Saturday, April 13, 2013

13 Spills. 30 Days. Nearly 1.2 Million Toxic Gallons.

Big oil: a very perfect example of negligence and stupidity.

In gushes, drips, and spills. With leaks, derailments, and ruptures. Oil companies from North and South America have littered the world with more than 1,185,000 gallons of crude oil, tar sands, and other fossil fuel waste in the last month. Tcktcktck has a new infographic that tells the toxic tale...

All spills in order of occurrence:
March 11 – 21: Gwagwalada Town, Nigera
  • A week-long leak of Kilometer 407.5 NNPC (Nigeria National Petroleum Corp) pipeline. No official # of barrels spilled released, however the spill saturated a hectare (10,000 sq metres) of marshy ground near a major water source.
Tuesday, March 19: Fort Simpson, Northwest Territories Canada
  • Enbridge Norman Wells Pipeline leaks 6,290 barrels of crude oil
Monday, March 25: Fort MacKay, Alberta Canada
  • Suncor Tar Sands tailings pond leaks 2,200 barrels of toxic waste fluid into the Athabasca River
Wednesday, March 27: Parker Prairie, Minnesota USA
  • CP Rail train derails and spills 952 barrels of Tar Sands crude oil
Friday, March 29: Mayflower, Arkansas
  • Exxon Mobil’s Pegasus Pipeline suffers a 22 foot-long rupture, spilling at least 12,000 barrels of diluted Tar Sands bitumen
Sunday, March 31: A power plant in Lansing, Michigan USA
  • 16 barrels of an oil-based hydraulic fluid spills into the Grand River
Tuesday, April 2: Nembe, Nigeria
  • After suffering a reported theft of 60,000 barrels of oil per day from its Nembe Creek Trunkline pipeline, Shell Nigeria shuts off the pipe for 9 days to repair damage.
Wednesday, April 3: 350KM southeast of Newfoundland, Canada
  • A drilling platform leaks 0.25 barrels of crude oil
Wednesday, April 4: Chalmette, Louisiana USA
  • 0.24 barrels (100 lbs) of hydrogen sulfide and 0.04 barrels (10lbs of benzene) leak at an Exxon Refinery
Monday, April 8: Esmeraldas, Ecuador
  • The OPEC-managed OCP pipeline leaks 5,500 barrels of heavy crude oil, contaminating the Winchele estuary
Tuesday, April 9: 29KM NE of Nuiqsut, Alaska USA
  • Human error during maintenance spills 157 barrels of crude oil at a Repsol E&P USA Inc pipeline pump station

Thursday, April 11, 2013

Profits Just Hit Another All-Time High, Wages Just Hit Another All-Time Low

Henry Blodget | Apr. 11, 2013 | Business Insider

In case you need more confirmation that the US economy is out of balance, here are three charts for you.

1) Corporate profit margins just hit another all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't. What they're suffering from is a myopic obsession with short-term profits at the expense of long-term value creation).

2) Wages as a percent of the economy just hit another all-time low. Why are corporate profits so high? One reason is that companies are paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" represent spending power for consumers. And consumer spending is "revenue" for other companies. So the profit obsession is actually starving the rest of the economy of revenue growth.

3) Fewer Americans are working than at any time in the past three decades. The other reason corporations are so profitable is that they don't employ as many Americans as they used to. As a result, the employment-to-population ratio has collapsed. We're back at 1980s levels now.

In short, our current obsessed-with-profits philosophy is creating a country of a few million overlords and 300+ million serfs.

That's not what has made America a great country. It's also not what most people think America is supposed to be about.

So we might want to rethink that.

Specifically, we might want to have the goal of our corporations be to create long-term value for all of their constituencies (customers, employees, and shareholders), not just short-term profit for their shareholders.

Meanwhile, if you want to know more about what's wrong with the economy, and why our current obsession with short-term-profit is hurting all of us, flip through these charts:

AMERICA TODAY: 3 Million Overlords, 300 Million Serfs

How America Breeds Mental Illness from Birth Until Death

The over-diagnosis and over-prescription that dominates the mental health care scene in the US contributes to a system that is better at producing disorders than fixing them.  
April 10, 2013 | Al Jazeera | By Belén Fernández

In a recent article on the BBC News website, Professor Peter Kinderman - head of the Institute of Psychology, Health and Society at the University of Liverpool - warns that the forthcoming edition of the American Psychiatric Association's Diagnostic and Statistical Manual  "will lower many diagnostic thresholds and increase the number of people in the general population seen as having a mental illness".

According to Kinderman, the manual - scheduled for publication in May 2013 - constitutes a dangerous effort to pathologise emotions and other symptoms of human existence and will exacerbate the rampant over-prescribing of drugs that already occurs "despite significant side-effects and poor evidence of their effectiveness".

The practice of attributing emotional distress and other phenomena to alleged cerebral/biological abnormalities rather than to social and psychological causes, writes Kinderman, is particularly problematic: "Standard psychiatric diagnoses… do not correspond to meaningful clusters of symptoms in the real world" and can counter-productively result in "further stigma, discrimination and social exclusion" for their recipients.

