Wednesday, October 24, 2018
Uber's Secret Restaurant Empire
Uber’s Secret Restaurant Empire
via: (Bloomberg)
Innovation Under Socialism
I have friends who revel in arriving in a place and immediately investigating the neighborhood’s shortcuts, jogging down paths without a destination, wandering down wayward trails just to see where they lead. For those whose thirst for adventure is complemented by a healthy dose of spatial awareness and cognition, discovery is a thrill. Personally, I cannot relate to any of this. Nothing means less to me than the orientation of the sunrise and sunset. Your cardinal points are wasted on me, for I am a person endowed with no sense of direction whatsoever. Throw in any language other than my native fluency in French and English, along with a flailing Spanish, and my demise is guaranteed. Yet, in recent years, I have felt confident enough to explore places where I had never been before without knowing the local official language. In all this, my saving grace has been my iPhone—the powerful pocket-sized computer whose mapping and translating superpowers have convinced me almost no place is out of my reach. I’ll say it: I am a socialist and I love my iPhone.
This confession is music to the ears of the “capitalism made your iPhone” club. Indeed, proponents of capitalism often brandish rapid innovation as if it were an automatic checkmate on collectivist socioeconomic ideologies. To them, modern technology proves not only that capitalism works, but that it is the best system to stimulate innovation. The subtext of their retort is that a socialist economy could never generate technology this advanced. When coupled with a defense of “thought leaders” as obscenely rich as Steve Jobs, Elon Musk, and Jeff Bezos, their argument also contends that concentrating capital and power in the hands of a few billionaires is a small price to pay for the astronomical leaps in innovation from which we all benefit.
Capitalism’s fan base is not wrong that the iPhone, first released in 2007, is a product of America’s fiercely capitalist economy. I will also concede that without the vision of Steve Jobs, Apple’s late CEO and the 110th richest person in the world at his death, there would be no iPhone as we know it (although it is worth noting that the army of engineers and developers whose labor actually produced the iPhone might have come up with an equally wonderful smartphone). Nonetheless, their perspective is deeply misguided. It manages to both underestimate how much capitalism stifles innovation and misunderstand how much the fundamentals of a socialist economy make it the better system for stimulating innovation.
Innovation describes a four-step process that creates or ameliorates a thing or way of doing things. It begins with invention, the design of a device or process that did not previously exist in this form. The invention is then developed, meaning that it is improved with an eye towards eventual scaling, exchange or introduction on a market, and external use by others. At the production stage, the invention is built or reproduced. Finally, the invention is distributed to a wider audience. In our present economy, a minority of the innovation process happens at the individual level, from lonesome inventors and modern Benjamin Franklins who are able to conjure all sorts of contraptions in their garage. The majority, however, results from research and development (R&D) paid for by private firms, and by the public through government agencies, research institutions, and other recipients of federal and state funding.
The profit motive and exclusive proprietary rights are central to capitalist innovation. By law, private firms must prioritize the interest of their shareholders, which tends to be interchangeable with making as much money as possible. Accordingly, investments in any stage of the innovative process must eventually produce profits. To maximize profit, private firms jealously guard the value of their invention through regulations and restrictive contracts. Statutes and regulations help protect their trade secrets. The U.S. Patent and Trademarks Office routinely grants them utility and design patents that “exclude others from making, using, offering for sale, or selling … or importing the invention” for twenty years after the patent is issued. They enforce licensing agreements that can limit the uses and dissemination of all or part of their inventions. To further frustrate efforts to innovate on the back of their inventions, private firms subject their former employees to non-compete agreements that can severely limit them from using their knowledge and skills on competing projects for a period following their departure. Breaches carry dire consequences like expensive lawsuits, big money judgments, and other enormous hassles.
By contrast, the public sector innovates under an academic model instead of for profit. Certainly, earning tenure or an executive position can be lucrative. In some industries, a revolving door gives individuals the opportunity to innovate in both the private and public sectors throughout their careers. However, innovation in this area is less motivated by extracting profit, and more so by signifiers of prestige, career appointments, recognition, publication, project funding, and prizes.
The capitalist model has its perks. At present, private firms raise massive amounts of capital from the government to fund research, but also from banks, private equity, and wealthy donors. This vast amount of capital can prove lucrative for certain classes of workers. Innovative talent might accumulate wealth through generous compensation packages, which play an important role in attracting and retaining them.
Private firms also boast a terrifying nimbleness that allows them to push projects and respond to change faster than government institutions. For instance, firms can turn over staff quickly if their industry in the absence of unions and norms against firing workers at will, other than the standard prohibitions against discriminatory practices. In other words, without the regulatory and administrative constraints that saddle publicly funded projects, private firms can move through the innovative process faster.
Another advantage of the capitalist model is that profits—potential and actual—provide some measure of how well a company is innovating. Particularly, for the many private firms that sell some of their shares to the public on stock exchanges, prices serve as a form of feedback from investors and the market. Imagine that a publicly-traded retailer announces the imminent launch of an affordable, solar-powered computer that boasts power and speeds to rival Apple’s newest models. In the hours following the press release, the retailer’s stock value triples. A week later, while at a tech conference in the Colorado mountains, the retailer’s CEO lets it slip that the first prototype will actually retail for about four thousand dollars. Unfortunately for the CEO, he was wearing a hot mic. The quote is made public in an article titled “No debt-saddled, environmentally-conscious millennial will shed $4,000 for a computer!” The stock value immediately plummets by two-hundred percent.
The original rise in the retailer’s share value communicates that investors believe in the product as a profitable enterprise, and that they see this type of innovation as a worthwhile pursuit. The drop, on the other hand, suggests that they believe this specific product would be more marketable and therefore more profitable if it were developed for an audience beyond high-end consumers. The turn in the stock value can embolden the retailer—through its management, Board of Directors, or shareholders—to revisit its plan to innovate. It also signals to competitors that their innovation of a similar product could be well received, especially if they can overcome the original product’s weaknesses.
But prioritizing profit is a double-edged sword that can hamper innovation. Owning the proprietary rights allows private firms to block workers—through anti-competitive tools like non-compete agreements, patents, and licenses—who put labor into the innovation process from applying the extensive technical expertise and intimate understanding of the product to improve the innovation substantially. This becomes especially relevant once the workers leave the firm division in which they worked, or leave the firm altogether. Understandably, this lack of control and ownership will cause some workers, however passionate they may be about a project, to be less willing to maximize their contribution to the innovation.
Of course, the so-called nimbleness that allows firms to make drastic changes like mass layoffs is extremely harmful to the workers. This is no fluke. The capitalist economy thrives on a reserve army of labor. Inching closer to full employment makes workers scarcer, which empowers the labor force as a whole to bargain for higher wages and better work conditions. These threaten the firm’s bottom line. So, the capitalist economy is structured to maintain the balance of power towards the owners of capital. Positions that pay well (and less than well) come with the precariousness of at-will employment and disappearing union power. A constant pool of unemployed labor is maintained through layoffs and other tactics like higher interest rates, which the government will compel to help slow growth and thereby hiring. This system harms the potential for innovation, too.
The fear of losing work can dissuade workers from taking risks, experimenting, or speaking up as they identify items that could improve a taken approach—all actions that foster innovation. Meanwhile, thousands of individuals who could be contributing to the innovative process are instead involuntarily un-employed. This model also encourages monopolization, as concentrating market power gives private firms the most control over how much profit they can extract. But squashing competition that could contribute fresh ideas hurts every phase of the innovation process, while giving workers in fewer workplaces space to innovate.
Deferring to profit causes many areas of R&D to go unexplored. Private firms have less reason to invest in innovations likely to be made universally available for free if managers or investors do not see much upside for the firm’s bottom line. In theory, the slack in private research can be picked up by the public sector. In reality, however, decades of austerity measures threaten the public’s ability to underwrite risky and inefficient research. Both the Democratic and Republican parties increasingly adhere to a neoliberal ideology that vilifies “big government,” promotes running government like a business, pretends that government budgets should mirror household budgets or the private firm’s balance sheet, and rams privatization under the guises of so-called public-private partnerships and private subcontractors.
In the United States, public investment in R&D has been trending downward. As documented in a 2014 report from the Information Technology & Innovation Foundation, “[f]rom 2010 to 2013, federal R&D spending fell from $158.8 to $133.2 billion … Between 2003 and 2008, state funding for university research, as a share of GDP, dropped on average by 2 percent. States such as Arizona and Utah saw decreases of 49 percent and 24 percent respectively.” Even if public investment in the least profitable aspect of research suddenly surged, in our current model, the private sector continues to be the primary driver of development, production, and distribution. Where there remains little potential for profit, private firms will be reluctant to advance to the next phases of the innovation process. Public-private projects raise similar concerns. Coordinated efforts can increase private investment by spreading some costs and risk to the public. But to attract private partners in the first place, the public sector has a greater incentive to prioritize R&D projects with more financial upsides.
This is how the quest for profits and tight grip over proprietary rights, both important features of the capitalist model, discourage risk. Innovations are bound for plateauing after a few years, as firms increasingly favor minor aesthetic tweaks and updates over bold ideas while preventing other avenues of innovation from blossoming. At the same time, massive amounts of capital continue to float into the hands of a few. The price of innovating under capitalism is then both decreased innovation and decreased equality. The idea that this approach to innovation must be our best and only option is a delusion.
As I see it, four ingredients are key to kindling innovation. First, there must be problems requiring solutions (an easy one to meet). Second, there must be capital and resources available to invent, develop, produce, and distribute the innovative product. There must also be actual human beings available to participate in every phase of the innovation process. And fourth, at least some of these human beings must be have the creativity and motivation to participate in the innovation process. The question isn’t really whether a socialist economy can provide these four ingredients at all (it can) but rather, whether it can innovate better than a capitalist economy (it can).
This confession is music to the ears of the “capitalism made your iPhone” club. Indeed, proponents of capitalism often brandish rapid innovation as if it were an automatic checkmate on collectivist socioeconomic ideologies. To them, modern technology proves not only that capitalism works, but that it is the best system to stimulate innovation. The subtext of their retort is that a socialist economy could never generate technology this advanced. When coupled with a defense of “thought leaders” as obscenely rich as Steve Jobs, Elon Musk, and Jeff Bezos, their argument also contends that concentrating capital and power in the hands of a few billionaires is a small price to pay for the astronomical leaps in innovation from which we all benefit.
