Maybe the Fed never really missed the bubble after all

The news of the secret tapes of Carmen Segarra is out. 47 hours of secret recordings show us how the Federal Reserve has evolved into a captured regulator. It's hard to believe that one of the most powerful regulators in the world could become captured, but work by This American Life and ProPublica offer compelling evidence that is exactly what has happened.

The relevant episode of This American Life discusses the recordings in great detail, which I won't go into here. Suffice it to say, that when someone finally pipes up to ask the hard questions, she is shot down and fired for doing so. The subject of the question? Goldman Sachs, the bank everyone loves to hate (unless you're a senior manager there). The issue? Whether or not Goldman Sachs has a company wide policy concerning conflict of interest. Segarra maintains that Goldman Sachs does not have such a policy. Her supervisors disagreed.

There are some economists who are sure that the Federal Reserve did not see the collapse of the housing bubble coming. Others suspect otherwise. Paul Krugman notes that in 2005, former Federal Reserve Board chairman Alan Greenspan was presented with a paper by an economist warning of the risk taken on by the economy. That economist, Raghuram G. Rajan, warned us of a sort of disconnection between risk and liability. Translation: it might be better if banks could not make risky loans and sell them to an unsuspecting buyer as a security.

Rajan was later proven to be right. The collapse of the housing market was a supreme underestimation of risk. But I suggest here that the risk was underestimated because of a conflict of interest. The role of Goldman Sachs and other investment banks in the financial collapse is well documented and can be fairly summarized as follows: sell securities that are likely to fail, buy insurance to cover the failure of the same securities and collect when failure occurs. The position of Goldman Sachs fit the classic definition of a conflict of interest.

In the case of Carmen Segarra, she identified an instance of a conflict of interest within Goldman Sachs and reported it. During her investigation, she found another conflict of interest in the Fed. On the one hand, the Fed was a regulator, in charge of making sure that one of the biggest investment banks in the world did not take down the economy. On the other hand, her supervisors had become too friendly with management at the bank and sought to protect the bank if it were found to violate any regulations. The Fed, enamored with Goldman Sachs, had become a captured regulator.

Given all of the available information, I think that the Fed saw the housing bubble coming, but due to a conflict of interest, did nothing to prevent the collapse of that bubble. Segarra's recordings show a very definite pattern of a regulator protecting the regulated, a sincere desire on the part of her supervisors, not to offend Goldman Sachs.

How is it that bank examiners at the Federal Reserve can be cowed into submission? Could it be that they are hoping and wishing for a cushy 6-figure job at Goldman Sachs sometime in the hopefully not-too-distant future? I think it's more like a revolving door. This sort of practice may not be possible to eliminate, but it can be greatly reduced. How? I'm not sure, but I suspect there are plenty of suggestions to be found in the suggestion box at the Fed.

How patents pervert GMO science

Science Daily is running an article that is just literally gushing with the good news that genetically engineered crops cause no damage to the health of livestock fed a complete diet of GMO feed. The article provides some detail about the findings but makes no mention of the methodology. Yet, at the end of the article, a very political statement is made:

“To avoid international trade disruptions, it is critical that the regulatory approval process for genetically engineered products be established in countries importing these feeds at the same time that regulatory approvals are passed in the countries that are major exporters of animal feed,” Van Eenennaam said.

Yes, it must be very important to get those trade deals done so that ordinary people have no say over the content of their food and the labeling of the same. Patent holders, including the university, are anxious to get at the profits of their research, but first, they must get the trade deals done with great secrecy so that the scourge of GMOs can be spread worldwide. They want to go after 64 countries that insist on banning or labeling GMO crops.

There is no indication of peer review for this study yet as it has only just been released. The study was funded in part by the Kellog Foundation, that bastion of health from Wellville. But the article did prompt me to ask, how much money does the University of California receive from Monsanto? Well, I don't think that is an easy question to solve, as I'm sure, like the dark money in politics, companies like Monsanto would rather not have all of their contributions disclosed. But at least one group of researchers has expressed concern about it, the Students for Responsible Research at the University of Davis. UC Davis is the source of the original study mentioned at the beginning of this article.

Those same students express concern that so much private money is tilting research in favor of the commercial interests that benefit from research being done on their products. So I see an interesting trend here. Over the last 40 years, there has been a steady erosion of public funding for schools and colleges, all in the name of efficiency. During the same time, we see a steady increase in private funding of research institutions. Side question: if private funding is so efficient, why is the cost of education rising faster than inflation?

With private money comes private influence. The students going through those institutions will see the money before they see the principles and will have a tough choice to make. Do I produce research that flatters our benevolent benefactors, or do I create research based on critical thinking and analysis?

The purpose of research is to create knowledge that benefits us all. As the critics at the UC Davis' Students for Responsible Research point out, private money has created a sort of thought police, guarding against any criticism of privately funded research programs aimed at commercial objectives. Such a close relationship between public schools and private institutions can hinder or prevent the objective analysis required to ensure that our food is safe for all.

Consider that for decades, our great research institutions have been telling us how safe artificial sweeteners have been for us. Yet, very recently, a study has shown us how aspartame changes our digestion and can lead to diabetes and obesity by changing our gut bacteria. Most aspartame sold here in America comes from genetically modified E. Coli, our friendly gut bacteria. Given the widespread use of aspartame, and the far reaching consequences that research institutions friendly to their benefactors were not able to tell us about until now, how can we trust those same institutions to give us good research on GMOs?

We can't. At least not as long as they benefit from the enormous rents provided by strong patent monopolies. The incentives are too great and as such, pervert the goals of the research on GMOs. All GMOs currently in production and sold here in America have very strong patent protection. It is an unfortunate fact of life.

The tendency to promote that which brings in money over that which can help all of us is a very strong tendency indeed. It is easy to think that with more money than everyone else, one has an increased chance of survival, a natural advantage over others. It is also easy to forget that money is a social contract between the one and the many - that the wealthiest among us need the rest of us more than we need him.

Removing the patent protection for GMOs will remove the most perverse incentives associated with the research on genetically modified organisms and will allow truly beneficial research on the topic to prevail. There is no other way to achieve this goal.

I actually don't have a problem with GMOs per se, if they are proven safe. But as we have seen with artificial sweeteners, it can take decades of experience to be sure that something is safe for consumption. We could learn too late that GMOs aren't as safe as they were made out to be, and that would be a tragedy, now, wouldn't it?

The hidden bane of artificial sweeteners has been exposed

The results are in. Scientists now have very strong evidence that artificial sweeteners can alter gut bacteria in humans and that may lead to glucose intolerance and that in turn may lead to obesity and diabetes. A recent study has found that artificial sweeteners have a profound effect on gut bacteria that decreases our tolerance for glucose. In a nutshell, the body adapts to the artificial sweetener rather than natural sugars.

An article in ArsTechnica regarding the same Nature Journal entry says:

"Could this really be relevant to human health? To get a hint, the team got seven healthy volunteers to start consuming high levels of saccharin (the FDA's recommended maximum daily dose). At the end of a week, four of them ended up with a reduced insulin response."

This is suggestive, but not conclusive since everyone responds differently to artificial sweeteners. I do find it interesting that a reduced insulin response is found at all in just a week. What stands out to me is what happened next:

"Again, the researchers took stool samples and gave them to germ-free mice. Fecal transplants from those who had a poor insulin response transferred this response to the mice; fecal transplants from the ones who were unaffected by the saccharine had no effect."

The effect can be transferred? Well, it's not contagious, but the fecal transplants carried gut bacteria and that transferred the poor insulin response from one mouse to another. This shows that we get a lot of help from bacteria cells in our gut that don't even carry our own DNA. The scientists in this study also note that changes in gut bacteria can lead to metabolic disease and artificial sweetener induced glucose intolerance in health human subjects.

I remember years ago, how my sister shared with me her research about aspartame. She said that aspartame was originally a component of aircraft glue. I was never able to confirm that connection, but that was before the internet. Even today, I still cannot find that association, but that information altered my perception of artificial sweeteners. Already, I had tried them and hated the taste in drinks like Diet Coke and Diet Pepsi.

