Priorities…

Whitey Bulger and Aaron Swartz: Protecting the Guilty and Punishing the Innocent

Today’s Fresh Air is devoted to an interview with award-winning journalists Kevin Cullen and Shelley Murphy, whose new book, Whitey Bulger: America’s Most Wanted Gangster and the Manhunt That Brought Him to Justice, tells the extraordinary story of South Boston’s gangster king, Whitey Bulger.

It’s the story of a man captured in 2011 after 16 years on the run. By then, Bulger was wanted for 19 murders, extortion and loan sharking– crimes committed while leading a criminal enterprise in Boston from the 1970s until 1995…  But the genuinely remarkable part of the tale is that through most of his criminal career, Bulger was being protected by the FBI, for whom he was acting as an informant.  Intent on pursuing the prosecutions (of the major Cosa Nostra figures, “associates” of Bulger’s on whom he was ratting), the FBI shielded him from scrutiny and covered up his crimes– including multiple murders.

The FBI agents immediately involved in the Bulger case were disciplined (one, sent to prison for 10 years).  The Bureau’s position is that they were “rogues,” a sad exception to the institution’s norm.  But Cullen and Murphy aren’t buying it; as they explain, the scope of the cover-up(s) was such that it was simply inconceivable that two stray agents could have pulled it off.  They are convinced that culpability goes much, much higher into the Department of Justice.

It’s a riveting– and alarming– tale of individual crime and institutional malfeasance that you can hear here.

Against that backdrop, I caught up with Techdirt‘s report on the progress of the Congressional investigation into the DoJ’s prosecution of Aaron Swartz– the title of which, says it all:  ”DOJ Admits It Had To Put Aaron Swartz In Jail To Save Face Over The Arrest.”

As Techdirt and Huffington Post explain in their coverage, DOJ reps told Congressional staffers that part of the reason they went after Swartz with such zeal was his infamous Guerilla Open Access Manifesto, which argues:

We need to take information, wherever it is stored, make our copies and share them with the world. We need to take stuff that’s out of copyright and add it to the archive. We need to buy secret databases and put them on the Web. We need to download scientific journals and upload them to file sharing networks. We need to fight for Guerilla Open Access.

Note that Aaron was making, for the most part, a pretty uncontroversial argument, advocating perfectly legal (albeit unusual) action, not any kind of piracy:  taking stuff that’s out of copyright and adding it to the archive; buying secret databases and putting them on the Web.  It’s the scientific journal plea that’s at all controversial– though in context, it’s not all clear he was advocating any copyright violation…  and indeed, as Techdirt suggests, we seem to be “moving to an age where more and more [of that scientific research to which Aaron spoke] is open access anyway.”

Still, as HuffPo reports, the government found it ground for action:  ”The ‘Manifesto,’ Justice Department representatives told congressional staffers, demonstrated Swartz’s malicious intent in downloading documents on a massive scale.”

In the event, Aaron released nothing.  It’s possible that he planned to release all of the JSTOR documents he downloaded; it’s also possible that he meant to release only those in the public domain.  We’ll never know.

In any case, it seems clear that he was being prosecuted for (what the DoJ took to be) his “malicious intent”…  That’s to say, for his opinion, as expressed above, on how information should be available.

The institutional rot that led the DoJ to cover up multiple murders in the Bulger case may or may not have been cleared away; the FBI and DoJ may no longer be protecting the guilty from punishment.  In any event, the opposite now seems to be true:   it seems clear that the capture of the Justice Department by the Intellectual Property establishment is pretty complete.  (C.f. this piece from 1999; the packing of Justice with entertainment/media industry lawyers has continued apace.)  The result is the “arrest [or take-down or confiscate] first, ask questions later” approach to “enforcement” with which we live today… It was once the pride of Americans’ that, while we may or may not agree with each others’ opinions, we zealously protected each other’s rights to have them and to express them.  Today, those opinions are all too likely to be grounds– the sole grounds– for prosecutorial zeal.