Capitalism’s fan base is not wrong that the iPhone, first released in 2007, is a product of America’s fiercely capitalist economy. I will also concede that without the vision of Steve Jobs, Apple’s late CEO and the 110th richest person in the world at his death, there would be no iPhone as we know it (although it is worth noting that the army of engineers and developers whose labor actually produced the iPhone might have come up with an equally wonderful smartphone). Nonetheless, their perspective is deeply misguided. It manages to both underestimate how much capitalism stifles innovation and misunderstand how much the fundamentals of a socialist economy make it the better system for stimulating innovation.Innovation describes a four-step process that creates or ameliorates a thing or way of doing things. It begins with invention, the design of a device or process that did not previously exist in this form. The invention is then developed, meaning that it is improved with an eye towards eventual scaling, exchange or introduction on a market, and external use by others. At the production stage, the invention is built or reproduced. Finally, the invention is distributed to a wider audience. In our present economy, a minority of the innovation process happens at the individual level, from lonesome inventors and modern Benjamin Franklins who are able to conjure all sorts of contraptions in their garage. The majority, however, results from research and development (R&D) paid for by private firms, and by the public through government agencies, research institutions, and other recipients of federal and state funding.
The profit motive and exclusive proprietary rights are central to capitalist innovation. By law, private firms must prioritize the interest of their shareholders, which tends to be interchangeable with making as much money as possible. Accordingly, investments in any stage of the innovative process must eventually produce profits. To maximize profit, private firms jealously guard the value of their invention through regulations and restrictive contracts. Statutes and regulations help protect their trade secrets. The U.S. Patent and Trademarks Office routinely grants them utility and design patents that “exclude others from making, using, offering for sale, or selling … or importing the invention” for twenty years after the patent is issued. They enforce licensing agreements that can limit the uses and dissemination of all or part of their inventions. To further frustrate efforts to innovate on the back of their inventions, private firms subject their former employees to non-compete agreements that can severely limit them from using their knowledge and skills on competing projects for a period following their departure. Breaches carry dire consequences like expensive lawsuits, big money judgments, and other enormous hassles.
By contrast, the public sector innovates under an academic model instead of for profit. Certainly, earning tenure or an executive position can be lucrative. In some industries, a revolving door gives individuals the opportunity to innovate in both the private and public sectors throughout their careers. However, innovation in this area is less motivated by extracting profit, and more so by signifiers of prestige, career appointments, recognition, publication, project funding, and prizes.
The capitalist model has its perks. At present, private firms raise massive amounts of capital from the government to fund research, but also from banks, private equity, and wealthy donors. This vast amount of capital can prove lucrative for certain classes of workers. Innovative talent might accumulate wealth through generous compensation packages, which play an important role in attracting and retaining them.
Private firms also boast a terrifying nimbleness that allows them to push projects and respond to change faster than government institutions. For instance, firms can turn over staff quickly if their industry in the absence of unions and norms against firing workers at will, other than the standard prohibitions against discriminatory practices. In other words, without the regulatory and administrative constraints that saddle publicly funded projects, private firms can move through the innovative process faster.
Another advantage of the capitalist model is that profits—potential and actual—provide some measure of how well a company is innovating. Particularly, for the many private firms that sell some of their shares to the public on stock exchanges, prices serve as a form of feedback from investors and the market. Imagine that a publicly-traded retailer announces the imminent launch of an affordable, solar-powered computer that boasts power and speeds to rival Apple’s newest models. In the hours following the press release, the retailer’s stock value triples. A week later, while at a tech conference in the Colorado mountains, the retailer’s CEO lets it slip that the first prototype will actually retail for about four thousand dollars. Unfortunately for the CEO, he was wearing a hot mic. The quote is made public in an article titled “No debt-saddled, environmentally-conscious millennial will shed $4,000 for a computer!” The stock value immediately plummets by two-hundred percent.
The original rise in the retailer’s share value communicates that investors believe in the product as a profitable enterprise, and that they see this type of innovation as a worthwhile pursuit. The drop, on the other hand, suggests that they believe this specific product would be more marketable and therefore more profitable if it were developed for an audience beyond high-end consumers. The turn in the stock value can embolden the retailer—through its management, Board of Directors, or shareholders—to revisit its plan to innovate. It also signals to competitors that their innovation of a similar product could be well received, especially if they can overcome the original product’s weaknesses.
But prioritizing profit is a double-edged sword that can hamper innovation. Owning the proprietary rights allows private firms to block workers—through anti-competitive tools like non-compete agreements, patents, and licenses—who put labor into the innovation process from applying the extensive technical expertise and intimate understanding of the product to improve the innovation substantially. This becomes especially relevant once the workers leave the firm division in which they worked, or leave the firm altogether. Understandably, this lack of control and ownership will cause some workers, however passionate they may be about a project, to be less willing to maximize their contribution to the innovation.
Of course, the so-called nimbleness that allows firms to make drastic changes like mass layoffs is extremely harmful to the workers. This is no fluke. The capitalist economy thrives on a reserve army of labor. Inching closer to full employment makes workers scarcer, which empowers the labor force as a whole to bargain for higher wages and better work conditions. These threaten the firm’s bottom line. So, the capitalist economy is structured to maintain the balance of power towards the owners of capital. Positions that pay well (and less than well) come with the precariousness of at-will employment and disappearing union power. A constant pool of unemployed labor is maintained through layoffs and other tactics like higher interest rates, which the government will compel to help slow growth and thereby hiring. This system harms the potential for innovation, too.
The fear of losing work can dissuade workers from taking risks, experimenting, or speaking up as they identify items that could improve a taken approach—all actions that foster innovation. Meanwhile, thousands of individuals who could be contributing to the innovative process are instead involuntarily un-employed. This model also encourages monopolization, as concentrating market power gives private firms the most control over how much profit they can extract. But squashing competition that could contribute fresh ideas hurts every phase of the innovation process, while giving workers in fewer workplaces space to innovate.
Deferring to profit causes many areas of R&D to go unexplored. Private firms have less reason to invest in innovations likely to be made universally available for free if managers or investors do not see much upside for the firm’s bottom line. In theory, the slack in private research can be picked up by the public sector. In reality, however, decades of austerity measures threaten the public’s ability to underwrite risky and inefficient research. Both the Democratic and Republican parties increasingly adhere to a neoliberal ideology that vilifies “big government,” promotes running government like a business, pretends that government budgets should mirror household budgets or the private firm’s balance sheet, and rams privatization under the guises of so-called public-private partnerships and private subcontractors.
In the United States, public investment in R&D has been trending downward. As documented in a 2014 report from the Information Technology & Innovation Foundation, “[f]rom 2010 to 2013, federal R&D spending fell from $158.8 to $133.2 billion … Between 2003 and 2008, state funding for university research, as a share of GDP, dropped on average by 2 percent. States such as Arizona and Utah saw decreases of 49 percent and 24 percent respectively.” Even if public investment in the least profitable aspect of research suddenly surged, in our current model, the private sector continues to be the primary driver of development, production, and distribution. Where there remains little potential for profit, private firms will be reluctant to advance to the next phases of the innovation process. Public-private projects raise similar concerns. Coordinated efforts can increase private investment by spreading some costs and risk to the public. But to attract private partners in the first place, the public sector has a greater incentive to prioritize R&D projects with more financial upsides.
This is how the quest for profits and tight grip over proprietary rights, both important features of the capitalist model, discourage risk. Innovations are bound for plateauing after a few years, as firms increasingly favor minor aesthetic tweaks and updates over bold ideas while preventing other avenues of innovation from blossoming. At the same time, massive amounts of capital continue to float into the hands of a few. The price of innovating under capitalism is then both decreased innovation and decreased equality. The idea that this approach to innovation must be our best and only option is a delusion.
As I see it, four ingredients are key to kindling innovation. First, there must be problems requiring solutions (an easy one to meet). Second, there must be capital and resources available to invent, develop, produce, and distribute the innovative product. There must also be actual human beings available to participate in every phase of the innovation process. And fourth, at least some of these human beings must be have the creativity and motivation to participate in the innovation process. The question isn’t really whether a socialist economy can provide these four ingredients at all (it can) but rather, whether it can innovate better than a capitalist economy (it can).
by Vanessa Bee, Current Affairs | Read more:
Image: uncredited
How Fentanyl Took over Pennsylvania
The first time Nicki Saccomanno used fentanyl, she overdosed.
It was 2016, and the 38-year-old from Kensington hadn't known that the drugs she'd bought had been cut with the deadly synthetic opioid. She just remembers injecting herself with a bag, and then waking up surrounded by paramedics frantically trying to revive her.
Saccomanno, who has been addicted to heroin for 10 years, was shaken. But, before long, there was barely anything else to take but fentanyl to stave off the intense pain of withdrawal. Every corner, it seemed, was selling it. Saccomanno and other longtime heroin users found themselves forced to adapt.
For younger users, like the twentysomethings who live in the camps off Lehigh Avenue, fentanyl is all they've ever known. Like others before them, many graduated from using legal painkillers to illicit opioids in the last few years — except when they turned to the streets to feed their addictions, they were buying a drug much more powerful than their older counterparts had started on.
Young and old are paying for it with their lives. Fentanyl was present in 84 percent of Philadelphia's 1,217 fatal overdoses last year, and in 67 percent of the state's 5,456 overdose deaths in 2017, according to a wide-ranging report on the state of the opioid crisis in Pennsylvania released this month by the U.S. Drug Enforcement Administration.
The report shows how, over the last five years, the opioid crisis ballooned into an overdose crisis — how fentanyl contaminated the state's heroin supply, overwhelmed county morgues with overdose victims, and shocked advocates, people in addiction, and law-enforcement officials alike with its sudden ubiquity.
But to all of them, the explosion of fentanyl makes a kind of terrible sense: Fentanyl is significantly cheaper to produce than heroin. It draws a significantly larger profit. It's significantly more powerful and more addictive than heroin, even Kensington's supply, which has long been known as the cheapest and purest in the country.
These days, Saccomanno uses a combination of heroin and fentanyl, even though she hates it.
"You get sicker," she said. "You need to get more fentanyl more often. It makes being able to get well and stay well even harder. But you can't find anything else."
‘A dramatic shift’
Pure economics.
That's what law-enforcement officials say is driving the rise of fentanyl in Pennsylvania.
It has legitimate use as a drug to treat serious pain, like that in cancer patients, and has been on the illicit drug market for at least 15 years, said Pat Trainor, spokesman for the Philadelphia branch of the DEA. But it mostly turned up in unusual overdose rashes and would disappear from the scene again.
"Two or three years ago, we really saw a pretty dramatic shift," Trainor said. "It was initially seen as a cut or an adulterant in low-quality heroin, and it's really shifted now that it's pretty much largely — but not completely — replaced most of the heroin supply in Philadelphia."
In Philadelphia, he said, a kilogram of heroin, or 2.2 pounds, sells for $50,000 to $80,000, and a drug trafficker can make about $500,000 in profit off it. A kilogram of fentanyl sells for $53,000 to $55,000, is 50 to 100 times stronger, and can turn a profit of up to $5 million.
"For a lot of drug-trafficking organizations, it's that simple," said Trainor.
Most of the fentanyl that ends up in Pennsylvania is manufactured in China and smuggled through Mexican drug-trafficking organizations into the United States along the same routes used to traffic heroin, according to the DEA report.
