02/28/2014 archive

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

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Paul Krugman: No Big Deal

Everyone knows that the Obama administration’s domestic economic agenda is stalled in the face of scorched-earth opposition from Republicans. And that’s a bad thing: The U.S. economy would be in much better shape if Obama administration proposals like the American Jobs Act had become law.

It’s less well known that the administration’s international economic agenda is also stalled, for very different reasons. In particular, the centerpiece of that agenda – the proposed Trans-Pacific Partnership, or T.P.P. – doesn’t seem to be making much progress, thanks to a combination of negotiating difficulties abroad and bipartisan skepticism at home.

And you know what? That’s O.K. It’s far from clear that the T.P.P. is a good idea. It’s even less clear that it’s something on which President Obama should be spending political capital. I am in general a free trader, but I’ll be undismayed and even a bit relieved if the T.P.P. just fades away.

New York Times Editorial Board: Business and the Minimum Wage

Much of the discussion about the Democratic proposal to raise the minimum wage to $10.10 an hour by 2016 has rightly focused on the workers who will clearly benefit from the move. But what about businesses? How would higher wages affect them?

The answer – contrary to a great deal of reflexive hand-wringing by some conservative think tanks and politicians – is surprisingly positive. Scholarly studies and the experience of businesses themselves show that what companies lose when they pay more is often offset by lower turnover and increased productivity. Businesses are also able to deal with higher costs by modestly increasing prices and by giving smaller increases to higher-paid employees. [..]

The argument that a higher minimum wage would hurt business is old and tired. There is clear and compelling evidence that the economy and companies enjoy real benefits when workers are paid more.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

February 28 is the 59th day of the year in the Gregorian calendar. There are 306 days remaining until the end of the year (307 in leap years)

On this day in 1953, Cambridge University scientists James D. Watson and Frances H.C. Crick announce that they have determined the double-helix structure of DNA, the molecule containing human genes.

History of DNA research

DNA was first isolated by the Swiss physician Friedrich Miescher who, in 1869, discovered a microscopic substance in the pus of discarded surgical bandages. As it resided in the nuclei of cells, he called it “nuclein”. In 1919, Phoebus Levene identified the base, sugar and phosphate nucleotide unit. Levene suggested that DNA consisted of a string of nucleotide units linked together through the phosphate groups. However, Levene thought the chain was short and the bases repeated in a fixed order. In 1937 William Astbury produced the first X-ray diffraction patterns that showed that DNA had a regular structure.

In 1928, Frederick Griffith discovered that traits of the “smooth” form of the Pneumococcus could be transferred to the “rough” form of the same bacteria by mixing killed “smooth” bacteria with the live “rough” form. This system provided the first clear suggestion that DNA carries genetic information, the Avery-MacLeod-McCarty experiment, when Oswald Avery, along with coworkers Colin MacLeod and Maclyn McCarty, identified DNA as the transforming principle in 1943. DNA’s role in heredity was confirmed in 1952, when Alfred Hershey and Martha Chase in the Hershey-Chase experiment showed that DNA is the genetic material of the T2 phage.

In 1953, James D. Watson and Francis Crick suggested what is now accepted as the first correct double-helix model of DNA structure in the journal Nature. Their double-helix, molecular model of DNA was then based on a single X-ray diffraction image (labeled as “Photo 51”) taken by Rosalind Franklin and Raymond Gosling in May 1952, as well as the information that the DNA bases are paired – also obtained through private communications from Erwin Chargaff in the previous years. Chargaff’s rules played a very important role in establishing double-helix configurations for B-DNA as well as A-DNA.

Experimental evidence supporting the Watson and Crick model were published in a series of five articles in the same issue of Nature. Of these, Franklin and Gosling’s paper was the first publication of their own X-ray diffraction data and original analysis method that partially supported the Watson and Crick model; this issue also contained an article on DNA structure by Maurice Wilkins and two of his colleagues, whose analysis and in vivo B-DNA X-ray patterns also supported the presence in vivo of the double-helical DNA configurations as proposed by Crick and Watson for their double-helix molecular model of DNA in the previous two pages of Nature. In 1962, after Franklin’s death, Watson, Crick, and Wilkins jointly received the Nobel Prize in Physiology or Medicine. However, Nobel rules of the time allowed only living recipients, but a vigorous debate continues on who should receive credit for the discovery.

