CAN WE DREAM BIG ENOUGH– How unemployment & job loss result from dreaming too small.

Time to leave old train of thought

It’s time to leave old trains of thought and explore vast new possibilities

Accepted wisdom among economists and Silicon Valley types tells us that robotics and automation are about to vacuum up jobs in record numbers. While innovation used to create more jobs than it displaced, that will no longer be the case, experts say. From circuit board manufacture to software programming, the machines will be making themselves. From fast-food delivery to dental work, people will be standing by as machines serve our needs. Why will we need human workers?

This train of thought is following old tracks. We need to abandon it and investigate new territory in our quadcopter, with two questions in mind: 1) Is there work that remains undone? 2) Can we dream larger quests that will let us deploy the amazing powers now under our control?

Let’s start by studying the landscape of work. We tend to think of work and jobs as equivalent, but in fact, jobs only cover the work someone with resources is willing to pay for. In fact, enormous amounts of desirable work lies abandoned: infrastructure repair, impoverished child nourishment and nurturing, re-training, research in alternative energy and climate change-mitigation, systems for internalizing externalities, transforming trash into treasures, reducing pollution and waste, just to name a few. Suppose we were to deploy the Internet of Things and Big Data analytics to internalize corporate social responsibility into the cost of goods? This project alone would change the entire world’s economy and turn un-done work into paying jobs instead of pretending that profits are more important than people

Still, we cannot dispute that innovation is accelerating rapidly. In the past, computers pulled the plug on most typist pools, but word processing, graphic design and database management quickly redirected enterprising workers willing to retrain. Vast opportunities opened up for programmers. Now, however, the pace of change has ramped exponentially. Moving from typewriters to keyboards with spellcheck is a transition. Converting from driving a taxi to managing a fleet of self-driving delivery bots is a leap that requires vision, chutzpah and capital investment. Growing from a medical practice manager to a developer of hospitality facilities that provide automated medical care involves a change in self-reference: are we competing with robots for jobs, or are we applying their unmatchable speed and precision to do something amazing, to better our world and our lives?

The problem with accelerating productivity from technology is not that it competes with people, but that people dream too small.

The problem with accelerating productivity from technology is not that it competes with people, but that people dream too small. They follow old tracks instead of using the power of new technologies to launch vast enterprises, to clean up cities and oceans, to feed the hungry, heal the sick, to care for every child as we would our own, to expand into Space and to fulfill the potential of humankind.

What we need are leaders who dream big, who recognize the vast power that is building under human control and who apply it to the vast problems that face us. It is time to abandon old trains of thought. It is time to explore and envision new possibilities.

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Are Trump Fans Missing a Chance to Join the A-Team?

Any nearby primate can comprehend the meaning of Donald Trump’s railing and threat displays, no language skills required. Gorillas deploy similar behavior when an intruder appears, or when a lower-status member threatens to unseat them: I rule here. Outsiders, keep out. In our connected meritocracy of global commerce, the abrupt rise of a technological elite and the gradual fall of straight, white male privilege is resulting in an unprecedented shift of power. Is it any wonder those on the losing end applaud Trump’s thumps? Let us be honest and admit that none of us likes losing status. The question, however, is what to do about it. Are immigrants really the problem?

Most Americans know that if California were a country, it would be one of the top ten economies. Fewer realize that more than a quarter of California residents are immigrants, according to the California Public Policy Institute. In addition, Silicon Valley draws more domestic migrants from across the country than any other urban area. But California is not the only thriving region with a cross-cultural mix. Singapore, the world’s top economy per square mile, is the global leader in drawing top talent to its cosmopolitan city state.

Why does economic success associate with an inflow of people from other places? Information and complexity theory teaches us that the more we interact with different views, different networks of knowledge, the better equipped we are for success. This is especially true in a rapidly changing world. The more data and different perspectives on the context of that data, the more likely we will make better decisions. An immigrant or migrant who enters a new culture has the advantage of understanding multiple contexts and connecting networks in both worlds.