[The photo of Whitey Bulger was sourced here; the photo of Aaron, here]

For your reference (currency)…

 source

As U.S. presidential candidates are arguing over how vociferously to blame China for “currency manipulations,” the Chinese renminbi is replacing the dollar as the reference currency, the monetary standard, in much of Asia (which is to say, exchange rates with those emerging markets move most closely with the renminbi).

Recent research by Arvind Subramanian and Martin Kessler, which they summarize in the Financial Times, suggests that

…since June 2010 when the renminbi resumed floating, the number of currencies tracking it has increased compared with the earlier period of flexibility between July 2005 and 2008. Over the same period, the number tracking the euro and the dollar declined…  East Asia is now a renminbi bloc because the currencies of seven out of 10 countries in the region – including South Korea, Indonesia, Taiwan, Malaysia, Singapore and Thailand – track the renminbi more closely than the US dollar. For example, since the middle of 2010, the Korean won and the renminbi have appreciated by similar amounts against the dollar. Only three economies in the group – Hong Kong, Vietnam and Mongolia – still have currencies following the dollar more closely than the renminbi.This shift stems from China’s rise as a trader; its share of east Asian countries’ manufacturing trade has risen from 2 per cent in 1991 to about 22 per cent today. Countries that sell to the growing Chinese market or are locked in supply chains centred on China see the advantages of maintaining a stable exchange rate against the renminbi…

The impact is being felt elsewhere as well:

Trade is also propelling the rise of the renminbi outside east Asia. For example, the currencies of India, Chile, Israel, South Africa and Turkey all now follow the renminbi closely; in some cases, more so than the dollar. If China were to liberalise its financial and currency markets, the lure of the renminbi would broaden and quicken.

This is noteworthy– and surely worthy of serious discussion in the presidential election context– as an indicator both of the continuing global influence of China’s economy (arguably, in PPP terms, already the world’s largest), and of the erosion of the global reference currency advantage that, for the last several decades that U.S. has enjoyed.  America’s status as “reserve currency of choice” seems, at least for now, intact; but as Subramanian and Kessler note, being “the reference” matters too: “The symbolism and its historic significance cannot be understated because east Asia, despite physical distance, has always been part of the dollar backyard.”

At the same time, the shift underlines the complexity of the political situation in Asia.  Even as China’s military posturing and imperial grabs for territory are driving its neighbors under the umbrella of U.S. “protection,” growing trade is enmeshing them ever more deeply with China.  In the short term, this makes for a confused (and probably unbalanced) situation; but as Subramanian and Kessler observe, “politics trumps in the short run but economics wins in the long run.”

So perhaps instead of righteously demanding that China increase the value of its currency (the impacts of which in the U.S. would be many and complex– but on balance, simply inflationary), our prospective leaders should be focusing on how to rehabilitate and reenergize the sort of innovation that can make the U.S. a more competitive trading partner for developing economies– and indeed, the world at large.

ADDENDUM:  I should note, though it’s probably obvious, that the waxing Chinese currency dominion could wane, if China’s economy and trade are severely troubled– as, for example, the insightful Michael Pettis suggests they are…  And, as Mohamed El-Erian and Michael Spence argue, let’s not forget India.

Fitting the crime?…

A guest post from (Roughly) Daily…

Recently, The Economist took a look at the fines being levied against corporations found guilty of crimes. Their assessment was rather bleak:

The economics of crime prevention starts with a depressing assumption: executives simply weigh up all their options, including the illegal ones. Given a risk-free opportunity to mis-sell a product, or form a cartel, they will grab it. Most businesspeople are not this calculating, of course, but the assumption of harsh rationality is a useful way to work out how to deter rule-breakers.

In an influential 1968 paper on the economics of crime, Gary Becker of the University of Chicago set out a framework in which criminals weigh up the expected costs and benefits of breaking the law. The expected cost of lawless behaviour is the product of two things: the chance of being caught and the severity of the punishment if caught*…

The always-amazing David McCandliss at Information is Beautiful has put the issue into graphic perspective.