Credit Suisse helped wealthy Americans cheat the IRS, Senate report says

By Danielle Douglas, Washington Post

Published: February 25

Swiss banking giant Credit ­Suisse helped wealthy Americans hide billions of dollars from U.S. tax collectors for several years and federal prosecutors have done little to hold violators accountable, according to a U.S. Senate subcommittee report due out Wednesday.

The allegations were particularly stunning in the face of the budget cuts and deficits that the United States faces, lawmakers said. The report casts the Justice Department as a hapless enforcer that has dragged its feet in getting Credit Suisse to turn over the names of some 22,000 U.S. customers.

Lawmakers have accused the bank of helping wealthy Americans avoid paying taxes on as much as $12 billion in assets held at the institution. Prosecutors have been aware of the misconduct at Credit Suisse for at least four years, in which time they have indicted seven bankers and launched a probe of the institution, according to the report. But no one has stood trial, and the bank has not been held legally accountable, the report says.

The Golden Rule: Why Bankers Are In Charge

by Ian Welsh

2014 February 26

The most potent message, and the strongest effect on behaviour, is when someone has the right to create money. Money, in our society, is created by borrowing. Banks and other financial institutions which have the right to lend thus have the right to create money. They have to have some form of collateral, even if that collateral is just an expectation of future earnings “great business idea, we’ll lend you money, and use your expected profits as our collateral.”

This money can be loaned out at multiples of the underlying asset. During the 2000s some brokerages were allowed multipliers (leverage) of over 40%. Even better, often whatever you buy with a leveraged loan can then be used as an asset for another round of leverage, leading to extremely high levels of effective leverage.

Some organizations also have access to very low interest rates: they can borrow at close to “prime” the rate the central bank offers to the very best credit risks. Major banks are amongst those who can borrow at this rate. They can then lend out to other people, again, at a higher interest rate, and with leverage.

If you, personally, could borrow money at 1% annual interest rate, and lend out ten times that, do you think you could make a profit? What is your mortgage rate? What is your credit card’s interest rate?

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In theory profits are supposed to be self-limiting. If an industry makes more money than other industries, outsiders should see an opportunity, start up businesses, compete and drive down prices.

In the real world, that doesn’t happen as often as it does in theory, because you can’t just start up a bank with access to the Central Bank’s window. You can’t easily start up new pharmaceutical businesses, because it’s vastly expensive and there are huge regulatory hurdles. And when it does happen, why would you compete? Why not take the outsize profits? Why would you drive down profits? How does that benefit you?

The other check is supposed to be diminishing returns. The more money you have, the harder it is to find something to invest in: you run out of mortgages, or you run out of businesses to invest in which can make those returns. This does work, somewhat. It is at the heart of why the financial collapse happened: there weren’t enough assets for all the money chasing them, so widespread fraud occurred (liars loans, for example) and many people were given loans who couldn’t pay them back, while artificial assets were created which were not worth what they were sold for. Eventually this collapsed, but because the financial industry had already bought the political world, they were bailed out at a cost of trillions.

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When you make millions in a few years: enough to live on for the rest of your life, in high style, it isn’t important if you’re driving the firm to bankruptcy. You don’t need the bank or the firm to be there, you’ve already made your mint.

Now, as a politician, if you do what the financial industry (or any other wealth industry) wants, they donate to your reelection campaign. They make sure your friends and family have jobs. They invite you to the best parties. And if you’re defeated, and have voted the right way, well, they’ll take care of you afterwards as well, with a cushy job. Bill Clinton, who deregulated Wall Street, is worth 100 million dollars.

Because bankers control a lot of money, they control what other people do.

So, just how much do you trust the NSA?  Do you even trust it’s “professionalism”?

Your Humble Blogger is the Probable Target of Penny-Ante Cyber Predation

by Yves Smith, Naked Capitalism

Posted on February 26, 2014

I was hacked yesterday.

On the scale of hacks, it was simultaneously trivial but meant to intimidate. Or else hugely inept.

I am on some politically-oriented listservs. They are all Google Groups, hence one has to have a Google account to post to them and receive messages from them. I also have one political correspondent who was very communicative a while back, and so I also filtered his messages into a separate folder. Generally I’m not a fan of filtering (I prefer to get everything in my main mail account) but these were two exceptions where it made sense to put them in a separate place. He uses Gmail. I set up both folders under my Gmail account.

Both those email boxes were gone yesterday. That does not mean the contents were gone, that means the folders were deleted and the messages were gone too (I use IMAP, not POP).

