This article on High-Frequency Trading over at Balkinization (a collection of legal scholars and lawyers) caught my eye. It is a subject that I think we need to think about a lot more as a nation - executing market trades is a fundamental aspect of capitalism as we have designed it, but is buying, holding, and then selling stocks in only 11 seconds (or less) beneficial? Does it smooth the market value function, or does it instead introduce noise and volatility, and create possibilities for sabotage? Read author Frank Pasquale's thoughts at: http://balkin.blogspot.com/2010/11/martial-finance-case-of-high-frequency.html
The whole thing made me recall a book I read two years ago: The Tenured Professor, by economist John Kenneth Galbraith. Galbraith buried insights into our markets and our behavior that it has taken me time to appreciate, but the one of the themes of the book, that we behave relative to investing more based on what others are doing and less on what we think of as value, is especially pertinent to the subject of computer based trading, and High Frequency Trading in particular.
Thursday, November 25, 2010
Tuesday, November 23, 2010
oweno.com should be Oh, No! What a Load of Crap!
Nothing bothers me more than dishonesty in pushing national policy. I saw a commercial for oweno.com last night and again tonight while watching the news, and from the content, my 'National Scare' radar jumped into high gear. So, I checked out the site, and it is awful! But, just to demonstrate to you how awful (and why you should treat anything this bunch advocates with more than a little prejudice), I'll take it apart for you...
Can you imagine 13 trillion? Neither can I. oweno starts out by telling us that the National Debt is 13.6 trillion dollars. But, they never tell us what it means. And, because we can't imagine 13 trillion, we assume that must be a 'Big Deal'. However, this is to commit the fallacy of large numbers: Just because a number used to describe something is unusually large doesn't correlate that its meaning is similarly big.
We need something to compare it to. I have an idea: Let's compare the National Debt to our country's National Yearly Income: The GDP. Pulling numbers from the US Bureau of Economic Analysis (bea.gov), we can see that the US GDP for 2009 was 14.1 trillion dollars - so another way of expressing the US Debt would be to divide it by the US Income, and we get... 1 (One). Yep. The US Debt is 1. Consider this: Most US households, those that own their home, have a Debt of 2 or greater. So, is a US Debt of 1 a big deal?
If I told you that the US Debt over the last 100 years has ranged from .35 to 1.21, you would have a little more information. And If I told you that the debt of 1.21 occurred at the close of WWII (1945), and the most recent low of .5 occurred during the Carter Presidency, you would have a little more information. Yes, our debt has been growing since Reagan took office, after a long decline during the presidency's of Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, and Carter. It rose during Reagan and Bush, dropped during Clinton, and has risen again during Bush and Obama.
I could go on dragging up information about the US Debt, looking at other countries' debt, what economists would have to say, but you get the point: oweno.com starts out by telling its readers nothing, and instead attempts to scare them using very large numbers. Not a very auspices beginning for an organization 'dedicated to raising awareness about America’s fiscal challenges and accelerating action on them.' It takes information to raise awareness...
The second paragraph continues the fallacy of large numbers, as does the third. Hmmm, not doing very well in the information department yet...
Oh, the third then attempts to scare us again with the statement that 'half this money [$200 billion interest on the debt] goes overseas to foreign governments that own our debt.'
Yep, foreign governments do own our debt. They do so because we trade with them, and instead of importing and exporting in equal measure, we have been running a trade imbalance for the last decade: Foreign goods come into America, and American dollars go overseas to pay for them. The overseas nations then purchase US Treasury Bonds, since they can't purchase a like amount of American Manufactured goods. Economists from Krugman to Baker to Galbraith to Salmon to Thoma and on and on have been pointing this out for the last 10 years - you would think that a 'former Secretary of Commerce (Peter G. Peterson)' would also understand this: It's the overvalued US dollar that contributes to the 'fact' that foreign countries 'own' our debt, not our profligate ways.
The fourth paragraph is the most egregious of all, however. The foundation claims that the debt could 'double' by 2020, 'triple' by 2030, and 'quadruple' by 2040. Why the scare quotes? Because, they are being inherently dishonest with these statements (and one suspects they 'know' it, but are doing a little cya.)
Sure, the National Debt could 'quadruple' to $50 trillion by 2040, but where do you suppose the National Income could be in 2040? That's 30 years from now - Let's take a quick look at our historical change in National Income (GDP): Looking at numbers (again from bea.gov), we can see that the National GDP was $2.5 trillion in 1979, $5.4 trillion in 1989 (more than 'double'), $9.4 trillion in 1999 (more than 'triple'), and $14.1 trillion in 2009 (more than 'quadruple', in fact, almost 'sextuple'!!!!!) Oh, My, Gosh! Peter G. Peterson and oweno just gave away the game: If our debt were to continue at the current rate of 1 (One), and our GDP were to grow at historical rates, then our debt would become $50 trillion in 2040, which would be UNCHANGED from today!
