Wednesday, March 8, 2017
Going Underground: Inside the World of the Mole-Catchers
[ed. I think I'd hate moles less if they weren't so wily. Do a Google search of mole traps and look at all the various contraptions. There are millions of them because NONE OF THEM WORK! One hardware store even recommended a hose attachment for the exhaust pipe on my truck, which did absolutely nothing except make my lawn start to smoke (but maybe got the moles a little high). Now I use cinch mole traps, which the local golf course uses, but have to purchase them by mail order (because Washington state considers them inhumane). It's pretty much hit or miss. Mostly miss. Drives me nuts, like Bill Murray in Caddyshack.]
Roger Page purchased his home in East Bilney, a Norfolk farming community, about 25 years ago. For the better part of those 25 years, he bore no ill will toward the moles. He was fond of wildlife, or at least what little of it remained in the country. A family of deer foraged in the backyard. Foxes lolled in the road at dusk. Moles were a rarity.Page worked as a commercial pilot and when the occasional molehill erupted on his lawn, he would pat it down before departing again to New York or Hong Kong. They seemed to have an understanding, he and the moles. They mostly kept to the woods, while Page mostly kept to the garden.
But after he retired five years ago, Page expanded his back lawn and the moles became more persistent. As more and more molehills sprung up, Page came to feel as if their labours were engineered to produce in him the maximum anguish. He purchased traps at the garden centre, but they would often remain unsprung or – worse – sprung and empty.
He decided to escalate his counter-assault. During a stopover in Amsterdam, he bought a pungent bag of flower bulbs advertised as a natural mole deterrent. (The moles didn’t mind.) Next, he installed a solar-powered mole repeller, a torpedo-shaped device that emits vibrations that are supposed to keep the moles away. (The moles carried on.) He tried flooding them out with a water hose. (Moles are strong swimmers.) Finally, he tried suffocating them with the exhaust of his lawnmower. (Moles can survive in low‑oxygen environments.)
Page knew it wasn’t healthy to go on like this. Last September, he found the phone number of a woman named Louise Chapman, also known as the Lady Mole Catcher of Norwich. Traditional mole catching in Britain has experienced a resurgence following a 2006 European Union ban on strychnine, and Chapman is one of many trying to profit from the boom. A former drama teacher, she has been profiled in national newspapers and travelled to Australia in 2016 to be featured in the first season of a reality television show called Deadliest Pests Down Under, where she applied pink lipstick before hunting a funnel web spider. With the help of a business coach, she has also tried marketing Country Mole Catcher™ franchises across the country, offering newcomers to the business everything they need to get started for £7,500, plus a cut of their proceeds.
Chapman is a compact blonde woman, and – when she’s on the job – clad in Wellington boots. When we arrived at Page’s home, she popped open the back of her white Audi estate car and retrieved a bucket containing plastic flags, a garden spade and a long metal rod with a bulb on the end – a mole probe.
We followed Page to the side of his house. There, a ragged strip of lawn about the size of a tennis court lay dotted with patches of overturned earth, each patch spaced every two feet or so. The lawn looked as though it had been strafed by artillery. Chapman walked the length of it, taking note of small details: a crack in the soil, a dead patch of grass, a pile of fresh dirt. She saw herself as an archaeologist who could reconstruct the workings of an underground metropolis based on the scantest traces on the surface.
“I reckon there are three,” Chapman said at last. She gave Page a quote for the work: £80 for the first mole with the price dropping to £60 a mole for two or more. She couldn’t promise to dispatch them on the first visit or even the second one. It could take weeks, but he didn’t have to pay a penny if she wasn’t successful. “No mole, no fee,” they call it in the business. “You’ve already tried to catch them, and they might have got wily,” she warned.
Clients are sometimes taken aback by Chapman’s prices, which she makes a point of delivering in person. Page, however, readily agreed that it was worth it for his sanity, and Chapman got to work. She began by cutting a cube of turf from the roof of the mole run and carefully set it on the ground. Then, she inserted a trap shaped like a fizzy drink can into the hole and covered it with a few clumps of grass. This trap, known as the Duffus half-barrel and first patented in 1920, is based on traditional designs made of a clay or wooden barrel and a horsehair snare powered by a bent stick. In the modern metal trap, a spring-loaded wire loop functions as the snare. When the mole enters the device, it makes it halfway through this loop before brushing against the trigger. The wire loop then accelerates upward, crushing the mole against the trap’s curved roof.
Page was clearly torn between his desire to have an attractive lawn and the violent death he was about to sanction. “I don’t like killing animals,” he said. Chapman, on her hands and knees, looked up from her work. “You were driven to it,” she told him. When she had finished setting traps, she said that either she or her colleague Carole would return “in a few days”.
Chapman tossed off those last words casually, but they represented one of the most divisive issues in mole catching today. Unlike mousetraps, mole traps do not kill instantly and do not always kill cleanly. The world of mole catching is bitterly divided between those who believe that traps should be checked every 24 hours – to ensure that any injured moles are dispatched quickly, rather than being left to die a slow and agonising death – and those who don’t.
Because of the expense of driving out to check an empty trap day after day, opponents of such regulations argue that it would hasten the extinction of mole catching as it has been practised for centuries. “It will criminalise all the mole-catchers,” Chapman says. Britain would be overrun by molehills, which are not only unsightly, but can also potentially spread disease to livestock, trip up horses on race-courses, and ruin golf courses and football pitches. To professionals such as Chapman, such threats appear to outweigh the possibility that a maimed mole or an unfortunate weasel could be squirming in pain beneath someone’s lawn for days.
Image: Tony Evans /Timelaps/Getty Images
A Town Under Trial
At twenty-six, the owner, Tammy Papler, was shrewd beyond her years. She had picked the location for the ready-made customer base in Fort Campbell, and for the pool of potential workers: soldiers’ wives, ex-wives, and girlfriends, as well as women who had recently been discharged, most of them far from their families and without safety nets. She wore her hair in a fluffy blond permanent and took the pseudonym Mercedes. Some of her employees feared her temper.
Oak Grove, Kentucky, wasn’t a city in any meaningful sense, but rather just a commercial strip hedged by trailer parks and clapboard housing. Its population was around three thousand, though this number fluctuated depending on deployments. While Fort Campbell’s officers could afford the more elegant digs on the other side of the post in Clarksville, Tennessee, Oak Grove was a haven for young enlistees, and it drew seedy businesses like mosquitos to a bog. The main stretch of highway was lined with liquor stores, pawnshops, and adult businesses: Fantasee Lingerie, Donna’s Den, Mona’s Go-Go, Classic Touch, and Cherry Video, the last of which Papler also owned. The brothel operated in the back of a small brick building that it shared with a Chinese restaurant.The business cycle at New Life, as with Oak Grove’s small economy, rose and fell with military paydays. During the slow periods, the women would order takeout and watch the O.J. trial. There were moments of levity, and escapades. Once, two strangers came in off the interstate and plied a couple of workers with mounds of cocaine and hundred-dollar bills for an all-night party, but the men made such a mess in the Jacuzzi room that the workers had to spend their tips to have the carpet cleaned before Papler arrived in the morning.
For Ed Carter, a burly twenty-four-year-old police officer, the city was something of a playground. Carter grew up near Hopkinsville, the county seat, on a farm, where his father worked for an influential white family (the Carters were black) and his mother cleaned houses and churches for extra money. After dropping out of community college, Carter was recruited into the Police Explorers, an apprenticeship program for youths who want to work in law enforcement. He graduated into the midnight shift, responding to domestic fights of young military couples and scuffles at Oak Grove’s strip club.
With minimal training, he spent his first months on the job scrambling to learn the local geography and police procedures. But he didn’t need any instruction to push people around. (Once, Carter responded on a call about a fighting couple and he flung the husband out of their trailer.) He began to walk with a swagger. One of the badge’s perks, he found, was that wearing a uniform made it easy to pick up women—especially with so many men away on deployments. In 1992, he married a woman he’d met on the job, but this didn’t get in the way of his tomcatting.
As a bad cop, Carter was largely a product of his environment. The Oak Grove Police Department had only six officers and was known throughout Christian County for its corruption. Buddy Elliott, the police chief, was the older brother of the mayor, Jack, and together the Elliott brothers owned a major share of the local real estate. They used the police force as an arm of their business enterprises and sometimes as a revenue generator. For instance, in 1993, after some of the New Life massage parlor’s workers were charged with prostitution, Buddy Elliott came to Papler and asked whether she’d “get with the program.” She gave him $600 cash, and when the case reached a grand jury, the charges were dropped.
