Monthly Archives: April 2014

Google reads your emails and allows others to read them as well

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Let me start with this news item from two days ago, Google admits it’s reading your emails:

GOOGLE HAS UPDATED its privacy terms and conditions, eroding a little more of its users’ privacy.

Google is so far unapologetic about its changes, despite having created some controversy. The bulk of the responses worry that Google is now able to read users’ emails and scan them for its various purposes.

In its terms and conditions the firm said that its users agree that information that they submit and share with its systems is all fair game. Its update, the first since last November, makes the changes very clear.

This I have known myself since last October. This is the report I sent to IT within the University:

I am doing a presentation on Tuesday next week and wrote the following note to the coordinator of the seminar:

This is the paper I will speak to which is an update on my previously published paper. I cannot believe how much things have evolved from then. I will also do a set of overheads which will help me keep track of where I am and might even be of use to those who come to listen.

Attached to it was my paper named nowhere other than in the paper itself:

The Use of Multiple Choice Questions with Explanations for Economic Assessment

This was the same title for a paper I had written in 2008 and put up on an academic website along with an abstract. But for the past five years the paper had simply been a paper that could be accessed but no one had. And then, a few hours after sending my note off to the coordinator of the seminar I received the following email:

Hi Professor Kates,

Hope you are doing well.

I would like to introduce myself as [redacted], one of the fastest growing research acceleration firm. We have been working with academicians from 35 of the top 100 universities across the globe including researchers from Harvard, Wharton, Stanford, MIT, NUS, and INSEAD.

We help researchers with Data Harvesting, Analytics, Visualization and Technology Implementation. As an organization, our primary focus is to increase research productivity, reduce research costs, and enable researchers focus on the most important facets of their research. You can read more about us here .

As we read through the abstract of research paper on The Use of Multiple Choice Questions with Explanations for Economic Assessment, we thought it would be a good idea to set up some time for a short call and explore how we can help you accelerate your research. Let me know a good time and we can schedule a call accordingly. I look foward to hearing from you.

Regards

I do not believe in coincidences, specially not one in a million shots like this would have been. This was, moreover, not just someone who had read my email but had been able to open my attachment, read its title and presumably anything else they chose to read within the contents, and then send me a follow-up email, all on the same day.

It’s not just the NSA and it’s not just our foreign enemies. My google account information is not just being shared but my attachments can be opened by total strangers. And the more I think about it, the more it burns me up.

I then had very helpful assistance from someone in our IT department who was as interested as I was in whether Google really was reading my emails and allowing others to read them as well. After quite a number of emails back and forth to each other, this was the final email sent to me.

Hi Steve,

Apologies for the delay in getting back to you.

I’ve had some ongoing discussions with Google Support and here is the summary. They say that a message that travels only within Google servers can’t be accessed in transit, so could only be seen by a third party if the sending or receiving account is compromised by eg. phishing.

However, they also say that their mailflow algorithms mean that an email sent from one Google account to another, even sent from a Google user to themselves, may leave Google’s mail servers and come back in again. In that case, messages travelling on the internet would be subject to the inherent insecurity of email.

I’ve done a quick search to find a good explanation of why/how email is insecure, and I think this one sums it up pretty well:

http://www.digitaltrends.com/mobile/can-email-ever-be-secure/

As I understand it, hacking of email in transit, by eg. packet sniffing etc, is thought to be pretty rare. But it’s possible. However, there’s no way we or Google can establish whether or not this has happened since it would have occurred out in the wild, on servers or connections to which we have no access.

Not only is it not “out in the wild” or “pretty rare”, it even turns out to be integral to the google mail (gmail) system and no doubt common. The fact of the matter is that you do not know who your emails are being diverted to or who is reading them or the attachments. And now that Google has said so in public, it burns me up even more.

How can an atheist know right from wrong?

