How much do we Really Care About the Constitution?


Second Amendment

In lieu of Newtown shooting, Obama administration decided to put forward some initiatives that supposed to curb individuals’ ability to obtain firearms. Despite the fact that the initiatives are fairly toothless, they did cause a decent amount of outcry from around half of Americans who own guns. Furthermore, a lot of opponents of the motion chose to cite The Second Amendment of the Constitution to argue their point. While there are some legitimate arguments one can use to justify his position on gun control, I wanted to write this post to refute the concept that evoking Second Amendment is any way, shape or form a legitimate argument for gun rights.

The first problem with the argument is what seemed like the most obvious rebuttal to the statement. The reason Second Amendment gave rights to individuals to bear arms was to defend themselves against a tyrannical government. That was in 1787, when both the governments and the individuals had access to the same kind of weapons, thus it was actually feasible for ordinary citizens to get together and mount a legitimate opposition to the government that became oppressive. Enter 2013, when the US government spends nearly as much money on defense as the rest of the world combined and has nuclear weapons, long range missiles, Army, Navy, Marines and Air Force at its disposal. I would be really interested in seeing how these gun lovers are planning to fight this kind of firepower with their riffles and pistols. If they do believe they are able to build a legitimate opposition to this, they are delusional, if they don’t their argument falls apart.

The second problem is the fact that this argument is very absolutist. No one has ever proposed an initiative to take all the guns away from Americans. At the same time, we already do ban certain kind of firearms from individual use – those include things like tanks and ground to air rocket launchers. So if we are going to argue that Obama is infringing on our Second Amendment rights by banning certain kinds of semi-automatic weapons, we should probably go all the way and argue that our rights are already being restricted because we can’t go to Walmart and buy a tank. Somehow it seems to me that, outside of some fringe right-wing group of people, no one will be OK with this idea.

The third problem is the most troubling in my opinion and it is also one that truly reveals the extent to which these people actually care about the rights the Constitution provides. I think that if you care about one amendment of the document you should at least give some thought to the rest of it. As it stands right now, the Fourth Amendment (which guards against unreasonable searches and seizures) is essentially being wiped out of existence. Around the new year, the congress reapproved FISA Amendments Act, which basically gives the government right to eavesdrop on any international conversation, read your every email, text message or any other form of digital cross-border communication you might have. The government can also amass unlimited amounts of information about you as a person. And they can do all that without even bothering to obtain a warrant!

Where is the outrage from you, my Constitution lovers?

Election 2012


Source: AFP PHOTO / MICHAEL REYNOLDS

Well, the election is next Tuesday, so I figured I would try to lay down some of the arguments I have for and against each one of the two guys running this year. I guess this exercise is more for my own records because it will be interesting to go back few years down the road and see how my opinion has changed overtime.

Naturally I’m inclined to favor liberal ideas on social and monetary policy, thus I’m predisposed to like Mr Obama. That said, I think there are a whole slew of more rational arguments one can make for and against the current president and his challenger. I’ll try to break down a few aspects of each one’s platform and analyse pros and cons of those.

Deficit and Monetary Policy

While Obama can’t tout his record for fiscal prudency he also is able to justify these shortcomings. Inheriting an economy in a free-fall, there was not much he could do but to spend money in order to plug the gaping hole in demand that was created by the credit bubble. There are disagreements as to how that money could have been spent but another depression was averted. I wish Mr Obama provided some sort of credible plan of how he plans to reduce the deficit in the medium term, while propping the economy in the short run. Obama, unfortunately, never laid out any specific platform of what exactly he is going to do for the next four years. I wish he did.

