Relevant and even prescient commentary on news, politics and the economy.

Black Mirror Big Data Becomes Big Brother In China

Black Mirror Big Data Becomes Big Brother In China

And maybe coming soon to the US as well, enough to make Orwell sit up and take notice.

The first show of the 2016 season of the sci fi TV show, “Black Mirror,” called “Nosedive,” showed a future society where people have overall social scores (1-5) that are constantly being changed based on what they do and who they interact with and how.  Access to many things is based on one’s rating.  The female lead has a middling score and wants to raise it by attending wedding of friend with higher rating,  Her efforts to do so lead her to do things that make her rating fall, which then leads it to nosedive as others downrate her and dump her,with her ending up in prison.  While not quite that far gone, a system like this seems to be emerging in China, including the phenomenon of people dumping others whose social rating is falling, thus putting them into such a nosedive.  However, the scores are 350-950, resembling FICO financial ratings used initially by mortgage lenders in the US.

The emerging system is described in a recent Wired article by Mara Hvistendahl (probably Norwegian or Danish) who is currently living in China and has a low rating she has been trying to raise as she is shut out of buying various things due to it,  I suspect part of her low rating is because she is a foreigner, which she never mentions as a possible reason, but her description of how the system works and is being developed jointly by the Chinese government in conjunction with Alibaba through its Alipay system, particularly its Zhima “credit scoring system.”  It was initially a commercial system based on what people buy, but using big data goes much further to rate more broadly how people behave and with whom.  Thus a journalist who reported on corruption now has a low rating and cannot do many things.  Tyler Cowen has a link to this in his assorted links for Tuesday the 19th on Marginal Revolution, but I am having trouble linking either to either. (Dan here…fixed link)

Curiously in yesterday’s “China Watch,” a pro-Chinese government monthly newspaper that comes with the Washington Post, bragged about parts of this system in two articles.  One entitled “Alibaba credit scorer looks past deposits” reports on how its advanced “risk control” system is bringing in insurance companies  to help businesses avoid not getting paid.  The other, “Recruiters Switch On To Social Media,” reports how businesses search for possible employees by looking at their social networks on social media..  The benefits to those who might gain are stressed, but no possible downsides or criticism are mentioned.

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Corporatizatizing The All-Administrative University

Corporatizatizing The All-Administrative University

One of the few good things that appears to have happened in the conference committee on the generally awful impending GOP tax bill is that the hits students were going to take have been eliminated.  However, even without that additional burden, college students face costs that are far higher than any other nation and have been rising above inflation rates for decades.  While` students in Denmark actually get paid, costs are closing on $70,000 per year at the most expensive US institutions, with public schools having costs rising more rapidly than in the privates over the last decade, as states have cut public support in the wake of the revenue shortfalls that came with the Great Recession.  This is not likely to be reversed in many states as favorable views of universities among Republicans have fallen from nearly 60% to about 30% (with little change among Dems, still between 55 and 60%).

I would like to focus on a long-running trend that has been known for some time but somehow keeps disappearing from view.  This trend was best presented in the ever more relevant 2011 book by Johns Hopkins poli sci prof, Benjamin Ginsberg, The Fall of the Faculty: The Rise of the All-Administrative University and Why it Matters.  This rise of an all-powerful professional administration is tied to a corporatization of American academia.  From 1975 to 2005 while student populations rose 56%, faculty increased by 51%, administrators rose 85%, and their professional staffs rose 240%.  Around 2005 the total numbers of admins and staff surpassed that of faculty, with that trend simply continuing.  Admin salaries have risen faster than the other categories. On top of that, even as faculty numbers and salaries have not kept pace, there has also  been the weakening of status and pay arising  from the ongoing steady shift from tenure track faculty to temporary adjuncts who have risen   from 22% of faculty in 1970 to about 50% in 2017.

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The End Of The “Islamic State.”

The End Of The “Islamic State.”