In fact, statistics clearly show that immigrants and their offspring disproportionately contribute to American technological and business advantage. According to Business Insider, 57% of immigrants with patents immigrated to the US, rather than other countries. Some are so famous they need no first names: Einstein, Tesla, Carnegie and Astor. Not convinced? How about Andrew Grove of Intel, Sergey Brin of Google or Pierre Omidyar of EBay? If we add offspring of immigrants, the numbers include Steve Jobs. In fact, according to Forbes, 40% of Fortune 500 companies are run by immigrants or their offspring.

But does that mean we should admit any immigrants or just a few outliers? The international economic development group OECD has studied the impact of admitting outsiders to a nation’s team. It says that working-age immigrants add more than they cost societies. In fact, an uneducated immigrant is more likely to be a net contributor than an uneducated native. Long-term, the countries with lower segregation, who incorporate immigrants into their economy, show more economic advantage from immigration. The Economist cites multiple studies that show placing the same worker from a low-productivity nation into one with better infrastructure and more efficient systems increases output dramatically.

Immigration without inclusion, on the other hand, can do great harm. For instance, H1B visas give corporations the right to temporarily hire international talent at a lower price and send them back to their country of origin after a year. The corporation then closes its US division and puts the newly trained, less costly employee in charge of a new outsourced team abroad. IEEE, the largest professional society of engineers and computer scientists, recommends handing a green card to every STEM graduate with an advanced degree from US universities. Will this lower wages for engineers and computer scientists? Or will it entice companies who’ve outsourced to come flooding back to the US for the talent who would rather live here?

But how does migration fit in? Basically, it works the same way as immigration. Top universities, billionaire companies and federal behemoths in Silicon Valley, DC, NYC, Boston and elsewhere cause brain drain from across the US. As a result, outlying communities find themselves short of young adults. As older professionals retire, entire communities find themselves short of doctors, dentists and accountants, not to mention nurses, home maintenance and senior caregivers.

Our nation celebrates its founding by successful immigrant offspring, but rarely speaks of the many explorers who failed. For instance, one notorious Spanish team in Florida included sailors, soldiers and a few upper-class adventurers. They also brought along a priest to convert the locals and an illustrator to document the mission. The latter recorded how native residents attempted to teach the newcomers how to farm and where to fish. However, the explorers were accustomed to having others provide for their needs. Instead of learning to farm, they used their superior technology to steal natives’ food and enslave some of them. Not surprisingly, the locals rebelled and fled. Most of the remaining would-be conquistadors died of starvation. It was later teams comprised of men and women, sailors, farmers, blacksmiths and other tradesmen who founded the Colonies. These survivors traded with and learned from local residents.

Many outlying US areas are losing the mix of people that create thriving communities. Yet, like the failed conquistadors, they yearn to continue their former way of life. It’s easier to cheer an alpha male beating his chest than admit they need to change. After all, it takes humility to concede that people we used to disdain, however wrongly, excel in a New World that requires new behaviors. But humble pie might be an easier dish if someone showed them the real way out.

So far, no one has explained that they need higher bandwidth, not higher walls, to get back on their feet. They need better collaboration, not better barriers, to succeed in this New World. They need to attract talented migrants back, as well as immigrants anew. They need to realize that welcome mats, quality schools and high-quality services are the means of doing so, not the target for cuts.

Now is the time to act. Couples and families are fleeing high housing costs in Silicon Valley, NYC, Boston and other urban centers. Catching the outflow of talent is the true opportunity for lost communities to rejoin the economic mainstream. Welcome change, welcome newcomers, use their networks and learn from their viewpoints. Join the A-Team.

 

Let’s Outsource George Will’s Work

income dispairty economic employment wages

George Will Supports Donald Trump’s Right to Pay Lower Than Living Wages

Columnist George F. Will may disagree with Donald Trump on immigration, but he happily supports Trump’s right to pay less than a living wage to his 20,000 employees. And both press-savvy pundits realize that making outrageous statements is a great way to boost book and ad revenues. Mr. Trump’s proposals on immigration are little more eccentric than Mr. Will’s explanation of how disparity deluges the poor with prosperity. Here is a quote from a March 25, 2015 Washington Post editorial entitled “How Income Inequality Benefits Everyone.”

Every day the Chinese go to work, Americans get a raise: Chinese workers, many earning each day about what Americans spend on a Starbucks latte, produce apparel, appliances and other stuff cheaply, thereby enlarging Americans’ disposable income. Americans similarly get a raise when they shop at the stores that made Sam Walton a billionaire.

