December 31, 2013

Balance - by Glenn Hubbard and Tim Kane

Balance - by Glenn Hubbard and Tim Kane
The economics of great powers from ancient Rome to Modern America
[Authors were members of Mitt Romney economic advisers. It includes 8 case studies of Great Power imbalance - Rome, Ottoman, Spanish, British, Japan, European Union, & California)]

Recent research by Harvard economists Carmen Reinhart and Kenneth Rogoff suggests that countries with a total debt to gross domestic product (GDP) ratio that exceeds 90 percent face a tipping point of decline. And the US, with annual deficits that now amount to 5-10 % of annual GDP and a debt-to-GDP ratio of around 70%, is rapidly heading toward a critical level of imbalance.

Some sports, notably soccer and baseball, tend to be conservative, allowing few rule changes. In contrast, American football and basketball have been much more open to revising their rules. The evolution of play in those games has made them popular - and economically successful.

Presidents and legislators often know good policy from bad, but their incentives are short-term reelection rather than long-term national growth, a specific problem for representative democracies. When nations agree to open their borders with ‘free’ trade agreements by lowering tariffs, many industries lobby for non-tariff barriers (for restriction on imported beef in Japan or modified crops from Europe). Even though economists since Adam Smith haven argued that mercantilism is unproductive, the lure of managed trade is siren song during election season. The policy may be irrational economically while perfectly rational politically.

The lowest recent level of US debt held by the public relative to the size of the economy was 23.9% of GDP in 1974, which in real dollars was $344 bn. Today, the level is around 75% of GDP or $11,578bn (this figure does not include debt held in govt. accounts). By contrast, the European Central Bank reports that 2010 debt among member countries ranged from 119 % of GDP in Italy to 143 % in Greece and 6.6% in Estonia. Interest payment on higher debt level is a major expenditure category that crowds out normal government functions if interest rates rise.

Roman might have fallen one, three or five centuries before it ultimately did. That lesson should not be lost on modern nations. Sweden showed the way large European welfare states can succeed with reforms. By contrast, Greece today seems determined to show how reform can fail. What has been lingering in Japan for 2 decades, haunting Europe in recent years and now loose in the US is the beginning, not the end of a global fiscal reform.

“Wealth, as Mr. Hobbes says, is power - Adam Smith”
“In Europe and America, there’s growing feeling of hysteria....
We share the same biology, regardless of ideology - Sting, “Russians”

Daniel Kahneman (Nobel literate, 2011) says, The humans described by prospect theory are guided by the immediate emotional impact of gains and losses. His three summary points of the prospect theory are paraphrased here:

1. People have reference points. Outcomes better than the reference points are gains, while those worse than the reference points are losses

2. Behavior follows a principle of diminishing sensitivity. We think in terms of relative and not absolute values. As our reference endowment increases (that is, as we move from $100 to $1,000,000), the prospect of losing or gaining another $100 diminishes in importance

3. People have loss aversion. Equivalent losses loom larger than gains.

The application of prospect theory to Great Power behavior is this: a collective sense of loss aversion makes countries hesitant to change their economies, even when they see trading partners and perceived competitor nations growing and changing.

Research by economists on institutions has aimed at the following questions: Why did the industrial revolution begin there and then, and not 1650 or even around the year 50, about the time Hero of Alexandria had developed a steam engine? And why England and not in China or the Roman Empire, states brimming with technical genius? Why did Hero’s contemporaries not use steam engine to power instruments of production, instead of using them to wow tourists with magical toy?

Again, from economists: institutions. The economic revolution finally happened in England, in about 1750, because of institutions. As a consequence of the Glorious Revolution of 1688, the British government was able to commit to upholding private rights, protecting wealth, and eliminating arbitrary increase in taxes. These institutional changes gave entrepreneurs the incentives to make investments necessary to make the most technological inventions - the spinning jenny and the water frame, for example. Though a sophisticated economy at the same time, China, by contrast, lacked the intentions to allow entrepreneurship to flourish.

Economist Anne Krueger coined the term in describing the behavior of the third-world bureaucrats who were technically corrupt - selling business licenses to applicants who preferred to skip the regulatory waiting period. The existence of long waiting periods for licenses is usually a sign of rent-seeking. In modern economies, special interests often seek rents in the tax code by lobbying legislators. Monopolistic firms are natural rent-seekers, as are labor unions and guilds that expend their resources to limit competition.