People have also tried to make it closer to home, however. Unlike heroin, which is derived from opium poppies, fentanyl and its analogues can be produced in a lab. Earlier this year, DEA agents raided what they thought was a methamphetamine lab in a hotel room in western Pennsylvania. To their surprise, it turned out that the room's occupant had been trying to make fentanyl.
Seeking out fentanyl
Earlier this year, researchers from the Philadelphia Department of Public Health, conducting a survey of opioid users at Kensington's needle exchange, posed a question to 400 people in active addiction.
They knew that most of the city's heroin supply had already been tainted with fentanyl, and wanted to know how people in addiction were reacting. And so they asked drug users what they would do if they knew that fentanyl was in the drugs they were buying.
The answers they received shocked them. Of the drug users the Health Department surveyed, 45 percent told researchers that they weren't trying to avoid fentanyl at all — that they would be more likely to use a bag of fentanyl.
"There was more acceptance — it had become part of the community in a way it hadn't been initially. It was actually something people were going for because it was an enhanced high," said Kendra Viner, manager of the department's Opioid Surveillance Program. "And people between 25 and 34 years old were significantly more likely to say they would seek out fentanyl."
by Aubrey Whelan, Philidelphia Inquirer | Read more:
Image: John Duchneskie
It was 2016, and the 38-year-old from Kensington hadn't known that the drugs she'd bought had been cut with the deadly synthetic opioid. She just remembers injecting herself with a bag, and then waking up surrounded by paramedics frantically trying to revive her.
Saccomanno, who has been addicted to heroin for 10 years, was shaken. But, before long, there was barely anything else to take but fentanyl to stave off the intense pain of withdrawal. Every corner, it seemed, was selling it. Saccomanno and other longtime heroin users found themselves forced to adapt.
For younger users, like the twentysomethings who live in the camps off Lehigh Avenue, fentanyl is all they've ever known. Like others before them, many graduated from using legal painkillers to illicit opioids in the last few years — except when they turned to the streets to feed their addictions, they were buying a drug much more powerful than their older counterparts had started on.Young and old are paying for it with their lives. Fentanyl was present in 84 percent of Philadelphia's 1,217 fatal overdoses last year, and in 67 percent of the state's 5,456 overdose deaths in 2017, according to a wide-ranging report on the state of the opioid crisis in Pennsylvania released this month by the U.S. Drug Enforcement Administration.
The report shows how, over the last five years, the opioid crisis ballooned into an overdose crisis — how fentanyl contaminated the state's heroin supply, overwhelmed county morgues with overdose victims, and shocked advocates, people in addiction, and law-enforcement officials alike with its sudden ubiquity.
But to all of them, the explosion of fentanyl makes a kind of terrible sense: Fentanyl is significantly cheaper to produce than heroin. It draws a significantly larger profit. It's significantly more powerful and more addictive than heroin, even Kensington's supply, which has long been known as the cheapest and purest in the country.
These days, Saccomanno uses a combination of heroin and fentanyl, even though she hates it.
"You get sicker," she said. "You need to get more fentanyl more often. It makes being able to get well and stay well even harder. But you can't find anything else."
‘A dramatic shift’
Pure economics.
That's what law-enforcement officials say is driving the rise of fentanyl in Pennsylvania.
It has legitimate use as a drug to treat serious pain, like that in cancer patients, and has been on the illicit drug market for at least 15 years, said Pat Trainor, spokesman for the Philadelphia branch of the DEA. But it mostly turned up in unusual overdose rashes and would disappear from the scene again.
"Two or three years ago, we really saw a pretty dramatic shift," Trainor said. "It was initially seen as a cut or an adulterant in low-quality heroin, and it's really shifted now that it's pretty much largely — but not completely — replaced most of the heroin supply in Philadelphia."
In Philadelphia, he said, a kilogram of heroin, or 2.2 pounds, sells for $50,000 to $80,000, and a drug trafficker can make about $500,000 in profit off it. A kilogram of fentanyl sells for $53,000 to $55,000, is 50 to 100 times stronger, and can turn a profit of up to $5 million.
"For a lot of drug-trafficking organizations, it's that simple," said Trainor.
Most of the fentanyl that ends up in Pennsylvania is manufactured in China and smuggled through Mexican drug-trafficking organizations into the United States along the same routes used to traffic heroin, according to the DEA report.
People have also tried to make it closer to home, however. Unlike heroin, which is derived from opium poppies, fentanyl and its analogues can be produced in a lab. Earlier this year, DEA agents raided what they thought was a methamphetamine lab in a hotel room in western Pennsylvania. To their surprise, it turned out that the room's occupant had been trying to make fentanyl.
Seeking out fentanyl
Earlier this year, researchers from the Philadelphia Department of Public Health, conducting a survey of opioid users at Kensington's needle exchange, posed a question to 400 people in active addiction.
They knew that most of the city's heroin supply had already been tainted with fentanyl, and wanted to know how people in addiction were reacting. And so they asked drug users what they would do if they knew that fentanyl was in the drugs they were buying.
The answers they received shocked them. Of the drug users the Health Department surveyed, 45 percent told researchers that they weren't trying to avoid fentanyl at all — that they would be more likely to use a bag of fentanyl.
"There was more acceptance — it had become part of the community in a way it hadn't been initially. It was actually something people were going for because it was an enhanced high," said Kendra Viner, manager of the department's Opioid Surveillance Program. "And people between 25 and 34 years old were significantly more likely to say they would seek out fentanyl."
by Aubrey Whelan, Philidelphia Inquirer | Read more:
Image: John Duchneskie
Eight Reasons a Financial Crisis is Coming
It's been about 10 years since the last financial crisis. FocusEconomics wants to know if another one is due.
The short answer is yes.
In the last 10 years not a single fundamental economic flaw has been fixed in the US, Europe, Japan, or China.
The Fed was behind the curve for years contributing to the bubble. Massive rounds of QE in the US, EU, and Japan created extreme equity and junk bond bubbles.
Trump's tariffs are ill-founded as is Congressional spending wasted on war.
Potential Catalysts
- Junk Bond Bubble Bursting
- Equity Bubble Bursting
- Italy
- Tariffs
- Brexit
- Pensions
- Housing
- China
by Mike "Mish" Shedlock, MishTalk | Read more:
Image: uncredited
[ed. See also: Smoot–Hawley Tariff Act (Prediction: you'll be hearing a lot about this in the coming few months). And: The Music Fades Out (John P. Hussman, Ph.D.)]
[ed. See also: Smoot–Hawley Tariff Act (Prediction: you'll be hearing a lot about this in the coming few months). And: The Music Fades Out (John P. Hussman, Ph.D.)]
Tuesday, October 23, 2018
Gish Gallop
The Gish Gallop should not be confused with the argumentum ad nauseam, in which the same point is repeated many times. In a Gish Gallop, many bullshit points are given all at once.
Although it takes a trivial amount of effort on the Galloper's part to make each individual point before skipping on to the next (especially if they cite from a pre-concocted list of Gallop arguments), a refutation of the same Gallop may likely take much longer and require significantly more effort (per the basic principle that it's always easier to make a mess than to clean it back up again).
The tedium inherent in untangling a Gish Gallop typically allows for very little "creative license" or vivid rhetoric (in deliberate contrast to the exciting point-dashing central to the Galloping), which in turn risks boring the audience or readers, further loosening the refuter's grip on the crowd.
This is especially true in that the Galloper need only win a single one out of all his component arguments in order to be able to cast doubt on the entire refutation attempt. For this reason, the refuter must achieve a 100% success ratio (with all the yawn-inducing elaboration that goes with such precision). Thus, Gish Galloping is frequently employed (with particularly devastating results) in timed debates. The same is true for any time- or character-limited debate medium, including Twitter and newspaper editorials.
Examples of Gish Gallops are commonly found online, in crank "list" articles that claim to show "X hundred reasons for (or against) Y". At the highest levels of verbosity, with dozens upon dozens or even hundreds of minor arguments interlocking, each individual "reason" is — upon closer inspection — likely to consist of a few sentences at best.
Gish Gallops are almost always performed with numerous other logical fallacies baked in. The myriad component arguments constituting the Gallop may typically intersperse a few perfectly uncontroversial claims — the basic validity of which are intended to lend undue credence to the Gallop at large — with a devious hodgepodge of half-truths, outright lies, red herrings and straw men — which, if not rebutted as the fallacies they are, pile up into egregious problems for the refuter.
There may also be escape hatches or "gotcha" arguments present in the Gallop, which are — like the Gish Gallop itself — specifically designed to be brief to pose, yet take a long time to unravel and refute.
However, Gish Gallops aren't impossible to defeat — just tricky (not to say near-impossible for the unprepared). Upon closer inspection, many of the allegedly stand-alone component arguments may turn out to be nothing but thinly-veiled repetitions or simple rephrasings of the same basic points — which only makes the list taller, not more correct (hence; "proof by verbosity"). This essential flaw in the Gallop means that a skilled rebuttal of one component argument may in fact be a rebuttal to many.
“”If I were wrong, then one would have been enough!The Gish Gallop (also known as proof by verbosity) is the fallacious debate tactic of drowning your opponent in a flood of individually-weak arguments in order to prevent rebuttal of the whole argument collection without great effort. The Gish Gallop is a belt-fed version of the on the spot fallacy, as it's unreasonable for anyone to have a well-composed answer immediately available to every argument present in the Gallop. The Gish Gallop is named after creationist Duane Gish, who often abused it.
—Albert Einstein, commenting on the book 100 Authors Against Einstein
Although it takes a trivial amount of effort on the Galloper's part to make each individual point before skipping on to the next (especially if they cite from a pre-concocted list of Gallop arguments), a refutation of the same Gallop may likely take much longer and require significantly more effort (per the basic principle that it's always easier to make a mess than to clean it back up again).
The tedium inherent in untangling a Gish Gallop typically allows for very little "creative license" or vivid rhetoric (in deliberate contrast to the exciting point-dashing central to the Galloping), which in turn risks boring the audience or readers, further loosening the refuter's grip on the crowd.
This is especially true in that the Galloper need only win a single one out of all his component arguments in order to be able to cast doubt on the entire refutation attempt. For this reason, the refuter must achieve a 100% success ratio (with all the yawn-inducing elaboration that goes with such precision). Thus, Gish Galloping is frequently employed (with particularly devastating results) in timed debates. The same is true for any time- or character-limited debate medium, including Twitter and newspaper editorials.
Examples of Gish Gallops are commonly found online, in crank "list" articles that claim to show "X hundred reasons for (or against) Y". At the highest levels of verbosity, with dozens upon dozens or even hundreds of minor arguments interlocking, each individual "reason" is — upon closer inspection — likely to consist of a few sentences at best.
Gish Gallops are almost always performed with numerous other logical fallacies baked in. The myriad component arguments constituting the Gallop may typically intersperse a few perfectly uncontroversial claims — the basic validity of which are intended to lend undue credence to the Gallop at large — with a devious hodgepodge of half-truths, outright lies, red herrings and straw men — which, if not rebutted as the fallacies they are, pile up into egregious problems for the refuter.