Of course, Mr. Will ignores the externalities that underwrite latte wages for the Chinese. The environmental degradation cost that chokes Beijingers’ lungs and propounds climate change accumulates faster than US national debt. Will ignores the costs of rule of law that make the US a more preferable place than China for Mr. Walton and his cohorts to reside and found businesses. The roads and bridges crumbling from the weight of semis owned by companies paying less than their proportional share of taxes lie outside his scope. The Walton employees subsidized by food stamps, the flimsy Chinese nails and screws holding together new construction and the closing of Mom-n-Pop retail across America are not presented in balance against lower prices brought about by the Big Box retail phenomenon.

But then, why would Will want to discuss imbalance in a balanced manner when he is paid so handsomely to do otherwise? According to the Washington Speakers Bureau, Mr. Will gains $25,000 – $40,000 per event to explain why extreme disparity is beneficial and why companies should not be required to pay workers a minimum wage. And he is worth every penny to those who hire him. After all, he justifies their buying 2 years of a workers’ labor for less than Mr. Will takes home for an evening for statements like:

Monopoly profits are social blessings when they “signal to the ambitious the wealth they can earn by entering previously unknown markets.” So “when the wealth gap widens, the lifestyle gap shrinks ”

Driven by money himself, Mr. Will believes profit is the motive driving everyone. Like many, he cannot comprehend the aspiration for innovation and knowledge that drives inventors. And he misunderstands the genius for meeting needs that drives billionaire marketers. Neither Jobs not Zuckerberg were inventors. However, each keenly appreciated some aspect of human aspiration to be “cool” or socially accepted; each applied technology to fulfill that need. But neither, initially, was motivated by the prospect of enormous wealth.

For those driven to gain ever more wealth, regardless the social costs, Mr. Will’s speaking engagements pay off mightily. According to the US Bureau of Labor Statistics, the number of workers making minimum wage or less in 2014 was 3 million. Even if his work only dampens wages by $100 per worker per year, this is enough to keep Mr. Will’s validation of exorbitant disparity in high demand for a century to come.

But I think it is time that Mr. Will had some competition. I propose we hold a contest. Let’s invite those 3 million people to come up with reasons that their 2,999,999 fellow workers should continue to labor at current wage levels. I’m sure a number of them would be willing to do so for a small fraction of Mr. Will’s fees.

Don’t tax the rich; help them spend!

Wealthy want to tax themselvesPresident Obama’s proposal to raise taxes on those earning over $250,000 is not new. In 2012, nearly two in three Americans agreed with the idea of taxing those with high income, if the tax were aimed at deficit reduction. The idea was popular with almost every segment of the population: men and women, college-educated and non-, black, white and Hispanic, Catholic, Protestant and Evangelical, old and young, all supported such a tax hike. In fact, even 54% of those with incomes over $250,000 supported raising taxes on themselves! The one and only group in which a slight majority (53%) opposed the idea were… you guessed it: Republicans.

Most conservatives oppose higher taxes on principle because taxes may impair the economy. Sales taxes, particularly taxes on price-sensitive goods, cut demand because consumers have to pay more for the same product or service. Income taxes also reduce discretionary spending, especially among the poor. When demand drops, money flow stalls. However, taxes on the wealthy would probably not impact spending much. After all, a billionaire can only drive one Buggati at a time; most of his money lies unspent. So, as many wealthy and conservatives understand, the usual whining about higher taxes is not applicable in this case.

Money flow, like water flow, is the key to a strong economy: when a contractor buys lumber, his payment fills the pockets of local foresters, retailers, grocers, workers and many more. Adding money into an economy that solely recycles it into investment and day trading without ever touching the pockets of consumers does little for the economy. It is like water that rains into a reservoir and evaporates back into the air without ever flowing through any spigots.

Yet, however out-of-step with the public, Republicans rule Congress and a tax hike on earnings above a quarter-million ceiling will never reach the floor. Republicans see a “wealth tax” as resentful jealousy, punishing high-earners for their success. And think about it. How would you like it if the public vilified your social group, levied a tax on you and stripped away some of your assets without so much as a thank you?

