Wednesday, November 23, 2011

A Privatized Social Security: lets just call it Social Insecurity

The idea that privatizing Social Security can be done, as Newt Gingrich claims, "without hurting anybody" is ridiculous. Finance is a zero-sum game. What one person wins in the stock market, somebody else must lose. That is the whole point of privatization - to take a person who has spent his whole life working hard in a non-finance occupation and now put his savings at risk, to be eaten away by financial wizards whose entire profession is doing just that. What do financial experts do other than transfer money from other people's pockets into their own? Yes, venture capitalists help small companies; yes large firms raise money through bond sales. But most hedge funds and the like don't do any of that. They simply are moving the money around, not producing anything new, not curing any diseases, constructing no buildings, or growing any food. There is nothing wrong with investing in the stock market; I do it myself. But to force people to put their hard-earned money at risk of predation from anonymous financial experts forces everybody to become experts, and even so, there will still be winners and losers. I don't think someone who has worked his whole life building cars, sweeping floors, teaching kids, growing food, curing illnesses, driving buses,... should also be required to become a financial wizard just to keep their money safe from professionals whose only goal is taking other people's money. Getting rid of Social Security is just like getting rid of the Glass-Steagall Act: it seemed a good idea at the time but led to our financial collapse. Don't allow greed for a little more return destroy your retirement and leave you a pauper. Don't privatize Social Security and don't believe those who promise that "everybody can be rich", while somehow "nobody gets poor". It's simply not possible. It's a cruel fantasy which, like every con game, is simply too good to be true.

Monday, October 17, 2011

999: the latest rape of American retirees and disabled

What does Herman Cain's 999 scheme do to seniors and those on pensions, fixed income? It shafts them. Totally. During your working lifetime, you pay taxes on your income. You build up pensions, stocks, and other assets, generally using taxable income to do so (in other words, you paid the tax... the rest is YOUR money fair and square), except for a little that is tax free (401K, etc, tho most taxes on those are actually only deferred not eliminated). OK, now you are a senior or disabled and living off of that income. It's mostly tax free because you ALREADY PAID. Sounds fair, right? Sure does to me.

Now what will happen in 999 is that everything you BUY with that limited income will be taxed AGAIN, at 9%, PLUS state and local sales taxes. So this plan is an incredible shaft to seniors, except those who are so rich they are earning millions per year even though they are "retired". For those on fixed incomes, which is most Americans who worked during their younger years and who are now or will be retired, this plan will ScREw YoU to the wall big-time! But if somebody loses in the zero-sum tax game, somebody must win. If the corporations and upper class support this scheme, it's because it does exactly what the conservatives say they most hate: it re-distributes enormous quantities of wealth from the middle and lower earners, retirees, and disabled, to the most powerful and dangerous of us.

One thing nobody seems to be mentioning is that this plan does not REPLACE local sales taxes with a federal tax. If it did, your city, county and state would be bankrupt. No roads would get fixed, no schools operated, no buses running, no cops, no firemen... the Federal government does not do those jobs. Local government does. So we're talking about an ADDITIONAL sales tax. If you now pay 6%, you will pay 15%.

So there are the usual two groups of people who support silly plans like this. One is those who will benefit. And the other is those who are stupid.

Corporate Taxation: the myth that it does not really exist

A common mis-impression is that "corporations don't really pay taxes because they just pass the cost onto the consumer". If that were true, then we could just as well say that "individual workers don't pay taxes, because they just translate into higher wage demands". We could easily show that nobody pays taxes, because everybody simply passes them on to somebody else. In reality, when somebody is taxed, the burden is shared. If corporations are taxed, the burden is shared between the consumers, the stockholders, employees, suppliers, etc. How the burden is split depends on factors like the elasticity of demand for the company's products. Two companies A and B with identical income statements, taxed the same, might produce different splits in who pays for an additional tax burden (or who saves on a tax reduction), due to different elasticities for their products. Therefore it is no trivial task to calculate exactly how a given tax plan will work out, but it will never be simply 100% consumers, 0% stockholders, and 0% workers. Those who make such sweeping claims are either 1. ignorant of Economics 101 in which this subject is covered thoroughly; or 2. lying to support their particular vision. The latter point means that those advocates are pushing a plan which advantages themselves. If the wealthy like the 9-9-9 plan, it means that they think it will help them versus everybody else. After all, if the relative tax burden on each group and income level doesn't change, why would they support it?

