You’re a target.

I don’t care who you are, or where you are in the United States, but if you have a smartphone and internet access… you’re a target.

It used to be, back in the halcyon days of MySpace and AskJeeves, that you were merely a product. As in: internet firms provide a service to you and in turn they sell advertisers… you. The product was you – your eyeballs, your clicks, your attention – sold to those who in turn wanted to sell you something themselves. This seemed, to many people a fair enough trade. In fact, it seemed so fair that practically nobody used the for-pay services which sprang up in the dense ecosystem of the early internet and they all died off, steamrolled into extinction by Google and FaceBook.

But what admen know, spies, intelligence operatives and political consultants also know. Your attention can not just be turned towards buying a fancier car or a better dishwasher, it can be turned to action for specific purposes. Purposes, like, say, electing a certain person to the presidency and keeping him there. There have been lots of little nudges and targetings as the internet’s evolved, but we’re now seeing a truly large-scale example unfold before our eyes. It’s an old story, but it uses new tech.

But first, some history.

Back at the very beginning of the 20th century a tract came out called “The Protocols of the Elders of Zion”. It was supposedly a Jewish manifesto that spelled out how Jews would take over and enslave the world, starting with the Christian nations of Europe and North America. It was actually written by anti-semites in Russia and they and others like them in different countries help spread it rapidly through the world. There are still people today who refer to it, mainly to recruit people to various neo-nazi groups. The evidence that it was written by Russian anti-semites and not, in fact, by Jews, is overwhelming to the point it’d be silly for me to try and prove it here. The interesting point isn’t that this tract exists or was falsely created, the interesting point is why it was created, why it had an impact, and why elements of it persist to this day.

The Protocols was written at a time when the Tsar, Nicholas II, was under threat from revolutionaries and anarchists of all stripes. His grandfather, Alexander II, had been killed by a bomb-throwing anarchist, ironically while in the process of liberalizing and reforming Russia. Since Jews were over-represented in the ranks of revolutionaries (Why not, when revolution promised them freedom and equality instead of pogroms and subjugation), they made a perfect scapegoat for those who wanted to stop reform, let alone revolution, in its tracks. Besides, “Blood Libel”, wherein Jews supposedly use christian kids for sex and human sacrifice, had been well-established for centuries as a way of deflecting attention from the failings of the Russian state.

So picture yourself as a Russian peasant or factory worker around 1905. You have access to a newspaper or two, probably not at home, but at work. You might not read too well, but there are those at the local pub who can translate some of the tougher passages. You’re proud to be Russian. After all everyone is proud of where they’re from, or at least proud of their region, their family or clan. You’re a good Orthodox Christian, because of course you are! You know the government may be bad, tax collectors may be cruel, police may be corrupt, but you believe, because you have to believe it, that the Tsar himself is looking after you and your family. It’s hammered home, in church and at work when the boss has a meeting of the workers – the Tsar’s looking after you. He’s the father and you’re his children, all of you. Some of his other children may be bad (The tax collectors, judges, etc.), and you may be suffering because of it, but it’s just because he, the great Father, doesn’t know about you specifically!

Well, what happens when you start thinking about things a bit more and those explanations somehow don’t cut it? What if you start suspecting that maybe the Tsar himself isn’t actually really looking out for you? Well…

Guess what? You! There, yes you! Sergei! Ivan! Alexie! You’ve stumbled onto something! You’re a smart fellow, I can tell! You don’t accept the simple explanations they spread in church, or what the boss says out in public. Very wise, very wise. You’re right, you know, the Tsar isn’t actually giving his whole attention to your problems and the problems of those like yourself. You’re correct as it turns out, and there’s a secret that I’ll let you in on – it’s not because the Tsar doesn’t care who you are. It’s because he’s actually engaged in a secret life-or-death struggle against the shadowy evil cabal that actually want to enslave you! Yes, Sergei! Yes, Ivan! You figured it out! He’s fighting the Jews! For you! Look here, look at this pamphlet! It was brought at great personal danger from the evil circles of the Jews themselves so that we true Russians could see for ourselves what they plan. This is why the Tsar can’t hear your cries! This is why you must suffer! It’s because of them! Read the Protocols! It’s because of this battle that is going on far above your head! Yes, you were smart to see past the simple platitudes, and here’s your reward – this secret knowledge. So support the Tsar, no matter what! Accept your suffering, it’s for Russia! And whatever you do, don’t question – the real truth – now that you know it.

Does that seem over the top? Well…

Where before this kind of manipulation had to spread slowly and ineffectively through individual gatekeepers whispering over a mug of beer, or through distributing pamphlets, we can now see how exactly that kind of psychological operation works when turbocharged by individualized newsfeeds and targeted advertising. Did you click on a link in FaceBook about Russia? Congrats, FaceBook has sold you as a target to Russian troll farm operators. Did you click on a link about Ukraine? Congratulations, FaceBook has sold you as a target to Russian troll farm operators. Have you liked anything having to do with the Republican Party, ever? Congratulations, your FaceBook identity has been sold to Russian troll farm operators. And if you’ve ever shown any interest in firearms and/or distrust of the federal government, well, whoo-whee boy, those Russians just loooove your profile. Might even have a human target you instead of a bot. Have you received any kind of personalized message purporting to let you in on secret knowledge? Well, hello psy ops warrior! You’re in on the ground floor of the pyramid scheme!

Etc, Etc, Etc.

This brings me to QAnon. By now, most of us have heard of this online phenomenon. It’s a conspiracy that claims the Democratic Party is composed of pedophiles and satan worshippers. Furthermore, Donald Trump is onto these villains and is secretly fighting them far, far above everyone’s head. The fate of the United States thus rests on his success.

The resemblance to the Protocols of the Elders of Zion and to the Blood Libel trope is uncanny (They didn’t even change the stuff about pedophilia and child sacrifice!). But why does a psychological manipulation scheme designed to work on illiterate Russian peasants find success with presumably educated modern-day Americans? Let’s unpack this.

Pedophilia is disgusting, reviled and… secret. It is notoriously difficult to bring to light specifically because of the perceived shame it brings not just on the perpetrators, but on the victims themselves and their families. This facet of human psychology causes enormous problems for prosecution. When people refuse to talk about a crime, it’s hard to identify, much less stop it. That makes it absolutely perfect for conspiracies. After all, if someone suspects something might be going on, how do you disprove it? If I say you, dear reader, are a pedophile, how are you going to disprove it? What if I say it anonymously? What if I make sure that it’s not even a human of any kind who says it, but a spambot? Remember, you and everybody else, is a target and tracked not just virtually but geographically too. So what if I buy data from FaceBook on everyone in your neighborhood and specifically send official-looking “reports” into your newsfeed that name a certain individual (YOU!) as being wanted in connection with suspected pedophilia?

Kind of problematic, isn’t it?

But this kind of attack isn’t perfect. That’s because your neighbors might very well know you. They might know your family. They might know your friends. They might know, because of your behavior, because of your actions, because of past history, that whatever the spam machine is telling them is simply not true. And so in real life, in a community where people actually meet and go to church, have a beer at the bar, talk over lunch at work… in real life, this kind of personal attack isn’t always effective. You might be a loner, or maybe stand-offish, and thus a better target, but still… When people can see you for themselves they have the ability to make their own in-person decisions, in real life. Which is exactly what the conspiracy-monger doesn’t want.

So maybe instead you get an article that appears on your newsfeed about something that happened far away, in which no source is identified in the quotes, which does not come from any recognized news agency, but man, it just tugs at your heartstrings and fires you up with righteous anger at… them! That story is probably a plant. By clicking on the plant, you’ve now emphasized the big fat target on your head – a target for operatives, human and automated, who think you might be open to manipulation. So your newsfeed is going to get more of those type of stories, until you fall completely in the rabbit hole and click onto the websites, the chat rooms, the places where the true conspiracy-mongering comes out. Only instead of the Jews, it’s… well, it’s still the Jews, sort of (Actually George Soros as a stand-in for the rest of them), but also Democrats and black people. It’s QAnon.

QAnon is a sequel. It’s the Protocols of the elders of Zion and Blood Libel in new packaging, tailored for an American audience with more emphasis on Black people as the dupes instead of anarchists, a bit less on Jews, and a bunch on Democrats. Let’s take it in order.

The symmetry with 1903 Russia is pretty amazing, and kind of amusing in a train-wreck kind of way. There were actual real-life anarchists in 1903, so some of the conspiracy mongers today call BLM protesters literal anarchists too. I doubt any BLM protester carries a copy of Bukharin around, but White America has traditionally had at least a little bit of fear of angry black folks running amok, so for the purposes of the conspiracy this works just as well. Almost nobody these days knows what anarchism was or why it was bad, but the word still has the ability to frighten, which is good enough for conspiracy purposes. But for the sake of sanity let’s just quickly discuss the difference between actual, real-life anarchy and BLM.

Wanting to not get shot by the police is a different goal than wanting to destroy the entirety of capitalism. There.

Even if you, the conspiracy-maker, are able to slightly scare a White person with thoughts of angry Black people they might still see there’s a difference between actual anarchy and BLM. But there’s a way around that – looting and burning stores! That’s anarchy, right?

This plays into the hands of the conspiracists nicely, whether the people doing it are genuine BLM (No), thugs (Eh, maybe?), or provocateurs (Probably maybe?). Here’s where reality and the conspiracy meet in real life. The effect of burning and looting is to take away the core message of BLM (Don’t shoot and/or kill black people without real cause. Reform PDs that do so), and place it back in the conspiracy sphere, where burning and looting is symptomatic of the Jew/Soros/Democrats using black people to destroy good, honest, (White) America. And if you want to know how political operatives/spies use thugs for their own ends, just do some research and read about Kermit Roosevelt and Iran in 1953. Paying street thugs to go on a rampage and scare people has a long, dishonorable history.

So that’s the Blacks. What about the Jews?

