A Philosopher's Blog

Big Data & Ethics

Posted in Business, Ethics, Law, Philosophy, Politics, Reasoning/Logic by Michael LaBossiere on July 30, 2012
Big Data, The Moving Parts: Fast Data, Big Ana...

Big Data, The Moving Parts: Fast Data, Big Analytics, and Deep Insight (Photo credit: Dion Hinchcliffe)

For those not familiar with the phrase,  “Big Data” is used to describe the acquisition, storage and analysis of large quantities of data. The search giant Google was one of the pioneers in this area and it is developed into an industry worth billions of dollars. Big Data and its uses also raise ethical concerns.

One common use of Big Data is to analyse customer data so as to make predictions that would be useful in conducting targeted ad campaigns. Perhaps the most infamous example of this is Target’s pregnancy targeting. This Big Data adventure was a model of inductive reasoning. First, an analysis was conducted of Target customers who had signed up for Target’s new baby registry. The purchasing history of these women was analysed to find patterns of buying that corresponded to each stage of pregnancy. For example, pregnant women were found to often buy lots of unscented lotion at the start of the second trimester. Once the analysis revealed the buying patterns of pregnant women, Target then applied this information to the buying patterns of women customers. Oversimplifying things, they were essentially using an argument by analogy:  inferring that hat women not known to be pregnant who had X,Y, and Z patterns were probably pregnant because women known to be pregnant had X,Y, and Z buying patterns.  The women who were tagged as probably pregnant were then subject to targeted ads for baby products and this proved to be a winner for Target, other than some public relations issues.

One interesting aspect of this method is that it does not follow the usual model of predicting a person’s future buying behavior from  his/her past buying behavior. An example of predicting future buying behavior based on past behavior would be predicting that I would buy Gatorade the next time I went grocery shopping because I have been bought it consistently in the past. The analysis used by Target and other companies differs from this model by making inferences about the future behavior of customers based on their similarity to customers whose past buying behavior is known. For example, a store might see shifts in someone’s buying behavior that matches other data from people starting to get into fitness and thus predict the person was getting into fitness. The store might then send the person (and others like her) targeted ads featuring Gatorade coupons because their models show that such people buy more Gatorade.

This method also has an interesting Sherlock Holmes aspect to it. The fictional detective was able to use inductive logic (although he was presented as deducing) to make impressive inferences from seemingly innocuousness bits of information. Big Data can do this in reality and make reliable inferences based on what appears to be irrelevant information. For example, likely voting behavior might be inferred from factors such as one’s preferred beverage.

Naturally, Big Data can be used to sell a wide variety of products, including politicians and ideology. It also has non-commercial applications, such a law enforcement and political uses. As such, it is hardly surprising that companies and agencies are busily gathering and analyzing data at a relentless and ever growing pace. This certainly is cause for concern.

One ethical concern is that the use of Big Data can impact the outcome of elections. For example, analyzing massive amounts of data information can be acquired that would allow ads to be effectively crafted and targeted. Given that Big Data is expensive, the data advantage would tend to go to the side with the most money, thus increasing the influence of money on the outcome of elections. Naturally, the influence of money on elections is already a moral concern. While more spending does not assure victory, there is a clear connection between spending and success. To use but one obvious example, Mitt Romney was able to beta his Republican competitors in part by being able to outlast them financially and outspend them.

In any case, Big Data adds yet another tool and expense to political campaigning, thus making it more costly for people to run for office. This, in turn, means that those running for office will need even more money than before, thus making money an even greater factor than in the past. This, obviously enough, increases the ability of those with more money to influence the candidates and the issues.

On the face of it, it would seem unreasonable to require that campaigns go without Big Data. After all, it could be argued that this would be tantamount to demanding that campaigns operate in ignorance. However, the concerns about big money buying Big Data to influence elections could be addressed by campaign finance reform, which would be another ethical issue.

Perhaps the biggest ethical concern about Big Data is the matter of privacy. First, there is the ethical worry that much of the data used in Big Data is gathered without people knowing how the data will be used (and perhaps that it is even being gathered). For example, the customers at Target seemed to be unaware that Target was gathering such data about them to be analyzed and used to target ads.

While people might know that information is being collected about them, knowing this and knowing that the data will be analyzed for various purposes are two different things. As such, it can be argued that private data is being gathered without proper informed consent and this is morally wrong.

The obvious solution is for data collectors to make it clear about what the data will be used for, thus allowing people to make an informed choice regarding their private information. Of course, one problem that will remain is that it is rather difficult to know what sort of inferences can be made from seemingly innocuous data. As such, people might think that they are not providing any private data when they are, in fact, handing over data that can be used to make inferences about private matters.

If a business claims that they would be harmed because people would not hand over such information if they knew what it would be used for, the obvious reply is that this hardly gives them the right to deceive to get what they want. However, I do not think that businesses have much to worry about—Facebook has shown that many people are quite willing to hand over private information for little or nothing in return.

A second and perhaps the most important moral concern is that Big Data provides companies and others with the means of making inferences about people that go beyond the available data and into what might be regarded as the private realm. While this sort of reasoning is classic induction, Big Data changes the game because of the massive amount of data and processing power available to make these inferences, such as whether women are pregnant or not. In short, the analysis of seemingly innocuous data can yield inferences about information that people would tend to regard as private—or at the very least, information they would not think would be appropriate for a company to know.

One obvious counter to this is to argue that privacy rights are not being violated. After all, as long as the data used does not violate the privacy of individuals, then the inferences made from this data cannot be regarded as violating people’s privacy, even if the inferences are about matters that people would regard as private (such as pregnancy). To use an analogy, if I were to spy on someone and learn from thus that she was an alcoholic, then I would be violating her privacy. However, if I inferred that she is an alcoholic from publically available information, then I might know something private about her, but I have not violated her privacy.

This counter is certainly appealing. After all, there does seem to be a meaningful and relevant distinction between directly getting private information by violating privacy and inferring private information using public (or at least legitimately provided) data. To use an analogy, if I get the secret ingredient in someone’s prize recipe by sneaking a look at the recipe, then I have acted wrongly. However, if I infer the secret ingredient by tasting the food when I am invited to dinner, then I have not acted wrongly.

A reasonable reply to this counter is that while there is a difference between making an inference that yields private data and getting the data directly, there is also the matter of intent. It is, for example, one thing to infer the secret ingredient simply by tasting it, but it is quite another to arrange to get invited to dinner specifically so I can get that secret ingredient by tasting the food.  To use another example, it is one thing to infer that someone is an alcoholic, but quite another to systematically gather public data in order to determine whether or not she is an alcoholic. In the case of Big Data, there is clearly intent to infer data that customers have not already voluntarily provided. After all, if the data had been provided, there would be no need to undertake an analysis in order to get the desired information. Thus, while the means do not involve a direct violation of privacy rights, they do involve an indirect violation—at least in cases in which the data is private (or at least intended to be private).