Regarding the impending updates to the psychiatric manual, Kinderman notes that "[t]he new diagnosis of 'disruptive mood dysregulation disorder' will turn childhood temper tantrums into symptoms of a mental illness", while relaxed criteria for "generalised anxiety disorder" will turn "the worries of everyday life into targets for medical treatment". Normal grief will undergo conversion into "major depressive disorder". Additional cutting-edge maladies will include "internet addiction" and "sex addiction".

No guidelines are apparently provided as to how to go about diagnosing societies that obsessively pathologise routine aspects of individual life.

Societal diagnostics

Incidentally, the tendency toward over-diagnosis and over-prescription that dominates the mental health care scene in the US contributes to a system that is better at producing disorders than rectifying them.

For example, it is not difficult to see how anxiety that otherwise would not be present can be generated by inculcating persons with the fear that something is always wrong with them and that it requires purchase of a substance, service, or gadget to fix - a process aided by ubiquitous advertising for antidepressants.
The profitable endurance of the depression industry in particular is presumably ensured by the very nature of contemporary society - not least by the isolation of the individual who has been conditioned to believe that self-made success and material gains trump inter-human bonds in importance.

To be sure, neoliberal policies dependent on the obstruction of communal solidarity facilitate a mass alienation from human reality and deprive individuals of psychological support networks enjoyed in certain other cultures.

It could be argued that alienation in the US begins at birth, an event too often characterised by scheduled Caesarean sections, the immediate removal of newborns from the vicinity of their mothers in defiance of natural bonding needs, and hospital distribution of infant formula encouraging mothers to simplify their lives by administering expensive and potentially toxic material  to their offspring rather than the free nutrition that is generally located in their own breasts.

And it is pretty much downhill from there.

The "socialisation" process of children increasingly involves fundamentally anti-socialising activities such as video games and other technological distractions, the all-pervasiveness of which renders the proliferation of attention deficit disorder somewhat less than surprising. Of course, this does not stop ADD from being treated by and large as an individual mental defect rather than a societally induced condition.

Energetic children are reformed into automatons via the fanatical prescription of pharmaceuticals with side effects ranging from depression to sudden death, while a cultural insistence on individual triumph and competition over collaboration likely contributes to such manifestations of emotional insecurity as the institutionalised practice of bullying at US schools.

Luckily for drug companies and other entities that profit from mental disturbance, the New York Times reported in February with regard to victims of bullying and bullies themselves that "researchers have found that [an] elevated risk of psychiatric trouble extends into adulthood, sometimes even a decade after the intimidation has ended".

Disconnecting from the human condition

My own personal experience with mental health issues in the US includes a prolonged panic attack I suffered in high school in the late 90s. Convinced for a period of six months that I was on the verge of spontaneous death, I would hyperventilate, unceasingly check my pulse, and hide in bathroom stalls.

After later living abroad for many years in locations less estranged from reality, I concluded that the attacks had been hypochondriac fallout of extreme anxiety over the possibility of stigmatisation by society for exhibiting any indication of physical or psychological weakness - such as anxiety itself.

Of course, the structure and habits of other societies and cultures can also have adverse effects on the human nervous system; however, the position of the US as global superpower means that its acute unhinging from humanity contains worldwide ramifications.

For example, the mass production of isolated persons lacking empathy naturally facilitates the frequent military devastation of populations abroad - a hobby that has been deemed more lucrative than, say, providing health care to US children .

The agricultural imperialism of US-based corporations like Monsanto the devil, patron saint of the genetic modification of food, has also proved an effective means of global population control, facilitating the suicide of hundreds of thousands of farmers in India.

Obviously, a nutritional reliance on modified and artificial ingredients and other materials that do not technically qualify as food does not bode well for biological - and therefore also psychological - processes. The quest for profit at the expense of the functioning of the body is further evidence of the US disconnect from the human condition, which is reinforced by schizophrenic electronic multi-tasking and the general reduction of interpersonal relations to a barrage of mobile phone beeps and Facebook notifications.

In my interview last year with renowned Indian essayist Pankaj Mishra, he commented on the contemporary deterioration of the human essence:
"Our capacity for uncritical love has been expended recklessly in recent years on the free market… This was the false god we were instructed to worship during the era of globalisation and most of us duly obliged, even the least resourceful and economically underprivileged peoples, dazzled by our new goods and gadgets, the routinely updated models of mobile phones… [Now] we can see more clearly how a tiny minority has enriched itself, leaving many others feeling cheated, and exposed to deprivation and suffering."

Professor Kinderman notes in his BBC News article on mental illness that therapy constitutes a "humane and effective alternative… to traditional psychiatric diagnoses".

Any truly effective therapeutic approach, however, would require a thorough examination of the inhumane context in which minds function - and, presumably, a comprehensive systemic rewiring.

