How the Illinois IPass thing works.

Here is an excellet site that explains the Illinois IPass system very well: www.illinois-ipass.com

Why Aren’t There More Smart Americans?

The following post is a response to this article:

https://www.wired.com/2018/01/geeks-guide-david-ignatius/

Our problem is cultural. 

Our culture glorifies fame and leadership not intellectual achievement.

Thought: the life of Howard Hughes follows the trajectory of our culture as it changed with respect to it's image of scientists and technical people.

Hughes early life is described as follows:

"At a young age, Hughes demonstrated interest in science and technology. In particular, he had great engineering aptitude and built Houston's first "wireless" radio transmitter at age 11.[11] He went on to be one of the first licensed ham radio operators in Houston, having the assigned callsign W5CY (originally 5CY).[12] At 12, Hughes was photographed in the local newspaper, identified as being the first boy in Houston to have a "motorized" bicycle, which he had built from parts from his father's steam engine.[13] He was an indifferent student, with a liking for mathematics, flying, and mechanics. He took his first flying lesson at 14, and attended Fessenden School in Massachusetts in 1921."

Source: https://en.wikipedia.org/wiki/Howard_Hughes

Here is a picture of the young Howard Hughes:

If you google his name you see a procession of pictures of him with beautiful women and the image of him as a young and middle aged man is very much the swashbuckling hero. Think "the worlds most interesting man". That was the young and middle aged Hughes.

We all know what happened to him in his later life. Obsessive compulsive disorders, living in a hotel room, not cutting his hair or fingernails and so on. 

What is telling is that the image we have today of Howard Hughes is more the latter than the former and my opinion is that this is because we now feel that image is closer to the reality of scientists and engineers.

Watch an episode of "The Big Bang Theory" to see what I mean.

It's not something you would want to be if given a choice.

As of this writing a shockingly high percentage of the 1985 Chicago Bears Super Bowl championship team are either dead or disabled. Average age is only late 50's. Do we feel that their current state represents the "real" them? Obviously not. The "real" them is they way they were in 1985 (or thereabouts) and that is because we glorify athletics today - not scientists or engineers.

Can a reader mention even one top scientist or engineer alive today? 

Being a scientist or engineer is just not culturally "cool" today, and it has not been cool for quite some time.

It was when Howard Hughes was a young man.

This is why we don't have more "smart" people.

Notes on Russiagate

My rule is this: when you see a pattern of new accusations that serve to replace old and unproven ones then you should doubt the whole thing.

Hence, each time I read an article like this, I become more convinced that Russiagate is a nothing.

This particular article is chock full of innuendo and verbal ploys and that is standard fare for Russiagate at present.

My opinion is that Trump is a narcissistic bully and a loose cannon who was "elected" on a fluke but I'm pretty convinced now that Russiagate is a witch hunt. A combination of WMD, McCarthyism and Room Temperature Nuclear Fusion.

Let me dissect that article a bit to show you what I mean.

The first paragraph talks about an email where someone talks about something. That is called hearsay.  But even worse, the "allegation" in that paragraph is a nothing. The allegation is that someone from Russia wanted to make a "first contact" with the Trump campaign at ans NRA meeting in May of 2016. OK..so what. At that time Trump had just emerged as the presumptive GOP nominee and hence making a "first contact" would be an entirely appropriate thing to do. I'm sure nations like Israel, Korea, China, Germany etc. etc. were all starting to "reach out" in various ways  to Trump at about that time. I'm sure this is standard practice in every modern US campaign. As to Hillary she was a known commodity and already had contacts with such places. 

The targeting here of the NRA reminds me of the targeting of labor unions during McCarthyism. Labor unions were big and some had worldwide reach. Some tried very hard to influence elections. It was trivially easy to find some "link" to the Soviet Union from almost any major US labor union - and most of those "links" were innocuous.  

Personally I don't agree with much of what the NRA does or stands for but I will acknowledge it is a big organization, it is powerful politically and has outreach all over the world. The author of this article seems to really want us to believe that maybe "the Russians" have been instrumental in funding/bolstering the NRA - or plan to "use" the NRA in the future. Sounds like McCarthyism. I am also reminded of room temperature nuclear fusion. People so wanted to believe that and it looks like some on the left in the US so want to believe that either a) the NRA was bolstered in the past by "the Russians" or b) they plan on using the NRA in the future and hence the NRA might be guilty of some great crime that would merit it's  shackling (or even dismantlement). Drool to the floor at the prospect of one of the most powerful conservative groups in America being neutered.

Next point. The first sentence of the second paragraph:

"This is one of those episodes that is easy to lose track of amid the avalanche of evidence connecting the Trump administration and Russia. "

We don't have an avalanche of evidence at all, we have an avalanche of accusations. With each subsequent accusation not holding up under scrutiny it becomes more likely that this whole thing is a nothing. 

The heart of the Russiagate story is a) the "Trump Dossier", b) the hacking of the DNC c) the "Podesta" hack. None of those held up under scrutiny! The "Trump Dossier" has been exposed as political opposition research paid for by Hillary Clinton, the majority view in  the computer security field is that the DNC hack was the result of an insider who was upset about the shafting of Sanders, and that the data was delivered via a USB drive. Julian Assange of Wikileaks has denied from the beginning that it came from Russia. More on this in a bit but first, the Podesta hack. The Podesta hack was the result of  "phishing." An email was sent to him that said "Your email account has been compromised, click here to change your password" and a staffer reading it clicked on the link and changed the password. It does not take the Russians to do that kind of hacking. We all get those kinds of emails.

I became convinced that this whole thing was a witch hunt when the "Intelligence Community Assessment" was released in Jan 2017. Problem was they gave no technical evidence but instead said essentially "because we say so".  I think the verbiage they used was "the hacks bear the signature of a state sponsored actor" and then made a case that Russia was the only plausible state that could have done it. They pretty much parroted what the Clinton campaign was saying, and what the "Never Trump" people were saying (Mitt Romney et. al)

The Intelligence Community Assessment of January 2017 was fundamentally a political document. 

Common sense tells you that it does not take a "state sponsor" to do a phishing hack. Many in the computer security business have noted this - the most vocal being McAfee. Not a scintilla of real technical evidence has ever been presented to support the notion that this phishing thing was done by the Russians.

The computer security industry also has a dubious view of the allegation that the DNC hack was necessarily perpetrated by the Russians. Time stamps on files indicate that the key transfer must have been from a USB drive and could not have been accomplished via a remote hack. This bolsters the notion that the hack was done by a DNC insider - which is exactly what Julian Assange alleges.

The only supposed technical details were provided by the DNC's private in house security company "Crowdstrike" and it is they who claim to have found hacking tools and it is they who "linked" those tools to "the Russians".

Most damning of all is the fact that the DNC refused to hand over their servers to the FBI so that means all we have to go on is what their own in house security people (Crowdstrike) tell us. 