George Soros made his real, tycoon-level, money betting against, and breaking, the Bank of England. It’s an interesting story if you want to know about how sovereign states try to maintain their currency, but rather boring if you can’t be bothered about high finance. In any case, he tweaked some noses out of joint in the British establishment. Now a lot of British Lords and Earls are Arabophiles, and don’t particularly like Jews as a group to begin with. Maybe a legacy of the Lawrence of Arabia mythos, and the fact that both Arabs and Upper-Class Englishmen have a thing for horses. So Soros started off his career as a tycoon with some influential types in England against him. He also has been outspoken about the dangers of the modern Putin-style Russian expansion, so he really, truly, absolutely, is detested by the Kremlin. Not coincidentally, Russians have invested huge amounts in the City of London financial centers and in London Real Estate, so there’s been a lot of self-interest on the part of the British elite to play nice with Putin and his guys. For the reasons I just mentioned they fortunately all hate Soros, so pushing everything dirty onto him is a win-win. Best of all, he’s literally a Jewish financier, so you don’t even have to rewrite the section in the Protocols about Jews and money at all! In a twisted way it’s almost funny how the hatred of Soros from the UK and Russia has pushed into the American sphere, where he hasn’t done anything except give money to a couple PACs like lots of other liberals. If you’re interested by real conspiracies and need an individual to focus on, learn about how the Kremlin and UK elites have consistently tried to mess him and every one of his projects up. If you look at the mirror slightly sideways you can start to see what’s behind you.

Finally, the Democrats. Hillary Clinton was a pedophile. Of course, everyone knows that. What, you didn’t know that? it’s right here, on this link…

Where and how did this story begin? Again, everyone hates pedophiles. Do you want someone to hate your enemy? Call them a pedophile! It doesn’t matter if it’s true. In fact, it’s better if it’s not true! As long as you can create suspicion, you’ve won. And if people are already primed to think something bad about the other side all it takes is a nudge and a wink. This part of the Russian operation is melding The Protocols with Blood Libel. In fact, for anyone whose studied even a little Russian history this entire QAnon thing screams so much Russian style thinking it’s astonishing. A fantastical bunch of BS that had its origins in Russian state control of peasants is reformatted and incorporated into the American political frame and it works?! I mean, I remember as a college student reading the stories of Jews kidnapping Christian children and raping them and sacrificing them to the dark un-Christian God and thinking “How could those morons possibly, I mean, ever, possibly have believed that?”

Well, here we are. That exact old Russian folk tale is now spread by QAnon, except it’s not just Jews but Democrats also who are – yeah, you got it – kidnapping, raping, and sacrificing good Christian children. It is EXACTLY the same story from a couple centuries back. Somehow there are modern-day Americans, who are not time-transported Russian peasants, who actually believe that an entire political party, composed of millions of people – everyone from movers and shakers in Washington DC to local volunteers in rural counties of a few thousand – are in on a giant child sex trafficking-and-sacrificing scheme.

Fine, say the conspiracists. Disprove it.

And you can’t. Because you can’t disprove the existence of something that never existed. That’s the beauty of this conspiracy. That’s the beauty of the Protocols of the Elders, both the original and this new script. In 1903 Russia it was the Jews. In 2020 America it’s the Jew Soros/BLM/Democrats. Are you, Ivan – I mean, John… Are you a patriotic Russian? I mean American? Then support the Tsar! I mean Trump! He’s fighting this shadowy battle, far above your heads. Aren’t you a patriot? Don’t you understand that he’s your father, looking out for his children? The enemy are shadowy and hidden, but you, yes you! You have been given the secret knowledge to what’s really going on!

Just click on this link…

Now what if you haven’t drunk all the kool aid? You’ve read my screed this far. You say to yourself, I don’t know if I believe all this stuff about Protocols and a new conspiracy but let me just see. Now you click on a link about BLM. And hey, all of a sudden your feed changes, and you start to get stories that tug you another direction. This poor black kid on the other side of the country got murdered by some white racists. It’s unaccredited and far from you, and from a news organization you’ve never heard of, but the stories just heart-breaking. So you click on another link below and suddenly there’s another rabbit hole. Only this time it’s chat rooms and websites that say the only solution is violence! Got to show these fascists what time it is! Burn, baby, burn!

Congratulations, the conspiracy got you too, only looking at the mirror from a different direction. Whatever your fears are, whatever your weaknesses, the digital mirror wants to reflect them back at you, and then start changing the picture you see, slightly at first, then a little more, then a lot, until you’re inside looking out.

This, all this, isn’t about anything real except manipulation. It’s a psychological operation. You. Are. The. Target. Whatever you click on, you’re targeted. FaceBook doesn’t care. This American company absolutely does not give one single solitary damn about what happens in American society. It started off and has always, always, always been about one single thing: making money off of YOU, the user. The fact that Russians, Chinese, whoever, can buy all the most intimate data about you and everyone you know, fuse it with their own database of psychological profiles and target you with items designed to manipulate you one way or the other… FaceBook. Doesn’t. Care. And while the Protocols and the myth of Blood Libel are old-style scare-mongering, these are some reasonably sophisticated databases. Are you a warrior? The database says you get items and links from this silo specializing in combative outrage. Are you a worrier? The database says you get items from this silo specializing in helpless victims. Etc. Etc. Etc. Everyone fits a profile, at least to some degree. Once you can see what people have clicked in the past, you can have a pretty good idea of what their psychological profile is like. Fit them to the correct silo and start pouring into their brain all the items and stories you have that push them in the direction you want.

THAT’S the conspiracy.

If you don’t want to be part of the conspiracy the solution is simple. Delete FaceBook and other social sites. Don’t use them. Communicate with your friends by email. Yeah, it’s a step back maybe, but humans survived for millenia without that stupid blue logo. If you feel that you absolutely have to be on FaceBook or other similar social sites, at least turn off the “news” feed. Get your news from real sources, local, national, international. Learn a language and try to read foreign news sites in the original if you like a challenge. And if the article or news item is about something far away, and it doesn’t appear in other accredited sites or it otherwise seems off, just don’t click it. And don’t believe that crap about “mainstream media” being all lies. Real journalists actually interview people, cite sources, go places, and tell you about it. Sometimes real newspapers use anonymous sources, but they will say so. Actually fake news pretends that the information they tell you is supposedly secret, isn’t verifiable, and the sources can never be actually found.

The conspiracy is real, but it isn’t the one you think it is. Don’t be fooled. Don’t let some long-dead Russian Tsarist and his modern descendant turn you into a chump.

Talking with a friend about the recent Black Lives Matter protests, he suggested my background gives me a unique take on these events and that I should write down some thoughts.

So here goes. But before getting into it I should probably clarify that I’m a dark-haired caucasian man. Although born in the USA, I’ve travelled around the world multiple times – when I was a child due to my dad being a US Army officer with multiple overseas posting, and as an adult out of choice. I was also brought up multilingual because my Swedish mom spoke Swedish with me and my sister in the house, and I’d also pick up a bit of whatever the local language was where I happened to be. My background was in other words more international than that of most American kids.

From that perspective, one thing I can say without reservation is that America was strikingly racist pretty much all through childhood. I didn’t see it so much when I was overseas, being surrounded mostly by other military kids and families. Up until it was time to go to High School I was either in Asia or Europe, with one short interlude in Ft. Leavenworth while my dad went to OCS. But coming home, whether in Kansas when I was ten, or later on again in my teens I noticed there were some strong unwritten rules and attitudes regarding race to which raised-only-in-America Americans hewed closely. Just a few of the lesser ones: Blacks don’t swim. Whites can’t dance. Business executives are white, but most sports stars are black. Simple biases which, to be honest, blew my mind. Most troublesome were the ways in which kids seemed to internalize the casual, yet definite, separation into us and them.

A quick digression. I lived in (West) Germany for three years at the apogee of the Cold War, in the beginning of the 1980s. M60s and Leopard 1 tanks would regularly tear up the fields near our town as they practiced getting ready to repel the red hordes that might come at any moment through the Fulda Gap. Bo105s and Kiowa helicopters would clatter over my school sometimes, and there’d be stand-tos fairly regularly on weekends, since everyone knew the Russians would come on the beginning of a long weekend when most NATO forces were home with their families. Being precocious, I’d read Foreign Policy and The Economist when I could get my hands on a current issue, and I knew that once the Red Army got going our puny three US divisions wouldn’t stop them and we’d be forced to use tactical nukes. Which meant they’d use nukes, and considering I lived right near one of the major staging areas for US Forces in Europe, this meant I’d get nuked.

My point isn’t that this was a terrible thing for a young kid to live with, because I had a comfortable life. My point is that my early searches for life’s meaning included the very real notion that it could be taken away very, very quickly, and that if American lives (Including my own) had to be sacrificed to stop the Russians, so be it.

Secondary to that overarching threat of nuclear annihilation was the idea that when the Russians did come we’d all be in this together. I’m sure that there were racial issues in the barracks and mess halls, but I’m pretty sure that it wasn’t anywhere near the level of what civilian Americans internalized and lived with. As for us kids, my friends at school included a fair number of black Americans, Hispanics and Asians, as well as whites. I honestly cannot recall ever – EVER – having that be something we talked about or really noticed as kids. Much more objectionable was that we’d have run-ins occasionally with the local German kids who went to different schools. If there was ever an us versus them, that was it. Americans stood together, and skin color really wasn’t in the picture. The point I’m making is that being an American meant something in a way that I think most Americans who have never lived overseas could ever understand. Being capital-A American has absolutely nothing to do with something as frivolous as skin color. Only people with an unexamined sense of smug security could possibly waste their time on something so patently ridiculous. If there’s one thing that the ghost of Harry Truman can be proud of, it’s the integration of the US Armed Forces he forced through.