That is how you lie with big numbers, folks. The fourth paragraph reveals the foundation for the dishonest charlatans that they are - they attempt to scare us using big numbers without grounding those numbers in anything meaningful to which they apply. An honest organization would look at the debt in a meaningful way, using meaningful language to describe it. They would honestly say that we don't know whether the debt will grow or shrink in the coming years, and not attempt to scare us by showing how big of a number could by used to describe it if it were to remain equal to our GDP. An honest organization would look at the factors that increase the debt, and what occurred during the period from 1945 to 1980 that coincided with a steady decline of the debt, and the factors that accompanied its rise since then (and I deliberately say 'coincided' and 'accompanied', because causation is very, very difficult to determine in the noisy system that is our economy.)
I suspect that the Peter G. Peterson Foundation has something in mind, and it's not something that will be universally, or even majorly, good for Americans. I'll keep looking at (and rebuking) oweno until we figure out just what they want, and why they aren't willing to be honest in their evaluations in their attempt to get it.
Can you imagine 13 trillion? Neither can I. oweno starts out by telling us that the National Debt is 13.6 trillion dollars. But, they never tell us what it means. And, because we can't imagine 13 trillion, we assume that must be a 'Big Deal'. However, this is to commit the fallacy of large numbers: Just because a number used to describe something is unusually large doesn't correlate that its meaning is similarly big.
We need something to compare it to. I have an idea: Let's compare the National Debt to our country's National Yearly Income: The GDP. Pulling numbers from the US Bureau of Economic Analysis (bea.gov), we can see that the US GDP for 2009 was 14.1 trillion dollars - so another way of expressing the US Debt would be to divide it by the US Income, and we get... 1 (One). Yep. The US Debt is 1. Consider this: Most US households, those that own their home, have a Debt of 2 or greater. So, is a US Debt of 1 a big deal?
If I told you that the US Debt over the last 100 years has ranged from .35 to 1.21, you would have a little more information. And If I told you that the debt of 1.21 occurred at the close of WWII (1945), and the most recent low of .5 occurred during the Carter Presidency, you would have a little more information. Yes, our debt has been growing since Reagan took office, after a long decline during the presidency's of Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, and Carter. It rose during Reagan and Bush, dropped during Clinton, and has risen again during Bush and Obama.
I could go on dragging up information about the US Debt, looking at other countries' debt, what economists would have to say, but you get the point: oweno.com starts out by telling its readers nothing, and instead attempts to scare them using very large numbers. Not a very auspices beginning for an organization 'dedicated to raising awareness about America’s fiscal challenges and accelerating action on them.' It takes information to raise awareness...
The second paragraph continues the fallacy of large numbers, as does the third. Hmmm, not doing very well in the information department yet...
Oh, the third then attempts to scare us again with the statement that 'half this money [$200 billion interest on the debt] goes overseas to foreign governments that own our debt.'
Yep, foreign governments do own our debt. They do so because we trade with them, and instead of importing and exporting in equal measure, we have been running a trade imbalance for the last decade: Foreign goods come into America, and American dollars go overseas to pay for them. The overseas nations then purchase US Treasury Bonds, since they can't purchase a like amount of American Manufactured goods. Economists from Krugman to Baker to Galbraith to Salmon to Thoma and on and on have been pointing this out for the last 10 years - you would think that a 'former Secretary of Commerce (Peter G. Peterson)' would also understand this: It's the overvalued US dollar that contributes to the 'fact' that foreign countries 'own' our debt, not our profligate ways.
The fourth paragraph is the most egregious of all, however. The foundation claims that the debt could 'double' by 2020, 'triple' by 2030, and 'quadruple' by 2040. Why the scare quotes? Because, they are being inherently dishonest with these statements (and one suspects they 'know' it, but are doing a little cya.)
Sure, the National Debt could 'quadruple' to $50 trillion by 2040, but where do you suppose the National Income could be in 2040? That's 30 years from now - Let's take a quick look at our historical change in National Income (GDP): Looking at numbers (again from bea.gov), we can see that the National GDP was $2.5 trillion in 1979, $5.4 trillion in 1989 (more than 'double'), $9.4 trillion in 1999 (more than 'triple'), and $14.1 trillion in 2009 (more than 'quadruple', in fact, almost 'sextuple'!!!!!) Oh, My, Gosh! Peter G. Peterson and oweno just gave away the game: If our debt were to continue at the current rate of 1 (One), and our GDP were to grow at historical rates, then our debt would become $50 trillion in 2040, which would be UNCHANGED from today!
That is how you lie with big numbers, folks. The fourth paragraph reveals the foundation for the dishonest charlatans that they are - they attempt to scare us using big numbers without grounding those numbers in anything meaningful to which they apply. An honest organization would look at the debt in a meaningful way, using meaningful language to describe it. They would honestly say that we don't know whether the debt will grow or shrink in the coming years, and not attempt to scare us by showing how big of a number could by used to describe it if it were to remain equal to our GDP. An honest organization would look at the factors that increase the debt, and what occurred during the period from 1945 to 1980 that coincided with a steady decline of the debt, and the factors that accompanied its rise since then (and I deliberately say 'coincided' and 'accompanied', because causation is very, very difficult to determine in the noisy system that is our economy.)
I suspect that the Peter G. Peterson Foundation has something in mind, and it's not something that will be universally, or even majorly, good for Americans. I'll keep looking at (and rebuking) oweno until we figure out just what they want, and why they aren't willing to be honest in their evaluations in their attempt to get it.