Maybe there is a better way. What if, instead of treating the wealthy as villains, we give those who pay extra for the public good a little recognition for their accomplishment and contribution? In fact, we could offer them the opportunity to spend their way out of paying the tax. We could address our infrastructure deficit with tax credits and a brass donor plate to anyone who donated money toward rebuilding a bridge on the Department of Transportation’s list of necessary infrastructure repairs. (But no, the money cannot be spent with a construction company affiliated with the donor’s family without going out for bid, sorry.) Since businesses of the wealthy rely on taxpayer-funded infrastructure, it is appropriate that the wealthy help pay back their use and pay forward for the next generation. Donors might choose a bridge in their favorite neighborhood and point proudly to the plaque that will for generations recognize their contribution to the community. At the same time, construction workers will earn good wages and consumer spending will rise from wages that cannot be outsourced overseas.

Thus, infrastructure repair is an ideal way to send money into the wallets of construction workers and suppliers who will quickly send it on its way to others. Instead of recycling dollars from corporate ledgers to investors’ pockets and back again, we will send it into the flow of consumer and retail commerce. Yet let us be gracious and show our appreciation for the public spiritedness of contributors, even those who must be prodded. For a society that rewards rather than vilifies is a happier place to live.

The invisible hand or a million mouths?

The invisible hand or a million mouths?

Over the last two decades, physicists and information researchers in a new cross-disciplinary field “complexity science” have been unraveling what really underlies the phenomenon Adam Smith dubbed “the invisible hand.” They have come to realize that the invisible hand that guides the economy is more like millions of mouths, exchanging information. It is the exchange of information that lets prices, seemingly magically, align. It is the information passing from mouth to ear, or from computer to computer, that allows individual agents to react to events and actions around them. It is feedback, an action and the utility attributed to a perceived response to that action, that steers us.

Every being, ant or infant, requires feedback to learn. Many of us were taught that ants are born as workers, soldiers or caregivers, but scientists now know that ants change roles according to feedback from touching other ants. Similarly, an infant reaches for his parent’s face, her own toes, or a toy to gain feedback that builds competence. The more ants that touch antennae and the more times the infant touches her environment, the better the ant or infant will understand the world, at least to the point of sensory overload.

Complexity scientists discovered decades ago that informational patterns in biological systems explain phenomena in many other fields. The general public and even economists have not yet caught up with the research for several reasons. Books and TED talks are only absorbed by a few. And the simulations and game theory relied upon by complexity scientists are not the precise mathematical tools of classical economics older practitioners of the “dismal science” normally employ.

The old truism of classical capitalism said that selfish decisions made by individual entities seeking their own best interests were what led the economy to find its own best direction, but reality and information theory diverges. Examples of cooperative entities outcompeting non-cooperative abound. After all, why do we live in families?

Under information theory, it is not the drive of selfishness, but the exchange of information that increases utility. An ant inside the nest touches the antennae of other ants and senses whether they have been touching valuable food. If so, they head out to get some. Because the ant touches the antenna of the other ant, it now knows that if it follows that ant’s pheromone trail, it will likely find food. Yes, the ant will go collect food to feed itself and others in its family, but it is the exchange of information that has provided value. The more ants it interacts with, the better statistics it tends to collect on available opportunities. Without the exchange of information, the ant might stay inside the nest and continue working on repairing damage from yesterday’s flood rather than going out and taking advantage of the ripe cherries that dropped off a tree as a result of rains. The information transferred from other ants antennae is what tells the ant which action will bring most utility. The issue is not whether the ant’s interest in gathering food is selfish or communal. The utility depends upon the amount of information exchange. The larger the colony, the more ants interacted with, the better statistics an ant has on what it ought to do next.

This goes for ants, infants or economics. Competition is essential to provoke improvement, but competitiveness is not the opposite of cooperation. Competitiveness is the goal of cooperation. Hence, economic policy-making should not seek to promote selfishness and greed, which interferes with cooperation. It should seek to enhance information exchange, qualities like price transparency and truth in product representation. It should encourage rapid information exchange. Packaging that misleads, false claims that veil the reality of an exchange and regulations that slow the flow of information would all be anti-capitalist. Transparency and accessibility, rather than selfishness, would be virtues of the true capitalist.