22-Foot Gash in Pegasus Pipeline Puts Gaping Hole in Safety Claims

Here's your answer: Kill the fucking Keystone XL Pipeline. Big Oil can't be trusted to keep it from harming the areas through which they feed that pipeline.

Thursday, April 11, 2013 by Common Dreams
Heavy rains move into Mayflower, Arkansas as cleanup of ExxonMobil pipeline proves ever more difficult
- Jon Queally, staff writer

Dustin McDaniel, the Arkansas Attorney General announced on Wednesday evening that a '22 foot long and 2 inch wide' gash along the Pegasus pipeline allowed crude oil to flood the town of Mayflower with thousands of gallons of tar sands oil on March 29.

"The pipeline rupture is substantially larger than many of us initially thought." Arkansas Attorney General Dustin McDaniel speaks in Little Rock, Ark., Wednesday, April 10, 2013, about last month's oil pipeline leak in Mayflower, Ark. McDaniel says an ExxonMobil pipeline that burst last month, leaking oil into a neighborhood at Mayflower, has a hole in it that is 22 feet long and 2 inches wide.

 "The pipeline rupture is substantially larger than many of us initially thought," McDaniel said at the press conference.

Though he said the state does not yet have an official estimate of how much oil is estimated to have leaked through the hole, the Associated Press, citing filings from ExxonMobil and local officials, reports that "crews have recovered about 28,200 barrels of oily water and about 2,000 cubic yards of oiled soil and debris."

ExxonMobil also delivered more than 12,500 pages of documents to the AG's office, following a subpoena request by the state, though their contents remained unclear.

"More documents will be received and requested from Exxon in coming days," McDaniel said. "But now everyone's priority continues to be the cleanup efforts in Mayflower."

McDaniels said his immediate concern was about heavy thunderstorms heading for the area that could disperse the oil into run-offs and make ongoing cleanup harder.

Later on Wednesday, as the storm hit Mayflower, activist-journalists from TarSandsBlockade, documented the shifting weather and the impact on the spill area. As Treehugger reports:
A manmade disaster was made even worse by nature Wednesday night, as a severe thunderstorm hit Mayflower, Arkansas spreading the Exxon Mobil oil spill to the yards of homes along the cove and the main body of Lake Conway. For nearly two weeks, Exxon has maintained that oil has not reached Lake Conway, despite clear evidence both from aerial video and on-the-ground guerrilla reporting that showed oil had spread throughout a cove and wetlands, which are connected through ground water and drainage culverts to the main body of the lake. Images captured Wednesday night should put any doubt to rest that the main body of Lake Conway is now contaminated with oil.

Citizen journalists, Jak and Lauren, reporting for Tar Sands Blockade, braved the severe weather Wednesday, which included hail, lighting and chance of tornados, to report on what was happening to the site of the oil spill.

Watch their footage here.

It remains unclear what could have caused such a rupture, but experts have repeatedly warned that diluted bitumen—which is run at higher temperatures and contains more corrosive solvents and chemicals—puts added pressure on traditional pipelines.

As DeSmogBlog's Steve Horn reports:
In February, the Tar Sands Blockade group revealed photographs that appear to indicate that TransCanada - which is now building the southern half of the Keystone XL pipeline in Texas - may be laying poorly-welded pipe there.

Could it be a faulty or corroded weld that led to the gash in the 65-year-old Pegasus pipeline? Did it corrode due to its age or as a result of error on Exxon's part?

The 12,587 pages of documents will hopefully have some answers.

Edible City

Wednesday, April 10, 2013

The Ironic Justice of "This Modern World

Bi-Partisanship We Don’t Need

Wednesday, April 10, 2013 by
The President Offers to Cut Social Security and Republicans Agree
by Robert Reich

John Boehner, Speaker of the House, revealed why it’s politically naive for the President to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. “If the President believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a statement released Friday.

House Majority Leader Eric Cantor
agreed. He said on CNBC he didn’t understand “why we just don’t see the White House come forward and do the things that we agree on” such as cutting Social Security, without additional tax increases.

The President throws things on the table before the Republicans have even sat down for dinner.

Get it? The Republican leadership is already salivating over the President’s proposed Social Security cut. They’ve been wanting to cut Social Security for years.
But they won’t agree to close tax loopholes for the rich.

They’re already characterizing the President’s plan as a way to “save” Social Security — even though the cuts would undermine it — and they’re embracing it as an act of “bi-partisanship.”

“I’m encouraged by any steps that President Obama is taking to save and preserve Social Security,”cooed Texas Republican firebrand Ted Cruz. “I think it should be a bipartisan priority to strengthen Social Security and Medicare to preserve the benefits for existing seniors.”

Oh, please. Social Security hasn’t contributed to the budget deficit. And it’s solvent for the next two decades. (If we want to insure its solvency beyond that, the best fix is to lift the cap on income subject to Social Security taxes – now $113,700.)

And the day Ted Cruz agrees to raise taxes on the wealthy or even close a tax loophole will be when Texas freezes over.

