or CARING WHAT OTHERS THINK
http://www.wired.com/wiredscience/2011/05/wisdom-of-crowds-decline/
Sharing Information Corrupts Wisdom of Crowds
by Brandon Keim / May 16, 2011

When people can learn what others think, the wisdom of crowds may veer towards ignorance.

In a new study of crowd wisdom — the statistical phenomenon by which individual biases cancel each other out, distilling hundreds or thousands of individual guesses into uncannily accurate average answers — researchers told test participants about their peers’ guesses. As a result, their group insight went awry. “Although groups are initially ‘wise,’ knowledge about estimates of others narrows the diversity of opinions to such an extent that it undermines” collective wisdom, wrote researchers led by mathematician Jan Lorenz and sociologist Heiko Rahut of Switzerland’s ETH Zurich, in Proceedings of the National Academy of Sciences on May 16. “Even mild social influence can undermine the wisdom of crowd effect.”

The effect — perhaps better described as the accuracy of crowds, since it best applies to questions involving quantifiable estimates — has been described for decades, beginning with Francis Galton’s 1907 account of fairgoers guessing an ox’s weight. It reached mainstream prominence with economist James Surowiecki’s 2004 bestseller, The Wisdom of Crowds. As Surowiecki explained, certain conditions must be met for crowd wisdom to emerge. Members of the crowd ought to have a variety of opinions, and to arrive at those opinions independently. Take those away, and crowd intelligence fails, as evidenced in some market bubbles. Computer modeling of crowd behavior also hints at dynamics underlying crowd breakdowns, with he balance between information flow and diverse opinions becoming skewed.

Lorenz and Rahut’s experiment fits between large-scale, real-world messiness and theoretical investigation. They recruited 144 students from ETH Zurich, sitting them in isolated cubicles and asking them to guess Switzerland’s population density, the length of its border with Italy, the number of new immigrants to Zurich and how many crimes were committed in 2006. After answering, test subjects were given a small monetary reward based on their answer’s accuracy, then asked again. This proceeded for four more rounds; and while some students didn’t learn what their peers guessed, others were told. As testing progressed, the average answers of independent test subjects became more accurate, in keeping with the wisdom-of-crowds phenomenon. Socially influenced test subjects, however, actually became less accurate.

The researchers attributed this to three effects. The first they called “social influence”: Opinions became less diverse. The second effect was “range reduction”: In mathematical terms, correct answers became clustered at the group’s edges. Exacerbating it all was the “confidence effect,” in which students became more certain about their guesses. “The truth becomes less central if social influence is allowed,” wrote Lorenz and Rahut, who think this problem could be intensified in markets and politics — systems that rely on collective assessment. “Opinion polls and the mass media largely promote information feedback and therefore trigger convergence of how we judge the facts,” they wrote. The wisdom of crowds is valuable, but used improperly it “creates overconfidence in possibly false beliefs.”


Study participants were asked how many murders occurred in Switzerland in 2006. At the end of each round of questioning, they were given small payments for coming close to the actual answer (signified by the gray bar). At left is the range of responses among participants who received no information about others.

ABSTRACT
http://www.pnas.org/content/early/2011/05/10/1008636108.abstract
Social groups can be remarkably smart and knowledgeable when their averaged judgements are compared with the judgements of individuals. Already Galton [Galton F (1907) Nature 75:7] found evidence that the median estimate of a group can be more accurate than estimates of experts. This wisdom of crowd effect was recently supported by examples from stock markets, political elections, and quiz shows [Surowiecki J (2004) The Wisdom of Crowds]. In contrast, we demonstrate by experimental evidence (N = 144) that even mild social influence can undermine the wisdom of crowd effect in simple estimation tasks. In the experiment, subjects could reconsider their response to factual questions after having received average or full information of the responses of other subjects. We compare subjects’ convergence of estimates and improvements in accuracy over five consecutive estimation periods with a control condition, in which no information about others’ responses was provided. Although groups are initially “wise,” knowledge about estimates of others narrows the diversity of opinions to such an extent that it undermines the wisdom of crowd effect in three different ways. The “social influence effect” diminishes the diversity of the crowd without improvements of its collective error. The “range reduction effect” moves the position of the truth to peripheral regions of the range of estimates so that the crowd becomes less reliable in providing expertise for external observers. The “confidence effect” boosts individuals’ confidence after convergence of their estimates despite lack of improved accuracy. Examples of the revealed mechanism range from misled elites to the recent global financial crisis.

CONTACT
Jan Lorenz
http://janlo.de/blog/
http://www.staff.uni-oldenburg.de/jan.lorenz/
email : jan.lorenz [at] uni-oldenburg [dot] de / math [at] janlo [dot] de

Heiko Rauhut
http://www.soms.ethz.ch/people/rauhut
email : rauhut [at] gess.ethz [dot] ch

Crowdminingschematic2

SO DON’T ASK THEM
http://www.wired.com/wiredscience/2009/03/ecodatamining/
Crawling the Web to Foretell Ecosystem Collapse
by Alexis Madrigal  /  March 19, 2009

The Interwebs could become an early warning system for when the web of life is about to fray. By trawling scientific list-serves, Chinese fish market websites, and local news sources, ecologists think they can use human beings as sensors by mining their communications. “If we look at coral reefs, for example, the Internet may contain information that describes not only changes in the ecosystem, but also drivers of change, such as global seafood markets,” said Tim Daw, an ecologist at the UK’s University of East Anglia in a press release about his team’s new paper in Frontiers in Ecology and the Environment.

The six billion people on Earth are changing the biosphere so quickly that traditional ecological methods can’t keep up. Humans, though, are acute observers of their environments and bodies, so scientists are combing through the text and numbers on the Internet in hopes of extracting otherwise unavailable or expensive information. It’s more crowd mining than crowd sourcing. Much of the pioneering work in this type of Internet surveillance has come in the public health field, tracking disease. Google Flu Trends, which uses a cloud of keywords to determine how sick a population is, tracks epidemiological data from the Centers for Disease Control. Less serious projects — like this map of a United Kingdom snowstorm based on Tweets about snow — have also had some success tracking the real world.

These research efforts seem to indicate that people are good sensors, but pulling the information from what they post in human-readable formats and transforming it into quantitative models of the world is tough. The Global Public Health Intelligence Network has developed an epidemic warning system that pulls in data from news wires, web sites, and public health mailing lists. The GPHIN, which is probably the most advanced and uses highly variegated information, only picks up on about 40 percent of the 200 to 250 outbreaks that the World Health Organization investigates each year.

Nonetheless, Daw and and his co-authors from the  Stockholm Univeristy Resilience Centre, say traditional ecological monitoring has its problems, too. Humans can make huge changes to ecosystems faster than the standard methods of data collection can keep up. “The challenge is that existing monitoring systems are not at all in tune with the speed of social, economical and ecological changes,” the researchers write on their blog. By looking at human data, not just fisheries and ecological readings, they think they’ll be able to detect ecosystem tipping points before they happen. “Web crawlers can collect information on the drivers of ecosystem change, rather than the resultant ecological responses,” they write. “For example, if rapidly emerging markets for high value species are known to be socio-economic drivers which lead to overexploitation and collapse of a fishery, web crawlers can be designed to collect information on rapid changes in prices, landings or investments.”

But right now, their plans remain theoretical, and while scraping data seems easy enough, turning it into knowledge is another story. John Brownstein, a Harvard bioinformaticist and co-founder of HealthMap, which does for disease what Daw wants to do for ecology, said that applying the framework to ecology could work. “There’s no reason it can’t be done,” Brownstein said. “The only difference is that this is more difficult. The media and other sources are sensitive and fine-tuned to things like human disease. The threshold for the reporting of a mysterious disease is different from the threshold for an ecological phenomenon.” In other words, while reporters (or Tweeters) will include individual-level death data in human stories, massive die-offs or flora changes could very well go unnoticed and probably unquantified.

And even with disease data, there are serious signal-to-noise challenges. In a paper that Brownstein co-authored last week, he showed that monitoring search terms for disease indicators could have tipped officials off to a deadly outbreak of listeriosis in Canada. But spotting emergent diseases instead of ones that have already caused major damage is a more challenging proposition. “It’s so tough to figure out why people search for specific information,” he said.


EXCEPT : FILTER BUBBLES
http://www.rene-pickhardt.de/algorithmic-information-filter-from-elis-parisers-ted-talks/
Google is filtering and personalizing search results

Eli is pointing out a thing some people might have already noticed. If two different people search for the same thing on Google it is very probable that the search results will be very different. Google is doing this without telling the user that it is acutally filtering the results based on what the algorithm thinks the user might like. According to Eli Pariser Google is using 57 signals to determine the interest of us. Of course this kind of personalization has its good sides. When I am about to buy a new notebook computer y I definitely want to see different Websites if I live in Germany or in the US. This could be due to tax and shipping fees. Which means that I am most probably interested in local stores and not in oversea shops. Still this personalization and filtering is a huge potential for serious problems. We might think we get all the information we need. But in reality we are becoming blinded by the filters Google is using. We have no chance to determine what other information is filtert and potentially available for a certain topic. On the other hand due to the amount of information we need filters and computers to help us. But the systems should be more transparent.

Facebook is also filtering the newsstream from your friends:
I have always been thinking Facebook’s huge success is strongly correlated to the fact that there is hardly Spam on Facebook and the information economy is very smart and user friendly. The attention of users to status updates is very high making facebook a great place for every company to do online and viral marketing. This of course contributes to Facebook’s reach. In fact the information architecture on Facebook is even so smart that your 20’000 followers on Facebook might not receive your status updates since Facebook’s EdgeRank algorithm decides it is not relevant to your fans or friends. Edgerank might not have 57 signals but it still takes into consideration:

who your fans are friend with
what other news they like
how heavy they have interacted with you in the past
the time passed since your last status update

Great news isn’t it? Just compare this with my statement in a recent blog post about creating newsletters as a musician in order to communicate with your fans and not solely rely on other services like Facebook or MySpace. You don’t believe the Facebook thing? There is a video about the EdgeRank algorithm used by Facebook to determine which status updates should reach us and which shouldn’t. Feel free to have a look and thanks to the guys from Klurig Analytics for producing such a great video resource:

57 SIGNALS
http://www.thefilterbubble.com/guessing-googles-57-signals
http://www.rene-pickhardt.de/google-uses-57-signals-to-filter/
What are the 57 signals google uses to filter search results?

Since my blog post on Eli Pariser’s Ted talk about the filter bubble became quite popular and a lot of people seem to be interested in which 57 signals Google would use to filter search results I decided to extend the list from my article and list the signals I would use if I was google. It might not be 57 signals but I guess it is enough to get an idea:

  1. Our Search History.
  2. Our location
  3. the browser we use.
  4. the browsers version
  5. The computer we use
  6. The language we use
  7. the time we need to type in a query
  8. the time we spend on the search result page
  9. the time between selecting different results for the same query
  10. our operating system
  11. our operating systems version
  12. the resolution of our computer screen
  13. average amount of search requests per day
  14. average amount of search requests per topic (to finish search)
  15. distribution of search services we use (web / images / videos / real time / news / mobile)
  16. average position of search results we click on
  17. time of the day
  18. current date
  19. topics of ads we click on
  20. frequency we click advertising
  21. topics of adsense advertising we click while surfing other websites
  22. frequency we click on adsense advertising on other websites
  23. frequency of searches of domains on Google
  24. use of google.com or google toolbar
  25. our age
  26. our sex
  27. use of “i feel lucky button”
  28. do we use the enter key or mouse to send a search request
  29. do we use keyboard shortcuts to navigate through search results
  30. do we use advanced search commands  (how often)
  31. do we use igoogle (which widgets / topics)
  32. where on the screen do we click besides the search results (how often)
  33. where do we move the mouse and mark text in the search results
  34. amount of typos while searching
  35. how often do we use related search queries
  36. how often do we use autosuggestion
  37. how often do we use sepell correction
  38. distribution of short / general  queries vs. specific / long tail queries
  39. which other google services do we use (gmail / youtube/ maps / picasa /….)
  40. how often do we search for ourself

Uff I have to say after 57 minutes of brainstorming I am running out of ideas for the moment. This list of signals is a pure guess based on my knowledge and education on data mining. Not one signal I name might correspond to the 57 signals google is using. In future I might discuss why each of these signals could be interesting. But remember: as long as you have a high diversity in the distribution you are fine with any list of signals.

CONTACT
Eli Pariser
http://elipariser.com/
email : epariser [at] elipariser [dot] com

PREVIOUSLY on SPECTRE : the PANIC of CROWDS
https://spectregroup.wordpress.com/2008/11/04/the-panic-of-crowds/

the FOUR CONDITIONS of CROWD-MIND HEALTH
http://kottke.org/04/07/wisdom-of-crowds
The wisdom of crowds you say? As Surowiecki explains, yes, but only under the right conditions. In order for a crowd to be smart, he says it needs to satisfy four conditions:

1. Diversity. A group with many different points of view will make better decisions than one where everyone knows the same information. Think multi-disciplinary teams building Web sites…programmers, designers, biz dev, QA folks, end users, and copywriters all contributing to the process, each has a unique view of what the final product should be. Contrast that with, say, the President of the US and his Cabinet.

2. Independence. “People’s opinions are not determined by those around them.” AKA, avoiding the circular mill problem.

3. Decentralization. “Power does not fully reside in one central location, and many of the important decisions are made by individuals based on their own local and specific knowledge rather than by an omniscient or farseeing planner.” The open source software development process is an example of effect decentralization in action.

4. Aggregation. You need some way of determining the group’s answer from the individual responses of its members. The evils of design by committee are due in part to the lack of correct aggregation of information. A better way to harness a group for the purpose of designing something would be for the group’s opinion to be aggregated by an individual who is skilled at incorporating differing viewpoints into a single shared vision and for everyone in the group to be aware of that process (good managers do this). Aggregation seems to be the most tricky of the four conditions to satisfy because there are so many different ways to aggregate opinion, not all of which are right for a given situation.

Satisfy those four conditions and you’ve hopefully cancelled out some of the error involved in all decision making: “If you ask a large enough group of diverse, independent people to make a prediciton or estimate a probability, and then everage those estimates, the errors of each of them makes in coming up with an answer will cancel themselves out. Each person’s guess, you might say, has two components: information and error. Subtract the error, and you’re left with the information.”

CONTACT
James Surowiecki
http://www.newyorker.com/online/blogs/jamessurowiecki/
email : jamessuro [at] aol [dot] com

HOW CROWDS GET SMARTER
http://www.randomhouse.com/features/wisdomofcrowds/Q&A.html
Q & A with James Surowiecki

Q: How did you discover the wisdom of crowds?
A: The idea really came out of my writing on how markets work. Markets are made up of diverse people with different levels of information and intelligence, and yet when you put all those people together and they start buying and selling, they come up with generally intelligent decisions. Sometimes, though, they come up with remarkably stupid decisions—as they did during the stock-market bubble in the late 1990s. I was interested in what explained the successes and the failures of markets, and as I got further into it I realized that it wasn’t just markets that were smart. In fact, crowds of all sorts were often remarkably wise.

Q: Could you define “the crowd?”
A: A “crowd,” in the sense that I use the word in the book, is really any group of people who can act collectively to make decisions and solve problems. So, on the one hand, big organizations—like a company or a government agency—count as crowds. And so do small groups, like a team of scientists working on a problem. But just as interested—maybe even more interested—in groups that aren’t really aware themselves as groups, like bettors on a horse race or investors in the stock market. They make up crowds, too, because they’re collectively producing a solution to a complicated problem: the bets of people betting on a horse race determine what the odds on the race will be, and the choices of investors determine stock prices.

Q: Under what circumstances is the crowd smarter?
A: There are four key qualities that make a crowd smart. It needs to be diverse, so that people are bringing different pieces of information to the table. It needs to be decentralized, so that no one at the top is dictating the crowd’s answer. It needs a way of summarizing people’s opinions into one collective verdict. And the people in the crowd need to be independent, so that they pay attention mostly to their own information, and not worrying about what everyone around them thinks.

Q: And what circumstances can lead the crowd to make less-than-stellar decisions?
A: Essentially, any time most of the people in a group are biased in the same direction, it’s probably not going to make good decisions. So when diverse opinions are either frozen out or squelched when they’re voiced, groups tend to be dumb. And when people start paying too much attention to what others in the group think, that usually spells disaster, too. For instance, that’s how we get stock-market bubbles, which are a classic example of group stupidity: instead of worrying about how much a company is really worth, investors start worrying about how much other people will think the company is worth. The paradox of the wisdom of crowds is that the best group decisions come from lots of independent individual decisions.

Q: What kind of problems are crowds good at solving and what kind are they not good at solving?
A: Crowds are best when there’s a right answer to a problem or a question. (I call these “cognition” problems.) If you have, for instance, a factual question, the best way to get a consistently good answer is to ask a group. They’re also surprisingly good, though, at
solving other kinds of problems. For instance, in smart crowds, people cooperate and work together even when it’s more rational for them to let others do the work. And in smart crowds, people are also able to coordinate their behavior—for instance, buyers and sellers are able to find each other and trade at a reasonable price—without anyone being in charge. Groups aren’t good at what you might call problems of skill— for instance, don’t ask a group to perform surgery or fly a plane.

Q: Why are we not better off finding an expert to make all the hard decisions?
A: Experts, no matter how smart, only have limited amounts of information. They also, like all of us, have biases. It’s very rare that one person can know more than a large group of people, and almost never does that same person know more about a whole series of questions. The other problem in finding an expert is that it’s actually hard to identify true experts. In fact, if a group is smart enough to find a real expert, it’s more than smart enough not to need one.

Q: Can you explain how a betting pool can help predict the future?
A: Well, predicting the future is what bettors try to do every day, when they try to figure out what horse will win a race or what football team will win on Sunday. What horse-racing odds or a point spread represent, then, is the group’s collective judgment about the future. And what we know from many studies is that that collective judgment is often remarkably accurate. Now, we have to be careful here. In the case of a horse race, for instance, what the group is good at predicting is the likelihood of each horse winning. The potential benefits of this are pretty obvious. If you’re a company, say, that’s trying to decide which product you should put out, what you want to know is the likelihood of success of your different options. A betting pool—or a market, or some other way of tapping into the wisdom of crowds—is the best way for you to get that information.

Q: Can you give an example of a current company that is tapping into the “wisdom of crowds?”
A: There’s a division of Eli Lilly called e.Lilly, which has been experimenting with using internal stock markets and hypothetical drug candidates to predict whether new drugs will gain FDA approval. That’s an essential thing for drug companies to know, because their whole business depends on them not only picking winners—that is, good, safe drugs—but also killing losers before they’ve invested too much money in them.

Q: You’ve explained how tapping into the crowd’s collective wisdom can help a corporation, but how can it help other entities, like a government, or perhaps more importantly, an individual?
A: Well, the same principles that make collective wisdom useful to a company make it just as useful to the government. For instance, in the book I talk about the Columbia disaster, showing how NASA’s failure to deal with the shuttle’s problems stemmed, in part, from a failure to tap into knowledge and information that the people in the organization actually had. And in a broader sense, I think the book suggests that the more diverse and free the flow of information in a society is, the better the decisions that society will reach. As far as individuals go, I think there are two consequences. First, we can look to collective decisions—as long as the groups are diverse, etc.—to give us good predictions. But the collective decisions will only be smart if each of us tries to be as independent as possible. So instead of just taking the advice of your smart friend, you should try to make your own choice. In doing so, you’ll make the group smarter.