The solution, which would probably be rather problematic to implement, would involve setting restrictions on what sort of inferences can be made from the data on the grounds that people have a right to keep that information private, even if the means used to acquire it did not involve any direct violations of privacy rights.

My Amazon author page.

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The Security Show

Posted in Law, Technology by Michael LaBossiere on July 28, 2012
English: A TSA officer screens a piece of luggage.

English: A TSA officer screens a piece of luggage. (Photo credit: Wikipedia)

I recently flew home to Maine for my vacation, thus giving me my yearly exposure to the security procedures designed to save us from terror.

While I do not travel much, I do have the security process down. I put my watch and belt into my carry on (because, you know, belts presumably do bad things to the security hardware or out of concern that a passenger might hang himself out of frustration). I made sure that I had dark socks, because of the need to walk along the floor without shoes. Because, of course, some fool tried to put a bomb in his shoes one time. In a weird concession to age, people who are old enough can keep their shoes and light jackets on. I guess the logic is that people too old to work an iPad would not know how to bomb their shoes.

My ID was ready for the deep screening it goes through and, of course, as anyone knows, no terrorist would have a valid ID. I also had my laptop out because that presumably makes a big difference. My liquids (well, those outside of my body) were safely in the size limit and in the plastic bag. That way the screeners could glance at the bag and see that the containers were not labeled “high explosive” or “nitroglycerin.”

After that, I got my first ride in the full body scanner. It was rather like the scenes in the Fifth Element when the police make people stand and put their hands and feet on the yellow circles. Interestingly, the massively expensive scanner was baffled by my shorts-I had to be patted down anyway because the machine could not properly scan my pockets. As might be imagined, I was impressed to see my tax dollars being funneled to the corporation that makes these super expensive machines that can be apparently be defeated by a pair of $30 cargo shorts.

While they claim that the images don’t show any detail, I could see that the ladies (and some guys) gathered around the screen when I was going through. Yes, I have been working out ladies…and gentlemen.

After my stuff had been irradiated, I then put on my shoes, belt, watch and packed up my stuff so I could go and wait for my flight.

The flight back was basically the same, with one addition. While waiting, I saw some TSA folks roll up with their mobile testing stations. They waited around for about forty minutes until people were boarding and, for some reason, they pull people out of line as they were about the get on the plane rather than screening people while we are all waiting around. Presumably this way is more annoying and inconvenient. This is consistent with my hypothesis that much of the security procedures are the result of drunken wagers between government officials about how much bullshit Americans will put up with as long as they say “security” and “terror” enough.

As I was about to board, someone cut ahead of me and (of course) the TSA picked me for the special attention. As I watched people boarding ahead of me with their giant sized “carry-on” luggage I figured I’d have to check my properly sized carry on thanks to the TSA and the folks who think that anything they can carry (or wheel) counts as a carry on.

They explained the process to me and then rooted through my possessions looking for stuff I might have smuggled in between the time I was scanned and arrived at the gate. Interestingly, they were unarmed-so I am not sure what they would do if they found a real terrorist. Before I got the full body pat down I had the following conversation:

TSA Guy:”Do you have any sensitive areas?”
Me: “Just the usual ones.”

Then I got the full pat down, which was as degrading and as violating of my privacy and personal space as one would imagine. I do have sympathy for the TSA folks, of course. Just imagine spending your day caressing man-boobs and chubby thighs and you will probably feel for them, too.  Fortunately, I work out regularly, so the agent got to run his hands over some grade A man flesh. Or maybe grade A-, after all I am pushing towards 50 and I had been eating lobster, bacon and steak all week. Okay,so maybe B+. After determining that I did not have any items that might be used by a philosopher professor to destroy or seize the plane that was taking me to Atlanta, I was allowed to board and jam my carry on under the seat, thus ending that episode of security theater.



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Cookies & Politics: Consumer Advocacy

Posted in Ethics, Politics by Michael LaBossiere on July 27, 2012

Chick-fil-A (Photo credit: Wikipedia)

In my previous essay I discussed the company side of corporate advocacy. As noted in the essay, the group One Million Moms called for a boycott of Kraft in response to the rainbow Oreo. However, what motived my decision to write about consumer advocacy was the quandary faced by a friend of mine regarding Chick-Fil-A. On one hand, my friend really likes the food at Chick-Fil-A and has been a loyal customer for years. On the other hand, my friend is a supporter of same sex marriage and was dismayed to learn that Chick-Fil-A donated about $2 million to anti-gay groups in 2009. As might be imagined, my friend was worried that past purchases contributed (however insignificantly) to the company being able to make such donations. This sort of situation, obviously enough, raises some interesting moral concerns. I will start with an easy matter.

On the face of it, a person is free to decide whether or not to buy goods or services from a company based on their advocacy (or lack thereof). So, for example, if someone is pleased by the rainbow Oreo and decides to buy Oreos on that basis, then she has every right to do so. Likewise, if someone is displeased with what the rainbow Oreo stand for and decides to switch to another cookie, then he has every right to do so. After all, this is a matter of personal choice and can be seen as being on par with buying or not buying based on any factor—be it the actor shilling for the company or a taste preference.

It might be objected that buying or not buying based on advocacy would be unfair—after all, a person should buy based on the quality of the product or service and other such relevant factors rather than by the (alleged) irrelevant factor of company advocacy. The easy and obvious reply is that by entering into advocacy, the company has decided to make its advocacy a legitimate factor in purchasing decisions. If the company does not wish to be judged or impacted by its advocacy choices, then the only course of action (other than secrecy, which would seem to be morally dubious) is to not engage in that advocacy.

A more interesting moral problem is the issue of whether or not a person should buy from a company that engages in advocacy that s/he morally disagrees with. For example, a person who finds same-sex marriage morally unacceptable faces the question of whether to buy Kraft products in the light of the rain bow Oreo. As another example, a person who supports gay rights faces the issue of whether or not to patronize Chick-Fil-A.

This problem is similar to the matter of taxes addressed by Thoreau in his essay on civil disobedience. In this essay, he argued that people should not pay taxes to a state whose actions they found morally reprehensible. In Thoreau’s case, his concern was with the wickedness of slavery and what he regarded as an unjust war with Mexico on the part of the United States. As he saw it, a person has an obligation to at least not be a party to what s/he regards as evil. After all, a person who contributes to the doing of misdeeds bears some of the blame of those misdeeds. At the very least, the person’s involvement shows that they accept or at least tolerate those misdeeds.