So that was my background when I come back to the states to go to High School. A few things surprised me right off the bat. American kids knew nothing about the world outside. I’ve gotten used to it over the years, but when I was a kid I could not understand how anyone could be in High School or later without knowing where, for example, Japan or Brazil was on a map. Conversely I noticed I wasn’t considered really American because I didn’t know what Bubblelicious gum was (Not a joke. After saying no to an offering of gum because I didn’t understand what the kid offering it said it was, I was referred to literally as ‘the foreigner’). Lastly, and most important to my point, I didn’t understand why I needed to think of myself as ‘White’. This last point came up inevitably in some form of casual conversation about sports or music or any other cultural entity. Blacks were natural athletes, but whites worked harder at sports. Black music was fun to dance to, but white rock and roll was more “serious”. Etc, etc. None of this made sense to my kid brain, and it stills doesn’t. I’m not even getting into real racial issues, because even to me it was obvious that there were problems. I was in New England, and Boston had gotten a pretty bad rep during the 1970s because of busing. But that was just ignorant Southie Irish being racist, I was told. Never mind that the suburbs where I lived were staunchly white, not integrated like the international schools I was used to. And even those nice, majority white, middle-class kids at my school had some of those same “Southie” views under the surface. For a kid who grew up watching Armed Forces Network, where Gilligan’s Island segued seamlessly into Soul Train, these kinds of artificial distinctions seemed utterly bizarre. The kind of American I thought I was didn’t actually seem to exist in America itself. Nobody in the Continental US seemed to ever think about the Russians or nuclear war – they were more worried about whether a black family moved into their neighborhood.

But why? Nukes really don’t care what your skin color is. Isn’t that something worth pondering just for a moment?

What does any of this ancient history have to do with what’s going on now?

Well, the pendulum of American history seems to be swinging back a bit from the conservative tide that Reagan started. Is this a cultural revolution moment? Are the hippies coming back? Flower power and free love? Well, no. But if history doesn’t repeat, it does rhyme. Take the Capitol Hill neighborhood of Seattle. As I write this, multiple articles are being written about how this neighborhood, with it’s abandoned police station and ensuing “occupation” by self-styled radicals is something completely new. Except it’s not new, not at all. It’s just new in America. Any visitor to Copenhagen, Denmark, has had the chance to see this same experiment for the past forty years. A section of that town called Christiania was taken over by hippies at the tail end of the 1960s and run according to communal laws, with no police, or other forms of city officialdom. Two main things resulted. The good thing was that this part of Copenhagen became an artistic hub with incidentally, some of the best vegetarian restaurants in Europe. The bad part is that the hippie-friendly pot culture that was part and parcel of Christiania’s initial vibe eventually got corrupted by organized criminals, mainly bikers, who came in and took advantage of the lack of hard power. Turns out career criminals aren’t really amenable to persuasion on the merits of just, like… chilling out, man. So Christiania was a decades-long experiment that proved that you might have the best intentions in the world, but if you don’t have a plan of what to do when bad people show up, none of that matters a bit. Bombings, shootings and grenades harshed the mellow for a while there, and now Christiania has a police presence – although for what it’s worth it’s still a bit more laid-back than the rest of Copenhagen when it comes to cannabis.

I don’t know if the Capitol Hill Zone will become a peacenik haven of yoga and vegan food trucks, or a drug ridden dystopia. But there’s a reason most people instinctively know that a society needs somebody to take on those people that take advantage of liberty to do evil.

Which brings us to the police.

Another story from the past. I’m no longer a kid. I’m out of college, in my twenties and visiting my Mom’s relatives in Stockholm. It’s a warm Swedish Summer evening and I’m with my Uncle who lives in an apartment in the heart of the city. People from other apartments have gathered in the square formed by the enclosing building, a pleasant spot shut off from the traffic of the street outside. We’re sharing some beers my uncle’s brought down, and he introduces me to a couple who live a couple floor below him. They’re in their late twenties, early thirties, dressed casually but hip like so many Stockholmers. Blonde and with that healthy glow that seems to come naturally from walking and biking everywhere. I ask them what they do, and they say they’re both police. I’m a bit surprised because for some reason they didn’t seem like police to me, although why I don’t know. I’ll circle back to that.

My uncle mentions I’m from the states and they say they’ve just come back from there too. Vacation? No, a sort of exchange program. They’d been to some big city, New York if I remember right, for a few weeks and some American cops from that same department had come to Sweden, observing and taking notes how their opposite number police do things. We talk a little bit about America, the woman has more to say than the guy. She liked the stores, the fact that places are open all hours. I ask them what they thought of American cops, or how American police worked. Awkward silence. They both just looked down a bit and shook their heads.

But American shopping! That’s great!

I wasn’t interested in penology or had any desire to become a police officer. But I was surprised at their reaction, even a little offended. America’s the best! How can they think anything bad about it at all? But that’s simple patriotism, not thoughtfulness. Upon reflection it’s obvious that even the biggest of big city American PDs have not always had the best reputation from outside observers. For some reason I found that shocking. I probably shouldn’t have been, as my perception of American police has shifted from being primarily based on what I happened to see on TV to actually living all over the US and having friends of both sexes who happen to be black.

I don’t think Swedish police are necessarily much smarter or harder-working than American cops. But I do know that if they mess up, they can’t resign before being disciplined and just start over somewhere else, like American cops can. I do know that while they all carry guns, their training emphasizes over and over that pulling their sidearm is an absolute last resort. I also know that training to become a cop in Sweden takes five semesters (About 60 weeks) of college-level study plus six months probation. In America, the equivalent is 20-odd weeks of study, and about the same or longer probation. Does it help to be in Police Academy for about three times as long before going out in the field? Probably. If nothing else, it’s a lot longer to be inculcated with the right way to do things (Just as an aside, the Swedes aren’t even the real study nerds. German police have to go to school for three years before hitting the streets).

Why does this matter? Well, from experiencing some exciting moments at various times in my life I can say with some certainty that the first time something real and unexpected happens, it’s hard to act with absolutely correct wisdom and judgement. Fight-or-flight response is a real thing. And especially after my experience flying commercial aircraft I believe the value of going over abnormal and emergency situations over and over in a controlled environment cannot be overstated. This is especially true in building conditioned behaviors which go against the natural grain of most human instinct. A random human faced with an airplane’s engine catching fire is not instinctively going to pull out a book. A commercial pilot (After completing a few very obvious steps, like pushing a big blinking red light), does precisely that. Likewise, a random human facing an aggressive and hostile individual on the street is probably not going to first ask why they feel the way they do. A policeman trained in de-escalation techniques might very well do precisely that. In both cases the raw human has been turned into a professional, and their fight-or-flight instincts tempered into constructive behavior and actions. More time in the flight simulator or the police academy means more time to mold that raw human material into a professional, rather than hoping they figure it out “on the line”, or “on the streets”. Training over and over until the correct behavior is the natural behavior requires precisely that: training over and over. And it requires recurrent training once or twice a year, too, not just once upon hiring.

You want professionals? Train them that way from the start, and keep training them that way no matter how many years they have on the force. It’s that simple.

Setting aside training for a moment, there’s also the question of optics. A big part of the current issue citizens are discovering with American police is that there’s the “Protect and Serve” outward image that most (White) Americans see, and the “How we really do it here” mentality, particularly towards minority communities, that’s becoming clearer and clearer with the advent of cameras. Will training bring the optics of policing across all communities into alignment? I would argue that training more, and in a more consistent and realistic manner, would absolutely do that, to the benefit of no-one more than the police themselves. After all, the best type of police work is that which is done in conjunction with members of the community most affected by crime. If police are seen as illegitimate, they simply don’t get the tips and intelligence they need, they are ineffective, and crime flourishes. Good policing isn’t “tough” in the sense of cracking skulls, but by building solid cases against those criminals who are truly ringleaders and instigators.

More young black men die from other young black men than from the police, some say. Well, so what? More citizens are killed, overall, by other citizens than by the police. That’s why murder is a crime, and we hire police to prevent it. For about four years I lived in a drug-dealing neighborhood in LA. I wanted to make it in Hollywood, and thought I’d struck gold when I found a place that only cost a semi-outrageous amount. Of course, my upbringing hadn’t really prepared me to see the signs that I guess most Americans, let alone Angelenos, pick up without thinking. Bars on the windows? Dudes standing on the corner motionless? Weird graffitti that didn’t have any artistic merit but was just strange sort-of letters and numbers? Nothing like that in Germany or Thailand.

Besides, if you’re going to hustle in Hollywood and make a movie you have to put up with a little weirdness, right?

In the time I was there I found only a small measure of success in Hollywood, but I got a great close-up outsider’s view of Crime In America.

One day the police raided the Section 8 building kitty corner to mine. While they were trying to find their arrestee their cruiser got a couple tires slashed and some windows smashed. The next day twenty police cars blocked off the street in every direction, and police were coming and going for about six hours pulling people (All minority) from the building and driving them away.

I found out after moving away that my own house had been used as a drug stash, bags put under the foundation.

A neighbor who reported some troublemakers on his corner got his house fire-bombed.

More than once I had a couple people sitting in the closed-off yard outside my door when I came home that I had to shoo away – politely of course, but still.

That’s just a few off the top incidents I can remember. I don’t want to make it seem like I was some tough guy in the hood, I didn’t get shot or anything, but it definitely wasn’t a Mayberry vibe.

Now, the police would roll by in their cruisers fairly regularly in the day, but I don’t recall ever once seeing an officer patrolling on foot. Instead, at night there would be a slow, constant stream of nice, shiny cars rolling slowly through the neighborhood. The car would stop at a corner where a guy would separate himself from a light pole, and saunter up to the window and say a word or two. The car would then roll on to the next corner where a second guy would walk up to the window, after which the car would sidle on back to the hills or the beach whence it came. Because that’s where most of the drug buyers came from. They definitely weren’t local guys. The cars that started showing up after the sun went down were invariably driven by whites. Which brings an interesting point to the whole notion of Crime In America. There is not only a disparity between unarmed black people getting killed for the smallest, or indeed no, reason. There’s almost no attempt to choke off demand for drug crime from its source: in my personal experience, mostly white people with money.

Because so much crime in America is inextricably tied into the use and consumption of drugs, it might behoove people to think a bit about who does what. I’m not excusing the black guys slinging rock on the corner. But isn’t it a bit strange that you never read about some white Wall Street type getting busted in the local crime beat section of the paper, or its website? Because if that’s happening, I sure don’t see it anywhere in the media. The ghetto kids are cannon fodder for this war, but the ones actually driving it with their dollars and separated septums are nowhere to be seen in the statistics or the perp walk.