So for most of my adult life, I've taken a rather dim view of diet or lite anything. If you're drinking Coke lite, you're probably drinking too much. If you're using artificial sweeteners, you have almost no idea what you're putting into your body. My suspicions are that strong about it so I avoid them like the plague. I felt vindicated when I read that artificial sweeteners tend to increase your appetite. After all, we're dealing with a food industry that profits from addiction to food, so it makes sense.

The ability of our body to adapt is, I believe, the point to remember, for the body adapts to more than just artificial sweeteners. It's with anything we eat. Our bodies are built to adapt to the environment. Life adapts, automatically. When the environment changes, we change or we die. We don't have a choice about it, except with the modern diet for humans, as our gut bacteria have shown us. There we can make choices.

We can choose McD's or we can make our own at home. We can choose an apple, or an apple rollup in a nice, neat little package of cardboard and plastic. We can choose a diet soda pop, or we can drink some fresh squeezed orange juice. No pain, no gain, right?

The abstract for the article (sorry, I wasn't willing to pay $32 to Nature to get access to the PDF), has this to say in conclusion:

"Collectively, our results link NAS consumption, dysbiosis and metabolic abnormalities, thereby calling for a reassessment of massive NAS usage."

Here we have scientists who have done good research on the effects of artificial sweeteners and they are calling for more work on the subject. They too, have noted the dearth of studies and call for more studies to be done before we can be certain artificial sweeteners are safe.

Whatever the choices we make in what we choose to eat, one thing is clear, we adapt to our choices and we often pay very dear prices for the changes we incur. Can we ever look at a pack of Equal the same way again? I can. But with a bit more certainty now.

The grand carousel that actually goes somewhere

When I was a kid, I didn't watch the sun very closely. I saw it rise, and I saw it set and that was enough for me. Oh, sure, I was into astronomy, could tell you the names of all the planets and could tell you some of their orbital periods, their masses, and their order from nearest to the farthest from the sun. Pluto is still a planet. I don't care what anyone else says. There were nine planets when I was a kid, there will still be nine planets in my mind today.

I also learned about how the earth has an axis of rotation that is tilted 23 degrees from the plane of its orbit. This tilt of the earth gives rise to the seasons as we all orbit the sun. The seasons become more noticeable as we move away from the equator, the midpoint of the earth between the poles. But at the poles, the biggest difference we see in the seasons is the complete disappearance of the sun during the winter. Winter at the poles is a very long night, indeed.

I see the sunrise against the mountains, day in and day out. As I gained more experience, I found that it helps to have a point of reference on the horizon. As the weeks pass, I see the sun march back and forth across the horizon at sunrise and sunset. During the early morning and afternoon hours, I note the shift in the reflection of light off buildings and cars over time. We are, it seems, in motion on a grand carousel.

The earth spins at what may seem to be an incredible speed. As Einstein pointed out, speed is relative, so we don't feel it as motion because we're moving with it. Relative to the axis of rotation, though, people at the equator are moving at about 1,070 miles per hour. That speed decreases as you get closer to the poles where you are just spinning rather than experiencing any lateral motion.

In turn, the earth rotates around the sun. Every year, the earth travels 584 million miles around the sun. A year may seem like a long time, but the earth is still traveling very fast by our own standards - at a speed of approximately 67,108 miles per hour, or about 18 miles per second. That's a pretty heady speed, relatively speaking, but since we're moving with the earth, we don't really feel it now, do we?

The sun is a small, mediocre star in a galaxy of 100 to 400 billion stars - the actual number of stars is not really known since we can't see all of the stars in our galaxy. Our galaxy, affectionately known as The Milky Way, is about 100,000 light years across. To put that in perspective, the nearest star to our star is about 4 light years away. One light year is the distance covered by light in a year, or about 5,878,499,810,000 miles. That's 5.8 quadrillion miles. 

Based on a distance of 30,000 light years and a speed of 136 miles per second, the Sun's orbit period around the center of the Milky Way is about 225 million years. That period of time is called a cosmic year. The Sun has orbited the galaxy, more than 20 times during its 5 billion year lifetime. That makes the sun about 20 cosmic years old.

The Milky Way doesn't really orbit anything else, but it is part of what we know as The Local Group. This is a small group of galaxies that orbit around the Milky Way and the Andromeda Galaxy. If anything, the Milky Way is definite going somewhere - towards something called the Shapely Supercluster of galaxies comprising some 74,000 galaxies. The estimated speed of motion of the Milky Way towards that super cluster? About 1.4 million miles per hour.

Dean Martin is not so famously quoted as saying, "You know you're not drunk if you can lay on the floor without holding on." On the other hand, David Byrne says that "the world moves moves on a woman's hips, the world moves as it swivels and bops". Lucky for us, it's all relative so we can still enjoy a great game of billiards. In the meantime, we can relax because the passing of the seasons on the Grand Carousel is something we can all share, on any scale, even if we're actually going somewhere.

A study in contrasts: community broadband, with and without

I've become a big fan of muninetworks.org for my community broadband news. They are part of the Institute for Local Self-Reliance and they have done a great job documenting the benefits of community broadband. Their site is chock-full of useful information that can support a debate in favor of community broadband, even with the most determined detractors.

Two recent stories on that website offer a great study in contrast of life with and without community broadband. It is instructive to see that private monopolies are less efficient and less responsive than government monopolies can be. The difference, I think is in the attitude, not whether or not the entities are private or public. The public network says "I will serve everyone in my service area, no matter what." The private network says "I get to pick and choose based on profit incentives." Let's have a look at two different cases.

First there is the community that had to go without, the poor town of Cleveland, Tennessee. They are right at the edge of the EPB service area surrounding Chattanooga - tantalizingly close to one of the fastest ISPs in the country. The EPB offers gigabit service to anyone in their service area - it's reliable, lightning fast, and customers are very happy. But they can't extend their service to anyone who wants it because a state law prohibits the EPB from doing so. That law was written and pushed through the legislature by the cable and telephone companies.

The businesses in Cleveland suffer from inconsistent and slow service with customer service to match. They want alternatives to what they have, but the legislature, in the pockets of incumbent carriers, refuse to allow the EPB to expand their service area. The argument? Private companies should not have to compete against the government. But the incumbent carier, AT&T, refuses to serve everyone and relegates their customers in Cleveland to dial-up service. Dial-up! You know, with a phone line modem. That is so 1990s! Here we see that AT&T has betrayed the public trust by refusing to serve *everyone* with modern internet access through their private monopoly.

On the other hand, there are communities that have embraced community broadband, like Lafayette, Louisiana. Lafayette has built a community-own, 100% fiber network to everyone in their service area. That network is now paying dividends as three businesses have moved there, creating 1300 good-paying jobs. The attraction? Gigabit internet service, reliable, fast, and very reasonably priced at $70 a month.

Lafayette residents and businesses alike are very happy with their service. They now have an internet service provider that doesn't answer to big-shot executives in New York City or shareholders happy to pounce on every penny of profit. LUS Fiber answers to the community they serve and they understand what the term "public trust" means. They serve everyone because they know that the more they serve, the better life is for everyone.

This is the difference between public and private internet service. Private internet service providers will put profit before service. They are content to let customers languish if there is no alternative. They have no compunction about betraying the public trust of the franchise they were granted. Yet, they guard their private monopoly jealously with lavish contributions to the legislators that serve them well.

Community broadband is here to serve everyone in their service area so that everyone is a winner. They understand how important the public trust is to them, so customer service is the highest priority. They are more focused on the service than the money. They answer to citizens in homes and businesses throughout their service area, and they are responsive to community needs.

So what would you rather have? A private monopoly that will pick winners and losers or a community utility that serves everyone? I think the choice is obvious to most of us, but to legislators encumbered by the acceptance of corporate money, maybe not so much.

Where is the liberal bias in the media?