Saturday, October 15, 2011

Robot Cars: They Fought the Law and the Law Won

A persistent idea is that many problems related to automobiles could be solved if only we could have robots drive them instead of people. Google's robot car has attracted great attention. MIT (my alma mater) has annual contests related to building such cars. My opinion: they will never work. And thank God for that. Here's why.

Imagine a car driven by a robot which gets into an accident and kills somebody. Who is to blame? Legally that is. In other words, who pays? Right now, with humans driving and car companies only making the cars, the answer is clear: the driver pays (or his insurance company, which is the same thing, since the driver pays for the insurance). In a very few cases, the manufacturer is found liable due to faulty brakes or the like. In the vast majority of cases, of which there are tens of thousands per year (remember cars kill about 40,000 Americans annually), the car's manufacturer needn't even show up at court. The contest is between the drivers, and non-driver victims such as pedestrians and bicyclists.

Should robot cars be introduced, liability would be transferred from the driver to the manufacturer. This would open up a swarm of lawsuits. Even minor imperfections would attract bloodthirsty news reporters and attorneys. We all know that many human drivers have flaws. Nobody is perfect. We have limited vision, our attention wanders, our emotions rage, we take stupid risks, many of us don't really care that much if we hurt other people, as long as we don't have to pay. Yet, people exhibiting all these flaws are allowed to drive. Even after causing accidents most drivers are not restricted from driving! We simply accept human frailty, so every time we drive, walk, or cycle, we acknowledge the risk that "the other guy" is an idiot.

But what if machines, supposedly perfect, were driving? They might reduce the number of accidents. But it won't happen. An imperfection excused in a human driver would become the focus of endless litigation if the machine similarly lapsed. One reason is that a human error is, particularly with American obsession with individuality, assumed to be that driver's own problem. It's fine, as long as he avoids an accident. This is the philosophy of cure after the fact as opposed to prevent before the fact. Just because one driver exhibits a flaw that proves fatal, nobody then assumes that every other driver might similarly fail. But in the case of a machine, any flaw would be ascribed to all machines, of at least that model. Every tiny imperfection would raise a frightening prospect of millions of copies all doing the same thing. And indeed this is not an idle fear. This is the downside of mechanization: the construction of large-scale systems based on endless copies of identical components, with any design or manufacturing flaw replicated across the entire system.

Unfortunately some in the disabled community have seized upon robot cars as some sort of mechanized salvation. The disabled, particularly the visually impaired, have been cut out of the American transportation system by the endless gutting of our once-wonderful transit systems. This wholesale destruction, led by the auto and oil interests in the 1950s and 1960s, left the disabled with little other than crappy skeletal bus systems run for those too poor to drive. These people don't want to ride the bus either, and who can blame them given the lousy service remaining after decades of (mostly) Republican characterization of transit as socialism. Many places are not accessible without cars, so the disabled have limited access to jobs, entertainment, or even visiting friends. Trips easy 75 or 100 years ago are often more difficult now, for those who cannot drive. They hope that robot cars will bring them back into the mainstream of American life. But don't you believe it. It's a cruel fantasy which the legal liability issue alone will block, regardless of technological advance. After all, if you were a car company, would you make a car that would have you in the defendant's chair as soon as your latest model got into an accident?

Let's take a simple example of how hard this robot car business really is. Suppose you're a human driving a car and you have to hit one of two things: either a single person standing in the roadway, or two mannikins near the person. If you recognize the single person as real, you swerve and hit the mannikins. If you incorrectly think the mannikins are real, you have a lawsuit on your hands. Now what if you are a robot. How do you tell the difference? Unless you are an awfully sophisticated robot, you will see two people not two mannikins, so the choice is clear: do the lesser of two evils and hit the single person. Too bad that was the live one! LAWSUIT! But machines can't be defendants, so it's the manufacturer that gets the summons.