Over the year that followed, the cops got increasingly cozy at New Life, and some even hung out in the lobby when they were off duty. “They felt like they owned the place, they really did,” one of the workers remembers. “You never knew if they were just stopping by to say hi, or if they were wanting something.” Papler says she came up with a special procedure when an officer wanted sex: he didn’t pay, but his name was recorded at the bottom of the client register, so she could compensate the worker later herself. The Oak Grove government didn’t have much tax revenue, so when the patrol cars needed new lights, the cops imposed on Papler to foot the bill.
Carter spent more time at the brothel than any of his colleagues. He began a steady affair with the manager, and since his police salary was so meager, he compelled Papler to put him on the payroll as a “janitor.” She later said in court proceedings that the payments were really for “protection” or “hush money”—not for mopping the floors. And she was afraid that if she stopped, he’d get the place shut down. For all her friendliness with cops, Papler faced regular threats of closure. For backup, she had an emergency dispatcher keeping guard; whenever there was talk of another prostitution raid, the brothel would get a call—“a storm is coming” or “time to get the umbrellas out”—so her workers could get dressed.
Then, in the summer of 1994, Papler says, she cut Carter off. His payments cost her too much and they had a falling-out. She remembers telling him not to come back, but short of changing the locks, she couldn’t keep him out; he had a key. A few weeks later, in the early hours of September 20, two of her workers were alone at New Life. At 3:35 A.M., two colleagues found them in a back room of the brothel, naked, lying in puddles of blood, both shot through the head and stabbed in the neck. The investigators suspected Carter right away, but they didn’t have enough evidence to convict him. To many, it appeared that the Oak Grove Police Department had a hand in covering up the double murder. Within months, the New Life massage parlor shut down. Carter fled town and many of the locals close to the event eventually left, too, including Papler. The sheriff’s office handed over the investigation to the state, but for more than fifteen years no one was arrested. By the time I moved to the area, the case had almost evaporated into a grisly local legend.
In the fall of 2009, I arrived in Christian County. I’d landed a job at the Kentucky New Era in Hopkinsville—a newspaper founded in 1869 by two ex-Confederates—as a police and government reporter. On my first drive down for the job interview (from Michigan, where I’d recently finished college) the landscape surprised me. It was flat, dominated by soybean and tobacco fields; western Kentucky is more like the plains of southern Illinois than the wooded hills of Appalachia. I met the paper’s editor, Jennifer Brown, at the city’s only Starbucks. Forty-seven, with short dark hair, thick-rimmed glasses, and a light drawl, Brown grew up in Hopkinsville, raised two kids there, and had worked at the New Era for twenty-five years, mostly reporting. We talked about our favorite writers, and she gave me a rundown of local industry: it was largely agricultural, but in recent decades some auto-parts manufacturing plants had sprung up, because land was cheap and property taxes were nil.
And she told me about Fort Campbell. Comprising more than one hundred sixty square miles, it is five times the physical size of Hopkinsville, seven times that of Manhattan. Some thirty thousand soldiers were stationed there at the time, most living off-post, and it has its own golf course, bowling alley, and Starbucks franchise. In other words, a small city. The base is home to three major combat units: the 5th Special Forces Group, which was among the first deployed to Vietnam in 1961 and one of the last to leave; the 160th Special Operations Aviation Regiment, known for its involvement in the conflict in Somalia depicted in the movie Black Hawk Down; and the 101st Airborne, famous for its deployments to Europe during World War II and to Arkansas during the Little Rock desegregation crisis of 1957. Oak Grove, Brown told me, was the incorporated city outside the military gates and was permeated by Army culture.
by Nick Tabor, Oxford American | Read more:
Image: Tamara Reynolds
Tuesday, March 7, 2017
Bill Gates: The Robot That Takes Your Job Should Pay Taxes
[ed. See also: What's Wrong With Bill Gates' Robot Tax]
Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment.
It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.
In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.
“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them. (...)
Below is a transcript, lightly edited for style and clarity.
Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.
Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.
And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.
So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.
And so you could introduce a tax on robots…
There are many ways to take that extra productivity and generate more taxes. Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.
Could you figure out a way to do it that didn’t dis-incentivize innovation?
Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, “OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?”
You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It’s important to have the policies to go with that.
People should be figuring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won’t shape it for the positive things it can do.
by Kevin J. Delaney, Quartz | Read more:
It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.
In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them. (...)
Below is a transcript, lightly edited for style and clarity.
Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.
Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.
And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.
So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.
And so you could introduce a tax on robots…
There are many ways to take that extra productivity and generate more taxes. Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.
Could you figure out a way to do it that didn’t dis-incentivize innovation?
Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, “OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?”
You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It’s important to have the policies to go with that.
People should be figuring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won’t shape it for the positive things it can do.
by Kevin J. Delaney, Quartz | Read more:
Image: Quartz
Public Pensions Are in Better Shape Than You Think
The beleaguered condition of state and local pension plans is one of those ongoing disaster stories that crops up about once a week somewhere. The explanation usually goes something like this: Irresponsible politicians and greedy public employee unions created over-generous benefit schemes, leading to pension plans which aren't "fully-funded" and eventual fiscal crisis. That in turn necessitates benefit cuts, contribution hikes, or perhaps even abolishment of the pension scheme.
But a fascinating new paper from Tom Sgouros at UC Berkeley's Haas Institute makes a compelling argument that the crisis in public pensions is to a large degree the result of terrible accounting practices. (Stay with me, this is actually interesting.) He argues that the typical debate around public pensions revolves around accounting rules which were designed for the private sector — and their specific mechanics both overstate some dangers faced by public pensions and understate others.
To understand Sgouros' argument, it's perhaps best to start with what "fully-funded" means. This originally comes from the private sector, and it means that a pension plan has piled up enough assets to pay 100 percent of its existing obligations if the underlying business vanishes tomorrow. Thus if existing pensioners are estimated to collect $100 million in benefits before they die, but the fund only has $75 million, it has an "unfunded liability" of $25 million.
This approach makes reasonably good sense for a private company, because it really might go out of business and be liquidated at any moment, necessitating the pension fund to be spun off into a separate entity to make payouts to the former employees. But the Government Accounting Standards Board (GASB), a private group that sets standards for pension accounting, has applied this same logic to public pension funds as well, decreeing that they all should be 100 percent funded.
This makes far less sense for governments, because they are virtually never liquidated. Governments can and do suffer fiscal problems or even bankruptcy on occasion. But they are not businesses — you simply can't dissolve, say, Arkansas and sell its remaining assets to creditors because it's in financial difficulties. That gives governments a permanence and therefore a stability that private companies cannot possibly have.
The GASB insists that it only wants to set standards for measuring pension fund solvency. But its analytical framework has tremendous political influence. When people see "unfunded liability," they tend to assume that this is a direct hole in the pension funding scheme that will require some combination of benefit cuts or more funding. Governments across the nation have twisted themselves into knots trying to meet the 100-percent benchmark.
While all pensions have contributions coming in from workers, the permanence of those contributions is far more secure for public pensions. Plus, those contributions can be used to pay a substantial fraction of benefits.
Indeed, one could easily run a pension scheme on a pay-as-you-go basis, without any fund at all (this used be common). That might not be a perfect setup, since it wouldn't leave much room for error, but practically speaking, public pension funds can and do cruise along indefinitely only 70 percent or so funded.
This ties into a second objection: How misleading the calculation for future pension liabilities is.
A future pension liability is determined by calculating the "present value" of all future benefit payments, with a discount rate to account for inflation and interest rates. But this single number makes no distinction between liabilities that are due tomorrow, and those that are due gradually over, say, decades.
Fundamentally, a public pension is a method by which retirees are supported by current workers and financial returns, and one of its great strengths is its long time horizon and large pool of mutual supporters. It gives great leeway to muddle through problems that only crop up very slowly over time. If huge problems really will pile up, but only over 70 years, there is no reason to lose our minds now — small changes, regularly adjusted, will do the trick.
Finally, a 100-percent funding level — the supposed best possible state for a responsible pension manager — can actually be dangerous. It means that current contributions are not very necessary to pay benefits, sorely tempting politicians to cut back contributions or increase benefits. And because asset values tend to fluctuate a lot, this can leave pension funds seriously overextended if there is a market boom — creating the appearance of full funding — followed by a collapse. Numerous state and local public pensions were devastated by just this process during the dot-com and housing bubbles.
But a fascinating new paper from Tom Sgouros at UC Berkeley's Haas Institute makes a compelling argument that the crisis in public pensions is to a large degree the result of terrible accounting practices. (Stay with me, this is actually interesting.) He argues that the typical debate around public pensions revolves around accounting rules which were designed for the private sector — and their specific mechanics both overstate some dangers faced by public pensions and understate others.