This line of inquiry recognizes that explaining the emergence of growth requires a theory as to why some nations prosper while others fail to do so. Institutional explanations have centered on historical foundations - such as the rule of law, an independent judiciary and property rights.

Perhaps the way to think about this paradox is that there is no perfect set of economic rules that guarantee growth. The rules of capitalism circa 1820 were great for promoting growth in 1820, but were insufficient for 1920 industrial capitalism and certainly for 2020 techno capitalism.

Every decade that a Great Power can maintain balance is a triumph because the pressures to fall are natural, powerful and constant. Here are the key factors to watch for:

Bounded rationality means rulers are limited in their ability to choose the ideal economic policies.

National identity makes for strong cultural, political, and economic institutions, which are essential for growth and power, but that strength also implies conservatism in the sense of resistance to structural change.

With loss aversion, leaders rarely innovate, since they are averse to losing their status as leaders

Time preference matters too. Even when officials are cognizant of the need for reform, they defer necessary changes for another day or year,. Voters too, habitually discount the future value of higher prosperity tomorrow and avoid making painful choices in the present.

“The mind of the superior man dwells on righteousness; the mind of a little man dwells on profit - Confucius, Analects”.

“The Egyptians had a great secret, which they did not forget for thirty centuries. They feared and hated change, and they avoided it wherever possible - Charges Van Doren, The History of Knowledge”.

“Gold is the corpse of value,” says Goto Dengo....”The General didn’t care about gold. He understood that the real gold is here,” he points to his head, “in the intelligence of the people, and here,” he holds out his hands, “in the work that they do. Getting rid of our gold was the best thing that ever happened to Nippon. It made us rich” - Neal Stephenson, Cryptonomicon.

Following our tour of Great Power history, here then are seven lessons we draw:

1. Nothing is inevitable. At any moment in time, no great power is destined to succeed or to fail. Long-lived states such as Rome or Ottoman Turkey did not appreciate the reality of their demise.

2. People are people. There was never such thing as ‘Jewish physics’. That is, however, how many nationalist Germans in the early 20th century characterized the research of their country man Albert Einstein. In the same vein, we are typical or economists who reject the idea of ethnic economics. Supply & demand curves operate the same way in Beijing, Munich, Boston and Mumbai. Growth will accelerate in any country that establishes superior institutions with incentives for commerce, entrepreneurship, and technological change.

3. The existential threat is internal. In every case study, we saw Great Powers decline internally centuries before external threats toppled them.

4. Ignorance if the ultimate bind. Time and again, Great Powers decline because their wise and brave rulers do not know something essential about their economy. However, as we observed throughout our text, nobody else alive knew it, either.

5. Governments are the most dangerous ‘faction’. Every country has a diverse population, though outside observers often miss this fact, as they are prone to generalizations. Even supposedly homogenous ethnic nations such as Japan, Israel or Nigeria have, in reality sharp internal divisions. The task of a well-run democracy is to balance the interests of these inevitable factions, an outcome aided by freedom of expression. When the people who control the levers of government are able to enrich themselves at taxpayers’ expense, and when such centralized rent-seeking is unchecked, the situation can deteriorate toward fiscal ruin.

6. Loss aversion threatens innovations. In most cases of imperial decline, there was some faction that controlled the government and insisted on preservation of the status quo. When such a faction, like the Janissaries, for example, inserts itself into the economy, tolerance for economic innovation disappears. Because innovation routinely threatens traditional production methods (and profits), resistance to economic innovation is common among all growing economics, as for example, with 19th century Luddites’ resistance to the substitution of mechanical devices for artisans’ labor or contemporary resistance of some office workers to information technologies that substitute for them.

7. Under-stretch is a greater threat than over-stretch. Finally, as we reflect back of Paul Kennedy’s book ‘The Rise and Fall of the Great Powers’ and his argument that ‘imperial overstretch’ led to imperial decline, it seems clear that the economic history of Great Powers does not support that thesis. The data collected and assembled in the quarter century since then provide more evidence to the contrary.

Here are four modifications that will enhance the traditional text, improve its odds of becoming law, and just may be preempt the coming fiscal crisis:

1. The annual constraint on expenditure should be defined by the median federal inflation-adjusted revenues of the previous seven years, not the current year.