We’ve gathered and visualized the biggest corporate fines of the last seven years, not just as raw amounts, but also as a percentage of each company’s profits. That way you can see for yourself if the punishment was painful or puny…

See the full graphic (full size) here, and see the underlying data here.

*Becker had created the model as a framework for considering appropriately-discouraging penalties for malfeasance. He was horrified later to learn that it was being taught by business school colleagues as a decision aid.

###

As we contemplate crime and punishment, we might recall that it was on this date in 1950 that the first television show with a recorded “laugh track” (The Harry McCune Show) aired in the U.S.

 CBS TV engineer Charlie Douglass, the “father of the laugh track”

source

From The Annals of Audacity: (Not) Guilty As Charged…

On the same theme as Friday’s “A Ruse by any other name,” a guest post from (Roughly) Daily…

Mirco Pagano and Moreno De Turco have created the likenesses of seven musicians– Jimi Hendrix (above),  Jim Morrison, Michael Jackson, Bob Marley, James Brown, Freddie Mercury and Elvis, each caught on the floor as though the victim of a shooting– by carefully “spilling” their CDs.  It’s an arresting feat.

But their work is part of Piracy, an ad campaign, film short and sculptural work by ad agency TBWA. The conceit is that these musicians were ultimately brought down by internet piracy– ridiculous, as most of these artists died before “piracy” even had a name, and all profited handsomely from their recorded work.  To the extent that “piracy” is even an issue, in these cases the “endangered” aren’t the artists, but the record companies trying to milk their cash cows into eternity.  As Visual News (to whom, TotH) observes, “what looks like passion becomes something far more sinister.”

More of the work here.

###

As we sigh, we might send electrifying birthday greetings to the man who made all of this “piracy” possible– not just in its current on-line form, but in its earlier (and also recording industry-feared) broadcast incarnations– Lee De Forest; he was born on this date in 1873.  While he ultimately held 300 patents on a variety of inventions that abetted electronic communications, and co-founded the forerunner organization to the IEEE, De Forest is probably best remembered as the inventor of the Audion vacuum tube, which made possible live radio broadcasting and became the key component of all radio, telephone, radar, television, and computer systems before the invention of the transistor in 1947.

Unwittingly then had I discovered an Invisible Empire of the Air, intangible, yet solid as granite, whose structure shall persist while man inhabits the planet.

- Father of Radio: The Autobiography of Lee De Forest (1950), p. 4

 source

I’m a poet, and I didn’t know it…

A guest post from (Roughly) Daily…

source

The Economist‘s Free Exchange blog report’s on the Kauffman Foundation‘s most recent quarterly survey:

THE KAUFFMAN FOUNDATION conducts a quarterly survey of economics bloggers (you can see the third quarter results here). It tends to focus on current economic conditions and policy questions, but the fourth-quarter questionnaire contained something a little different: a challenge to capture the state of the economy in haiku. The results are sublime…

Indeed.  Consider the stylings of Reuters’ Felix Salmon:

No one has a job
Except econobloggers
And they’re not paid much

Or the musings of Professor Stephen Karlson:

Intermodal loadings increase
Trade conflict looms without cease
Occupy Wall Street

Or this, from Robert Cringely:

Econ guys, gentle souls
Think policies guide markets
Jail time is better

Or the only-too-culturally-appropriate contribution of Amol Agrawal:

When Japan fell in 1990s
They were lectured by the world economists
Time for Japanese to smile

… more at “The economy in haiku .”

As we think in seventeen syllables, we might recall that it was on this date in 1993 that the Maastricht Treaty came into effect, formally establishing the European Union (EU)… and laying the groundwork for the Eurozone– the European Monetary Union and the creation of the Euro– and thus for the painful pecuniary pageant that is playing out on the Continent today…

source

Inside the Beltway…

From Christopher Wright, a comic illustrating a theme that we’ve visited before (e.g., here and here)  While he focuses on Net Neutrality, one should feel free to substitute the Corporatist concern of one’s choice– energy policy, agricultural policy, financial industry policy, pharmaceuticals, intellectual property, etc., etc.– the mechanism works in just the same way…

Corporations are people, the Supreme Court averred as it proscribed any impediment to corporate political activity… it’s just that not all “people” are created equal, after all.