On Sunday, September 21st, there was a historic march in New York City. More than 400,000 people gathered to march in protest in favor of the earth, to protest the economic policies that have given rise to climate change. The story was plastered all over the internet. There is no way you could miss it in any social media or news on the internet. Yet, our Sunday morning talk shows had nothing to say about it.

Most conservative politicians would rather whine about liberal media bias than tell you about all the stuff that is missing from the news. From massive trade deals to gerrymandering, most politics is omitted from the news to avoid stirring up the vote every two years. Instead, the news brings you gory stories about violence between people or how a kitten was rescued from a tree by a fireman. Network news, even local news, is very unappealing compared to what I can get on the internet.

If anything, the media has a conservative bias in favor of stories about people rather than stories about what elected and unelected representatives are voting for. Over at the Daily KOS, they have a list of big news stories that would be front page news if there were a liberal bias in the media. But they're not news. Why?

Think about what you buy when you buy a newspaper. There is room for news and room for advertising. That space for advertising? That's called the "newshole". The rest of the real estate is for advertising. Your 50 cents isn't what pays for the newspaper. The advertisers pay for the newspaper. And if the advertisers aren't happy with a story that appears next to their ad, you can bet that the editor is going to hear about it.

Who are the advertisers? They are capitalists with businesses big and small. They've made an investment in advertising to draw you in to their store or website to buy something. They are making a bet that their products will have better sales when you see their ads. So if you run a paper, you better have nice, gushy stories about how great capitalists are while showing how bad those little people can be to other little people. Yeah, capitalists are different from the little people. I know one of them. He thinks he's immortal. Seriously.

This is just my take on the news. I look for the news I want to see. But I also know that if there is any concern about bias in the media, there is something I can do on the internet that I can't do on TV. I can cross check stories. That means I can search for stories in the news and then read about the same story from different regions of the country and the world.

Cross-checking a story allows me to corroborate facts about a story. I will read conservative and liberal sources, for and against, and I will look for any other way to contrast sources so that I can get two opposing views of the same topic. It's easy to do. When I search for a topic in Google News, there are often several hundred to several thousand hits that I can choose from. I can hopscotch around the country to read about one story to get a better sense of the fairness of narrative.

Remember, reading is not believing, it is thinking. Whether or not there is bias in the media, we all have our own biases. we have biases in what we choose to read, where we choose to find our sources and how we choose to interpret what we read. We can read with an uncritical eye or we can do some research on topics that are more important to us.

With every word, every sentence, every paragraph that we read in, we must find a way to make sense of it for ourselves. When we share that information, we can add our own narrative to the story, and so the next person does the same thing, and so on. That is how we've done it for thousands of years. That is the only way we know how. The internet, as far as I can tell, is the best resource for checking our sources, their biases and their facts. The internet has become a repository for all human knowledge, irrespective of bias.

But there is one thing that is incontrovertible: the climate is changing, people have noticed and they are asking their leaders to take action. That is front page news, top of the hour news on TV, but not in this country.

Thoughts on the movie, "12 Years A Slave"

Over the weekend, I had an opportunity to watch "12 Years A Slave". The Internet Movie Database provides the following synopsis:

"In the antebellum United States, Solomon Northup, a free black man from upstate New York, is abducted and sold into slavery."

It was a brutal and fascinating journey from freedom to slavery to freedom again. What really blows my mind is that the movie is based on a true story. In the end, no one really knows how Solomon died or when. But we see how he lived and found the determination to find salvation rather than despair. He found freedom in his own mind and chose to shine by his talents and abilities than to subject to abject humiliation. He kept his eyes on the prize, studiously and consistently for 12 years until he found freedom.

What I also found striking about movie were the antagonists, the slave owners, and their subordinates, and how they imposed their false piety upon others. We see them in the movie, giving sermons to their slaves, as if somehow, being in the bondage of slavery and listening to the sermon would somehow save them from the devil. I wondered to myself, if that were such a great and compelling duty, why more white men did not submit themselves to slavery.

In the movie, I also saw a white slave owner pretend his monogamy to his wife while raping the slave women, yet still, he felt so righteous. The same slave owner, preferring to be called "Master", imposed severe violence on his slaves, as if he were the one, the only, God. From whipping to hanging, the masters knew the tools of their trade well.

It is with great sadness that I saw in the movie, how false piety can be used as an excuse to impose slavery upon others. With each historical drama that I see about that period of our great nation's history, I see how far we have come and how far we have yet to go. For there are still people in the South who believe it is right to suppress or eliminate the vote of people of any color. They still believe it is their right to discriminate and segregate people of color from that who they deem most holy, the white man, irrespective of his sins.

The movie reminded me of how we are all connected and that we cannot impose pain or imprisonment upon another, without doing the same thing to ourselves. That is why I try, with much success, to err on the side of peace.

What if we didn't bail out the banks in 2008?

In the months leading up to the collapse of our banks, there were many warnings of what was to come without changing course. The people in charge of our biggest banks were smart people and they knew what they were doing (or they wouldn't be there), but refused to listen to good advice and had very little oversight from the government or the markets. When their errors in judgement finally came down to losing big money, they found allies in government who would help them at the expense of the taxpayer. They held a gun to their head and said, "Bail us out, or we'll pull the trigger!"

When the government bailed out the banks, they made it easier for the banks to hold onto to their property rather than selling it at fire sale prices (Iceland figured this part out early). Letting them fail would have been better for the economy and that would have tipped the scales back to the 99%. But the one percenters would have none of that. They wanted government insurance (that everyone else bought for them, without their consent) for their failed investments. They had unclean hands.

What does that mean? Well, they expected to loan money out to everyone else, sit back and collect a check while keeping inflation low, keeping wages for labor stagnant, and expecting people to make payments on mortgages that they could not afford once the ARMs went up. This was done on a very large scale and went on for more than 30 years. It's like they were trying to find more and more ways to make money without working. Their plan worked for awhile, but then in 2008, it stopped. Too many foreclosures due to adjustable rate mortgages adjusting. No could adjust to a mortgage payment that went up by $1000 a month on a jumbo loan without a commensurate wage increase.

If the government had refused to bail them out, yes, there would have been hard times, but the wealthiest among us would have had to work again instead of living on government bailouts. Without the bailouts, the banks would have had to sell off their assets as soon as possible to recoup their investments, or what remained of them. This is how capitalism is supposed to work. If you make a mistake, no worries, sell your assets so that you have some money left, even if you take a bath while selling them, you will still have money.

But the so-called capitalists didn't want to lose any money. They felt it was not their fault that they lost money and expected the government to help them out. Without government help, the tide would have turned and our economy would have come roaring back because people could buy property on the cheap. Oh, well. Live and learn. That's why we're here, you know, to learn from our mistakes.

Unfortunately, the same people who were bailed out didn't get to learn from their mistakes and many of them are still alive, still in power, and exercising that power daily. A true capitalist accepts the risk of his investments and is willing to take a bath when he makes a mistake. The men and women in power today are not true capitalists for they have committed the sin of socializing risk while privatizing profits.

There was a time when we could say that America was a capitalist country. Not anymore. Maybe that's not such a bad thing if you live in a Conservative Nanny State.

Everything works better with a network

A new study has found that cities with super fast internet - that's gigabit speed - are more productive. The study seems to have done a fair job of ruling out other factors and found that on average, cities with gigabit speeds had an increase of about 1.1 percent annual GDP per capita. That doesn't seem like a lot, but it compounds nicely over time and it makes a big difference when compared to cities without the same access to the internet.

This parallels nicely with comments made by Tom Wheeler, chairman of the FCC:

Chattanooga’s proximity to the Tennessee River – a natural network – fueled its initial growth. When the railroad network arrived in the mid-19th century, Chattanooga became a boom town. The railroad allowed raw material to flow into the area and finished products to flow out to markets around the country – making Chattanooga an industrial powerhouse.

Chattanooga is home to one of the first gigabit networks in the country, providing super fast internet access to every home and business within the service area of the EPB of Tennessee. The EPB offers internet access at speeds 100 times the national average speed of 10 mbs. The EPB offered gigabit service even before Google Fiber did - by two years.