Q: When you talk about using the crowd to make a decision, are you talking about consensus?
A: No, and this is one of the most important points in the book. The wisdom of crowds isn’t about consensus. It really emerges from disagreement and even conflict. It’s what you might call the average opinion of the group, but it’s not an opinion that every one in the group can agree on. So that means you can’t find collective wisdom via compromise.

Q: What would Charles MacKay—the author of Extraordinary Popular Delusions and the Madness of Crowds—think of your book?
A: He would probably think I’m deluded. Mackay thought crowds were doomed to excess and foolishness, and that only individuals could produce intelligent decisions. On the other hand, a good chunk of my book is about how crowds can, as it were, go mad, and what allows them to succumb to delusions. Mackay would like those chapters.

Q: What do you most hope people will learn from reading your book?
A: I think the most important lesson is not to rely on the wisdom of one or two experts or leaders when making difficult decisions. That doesn’t mean that expertise is irrelevant, or that we don’t need smart people. It just means that together all of us know more than any one of us does.

EARLY CROWD EXPERIMENTS
http://www.randomhouse.com/features/wisdomofcrowds/audio.html
http://www.randomhouse.com/features/wisdomofcrowds/excerpt.html
by James Surowiecki

As it happens, the possibilities of group intelligence, at least when it came to judging questions of fact, were demonstrated by a host of experiments conducted by American sociologists and psychologists between 1920 and the mid-1950s, the heyday of research into group dynamics. Although in general, as we’ll see, the bigger the crowd the better, the groups in most of these early experiments—which for some reason remained relatively unknown outside of academia—were relatively small. Yet they nonetheless performed very well. The Columbia sociologist Hazel Knight kicked things off with a series of studies in the early 1920s, the first of which had the virtue of simplicity. In that study Knight asked the students in her class to estimate the room’s temperature, and then took a simple average of the estimates. The group guessed 72.4 degrees, while the actual temperature was 72 degrees. This was not, to be sure, the most auspicious beginning, since classroom temperatures are so stable that it’s hard to imagine a class’s estimate being too far off base. But in the years that followed, far more convincing evidence emerged, as students and soldiers across America were subjected to a barrage of puzzles, intelligence tests, and word games. The sociologist Kate H. Gordon asked two hundred students to rank items by weight, and found that the group’s “estimate” was 94 percent accurate, which was better than all but five of the individual guesses. In another experiment students were asked to look at ten piles of buckshot—each a slightly different size than the rest—that had been glued to a piece of white cardboard, and rank them by size. This time, the group’s guess was 94.5 percent accurate. A classic demonstration of group intelligence is the jelly-beans-in-the-jar experiment, in which invariably the group’s estimate is superior to the vast majority of the individual guesses. When finance professor Jack Treynor ran the experiment in his class with a jar that held 850 beans, the group estimate was 871. Only one of the fifty-six people in the class made a better guess.

There are two lessons to draw from these experiments. First, in most of them the members of the group were not talking to each other or working on a problem together. They were making individual guesses, which were aggregated and then averaged. This is exactly what Francis Galton did, and it is likely to produce excellent results. (In a later chapter, we’ll see how having members interact changes things, sometimes for the better, sometimes for the worse.) Second, the group’s guess will not be better than that of every single person in the group each time. In many (perhaps most) cases, there will be a few people who do better than the group. This is, in some sense, a good thing, since especially in situations where there is an incentive for doing well (like, say, the stock market) it gives people reason to keep participating. But there is no evidence in these studies that certain people consistently outperform the group. In other words, if you run ten different jelly-bean-counting experiments, it’s likely that each time one or two students will outperform the group. But they will not be the same students each time. Over the ten experiments, the group’s performance will almost certainly be the best possible. The simplest way to get reliably good answers is just to ask the group each time.

A similarly blunt approach also seems to work when wrestling with other kinds of problems. The theoretical physicist Norman L. Johnson has demonstrated this using computer simulations of individual “agents” making their way through a maze. Johnson, who does his work at the Los Alamos National Laboratory, was interested in understanding how groups might be able to solve problems that individuals on their own found difficult. So he built a maze—one that could be navigated via many different paths, some shorter, and some longer—and sent a group of agents into the maze one by one. The first time through, they just wandered around, the way you would if you were looking for a particular café in a city where you’d never been before. Whenever they came to a turning point—what Johnson called a “node”—they would randomly choose to go right or left. Therefore some people found their way, by chance, to the exit quickly, others more slowly. Then Johnson sent the agents back into the maze, but this time he allowed them to use the information they’d learned on their first trip, as if they’d dropped bread crumbs behind them the first time around. Johnson wanted to know how well his agents would use their new information. Predictably enough, they used it well, and were much smarter the second time through. The average agent took 34.3 steps to find the exit the first time, and just 12.8 steps to find it the second.

The key to the experiment, though, was this: Johnson took the results of all the trips through the maze and used them to calculate what he called the group’s “collective solution.” He figured out what a majority of the group did at each node of the maze, and then plotted a path through the maze based on the majority’s decisions. (If more people turned left than right at a given node, that was the direction he assumed the group took. Tie votes were broken randomly.) The group’s path was just nine steps long, which was not only shorter than the path of the average individual (12.8 steps), but as short as the path that even the smartest individual had been able to come up with. It was also as good an answer as you could find. There was no way to get through the maze in fewer than nine steps, so the group had discovered the optimal solution. The obvious question that follows, though, is: The judgment of crowds may be good in laboratory settings and classrooms, but what happens in the real world?

II. on the UTILITY of PREDICTION MARKETS

ROGUE PROPAGANDIST TRIES to BULLSHIT MARKET
http://www.whistle-safe.org/article.pl?sid=32/07/20/0833218
http://www.cqpolitics.com/wmspage.cfm?docID=news-000002976265&referrer=js
Trader Drove Up Price of McCain ‘Stock’ in Online Market
BY Josh Rogin / Oct. 21, 2008

An internal investigation by the popular online market Intrade has revealed that an investor’s purchases prompted “unusual” price swings that boosted the prediction that Sen. John McCain will become president. Over the past several weeks, the investor has pushed hundreds of thousands of dollars into one of Intrade’s predictive markets for the presidential election, the company said. “The trading that caused the unusual price movements and discrepancies was principally due to a single ‘institutional’ member on Intrade,” said the company’s chief executive, John Delaney, in a statement released Thursday. “We have been in contact with the firm on a number of occasions. I have spoken to those involved personally.” After the internal investigation into the trading patterns, Intrade found no wrongdoing or violation of its exchange rules, according to the company. Citing privacy policies, Delaney would not disclose the investor’s identity or whether the investor was affiliated with any political campaign. According to Delaney the investor was using “increased depth” in the Intrade market “to manage certain risks.” The action boosted the McCain prediction over its previous market value and above the levels of competing predictive-market Web sites. Pundits and politicians have used Intrade to track the fortunes of the two presidential candidates. Through the site, begun in 1999 and incorporated in Ireland, traders buy and sell “contracts” that function as stocks, allowing investors to gamble on the outcome of political, cultural, or even geological events such as the weather.

The company asserts and experts have found that the Intrade market is generally more accurate in predicting the outcome of major events than other leading indicators, including public opinion polls. But the relatively small scale of the market and its lack of outside regulation could leave the system vulnerable to unscrupulous investors, scholars of predictive markets say. Justin Wolfers, an associate professor at the University of Pennsylvania’s Wharton School of Business, said the trades in question do not follow any logical investment strategy. “Who knows who’s doing it, it’s obviously someone who wants good news for McCain,” said Wolfers, who has been following the situation closely. McCain campaign spokesman Michael Goldfarb said: “It’s always a good time to buy McCain.”

Ripple Effects
Intrade users first noticed something amiss when a series of large purchases running counter to market predictions sparked volatility in the prices of John McCain and Barack Obama contracts. The investor under scrutiny purchased large blocks of McCain futures at once, boosting their price and increasing the prediction that McCain had a greater chance of winning the presidential election. At other times, according to Intrade’s online records, blocks of Obama futures were sold — lowering the market’s prediction about Obama’s standing in the race. According to Intrade bulletin boards and market histories, smaller investors swept in to take advantage of what they saw as price discrepancies caused by the market shifts — quickly returning the Obama and McCain futures prices to their previous value. This resulted in losses for the investor and profits for the small investors who followed the patterns to take maximum advantage. The activities of the trader, dubbed the “rogue trader” on Intrade’s message boards, raised several questions. For example, the trader purchased large contracts named specifically after McCain and Obama. There were no similar-sized investments, however, in separate instruments that predict a generic Republican or Democratic presidential win — even though both sets of contracts apply to the same event, prices show. Some political news sites, such as realclearpolitics.org, prominently display Intrade’s McCain contract value but do not display the corresponding value for a Republican presidential win. Similar trading patterns were not found in competing predictive market Web sites betting on John McCain , such as the Iowa Electronic Markets or Betfair. This means the trader was paying thousands of dollars more than necessary to purchase McCain contracts on Intrade, where the price of betting on McCain was much higher. On Sept. 24, for example, Obama contracts were trading on Intrade at a price that predicts a 52 percent chance of an Obama victory. At the same time, Betfair and IEM contracts equated to about a 62 percent chance of an Obama victory, according to the political site fivethirtyeight.com. Intrade records show the trader often purchased tens or hundreds of thousands of dollars of contracts in the middle of the night, when activity was at its lowest, and in large bursts. In a three-day period from Sept. 30 through Oct. 2, four separate flurries of buying drove the price of the McCain contracts up by 3 to 5 points each. Those numbers eventually settled when the market compensated. “These movements over McCain largely occurred at time when there was no way that any useful information came out that was pro-McCain,” Wolfers said. “A profit-motivated guy wants to buy his stock in a way that would minimize his impact on the price, a manipulator wants to maximize it.”

Rogue Tactics
According to Intrade, the company contacted the investor and used public and private data held by the company as part of its investigation. That included an analysis of the trades made by the investor, tracking of Internet addresses, checking physical addresses and other information. Intrade released details about its investigation in a statement on its Web site. Some Intrade users commented on the company’s message board that the trader may believe in McCain’s chances for victory, despite trends in recent public opinion polls. Indeed, bucking conventional wisdom can be a profit-making strategy. For example, David Rothschild, a researcher and Ph.D. candidate at the Wharton School, said that during the first two presidential debates, the trader bet thousands of dollars on a McCain electoral victory at the same moment that instant polls were suggesting that Obama would win. “That’s equivalent to buying a company’s stock just as negative earning reports come out,” Rothschild said. “It is a bad investment, but may make some observers think that Mr. McCain won the debate, which, again would be the goal of market manipulation.” Also, the trader paid a premium of 10 percent to 20 percent on every dollar traded by not placing similar bets on other Web sites, according to Rothschild’s calculations. Overall, if the trader’s motive was to influence the Intrade market, he was remarkably successful, Rothschild said. The trader’s actions help keep the probability of Obama winning the election on Intrade about 10 percent lower than Betfair and IEM for more than a month. “If the investor did this as investment, not to manipulate Intrade, he is one of the most foolish investors in the world,” Rothschild said.

MARKET MANIPULATION RESEARCH
http://hanson.gmu.edu/biashelp.pdf
http://www.unc.edu/~cigar/papers/ManipIHT_June2008(KS).pdf
http://bpp.wharton.upenn.edu/jwolfers/Press/WSJcolumn/16-Market%20Manipulation%20Muddies%20Election%20Outlook.pdf

PROOF OF CONCEPT?
http://www.fivethirtyeight.com/2008/09/intrade-betting-is-suspcious.html
http://freakonomics.blogs.nytimes.com/2008/10/02/manipulation-in-political-prediction-markets/#more-3145
http://www.marginalrevolution.com/marginalrevolution/2008/01/prediction-mark.html
http://www.marginalrevolution.com/marginalrevolution/2008/10/manipulation-of.html
“This is big news but not for the reasons that most people think. Although some manipulation is clearly possible in the short run, the manipulation was already suspected due to differences between Intrade and other prediction markets. As a result: “According to Intrade bulletin boards and market histories, smaller investors swept in to take advantage of what they saw as price discrepancies caused by the market shifts — quickly returning the Obama and McCain futures prices to their previous value. This resulted in losses for the investor and profits for the small investors who followed the patterns to take
maximum advantage.”

This supports Robin Hanson’s and Ryan Oprea’s finding that manipulation can improve (!) prediction markets – the reason is that manipulation offers informed investors a free lunch. In a stock market, for example, when you buy (thinking the price will rise) someone else is selling (presumably thinking the price will fall) so if you do not have inside information you should not expect an above normal profit from your trade. But a manipulator sells and buys based on reasons other than expectations and so offers other investors a greater than normal return. The more manipulation, therefore, the greater the expected profit from betting according to rational expectations.

An even more important lesson is that prediction markets have truly arrived when people think they are worth manipulating. Notice that the manipulator probably doesn’t care about changing the market prediction per se. Instead, a manipulator willing to bet hundreds of thousands to change the prediction of a McCain win must think that the prediction will actually affect the outcome. And if people think prediction markets are this important then can decision markets be far behind?”

COLLECTIVE INTELLIGENCE
http://www.prokons.com/prediction-markets/faq
http://flipflopmoney.com/2008/05/11/intrade-making-money-online-not-the-usual-way/
http://www.intrade.com/
http://us.newsfutures.com/
http://www.biz.uiowa.edu/iem/
http://www.fivethirtyeight.com/
http://www.realclearpolitics.com/
http://www.hsx.com/

http://en.wikipedia.org/wiki/Prediction_market
http://en.wikipedia.org/wiki/Election_Stock_Market
http://en.wikipedia.org/wiki/Policy_Analysis_Market
http://en.wikipedia.org/wiki/Futures_market
http://en.wikipedia.org/wiki/Efficient_market_hypothesis

http://www.forecastingprinciples.com/PM/
http://www.midasoracle.org/
http://www.chrisfmasse.com/
http://www.predictionmarketjournal.com/
http://www.pmindustry.org/
http://betting.betfair.com/specials/politics-betting/prediction-markets/
http://www.dmreview.com/bissues/20070301/2600311-1.html?bir=1
http://www.ideosphere.com/
http://www.consensuspoint.com/blog/?m=200809

POSITIVE ECONOMICS
http://en.wikipedia.org/wiki/Positive_economics
http://en.wikipedia.org/wiki/Essays_in_Positive_Economics#The_Methodology_of_Positive_Economics
http://academic2.american.edu/~dfagel/Class%20Readings/Friedman/Methodology.pdf

ORGANIZING without ORGANIZATIONS
http://cyber.law.harvard.edu/interactive/events/2008/02/shirky
http://www.herecomeseverybody.org/
http://www.shirky.com/

‘HERD INSTINCT’ as ECONOMIC MODEL
http://www.forbes.com/2008/10/21/why-bubbles-economy-markets-bubbles08-cx_th_1021harford.html
Why Do Markets Create Bubbles?
BY Tim Harford / 10.21.08

Bubbles are like pornography: Everyone has his or her own opinion as to what qualifies, but it is impossible to pen a precise definition. If you wish to push the metaphor further, both are also fun for a while, if you like that sort of thing, but apt to end up making you feel deflated and embarrassed. Bubbles are also embarrassing for the economics profession. It’s not that we have no idea what causes bubbles to form, it’s that we have too many ideas for comfort. Some explanations are psychological. Some point out that many bubbles have been stoked not by markets but by governments. There is even a school of thought that some famous bubbles weren’t bubbles at all.

The psychological explanation is the easiest to explain: People get carried away. They hear stories of their neighbors getting rich and they want a piece of the action. They figure, somehow, that the price of stocks (1929) or dot-com start-ups (1999) or real estate (2006) can only go up. A symptom of this crowd psychology is that the typical investor displays exquisitely bad timing. The economist Ilia Dichev of the University of Michigan has recently calculated “dollar-weighted” returns for major stock indexes; this is a way of adjusting for investors rushing into the market at certain times. It turns out that “dollar-weighted” returns are substantially lower than “buy and hold” returns. In other words, investors flood in when the market is near its peak, tending to buy high and sell low. The herd instinct seems to cost us money. That is awkward for economists, because mainstream economic models do not really encompass “herd instinct” as a variable. Still, some economists are teaming up with psychologists and even neurophysiologists in the search for an answer.

Cambridge economist John Coates is one of them. He used to manage a Wall Street trading desk and was struck by the way the (male) traders changed as the dot-com bubble inflated. They would pump their arms, yell, leave pornography around the office and in general behave as though they were high on something. It turns out that they were: It was testosterone. Many male animals–bulls, hares, rutting stags and the like–fight with sexual rivals. The winner experiences a surge of testosterone, which makes him more aggressive and more likely to take risks. In the short run that tends to mean that winners keep winning; in the long run, they take too many risks. Dr. Coates wondered if profitable traders were also running on testosterone, and a few saliva samples later it appears that he is right. Profitable trading days boost testosterone levels and tend to encourage more risk-taking, more wins and more testosterone. When the risks didn’t pay off, the testosterone ebbed away to be replaced by a stress hormone, cortisol. The whole process seems likely to exaggerate peaks and troughs. These psychological explanations are likely to help us understand what goes on as bubbles form and how they might be prevented. Yet they make me nervous: It is too easy to blame a bubble on the mob psychology of the market when a closer look at most bubbles reveals that there is much more to the story than that.

For example, one famous early “mania” was the Mississippi bubble, in which countless investors poured their money into the Compagnie des Indes in France in 1720, and lost it. Yet there was more going on than a free-market frenzy: The government could hardly have been more closely involved. The Compagnie des Indes had effectively taken over the French Treasury and legal monopolies on French trade with much of the rest of the world (including Louisiana–hence “Mississippi bubble”). Investors were hardly insane to think that such a political machine might be profitable, especially since the king of France personally held many of the shares. But the king sold out near the top in 1720; within two years, the Compagnie was bankrupt and its political power dismantled.

The government played its own part in the current credit crunch, too. For all the scapegoating of deregulation, thoughtful commentators also point to the Federal Reserve’s policy of cheap money, and Fannie and Freddie’s enormous appetite for junk mortgages–urged all the way by politicians trying to make credit available to poor and risky borrowers. Market psychology was part of the story, but not the whole story. The idea that ordinary people have a tendency to be caught up in investment manias is a powerful one, thanks in part to Charles Mackay, author in 1841 of the evergreen book Extraordinary Popular Delusions and the Madness of Crowds. Mackay’s most memorable example was the notorious Dutch tulip bubble of 1637, in which –absurdity!–tulip bulbs changed hands for the price of a house.

It is the quintessential case study of financial hysteria, but it’s not clear that there was ever an important tulip bubble. Rare tulip flowers–we now know that their intricate patterning is caused by a virus–were worth huge sums to wealthy Parisian gentlemen trying to impress the ladies. Bulbs were the assets that produced these floral gems, like geese that laid golden eggs. Their value was no fantasy. Peter Garber, a historian of economic bubbles, points out that a single bulb could, over time, be used to produce many more bulbs. The price of the bulbs would, of course, fall as more were cultivated. A modern analogy would the first copy of a Hollywood film: the final copies may circulate for a few dollars, but the original is worth tens of millions. Garber points out that rare flower breeds still change hands for hundreds of thousands of dollars. Perhaps we shouldn’t be quite so sure that the tulipmania really was a mania. Economists are going to have to get better at understanding why bubbles form from a heady mix of fraud, greed, perverse incentives, mob psychology and government incompetence. What we should never forget is that underneath the apparent hysteria, there is often a cold rationality to it all.