What would the DNC rather the public believe a) one or more insiders who were disgruntled about the treatment of Bernie Sanders leaked data on that subject to the media (Wikileaks, ect.) or b) "the Russians" hacked the DNC and leaked information designed to help Donald J. Trump and undermine democracy in the US.

Obviously b) is the preferred narrative for the DNC! 

Also consider that NSA hacking tools which include include a facility to spoof "Russian hacking"  have been released -to the public. 

One piece of "evidence" that Crowdstrike released was something with Cyrillic text. Several top American computer security guys (including McAffee)  quickly replied that a real state sponsor would not leave behind such obvious footprints and  that this smacked of a frame-up. There was even the name of a notorious Soviet spy in the Cyrillic writing released by Crowdstrike as evidence.. McAffee and others observed that only someone not actually familiar with Russian history and language would put such a name in there.

Here is an excellent artice from over a year ago on the subject:

https://theintercept.com/2016/12/14/heres-the-public-evidence-russia-hacked-the-dnc-its-not-enough/

Note: this article was written prior to the  "Intelligence Community Assessment" of Jan 2017 which shed nothing new on the subject but just essentially parroted what Crowdstrike said and ignored the subsequent contrary evidence.

The Intelligence Community Assessment of January 2017 was fundamentally a political document. 

Subsequent to that time the focus has moved off of the the original hacking allegations/dossier and onto new and unrelated allegations of Russian meddling. This is the pattern we saw in the Weapons of Mass Destruction saga. When the Yellowcake story broke down they moved onto "Bio weapons trailers", and when that proved nothing but speculation they released "damning intercepted messages" which supposedly revealed Saddam's aides were talking about the subject. We know what happened in that case.

My rule is this: when you see a pattern of new accusations that serve to replace old and unproven ones (IE change the subject), then you should doubt the whole thing.

The Russian hacking story is a fraud

The allegation that Russian government sponsored hacking influenced the last election is baseless and is a fraud.

The fraud is being propagated for political purposes with the aim being to delegitimize the presidency of Donald Trump.

I will give you the basics of how we can know this is a fraud and expand on it  in the coming days/weeks/months as the story falls apart.

The basic points are these:
1) There is a lack of specific evidence pointing to the Russian government. No IP addresses, no physical names or physical addresses. The technology supposedly used is not limited to Russia much less the Russian government. Some of the programs/methods that were (supposedly) used were originally created by Russian programmers. That means nothing. I'm running Kaspersky security on my computer as I write this, does that mean I'm in kahoots with the Russians?

2) The case is overwhelmingly "social". Everybody Knows. Today it was reported that all the major US intelligence agencies are united in their assessment that the Russian government was behind the hacking during the election and that their aim was to hurt Hillary Clinton and help Donald Trump.

When the "social truth" starts to coalesce around something and physical facts are missing that is a red flag. Generally the "social truth" turns out to be wrong. As it will in this case. Remember WMD in 2002?

Think of this: will any of these senior intelligence officials suffer reputational or professional harm if they are wrong about their allegation of Russian government hacking? History shows they probably won't. They will be able to say "everybody thought so". But if any one of them crossed up the others and said "I don't think Russia was involved" and he turned out to be wrong, his career and reputation would likely be destroyed. Each and every one of these senior intelligence officials are in fact human beings and they are all likely ambitions and probably care a lot about their reputations. "Herding behavior" is very common in such situations.

Not only am I not swayed by the unanimity of US intel (at the present time as presented by top politically appointed officials), it makes me doubt the case even more because there is pretty much zero physical evidence to back it up.

Let me repeat: there is zero physical evidence of Russian government involvement.

The point that was stressed today by US intelligence agencies was that the activity observed had the "unique signature" of Russian government hacking. It was a "pattern of behavior" thing. That is essentially the logic used at the Salem Witch trials. It's "we know because we are the experts and we are telling you so."

I will end here by presenting the exact moment when I came to the conclusion that this is a fraud. Last night a story ran on CNN with the headline "US identifies go-betweens who gave emails to WikiLeaks" and needless to say I read it. No "go-betweens" were discussed in the story at all, what was discussed was "intercepted conversations of Russian officials expressing happiness at Trump's win." And "another official described some of the messages as congratulatory."

At that point the case was sealed to me.

This thing is politically motivated fraud.

Russian officials being happy about Trump winning does not mean the Russian government hacked the DNC. Russian officials "congratulating each other" does not mean the Russian government hacked Podesta. Anyone who knows a foreign language will understand how easy it is for a non native speaker to take something out of context in a foreign language. Russian officials "congratulating themselves" means absolutely nothing. The fact that this was presented is ironically evidence of social hacking on the part of the US news media. Social hacking is what you try to do when you don't have the facts on your side. This story indicated to me that they don't have facts but are desperate to make their case.

I have more reasons for knowing this is a fraud but it will take time to present them. I will enjoy presenting my analysis as this story is debunked.

Hopefully it will serve as a guide to critical thinking in such matters.

Maybe we need another great depression

Every day it seems something jumps out at me that indicates we have misplaced priorities. 

I trust that you have heard about this "deflategate" scandal with the Patriots?

Brady is alleged to have benefited from footballs that were slightly deflated prior to the AFC championship game last January. The allegation came from a rival team.

The NFL commissioned a "study" to determine if the offense even occurred and paid 5 million dollars on the study. The study found Brady guilty. Very guilty. Outrageously guilty. On the basis of that "study" he has been suspended for 1/4 of the next season and hit with a huge fine. 

The study has been dissected by several independent groups (one at MIT) and found to be junk. Really really junk. Results cannot be reproduced, statistics faulty and initial conditions either ignored or misconstrued. Brady has hired a power lawyer and is appealing. Some observers are saying that over 30 million dollars could be spent on this before it's over. Even if 100% guilty the offense is akin to the batter rubbing out that back line of the batters box and standing an inch or two back. Happens all the time.  

To me this is just a symptom of "to much time on the hands" and "money burning a hole in pockets."

The NFL is known to be one of the most subsidized businesses in America, 50% of it's infrastructure costs are paid by state and localtaxpayers. The NFL is tax exempt.  When businesses entertain clients by buying Patriot tickets it's a tax deductible expense.

Methinks some of these privileges and tax advantages should be taken away. Firstly on principle and second this episode shows a maturity level of 7th grade but with adult wallets connected to public money. The lead author of the study, Ted Wells is reported to have made a cool million on it. One months work. The sports talk shows in Boston are raking in advertising money by keeping this scandal gravy train rolling. No one is apparently looking for the truth, everyone is peddling an agenda and looking to make money. And the issue is miniscule to begin with.