Networks are everywhere. They are the most efficient way to distribute anything. There is no other way to do it until we have teleportation, and even then, we will need a network.

Everything in life uses networks. Plants, trees, rivers, the veins in your hand - they are all networks. The speed of the network can determine outcomes. The complexity of the network can determine capacity. One estimate holds that there are 100 trillion connections between cells in the human brain, a very fast, very efficient thinking machine. The internet is developing connections like that.

It takes community networks to make this happen. Why? Because private internet service providers like Comcast, AT&T, Time-Warner and Verizon would rather put shareholders and executives first before customers. Because these same companies were able to secure enough trust from the communities they serve to get a private monopoly, then they betrayed that trust by denying better service or any service at all, or playing favorites.

Community networks do not carry the baggage of corporate loyalties like the incumbents do. Their first priority is customer service to deliver and maintain high speed internet access. They do not have to answer to shareholders or executives. They must answer to voters and city councils. Without that baggage, community networks can deliver a superior connection at a better price than the unelected incumbent service providers.

Cable is a dying industry that picks favorites and leaves everyone else out to hang. The phone companies? They're tacitly conceding territory to cable in exchange for peace with cable. Let's move along and forget them. Let's build the network that serves everyone in every home and business. Community broadband is not the utility of the future. It the utility we need now.

The symptoms of trickle-down economics

Oligarchies mean that the top 1% can make decisions for other people without accountability and without consequences. In an oligarchy, the people at the top can earn money without work. The people at the top become, in a sense, royalty. In a sense, it's very well obscured slavery.

We live in a defacto oligarchy, something proven by more than one study like this one. We can thank Reagan Republicans for getting the ball rolling. Tea Party Republicans are working hard to make sure we never find the ball. Trickle-Down economics, as it was called during an election featuring Ronald Reagan, doesn't work. George Herbert Walker Bush called it "voodoo economics", and I think, it was for good reason. He knew that Trickle-Down economics doesn't work.

We have inflation when there are more dollars chasing available goods. That what I learned in school, but we never discussed deflation. Maybe that's because they never believed that it would happen then. But it is happening in Europe, and it could happen here, too. Deflation comes with money being pulled out of the market, driving employment and prices down.

As wealth accumulates in the hands of the few, inflation is abated because money is being pulled out of circulation. This is exactly what we saw in the meltdown - a tremendous transfer and accumulation of money in the hands of the very few - with very low inflation. Very low inflation can lead to deflation, and that is very hard on anyone who doesn't have money. But for those who have money, their money increases in value without additional work, a very convenient fact that conservatives don't discuss too freely.

So while the press is happy to report on low inflation, they tend to omit the cost of low inflation to everyone else. Anyone who owes a debt will have will have to work much harder to pay it off. Take a simple mortgage for example. Over thirty years, the payment on the mortgage is the same number. At first, when families are young, the majority of the payment is interest with very little principle, and it's hard to make the payment because earning power is lower for young adults. As adults near middle age, the payment is the same, but relative to earning power and inflation over time, the effective payment is lower. More disposable income is available in later years.

That is what should have been happening in the years leading up to 2008. But incomes for labor had been stagnant for 30 years and people couldn't move. They couldn't pay off debt. They couldn't buy houses. They couldn't sell houses. But if you had money at that time, making money is much, much easier. The only people who were bailed out were the people who had money. Everyone else was out of luck.

If you own debt, low inflation is fantastic. If you owe debt, low inflation will be the bane of your existence. Maybe that's the reason we allow for inflation in the first place. You know, to avoid revolution.

The disintermediation of cable

The good folks of Longmont, Colorado are getting a gig fiber service to their homes and businesses. They are in addition to the 400 cities and towns that have rolled their own broadband with speeds and prices that are far better than the incumbents care to offer. Early adopters will be privy to 1 Gbs speeds up and down, for $50 a month. That is an incredible rate that no one at Comcast, Centurylink, AT&T, Time-Warner or Verizon will ever offer. They have shareholders to answer to.

But what I find so interesting is an observation made by the general manager of Longmont Power and Communications, Tom Roiniotis:

“Cable TV is a dying industry. People want to get the TV that they want, not the TV that the cable companies force them to get.”

When pressed for an example, Roiniotis considered sports. If you want to watch an NFL game, why should you have to pay for two hundred channels you’ll never even tune into? There is a growing consensus that audiences don’t want to watch the movie that happens to be on Showtime right now, they want to choose when to start, when to pause, and what movie they’re interested in. As he put it, “The consumer is finally becoming king in the world of TV.”

 He has summarized exactly how I feel about cable. I don't watch ESPN, don't care for it, but I must pay for it so that rabid sports fans can have their subsidy. I don't watch the movie channels because they aren't showing what I want to watch when I want to watch it. I prefer to stream everything and be able to pause when I want to pause. Then I can return to it when an interruption has been resolved.

He also notes that I'm not alone. Millions of viewers like me want more control over how we receive our content. I simply deplore the notion that I'm a trained monkey who will sit and watch what cable companies deem good enough to deliver when they want to deliver it. If there is something I really want to watch without interruption, I watch it early in the morning when everyone else is asleep. On my computer, with my headphones. Maybe someday in the future, I will have my own home theater, but that is for another article.

I've been so busy lately, that I really haven't had much time for TV. Even the news is not appealing to me. Just more news about angry people doing bad stuff to other people. Who needs that?

There is also a nice video that provides a physical demonstration of how fast a gigabit service would be. You can check it out here. I remember my first 1.5 mbs connection in 2001. It was 50 times faster than my humble modem. A gigabit connection is 20 times faster than my 50 mbs connection I have now, but I pay about $75 a month for it. Longmont residents will get gigabit service for $50 a month.

We're rolling our own here in Utah, too. Utopia is working carefully with Macquarie Capital to create a world class service that will connect every home and business in my city to gigabit access. It might not be as cheap as the service in Longmont, but it will be far better than what incumbent providers are willing to provide on performance and price. Shareholders and executives hold a higher position than customers with incumbent providers. But with numerous examples around the country, municipal broadband only answers to customers and voters.

Yeah, I like that idea. An internet service that must listen to customers first. What a concept.

That equinox thing

We are once again approaching the autumnal equinox, the midpoint of the earth's orbit around the sun. We call it a midpoint because the earth is tilted 23 degrees off perpendicular to its orbital plane. In the summer the northern hemisphere tilts towards the sun and in the winter, the northern hemisphere tilts away from the sun. The equinox is the midpoint between solstices.

At solstice, the position of the sun is at it's most extreme. The summer solstice shows the sun at the most northern position at noon, bringing the northern hemisphere the warmest temperatures. The winter solstice shows the sun at the most southern extreme. That is why this time of year is called the equinox, which will fall on September 23nd.

The shadow play at sunrise and sunset near the equinox are a source of fascination for me. The way the light plays around equinox just seem sort of odd, out of place. Like we're not really sure where they are going to go. They are, in a sense, timeless since they reflect neither winter nor summer. In the autumnal equinox, the sun sets right down the middle of a street that intersects at 90 degrees with the street I live on. One of the windows of my house happens to look straight down the middle of that street. So for a few days a year, I get a perfect shot of sunset at the onset of spring and fall.

I am reminded of the movie Thor, and the mythical land of Asgard. In the movie, Asgard is portrayed as a land where the sun hangs perpetually over the horizon, as if in eternal sunset during the day. The light is golden, mellow and warm. The shadows are long and winding across the landscape, turning up the walls in dwellings where the light shines. I get a little of that in my home and it is a thrill to see the light shine across my house to the opposing wall.

I see the leaves turning color, the grass getting greener as it can now hold more water thanks to lower temperatures and less sunlight. In the summer, the grass can dry out quite a bit in the hot desert I live in now. At summer solstice, the temps average 90+, the days are long and the sprinklers run long and heavy. In the winter, we get a bit of snow that covers the grass with a wonderful blanket of soft white. The albedo of snow is so strong that at night, the city lights bounce off the clouds, then to the snow to give the backyard an eerie twilight at midnight.