Mind the Gap…

Further to “Looking for something other than a lump of coal in the stocking…,” a piece of data that helps explain high debt on the one hand and high consumer expenditure on the other:

click to enlarge

As Calculated Risk observes:

This graph shows the saving rate starting in 1959 (using a three month trailing average for smoothing) through the November Personal Income report.

When the recession began, I expected the saving rate to rise to 8% or more… It is possible the saving rate has peaked, or it might rise a little further, but either way most of the adjustment has already happened and consumption will probably mostly keep pace with income growth next year.

Which brings us (back) to a question that’s been alive since 9/15/08 (c.f., e.g., here and here):

… and leaves me– as I send you all, Dear Readers, the Salutations of the Season– suspecting that (as usual) Mark Twain was right:

A day of “sincere and humble thanks”…

On October 3, 1789, President George Washington issued a proclamation naming Thursday, November 26, 1789 as an official holiday of “sincere and humble thanks,” and the United States celebrated its first Thanksgiving under its new Constitution.

click image to see enlargement at source; click here to see original manuscript at the National Archives

The holiday became traditional, at least in New England, but was celebrated each year at different times in the late Fall.  Then in September of 1863, a magazine editor named Sarah Josepha Hale wrote President Abraham Lincoln, urging him to have the “day of our annual Thanksgiving made a National and fixed Union Festival.” Lincoln responded:

Proclamation Establishing Thanksgiving Day

October 3, 1863

The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies.  To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften the heart…

click image to see enlargement at the National Archive; click here for transcription

(According to an April 1, 1864, letter from John Nicolay, one of President Lincoln’s secretaries, this document was written by Secretary of State William Seward, and the original was in his handwriting. Indeed, on October 3, 1863, fellow Cabinet member Gideon Welles noted in his diary that he had complimented Seward on his work. A year later the manuscript was sold to benefit Union troops.)

The Wages of Fear

Uncle Sam watching as the proprietor of Copperhead House closes up– as the war took a turn in Lincoln’s favor, public support for the Copperheads evaporated (source)

The most recent episode of PRI’s The Takeaway featured a piece in which historian Jennifer Weber argues that the Copperheads, protesters of Lincoln’s Civil War policies, were the historical precedent for the Tea Party Movement of today.  The Copperheads were largely Jacksonian (that’s to say, enthusiasts of “personal populism”) in their orientation, nostalgic for an agrarian past (as much imagined as real), and quick to invoke the Constitution (in ways that did and didn’t actually reflect the writings of the Framers)– so one can see a family resemblance with the Tea Party…

“Citizen Know Nothing,” The Know Nothing Party’s nativist ideal (source)

And then there’s the Know Nothing Party, a movement that peaked a decade before the Civil War.  Largely animated by anti-immigrant feelings (in those days Germans and the Irish were “the problem”), the Know-Nothings actually fielded candidates and took elections on a platform that centered on severe limits on immigration (and even more severe on citizenship), restricting public services/office to Protestants of English/Scottish heritage, requiring daily Bible readings in schools, and mandating English as the sole language of the nation…  again, hard not to hear the echo.

Indeed, this brew of nativist, anti-government feeling has been around consistently since before emergence of the U.S. as a nation: slightly oversimply put, the American Revolution was for control by the then-current residents of the Colonies and against too much government interference in their affairs.  So the principles that animate the Tea Party and its ancestors should surprise no one; they’re in our DNA.

These movements had plenty of precedent in the early years of the Union, stretching back, e.g., to the political tide that drove the Alien and Sedition Acts.  And they’ve had lots of progeny, a mixed litter that ranges from the first Ku Klux Klan through the American Independent Party to the Reform Party and America First.