I am highly confident (to use the old Drexel formulation) that I didn’t delete them by accident. First, Macs give you all sorts of warnings for actions like that. Second, I only occasionally access those folders, and you have to highlight those accounts to do something stupid to them. Third, the removal of one could conceivably be an accident, but two? Particularly since these are the only two that are focused solely on political activity (by contrast, my main email box has so much spam, both genuine spam and news-related spamming, that the noise to content ratio is very high).

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The more interesting question is therefore what this signifies. Deleting two folders both politically-related, is either very clumsy or intended to send a message. If the latter, even though I regularly harass banks, I doubt they’d be that interested. I don’t do much original reporting, as opposed to interpreting and sharpening public domain information. Banks are more concerned about what runs in the New York Times or the Washington Post or USA Today (or until recently, Rolling Stone). Blogs are ankle-biters at most and I doubt they see them as any threat. By contrast, I’ve been told our efforts have been helpful in at least for now stymieing the TransPacific Partnership, and we’ve also been consistent critics of Obamacare. My sense is the Democratic party feels vulnerable on the Obamacare front, with the Senate majority at risk in the midterm elections and the Republicans pounding on that topic (as confirmed by the frequency of the attacks in Democrat-favoring blogs on the MSM stories critical of Obamacare). So the odds favor this being someone who is not happy with our political writings of late. Note that the Project on Government Oversight, clearly a more influential group than NC, had a break-in that looked designed to intimidate rather than extract information. So this may be the fashion of the month in incursions.

Nevertheless, this sort of incursion is the cyber analogue of the sort of penny-ante predation the banks engage in routinely, like charging 3% for foreign exchange transactions. Yes, you can get a separate no-FX charge card, but if you are busy like me, and you actually do buy once in a while from foreign sites, it’s altogether too easy to forget to check to pay that weirdo card you hardly use and incur more in late fees than the 3% ripoff on your regular card. Or how about the $25 account charge if you balance drops below a certain level? I had that happen all of one day in one month last year and was royally pissed, and it was due to the order in which they credited charges versus deposits that day. Not worth fighting it.

Remember, if my aim was to end vulnerability, I can’t secure my communications by myself. I either have to encrypt (which requires two party cooperation) or at least get my most important correspondents on a more secure mail service. And I can’t participate in these very useful Google Groups. And if you’ve got a determined, well-connected intruder, we now know computers have backdoors at the Bios level. How does a mere mortal like me contend with that when even the hard-core techies seem flummoxed?

So just as we’ve all become resigned to having banks take more than they deserve, most of us are similarly resigned to routine snooping (the capture of data by vendors, use of cookies, etc). Those of us who are more visible on the Web face a correspondingly greater level of exposure. It’s just not possible to be secure and be on the Web, and I may accidentally be a little less at risk than most people in my shoes, not by virtue of great planning or even adequate defenses, but simply by not having migrated as much of my life to the computer or even a stupid phone as have the overwhelming majority of Americans.

Yes, we should be alarmed by documentation that shows spy agencies could be involved in dirty tricks

by digby, Hullabaloo

2/25/2014 01:30:00 PM

I notice that people are complaining about Glenn Greenwald’s latest piece about the spy agencies’ ratfucking operations because of its “tone” and I realize that it’s time to remind people of this little episode in case anyone’s gotten it into their heads that this is just some paranoid conspiracy theory.

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If they could give us even one good reason beyond “because we can” and “maybe we might find it useful some day” perhaps people would be less alarmed. But when you have documented misuse of the data by private organizations, documented plans to use propaganda and dirty tricks to discredit dissenters along with not even one example of how these programs have been helpful, it’s just beyond my ken as to why people are still defending the government’s ongoing insistence that this is perfectly above board.

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I truly believe that lies at the center of this issue. The national security apparatus and, in particular, the spy agencies, are like a cloistered cult at this point, completely oblivious to the real world implications of what they are doing or how it’s being perceived. They seem to be stunned that anyone would question them — a very bad characteristic for any institution with the kind of power they have. You don’t have to be an oracle to see how that can go sideways very easily. Indeed, all you have to do is look at that Chamber of Commerce gambit to see exactly how it can happen.

Conspiracy Theories

CASS R. SUNSTEIN University of Chicago – Law School

ADRIAN VERMEULE  Harvard University – Harvard Law School

January 15, 2008

Of course some conspiracy theories, under our definition, have turned out to be true. The Watergate hotel room used by Democratic National Committee was, in fact,  bugged by Republican officials, operating at the behest of the White House. In the 1950s, the Central Intelligence Agency did, in fact, administer LSD and related drugs under Project MKULTRA, in an effort to investigate the possibility of “mind control.” Operation Northwoods, a rumored plan by the Department of Defense to simulate acts of terrorism and to blame them on Cuba, really was proposed by high-level officials (though the plan never went into effect).