When it comes to Mitt Romney, however, the story is even worse. Huge tax cuts are at the core of his platform, while his plans on how he wants to pay for them are conveniently vague. Eliminating deductions from the tax code is a great idea, but mathematics don’t seem to add up in this one. In the light of that I can understand why Romney is not giving out any specifics. One reason is that upsetting certain constituencies has some real electoral consequences; the risk he would not want to take. Second reason is the fact that it gives him an ability to argue that math here actually does work; it’s easier to argue with very vague assumptions rather than putting specifics on the table. I do understand that whatever he proposes will get modified 20 times over in the congress, but it would be worthwhile to provide some specifics to the voters because it will give them an idea about what his agenda actually implies. Bottom line is: most independent economists argue that it is mathematically impossible to administer those tax cuts, not increase burden on low/middle income classes and reduce the deficit at the same time. In the light of that, the centerpiece of Mr Romney’s platform is a bunch of bull.

Advantage: Obama

Social Policy

As a pretty progressive person, this part of Romney’s platform is not even anything I would contemplate a lot about. While Romney is probably a moderate at heart, his party dragged him so far to the right that his social policy positions (like stance on abortion) alone are enough to make me never want to vote for the guy. The current social platform of GOP is something that should have been abandoned 500 years ago and the fact that so many people are still pushing these ideas is indeed scary.

Obama is pretty cautious about his stances on social issues, but at the very least he is moving in the right direction.

Advantage: Obama

Foreign Policy

This is the part where both candidates leave me wishing for a third alternative. It seems like any kind of talk of reducing military spending due to absence of any feasible threat is not even being discussed anymore. The only real difference in the stance of Obama and Romney on foreign policy is how much they want to spend on defense budget with Romney wanting to increase it beyond what the defense department is actually asking for. Knowing a few people who have actually worked on defense contracts, I have a slight idea about how much waste there is in the system. Increasing the spending will just cause more of the same wasteful spending that could be used for things like research or education.

Advantage: Obama.

Regulation and Commerce

Here, I actually believe that Romney could, in fact, be more competent than the president. There is a decent amount of red tape that was put in by Obama administration, which according to experts is useless. Obama also supports unionised labour, which, in my opinion outlived its usefulness.  Romney has worked as a consultant and probably does understand business better so I do think he would be better suited in regulating regular businesses. There are caveats here though. One caveat here is environmental regulation, which Romney seem to think is not needed. To be fair, outside of putting up a requirement for fuel efficiency, Obama has not done much to halt the effects of global warming (he did invest a lot of money into green technologies, but this is not regulation). Second caveat is regulation of financial institutions. Majority of Romney’s big donors are investment banks like Goldman Sachs and Meryl Lynch – the same guys that got us in the hole we are currently in. He wants to repeal Dodd Frank and never specified what it would be replaced with. In my opinion we would be better off if things like derivatives and credit default swaps were banned altogether. Unfortunately, neither one of the candidates will do anything remotely close to this, but Obama is more likely to go in the right direction.

Advantage: Split

Entitlements

Entitlements are one thing that will deal with us unless we deal with it. Due to that, Romney’s plan seems more credible to me that that of Obama. No matter how much we dislike it, we have to come to terms with the fact that, unless we tax everyone at some astronomical rates, we will not be able to afford the current level of Medicare spending. Turning Medicare into voucher system might not be the best idea but, at least, it deals with the problem. Obama has proposed $700 billion reduction in payments to the hospitals, but this money is not going to be saved, but given to Obamacare. Beyond that, the amount that the government spends on Medicare is going keep getting bigger.

Advantage: Romney

Immigration

Romney has actually said that the state of Arizona could be the model for the nation. He also likes his “self-deportation” approach of making immigrant life so miserable that they will leave. He never talked about streamlining visa process and lifting red tape for educated immigrants. Enough said.

Advantage: Obama

Bottom Line

Romney: being severely socially conservative and running on the plan that resembles wishful thinking, I would not expect much good to come out of Romney’s administration. The “5 Point Plan” the he is running on is not really a plan but a set of, at times vague, goals. A plan would be a more concrete description of how those goals are going to be achieved. Romney used to be a consultant but his current behavior cannot be further from what behavior of a real consultant would resemble. I’m a consultant as well and, if on an assignment, I told my client “You need to cut costs”, I would expect to hear something like “Thanks, Einstein we already knew that. We need you to tell us how to do that”. How he is going to do that is precisely what Romney’s “plan” lacks. This, on top of the fact that current Republican party seems to be falling off the cliff of sensibility and reason, makes Romney look like a poor choice to me.