That they’re especially active now is no mystery: in times of economic and social stress, of transition, fear of change– and the anger that attends it– generate enough heat to bring things to a boil.

And so things percolate today– in the U.S., and in analogous ways, across much of the developed world.

In the context of this blog’s purview, these dynamics are certainly relevant as drivers of a business environment in which, for instance…

- protectionist sentiment generates policies that, at best, impede global commerce (and at worst, touch off trade/currency “wars,” even trigger deflationary spirals)

- nativist/anti-immigration sentiment chokes off the flow of workers to economies that, for demographic reasons, needs those workers to sustain productivity and growth, and to pay for already-committed social services

- the resulting economic strain, amplified by a broad appetite for the familiar, leads to increased concentration of, and market dominance by, incumbents.

- etc., etc.

Not a pretty picture (e.g., here and here)…

And these dynamics matter within organizations as well.   Rooted in fear as they are, the primary impulses at work are defensive– “circle the wagons”– and regressively traditionalist– “roll back the clock”…  the worst possible orientation for a nation or an organization that needs to innovate, to learn its way into the future.

In the short run…  well, in the short run this “overcast” seems sure to make for a dank and trepidatious time.  Happily, history is encouraging to those who take the long view:  economic stresses pass; social changes are absorbed by new generations; fear abates…  but the longer it takes, the deeper the trough out of which individuals and organizations and nations have to climb.

So it behooves us, even as we’re honest about the challenges that we face, to find a way past our fear– and the sooner, the better.  When Franklin D. Roosevelt faced a nation challenged in ways all too similar to those that best us, he asserted his “firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” (first Inaugural Address, 1933).

We can stipulate that, as individuals, as nations, and globally, we face substantial challenges more concrete than “fear itself”; they are all too easy to enumerate.  Still, we’d do well to take FDR’s words to heart.

Change isn’t inherently good or bad; change simply is.  And change will continue, as ever it has.  It’s up to us to embrace change, indeed to contribute to the change, and to make it work for us all.  Otherwise, it’s a pretty safe bet– circled wagons notwithstanding– that change will happen to us.

The Value of Ideas…

The Worldmapper Project at the University of Sheffield publishes world maps on which territories are re-sized to illustrate a the subject of interest.  They’re up to 700 so far, covering topics that range from income and educations levels, to internet users and greenhouse gases…

They are all worth a browse, as each highlights realities and relationships that weren’t before as apparent as Worldmapper makes them.  But one in particular stand out:

Royalties And License Fees Exports

Territory size shows the proportion of worldwide net exports of royalties and license fees (in US$) that come from there. Net exports are exports minus imports. When imports are larger than exports the territory is not shown.

Only 18 (out of 200) territories are net exporters of license fees and royalties. This means that a few people living in less than a tenth of the territories in the world between them receive the US$30 billion of net export earnings for these services.

The International Monetary Fund explained that royalties and license fees include “international payments and receipts for the authorised use of intangible, non-produced, non-financial assets and proprietary rights … and with the use, through licensing agreements, of produced originals or prototypes …”. Thus these export earnings are payments for past ideas.

These fees are, of course, the result of creative and technological leadership over the years past; at a net $30 Billion, they’re not that big a part of total global flows– they are dwarfed by the proceeds that those same creative and technological leaders earn from direct sales abroad…  but they are the avatar of commercial leadership, a kind of “tribute” paid to an economic emperor.

This isn’t lost on those emerging markets who don’t (yet) appear on the map; indeed, they want theirs. (Consider, for example, China, as explained in Mary Kay Magistad’s award-winning series for The World.)

So there’s no question why “increasing innovation in emerging markets” is a main theme at the World Economic Forum’s “Summer Davos” in Tianjin (from whence, this post).  Rather, given that focus and the energy behind it (and indeed, given the force of gravity), the question is:  how will this map look in 2020?  2030?

(TotH to Robert Krulwich for the lead to Worldmapper.)