How about this pretty scenario. Mr. Robot has again two choices. One is to hit an obviously wealthy white person. The other an equally obviously down-and-out black person. Can you imagine the media feeding frenzy regardless of which our robocar chooses to snuff?

What about cats and dogs? Can Mr. Robot even notice them? How about bicyclists? Do I want to trust car companies, who hate bicyclists almost as much as they hate trains, to build cars to avoid them?

Some say that the answer is to redesign our cities to accommodate robots. Build a whole second road system just for robot cars. Funny how when you propose a public transit improvement, all anybody talks about is what it will cost, but when you propose an automobile improvement, nobody brings up the cost. Or make every person wear a transponder, perhaps implanted at birth whether you want it or not, so as to continuously inform all the cars around "hey, I'm a real human being, please don't hit me!" Naturally the Republicans, based on their recent debate performance in which they loved the idea that sick people without medical insurance should be killed, will say that if a robot car kills somebody without a transponder it's the victim's fault. The Republicans will also love the transponder idea because the FBI now can spy on everybody's location. (then they will accuse the Democrats of being the party of "intrusive big government")

I say the answer is not to redesign cars so that we can cram more into our long-suffering cities. The answer is to redesign our cities so as to need fewer cars. That is what will improve the lives of the disabled and others who cannot drive. That is what will save tens of thousands each year, many of them children. That is what will cut pollution. That will reduce energy use, our dependence on foreign sources, and reduce those sources' support for terrorism. That is what will restore a lost civility and community spirit. It's as simple as that.

High-Speed Rail: A lesson in fear-mongering

For me, it was like a dream come true. I had written to Barack Obama during the 2008 elections, asking him to strongly consider making construction of an American high-speed rail system a priority. While he did not mention it during the campaign, once he was in the White House, he, Vice President Joseph Biden, and Transportation Secretary Ray LaHood created a framework for such a system. The "recovery act" provided $8 billion as a starter package. Some 30 states and multi-state compacts submitted projects totaling over $50 billion, competing for the actual funding available. Meanwhile, California voters had already passed a $9.9 billion HSR measure. Florida and a midwest compact had been planning a system for some years. It seemed like the American dark age of rail was finally coming to an end!

Perhaps my ecstasy was premature. While the business community would benefit from HSR, just as it benefits from other transportation and communication advances, there exists a substantial industrial grouping that sees no advantage to themselves in allowing Americans another choice besides automobiles and airplanes for intercity travel. This group, consisting of the oil, auto, airline, and highway corporations, swung into action. They quickly crafted a masterful fear campaign. After all, it had been done before. When Texas considered building an HSR system a decade ago, Southwest Airlines funded a successful anti-rail message. Now the stakes were higher; it wasn't just Texas anymore.

Groups rapidly formed, which pumped an unceasing flood of letters into newspapers, denouncing HSR and its costs and impacts. Absurd claims were made about its costs, with made-up numbers that bear no relation to the experience of countries which have actually built HSR, usually being many times higher than actual cost figures. Using Karl Rove's concept of "attack your enemies' strengths" (for example, his hit campaign against John Kerry's military record, which bordered on doubting any soldier's claim to bravery), the anti-rail fanatics called into question rail's environmental and energy-saving advantages. Europeans would laugh at any of these claims, since they have experience with HSR and pay the taxes to support it. But Americans have no such experience and so are fertile ground for believing rail opponents' outright lying.

Rail opponents cite that HSR will take land, it will create noise, it will use energy. All these things are true, but they are also even more true of road and air travel. Opponents never state an alternative for handling growth (particularly in California), other than feeble references to fixing potholes and building more freeways. Those latter proposals are particularly funny since what the anti-rail people are basically saying is "rail is socialist, it will cost taxpayers money... so let's spend yet more taxpayer money on roads!"