The President is scheduled to dine with a dozen Senate Republicans Wednesday night. Among those attending will be John Boozman of Arkansas, who has already praised Obama for “starting to throw things on the table,” like the Social Security cuts.

That’s exactly the problem. The President throws things on the table before the Republicans have even sat down for dinner.

The President’s predilection for negotiating with himself is not new. But his willingness to do it with Social Security, the government’s most popular program — which Democrats have protected from Republican assaults for almost eighty years — doesn’t bode well.

Julian Assange presents massive Project K leak on Wikileaks

‘Who controls the past controls the future’
  April 08, 2013

Download video (99.6 MB)    

WikiLeaks founder Julian Assange formally unveiled on Monday the latest release from the whistleblower site, Project K, calling it “the single most significant geopolitical publication that has ever existed.”

Speaking via Skype from the Ecuadorian Embassy in London, Assange introduced Project K on Monday morning to a group of journalists at the National Press Club in Washington, DC. Nearly three years earlier to the day, Assange spoke at the Press Club in person to debut “Collateral Murder,” a video of US soldiers firing at Iraqi civilians that has since become one of WikiLeaks’ most well-recognized contributions to journalism.

 Since that release, WikiLeaks and the organization’s associates have become the target of a number of government investigations, with Assange himself having been confined to the embassy in London for nearly one year while awaiting safe passage to Ecuador where he was granted political asylum. Ongoing attempts to prosecute the journalists for sharing state secrets aside, however, Assange and company have now unloaded the organization’s biggest leak yet.

Project K, says Assange, contains roughly 1.7 million files composed of US Department of State diplomatic communications. And although the material has been classified, declassified and, in some instances, re-classified, the public’s inability to access and peruse the unredacted copies has made them nearly inaccessible. “One form of secrecy is the complexity and the accessibility of documents,” WikiLeaks spokesperson Kristinn Hrafnsson said during Monday’s event. “You could say that the government cannot be trusted with these documents.” "He who controls the past controls the future, and he who controls the present controls the past,” Assange chimed in using his webcam in London to quote from George Orwell’s novel 1984.

“The US administration cannot be trusted with its control of its past,” he said. “That is the result of this information being hidden by secrecy, but more often being hidden in the borderline between secrecy and complexity.” The 1.7 million cables released on Monday span the period of time between 1973 and 1976 when Henry Kissinger sat at the head the State Department under Presidents Richard Nixon and Gerald Ford.  

WikiLeaks has now combined their latest files with the previously-released State Department diplomatic cables that they published starting in 2010 after US Army Private first class Bradley Manning gained access to military intelligence servers and sent over 250,000 documents to the site, along with “Collateral Murder” and a trove of other documents. By combining the earlier State Dept. memos with the new collection of Kissinger cables, Assange says WikiLeaks has created a database that gives journalists unprecedented access to roughly 2 million documents that paint a unique picture of the United States’ relationships with foreign nations during a number of presidential administrations. That infrastructure, dubbed the WikiLeaks Public Library of US Diplomacy (PlusD), “is what Google should be like,” Assange said. “This is a search system that investigative journalists can use effectively,” he said.

With the publishing of the State Dept. cables credited to Pfc. Manning, WikiLeaks previously brought to the public periphery a tome of material that largely focuses on US foreign policy at the dawn of the twenty-first century. The Kissinger cables though, said Assange, reveals a multitude about the US and other nations during a time when western society as we know it today really began to take form.

“The period of the 1970s in diplomacy is referred to as the ‘Big Bang.’ This is when the modern international order came to be,” Assange said at the press conference. “There is really only two periods: post-World War Two and the 1970s.” During the ‘70s, vast decolonization caused the number of countries on the planet to go from only 104 to roughly 160. “To understand all of that complexity, the US State Dept. put together a system to harvest intelligence from its diplomats across the world,” Assange said of Project K. Today, he added, the White House has “more direct control of the periphery.” During the 70s, however, “the relationship between ambassadors and their host government was more essential.”

Project K helps shine a light on exactly how those interactions played out during a time when the Vietnam conflict, Watergate and the Cold War warranted the US to embark in a number of conversations with persons of all affiliations around the world. “The United States makes a priority gaining influence and contacts and informants within opposition movements. Partly in order to corrupt them, partly in order to have bets on both the lead horse and the second in case there is a transition of power,” he said.

But while American interest in the Soviet Union was largely a focal point of the US during the 1970s as one might expect, Assange said that the “titanic struggle” between the two bodies represents only a small sampling of the State Department’s interests during that time. The Kissinger Cables, at roughly one billion words, show that the US “is essentially checking the activity and inactivity of other empires,” said Assange. France, Spain, the UK, Australia and Sweden are all discussed in length in the cables, and even politicians still relevant today make appearances.