How do I know there’s a double standard? Because it’s blindingly obvious.

Another story.

I was still living in LA but visiting Boston. As a private pilot, on a lark I rented a small airplane and flew from Bedford, Massachusetts to Provincetown out on Cape Cod. Provincetown, for people who have grown up in Boston, is apparently well known as a gay community. I, of course, had not grown up in Boston, or at least not long enough. I just thought it’d be interesting to fly across the bay. I took the plane, flew over the North Shore, and after a little under an hour landed at P-town, as it’s called. I wandered the terminal a bit before heading back, but was shocked, well and truly shocked, to see a small display on a counter for arriving passengers.

This display had a medium size basket, and next to it a sign that said (I’m paraphrasing because this was a long time ago), “Please leave your uppers, reds, blues and other pills or drugs in this basket. It’s illegal to use meth or cocaine in Provincetown. Thanks for your cooperation, Provincetown Police”

I have never come across something like this before or since, perhaps because I don’t desire to hang out with a bunch of gays. I just picked Provincetown as a destination because it was an interesting over-water flight. In fact I couldn’t figure out why this random coastal town could possibly have something like this until a native long-life Bostonian said something to the effect that, yeah, it’s a gay town and they do what they like there. No matter how troublesome this seemed to me, maybe I should just have shrugged or something. But this thing really hit me. I was living in a place where American citizens who happened to be black were being shoveled into the criminal justice system like so much cattle and here were gays being given a wink and a nod that they could do or take whatever drugs they wanted.

Hypocrisy much? There is a really blatant double standard in the policy of drug law enforcement in the US, and this was such a crystal clear example. Privileged gays can do whatever they want with regards to drug dealing and drug use with a smile and a wink from law enforcement in “their” town, but minorities in hardscrabble neighborhoods get their lives ruined from their first felony stop and away they go to the gladiator schools and gangs.

Which does not mean I’m excusing criminality. It’s the double standard that gets me.

While I lived in that part of LA the most useful comment I ever heard regarding crime and individual criminals came from a detective who happened to knock on my door to ask if I’d seen anything on a particular night when someone had gotten shot. I wasn’t able to help him, but during the conversation he said in an off-hand manner that one of the two real bad apples from the block had gotten out of jail just a few days ago and so they’d been expecting something like a shooting.

This throwaway comment that I’m sure the detective didn’t think anything of struck me deeply. Mandatory sentencing laws meant that foot soldiers in the gangs, caught for having some baggies of crack on them, could be expected to go to prison for longer than their bosses went to jail for ordering a murder, if those bosses even got caught in the first place. I’m not saying all gang members are angels who deserve everyone’s sympathy, but considering the relative misery that the truly-, for-real-, damn-that’s-awful- bad guys cause when they’re out versus the small fry guys, shouldn’t police really concentrate on cutting off the head of the snake versus trying to catch the tail?

Police training and greater emphasis on intelligence. And less hypocrisy. What else? Well of course, there’s also the fact that Americans are crazy about guns in a way that’s just out of alignment with every other advanced country on the planet.

Time for another digression.

The Austrian gun manufacturer Glock has become the default choice for many police departments in the US, and indeed other places as well. This is bad for a simple reason, and that reason is that they’re just about the easiest pistol to shoot that exists. Most handguns have one or more external safeties. The purpose of the safety is to prevent the operator from firing the gun accidentally, assuming there’s a round already chambered. On a typical non-Glock handgun the safety might be a small lever alongside the receiver. To operate the gun, the user has to flick the lever to the correct position and then pull the trigger. Two separate actions. The user cannot just grab the gun and pull the trigger and have the gun fire.

So on most guns, you have to really be aware of what you’re doing before firing. Glocks don’t have that type of safety. The Glock safety is incorporated in the trigger. You begin to pull the trigger and the “safety” part of the trigger follows along as the trigger’s depressed. In other words, if you grab the gun and simply pull the trigger the gun will fire. The “safety” isn’t really a safety at all. I would argue that at least a few of the incidents we’ve seen where police shot unarmed victims might simply be the result of poor training (Pulling the gun in a non-life threatening situation), andrenaline, and a horrifically bad human interface on the actual weapon. For use as a military sidearm pulling the gun and shooting immediately might make sense. If a soldier is resorting to a sidearm rather than his rifle then a split second really might be literally the difference between life and death. However, this has not been the case in any of the recent shootings where police shot unarmed citizens.

Incidentally, a word on why it’s so important to use proper descriptors, especially when talking about military versus civilian use of fire power.

The people we’ve all recently seen shot or otherwise assaulted without cause are citizens. NOT “civilians”. Police officers are civilians themselves. The false divide that seems to have crept into some discussions of police on one side and “civilians” on the other is false. Police are not soldiers, and thank goodness for that. True military firepower has no place on our streets. So if it takes a half second for a CIVILIAN police officer to actually consciously set the weapon to fire before pulling the trigger, I would argue that that is precisely a good thing. Rather than jumping out of his cruiser and shooting at a twelve-year old kid with a bb-gun within a few seconds, a police officer might have the weapon in his hand but have to think about the situation first. And a little American kid would be alive.

This is a strange time in our nation’s history. We’re tearing at each other in a way that I don’t believe I’ve really seen before in my lifetime. Nevertheless, we are, and will remain, Americans. All of us. Black and white. Police and regular citizen. Soldiers overseas or stay-at-homes who never even leave their native state. We’re still all Americans, and it’s up to us to figure out what we want from ourselves and our fellow citizens, and for this country.

When my little town in Southern Virginia had a Black Lives Matter parade I went, carrying an American flag.

Because what else is a American who still has hope for the future gonna do?

The Economist magazine has an excellent leader on Russia and Putin in their February 14th edition. The take-away, which needs repeating, is that Russia is not, in its political leadership or economic make-up, similar to the West, and cannot be thought of as equivalent.

This needs repeating, because Russia has been a blind spot in Western political thought. After the Cold War, most Americans and West Europeans breathed a sigh of relief and concentrated on domestic issues. Sure, there were still attempts to “integrate” our former foe, whether economically or with mutually beneficial initiatives such as the program to secure nuclear warheads, but the focus the USSR/Russia had played in geostrategic thinking fell away. This was a mistake.

Russia is not so complicated as Churchill’s “enigma wrapped in a mystery” quote might have us think, but it is not quite an open book either. In fact, Russia (And to a certain extent our other peer rival, China), is a society fundamentally different from the West in its very outlook on life. Basically, it is a closed society, while the Western nations are open societies. Yes, there are lacks of freedom in the West too for certain individuals and groups, but the difference between our failings on that front and those of the post-communist nations is orders of magnitude smaller. This basic outlook of closed or open colors every interaction between the West and Russia, and leads to misunderstanding and miscalculations when not kept in the forefront of mind.

Russia does not reward political expression from any but the elites. It does not reward innovation, efficiency, or originality of thought. Control is top-down, and the political and economic spheres are bound together to such a degree that they are practically indistinguishable. In the long run, this will lead inevitably to an economic hollowing out, a process which is already well under way. As Western nations have transitioned to an information economy, and China and India (Two developing countries who have decoupled economics and politics to some degree) are stepping up the developmental ladder from manufacturing to a degree of intellectual value-add in their products, Russia is completely stagnant. Quick, name one single Russian product which has been successful on the international market. Apart from weapons, vodka and oil (Or natural gas), there is nothing which Russia produces that anyone anywhere in the rest of the world wants to buy. And neither vodka nor oil is a product which demands any degree of intellectual capital to produce. Weapons alone are Russian products which are knowledge-intensive and exportable, and this is more a legacy of the Soviet Union’s massive investment in that capacity on the one hand, and Western inefficiencies in weapons production (Particularly the US DoD’s ridiculously mismanaged procurement system, with plenty of blame going to Congress and its pork-barrel mentality) on the other. This means that Russia’s leaders, from Putin on through the rest of his coterie, have no understanding of what a modern economy needs to survive, much less compete, in the global economy.

Since Putin and his fellows have no understanding of economic development, it’s not so strange that he would see politics, both international and domestic, in terms of “strength” above all. This is the Russian tradition of the Vozdh, and with certain occasional forays into top-down attempts at liberalization such as the reign of Peter the Great and Alexander II, it has been the default setting for how Russians approach leadership. Western leaders have been naïve in the extreme to ignore the strength of this subconscious outlook on life. When “we” say something that to us seems self-explanatory, such as that economic liberalization depends on a strong civil service and independent judiciary, an unsophisticated, non-international Russian hears an attack on his centralized power base. When “we” say that human rights matter, because it is self-explanatory that individuals won’t create value in the economic sphere without a chance of reaping rewards, a Russian leader hears an attempt to foment attacks on his centralized power.

We should not be so smug, either, as to believe that simply because our societies produce better products, services and quality of life, that these are somehow innate qualities. There has never been, and does not exist now, a genetic disposition to a better society or culture. The West is currently benefiting from institutions built up over centuries, from the Magna Carta on, which are independently strong enough to survive attacks from individuals who seek to subvert them for personal gain. Arrogance or schadenfreude at Russia’s economic flailing is misplaced. We too, need to be vigilant and keep tending to our own economic garden, lest it fall to the entropy of naked greed.

This big picture overview of cultural differences may all be very well, but what, exactly, does it mean? Particularly when Russia is carving out parts of Ukraine simply to prove a point? The point being, of course, that Russia has its Great-Power sphere of influence in the “near abroad” and everyone needs to keep out. What options does the West have in trying to influence events?

First and foremost, the West needs to hold fast to the fact that despite the differences between the US and Europe, we share far more with each other culturally, economically and socially than we do with Russia. This is a point which from the American perspective cannot be over-emphasized. While Europeans might well look across the water to the West and see a nation of cowboys, from our perspective Europe has failed dismally when it comes to the necessary application of force, whether political or, in particular, military. Europe’s track record does not inspire confidence.