At equinox, the grass is warm and moist from the sun and the water remaining from the last sprinkler run. Walking with bare feet, the grass reminds me of my source, the earth, charging me with the grounding effect, electrons from the earth. I always feel better after a walk in bare feet on grass. From the cool grass in the shadows, to the warm grass in the sun, my feet are reminded of their kinship with the earth, having spent so much time in shoes.

There is something else I love about that time when the sun hangs over the horizon: the way the sunlight passes through the blades of grass on my lawn. There is a certain magic to seeing the grass light up with sunlight as the light passes right through, but its green. The shadow play, the golden light, and the grass all come together for some incredible scenes of serenity for me.

These are things I will teach my kids to appreciate. The sensation of the seasons, their changes and their effects on the mind and the body, are all important to me. For they remind me that time is of the essence and that the most important moment is now. Since the past doesn't exist anymore, and the future is not here yet, there is only one place to be. To be anywhere else is to be absent from life.

The Public Option

I can remember the debates over Obamacare. Conservatives charged that the public option is not an option, that it would amount to a government takeover of our healthcare system. Liberals defended the public option saying that it would provide the poorest among us with an option they could afford and it would keep the private providers in check, and honest.

England has a single payer plan that is run by their government. During the last summer Olympics there (if you can call it that), the opening ceremonies paid a massive tribute to their health care system. The Brits really love their healthcare system and would not do it any other way. I've read great reviews of this system by Americans visiting there, and they were all shocked and awed by the efficiency and low costs of the system.

We have something like it here in America. It's called Medicare. Numerous studies have been done on it and the consensus is that it's a public option for the elderly, and a very efficient and cost effective one at that. Some say that Medicare is one of the most important checks on private providers that we have right now.

Then there is public internet access, aka, community broadband, or municipal broadband. In over 400 cities across this country, and the list is growing, cities have been building their own networks. Municipal broadband is what happens when the incumbent providers betray the public trust and refuse to build out their networks to meet demand. Why? Bean counters in New York don't think there is enough value in the neighborhood to justify laying fiber. So small towns and communities have taken it upon themselves to build it and serve the community.

Conservatives charge that the government has no business building networks for internet access. But governments do have to build roads, right? Conservatives also wring their hands over boondoggle networks that may languish because of public mismanagement. Yet, statistics show that 95% of municipal broadband networks not only succeed, they outperform the private sector offerings in terms of price and speed. In contrast to Comcast, municipal broadband customers are also very happy with their service.

Municipal broadband helps to keep companies like Comcast, Time-Warner and Verizon honest. Municipal broadband is infrastructure, like roads, a fact that the FCC has noticed recently. It is a public option very much worth considering, so I find it puzzling when state legislatures pass laws that prevent cities from building their own fiber networks.

Apparently, the public option doesn't stop there. How about a public gas station in a deep Red State, built by conservative Republicans in Somerset, Kentucky? The gas station charges less for gas than private stations and was built on the notion that the lower prices a public gas station offers would bring tourists and businesses to town, thus creating jobs. The mayor who brought it in says that it's the job of government to protect people from big business. How about that?

Like the city of Somerset, many people in America are beginning to question the profit motive for commodities and infrastructure. There isn't anything wrong with profit, but profit at any cost is destructive. When our healthcare system costs 18% of GDP while other countries see 8-9%, we know something is wrong. We know that money could be used to create jobs. We rank something like 11th or 12th in the world in terms of internet speed, but our costs are at the top relative to other countries for the same speed. These very high costs belie the so-called "efficiency" of capitalism.

When a Republican mayor builds a public gas station intended to just break even, he is tacitly admitting that there are limits to capitalism. I'm not in favor of the abolition of capitalism because I see that there are many benefits to it. But I do believe that greater oversight is reasonable and necessary.

The public option is one way that governments can provide that oversight. It has been said that we learn by doing. When the government does it, they learn what private providers do and have an easier time regulating private providers. With a public option, we can keep private providers in check so that consumers are not gouged, and that public safety is maintained. This is particularly true of infrastructure, healthcare and, it seems, commodities like gas and water.

Now that I think about it, gas is something that everyone uses directly or indirectly, just like electricity and water. We may be onto something here with gas stations.

About that amendment to overturn Citizens United

I've been loosely following the debate over a proposed amendment to the Constitution that would clarify the authority of the Congress to regulate the political influence of money in elections. This issue is very hotly contested between conservatives and liberals. Conservatives would like us to believe that this issue is about freedom of speech. Liberals have a very simple response:

"Money is not speech. Corporations are not people."

I have been following two diametrically opposed factions on Facebook: those who support Senator Bernie Sanders and those who support Senator Mike Lee. Both senators have participated in the debate over Senate Joint Resolution 19:                         

`Article--

`Section 1. To advance democratic self-government and political equality, and to protect the integrity of government and the electoral process, Congress and the States may regulate and set reasonable limits on the raising and spending of money by candidates and others to influence elections.

`Section 2. Congress and the States shall have power to implement and enforce this article by appropriate legislation, and may distinguish between natural persons and corporations or other artificial entities created by law, including by prohibiting such entities from spending money to influence elections.

`Section 3. Nothing in this article shall be construed to grant Congress or the States the power to abridge the freedom of the press.'.

Supporters of Bernie Sanders are fervent supporters of this proposed amendment to the Constitution. The amendment is clear that the intent is to ensure that courts know what powers have been delegated to the Congress. But if you listen to supporters of Senator Mike Lee of Utah, they will tell you that this amendment is treason.

While searching for information on this amendment, I found another proposed amendment that isn't getting the news that SJ19 is getting. Senate Joint Resolution 18 does something that I think is far more important:

`Article--

`Section 1. We the people who ordain and establish this Constitution intend the rights protected by this Constitution to be the rights of natural persons.

`Section 2. The words people, person, or citizen as used in this Constitution do not include corporations, limited liability companies or other corporate entities established by the laws of any State, the United States, or any foreign state, and such corporate entities are subject to such regulation as the people, through their elected State and Federal representatives, deem reasonable and are otherwise consistent with the powers of Congress and the States under this Constitution.

`Section 3. Nothing contained herein shall be construed to limit the people's rights of freedom of speech, freedom of the press, free exercise of religion, freedom of association and all such other rights of the people, which rights are unalienable.'.

By clearly excluding corporations from the meaning of the terms, person, people and citizens, we can get down to the business of taking big money out of politics.

Corporations are clearly not people. They are a group of people assembled with a few privileges granted by the state that ordinary humans do not enjoy. Corporations shield the personal liability of the officers and shareholders of the corporation.

Humans do not enjoy limited liability. Corporations also enjoy succession, that is, when a part of the corporations dies, he or she can be replaced and the corporation lives to see another day. Corporations can do something else that humans cannot do: they can support causes that are in conflict with their shareholders, employees or customers. Humans are rather binary in this regard, a single human either opposes or supports a cause, he cannot do both without resorting to therapy.

While there are some who maintain that corporations should have the same rights that people do, those same people seem unwilling to acknowledge a few basic facts. For example, corporations are creations of the state. Corporations exist solely at the pleasure of the people and derive their power power from the people they are supposed to serve. When a corporation gets out of line, the people are entirely within their rights to dissolve that corporation.

The hierarchy of power relating to corporations is as follows:

The People

The States

The Corporations

Notice who's at the bottom. Yes, that's right. Corporations. The people and the states that represents the people have the ultimate authority over the disposition of any corporation, under all circumstances.

But if you have noticed the sea change in politics over the last 30 years or so, the hierarchy now looks a lot more like this (just ask Comcast):

The Corporations

The States

The People

Decades of conditioning have led us to believe that giant monopoly corporations are the norm rather than the exception, that a free market even has a place for private monopolies and finally, that private monopolies are a more efficient means of allocating resources in a society than a free market. Yes, we've been duped. But these two amendments could finally put a leash on an enormous political power that has a tiny conscience, no discernible empathy for the people it profits from, and apparently, no limits to its appetite for more of whatever should happen to catch its fancy at the moment.