To understand Sgouros' argument, it's perhaps best to start with what "fully-funded" means. This originally comes from the private sector, and it means that a pension plan has piled up enough assets to pay 100 percent of its existing obligations if the underlying business vanishes tomorrow. Thus if existing pensioners are estimated to collect $100 million in benefits before they die, but the fund only has $75 million, it has an "unfunded liability" of $25 million.This approach makes reasonably good sense for a private company, because it really might go out of business and be liquidated at any moment, necessitating the pension fund to be spun off into a separate entity to make payouts to the former employees. But the Government Accounting Standards Board (GASB), a private group that sets standards for pension accounting, has applied this same logic to public pension funds as well, decreeing that they all should be 100 percent funded.
This makes far less sense for governments, because they are virtually never liquidated. Governments can and do suffer fiscal problems or even bankruptcy on occasion. But they are not businesses — you simply can't dissolve, say, Arkansas and sell its remaining assets to creditors because it's in financial difficulties. That gives governments a permanence and therefore a stability that private companies cannot possibly have.
The GASB insists that it only wants to set standards for measuring pension fund solvency. But its analytical framework has tremendous political influence. When people see "unfunded liability," they tend to assume that this is a direct hole in the pension funding scheme that will require some combination of benefit cuts or more funding. Governments across the nation have twisted themselves into knots trying to meet the 100-percent benchmark.
While all pensions have contributions coming in from workers, the permanence of those contributions is far more secure for public pensions. Plus, those contributions can be used to pay a substantial fraction of benefits.
Indeed, one could easily run a pension scheme on a pay-as-you-go basis, without any fund at all (this used be common). That might not be a perfect setup, since it wouldn't leave much room for error, but practically speaking, public pension funds can and do cruise along indefinitely only 70 percent or so funded.
This ties into a second objection: How misleading the calculation for future pension liabilities is.
A future pension liability is determined by calculating the "present value" of all future benefit payments, with a discount rate to account for inflation and interest rates. But this single number makes no distinction between liabilities that are due tomorrow, and those that are due gradually over, say, decades.
Fundamentally, a public pension is a method by which retirees are supported by current workers and financial returns, and one of its great strengths is its long time horizon and large pool of mutual supporters. It gives great leeway to muddle through problems that only crop up very slowly over time. If huge problems really will pile up, but only over 70 years, there is no reason to lose our minds now — small changes, regularly adjusted, will do the trick.
Finally, a 100-percent funding level — the supposed best possible state for a responsible pension manager — can actually be dangerous. It means that current contributions are not very necessary to pay benefits, sorely tempting politicians to cut back contributions or increase benefits. And because asset values tend to fluctuate a lot, this can leave pension funds seriously overextended if there is a market boom — creating the appearance of full funding — followed by a collapse. Numerous state and local public pensions were devastated by just this process during the dot-com and housing bubbles.
by This Week | Read more:
Image: Haas Institute
Monday, March 6, 2017
Instead of ‘1984,’ Read This
Although America’s political system seems unable to stimulate robust, sustained economic growth, it at least is stimulating consumption of a small but important segment of literature. Dystopian novels are selling briskly — Aldous Huxley’s “Brave New World” (1932), Sinclair Lewis’s “It Can’t Happen Here” (1935), George Orwell’s “Animal Farm” (1945) and “1984” (1949), Ray Bradbury’s “Fahrenheit 451” (1953) and Margaret Atwood’s “The Handmaid’s Tale” (1985), all warning about nasty regimes displacing democracy.
There is, however, a more recent and pertinent presentation of a grim future. Last year, in her 13th novel, “The Mandibles: A Family, 2029-2047,” Lionel Shriver imagined America slouching into dystopia merely by continuing current practices.
Shriver, who is fascinated by the susceptibility of complex systems to catastrophic collapses, begins her story after the 2029 economic crash and the Great Renunciation, whereby the nation, like a dissolute Atlas, shrugged off its national debt, saying to creditors: It’s nothing personal. The world is not amused, and Americans’ subsequent downward social mobility is not pretty.
Florence Darkly, a millennial, is a “single mother” but such mothers now outnumber married ones. Newspapers have almost disappeared, so “print journalism had given way to a rabble of amateurs hawking unverified stories and always to an ideological purpose.” Mexico has paid for an electronic border fence to keep out American refugees. Her Americans are living, on average, to 92, the economy is “powered by the whims of the retired,” and, “desperate to qualify for entitlements, these days everyone couldn’t wait to be old.” People who have never been told “no” are apoplectic if they can’t retire at 52. Antibiotic-resistant bacteria are ubiquitous, so shaking hands is imprudent. (...)
Social order collapses when hyperinflation follows the promiscuous printing of money after the Renunciation. This punishes those “who had a conscientious, caretaking relationship to the future.” Government salaries and Medicare reimbursements are “linked to an inflation algorithm that didn’t require further action from Congress. Even if a Snickers bar eventually cost $5 billion, they were safe.”
In a Reason magazine interview, Shriver says, “I think it is in the nature of government to infinitely expand until it eats its young.” In her novel, she writes:
“The state starts moving money around. A little fairness here, little more fairness there. . . . Eventually social democracies all arrive at the same tipping point: where half the country depends on the other half. . . . Government becomes a pricey, clumsy, inefficient mechanism for transferring wealth from people who do something to people who don’t, and from the young to the old — which is the wrong direction. All that effort, and you’ve only managed a new unfairness.”
Florence learns to appreciate “the miracle of civilization.” It is miraculous because “failure and decay were the world’s natural state. What was astonishing was anything that worked as intended, for any duration whatsoever.” Laughing mordantly as the apocalypse approaches, Shriver has a gimlet eye for the foibles of today’s secure (or so it thinks) upper middle class, from Washington’s Cleveland Park to Brooklyn. About the gentrification of the latter, she observes:
“Oh, you could get a facelift nearby, put your dog in therapy, or spend $500 at Ottawa on a bafflingly trendy dinner of Canadian cuisine (the city’s elite was running out of new ethnicities whose food could become fashionable). But you couldn’t buy a screwdriver, pick up a gallon of paint, take in your dry cleaning, get new tips on your high heels, copy a key, or buy a slice of pizza. Wealthy residents might own bicycles worth $5K, but no shop within miles would repair the brakes. . . . High rents had priced out the very service sector whose presence at ready hand once helped to justify urban living.”
There is, however, a more recent and pertinent presentation of a grim future. Last year, in her 13th novel, “The Mandibles: A Family, 2029-2047,” Lionel Shriver imagined America slouching into dystopia merely by continuing current practices.
Shriver, who is fascinated by the susceptibility of complex systems to catastrophic collapses, begins her story after the 2029 economic crash and the Great Renunciation, whereby the nation, like a dissolute Atlas, shrugged off its national debt, saying to creditors: It’s nothing personal. The world is not amused, and Americans’ subsequent downward social mobility is not pretty.Florence Darkly, a millennial, is a “single mother” but such mothers now outnumber married ones. Newspapers have almost disappeared, so “print journalism had given way to a rabble of amateurs hawking unverified stories and always to an ideological purpose.” Mexico has paid for an electronic border fence to keep out American refugees. Her Americans are living, on average, to 92, the economy is “powered by the whims of the retired,” and, “desperate to qualify for entitlements, these days everyone couldn’t wait to be old.” People who have never been told “no” are apoplectic if they can’t retire at 52. Antibiotic-resistant bacteria are ubiquitous, so shaking hands is imprudent. (...)
Social order collapses when hyperinflation follows the promiscuous printing of money after the Renunciation. This punishes those “who had a conscientious, caretaking relationship to the future.” Government salaries and Medicare reimbursements are “linked to an inflation algorithm that didn’t require further action from Congress. Even if a Snickers bar eventually cost $5 billion, they were safe.”
In a Reason magazine interview, Shriver says, “I think it is in the nature of government to infinitely expand until it eats its young.” In her novel, she writes:
“The state starts moving money around. A little fairness here, little more fairness there. . . . Eventually social democracies all arrive at the same tipping point: where half the country depends on the other half. . . . Government becomes a pricey, clumsy, inefficient mechanism for transferring wealth from people who do something to people who don’t, and from the young to the old — which is the wrong direction. All that effort, and you’ve only managed a new unfairness.”