Obama: while there were a few things to be disappointed about (like president’s inability to work with the congress or perhaps sub-optimal use of stimulus money), I think Obama deserves re-election. His proposed policies make way more sense that those of Romney. Taxing the affluent in order to pay for things like research, education and infrastructure is something that every nation does, while America has essentially regressive tax system. I wish he was more aggressive in dealing with the fiscal problems and pursuing other parts of his rhetoric. Given the options, however, there is no question about who I would support.

Obama 2012

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Education in the Information Age


Image

Source: sxc.hu

I was watching PBS Newshour recently (yes, I watch PBS at times), where the anchor and the guests were discussing the slipping reading scores of American students entering colleges. The prescription suggested by the “experts” seemed to be pretty basic: we have to get tougher, extend schooldays and set higher benchmarks for the kids. I think this is an awfully outdated view on how to deal with these kinds of issues; a view that doesn’t take the changing environment into consideration.

The nature of education has changed in the last 20 years more than it has in 200 years preceding the last 20. With invention of internet and search engines, the ability to absorb all of the information in detail lost its importance; at the same time, the ability to understand the basic premise and conclusion from many sources has become extremely important.

When you have to search library for 20 minutes in order to find the book you think you need to do research, it probably makes sense to dig deeper into content and understand details because there might not be any other source of information at hand. And the wait is much longer when the book is not in the library near you. This is why, during my undergrad and grad school years, I’ve checked out a book from the library total of 1 time.

Today, the entire world’s knowledge can be accessed with a few basic keywords via Google. When pouring through dozens of research papers, it is impossible to understand every paper in detail without spending insurmountable amount of time reading them. Doing research for any given project at work, I generally end up amassing a collection of at least 20 papers, relevant to the topic. If I read every one of them in its entirety, I would spend a week doing basic research before I can even start making any basic conclusions.

Being able to parse through hundreds of ideas to get the basics of an argument is much more important today simply because those ideas are easily accessible, which is why the way we evaluate our students needs to change. The focus should shift from evaluating the ability to simply read fast to assessing the ability to parse through the basic ideas and build conclusions based on those ideas. This will require changing our perspective on how we view our educational system because pushing old ideas in a changing environment will not achieve any positive results.

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The Rich Need to go Shopping


I think it is a pretty common consensus that the reason we are going through this endemic recovery is the lack of demand. The financial crisis destroyed huge amounts of wealth when the housing bubble collapsed and the government later on scrambled to plug the hole with stimulus spending in order to stimulate the demand. The two rounds of stimulus, worth roughly $1.5 billion, did stop economy from the free fall but also added enormous amount to America’s debt.

Now, if $1.5 billion was enough to stop the economic depression, another round of similar injection of capital into the economy could feasibly put America back on track to economic growth.

Average annual income of a person at the top 1% of the income distribution is $960,000. There are 3 million of those people, so their total yearly salary is worth roughly $3 trillion dollars. And this is only the income, not wealth (this figure is much bigger). Much of the money and wealth earned by the rich is not spent but ends up in their bank accounts and other financial investments. While this money does provide capital for banks to finance credit, it would be far more useful if this money was spent on domestically produced goods and services. Which is why the rich need to go shopping.

Imagine, the rich just blowing their money on artificial consumption, buying American cars and anything else carrying a label “Made in USA”. The factories will be working overtime, hiring anyone they can to keep up with the demand. The more people will get jobs, the more people will have money to spend which will drive the demand even further. I’m not asking that the rich donate to the charity or do any other kind of philanthropy - they just need to go shopping. That’s when the wealth will actually start trickling down.

This is how World War II helped America get out of the Great Depression but we don’t need another catastrophic event in order jump start the economy. It makes no sense that enormous amounts of wealth are sitting in foreign bank accounts while they could be used to just buy anything made in US and get us out of this hole.