FIELD RECORDINGS
http://betting.betfair.com/specials/politics-betting/prediction-markets/the-betfair-prof/whats-the-connection-between-a-1906-poultry-exhibition-and-t-180908.html
What’s the connection between a 1906 poultry exhibition and the 2008 US election?
by Leighton Vaughan Williams / 18 September 2008

Sir Francis Galton was an English explorer, anthropologist, scientist, who was born in 1822 and died in 1911. To students of prediction markets he is best known, however, for his visit, at the age of 85, to the West of England Fat Stock and Poultry Exhibition, and what happened when he came across a competition in which visitors could, for sixpence, guess the weight of an ox. Those who guessed closest would receive prizes. About 800 people entered. Ever the scientist, he decided to examine the ledger of entries to see how clever these ordinary folk actually were in estimating the correct weight. In letters to ‘Nature’ magazine, published in March of 1907, he explained just how ordinary those entering the competition were. “Many non-experts competed”, he wrote, “like those clerks and others who have no knowledge of horses, but who bet on races, guided by newspapers, friends, and their own fancies … The average was probably as well fitted for making a just estimate of the dressed weight of the ox as an average voter is of judging the merits of most political issues”.

The results surprised him. For what he found was that the crowd had guessed (taking the mean, i.e. adding up the guesses and dividing by the number of entrants) that the ox would weigh 1,197 pounds. In fact, it weighed 1,198 pounds! The median estimate (listing the guesses from the highest to the lowest and taking the mid-point) was also close (1,207 pounds, and therefore still within 1% of the correct weight) but not as close. Some have argued that Galton himself favoured the use of the median rather than the mean, and so was double-surprised when the mean beat the median. Others have argued that the point is incidental and what this tale demonstrates about the wisdom of the crowd is more important than such a fine statistical detail. I think that both these points of view contain some merit. The power of the market to aggregate information is indeed a critically important idea. But it is also important to be able to distinguish in different contexts which measure of the ‘average’ (the mean, the median, or perhaps some other measure) is more suited to the purpose at hand.

Take the stream of opinion polls which contribute to the collective knowledge that drives the Betfair market about the identity of the next President of the United States. If five are released, say, on a given day, what is the most appropriate way of gauging the information contained in them? Should we simply add up the polling numbers for each candidate and divide by the number of polls, or should we list them from highest polling score to lowest and take the mid-point. The convention adopted by sites such as http://www.realclearpolitics.com is to take the mean. But is there a better measure than the mean of discerning the collective wisdom contained in the polls, and if so, what is it? The jury is still deliberating.

CONTACT
Leighton Vaughan Williams
http://www.ntu.ac.uk/research/school_research/nbs/staff/61441gp.html
http://www.ntu.ac.uk/nbs/business/specialist_centres/political_forecasting.html
http://www.predictionmarketjournal.com/
email : leighton.vaughan-williams [at] ntu.ac [dot] uk

‘COLLECTIVE BEST GUESS’ CORRECT within a FURLONG
http://betting.betfair.com/specials/politics-betting/prediction-markets/the-betfair-prof/the-betfair-prof-question-how-do-you-find-a-missing-submarin-080408.html
“Question: How do you find a missing submarine? Answer: Ask the audience”
BY Leighton Vaughan Williams / 8 April 2008

During a car journey between Nottingham and Warwick the other week I was told a story about the value of crowd wisdom in turning up buried treasure. The story was that by asking a host of people, each with a little knowledge of ships, sailing and the sea, where a vessel is likely to have sunk in years gone by, it is possible with astonishing accuracy to pinpoint the wreck and the bounty within. Individually, each of those contributing a guess as to the location is limited to their special knowledge, whether of winds or tides or surf or sailors, but the idea is that together their combined wisdom (arrived at by averaging their guesses) could pinpoint the treasure more accurately than a range of other predictive tools. At least that’s the way it was told to me by an economist who was in turn told the story by a physicist friend.

To any advocate of the power of prediction markets, this certainly sounds plausible, so I decided to investigate further. Soon I was getting acquainted with the fascinating tale of the submarine USS Scorpion, as related by Mark Rubinstein, Professor of Applied Investment Analysis at the University of California at Berkeley. In a fascinating paper titled, ‘Rational Markets? Yes or No? The Affirmative Case’, he tells of a story related in a book called ‘Blind Man’s Bluff: The Untold Story of American Submarine Espionage’ by Sherry Sontag and Christopher Drew. The book tells how on the afternoon of May 27, 1968, the submarine USS Scorpion was declared missing with all 99 men aboard. It was known that she must be lost at some point below the surface of the Atlantic Ocean within a circle 20 miles wide. This information was of some help, of course, but not enough to determine even five months later where she could actually be found.

The Navy had all but given up hope of finding the submarine when John Craven, who was their top deep-water scientist, came up with a plan which pre-dated the explosion of interest in prediction markets by decades. He simply turned to a group of submarine and salvage experts and asked them to bet on the probabilities of what could have happened. Taking an average of their responses, he was able to identify the location of the missing vessel to within a furlong (220 yards) of its actual location. The sub was found. Sontag and Drew also relate the story of how the Navy located a live hydrogen bomb lost by the Air Force, albeit without reference in that case to the wisdom of crowds. Perhaps, though, that tale is too secret yet to be told! What then, I wonder, would those scientific giants, Karl Pearson and Lord Rayleigh, have made of it all? It was their correspondence, you may recall, in the pages of the scientific journal, ‘Nature’, which answered the classic query of where to find the drunk you left in a field. “Where you left him,” was the answer. Which is all very well, of course, if you were sober enough yourself to know exactly where that might have been!

PREVIOUSLY on SPECTRE : TANGANYIKA LAUGHTER EPIDEMIC, 1962-64
https://spectregroup.wordpress.com/2009/01/03/tanganyika-laughter-epidemic-1962-64/
CROWD-SOURCING the FUTURE
https://spectregroup.wordpress.com/2007/04/05/crowd-sourcing-the-future/
MECHANISM DESIGN THEORY
https://spectregroup.wordpress.com/2007/10/22/mechanism-design-theory/
SWARM INTELLIGENCE
https://spectregroup.wordpress.com/2007/07/16/swarm-intelligence/1

SEE ALSO : FINANCIAL LITERACY
http://annalusardi.blogspot.com/
http://www.dartmouth.edu/~alusardi/media.html

GAIN CONFIDENCE
http://www.gametheory.net/dictionary/
http://www.gametheory.net/tests/
http://www.gametheory.net/games/
http://www.gametheory.net/applets/
http://www.gametheory.net/links/academic-journals.html
http://www.gametheory.net/lectures/
http://www.gametheory.net/books/
http://gambit.sourceforge.net/
http://www.strategy-business.com/library/enews
http://www.ics.uci.edu/~eppstein/cgt/
http://kuznets.fas.harvard.edu/~aroth/alroth.html
http://www.perfecteconomy.com/pg-glossary-of-terms.html
http://www-sop.inria.fr/coprin/ISDG/
http://meganmcardle.theatlantic.com/archives/2008/10/recommended_reading.php
http://www.econlib.org/

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NO INFRASTRUCTURE, at ALL

CALLS for INNOVATION
http://www.trackernews.net/search/?s=HAITI
http://crisismapping.ning.com/

OPEN STREET MAP TOOLKIT
http://www.openstreetmap.org/?lat=18.72&lon=-72.68&zoom=8&layers=B000FTF
http://wiki.openstreetmap.org/wiki/WikiProject_Haiti
http://labs.geofabrik.de/haiti/


(Ricardo Arduengo/AP)

TXT 4636 FREE COMM SYSTEM
http://blog.ushahidi.com/index.php/2010/01/17/the-4636-sms-shortcode-for-reporting-in-haiti/
http://blog.ushahidi.com/index.php/2010/01/18/ushahidi-fletcher-situation-room-update/
http://blog.ushahidi.com/index.php/2010/01/20/4636-success-stories-from-haiti/

GOOGLE MISSING PERSON SPREADSHEET
http://haiticrisis.appspot.com/
https://spreadsheets.google.com/pub?key=t0Ya6eH0L7fn599qN4WsJkw&gid=0
https://spreadsheets.google.com/pub?key=t0Ya6eH0L7fn599qN4WsJkw&gid=1
iREPORT SEARCH BY NAME
http://www.ireport.com/ir-topic-stories.jspa?topicId=381628
INT’L RED CROSS
http://www.familylinks.icrc.org/haiti/people
http://www.familylinks.icrc.org/haiti

REUTERS EMERGENCY INFORMATION SERVICE (EIS)
http://www.alertnet.org/thenews/newsdesk/126373176384.htm
“EIS is exclusively operating for and on behalf of earthquake survivors, using local languages, French and Creole. The service is free and global. People in Haiti and families and friends around the world can register via a simple text message. Survivors will receive critical news and information direct to their mobiles”

InSTEDD
http://www.instedd.org/technology_overview
http://www.instedd.org/technology_field_lab

RELIEF EFFORTS
http://www.mercycorps.org/
http://www.standwithhaiti.org/haiti
http://www.cidi.org/incident/haiti-10a/
http://community.apan.org/hadr/haiti/default.aspx
http://www.usaid.gov/faqs.html#q4
http://www.interaction.org/crisis-list/earthquake-haiti
http://blog.ted.com/2010/01/the_haiti_trage.php

OVERSIGHT
http://www.disasteraccountability.org/
http://www2.guidestar.org/

HEALTH + SANITATION GUIDES (KREYOL)
http://www.hesperian.org/publications_download.php
http://www.hesperian.info/assets/Where_There_is_no_Doctor_Creole.pdf
http://www.hesperian.info/assets/hesperian_wwhnd_haitian%20creole_2000.pdf
http://www.hesperian.info/assets/PDF%20Kreyol%20sanitation%20book-1.pdf

kreyol

LEARN KREYOL
http://haiticrisis.appspot.com/?lang=ht
http://crisiscommons.org/wiki/index.php?title=Creole-French-English_Phrase_Dictionary_Wiki

TECHNICAL VOLUNTEER REGISTRY
http://dex.cidi.org/
http://www.ewb-usa.org/haiti.php

IMPORTABLE INFRASTRUCTURE :
WHO’S WHERE, DOING WHAT
http://haiti-orgs.sahanafoundation.org/prod/or/organisation
http://haiti.sahanafoundation.org/prod/
http://www.reliefweb.int/rw/dbc.nsf/doc108?OpenForm&emid=EQ-2010-000009-HTI&rc=2

CONDITIONS
http://wfplogistics.org/haiti-earthquake-2010

NAVIGATOR
http://www.garmin.com/garmin/cms/site/us/onthetrail/

CONTEXT
http://google-latlong.blogspot.com/2010/01/haiti-imagery-layer-now-available.html
http://www.pbs.org/newshour/rundown/2010/01/scenes-of-destruction-in-haiti-from-above.html

Images of this week’s massive earthquake in Haiti are now flowing out of the country as aid workers and journalists flow in. What we have seen so far confirms the obvious: devastation is massive and widespread. Buildings collapsed. Homes destroyed. A country once inching back from the abyss has been thrown violently back. The photos above, courtesy of GeoEye and Google, show parts of Port-au-Prince before and after the quake. The white building in the bottom frame is the presidential palace, cracked along its axis. This morning, Google added GeoEye’s new imagery to Google Earth. It is available here. We’ve embedded it below. Google Earth Library also has a good collection of data and images from Haiti. Additionally, Google has launched a dynamic spreadsheet, called the “Haiti Situation Tracking Form” that allows people to post messages looking for loved ones and other updates.

CRISIS MAPPING
http://haiti.ushahidi.com/main
http://haiti.ushahidi.com/reports/submit
http://blog.ushahidi.com/index.php/2010/01/13/haiti-earthquake/
http://sitroom.ushahididev.com/
http://leeinhaiti.com/
http://wiki.sahana.lk/doku.php/haiti:start
http://talksahana.com/?p=333

TECH VOLUNTEERS
http://english.aljazeera.net/news/americas/2010/01/20101206836217899.html

Hundreds of web technicians, spurred into action by Haiti’s earthquake one week ago, have developed new web-based tools and services to help the relief effort. Volunteers in the US built and refined software for tracking missing people, mapping the disaster areas and enabling urgent text messaging. Tim Schwartz, a web programmer in San Diego, California, said that he feared that due to so many social-networking sites, crucial information about Haitian earthquake victims would “go everywhere on the internet [but] it would be very hard to actually find people”.

Acting on his concern, Schwartz and 10 other web developers built http://www.haitianquake.com, an online lost-and-found site to help Haitians in and out of the country to locate missing relatives. The database, which anyone can update, was online less than 24 hours after the earthquake struck, with more than 6,000 entries due to a built-in “scraper” that gathered data from emergency relief organisations working at the site of the earthquake in the Haitian capital of Port-au-Prince. Agencies, including the International Committee of the Red Cross and the US federal emergency management agency [Fema], put the systems to use and two days later, Google, the US search engine giant, created PersonFinder, which consolidated all the information from various person-finding sites. Christopher Csikszentmihalyi, the director of media at the Massachusetts Institute of Technology, said PersonFinder, which can be embedded in any website and thus far has more than 32,000 records, “greatly increases the chances that Haitians in Haiti and abroad will be able to find each other”.

Dispatching rescuers
Another volunteer project forged in the earthquake’s aftermath was a mobile phone text-messaging system that helps relief groups dispatch rescuers, food and water. Patrick Meier, the director of Crisis Mapping and Strategic Partnerships at Ushahidi, an online crisis-reporting platform, told Al Jazeera such tools allow near real-time disaster response. “One of the most recent developments in that effort has been the free text messages [they are usually in Creole but in 10 minutes we get them translated into English] … if anyone inside Haiti texts 4636, we get that information in near real time and can [then] map it [and get the information to organisations that need it],” he said. “We have had a number of success stories. One of the very first was a report that went up through Ushahidi about an orphanage that was desperately running out of water … soon after we had someone report they had dispatched 20 litres of water to the orphanage.” In another collaborative effort, volunteers from online OpenStreetMap “crisis mapping” project provide up-to-the-minute data, such as the location of new field hospitals and collapsed bridges.

USHAHIDI [TESTIMONY]
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/15/AR2010011502650.html
online tool to Haitian disaster relief effort
BY Monica Hesse / January 16, 2010

Patrick Meier learned about the earthquakes at 7 p.m. Tuesday while he was watching the news in Boston. By 7:20, he’d contacted a colleague in Atlanta. By 7:40, the two were mobilizing an online tool created by a Kenyan lawyer in South Africa. By 8, they were gathering intelligence from everyplace, in a global effort to crowd-source assistance for Haiti. The site is www.Ushahidi.com, and it allows users to submit eyewitness accounts or other relevant information for disaster zones via e-mail, text or Twitter — and then visualize the frequency of these events on a map. By Friday, Ushahidi, which means “testimony” in Swahili, had received nearly 33,000 unique visitors, and several hundred personal reports that mainstream news organizations might not hear about. “Chantal Landrin is stuck under the rubble at a house in Turjo!” one user submitted via Twitter. “Please help me find my family in Haiti,” begins another poster. The majority of Ushahidi’s posts are from people — many from the United States — hoping to find information about missing relatives. “Route 9 is access point into [Port-au-Prince] but still precarious,” writes another, who has traveled the road.

Taken individually, these bits of data might not be terribly useful. The goal is that by aggregating the incidents in a visual format, people and organizations using the site will be able to see patterns of destruction, to determine where services should be concentrated. A red dot on the map, for example, signifies that looting is happening near a town called Pétionville; another shows that Hotel Villa Creole has become a site of medical triage. The practice is known as crisis mapping, a newer field of disaster analysis using geography-based data sets, employed by organizations like Ushahidi and Arlington-based GeoCommons. Although individuals have used Twitter and Facebook to share anecdotes for a few years — notably, during 2009’s contested Iranian elections — crisis mapping brings many data points together, making meaning out of randomness and spreading information about areas lacking well-developed records. “We’re providing a repository for all kinds of organizations,” says Meier, who in addition to working as Ushahidi’s director of strategic operations also founded the International Network of Crisis Mappers.

Ushahidi was originally founded in 2008 to map reports of violence in post-election Kenya. Ory Okolloh, a lawyer, had been trying to keep track of these incidents via her personal blog, “but I got swamped by how much information was coming in,” Okolloh says, “and I wanted to have a larger context of what was happening.” She appealed to the blogosphere for help, and soon had a site that allowed the entire Kenyan population to catalogue the injustices and atrocities they were witnessing — a real-time encyclopedia of unrest. Since then, the Ushahidi platform has been employed in many smaller projects, from monitoring elections in India to tracking medicine in various African countries. “Stop the Stock-outs,” as the medical project was known, involved volunteers swarming pharmacies to check the availability of common drugs and text their findings to be displayed on a map. In Kenya alone, more than 100 health centers were revealed to be operating without necessary medication, according to reports. The Kenyan government later allocated more funds for medication.

In Haiti, Meier says, it’s too early to tell what impact Ushahidi might have on relief efforts. Some of the rescue workers for whom Ushahidi was intended are currently too besieged by the chaos of the situation to attempt incorporating it into their work: “Our colleagues are not feeding information into crowdsourcing platforms for now,” writes Florian Westphal of the International Committee of the Red Cross via e-mail. “I don’t think they have the time.” Crisis mappers hope that their analytics will gain greater use in coming days, as rescue workers attempt to navigate the changed landscape. “Being one of the poorest countries in the Western Hemisphere, Haiti doesn’t have the infrastructure that a more developed country would have,” such as extensive Global Positioning System equipment that would aid in mapping the terrain, says Andrew Turner, chief technology officer of GeoCommons, which has also been producing Haiti-related maps. “Now you have all of these people needing to know how to get from here to there. . . . You need to know where the triage centers are, and the food and water. An old map would be irrelevant with road closings.”

The crowd-sourcing represents what Meier sees as the future of crisis response. “We’re going to need to collaborate, we’re going to need to share data,” he says. “The best way to provide humanitarian response is to be able to provide platforms” and tools that allow people to share on-the-ground information quickly. On Ushahidi, someone posts that the National Cathedral has collapsed, and the map gets another tiny dot of red.

CRISIS COMMONS [WHITE HAT]
http://haiti.crisiscommons.org/
http://crisiscommons.org/wiki/index.php?title=Haiti/2010_Earthquake
http://twitter.com/crisiscamp

TXT/SMS DONATIONS
http://blogs.consumerreports.org/money/2010/01/update-donating-haiti-relief-red-cross-text-donations-better-business-bureau-wise-giving-alliance.html
http://www.techcrunch.com/2010/01/14/text-message-donations-to-haiti/
http://www.giveonthego.com/
http://www.mobilegiving.org/
http://www.mobileaccord.com/
http://www.mgive.com/help/haiti.aspx
http://www.mgive.com/Learn_More.aspx
http://blog.mgive.com/category/case-studies/

DOCTORS WITHOUT BORDERS ALREADY THERE (FACILITIES DESTROYED)
http://doctorswithoutborders.org/news/
http://doctorswithoutborders.org/news/article.cfm?id=4157

The first reports are now emerging from Doctors Without Borders/Médecins Sans Frontières (MSF) teams who were already working on medical projects Haiti. They are treating hundreds of people injured in the quake and have been setting up clinics in tents to replace their own damaged medical facilities.