Florence learns to appreciate “the miracle of civilization.” It is miraculous because “failure and decay were the world’s natural state. What was astonishing was anything that worked as intended, for any duration whatsoever.” Laughing mordantly as the apocalypse approaches, Shriver has a gimlet eye for the foibles of today’s secure (or so it thinks) upper middle class, from Washington’s Cleveland Park to Brooklyn. About the gentrification of the latter, she observes:
“Oh, you could get a facelift nearby, put your dog in therapy, or spend $500 at Ottawa on a bafflingly trendy dinner of Canadian cuisine (the city’s elite was running out of new ethnicities whose food could become fashionable). But you couldn’t buy a screwdriver, pick up a gallon of paint, take in your dry cleaning, get new tips on your high heels, copy a key, or buy a slice of pizza. Wealthy residents might own bicycles worth $5K, but no shop within miles would repair the brakes. . . . High rents had priced out the very service sector whose presence at ready hand once helped to justify urban living.”
by George F. Will, WSJ | Read more:
Image: Sarah Lee
Inside the Loneliest Five-Star Restaurant in the World
You can eat foie gras at Antarctica's Concordia Station, but your closest neighbor is the International Space Station and you might not see oranges for three months.
Life in the kitchen is never easy—being a chef is a profession that involves an incredible amount of precision, creativity, and the ability to keep your cool in this uniquely stressful environment, even in the best of conditions. In a place like Antarctica's Concordia Station, one of the most isolated research facilities in the world, where day and night can last months on end and temperatures generally hover between -30 and -60 Celsius, the already stressful task of being a chef begins to sound downright hellish.
This however, is not the opinion of Luca Ficara, who has been serving as the base's resident chef since November.
When I Skyped with Ficara last week, he was well into the first full week of perpetual darkness at the base, but despite the fact that he wouldn't be seeing the sun for another three months, he was all smiles and jokes. Ficara must operate in an environment which is a far cry from "the best of conditions," yet despite all the hardships his job description entails, it's the small things that he misses most: "It's been three months since I've had a orange," he told me with a melancholy that only three months without a orange can warrant.
Ficara, affectionately referred to as "the David Copperfield of the kitchen" by his crewmates, hails from Sicily, where he spent five years training as a chef in the IPSSAR Hospitality School in Catania, Italy. At 30, Ficara has spent years working in kitchens in Australia, England, and Spain, although working in a kitchen on the white continent was always little more than a dream.
"To be honest, [going to Antarctica] was not in my plan," said Ficara, laughing. "It was like a lottery—you just buy a scratch card, and if you're lucky, you're going to win. You always dream about it, but you never think you will be the winner."
Each year, the Italian National Program for Antarctic Research (which maintains the base along with the French Polar Institute Paul Emile Victor) holds a lottery to determine who will be spending the next year as the resident chef at Concordia. This lottery system has won the station something of a reputation for its food, which received a nod in the Lonely Planet as a place "considered by many to enjoy Antarctica's best cuisine, with fine wines and seven-course lunches on Sundays."
While Ficara didn't really expect to end up in the Concordia Kitchen, he turned out to be the perfect fit for the job given his diverse culinary repertoire. The chefs chosen by the PNRA must demonstrate not only proficiency as cooks, but also a robust knowledge of international culinary practices so that they can cater to the tastes of the 13-person Concordia winter crew, who hail from England, Switzerland, France, and Italy.
The winter-over crew at Concordia is living in near total isolation, their contact with the outside world limited to digital interactions during the eight months of the year when Antarctica is so cold that jet fuel turns to gel, prohibiting any visitors from reaching the base. In these isolated conditions, food takes on a special importance for everyone at the base. While the crew may be landlocked until November, Ficara nonetheless manages to allow his colleagues to return to their homes on a nightly basis, riding on aromas of Yorkshire pudding, foie gras, or chicken parmigiana.
In addition to trying to cater to the local tastes of the various crew members, Ficara also arranges for themed nights each Saturday, occasions for which he prepares some of his most lavish meals.
"You must understand that every day is the same. So to give some effect of the end of the week we try to make special events," said Ficara. "For example, for the French crew, I tried to make a very fancy French meal. I gave somebody a job as a sommelier and explained how to serve the food. We've done a few nights like this—very stylish."
Despite the festive atmosphere that is brought about by Ficara's elaborate feasts each week at the base, it wouldn't be much of a party without another crucial ingredient: alcohol. The crew keeps a decent variety of spirits on site, but only have access to them on Saturday evenings during which they eat, drink, and be merry to celebrate the end of another week at the base. In addition to downloading recipes for cocktails to experiment with over dinner, the crew is particularly fond of wine, the lifeblood of its Italian and French crew members.
"It's not like we have a wine bar, but we have a lot of wine—unfortunately, we just have French wine," said Ficara with a laugh. "I think the best wine for everybody is the wine from where you're born, but a glass of wine is always a pleasure [even if it's French]."
During the summer months (November to February), the Concordia population grows to around 75 people, which often requires the chef to take on some additional help in the kitchen. During the eight months where there are only a dozen other crew members on site, Ficara must crank out three meals a day on his own. A daunting task, but Ficara is not always without help—he keeps the kitchen door open, always ready to offer cooking lessons to his crewmates.
"Most of the time I'm alone in the kitchen, but sometimes I like to give cooking lessons to the crew, so I'll make some muffins with Beth [Concordia's English doctor] or some pizza with Mario [Concordia's Italian Mission Commander]," Ficara told me. In addition to instructing the crew on how to cook, Luca also entertains them with stories about how he came to learn about the dish they are preparing. "It's nice when we have meals because we share the experience of traveling or we share the ingredients we'd never have known. Each plate has some history from me, so I always explain how I know how to prepare something."
This however, is not the opinion of Luca Ficara, who has been serving as the base's resident chef since November.When I Skyped with Ficara last week, he was well into the first full week of perpetual darkness at the base, but despite the fact that he wouldn't be seeing the sun for another three months, he was all smiles and jokes. Ficara must operate in an environment which is a far cry from "the best of conditions," yet despite all the hardships his job description entails, it's the small things that he misses most: "It's been three months since I've had a orange," he told me with a melancholy that only three months without a orange can warrant.
Ficara, affectionately referred to as "the David Copperfield of the kitchen" by his crewmates, hails from Sicily, where he spent five years training as a chef in the IPSSAR Hospitality School in Catania, Italy. At 30, Ficara has spent years working in kitchens in Australia, England, and Spain, although working in a kitchen on the white continent was always little more than a dream.
"To be honest, [going to Antarctica] was not in my plan," said Ficara, laughing. "It was like a lottery—you just buy a scratch card, and if you're lucky, you're going to win. You always dream about it, but you never think you will be the winner."
Each year, the Italian National Program for Antarctic Research (which maintains the base along with the French Polar Institute Paul Emile Victor) holds a lottery to determine who will be spending the next year as the resident chef at Concordia. This lottery system has won the station something of a reputation for its food, which received a nod in the Lonely Planet as a place "considered by many to enjoy Antarctica's best cuisine, with fine wines and seven-course lunches on Sundays."
While Ficara didn't really expect to end up in the Concordia Kitchen, he turned out to be the perfect fit for the job given his diverse culinary repertoire. The chefs chosen by the PNRA must demonstrate not only proficiency as cooks, but also a robust knowledge of international culinary practices so that they can cater to the tastes of the 13-person Concordia winter crew, who hail from England, Switzerland, France, and Italy.
The winter-over crew at Concordia is living in near total isolation, their contact with the outside world limited to digital interactions during the eight months of the year when Antarctica is so cold that jet fuel turns to gel, prohibiting any visitors from reaching the base. In these isolated conditions, food takes on a special importance for everyone at the base. While the crew may be landlocked until November, Ficara nonetheless manages to allow his colleagues to return to their homes on a nightly basis, riding on aromas of Yorkshire pudding, foie gras, or chicken parmigiana.
In addition to trying to cater to the local tastes of the various crew members, Ficara also arranges for themed nights each Saturday, occasions for which he prepares some of his most lavish meals.
"You must understand that every day is the same. So to give some effect of the end of the week we try to make special events," said Ficara. "For example, for the French crew, I tried to make a very fancy French meal. I gave somebody a job as a sommelier and explained how to serve the food. We've done a few nights like this—very stylish."
Despite the festive atmosphere that is brought about by Ficara's elaborate feasts each week at the base, it wouldn't be much of a party without another crucial ingredient: alcohol. The crew keeps a decent variety of spirits on site, but only have access to them on Saturday evenings during which they eat, drink, and be merry to celebrate the end of another week at the base. In addition to downloading recipes for cocktails to experiment with over dinner, the crew is particularly fond of wine, the lifeblood of its Italian and French crew members.
"It's not like we have a wine bar, but we have a lot of wine—unfortunately, we just have French wine," said Ficara with a laugh. "I think the best wine for everybody is the wine from where you're born, but a glass of wine is always a pleasure [even if it's French]."