There are two aspects of this debate, one about the term, “Islamic State,” and the other about the its application. So, until about a month ago the entity calling itself ” al-Dawla al Islamiyya fi al-Iraq wa al Sham(s),” was claiming to be the most important Muslim political entity in the world, the center of its “Caliphate” which claimed to be the only legitimate and supreme ruler and polltical state for the entire Islamic/Muslim world. As of this moment it remains unclear what the status of the self-proclaimed al-Khalifa, Abu-Bakr al Baghdadi. Rumors have had him dead while others say he remains alive and in charge of the remnants of his group.

Regarding its real world actual existence, well, I am posting this because about a month ago this group lost control of the last good sized town that it controlled, Abu Kamal, reported by the seriously ignorant western media as “Bukamel,” about 40,000 in population, a town on the Euphrates River just over the border from Iraq on the Syrian side.  Apparently it now controls no town or city of any size, although supposedly it continues to operate in rural desert areas along the Syria/Iraq border. But as an entity that rules any sort of meaningful government as a “state,” well, it has ceased to exist  as that as of the takeover of Abu Kamal by Syrian state forces backed by both Russia and  Iran as well as the US to a lesser degree, and has returned to its earlier roots as a guerrilla rebel movement, not a status as a “state,” according to any serious definition of that term.

The second part of this involves mainstream western media.  Somehow somebody in control of these things decided and enforced that what al-Dawla al Islamiyya fi al-Iraq wa al Sham(s) would be known as “officially” in western mainstream media (to be specific the “papers of record,” the New York Times and the Washington Post), would be the seriously misleading and ideologically/theocratically inaccurate term, “the Islamic State.”

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Is Bitcoin A Speculative Bubble?

Is Bitcoin A Speculative Bubble?

 There are at least two definitions of a speculative bubble.  The first, and most widely accepted, is that it involves a price of an asset that rises substantially above its fundamental and then falls back towards that fundamental.  The other, not necessarily all that clearly distinguishable from the former, involves an asset price that rises due to people buying due to an expectation that they will get a capital gain from its expected future price rise, with this then happening due to a self-fulfilling prophecy, with eventually the price falling sharply, with this not necessarily involving a fall towards a fundamental because the asset may have no fundamental at all.

I note before proceeding futher that there is an enormous debate and literature on identifying fundamentals at all, even when they might theoretically exist.  There is a serious body of opinion dating from Flood and Garber a quarter of a century ago that one cannot identify them econometrically (“Tulipmania”).  This has been shown to be false by me and many others in various papers, including particularly on closed-end funds where the net asset value of the fund minus taxes and fees is a fundamental, and when those soar to twice the value of the underlying net asset value, well, we are looking at a bubble. The lit is there and decisive.  I asked Garber to comment on a paper presented a long time ago at a conference on this point, but the chicken shit did not show up to admit that he was just plain wrong.  He had no legitimate excuse for his absence.

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Tolerance And Terrorism In Saudi Arabia

Tolerance And Terrorism In Saudi Arabia

On the one hand this past week, Thomas Friedman at the New York Times has written a praising column about Crown Prince Muhammed bin Salman (MbS). He is going to bring a new “wave of tolerance” into Saudi Arabia, along with more generally modernizing it. This claim is not totally without substance given his setting up for women to drive starting next June as well as letting them go to sports events with men and also curbing some of the excesses of the Mutaween, the religious police. It is not clear what further liberalizations are in order, but Friedman assures they are coming. A newly tolerant Saudi Arabia is on our doorstep, whoopee!

OTOH, it has since been announced that MbS is overseeing a rewriting of the criminal code of the Kingdom of Saudi Arabia (KSA). A major part of this rewriting is to help the government combat terrorism, with the death penalty available for helping to aid in this. Just as we all oppose corruption, which MbS fought by arresting 201 people, many of whom also seem to have been potential political rivals or critics, we all oppose terrorism. But just as with corruption, terrorism can be stretched to mean many things. And indeed, it turns out that one of the items appearing in the new criminal code is that criticizing the king is an act of terrorism, punishable by death. This is how one has tolerance while fighting terrorism at the same time in the new Saudi Arabia, whoopee!

Barkley Rosser

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A Race To Suppress Academic Freedom?

A Race To Suppress Academic Freedom?