When Yugoslavia imploded, unpleasant ancient German prejudices surfaced and led to the premature recognition of Croatia, hastening the rise of Milosevic and thence to the horrors of Srebrenice and the rest. It took years of waiting for “Europe” to do something before the US stepped in and ended the slaughter in the Balkans. Not completely successfully, but at least to a degree. When the EU talked of expansion as a way to project peace and economic development, one of the gobsmackingly stupid things that led to was the ascension of Cyprus as a full EU member, despite no formal peace between the Greek South of the island and Turkish North. This insanely stupid piece of non-diplomacy led incidentally to the rise of Cypriot banks as funnels for the swaths of cash that flowed out of the former Soviet Union. It’s not a stretch to say that if Cyprus had never joined the EU, Putin and his coterie would not have been nearly as personally successful in amassing their fortunes. Was Cyprus and its back-door banks an inside job? Did a bunch of the European technocrat elite get paid off for this betrayal? Who knows. Europeans themselves have never addressed it. And the continuation of such underhanded financial shenanigans led as well to parts of the City becoming Londongrad, a daggar of Russian corruption placed right at the center of the Western financial system. This unseemly scramble for crumbs from the oligarchs’ table has been far from Great Britain’s finest moment.

To counteract Russian aggression and short-term thinking the West must do a far better job of integrating their financial, diplomatic and military response. Since it is the Russian elite centered around Putin which is the problem, personally directed sanctions, aimed where it hurts (at their wallets), are effective and should be continued at the least or even expanded. Diplomatically, there is absolutely no reason to keep pretending Russia is a real nation that should be treated as such in talking shops such as the G8. Militarily, in Ukraine in particular, the situation is trickier. Putin’s ultimate aim is to decouple the US from Europe, which means at the least weakening NATO, and at best (from his perspective) making NATO completely ineffective. Ukraine is just a start. The ultimate goal would be to attack a geographically close, small NATO member, such as Estonia or Lithuania, and force them out. This would be done with just enough visible military force so that it is obvious that Russia is imposing its will, but not so much that a unified Western response is politically unavoidable. In other words, it would not be a Russian blitzkrieg of tank divisions rolling into Vilnius or Tallinn, but a concerted propaganda campaign lamenting the suffering of ethnic Russians, coupled with black ops that target local centers of possible resistance, whether institutions or individuals. Closed societies prefer working in the shadows, and the Russians take an inordinate pride in their maskirovka, or ability to mislead. Westerners should pay attention not to words, but deeds. When prominent Estonians or Lithuanians start dropping dead from heart attacks or getting run over in hit and run accidents, it really shouldn’t even be on the agenda to engage with whatever propaganda Moscow uses to try to set the debate. The West, and Europe in particular, needs to toughen up and understand what we’re dealing with. To that end, further build up of forces in Poland and the Baltics should be a priority. In particular, Washington must bite the bullet and commit ground and air troops. The sad fact is that Europe alone doesn’t have the capacity or recent history to scare off Putin.

Finally, coming full circle is the question of Ukraine itself. While the cowboy wing of American foreign policy demands immediate shipment of offensive arms, it’s not quite so simple. The Ukraine military is not even in the neighborhood of that of Poland, say, or France, let alone the US military, when it comes to actual ability. They have an astounding lack of capacity when it comes to logistics and support of frontline troops, even now, after a year of continuous fighting. Sending arms without addressing the structural problems in the Ukrainian military would be like pouring water into a bucket with a hole at the bottom. In the question of creating capacity among our allies the US can legitimately be criticized. Our own track record is, frankly, abysmal. In Iraq, we trained, supplied and equipped a local force without ever addressing the political problems which made such training and equipment meaningless. What good is giving shiny new tanks and guns to troops who abandon them as soon as there’s conflict because, with all the justification in the world, those troops don’t trust their local leaders? In Afghanistan, we enabled corruption at the outset of our campaign, buying short-term warlord “allies” but setting the seeds for developmental failure in the long run. Going further back, the withdrawals from Beirut after the barracks bombing, the withdrawal from Mogadishu after the Black Hawk down incident, and the Iran-Contra scandal itself shows that within Washington DC, at the very highest levels, there is an ignorance, lack of planning, and short-term domestic political stupidity which can subvert our own intentions better than any enemy action. Overall, we’re far from being strategic geopolitical geniuses. Still, we’re the only ones who can realistically take on the Russian military.

For this reason, any attempt to provide military aid should be considered far more carefully than current domestic political discourse suggests. It’s not just about sending APCs, missiles and tanks. Far more important is the question as to whether any such aid actually would be useful. Are the Ukrainian troops well-led? Is their morale high, or constantly undermined by knowledge of profiteering from small-time fat cats back in Kiev? What is the political settlement that will lead, in the event of military “victory”, to stability in East Ukraine? If we give Putin a bloody nose in Ukraine, have we covered our bases when it comes to what he might do in the Baltics? None of these questions have easy, glib, answers. However, if something is to be done, it comes down to the US. We can muddle along in a incoherent way like we’ve done for the past decade, or we can actually identify goals, formulate a strategy to reach them, identify the tactics that will allow success, and finally maintain the will and strength of purpose to achieve those ultimate goals.

It shouldn’t be difficult, except that it is.

The Economist has an interesting article this week on the difficulties that China’s North-Eastern region is going through:

http://www.economist.com/news/china/21637449-after-promising-signs-renaissance-chinas-old-rustbelt-suffers-big-setback-back-cold

It can surely be no coincidence that this region borders on North Korea, and shows up some of the economic costs associated with China’s continuing support of that regime.

Quite apart from questions of human rights or other soft power aspects which are diminished by China’s support to the DPRK, the fact that North Korea is and will remain a country shunned by the rest of the world bears real economic and social costs for China itself.

As a thought experiment, imagine that Korea was a single, unified country run from Seoul, instead of being a divided peninsula. China’s North-Eastern region would have a much easier route for import and export of goods through rail links and then ports on Korea’s East coast. In addition, Korean investment would naturally flow to that region, bringing jobs and economic renewal. This might well also benefit China politically, as the triumvirate of China, Korea and Japan would be better balanced. Tensions between China and Japan (And thus Japan’s ally America), would benefit from a single Korea pursuing its legitimate interests. South Korea, while an American ally itself, does not see eye to eye with Japan on a range of issues. China might not feel quite so “encircled” if it observes its neighbors engaging politically with each other on natural and normal questions of economics and diplomacy.

As long as North Korea exists, however, South Korea will remain far more concerned in its calculations with whatever is happening in the North to the exclusion of pursuing other interests. Were the North to be absorbed by the South, not only would diplomatic calculi change between Japan and China, probably lessening the chances of a dualistic tug of war between them, there would also be an enormous boon for China’s North East in providing labor and machinery to help rebuild the former DPRK. Japan too, with considerable construction capital and expertise, might do very well out of such a reconstruction.

However, China’s continuing support of the Kim regime instead ensures that the natural economic development of the region, and any possible boom in investment and reconstruction of the former North Korea, remains stymied. Instead of showing some kind of Chinese strength, their support of North Korea shows a deep-rooted fear. Fear of “encirclement” by economic and political rivals, and fear of change itself. This deep-rooted fear apparently trumps the costs in terms of development and social stability within China itself.

There are seldom clear-cut examples of self-inflicted, internal, economic and social damage caused by purely political concerns. Unfortunately, the case of China’s North-East economic problems, caused at least partially by its bloody-minded support of North Korea, come what may, is one.

Economics is a dismal science. For a reason. The numbers which typically get touted as signs of economic health within a nation do not always correlate with citizens’ actual experience of their individual well-being. Much of this can be traced to the numbers used. Typically, a nation’s economic health is described through the crude measure of GDP, or Gross Domestic product. In other words, the production of goods and services within the borders of a country. If this is growing, the economy is said to be doing well. If it is declining, the economy is not doing well. So far, so good. What GDP suffers from is in its very name: it is a gross measure. It does not show anything other than total output. It does not take into account the distribution across society of production or of products and services. GDP can very well be growing, but with the gains accumulating only to a few citizens, while the rest of the population might see stagnant, or even declining standards of living. This has profound implications for the political and social health of a country. Throughout history, social inequality and economic injustice have gone hand in hand in creating conditions of instability and conflict. For policy makers and politicians, citizens and businessmen, the optimal state of a nation’s economy has been to see shared effort and work resulting in a fair share of the results. But too often, GDP alone is seen as the most important measure of whether political action in the economic sphere is providing positive or negative results. It is far past time for GDP to be retired from serious discussion as the sole measure of national economics. For the purposes of this essay, I’ll hereby only use GDP in its most useful social sense of per-capita GDP, not total overall GDP.

What should take the place of per-capita GDP? Because I am incredibly modest, I suggest something called the Lawrence A Pearlman Index. or PI, for short. This takes GDP, which is useful in a narrow sense, but combines it with the Gini coefficient of social inequality to provide a more holistic and complete picture of a country’s economic state. There could well be other measures included in a more complete equation, such as levels of health, education and other indicators of social welfare, but although GDP itself is very crude and simplistic, one should not go to the opposite extreme and try to create an alternative which is needlessly complex. The idea is simply to replace GDP as the de facto, basal, number of discussion in economic development terms. There is one additional factor which has an immense, and generally unspoken, effect of economic health which will be addressed later, but first things first.

The current gold standard for measuring a nation’s level of economic inequality is the Gini Index, in which a score of 0.0 would indicate a society in which all economic resources are divided completely equally to all citizens, and a score of 1.0 indicates a country in which one single citizen holds access to all resources and no-one else has anything. Obviously, it’s impossible to have score at either the extreme high end or low end; most of the more egalitarian North European nations have a score a score around .2-low.3, and most developing countries are less egalitarian and have scores somewhere around .4-.5.

Let’s look at some examples. A developed North American economy, represented by the United States. A developing South American country, represented by Brazil. A representative South-East Asian developing country, Thailand. A mature European economy, Holland. And finally China (All data in the tables below sourced from the World Bank’s website. Brazil’s Gini index number is from 2012, as there was no data from 2010 available). For the sake of making the GINI coefficients easier to work with, I’ve chosen to multiply them by 100, giving a positive integer.