During the summer months (November to February), the Concordia population grows to around 75 people, which often requires the chef to take on some additional help in the kitchen. During the eight months where there are only a dozen other crew members on site, Ficara must crank out three meals a day on his own. A daunting task, but Ficara is not always without help—he keeps the kitchen door open, always ready to offer cooking lessons to his crewmates.
"Most of the time I'm alone in the kitchen, but sometimes I like to give cooking lessons to the crew, so I'll make some muffins with Beth [Concordia's English doctor] or some pizza with Mario [Concordia's Italian Mission Commander]," Ficara told me. In addition to instructing the crew on how to cook, Luca also entertains them with stories about how he came to learn about the dish they are preparing. "It's nice when we have meals because we share the experience of traveling or we share the ingredients we'd never have known. Each plate has some history from me, so I always explain how I know how to prepare something."
by Daniel Oberhaus, Munchies | Read more:
Image: IPEV/PNRA
Learning to Love the Secret Language of Urine
[ed. See also: How much pee is in our swimming pools? New urine test reveals the truth. Yikes.]
Learning about the body’s many excretions, secretions and suppurations in medical school, I realized that each medical specialty has its own essential effluent. And I heard that some physicians choose their careers based on the bodily fluid they find least revolting. Thus, a doctor disgusted by stool and pus but able to stand the sight of blood might end up a hematologist, while one repulsed by urine and bile but tolerant of sputum might choose pulmonology.
Many physicians are actively drawn to a particular bodily fluid, intrigued by its unique diagnostic mysteries. Each fluid that runs through the body is a language in which diseases speak to physicians, telling them what is wrong with a patient. And specializing means becoming fluent in one specific fluid’s dialect, learning to interpret its colors, textures and consistencies, and spending a career pondering its secrets.
As a medical student, I saw that a bodily fluid could shape a career. And though I resisted settling on just one (I remain a generalist), I have always been partial to pee.
I’ve studied all the body’s fluids and used each in diagnosing disease, and urine stands out in the wealth of information it grants about a patient’s condition. Conceived in the kidneys — a pair of bean-shaped organs tucked away in the abdomen’s rear — urine runs down the ureters and is conveniently stored in the bladder, from which it is gathered in plastic cups for testing. Urine analysis is performed frequently enough by physicians to have earned the shorthand “urinalysis” — no other bodily fluid can claim to be on a nickname-basis with the medical profession.
I remember the first time I watched a nephrologist turn a urine sample into a diagnosis. As a medical student at Cooper University Hospital in Camden, N.J., I followed behind as he carried a small, plastic urine cup to the microscope room in the nephrology department. He plunged a diagnostic dipstick into the fluid to reveal bits of blood and protein unseen by the naked eye. He then placed some urine into a centrifuge, which spun rapidly and concentrated floating cells into a sediment at the vial’s bottom. After peering through a microscope at a single drop of this stuff, noting stray bits of debris flung across the viewing field, the nephrologist wove a comprehensive diagnostic tale that encompassed all the patient’s symptoms and lab abnormalities. The diagnosis turned out to be glomerulonephritis, a rare form of kidney disease. He was able to look inside that patient with a clairvoyance that seemed positively sorcerous, with urine as his crystal ball. From that moment I was determined to learn urine’s subtle language.
Learning about the body’s many excretions, secretions and suppurations in medical school, I realized that each medical specialty has its own essential effluent. And I heard that some physicians choose their careers based on the bodily fluid they find least revolting. Thus, a doctor disgusted by stool and pus but able to stand the sight of blood might end up a hematologist, while one repulsed by urine and bile but tolerant of sputum might choose pulmonology.
Many physicians are actively drawn to a particular bodily fluid, intrigued by its unique diagnostic mysteries. Each fluid that runs through the body is a language in which diseases speak to physicians, telling them what is wrong with a patient. And specializing means becoming fluent in one specific fluid’s dialect, learning to interpret its colors, textures and consistencies, and spending a career pondering its secrets.
As a medical student, I saw that a bodily fluid could shape a career. And though I resisted settling on just one (I remain a generalist), I have always been partial to pee.I’ve studied all the body’s fluids and used each in diagnosing disease, and urine stands out in the wealth of information it grants about a patient’s condition. Conceived in the kidneys — a pair of bean-shaped organs tucked away in the abdomen’s rear — urine runs down the ureters and is conveniently stored in the bladder, from which it is gathered in plastic cups for testing. Urine analysis is performed frequently enough by physicians to have earned the shorthand “urinalysis” — no other bodily fluid can claim to be on a nickname-basis with the medical profession.
I remember the first time I watched a nephrologist turn a urine sample into a diagnosis. As a medical student at Cooper University Hospital in Camden, N.J., I followed behind as he carried a small, plastic urine cup to the microscope room in the nephrology department. He plunged a diagnostic dipstick into the fluid to reveal bits of blood and protein unseen by the naked eye. He then placed some urine into a centrifuge, which spun rapidly and concentrated floating cells into a sediment at the vial’s bottom. After peering through a microscope at a single drop of this stuff, noting stray bits of debris flung across the viewing field, the nephrologist wove a comprehensive diagnostic tale that encompassed all the patient’s symptoms and lab abnormalities. The diagnosis turned out to be glomerulonephritis, a rare form of kidney disease. He was able to look inside that patient with a clairvoyance that seemed positively sorcerous, with urine as his crystal ball. From that moment I was determined to learn urine’s subtle language.
by Jonathan Reisman, Washington Post | Read more:
Image: Christine Glade/Istock
Imagine If You Will...
You can't see it from this angle, but just off-camera Rod Serling is smoking a cigarette and delivering a monologue. Maybe one like this:
The Monsters Are Due on Maple Street (1960)by Tom Sullivan
Narrator: [Closing Narration] The tools of conquest do not necessarily come with bombs and explosions and fallout. There are weapons that are simply thoughts, attitudes, prejudices to be found only in the minds of men. For the record, prejudices can kill, and suspicion can destroy, and a thoughtless frightened search for a scapegoat has a fallout all of its own for the children, and the children yet unborn. And the pity of it is that these things cannot be confined to the Twilight Zone.
[ed. See also: Donald Trump isn’t the only villain – the Republican party shares the blame]
Sunday, March 5, 2017
Newsrooms Are Making Leaking Easier–and More Secure–Than Ever
A growing number of disaffected government insiders have been approaching journalists to share information anonymously since the election in November and the inauguration just over a month ago. In response, news organizations have made it safer and easier for potential whistleblowers by actively encouraging them to use a variety of secure communication channels.
Many outlets have even posted instructions and assigned additional staff to monitor the information that arrives over these channels–such as the encrypted mobile application Signal and the dedicated whistleblowing platform SecureDrop. The Washington Post wrote a lengthy piece offering advice for leaking government documents. ProPublica updated its “How to Leak” page and posted an instructional video with Nieman Lab. And The New York Times published a page titled “Got a confidential news tip?” which details a number of secure channels, from encrypted email to plain manila envelopes, alongside basic instructions for using them safely.
But even as more news outlets promote secure channels for outreach from potential sources, it is still incredibly rare for these tools to be mentioned in published stories. Every newsroom has editorial policies regarding the treatment of anonymous sources, and most interpret the mere mention of tools like Signal or SecureDrop to be an unnecessary risk. As a result, the usefulness of these tools is underpublicized, and a study published by the Tow Center for Digital Journalism last year still offers the only account of SecureDrop’s value in newsrooms. Of the ten news outlets studied at the time, nine said that they regularly receive newsworthy information through SecureDrop.
The demand for secure communication tools has only risen since Trump’s election. The Times launched SecureDrop just a week after the election, while downloads of the Signal app rose 400 percent during the month of November. There are currently 22 active SecureDrop installations in newsrooms—nearly twice as many as there were just a year ago. A handful of freelance journalists and about a dozen non-profit groups also use SecureDrop.
Government employees, too, are taking advantage. Members of the Environmental Protection Agency, Foreign Service, and Department of Labor have been using Signal to communicate with the press against the President’s gag order. Aids to politicians are using Signal and a similar app called Confide not just for leaking, but for personal protection under increased suspicion and surveillance. These apps may pass unnoticed unless users are subjected to a “phone check,” like the one press secretary Sean Spicer allegedly demanded from a dozen communications staffers last week.
According to Derek Kravitz, research editor at ProPublica, a single source often uses multiple secure channels to communicate with a reporter. Signal has become the most common way for new sources to contact them, while SecureDrop mainly serves as a guarded vessel for documents and data dumps. “It’s mostly people contacting us on Signal or another medium,” Kravitz said, “and then we’ll go to SecureDrop to see if they’ve sent anything.”