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The Spectator has a story on The return of God: atheism’s crisis of faith. That the world as we know it cannot possibly be the result of spontaneous creation and Darwinian natural selection is so obvious that I am no longer even embarrassed in the company of atheists who I now think of as intellectually shallow and impossibly obtuse. Atheism cannot be defended other than as a form of wilful ignorance. Even the existence of a morality within human societies, a largely common morality shared across all religious groups – although with large differences in view about whether non-members of the religion are protected by these beliefs – shows a kind of understanding of the difference between right and wrong.

The new atheism has reached the limits of what it can achieve because it is attempting to renew secular humanism in anti-religious terms. This cannot be done. It’s a paltry and dishonest attempt, because it avoids reflecting on the tradition of secular humanism. Such reflection is awkward for it, due to its muddled claim that morality is just natural, and so no special tradition is needed. And yet — felix culpa! The atheists have unwittingly raised the question, which we generally prefer to evade, of what secular humanism is, how it is related to God. By tackling this big issue ineptly, they have at least hauled it onto the table. (Also — a slightly different point — their unattractive polemics have surely helped to push some semi-Christians off the fence, onto the faithful side — seemingly including A.N. Wilson and Diarmaid MacCulloch. And they have nudged some quietly Christian authors into writing about their faith — Francis Spufford stands out.)

Evade it as you like, without God there can be no morality beyond self-interest and what you can get away with.

The new barbarism

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There is an article in the latest Standpoint with the interesting title, Are we learning the right lessons from the Holocaust?. This discussion is based on the author’s reflections on an exhibition dedicated to Anne Frank:

Many believe that the holocaust teaches modern societies the need for racial tolerance, to stand up for the persecuted, and so on. The protagonists of this view vary enormously in their politics and prescriptions. They range from those who see, not unreasonably, a mortal threat to Jewry in the paranoid anti-Semitic worldview of a nuclear-armed Iranian leadership, to those who, less reasonably, accuse Israel of perpetrating genocide against the Palestinians.

He describes the basis of this “Anne Frank” exhibition in this way:

The thrust of the exhibition – as indicated by its inclusion of ‘and you’ – is to demonstrate how Anne Frank’s story transcends the specificity of time and place to embrace the cause of all humanity. It does so by reminding us of the number of genocides that have happened since the holocaust, including Briafra, Cambodia, Sudan (on many occasions), Bosnia, Kosovo, among others. It also laments the prevalence of ethnic and cultural prejudice occurring even in advanced western societies. The exhibition features panels on the experiences of black people and homosexuals.

The interesting part of all this he notices is that amongst this homily to tolerance, the fact that Anne Frank was murdered because she was a Jew has tended to be read out of the story. His conclusion:

Sadly, modern anti-Semitism is not a negation of multi-culturalism, but in some respects a result of it.Perhaps the only occasion when the extreme right and extreme left sit down together in harmony is when they combine to descry the power of international Jewry (sometimes thinly disguised as ‘Zionism’). Here, diversity is not the solution, but part of the problem, because an extreme desire to respect it often means tolerating extreme intolerance. The exhibition could easily have ended with a poster containing portraits of the white extreme right-wing politician Jean Marie le Pen, the black comedian Dieudonne M’Bala M’Bala, an Iranian Mullahs, and assorted other extremists, with the question: “Which one of these is an anti-Semite?” Answer: “All of them.”

Hatred of Jews has returned in some parts of the world to a similar intensity as in pre-World War II Central and Eastern Europe and in other parts has become as bad as it has ever been. What to make of this latest turn of events, Jews ‘ordered to register and list property’ in east Ukraine city of Donetsk where pro-Russian militants have taken over government buildings:

Jews have reportedly been told to ‘register’ with pro-Russian forces in the east Ukrainian city of Donetsk.

They were also told they would need to provide a list of property they own as well as being ordered to pay a fee or face the threat of deportation.

U.S. officials in Washington say leaflets bearing the chilling order have recently appeared in the city amid pro and anti-Russian protests as tensions rise in the area.

It comes after Jews leaving a synagogue in the city of Donetsk were reportedly told they had to ‘register’ with Ukranians trying to make the city part of Russia.