2. Any amendment should be simple, focused only to fiscal balance

3. Any new rule or balanced budget amendment should use escalating super-majorities for exemptions that are universal.

4. The balanced budget act should provide a glide path to a lower debt-to-GDP ratio.

December 28, 2013

Hungry for Ecstasy by Sharon Klayman Farber

Hungry for Ecstasy by Sharon Klayman Farber
Trauma, the brain, and the Influence of the Sixties
[As one reviewer commented, “Forber provides a remarkably engaging view of experience that, for many people, stands among their lives’ most defining moments’. A very good book that I want to re-read]

Presentations of Gender [M.D. Robert J. Stoller] included in this book an idiosyncratic list of proposals for a program of psychoanalytic exploration.

1. Do what you enjoy
2. Be very curious
3. Do not have a clear-cut plan
4. Do not know what your conclusion will be or even where you are heading; do not head
5. Have patience; then always be impatient
6. Think it over; let it soak; listen carefully to the repetitions; let the discoveries find you
7. Use whatever techniques for data collecting appeal to you, but never stop psychoanalyzing
8. Fine people more honorable committed to scientific method than yourself and stick them with the grubby work of properly confirming hypotheses.
9. Do not try for a grant if acceptance means you must accomplish what you promised
10. Since no research anywhere comes to final conclusions, you need not rush. Act as if you will live forever, it will not make any difference to you if that estimate is wrong.

To sum up what is ecstasy is, Marghanita Laski concluded that ecstasy is an altered state of consciousness with greatly reduced external awareness and expanded interior mental and spiritual awareness which is often accompanied by hallucinations.

W.T. Stace described the core sense of mystical oneness as existing in two forms. There is the extrovertive mystical experience which looks outward to the world through the senses and finds unity , as everything that can be heard, seen, smelled, tasted or touched is melded into one. In contrast, the introvertive mystical experience turns inward, often shutting out the senses, transcending them into a pure consciousness.

Sudhir Kakar, thought to be the father of Indian psychoanalysis, used Sri Ramakrishna's life as a case study of extreme ecstasies and published a fiction study of Ramakrishna, called Ecstasy. So many of Radhakrishna’s visions and fantasies seem quite bizarre and pathological when taken out of context by become much less so when one relates them to Bengal as it was in the 19th century. From psychoanalytic point of view, Ramakrishna could be diagnosed as a secondary transsexual and psychotic, he was more interested in a meta-psychological non-pathological explanation that connects Ramakrishna's mystical realization with creativity.

“The soul should always stand ajar
Ready to welcome the ecstatic experience - Emily Dickinson”

Until the recent interest in Western culture in Eastern meditative and yogic practices, Western culture tended to regard these practices as pathological, partly because of the Cartesian dualism in Western medicine, which regards the mind and body as separate entities. And when psychoanalysis at the beginning, recognized that a dissociative response was a consequence of trauma, the emphasis was on dissociation in relation to psychopathology.

In some Scandinavian countries, sneezing while driving a car is a violation, because one can lose control of the wheel (Clement 19940.

In order to understand the increase in spending after 9/11, it helps to understand that women who are compulsive shoppers go into an altered state when shopping. The anticipation of finding, then buying or stealing the most perfect pair of shoes is exciting, transcending thoughts of their mortality and destructibility.  In the wake of the terrorist attacks, the need t to escape the terror of being annihilated can lead many to excitement at the prospect of acquiring beautiful apparel and some may even have gone into a ecstatic state in obtaining it.

The 3rd eye and altered state of consciousness:
Imagine the possibility that your own brain can manufacture psychedelic experiences without the use of psychedelic drugs. DMT a chemical derived from plants is also manufactured by the human brain. Psychiatrist Rick Strassman, who has done cutting-edge research on DMT, believes that DMT is involved in a variety of altered states, including near-death experience and mystical experiences. He believes it also exists in the brain’s pineal gland, a small endocrine gland, located between the two hemispheres, deep near the center of the brain. Strassman tells us that the pineal gland is unique in being the only brain site that is unpaired; all other have left and right counterparts.