Outsourcing Creativity


We have already outsourced manual labor to robots, now musicians can be replaced by algorithms. To me this is fascinating…

In 2004, New Zealander Ben Novak went from being a musical unknown with no industry connections to a top-10 hit across European radio stations. Rather than owing his lucky break to a talent scout, Novak had a computer algorithm to thank. Created by the company Music X-Ray, the software “uses Fourier transforms—a method of separating a signal from the ‘noise’ of complex data—to isolate a song’s base melody, beat, tempo, rhythm, octave, pitch, chords, progression, sonic brilliance, and several other factors that catch a listener’s ear.” By building a 3D model of these qualities, the software can compare new songs to hits of the past.

Though, this is still pretty far from actually outsourcing creativity and I’m not even sure if it will ever be possible.

http://bigthink.com/ideafeed/can-we-automate-creativity

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Politics of Social Issues


Obama, Gay Marriage

Source: CNN.com

Mr. Obama finally came out in support of gay marriage after the blunder of his VP forced him to take a definitive stance on the issue. While this announcement is being touted as a groundbreaking event, where the first ever American president announced his support for the issue, the significance of it seems to be slightly exaggerated to me.

Being mostly a symbolic gesture, pro gay marriage agenda will not become part of this administration’s strategy. Furthermore, given the fact that states will still have the final say on the issue, the announcement is not likely to cause any dramatic change in the course of events whatsoever. Essentially, not a single policy will be affected by this turn of events.

Politically, though, this move could have some real consequences for the electability and fundraising efforts of the president. To be honest, I am not sure if this is likely to benefit or hurt Obama in the presidential election in November. The opinion on the general electorate is essentially split 50/50 on the topic. The majority of independent voters, however, tend to be in favor of gay marriage, which is good for the administration. Also, the democrats are naturally mostly in favor of allowing gays to marry, so this could help Obama to energize the base. So, without relying on any official statistical analysis, I would think that the president will derive some sort of electoral advantage from this.

Another “win” that Obama got from this announcement is the fact that it will force the GOP and his main rival Mitt Romney to take a definitive opposing view on the issue that is becoming more and more accepted by the mainstream culture. At the time when Mitt needs to start shifting to the center in order to capture the independent voters, he will be forced to move back to the right to make sure the conservative base is not alienated.

In fact, this kind of strategy could become pretty useful for democrats in the reelection campaign. Voicing their opinion on certain social issues that have mainstream support, but are opposed by the extremely conservative GOP base, could be fairly beneficial for the president and his administration. So I say Obama needs to come out explicitly in opposition to teaching creationism in public schools, for example. I can see Fox running headlines the next day about president’s war on religion and Mitt Romney reluctantly saying that school should have the freedom to teach whatever they want. Romney will be forced to do that in order to appease the conservative base, but he will also alienate pretty decent majority of independents.

Overall, I am glad that the president came out in support of equal rights for LGBT community but, unless it becomes part of the administration’s agenda, it is not likely to have any significant effect on the advancement of those rights.

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Capitalism as a Driver of Space Exploration


Source: education.ezinemark.com

In one of his speeches, Newt Gingrich asserted that, by the end of his second term, US will have a permanent base on the moon. While, most sensible people will discard this statement as a loony endeavor of an overambitious politician, I think Gingrich does have a point.

While moon colonies are a fairly distant goal, I think that more casual space travel could become feasible within next decade. The force behind this, however, will not be Newt’s administration controlling the White House (hopefully); instead it will be the profit motif driving any organization in a capitalist society.

Today we already have a number of firms like SpaceX that are close to developing a ship capable of carrying a person to space. SpaceX was mostly funded by the ambitious entrepreneur Elon Musk, a founder of PayPal, whose passion for space exploration drove him to invest millions of dollars in the firm. But, while the ambition started this endeavor, the eventual goal of the firm is to be profitable in the long run. Once the company is capable of sending a man to space, Musk is planning on selling trips to space to those who can afford it.