Thursday, November 11, 2010
Dennis Cauchon of USAToday Should Be Fired
As a journalist, he is either incompetent or, worse, he is a biased hack that wants to mislead us. Either way, he has no use holding a reporting position at a major US newspaper.
The dual articles that have caught my attention (and caused my ire) are this one and this one. You probably heard both on the national nightly news: In the first, he outlines that the number of workers being paid more than $150,000 has risen tenfold in the last five years, and doubled in the last two. In the second, he purports to tell us that federal workers earn double their private counterparts.
I don't have the time to dissect each and every claim he makes (although they appear to be universally incorrect!), but I'll start, and you can understand the underlying problems in his 'reporting'.
First: Mr Cauchon doesn't cite his sources. Although he does indicate that the information comes from the Office of Personnel Management, they have hundreds of documents available to the public. I was able to find a couple that surely he looked at, but not all. That's shoddy on his part (or deliberately obfuscating).
Second: The claim that the number of federal workers making more than $150,000 has ballooned.
If Mr Cauchon had the least bit of economic knowledge, he would realize two things that would have to be investigated underlying this. First, he would have to account for inflation: Using a nominal 3% figure for the last five years, we would find that any worker who was making $130,000 or more in 2005 we would expect to be making $150,000 or more today. I was able to find a figure for 2004: There were over 34,000 federal civilian employees making more than $130,000 at that time. So we would expect that if their salaries had just kept pace with inflation, there would be at least that many making more than $150,000 today. Now, Mr Cauchon does show that there are more than 82,000 making above $150,000 today. So, the news is not that we have 75000 more people earning at that rate, but that we have 40,000 more earning. Second, since Mr Cauchon is paid to do his reporting (as opposed to you and I who have to take time away from our personal lives to find this information), he should have dug a little deeper into where the extra high paying employees existed: Is there legislation passed during the last five years that created these jobs? Are they located in one area of the country? What is the underlying cause?
That would be useful information with which to inform our opinion.
Third: The Claim (from the second article) that Federal Pay is double its private counterparts.
That appears to be completely bogus and misleading. From the reports that I did find at the OPM site, they conduct extensive studies every year in an attempt to pay federal employees the same amount for the same job as their private counterparts: They compare the required education and experience to arrive at comparable salaries. They are open about their methodology, and in fact conclude that, on average, federal employees are paid slightly less than their private counterparts. In the second article, Mr Cauchon admits that they study he or his counterparts are using disregards eduction and experience - i.e., it is useless for doing any sort of pay comparison! What a load of crap!
Finally, the point that the numbers growing exponentially during the last two years: We would expect that also. If you think about the pay of all individuals as a pyramid, with ever larger numbers at lower pay, and the pyramid rising out of the water (the $150,000 pay line), you would expect that each year a greater number of individuals would rise above that line - reproducing the numbers in his article tells us nothing useful about the movement in pay: The same effect is occurring in the private sector...
The real reasons Mr Cauchon has gained my ire are these: First, we count on our reporters to inform our opinion, so that we can make considered decisions about various subjects. When a report does his or her job so shoddily that they provide mis-information at best, we are not capable of doing our jobs as citizens in a democracy. Since the implicit undertone of his dual articles is that Federal workers are being paid above their skill, education, and experience levels, I want to turn that back on Mr Cauchon and have shown how he is obviously being paid way above his level of expertise as well.
Second, as the aforementioned citizen in a democracy, I take affront to these wholesale attacks on our government. We form our government and use it to achieve collectively those objectives we cannot achieve alone. Sure we have the military to protect us from outside attackers, but we have also found the need to protect ourselves from the rapacious, wealthy elite, who would, in many cases, poison us with our food, their chemicals, drugs; take advantage of us through obfuscated contracts, unsafe working conditions, and more. We've used our government time and again to stipulate our interactions, and provide laws to regulate their behavior, and qualified individuals to oversee the enforcement of those regulations.
Like a cancer in an otherwise healthy body, there are pockets of graft, corruption, perhaps nepotism that form within our otherwise healthy and useful government. I want, nay, depend upon intrepid, intelligent, and well informed reporters who will ferret out those pockets and expose them, so that we can act to control, reform, or remove them.
Unfortunately, Mr Cauchon displays none of those qualities in his writings of Nov 10. Instead, he opens the door for wholesale assaults on our entire federal employee system (See, for example, Mr Beohner's comments on freezing all government pay). That would surely undermine our collective goals as a citizenry, since it is less than 4% of all federal civilian employees who make a great deal; most federal employees are paid down in a scale commensurate with their private counterparts, a scant 1.4% raise this year likely falls behind inflation, and they become poorer, too.
Mr. Cauchon has not informed us, has not uncovered corruption or a frightening trend, has not even told the truth in any meaningful way. Although, I am probably wrong in calling for his firing: He could be sent back to the copyroom, etc for more training. His editor is probably the individual who should be fired for dereliction of duties in allowing Mr Cauchon's piece to even appear!
The dual articles that have caught my attention (and caused my ire) are this one and this one. You probably heard both on the national nightly news: In the first, he outlines that the number of workers being paid more than $150,000 has risen tenfold in the last five years, and doubled in the last two. In the second, he purports to tell us that federal workers earn double their private counterparts.