The Martissant health center in a poor area of Port-au-Prince had to be evacuated after the earthquake because it was damaged and unstable. The patients are now in tents in the grounds and the medical staff have been dealing with a flow of casualties from the town. They have already treated between 300 and 350 people, mainly for trauma injuries and fractures. Among them are 50 people suffering from burns—some of them severe—many of them caused by domestic gas containers exploding in collapsing buidings. At the Pacot rehabilitation center another 300 to 400 people have been treated. In one of MSF’s adminstrative offices in Petionville, another part of Port-au-Prince, a tent clinic there has seen at least 200 injured people. More are getting assistance at what was the Solidarite maternity hospital, which was seriously damaged.

One of MSF’s senior staff, Stefano Zannini, was out for most of the night, trying to assess the needs in the city and looking at the state of the medical facilities. “The situation is chaotic,” he said. “I visited five medical centers, including a major hospital, and most of them were not functioning. Many are damaged and I saw a distressing number of dead bodies. Some parts of the city are without electricity and people have gathered outside, lighting fires in the street and trying to help and comfort each other. When they saw that I was from MSF they were asking for help, particularly to treat their wounded. There was strong solidarity among people in the streets.” Another MSF coordinator there, Hans van Dillen, confirmed that Port-au-Prince was quite unable to cope with the scale of the disaster. “There are hunderds of thousands of people who are sleeping in the streets because they are homeless,” said van Dillen. “We see open fractures, head injuries. The problem is that we can not forward people to proper surgery at this stage.”

So many of the city’s medical facilities have been damaged, healthcare is severely disrupted at precisely the moment when medical needs are high. MSF is also working to get more staff into the country. Around 70 more staff are expected to arrive in the coming days. MSF is sending out a 100-bed hospital with an inflatable surgical unit, consisting of two operating theaters and seven hospitalization tents. Nephrologists will be sent as part of the team in order to deal with the affects of crush injuries. However, transport links are difficult and it is not yet clear whether supplies and medical staff will have to go in through neighboring Dominican Republic. MSF is also concerned about the safety of some of its own staff. There are 800 of them and not all have yet been accounted for because of the poor communications and general disruption.

INFLATABLE HOSPITAL EN ROUTE
http://www.doctorswithoutborders.org/press/release.cfm?id=4165
Doctors Without Borders Cargo Plane With Full Hospital and Staff Blocked From Landing in Port-au-Prince / 17 January 2009

Doctors Without Borders/Médecins Sans Frontières (MSF) urges that its cargo planes carrying essential medical and surgical material be allowed to land in Port-au-Prince in order to treat thousands of wounded waiting for vital surgical operations. Priority must be given immediately to planes carrying lifesaving equipment and medical personnel.

Despite guarantees, given by the United Nations and the US Defense Department, an MSF cargo plane carrying an inflatable surgical hospital was blocked from landing in Port-au-Prince on Saturday, and was re-routed to Samana, in Dominican Republic. All material from the cargo is now being sent by truck from Samana, but this has added a 24-hour delay for the arrival of the hospital.

A second MSF plane is currently on its way and scheduled to land today in Port- au-Prince at around 10 am local time with additional lifesaving medical material and the rest of the equipment for the hospital. If this plane is also rerouted then the installation of the hospital will be further delayed, in a situation where thousands of wounded are still in need of life saving treatment.

The inflatable hospital includes 2 operating theaters, an intensive care unit, 100-bed hospitalization capacity, an emergency room and all the necessary equipment needed for sterilizing material. MSF teams are currently working around the clock in 5 different hospitals in Port-au-Prince, but only 2 operating theaters are fully functional, while a third operating theater has been improvised for minor surgery due to the massive influx of wounded and lack of functional referral structures.

MEANWHILE : NO MEDICINE, BABY BEING BORN on STREET
http://english.aljazeera.net/news/americas/2010/01/2010114164959501665.html

CHILD SCAVENGERS SELLING at STREET MARKETS

NETWORK RELIEF KIT
http://www.make-digital.com/make/vol19/?pg=46&pm=1
http://www.nethope.org/images/uploads/casestudies/DisasterRelief.pdf
“NetHope members who have been active in our relief efforts firmly believe that NGOs on the ground require a lightweight “NetHope ICT Kit” they can carry in their baggage to provide instant communications from Day 1 onward. This kit must have the following features:”


NETHOPE
http://www.nethope.org/about/faq/
http://www.nethope.org/impact/programs/
http://www.theeastafrican.co.ke/business/-/2560/817908/-/4gqf59z/-/

TECH SUPPORT
http://www.inveneo.org/?q=wifi_access_point
http://www.inveneo.org/?q=haiti-response
http://www.inveneo.org/?q=poweradvantage
http://www.cioinsight.com/c/a/Past-News/IT-Lends-a-Helping-Hand-An-interview-with-NetHopes-Edward-GrangerHapp/
IT Lends a Helping Hand: interview with NetHope’s Edward Granger-Happ / 2005-01-28

How to help the IT relief effort : “Donate laptops, desktops, network equipment and other technology. Donate bandwidth, especially satellite transponder space. Serve as a volunteer, and encourage your staff to do the same.”

The relief workers toiling in the tsunami-battered nations of southern Asia, Sri Lanka and Indonesia don’t just need money; they need IT support. Like all professionals, their effectiveness and productivity can be amplified by IT—only in their case it means saving more lives and restoring communities more quickly. But field workers for organizations such as Save the Children, Oxfam, and CARE must do their work in nightmarish conditions, often without electricity, phone lines and the human basics. Edward Granger-Happ, the chairman of the board and a founder of NetHope, Inc., is a CIO on the front lines of the tsunami relief effort. NetHope is an organization made up of IT executives from 15 non-government relief organizations who have banded together for cooperative effort rather than competitive advantage. NetHope members share information and know-how, and work together with corporate partners such as Cisco Systems, IBM and Microsoft to develop, share and supply equipment, software and communications services for their members’ relief workers.

Granger-Happ doubles as the chief technology officer of Save the Children, a Westport, Conn.-based charity and relief organization and a NetHope member. He left behind a 24-year career in the private sector, first as an executive with First Boston, Lotus, Chase and Data Broadcasting Corp., then as senior partner and founder of a management consulting firm, to join Save the Children about four years ago.

CIO Insight executive editor Allan E. Alter spoke with Granger-Happ about NetHope’s founding and mission, its work in tsunami relief, and how CIOs and other IT managers and professionals can help NetHope provide technical support.

Q. What is NetHope?
A. My 30-second description is that we’re a group of the largest international non-profits who have banded together to bring ICT – information and communication technology – out to the most challenged areas of the world in which we work. The members are 15 of the largest international non-profits, representing a collective $3.5 billion relief and long term development aid. NetHope is in Sunnyvale, Calif., because that’s where our executive director and finance director are. The members of the board come from throughout the U.S. and the U.K.

Q. What is its mission?
A. To make a difference in the world at the point where our members’ programs touch children and families. The analogy for the for-profit world is where the products meet the customers. Our primary focus is the field worker who is sometimes hours or miles away from even the central field office in the country, administering relief programs like those in Banda Aceh, Indonesia, as well as long-term development, HIV, education, economic opportunity, and conservation-type work.

Q. Why was NetHope started?
A. It started with a white paper, called “Wiring the Virtual Village,” I wrote during my first nine months at Save the Children and presented to Cisco Systems in March 2001. Essentially, it said if we band together as a group of non-profits, we can solve our communication and technology infrastructure problems faster and cheaper than if we continue to try to do it on our own. We all have the same IT issues: in the U.S and Europe IT infrastructure is taken for granted, but in the areas we work we can’t even take electricity for granted. My compelling hypothesis No. 2 is that if we band together to solve these problems, we would be much more attractive to corporate technology partners. A technology company that is interested in philanthropic work could benefit 15 non-profits if it contributed technology, money or people through NetHope, not just one. They would leverage their gifts and time much more than with one-off grants to individual non-profits. It’s also lower risk, because if one or two non-profits have difficulty implementing a grant (always a big concern for corporate partners), the other 12 or 13 who had success can help the other two come up to speed. I spent the first 24 years of my career in the for-profit world, and I was very encouraged by the openness and willingness of non-profits to share internal information and cooperate.

In early April 2001, I got a call from Cisco, when they were launching their Cisco Fellow program. Right after the dot.com bubble burst, companies like Cisco had a significant economic downturn. One expense-neutral alternative they found to downsizing was to give managers the option of working with a non-profit, and they would pay for a portion of the expenses. Financially, you come out better if you do this than if you lay off employees; otherwise, you’d have to pay severance and unemployment, and then hire a recruiter when you wanted to fill the position again at the end of the downturn. Two thirds of Cisco Fellows, however, return as an employee. They asked if we’d be interested in that, and I said absolutely. We hired the first Cisco Fellow in June 2001. That was Dipak Basu, and he’s been the executive director of NetHope for its first three years. Dipak gets the credit for taking this vision of a cooperative among non-profits and making it happen. I was really just the idea person.

By the way, when people returned to Cisco after doing this fellowship program, they all said it was critical to their development as leaders. So now Cisco employees have the option of doing this for several months. It’s become strategic for them.

Q. What is NetHope doing now to help the tsunami victims?
A. The key thing NetHope is doing is a project that began a year ago with some technology that had been developed by some Cisco engineers in North Carolina working with Inmarsat in London as a response to the Sept. 11 emergency, where communications and networking was knocked out in New York City. They came up with some off-the-shelf components they put together in a single box to provide what I call a “network-in-a-box.” In relief situations you want to establish voice and data communications in 72 hours or less. In the initial stages of disaster relief, the first relief workers are highly mobile; they are doing situation assessments, determining what the key needs are and marshaling the resources and the equipment that’s necessary to fulfill these needs. You need to have voice and data communications to make that happen. So we saw that network-in-a-box as a potential “net relief kit” (NRK). The kit, which is built by Cisco and now in its second generation, is the size of a weekender suitcase. It’s meant to be out in a field location; it’s ruggedized, runs off a car battery, and is cooled by multiple fans. It can support up to 50 laptops and four or more wireless telephones. It gives us a box with a handle that people flying to the disaster area can bring with them. NetHope has been the driving force behind developing that project, and Cisco has donated the engineering time and expertise to put the box together.

We had done two lab tests of the NRK and were scheduling field tests in Africa for this quarter when the tsunami hit. Our emergency people had reports about the problem within hours. Save the Children’s field office at Banda Aceh was hit and our field office people were lost; all but two were later accounted for. We also lost ten midwives with a community partner. Many of the NetHope managers, like Catholic Relief Services, World Vision, Save the Children and others, who are responding to this emergency in Indonesia and Sri Lanka and to a lesser extent in Myanmar and India, said we need to take this NRK and get it into the field. We said this emergency will become our trial. It’s not the typical way you build and do a trial, but if there’s anything we’ve learned in IT it’s that speed is essential in product development.

The way emergency response works, you get initial response people who try to get in there as soon as possible, determine the situation and what the needs are, and the people in headquarters try to martial the resources and goods—locally at first, so there’s no shipping, but longer-term usually from the U.S. and other sources. This first phase is highly individual and highly mobile. These initial response people took satellite phones, thanks to an agreement we had already worked out with Iridium. We had daily conference calls among members of NetHope during the first phase, and shared our technology assessment information and discussed who can bring what technologies to bear. That information sharing and consulting among members is of enormous value to organizations like Save the Children; we don’t have a large IT staff, and it feels especially small when we’re operating in triage and crisis mode. That happened in Afghanistan and Iraq, and now it’s happening in Indonesia.

The second phase in emergency response involves groups of people, but they’re also highly mobile and need to talk with one another. We’re now starting the second phase, and that’s when the NRK will be used. Many of these groups will operate in tent communities; when we get in with the NRK, we connect their laptops. The kit is just going over now. Our director of networks will be the point person for the first kit. He’s landed in Jakarta, and he’ll be gathering the equipment he needs and will be going to Banda Aceh in the next few days.

Q. How many NRKs will be going out?
A. We’ve asked for ten. That’s the preliminary request, and we haven’t heard back yet what’s possible. That’s the challenge. They are still custom-made; it’s the dedication of the engineers at Cisco in North Carolina that’s putting them together. We’re going to try to share the NRKs as much as possible, but there are bandwidth issues there. In some places we can only get a 64K connections, and there’s only so much bandwidth you can share. Bandwidth is always an issue. Not until the third phase do we establish a more permanent office, and we will outfit that office with a VSAT or other connections, LANs and desktop PCs. When you get to the third phase the NRK is irrelevant because you get a VSAT in a more permanent building. The final way NetHope will be of value will be taking its learning and experiences and sharing it with non-members and developing countries. That’s part of the philanthropic value of what NetHope is doing: Just as we benefit from our knowledge-sharing experiences, we want to turn around and open that to others.

Q. How will that knowledge-sharing be done?
A. NetHope members actually use IBM Lotus Domino QuickPlace, a donation IBM Lotus made to Save the Children. We have a library of posted documents and information, a discussion area, and folders for each of the emergencies and projects on which we’re working. It’s a fully searchable and indexed knowledge base of information, and we have close to four years of information in it now. And here’s the tie-back to how open non-profits are to sharing information: If the head of network engineering at Oxfam has discussions with three satellite phone providers in the European Union, he’ll summarize it and post it for the rest of the members. We don’t all have to talk to those three EU phone providers.

Q. What will you be doing in the next two to eight weeks to help the tsunami victims?
A. I think phase 2 will last at least 90 days, maybe longer. With the extent of the damage we’re seeing in the Banda Aceh area, it may take significantly longer before we can establish a field office that has electricity and communications. Again, NetHope is focused on that relief worker, the relief worker who is doing the food distributions and handling medical programs, crisis intervention in terms of psychological counseling for families and kids, and relocation services. Our job is to make that field workers’ job as easy as possible, by giving him communications and by minimizing the amount of paperwork he needs to do. If you remember what it was like to work without e-mail and a computer, and think about how much easier it is now to do that much more, we want to give the same advantages to the field worker. We’re bringing in laptops, LANs, wireless telephones, satellite telephones, portable satellite dishes, larger satellite dishes for the longer term, and the NRK is the network infrastructure that sits in the middle of that.

Communications is critical for security. In Iraq, communication is essential to make sure people are safe and accounted for. These areas we are going into now for tsunami relief have tenuous situations; there’s a civil war and insurrections going on. Security is an issue there as well. It used to be, before the UN was bombed in Baghdad, that non-profits were immune. We could go in as politically and religiously neutral and meet dire needs wherever we went. That whole world changed with the UN bombing in Baghdad; we’re no longer immune, we’re now one of the targets. There have been kidnappings and bombings. It’s a different world for non-profits. Now we have to spend time on security planning that we didn’t have to do before. And that requires better technology.

Q. What can IT executives do to help the tsunami victims and NetHope?
A. To the degree they have bandwidth or technology they can share, that is of significant interest to us. Many laptops and desktop PCs are on two-year leases; CIOs ought to take them as they come off lease and donate them to non-profits, and get the tax write-off if you do the buy-out. It’s a win-win. Check with your accounting department first, of course. We have a third-party “wiping service” to delete any data from the donated machines.

Q. How can companies share bandwidth?
A. Many companies have paid for large amounts of satellite transponder space; it’s the rented space on the bird itself. To the extent they have transponder space on satellites that cover India, Sri Lanka and Indonesia, they can help. We still have to put satellite communications equipment on the ground, but the most expensive part is often the recurring transponder space rent. We’ve talked with some corporations about sharing network infrastructure, but global companies are in the major cities and that’s not where we typically are. But they will have satellite transponder space. Many companies rent space for peak periods. When it’s not peak time, there ought to be ways to donate transponder space.

There’s another way CIOs could help, and that is to volunteer to act as advisers to the non-profit IT directors, from NetHope to the individual IT directors at the non-profits. Save the Children spends less than 1.5 percent of revenue on IT, and our headquarters IT department is 23 people for a 3,200-person organization in 40 countries. So we’re excellent at taking slim resources and stretching them to do incredible things. But when you layer on top of it a disaster of this magnitude, where you have to turn your attention to those things, getting help and advice on more efficient ways to do the day-to-day blocking and tackling, or to even come and volunteer to fill in to do those things, would be very valuable. We’re good at stretching things thin to run a normal operation, but add a disaster like this and it becomes an abnormal operation. We have daily stand-up meetings to look at everyone’s top three things they are doing that impacts their response. There could be lots of other things that don’t happen. Having people who are experts at crisis management and in applying medical triage to business situation would be invaluable to non-profits.

Q. What kinds of people from an IT staff would you want as volunteers?
A. It could be as basic as help-desk people who can configure PC laptops before they go out in the field. It could be network engineers who can run our data centers. At senior-management level, advisers on how to apply triage and crisis management to most efficiently manage hour-to-hour with our limited resources. To help, go to www.nethope.org. There’s a link to contact us at http://www.nethope.org/contactus.html. Or call us at (408) 525-2451 or e-mail us at info [at] nethope.org. Those calls and e-mails will get funneled to Molly Tschang, our current executive director, who will take it from there. If anyone is interested in particular in Save the Children, contact me by email at ehapp [at] savechildren [dot] org rather than call.

Q. Is there anything else you’d like to add?
A. NetHope doesn’t happen without our corporate partners, especially Cisco, IBM, Microsoft, Immarsat and Eutelsat. Microsoft and Cisco have worked with us from day one when this tragedy struck, asking us how they can help. Cisco has responded by speeding up the Net Relief Kit, and employees at both organizations are donating to Save the Children. They’ve been incredible partners. Beyond business partners, these are organizations that really care about making a difference, and they have taken a keen interest in having NetHope succeed.

And just two human-interest points: This is my third career. I worked on Wall Street for the first 14 years of my career, with First Boston, Chase, Lotus and Data Broadcasting Corp. Then I ran my own management consulting business in IT and balanced scorecard work for ten years before joining Save the Children. Which leads me to my second point: I could double my income at any corporate firm, but what’s more important to me at this point in my career is having the ability to make an impact every day in what I do. When we get IT right, more kids get fed, more kids get inoculated, and more kids get educated and taught. The value of that is immeasurable. So my whole model has turned from pursuit of success to pursuit of significance.