While the price of these kinds of trips is likely to be very expensive initially, I bet there are going to be a lot of takers (I know I would buy a trip to space if I was a multi-millionaire). Even if one trip were to cost $1 million, I can see at least 100 people signing up for it, which would rake in considerable revenue (I have to admit, though, that I have absolutely no idea how much a space flight would cost to a firm like SpaceX). The profits from these trips can be invested back into R&D which will make the flights more affordable to the broader public.

So my point is that markets can soon become a better tool for space exploration than government funding. It is important to understand that governments played a major role in this by doing the fundamental research that firms like Space X were able to take an advantage of. In the future, though, I can see space exploration can take a similar evolutionary path as Internet once did where the government provided initial research and development which allowed the private sector to see the market potential of the invention and develop it further.

SYDGKJT265B6

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The “Return” of Putin


On March 4th, with 64% of the vote, Vladimir Putin became once again the president of Russia, which he is eligible to rule for another 12 years. If he does end up serving the next 12 years as Russian president, he will be the longest standing Russian ruler outside of Stalin who served for 31 years.

No one was surprised about the outcome of the elections and protest meetings about the results were being organized even before people went to polls. The main theme of the demonstrations seemed to be the perceived unfairness of the rigged voting and call for a rerun of the election. I doubt the outcome will be much different even if the elections are held in a very honest way. Rigging elections in a more-or-less conspicuous way can only account for 5%-10% of the outcome. Putin was going to win regardless and Kremlin rigged elections, by sending people to vote multiple times, as an insurance policy to make sure no surprises happen.

The problem in my opinion goes deeper than the rigged election. Majority of Russia still gets most of it information from the state-controlled media, where Putin is talked about as someone who brought stability and prosperity while corruption and repression of free speech is being downplayed. Swaying public opinion in this kind of environment is easier than when people have access to free and independent outlets. This is evident by the fact that majority of Moscow, where most people actually have access to internet and get their information from the sources other than state television, voted against Putin.

The situation is complicated even further by the fact that no real opposition is allowed to participate in a public debate. The system for registering political parties in Russia is very complicated and Kremlin is able to veto any party with views that differ radically from its own. With lack of any credible opposition, Putin seems like the best option available.

Overall, I think that the game was rigged from the very beginning and the election results are just an indicator of Kremlin’s influence over the rules of this game. If the elections were held again the outcome would be the same. The opposition needs to demand changes that go deeper than holding honest elections, they need to demand more open and honest system.

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If Romney becomes our next president


The Economist

The Economist magazine recently ran an issue with Mitt Romney on the front page, saying “America’s Next CEO?” which made me think about the role of business people in the government and what advantages they have compared to those who worked in the public sector their entire lives. A big part of GOP rhetoric, especially before every presidential election, is that they understand business. Many of them have worked in the private sector where they were hugely successful (i.e. Mitt Romney at Bain, Herman Cain at Godfather’s Pizza). While I disagree with the opinion that the government should run like a business (in fact, I think the reason government exists is to provide things that market cannot like national defense, welfare and regulation), I think there is one very important lesson that governments could learn from private sector, namely they could learn how to streamline their operations.

Governments everywhere are huge bureaucracies that usually operate very inefficiently and where returns on investment are often vague. Given these inefficiencies, I think that implementing an ERP system with a data warehouse that would be able to track and analyze inputs and outputs of government activity, providing KPIs and ROIs across the board would be a huge improvement. Building this sort of system is a huge undertaking for even a small government, but it could be done nevertheless. Mitt Romney spent all of his life in private sector working as management consultant for BCG and later for Bain. While I am not exactly sure what kind of consultant he was, he should have decent set of skills for assessing business needs and figuring out how to streamline its operations with the help of Information Technology. I could even see someone like him running on this issue. It actually aligns with the republican rhetoric about trimming down the size of the government and making it more efficient. Imagine how many bureaucrats can be laid off if such a system was implemented? Spending on the government bureaucracy could be at least halved. It would be interesting if a president would basically buy out a firm like Accenture to put all of its consultants onto streamlining the operations of US government. A four year term could, potentially, be enough to make something like this happen, given there are enoughpeople working on it.