The race is between the two nations competing for global dominance, the US and China.  This post is triggered by an unnamed editorial in today’s Washington Post (probably authored by Fred Hiatt) criticizing China for imposing ideological limits on Chinese universities.  Since the recent party congress, 40 universities have set up centers for studyiing Xi Jinping Thought.  14 universities have come under attack for being “ideologically weak.”  Joint operations between US and Chinese universities must appoint a party secretary as a vice chancellor.  There have also been restrictions on the internet and other matters.  Without doubt, putting restrictions on higher education will make it harder for China to move into a position of full global leadership.

Of course, the WaPo editorial did not notice trends in US academia that also may lead to suppression of research activity and threaten the current leading position of US higher ed in the world, although there have been reports and columns commenting on these trends.  Among them are the push for political correctness coming from students, but probably more important is the assault on higher ed coming from the Trump administration.  This is seen in the attack on tax breaks for students but also the push to distort funding for research on certain topics. While not directly on higher ed, probably the most damaging has been the attack on science in government agencies, especially the EPA, with such nonsense as banning scientists who have received funding from the agencies on their scientific advisory boards, even as those receiving funding from corporations at odds with goals of these agencies are allowed to be on those boards.

Really, it looks that the two most powerful nations on the planet are having a race to suppress academic freedom and suppress the free development of knowledge in this world at a time when we need more of that.

Barkley Rosser

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Proposing A Judicial Coup Via A Tax Bill

Proposing A Judicial Coup Via A Tax Bill

On today’s Washington Post editorial page in a column entitled “Packing the courts like a turducken” (a deboned duck within a deboned chicken within a deboned turkey, or something like that, all for Thanksgiving, thank you), Ronald A. Klain not only reports on the actual push to pack courts with lots of young, incompetent extremists that is going on after Congress sat on judicial nominees by Obama in recent years, but also a proposal coming from a co-founder of the Federalist Society, Steven Calabresi.  He both wants to expand the judiciary by 50% and have them all appointed in the next year, but to  replace the 158 administrative law judges with lifetime appointments by the president.  The latter are currently only appointed for one term and are civil service personnel passing on issues dealing with such agencies as the EPA and the SEC.

Most particularly, he suggests that this be packed into the current tax bill, a true turducken. The only good thing about this is that it does not look like anybody in Congress is pushing it.  But if they did, this would put the US even more in the same category as nations like Turkey, Russia, and Hungary where executive authorities move vigorously to take direct control over formerly independent judiciaries.  It is bad enough the degree to which this sort of thing is actually happening as it is.

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Two Powerful Women Losing Power

Two Powerful Women Losing Power

That would be respective Angela Merkel and Janet Yellen, both reported to have lost a lot of power in today’s Washington Post.  During at least the last year, if not the last four, they have been probably the two most powerful women on the planet.

In the case of Merkel, what has happened is that she has failed to form a coalition government after last month’s election, which put her and her party in the lead, but not enough so to allow her to push through to a coalition government, with the hard right Alternative for Democracy (AfD) getting seats.in the Bundestag.  She had been trying to form a “Jamaica” coalition with the Greens and the Free Democrats, but the latter withdrew from the negotiations for reasons the WaPo story did not clarify (quality of reporting at WaPo has been declining steadily for some time).  Apparently she then made a last gasp effort to negotiate another “grand coalition” with the Social Democrats, but having lost a lot of support due to having been in such an arrangement prior to the last election, they refused.

It looks like she will call for another round of elections in January, and the AfD is crowing with delight for an apparent triumph on their part.  I guess we shall see.  In the meantime, aside from her personal embarrassment, EU-Brexit negotiations are now reportedly in a stall pattern as nobody wants to sign on to anything without a definitely in-place government in Germany to approve or disapprove of it.   Merkel may yet regain her power if the January elections go more firmly her way, although she may well be forced to step aside as Kanzler der Bundes Deutsches Republik and more completely and thoroughly lose power. Many fear the results of the latter, although if it were to be due to a government led by the SocDems, many hear might cheer.