In the case of the state, the consequences of not paying taxes tend to be fairly serious, at least for the typical citizen. It is also rather difficult for the average citizen to get beyond the reach of the state. As such, citizens should probably be given considerable slack when it comes to paying their taxes to states that do wicked things. After all, all states do wicked things and living out in the open ocean or on an ice sheet are not viable options for most folks.

Fortunately, the situation is considerably easier when it comes to companies that engage in advocacy. After all, there are generally many companies that offer similar goods and services. As such, it is relatively easy for a person to avoid contributing to cause that s/he finds morally unacceptable. For example, a cookie lover who is opposed to same-sex marriage can turn away from Oreos in favor of cookie that is no friend of gay rights. As another example, a person who favors gay rights can consume chicken from a company that does not contribute to anti-gay groups.

It might be countered that people should not have to make such choices. After all, it could be argued, by buying from those companies the consumer is expressing a preference for the product or service and not an approval of a specific moral or political agenda that the company might endorse.

The obvious reply to this counter is that while a person can patronize the company without supporting its advocacy, the customer is contributing in some minor way to that advocacy. For example, the money Kraft made from selling products paid for the creation of the rainbow Oreo. As another example, $2 million of the money Chick-Fil-A made from selling food was given to anti-gay groups.

It could be objected that very little of the money a company receives ever ends up in advocacy and each customer only spends a fairly small amount. If one were to calculate what, for example, the average Kraft or Chick-Fil-A customer spends per year and then take into account what percentage a company spends on advocacy, it would turn out that each customer would make a miniscule contribution. As such, to say that the customer contributes to the advocacy would seem absurd.

The reply to this is that even a miniscule contribution is still a contribution and the individual is thus responsible to that miniscule degree for advocacy conducted by that company (unless, of course, the advocacy money is somehow generated entirely from other revenue sources). As such, if someone opposed to same sex marriage bought Kraft food, s/he made some microscopic contribution to the rainbow Oreo. Likewise, if a person who is for gay rights ate at Chick-Fil-A, then s/he helped fund anti-gay organizations. Naturally, a person’s responsibility can be mitigated by legitimate ignorance. For example, I know people who had not heard about the rainbow Oreo or Chick-Fil-A’s donations until I mentioned these things.

Because being a customer of a company that engages in advocacy helps fund that advocacy, it would seem to follow that a person who regards the advocacy position taken by a company as immoral should not patronize that company. Otherwise s/he would be contributing to something s/he regards as wrong and that would certainly seem wrong.

That said, there is obviously the question of whether the person is right in his/her moral assessment. For example, if homosexuals are morally entitled to equal rights, then Chick-Fil-A would be acting wrongly in supporting groups that seem intent on denying gay rights. Kraft would, in contrast, be acting rightly in showing its support. In this scenario, boycotting Chick-Fil-A would seem right, but boycotting Kraft because of its support of gay rights would be wrong.

My Amazon author page.

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Cookies & Politics: Company Advocacy

Posted in Business, Ethics, Law, Philosophy, Politics by Michael LaBossiere on July 25, 2012
English: Different sizes of Oreo cookies. From...

(Photo credit: Wikipedia)

On Gay Pride Day Kraft posted an image of a rainbow Oreo cookie (sadly not yet a real product). Almost immediately, the group One Million Moms condemned Kraft and urged a boycott of Kraft foods for attempting to jam their views down the throats of America. On an interesting side note, conservative groups seem to be rather inclined to use the metaphor of things being jammed down their throats, but that is probably more a matter for a psychologist than a philosopher.

One Million Moms has been consistent in its condemnation of companies that indicate an acceptance of homosexuality. They have condemned both DC and Marvel for having gay characters in their comic books. They also advocated boycotting J.C. Penney because the company hired Ellen DeGeneres as a spokesperson (she is openly and famously gay). They even went after the company for including a lesbian couple in its advertisement for Mother’s Day and for including a gay male couple in a Father’s Day advertisement.

Naturally, One Million Moms is not alone in this—other anti-gay groups and individuals have protested against companies that indicate that they are accepting of homosexual customers.

Not surprisingly, there are also people who condemn companies for the opposite reason, namely their being against homosexuality. For example, Chick-Fil-A donated about $2 million to anti-gay groups in 2009 and this has concerned some customers.

As might be imagined, these sorts of situations raise some interesting philosophical issues. One point of concern is whether or not companies should be involved in political causes, such as same sex marriage. Another is whether or not people should boycott companies that support views that they oppose.

If I were in charge of making decisions for a company, I would be inclined to not engage my company in advocacy. This is, of course, based on the approach I take to being a professor: I am not there to preach a specific ideological agenda or make converts to my cause. Rather, I am there to provide a quality educational opportunity. By analogy, if I was running a company that made computers, my goal would be to make computers that people would buy and not to support a specific ideological agenda. That is not the function of my company—it is not an ideology company but a computer company.

Naturally, in my personal capacity I do endorse specific views and I should certainly do so. However, I make it clear that my views are not necessarily those of my employer or my students. After all, I do not speak for all of them and their views are no doubt different from mine. Likewise, if I owned a company, it would be unreasonable and unethical of me to claim to speak for all my employees and for my customers on matters of ideology. That said, there are at least two obvious counters.

One obvious counter is that a company that remains silent on key issues can be justly regarded as tacitly accepting certain views. When these views are immoral, this involves the company in the immorality. For example, a company that went along with segregation in the United States would be acting immorally by simply going along with that evil.

It might be objected that companies should simply go with whatever the law or practice of the day is, thus not being advocates one way or the other. While this is tempting, there do not seem to be any reasonable grounds for exempting the people who run companies from the requirements of ethics. Hence, the excuse of “I was just following the law and doing business” seems to ring almost as hollow as “I was just following orders.” As such, it would seem that companies do need to be concerned about the stances they take on issues that actually concern the business of the company. This does, of course, give them a reasonable out on issues that do not concern the business of the company.

In the case of homosexuality, it could be argued that most companies do not need to take a stance on the relevant issues, such as the ethics of same-sex marriage. As such, they cannot be condemned for not taking a stance or engaging in advocacy one way or the other. However, it can be argued that even if they do not need to take a stance, they can do so and this leads to the second counter.

The second obvious counter is that companies have the moral right to engage in advocacy based on the right of free expression that the decision makers of the company possess. As far as the concern that company advocacy is questionable because the few decision makers for the company are claiming to speak for the entire company, there are two replies.