Eastern and Western visions may have experiences with symbolic or religious content, which, may become transformed into this dazzling light. The pineal gland has been called the 3rd eye or the spirit gland. Hindu regards it as the site of the sixth chakra, while Descartes devoted a good deal of time studying it, calling it the seat of the soul.

Oddly, the third eye, like the two seeing eyes, is sensitive to light and has a lens, cornea and retina. It helps regulate the body’s temperature and skin pigmentation. It produces melatonin, a derivative of serotonin, which affects how wake/sleep patterns and seasonal functions are modulated. How much melatonin your body produces it depends on light. During the winter when the days are shorter, your body may produce melatonin earlier or later in the day than usual, a change that can produce symptoms of seasonal affective disorder, sometimes called winter depression. The pineal gland contains more serotonin than anywhere else in the body and can convert serotonin to tryptophan, a crucial step in forming DMT. The pineal gland sits strategically close to the crucial emotional and sensory brain centers, because it is surrounded by the limbic or emotional brain. The pineal gland has direct access to the brain's emotional centers.

Many runners and ballerinas experience a high during or dancing because extreme stress on the body causes dopamine levels to rise, thus increasing the threshold for pain. Smell and taste create distinctly intense memories and that memory depends upon the moment and mood of the person remembering.

Around 100 years ago, Freud posed a question to Marie Bonaparte one of his students: “the great question that has never been answered and which I have not yet been able to answer, despite my 30 years of research into the feminine soul, is “What does a woman want?” Regardless of whether they considered themselves lesbian, straight or bisexual, women became aroused strongly and quickly when viewing pornography, of the male homosexual, lesbian or heterosexual variety. Men who considered themselves straight, were excited by heterosexual or lesbian porn, but were largely unmoved by male homosexual porn, demonstrating a pattern of attraction that was the polar opposite of women’s. This gender differences raises some interesting questions. Why does such a broader range of stimuli arouse women but not men?

Researcher Lisa Diamond has found that women’s sexuality is quite fluid and bendable. Although a woman may have an innate sexual orientation, she has found that despite this orientation, desire can be superseded by emotional closeness and erotic attraction can become redirected. Many of her subjects typically described being attracted “to person, not their gender”. Lisa says, “Women want to be thrown up against a wall but not truly endangered. Women want a caveman and caring”. But whatever it is that women really want, an orgasm, in any case, is literally a mind-blowing experience for a woman. When a woman is attracted to someone, her body quivers with a gush of phenyl-ethylamine, a brain hormone that speeds up the flow of information between neurons, turning on her pleasure centers and creating a frenzy of excitement because everything she experiences gives her pleasure. The body uses phenyl-ethylamine for more than infatuation; it keeps one alert, confident and ready to try something new and thrill-seeking. Chocolate contains lots of it, which may be one of the reasons many women consider themselves to be chocoholics, insisting that it is additive, producing an immediate feeling of well-being, with abstinence leading to withdrawal symptoms.

Feeling cared for by her partner seems to be important in heightening arousal. As arousal increases, much of the women’s brain shuts down, turning off fear, anxiety and all emotion, thus freeing her from all restraint. In comparison, men seem to require little time or trust in their partner to climax just direct physical stimulation. In fact obtaining meaningful brain scan data from men was problematic because their orgasms typically are so short-lasting. In men, we must differentiate between orgasm and ejaculation though they usually occur almost simultaneously. Some men can recognize the separation of the two processes, allowing them to experience multiple orgasms without the occurrence of ejaculation.

The sixties were a confusing, exhilarating, depressing time and the aftershock resonates in our lives today. The year 1961 was called the upside down year; if you turn the number upside down, it still reads the same.
“People today are still living off the table scraps of the sixties. They are still being passed around - the music and ideas - Bob Dylan (1992)”.

“In writing this chapter, I sense a vocabulary weakness; there are not enough words for the colors of pain - Robert Stoller”

There are four types of mediation and there is major difference between TM(transcendental meditation) and the others. First, there is contemplation, in which you take a sentence or a parable and you think about it. You just go into your mind and close out the outside world and you think... Contemplation is another type of mediation that I would classify as Christian meditation. This consists of studying the scriptures and pondering God and thinking about how you can use that scripture to give meaning to your life. The third type of meditation is simply concentration, where you concentrate on one spot on the wall or your navel or a spot on the middle of your forehead. If you find yourself wandering off into other things, you bring your mind right back to that one point... In TM, you empty your mind. TM is switching your mind into neutral. You have no control over it.