CONTACT
Edward Granger-Happ
http://www.eghapp.blogspot.com/
http://www.nethope.org/about/board-of-directors/ed-granger-happ/
http://www.fairfieldreview.org/hpmd/EGHprofile.nsf/
email : ehapp [@] savethechildren [dot] org / ehapp [at] hpmd [dot] com

CROWD-FUNDING / MICROFINANCE
http://www.mercycorps.org/topics/microfinance
https://www.microplace.com/investments/details/Sevis+Finansye+Fonkoze+via+Oikocredit+GC+Note
https://www.microplace.com/learn_more/howitworks
http://grameenfoundation.wordpress.com/
https://secure3.convio.net/gfusa/site/Donation2?df_id=1820&1820.donation=form1
http://www.grameenfoundation.org/americas/haiti
http://www.kiva.org/about/inside/2010/01/13/earthquake-in-haiti-update-on-kiva.html
http://www.accion.org/Page.aspx?pid=225
http://www.accion.org/microcredit-vs-microfinance

FRONTLINE SMS
http://medic.frontlinesms.com/
http://credit.frontlinesms.com/
http://www.frontlinesms.com/download/
http://www.frontlinesms.com/who/
http://www.frontlinesms.com/
http://www.kiwanja.net/blog/category/frontlinesms/

ICT4D [KNOWLEDGE SHARING]
http://inventory.ict4peace.org/Haiti+Earthquake+-+January+2010
http://en.wikipedia.org/wiki/Information_and_communication_technologies_for_development
http://mayafrica.wordpress.com/the-abc-of-ict4d/
http://www.apdip.net/resources/case
http://www.infodev.org/en/Publication.107.html
http://celac.wordpress.com/
http://www.celac.or.ug/
http://successtories.wordpress.com/

ONE LAPTOP PER CHILD [NO HAITI?]
http://wiki.laptop.org/go/Regional_groups#20_Active_Groups_for_groups.laptop.org

$75 WATERPROOF COMPUTER w/CAMERA [SOLAR or CRANK?]
http://laptop.org/en/participate/get-involved.shtml
http://www.forbes.com/2009/12/22/tablet-computer-negroponte-technology-cio-network-olpc.html
Take a look at the designs for what could someday be the world’s cheapest PC, and you may start to wish you were a third-grade child in Burundi.
BY Andy Greenberg / 12.22.09

One Laptop Per Child (OLPC), MIT professor Nicholas Negroponte’s non-profit effort aimed at putting cheap educational laptops into the hands of developing world schoolchildren, is working on an upgrade to its so-called XO computer, once known as the “hundred-dollar laptop.” That revamped machine, known as the XO-3 and targeted for release in 2012, is still more of a pipe dream than a product. But early designs for the PC reveal a minimalist slate of touch-powered electronics that drops practically every feature of a traditional computer except its 8.5-by-11-inch screen, a scheme that would shed all of the first XO’s child-like clunkiness without losing its simple accessibility. “I wanted to bring the One Laptop Per Child identity to life in this new form,” says Yves Behar, founder of FuseProject, which designed the both the original and the XO-3. “That meant taking the visual complexity away, bringing tactility and friendliness, touch and color.”

Behar says he hopes to shrink the frame around the XO-3’s display down to practically nothing, opting for a virtual keyboard instead of a physical one, and no buttons. The result, in his mock-ups, is a screen surrounded by only a thin green rubber gasket. “Nicholas [Negroponte] asked for something extremely simple and practically frameless,” he says. “The media or content on the computer will be the prime visual element.” In fact, that new form factor is just the beginning of OLPC’s monstrous ambitions: It aims to make its tablet PC highly durable, all plastic, waterproof, half the thickness of an iPhone and use less than a watt of power, despite an 8-gigaherz processor. The price: an unprecedented $75.

Many of OLPC’s goals, to be fair, are more imagination than road map. And Negroponte has a history of overpromising. The original XO never hit its original goal of $100, (it currently sells for $172) and another touch screen upgrade to the XO that Negroponte announced in May 2008 was quietly scrapped this year based on costs. But in this case, Negroponte’s plan has a twist: As OLPC assembles the components for its dream machine, it plans to open the architecture of the device to allow any other PC maker to take over the project. Negroponte is more interested in pressuring the industry to make cheaper, more education-focused PCs than he is in manufacturing any specific machine. “We don’t necessarily need to build it,” Negroponte told Forbes. “We just need to threaten to build it.”

Regardless of who puts their stamp on the ultra-cheap tablet, OLPC’s biggest task may be getting the various components in line. A typical fragile, glass LCD screen hardly seems a wise choice in the hands of young children, or in countries with unpredictable and scarce electricity. So OLPC hopes to incorporate plastic back-plane components, possibly from Mountain View, Calif.-based Plastic Logic, that would be far more durable. The tablet will also likely use ultra low-power screens from start-up Pixel Qi with both reflective and LCD capabilities, created by former Negroponte disciple Mary Lou Jepsen. If Behar’s design comes to fruition, the XO-3 will feature a camera on the back of the device and a finger-hold ring on the computer’s corner. That loop, a metal cable that runs from the device’s rim and is encased in the same rubber as the screen frame, can be used to steady the computer in the user’s hand or to let it hang at one’s side. Magnets in the loop could also be used to keep it tucked behind the machine, out of the way.

Those simple additions are the only departures from the tablet’s minimalist design: Ideally, the machine won’t even have a charging port. Behar says OLPC wants to use induction to wirelessly charge the battery through its rubber frame. “We wanted to remove all the scars that you typically see on a laptop from Lenovo or HP,” he says. While the tablet isn’t slated to appear until 2012, OLPC has other plans in the meantime. An incremental upgrade of the XO set for release in January will have several times the memory, storage and processing power of the current machine. The next upgrade, in 2011, will boost the machine’s performance again and replace its AMD chip with a lower-power processor from phone chip maker Marvell.

When it comes to his plans for the $75 dream tablet, however, Negroponte admits his track record of lofty promises doesn’t offer much assurance that this latest fantasy machine will appear. But he warns the computer industry not to underestimate OLPC. “Sure, if I were a commercial entity coming to you for investment, and I’d made the projections I had in the past, you wouldn’t invest again,” he says. “But we’re not a commercial operation. If we only achieve half of what we’re setting out to do, it could have very big consequences.”

CONTACT
Nicholas Negroponte
http://web.media.mit.edu/~nicholas/
http://laptop.org/en/participate/index.shtml
email : nicholas [at] media.mit [dot] edu

ENDORSEMENT
http://www.i4u.com/article29451.html
BY Robert Evans / 23 Dec 2009

“One Laptop Per Child is a charity run by Nicholas Negroponte. Their goal is to provide laptops to every child in the developing world. One of the ways they do this is by selling their ultra-cheap machines to Westerners for double the price. That way you get a laptop, and you get to buy a laptop for some kid in Uganda or Somalia. While the current versions of the OLPC are fairly unimpressive, the XO-3, Negroponte’s design for the 2012 OLPC, looks incredible.

Forbes reports that this new OLPC is going to be a totally stripped down, 8.5″-11” tablet PC. The only features of this tablet will be the touchscreen, and a little ring on the side to act as a hand-hold or to loop into a belt. The XO-3 will be simple and durable; it’s going to be made entirely of plastic will be waterproof. It should pack an 8 GHz processor, but will use less than a watt of power. Remember; this thing isn’t scheduled to hit until 2012.

The price is expected to be $75. Whether or not this device will ever launch, let alone at that price, remains to be seen. I really hope it does, though. One Laptop Per Child is an incredibly beneficial charity that allows poor children all around the world to connect to the Internet. It makes possible a level of communication and exposure to information that none of these children would otherwise have. Plus, the XO-3 is supposed to have a camera. That means Flickr will soon be populated with thousands of shots from OLPC owners in exotic locales all around the world. That alone is worth a donation or two.

PORTABLE GENERATORS
http://www.solarstik.com/
SOLAR OVENS
http://www.sunbdcorp.com/haiti.php
INFLATABLE SATELLITE ANTENNAS
http://www.gatr.com/index.php?option=com_content&task=view&id=60&Itemid=26
HEXAYURTS
http://www.appropedia.org/Hexayurt
http://hexayurt.com/

STAR-TIDES / STARFISH
http://star-tides.net/about/research
http://star-tides.net/files/STAR-TIDES%20-StarFish%20paper%20-%20DH%2070_0.pdf
http://www.ndu.edu/ctnsp/wells_bio.htm
http://www.wired.com/dangerroom/2008/10/fast-cheap-and/
Fast, Cheap and Sustainable:
Ex-Pentagon Geek Plots Disaster Relief 2.0
BY Nathan Hodge / October 16, 2008

Linton Wells used to be one of the Pentagon geeks-in-chief — a prime mover in the military’s embrace of information technology. Now, he wants to encourage the Defense Deparment to network with relief agencies, civic organizations and the private sector in order to reboot disaster recovery. The goal of the tech-heavy effort is not only to avoid a Hurricane Katrina repeat. It’s to get better at stabilizing failed states that could easily slip into radical hands. But first, the boys in uniform have to get over their traditional reluctance to cooperate with civilians.

Nation-building, perhaps by default, has become a core mission for the U.S. military. Last week, the Army unveiled its new stability operations manual. And this week, the Department of Defense is hosting a demonstration of some of the more innovative new tools for disaster relief and humanitarian assistance.

The project is called STAR-TIDES (Sustainable Technologies, Accelerated Research-Transportable Infrastructures for Development and Emergency Support). The acronym may be long, but the concept is simple: it is supposed to pull together cheap and effective solutions for humanitarian emergencies or post-war reconstruction.

Among the items on display at the Pentagon demo: solar cooking panels; Solar Stik portable power generators (pictured); inflatable satellite antennas; and water purification systems. It’s an intriguing sight to see bureaucrats sip purified
Potomac River water in the Pentagon center court, or to watch a two-star general inspect a tree-hugger’s Hexayurt shelter.

The buzzwords here are “affordable solutions,” “sustainable support” or “capacity building” – all terms borrowed from the world of aid and development. STAR-TIDES is also part of a larger effort by Wells to spread the word these concepts within the Defense Department.

“We’re not an operating agency,” Wells said. “I’m coordinating this with a few colleagues on a more or less volunteer basis. If someone comes in and says, ‘coordinate the next Katrina,’ we’re not in a position to do that. We are in a position to try to perhaps help the decisionmakers to think ahead and maybe get some of these coalitions built so there’d be better planning for whole-of-government, civil society, and maybe different scenarios they might not otherwise think of.”

The current demo is set up for a few scenarios: disaster relief in Central America or the Western Pacific; stabilization and reconstruction in Afghanistan; and refugee support in sub-Saharan Africa. Some of the technology on display could also be used for “defense support to civil authorities” (think Hurricane Katrina).

A project like STAR-TIDES faces more than institutional resistance within the Pentagon; non-governmental organizations (NGOs) and aid groups are often wary of working with the military. Wells said he recognized the limitations.

“In many respects, the conflict-resolution NGOs are quite willing to work with the military, whereas the humanitarian assistance NGOs are more wary because their people are in the field and could be at risk,” he said. “If they are seen going in and out of military facilities or communicating routinely with the military, instead of being neutral parties in the crisis, one side or the other can attribute to them the motives of the U.S. military. So they actually see in some cases their people being at risk. … What we try to do is recognize their constraints, recognize their environment, in a social network, trust-building type of arrangement. Deliver something of value that’s useful to them and show how it’s advantageous for them to work with the U.S.”

STABILITY OPERATIONS FIELD MANUAL 3-07
usacac.army.mil/cac2/repository/FM307/FM3-07.pdf
http://www.army.mil/-newsreleases/2008/10/06/13091-army-unveils-new-stability-operations-manual/
http://smallwarsjournal.com/blog/2008/09/field-manual-307-stability-ope/

CIVIL-MILITARY INTERACTION REPORT : STRONG ANGEL III
www.strongangel3.net/files/sa/10-20-30.pd
http://en.wikipedia.org/wiki/Strong_Angel
http://www.strongangel3.net/

PREVIOUSLY on SPECTRE :
HASTILY FORMED RELIEF NETWORKS
https://spectregroup.wordpress.com/2006/08/17/strong-angel-iii-hastily-formed-networks/
TXTBANKNG THE UNBANKED
https://spectregroup.wordpress.com/2009/07/10/sms-banking-in-kenya/
ONE CELLPHONE PER CHILD
https://spectregroup.wordpress.com/2008/09/21/one-cellphone-per-child
KATRINA 2.0
https://spectregroup.wordpress.com/2008/09/01/katrina-20/
R U IN JAIL?
https://spectregroup.wordpress.com/2008/04/01/r-u-in-jail/

U.S. STOPS DEPORTING HAITIANS
http://www.csmonitor.com/World/Global-News/2010/0113/Haiti-earthquake-US-stops-deporting-Haitians

GUANTANAMO BACK to being REFUGEE CAMP
http://www.miamiherald.com/news/americas/guantanamo/story/1438773-p2.html
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/21/AR2010012103547.html

Workers have also been preparing tents at Guantanamo Bay for Haitian migrants in case the earthquake spurs a mass migration. This is not a new role for the base: At any given moment, the facility temporarily holds small groups of migrants, mostly from Cuba. In the 1990s, Guantanamo housed tens of thousands of Haitian boat people until they could be sent home. About 100 tents, each capable of holding 10 people, have been erected. The U.S. has capacity to hold up to 13,000 at that site, which is on the opposite side of the base, separated by 2 1/2 miles of water, from the detention center for terrorism suspects. Blaisdell said he is considering additional places in case more space is needed.

At the prison, Friday’s deadline for the closure of the base prison was a nonevent. Behind walls of razor wire, officials say they will be on alert for protests by prisoners. But Army Col. Bruce Vargo, the guard force commander, said the reduced population and the decision to house nearly 75 percent of the men in communal settings has eased tensions. He does not expect significant trouble. The delay in closing the base has angered Guantanamo’s many critics, but attorneys for prisoners say most of their clients were always skeptical that they would be going home soon. Many of them now have regular access to the news and could read copies of Obama’s order posted around the camps. “When they saw how slow the review process became and the tiny trickle of men transferred from Guantanamo, they were realistic and saw it would be impossible to meet the Jan. 22 deadline,” said David Remes, a Washington attorney for 18 prisoners.

Navy Rear Adm. Thomas Copeman, commander of the task force that runs the detention center, views with pride the base’s role in trying to solve the humanitarian crisis. “The ability to conduct real-world humanitarian assistance and disaster relief … that’s more exhilarating at the moment then walking the block in the detention camp, not to say that walking the block is not an extremely important mission for the United States but probably not as gratifying as saving someone’s life.”

EXPECTATIONS of VIOLENCE, CORDON against REFUGEES
http://todayspictures.slate.com/20100121/
http://www.slate.com/id/2242078/
Why Did We Focus on Securing Haiti, Rather Than Helping Haitians?
Here are two possibilities, neither of them flattering.
BY Ben Ehrenreich / Jan. 21, 2010

By the weekend, it was clear that something perverse was going on in Haiti, something savage and bestial in its lack of concern for human life. I’m not talking about the earthquake, and certainly not about the so-called “looting,” which I prefer to think of as the autonomously organized distribution of unjustly hoarded goods. I’m talking about the U.S. relief effort.

For two days after the quake, despite almost unimaginable destruction, there were reasons to be optimistic. With a few notable exceptions—Pat Robertson and David Brooks among them—Americans reacted with extraordinary and unhesitating generosity of spirit and of purse. Port-au-Prince is not much farther from Washington, D.C., than, say, New Orleans, and the current president of the United States, unlike his predecessor, was quick to react to catastrophe. Taking advantage of “our unique capacity to project power around the world,” President Barack Obama pledged abundant aid and 10,000 troops. Troops? Port-au-Prince had been leveled by an earthquake, not a barbarian invasion, but, OK, troops. Maybe they could put down their rifles and, you know, carry stuff, make themselves useful. At least they could get there soon: The naval base at Guantanamo was barely 200 miles away.

The Cubans, at least, would show up quickly. It wasn’t until Friday, three days after the quake, that the “supercarrier” USS Carl Vinson, arrived—and promptly ran out of supplies. “We have communications, we have some command and control, but we don’t have much relief supplies to offer,” admitted Rear Adm. Ted Branch. So what were they doing there?

“Command and control” turned out to be the key words. The U.S. military did what the U.S. military does. Like a slow-witted, fearful giant, it built a wall around itself, commandeering the Port-au-Prince airport and constructing a mini-Green Zone. As thousands of tons of desperately needed food, water, and medical supplies piled up behind the airport fences—and thousands of corpses piled up outside them—Defense Secretary Robert Gates ruled out the possibility of using American aircraft to airdrop supplies: “An airdrop is simply going to lead to riots,” he said. The military’s first priority was to build a “structure for distribution” and “to provide security.” (Four days and many deaths later, the United States began airdropping aid.)

The TV networks and major papers gamely played along. Forget hunger, dehydration, gangrene, septicemia—the real concern was “the security situation,” the possibility of chaos, violence, looting. Never mind that the overwhelming majority of on-the-ground accounts from people who did not have to answer to editors described Haitians taking care of one another, digging through rubble with their bare hands, caring for injured loved ones—and strangers—in the absence of outside help. Even the evidence of “looting” documented something that looked more like mutual aid: The photograph that accompanied a Sunday New York Times article reporting “pockets of violence and anarchy” showed men standing atop the ruins of a store, tossing supplies to the gathered crowd.

The guiding assumption, though, was that Haitian society was on the very edge of dissolving into savagery. Suffering from “progress-resistant cultural influences” (that’s David Brooks finding a polite way to call black people primitive), Haitians were expected to devour one another and, like wounded dogs, to snap at the hands that fed them. As much as any logistical bottleneck, the mania for security slowed the distribution of aid.

Air-traffic control in the Haitian capital was outsourced to an Air Force base in Florida, which, not surprisingly, gave priority to its own pilots. While the military flew in troops and equipment, planes bearing supplies for the Red Cross, the World Food Program, and Doctors Without Borders were rerouted to Santo Domingo in neighboring Dominican Republic. Aid flights from Mexico, Russia, and France were refused permission to land. On Monday, the British Daily Telegraph reported, the French minister in charge of humanitarian aid admitted he had been involved in a “scuffle” with a U.S. commander in the airport’s control tower. According to the Telegraph, it took the intervention of the United Nations for the United States to agree to prioritize humanitarian flights over military deliveries.

Meanwhile, much of the aid that was arriving remained at the airport. Haitians watched American helicopters fly over the capital, commanding and controlling, but no aid at all was being distributed in most of the city. On Tuesday, a doctor at a field hospital within site of the runways complained that five to 10 patients were dying each day for lack of the most basic medical necessities. “We can look at the supplies sitting there,” Alphonse Edward told Britain’s Channel 4 News.

The much-feared descent into anarchy stubbornly refused to materialize. “It is calm at this time,” Lt. Gen. Ken Keen, deputy commander of the U.S. Southern Command, admitted to the AP on Monday. “Those who live and work here … tell me that the level of violence that we see right now is below pre-earthquake levels.” He announced that four—four, in a city of more than 2 million—aid-distribution points had been set up on the sixth day of the crisis.

So what happened? Why the mad rush to command and control, with all its ultimately murderous consequences? Why the paranoid focus on security above saving lives? Clearly, President Obama failed to learn one of the basic lessons taught by Hurricane Katrina: You can’t solve a humanitarian problem by throwing guns at it. Before the president had finished insisting that “my national security team understands that I will not put up with any excuses,” Haiti’s fate was sealed. National security teams prioritize national security, an amorphous and expensive notion that has little to do with keeping Haitian citizens alive.

This leaves the more disturbing question of why the Obama administration chose to respond as if they were there to confront an insurgency, rather than to clear rubble and distribute antibiotics and MREs. The beginning of an answer can be found in what Rebecca Solnit, author of A Paradise Built in Hell, calls “elite panic”—the conviction of the powerful that their own Hobbesian corporate ethic is innate in all of us, that in the absence of centralized authority, only cannibalism can reign.

But the danger of hunger-crazed mobs never came up after the 2004 Pacific tsunami, and no one mentions security when tornados and floods wipe out swaths of the American Midwest. This suggests two possibilities, neither of them flattering. The first is that the administration had strategic reasons for sending 10,000 troops that had little to do with disaster relief. This is the explanation favored by the Latin American left and, given the United States’ history of invasion and occupation in Haiti (and in the Dominican Republic and Cuba and Nicaragua and Grenada and Panama), it is difficult to dismiss. Only time will tell what “reconstruction” means.

Another answer lies closer to home. New Orleans and Port-au-Prince have one obvious thing in common: The majority of both cities’ residents are black and poor. White people who are not poor have been known, when confronted with black people who are, to start locking their car doors and muttering about their security. It doesn’t matter what color our president is. Even when it is ostensibly doing good, the U.S. government can be racist, and, in an entirely civil and bureaucratic fashion, savagely cruel.