I drove to Michigan last weekend for a camping trip. Construction everywhere. Traffic jammed. Rust on bridges in downtown Chicago. Signs of shoddiness everywhere on the roads. Billboards advertising personal injury lawyers, casinos, drug rehab centers and strip joints line the shoddy roads.

I just read a devastating critique of the Boston olympic bid in Harvard Magazine. In it they mentioned that the city of Chicago had spent over 100 million dollars on their failed bid several years ago. 100 million dollars. How was this 100 million spent? Basically making a bunch of nice looking power point presentations, renting nice hotel conference rooms and on public relations (propaganda). Reportedly the private sector also spent about 100 million (collectively) on pushing the failed Chicago olympic bid. That's 200 million total.

Currently there is a big reconstruction project going on on the CTA. The biggest and most important aspect is total reconstruction of the Wilson stop on the Red Line. Cost? You guessed it: $200 million:

"The $203 million Wilson Station Reconstruction Project will be one of the largest CTA 'L' station projects in the agency's history. The planned reconstruction of the Wilson Red Line station is slated to begin in 2014, and will replace the badly deteriorated facility that was built in 1923"

http://www.transitchicago.com/wilson/

The image below shows another red line platform (Wilson ave stop). As you can see it's made from wood. Yes WOOD. Often rotting at the edges and wavy/inconsistent when you walk on it as you can see in the picture.

This is 2015 and the majority of the platforms of mass transit stations in America's third largest city are still made of wood.

These are not isolated things. It's all over the place. Ignoring the basics while spending large amounts of money on non-serious (sometimes even trivial) things.

Another great depression would certainly cause people to get more serious with their priorities. 

Are we headed towards a minor energy crisis?

Funny how this sentence is buried towards the end of an article on the current natural gas situation:
"Gas is up 32 percent this year, heading for the biggest annual gain since 2005."

That just does not fit the current narrative of energy cornucopia - and is dismissed as the result of unusually cold weather.

But reality is starting to show potential trouble on the near term horizon.

The current level of natural gas supply is the lowest it's been in years for this time of year and is dropping at a very fast rate compared with historical averages.

The other main heating fuels - propane and distillates (heating oil) are also running very low.

Stock levels of natural gas, propane and distillates are all so low that they are ALL below the lowest point in their 5 year range - IE this is the lowest stock level we have seen in over 5 years for this time of year.

And the media continues their cornucopia talk. Articles ask if  the U.S. be destabilizing energy rich nations when we start to export natural gas in a big way. I think this is absurdly premature.

If the rate of stock draws of Natural Gas continues at it's current pace (last three weeks) it will reach 718 Billion Cubic feet by the middle of March. The lowest stock levels recorded in recent history was 642 Billion Cubic feet at the end of winter 2003. Last years minimum was about 1700 BCF and the year before that the minimum was well over 2000 BCF.

Propane and Distillates are also on a path towards very low stock levels by the end of winter.

I do not think that Natural Gas inventories will drop to 718 Billion Cubic Feet by the middle of March because the price will move up in a big way long before it gets that low. Likewise propane and distillates will see strong increases in price if the current stock level draws continue at even close to the current pace.

The last two winters have been mild. 2011-2012 was one of the warmest in history and 2012-2013 was somewhat above average. So far 2013-2014 is running somewhat below average.

The Energy Cornucopias are warning that if prices rise this will result in the market being flooded with new supply. But stock levels are currently dropping like a stone so if this glut of low cost supply really exists it should hit the market any time. If this glut of low cost supply really exists the stock levels will quickly stabilize - in this case it means they will drop at a substantially lower rate while the price stays somewhat stable. Readers of this blog know that I am quite skeptical of the this "energy cornucopia" and am therefore guessing that we will see a big increases in the price of Natural Gas, Propane and perhaps even diesel over the next couple of months unless we have a big warning trend and fast.

It could get bad enough to be labeled as a minor energy crisis.

I do not think it will be a major energy crisis because solar and wind are waiting in the wings with prices not much higher than fossil fuels right now and could ramp up in a big way pretty fast. There was no such infrastructure for solar and wind in the 1970's.

How would this affect heating? Short run: space heaters running on electricity that stays cheap even as natural gas and propane skyrocket. Longer term: electric baseboard heat - or many other options.

Global Cooling?

- The amount of ice in the arctic for this time of year is the highest it's been in years. See: http://nsidc.org/arcticseaicenews/ (click on the graph on the right. The green line was last year and the blue line is this year. Notice that the blue line is way above the green line.

- The amount of ice in the antarctic set a all time record high this summer (winter for them). See http://nsidc.org/arcticseaicenews/. Go down the page to "Another record high in the Antarctic" Note: 2012 was the old record year.

- Hurricane activity has been very low this fall.

These are all signs of cooling of course.

What is causing this?

- From what I read the high ice level in the antarctic is believed to be due to leftover effects from the ozone hole.

- The current sunspot cycle is weak and weak sunspot activity is correlated with cooler temperatures. More sunspots indicate a more energetic sun.

And now the story starts to get interesting.

The current sunspot cycle is actually the weakest in over 100 years and it appears that we may be headed for another "Maunder Minimum" or something close to that. That's what caused the "little ice age" between 1680 and 1725. 

Regardless of whether we hit (or surpass) the Maunder Minimum, it looks like we are headed for a period of very few or no sunspots for an extended period of time. See: http://phys.org/news203746768.html and http://solarscience.msfc.nasa.gov/SunspotCycle.shtml 

and this is strongly correlated with cool temperatures.

But you hear nothing about this in our media. Nothing. And it's pretty interesting!

Why?

- Liberals don't want to talk about it for obvious reasons: it might undercut their dire warnings on Global Warming.

- Conservatives don't want to talk about it either. It might come across as defending polluters: "gee we might be headed for an ice age without all those coal fired power plants?". That's not a winning message. It also might come across as "admitting" to global warming in a back door way - and some want to deny global warming.

- The mainstream media (both liberal and conservative) likes sensationalism and likes to hew to a story line. The story line is Global Warming. 

- No one wants to hear that some things are out of our control. That makes people feel powerless. Sunspots are 100% out of our control. They don't even have to sign up for Obamacare :)

- Once "truths" are established, the powers that be do not like to admit they were wrong. Think the new economy of 1999 and "housing prices cannot go down on a nationwide basis for an extended time" crapola of 2003-2007.

One other interesting tidbit: on Sept 12, 2001 a noticeable increase of global temperatures was seen: something like .3 degrees. The reason is hypothesized to be the lack of contrails from jet airplanes that were not flying that day. Those contrails apparently cool things a bit. Take them away and the temp goes up. But before that contrails were thought to be another cause of warming. 

Takeaways from all this:

- Climate is influenced by things other than human activity

- Some things that humans do tend to increase the temperature and some things humans do tend to decrease the temperature. 

- It's complex and not at all straightforward.

- If climatologists got the contrail thing wrong (they did) then what else are they mistaken about.