Home on the grange

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This business with Barry O’Farrell is one more example that the only way to keep government corruption down is by electing governments that journalists, and the media generally, don’t like.

I would venture to say that virtually none of the scandals related to the R-G-R governments has entered common consciousness across the country, not in any deep and enduring way. They are reported to the most minimal extent and explained away at every turn. Labor Members of Parliament and party executives have gone to jail for heaven’s sake, and a former leader is heading for a potential rendezvous with the court system for involvement in a SLUSH FUND, but who has been forced to notice?

Both the MYKI card and the Desal plant down here in Victoria ought to have been worth an ocean of printer’s ink and hours of media time but only we old hands even bother to notice and who within the community even remembers or understands how their living standards are being reduced because of such decisions. The NBN is potentially the most expensive but also potentially provides the lowest return on the dollar of any major infrastructure project in the history of this country. Literally billions have been wasted on projects that were never going to return a positive financial outcome but you won’t read about it in The Age or see it on the ABC, and certainly they won’t tell you the effect on our living standards, assuming they even understand this themselves.

Meanwhile a $3000 bottle of grange will undoubtedly remain headline material until the next election, and not just the election in NSW but federally as well.

A tale of two airports

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Government spending absorbs national saving. Unless those resources are used in a value-adding way, the economy becomes worse off rather than better off. Spending of itself is not the road to growth. Only spending that creates more value than is used up during production leaves you ahead. We in the supposedly capitalist economies of the West are systematically ruining our economies because our governments waste our resources at prodigious rates rather than creating value or leaving those resources to be used by those who can. The United States is in the midst of turning itself into the Argentina of the twenty-first century. And as Exhibit A, let me take you to these passages from a recent column by Peter Costello, a great Treasurer because he understood these issues intuitively and with great clarity. Here he is discussing what was unmistakeable on a fight from New York to Hong Kong:

The real thing that was troubling me on that long flight to Hong Kong was why countries like the United States do infrastructure so badly when places like Hong Kong do it so well. When I flew out of New York’s Kennedy Airport, the Airtrain wasn’t working. Passengers had to bus from one Terminal to another. People were squeezed in excess of safety limits, more like battery hens than human beings. The security staff were surly and difficult. The planes were late and the terminal was rundown.

Flying into Hong Kong was like returning to the developed world. The terminal is connected to the city centre by a fast rain. Massive purpose-built suspension bridges and tunnels link it by road. Hong Kong reclaimed the land to build the airport from the sea — just as it has for other major developments.

Both these airports are owned by government authorities. Before someone tells you that we need higher taxes to pay for more infrastructure just remember that Hong Kong, with its airport and its first-class Mass Transportation System, has one of the world’s lowest tax rates, with a top income tax rate of 17 per cent and no GST.

I suspect that Hong Kong airport may be like the Moscow subway, a much more ornate facility than would be justified by the return alone and heavily subsidised as a showpiece to the world. Whether other less visible infrastructure spending in Hong Kong is equally substantial I would have my doubts. But the airport in New York is falling to bits because the capital required for mere maintenance is unavailable because so much of it is already being wasted by governments. There is an immense amount of capital in the US to get through, but Obama and the Democrats, ably assisted by the Republicans, are wasting their inheritance. Ten more years of this and it will be a poor country, as much of the country already is. There are huge lessons for us if we have the wit to understand them. I only say again that modern textbook economic theory will explain almost none of this.

Picked up at Andrew Bolt.

The invisible woman made to appear

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I have seldom experienced the tension of a movie in the way I did when watching The Invisible Woman . It is based on a 1991 book about a love affair between Charles Dickens and a young 18 year old girl, Ellen Ternan. Nothing of their correspondence has survived so the book was a recreation of how it might have been based on the few facts that are actually known. The Age reviewer gives it a very reluctant three stars but more accurate is the 84% given to it by audiences at Rotten Tomatoes. Even the critics were at 76%. And if you know nothing about the real Charles Dickens, or Wilkie Collins for that matter, watching the film is an education in both personality and the morality of the time. Highly recommended.