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ARAMCO CEO Is Delusional

ARAMCO CEO Is Delusional

Financial Times reported yesterday that Amin Nasser, the CEO of the Arabian American Oil Company (ARAMCO, currently 100% owned by the Saudi government, although originally founded by four former US oil company majors), has declared that investors should feel pleased that Crown Prince Muhammed bin Salman has arrested and purged over 200 Saudi princes, government officials, and private businessmen.  This is because this was strictly an anti-corruption move, and foreign investors can be assured that there will now be no corruption in the Kingdom. Really, he said this.

Now I declared in my post title that Nasser is delusional, but I doubt it.  I suspect that he is a very smart guy. The question is whether he can convince any potential buyers of the upcoming possibly $2 trillion Initial Public Offering of 5% of ARAMCO stock that indeed this purge sends a good signal to them about buying ARAMCO stock.  Wow, the nation will now be rid of corruption, and, no, future investor, you need have no fear of being arbitrarily arrested or having your assets seized by MbS, none whatsoever, not that you were worrying about those things previously, but now you really do not need to worry about them at all.

Of course on the very same page of the FT there was another article about how MbS’s purge has rattled world oil markets, with oil prices now sharply falling after sharply rising after he made his purge.  Nobody knows what the implications are or what the heck is going on, but, hey, no problem, no need to worry, Inshallah bukra maalesh (God willing tomorrow no problem, a fave line in KSA).  In any case, Nasser’s public statement will undoubtedly completely reassure everybody, and all will become extremely calm before we know it.

Oh, there is also the matter of where this IPO will happen, touted to be the largest in history.  New York and London stock exchanges have actually been competing with each other to host it, but in fact in the end this may not be such a good idea and they may not be in the running for real anyway.  According to the FT the Saudis are also considering Hong Kong and Tokyo, but at the end of the article it was floated what I have all along expected and predicted: that the IPO will be handled out of Riyadh’s own exchange with specially targeted sales to specially targeted individuals, with a lot of them being local big money Saudis.  So maybe Nasser’s speech was not for all the foolish foreigners, but for the well-off locals: buy when we tell you to or else you can join the officially designated-to-be-corrupt 200 plus..

Barkley Rosser

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Saudi Crown Prince Attempts To Destabilize Lebanon

Saudi Crown Prince Attempts To Destabilize Lebanon

Of course that is not what Muhammed bin Salman (MbS) or his mouthpieces claim, but it is pretty much what every commentator I have seen outside of Saudi Arabia thinks is the likely outcome of his most recent actions, taken on the heels of his purge/arrests of over 200 people, with apparently more possibly about to be swept up in a supposed anti-corruption drive, although as Anne Applebaum put it, “In some countries a person is charges with corruption and then arrested, while in others they are arrested and then charged with corruption, with Saudi Arabia being among these latter.”  An unfortunate aspect of the current situation is that there are many loose ends and uncertainties, with many people in Lebanon making accusations that are being denied by Saudi authorities, but with no credible denials of the charges coming from those most affected and involved.

What KSA has done is invite the premier of Lebannon, Saad al-Hariri to visit KSA and then have him announce Riyadh his resignation from that position.  While he seems to have said little of any substance in his resignation speech and has said basically nothing since then nor made any public appearances that I am aware of, Saudi authorities said that the reason for this resignation was that he was in danger of being assassinated by Hezbollah or other enemies, which had happened to his father Raif in 2005, making this suggestion/accusation have some credibility.  Raif had also been premier, a position guaranteed to a Sunni as part of the Syrian government and Hezbollah, the latter a longstanding relationship.

As it is, nobody in Lebanon has accepted al-Hariri’s resignation, including the members of his own party, the Forward Movement, although they have so far defended the Saudis against criticism of their actions.  All the major political figures have demanded that he return to Lebanon so that he can resign there if he so wishes, including both his rivals such as Aoun and Nasrallah, the Hezbollah leader, as well as the members of his party.  Those in the rival parties, although all in the coalition together, have charged the Saudis with putting al-Hariri under house  arrest and forcibly preventing him from returning to Lebanon.  What he actually can do or wants to do is unknown.

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