Kravitz added that “the flow of tips and leaks has been consistent since inauguration,” and so has their quality: “Nearly all messages have had some news value or public interest.”
Tools like Signal and SecureDrop are not only resilient to attack, but also fairly user-friendly. They are designed to minimize risk, even for inexperienced users. “Not every source is an expert on being an anonymous source,” says Kevin Poulsen, the hacker and longtime Wired reporter who originally conceived of SecureDrop. “That’s not why they’re contacting a reporter. It’s because they’re an expert on something else.”
It makes sense that so many first-time whistleblowers are turning to Signal, in particular: There is little separating the experience of using Signal from typical texting and calling on a smartphone. Yet this ease does not come at the expense of security. Signal’s code, developed by Open Whisper Systems, is freely available for anyone to test and verify. Even Edward Snowden endorses Signal as the best secure communication tool for most people.
by Charles Berret, Columbia Journalism Review | Read more:
Many outlets have even posted instructions and assigned additional staff to monitor the information that arrives over these channels–such as the encrypted mobile application Signal and the dedicated whistleblowing platform SecureDrop. The Washington Post wrote a lengthy piece offering advice for leaking government documents. ProPublica updated its “How to Leak” page and posted an instructional video with Nieman Lab. And The New York Times published a page titled “Got a confidential news tip?” which details a number of secure channels, from encrypted email to plain manila envelopes, alongside basic instructions for using them safely.
But even as more news outlets promote secure channels for outreach from potential sources, it is still incredibly rare for these tools to be mentioned in published stories. Every newsroom has editorial policies regarding the treatment of anonymous sources, and most interpret the mere mention of tools like Signal or SecureDrop to be an unnecessary risk. As a result, the usefulness of these tools is underpublicized, and a study published by the Tow Center for Digital Journalism last year still offers the only account of SecureDrop’s value in newsrooms. Of the ten news outlets studied at the time, nine said that they regularly receive newsworthy information through SecureDrop.The demand for secure communication tools has only risen since Trump’s election. The Times launched SecureDrop just a week after the election, while downloads of the Signal app rose 400 percent during the month of November. There are currently 22 active SecureDrop installations in newsrooms—nearly twice as many as there were just a year ago. A handful of freelance journalists and about a dozen non-profit groups also use SecureDrop.
Government employees, too, are taking advantage. Members of the Environmental Protection Agency, Foreign Service, and Department of Labor have been using Signal to communicate with the press against the President’s gag order. Aids to politicians are using Signal and a similar app called Confide not just for leaking, but for personal protection under increased suspicion and surveillance. These apps may pass unnoticed unless users are subjected to a “phone check,” like the one press secretary Sean Spicer allegedly demanded from a dozen communications staffers last week.
According to Derek Kravitz, research editor at ProPublica, a single source often uses multiple secure channels to communicate with a reporter. Signal has become the most common way for new sources to contact them, while SecureDrop mainly serves as a guarded vessel for documents and data dumps. “It’s mostly people contacting us on Signal or another medium,” Kravitz said, “and then we’ll go to SecureDrop to see if they’ve sent anything.”
Kravitz added that “the flow of tips and leaks has been consistent since inauguration,” and so has their quality: “Nearly all messages have had some news value or public interest.”
Tools like Signal and SecureDrop are not only resilient to attack, but also fairly user-friendly. They are designed to minimize risk, even for inexperienced users. “Not every source is an expert on being an anonymous source,” says Kevin Poulsen, the hacker and longtime Wired reporter who originally conceived of SecureDrop. “That’s not why they’re contacting a reporter. It’s because they’re an expert on something else.”
It makes sense that so many first-time whistleblowers are turning to Signal, in particular: There is little separating the experience of using Signal from typical texting and calling on a smartphone. Yet this ease does not come at the expense of security. Signal’s code, developed by Open Whisper Systems, is freely available for anyone to test and verify. Even Edward Snowden endorses Signal as the best secure communication tool for most people.
by Charles Berret, Columbia Journalism Review | Read more:
Image: Getty
The Most Broadly Overvalued Moment in Market History
"The issue is no longer whether the currnet market resembles those preceding the 1929, 1969-70, 1973-74, and 1987 crashes. The issue is only - are conditions like October of 1929, or more like April? Like October of 1987, or more like July? If the latter, then over the short-term, arrogant imprudence will continue to be mistaken for enlightened genius, while studied restraint will be mistaken for stubborn foolishness. We can't rule out further short-term gains, but those gains will turn bitter... Let's not be shy: regardless of short-term action, we ultimately expect the S&P 500 to fall by more than half, and the Nasdaq by two-thirds. Don't scoff without reviewing history first."
- John P. Hussman, Ph.D., Hussman Econometrics, February 9, 2000
"On Wall Street, urgent stupidity has one terminal symptom, and it is the belief that money is free. Investors have turned the market into a carnival, where everybody 'knows' that the new rides are the good rides, and the old rides just don't work. Where the carnival barkers seem to hand out free money just for showing up. Unfortunately, this business is not that kind - it has always been true that in every pyramid, in every easy-money sure-thing, the first ones to get out are the only ones to get out... Over time, price/revenue ratios come back in line. Currently, that would require an 83% plunge in tech stocks (recall the 1969-70 tech massacre). The plunge may be muted to about 65% given several years of revenue growth. If you understand values and market history, you know we're not joking."
- John P. Hussman, Ph.D., Hussman Econometrics, March 7, 2000
On Wednesday, the consensus of the most reliable equity market valuation measures we identify (those most tightly correlated with actual subsequent S&P 500 total returns in market cycles across history) advanced within 5% of the extreme registered in March 2000. Recall that following that peak, the S&P 500 did indeed lose half of its value, the Nasdaq Composite lost 80% of its value, and the tech-heavy Nasdaq 100 Index lost an oddly precise 83% of its value. With historically reliable valuation measures beyond those of 1929 and lesser peaks, capitalization-weighted measures are essentially tied with the most offensive levels in history. Meanwhile, the valuation of the median component of the S&P 500 is already far beyond the median valuations observed at the peaks of 2000, 2007 and prior market cycles, while our estimate for 10-12 year returns on a conventional 60/30/10 mix of stocks, bonds, and T-bills fell to a record low last week, making this the most broadly overvalued instant in market history.
There is a quick, knee-jerk response floating around these days, which asserts that “stocks are still cheap relative to interest rates.” This argument is quite popular with investors who haven’t spent much time getting their hands dirty with historical data, satisfied to repeat verbal arguments they’ve heard elsewhere as a substitute for analysis. It’s even an argument we recently heard, almost inexplicably, from one investor we’ve regularly agreed with at market extremes over several decades (more on that below). In 2007, as the market was peaking just before the global financial crisis, precisely the same misguided assertions prompted me to write Long-Term Evidence on the Fed Model and Forward Operating P/E Ratios. See also How Much Do Interest Rates Affect the Fair Value of Stocks? from May of that year. Let’s address this argument once again, in additional detail.
Valuations and interest rates
There’s no question that interest rates are relevant to the fair valuation of stocks. After all, a security is nothing but a claim to some future stream of cash flows that will be delivered into the hands of investors over time. The higher the price an investor pays for a given stream of future cash flows, the lower the long-term return the investor can expect to earn as those cash flows are received. Conversely, the lower the long-term return an investor can tolerate, the higher the price they will agree to pay for that stream of future cash flows. If interest rates are low, it’s not unreasonable to expect that investors would accept a lower expected future return on stocks. If rates are high, it’s not unreasonable to expect that investors would demand a higher expected future return on stocks.
The problem is that investors often misinterpret the form of this relationship, and become confused about when interest rate information is needed and when it is not. Specifically, given a set of expected future cash flows and the current price of the security, one does not need any information about interest rates at all to estimate the long-term return on that security. The price of the security and the cash flows are sufficient statistics to calculate that expected return. For example, if a security that promises to deliver a $100 cash flow in 10 years is priced at $82 today, we immediately know that the expected 10-year return is (100/82)^(1/10)-1 = 2%. Having estimated that 2% return, we can now compare it with competing returns on bonds, to judge whether we think it’s adequate, but no knowledge of interest rates is required to “adjust” the arithmetic.
There are three objects of interest here: the current price, the future stream of expected cash flows, and the long-term rate of return that converts one to the other. Given any two of these, one can estimate the third. For example, given a set of expected future cash flows and some “justified” return of the investor’s choosing, one can use those two pieces of information to calculate the price that will deliver that desired expected return. If I want a $100 future payment to give me a 5% future return over 10 years, I should be willing to pay no more than $100/(1.05)^10 = $61.39.