Economists then and now

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Not often a blog post begins with a statement that I find profoundly true and important, but there was this the other day:

Economic Illiteracy and Global Economic Worries

An economist used to be a person who was able to explain why the economy works well without interference by the state, and, indeed, better than if such meddling were to be effected. Nowadays, an economist is a person who affirms that the economy can only work properly thanks to interventions by the state.

The economist – versed in knowledge about the invisible hand – has metamorphosed into a staunch proponent of economic policy, the politician’s advisor ambitious to steer the visible hand.

Which then continued as follows which was even more pleasing:

Steve Kates writes in his superb Free Market Economics. An Introduction to the General Reader:

The approach taken to teaching economics has become one in which the market mechanism is … taught only so that there is a basis for explaining why markets … [do] not operate properly. The market mechanism is seldom explained as what it is: the sole means to achieve prosperity and the basis for a continuing improvement in living standards for an entire population [p.284]. … [F]ew are any longer taught that economies have major properties for self-adjustment and are able to recuperate on their own without major government involvement. [p.287]

One of the great dangers of a state monopoly in education is that it provides inordinate leverage for uniform patterns of thought.

The massive distortions in the leading modern economies do seem to be intimately related to the prevalence of the politically both subaltern and ambitious(-for-power-and-status) “economics” of market failure and dirigiste conceit.

Cultural economics and the history of economic thought

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I have submitted a paper to a conference on cultural economics and have been asked to explain how a paper on the history of economic thought belongs in a conference on cultural economics. Since the premise of the letter to me was, in the words of the conference organiser, “the more the merrier”, the query was entirely friendly. This is my reply:

I am all for the more the merrier and I must tell you that attending the conference does seem a very copasetic way to spend a few days in Montreal at the start of summer. So I will begin by saying that I have approval to attend your conference since I am already attending the HES conference in the previous week and my confreres will be there already. Nevertheless, I would very much like to help chisel out a bit more territory for cultural economics which is what I am hoping to do with my paper.

The notion that lies behind it came to me in this review of my Defending the History of Economic Thought written by my friend AW whom I am sure you know very well. There he wrote (using the initials IH for Intellectual History):

“More fruitfully, Kates reminds us that HET can be ‘a conversation with economists of the past on contemporary questions.’ Now we are talking IH, the opportunity cost of which needs to be justified. In my opinion, the value of IH to the apprentice economist depends on what kind of economist we are training. There is a large demand, in both the private and public sectors, for skilled technicians in essentially subordinate positions. IH is of no more professional importance to them than Shakespeare or Mozart. But if we are training high-status economists – the Krugmans and Stiglitzes of this world, who play a large part in public affairs and in elite universities – then we must encourage a wide and humane culture: literary, philosophical, historical, artistic and scientific. IH certainly belongs in the mix here. The great Paul Samuelson was a better economist (of this kind) for his ‘conversations’ – often quite disputatious – with Quesnay, Hume, Adam Smith, Thünen and Marx. At his Nobel Prize banquet he listed among the conditions for academic success in economics, fourthly: ‘you must read the works of the great masters.’”

In my book, I did not entirely neglect this side of the issue but I cannot say that I explored it thoroughly either. And while I completely agree with AW in relation to its necessity amongst the elite of the profession, I am not sure that I would wish to stop there since when someone is an undergraduate, or even a graduate student, it is impossible to know who is going to be at the elite of the profession 20-30 years hence. So that is why my abstract is written as it is:

“There is a growing recognition that economists need to study the history of their subject not just because it helps to understand how economies work, but also because it is part of the transmission of cultural traditions. It is not just that knowing the works of the great economists of the past, such as Adam Smith or John Stuart Mill, is valuable for their economic insights, but may be even more valuable for the traditions they represent. This paper looks at the importance of the history of economic thought in terms of the cultural transmission such studies represent. From that premise, it goes on to suggest how the history of economics should be taught so that both the economics of earlier times is understood as well as providing deeper insights into the cultures of both their own times and, by way of contrast, our own.”