I don't have the time to dissect each and every claim he makes (although they appear to be universally incorrect!), but I'll start, and you can understand the underlying problems in his 'reporting'.
First: Mr Cauchon doesn't cite his sources. Although he does indicate that the information comes from the Office of Personnel Management, they have hundreds of documents available to the public. I was able to find a couple that surely he looked at, but not all. That's shoddy on his part (or deliberately obfuscating).
Second: The claim that the number of federal workers making more than $150,000 has ballooned.
If Mr Cauchon had the least bit of economic knowledge, he would realize two things that would have to be investigated underlying this. First, he would have to account for inflation: Using a nominal 3% figure for the last five years, we would find that any worker who was making $130,000 or more in 2005 we would expect to be making $150,000 or more today. I was able to find a figure for 2004: There were over 34,000 federal civilian employees making more than $130,000 at that time. So we would expect that if their salaries had just kept pace with inflation, there would be at least that many making more than $150,000 today. Now, Mr Cauchon does show that there are more than 82,000 making above $150,000 today. So, the news is not that we have 75000 more people earning at that rate, but that we have 40,000 more earning. Second, since Mr Cauchon is paid to do his reporting (as opposed to you and I who have to take time away from our personal lives to find this information), he should have dug a little deeper into where the extra high paying employees existed: Is there legislation passed during the last five years that created these jobs? Are they located in one area of the country? What is the underlying cause?
That would be useful information with which to inform our opinion.
Third: The Claim (from the second article) that Federal Pay is double its private counterparts.
That appears to be completely bogus and misleading. From the reports that I did find at the OPM site, they conduct extensive studies every year in an attempt to pay federal employees the same amount for the same job as their private counterparts: They compare the required education and experience to arrive at comparable salaries. They are open about their methodology, and in fact conclude that, on average, federal employees are paid slightly less than their private counterparts. In the second article, Mr Cauchon admits that they study he or his counterparts are using disregards eduction and experience - i.e., it is useless for doing any sort of pay comparison! What a load of crap!
Finally, the point that the numbers growing exponentially during the last two years: We would expect that also. If you think about the pay of all individuals as a pyramid, with ever larger numbers at lower pay, and the pyramid rising out of the water (the $150,000 pay line), you would expect that each year a greater number of individuals would rise above that line - reproducing the numbers in his article tells us nothing useful about the movement in pay: The same effect is occurring in the private sector...
The real reasons Mr Cauchon has gained my ire are these: First, we count on our reporters to inform our opinion, so that we can make considered decisions about various subjects. When a report does his or her job so shoddily that they provide mis-information at best, we are not capable of doing our jobs as citizens in a democracy. Since the implicit undertone of his dual articles is that Federal workers are being paid above their skill, education, and experience levels, I want to turn that back on Mr Cauchon and have shown how he is obviously being paid way above his level of expertise as well.
Second, as the aforementioned citizen in a democracy, I take affront to these wholesale attacks on our government. We form our government and use it to achieve collectively those objectives we cannot achieve alone. Sure we have the military to protect us from outside attackers, but we have also found the need to protect ourselves from the rapacious, wealthy elite, who would, in many cases, poison us with our food, their chemicals, drugs; take advantage of us through obfuscated contracts, unsafe working conditions, and more. We've used our government time and again to stipulate our interactions, and provide laws to regulate their behavior, and qualified individuals to oversee the enforcement of those regulations.
Like a cancer in an otherwise healthy body, there are pockets of graft, corruption, perhaps nepotism that form within our otherwise healthy and useful government. I want, nay, depend upon intrepid, intelligent, and well informed reporters who will ferret out those pockets and expose them, so that we can act to control, reform, or remove them.
Unfortunately, Mr Cauchon displays none of those qualities in his writings of Nov 10. Instead, he opens the door for wholesale assaults on our entire federal employee system (See, for example, Mr Beohner's comments on freezing all government pay). That would surely undermine our collective goals as a citizenry, since it is less than 4% of all federal civilian employees who make a great deal; most federal employees are paid down in a scale commensurate with their private counterparts, a scant 1.4% raise this year likely falls behind inflation, and they become poorer, too.
Mr. Cauchon has not informed us, has not uncovered corruption or a frightening trend, has not even told the truth in any meaningful way. Although, I am probably wrong in calling for his firing: He could be sent back to the copyroom, etc for more training. His editor is probably the individual who should be fired for dereliction of duties in allowing Mr Cauchon's piece to even appear!
Wednesday, October 27, 2010
Dr. John Ioannidis is Revealing our Lack of Knowledge
Dr. John Ioannidis is a meta-researcher, and in this piece at The Atlantic, he explains how bias and a lack of true understanding of randomness renders many of our medical studies equivocal. Researchers go in to a study looking for a correlation, and viola! they find it. Sometimes, another team goes in looking for the opposite correlation, and viola! they find it. Frequently, however, the hallmark of science: That another team will attempt to duplicate your study and either add to the evidence or highlight an error - never occurs.
Naturally, drug studies are the worst. Naturally, because most of us intuitively grasp that where big money is involved, where a great deal is at stake, the research can easily be corrupted. It's corrupted in this sense because the researchers want to see the correlations between their new drug and the benefits - and that inherent bias leads them to set up a study that will naturally prove, rather than disprove the efficacy of their new product.