These two proposed amendments are necessary to roll back more than 30 years of damage to our country, to wrest away their megaphone and redistribute their power back to the people where it more properly resides. Until these articles are added to our Constitution, it's going to be a rough ride.

Updated: A landmark decision on patents: Alice vs CLS Bank

The Electronic Frontier Foundation has done a great job of covering Alice vs CLS Bank, a case that made it to the Supreme Court through years of litigation to finally give us a landmark ruling. EFF sums it up nicely here:

Alice Corp.'s patent claimed a form of escrowing that was well known. Called an “intermediated settlement,” it allowed a third party to act as an intermediary by creating “shadow accounts” for parties, and only allowing transactions to go through if the “shadow account” showed the party had enough money. Oh—and it was done with a computer.

The plaintiff was seeking patent protection for putting a practice that has been well known for many years on a computer. Intermediate settlements are performed with math, you know, addition, subtraction, division and multiplication and a little algebra. This is the kind of stuff you can do in your head and on paper. But Alice Corp. would have loved to have patent protection for putting that process on a computer.

The Supreme Court has ruled, finally, that you cannot take an abstract idea, implement it on a computer and then expect to get a patent for your...invention. The EFF has honored this ruling by starting a Stupid Patent of the Month series to show how our tax dollars are being put to use. Their first example is that of a patent for programming the functions of a secretary into a computer.

The pro-patent apologists are exasperated as they try to explain to us and the courts that patents should be easier to get. Why? To protect small businesses so that when they invent something novel and new, anything at all, they should be able to get protection for it. The problem is that doing so creates a tragedy of the anti-commons. There are so many patents now, that it's truly a guessing game to know if you're infringing on someone's patent when you run your business.

The purpose of a patent is to protect something truly novel. But the patent office, starved of funding by a conservative Congress, allows the patent office to get its funding from patent application fees. This is exactly the wrong incentive to give to the patent office. The patent office now issues hundreds of thousands of patents each year, each with 17-20 years of protection. The approval rate is about 50%, a rate that is still far too high. Patents should be very, very hard to get, but until Congress figures out the incentive problem it created, we're going to see a patent office "open for business".

Thankfully, Alice vs CLS Bank will help to clear out hundreds of thousands of computer implemented inventions, also known as software patents, that hinder the true innovators, the true job creators. Unfortunately, for the small businesses approached by a patent troll, those patents that are disqualified by the Alice vs CLS Bank ruling will not be found until litigation ensues. Maybe the patent office will follow this new guidance from the Supreme Court to stem the flow of patents from their desks. From the looks of this, the patent office seems to think that the new ruling has very limited effect on their work.

It may take a few more rulings to finally cure the patent office of its tendency to approve patents for math.

Well, there is a sea change in the courts and the lower courts are starting to rule on subject matter relating to patents. Just this year alone, there have been 11 rulings on patent subject matter, which, apparently is a record up to this point. Last year there were 13 such rulings. If the patent office isn't going to listen to the Supreme Court, then the lower courts will have to do the heavy lifting until the patent office wakes up.

What I find so interesting too, is that companies like Microsoft, Intellectual Ventures and Acacia are all making tons of money from stiffing small businesses with patent licenses for patents that are no more than doing something we can do in our head or with pen and paper, with software on a computer.

Microsoft is making $2 billion a year on Android device licensing alone - all of it on software or idea patents. Parasitic business models might not have been what the framers had in mind when they wrote the Constitution, but that is what we're seeing. Properly applied, CLS vs Alice could be used to completely destroy those patents and force Microsoft to do something else. You know, like make a better product than Android. I can see Microsoft in the future as a patent holding company, but with this ruling, that plan will be nixed.

This is not just good for consumers, it is also great for free software in general. Defendants in patent cases are becoming bolder, and more effective at dealing with patent trolls like Microsoft and Intellectual Ventures. If you use Linux, or any other free software, or if you're a developer, your load just got a lot lighter.

There is one other point that I think is worth mentioning. As far as I know, none of the cases so far, have ever pointed out that running software on a computer does not make a new machine. The computer has a central processing unit, we know it as the CPU. The CPU has a well-defined instruction set used to interpret code. The instruction set tells the CPU how to interpret code that is running on the computer.

Running code on a computer does not create a new machine because it does not change the processor. The code does not tell the machine (CPU) how to do something it does not already know how to do: interpreting code and executing that code. This is the ultimate argument against software patents and it should be deployed as soon as possible to test it. I think that this argument goes beyond doing something on a computer, it says that the computer is not a new machine with new software.

Remember, patents are for inventions, you know, stuff you make and sell. They are not for "ideas", like putting money in escrow and keeping track of it using a computer. This is what the fight against software patents is all about.

How unions could help the middle class

I'm in the middle of a book called, The End of Loser Liberalism, by Dean Baker. He has an interesting passage on unions as follows:

"Though labor law provides protections to workers and their unions, it
also constrains workers' power in important ways. For example, it is illegal to
organize or honor a secondary boycott. If the workers at a restaurant go on
strike and then arrange for the Teamsters to refuse to deliver food to honor
the strike, the restaurant can enlist the government to deliver injunctions and
impose fines against the Teamsters. If Teamsters officials ignore the injunction
(e.g., they don‟t tell their members that they cannot refuse to deliver food to
the restaurant), they can face imprisonment. This is not the free market; this
is the government intervening on behalf of employers."

Exactly. Why shouldn't people be able to organize peaceful protests such as boycotts and labor strikes, sick-ins and the like? Our laws are designed to give businesses the upper-hand in almost every interaction between worker and capital owner.  Business owners will tell us that they create jobs when they are unmolested by unions. Yet, as we have seen since 1980, if you give business an inch against, labor, they will take a mile.

There is something else our anti-union laws have helped to do, they have given rise to giant monopolies. When labor is captured, business is free to grow in power and size. Such power leads to a positive feedback loop for those who own capital. Bigger stock prices and dividends come at the expense of labor.

But if union power is restored, it can be an effective check on the power of businesses, big and small. If it is discovered that Apple is using slave labor for mining, manufacturing and sale of its products, a big enough union can put the brakes on that far faster than a do-nothing Congress ever will. In fact, it has been found that Apple is using slave labor, amassing enormous profits from it and sharing that profit not with their workers, but with the shareholders. But there is not enough union power to keep Apple in check.

Why does Apple need to use slave labor? They derive enormous rents from patents, copyrights and tax laws that favor capital over labor. Could it be that slave labor keeps prices low enough so that ordinary people, facing wages that have barely moved in 30 years, can afford their products? Oh, wait a minute, most people buy an iPhone on time rather than paying cash.

Want to see wages keep up with inflation? Bring the unions back. Power is in numbers, CEOs understand this, but most ordinary people do not. We've live for a long time without union power and now we're suffering for it.

A strong union-based labor market would help wages to keep up with inflation. A strong union labor market would have the political will and muscle to keep corporate power in check. Unions are a part of the free market, but you won't hear that from a Conservative Nanny State Congressperson or even conservative Democrats.

Science Fiction: Awake in a clean world again, Part II

"2169..." Jack blew a long whistle and in that moment he realized that, technically, he was 200 years old, yet he was too young to be a Baby Boomer. Right away, he figured that everyone he ever knew was dead. Parents gone. Kids gone. Even grand kids, gone. But he had kids, and they had kids and they had kids. Maybe someone is still around.  Nah.

His head started to reel so he laid back down in bed, staring at the ceiling. Everyone and everything that he ever knew and loved is gone. Then he began to wonder what happened to the world and wanted to know more, but before he could do any more searching on the tablet, the doctor walked in.

"Good morning, Jack. I'm doctor Josephson." The doctor was a tall, thin man with short graying sideburns. He had a warm smile and friendly demeanor. "How do you feel today?"