A sensible man will remember that the eyes may be confused in two ways - by a change from light to darkness or from darkness to light; and he will recognize that the same thing happen to the soul - Plato.

Death and sex are powerfully linked in the minds of the suicide bombers. To understand the ecstasy of the suicide bomber, one must understand thing of cult psychology, because terrorists have become in reality members of a destructive mind control cult. The source of their rage is not only poverty and lack of opportunity, because only some are poor and uneducated. The man’s organic need is the primary factor in sexual expression in fundamentalist Islamic culture. Only married men have sexual privileges and they have nothing to do with mutuality but with pleasure through violent domination. Therefore Islam allows the man to have four wives at a time. It has been something of a secret to Western culture that in absence of a female sexual partner, it is acceptable for a man take a boy to use as a woman. It is nothing to with homosexuality. It is simply a man ‘doing what men do’ in much the same way that it becomes acceptable in prison.

An Egyptian psychiatrist interviewed on popular Iqraa Television beamed gleefully as he explained that Western civilization has no concepts of self-sacrifice and honor, which is why infidels fail to understand that the suicide bomber experiences “the height of ecstasy and happiness’ just at the moment when he presses the button to blow himself up.

“The great Goddess everywhere demands sacrifices, because the decisive moments in the life of the female - menstruation, deflowering, conception and childbearing - are intimately bound up with a sacrifice of blood” - Erich Neumann, The Great Mother: An Analysis of the Archetype.

Some of the earliest deities worshipped by human were female, but they were hardly the nurturing ‘earth mothers’ imagined by so many later scholars, both male and female. The archaic goddess was a huntress, a consumer of sacrificial offerings, and most strikingly an anthropomorphized version of the predator beast” Ehrenreich).

One of the most murderous predators was the Hindu goddess Kali, who wears a necklace of skulls and carries a bloodied ax and a giant’s severed head... She is most demanding of blood sacrifices, esp. ‘the human blood offered by frenzied, self-mutilating cult worshippers’. No wonder that she is often depicted with blood streaming from her mouth.

Creativity - like human life itself - beings in darkness - Julia Cameron.

If we had to say what writing is, we would have to define it essentially as an act of courage - Cynthia Ozick

Writers are not just people who sit down and write. They hazard themselves. Every time you compose a book your composition of yourself is at stake - E.L. Doctorow.

All artists aim at immortality; their objects must not only be brought back to life, but also life has to be eternal. And of all human activities art comes nearest to achieving immortality. a great work of art is likely to escape destruction and oblivion - Segal.

For many involved parents who talk to their children about the risks of drugs alcohol, and casual sex, it may not occur to them to tell them about the hazards of inhalant abuse because they may never have heard of it. Inhalant abuse, also known as huffing, sniffing, dusting, and bagging, is a potentially deadly form of substances abuse. It is esp. dangerous because kids think that all they are inhaling through their mouth or nose is air. They consider it to be harmless way to get high, without the cost of drugs. Nothing could be further from truth.

Inhalants are easily accessible, legal, everyday products that can be found in home, school, or office - typewriter correction fluid, computer dusting spray, gasoline, aerosol whipped cream or other products, paints, and glue. They are ‘huffed’ to create high, affecting the brain forcefully and rapidly by preventing oxygen from reaching the lungs. When exposure to inhalants becomes chronic, it causes widespread damage to the brain and other parts of the nervous system. Poppers or amyl nitrite may be inhaled to enhance sexual pleasure, and have long been part of the club culture,. Because the high is so brief, lasting only a few minutes, users may try to prolong it by inhaling continually over several hours, thus increasing the risk. Death can occur even with first-time use. Other risks include slurred speech, dizziness, confusion, hallucination, delusions, headache, muscle spasm, and vomiting. The suffocation can lead to brain damage, muscle spasms and tremors, addiction, liver, lung and kidney problems, cognitive, hearing and vision damage and heart attack. One in five American teens has used inhalants to get high, according to the national Institute on drug Abuse.

Hope is the Thing with feathers
That perches in the soul
And sings the tune without the words
And never stops at all - Emily Dickinson.