THOUSANDS of ARMED PRISONERS at LARGE

LOCALS LYNCH ESCAPED GANG LEADER
http://www.guardian.co.uk/world/audio/2010/jan/21/haiti-natural-disasters
http://www.guardian.co.uk/world/2010/jan/20/haiti-escaped-prisoners-cite-soleil
Haiti escaped prisoners chased out of notorious slum Cité Soleil
Ed Pilkington and Tom Phillips, in Cité Soleil / 20 January 2010

When the 3,000 inmates of the central prison in Port-au-Prince unexpectedly gained their freedom, courtesy of the earthquake, everybody knew where they would be headed: Cité Soleil, the poorest area of this poorest city, in whose maze of streets they could vanish.

But the fugitives hadn’t counted on one thing: the determination of Cité Soleil’s people not to let them back. “We’ve got so many huge problems because of the earthquake, we have so little food, water and medicines, we can’t deal with another huge problem,” said Caries Rubens, 26, one of the area’s 300,000 people.

Several of the escapers had been gang leaders in the slum neighbourhood, ensnaring and terrorising the people with drugs and guns. Nobody wanted to see them regain their hold. When news that the earthquake had granted the prisoners early parole reached Cité Soleil, a committee was set up, then vigilante security teams. Prisoners spotted re-entering the area were chased and run out of town. Those who were caught came to a more definitive end. Bled, one of the most notorious gang leaders whose moniker derives from what happened to his many murder and kidnapping victims, was welcomed back by a lynch mob wielding machetes.

That the people of this downtrodden place have shown a determination to stand up to gang leaders is a sign of the change that has taken root in Cité Soleil. Between 2002 and 2006 the area was almost entirely in the grip of the gangs, but in the last three years, partly through the intervention of UN peacekeepers and partly through communal self-help, the gangs’ power has waned and the people’s confidence has grown.

Rubens is a member of a local charity that tries to help the young find an alternative path to adulthood through education rather than violence and drugs. “It’s very difficult to ask a young kid to stay out of the gangs in Cité Soleil,” said Fedora Camille Chevry, who set up the charity Fondation Roussan Camille. “To do that there has to be hope and in Cité Soleil there is so little hope. By providing them with a way of opening up their minds, we try and give them that hope.”

If the foundation is trying to work to shore up the community from within, from the outside UN forces are keeping a close eye on Cité Soleil for fear that the prison breakout might prompt a slide back into the dark past. Their commanding officer has vowed to “intensify” operations to recapture the escapees.

General Florianao Peixoto said his troops had drawn up a list of targets and had already begun making arrests. “We are going to have to carry out more intensive activities to get these elements back where they belong. The hypothesis is that these leaders will regroup to carry out collective operations. But I have a military force that is far superior to that of any gang.”

“We know the area and we have it under control,” said Captain Italo Monsores, a Brazilian marine, during a tour of Cité Soleil’s rubble-strewn streets. The threat, like in so much of this stricken city, is that the devastation will destroy the fragile gains of recent years. Cité Soleil is a chaotic jumble of concrete houses interspersed with corrugated iron shacks. Several of the structures have collapsed, including a school where the metal roof has fallen on to wooden desks stamped with the logo of the UN children’s agency Unicef.

The death toll here was probably lower than in other parts by dint of the houses being low-rise, but many people were wounded in an area with primitive medical services. We came across a woman whose left arm had been burnt to a blackened crust. She had been cooking when the earthquake happened, tipping a saucepan of boiling water over her. Her arm looked as though it were weeping and in risk of infection. Down the road a long line of women was queuing with buckets at a water tanker. There was scuffling and shouting at the front – unsurprisingly as Cité Soleil has been without drinking water for days. We were taken to see the central water tower, which had keeled over.

Food remains difficult to find. We passed a small shop selling balloons, brooms, salami, lollipops and other random items. The owner now sells his wares from behind a metal grille. “Times are hard,” he said. “People might be tempted to rob.” As Rubens puts it: “You want to know how we feel? We feel alone.” But there is grit and imagination here too. Up above the iron roofs, under the flight path of Black Hawk helicopters ferrying supplies, a kite made of plastic and paper flapped in the wind.

ALTERNATIVE to MILITARY is WHO EXACTLY?
http://smallwarsjournal.com/blog/2008/01/insourcing-the-tools-of-nation/
http://www.washingtonpost.com/wp-dyn/content/article/2008/02/14/AR2008021403433.html

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/15/AR2010011502457.html
After the earthquake, how to rebuild Haiti from scratch
By Jeffrey D. Sachs / January 17, 2010

President Obama has declared that the United States will not forsake Haiti in its moment of agony. Honoring this commitment would be a first for Washington. To prevent a deepening spiral of death, the United States will have to do things differently than in the past. American relief and development institutions do not function properly, and to believe otherwise would be to condemn Haiti’s poor and dying to our own mythology.

In Haiti, we are facing not only a horrific natural disaster but the tectonics of nature, poverty and politics. Even before last week’s earthquake, roughly half of the nation’s 10 million inhabitants lived in destitution, in squalid housing built of adobe or masonry without reinforcements, perched precariously on hillsides. The country is still trying to recover from the hurricanes of 2008 as well as longtime social and political traumas. The government’s inability to cope has been obvious, but those of us who have been around Haiti for many years also know about the lofty international promises that follow each disaster — and how ineffectual the response has been each time.

In the past two decades, U.S. interventions have done much more harm than good to the Haitian economy. In the early 1990s, Washington thought it did Haiti a favor by imposing a crushing trade embargo to bring about democratization — specifically, the reinstatement of democratically elected President Jean-Bertrand Aristide. The embargo destroyed Haiti’s fragile manufacturing industries. Then, true to America’s political swings, ideologues in the Bush administration spent years trying to oust Aristide, first by foisting a de facto and illegal aid freeze on international development agencies, and then by brazenly toppling Aristide and carrying him to the Central African Republic. Congress took a pass on reviewing these sordid events, pausing only to declare its love for the Haitian people.

Now it’s time to save Haitian lives by the millions, or watch a generation perish. A serious response will require a new approach. President Obama should recognize that the U.S. government alone lacks the means, attention span and true regard for Haiti that is needed to see this through past the most urgent phase. After the coming weeks, during which U.S. emergency airlift assistance is essential, the effort should be quickly internationalized, in an effective manner that acknowledges U.S. political realities and leverages the help that Washington will give.

Typically, a tragedy such as this is followed by international pledges of billions of dollars, but then only a slow trickle of help. The government of Haiti, overwhelmed far before this earthquake, is in no position to pester 20 or more complicated donor agencies to follow up on designing projects and disbursing funds. The recovery operation needs money in the bank — in a single, transparent, multidonor recovery fund for Haiti and the world to see. Haiti does not need a pledging session; it needs a bank account to fund its survival and reconstruction. The Inter-American Development Bank would be an excellent venue; it is well-run and highly regarded, already serves as Haiti’s largest development financier and could bring in donor partners from around the globe.

How would a Haiti Recovery Fund be organized? It should receive emergency outlays from the United States and other donors; organize a board that includes members appointed by Haitian President René Préval, the U.N. secretary general and donors; and empower a management team to formulate and execute plans agreed to by the Haitian government. Very soon, the first phase of recovery operations in Haiti will end. Tragically, tens or hundreds of thousands will have died under the rubble, with relief and equipment arriving too late. Now the race is on to save Haiti itself. Its capital, a city without reserves of food, water, power, shelter, hospitals, medicine and other vital supplies, faces the real possibilities of hunger, epidemics and civil unrest. And the rest of the country is like a body without a head. The port is shut, the government is overwhelmed, many U.N. peacekeepers have transferred to Port-au-Prince, and the normal operations of government, skimpy as they once were, have broken down entirely.

The recovery fund would focus first on restoring basic services needed for survival. For months to come, medical supplies from abroad should be stockpiled and then distributed in the capital and beyond. Makeshift surgical units and clinical facilities will be essential. Power plants on offshore barges will be needed for electricity until new plants can be constructed. The salaries of public workers — especially teachers, police officers, nurses, reconstruction workers and engineers — must be assured, despite an utter collapse of revenues. Haiti’s currency will need to be backed by international reserves so that the demand for public spending does not create harrowing inflation. The Haiti Recovery Fund, together with a quick-disbursing grant from the International Monetary Fund, should provide the needed reserves and budget financing.

Emergency relief should quickly and seamlessly transform into reconstruction and development. Indeed, if we stop at humanitarian relief alone, Haiti will be back in crisis soon enough, after the next disaster. The first step in this transition is food security: Haiti’s farmers will need seed and fertilizer within weeks if they are to grow food for a destitute country. The displaced urban population will need income support or food transfers to subsist. The World Food Program’s effective food-for-work projects can help feed workers recruited to rebuild roads and buildings.

After the extreme emergency period over the next few weeks, growing more food in Haiti will be far cheaper, more reliable and more sustainable than living on imported food aid. Supplying the farm inputs to Haiti will require more grants — as impoverished farmers have no capacity to buy seeds, fertilizer and small-scale equipment — as well as official aid to help deliver such materials to Haiti’s remote villages.

New shelters must not be makeshift units that would be destroyed by Haiti’s frequent floods, landslides and hurricanes. The country will need a revived and expanded construction industry to produce the brick, reinforced concrete and other vital materials. Private companies, domestic and international, should be contracted to set up operations. China is capable of quickly dismantling a factory, putting it in containers on ships and reconstructing it within weeks in a foreign location. Such efforts are needed immediately. (The asphalt for Liberia’s roads comes from a Chinese factory assembled this way in the capital, Monrovia.) The list of needs goes on; it was very long and urgent even before last week’s calamity.

The Haiti Recovery Fund should be constituted for five years — a suitable period to respond to such a challenge. Electoral politics in Haiti should be suspended for at least one year as well. This is no time for national elections; the people’s survival is the first purpose of politics. How much money would the Haiti Recovery Fund need? And where should it come from? Here is a rough estimate: Before the earthquake but after the hurricanes, I had calculated an urgent (and unmet) development financing need of $1.4 billion per year for Haiti, up from about $300 million currently. Basic urgent reconstruction costs will add perhaps another $5 billion to $10 billion over the next few years. One can imagine annual disbursements of $2 billion to $3 billion annually over the next five years.

Obama should seek an immediate appropriation of at least $1 billion this year and next for a Haiti Recovery Fund, and ask other countries and international agencies to fill in the rest, not with promises but with cash. The obvious way for Washington to cover this new funding is by introducing special taxes on Wall Street bonuses, utterly unjustified payments that will be announced in the next days. Haiti will suffer a quick death of hunger and disease unless we act, and the United States will suffer a slow and painful moral death unless we respond to the extreme distress of our neighbors, whom we have neglected for so long and, at times, even put in harm’s way.

CRISIS PROFITEERING
http://mobile.thenation.com/doc/20100201/scahill
BY Jeremy Scahill /

“We saw this type of Iraq-style disaster profiteering in New Orleans, and you can expect to see a lot more of this in Haiti over the coming days, weeks and months. Private security companies are seeing big dollar signs in Haiti thanks in no small part to the media hype about “looters.” After Katrina, the number of private security companies registered (and unregistered) multiplied overnight. Banks, wealthy individuals, the US government all hired private security. I even encountered Israeli mercenaries operating an armed checkpoint outside of an elite gated community in New Orleans. They worked for a company called Instinctive Shooting International. (That is not a joke).

Now, it is kicking into full gear in Haiti. The Orwellian-named mercenary trade group International Peace Operations Association didn’t waste much time in offering the “services” of its member companies to swoop down on Haiti for some old-fashioned “humanitarian assistance” in the form of disaster profiteering. Within hours of the massive earthquake in Haiti, the IPOA created a special webpage for prospective clients, saying: “In the wake of the tragic events in Haiti, a number of IPOA’s member companies are available and prepared to provide a wide variety of critical relief services to the earthquake’s victims.”

While some of the companies specialize in rapid housing construction, emergency relief shelters and transportation, others are private security companies that operate in Iraq and Afghanistan, such as Triple Canopy, the company that took over Blackwater’s massive State Department contract in Iraq. For years, Blackwater played a major role in IPOA until it left the group following the 2007 Nisour Square massacre.

In 2005, while still a leading member of IPOA, Blackwater’s owner Erik Prince deployed his forces in New Orleans in the aftermath of Hurricane Katrina. Far from some sort of generous gift to the suffering people of the US gulf, Blackwater raked in some $70 million in Homeland Security contracts that began with a massive no-bid contract to provide protective services for FEMA. Blackwater billed US taxpayers $950 per man per day.

The current US program under which armed security companies work for the State Department in Iraq–the Worldwide Personal Protection Program–has its roots in Haiti during the Clinton administration. In 1994, private US forces, such as DynCorp, became a staple of US operations in the country following the overthrow of Jean-Bertrand Aristide by CIA-backed death squads. When President Bush invaded Iraq, his administration radically expanded that program and turned it into the privatized paramilitary force it is today. At the time of his overthrow in 2004, Aristide was being protected by a San Francisco-based private security firm, the Steele Foundation.

Beyond the establishment mercenary industry’s activities in Haiti, look for more stories like this one: On January 15, a Florida-based company called All Pro Legal Investigations registered the URL Haiti-Security.com. It is basically a copy of the company’s existing US website but is now targeted for business in Haiti, claiming the “purpose of this site is to assure construction and reconstruction companies considering a Haiti project that professional security is available.”

“All Protection and Security has made a commitment to the Haitian community and will provide professional security against any threat to prosperity in Haiti,” the site proclaims. “Job sites and supply convoys will be protected against looters and vandals. Workers will be protected against gang violence and intimidation. The people of Haiti will recover, with the help of the good people from the world over.”

The company boasts that it has run “Thousands of successful missions in Iraq and Afghanistan.” As for its personnel, “Each and every member of our team is a former Law Enforcement Officer or former Military service member,” the site claims. “If Operator experience, training and qualifications matter, choose All Protection and Security for your high-threat Haiti security needs.” Among the services offered are: “High Threat terminations,” dealing with “worker unrest,” armed guards and “Armed Cargo Escorts.” Oh, and apparently they are currently hiring.

What is unfolding in Haiti seems to be part of what Naomi Klein has labeled the “Shock Doctrine.” Indeed, on the Heritage Foundation blog, opportunity was being found in the crisis with a post titled: “Amidst the Suffering, Crisis in Haiti Offers Opportunities to the U.S.” “In addition to providing immediate humanitarian assistance, the U.S. response to the tragic earthquake in Haiti earthquake offers opportunities to re-shape Haiti’s long-dysfunctional government and economy as well as to improve the public image of the United States in the region,” wrote Heritage fellow Jim Roberts in a post that was subsequently altered to tone down the shock-doctrine language. The title was later changed to: “Things to Remember While Helping Haiti” and the wording changed to “In addition to providing immediate humanitarian assistance, the U.S. response to the tragic earthquake in Haiti should address long-held concerns over the fragile political environment that exists in the region.””

PEACEOPS
http://peaceops.org/poi/
http://www.peaceops.org/law/

IPOA
http://ipoaworld.org/eng/haiti.html
http://ipoaworld.org/eng/aboutipoa.html
“IPOA is a 501(c)(6) non-profit trade association. IPOA’s mission is to: promote high operational and ethical standards of firms active in the peace and stability operations industry; to engage in a constructive dialogue and advocacy with policy-makers about the growing and positive contribution of these firms to the enhancement of international peace, development and human security; to provides unique networking and business development opportunities for its member companies; and to inform the concerned public about the activities and role of the industry. IPOA is committed to raising the standards of the peace and stability operations industry to ensure sound and ethical professionalism and transparency in the conduct of peacekeeping and post-conflict reconstruction activities. All member companies subscribe to the IPOA Code of Conduct, which represents a constructive effort towards better regulating private sector operations in conflict and post-conflict environments. It reflects our belief that high standards will both benefit the industry and serve the greater causes of peace, development, and human security.”

DISASTER CAPITALISM
http://www.democracynow.org/2010/1/14/naomi_klein_issues_haiti_disaster_capitalism
http://www.naomiklein.org/articles/2010/01/haiti-disaster-capitalism-alert-stop-them-they-shock-again

CRISIS as OPPORTUNITY
http://74.125.93.132/search?q=cache:X2tagj8j4TYJ:blog.heritage.org/2010/01/13/amidst-the-suffering-crisis-in-haiti-offers-opportunities-to-the%20u-s/+”amidst+the+suffering+crisis+in+haiti+offers+opportunities%%2022&cd=1&;hl=en&ct=clnk&gl=us
Amidst the Suffering, Crisis in Haiti Offers Opportunities to the U.S.
BY Jim Roberts / January 13th, 2010

“In addition to providing immediate humanitarian assistance, the U.S. response to the tragic earthquake in Haiti earthquake offers opportunities to re-shape Haiti’s long-dysfunctional government and economy as well as to improve the public image of the United States in the region. The U.S. government response should be bold and decisive. It must mobilize U.S. civilian and military capabilities for short-term rescue and relief and long-term recovery and reform. President Obama should tap high-level, bipartisan leadership. Clearly former President Clinton, who was already named as the U.N. envoy on Haiti, is a logical choice. President Obama should also reach out to a senior Republican figure, perhaps former President George W. Bush, to lead the bipartisan effort for the Republicans.

While on the ground in Haiti, the U.S. military can also interrupt the nightly flights of cocaine to Haiti and the Dominican Republic from the Venezuelan coast and counter the ongoing efforts of Venezuelan President Hugo Chavez to destabilize the island of Hispaniola. This U.S. military presence, which should also include a large contingent of U.S. Coast Guard assets, can also prevent any large-scale movement by Haitians to take to the sea in rickety watercraft to try to enter the U.S. illegally.

Meanwhile, the U.S. must be prepared to insist that the Haiti government work closely with the U.S. to insure that corruption does not infect the humanitarian assistance flowing to Haiti. Long-term reforms for Haitian democracy and its economy are also badly overdue.
Congress should immediately begin work on a package of assistance, trade, and reconstruction efforts needed to put Haiti on its feet and open the way for deep and lasting democratic reforms. The U.S. should implement a strong and vigorous public diplomacy effort to counter the negative propaganda certain to emanate from the Castro-Chavez camp. Such an effort will also demonstrate that the U.S.’s involvement in the Caribbean remains a powerful force for good in the Americas and around the globe.

REVISED
http://blog.heritage.org/2010/01/13/things-to-remember-while-helping-haiti/

Today, the United States began surveying the damage inflicted by a devastating earthquake in Haiti this week. In addition to providing immediate humanitarian assistance, the U.S. response to the tragic earthquake should address long-held concerns over the fragile political environment that exists in the region.

The U.S. government response should be bold and decisive. It must mobilize U.S. civilian and military capabilities for short-term rescue and relief and long-term recovery and reform. President Obama should tap high-level, bipartisan leadership. Clearly former President Clinton, who was already named as the U.N. envoy on Haiti, is a logical choice. President Obama should also reach out to a senior Republican figure, perhaps former President George W. Bush, to lead the bipartisan effort for the Republicans.

While on the ground in Haiti, the U.S. military can also interrupt the nightly flights of cocaine to Haiti and the Dominican Republic from the Venezuelan coast and counter the ongoing efforts of Venezuelan President Hugo Chavez to destabilize the island of Hispaniola. This U.S. military presence, which should also include a large contingent of U.S. Coast Guard assets, can also prevent any large-scale movement by Haitians to take to the sea in dangerous and rickety watercraft to try to enter the U.S. illegally.