One is that while a company need not reflect the views of its employees, the employees are not obligated to endorse the advocacy views adopted by the decision makers of the company. That is, working for a company does not morally obligate the worker to accept the positions advocated by the company. So, someone could work for Kraft without being a supporter of same-sex marriage and their employment at Kraft should not be taken as an endorsement of what the rainbow Oreo stands for. Employees who find this too objectionable can, of course, quit—provided that they can find another job.

Second is that the company decision makers already make decisions about what the company does and deciding to take an advocacy position is just another decision. For example, Apple does not consult with the people who assemble iPads to see what they think about what the next version of iOS should be or what the EULA should contain. As such, they are not exceeding their legitimate authority over the company as an entity.

That said, the people who decide the advocacy roles and positions of the company are morally accountable for those roles and positions. As such, if they adopt an unethical position, they would be acting wrongly. There is also the practical concern of the impact of such advocacy on the company’s bottom line. After all, advocacy is often done with the intent of attracting or keeping customers and there is the question of which stance will result in the greatest profits. This is, of course, more of a practical than ethical question. Deciding to take a position based on the profit potential is, however, a matter of ethical concern. The company side is but one side of the cookie, there is also the consumer side. This will be discussed in the next essay.

My Amazon author page.

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Psychohistory & Big Data

Posted in Business, Metaphysics, Technology by Michael LaBossiere on July 23, 2012
English: This image is a reproduction of an or...

(Photo credit: Wikipedia)

Isaac Asimov introduced the fictional scientific field of psychohistory in his Foundation universe. In this science fiction setting, this science could predict the future by analyzing data and making inductive inferences from this data using various algorithms and formulas. The predictions resulting from the science are not about specific individuals, but rather about broad events. For example, the science could predict the fall of the Empire, but it could not be used to predict which specific person would be the emperor at that time.

Not surprisingly, real thinkers have been striving to make such predictions for quite some time and have met with some success at making statistical predictions involving large numbers of people. For example, the number of traffic accidents that will occur in a year can be predicted with a fair degree of accuracy as can the number of births.  However, making the sort of predictions made in the Foundation series has been beyond the reach of current social sciences. However, this might change.

Psychohistory is, in many ways, would work like weather prediction: data needs to be collected, analyzed and used to create mathematical models. Ideally, the model would be a perfect duplicate of reality and time could be accelerated in the model to see what will happen. Of course, making such a model is rather challenging.

One major restrictive factor has been that of data. After all, the ideal would be a perfect reconstruction of the world and to the degree that the available data falls short, the model becomes less than accurate.

While humans have been gathering and storing information since the advent of writing, we are currently gathering and storing more information than ever before. In fact, the practice of gathering, storing and analyzing data is now a standard business practice that goes by the name “Big Data.” Google was one of the pioneers of modern Big Data but other companies and organizations have gotten into the game. Some are involved because it is an industry worth billions while others are involved for other reasons (such as law enforcement). In any case, significant effort is being expended to gather up data that would be useful in predicting human behavior whether the goal is to sell more baby products or fight terrorism. People are, of course, contributing to this process by handing over massive amounts of data via social networking sites and other ways, such as trading private information for “free” stuff.  As such, there is now a massive quantity of Big Data that would be very useful in modeling the future.

The data will, of course, always be less than complete. In addition to the practical limits, there is also the problem of “limited” omniscience—knowing everything that is and was. Unlimited omniscience would include knowing everything, including what will be (assuming that can be known). Given human limitations, we will never have that complete information. As such, the epistemic limits will certainly prevent a perfect model because there will presumably always be past things that we do not know (and perhaps there are unknowable things) and hence they will not be in the data.

But, perhaps there is a way around this. If a suitably awesome machine could be built, perhaps it could predict everything from a single truth—a Cartesian machine of sorts. This leads to a second restrictive element.

A second restrictive factor has been a matter of logic. To be specific, there is the problem of creating the “software” to analyze the massive amounts of data so as to make predictions. Much of this involves inductive reasoning. After all, the goal is to make an inference from what is known (the sample) to what is not known (the target). This sort of reasoning is, of course, essentially philosophical. As such, it is hardly surprising that Leibniz was one of the first to explicitly propose creating a model of reality using symbols. Hobbes also believed that the social sciences could be “real” sciences and took geometry as his model.

While the “software” is still not quite up to psychohistory standards, there have been some impressive results in the business world in the field of predictive analysis. Of course, some of these successes have created some concern such as Target’s infamous use of such results to predict pregnancies and thus engage in targeted marketing of women who were statistically likely to be pregnant based on their buying behaviors.

As might be imagined, metaphysics becomes a factor in regards to predictive software. One important matter is whether or not humans have free will. After all, if humans do have free will in the classic sense, then predicting human behavior will always be limited by that factor. Of course, it can be argued that even if people do have that mysterious free will, people still behave in ways that are subject to statistical analysis. So, X% of people will freely do Y, while Z% of people will freely not. Though they are all free, the general patterns of behavior would certainly remain predictable. After all, we already engage in effective statistical predictions and if these are compatible with our (alleged) free will, then it seems reasonable that the same would apply to other large scale predictions as well. As such, psychohistory would be consistent with free will. That said, perhaps free will could be a factor that could “break” some predictions, perhaps in very important ways. The “breakage” caused by free will would seem to depend on how much impact individual choice has on the behavior of the whole.

A second important matter is, obviously enough, whether reality is determined or not. If we live in a deterministic world, this would seem to make definitive predictions easier (if that even makes sense to say in a deterministic universe). After all, there would be no random chance or free will to complicate matters. Of course, even if we live in a random universe then predictions would still be possible. They would, of course, lack the certainly that would be theoretically possible in a deterministic universe, but such is life in a random universe.

A third important matter is whether or not reality can be adequately modeled. This involves concerns about the nature of reality as well as the capability of humans to develop a means of modeling reality. It seems reasonable to believe that our models will always fall short of reality, thus ensuring that predictions will always potentially be in error.

A third restrictive factor is processing power. Before computers, data analysis was done by humans and this placed a rather serious limit on the volume of data processed and the speed at which it could be done. While modern computers lack human intelligence, they are well suited to data analysis—at least once they have been properly programmed by humans. While the industry is starting to run into the limits imposed by physics when it comes to improvements in processors, creating massive networks as provided a means to work around this, at least for a while.

There is, of course, the fact that it is probably impossible to build a machine with enough processing power to recreate the world (even if it is assumed that the data is complete and completely accurate) even in a virtual way. As such, this will also limit the efficacy of predictions.

Perhaps someday we will be able to predict the future so as to know whether or not we need to wear shades.