There may also be escape hatches or "gotcha" arguments present in the Gallop, which are — like the Gish Gallop itself — specifically designed to be brief to pose, yet take a long time to unravel and refute.
However, Gish Gallops aren't impossible to defeat — just tricky (not to say near-impossible for the unprepared). Upon closer inspection, many of the allegedly stand-alone component arguments may turn out to be nothing but thinly-veiled repetitions or simple rephrasings of the same basic points — which only makes the list taller, not more correct (hence; "proof by verbosity"). This essential flaw in the Gallop means that a skilled rebuttal of one component argument may in fact be a rebuttal to many.
by Rational Wiki | Read more:
Not the Man They Think He Is at Home
There’s an incident from early on in Elton John’s career that reminds us how peculiar it has been. The year was 1970. John’s first album, Empty Sky, had been released in the U.K. but had gone nowhere. His label, supportive of him in fits and starts, eventually laid out for a decent producer and some lush orchestrations for his second album, which was self-titled and came out that spring. Today, we know Elton John as a lasting and flamboyant star; put that aside for right now and remember that back then, no one was thinking in those terms about the plainly talented but pudgy and somewhat morose 22-year-old they were working with at the time. The first single from Elton John, “Border Song,” was a flop. The label’s next move, for some reason, was to dig out a non-album track and release it as the second single, hoping to garner more attention that way. That release, “Rock and Roll Madonna,” went nowhere, either. The label went back to the album, poked around some more, and made a third try, with “Take Me to the Pilot.”
It wasn’t a hit.
By this time, other things were going on in John’s career. The shy boy behind the scenes found a raucous personality on stage; he and a small band had flown to America and had wowed the industry with a cacophonous six-night stand at the famous Troubadour nightclub in L.A. And by this time, John had finished a third album, Tumbleweed Connection, which was released that October.
That’s when something interesting happened. Late in the year, some radio DJs checked out the B-side of the “Pilot” single, which was a throwaway track from the Elton John album. They began to play it. This was not typical at the time. The B-side was a forlorn-sounding piano-based track.
The first words of the song went, “It’s a little bit funny / This feeling inside …”
A few months later, in early 1971, nearly a year after the release of the album, the B-side was a top-ten hit both in the U.S. and in the U.K. The track, “Your Song,” is a standard today, nearly 50 years on; it is one of the most played radio singles of all time, and has been covered by scores of artists, perhaps hundreds. But isn’t it weird that no one — label execs, marketers, or journos — thought it was a single back then, or even notable? For some reason, even experienced music industry people at the time couldn’t “hear” the song.
In some fundamental way, “Your Song” was unusual. The melody is sturdy, of course, and the chorus is plainly as lovely as can be, but there was something about its formal presentation — coursing strings, a prominent, tasteful bass, a subtle but insistent set of piano fills — that wasn’t registering. Maybe it just wasn’t cool enough. As for the lyrics, their premise — “I’m writing a song about writing a song for you” — has some remote Cole Porter overtones, I guess, but there’s nothing droll or arch about it; indeed, if anything, it suffers from over-sincerity. It was the end of the psychedelic era, remember, and the more somber singer-songwriters had their roots in folk and blues. “Your Song” is arguably a traditional pop ballad, but it’s conceived and performed with a somewhat shambling but definite rock-and-roll authenticity. The writing is elegant and prosaic at the same time; are the lyrics conversational and halting, or exquisitely crafted to sound that way? I think, in 1970, the people first confronted by the song couldn’t process what is, for us, today, its patent brilliance, because they hadn’t heard a song like it before. It’s familiar to us today, because we live in a world that Elton John has made his own.
Indeed, to many, John is a bit too obvious, now: the teddy-bear pop-rock star, the burbling sidekick of royalty, the aging, bewigged gay icon. But that cozy mien has always hidden something uncompromising and a bit strange underneath. He is a dubious figure set against the high intellectualism of Joni Mitchell, say, or the assuredly more dangerous work of Lou Reed, or that of Bowie, and on and on. But in his own way, originally, and then definitely as his acclaim grew, he found his own distinctive passage through the apocalypse of the post-Beatles pop landscape — and offered us ever more ambitious pop constructions, culminating in some sort of weird masterpiece, Goodbye Yellow Brick Road, and then an odd autobiographical song cycle, Captain Fantastic and the Brown Dirt Cowboy, in which he looked back to examine his life and the years of insecurity preceding his stardom.
Those were his artistic achievements. His commercials ones were even bigger. Bowie looms large in rock history now, but in the U.S., in the early ’70s, he was nothing close to a star. John famously took sartorial flamboyance to almost transvestite levels but was treated as a curiosity, and never registered as transgressive. He had seven No. 1 albums in a row in the U.S. These albums, in a three-and-a-half-year period, spent a total of 39 weeks at No. 1, a bit less than a quarter of that overall span. By Billboard’s rankings, he is by far the biggest album act of the 1970s (despite the fact that he didn’t have a top-ten album after 1976). He is also Billboard’s biggest singles act of the decade, and the magazine’s third-biggest singles artist of all time, with nine No. 1 singles and 27 top-ten hits, which is a lot. In all, he’s sold more than 150 million albums and 100 million singles.
Fifty years into his career, John has embarked on what is supposed to be his absolutely final Farewell-Good-bye-I’m-Retiring-I-Really-Mean-It Tour. The first time he announced his final show, for those keeping score, was in 1976. “Who wants to be a 45-year-old entertainer in Las Vegas like Elvis?” he said at the time. (He played his 449th and 450th Las Vegas shows, supposedly his final ones, this May, at the age of 71.) The new tour began in Allentown and Philadelphia and will come to Madison Square Garden on October 18 and 19, and then again on November 8 and 9 — after which the Farewell Yellow Brick Road tour has shows scheduled through 2019.
But for the record, it should be said that if there is one thing John is not, it’s obvious. He doesn’t write his own lyrics; he has spoken to us, if he has at all, through the words of other lyricists, most prominently Bernie Taupin, with whom he formed a songwriting partnership in 1967 that lasted through the entirety of his classic years. Over the decades, the themes and subjects of Taupin’s words have benignly reflected onto the singer’s persona, even though we have no reason to think they accurately represent it. And John’s songwriting process make their significance even more obscure. The pair didn’t (and still don’t) work together; instead, John walks off with Taupin’s scrawls and, with uncanny speed and focus, makes the songs he wants out of them. (Band members and producers over the years have testified that the composition of some of his most famous works was accomplished in 15 or 20 minutes.) In effect, he has always made Taupin’s words mean what he wants them to mean, giving himself the room to identify with or distance himself from them at will. In other words, if you think you know Elton John through his songs — you don’t.
It wasn’t a hit.
By this time, other things were going on in John’s career. The shy boy behind the scenes found a raucous personality on stage; he and a small band had flown to America and had wowed the industry with a cacophonous six-night stand at the famous Troubadour nightclub in L.A. And by this time, John had finished a third album, Tumbleweed Connection, which was released that October.
That’s when something interesting happened. Late in the year, some radio DJs checked out the B-side of the “Pilot” single, which was a throwaway track from the Elton John album. They began to play it. This was not typical at the time. The B-side was a forlorn-sounding piano-based track.The first words of the song went, “It’s a little bit funny / This feeling inside …”
A few months later, in early 1971, nearly a year after the release of the album, the B-side was a top-ten hit both in the U.S. and in the U.K. The track, “Your Song,” is a standard today, nearly 50 years on; it is one of the most played radio singles of all time, and has been covered by scores of artists, perhaps hundreds. But isn’t it weird that no one — label execs, marketers, or journos — thought it was a single back then, or even notable? For some reason, even experienced music industry people at the time couldn’t “hear” the song.
In some fundamental way, “Your Song” was unusual. The melody is sturdy, of course, and the chorus is plainly as lovely as can be, but there was something about its formal presentation — coursing strings, a prominent, tasteful bass, a subtle but insistent set of piano fills — that wasn’t registering. Maybe it just wasn’t cool enough. As for the lyrics, their premise — “I’m writing a song about writing a song for you” — has some remote Cole Porter overtones, I guess, but there’s nothing droll or arch about it; indeed, if anything, it suffers from over-sincerity. It was the end of the psychedelic era, remember, and the more somber singer-songwriters had their roots in folk and blues. “Your Song” is arguably a traditional pop ballad, but it’s conceived and performed with a somewhat shambling but definite rock-and-roll authenticity. The writing is elegant and prosaic at the same time; are the lyrics conversational and halting, or exquisitely crafted to sound that way? I think, in 1970, the people first confronted by the song couldn’t process what is, for us, today, its patent brilliance, because they hadn’t heard a song like it before. It’s familiar to us today, because we live in a world that Elton John has made his own.
Indeed, to many, John is a bit too obvious, now: the teddy-bear pop-rock star, the burbling sidekick of royalty, the aging, bewigged gay icon. But that cozy mien has always hidden something uncompromising and a bit strange underneath. He is a dubious figure set against the high intellectualism of Joni Mitchell, say, or the assuredly more dangerous work of Lou Reed, or that of Bowie, and on and on. But in his own way, originally, and then definitely as his acclaim grew, he found his own distinctive passage through the apocalypse of the post-Beatles pop landscape — and offered us ever more ambitious pop constructions, culminating in some sort of weird masterpiece, Goodbye Yellow Brick Road, and then an odd autobiographical song cycle, Captain Fantastic and the Brown Dirt Cowboy, in which he looked back to examine his life and the years of insecurity preceding his stardom.
Those were his artistic achievements. His commercials ones were even bigger. Bowie looms large in rock history now, but in the U.S., in the early ’70s, he was nothing close to a star. John famously took sartorial flamboyance to almost transvestite levels but was treated as a curiosity, and never registered as transgressive. He had seven No. 1 albums in a row in the U.S. These albums, in a three-and-a-half-year period, spent a total of 39 weeks at No. 1, a bit less than a quarter of that overall span. By Billboard’s rankings, he is by far the biggest album act of the 1970s (despite the fact that he didn’t have a top-ten album after 1976). He is also Billboard’s biggest singles act of the decade, and the magazine’s third-biggest singles artist of all time, with nine No. 1 singles and 27 top-ten hits, which is a lot. In all, he’s sold more than 150 million albums and 100 million singles.
Fifty years into his career, John has embarked on what is supposed to be his absolutely final Farewell-Good-bye-I’m-Retiring-I-Really-Mean-It Tour. The first time he announced his final show, for those keeping score, was in 1976. “Who wants to be a 45-year-old entertainer in Las Vegas like Elvis?” he said at the time. (He played his 449th and 450th Las Vegas shows, supposedly his final ones, this May, at the age of 71.) The new tour began in Allentown and Philadelphia and will come to Madison Square Garden on October 18 and 19, and then again on November 8 and 9 — after which the Farewell Yellow Brick Road tour has shows scheduled through 2019.