Meanwhile, the U.S. must be prepared to insist that the Haiti government work closely with the U.S. to insure that corruption does not infect the humanitarian assistance flowing to Haiti. Long-term reforms for Haitian democracy and its economy are also badly overdue. Congress should immediately begin work on a package of assistance, trade, and reconstruction efforts needed to put Haiti on its feet and open the way for deep and lasting democratic reforms.

The U.S. should implement a strong and vigorous public diplomacy effort to counter the negative propaganda certain to emanate from the Castro-Chavez camp. Such an effort will also demonstrate that the U.S.’s involvement in the Caribbean remains a powerful force for good in the Americas and around the globe.

“NO LOANS” – DEBT ACTIVISTS MAKE BREAKTHROUGH
http://www.npr.org/templates/story/story.php?storyId=122802377
Global Activism At Work: IMF Clarifies Loan
BY Richard Kim / January 21, 2010

“Last Friday I wrote about the IMF’s new $100 million loan to Haiti. I cited debt relief activists who told me that the new loan would be an extension of the IMF’s existing loan of $165 million. This information was confirmed by the IMF’s press release, which stated that “emergency financing would be provided as an augmentation to the existing IMF-supported arrangement with Haiti under the Extended Credit Facility [ECF].” The IMF’s announcement provided no further information about conditions that may or may not be attached to the loan and made no mention of future debt relief for Haiti.

My post was based largely on an analysis by Soren Ambrose, the development finance coordinator of ActionAid International, who concluded that augmenting the existing ECF loan to Haiti would impose the same conditions as the original loan. Those conditions include raising prices for electricity, refusing pay raises for any public sector employees except those making minimum wage and keeping inflation as low as possible. Ambrose says that he doesn’t know of any established procedure that would exempt an augmentation of an existing program from the program’s conditions. (His analysis also noted that Haiti’s existing program with the IMF was due to expire at the end of this month and that negotiations on the loan’s terms were likely underway already.)

As the IMF announced its $100 million loan under vague and presumably onerous terms, debt relief activists like the folks at Jubilee USA were already calling for a different kind of global response. They were demanding that aid to Haiti come in the form of grants, not loans. But given the magnitude of the crisis and the fact that the IMF does not issue grants, they welcomed the IMF loan in the hopes that its terms could be altered in the future and that Haiti’s entire debt could be canceled. At the same time, Naomi Klein and others warned about the possibility that the earthquake would be used as a pretext to amp up Haiti’s exposure to the shock doctrine. Activists started a Facebook group, No Shock Doctrine for Haiti, and in less than a week, it has attracted almost 18,000 members. Appeals for debt relief and for the recognition of Haiti’s economic sovereignty were written to the Obama administration, the IMF, the World Bank and anyone else who might play a role in Haiti’s reconstruction.

Today, the IMF put out an announcement clarifying the terms of its new loan to Haiti — it’s “an interest-free loan of $100 million in emergency funds.” A spokesman for the IMF emailed me to confirm that “the US $100 million loan does not carry any conditionality. It is an emergency loan aimed at getting the Haitian economy back to function again…” The IMF’s managing director Dominique Strauss-Kahn said in a statement that the IMF would immediately work to cancel the entirety of Haiti’s debt ($265 million) to the fund:

“The most important thing is that the IMF is now working with all donors to try to delete all the Haitian debt, including our new loan. If we succeed—and I’m sure we will succeed—even this loan will turn out to be finally a grant, because all the debt will have been deleted.”

In other words, as the IMF is processing a loan, it is also making a public promise to try to cancel it.

Klein says that this is “unprecedented in my experience and shows that public pressure in moments of disaster can seriously subvert shock doctrine tactics.” Neil Watkins, Executive Director of Jubilee USA, likewise hails the IMF’s response. “Since the IMF’s announcement last week of its intention to provide Haiti with a $100 million loan, Jubilee USA and our partners have been calling for grants and debt cancellation—not new loans—for Haiti. We are pleased that Managing Director Strauss-Kahn has responded to that call.”

Watkins and others will continue to follow the issue, holding the IMF to its commitment to debt relief and non-conditionality. They’re also pressing the case on Haiti’s other outstanding debt. The largest multilateral holders of Haiti’s debt are the Inter-American Development Bank ($447 million), the IMF ($165 million, plus $100 million in new lending), the World Bank’s International Development Association ($39 million) and the International Fund for Agricultural Development ($13 million). The largest bilateral loans are held by Venezuela ($295 million—hello, Chavez!?) and Taiwan ($92 million). The lesson: global activism can work, especially in a moment of such acutely visible human need. Keep up the mobilization, on Facebook and in real life.

JUBILEE ACT / HR 4405 [DEBT RELIEF]
http://www.jubileeusa.org/jubilee-act.html
http://www.jubileeusa.org/jubilee-act/07jacountries.html
for Responsible Lending and Expanded Debt Cancellation

DROP the DEBT
http://www.one.org/us/actnow/drophaitiandebt/index.html

IMF RECOMMENDS DEBT FORGIVENESS, MARSHALL PLAN
http://en.wikipedia.org/wiki/Dominique_Strauss-Kahn
http://english.aljazeera.net/business/2010/01/201012134313606654.html
IMF urges ‘Marshall Plan’ for Haiti

The head of the International Monetary Fund (IMF) has called for an ambitious international recovery plan for earthquake-ravaged Haiti, similar to the US “Marshall Plan” that rebuilt Europe after World War II. “My belief is that Haiti, which has been incredibly hit by different things – the food and fuel prices crisis, then the hurricane, then the earthquake – needs something that is big,” Dominique Strauss-Kahn told reporters on Wednesday.

What is needed, he said, is “not only a piecemeal approach, but something which is much bigger to deal with the reconstruction of the country – some kind of a Marshall Plan that we need now to implement for Haiti.” While the primary focus remains on rescue and immediate relief efforts after the massive January 12 quake, international financial institutions say urgent measures are needed to help rebuild Haiti’s shattered economy.

Officials fear as many as 200,000 people were killed in the quake that reduced most of the Haitian capital Port-au-Prince to rubble and impacted an estimated three million people, or one third of the country’s population. “The urgency, today, is to save the people. The urgency, in some weeks, will be the reconstruction,” Strauss-Kahn said. Last week, the IMF promised an interest-free loan of $100 million in initial emergency funds to the Haitian government. However, the loan has drawn criticism for adding to the country’s debt burden.

“The most important thing is that the IMF is now working with all donors to try to delete all the Haitian debt, including our new loan,” Strauss-Kahn said. The IMF and the World Bank classify Haiti among “heavily indebted poor countries” eligible for debt forgiveness. The Caribbean nation was granted $1.2bn in debt relief last June.

Economic recovery
Experts say cash flow needs to be urgently restored to begin recovery [Reuters] The IMF is also working with donors to get cash circulating again in Haiti’s devastated economy so people can buy food and civil servants can get paid, a senior IMF official said on Wednesday. According to Nicolas Eyzaguirre, director of the IMF’s western hemisphere department, banks will reopen shortly while some money transfer agencies are already functioning for remittances sent by Haitians living abroad.

Remittances for Haitian expatriates have been a major “We need to urgently help Haiti to get its economy functioning again,” he said. Eyzaguirre said the cost to the Haitian economy wrought by the quake would probably exceed the $900m – or about 15 per cent of the country’s GDP – caused by devastating hurricanes in 2008. However he said in the early days after the quake there was still a lot of uncertainty over the full impact.

Davos agenda
Disaster-hit Haiti will also be one of the top agenda items at this year’s gathering of the World Economic Forum (WEF), Klaus Schwab, the group’s chairman and founder, has said. The annual meeting, which will draw more than 2,000 government, business and religious leaders from around the world, is scheduled to begin on January 27, two weeks after the earthquake struck.

Schwab said a special panel on Haiti will be held on January 28, where a reconstruction initiative should be outlined. “We hope that we can present a major common effort to the world community showing true corporate global citizenship in Davos,” Schwab said during a news conference in Geneva on Wednesday. Former US president Bill Clinton, who acts as a special envoy for Haiti, and Helen Clark, the former New Zealand prime minister and administrator of the United Nations Development Programme, will support the WEF’s initiative.

TRUE CAUSE : GENERAL FAILURE TO SUPPORT THE ONLY

SUCCESSFUL SLAVE INSURRECTION IN KNOWN HISTORY
http://www.pbs.org/egaliteforall/
Toussaint Louverture and the Haitian Revolution

It was the only successful slave insurrection in history. It grasped the full meaning of French revolutionary ideas — liberté, eqalité, fraternité — and used them to create the world’s first Black republic. It changed the trajectory of colonial economics…and led to America’s acquisition of the Louisiana territory from France. “It” was the Haitian Revolution, a movement that’s been called the true birth moment of universal human rights. Vaguely remembered today, the Haitian Revolution was a hurricane at the turn of the nineteenth century — traumatizing Southern planters and inspiring slaves and abolitionists, worldwide.

The man at the forefront of Haiti’s epochal uprising was Toussaint Louverture. He was world-known in his day and deserves a place among history’s most celebrated figures today. Born into slavery, Toussaint had been freed by his master before the revolt began. He owned property and was financially secure. He risked it all, however, to join then lead an army of slaves that would fight, in turn, the French, the British, and the Spanish empires for twelve years. He was often compared to George Washington. But his is military feats alarmed Thomas Jefferson… and ultimately provoked a full-scale attack from Napoleon Bonaparte. France’s final offensive would cost Toussaint his life. But France lost, nonetheless, and the richest colony in the Americas became an independent black republic.

The story of Haiti’s revolution is a story of extraordinary pathos. Half a million slaves dared hope for an unprecedented end to slavery and thousands died in the process. But the revolution’s history is also a story of forgotten people and milestones. Haitian slaves did not just fight with weapons. In 1794 a multi-racial delegation from Haiti traveled to Paris to address the national assembly. They spoke powerfully about slavery’s moral and physical violence. They argued that their struggle was part of France’s domestic revolution against despotism. And they won the day. The elocution of Haitian Blacks led to a sudden decree that not only freed the empire’s entire slave population, it made them French citizens, too.

the HAITIAN REVOLUTION of 1791-1803
http://www.webster.edu/~corbetre/haiti/history/revolution/revolution1.htm
http://www.webster.edu/~corbetre/haiti/history/revolution/revolution4.htm

as per U.S. LIBRARY Of CONGRESS
http://lcweb2.loc.gov/frd/cs/httoc.html#ht0013
The Slave Rebellion of 1791 / [data as of December 1989]

Violent conflicts between white colonists and black slaves were common in Saint-Domingue. Bands of runaway slaves, known as maroons (marrons), entrenched themselves in bastions in the colony’s mountains and forests, from which they harried white-owned plantations both to secure provisions and weaponry and to avenge themselves against the inhabitants. As their numbers grew, these bands, sometimes consisting of thousands of people, began to carry out hit-and-run attacks throughout the colony. This guerrilla warfare, however, lacked centralized organization and leadership. The most famous maroon leader was François Macandal, whose six-year rebellion (1751-57) left an estimated 6,000 dead. Reportedly a boko, or voodoo sorcerer, Macandal drew from African traditions and religions to motivate his followers. The French burned him at the stake in Cap Français in 1758. Popular accounts of his execution that say the stake snapped during his execution have enhanced his legendary stature.

Many Haitians point to the maroons’ attacks as the first manifestation of a revolt against French rule and the slaveholding system. The attacks certainly presaged the 1791 slave rebellion, which evolved into the Haitian Revolution. They also marked the beginning of a martial tradition for blacks, just as service in the colonial militia had done for the gens de couleur. The maroons, however, seemed incapable of staging a broad-based insurrection on their own. Although challenged and vexed by the maroons’ actions, colonial authorities effectively repelled the attacks, especially with help from the gens de couleur, who were probably forced into cooperating.

The arrangement that enabled the whites and the landed gens de couleur to preserve the stability of the slaveholding system was unstable. In an economic sense, the system worked for both groups. The gens de couleur, however, had aspirations beyond the accumulation of goods. They desired equality with white colonists, and many of them desired power. The events set in motion in 1789 by the French Revolution shook up, and eventually shattered, the arrangement.

The National Assembly in Paris required the white Colonial Assembly to grant suffrage to the landed and tax-paying gens de couleur. (The white colonists had had a history of ignoring French efforts to improve the lot of the black and the mulatto populations.) The Assembly refused, leading to the first mulatto rebellion in Saint-Domingue. The rebellion, led by Vincent Ogé in 1790, failed when the white militia reinforced itself with a corps of black volunteers. (The white elite was constantly prepared to use racial tension between blacks and mulattoes to advantage.) Ogé’s rebellion was a sign of broader unrest in Saint-Domingue.

A slave rebellion of 1791 finally toppled the colony. Launched in August of that year, the revolt represented the culmination of a protracted conspiracy among black leaders. According to accounts of the rebellion that have been told through the years, François-Dominique Toussaint Louverture helped plot the uprising, although this claim has never been substantiated. Among the rebellion’s leaders were Boukman, a maroon and voodoo houngan (priest); Georges Biassou, who later made Toussaint his aide; Jean-François, who subsequently commanded forces, along with Biassou and Toussaint, under the Spanish flag; and Jeannot, the bloodthirstiest of them all. These leaders sealed their compact with a voodoo ceremony conducted by Boukman in the Bois Cayman (Alligator Woods) in early August 1791. On August 22, a little more than a week after the ceremony, the uprising of their black followers began.

The carnage that the slaves wreaked in northern settlements, such as Acul, Limbé, Flaville, and Le Normand, revealed the simmering fury of an oppressed people. The bands of slaves slaughtered every white person they encountered. As their standard, they carried a pike with the carcass of an impaled white baby. Accounts of the rebellion describe widespread torching of property, fields, factories, and anything else that belonged to, or served, slaveholders. The inferno is said to have burned almost continuously for months.

News of the slaves’ uprising quickly reached Cap Français. Reprisals against nonwhites were swift and every bit as brutal as the atrocities committed by the slaves. Although outnumbered, the inhabitants of Le Cap (the local diminutive for Cap Français) were well-armed and prepared to defend themselves against the tens of thousands of blacks who descended upon the port city. Despite their voodoo-inspired heroism, the ex-slaves fell in large numbers to the colonists’ firepower and were forced to withdraw. The rebellion left an estimated 10,000 blacks and 2,000 whites dead and more than 1,000 plantations sacked and razed.

Even though it failed, the slave rebellion at Cap Français set in motion events that culminated in the Haitian Revolution. Mulatto forces under the capable leadership of André Rigaud, Alexandre Pétion, and others clashed with white militiamen in the west and the south (where, once again, whites recruited black slaves to their cause). Sympathy with the Republican cause in France inspired the mulattoes. Sentiment in the National Assembly vacillated, but it finally favored the enfranchisement of gens de couleur and the enforcement of equal rights. Whites, who had had little respect for royal governance in the past, now rallied behind the Bourbons and rejected the radical egalitarian notions of the French revolutionaries. Commissioners from the French Republic, dispatched in 1792 to Saint-Domingue, pledged their limited support to the gens de couleur in the midst of an increasingly anarchic situation. In various regions of the colony, black slaves rebelled against white colonists, mulattoes battled white levies, and black royalists opposed both whites and mulattoes. Foreign interventionists found these unstable conditions irresistible; Spanish and British involvement in the unrest in Saint-Domingue opened yet another chapter in the revolution.

TRIGGERED by FRENCH REVOLT: ‘THEY SAID EVERYONE!’
http://www.kreyol.com/history003.html
Federal Research Division Library of Congress
Edited by Richard A. Haggerty / Research Completed December 1989

Although Hispaniola never realized its economic potential under Spanish rule, it remained strategically important as the gateway to the Caribbean. The Caribbean region provided the opportunity for seafarers from Britain, France, and the Netherlands to impede Spanish shipping, to waylay galleons crammed with gold, and to establish a foothold in a hemisphere parceled by papal decree between the Roman Catholic kingdoms of Spain and Portugal. This competition was carried on throughout the Caribbean, but nowhere as intensely as on Hispaniola. Sir Francis Drake of England led one of the most famous forays against the port of Santo Domingo in 1586, just two years before he played a key role in the English navy’s defeat of the Spanish Armada. Drake failed to secure the island, but his raid, along with the arrival of corsairs and freebooters in scattered settlements, was part of a pattern of encroachment that gradually diluted Spanish dominance.

French Settlement and Sovereignty
Reportedly expelled by the Spanish from Saint Christopher (Saint Kitts), the original French residents of Tortuga Island (Ile de la Tortue), off the northwest coast of Hispaniola, sustained themselves mostly through two means: curing the meat and tanning the hides of wild game, and pirating Spanish ships. The former activity lent these hardy souls the colorful designation of buccaneers, derived from the Arawak word for the smoking of meat. It took decades for the buccaneers and the more staid settlers that followed them to establish themselves on Tortuga. Skirmishes with Spanish and English forces were common. As the maintenance of the empire tried the wit, and drained the energies, of a declining Spain, however, foreign intervention became more forceful.

The freewheeling society of Tortuga that was often described in romantic literature had faded into legend by the end of the seventeenth century. The first permanent settlement on Tortuga was established in 1659 under the commission of King Louis XIV. French Huguenots had already begun to settle the north coast of Hispaniola by that time. The establishment in 1664 of the French West India Company for the purpose of directing the expected commerce between the colony and France underscored the seriousness of the enterprise. Settlers steadily encroached upon the northwest shoulder of the island, and they took advantage of the area’s relative remoteness from the Spanish capital city of Santo Domingo. In 1670 they established their first major community, Cap François (later Cap Français, now Cap-Haïtien). During this period, the western part of the island was commonly referred to as Saint-Domingue, the name it bore officially after Spain relinquished sovereignty over the area to France in the Treaty of Ryswick in 1697.

Colonial Society: The Conflicts of Color and Class
By the mid-eighteenth century, a territory largely neglected under Spanish rule had become the richest and most coveted colony in the Western Hemisphere. By the eve of the French Revolution, Saint-Domingue produced about 60 percent of the world’s coffee and about 40 percent of the sugar imported by France and Britain. Saint-Domingue played a pivotal role in the French economy, accounting for almost two-thirds of French commercial interests abroad and about 40 percent of foreign trade. The system that provided such largess to the mother country, such luxury to planters, and so many jobs in France had a fatal flaw, however. That flaw was slavery.

The origins of modern Haitian society lie within the slaveholding system. The mixture of races that eventually divided Haiti into a small, mainly mulatto elite and an impoverished black majority began with the slavemasters’ concubinage of African women. Today Haiti’s culture and its predominant religion (voodoo) stem from the fact that the majority of slaves in SaintDomingue were brought from Africa. (The slave population totalled at least 500,000, and perhaps as many as 700,000, by 1791.) Only a few of the slaves had been born and raised on the island. The slaveholding system in Saint-Domingue was particularly cruel and abusive, and few slaves (especially males) lived long enough to reproduce. The racially tinged conflicts that have marked Haitian history can be traced similarly to slavery.

While the masses of black slaves formed the foundation of colonial society, the upper strata evolved along lines of color and class. Most commentators have classified the population of the time into three groups: white colonists, or blancs; free blacks (usually mulattoes, or gens de couleur–people of color), or affranchis; and the slaves.