2010 USA Brazil Thailand Holland China
GDP $48,358 $10,978 $4,803 $46,773 $4,433
Gini 41.1 52.7 39.4 28.9 42.1

A simple equation which will no doubt have some purist economists screaming in frustration (Because it’s using apples AND oranges to create a hybrid data set), is to simply divide GDP by the Gini coefficient. The result is in the third row below:

2010 USA Brazil Thailand Holland China
GDP $48,358 $10,978 $4,803 $46,773 $4,433
Gini 41.1 52.7 39.4 28.9 42.1
Pearlman Index 1177 208 122 1618 105

What does the modestly-named Pearlman Index (PI) tell us? It shows that although the US and the Netherlands have very similar per-capita GDP numbers, the Netherlands has a much more even distribution of that economic production, by a factor of roughly 50%. Anyone who has travelled in both the US and the Netherlands could confirm the general sense of a wider spread of economic income and activity across society as a whole in Holland, compared to the US with its greater spreads between the very wealthy and the very poor.

What about the other countries? A nice effect of the PI is that even with similar per-capita numbers, the differences in how economic activity actually spreads across a country are still easily seen at lower levels of economic development. Thailand and China have fairly similar GDP figures, a spread of less than ten percent, but combined with their different Gini numbers, the differences in the PI jump to nearly 20%. This has important implications for policy makers in developing countries. Focusing solely on GDP might well be a very narrow and, in the long run, counter-productive, goal. If the spread between per-capita GDP and the PI is large, it would seem to indicate that growth alone might not prevent potential social unrest in the future.

What about Brazil? It has truly staggeringly high inequality. Were it merely to have the same, still relatively high, levels of inequality as the US, its PI would be 267, rather than 208. That’s roughly a 25% increase in general, widely-spread economic growth and development. Food for thought.

The PI shown above is still a simple, crude device. As mentioned earlier, there is one more factor which has a large, and in some countries outsize, effect on a nation’s economy. That is corruption.

Raw output, as measured by GDP, matters. Social inequality, as measured by the Gini coefficient, matters, since it shows how economic activity and capital is actually distributed. And corruption, in its many forms, matters very much because it misallocates resources, diverts capital from being used efficiently, and in general acts as both a tax, and a brake, on economic activity.

How to construct the equation? All three elements – GDP, Gini coefficient, and corruption must be included, but care must be used. They all measure different things, after all. GDP and the Gini coefficient are easiest to reconcile, as demonstrated above. Corruption, however, is an animal of a different color. By its nature, it is difficult to find reliable data on how it affects economic development, since corruption relies on silence and thus is far from any official economic data set. The organization Transparency International has provided a valuable service with its Index of Perceived Corruption, yet as useful as their data is, it suffers from an inescapable problem of methodology.

Basically the Transparency International rankings are based on surveys. These might be rigorously researched, yet they do not actually measure any real, “hard”, data points as both the GDP figures and the Gini Index do. Nevertheless they are the only real source we have at present to account for the effect of corruption on an economy, imperfect though they might be. So let’s see what happens when we plug those numbers into the PI.

First of all, Transparency International rankings are relativistic, comparing all the nations of the Earth in which it was and is possible to conduct the survey. Since they are rankings based on nations vis-à-vis one another, we need to normalize them into some form of solid data that can be used together with GDP and Gini data. These are 175 in number. So we need to convert them from rankings…

2010 USA Brazil Thailand Holland China
TI Index 22 69 78 7 78

…to “hard” (-ish) numbers. The easiest way to do this is to divide the ranking number by the number of countries in the total survey (175), and for the sake of legibility and simplicity, multiply by 100 to get something easy to use:

2010 USA Brazil Thailand Holland China
TI Index 22 69 78 7 78
Converted TI index 12.57 39.43 44.57 4.00 44.57

This converted TI number can now be used to divide the original GDP-and-Gini Pearlman Index.

2010 USA Brazil Thailand Holland China
TI Index 22 69 78 7 78
Converted TI index 12.57 39.43 44.57 4.00 44.57
New PI 93.6 5.3 2.7 404.6 2.4

Finally we have an index which measures economic activity overall, how well that economic activity is spread throughout society, and which takes account of corruption. The “New PI” number is simple to use, and rewards improvements in reducing both corruption and inequality on a logorithmic scale. Simply put, as corruption and/or inequality is reduced, the PI score would rise extremely rapidly. For this reason, I believe it might be useful for policy makers and concerned and informed citizens in general, as an additional means of comparing and evaluating their nations’ economic progress. As an American, it is rather unflattering to see my nation so far behind a modern, European country. But it gives a far more complete picture of overall economic development across society as a whole than merely comparing per-capita GDP, and it takes into account that economics and politics, social being and work, can and should be considered in whole, not part.

Sometimes two disparate things can show the same effect better than either alone.

So:

Read THIS:

http://www.economist.com/news/leaders/21584342-chinas-banking-behemoths-are-too-beholden-state-it-time-set-finance-free-too-big

Then look at THIS:

http://io9.com/chinas-brand-new-abandoned-cities-could-be-dystopian-m-1238731420/1244622339

 

WHERE DO WE STAND?

There’s a lot of food for thought in the director of the NSA’s recent testimony before Australia’s parliament. It focuses on the narrow question of Chinese telecom Huawei’s position in Western markets, but expands from that to cover many deep questions about how Western nations should deal with China’s rise.

(http://www.afr.com/p/national/transcript_interview_with_former_KnS7JDIrw73GWlljxA7vdK)

It is clear that the primary goal of the Chinese Communist Party (CCP,) like all organizations holding political power, is to continue in power. Self-preservation is an understandable impetus for human action. The good news is that the CCP, after Deng’s reforms of the late 1970s and 1980s, sees rising living standards, and not the exportation of ideology, as the best way to retain legitimacy among the Chinese people. Inevitably, however, living standards cannot rise indefinitely. The most economically advanced nations of the world can expand, at most, 2-3% per year, in favorable conditions. China’s rise as an economic powerhouse expanding at 7, 8 or even 10% a year comes from starting from a very low base and getting rid of the ideological self-inflicted wounds which held them back for so long. As they inevitably move from simply putting cheap labor to work into the higher realms of economic activity, their growth will slow. How can the CCP maintain its legitimacy, if it is unable to provide what it promised to its citizens?

AERO AND SPACE: TWO (SOMEWHAT) SEPARATE WORLDS

Industrial spying is the lazy man’s way to achieve results cheaply. Stealing someone’s better idea – and putting it on the marketplace at less cost than the originator – is a form of rent-seeking which carries little costs (so far.) The problem is that it does not build up the capacity to innovate in the future. In this sense, China may steal or spy their way to economic growth for a while more, but they will be unable to actually compete with Western economies, which more closely follow the capitalist credo of fair economic competition, with its emphasis on innovation, whether building a better mousetrap or better commercial jet.

Two examples of Chinese endeavor illustrate this neatly: their space program and their attempts at creating a commercial aviation industry. The Chinese space program follows the American NASA model quite closely, and has had similarly spectacular results. It would be quibbling to say that they benefitted unduly from American and Soviet experience in the field of manned space flight. Putting men and women into space and returning them safely is no small feat. When one considers the complexity of spaceflight – millions of components and events needing to take place correctly and in time – the Chinese success is extremely impressive. However, a well-funded governmental space agency with clear goals and political support is a very different animal from a commercial endeavor, which operates in an entirely different universe of costs and benefits. Here the Chinese experience shows the weaknesses of their system.

Off hand, I cannot think of a single commercial aviation program which followed its projected schedule to completion. In space exploration a government may throw more resources at a problem, whether in terms of engineers, funding and/or materials, provided the political support exists. This is not the case when creating airliners from scratch. If an aircraft cannot create a profit, it is de facto not going to be a successful commercial venture. This is where China’s industrial spying actually hurts them in the long run.

It is a fundamental issue: to create value you must first create the capacity to create value.

Aircraft engineers may steal blueprints (or, nowadays, CAD/CAM files) to see how a competitor has built an aircraft, but that says nothing about how the teams of engineers, accountants and managers solve the problems which inevitably arise when going from the drawing to the finished product.

SOME HISTORY

An example from the dusty past: the US created the B-29 bomber during WWII. This weapon was far in advance of any other aircraft of the time (even allowing for the German’s creation of swept-wing jets.) It was a complex project, larger than any other comparable aircraft. Its performance in terms of range, payload and speed stood in a class of its own. One of these aircraft was in a raid over Japan towards the end of WWII, when it suffered engine problems and was unable to return to its base. It was forced to land in the Soviet Union. The Soviets were supposed to return all allied aircraft promptly, but in this case they stalled American requests for its return. On Stalin’s express orders they disassembled it instead, copied all the pieces, and made a copy, called the Li-4. However, the stories of Soviet’s problems with creating a copy that functioned as well as the original were many. The copy did not carry as heavy a bomb load, or fly as fast or as far.

In any case, by the time the Cold War started in earnest, the US was already working on aircraft that were far more advanced, from the B-36 through the swept-wing B-47 to the B-52; a design so successful it is still in service today. Did the Soviets gain an unfair advantage from stealing? Yes. Not just the Li-4, but even the MiG-15 of Korean War fame benefitted from Western technology. (In the MiG’s case, it was the British, who sent four of their very most advanced end-of-war jet engines to the Russians. Why? Misplaced goodwill is the kindest explanation.)

But the Russians did not, could not, create the same type of industrial base which would lead instead of follow. There wasn’t the back-and-forth between military and commercial endeavor which produces advances in both fields. While surely there were many talented, intelligent people within aviation in the Soviet Union, the society as a whole did not reward initiative and innovation. This is why the CCP’s current, similar, strategy of stealing their way to success is problematic for them.

MORALITY? IN AEROSPACE?

Spying on one’s enemies has a moral range, just like any human endeavor. If you know that someone wants to harm you, trying to prevent this is a clear prerogative of action. Outright theft, blackmail and other dark arts are more problematic.