Newly elected Republican governors in Wisconsin, Ohio, and Florida killed their states' high-speed rail programs with fanfare, as if they were doing their voters a favor. The Wisconsin governor, Scott Walker, turned down a $800 million federal HSR grant on the basis that his state might be on the hook for a mere 1% of that total, $8 million per year, in operating subsidies. He completely ignored the vast sums the federal government had given his state for highways, and that the state's taxpayers are on the hook for the very substantial operating costs of these roads.

The anti-rail campaign in California particularly has now reached a fever pitch. Accusations that rail supporters are Communists hell-bent on stealing hard-working folks' money is a major component, singing a very old song remarkably effective at getting Americans to turn against great ideas.

Journalists, smelling blood, eagerly jumped on the anti-rail bandwagon, even those who supported it before there actually was a program. It is always easier to write vitriolic articles opposing something than reasoned pieces supporting something. That makes great firebrand journalism, but lousy social policy.

This is how the corporate sector gets its way. Meanwhile China is experimenting with 300 mph (500 kph) trains. America has stopped marching into the future because of the endless whining of a small group of corporate interests who will be damaged by HSR. This is a prescription for stagnation and eventual collapse. We have forgotten Peter Schumpeter's concept of "creative destruction" in which obsolete companies and their technologies go away and are replaced by new systems. We have forgotten that private business does not do everything. Business requires infrastructure but it cannot risk its own capital providing it. That's why governments everywhere provide roads, airports, sewers, water lines, courts, schools, street lighting, sidewalks, ports, air traffic control, weather satellites, and the scientific research that makes all possible... the list goes on and on. We have fallen victim to the corporate/Republican propaganda that government is purely parasitic. Meanwhile, the very same people claiming that HSR is "another government boondoggle, let private industry do it if it really is so good" continue driving on their taxpayer-funded roads and flying from publicly-owned airports. I have yet to see a single rail opponent propose privatizing roads or airports he uses.

Without a change in course, this once-great country is toast... and deservedly so, for being so stupid, selfish, and greedy as to be unwilling to invest in our collective future the way past generations did. Shame on us.

Llewellyn's Number

I got the idea for "Llewellyn's Number" upon reading Carl Sagan's only science-fiction book, Contact. In this story, an advanced alien species has discovered that hidden in certain important numbers like pi and e, are clearly messages when properly decoded. Because mathematics cannot be technologically faked, the aliens take this as proof of God's existence. While I'm not interested in such "proofs" myself, the idea of transcendental numbers containing messages intrigued me. I wondered about a more general idea: in a number like pi, would ANY finite-length string of digits occur? If so, then ALL messages, both true and false, would occur using any decoding scheme. It's obvious that this could only be true for finite-length strings. It's also clear that it is not true for all transcendental numbers. For example, the Liouville numbers consist only of 1s with intervening numbers of zeros which strictly increase according to the factorial function. It's also obvious that if pi (let's just take pi as our "classic example") does possess this property, then each finite-length digit string must occur an infinite number of times. This is because if it is a string of length N, it also is the prefix for 10 strings of length N+1, 100 strings of length N+2, etc, and all these longer strings must also occur by supposition. I'm assuming decimal expansion here although any base would do.

Not being able to determine if pi or e has such properties, I decided to construct my own number which surely has this property, so I call it Llewellyn's Number, or L-10 (10 for base 10, there is one such number for every integer >= 2, so there are actually an infinite number of them). L-10 begins with a decimal point, followed by the ten digits, i.e., .0123456789 ... it is then followed by all the two-digit numbers, so the next two hundred digits are 00 01 02... 10 11 ... 98 99 (spaces added for clarity only). So now we have L-10 = .0123456789000102...99 .... Now we follow with all 1000 three-digit numbers, etc. Using any typical encoding scheme (for example, each two digits representing its ASCII value) to convert into readable character data, it's clear that L-10 contains every finite length string of decimal digits, each an infinite number of times; thus it contains every possible decoded text, such as English. So it contains an infinite number of copies of Hamlet, including every possible misspelling, alteration, and so on. Of course, most randomly-chosen substrings will be gibberish, but the idea is still cool.

Now I suspect L is transcendental, but I don't know enough math to prove it! Any help out there?