The rise in CO2 is well documented and not controversial. The rise in CO2 is due to human activity. I asked my cousin Bradley about this last time we got together (he is a professor at Northwestern and a global warming expert!). He assured me that the rise in CO2 is attributable to fossil fuel and not volcanic activity and they can know that via isotopes and other very rigorous methods.

But the temp has not gone up nearly as much as the models predicted given the rise in CO2, and for the moment we have a noticeable cooling trend.

I think the reasons are a) the sunspot cycle and b) some human activity is having a cooling effect.

I think the biggest bias in our media is sensationalism and hewing to established story lines (herd behavior) and that's why you hear pretty much nothing about what I talked about above: a dramatic rise in ice in the arctic, very few hurricanes, all time max ice extent in antarctic, early cold in North America, a foot of snow in Kiev the other day but nothing about the trend. Important information is not getting through.

Remarkable stability in the oil market

The price has been remarkably stable/consistent since 2010. Never going much above $105 and never dropping below $85 during this time.

This, I believe is the result of a very large supply of expensive oil coming onto the market starting in earnest in 2009. Shale oil has a marginal cost of 80/barrel or so. The talk of a "technological revolution" is hype. 

It's real interesting that virtually nobody in the media talks about the stability of oil prices which could be construed as a good thing (isn't stability usually good?). But my guess is that stability at a price in the mid/upper 90's weakens the case of a "technological revolution" so it's ignored. Stability and revolution just do not go together. A technological revolution should send oil prices dropping like a stone (like computer chip prices did). Stability indicates that we have not have had one. We have had an economic revolution where due to economic factors (supply and demand) we now need to exploit much more expensive oil. It just so happens that there is a LOT of expensive oil out there hence the stability in price.

I think we may be on the verge of an era of green energy. Cost in a MPG sense for electric cars is 2/gallon right now and I do not see that going much higher. To many sources of elect are out there and wind and solar will never become more expensive. They will become less and less expensive but at a slow rate. We have a boom in nat gas. More cheap elect. Global warming may cause people to re-evaluate Nuclear.

Possible story in Popular Mechanics 5 years from now:

"10 Tips on keeping your Hybrid running on electricity for as long as possible "

Reason for this headline: oil will still be expensive but electricity may be even cheaper than it is today and the range problems of elect cars will not yet be solved.

Letter to Jeff Madrick regarding "Education Is Not the Answer"

See:
http://harpers.org/archive/2013/06/education-is-not-the-answer/

My letter to Mr. Madrick:

Mr. Madrick,

I thought "Education Is Not the Answer" was very good. I have been skeptical of the "Education IS the answer" arguments for a long time. 

My degree is in Finance and one of the basics of Finance is "net present value" which a way to determine present value of something given certain assumptions, payments etc. NPV analysis is used all over the place in business and finance but -tellingly- has not been used in any of the 'important' studies which purport to show the importance of college education WRT earnings/wealth.

A NPV analysis typically works by asking what is the current value of a stream of future income. Typically what is being valued is a loan or a business (how much should we pay to buy a business that is making a profit of X). The core concept is that you pay something now to get something later and given your assumptions on interest rates, future profits and so forth, how much should you pay.  This is a core concept of Finance and obviously could be used to estimate the value of a college education. But it isn't. The analyses I have seen on the value of education simply calculates the increased earnings that college graduates attain over their career and do not consider the up front cost at all! But there is (of course) a substantial up-front cost to college: not just the payments and loans and interest on those loans but 4 years making very little or no money vs. 4 years of employment. During those 4 years of employment a person can make contributions to a 401K, has withholding for Social Security and has 4 years seniority at the end where a college grad is starting for 0 with no 401k, and 0 into Social Security. This is significant. On a purely financial basis one needs to make a lot more money later to make up for all of that.

But no analysis that I have seen on the value of a college education gets into NPV - they simply calculate the increased earnings of college grads and say oh how great that is - without rigorously considering the costs. The costs are important! The lack of subjecting the costs to a a rigorous NPV analysis caused me to be skeptical of studies purporting to show the benefits of college (in a financial sense) a long time ago. 

But it gets worse. The "value" of college seems to be to broad a concept. It's like asking what is the value of living in New York City. The average income in New York is very high of course. But there is a big difference between Manhattan and the Bronx, and there is a big difference between being transferred to New York by an employer and moving there "on spec" so to speak. If someone asks "is it worth moving to New York?", you would need a lot more information before you could answer intelligently. A college education is likewise a very broad concept. There is a big difference between majoring in English vs. Electrical Engineering. 

But it gets even worse. How does an English major fare if he gets an entry level job and never gets any further education vs. an English major who goes into sales, gets and MBA had has a laser like focus on getting a corner office job someday. This latter English major's income stream will likely be far higher than the former. 

What is more important: level of education/skill or job title in determining who makes a lot of money. Where is the stronger correlation: level of education/skill to income (and income gains) or job title X (such as CEO) to income and income gains. I suspect the stronger correlation is to job title. 

I suspect that an there is a strong correlation between level of authority/management and income gains over the last 30 years. IE if you are in upper management of a sizable company then it's pretty likely that your income rose more than most people. I also suspect there is a strong correlation between money management and income gains over the last 30 years  IE if you in the management team of a hedge fund then then it's pretty likely that your income rose more than most people. Finally I suspect that professional athletes and major entertainers have made strong gains over the last 30 years. I also suspect that if you are involved in making something your income dropped. Think assembly line workers, and industrial engineers.

And how about this: what happened to your income over the last 30 years if you were in a job that used to be unionized but no longer is. Think assembly line worker. I'm guessing that if you are in this category your income over the last 30 years took a hit.

I use the word "suspect" and "guess" above because it's a) what I see all around me but b) you don't see a lot of rigorous analysis/reporting on it. You see a lot of reporting on the so called "1%" but you don't see a lot of reporting/analysis on who they are. When that subject comes up the platitudes fly regarding education and skills. 

The article "Education Is Not the Answer" seems to imply that a big cause of income polarization over the last 30 years has been the decline of unions which decreased the the bargaining power of workers and strengthened the hand of management. Perhaps there has been a substantial transfer of wealth away from (industrial and other) workers and to management (especially upper management). But this is certainly not the story we hear in our media day after day. We hear a bright sunny story about skill and education. It is important to know which one is more accurate.

And as to the value of a college education for the average person: how about a NPV analysis.

The energy bubble

Currently the media is filled with stories about a so called "Energy Revolution" that has occurred and is supposedly unleashing vast quantities of heretofore unknown or unusable hydrocarbon resources - mostly oil and natural gas.

This is nothing less than the intellectual fraud or our times and what we are seeing now actually just another bubble. It's an intellectual fraud almost on a par with the "new economy" of the dot com era and the crazy idea of 10 years ago that the housing market could not see a general contraction.