Jack took a moment to check in with his body. No pain, no difficulty. Just taking in a new environment and a new encounter with a stranger. "I feel quite alright, really. I guess I feel a bit awkward about time at the moment."

"Yes, as expected. You've been asleep since about 2020, that's as near as we can figure from the records we found on you." The doctor sighed, "You're lucky we found you, too."

As Jack considered where and when he was, the doctor began to look over the charts and studied Jack briefly. Dr. Josephson was quite curious about this man who has slept for 150 years. He could find no anomalies for such a long, deep sleep. "We found your medical records within a week after we found you. Looks like you have pancreatic cancer. You won't have to worry about that now. With a few weeks of gene therapy, we'll knock that out. We'll get that started in a few days."

"What about insurance? Who is going to pay for it?" Jack said. He figured he would be on the hook for something. Who is going to pay for 150 years of sleep?

"Don't worry, Jack. We got that covered. We have universal insurance now. Everyone is covered." The doctor seemed happy to tell Jack the good news. He could also see that Jack needed some orientation. "Just know that we found that the cause of every disease you know of in the 20th century to be from industrial pollutants. Around 2050, class action lawsuits threatened the existence of every manufacturing industry worldwide. So it was decided - agreed - by all concerned, that every industry would pay a tax into a universal health insurance fund. Either that, or be sued out of existence. They paid the tax and it's been that way ever since."

"So what next?" said Jack, with eyebrows up and a weak smile.

Dr. Josephson said, "We need a few days of observation. A team of scientists are coming to review your records, and get first hand impressions. You're one of the oldest sleepers we've found and we expect to learn a thing or two from you. Then we'll get started on gene therapy. So, are you hungry?"

The hunger pangs hit harder this time and Jack was more than ready. "Oh, yes. You bet I'm hungry."

"Great," said the good doctor. "It's time for an early lunch so you can place your order from the tablet any time you're ready. The kitchen responds pretty quick, so don't be surprised to see your food in less than ten minutes. "I'll be back in the afternoon with a few members of our team. Figure on us returning around 3 pm. Will that work for you?"

"That would give me time to read some more, take a look outside and take a nap." thought Jack. "Sure, 3 pm is fine with me," he told the doctor.

In a few minutes he found himself flipping through pages in the tablet, but could not find the menu or the kitchen. "Hey, this is the 22nd century. I should be able to talk to the tablet," Jack thought, as he began to wonder what the gadgets in the world could do. "Show me a menu," he said the tablet.

"Menu from where?' responded the tablet, in a warm feminine voice. Jack looked at the tablet but could not see any speakers, yet somehow, there was sound. No matter. Hunger was taking supremacy.

"Show me the menu for the kitchen in this hospital." Sure enough, modern semantics and sound recognition could figure out what Jack was saying and he was presented with a menu. As he had hoped, he found some familiar items, but the screen showed a notice indicating that the selections had been filtered to allow only the softest, most edible foods. After 150 years of sleep, what can you expect?

"OK, I'll go with the cream of wheat," Jack said with some resignation.

Having placed his order, he continued with his reading. A few minutes later, his food had arrived, by robot. It didn't really have a face or anything like that. Just a platform that rolled around the floor in a seemingly intelligent way. The robot raised the tray to his bed height and placed it on his lap as the head of the bed ascended to position Jack for eating - without Jack's prodding. He didn't have to press any buttons to raise the bed. It was like the bed knew what he wanted to do and took the initiative.

The little robot scooted away after completing the delivery and Jack contented himself with reading and eating. He flipped through the news, aimlessly, without any idea of what he wanted to see. Without his fingers. "Hey, wait a minute," he thought. The pages stopped flipping. "You mean I can just think about flipping pages and the pages turn?", he though to himself, quietly.

"Yes," responded the tablet through the speakers. "You don't even have to use your fingers or your voice." Jack was a bit startled by the response and splashed some cereal onto the tray. He took a few breaths and began to settle into search mode. He started to search for any surviving relatives of his family. Anything at all, any clues, even a great grandson or daughter would be fine with him.

As he finished his cereal, his searching continued, just by thinking. Interacting with the tablet by thinking was taking a toll on his mind. Using thought to control a computer requires discipline that Jack was not entirely prepared for, and before he knew it, he was asleep again.

Someone has noticed a conflict between capital and labor

I had the opportunity this morning to watch a video from Moyers and Company featuring Elizabeth Warren - it's only 15 minutes so check it out. In that video, Warren runs through the factors leading up to the Great Recession, years before it happened - the video was shot in 2004. Yes, she too, predicted the Great Recession. As a professor at Harvard University specializing in bankruptcy law, she had seen the trends first hand. Laws are written to solve problems and hoo-boy, she saw the problems coming.

Warren isn't the only one who saw the Great Recession coming. Dean Baker is an economist who was giving us warnings about the collapse of the housing bubble for years prior to it happening. Even Rebecca Schoenkoph, the "Commie Girl" of the OC Weekly saw signs of a Great Rcession coming when she pointed out that the payment on a jumbo mortgage would rise by more than $1000 a month for every percentage point increase. This is what she wrote in 2006:

I tried to argue: this market is going to crash, I said, probably no later than 2007 (when the first wave of interest-only loans' balloon payments come due), and all those people who have interest-only loans—one-third of the loans that were opened last year were interest-only—are going to suck it, which is the scientific term. You know when the last time was that interest-only loans were as popular as they've been in the past two years? In the 1920s, so there's a little food for thought.

Ok, so she was off by one year, but that's pretty close.

Unfortunately, you won't see much of Warren on any private television network talking like this. None of the major private networks are willing to air this kind of reporting because that would make their sponsors look pretty bad, but at least PBS is willing to do it. This is what public broadcasting is for: broadcasting not for the profit, but for the benefit of the public.

Anyway, Warren makes a fascinating point in the interview: the average down payment on a house before Reagan was 18%. In 2004, it was about 3%. You can still get a loan with 3% down. Warren also points out that for the previous 30 years, the average wage for full-time working men had moved only 1%. 1%! It's moved a bit more for women, but that's because more women were completing their education despite the unequal pay between men and women and the rising costs of education. Even then, that's more debt.

What we are seeing here is the effects of having an upper class that is unwilling to pay more to the middle class to get the real work done. Seems that the upper class is quite content to loan a higher standard of living to the middle class, especially with stagnating wages and government insurance on the loans. Remember the bailouts? Yeah, that's government insurance, and no, that didn't help the middle class. But, boy, those bailouts worked wonders for executive compensation!

Capital isn't worth a damn without labor. You can buy property, but if there is no labor, there is no value. I know, it's a love-hate thing. Even if you could replace labor with robots, you would still need people to buy what the robots make and those people would still have to work for money to pay for it.

Yet, what we are seeing is just like Warren said, an assault on the middle class like nothing we've seen before. We have an upper class that is so completely obsessed with what has been taken from them in taxes that, rather than being grateful for the gifts they have received, they have waged a 30-year war to tear away any semblance of prosperity from the middle class.

When you own capital, it comes with the expectation that it will not only gain value, but it will pay rents, dividends and royalties. All of that value comes from labor. Where else is it going to come from? The magic words of Alan Greenspan? No. When you own capital, that means other people are working when you are not - they're working for you. That's what capital is all about. I guess that would make capitalism a disease.

Private internet monopolies run for their lives

I just finished reading this fascinating piece about how our much bemoaned incumbent internet service providers have been fending off the latest threat to their existence: community broadband. The Center for Public Integrity has done a great job of rounding up compelling examples of success and failure in community broadband. They have also shown just how low incumbent carriers are willing to go to protect their private monopolies.

In particular, I found this choice quote:

“The idea of private capital competing with taxpayer-provided capital just feels inconsistent to us with what a free-market system looks like,” AT&T Chief Executive Officer Randall Stephenson said at a U.S. Senate hearing in June. “But where it’s unserved, it seems like a logical place for government to step in and provide a solution.”