But for the record, it should be said that if there is one thing John is not, it’s obvious. He doesn’t write his own lyrics; he has spoken to us, if he has at all, through the words of other lyricists, most prominently Bernie Taupin, with whom he formed a songwriting partnership in 1967 that lasted through the entirety of his classic years. Over the decades, the themes and subjects of Taupin’s words have benignly reflected onto the singer’s persona, even though we have no reason to think they accurately represent it. And John’s songwriting process make their significance even more obscure. The pair didn’t (and still don’t) work together; instead, John walks off with Taupin’s scrawls and, with uncanny speed and focus, makes the songs he wants out of them. (Band members and producers over the years have testified that the composition of some of his most famous works was accomplished in 15 or 20 minutes.) In effect, he has always made Taupin’s words mean what he wants them to mean, giving himself the room to identify with or distance himself from them at will. In other words, if you think you know Elton John through his songs — you don’t.
by Bill Wyman, Vulture | Read more:
Image: Jack Robinson/Condé Nast via Getty Images
First Twitter Gave Me Power. Then I Felt Hopeless.
From October 2015 to the present day, I have lived approximately 168 different lives on the internet. I was Eve the Nobody before I was Eve the Sex Writer before I was Eve the Comedian before I was Eve the Depressed Girl before I was Eve the Drunk before I was Eve the Feminist before I was Eve the Tech Blogger before I was Eve the Democratic Socialist before I was Eve the Hater before I was Eve the Teetotaler before I was Eve the Professional Politics Writer before I was Eve the Sword Girl before I became whichever iteration of myself I am today.
Translating the essence of who you are into a digestible product is a strange way to live, especially when you’re a young adult and your sense of self is in flux. It was never my main intention to peddle my personality for a living, but in the era of social media, the personal brand reigns supreme; self-commodification was an inevitable outcome for a young writer like myself—extremely online, comfortable with confessing her most deranged impulses to a large audience, and looking for affirmation and love. Translating the ups and downs of my existence into my personal brand was a way of life for me. The more I viewed my life as something to be consumed by other people, capitalizing on all the pain and pleasure and resentment and fear that come along with being alive, the more compulsively I posted. My way of being online was always unsustainable, and each time I couldn’t sustain it any longer, I shed my skin, and evolved into a slightly more adept version of myself.
Let’s go back to October 2015: My life was about to change forever because I was about to post my first viral tweet. I had graduated college a year before, and even though I knew that I wanted to write for a living, I was unsure exactly how to realize that ambition. After a year of aimless drifting, I ran into a friend at a bar who was working as an editor at a small web publication, and I started freelancing personal essays and silly blog posts while working part-time at a coffee shop. Every now and then, I’d tweet a mundane observation or a link to an article, but I didn’t have enough followers to get in deep. (...)
Fast-forward to 2016: I am on Twitter for hours and hours and hours every day, so it’s not entirely surprising that I am also lonely and depressed. I am tweeting through it all and I am handsomely rewarded for my social media impulses: My follower count balloons to 10,000 and it just keeps getting bigger. To me, that means I am special and I am doing something right. I’ve successfully capitalized on the internet notoriety I received from my first viral tweet to realize my career ambitions—I am freelance writing for whoever will have me and my Twitter brand is key to my hustle. I date guys who don’t like me back and then get paid by publications like Cosmopolitan and New York Magazine to spill the details of my disastrous love life, among other things. I feel like a legitimate writer, and I am reveling in it, and yet I still feel empty. Even though I panic about the toll my social media compulsion is taking on me, I tweet and I tweet and I tweet some more. I do it because I tell myself I wouldn’t be where I am—eking out a living off writing—if it wasn’t for all my tweeting. It’s not like I get the majority of my work through any connection or secret “in.” Instead, it’s because people see me on Twitter. I feel indebted to the social platform, and unlike the thrill of my first viral tweet, it feels like a burden. I don’t want to admit it, but I am scared.
Now it’s March 2017: I have just started a new job covering politics for VICE. I don’t think I would’ve have gotten this job without my Twitter; after all, I now have 40,000 followers, and those are the people who click on my articles, and that’s good for business. It’s what makes me a valuable asset. As I pivot from oversharing my personal plight to thoughtlessly spewing out half-formed ideas about our current political hell, my following surges. I’ll write an aggressive political take, and it will make some people mad and that will lead to more followers, and so it goes.
As 2018 swings into full gear, my life neatens up and I can no longer ignore the cracks in my personal brand. I have a full-time job and I am in a serious long-term relationship with an amazing man whose love and companionship nourishes me in ways the affirmation of thousands of strangers never could. I hate Twitter. I have 79,000 followers and I still fucking hate it. I also still use it constantly. My timeline is a stream of infinite negativity, of horrific news, and everybody yelling at one another, and maybe I’m just getting older, but suddenly I am exhausted by all the cyber-rage. Every day online feels like Gamergate. The internet is angrier and more savage than it’s ever been, and it’s not safe to use Twitter as loosely as I once did. For the first time in years, my impulse to inform the world of all my inane passing thoughts and feelings has fizzled out. Moreover, I am gripped with fear that an amorphous Twitter beast will punish me for all the crazy things I’ve publicly shared over the years, that all my meanest and most callous moments will come back to bite me in the ass.
Translating the essence of who you are into a digestible product is a strange way to live, especially when you’re a young adult and your sense of self is in flux. It was never my main intention to peddle my personality for a living, but in the era of social media, the personal brand reigns supreme; self-commodification was an inevitable outcome for a young writer like myself—extremely online, comfortable with confessing her most deranged impulses to a large audience, and looking for affirmation and love. Translating the ups and downs of my existence into my personal brand was a way of life for me. The more I viewed my life as something to be consumed by other people, capitalizing on all the pain and pleasure and resentment and fear that come along with being alive, the more compulsively I posted. My way of being online was always unsustainable, and each time I couldn’t sustain it any longer, I shed my skin, and evolved into a slightly more adept version of myself.
Let’s go back to October 2015: My life was about to change forever because I was about to post my first viral tweet. I had graduated college a year before, and even though I knew that I wanted to write for a living, I was unsure exactly how to realize that ambition. After a year of aimless drifting, I ran into a friend at a bar who was working as an editor at a small web publication, and I started freelancing personal essays and silly blog posts while working part-time at a coffee shop. Every now and then, I’d tweet a mundane observation or a link to an article, but I didn’t have enough followers to get in deep. (...)Fast-forward to 2016: I am on Twitter for hours and hours and hours every day, so it’s not entirely surprising that I am also lonely and depressed. I am tweeting through it all and I am handsomely rewarded for my social media impulses: My follower count balloons to 10,000 and it just keeps getting bigger. To me, that means I am special and I am doing something right. I’ve successfully capitalized on the internet notoriety I received from my first viral tweet to realize my career ambitions—I am freelance writing for whoever will have me and my Twitter brand is key to my hustle. I date guys who don’t like me back and then get paid by publications like Cosmopolitan and New York Magazine to spill the details of my disastrous love life, among other things. I feel like a legitimate writer, and I am reveling in it, and yet I still feel empty. Even though I panic about the toll my social media compulsion is taking on me, I tweet and I tweet and I tweet some more. I do it because I tell myself I wouldn’t be where I am—eking out a living off writing—if it wasn’t for all my tweeting. It’s not like I get the majority of my work through any connection or secret “in.” Instead, it’s because people see me on Twitter. I feel indebted to the social platform, and unlike the thrill of my first viral tweet, it feels like a burden. I don’t want to admit it, but I am scared.
Now it’s March 2017: I have just started a new job covering politics for VICE. I don’t think I would’ve have gotten this job without my Twitter; after all, I now have 40,000 followers, and those are the people who click on my articles, and that’s good for business. It’s what makes me a valuable asset. As I pivot from oversharing my personal plight to thoughtlessly spewing out half-formed ideas about our current political hell, my following surges. I’ll write an aggressive political take, and it will make some people mad and that will lead to more followers, and so it goes.
As 2018 swings into full gear, my life neatens up and I can no longer ignore the cracks in my personal brand. I have a full-time job and I am in a serious long-term relationship with an amazing man whose love and companionship nourishes me in ways the affirmation of thousands of strangers never could. I hate Twitter. I have 79,000 followers and I still fucking hate it. I also still use it constantly. My timeline is a stream of infinite negativity, of horrific news, and everybody yelling at one another, and maybe I’m just getting older, but suddenly I am exhausted by all the cyber-rage. Every day online feels like Gamergate. The internet is angrier and more savage than it’s ever been, and it’s not safe to use Twitter as loosely as I once did. For the first time in years, my impulse to inform the world of all my inane passing thoughts and feelings has fizzled out. Moreover, I am gripped with fear that an amorphous Twitter beast will punish me for all the crazy things I’ve publicly shared over the years, that all my meanest and most callous moments will come back to bite me in the ass.
by Eve Peyser, Vice | Read more:
Image: Kitron Neuschatz & Lia Kantrowitz
Monday, October 22, 2018
Want to Know When You’re Going to Die?
It's the ultimate unanswerable question we all face: When will I die? If we knew, would we live differently? So far, science has been no more accurate at predicting life span than a $10 fortune teller. But that’s starting to change.
The measures being developed will never get good enough to forecast an exact date or time of death, but insurance companies are already finding them useful, as are hospitals and palliative care teams. “I would love to know when I’m going to die,” says Brian Chen, a researcher who is chief science officer for Life Epigenetics, a company that services the insurance industry. “That would influence how I approach life.”
The work still needs to be made more practical, and companies have to figure out the best uses for the data. Ethicists, meanwhile, worry about how people will cope with knowing the final secret of life. But like it or not, the death predictor is coming.
The clock
Steve Horvath, a UCLA biostatistician who grew up in Frankfurt, Germany, describes himself as “very straight,” while his identical twin brother is gay. So he had a personal interest when, a few years ago, a colleague asked him for help analyzing biological data from the saliva of twins with opposite sexual orientations. The colleague was trying to detect chemical changes that would indicate whether certain genes were turned on or off.
The hypothesis was that these so-called epigenetic changes, which alter the activity of DNA but not the DNA sequence itself, might help explain why two people with identical genes differ in this way. But Horvath found “zero signal” in the epigenetics of the twins’ saliva. Instead, what caught his attention was a powerful link between epigenetic changes and aging. “I was blown away by how strong the signal was,” he says. “I dropped most other projects in my lab and said: ‘This is the future.’”
Horvath became particularly intrigued by how certain chemical changes to cytosine—one of the four DNA bases, or “letters” of the genetic code—make genes more or less active. Given someone’s actual age, looking for these changes in that person’s DNA can tell him whether the person’s body is aging unusually fast or slowly. His team tested this epigenetic clock on 13,000 blood samples collected decades ago, from people whose subsequent date of death was known. The results revealed that the clock can be used to predict mortality.