In a nutshell the idea is that a technological revolution has occurred over the past 10 years that has allowed the oil and gas industry to a) discover reserves they did not know about before and/or b) exploit reserves that were known about but to expensive prior to this "revolution" to exploit.

When the discussion moves to what exactly this technological revolution is the discussion gets hazy fast. Or downright inaccurate to an almost silly level.

Before I get into more details on this fraud let me tell you what has occurred: the price of oil has remained high enough for long enough so that long known about reserves of expensive and dirty oil can be exploited at a profit. The price has remained high because the ready supply of conventional light sweet crude is no longer enough to supply world demand and there no other choice but to either exploit expensive dirty oil or use more unconventional sources (solar and wind specifically). Both are happening.

What is my evidence? Exhibit A is the price of oil. As I write this the price of WTI crude is 95.61. Adjusted for inflation the price during the 1979 oil shock didn't even reach 80. The price of crude oil gained consistently from 2000 to 2008 and peaked at a bit over 135 in the summer of 2008 before dropping to just under 75 and then going back up to a consistent range of between 85 and 105 for several years.

The marginal cost of production of Saudi Crude is about 12/barrel, and the marginal cost of production of conventional Texas crude is about 25/barrel. The marginal cost of (fracked) oil in North Dakota is about 80/barrel.

From http://www.reuters.com/article/2009/07/28/oil-cost-factbox-idUSLS12407420090728

 Oilfields                   Estimated Production
 /source                        Costs ($ 2008)
 Mideast/N.Africa oilfields         6 -  28
 Other conventional oilfields       6 -  39
 CO2 enhanced oil recovery         30 -  80
 Deep/ultra-deep-water oilfields   32 -  65
 Enhanced oil recovery             32 -  82
 Arctic oilfields                  32 - 100
 Heavy oil/bitumen                 32 -  68
 Oil shales                        52 - 113
 Gas to liquids                    38 - 113
 Coal to liquids                   60 - 113

If there was enough in the first two lines above (conventional oil) to satisfy world demand then the price would collapse from what it is now (95.61) to at least 40/barrel (perhaps lower) and heavy oil/shale production would evaporate.

We have had a revolution all right but it has been a economic revolution. Oil prices are now persistently high enough to make it economic to exploit expensive dirty oil.

Lets look at some of the details of the "technological revolution" fraud.

Lets start here:

New technology propels 'old energy' boom

By JONATHAN FAHEY | Associated Press
http://finance.yahoo.com/news/technology-propels-old-energy-boom-155331085.html

what are the nuts and bolts of this "revolution?" horizontal drilling and fracking. Fact: horizontal drilling has been done since the 1930's and fracking since the 1960's. At no time then or now could they get the process such that the oil drilled would be price competitive with conventional oil. This article also talks about "imaging techniques" and "computer technology".  Both are of course used and both are better now then they used to but it's a fraud to call them revolutionary in the sense of enabling a technological hydrocarbon boom. Fact: nothing revolutionary from a technological standpoint has happened in this industry in the last 20 years.

The power of this "technology propels energy boom" story is that it tells us what we want to hear (and not coincidentally what the oil industry wants us to believe). Reality is not so nice. Also, reality is more complex. A simple happy story sells -  remember room temperature nuclear fusion? A complex story about high prices and hard choices does not sell.

This current happy story is so compelling that we now read things reminiscent of the dot com boom:

The Dark Side of Energy Independence says: "America’s oil and gas bonanza will drive down global energy prices, undercutting the foundations of petrostates everywhere " Talk about wishful thinking! The price of oil has not even dropped at all (see data above). The Dark Side of Energy Independence is filled with the kind of overconfident/wishful thinking we saw during the late 90's.

Power Shift "Energy Boom Dawning in America" has more happy story/overconfident talk.

And here's an article on exporting natural gas. Talk about counting your chickens before they hatch!

And here is something on the glorious wonders we see as the Energy Boom begins to ripple through the US economy.

In these stories we hear talk about how a) the U.S. will soon be energy independent, b) the U.S. will overtake Saudi Arabia in production c) the price of oil and natural gas will drop. d) it's all based on a technological (not economic) revolution.

But wait a minute....the price has not dropped (as I discussed above). Notice how those articles either completely miss that point or skirt around it. The problem is that the steady high price of oil over the very same time frame as this so called "technological revolution" blows a huge hole in the argument.

The facts are that pretty much the same technology is used now as was tried in 1979 (and earlier) but now the price of oil is high enough to make it economical. What we have had is an economic revolution not a technological revolution. 

There is plenty of dirty, hard to get unconventional oil and other hydrocarbons out there (and we knew a lot about them in Jimmy Carters time) but we have not had a technological revolution that has lowered the price. We exploiting these expensive and dirty sources now because we have no better choice. In 1995 we did have a better choice. 

What will happen now? The price of oil will continue it's long steady march upward (with some reversals of course) - because the easy oil is always drilled first. Conventional crude was preferred over unconventional because it's easier and cheaper, and the easiest unconventional crude will also be drilled first. The era of cheap oil is over and the price will continue to rise.

It appears that the lowest cost alternative energy is wind and the cost equivalent energy price of wind is approaching that of some fossil fuels. Once oil is more expensive than wind (or solar) on an energy equivalent basis we will see wind (or solar) energy explode. That day is coming and that will be the real news.

James Stewart needs some common sense

James Stewart in "

In a New Era of Insider Trading, It’s Risk vs. Reward Squared"

writes:

"Mathew Martoma, a former SAC trader who was accused last month of using secret informationto help SAC gain profits, was paid a $9.4 million bonus in 2008, when he was just 34. At the same time, the cost of failure can be catastrophic. When he failed to replicate that kind of information, he was fired a little more than a year later. (Mr. Martoma pleaded not guilty to the charge, and, through his lawyer, has denied any wrongdoing.)"

Stewart thinks this outcome is "catastrophic?" On what planet. Catastrophic might be having to pay back 18.8 million. Or going to prison for a long time.  But just losing your job and keeping the 9.4 million made under suspicious circumstances? This is a catastrophe?

Stewart needs to read the final chapter of 

Antifragile: Things That Gain from Disorder by

by Nassim Nicholas Taleb

that chapter is titled "Skin in the game" and in it Taleb shows that in economics and ethics, systems where people have no 'skin in the game' are extremely fragile, those where they have "soul" in the game are antifragile. Mathew Martoma had no skin in the game - he was trading SAC's money not his own and was not bound by any contract or law to make up for his losses. It was a classic "heads I win, tails you lose" situation. 