Margaret Thatcher died last night and of course there is a great many cables about her,” said Assange, who put the figure of memos relating to the recently passed former prime minister at around 400. Kissinger, who is alive and active today, is referenced in over 200,000 individual documents included in the trove. Former Swedish Prime Minister Carl Bildt — a critic of the whistleblower site and today the nation’s foreign minister — also makes a number of appearances in Project K as well.
Speaking to RT at the conference, Hrafnsson said that neither Kissinger nor the current Department of State has yet to respond to the leak — nor does he expect them to. On his part, however, Assange told RT that any formal federal investigation into this project will likely not dwell on any damages spawned by the leak, but instead will focus on how his organization managed to take 1.7 million documents and reverse engineer them in order to publish them in the public domain.

“Essentially,” said Assange, it’s “what Aaron Swartz was doing.” “If the Department of Justice was to go after us for this release like they are attempting to prosecute us for previous releases involving US embassies documents, the approach would probably be along the lines of the approach that was taken was Swartz,” said Assange, “which is the sort of manner of acquisition as opposed to the classification for the matter.” Hrafnsson said that WikiLeaks has been working on Project K and the PlusD database for roughly one year.

America’s Death Wish

A Militarized Society

Again we hear (NYT ed., 4/6) about “the damage wrought by the gun lobby,” as though a cabal of manufacturers and other interested parties was responsible for the diseased mentality centered on gun violence in America. What a convenient scapegoat, when in reality structural-cultural behavioral malfunction taking ideological and political form, increasingly seen in daily life, speaks instead to the institutional core of society. America exemplifies a social system of puristic capitalism.
Whatever occurs in that matrix, from top to bottom, from targeted assassination to streetcorner hold-ups, from the activities of POTUS to that of the gang member, must be related back to the originative framework, one characterized by militarism, the commission of war crimes, abrogation of the rule of law, policy-designs promotive of unemployment, deregulation, trickle-down wealth distribution accentuating and making worse class differentials of income and power, and inequality as the first principle of life. In sum, human worth has no intrinsic value or meaning. This profound alienation is not caused by, but is the precedent condition for, gun violence.

How view Newtown, when drones kill more children in a year via collateral damage than a half-century of senseless mayhem? A deranged killer, or America’s top leadership huddled together on Terror Tuesdays, flipping baseball cards to determine who next is vaporized, just steps off the Situation Room? To exonerate a dying culture and the death it creates and sucks down with it, is simplistic when before our eyes we see human indifference at every turn, and cover-ups to hide our mechanisms of repression and exploitation, a condition of self-pacification which makes life tolerable and the blood-letting normal. Violence, of course, has been central to the American experience, over 400 years in the making. This has been not only individual violence, always present when the political culture sanctions what some can do to others with impunity, but also structural-economic violence, as in the enforcement of slavery and the immiserization of the working class, in both cases reflecting stages of capitalist development in which the organization of the labor force receives prime consideration.

But with the disciplining of labor inevitably comes the legitimation of force per se, part of the inventory of the peacetime army and also franchised out to Pinkertons, strikebreakers, and goon squads of every description. Suppression was America’s middle name when it came to maintaining the status quo, more recently giving way to subtler means of gaining class advantage (as in stimulating false consciousness), but with the same unmistakable authorization of force should there be the need.

Does this take us to the roots of gun violence? Probably not. Antecedently, we must look to how the human personality has been shaped by the specific features of the institutional system–and oddly enough, the starting place for both is the same: the political economy which thrives on the insensate individual, rejects moral standards not generated by or conducive to the property right (the materialization of ethics), and finds war the ideal state for advancing hegemonic interests (as well as disposing of surplus production). This may seem a stretch in accounting for garden-variety crime, but consider, how would crime, gun violence in particular, be sustained in the absence of invidious distinctions? In juridical principles and practices devoted to the equalitarian administration of justice? In gross domestic product directed to the well-being of society, not simply its militarization?

The odds are stacked against gun control, let alone gun disappearance. Cosmetic surgery may follow the recent flurry of interest. Even then, the pathology of force, intuitively sensing nothing has been done, will create a still deeper penetration of the American psyche. Here follows my New York Times Comment (Apr. 6) on the gun lobby, an editorial–to its credit—that encounters the problem at least half-way:
The gun lobby would be powerless if the society were genuinely democratic. As it is, America reveals its inmost nature (gun violence providing irrefutable proof): a culture of unrestrained individualism, underpinned by a doctrine of unlimited wealth accumulation, by any means possible. Humans become transvalued as objects, better yet, obstacles, to be run over when they stand in the way of one’s goals, themselves narrowly materialistic. How expect otherwise, given policies at the top favoring assassination, massive defense spending, confrontation with China, paramilitary operations on a global basis?

Desensitization to death, contempt for rule of law, the doctrine of permanent war, all testify to the enshrinement of violence. Demonizing advocates for “gun rights” merely passes the buck. WE are the problem, not the crazies in our midst, and until we take stock of American militarism, poisoning the wellsprings of society’s basic values, there shall be countless more Newtowns in our future, marching stride for stride with interventions, joint exercises, weapons’ development, an atmosphere of shock and awe.