My Amazon Author Page. Big Data predicts that you will buy some books. Don’t make big data cry.

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Taxing Mitt

Posted in Business, Ethics, Philosophy, Politics by Michael LaBossiere on July 20, 2012
speaking at CPAC in Washington D.C. on Februar...

(Photo credit: Wikipedia)

While Mitt Romney has released his recent tax returns, he has taken considerable heat for not releasing more of them. While it is no surprise that the Democrats have been pushing Romney on this, some conservatives have also urged Romney to release these returns.

Romney’s view seems to be that he has done what is required and his wife said that  they have “given all you people need to know.” This does raise a legitimate question about what voters have the right to know about candidates. While presidential contenders have historically released tax returns covering many years, Romney is not violating any laws by refusing to release the tax returns in question. Assuming that the law defines what voters have the right to know, then the voters have no right to know the content of these returns. Of course, what people have a right to know (as defined by the law) and what people need to know can be two distinct things. After all, in order to properly assess the candidates, voters might claim to need information that the candidates are not legally obligated to share. For example, some people wanted to know a great deal about Obama and desired to see his college transcripts. In the case of Romney, some voters seem to think they need to know about these tax returns. However, the mere fact that voters want to know or think they need to know something does not entail that they actually have a legitimate need to know it. That is, that they have a right to know. While politicians can legitimately be expected to provide more information to the public than a typical citizen, they do not surrender their privacy completely. As such, there is still a legitimate question of whether the public has a legitimate need to know about these tax returns.

Given that other presidential candidates have released extensive tax records, it does seem well established that there is  legitimate expectation on the part of voters that they will have access to such information. Of course, it could be countered that this is a mere tradition and has no moral weight. That is, the fact that other candidates (including Romney’s father) released their returns does not entail that the voters have a right to see Romney’s tax returns-even if they would be relevant in making their voting decision.

Naturally, it could be argued that Romney has tacitly made the tax returns a matter of legitimate public concern. After all, much of his case for why he should be president is based on his success in business. If the voters are to properly assess Romney’s business competence, the voters need access to these financial records. As such, it could be argued that Romney has given voters a legitimate need to know about these returns. As such, the voters do not have all they need to know and the returns should be released.

Romney has also argued that he does not want to release them because the Democrats would go through them looking for material with which to attack Romney. As the Democrats see it, this means that the tax returns must contain things that would give them plenty of ammunition against Romney. As Romney sees it, the Democrats will twist and misuse the returns to make him look bad. As such, he seems to think he is better off taking the criticism for not releasing the returns than sustaining the damage that would result from releasing them.

On the one hand, it could be contended that Romney has a legitimate point. If there is nothing bad in his tax returns, but the Democrats will be able to somehow manufacture ammunition from this nothing, then releasing them would unjustly damage him. On the other hand, it can be contended that this reply is rather dubious. After all, if there is nothing bad in the tax returns, then the Democrats would simply be making things up if they said bad things about the returns-something they could do with or without the actual returns. To be fair to Romney, pundits and spinners are often able to twist innocuous things to make them look terrible. For example, pundits on the right have managed to do this sort of thing to Obama even when he released what was demanded, such as his birth certificate. However, there is the rather important question of whether or not there is anything bad in the returns and it does seem that voters have a right to know about this.

Some of Romney’s fellow Republicans are urging him to release the tax returns, mainly because of the damage that his making an issue of this is doing to his campaign.  Given that Obama has released several years of tax returns, it does make Romney look bad, especially since a beloved narrative on the right has been that Obama is a keeper of secrets. While people are generally not consistent in politics, Romney’s secrecy in this matter is not playing well even among those who are not fans of Obama. After all, it is natural to infer that if someone is keeping something secret, what is being concealed must be worse for the person than the damage done by people knowing they are keeping secrets. By keeping the returns secret, Romney invites speculation and causes people to wonder what terrible secrets he is hiding. This is, obviously enough, not a good strategy. Unless, of course, what is being concealed really is so bad that keeping it secret is preferable.

It is unlikely that the tax returns contain anything incredibly dire, such as evidence of criminal activity. While this is mere speculation, I suspect that the returns show that Romney made vast amounts of money and made use of every loophole and trick to pay as little taxes as possible. Since most people try to do the same (that is, pay as little as possible) and everyone knows Romney is rich, there must be something that the returns will show that would be damaging in some way. Speculating once again, I think that the problem might be that Romney’s tax returns would provide the Democrats with vivid ammunition against the Republican narrative that the job creators are over-taxed. After all, if Romney’s people were able to work the existing laws to keep Romney’s taxes rather low, this would enable the Democrats to point directly to Romney as evidence that the rich are underpaying rather than overpaying.

There might be other things on the tax returns, such as Swiss bank accounts, that would also provide the Democrats with considerable political ammunition to use to counter the Republican narratives about taxes, job creators and wealth. Of course, most of this would merely confirm what people already know: Romney is very rich and no doubt does all the sorts of things that rich people do that less affluent people cannot. However, the tax returns might provide such clear evidence of class disparity in America that they would actually hurt Romney’s chances. Or perhaps not. After all, people already know that Romney is exceptionally rich and upper class and he seems to be doing well despite (or perhaps because) of this.

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76 Fallacies

Posted in Philosophy, Reasoning/Logic by Michael LaBossiere on July 19, 2012

In addition to combining the content of my 42 Fallacies and 30 More Fallacies, this book features some revisions as well as a new section on common formal fallacies.

As the title indicates, this book presents seventy six fallacies. The focus is on providing the reader with definitions and examples of these common fallacies rather than being a handbook on winning arguments or general logic.

Available now at Amazon: United States and United Kingdom






The book presents the following 73 informal fallacies:

Accent, Fallacy of

Accident, Fallacy of

Ad Hominem

Ad Hominem Tu Quoque

Amphiboly, Fallacy of

Anecdotal Evidence, Fallacy Of

Appeal to the Consequences of a Belief

Appeal to Authority, Fallacious

Appeal to Belief

Appeal to Common Practice

Appeal to Emotion

Appeal to Envy

Appeal to Fear

Appeal to Flattery

Appeal to Group Identity

Appeal to Guilt

Appeal to Novelty

Appeal to Pity

Appeal to Popularity

Appeal to Ridicule

Appeal to Spite

Appeal to Tradition

Appeal to Silence

Appeal to Vanity

Argumentum ad Hitlerum

Begging the Question

Biased Generalization

Burden of Proof

Complex Question

Composition, Fallacy of

Confusing Cause and Effect

Confusing Explanations and Excuses

Circumstantial Ad Hominem

Cum Hoc, Ergo Propter Hoc

Division, Fallacy of

Equivocation, Fallacy of

Fallacious Example

Fallacy Fallacy

False Dilemma

Gambler’s Fallacy

Genetic Fallacy

Guilt by Association

Hasty Generalization

Historian’s Fallacy

Illicit Conversion

Ignoring a Common Cause

Incomplete Evidence

Middle Ground

Misleading Vividness

Moving the Goal Posts

Oversimplified Cause

Overconfident Inference from Unknown Statistics

Pathetic Fallacy

Peer Pressure

Personal Attack

Poisoning the Well

Positive Ad Hominem

Post Hoc

Proving X, Concluding Y

Psychologist’s fallacy

Questionable Cause


Red Herring

Reification, Fallacy of

Relativist Fallacy

Slippery Slope

Special Pleading


Straw Man

Texas Sharpshooter Fallacy

Two Wrongs Make a Right

Victim Fallacy

Weak Analogy


The book contains the following three formal (deductive) fallacies:


Affirming the Consequent

Denying the Antecedent

Undistributed Middle



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Posted in Business, Ethics, Philosophy, Politics by Michael LaBossiere on July 18, 2012

In times of tight budgets, states endeavor to cut spending. While one approach is to fire state workers directly and eliminate positions, another is to privatize something the state used to handle (such as a prison or school busing).

The reasons given for privatizing are, of course, intended to be sensible. Privatizing is supposed to save money. It is supposed to result in higher quality service. It is supposed to reduce red tape. If privatizing did these things, then it would be a good idea. After all, getting better service for less cost and less red tape would be great. In fact, even if privatizing only improved one area (cost, quality, or bureaucracy) then it would be a good thing (assuming it did not make things worse otherwise). However, there is the obvious question of whether privatizing can deliver these alleged goods.

While it is commonly an article of faith that privatizing saves money, this does not seem to be the case. While the matter has not been extensively studied, the evidence indicates that privatization generally increases costs rather than saving money. While it might be objected that the matter has not been well studied, this would obviously not serve as evidence that privatization would save money. At best, this objection would have as its main impact that it is reasonable to be uncertain about what impact privatization would have-although it clearly did not have a positive impact in the vast majority of cases examined in the study.

Intuitively, it simply seems unlikely that privatizing would save money. After all, there is no private sector magic that enables it to do things that simply cannot be done by the state. As such, the state could save money by doing whatever it is that would be done by the contractors to save money. This would, of course, save the state even more money than privatizing. After all, the private contractors need to make a profit on top of what it costs them to provide the service-something the state obviously does not need to do.

In order for the privatizing of a service to save the state money, the costs incurred by the contractor plus the profit must be less than what it would cost the state to do it. It is not clear how this would be possible without the assumption that the state, as a matter of necessity, must always pay higher costs than the private contractor.

It could, of course, be countered that the state simply must do things inefficiently and in a costly manner. That is, the private sector is simply better than the public sector and hence privatizing can save money.

One obvious reply is that this seems to simply beg the question by assuming that the private sector will do things more cost effectively than could possibly be done by the state and thus be able to save the state money while also making an adequate profit. What is needed, of course, is evidence that this can be done. Ideology is, of course, not evidence. As noted above, the existing (albeit limited) evidence is that privatizing is not a money saver.

This is, of course, a factual matter. I have no objection to privatization in principle—my objection is based on the evidence that it does not save money. If it can be shown that privatizing a service would save money and that it would not be possible for the state to engage in the money saving practices that enable the private contractor to save money (that is, the only way to save is to go private), then I would be for that privatization. If, however, the state can save more money by adopting effective cost savings measures, then that would be the better option. After all, if the goal is to save money, then the greater savings wins. That said, it is also important to take into account the quality of the services.

As far as quality goes, a stock argument is that privatization is a good idea because it will improve quality.  It is often argued that the state is bad at doing things and hence provides low quality services. In contrast, the private sector is supposed to provide higher quality services (at a lower cost).  While higher quality (at a lower cost) is appealing, there is the obvious question of whether this is true or merely a claim based in ideological faith. As with the matter of saving money, this is a factual matter.

While people do point to problems with the quality of state services, it is also easy to point to quality problems with privatized services. These can be rather horrible, as shown by rather serious problems involving the way the privatized half way houses in New Jersey have been run Paul Krugman provides an interesting analysis of this problem that is well worth reading. As such, the idea that the private sector will simply be better because it is private does not seem to be true.

As I argued with the case of savings, unless it is assumed that the state is incapable of providing quality services it would seem that there is nothing that a private contractor could do in terms of quality that the state could not do. After all, there does not seem to be a private sector magic that enhances quality.

There is also the obvious point that the private contractor has to make a profit and this can lead to cutting corners. After all, lowering costs is a rather effective way of increasing profits. However, cost cutting often involves cutting quality and this practice is common fodder for news stories about the horrors of quality cutting to save money.

It might be replied that the private sector has to have better quality because the contractor must keep the customer happy. However, the people they have to keep happy are the same people who would be “customers” of the state. So, if a need to keep people happy leads to good quality, then the state should be subject to this as well. After all, just as unhappy people would change companies, they would also presumably vote to change the people running the state.

I am, of course, in favor of what would provide the highest quality services for a reasonable cost. If privatization would do this better than the state, then that would be the sensible thing to do. However, this must be based on evidence rather than an ideological commitment that simply favors the private (or public) sector.

In regards to the reduction of red tape, privatization clearly does not do that. In fact, it adds more bureaucracy.  Instead of two levels (state and state employees) there are now three levels (state, contractor, and employees).

It might be countered that there will be less bureaucracy at the state level because most of it will be privatized. While this would be true, it does not actually reduce the bureaucracy—it just moves it.

It might then be countered that the private sector is just less bureaucratic than the state and hence it will be able to do the same with less bureaucracy.

One obvious reply is that the private sector seems to have plenty of bureaucracy. Another is that if the contractor can do the job as well with less bureaucracy, then it would make sense that the state could simply follow the same approach—unless, of course, there is a contractor magic that must of necessity be denied to the state.

As with cost and quality, the bureaucracy reduction is a factual matter. If privatization did reduce the overall bureaucracy (rather than shift it) while still being able to provide the same (or better) management, then this would be a gain. However, this is something that must be shown rather being assumed on the basis of ideology.

Overall, if privatization could save money, reduce bureaucracy and increase quality, then it would be a good idea. However, this is not something that should be accepted (or rejected) merely on ideological faith. As it stands, the evidence seems to be that privatization is no magic bullet.