To think that the prospect of losing ones job is "catastrophic" in this kind of circumstance takes, well a profound *lack* of common sense. If a 43 year old auto worker in Michigan making $65,00 loses his job when the plant closes down and he has a mortgage and 3 kids, *that* is pretty catastrophic. If someone at age 34 makes 9.4 million as a trader in year X then loses his job, he can literally live off that money for the rest of his life. Or start a business. Or get another job as a trader somewhere else. Or go back to school and get another degree. Or travel the world...or..or...or. It really takes a profound lack of common sense to think this outcome is "catastrophic".

As I said above, "catastrophic" in this instance would be jail or being forced to pay back any ill-begotten gains with damages. 

Stewart needs to read the last chapter of "Antifragile" and get some common sense!

 

Remember: they create the wealth

Note that according to our media and popular culture guys like Matty Moroun - billionaire and the according to Forbes the 321st richest American, "create the wealth" and for that reason should be celebrated.

He owns the Ambassador Bridge linking Detroit and Windsor Ontario and also ownes several associated businesses, duty free shops etc. He also owns a lot of property in Detroit.

Our culture tells us that such people should be honored and celebrated because "they create the wealth". Without them the rest of us would be poorer. Attacks on them are generally motivated by jealousy we are told.

Reality tells a far different story. He's pretty much of a monopolist and an operator who is very good at playing the system. He is directly fighting a new bridge which would be financed partly with public money. This new bridge would a) increase the amount of traffic possible between Detroit and Canada, b) create many new jobs in the short run and retain some of those jobs for a long time, c) give the Ambassador Bridge much needed competition.

The Moroun family is fighting the new project tooth and nail and according to one source has threatened to "destroy" it completely. IE prevent the creation of new wealth.

Wait, I thought that entrepreneurs were in favor of competition. I thought they *created the wealth* by competing hard and welcoming new competition wherever and whenever it arises. In this case it looks a lot like Matty Moroun and his family are fighting to keep monopoly power. And it looks like that monopoly power has been instrumental in making Moroun and his family very very rich - at the *expense* of the rest of us. Of course he wants the gravy train to continue.

And the property he owns in Detroit? Slums mostly.

But remember, regardless of the facts, our popular culture tells us that these guys "create the wealth".

Sources:
http://tpmmuckraker.talkingpointsmemo.com/2011/06/koch-backed_afp_admits_to_posting_fake_eviction_no_1.php
http://en.wikipedia.org/wiki/Matty_Moroun
http://www.mattymoroun.com/
http://buildthedricnow.com/2010/06/01/466/

Why we don't have more progress in AI

1) Deep ambivalence in the public, elected officials and the elite (IE everyone) about whether it's good to have AI move forward in the first place. The diversion into talk about 'morality' and 'ethics' whenever AI discussed reveals this ambivalence. You don't get the same kind of discussion at a conference devoted to materials science. People are not afraid of a stronger beam in a bridge they way they are of 'better/smarter/more capable' AI.

2) Many vested interests would have a lot to lose from better/stronger AI so they can be counted on to be ambivalent at best towards the prospects of better AI.

Examples are the professions of:
Accounting
Law
Medicine

and many more.

Take Law for instance. Would it possibly be a benefit for many people to have some sort of a system that could understand natural language and answer (or at least start to answer) routine legal questions? Of course. And how would our legal profession feel about that. We can be quite certain that the legal profession would be ambivalent at best - and probably hostile to the whole enterprise.

Professions like law, medicine, and accounting are regulated and in order to practice in these fields you need some sort of standing (typically a degree and then you must pass one or more exams). How exactly would some AI entity gain the the standing to practice in these areas. This has not happened yet and is not likely to happen soon. Hence for AI to operate in these fields it has to be under the control (used as a tool) of a human provider. IE a law firm can use AI for legal research but you or me cannot. See:
http://www.nytimes.com/2011/03/05/science/05legal.html

Note that automating discovery has cost some firms lots of billable hours. How exactly would the legal profession feel about an online agent available to answer routine legal questions. Currently I would have to go to a law firm and pay a retainer (hundreds of dollars typically) just to attain the right to get a question answered.

To show how tenaciously (and effectively) professions can fight automation (much less AI) look at the Real Estate field. Ten to fifteen years ago the the prevailing feeling was that the traditional methods were doomed. Who would need/want the MLS system after the arrival of the internet. What would happen to 90% of the real estate agents out there charging 7% when people could just go online. Surely a website or a set of websites would disrupt the whole thing. But it's 2011 and the real estate field operates pretty much the way it did in 1980 and still charges 7%, the MLS system is not just alive but as dominant as ever and can only be accessed by a licensed real estate professional. Most tellingly, the typical real estate commission is the same as it has been for decades. See:
http://www.city-data.com/forum/real-estate-professionals/7423-whats-typical-realtor-commissions-5-6-a.html

7 percent (or maybe 6 if you really negotiate hard) was standard in 1980.

The MLS system was closed in 1980; you had to be an agent to get access. As of today (May 14, 2011) it still is: "Most MLS systems restrict membership and access to real estate brokers (and their agents) who are appropriately licensed by the state (or province); are members of a local board or association of realtors; and are members of the trade association" source: http://en.wikipedia.org/wiki/Multiple_Listing_Service#Limitations_of_access_and_Criticisms_of_MLS

Any entity (human or AI entity) needs interaction and feedback in order to progress but in most real world cases AI entities lack standing and hence cannot interact and get feedback directly. They have no 'agency' to act on their own and this in my opinion hobbles progress in AI.

Maybe corporate person-hood could be helpful. Perhaps a corporation could be formed with some sort of AI system as it's main component and then perhaps this entity could be given the license to practice law (or accounting or medicine) - given that a corporation is legally a person in some respects.

Some in the AI field may be thinking of a more general solution - something that could 'do it all' so to speak. My response would be to look at life: do we have one ultimate life form or do we have finches with specialized beaks, algae, killer whales and bighorn sheep. Living things evolve, adapt and fill in whatever space/niche they can. My feeling is that AI must do the same to make real progress. When it comes to 'higher order' human affairs that means practicing law, medicine, doing real estate transactions and so forth.

Ted Williams and Carl Crawford

From
http://sports.espn.go.com/boston/mlb/columns/story?columnist=edes_gordon&id=6366474

"In his first dozen games with the Boston Red Sox, Crawford has been paid more ($1.5 million) than Ted Williams is said to have been paid his entire career ($1.45 million, according to baseball-reference.com)."

Full article:
Friday, April 15, 2011
Updated: April 16, 3:01 AM ET
For Carl Crawford, now come the boos
By Gordon Edes
ESPNBoston.com

BOSTON -- He is not alone, of course. Not on a team that is 2-10, is collectively batting .224 and has five players in Friday night's starting lineup batting at the Mendoza Line (.200) or worse.
But Carl Crawford was the one advertised as the game-changer, the left fielder being paid on average more than any of his illustrious predecessors in Fenway Park, including Manny Ramirez. More? In his first dozen games with the Boston Red Sox, Crawford has been paid more ($1.5 million) than Ted Williams is said to have been paid his entire career ($1.45 million, according to baseball-reference.com).
So, Crawford is the biggest target and the player at whom Red Sox fans are now directing boos, a sound foreign to him during the nine seasons he spent with the Tampa Bay Rays.