I've seen the type of bias Dr. Ionnidis is capturing first hand, amongst myself and my peers. It's much easier to set up a test or study that duplicates our beliefs about how something works; it is much, much harder to devise a test that could actually disprove (and hence validate if passed) our belief in how a system works.
Correlation and causation continue to be difficult to tease out of the world around us - we don't know much, and Dr. Ionnidis research has cast doubt on much of what we thought we knew. Read the article: It is fascinating!
I think my next project will be to download the study mentioned and read about the 45 pivotal studies Dr. Ionnidis concentrated on - what medical and nutrition advice that we take for granted is uncertain?
(If you can't follow the links, here is the complete url:
http://www.theatlantic.com/magazine/archive/2010/11/lies-damned-lies-and-medical-science/8269/
)
Naturally, drug studies are the worst. Naturally, because most of us intuitively grasp that where big money is involved, where a great deal is at stake, the research can easily be corrupted. It's corrupted in this sense because the researchers want to see the correlations between their new drug and the benefits - and that inherent bias leads them to set up a study that will naturally prove, rather than disprove the efficacy of their new product.
I've seen the type of bias Dr. Ionnidis is capturing first hand, amongst myself and my peers. It's much easier to set up a test or study that duplicates our beliefs about how something works; it is much, much harder to devise a test that could actually disprove (and hence validate if passed) our belief in how a system works.
Correlation and causation continue to be difficult to tease out of the world around us - we don't know much, and Dr. Ionnidis research has cast doubt on much of what we thought we knew. Read the article: It is fascinating!
I think my next project will be to download the study mentioned and read about the 45 pivotal studies Dr. Ionnidis concentrated on - what medical and nutrition advice that we take for granted is uncertain?
(If you can't follow the links, here is the complete url:
http://www.theatlantic.com/magazine/archive/2010/11/lies-damned-lies-and-medical-science/8269/
)
Wednesday, October 13, 2010
Jail Time
I heard this story on the news yesterday: Hungary has jailed the executive of MAL Co., the company that appears to have disregarded safety and maintenance provisions that led to the collapse of a holding tank wall, releasing a million gallons of post aluminum processing sludge (which contains the toxic chemicals cyanide, cadmium, and chromium.) Eight people have died as a result of the spill, and hundreds evacuated.
It's an interesting action. We often give corporate cover to the individuals who manage and work at a company, allowing their malfeasance to go unpunished (we punish the shareholders instead, by fining the company and reducing it's profits.) I understand well the thinking behind this strategy: Sometimes, in the course of business, unforeseen events occur, property receives damage, people get hurt: We don't want to go on a hunt every time, else few (if any) people would be willing to run a business, and we all would suffer. Besides, if the actions and fines are large enough, presumably the shareholders would sack the management of the company, and install new leaders who will work to ensure that profits aren't endangered by carelessness or neglect.
But we must also be mindful of the fact that businesses and corporations have no intrinsic morals: Only people are moral agents capable of determining their course of action. As a society, we should certainly demand moral behavior -- and we can communicate our definition of moral behavior by the rules and regulations we levy upon the conduct of a business. When those rules or regulations are disregarded, willfully ignored or knowingly violated by employees, it is those same employees that should pay restitution to society, not others.
We don't yet know if there was criminal misconduct at MAL Co., and will have to wait for the outcome of the Hungarian Courts. However, since they justify their high salaries upon the idea that a CEO imbues his company with his philosophy, drive, and vision, if the individuals of a corporation have been found to be acting immorally, we should certainly start at the top in filing criminal charges, as Hungary has done.
I've often wondered how much corporate wrongdoing would be cured by the simple expedient of jailing the CEO. Neglect to follow established procedures for cleanliness, and your eggs become tainted with Salmonella, sickening consumers? Go to jail. Rush the process in violation of regulations and procedures, having your oil rig explode and spill millions of gallons of oil? Go to jail. Violate OSHA standards, causing workers to be injured or killed on the job? Go to jail.
It'd be interesting to try. I'll be very curious to see the outcome in Hungary.
It's an interesting action. We often give corporate cover to the individuals who manage and work at a company, allowing their malfeasance to go unpunished (we punish the shareholders instead, by fining the company and reducing it's profits.) I understand well the thinking behind this strategy: Sometimes, in the course of business, unforeseen events occur, property receives damage, people get hurt: We don't want to go on a hunt every time, else few (if any) people would be willing to run a business, and we all would suffer. Besides, if the actions and fines are large enough, presumably the shareholders would sack the management of the company, and install new leaders who will work to ensure that profits aren't endangered by carelessness or neglect.
But we must also be mindful of the fact that businesses and corporations have no intrinsic morals: Only people are moral agents capable of determining their course of action. As a society, we should certainly demand moral behavior -- and we can communicate our definition of moral behavior by the rules and regulations we levy upon the conduct of a business. When those rules or regulations are disregarded, willfully ignored or knowingly violated by employees, it is those same employees that should pay restitution to society, not others.