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Posted in Business, Ethics, Law, Philosophy, Politics by Michael LaBossiere on July 16, 2012
English: A chronically homeless individual inh...

English: A chronically homeless individual inhabiting a bus shelter in Porter Square (Photo credit: Wikipedia)

In the United States, the number of homeless shelters increased in the 1980s due to a variety of factors. One factor was the recession of that time which resulted in more people being unable to afford housing. A second factor was a shift away from single room housing. Though rather limited in size, this sort of housing was cheaper than the alternatives. Back in the early 1990s, some of my fellow graduate students lived in singles, but these seemed to be (like most graduate student housing) relics from another time. A third factor was the infamous closing of mental institutions and reduction in care for the mentally ill. While proponents of the approach lauded the cost savings, some critics saw it is as simply dumping the ill onto the streets.

In the face of this surge in homelessness religious groups, charitable organizations and governments increased the number of homeless shelters. The intent was to provide people with a place to stay until they could sort out their problems and thus be able to have a permanent home. This approach does make a certain sense and did work in some cases. After all, it seems reasonable to infer that people become homeless because of problems (financial, mental and so on) and that once these problems are fixed, then a person will be ready to have a home. Unfortunately, this approach did not prove very successful and there are about 640,000 homeless Americans with about 110,000 of them being chronically homeless.

Fortunately, an alternative approach seems to be having a more positive impact. This approach reverses the old approach: rather than “fixing” people so that they are ready for permanent homes, this approach involves getting the homeless into more home-like shelters or permanent housing. Those who need treatment are given treatment and the results seem to have been very positive: 85% of those involved in this approach remain in their homes rather than ending up back on the streets.

While this approach seems to have merit, there is the stock concern that the state funded programs are wasting the taxpayers’ money by supporting free-riders. Somewhat ironically, the troubled economic times that increase homelessness also decrease the funding available for such programs and also gives some support to claims that scarce financial resources should be better used, perhaps by allowing more tax breaks for the job creators. As such, there seem to be two main arguments against funding such programs with state money.

The first is a utilitarian argument. Because of the recession, there is less state money available than what was normal before. As such, it is even more important that the money be spent effectively. Putting money into shelters, programs and permanent housing for the homeless would yield less positive results than using the money elsewhere (such as deficit reduction, tax breaks for the job creators or maintaining infrastructure). As such, the money should be spent in these other areas rather than in addressing the problem of homelessness.

This argument can, of course, be countered by showing that the money spent on addressing homelessness would be less than the cost of not addressing the problem. If this is the case, than the cost argument favors spending the money rather than incurring the costs that can be avoided or mitigated by spending.

While homelessness is clearly bad for the people who are homeless, it also is rather costly to society as a whole.

One area of cost is the medical costs of homelessness. On average, homeless people average hospital stays four days longer than comparable non homeless people. This costs about $2,414 per hospitalization. Also, since homeless people tend to not have insurance, the cost is born either by the state (that is, us) or by those with insurance (in the form of increased premiums).

Not surprisingly, people do become homeless because of medical problems and medical problems are also caused by being homeless. Those who are homeless are more likely to become ill than those who have homes and are more likely to suffer from problems of greater severity. As such, homelessness adds a burden to the health care system, especially the emergency rooms. Addressing the problem of homelessness would help reduce these costs.

Another area is crime and prisons. People who are homeless tend to spend more time in prison than the non-homeless. In some cases, they are arrested for “general” criminal activity, but they are often arrested for breaking laws that are aimed specifically at the homeless, such as laws against loitering and begging.

While prisons can be quite profitable for the private companies that run them, it costs an average of $20,000 a year to keep a person in prison. The specific costs vary due vary. For example, a prison stay in California costs $47,000 a year. While those who profit from prisons will not see it this way, reducing homelessness would be a good thing because it would mean fewer people in prison and thus lower the cost to the taxpayers.

A third factor is the cost of emergency shelters—the traditional homeless shelter. These shelters are considerably more expensive than the cost of a permanent residence. As such, permanent housing would provide a savings over temporary shelters.

Naturally, it is reasonable to wonder what impact the permanent home programs might have on the cost to society of homelessness.

One program resulted in a savings of $2,449 per person each month compared to the cost of temporary shelters. A study in my home state of Maine  showed that the permanent housing approach yielded a 57 decrease in the cost of mental health services, mainly due to a 79% reduction in the cost of hospitalization. In Los Angeles, a study showed that putting four people into permanent housing saved over $80,000 per year.

Of course, this savings assumes that the temporary shelters would be funded. For those willing to allow homeless people to live on the streets, this sort of program would not yield the highest savings. After all, the cost of housing the homeless on the street would be nothing. Of course, this would not reduce the other costs associated with homelessness and would almost certainly increase them. After all, people living on the street are more likely to get ill or injured and also more likely to be arrested.

Of course, the medical costs could be addressed by changing the law so that people can be refused even emergency medical care if they cannot pay and ending all state-funded treatment programs for addiction and mental illness. That is, we could entirely abandon the homeless, other than providing them with prison when they are arrested. Of course, there would still remain the question as to whether or not this would result in a cost saving. After all, the abandonment approach might result in a large enough increase in number of homeless people being imprisoned to offset the savings from abandonment. Naturally, this does not take into account the moral cost of abandonment, just the financial cost.

Overall, the evidence does seem to be that providing permanent housing for the homeless would be a cost saver, though perhaps not as big a cost saver as comprehensive abandonment. The second argument is a moral argument or, rather, various moral arguments. One stock argument is based on the idea that we have no moral obligations to others and hence it is not the case that we should provide such support to the homeless. On this view, we could provide such support, but we are not obligated to do so.

A second stock argument is that providing such support is immoral because it creates a culture of dependency. That is, by providing the homeless with permanent homes and treatment for any health problems they might possess they are learning to depend on others and will be unable to carry their own weight. While not supporting them might seem harsh, the argument is that this sort of “tough love” will enable then to pull themselves up by their bootstraps.

While this line of reasoning has some appeal, one obvious reply is that this approach seems analogous to addressing a broken leg by refusing to treat it because putting a cast on a broken leg will just make the person dependent on the cast.  As with a broken leg a person whose life is broken needs support until she can stand on her own again.

One reply to this is that while this might hold for those who will be able to stand on their own, it does not address the problem of those who will remain dependent on support forever. These people, it can be argued, are just parasites and should not be supported.

I do, of course, agree that someone who is just free-riding the system should not be supported. However, the number of people who will become homeless and unemployed just so they can free-ride seems to be rather low (but more than nothing). After all, most people want to be self-supporting rather than dependent on others. To deny people who need the support to rebuild just because some small percentage of people would free-ride seems as unreasonable as getting rid of handicapped parking because some people will get decals for those spaces that they are not really entitled to.  It can also be countered that supporting a free-rider in such a program would be cheaper and less damaging than having them free-riding on the alternative system.