What happens when selfishness topples from its pedestal? It means we can seek to be heroes again. It means we can find our value in sharing what we know. It means that we can recognize selfishness as the immature state that progresses in adults to a caring community.

Is the Invisible Hand Really Millions of Mouths?

Washington Trust Busters Raise Militias

Screen Shot 2014-07-11 at 11.37.18 AMWashington is crawling with trust busters, who are behind an estimated 1000 militias now active around the country. But these trust-busters are not Teddy Roosevelt’s kind. They are not busting banking conglomerates or energy monopolies. Instead, the trust they are busting is the good kind, the kind that lets commerce, politics and society operate more smoothly. The trust they are busting is trust in democratic government, trust in equal protection under the law and trust in the integrity of those with authority. And the rise of anti-government militias — at the extreme end — and libertarianism, in general, is a result.

Trust underlies a prosperous society. Ask any game theorist; getting to the best outcome is much easier if enforcement or social stigma makes most people follow the rules. Trust reduces stress levels in the amygdala; it makes people more likely to take some risks, to be creative. At an economic level, trust enables global commerce to function. We type our credit card numbers into Verisign sites, confident we will not be charged next day for a laptop shipped to Moscow.

The result of today’s Washington trust-busting is that citizens, particularly young adults, lack trust. Without trust in our system of government, they turn to libertarianism, rejecting centralized government and authority. But what we pampered Americans do not understand is the full consequences of demolishing government, consequences that citizens of Somalia, Eritrea and South Sudan know all too well. We have lived our entire lives in a nation with rule of law. We have had three, or maybe five, square meals a day every one of those days.

Even esteemed Libertarian economists seem to misunderstand the consequences. Chairman of the Economics Department at Harvard, Gregory Mankiw, for instance, describes libertarianism and other approaches to income redistribution for tens of thousands of freshmen in his popular text Principles of Economics. As economists are prone to do, Mankiw relies on metaphor to persuade, rather than data or fact. As described in an earlier blog, such economic metaphors are often holey, and that does not mean they qualify as religious.

Mankiw starts with Utilitarianism, which recognizes that a thousand dollars provides less utility to a billionaire than one dollar to a starving person. However, Utilitarianism also recognizes that sharing money equally would create a disincentive for anyone to work, so soon everyone would be hungry. What would a Utilitarian do about inequality? Mankiw presents a common utilitarian scenario for students. Suppose Peter and Paul each have a well in the desert. Peter’s is full; Paul’s is not. They have only a leaky bucket (taxes) to carry water from Peter to Paul. Utilitarian conclusions follow from the metaphor: we should carry Paul enough water to survive, but certainly not try to equalize access to water.

Next, Mankiw turns to Liberalism: John Rawls’ metaphor of a “veil of ignorance” and Liberal goals of justice. Since many wealthy people will want the wealthy to have more, while the poor vice versa, Liberals believe we cannot expect people to decide justly unless they perform the following thought experiment. Suppose that, before being born, behind a veil of ignorance of their future, students could allocate wealth in certain percentages across the spectrum. They would try to set up a range of outcomes that they could live with, regardless where birth placed them.

Mankiw presents the first two “isms” neutrally enough, but not so with Libertarianism. Libertarianism dictates that no person or group should interfere with the distribution of resources; as long as the process for competition is fair, the outcome is fair. Therefore, government should not intercede to change any distribution of wealth, even if some folks perish. After all, it would be their own fault.

Rather than encouraging students to investigate the premises, Mankiv advocates for Libertarianism, citing Robert Nozick’s metaphor of classroom grading:

Suppose you were asked to judge the fairness of the grades in the economics course you are now taking. Would you imagine yourself behind a veil of ignorance and choose a grade distribution without knowing the talents and efforts of each student? Or would you ensure that the process of assigning grades to students is fair without regard for whether the resulting distribution is equal or unequal? For the case of grades at least, the libertarian emphasis on process over outcomes is compelling.

For college freshmen, this is a powerful metaphor. Grades are of high concern. Mankiw is a thought leader from one of the world’s top economics departments, influencing thousands of professors and tens of thousands of students to continue economics’ dismal practice of hopping aboard metaphors without testing them.

