choice but probably not an optimal one. She’d be divisive in a general election and, at 66, reinforces the age issue.)

One-term Biden wouldn’t have to worry about satisfying constituencies or winning reelection. One-term Biden, this argument would go, would be free to craft the kind of bipartisan deals that only a Senate veteran can pull off — although, in my view, Biden’s chief deal-making claim to fame as vice president, the fiscal-cliff agreement, gave away too much to Republicans.

An alternative, or perhaps complementary, theory is that Biden could run to Clinton’s left, seeking to seize on the base energy evoked by Warren and, in her stead, Sen. Bernie Sanders (I-Vt.).

IMO Joe Biden brings even less to a presidential candidacy than Hillary Clinton if such a thing be possible. That the absence of prospective candidates under the age of 65 doesn’t impel the Democrats to question their more general political strategy is astounding. Basically, the party has lost a whole generation of elected office holders.

1 comment

The Case for Raising Interest Rates

Well, there’s something you don’t see every day. William Cohan articulates the case for the Fed’s raising interest rates:

The case for raising rates is straightforward: Like any commodity, the price of borrowing money — interest rates — should be determined by supply and demand, not by manipulation by a market behemoth. Essentially, the clever Q.E. program caused a widespread mispricing of risk, deluding investors into underestimating the risk of various financial assets they were buying.

The only way to return the assessment of risk to something resembling normalcy is to stop the manipulation. That requires nothing less than serious intestinal fortitude from the Fed and a willingness to raise interest rates in the face of determined opposition from Wall Street.

I honestly don’t know what the Fed should do. I’m glad it’s not my call. While I think that removing money from the economy would be a mistake at this point, the harm that the present very low interest rates is doing is enormous. Just look at the risks being taken in pursuit of yield by individuals and organizations that are in no position to take risks. Very low interest rates over the period of a generation let alone forever will be a disaster.

A big problem is that fiscal policy and monetary policy have been pulling in the opposite directions. IMO nearly everything that has been done since the recession has been an error. If there hadn’t been mis-steps there’d have been no steps at all which probably would have been better.


The Council Has Spoken!

The Watcher’s Council has announced its winners for last week.

Council Winners

Non-Council Winners

The announcement post at the Watcher’s site is here.


The Refugees

Let’s stipulate right off the bat that many of the people living in African or Middle Eastern countries meet the definition of refugees under the 1951 Refugee Convention and that’s probably been true for the last 70 years. In Hungary a truck was found full of dead people, presumably being trafficked from Bulgaria through Hungary to Germany. 150 more dead people off the coast of Libya and that scene is replicated many times a week. It’s a humanitarian nightmare.

It’s also a legal thicket. Greece, Bulgaria, and Italy are practically on their backs as it is. They can’t accommodate all of the refugees even if they wanted to which, let’s face it, they don’t. When people from Libya or Syria or Afghanistan or Somalia arrive in Italy, Bulgaria, or Greece they’re refugees and the host countries can’t turn them away. However, Bulgaria, Italy, or Greece are just transit countries and when they leave those places for Germany or Sweden they’re economic migrants and Germany and Sweden can turn them away.

What’s the moral of this story? I think it’s that stability has value. We upset the apple cart, first in Iraq and then in Libya. And now the apples are pouring out all over the ground. It’s an awful situation.


Are We the Remora Or the Shark?

Niall Ferguson has a very interesting op-ed on the symbiotic relationship between China and the United States and the role that central bankers play in it:

Two years after the taper tantrum, this was the week of the Chimerican chill. Economist Moritz Schularick and I coined the word Chimerica in these pages in 2007, combining China and America, to describe the symbiotic relationship increasingly dominating the world economy. That is even truer now, as the past several days have shown. For the first time in financial history, a sneeze in Shanghai gave Wall Street—and almost every other stock market in the world—a cold.

Before the 2008 financial crisis, Chimerica was a marriage of opposites. China saved, exported and lent. America consumed, imported and borrowed. For a few heady years, the odd couple were happy together. Not only did the glut of Chinese savings lower the cost of capital, the glut of Chinese workers reduced the cost of labor. Every asset class on the planet rallied.

But the unbalanced economic relationship between China and America posed a threat to global financial stability. That was our point in 2007: Chimerica was a chimera. Without the flow of Chinese savings into U.S. dollars back then, a result of Beijing’s large-scale intervention to keep its currency weak, American interest rates would surely have been higher and the U.S. housing bubble less inflated. Surprisingly, the 2008 financial crisis didn’t lead to a Sino-American divorce, despite mutual accusations of monetary manipulation. Instead, like any couple who spend long enough in each other’s company, the Chimericans grew ever more alike.

He seems to long for China to become more like the United States:

After the bursting of the stock bubble in June, the Chinese government resorted to a bewildering combination of market interventions, exhorting pension funds to buy and threatening sellers with prosecution. These measures have not only failed, they have also damaged the government’s credibility.

Such blunt instruments must be set aside, and the role of the People’s Bank of China (PBOC) redefined so that it becomes more Fed-like in character. China’s leaders need to see that regardless of the Fed’s official dual mandate—to promote stable prices and maximum employment—responsibility for preventing an asset-price crash lies with the central bank alone.

which I found distressing. Is it the Federal Reserve’s responsibility to stabilize asset prices? If it is it’s done a terrible job of it. In 2008 the DOW closed under 8800. It’s double that now. I don’t see how that can be construed as stabilizing asset prices or even ensuring that they only rise in an orderly fashion.

Silly me. I thought the Federal Reserve’s mandate was to preserve an elastic currency not to ensure that the stock market always goes up. Of course, as the total volume of the stock market rises out of relationship to the real economy “elastic currency” increasingly comes to mean “ensuring the stock market always goes up”. Sounds like we need a statutory redefinition of the Fed’s mandates.

Meanwhile, the use of the symbiosis metaphor to describe the relationship between the United States and China makes me queasy. It’s obviously not a commensalist relationship and, if it’s one of mutualism, from my vantage point it certainly looks as though one of the parties benefits so much while the other benefits so little it’s hardly mutual at all. Let me see, there’s a word that describes a symbiosis that is neither commensalist nor mutualist. What could that word be?