Here again, we see a government protected monopoly perpetuating the illusion that they are acting as a private enterprise in a free market, when in fact, nothing could be further from the truth. They think that they can pick and choose who and where they want to serve, but the purpose of their franchise agreements is to make sure that everyone is served and that they meet the demand for service. If they were meeting demand, community broadband would not even be a consideration.

I also found the following quote very telling about the other side, the government side:

“We don’t quarrel with the fact that AT&T has shareholders that it has to answer to,” Bowling said with a drawl while sitting in the spacious wood-paneled den of her log-cabin-style home. “That’s fine, and I believe in capitalism and the free market. But when they won’t come in, then Tennesseans have an obligation to do it themselves.” 

That is from Janice Bowling, a Republican state senator from Tennessee. Clearly, we have a difference in opinion here. But what is striking to me is that incumbent telcos actually believe they have the right to tell communities to sit down, shut up and wait for them to give residents world-class service when they're good and ready.

This is the problem with the entire debate and the debate needs to be reframed. The debate isn't about whether or not government should get involved in providing and selling internet access. There are numerous examples of utilities selling internet access at very reasonable rates with very high speeds, and making money doing it. They are paying off bonds and setting aside money for improvements.

The debate needs to take into account that so-called "private internet" services offered by the incumbents are really all that private. They act as if only private capital is involved, and ignore all of the help they have gotten along the way, all of the trust we have given them to provide the services we expect to get.

Consider the easements internet providers get around the home. They get to run their cable in the ground in public roads on poles on our sidewalks. They are also willing to sue to prevent others from using that space, just as Centurylink sued Utopia to stop it from running cable to my house.

Then there is the matter of trust. At my location, there is only one provider with better than 5mbs of speed and that is Comcast. In a truly competitive market, I would expect see more than a dozen companies offering service, but there are only two. As far as I can tell, Centurylink has ceded this territory to Comcast. Probably because they both know that true competition is expensive.

If we listen to the incumbents, we will hear about the failures, the mismanagement and the problems associated with community broadband. But we will never hear about the same problems with so-called private broadband services. Nor will we ever hear about the millions spent on lobbying rather than on building.

Shouldn't that be what the debate is about?

A study in contrasts: creationism as science in schools

Isn't that peculiar? The official Jewish position is that creationism and intelligent design are not science and should not be taught as such.

I had a recent debate on the topic of teaching Creation or Intelligent Design Theory in schools on Facebook. In that debate my opponent called me bitter and suggested that I should not be opposed to teaching different worldviews in science class. Actually, I have no opposition to teaching "different worldviews" in sociology, theology or philosophy, but there is no way you can tell me that "Creation Theory" is science.

The only "faith" that I know of that approaches science is Buddhism. There are historical accounts of Buddha (oddly, there are no historical accounts of Jesus), so we know that he's real. The story goes that Buddha sought the path to enlightenment through personal experimentation. He tried something akin to gluttony - plenty of women, plenty of money and luxury and still could not find happiness. Then he went the other way and tried asceticism, and as could be expected, he was pretty miserable. So he tried to find the middle ground, and when he found it, he found enlightenment and shared his experience with us.

That is what science is all about. Consider an idea or hypothesis, test it, share it, let others test it and see if they get the same results.

Yet, no one in the vast community of Buddhists will ask you to teach their faith as science. The members of the Jewish faith are also averse to teaching their faith as science. Even the Muslims, as fanatical as they can be, seem to agree that Darwin's theory of evolution is the most accurate explanation for our being, as they do teach evolutionary biology in school.

At the same time, most Christians around this country seem absolutely desperate to get their pet theories taught as science. So the Christians seem to be the odd man out on this issue.

I've often wondered why they are so adamant on getting creation theory in school, but have never been brave enough to ask. In debates they try to couch it as an innocent desire to make sure kids know there are alternative theories. But creation theory lacks something that all powerful scientific theories do: all scientific theories are considered scientific knowledge because they can be tested over and again, and they can be used to predict outcomes.

The theory of evolution has been tested over and again and can be used to predict outcomes, just like the theory of gravity. No one has ever been able to prove Creation Theory or Intelligent Design. I doubt anyone ever will, and for that reason, religious theories should not ever be taught in school as science.

Perhaps the Christians could be more careful about what they wish for.

How so-called private enterprise loves government intervention in the market

Several days ago, I found a blog post by Anne Veigle, Senior Vice President, Communications, US Telecom, a broadband business association. US Telecom seems to be a sort of union of businesses dedicated to maintaining and extending the private monopoly of internet access so thoroughly enjoyed by the companies we hate the most: AT&T, Time-Warner, and Comcast. Check any consumer poll and you will find them there, at the bottom of the list as the most hated companies in America.

In her blog post, Ms. Veigle sought to criticize the FCC for it's intention to pre-empt state laws that prevent cities and towns from building their own broadband services when the private monopolies fail to meet their needs. I just could not let that go without a response, so I posted a response as a comment to her blog. Note that the comment was never published. Had I gushed with support for her position, I might have seen my comment published. Unfortunately, the incumbent carriers have no interest in an honest debate on this subject.

Ms. Veigle says that municipal broadband has been a mixed bag with many failures. I know of one of those so-called failures: Utopia. Utopia is a municipal broadband service here in Utah. Had Utopia been able to proceed without intervention by the incumbents, it would have been fine. But the incumbents sought to make sure it would fail by lobbying for legislation that would prevent it from meeting the objective of serving every home and business with high speed internet access. Then the incumbents like Comcast and Quest (now Centurylink) sued to stop it, only to lose. Ms. Veigle cherry-picks the failures while ignoring the vast majority of successes like Chattanooga, TN and Wilson, NC. It's also worth noting that I've talked with people who are connected to the Utopia network and they love it.

As noted previously, I could not let this go without a response. I would have published this article sooner, but I've been studying for an exam I'm taking today, so I had to set priorities. Today, I'm taking a break. My brain is pretty full. So here is my never published comment, in its entirety:

Anne,

You say that the feds should not interfere with how states choose to regulate municipal broadband, as if self-determination is very important. Yet, you choose to ignore the fact that cities and small towns should be able to choose how internet is provided since they are the closest to the problems they need to solve. After all, they are the ones who granted franchises to your association members and trusted them to build the service needed to keep up with the rest of the world.

What you propose then, is to let the state governments tie the hands of the local governments that are trying to meet the needs of the residents, when private service providers fail.

In a truly free market, where there is a need, a private provider will appear. But your members, like Comcast and Time-Warner, aren't just concerned with municipal broadband. They are also seeking to hinder or eliminate the possibility of private competition as well. The incumbent carriers seem to want the entire market to themselves, while taking their sweet time providing world class service to people who ask for it, but can't get it.

That's why we have Utopia here in Utah. Even when Utopia seeks to work with a very large infrastructure finance firm like Macquarie to build out and manage the network, we see that private firms like Comcast and Centurylink are using their political connections to nix the deal.

Your words ring hollow and inconsistent. No serious economist would call a duopoly a highly competitive market, but that is what you are trying to do. You seem to want the rest of us to shut up and wait for your incumbent carriers to provide the service we need when they're good and ready, while at the same time, you and your cohorts are lobbying to prevent competition with government intervention in the market.

You might disagree with this post, and you might even delete it (don't worry, ti's going on my blog tomorrow). Your response is appreciated. I would love to know how you justify top down intrusion from the state to local level while criticizing federal intervention on behalf of municipal broadband.

For someone who talks about the free market, you sure seem to like government intervention in the market when it benefits your members.

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That is it, in a nutshell. Municipal broadband is here to stay, and with any luck, here in Utah, we'll have it up and running in a few years. So far, 6 of the 11 remaining Utopia cities have committed to working with Macquarie on a deal to connect every business and every home to a network that would provide gigabit access to the internet. I live in one of those cities but I am not connected just yet.

Municipal broadband is our only real hope of breaking a private monopoly on internet access that is so pervasive and powerful, there are no other competing interests that can break it. Let's hope that reasonable minds prevail and let municipal broadband build the networks we need to keep up with the rest of the world.