We don't yet know if there was criminal misconduct at MAL Co., and will have to wait for the outcome of the Hungarian Courts. However, since they justify their high salaries upon the idea that a CEO imbues his company with his philosophy, drive, and vision, if the individuals of a corporation have been found to be acting immorally, we should certainly start at the top in filing criminal charges, as Hungary has done.
I've often wondered how much corporate wrongdoing would be cured by the simple expedient of jailing the CEO. Neglect to follow established procedures for cleanliness, and your eggs become tainted with Salmonella, sickening consumers? Go to jail. Rush the process in violation of regulations and procedures, having your oil rig explode and spill millions of gallons of oil? Go to jail. Violate OSHA standards, causing workers to be injured or killed on the job? Go to jail.
It'd be interesting to try. I'll be very curious to see the outcome in Hungary.
Saturday, October 9, 2010
Surf's Up!
A storm whips the seas of the Pacific. For days, the winds feed energy into the ocean, whipping the waves higher. One collection of energy, for unknown reasons, usurps the power of its neighbors, growing substantially larger. Perhaps its alignment and the wind's alignment correlated longer. Perhaps the input energy achieved something akin to resonant frequency with the wave energy, and each little push caused it to grow. Whatever the cause, this wave and its energy grew to more than twice the average of the storm frenzied sea.
First on its path eastward is a low slung bulk container ship. Built in the 70's to manage 40 foot oceans, the ship has been taking on small amounts of water as the waves of the storm crash over its bow. The metal and ore below deck has started shifting from the constant rolling and pitching. The captain's best course would be to slow to a crawl and wait the storm out, but he's on a timetable: Payday doesn't occur until he docks, and his next paycheck depends upon unloading this load and getting another. So, he presses on.
A sister wave to the one we're tracking, not quite as big, but substantially larger than the 30 foot seas rears up and crashes over the ship's bow, straining hatches. The cargo moves some more. The ship plunges into the trough, and then the captain sees it: The biggest wave of his experience. A 90 foot monster rears ahead, crashes into his ship. Hatches are burst under the weight and the twisting, water floods the fore compartments. The 70000 ton vessel is suddenly much heavier, up front, and driven by its motors and momentum, literally drives itself into the ocean. A little over a minute later the ocean closes over its stern; the ship and its crew gone. No mayday was sounded, no transmission released to aid in finding the vessel.
The wave continues on, undeterred, heading for the California coast. Alerted to the presence of the storm, the big wave surfers are gathering, waiting. What size waves will arrive? Will they get a chance at the XXL prize for surfing a 100 foot wave? Jet skis are readied, surf boards are waxed, the ocean is scanned. As the storm surge starts rolling in, the surfers head out for a day testing themselves against the enormous energies of the ocean. The swells increase, first 40, and then 50 foot waves. Finally, the big ones arrive: 60, 65 feet, and then the one they'll talk about for years: Perhaps 70, maybe 75 feet tall. A ride is made, pictures are taken. The energy dissipates.
The wave scientists gather in Maui. They've gotten solid evidence from instrumented oil rigs in the North Sea, from scientific ships that didn't meet the fate of the freighter, from data relayed back from weather satellites: 100 foot waves, once only sailor's legends, routinely rise out of 30 and 40 foot seas. The problem: Their models don't predict them. The models used are accurate in predicting when a storm will whip up 30 foot waves, when it will whip up 40 foot waves – but they tend to predict uniform wave heights, not the regular monster that they now know occurs.
The information sheds light on another mystery: Lloyd's of London, a major insurer of shipping companies and ships, reveals that 2 major cargo ships disappear every month carrying their cargo. If the bulk of the ships built over the last 30 years were designed for a maximum wave of 60 feet, what happens when the crew meets a monster? Simulations back up the scenario with which I opened this essay: They drive themselves into the ocean after water breaches the hatches, after it floods the fore storage areas.
Susan Casey weaves these elements together, and more, in her book “The Wave: In Pursuit of the Rogues, Freaks, and Giants of the Ocean.” The majority of the book follows the big wave surfers as they hunt out the biggest waves to ride, and then underscores what they're doing with a search to understand how the waves gain their energy and what science is discovering. After reading the book I am in awe of guys like Laird Hamilton, Brett Lickle, and Dave Kamada, fascinated by the energies of the ocean, and have a reinforced understanding that the key to predicting the future climate of the earth rests on a deeper knowledge of the oceans – knowledge that scientists are just now beginning to gain.
I also won't be sailing or surfing anytime soon!
(Casey, Susan. “The Wave: In Pursuit of the Rogues, Freaks, and Giants of the Ocean.” Doubleday, New York. 2010)
First on its path eastward is a low slung bulk container ship. Built in the 70's to manage 40 foot oceans, the ship has been taking on small amounts of water as the waves of the storm crash over its bow. The metal and ore below deck has started shifting from the constant rolling and pitching. The captain's best course would be to slow to a crawl and wait the storm out, but he's on a timetable: Payday doesn't occur until he docks, and his next paycheck depends upon unloading this load and getting another. So, he presses on.