It is not naive to claim that political control as an all-encompassing end in itself precludes success in other fields. This is the barrier that the CCP will run up against time and again: as spying and copying is rewarded, other endeavors are devalued. Yet it is those other things, innovation and initiative, which create value and ensure true competitiveness between states, economies and corporations.

In the long run I am certain this analysis is correct. However, as the saying goes, in the long run we’re all dead. What to do now, in the present, when we’re being harmed by this Chinese strategy?

Industrial spying is nothing new. In recent times France and Israel, putative American allies, aggressively attempted to acquire American knowledge through subterfuge (for quite separate reasons.) France was desperate to acquire its own nuclear deterrence in the sixties, but as a medium-sized power it did not have the resources of the US or Soviet Union. Israel… well, God wants them to have everything, apparently. In any case, that spying did not seem to be as all-encompassing as what China is trying to do presently. Even if, as posited earlier, this is a counter-productive strategy for the Chinese themselves in the long run, it causes real and true harm to the US now.

What to do? It would behoove us to disentangle this challenge from abroad from what we do to ourselves. America will not succeed as a surveillance state. To an individual company, or indeed, an individual innovator, it matters little whether the threat of theft of intellectual property comes from some anonymous Chinese IP address, from the American government itself, or indeed an American-based competitor. Robust protection of property rights is the prerequisite for any economic success. The suspicion, if not outright paranoia, of spying does immeasurable harm to economic planning, from future investment to innovation.

The collision of the security and economic spheres is based on their very real difference in world-view. Security, put bluntly, does not, indeed cannot, create value. It can only preserve it (leaving aside control of raw materials such as oil, steel, etc.) Economic growth can only come from creating value (leaving aside cases of monopolies or political machinations.)They are two different world views which can be summed up as threats versus possibilities.

DO WE FOLLOW OUR OWN RULES?

Two examples: a decade or so ago a Chinese oil company attempted to purchase outright the American oil company Unocal. From a Chinese perspective this was a clear and straightforward issue of acquiring future oil supply for its industries. This was blocked by congress, looking at it through the narrow, misguided prism of national security. Unocal could by no means be perceived as a company which has access to state secrets or could plausibly pose a threat to us, if owned by a rival power, unless we were, in fact, at war.

By blocking this acquisition we showed Chinese leadership that our words do not match our deeds; that although we profess to believe in a free market, we do not follow our own rules, and that Chinese self-interest, even when clearly identifiable as non-threatening and understandable, does not stand a chance when confronted by American parochialism. From there to Huawei’s attempts to penetrate Western markets, and thus have access to Western intelligence, is a pretty clear line, albeit across economic sectors from commodities to intellectual work. Still, if we do not allow fair competition, then why should the Chinese try to play by our rules?

Obviously telecoms switchers and routers have the capacity to intercept information, which is a completely different animal than having access to raw materials such as oil, but this Chinese perception of unfairness was a completely self-inflicted American wound in some respects. Blocking Huawei from US markets is understandable and necessary. But both sides must be allowed to play the game fairly in the first place to compete. It would have been in our national security interests to allow China to purchase Unocal and its reserves, showing that we do allow competition. Then our protestations at attempts of industrial spying when it came to actual, real, questions of national security in the information arena would have a weight which, from the Chinese perspective, they lack.

China may still have pursued their current large scale intelligence-gathering, but a more moderate initial reaction to Chinese attempts to acquire US companies which were not actually matters of national security would have given pause to the more aggressive elements within their leadership and provided cover for those Chinese who realize modernization and growth must come from within rather than external theft, to say nothing of our own bargaining position.

YES, THE REAL WORLD CAN BE UNPLEASANT, AND YET…

It would be insane to think that security is completely unnecessary. However, it is equally counter-productive to put the cart before the horse and claim that security trumps economics. In certain historical eras where existential threats and the possibility of annihilation were real, whether due to ideology, religion or other real or perceived differences, that may have been the case. But the genius of the American age is that competition between countries has been, and continues to be, primarily economic and not military. WWII was won in the factories of Detroit and Long Beach as much as on the beaches of Normandy, Iwo Jima or in Stalingrad. Contrast this with the European age of the 19th century, where military might stood supreme and ended with the carnage of WWI.

Is China the aggressive new power compared to the current US hegemon, as was Germany in 1900 towards Great Britain?

Probably not. Germany and Britain competed in arenas which bear some resemblance, but do not mirror, those between China and the US today. America is a service economy, which still manufactures some things. China is a manufacturing economy, which is not yet a true creator or incubator of services and intellectual innovation. This is surely not because Americans are inherently smarter, but that the trajectory of economic development is not neatly overlapping. Therefore, it is worrying that China seems to be sending its best minds into security and spying rather than into economic innovation. This makes sense for preserving the CCP at the apex of power, but not for becoming a better competitor to the US in more advanced fields. As an American it is infuriating to see actions that could help our own economy be punished by this indirect tax on innovation. It is difficult to say exactly what steps should be taken. The internet system (Today’s primary means of spying) is an American creation which is apparently being turned back on us. This is legitimate cause for concern.

Can the entire internet be changed from its basis of trust (one computer accepts that a data packet that says it comes from a certain computer, does, in fact come from this computer and not from an imposter,) and if so, how?

Smarter minds than mine have surely wrestled with this question, but so far it seems the system in place cannot change that fundamental, exploitable, flaw. Instead, we apparently must all become adept at recognizing Trojan horses, worms, one-days and all the rest of the disheartening lexicon of online subterfuge. However, not out of any misplaced sense of cheap patriotism, but in recognition that our system truly has created an economic system which seems more successful than the alternatives, we should, at the very least, ensure that suspicion of internet misuse does not originate from our own government. The trust that existed at the dawn on the internet age, whether digital or human-based, is dead and buried. Something needs to take its place, but with an important caveat: security may be necessary, but if it kills what it was meant to protect, it is worse than no security at all.

Our economy isn’t working as it should. There’s economic unfairness, unemployment remains stubbornly high, and there seem to be few political answers to the great mass of people feeling the pinch of hardship. There is an enormous and seemingly accelerating concentration of wealth at the top, and a questioning of whether our economic system serves the majority.

To misappropriate Churchill, capitalism is the worst possible choice of economic system – except for all the others. We do not, in any case, live in a purely capitalist world. All economies are mixed to some degree, by necessity. Without an independent arbitrator (The government) to control the relationship between economic actors, there could be no capitalism anyway, just a quick devolution to a system of monopolies, practically (and ironically) indistinguishable from communism.

This preamble isn’t meant to moan about how things are. It’s just useful to remind ourselves that the world as it is can be changed, if we keep a firm grasp on the obstacles preventing us from getting there. One of the biggest sources of rot in our current economic climate is the perception and reality of unfairness, and one of the worst exemplars is executive pay. Most of us have at some point heard some variant of these statistics: a CEO decades ago earned about 20 to 30 times what the average worker did, but now he earns hundreds of times more. Sure, apologists can quibble about how certain sectors see less of this effect than others, and how bankers, in particular, are now somehow exempt from ordinary industrial concepts of economic effort and reward, but it is indisputable that there has been a change in what constitutes wealth accumulation at the top, compared to the past.

Even worse, from the perspective of someone who wants to see a functional, efficient system of wealth creation spread across society, is the reward of incompetence, if not outright malfeasance, to corporate heads who run their companies into the ground, shortchange their workforces and damage the environment (Both literally and figuratively) in the quest for short-term personal reward. Much was made a few years back of how the mechanism of stock options was the culprit for much of this economic short-termism and bad leadership. Managers given stock options planned and managed the actions of the company just to make sure the stock was high at whatever point in time they could cash out those options, rather than managing with the goal of making sure the company could thrive long term. Cutting the employee count to the bone was one favorite method, since chopping off payroll shows up as profit on the balance sheet. Short-changing R & D another. But both those actions, and similar ones which trade off future investment for a better short-term balance sheet, incapacitate the company when it comes to future growth. How can a company make better products when there’s no investment in research and development? How can it meet future growth when employees with institutional knowledge have been sacked? That isn’t capitalism, it’s cronyism run rampant.

However, while stock options have been a destabilizing factor in high-level corporate management, they are just a mechanism of reward. If we take away options, people in charge of reward will find something else, similar enough to have the same effect, but different enough to escape complaints for a while.

No, to fix the problem you have to change who gets rewarded and by whom. Ivory tower economists, an unfortunate number of whom make a living apologizing for the real faults of capitalism without addressing their causes, make the argument that corporations are run for the benefit of shareholders. Pure horse manure. If that system ever really worked, it is demonstrably broken at present. Too many corporations in America are nowadays run for the benefit of the top managers and the board members themselves. In the idealized classic capitalism of Friedman et al, the board is supposed to represent the shareholders and see to it that managers run the corporation well. Which is why people could at one time claim with a straight face that a corporation’s only function was to maximize shareholder value. But what happens when the managers of one corporation are the board members of another? When they are all the same people, where is the incentive to ensure good management, an abstract ideal, rather than just pillage the corporation for personal pay and wealth (and the individual shareholder can go hang)?

Our American system of capitalism has become infested with corruption at the top, where the highest levels reward themselves at the expense of the company they are supposed to serve. And who can blame them, when there is no sanction against such behavior?

I propose a simple rule. No single person working for one company or corporation can serve on the board of any other. Period. And to prevent a revolving-door effect of cronyism, no person may serve on a board who has worked for any other company, until at least ten years have passed. The intent, of course, is that managers who retire will only be able to serve on the board of their old company. Might that have the effect of concentrating their minds on the long-term effects of their decisions? Might it also mean that companies are led by people who align their own interests with that of the company for the long run, rather than seeing it as a cow to be milked for short-term personal gain? Might boards then make decisions of executive pay and reward based on the best interests of the company as a whole, which is what they’re supposed to do?

One can certainly hope so.

There’s an interesting question of semantics at the root of the word “empathy”. The New Yorker has an article in which the author decries the facile ways in which much popular culture misdirects resources based on individualization of tragedies and thus the identification with certain events and people but not other, objectively worse, events,or more badly-treated, people (http://www.newyorker.com/arts/critics/atlarge/2013/05/20/130520crat_atlarge_bloom?currentPage=all).