Another stock moral argument against providing support for other people is that those being supported are stealing from the taxpayers by having their housing and treatments being paid for by others. As such, the homeless are morally in the wrong and we should not enable their theft by allowing such programs. Alternatively, the homeless people could be cast as being pawns used by the politicians who are stealing money from taxpayers and giving it to the homeless. Or, for extra immorality, the homeless and those who enable such support can be seen as being in wicked (or at least misguided) cahoots.

One obvious reply is that by this sort of reasoning we all spend years as thieves. After all, as children we live off our parents (or whoever is keeping is alive), we steal education from the state (or whoever is paying for it), and until we pay enough in taxes to pay for all the public goods and services we use we are stealing every time we walk down a public sidewalk, drive on a public street or go to free a public park. We also steal from all those who have come before us and who enabled us to live in a modern society with technology, medicine and such. That is, we are all beneficiaries of the labor, money and ideas of others. As such, it would be somewhat hypocritical to regard the homeless as thieves because they are assisted by others.

The obvious reply is that the non-homeless who do pay taxes (and presumably pay off their financial debt to their families) eventually pay back what they stole (or borrowed) from society when they were young thieves. Of course, the same could be said of the homeless—if they are able to return to society and work, they can repay what they owe to others.

This does not, however, address the problem presented by those who will either never be able to return to contributing to society or who will not be able to repay what they cost society, perhaps because of mental illness. The obvious reply to this is that it would seem unreasonable to see such people as thieves. It could, of course, be argued that we should be rid of those who cannot support themselves—but this would be a different moral argument than the one based on thievery.

What, then, about people who could return to society but elect to be free-riders? That is, their situation is entirely a matter of choice and tomorrow they could be at a job earning enough to pay their own way. In this sort of case it would be reasonable to regard these people as thieves. After all, they are taking what they could earn by honest labor and there would be (by the scenario presented) no justification for them receiving support. However, these cases seem to be rather limited in number (but more than none, I am sure). As argued above, the fact that a very few people might exploit something intended to help people in need does not give an adequate reason to treat everyone in such a program as being an exploiter.

In light of the above arguments, providing permanent housing for the homeless seems to be both a cost saver and morally acceptable.

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Posted in Business by Michael LaBossiere on July 13, 2012
Official photographic portrait of US President...

Get this man a bubble! (Photo credit: Wikipedia)

While many corporations are doing great, the economy is still in fairly rough shape. As is to be expected, the two political parties are busily forging their rhetorical weapons for the 2012 election and claiming that only their ideological points can save the day. For example, the stock Republican line is that cutting taxes and removing regulations will save the day. The Democrats counter with what one would expect from the Democrats.

While politicians can obviously impact the economy (see, for example, prohibition) by their decisions, it is reasonable to consider whether or not specific proposals would have a positive impact (or any impact at all). Consider, for example, taxes. As noted above, the stock Republican line is that we need to cut taxes to grow business to get the economy going. There are, of course, some obvious problems with this view.

First, there have been periods of prosperity with higher taxes, such as during the Clinton area. This indicates that the impact of tax cuts is somewhat limited. Second, taxes are rather low now. Despite the rhetoric to the contrary, Obama has been largely following the Bush strategy of lowering taxes. As the Republics delight in claiming, unemployment is still high and the economy (aside from the top corporations) is still limping. Third, thanks to loopholes and the ways the laws are written, the very wealthy and corporations are able to pay remarkably low (sometimes no) taxes. If low taxes were the true engine of recovery, we should be doing amazingly well. As such, cutting our way to prosperity doesn’t seem any more likely to work than trying to tax and spend our way out of it. So, what would save the day? Turning back to history, three interesting potential solutions  present themselves.

First off, there is war. Winning one seems to have really helped us after WWII. Of course, there are some problems with this option. We are, obviously enough, at war and it does not seem to be getting us out of the hole. Also, what really helped out after WWII was that our competition had been bombed into rubble. So, unless we are willing to bomb our competition, war does not seem like it will get us out this time.

As a second option, there is a new frontier. It can be a “new” land rich with resources or technological innovation(s) that change the world. Unfortunately, all the land seems to have been grabbed up (requiring option one if we want to get it). We could try space or the deep sea, but we lack the technology to really exploit those environments-at least for now. As far as the technology goes, some might point out that we have Facebook. While that made some billionaires and millionaires, it wasn’t enough-mainly because it might not actually be a real frontier, but is probably part of a bubble. So, unless someone is assembling a warp drive in their garage, we are still stuck with a slow climb out of the recession. Unless, of course, we can take advantage of the third option.

As a third possibility, there is the bubble. Looking back, it seems what saves us (then dooms us) is the bubble. In the 1980s we had the Savings and Loan Bubble (better known as the S&L crisis). The economy grew with the bubble and then burst with the bubble. We struggled along until 1995 with the beginning of the dot-com bubble. This bubble expanded until about 2000 and then burst. Pets.com was the mascot of this bubble-the company went from having its sock puppet being interviewed by People to vanishing in a puff of $300 million in lost investments. After the dot-com bubble, the geniuses in finance gave us a massive housing (and finance) bubble that expanded the world economy until it burst, almost taking down the world. We are still cleaning up that burst bubble.

As is to be be expected, the presidents and politicians presiding over the rises love to take credit for them. However,  the main connection between policy and the bubble expansion seems to be that there are policies that allow people to act in ways that will ultimately cause the bubble to burst. For example, the policies governing housing and finance allowed the bubble to grow via financial wizardry and deceit. Since the growth was largely illusory, it was hardly a shock that the bubble burst under the very same policies that allowed it to grow.

In some cases, it is like a situation in which a parent allows the kids to feast on sugar and junk rather than good food. While they will run around madly for a while, this cannot be sustained on sugar and they will crash. Likewise for the economy. In some cases, it is like adults gorging on sugar-they should know better, but they do it anyway. And then some of them are shocked when the vomiting begins. There are some signs that we are bubbling again.  For example, there is the Facebook economy that seems to have bubbled up nicely and housing seems to be inflating a bit again.  Once we get the next bubble inflated, someone (Obama or Romney) will take credit for getting is back to the good times. Then the bubble will burst and we’ll go through yet another round of proposed solutions. But all we really need is another bubble. Then another. Then another. Fortunately, the bubble residue can be like coral-sometimes it provides a solid foundation upon which something can live.

Stay bubbly, my friends.

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