A sister wave to the one we're tracking, not quite as big, but substantially larger than the 30 foot seas rears up and crashes over the ship's bow, straining hatches. The cargo moves some more. The ship plunges into the trough, and then the captain sees it: The biggest wave of his experience. A 90 foot monster rears ahead, crashes into his ship. Hatches are burst under the weight and the twisting, water floods the fore compartments. The 70000 ton vessel is suddenly much heavier, up front, and driven by its motors and momentum, literally drives itself into the ocean. A little over a minute later the ocean closes over its stern; the ship and its crew gone. No mayday was sounded, no transmission released to aid in finding the vessel.
The wave continues on, undeterred, heading for the California coast. Alerted to the presence of the storm, the big wave surfers are gathering, waiting. What size waves will arrive? Will they get a chance at the XXL prize for surfing a 100 foot wave? Jet skis are readied, surf boards are waxed, the ocean is scanned. As the storm surge starts rolling in, the surfers head out for a day testing themselves against the enormous energies of the ocean. The swells increase, first 40, and then 50 foot waves. Finally, the big ones arrive: 60, 65 feet, and then the one they'll talk about for years: Perhaps 70, maybe 75 feet tall. A ride is made, pictures are taken. The energy dissipates.
The wave scientists gather in Maui. They've gotten solid evidence from instrumented oil rigs in the North Sea, from scientific ships that didn't meet the fate of the freighter, from data relayed back from weather satellites: 100 foot waves, once only sailor's legends, routinely rise out of 30 and 40 foot seas. The problem: Their models don't predict them. The models used are accurate in predicting when a storm will whip up 30 foot waves, when it will whip up 40 foot waves – but they tend to predict uniform wave heights, not the regular monster that they now know occurs.
The information sheds light on another mystery: Lloyd's of London, a major insurer of shipping companies and ships, reveals that 2 major cargo ships disappear every month carrying their cargo. If the bulk of the ships built over the last 30 years were designed for a maximum wave of 60 feet, what happens when the crew meets a monster? Simulations back up the scenario with which I opened this essay: They drive themselves into the ocean after water breaches the hatches, after it floods the fore storage areas.
Susan Casey weaves these elements together, and more, in her book “The Wave: In Pursuit of the Rogues, Freaks, and Giants of the Ocean.” The majority of the book follows the big wave surfers as they hunt out the biggest waves to ride, and then underscores what they're doing with a search to understand how the waves gain their energy and what science is discovering. After reading the book I am in awe of guys like Laird Hamilton, Brett Lickle, and Dave Kamada, fascinated by the energies of the ocean, and have a reinforced understanding that the key to predicting the future climate of the earth rests on a deeper knowledge of the oceans – knowledge that scientists are just now beginning to gain.
I also won't be sailing or surfing anytime soon!
(Casey, Susan. “The Wave: In Pursuit of the Rogues, Freaks, and Giants of the Ocean.” Doubleday, New York. 2010)
Sunday, September 12, 2010
A Better Example
I have one gripe with Harry Potter. Although the series is fascinating, Harry the Hero leaves some to be desired. As the chosen one to defeat Voldemort, he doesn't have to work to achieve success. Sure, at times he believes he needs to, but he never puts forth the effort it would take to really become better or more powerful. His friend Hermione, in contrast, works diligently and long to improve her abilities as a wizard, but there is a sense throughout the story that she, although much, much better than any of her classmates (and one of the best students in decades), will never learn enough or develop enough skill to defeat Voldermort. Only Harry can do that, because only Harry possesses the innate talent necessary. Harry succeeds not because of what he does, but because J.K. Rowling decided that he would, and creates him with an innate quality imbued to him by his parents that will enable him to prevail.
What a self-defeating message! If you are chosen, you can succeed, but if not, no level of effort or work will enable you.
As studies have shown, repeatedly telling a child that he or she is smart or talented sets them up for failure. Why? Because, if their smartness is innate, and nothing which they can influence by practice or effort, then when the inevitable struggle comes, they quit, believing that they've reached the limit of their talent. “I just wasn't smart enough for physics” or “Calculus was okay, but differential equations was beyond me” or maybe “I could memorize anything until confronted with Gray's Anatomy.” Each represents a failure to believe in the power of practice, the power of effort, the power of self.
We need to get away from the hero who achieves success through innateness, and instead demonstrates those qualities that lead to success in the actual world in which we live: Effort, practice, mentoring, honesty, and more practice. Heroes that fill our children's minds with the ideas and ideals that we would pass on as parents, if only we had the gift of storytelling ourselves.
Fortunately, John Flanagan is such an author and parent. He started the “Rangers Apprentice” series for his son Michael, and infuses the story with exactly the sort of messages that I'm advocating. His characters have innate qualities that predispose them to certain activities (Horace has size and strength, Will has grace and control, Jenny an ebullient personality) – but it is the practice and effort each puts in after being selected (at age 15) for their respective training that reveals growing levels of competence. Horace is bullied, and the extra work he does hoping to appease his tormentors naturally leads to higher skill as a future knight (plus, the bullying situation is brought to a neat resolution, as an adult recognizes and steps in to help the students understand that accepting and perpetuating bullying is unequivocally wrong.)
Will is the main protagonist, and undergoes some initial frustrations (and defeats) as he finds that his small size limits him from Battle School, his heart's desire. However, selected by the ranger Halt to be his apprentice, and through Halt's mentoring and lots of practicing (“I know, practice!” grumbles Will at one point), Will's skills improve, and he receives accolades for his earned abilities, not his innate talents. Author Flanagan uses scenes with Will's former wardmates (he is an orphan) to show the satisfaction gained from earned recognition to drive home the point.