In the case of the grading metaphor, the most basic analysis would reveal that Nozick’s example does not match Libertarian philosophy at all. In the Wild West of Libertarianism, at the end of the semester, the worst student would be shot, middle students would be assigned to work in cubicles and the top student would be chauffeured to his new private jet to spend the weekend in the Azores. A university classroom is an institution far removed from any free and unfettered world without centralized authority. School authorities decided that grades were an appropriate distribution of value to a classroom of students for their work. No one wants to get an F, but it is rarely fatal. Everyone wants to get an A+, but you can go to grad school somewhere with a B. Bottom line: Nozick’s grading metaphor actually supports central authorities who assure a fair range of outcomes behind a veil of ignorance.

Yet for the rest of their careers, tens of thousands of former economics students may expect only reasonable outcomes from Libertarian policies. Having grown up in a nation ruled by law, with free public schools, these freshmen are not aware that outcomes other than F to A are possible. Behind their veil of ignorance, they do not realize that being too poor to pay for elementary school or being shot for attending any school are potential outcomes. And the trust-busters of Washington have set them up to believe such anti-government rhetoric. Indeed, a Square Deal for the average citizen seems nearly impossible through the ballot box 114 years after Teddy Roosevelt ran on that platform.

Iraq Lessons Learned, for Voters

Scan the World Affairs Journal and you can find “Lessons Learned” from Iraq War insiders including Secretary of Defense, Paul Wolfowitz and former Director of the National Security Administration, Michael Hayden. Lessons range from nation-building to intelligence policy. But the American people do not get to make policy. They only get to review it and most of us would rather eat chicken wings and watch the World Cup. So, the first lesson for those who care is how to drag friends and neighbors out of the Barcalounger®. That one is difficult, so we’ll save it for last. Four easier lessons follow:

1. Avoid North Korea Syndrome: Despite globalization, we Americans still focus on our navels. We still invest more in General Electric than the Canadian National Railroad, despite shareholder’s yield of 65% on the latter. We prefer Jimmy Buffett to Bjorn Ulvaeus, even though we loved the latter’s Mama Mia. And we almost never read what other countries’ journalists write about us. In fact, Americans might as well live in North Korea for all the external viewpoints we gain on our own situation.
A hallmark of human development is something psychologists call “Theory of Mind” (ToM) It means that young children come to realize that their own view of reality does not always match what others see. Crows and higher primates share with us the ability to perceive situations from others’ points of view, no doubt because it has proven advantageous to their survival. Americans as a people, however, have not yet developed ToM. In fact, those of us who read the many English-language foreign newspapers may be disparaged as “un-American” because we seek other viewpoints. Anyone who read foreign news would have met the Iraqi WMD claim with questioning eyebrows.

2. Don’t compare war with a lottery ticket. In his World Affairs “Lessons Learned” article, Hayden comments that “we may have had stronger evidence on Iraqi WMD than we had on bin Laden’s location” before Navy SEAL Team 6 were given the green light. That is a bit like saying the probability of winning the lottery is the same as the probability of surviving in a tube over Niagara Falls. The down side is exponentially different. Not that the lives of Navy SEAL personnel are inconsequential, by any means, but the 4,486 American soldiers and estimated 110,000 other dead and quarter million injured far outweigh them. And few of the civilians chose to place their lives and those of their children in harm’s way, as did the brave SEALS.
So when someone tells us that WMD’s are nearly certainly in possession of a country that might attack us in the near future, we should remember that we are not comparing these possibilities with the cost of a lottery ticket. How many lives, how much damage and how many dollars fund the alternative? We need to compare the potential down sides of both options as well as the credibility of their justifications.

3. Demand Plan B. Denizens of the Beltway Bubble can come to believe anything: defaulting on the national debt is a good thing, and the American people will never rebel as long as Stephen Colbert doesn’t tell them to. Beltwayers might even believe that the Department of Defense can install a new government in a nation steeped in internecine violence in a fifth of the time it takes the Department of Health and Human Services to roll out a national healthcare website. Regardless what Washington promises, even if the plan sounds reasonable, the American people need to demand Plan B.
Asking for Plan B is standard practice in business and product design. Projects have milestones and if they are not met, plans have to change. By asking for Plan B, we force the Beltway Bubbleheads to actually have to think of one and justify it to us. It could just reveal flaws in judgment that keep us from having to use it.