Carl Crawford's .137 BA is not what fans were expecting. He has only seven hits in 51 at-bats.
"They have to boo," he said after Friday night's 7-6 loss to the Toronto Blue Jays, in which he went hitless in five at-bats, including a three-strike punchout in the ninth that ended with him swinging at a pitch that bounced in front of the plate.
"I'm playing real bad; we're playing real bad," Crawford said. "You definitely understand. You can't be upset about that. You kind of feel their frustration a little, but we're frustrated, too."
So far, Crawford's Red Sox experience has been The Nightmare on Lansdowne Street. He now is 51 at-bats into his Sox career and he has seven hits. One has gone for extra bases. The average is .137. He has scored three runs and knocked in one. He couldn't look more uncomfortable at the plate. The ump cost him an infield hit in his first at-bat Friday, but with Jacoby Ellsbury on third and one out in the seventh, Crawford managed just a shallow fly to left.
He also came up short on Travis Snider's game-tying double in the sixth, a ball that hit above him on the left-field scoreboard. He admitted afterward he might have been able to catch it.
At the plate, he is so at sea, he might as well be the USS Crawford.
Manager Terry Francona said he looked "a little bit jumpy," which is kinder than saying he looks painfully and totally out of sync.
"I thought he beat out that ball in the first inning," Francona said of Crawford's bid for an infield hit, which replays appeared to show he had won in a photo-finish race with pitcher Brett Cecil to the bag at first.
"I know he didn't hit it good," Francona continued, "but it's amazing how something like that [helps]. You go out to left field and you're 1-for-1 and you're feeling OK about yourself."
“
They have to boo. I'm playing real bad; we're playing real bad. You definitely understand. You can't be upset about that. You kind of feel their frustration a little, but we're frustrated, too.

” -- Red Sox left fielder Carl Crawford
Instead, it's impossible to imagine Crawford feeling anything but miserable. The Sox had essentially two days off, with a rainout Wednesday and a scheduled off day Thursday. Crawford was asked whether he thought about baseball during that time or tried to avoid thinking about it.
"You think about baseball a little bit," Crawford said. "You get your mind off it a little bit, try to relax as much as you can."
But at the plate, Crawford looks like he's mainlining Red Bull, swinging at pitches far out of the zone, fouling off pitches that he should be hitting off the wall, rolling over on way too many pitches and beating them into the ground.
"I'm still battling right now," he said. "Obviously I'm not getting the results I want, but I got to keep battling."
The Sox caught a break Friday night when umpires overruled a home run call on Adam Lind's first-inning drive that veered just right of the Pesky Pole and called it foul. Had the call stood, the Jays would have led 3-0. Instead, the Sox built a 3-0 lead on home runs by Dustin Pedroia and Kevin Youkilis, who has 15 walks but had not yet gone deep until he deposited one in the center-field camera well.
But Clay Buchholz walked five batters in just five-innings plus, and the Jays pulled off a hit-and-run and a double steal in a four-run seventh inning, the runs all coming at the expense of Bobby Jenks, who heard boos, too.

Prison Job Trumps Harvard Degree

Prison Job Trumps Harvard Degree

Published May 01, 2011 | The Wall Street Journal

Roughly 2,000 students have to decide by Sunday whether to accept a spot at Harvard. Here's some advice: Forget Harvard. If you want to earn big bucks and retire young, you're better off becoming a California prison guard.

The job might not sound glamorous, but a brochure from the California Department of Corrections and Rehabilitations boasts that it "has been called 'the greatest entry-level job in California' -- and for good reason. Our officers earn a great salary, and a retirement package you just can't find in private industry. We even pay you to attend our academy." That's right -- instead of paying more than $200,000 to attend Harvard, you could earn $3,050 a month at cadet academy.

It gets better.

Training only takes four months, and upon graduating you can look forward to a job with great health, dental and vision benefits and a starting base salary between $45,288 and $65,364. By comparison, Harvard grads can expect to earn $49,897 fresh out of college and $124,759 after 20 years.

As a California prison guard, you can make six figures in overtime and bonuses alone. While Harvard-educated lawyers and consultants often have to work long hours with little recompense besides Chinese take-out, prison guards receive time-and-a-half whenever they work more than 40 hours a week. One sergeant with a base salary of $81,683 collected $114,334 in overtime and $8,648 in bonuses last year, and he's not even the highest paid.

Sure, Harvard grads working in the private sector get bonuses, too, but only if they're good at what they do. Prison guards receive a $1,560 "fitness" bonus just for getting an annual check-up.

Most Harvard grads only get three weeks of vacation each year, even after working for 20 years -- and they're often too busy to take a long trip. Prison guards, on the other hand, get seven weeks of vacation, five of them paid. If they're too busy racking up overtime to use their vacation days, they can cash the days in when they retire. There's no cap on how many vacation days they can cash in! Eighty officers last year cashed in over $100,000 at retirement.

The cherry on top is the defined-benefit pension. Unlike most Harvard grads working in the private sector, prison guards don't have to delay retirement if their 401(k)s take a hit. Prison guards can retire at the age of 55 and earn 85% of their final year's salary for the rest of their lives. They also continue to receive medical benefits.

Read more: http://www.foxnews.com/opinion/2011/05/01/prison-job-trumps-harvard-degree/#ixzz1LAHqFtBI

Response to bank fee article

http://chicagobreakingbusiness.com/2011/04/citibank-to-pay-small-checks-first.html

The idea that a reason for processing checks from biggest to smallest is to make sure “important” things like mortgages are covered is ridiculous.

1) Typically ALL checks in a daily batch are covered REGARDLESS of the order they are processed in. Lets do an example: the balance is $100 and two checks come in and both are covered: one for $101 and the other for $25. If you process the $101 first there will be 2 bounce fees, if the $25 check is processed first there is only one fee. The consumer would only get a “benefit”, if the bank could ONLY cover one of the two and had to CHOOSE which one (and then correctly chose the most important one). But typically (like 99% of the time) ALL checks in a daily batch are covered, and the “biggest first” rule typically does nothing but give the bank extra fee income. The key thing is this: does the bank need/intend to CHOOSE which from a batch to cover and which to NOT cover: only then could there be a benefit to the consumer by CHOOSING the biggest.

If the bank was really concerned with the consumer’s welfare they would arrange the checks from SMALLEST to LARGEST if all were going to be covered, and ONLY in the case where a CHOICE had to be made, cover the biggest first. Well maybe….read on.