Because most common diseases—cancer, heart disease, Alzheimer’s—are diseases of aging, the ticking of Horvath’s clock predicts how long someone will live and how much of that life will be free of these diseases (though it doesn’t foretell which ones people will get). “After five years of research, there is nobody who disputes that epigenetics predicts life span,” he says. (...)
Slow the ticking
As we age, the cytosine at hundreds of thousand of spots in our DNA either gains or loses methyl chemical groups (CH3). Horvath’s insight was to measure these increases and decreases in methylation, find the 300 to 500 changes that matter most, and use those to make his clocks. His findings suggest that the speed of the clock is strongly influenced by underlying genes. He estimates that about 40% of the ticking rate is determined by genetic inheritance, and the rest by lifestyle and luck.
Morgan Levine, who completed postdoctoral research in Horvath’s lab and now runs her own lab at Yale, is starting to compare an individual’s epigenetic profile with the profile of cells from the lining of a healthy umbilical cord. The more people deviate from that standard, the worse off they are likely to be. She thinks she will eventually be able to compare various epigenetic age measures to predict even in childhood who is going to be at greatest risk of which diseases—when it’s still early enough to change that future. “Your genes aren’t your fate, but even less so with things like epigenetics,” she says. “There definitely should be things we can do to delay aging if we can just figure out what they are.”
by Karen Weintraub, MIT Review | Read more:
Image:Vera Kratochvil/public domain
[ed. Whether it's epigenetics, bionics, gene editing or transhumanist brain uploads, immortal life is coming. We just need to survive politicians, climate change, bio-terrorism and nuclear war first. See also: Actors are digitally preserving themselves to continue their careers beyond the grave.]
The measures being developed will never get good enough to forecast an exact date or time of death, but insurance companies are already finding them useful, as are hospitals and palliative care teams. “I would love to know when I’m going to die,” says Brian Chen, a researcher who is chief science officer for Life Epigenetics, a company that services the insurance industry. “That would influence how I approach life.”The work still needs to be made more practical, and companies have to figure out the best uses for the data. Ethicists, meanwhile, worry about how people will cope with knowing the final secret of life. But like it or not, the death predictor is coming.
The clock
Steve Horvath, a UCLA biostatistician who grew up in Frankfurt, Germany, describes himself as “very straight,” while his identical twin brother is gay. So he had a personal interest when, a few years ago, a colleague asked him for help analyzing biological data from the saliva of twins with opposite sexual orientations. The colleague was trying to detect chemical changes that would indicate whether certain genes were turned on or off.
The hypothesis was that these so-called epigenetic changes, which alter the activity of DNA but not the DNA sequence itself, might help explain why two people with identical genes differ in this way. But Horvath found “zero signal” in the epigenetics of the twins’ saliva. Instead, what caught his attention was a powerful link between epigenetic changes and aging. “I was blown away by how strong the signal was,” he says. “I dropped most other projects in my lab and said: ‘This is the future.’”
Horvath became particularly intrigued by how certain chemical changes to cytosine—one of the four DNA bases, or “letters” of the genetic code—make genes more or less active. Given someone’s actual age, looking for these changes in that person’s DNA can tell him whether the person’s body is aging unusually fast or slowly. His team tested this epigenetic clock on 13,000 blood samples collected decades ago, from people whose subsequent date of death was known. The results revealed that the clock can be used to predict mortality.
Because most common diseases—cancer, heart disease, Alzheimer’s—are diseases of aging, the ticking of Horvath’s clock predicts how long someone will live and how much of that life will be free of these diseases (though it doesn’t foretell which ones people will get). “After five years of research, there is nobody who disputes that epigenetics predicts life span,” he says. (...)
Slow the ticking
As we age, the cytosine at hundreds of thousand of spots in our DNA either gains or loses methyl chemical groups (CH3). Horvath’s insight was to measure these increases and decreases in methylation, find the 300 to 500 changes that matter most, and use those to make his clocks. His findings suggest that the speed of the clock is strongly influenced by underlying genes. He estimates that about 40% of the ticking rate is determined by genetic inheritance, and the rest by lifestyle and luck.
Morgan Levine, who completed postdoctoral research in Horvath’s lab and now runs her own lab at Yale, is starting to compare an individual’s epigenetic profile with the profile of cells from the lining of a healthy umbilical cord. The more people deviate from that standard, the worse off they are likely to be. She thinks she will eventually be able to compare various epigenetic age measures to predict even in childhood who is going to be at greatest risk of which diseases—when it’s still early enough to change that future. “Your genes aren’t your fate, but even less so with things like epigenetics,” she says. “There definitely should be things we can do to delay aging if we can just figure out what they are.”
by Karen Weintraub, MIT Review | Read more:
Image:Vera Kratochvil/public domain
[ed. Whether it's epigenetics, bionics, gene editing or transhumanist brain uploads, immortal life is coming. We just need to survive politicians, climate change, bio-terrorism and nuclear war first. See also: Actors are digitally preserving themselves to continue their careers beyond the grave.]
Cantonese Roast Pork Belly - A Chinatown Classic
Cantonese Roast Pork Belly, or siu yuk (bah…my Cantonese is terrible…slash nonexistent), is getting added to our compendium of roast meats that can usually be found in your average Chinatown restaurant window. After already posting recipes for Soy Sauce Chicken, “White Cut” Chicken, Roast Duck, and Char Siu Pork, we’ve saved the best for last.
Now, understand that although I was practically raised on this stuff like most children were raised on dinosaur chicken nuggets, I came to the party with absolutely no knowledge of how to actually make this Cantonese classic roast pork belly. But don’t worry…although I happen to be writing this Chinese crispy roast pork belly recipe, I had a lot of help from the parents on this one. We did our research (this YouTube video played a big part in our success), and the results were pretty on point.
After we all came to an agreement on the right roast pork belly recipe, I cooked this thing pretty much on my own, and if I can do it, you totally can. It’s way easier than you’d expect. I don’t want to give away any spoilers up here, so scroll down to see how it’s done.
by Sarah, The Woks of Life | Read more:
Image: Woks of Life
[ed. See also: 18 Chinese Must-Try Pork Belly Recipes and Chinese Sauces, Vinegars, and Oils.]
Sunday, October 21, 2018
How Hedge Funds Are Looting Public Pensions: Part 1
Thousands of Kentucky public school teachers swarmed the state Capitol earlier this year, angry not about low salaries, but about their shrinking pensions. Among their concerns: the high portion of their money that has ended up in the hands of Wall Street in opaque, high-cost products that seem to benefit no one aside from the people who sold them. Rising pension costs helped to send teachers in Colorado into the streets in protest a few weeks later. In the last year, pension woes have also prompted teachers in Ohio and Oklahoma to march. And police, firefighters, and other public employees in Michigan have been staging protests since at least 2016 to preserve their public pensions, more than one-third of which is invested in “alternatives”: private equity, hedge funds, commodities, distressed debt, and other opaque Wall Street investment vehicles.
A “Wall Street coup” — that’s how pension expert Edward “Ted” Siedle describes it. Public pensions across the country now squander tens of billions of dollars each year on risky, often poor-performing alternative investments — money public pensions can ill afford to waste. For all the talk of insolvency, $4 trillion now sits in the coffers of the country’s public pensions. It’s a giant pile of money of intense interest to Wall Street — one generally overseen by boards stocked with laypeople, often political appointees. “Time and again,” Siedle has written, “hucksters successfully pull the wool over these boards’ eyes.”
In 1974, in the wake of the spectacular collapse of the Studebaker car company and its pension plan, Congress passed a piece of landmark legislation, the Employee Retirement Income Security Act. Under ERISA, companies are required to adequately fund their pensions and follow what was then called the “prudent man” rule, which barred those in charge from putting pension dollars into overly risky investments. The departments of Labor, Treasury, and Commerce were charged with overseeing the country’s pensions and a new body was created, called the Pension Benefit Guaranty Corporation, that would backstop pensions should a business default.
Except Congress left out public employees entirely — with a yawning loophole that granted an exemption to public pensions. ERISA expressly exempts public pensions operated by state and local governments — the plans that provide for the country’s teachers, firefighters, police officers, and librarians in their retirement. Forty-four years after the passage of ERISA, these public workers comprise the majority of active employees still contributing to pension plans. And they have been left largely unprotected.
Siedle calls it “the loophole that is swallowing America.”
The public pensions loophole helps explain why we read a lot more about underfunded state or municipal pensions teetering on the edge of default than we do dangerously underfunded pensions in the private sector. Thanks to ERISA, private pensions are better funded, and when they do face default, the federal benefit guaranty kicks in.
Because ERISA’s adequate funding requirement exempts governments, there are some half a dozen states with pension systems at the breaking point, including Illinois, where lawmakers are wrestling with unfunded pension liabilities of $129 billion, and Kentucky, where the state’s unfunded public pension liabilities top $27 billion.
That ERISA’s fiduciary oversight rule also exempts governments helps explain how Wall Street pulled off its coup, according to Siedle, a former Securities and Exchange Commission lawyer who for decades has been investigating public pensions. Instead of the strong protections imposed on the private sector by Congress, Siedle notes, “public pensions are regulated by a thin patchwork quilt of state and local laws,” and many don’t even submit to an annual audit. “No federal or state regulator, or law enforcement agency, is policing these plans for criminal activity,” according to Siedle. “No worries about the Department of Labor or FBI.”
Until the 21st century, public pensions generally invested in a standard blend of stocks and bonds. The more daring or community-minded among them may have invested a small fraction of their holdings in real estate projects or other exotic investments, yet alternatives averaged only 5 or 6 percent throughout the 1980s and 1990s. Yet as alternative investment structures grew in recent decades, and as pension funds sought desperately to make up for funding shortfalls, more and more of those trillions of dollars made their way to the country’s hedge funds and private equity managers. When, in 2017, the Pew Charitable Trusts looked at 73 of the country’s largest public pensions, researchers found that a full 25 percent of the pension money was invested in these high-fee alternatives.
The irony is that pensions don’t need to be 100 percent funded to be sound, as employees don’t all retire at once. Rating agencies and government monitors typically consider 70 to 80 percent to be adequate. And the country’s public pensions are generally hitting that mark, averaging 76 percent funding as of 2015, according to a survey by the National Conference on Public Employee Retirement Systems. “To suggest that there’s some nationwide crisis is simply not true,” says Bailey Childers, former director of the National Public Pension Coalition.