4. Ask the Willie Sutton question. We Americans need to understand our government’s operation as well as robber Willie Sutton understood his fixation with banks. “Where is the money?” is a question that will often reveal the motivation behind political drumbeats. It was so before Queen Cleopatra and will remain so long after Obama’s naiveté let bankers run wild, even if the coin of the realm becomes Amazon points.
Asking where the money is would have revealed why we started almost every war. Tea was a valuable commodity back in 1773 when the “Sons of Liberty” dumped 342 cases of it, worth over a million of today’s dollars, into Boston Harbor. Trade policy was at the heart of the conflict between Britain and the colonies. Arms manufacturers have never discourage increased use of their products, though until the recent past, they had the sense to incite wars overseas. When a former oil man becomes president and invades a chief oil-producing nation, asking “Where is the money?” cuts through the ideological fog concocted to sell schemes to the American public. Some may be interested in the spread of democracy and freedom, but the roots of ideologies lie in cash. Where is the money going? When the answer is into the pocket of the Vice President’s company, Haliburton, the reasons behind pursuit of war are clear.

Nations’ learning evinces in laws and procedures. Whether our nation has learned any lessons from Iraq remains to be seen. But voters need to learn four lessons: read foreign newspapers, understand the downsides, demand Plan B and follow the money trail. If four seems like too much to ask, start your friends and neighbors reading Al Jazeera and the London Financial Times. It will open their eyes to some of the downsides, plans B and C, plus the money trail. And they can do it on their smart phones, from the Barcalounger.

Carbon costs of $1/2 trillion by 2040 without Obama regs

President Obama may be flailing on some diplomatic fronts, but his carbon dioxide emission regulations under the Clean Air Act could keep his international legacy afloat. Environmental Protection Agency (EPA) regulations could do more than just set climate policy moving. It could bring home jobs that have been based overseas, scoring wins for both the trade deficit and economic disparity.

The Obama administration has been constructing a case and searching for a means to reduce carbon in our atmosphere for some time. A year ago, the Interagency Working Group on Social Cost of Carbon released a report for regulatory impact analysis, with input from eleven departments, all the way from Energy, Transportation, Agriculture and Commerce to Management and Budget, Treasury and the EPA. The group’s average estimated social cost of carbon emissions, assuming a 3.0% discount rate, would climb from $33 per metric ton in 2010 to $62 in 2040. Overall, this pegs carbon emission costs at nearly a quarter trillion dollars in 2015, and over half a trillion by 2040, without intervention. Carbon emissions along with other greenhouse gases cause melting of the ice caps, rising oceans and acidification that harms the vital base of the food chain that sustains all life.

According to the EPA, 32% of US carbon emissions derive from electricity generation. Coal-fueled plants arethe worst offenders, emitting up to twice as much carbon per unit of electricity as natural gas, so coal is the natural first target. Coal is particularly popular for reduction given US high reserves of natural gas.

But the real drama for the US economy will come if regulations specify that imports from countries that do not meet US EPA regulations will fall under tariff. By not monetizing the social cost of carbon emissions and other pollution, the world’s economies drove jobs to those countries willing to exchange short-term gain for long-term environmental wounds. The infection spread to us all, not just from oceans rising and acidifying, but from jobs lost to competitors operating under different environmental rules. Import tariffs on dirty sources could have significant impact.

But recognizing social costs could reach even further. It could set a precedent to be held up by other agencies and levels of government. How many jobs have been lost to a lack of recognition of the life-time cost of 176,000 high-school drop-outs per year? What are the social costs of banks usurious interest rates, wealth-redistributing bonus programs and anti-entrepreneurial merchant fees to local and state coffers? What is the social cost of swath development that leaves dead zones for cities to maintain or raze? Short-term profiteers challenge social cost estimations. Yet can these numbers be any less accurate than Department of Defense estimations back in 2003 of how much it would cost to invade Iraq? The fact is, social costs are real and large, even though they may not be precise.