So when you want to convert a set of expected cash flows into an acceptable price today, interest rates may very well affect the “justified” rate of return you choose. But if you already know the current price, and the expected cash flows, you don’t need any information about prevailing interest rates in order to estimate the expected rate of return. One does not have to “factor in” the level of interest rates when observable valuations are used to estimate prospective long-term market returns, because interest rates are irrelevant to that calculation. The only thing that interest rates do at that point is to allow a comparison of the expected return that’s already baked in the cake with alternative returns available in the bond market.
The Fed Model is an artifact of just 16 years of history
There’s an additional problem. While it’s compelling to believe that the expected return on stocks and bonds should have a one-to-one relationship, history doesn’t bear that out at all. Indeed, over the past century, the correlation between bond and stock yields has historically gone in the entirely wrong direction except during the inflation-disinflation cycle from about 1970 to 1998. What investors may not realize is that the correlation between interest rates and earnings yields (as well as dividend yields) has been negative since 1998. Investors across history have not been consistent at all in treating stocks and bonds as closely competing substitutes.
As I noted during the bubbles that ended in 2000 and 2007, the problem with the Fed Model (which compares the S&P 500 forward operating earnings yield with the 10-year Treasury yield) is that this presumed one-to-one relationship between stock and bond yields is wholly an artifact of the disinflationary period from 1982 to 1998. The stock market advance from 1982 to 1998 represented one of the steepest movements from deep secular undervaluation to extreme secular overvaluation in stock market history. Concurrently, bond yields declined as inflation retreated from high levels of the 1970’s. What the Fed Model does is to overlay those two outcomes and treat them as if stocks were “fairly valued” the entire time.
The chart below shows the S&P 500 forward operating earnings yield alongside the 10-year Treasury bond yield. The inset of the chart is the chart that appeared in Alan Greenspan’s 1997 Humphrey Hawkins testimony, and is the entire basis upon which the Fed Model rests. The same segment of history is highlighted in the yellow block. Notice that this is the only segment of history in which the presumed one-to-one relationship actually held.
The Fed Model is not a fair-value relationship, but an artifact of a specific disinflationary segment of market history. It is descriptive of yield behavior during that limited period, but it has a very poor predictive record with regard to actual subsequent market returns.
When investors assert that stocks are “fairly valued relative to interest rates,” they are essentially invoking the Fed Model. What they seem to have in mind is that regardless of absolute valuation levels, stocks can be expected to achieve acceptably high returns as long as the S&P 500 forward operating earnings yield is higher than the 10-year Treasury yield.
No, no. That’s not how any of this works, and we have a century of evidence to show it. The deep undervaluation of stocks in 1982 was followed by glorious subsequent returns. The steep overvaluation of stocks in 1998 was followed by one crash, then another, which left S&P 500 total returns negative for more than a decade. I fully expect that current valuations, which are within a breath of 2000 extremes on the most historically reliable measures, will again result in zero or negative returns over the coming 10-12 years. Let’s dig into some data to detail the basis for those expectations.
First, a quick note on historically reliable valuation measures. The value of any security is based on the long-term stream of cash flows that it can be expected to deliver over decades and decades. While corporate earnings are certainly required to generate future cash flows, current earnings (or even forward earnings) are very poor “sufficient statistics” for that stream of cash flows. That’s true not only because of fluctuations in profit margins over the economic cycle, but also due to very long-term competitive forces that exert themselves over multiple economic cycles. From the standpoint of historical reliability, valuation measures that dampen or mute the impact of fluctuating profit margins dramatically outperform measures based on current earnings. Indeed, even the Shiller CAPE, which uses a 10-year average of inflation-adjusted earnings, provides substantially better results when one also adjusts for the embedded profit margin (the denominator of the CAPE / S&P 500 revenues). For a brief primer on the importance of implied profit margins in evaluating market valuations, see Two Point Three Sigmas Above the Norm and Margins, Multiples, and the Iron Law of Valuation.
The chart below shows the ratio of nonfinancial market capitalization to corporate gross value-added, including estimated foreign revenues. I created this measure, MarketCap/GVA, as an apples-to-apples alternative to market capitalization/GDP that matches the object in the numerator with the object in the denominator, and also takes foreign revenues into account. We find this measure to be better correlated with actual subsequent S&P 500 total returns than any other measure we’ve studied in market cycles across history, including price/earnings, price/forward earnings, price/book, price/dividends, enterprise value/EBITDA, the Fed Model, Tobin’s Q, market cap/GDP, the NIPA profits cyclically-adjusted P/E (CAPE), and the Shiller CAPE.
MarketCap/GVA is shown below on an inverted log scale (blue line, left scale), along with the actual subsequent 12-year total return of the S&P 500 (red line, right scale). From current valuations, which now rival the most extreme levels in U.S. history, we estimate likely S&P 500 nominal total returns averaging less than 1% annually over the coming 12-year horizon. As a side note, we tend to prefer a 12-year horizon because that is the point where the autocorrelation profile of valuations drops to zero, and is therefore the horizon over which mean reversion is most reliable (see Valuations Not Only Mean-Revert, They Mean-Invert).
I’m often asked why we don’t “adjust” MarketCap/GVA for the level of interest rates. The answer, as detailed at the beginning of this comment, is that given both the price of a security, and the expected stream of future expected cash flows (or a sufficient statistic for those cash flows), one does not need any information at all about interest rates in order to estimate the expected long-term return on that security. Each point in the chart below shows the actual 12-year subsequent total return of the S&P 500 index, along with two fitted values, one using MarketCap/GVA alone, and the other including the 10-year Treasury bond yield as an additional explanatory variable. That additional variable adds absolutely no incremental explanatory power. Both fitted values have a 93% correlation with actual subsequent 12-year S&P 500 total returns.
We’re now in a position to say something very precise about current valuations and interest rates. Given the present level of interest rates, investors who are willing to accept likely prospective nominal total returns on the S&P 500 of less than 1% over the coming 12-year period are entirely welcome to judge stocks as “fairly valued relative to interest rates.” But understand that this is precisely what that phrase implies here.
Moreover, as one can see from the foregoing charts, there’s not a single market cycle in history, neither in the period before the 1970’s (when interest rates regularly hovered near current levels), nor in recent decades, that has failed to raise prospective 10-12 year S&P 500 total returns to the 8-10% range or beyond over the completion of that cycle. So even if investors are willing to accept 10-12 year total returns of next to nothing, they should also be fully prepared for an interim market loss on the order of 50-60%, because that is the decline that would now be required to restore those 8-10% return expectations, without even breaking below historical valuation norms.
- John P. Hussman, Ph.D., Hussman Econometrics, February 9, 2000
"On Wall Street, urgent stupidity has one terminal symptom, and it is the belief that money is free. Investors have turned the market into a carnival, where everybody 'knows' that the new rides are the good rides, and the old rides just don't work. Where the carnival barkers seem to hand out free money just for showing up. Unfortunately, this business is not that kind - it has always been true that in every pyramid, in every easy-money sure-thing, the first ones to get out are the only ones to get out... Over time, price/revenue ratios come back in line. Currently, that would require an 83% plunge in tech stocks (recall the 1969-70 tech massacre). The plunge may be muted to about 65% given several years of revenue growth. If you understand values and market history, you know we're not joking."
- John P. Hussman, Ph.D., Hussman Econometrics, March 7, 2000
On Wednesday, the consensus of the most reliable equity market valuation measures we identify (those most tightly correlated with actual subsequent S&P 500 total returns in market cycles across history) advanced within 5% of the extreme registered in March 2000. Recall that following that peak, the S&P 500 did indeed lose half of its value, the Nasdaq Composite lost 80% of its value, and the tech-heavy Nasdaq 100 Index lost an oddly precise 83% of its value. With historically reliable valuation measures beyond those of 1929 and lesser peaks, capitalization-weighted measures are essentially tied with the most offensive levels in history. Meanwhile, the valuation of the median component of the S&P 500 is already far beyond the median valuations observed at the peaks of 2000, 2007 and prior market cycles, while our estimate for 10-12 year returns on a conventional 60/30/10 mix of stocks, bonds, and T-bills fell to a record low last week, making this the most broadly overvalued instant in market history.