Yet public pensions continue to make desperate investments — and the competition for a piece of that action is so intense that it’s often involved outright fraud. It was in part a pension sting operation that helped take down Illinois Gov. Rod Blagojevich, who was back in the news earlier this year when President Donald Trump floated the idea of commuting the sentence of his former “Apprentice” star. In New York, Comptroller Alan Hevesi, who oversaw a $125 billion pension fund, confessed in court in 2010 that he had signed off on a $250 million pension investment in exchange for nearly $1 million in illegal gifts from a man named Elliott Broidy. Broidy, who ultimately pleaded guilty to a misdemeanor, is a major political donor with close ties to Trump; so close, in fact, that he resigned as deputy finance chair of the Republican National Committee this past April after it was revealed that Trump’s personal lawyer, Michael Cohen, arranged a $1.6 million payoff to a pregnant former Playboy model, allegedly on his behalf. Pension scandals have touched the Carlyle Group, a well-feathered landing spot for retired public officials (including former President George H. W. Bush and former British Prime Minister John Major), and also some of the biggest names in money management on Wall Street. In July 2018 alone, the SEC sanctioned private equity firms and other investment advisers for violating its “pay-to-play” rules — in Texas, Wisconsin, Indiana, Illinois, Rhode Island, and Los Angeles.
A scandal in California didn’t involve any high-profile elected officials but was, if anything, even more outrageous. There, the CEO of the country’s largest public pension was brought down by a pay-to-play scheme involving a former trustee and billions of dollars in public funds. Fred Buenrostro ran the California Public Employees’ Retirement System from 2002 to 2008. Alfred J.R. Villalobos, a former CalPERS trustee who became a placement agent, allegedly paid for Buenrostro’s wedding, took him on a trip around the world, and paid him hundreds of thousands of dollars stuffed in paper sacks and a shoebox. In exchange, prosecutors charged, Villalobos secured more than $3 billion in CalPERS investments for his client, Apollo Global Management, a giant of the private equity world. Over a five-year period, Villalobos earned around $50 million for helping his private equity clients win deals with CalPERS; he pleaded not guilty but took his own life before trial. Apollo’s punishment was the additional $550 million it received from CalPERS in 2017.
Yet much of what Siedle called the “looting” of the country’s public pensions takes place through perfectly legal investments with exorbitantly high fees. As an example, he brings up Rhode Island, where he spent time in 2013 after one of the big public employees’ unions, AFSCME, hired him to investigate the state pension there. Rarely was the wealth transfer from workers to Wall Street as vivid. The new state treasurer, whose campaign had been bankrolled by several New York hedge fund managers, championed a plan that cut employee benefits by roughly 3 percent several years back — and then gave most of the money the system saved to a trio of hedge funds to which it had entrusted a big chunk of its investments. “It wasn’t an austerity program,” Siedle said. “It wasn’t reformed. It was simply about paying lower benefits so Wall Street could get paid.”
The High Price of Hedge Funds
Hedge funds and other more exotic investments come at a steep price. A pension fund seeking to own a diverse basket of technology stocks, say, or invest in promising, mid-sized European companies may hire a stockbroker to handle that aspect of its portfolio for around 0.5 percent annually, or $500,000 a year for every $100 million invested. By comparison, hedge funds and private equity charge fees that work out closer to 5 percent annually, according to Howard Pohl, an investment consultant who has been advising public pension managers for more than four decades. Yves Smith, the pen name of management consultant Susan Webber, puts that figure closer to 7 percent a year on private equity investments. That’s $5 million to $7 million each year on every $100 million a pension invests with a firm. The deal has worked out well for some of Wall Street’s best-known billionaires, including Stephen Schwarzman, CEO of the Blackstone Group, who pocketed $787 millionlast year; Henry Kravis and George Roberts, the co-founders of Kohlberg Kravis Roberts, who took home a combined $343 million in 2017; and Steve Cohen, the disgraced hedge fund king worth an estimated $13 billion. All of them included public pension funds among their major clients.
The pensions haven’t fared nearly as well. The 2017 Pew study found that those funds that had recently and rapidly invested in alternatives reported the weakest 10-year returns. A 2018 report by the conservative Maryland Public Policy Institute put a price tag on those mediocre results. The group compared the actual performance of the $49 billion Maryland State Retirement and Pension System against a model with a straightforward “60-40” approach, in which 60 percent of a portfolio is invested in stocks and 40 percent in bonds. Despite the hundreds of millions of dollars in additional fees the pension system had paid to private equity firms and hedge funds, it would have earned an additional $5 billion over the prior 10 years had it adopted the more judicious 60-40 strategy. A 2015 studycommissioned by the then-$15 billion Kentucky Retirement System found that overexposure to hedge funds contributed to more than $1 billion in lost returns over five years when compared to the returns earned by its more cautious peers. A study that same year by the liberal Roosevelt Institute and American Federation of Teachers found that poor returns on hedge fund investments had cost 11 of the country’s larger statewide public pensions $8 billion in lost revenue over the previous decade because most of the profits were eaten up by the steep fees hedge funds charge their investors.
“I could never figure out why somebody working at a hedge fund is worth 10 times more than the guy at Fidelity,” Pohl said.
Citizens United, the landmark Supreme Court decision that ushered in a boom in political dark money, also accelerated the siphoning off of billions of pension dollars into inappropriate investments. “Since Citizens United, investments in alternatives have absolutely exploded,” said Chris Tobe, a former trustee for the Kentucky Retirement System. Wall Street firms can now write big checks to a political or party committee to curry favor among elected officials who control pension fund appointments — completely out of the public view. A new SEC rule that year imposed tight restrictions on political contributions by hedge funds, private equity firms, and others to any public official who could have sway over an investment decision. Yet Citizens United effectively made the rule irrelevant, as money flooded in to proxies instead. Executives at firms managing state pension money gave $6.8 million to the Republican Governors Association in the 2014 election cycle, according to the nonprofit MapLight, and $151,000 to its Democratic equivalent.
Much of the overreliance on private equity and hedge funds boils down to what Ted Siedle sees as a mismatch between the civil servants, who work for the public pensions, and the salespeople, who show up with their sophisticated marketing materials and pitches that make it sound as if only a small elite is fortunate to get a piece of the hot, new fund they are peddling.
“You’ve got Wall Street marketers with virtually unlimited expense accounts, under orders by their bosses to do anything necessary to win over these government pension officials who control trillions,” Siedle said. “So people living these mundane lives are being flown to five-star hotels in Maui, in Honolulu, in Phoenix, in Puerto Rico, in Bermuda. They’re being flown to New York, where they see the hottest Broadway shows, or they’re in Las Vegas at Cirque du Soleil. I’ve seen everything from trips to strip clubs to helicopter rides over Maui to hot-air balloon rides in Albuquerque.”
A “Wall Street coup” — that’s how pension expert Edward “Ted” Siedle describes it. Public pensions across the country now squander tens of billions of dollars each year on risky, often poor-performing alternative investments — money public pensions can ill afford to waste. For all the talk of insolvency, $4 trillion now sits in the coffers of the country’s public pensions. It’s a giant pile of money of intense interest to Wall Street — one generally overseen by boards stocked with laypeople, often political appointees. “Time and again,” Siedle has written, “hucksters successfully pull the wool over these boards’ eyes.”In 1974, in the wake of the spectacular collapse of the Studebaker car company and its pension plan, Congress passed a piece of landmark legislation, the Employee Retirement Income Security Act. Under ERISA, companies are required to adequately fund their pensions and follow what was then called the “prudent man” rule, which barred those in charge from putting pension dollars into overly risky investments. The departments of Labor, Treasury, and Commerce were charged with overseeing the country’s pensions and a new body was created, called the Pension Benefit Guaranty Corporation, that would backstop pensions should a business default.
Except Congress left out public employees entirely — with a yawning loophole that granted an exemption to public pensions. ERISA expressly exempts public pensions operated by state and local governments — the plans that provide for the country’s teachers, firefighters, police officers, and librarians in their retirement. Forty-four years after the passage of ERISA, these public workers comprise the majority of active employees still contributing to pension plans. And they have been left largely unprotected.
Siedle calls it “the loophole that is swallowing America.”
The public pensions loophole helps explain why we read a lot more about underfunded state or municipal pensions teetering on the edge of default than we do dangerously underfunded pensions in the private sector. Thanks to ERISA, private pensions are better funded, and when they do face default, the federal benefit guaranty kicks in.
Because ERISA’s adequate funding requirement exempts governments, there are some half a dozen states with pension systems at the breaking point, including Illinois, where lawmakers are wrestling with unfunded pension liabilities of $129 billion, and Kentucky, where the state’s unfunded public pension liabilities top $27 billion.
That ERISA’s fiduciary oversight rule also exempts governments helps explain how Wall Street pulled off its coup, according to Siedle, a former Securities and Exchange Commission lawyer who for decades has been investigating public pensions. Instead of the strong protections imposed on the private sector by Congress, Siedle notes, “public pensions are regulated by a thin patchwork quilt of state and local laws,” and many don’t even submit to an annual audit. “No federal or state regulator, or law enforcement agency, is policing these plans for criminal activity,” according to Siedle. “No worries about the Department of Labor or FBI.”
Until the 21st century, public pensions generally invested in a standard blend of stocks and bonds. The more daring or community-minded among them may have invested a small fraction of their holdings in real estate projects or other exotic investments, yet alternatives averaged only 5 or 6 percent throughout the 1980s and 1990s. Yet as alternative investment structures grew in recent decades, and as pension funds sought desperately to make up for funding shortfalls, more and more of those trillions of dollars made their way to the country’s hedge funds and private equity managers. When, in 2017, the Pew Charitable Trusts looked at 73 of the country’s largest public pensions, researchers found that a full 25 percent of the pension money was invested in these high-fee alternatives.
The irony is that pensions don’t need to be 100 percent funded to be sound, as employees don’t all retire at once. Rating agencies and government monitors typically consider 70 to 80 percent to be adequate. And the country’s public pensions are generally hitting that mark, averaging 76 percent funding as of 2015, according to a survey by the National Conference on Public Employee Retirement Systems. “To suggest that there’s some nationwide crisis is simply not true,” says Bailey Childers, former director of the National Public Pension Coalition.
Yet public pensions continue to make desperate investments — and the competition for a piece of that action is so intense that it’s often involved outright fraud. It was in part a pension sting operation that helped take down Illinois Gov. Rod Blagojevich, who was back in the news earlier this year when President Donald Trump floated the idea of commuting the sentence of his former “Apprentice” star. In New York, Comptroller Alan Hevesi, who oversaw a $125 billion pension fund, confessed in court in 2010 that he had signed off on a $250 million pension investment in exchange for nearly $1 million in illegal gifts from a man named Elliott Broidy. Broidy, who ultimately pleaded guilty to a misdemeanor, is a major political donor with close ties to Trump; so close, in fact, that he resigned as deputy finance chair of the Republican National Committee this past April after it was revealed that Trump’s personal lawyer, Michael Cohen, arranged a $1.6 million payoff to a pregnant former Playboy model, allegedly on his behalf. Pension scandals have touched the Carlyle Group, a well-feathered landing spot for retired public officials (including former President George H. W. Bush and former British Prime Minister John Major), and also some of the biggest names in money management on Wall Street. In July 2018 alone, the SEC sanctioned private equity firms and other investment advisers for violating its “pay-to-play” rules — in Texas, Wisconsin, Indiana, Illinois, Rhode Island, and Los Angeles.