If Obama wishes to make an impact on gun control, let him first forswear the use of armed drones for targeted assassination, campaigns for regime change, and, at home, the slow deaths of our people facing unemployment, foreclosure, and other social diseases brought on directly through deregulation of the economy and the wider militarization of American life.

Monday, April 8, 2013

Minding the reality gap

Minding the Gap
Matt Asher - Probability and statistics blog

Officially, unemployment in the US is declining. It’s fallen from a high of 9.1% a couple years ago, to 7.8% in recent months. This would be good news, if the official unemployment rate measured unemployment, in the everyday sense of the word. It doesn’t. The technical definition of “U3″ unemployment, the most commonly reported figure, excludes people who’ve given up looking for work, those who’ve retired early due to market conditions, and workers so part time they clock in just one hour per week.

Most critically, unemployment excludes the 14 million American on disability benefits, a number which has quadrupled over the last 30 years. If you include just this one segment of the population in the official numbers, the unemployment rate would double. On Saturday, This American Life devoted their entire hour to an exploration of this statistic. Russ Robert’s, who’s podcast I’ve recommend in the past, discussed the same topic last year. Despite the magnitude of the program and the scale of the change, these are the only outlets I know of to report on the disability number, and on the implications it has for how we interpret the decline in U3 unemployment.

Targeting the number, not the reality

Statistics, in the sense of numerical estimates, are measures which attempt to condense the complex world of millions of people into a single data point. Honest statistics come with margins of error (the most honest indicate, at least qualitatively, a margin of error for their margin of error). But even the best statistical measures are merely symptoms of some underlying reality; they reflect some aspect of the reality as accurately as possible. The danger with repeated presentations of any statistic (as in the quarterly, monthly, and even hourly reporting of GDP, unemployment, and Dow Jones averages), is that we start to focus on this number by itself, regardless of the reality it was created to represent. It’s as if the patient has a high fever and all anyone talks about is what the thermometer says. Eventually the focus becomes, “How do we get the thermometer reading down?” All manner of effort goes into reducing the reading, irrespective of the short, and certainly long-term, health of the patient. When politicians speak about targeting unemployment figures, this is what they mean, quite literally. Their goal is to bring down the rate that gets reported by the Bureau of Labor Statistics, the number discussed on television and in every mainstream source of media.

Politicians focus on high profile metrics, and not the underlying realities, because the bigger and more complicated the system, the easier it is to tweak the method of measurement or its numeric output, relative to the difficulty of fixing the system itself. Instead of creating conditions which allow for growth in employment (which would likely require a reduction in politicians’ legislative and financial powers), the US has quietly moved a huge segment of its population off welfare, which counts against unemployment, and into disability and prisons — the incarcerated also don’t count in U3, whether they are slaving away behind bars or not.

How metrics go bad

Over time, all social metrics diverge from the reality they were created to reflect. Sometimes this is the result of a natural drift in the underlying conditions; the metric no longer captures the same information it had in the past, or no longer represents the broad segment of society it once did. For example, the number of physical letters delivered by the postal service no longer tracks the level of communication between citizens.

Statistics and the reality they were designed to represent are also forced apart through deliberate manipulation. Official unemployment figures are just one example of an aggressively targeted/manipulated metric. Another widely abused figure is the official inflation rate, or core Consumer Price Index. This measure excludes food and energy prices, for the stated reason that they are highly volatile. Of course, these commodities represent a significant fraction of nearly everyone’s budget, and their prices can be a leading indicator of inflation. The CPI also uses a complex formula to calculate “hedonics,” which mark down reported prices based on how much better the new version of a product is compared to the old one (do a search for “let them eat iPads”).

I don’t see it as a coincidence that unemployment and inflation figures are among the most widely reported and the most actively manipulated. In fact, I take the following to be an empirical trend so strong I’m willing to call it a law: the greater the visibility of a metric, the more money and careers riding on it, the higher the likelihood it will be “targeted.” In this light, the great scandal related to manipulation of LIBOR, a number which serves as pivot point for trillions of dollars in contracts, is that the figure was assumed to be accurate to begin with.

Often the very credibility of the metric, built up over time by its integrity and ability to reflect an essential feature of the underlying reality, is cashed in by those who manipulate it. Such was the case with the credit ratings agencies: after a long run of prudent assessments, they relaxed their standards for evaluating mortgage bundles, cashing in on the windfall profits generated by the housing bubble.

Why we don’t see the gaps

It might seem like the disconnect between a statistic and reality would cause a dissonance that, once large enough to be clearly visible, would lead to reformulation of the statistic, bringing it back in line with the underlying fundamentals. Clearly there are natural pressures in that direction. For example, people laid off at the beginning of a recession are unlikely to believe that the recovery has begun until they themselves go back to work. Their skepticism of the unemployment figure erodes its credibility. Unfortunately, two powerful forces work against the re-alignment of metric and reality: the first related to momentum and our blindness to small changes, the second having to do with the effects of reflexivity and willful ignorance.