One thing which is troubling is how “empathy” has taken over the meanings of the equally useful, but somehow maligned, words “charity” and “pity.” Empathy means the capacity to see the world through the eyes of others. For some reason, people seem to think this also means identification with others. But that’s not true at all. An FBI profiler needs an extraordinary degree of empathy to understand the thought processes of a serial killer, but that hardly means he or she wants to be a serial killer him or herself. Likewise, a general, if he’s smart, will try to see the battlefield from the vantage point of his enemy, requiring a, perhaps slightly different, form of empathy. Or, to use an example mentioned in the article, and which in a previous life working for a humanitarian NGO I wrestled with, how do you understand the thought processes of a warlord who gladly lets thousands starve as long as he retains power? You need empathy to even begin to understand such thought processes, but that doesn’t mean you want to be that other person.

Pathos, on which the word empathy rests, means “feeling”. Just because you can understand what somebody else is feeling doesn’t mean you want to feel it yourself. Empathy does not mean identification. And this is what our somewhat insipid culture of good feelings has done to the word: stripped it of usefulness in difficult situations in favor of a sanitized, half-baked attempt to use it instead of the far more accurate words charity and pity.

Neither charity or pity, properly understood, is necessarily bad. Unfounded charity or pity on the other hand, is unmitigated evil. And since there have, in fact, been so many cases of the natural human feeling of charity and/or pity being manipulated to unjust and unfair ends (Everything from crooked televangelists to email scams), we’ve become suspicious of the words themselves. Pity and charity have become shorthand for weakness, for only a fool would get burned repeatedly by indulging in such feelings when there are so many amoral scammers ready to pounce by manipulating them, right?

It’s too bad, because charity, the desire to help others when we feel able, is part of being human. A caveat: as an American I, and I assume anyone reading this, may be an outlier. Contrary to our “E Pluribus Unum” motto, much of human history has actually been spent with an inordinate amount of energy directed specifically towards preventing charity towards anyone outside the tribe, however that may be defined. In fact, genocide only becomes possible when the “other”is specifically denied humanity. No humanity means no charity, means also no empathy by definition (since who understand what an animal thinks), means mass killing. Use enough non-human descriptors of someone, and empathy, both in its true sense, or even the current definition as a stand in for pity or charity, becomes impossible in the listener’s mind.

Likewise pity can be good, not in the cloying sense of privilege looking down on the less fortunate, or even worse, the “Pity the fool” machismo of deflecting all forms of weakness, but in the sense of awakening us from our perhaps lucky, privileged or otherwise better circumstances to reflect on how life might be otherwise. This is not, strictly speaking, empathy. Feeling fortunate is useful when it’s justified. If you’re not a monster, then it will lead to consideration of life, what we do with it, and how we want to spend our time on earth (hint: the answer is, not like the person we’re pitying). This is not, however, empathy. Imagining how I would be or act were I a wino in an alleyway does not mean I understand, or see life, through those eyes. I’m just placing myself in that situation, not attempting to be that other person. Were I truly empathetic, I would be able to see life as that other person sees it, but that’s not the case, nor is it the case for the majority if not all, examples of how we use the word.

Empathy and identification are different. One is an example of how strong and accurate the imagination is, the other is a misdirection of the self towards some other, probably fanciful conception, of a different self. When our society tries to emphasize empathy, they’re not really doing it right.

Orwell was right to call a warning on how the English language, or any language for that matter, can be debased. Assassination becomes “targeted killing,” implying a reasonableness (or at least an intellectual ability to target) on the part of those doing the assassinating, rather than the older, truer, meaning of nihilistic, often random, death to pursue questionable ends. We used to take it seriously, the question of who to kill outside of a traditional battlefield. Now… meh. Torture becomes “enhanced interrogation,” implying merely a strengthening of a socially accepted means of seeking truth, rather than an amoral means of asserting authority (And incidentally, acquiring dubious information). On the other side of the spectrum we have “empathy”,which is rapidly becoming devalued of its original meaning of simply being able to imagine another’s existence, and turned into a word substitute for “charity”or “pity”, themselves weakened by misappropriation. Even worse, empathy has begun to imply identification, which, applied to some cases, is horrific.

As language reflects society, this is worrying. The ways in which the words which used to have positive connotations have become weakened or debased, and conversely, words which used to imply negative moral values have become replaced with other, more emollient ones, implies something about how we see ourselves. Land of the free and home of the brave? Maybe those words themselves are next on the block. Fifty years from now, will our children be speaking of the land of the safe and home of the secure instead? I hope not.

There’s a interesting interview in Scientific American about the possible intersection in advanced mathematics of physics and economics (http://blogs.scientificamerican.com/cross-check/2013/05/01/author-of-the-physics-of-wall-street-ponders-strings-black-swans-and-a-final-theory-of-finance/).

While I’m all for any kind of cross-fertilization of ideas across different disciplines (A great quote I once heard is that Universities shouldn’t teach Psychology, History, Literature or other liberal arts disciplines but just one thing, “Human Studies”. And Math), I feel there’s an elephant in the room in this discussion that isn’t mentioned, and that’s the fact that economics/finance differs from Physics in their fundamental inputs.

Both of the disciplines use math to attempt to explain, and thus accurately predict, reality. However, economics is attempting to describe reality while looking through the rear-view mirror, as it were, while physics by definition describes reality in a more all-encompassing sense. Physics is independent of what’s gone before, so predictive behavior is just that: a mathematical physics model will accurately say what we can expect in future. To choose just one example, the idea of a red shift, of an expanding universe, was understood to be correct even if we couldn’t see it with the tools at our disposal when first posited. With more advanced telescopes, the theory was shown to be demonstrably true. One can attempt an economics experiment which ignores basic human behavior, but the predictive qualities are, to be kind, lacking (Soviet Union, anyone?).

The study of economics and finance also has a completely different rewards system than that of physics. While a finance mathematician is looking to, in a very real sense, maximize profits, a physicist is looking only to validate theory. Rewards come only if the theory is true, not if it proves a temporary benefit relative to other researchers. This is important because we don’t have any notion of objectivity in finance equivalent to the objectivity found in physics (Demonstrable and replicable testing to prove validation). Instead, finance and/or economics is a rolling road of constant experimentation where the inputs are not fully understood, and the experiment cannot be easily replicated, if at all. In addition, there is a financial incentive to misdirect others in order to maximize gain (On the most basic level, something like insider trading of classified information, on a macro level, lobbying for financial policies which are detrimental to the economy at large but serve a narrow,parochial, temporary interest). Math is that circumstance is just a tool, to be used for “good” (accurate, predictive, explanation of behavior) or “ill” (temporary profits at the cost of understanding).

The ideal in both cases is to explain the world we live in. Attempting to understand the world in an all-encompassing way through math is not a recent human endeavor. Descartes, for example, used the clockwork analogy of the universe to explain reality: the universe is predictable, like a clock, working with predictable mechanisms. Our lack of understanding the future is dependent on the fact that we simply don’t know what all the pieces are, what they do, or how they interact. If one could have a massive consciousness (He used this to argue for the existence of God, since such an understanding was obviously beyond our limited human brain capacity), one could see the future, because we could see how the interaction of everything, from the proverbial beating of a butterfly’s wings in Brazil to the marching of an army, interacts and affects reality.

Math in the service of science, whether economics or physics, has the same primary purpose: to predict what will happen next. But economics in general, and finance in particular, does not start from a truly scientific base. Simply put, there is no objective reality when it comes to money. Our economic system “works” in the sense that people can have jobs, earn money, procure goods and services, and hopefully enjoy a rising physical standard of living, but there is little that is objectively demonstrable or replicable in this field of human behavior. To take it to the most fundamental level, the dollar bills in my wallet are nothing but pieces of paper, of no inherent value, without the collective notion of the world in which I live, that they do, indeed, have a value commensurate with the numbers printed on them. The digital flow of ones and zeros that make up “money” in the modern financial world is even more arbitrarily connected to any physical value.

This is a far cry from classical physics. A hydrogen atom does not gain electrons or protons because of changes in politics, tax or fiscal policy or the movements of markets. The element table we all learned (In my case, sort of learned) in High School doesn’t change due to social change. But the value of a dollar, or of any currency, does in fact change, rather arbitrarily at times. It changes because although there are hard, physical factors which make up part of the input data base of economics (A factory turned out x number of widgets this month. An oil well produced so and so many barrels last year), there are also factors which, though influential, are incredibly hard to predict because they are disconnected from that type of real, physical thing or process (For example, political instability in a country causing a run on banks).

In this case, the seeming certainty of mathematical models can have a detrimental effect on economic studies because the mathematical model will only be as reliable as the information on which it is based. To be truly accurate, mathematical economic models must be able to incorporate all the incredibly diverse sources of information, from crop yields in Argentina to the housing market in Singapore, which might possibly have an impact on any economy in our interconnected world. Not only that, but the model must incorporate this information in correct proportion to its effect. Not only that, but it must also incorporate those “non-economic” factors, mainly but not solely political, which affect economies, again in proper proportion to likely effect. Not only that, but the data itself has to be valid and trustworthy, and ideally, immutable.

This is an extremely tall order.

Now, this essay is a bit of a red herring, in the sense that these quasi-philosophical musings are not, strictly speaking, what the article cited above is about. The two individuals in the discussion are talking about math in the service of financial models such as what hedge funds use to maximize their returns, and whether the math models of physics might have some useful influence. But those financial models remain divorced from the sort of real, verifiable data from which physics benefits. It is for this reason that, despite some of the best mathematical minds residing and working in Wall Street, we have “unexplained” financial catastrophes that no one supposedly sees coming. As the saying goes, it’s hard to build a castle on sand, and the economic data which goes into the models Wall Street uses are really just that.

This is not to argue that finance or economics doesn’t benefit from advanced mathematics. But as useful as economic models are, whether derived from physics and applied to finance, or created in situ, they can only serve with the constant understanding that just because they are numbers, and therefore seemingly certain and distinct, they remain at best estimates based on a sea of informational uncertainty.