2) The notion that the biggest check is the “most important” to the consumer is suspect. What is “most important” is subjective and varies depending on circumstances. And it’s really none of the banks business, it’s the individual consumer’s business. Maybe a struggling person is 3 months behind on the electric bill and it’s about to be cut off but the check to cover that is not the biggest in the daily batch. Maybe a small check is a deposit for some very important purchase. Do any of the banks try to determine the nature of a check (such as is it for a mortgage or rent, or electricity) and take that into account when arranging the order? Of course not! Because this “biggest first” policy has nothing to do with protecting consumers and has everything to do with generating fee income for the banks.

In cases of fraud or identity theft the perpetrator typically writes out pretty big check(s) (or other big debits). Given the “biggest first” policy of most banks these would be the FIRST ONES HONORED. Not very consumer friendly.

Additionally, why not credit deposits first then look at checks and other debits. If the objective was consumer protection (as the banks absurdly claim) that is what they would do.

I actually wrote some of the software to do this kind of processing at a large bank so I know just how corrupt and rigged the whole game is. Everything is done to “maximize fee income” and s*c&^%%%ew the consumer. Especially those consumers who are hurting and on the edge already. Not that banks care about that – such people are just easy fodder for looting.

I agree with Lorenzo, the fair way to do it is to process in check number order. That way the consumer can write out his most important checks first and that will influence which get covered first. Also banks should credit deposits FIRST prior to processing checks.

But none of these changes will be widespread without a lot of pressure and hard work on the part of consumer advocates.

Remember that most bank accounts these days are in large public banks who exist fundamentally to make money for their shareholders. They do not exist for the benefit of their account holders, their mission is to make money for their shareholders.

A good idea

Prairie onion cohousing

Setting the stage for the next oil crunch

The massive spill in the gulf has led to:
- A moratorium on new deep water drilling in the gulf of Mexico.
- The probable acceleration in decline in the amount of oil coming through the Alaska pipeline: http://online.wsj.com/article/SB10001424052748704067504575304942111464272.html?KEYWORDS=Alaska+pipeline
- Norway banning new oil and gas drilling "until the investigation into the explosion and spill in the US Gulf of Mexico is complete"

The oil industry is already struggling very hard to keep oil production steady.

Demand for oil is growing in China, India and throughout the developing world.

The economy is improving slightly in the developed world.

Something has to give. I forsee either another 2008 run-up in prices (147/barrel or worse), the recession coming back tanking oil demand, or something in the middle. This article from the oil drum is very good:

http://www.theoildrum.com/node/6574#more

The ownership society

The story:

------------------------------------------------------------------------------------
Utah Jazz fans sue over new seating policy

SALT LAKE CITY (AP)—A group of well-heeled Utah Jazz fans has sued the team’s corporate parent, claiming a new seating policy has caused their VIP seats to plummet in value.

Members of the Jazz 100 Club, in their complaint filed Friday in 3rd District Court, are seeking more than $19 million in damages.

The dispute stems from a January policy change allowing all season-ticket holders to also transfer ownership rights to their seats in EnergySolutions Arena.

Previously, only 220 courtside seats that were held by the 50 to 60 club members could be sold or bequeathed, an exclusivity that increased their value.

Club members say their seat positions that once sold for as much as $200,000 now go for $20,000, a drop of 90 percent.

Jazz officials say they take the matter seriously.
------------------------------------------------------------------------------------

Commentary
Once again we see how the insiders, the elite, the privileged first rig things in their favor and then scream bloody murder if anyone attempts to undo the rigging.

Much of American society has sadly become like this. Anyone with an ounce of intellectual honesty can see that we have become a class society with serious privileges afforded to the top. In this case they can sell their asset (the season ticket) but others cannot (or could not). That's a pretty serious difference. A consequential difference. A class difference. In this case literally.

The average fan could buy but not sell, the real power and real ownership of those seats resided with the team owners. They retained *real* ownership. The "Jazz 100 Club seats" on the other hand afforded real ownership to the purchaser. Team owners and "Jazz 100 Club" in one class and other fans in another.

This is a metaphor for our so called "ownership society" which has always been a fraud. Like the majority of Jazz season ticket holders, people have been made to *feel* like owners but were never really *made* owners nor awarded the true privileges of ownership. In the case of the stock market the difference is one of scale not class. The middle class is given 401ks and ESOPs while the top brass is given stock grants and options that are orders of magnitude bigger.

Ownership is not real unless it's sizable.

When average Joe purchases 100 shares of stock he's not an owner in the same way that top brass are when they get grants of 10s of millions of shares. Imagine being able to purchase a corner of a cupboard in 10 million dollar home. That's what most of us get in the stock market. Technically it's "ownership" but not really.

The upper classes have always been about privilege: getting it, maintaining it and expanding it. Be it through an explicit class (like the Jazz 100 Club), through more informal manifestations of class, or through scope (the CEO gets 35 million shares, the ESOP gives you 100) they have it and always want more. When some sort of class privilege is ended it costs those in that class money.

The "ownership society" sounds like a great idea. If there was ever a sincere effort to engineer a *real* ownership society it would be a very good thing but all that we have done so far is window dressing and feel good stuff.

The next point will make for entire post at a later time. The change in corporate compensation over the last 30 to 40 years which gives top brass most of their compensation in stock has been in my opinion one of the most severe and cynical manifestations of class warfare in our nations history. Before this changeover direct comparisons of salaries provided a rigor that has been swept away with the stock option granting game. Say senior executive X makes 85,000 and an assembly line worker makes 5,000 (think 1970). The comparison is easy. But fast forward to 2010 and the senior executive makes most of his compensation via a maze of stock options and grants and it's not so simple. And there is of course an intellectual slight of hand going on whereby it's implied that the executives are not so much being *paid* as "made owners" (which is OK!). They are getting an ownership stake and that's a good thing because that "aligns their interests with those of the company."

This would imply of course that without these extra inducements the senior executives might actually operate in a way opposed to the company? Does that make any sense? CEO's and other top brass were secretly sabotaging their companies in 1970 because they didn't make enough money? This is of course absurd. If there is any class of employee who we can realistically expect to "have his interests aligned with the company" to begin with it's the senior management team. Any compensation system based remotely in reality that sought to "align the interests of employees to those of the company" would start at the bottom, because it is there that common sense dictates employees are most likely to not have their interests aligned with those of the company to begin with. OK maybe they don't matter and are easily replaceable. How about skilled workers, salespeople and engineers. Wouldn't it be a good thing if we made sure *their* interests were aligned with the company? Well that's not what happened, the stock option windfall goes overwhelmingly to senior managements - the one group that we should expect to *already* have their interests aligned with the company.

What is going on of course is class warfare perpetrated relentlessly by the top 2% to 5% on the rest of us.

This group is the biggest impediment to a *real* ownership society and will have to be fought tooth and nail if it is to ever happen.