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For our purposes, the most useful way to understand the pervasiveness of conspiracy theories is to examine how people acquire information. For most of what they believe that they know, human beings lack personal or direct information; they must rely on what other people think. In some domains, people suffer from a “crippled epistemology,” in the sense that they know very few things, and what they know is wrong. Many extremists fall in this category; their extremism stems not from irrationality, but from the fact that they have little (r elevant) information, and their extremist views are supported by what little they know. Conspiracy theorizing often has the same feature. Those who believe that Israel was responsible for the attacks of 9/11, or that the Central Intelligence Agency killed President Kennedy, may well be responding quite rationally to the informational signals that they receive. Consider here the suggestive fact that terrorism is more likely to arise in nations that lack civil rights and civil liberties. An evident reason for the connection is that terrorism is an extreme form of political protest, and when peo ple lack the usual outlets for registering their protest, they might resort to violence. But consider another  possibility: When civil rights and civil liberties are restricted, little information is available, and what comes from government cannot be trusted. If the trustworthy information justifies conspiracy theories and extremism, and (therefore?) violence, then terrorism is more likely to arise.

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Cognitive infiltration

Rather than taking the continued existence of the hard core as a constraint, and addressing itself solely to the third-party mass audience, government might undertake (legal) tactics for breaking up the tight cognitive clusters of extremist theories, arguments and rhetoric that are produced by the hard core and reinforce it in turn. One promising tactic is cognitive infiltration of extremist groups. By this we do not mean 1960s-style infiltration with a view to surveillance and collecting information, possibly for use in future prosecutions. Rather, we mean that government efforts might succeed in weakening or even breaking up the ideological and epistemological complexes that constitute these networks and groups.

How might this tactic work? Recall that extremist networks and groups, including the groups that purvey conspiracy theories, typically suffer from a kind of crippled epistemology. Hearing only conspiratorial accounts of government behavior, their members become ever more prone to believe and generate such accounts. Informational and reputational cascades, group polarization, and selection effects suggest that the generation of ever-more-extreme views within these groups can be dampened or reversed by the introduction of cognitive diversity. We suggest a role for government efforts, and agents, in introducing such diversity. Government agents (and their allies) might enter chat rooms, online social networks, or even real-space groups and attempt to undermine percolating conspiracy theories by raising doubts about their factual premises, causal logic or implications for political action.

In one variant, government agents would openly proclaim, or at least make no effort to conceal, their institutional affiliations. A recent newspaper story recounts that Arabic-speaking Muslim officials from the State Department have participated in dialogues at radical Islamist chat rooms and websites in order to ventilate arguments not usually heard among the groups that cluster around those sites, with some success. In another variant, government officials would participate anonymously or even with false identities. Each approach has distinct costs and benefits; the second is riskier but  potentially brings higher returns. In the former case, where government officials  participate openly as such, hard-core members of the relevant networks, communities and conspiracy-minded organizations may entirely discount what the officials say, right from the beginning. The risk with tactics of anonymous participation, conversely, is that if the tactic becomes known, any true member of the relevant groups who raises doubts may be suspected of government connections. Despite these difficulties, the two forms of cognitive infiltration offer different risk-reward mixes and are both potentially useful instruments.

There is a similar tradeoff along another dimension: whether the infiltration should occur in the real world, through physical penetration of conspiracist groups by undercover agents, or instead should occur strictly in cyberspace. The latter is safer, but  potentially less productive. The former will sometimes be indispensable, where the groups that purvey conspiracy theories (and perhaps themselves formulate conspiracies) formulate their views through real-space informational networks rather than virtual networks. Infiltration of any kind poses well-known risks: perhaps agents will be asked to perform criminal acts to prove their bona fides, or (less plausibly) will themselves  become persuaded by the conspiratorial views they are supposed to be undermining;  perhaps agents will be unmasked and harmed by the infiltrated group. But the risks are generally greater for real-world infiltration, where the agent is exposed to more serious harms.

Indeed, for some sycophantic OLC conception of “It’s legal if the President does it” that was Nixon’s last refuge from the rule of law.  Even England rejected this concept of despotic rule 799 years ago.