A scandal in California didn’t involve any high-profile elected officials but was, if anything, even more outrageous. There, the CEO of the country’s largest public pension was brought down by a pay-to-play scheme involving a former trustee and billions of dollars in public funds. Fred Buenrostro ran the California Public Employees’ Retirement System from 2002 to 2008. Alfred J.R. Villalobos, a former CalPERS trustee who became a placement agent, allegedly paid for Buenrostro’s wedding, took him on a trip around the world, and paid him hundreds of thousands of dollars stuffed in paper sacks and a shoebox. In exchange, prosecutors charged, Villalobos secured more than $3 billion in CalPERS investments for his client, Apollo Global Management, a giant of the private equity world. Over a five-year period, Villalobos earned around $50 million for helping his private equity clients win deals with CalPERS; he pleaded not guilty but took his own life before trial. Apollo’s punishment was the additional $550 million it received from CalPERS in 2017.
Yet much of what Siedle called the “looting” of the country’s public pensions takes place through perfectly legal investments with exorbitantly high fees. As an example, he brings up Rhode Island, where he spent time in 2013 after one of the big public employees’ unions, AFSCME, hired him to investigate the state pension there. Rarely was the wealth transfer from workers to Wall Street as vivid. The new state treasurer, whose campaign had been bankrolled by several New York hedge fund managers, championed a plan that cut employee benefits by roughly 3 percent several years back — and then gave most of the money the system saved to a trio of hedge funds to which it had entrusted a big chunk of its investments. “It wasn’t an austerity program,” Siedle said. “It wasn’t reformed. It was simply about paying lower benefits so Wall Street could get paid.”
The High Price of Hedge Funds
Hedge funds and other more exotic investments come at a steep price. A pension fund seeking to own a diverse basket of technology stocks, say, or invest in promising, mid-sized European companies may hire a stockbroker to handle that aspect of its portfolio for around 0.5 percent annually, or $500,000 a year for every $100 million invested. By comparison, hedge funds and private equity charge fees that work out closer to 5 percent annually, according to Howard Pohl, an investment consultant who has been advising public pension managers for more than four decades. Yves Smith, the pen name of management consultant Susan Webber, puts that figure closer to 7 percent a year on private equity investments. That’s $5 million to $7 million each year on every $100 million a pension invests with a firm. The deal has worked out well for some of Wall Street’s best-known billionaires, including Stephen Schwarzman, CEO of the Blackstone Group, who pocketed $787 millionlast year; Henry Kravis and George Roberts, the co-founders of Kohlberg Kravis Roberts, who took home a combined $343 million in 2017; and Steve Cohen, the disgraced hedge fund king worth an estimated $13 billion. All of them included public pension funds among their major clients.
The pensions haven’t fared nearly as well. The 2017 Pew study found that those funds that had recently and rapidly invested in alternatives reported the weakest 10-year returns. A 2018 report by the conservative Maryland Public Policy Institute put a price tag on those mediocre results. The group compared the actual performance of the $49 billion Maryland State Retirement and Pension System against a model with a straightforward “60-40” approach, in which 60 percent of a portfolio is invested in stocks and 40 percent in bonds. Despite the hundreds of millions of dollars in additional fees the pension system had paid to private equity firms and hedge funds, it would have earned an additional $5 billion over the prior 10 years had it adopted the more judicious 60-40 strategy. A 2015 studycommissioned by the then-$15 billion Kentucky Retirement System found that overexposure to hedge funds contributed to more than $1 billion in lost returns over five years when compared to the returns earned by its more cautious peers. A study that same year by the liberal Roosevelt Institute and American Federation of Teachers found that poor returns on hedge fund investments had cost 11 of the country’s larger statewide public pensions $8 billion in lost revenue over the previous decade because most of the profits were eaten up by the steep fees hedge funds charge their investors.
“I could never figure out why somebody working at a hedge fund is worth 10 times more than the guy at Fidelity,” Pohl said.
Citizens United, the landmark Supreme Court decision that ushered in a boom in political dark money, also accelerated the siphoning off of billions of pension dollars into inappropriate investments. “Since Citizens United, investments in alternatives have absolutely exploded,” said Chris Tobe, a former trustee for the Kentucky Retirement System. Wall Street firms can now write big checks to a political or party committee to curry favor among elected officials who control pension fund appointments — completely out of the public view. A new SEC rule that year imposed tight restrictions on political contributions by hedge funds, private equity firms, and others to any public official who could have sway over an investment decision. Yet Citizens United effectively made the rule irrelevant, as money flooded in to proxies instead. Executives at firms managing state pension money gave $6.8 million to the Republican Governors Association in the 2014 election cycle, according to the nonprofit MapLight, and $151,000 to its Democratic equivalent.
Much of the overreliance on private equity and hedge funds boils down to what Ted Siedle sees as a mismatch between the civil servants, who work for the public pensions, and the salespeople, who show up with their sophisticated marketing materials and pitches that make it sound as if only a small elite is fortunate to get a piece of the hot, new fund they are peddling.
“You’ve got Wall Street marketers with virtually unlimited expense accounts, under orders by their bosses to do anything necessary to win over these government pension officials who control trillions,” Siedle said. “So people living these mundane lives are being flown to five-star hotels in Maui, in Honolulu, in Phoenix, in Puerto Rico, in Bermuda. They’re being flown to New York, where they see the hottest Broadway shows, or they’re in Las Vegas at Cirque du Soleil. I’ve seen everything from trips to strip clubs to helicopter rides over Maui to hot-air balloon rides in Albuquerque.”
by Gary Rivlin, The Intercept | Read more:
Image: Allen J. Schaben/Los Angeles Times via Getty Images
[ed. See also: Public Pensions for Sale: Part 2]
‘Four Thousand Miles for the W’
Not long ago, the Seattle Seahawks looked like a budding dynasty. With the franchise trying to rebuild on the fly, a trip to London came at the worst possible time. Or was it the best?
The N.F.L. told the Seattle Seahawks last winter that they would face the Raiders in London on Oct. 14.
Back then, months before the rest of the 2018 schedule came out, the Seahawks could never have anticipated that last weekend’s trip to London would come at a pivotal juncture for the franchise: Their record stood at 2-3 after a tough loss to the Los Angeles Rams.
Then it was time to spread the gospel of American football overseas. Instead of heading about 670 miles south to Oakland, Calif., the Seahawks would fly nearly 5,000 miles to England, eight time zones away.
Sending an N.F.L. team overseas is a herculean venture. Players need passports, the equipment staff sends supplies months in advance, the travel director has to navigate an unfamiliar airport and hotel, and the trainers will often modify the players’ diet and sleep regimens. Then there is the equipment, some 21,000 pounds of it, that must be transported.
The Seahawks were doing all this while searching for their footing. The cornerstones of the team’s dominant Super Bowl defenses were mostly gone. Russell Wilson, the franchise quarterback, had one year remaining on his contract and was expected to seek a far larger deal. In Week 4, safety Earl Thomas broke his leg and appeared to point his middle finger at the Seahawks’ bench as he was carted off the field. The team owner Paul G. Allen’s non-Hodgkin’s lymphoma, which was in remission, had returned — something that proved far more serious than all but a few realized. (Allen died on Monday.)
Maybe, with pressure mounting, a venture far away was exactly what this franchise needed. (...)
They boarded a chartered Airbus A340-600 that included 45 sleeping pods in first class for the veteran players. Coach Pete Carroll sat in the first row of business class along with other coaches. Rookies and members of the practice squad sat behind them. About half the 170 passengers sat in coach, which was filled with giddy chatter before takeoff. The menu was the same for everyone: beef filet, Cajun chicken or herb roasted salmon.
The players and coaches rolled off the plane on Thursday about 1:30 p.m. Some players struggled to stay awake, like defensive end Frank Clark, who draped his thick coat over his head.
Buses took them to the Grove, a resort in Watford, north of London, that features grass tennis courts and a golf course.
It has plenty of amenities, but nothing was left to chance. The team shipped 1,150 rolls of athletic tape, two tons of medical supplies, 350 power adapters, 500 pairs of shoes and 240 pairs of socks. In all, the Seahawks had shipped 21,000 pounds of gear and products worth $770,000. Some items — toiletries, snacks, bottled water, Gorilla Glue, lighters (to burn off loose threads) and cayenne pepper, which when mixed with talcum powder keeps players’ feet warm — were ordered from the Amazon U.K. website.
The N.F.L. told the Seattle Seahawks last winter that they would face the Raiders in London on Oct. 14.
Back then, months before the rest of the 2018 schedule came out, the Seahawks could never have anticipated that last weekend’s trip to London would come at a pivotal juncture for the franchise: Their record stood at 2-3 after a tough loss to the Los Angeles Rams.
Then it was time to spread the gospel of American football overseas. Instead of heading about 670 miles south to Oakland, Calif., the Seahawks would fly nearly 5,000 miles to England, eight time zones away.Sending an N.F.L. team overseas is a herculean venture. Players need passports, the equipment staff sends supplies months in advance, the travel director has to navigate an unfamiliar airport and hotel, and the trainers will often modify the players’ diet and sleep regimens. Then there is the equipment, some 21,000 pounds of it, that must be transported.
The Seahawks were doing all this while searching for their footing. The cornerstones of the team’s dominant Super Bowl defenses were mostly gone. Russell Wilson, the franchise quarterback, had one year remaining on his contract and was expected to seek a far larger deal. In Week 4, safety Earl Thomas broke his leg and appeared to point his middle finger at the Seahawks’ bench as he was carted off the field. The team owner Paul G. Allen’s non-Hodgkin’s lymphoma, which was in remission, had returned — something that proved far more serious than all but a few realized. (Allen died on Monday.)
Maybe, with pressure mounting, a venture far away was exactly what this franchise needed. (...)
They boarded a chartered Airbus A340-600 that included 45 sleeping pods in first class for the veteran players. Coach Pete Carroll sat in the first row of business class along with other coaches. Rookies and members of the practice squad sat behind them. About half the 170 passengers sat in coach, which was filled with giddy chatter before takeoff. The menu was the same for everyone: beef filet, Cajun chicken or herb roasted salmon.
The players and coaches rolled off the plane on Thursday about 1:30 p.m. Some players struggled to stay awake, like defensive end Frank Clark, who draped his thick coat over his head.
Buses took them to the Grove, a resort in Watford, north of London, that features grass tennis courts and a golf course.
It has plenty of amenities, but nothing was left to chance. The team shipped 1,150 rolls of athletic tape, two tons of medical supplies, 350 power adapters, 500 pairs of shoes and 240 pairs of socks. In all, the Seahawks had shipped 21,000 pounds of gear and products worth $770,000. Some items — toiletries, snacks, bottled water, Gorilla Glue, lighters (to burn off loose threads) and cayenne pepper, which when mixed with talcum powder keeps players’ feet warm — were ordered from the Amazon U.K. website.
by Ken Belson, NY Times | Read more:
Image: Brett Carlsen for The New York Times
Friday, October 19, 2018
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