And unlike Iraq’s supposed WMD’s, carbon emissions are true sources of mass destruction. Now is the time for the US to show true global. Done right, tough EPA regulations could place Mr. Obama in the history books as the man who turned the tides.

Is Piketty’s problem a pyramid or a funnel?

Thomas Piketty has supplied a simple formula to describe surging disparity in America: return on capital > wage growth. Left and right-wing economists are applauding or contesting his numbers. But the general public thinks in metaphors, not formulae. And it was the metaphor of trickle-down that convinced politicians to cut taxes on the wealthy.

Metaphor is powerful. It can fix political direction firmly as tarmac. Recent cognitive research reveals that metaphor underlies much of our thought and action. The Anterior Cingulate Cortex of the human brain often relies on metaphor when it compares expectation and reality. If key features of one phenomenon match key features of another, the brain links the two in a strong bond that shortcuts further consideration. The brain pulls its expectations from the metaphor and our perception of reality filters through the metaphor instead of from the phenomenon itself.

It is a shortcut fraught with danger. Some attributes may be misleading similar. These Sirens call us forward, yet we end up on the rocks because the pattern does not fully match, or, in this case, because we have mixed two perfectly good metaphors in a way that distorts their meaning.

Trickle-down is based on a well-established metaphor, money as water. This fine metaphor seeds terms from liquidity to money flow to froth, churn, bubbles and trickle-down. The mathematics of turbulence verifies that the behavior of our economy in multitudinous ways matches the droplets of H2O that form the basis for life. Stagnant water becomes fetid and useless, just as an economy caught in a liquidity trap stagnates. As water must flow through the hydrological cycle to quench our thirst, power turbines, cool steel, and grow plants, so money (to fulfill the metaphor) must flow from factors of land, capital, labor and entrepreneurship to firms, government and households. Water performs as an economic metaphor and trickle-down makes sense in its context.

But the most treacherous metaphors are the ones hidden from view. Implicit in the trickle-down, water-as-money metaphor lies another, the metaphor of the social pyramid. In fact, without the idea of a social pyramid with the wealthy on top and the rest below, the trickle-down economic metaphor makes no sense. Unless the wealthy are at the top of the pyramid, why would we have to give them money to trickle down?

The class pyramid is a metaphor as old and unexceptional as its Egyptian source. At the top of the Egyptian pyramid was the pharaoh, whose patron Sun God, Amon-Re, created the world. Just below the pharaoh on the pyramid were government officials, followed by priests, scribes, artisans and, the largest class, at the base of the pyramid, the commoners. The idea of an aristocracy, transferred from the Old World to the New, was anathema to the founders of our nation. Still, it would be difficult to contest the fact that such a pyramid exists in a nation where the top 1% now own over $20 trillion of the nation’s $54 trillion in assets and the bottom 40% are in the red, owing money, mostly to those same wealthy.

But here is where our metaphors mix. Not only is the concept of the social pyramid repugnant to our founding principles, but it mixes the trickle-down metaphor. If money is like water, surely the wealthy apex lies deepest, drowning in it, while the impoverished base sits high and dry above. Doesn’t our economy really more resemble an upside down pyramid, a funnel? The poor spend money the instant they get it. The middle class take a little longer to spend, but money that reaches the wealthy is more likely to be invested than to generate demand. After all, their glasses and garages are full. A better metaphor, then, for the way wealth behaves, would be a funnel, flowing from the widest group of poor atop, collecting at the bottom, with the rich.

A good metaphor suggests possible solutions. An economic funnel requires filling to keep money moving, and funnels are filled from the wide end sloping to the narrow end. This is not a liberal or a conservative notion; it does not dictate policy choices about how to fill the funnel, such as more government jobs vs. lower interest rates. It just describes a phenomenon. The funnel metaphor says that any benefit, whether given to the poor, middle class or wealthy will flow downward toward more affluent people. Water trickles down in a funnel, as money does in real life, to the narrow end, to the few. How we get the money to cycle back up, whether through conservative public-private partnership or progressive infrastructure projects, is a policy decision. The trickle-down funnel metaphor brings new conclusions about the results of policy. And it describes what will happen if no policy action is taken.