Flanagan even manages to weave in traits such as honesty into the story. Will learns that Halt watched him two years previously as he snuck into the kitchen to steal some cakes. Will was caught at that time, and when confronted by the cook, deliberates, and decides to tell the truth. He takes the punishment, and forgets the incident. However, Halt reveals to Will that the moment of honesty two years previously has had an enormous impact:
The point may be lost on many of the young readers, but then again, maybe not. It never hurts to emphasize that honesty's rewards may not be readily apparent, or that a lack of honesty may take 1 or 3 or 5 years before it returns to haunt you.
The rest of the book delights, too. There are exciting battles, mythical creatures, and the growing back story of a power-hungry antagonist returning for another attempt to conquer the kingdom. Will and his friends are young, and we expect as the series continues, that they will play ever larger roles in defending, not because they are the innately Chosen Few, but because they will be the ones who have invested more effort into developing their skills, and so are the ones who will ultimately be able to rise to the challenge.
I'd much rather see a series like Flanagan's in the hands of our young readers, with heroes like Will and Horace imitated and idolized by our sons (and daughters) than stories with empty, predestined “heroes” like Harry. Through John Flanagan's storytelling, Will's story sets a much better example of how success over challenges can be obtained, and hopefully, a better message that developing one's skills is not an innate process, but one very much determined by effort and attention.
(Flanagan, John. "Ranger's Apprentice, Book One: The Ruins of Gorlan." Puffin Books, 2005.)
What a self-defeating message! If you are chosen, you can succeed, but if not, no level of effort or work will enable you.
As studies have shown, repeatedly telling a child that he or she is smart or talented sets them up for failure. Why? Because, if their smartness is innate, and nothing which they can influence by practice or effort, then when the inevitable struggle comes, they quit, believing that they've reached the limit of their talent. “I just wasn't smart enough for physics” or “Calculus was okay, but differential equations was beyond me” or maybe “I could memorize anything until confronted with Gray's Anatomy.” Each represents a failure to believe in the power of practice, the power of effort, the power of self.
We need to get away from the hero who achieves success through innateness, and instead demonstrates those qualities that lead to success in the actual world in which we live: Effort, practice, mentoring, honesty, and more practice. Heroes that fill our children's minds with the ideas and ideals that we would pass on as parents, if only we had the gift of storytelling ourselves.
Fortunately, John Flanagan is such an author and parent. He started the “Rangers Apprentice” series for his son Michael, and infuses the story with exactly the sort of messages that I'm advocating. His characters have innate qualities that predispose them to certain activities (Horace has size and strength, Will has grace and control, Jenny an ebullient personality) – but it is the practice and effort each puts in after being selected (at age 15) for their respective training that reveals growing levels of competence. Horace is bullied, and the extra work he does hoping to appease his tormentors naturally leads to higher skill as a future knight (plus, the bullying situation is brought to a neat resolution, as an adult recognizes and steps in to help the students understand that accepting and perpetuating bullying is unequivocally wrong.)
Will is the main protagonist, and undergoes some initial frustrations (and defeats) as he finds that his small size limits him from Battle School, his heart's desire. However, selected by the ranger Halt to be his apprentice, and through Halt's mentoring and lots of practicing (“I know, practice!” grumbles Will at one point), Will's skills improve, and he receives accolades for his earned abilities, not his innate talents. Author Flanagan uses scenes with Will's former wardmates (he is an orphan) to show the satisfaction gained from earned recognition to drive home the point.
Flanagan even manages to weave in traits such as honesty into the story. Will learns that Halt watched him two years previously as he snuck into the kitchen to steal some cakes. Will was caught at that time, and when confronted by the cook, deliberates, and decides to tell the truth. He takes the punishment, and forgets the incident. However, Halt reveals to Will that the moment of honesty two years previously has had an enormous impact:
“I wondered if I shouldn't have lied,” [Will] admitted. Halt shook his head very slowly. “Oh, no, Will. If you'd lied, you never would have become my apprentice.”
The point may be lost on many of the young readers, but then again, maybe not. It never hurts to emphasize that honesty's rewards may not be readily apparent, or that a lack of honesty may take 1 or 3 or 5 years before it returns to haunt you.
The rest of the book delights, too. There are exciting battles, mythical creatures, and the growing back story of a power-hungry antagonist returning for another attempt to conquer the kingdom. Will and his friends are young, and we expect as the series continues, that they will play ever larger roles in defending, not because they are the innately Chosen Few, but because they will be the ones who have invested more effort into developing their skills, and so are the ones who will ultimately be able to rise to the challenge.
I'd much rather see a series like Flanagan's in the hands of our young readers, with heroes like Will and Horace imitated and idolized by our sons (and daughters) than stories with empty, predestined “heroes” like Harry. Through John Flanagan's storytelling, Will's story sets a much better example of how success over challenges can be obtained, and hopefully, a better message that developing one's skills is not an innate process, but one very much determined by effort and attention.
(Flanagan, John. "Ranger's Apprentice, Book One: The Ruins of Gorlan." Puffin Books, 2005.)
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