Nor should you think that this is a late conversion. As part of the course I teach which is based on the book I wrote, there is a major section on the history of economic thought whose importance I explain not just in relation to helping them understand the theory we teach but also this, which is quoted from my Free Market Economics (Kates 2011: 181):

“It is also important, as a matter of general cultural awareness, to know the great economists of the past who have had an influence on the way in which we think about economic matters. For good or ill, these people have influenced our lives more than any other people in the social sciences because it is based on their theories that our economic structures are organised. This is true irrespective of the kind of economic system one happens to live within.”

I am always struck by how little any of my students know about the historical and intellectual traditions of their own culture. All of the following make at least walk-on appearances although most are treated at length: Adam Smith, J.-B. Say, T.R. Malthus, David Ricardo, James Mill, John Stuart Mill, Karl Marx, Charles Darwin, Stanley Jevons, Karl Menger, Leon Walras, Alfred Marshall, F.A. Hayek, Ludwig von Mises and J.M. Keynes. On more minor members of the economics tradition, I throw in Robert Torrens, Walter Bagehot, Henry Clay, Fred Taylor, Gottfried Haberler, Paul Samuelson, Gary Becker and William Baumol. It will not, of course, surprise you that even in my class of graduate students, the only one that any of them have ever heard of is Marx. To encourage someone to speak up, I always say (as a joke but they can’t be 100% sure) that I will give an automatic “A” to anyone who can tell me a single historical fact about John Stuart Mill. I have had only one taker in the last five years. Their cultural knowledge is pitiful. My course is a tiny experiment in trying to do better. And I might note that as I begin this three hour class on the history of economics, I always say to them that for some this will be the longest three hours of their lives but for others it will be amongst the best experiences they will have in a classroom during their entire university career. And at the break, around half don’t come back but the half that remain feel they have learned something worthwhile which gives them some sense of what they have missed out on had they actually had a genuinely liberal education.

Anyway, I hope you find this interesting as a subject for a paper. I have already written up some of what I intend to give but will leave it in your hands whether space can be found for me to present at the conference. I do, in any case, look forward to being there in June.

With kindest best wishes

Government ‘investment’ does not equal growth

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Judy Sloan’s column from The Australian today goes under the heading, Public spending won’t fuel the growth engine. I mention this on the same day as I have received word that my paper on Mill’s Fourth Proposition on Capital has been accepted for publication.

First Mill. In 1848, John Stuart Mill in his Principles of Political Economy included his four propositions on capital which not only never challenged in his lifetime, the fourth, that demand for commodities is not demand for labour, was described by Leslie Stephen in 1876 as the “best test of a sound economist”. It was the pons asinorum of classical economics, the divide that separated those who could understand economics from those who could not. But what is remarkable is that since that date in 1876, not only has there not been another economist to have embraced this statement in full, but it has been challenged by some of the greatest names in the history of economics – Marshall, Pigou, Hayek are just some amongst a quite extraordinary array of economists from every side of the economics divide who have tried to explain what Mill meant. To my astonishment, I am literally the first person since 1876 who has argued in print that what Mill wrote is literally true. It is the best test of a sound economist.

And what the proposition meant, as the words plainly state, is that buying non-value-adding goods and services – and here the issue is public spending in particular – will not lead to increased employment because it does not lead to economic growth. A Keynesian stimulus is therefore doomed to fail, evidence for which has been accumulating at an astronomical rate since 2009.

Judy in her column has brought forward evidence from a paper published in the UK whose subtitle is, “Government ‘investment’ does not equal growth” and written by an economist by name of Brian Sturgess. Here is Judy’s conclusion:

If the government is intent on spending even greater proportions of GDP on infrastructure — which was already ramped up under the Labor government — it must ensure that only projects for which the benefits far exceed the costs are approved. Spending money on infrastructure is no silver bullet to achieving economic growth and better living standards. Let’s just hope the audit commission has taken on board some of Sturgess’s conclusions.

Yes, let us hope our government has taken on these conclusions which once went under the collective name Say’s Law.