Overall, I think this kind of transformation will happen inevitably in the future. Making it happen rather sooner than later, however, would provide a much-needed help in dealing with the huge deficits US government is running. It could also make a legitimate campaign issue that aligns with republican rhetoric and could actually be accomplished.

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When Democracy Fails


“An informed citizenry is the only true repository of the public will,” said Thomas Jefferson sometime in late 1700s. I could not agree more with the statement, but in today’s socioeconomic system of complex rules, laws and regulations it is becoming increasingly harder to have informed and rational citizens, who express their will based on their economic self-interest. It would seem that, with the proliferation of Internet and other forms of communication technology, the information has truly become free and accessible to anyone. While that is true, the sheer amount of information one has to know to make an informed decision on the issues of public policy is astounding. Furthermore, one also has to have a decent amount of education in order to understand the implications of public policy. For example, an average US citizen today faces many hardships as a result of prolonged recession, which was brought about by bursting of an asset bubble that was fueled by over-optimistic expectations about the growth of prices of real estate. The growth of asset bubble in turn was fueled by reckless lending from big banks, which also assumed the prices have no where to go but up, while government made it even easier to borrow for people who should not be able to afford to own their own house. Meanwhile the banks learned how to make money on people defaulting on their loans by betting against those loans and reselling them to other entities and banks. Yet another part of the story is the fact that all financial institutions were interconnected with each other to the point that failure of one, comparably small, bank like Lehman Brothers could bring the whole system to a halt because everyone was so overleveraged that even small decrease in liquidity could bring a giant institution like AIG down. This all is a very simplified and incomplete version of the story of course, but you get the point. One cannot expect an average person with a high school degree to have a good understanding of why the crisis happened, which sounds odd given the fact that this average person is very likely to have lost his job, while his house lost 1/3 of it’s value, which makes the house worth less than how much that person still owes for it. So overnight the house went from being an asset to being a huge liability, while this person is no longer able to make payments for it anymore.

Those people, however, have to vote based on their understanding of what is happening in the world today. They should cast their vote for the person, most qualified to lead the country into great and prosperous future, so they need to make up their opinion somehow. And this is where it gets scary because, not being able to understand all the socio-economic forces at play, people end up voting based on a very limited scope of issues, which they actually understand. These issues can be as irrelevant as identification with a certain political party, support or opposition for things like Marijuana laws or “Don’t Ask, Don’t Tell” or even personal qualities of the candidates, which, at best, should play a secondary role in their decision-making process. In social psychology this is called Bounded Awareness or the tendency of people to concentrate on a certain set of information while overlooking other, sometimes more important, set of information. This causes them to make irrational decisions, but it is the only way we are able to deal with information overload. This problem is further amplified by the fact that people with a certain political affiliation are not very likely to encounter people from the opposite side of political spectrum in real life, so not a lot of new information ever enters their worldview.

This kind of behavior promotes very different political system from what it ideally should be because, as a society, we end up voting not for people with the best policy plans but for those who personally appeal to us the most. We pick sides (i.e. Republican or Democrat) and there are not many things that could cause us to shift our positions, not even rational arguments. Elections become a popularity contest where personal characteristics of candidates play a bigger role than their proposed policy actions.

I am not sure how we could deal with these kinds of trends. My initial intuition is to let people vote on issues instead of candidates, given that they are not able to understand every single issue a particular candidate stands for. In practice, however, this kind of referendum does not always yield the best outcome. People in California voted themselves into near bankruptcy, using this kind of system, despite the fact that they have some very vibrant industries based in the state.

I think that some set of incentives needs to exist in order to make sure people who genuinely care about the welfare of the society as a whole get into public office. Eliminating campaign financing by corporations and making lobbying illegal would be steps in the right direction.

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