In terms of inertia, humans have a built-in tendency to believe that what has been will continue to be. More sharply, the longer a trend has continued, the longer we presume it will continue — if it hasn’t happened yet, how could it happen now? Laplace’s rule of succession is our best tool for estimating probabilities under the assumption of a constant generating process, one that spits out a stream of conditionally independent (exchangeable) data points. But the rule of succession fails utterly, at times spectacularly, when the underlying conditions change. And underlying conditions always change!

These changes, when they come slowly, pass under our radar. Humans are great at noticing large differences from one day to the next, but poor at detecting slow changes over long periods of time. Ever walked by an old store with an awning or sign that’s filthy and falling apart? You wonder how the store owner could fail to notice the problem, but there was never any one moment when it passed from shiny and new to old and decrepit. If you think you’d never be as blind as that shop keeper, look down at your keyboard right now. As with our environment, if the gap between statistic and reality changes slowly, over time, we may not see the changes. Meanwhile, historical use of the statistic lends weight to it’s credibility, reducing the chance that we’d notice or question the change — it has to be right, it’s what we’ve always used!

The perceived stability of slowly changing systems encourages participants to depend on or exploit it. This, in turn, can create long term instabilities as minor fluctuations trigger extreme reactions on the part of participants. Throughout the late 20th century and the first years of the 21st, a large number of investors participated in the “Carry Trade,” a scheme which depended on the long term stability of the Yen, and of the differential between borrowing rates in Japan and interest rates abroad. When conditions changed in 2008, investors “unwound” these trades at full speed, spiking volatility and encouraging even more traders to exit their positions as fast as they could.

These feedback loops are an example of reflexivity, the tendency in some complex systems for perception (everyone will panic and sell) to affect reality (everyone panics and sells). Reflexivity can turn statistical pronouncements into self-fulfilling prophecies, at least for a time. The belief that inflation is low, if widespread, can suppress inflation in and of itself! If I believe that the cash in my wallet and the deposits in my bank account will still be worth essentially the same amount tomorrow or in a year, then I’m less likely to rush out to exchange my currency for hard goods. Conversely, once it’s clear that my Bank of Zimbabwe Bearer Cheques have a steeply declining half-life of purchasing power, then I’m going to trade these paper notes for tangible goods as quickly as possible, nominal price be damned!

Don’t look down

If perception can shape reality, then does the gap between reality and statistic matter? Clearly, the people who benefit most from the status quo do their best to avoid looking down, lest they encourage others to do the same. More generally, though, can we keep going forward so long as we don’t look down, like Wile E. Coyote chasing the road runner off a cliff?

The clear empirical answer to that questions is: “Yes, at least for a while.” The key is that no one knows how long this while can last, nor is it clear what happens when the reckoning comes. Despite what ignorant commentators might have said ex post facto, by 2006 there was wide understanding that housing prices were becoming un-sustainably inflated. In 2008, US prices crashed back down to earth. North of the border, in Canada, the seemingly equally inflated housing market stumbled, shrugged, then continued along at more level, but still gravity-defying trajectory.

The high cost of maintaining the facade

Even as the pressures to close the gap grow along with its size, the larger the divergence between official numbers and reality, the greater the pressures to keep up the facade. If the fictional single entity we call “the economy” appears to be doing better, politicians get re-elected and consumers spend more money. When the music finally stops, so too will the gravy-train for a number of vested interests. So the day of reckoning just keeps getting worse and worse as more and more resources go into maintaining the illusion, into reassuring the public that nothing’s wrong, into extending, pretending, and even, if need be, shooting the messenger.

It’s not just politicians and corporations who become invested in hiding and ignoring the gap. We believe official statistics because we want to believe them, and we act as if we believe them because we believe that others believe them. We buy houses or stocks at inflated prices on the hope that someone else will buy them from us at an even more inflated price.

My (strong) belief is that most economic and political Black Swans are the result of mass delusion, based on our faith in the quality and meaning of prominently reported, endlessly repeated, officially sanctioned statistics. The illustration at the beginning of this post comes from a comic I authored about a character who makes his living off just this gap between official data and the reality on the ground, a gap that always closes, sooner or later, making some rich and toppling others.

The Real Unemployment Rate Is Worse Than You Think - 23.3% (even that11.6 number is too low)

When you factor in all those who have stopped looking because thereare no jobs,those forced to work part-time because there are no jobs in their professional field, those forced to retire early because there are no jobs, those who are living off their parents because there are no jobs, you get a Real Unemployment rate of 23.3%, as illustrated by the above chart. Worse than all but 2 yeqars during the Great Depression.

Our (s)Elected Officials have failed us completely. They do the bidding of their corporate masters while we suffer at their hands.

Vanishing workforce diminishes growth

Put out an all-points bulletin: Millions of Americans have gone missing from the workforce.
By Jim Tankersley, Published: April 6

Every month that those would-be workers are gone raises the odds that they might never come back, dimming the prospects for future economic growth.