There is a quick, knee-jerk response floating around these days, which asserts that “stocks are still cheap relative to interest rates.” This argument is quite popular with investors who haven’t spent much time getting their hands dirty with historical data, satisfied to repeat verbal arguments they’ve heard elsewhere as a substitute for analysis. It’s even an argument we recently heard, almost inexplicably, from one investor we’ve regularly agreed with at market extremes over several decades (more on that below). In 2007, as the market was peaking just before the global financial crisis, precisely the same misguided assertions prompted me to write Long-Term Evidence on the Fed Model and Forward Operating P/E Ratios. See also How Much Do Interest Rates Affect the Fair Value of Stocks? from May of that year. Let’s address this argument once again, in additional detail.
Valuations and interest rates
There’s no question that interest rates are relevant to the fair valuation of stocks. After all, a security is nothing but a claim to some future stream of cash flows that will be delivered into the hands of investors over time. The higher the price an investor pays for a given stream of future cash flows, the lower the long-term return the investor can expect to earn as those cash flows are received. Conversely, the lower the long-term return an investor can tolerate, the higher the price they will agree to pay for that stream of future cash flows. If interest rates are low, it’s not unreasonable to expect that investors would accept a lower expected future return on stocks. If rates are high, it’s not unreasonable to expect that investors would demand a higher expected future return on stocks.
The problem is that investors often misinterpret the form of this relationship, and become confused about when interest rate information is needed and when it is not. Specifically, given a set of expected future cash flows and the current price of the security, one does not need any information about interest rates at all to estimate the long-term return on that security. The price of the security and the cash flows are sufficient statistics to calculate that expected return. For example, if a security that promises to deliver a $100 cash flow in 10 years is priced at $82 today, we immediately know that the expected 10-year return is (100/82)^(1/10)-1 = 2%. Having estimated that 2% return, we can now compare it with competing returns on bonds, to judge whether we think it’s adequate, but no knowledge of interest rates is required to “adjust” the arithmetic.
There are three objects of interest here: the current price, the future stream of expected cash flows, and the long-term rate of return that converts one to the other. Given any two of these, one can estimate the third. For example, given a set of expected future cash flows and some “justified” return of the investor’s choosing, one can use those two pieces of information to calculate the price that will deliver that desired expected return. If I want a $100 future payment to give me a 5% future return over 10 years, I should be willing to pay no more than $100/(1.05)^10 = $61.39.
So when you want to convert a set of expected cash flows into an acceptable price today, interest rates may very well affect the “justified” rate of return you choose. But if you already know the current price, and the expected cash flows, you don’t need any information about prevailing interest rates in order to estimate the expected rate of return. One does not have to “factor in” the level of interest rates when observable valuations are used to estimate prospective long-term market returns, because interest rates are irrelevant to that calculation. The only thing that interest rates do at that point is to allow a comparison of the expected return that’s already baked in the cake with alternative returns available in the bond market.
The Fed Model is an artifact of just 16 years of history
There’s an additional problem. While it’s compelling to believe that the expected return on stocks and bonds should have a one-to-one relationship, history doesn’t bear that out at all. Indeed, over the past century, the correlation between bond and stock yields has historically gone in the entirely wrong direction except during the inflation-disinflation cycle from about 1970 to 1998. What investors may not realize is that the correlation between interest rates and earnings yields (as well as dividend yields) has been negative since 1998. Investors across history have not been consistent at all in treating stocks and bonds as closely competing substitutes.
As I noted during the bubbles that ended in 2000 and 2007, the problem with the Fed Model (which compares the S&P 500 forward operating earnings yield with the 10-year Treasury yield) is that this presumed one-to-one relationship between stock and bond yields is wholly an artifact of the disinflationary period from 1982 to 1998. The stock market advance from 1982 to 1998 represented one of the steepest movements from deep secular undervaluation to extreme secular overvaluation in stock market history. Concurrently, bond yields declined as inflation retreated from high levels of the 1970’s. What the Fed Model does is to overlay those two outcomes and treat them as if stocks were “fairly valued” the entire time.
The chart below shows the S&P 500 forward operating earnings yield alongside the 10-year Treasury bond yield. The inset of the chart is the chart that appeared in Alan Greenspan’s 1997 Humphrey Hawkins testimony, and is the entire basis upon which the Fed Model rests. The same segment of history is highlighted in the yellow block. Notice that this is the only segment of history in which the presumed one-to-one relationship actually held.
The Fed Model is not a fair-value relationship, but an artifact of a specific disinflationary segment of market history. It is descriptive of yield behavior during that limited period, but it has a very poor predictive record with regard to actual subsequent market returns.
When investors assert that stocks are “fairly valued relative to interest rates,” they are essentially invoking the Fed Model. What they seem to have in mind is that regardless of absolute valuation levels, stocks can be expected to achieve acceptably high returns as long as the S&P 500 forward operating earnings yield is higher than the 10-year Treasury yield.
No, no. That’s not how any of this works, and we have a century of evidence to show it. The deep undervaluation of stocks in 1982 was followed by glorious subsequent returns. The steep overvaluation of stocks in 1998 was followed by one crash, then another, which left S&P 500 total returns negative for more than a decade. I fully expect that current valuations, which are within a breath of 2000 extremes on the most historically reliable measures, will again result in zero or negative returns over the coming 10-12 years. Let’s dig into some data to detail the basis for those expectations.
First, a quick note on historically reliable valuation measures. The value of any security is based on the long-term stream of cash flows that it can be expected to deliver over decades and decades. While corporate earnings are certainly required to generate future cash flows, current earnings (or even forward earnings) are very poor “sufficient statistics” for that stream of cash flows. That’s true not only because of fluctuations in profit margins over the economic cycle, but also due to very long-term competitive forces that exert themselves over multiple economic cycles. From the standpoint of historical reliability, valuation measures that dampen or mute the impact of fluctuating profit margins dramatically outperform measures based on current earnings. Indeed, even the Shiller CAPE, which uses a 10-year average of inflation-adjusted earnings, provides substantially better results when one also adjusts for the embedded profit margin (the denominator of the CAPE / S&P 500 revenues). For a brief primer on the importance of implied profit margins in evaluating market valuations, see Two Point Three Sigmas Above the Norm and Margins, Multiples, and the Iron Law of Valuation.
The chart below shows the ratio of nonfinancial market capitalization to corporate gross value-added, including estimated foreign revenues. I created this measure, MarketCap/GVA, as an apples-to-apples alternative to market capitalization/GDP that matches the object in the numerator with the object in the denominator, and also takes foreign revenues into account. We find this measure to be better correlated with actual subsequent S&P 500 total returns than any other measure we’ve studied in market cycles across history, including price/earnings, price/forward earnings, price/book, price/dividends, enterprise value/EBITDA, the Fed Model, Tobin’s Q, market cap/GDP, the NIPA profits cyclically-adjusted P/E (CAPE), and the Shiller CAPE.
MarketCap/GVA is shown below on an inverted log scale (blue line, left scale), along with the actual subsequent 12-year total return of the S&P 500 (red line, right scale). From current valuations, which now rival the most extreme levels in U.S. history, we estimate likely S&P 500 nominal total returns averaging less than 1% annually over the coming 12-year horizon. As a side note, we tend to prefer a 12-year horizon because that is the point where the autocorrelation profile of valuations drops to zero, and is therefore the horizon over which mean reversion is most reliable (see Valuations Not Only Mean-Revert, They Mean-Invert).
I’m often asked why we don’t “adjust” MarketCap/GVA for the level of interest rates. The answer, as detailed at the beginning of this comment, is that given both the price of a security, and the expected stream of future expected cash flows (or a sufficient statistic for those cash flows), one does not need any information at all about interest rates in order to estimate the expected long-term return on that security. Each point in the chart below shows the actual 12-year subsequent total return of the S&P 500 index, along with two fitted values, one using MarketCap/GVA alone, and the other including the 10-year Treasury bond yield as an additional explanatory variable. That additional variable adds absolutely no incremental explanatory power. Both fitted values have a 93% correlation with actual subsequent 12-year S&P 500 total returns.
We’re now in a position to say something very precise about current valuations and interest rates. Given the present level of interest rates, investors who are willing to accept likely prospective nominal total returns on the S&P 500 of less than 1% over the coming 12-year period are entirely welcome to judge stocks as “fairly valued relative to interest rates.” But understand that this is precisely what that phrase implies here.
Moreover, as one can see from the foregoing charts, there’s not a single market cycle in history, neither in the period before the 1970’s (when interest rates regularly hovered near current levels), nor in recent decades, that has failed to raise prospective 10-12 year S&P 500 total returns to the 8-10% range or beyond over the completion of that cycle. So even if investors are willing to accept 10-12 year total returns of next to nothing, they should also be fully prepared for an interim market loss on the order of 50-60%, because that is the decline that would now be required to restore those 8-10% return expectations, without even breaking below historical valuation norms.
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