The vanishing trend is more than a decade old, but it accelerated during the Great Recession. Throughout 2012, economists held out hope that it had stopped. But then came Friday’s jobs report, and hopes were dashed.

The Labor Department reported that the U.S. labor force — everyone who has a job or is looking for one — shrank by 500,000 people in March. That brought the civilian labor force participation rate to 63.3 percent in March, its lowest level since May 1979. And it left the workforce several million members smaller than the Congressional Budget Office estimates that it should be, given the nation’s demographics.

Perplexingly, the driving force behind the decline does not appear to be baby boomers beginning to retire, an event economists have long predicted would shrink the size of the workforce. It’s people in the prime of their working years, ages 25 to 54, who began tumbling out of the job market in the early 2000s and have continued to disappear during the (supposed) recovery.

That’s obviously bad for those people, who aren’t earning money in any way that would legally require them to pay taxes.
It’s also bad for the economy for a simple reason: The fewer workers, the less growth produced.

A smaller workforce reduces what economists call potential gross domestic product, or how much the economy can be expected to expand over the long term. The decade of declining U.S. workforce participation has taken a toll on that potential growth level, many forecasters say. For example, Michelle Meyer, a senior U.S. economist at Bank of America Merrill Lynch, said her real potential growth projections have fallen from 3.25 percent a year in the mid-2000s to 2.25 percent today — all because of the change in participation levels.

So, where did everybody go? And if hiring picks up, will they come back?

Economists have ideas but not all the answers.

“Prime-aged people are working less, and we don’t know why,” said Betsey Stevenson, a labor economist and associate professor at the University of Michigan. “I get concerned because there are a lot of people who have useful and productive skills that could really contribute to the economy, and we’re just failing to find ways to get them involved.”

The easiest explanation for vanishing prime-aged workers is the weak job market: The economy just isn’t creating enough new jobs to keep job-seekers engaged, so many of them are getting frustrated and abandoning their search for work.

In order to pull people back into the workforce, said Heidi Shierholz, a labor market economist at the liberal Economic Policy Institute, “it’s going to take seriously improving job opportunities, and that hasn’t happened yet.”

Some researchers are making headway in explaining where people go when they leave the workforce. The conservative Heritage Foundation did a study last year that found that most of the people who left between 2007 and 2011 ended up in one of two places: They went to school, or they went on disability (bullshit!). The researchers expect the students to eventually return, but not the workers on disability, said James Sherk, Heritage’s senior policy analyst in labor economics.

Still, some aspects of the vanishing trend remain a mystery. Economists are struggling to explain why a large number of prime-aged African American men aren’t working. After decades of entering the workforce in greater numbers, women reached a saturation point in the past decade, and their participation has declined since then. No one is sure why.

A paper presented at the Brookings Institution last year by Robert Moffitt, a Johns Hopkins University economist, found declining participation to be “disproportionately concentrated among the less educated and younger groups within the male and the female populations and, for women, especially among unmarried women without children.” But the overall decline for women, he wrote, is “more difficult to explain” than that of men.

The hope among many economists is that faster growth and stronger job creation will begin to pull people back into the workforce. In that sense, workforce dropouts would be like an idled army, ready to form up again when the cause demands it. That would be good news for the economy: “We don’t think all of these workers are permanently lost,” said Meyer, the Bank of America economist.

Other economists are not so sure. The fear is that the longer people are out of work, the more their skills will erode. Their social networks will atrophy. Gaps in their résumés will scare off potential employers. They would become essentially unemployable.

Evidence is scant that this scenario has set in. But Friday’s numbers reignited concerns. “The idea that labor force participation is structurally or institutionally impaired gains increasing credence with each passing jobs report,” JPMorgan economists wrote in a research note Friday.

The longer the trend goes, the better the odds that’s true.

Like the song says, "Those jobs are goin', boys, and they ain't comin' back..."

Low-wage job growth: Most New Jobs are Low Wage Food Service Jobs

But they should be grateful they even have jobs, right?

April 5, 2013
The Fries-With-That Economy 

Dollars to doughnuts.

One of the more striking patterns in the recovery has been the fast clip of low-wage job growth. The best example of this is probably in food services and drinking places, which have been adding jobs for 37 consecutive months. (Employment over all has been growing for 30 consecutive months.) Over that time, eating and drinking places have added 856,200 jobs.

As a result of all this cumulative hiring, the industry accounted for almost one in 13 of all American jobs in March. That is the highest share it has held.

Source: Bureau of Labor Statistics, Haver Analytics.

The average hourly wage in food services and drinking establishments is $11.98, which is about half that for the private sector over all ($23.82 an hour).

I should note, by the way, that the National Restaurant Association says its members are still not very upbeat about the future of the economy.

And also, the trends in food services growth are still not nearly as impressive as those in health care, which has been growing nonstop in both recession and recovery. Health care employment as a share of total employment is also at its high, at 10.7 percent.