Conflict and resentment permeated the society of SaintDomingue . Beginning in 1758, the white landowners, or grands blancs, discriminated against the affranchis through legislation. Statutes forbade gens de couleur from taking up certain professions, marrying whites, wearing European clothing, carrying swords or firearms in public, or attending social functions where whites were present. The restrictions eventually became so detailed that they essentially defined a caste system. However, regulations did not restrict the affranchis’ purchase of land, and some eventually accumulated substantial holdings. Others accumulated wealth through another activity permitted to affranchis by the grands blancs–in the words of historian C.L.R. James, “The privilege of lending money to white men.” The mounting debt of the white planters to the gens de couleur provided further motivation for racial discrimination.


Eduardo Munoz/Reuters

INDEPENDENCE
http://www.kreyol.com/history005.html

On January 1, 1804, Haiti proclaimed its independence. Through this action, it became the second independent state in the Western Hemisphere and the first free black republic in the world. Haiti’s uniqueness attracted much attention and symbolized the aspirations of enslaved and exploited peoples around the globe. Nonetheless, Haitians made no overt effort to inspire, to support, or to aid slave rebellions similar to their own because they feared that the great powers would take renewed action against them. For the sake of national survival, nonintervention became a Haitian credo.

Dessalines, who had commanded the black and the mulatto forces during the final phase of the revolution, became the new country’s leader; he ruled under the dictatorial 1801 constitution. The land he governed had been devastated by years of warfare. The agricultural base was all but destroyed, and the population was uneducated and largely unskilled. Commerce was virtually nonexistent. Contemplating this bleak situation, Dessalines determined, as Toussaint had done, that a firm hand was needed.

White residents felt the sting most sharply. While Toussaint, a former privileged slave of a tolerant white master, had felt a certain magnanimity toward whites, Dessalines, a former field slave, despised them with a maniacal intensity. He reportedly agreed wholeheartedly with his aide, Boisrond-Tonnerre, who stated, “For our declaration of independence, we should have the skin of a white man for parchment, his skull for an inkwell, his blood for ink, and a bayonet for a pen!” Accordingly, whites were slaughtered wholesale under the rule of Dessalines.

Although blacks were not massacred under Dessalines, they witnessed little improvement in the quality of their lives. To restore some measure of agricultural productivity, Dessalines reestablished the plantation system. Harsh measures bound laborers to their assigned work places, and penalties were imposed on runaways and on those who harbored them. Because Dessalines drew his only organizational experience from war, it was natural for him to use the military as a tool for governing the new nation. The rule of Dessalines set a pattern for direct involvement of the army in politics that continued unchallenged for more than 150 years.

In 1805 Dessalines crowned himself Emperor of Haiti. By this point, his autocratic rule had disenchanted important sectors of Haitian society, particularly mulattoes such as Pétion. The mulattoes resented Dessalines mostly for racial reasons, but the more educated and cultured gens de couleur also derided the emperor (and most of his aides and officers) for his ignorance and illiteracy. Efforts by Dessalines to bring mulatto families into the ruling group through marriage met with resistance. Pétion himself declined the offer of the hand of the emperor’s daughter. Many mulattoes were appalled by the rampant corruption and licentiousness of the emperor’s court. Dessalines’s absorption of a considerable amount of land into the hands of the state through the exploitation of irregularities in titling procedures also aroused the ire of landowners.

The disaffection that sealed the emperor’s fate arose within the ranks of the army, where Dessalines had lost support at all levels. The voracious appetites of his ruling clique apparently left little or nothing in the treasury for military salaries and provisions. Although reportedly aware of discontent among the ranks, Dessalines made no effort to redress these shortcomings. Instead, he relied on the same iron-fisted control with which he kept rural laborers in line. That his judgement in this matter had been in error became apparent on the road to Port-au-Prince as he rode with a column of troops on its way to crush a mulattoled rebellion. A group of people, probably hired by Pétion or Etienne-Elie Gérin (another mulatto officer), shot the emperor and hacked his body to pieces.

Under Dessalines the Haitian economy had made little progress despite the restoration of forced labor. Conflict between blacks and mulattoes ended the cooperation that the revolution had produced, and the brutality toward whites shocked foreign governments and isolated Haiti internationally. A lasting enmity against Haiti arose among Dominicans as a result of the emperor’s unsuccessful invasion of Santo Domingo in 1805. Dessalines’s failure to consolidate Haiti and to unite Haitians had ramifications in the years that followed, as the nation split into two rival enclaves.

TORTUGA of SONG
http://books.google.com/books?id=SJEg0p4RCP4C

COLONIZED by BUCANEERS
http://www.thepiratesrealm.com/Isle%20of%20Tortuga.html

These men were known for the meat that they barbecued (French for smoked meat is viande boucanee), and so eventually were named… Buccaneers. When these hunters learned that piracy was more profitable than selling meat, they were soon making regular raids on the Spanish ships sailing the local trade routes. An early French governor named Jean le Vasseur used his training as an engineer to build a 24-gun fort by the harbor which helped to repel Spanish attacks. French governors preferred to use the buccaneers for local defense, as the British governors were later to do at Port Royal, and Tortuga Island became well-known for those men calling themselves the Brethren of the Coast. The most notorious among the pirates of Tortuga was Francois L’Ollonais, a psychopath whose method of choice was often horrible tortures and murder. Sir Henry Morgan started his career of piracy from this very island.

FLYING WRONG FLAG LEGAL
http://www.blackpearltales.net/erins_site/History.html#top

Tortuga was initially founded by the French in 1625, who realized Hispaniola was awfully thick with Spaniards and so turned their attentions to the large island just northward. There the French and some English with them began setting up plantations and making themselves at home. However, the Spaniards and their new neighbors took periodic swats at each other and control of the island switched back and forth a few times. Most of the English on Tortuga decided to move elsewhere, but a few remained to form their own small colony. For a time the French and English on Tortuga both had their own colonies and governors, and managed an uneasy co-existance.

It was the French who first encouraged privateers to use Tortuga as their base, in large part as a deterent to Spanish incursions. By 1633 Tortuga is a haven for the wolves of the sea. Tortuga comes under attack by the Spanish several times over the years, the struggle for control bloody and fierce. By 1641 the English colonists on Tortuga were expelled by the French – but this did not curtail English pirates or privateers, who continued to ply their trade with their French and Dutch brethren, and Tortuga’s uproarious career likewise continued. In 1653 the French governor was assassinated, whereupon the Spanish instantly pounced on his predecessor, and when the smoke cleared the English returned to hold the island from 1655-59. But once again the balance of power changed to French hands.

About 1665 the governor of Tortuga wished to somewhat civilize his piratical folk, and did his best to encourage proper colonization and trade of their hard-won goods. He met with dubious success, but the island continued to be the playground of the Brotherhood of the Coast. By 1670 a great many privateers sailed under commisions granted by the governor of Tortuga, not the least being the infamous Henry Morgan, who led his fleet to attack Santa Marta, Rio de la Hacha, Puerto Bello and Panama.

The death of the privateers came in the 1680’s, when English laws made it a felony to sail under a foreign flag. Thereafter if any Englishman was found privateering under any flag other than his own – and after the 1684 Treaty of Ratisbone England no longer issued letters of marque – he would be hanged. In 1688 Henry Morgan died in Jamaica, and the glory days of the privateers was over.

FOLLOWED (PERHAPS INEVITABLY) by FREE ENTERPRISE ZONE
ADMINISTRATED by KNOWN RADIO PIRATE (INVITED)
http://en.wikipedia.org/wiki/Don_Pierson
Freeport Tortuga + Don Pierson

In 1967, during the time that Don Pierson was attempting to lease the ship which had been the former homes of [pirate stations] Swinging Radio England and Britain Radio, he received a response from the Ambassador for Haiti in Washington, DC. Don Pierson’s original plan was to lease or sell the ship to the government of Haiti for it to establish two powerful 50 kW commercial radio stations aimed at American tourists visiting the old buccaneer stronghold of Tortuga island, which is located some 10 miles off the north coast of the main Haitian island of Hispaniola which is also shared by the Dominican Republic.

This offer became a plan to develop the island itself as a freeport and he was asked to assist the government of Haiti to encourage business investment in that poverty-stricken land. After years of research and negotiation, Don Pierson’s idea of a privately financed, privately managed free enterprise zone became a reality in 1971 when Haitian dictator François Duvalier (known as “Papa Doc”) and the Haitian government entered into a 99-year contract with Don Pierson’s company called Dupont Caribbean Inc. This contract provided for the establishment of Freeport Tortuga.

Within 18 months Don Pierson succeeded in building the island’s first airport, a loading dock for seagoing vessels, a rudimentary water and sewer system, an electricity generating facility, and six miles of paved road. Of equal importance. the project created jobs for some 400 previously unemployed Haitians and resulted in the establishment of a small school to teach various job skills. During this period he also became Honorary Consul of the Republic of Haiti to Texas from 1969 through 1974. Tragically, the free port project came to abrupt end in 1974 when, after it was announced that Gulf Oil Corporation was contemplating investing more than $300 million to build a resort on the island, the government of Jean-Claude Duvalier (known as “Baby Doc”), summarily expropriated the project, resulting in its collapse. A similar venture on the island of Dominica which was attempted in the wake of the failed project in Haiti, also met with disaster following governmental turmoil in Dominica.

PREVIOUSLY on SPECTRE :
HAITIANS EATING MUD
https://spectregroup.wordpress.com/2008/04/21/haitians-eating-mud/

NON-HYPOTHETICAL MALTHUSIAN CATASTROPHE
[SEE ALSO GRAHAM GREENE]

REPARATIONS (DEBT) to FRANCE for DAMAGES INCURRED by REVOLUTION
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6281614.ece
Haiti: the land where children eat mud
What is the West doing to rescue the ‘nightmare republic’?
BY Alex von Tunzelmann / May 17, 2009

If you ever hear of Haiti, it is usually because of something frightening. It is famous for hurricanes, deforestation, poverty, drug smuggling, violence, dictatorships, voodoo and slavery. Half a century ago, when it was under the tyranny of François “Papa Doc” Duvalier and his “zombie” militia, Graham Greene called Haiti the “nightmare republic”. Though Papa Doc has long gone, the nightmares have never ended in this Caribbean dystopia. Haiti is the poorest country and only Third World nation in the western hemisphere, and it’s getting worse.

Two centuries ago, the political economist Robert Malthus postulated that a society in which the population grew too fast could reach a point where people simply could not be fed, leading to a total collapse. Over the past five years, Haiti has not only met but exceeded the conditions for a Malthusian catastrophe. The only things keeping the country from absolute disaster are imported food and charity. With a global economic crisis afoot, the question is how long that can be sustained. I had plenty of reservations about going to Haiti. It is a place born out of the darkest days of slavery: a country where white people have always been regarded, with some reason, as the enemy, and where, in some areas, half of all women and girls have been the victims of rape.

I am a historian, not a foreign correspondent or aid worker, but I wanted to see for myself what life was like in this haunted nation. Notables including Ban Ki-moon, Bill Clinton and Hillary Clinton have visited Haiti in the past couple of months, highlighting the fact that the country is poised on the brink of what could be a humanitarian crisis of terrifying proportions.

In the 1960s, Papa Doc decorated the “Welcome to Haiti” sign at Port-au-Prince’s airport with the dismembered corpses of his enemies. At least they’ve taken those down. Instead there’s a calypso band playing for tips, and a swarm of hustling taxi drivers. Immediately I hear the epithet by which I will be known for the next week: la blanche, the white woman.

At the hotel in the relatively affluent suburb of Pétionville, there is a long list of rules. Don’t go out alone. Don’t walk more than two kilometres in any direction. Don’t go out after dark at all. If you hear gunshots, stay inside. Smile at the man toting an assault rifle who stands at the hotel entrance. He’s here for your protection.

Just why is Haiti in such a dire situation, so much worse than any other country in the Americas, and as bad as anywhere on Earth? Some blame the United Nations. Some blame the Americans. Some have theories about the collision of global warming with global capitalism. All are careful to point out that the Haitian elite deserves its reputation for being greedy, negligent and kleptocratic. “I think the Haitian people have been made to suffer by God,” Wilbert, a teacher, tells me, “but the time will come soon when we will be rewarded with Heaven.”

History tells a different story. The appalling state of the country is a direct result of having offended a quite different celestial authority — the French. France gained the western third of the island of Hispaniola — the territory that is now Haiti — in 1697. It planted sugar and coffee, supported by an unprecedented increase in the importation of African slaves. Economically, the result was a success, but life as a slave was intolerable. Living conditions were squalid, disease was rife, and beatings and abuses were universal. The slaves’ life expectancy was 21 years. After a dramatic slave uprising that shook the western world, and 12 years of war, Haiti finally defeated Napoleon’s forces in 1804 and declared independence. But France demanded reparations: 150m francs, in gold.

For Haiti, this debt did not signify the beginning of freedom, but the end of hope. Even after it was reduced to 60m francs in the 1830s, it was still far more than the war-ravaged country could afford. Haiti was the only country in which the ex-slaves themselves were expected to pay a foreign government for their liberty. By 1900, it was spending 80% of its national budget on repayments. In order to manage the original reparations, further loans were taken out — mostly from the United States, Germany and France. Instead of developing its potential, this deformed state produced a parade of nefarious leaders, most of whom gave up the insurmountable task of trying to fix the country and looted it instead. In 1947, Haiti finally paid off the original reparations, plus interest. Doing so left it destitute, corrupt, disastrously lacking in investment and politically volatile. Haiti was trapped in a downward spiral, from which it is still impossible to escape. It remains hopelessly in debt to this day.

Like all cities, Port-au-Prince has better and worse neighbourhoods. Unlike all cities, several of its worst neighbourhoods are declared conflict zones. Some slums are so dangerous that even the United Nations peacekeeping troops, who carry machineguns, do not venture in. The UN is not popular here. Peacekeepers are rumoured to have massacred unarmed slum-dwellers on several occasions. “A lot of people say the UN soldiers trade guns and drugs,” a Haitian student tells me while we walk around Champs de Mars, the park by the National Palace, a line of soldiers just in front of us. Many Haitians palpably mistrust foreigners. Pedestrians and peanut-sellers keep their eyes on me but stay back, as if I were a predator.

Just 10 minutes’ drive from the National Palace, past a cemetery filled with elaborate pastel-coloured tombs, is Carrefour Feuilles. A perilous stack of breeze blocks, filth and human misery teetering on the hills overlooking the bay, it is considered to be among the most dangerous and deprived of the city’s slums. The streets are too narrow and rutted to drive. I walk up steep paths in between shacks of mud and rusting corrugated iron. At every turn, the route is obstructed by heaps of discarded packaging, decomposing rubbish and human waste, over which goats and children crawl, foraging for food. In the blazing midday sun, the stench is hard to endure.

This is a place where you come face to face with Haiti’s industrial collapse. Unemployment, which hovers around 75% nationally, is higher here. Most people are illiterate, unskilled and unhealthy. The only vaguely legal option open to the majority of residents is to buy a few items of cheap produce, and sell them at a tiny profit in the markets. Unfortunately, the city’s recent effort to clean up the streets in the centre has meant that many of these traders have been kicked out. The remaining jobs open to them make an unappealing list: selling drugs, selling weapons, robbery, blackmail, prostitution and kidnapping. It is the kidnappings that make headlines.

For the gangs, in a country that produces virtually nothing, terror is one of the few reliable sources of income. Gang members ambush an ordinary person, usually someone unlikely to resist, such as a woman or a child. They saw off one of the victim’s fingers or an ear, and take it to the family, along with a demand for money. Even if the ransom is paid, the victim often ends up dead. At one point, kidnappings were reported five times a day. There was another peak in the first few months of 2008, but some arrests of gang leaders were made over the summer, and now the official statistics have stabilised at something closer to one incident every couple of days.

Foreigners have been targeted, which is why nobody will let me walk around on my own, but the greatest danger is to ordinary Haitians. Even slum-dwellers are often abducted and tortured by the gangs, sometimes for a ransom as little as the price of a cocktail in London.

“Parents in Carrefour Feuilles are happy when their son joins a gang,” one Haitian woman, who runs an anti-violence project, tells me. “They are also happy when their daughters become child prostitutes. It means the family can afford to eat.” Posters advocating sexual abstinence can be seen on every street. So far, they do not appear to be having much impact: population growth is rising. Haiti was considered unsustainably overcrowded in the 1950s, when the population was 3m. Now it is 9m. Survival is a daily effort, and these starving slum-dwellers will seize on any opportunity to earn money, however unpleasant.

The new idea from the UN and the US is Hope II, a programme that would give Haitian companies duty-free access to the American market for nine years. The focus is on agriculture and garment factories. A similar scheme has been running since 2006, and the results look good on paper: 3,000 jobs are said to have been created. On the street, though, the word is not good. Pay is subsistence level at best, and does not keep pace with food prices. Conditions are dangerous and unsanitary. Workers are charged for going to the toilet. Abuse is widespread.

There are people who argue that rich countries, too, once went through a stage of sweatshop labour, and that this is some sort of necessary purgatory on the road to improvement. It is an easy argument to make from a comfortable armchair in the home counties, but it is ahistorical. Haiti’s path of development has been completely different from those of the rich countries. The reason it has not become sustainable is that, for two centuries, rich countries and their banks have menaced almost all of its wealth out of it. For how much longer should the Haitians do penance?

The country’s problems were only exacerbated when, in 1957, François Duvalier became president. Exploiting Haitian beliefs in the traditions of voodoo (most Haitians still practise it today), he established a personal militia, the Tonton Macoutes, rumoured to be zombies he had raised from the dead, who soon gained a chilling reputation for rape and torture.

Papa Doc himself affected the style of Baron Samedi, the spirit of the dead, appearing in a black top hat and pinstriped suit. Reports from Haiti brought forth disgust from the developed world, but the protests did not turn into action. Instead of moving to condemn and remove these dictators, the world’s richest countries opened their chequebooks. In 1967, American-owned plantations in the Dominican Republic paid Papa Doc directly for rounding up 20,000 Haitians to work on their lands. In 1972, his son and heir, Baby Doc’s minister of the interior, was exposed for literally selling Haitian blood to private American hospitals: $3 a litre, no questions asked. During the Duvaliers’ combined 28 years in power, up to 60,000 Haitians were “disappeared” by the regime. The Duvaliers swindled international creditors and aid agencies for enormous sums. The American government, via various agencies and banks, lent millions to both dictators.

Though there was anger in Washington about the Duvaliers and their 80% rate of aid embezzlement, no action was taken to remove them until 1986. The Duvaliers were always happy to sign up to new loans, and to give lucrative contracts to American corporations. Most of the projects went nowhere. Haiti is littered with half-built and abandoned schools, hospitals, bridges and roads.

Most of the money lent to the Duvaliers found its way into private bank accounts. When Baby Doc fled, he took millions with him: estimates go as high as $900m. The debts incurred by the Duvaliers make up 45% of Haiti’s total current debt. None of the creditors finds the fact of their complicity a compelling argument for cancellation. Those creditors include the Inter-American Development Bank, the World Bank, the IMF and the governments of the US and France.

Debt relief is at the discretion of the Heavily Indebted Poor Countries Initiative, run by the World Bank and the IMF. Haiti must meet certain conditions, including poverty reduction and inflation controls, before any debt can be written off. By international standards, the sums are small, but for Haiti they are enormous. The World Bank alone demands an estimated $1.6m a month.

On April 14, in a speech at a conference on Haiti’s social and economic development, Robert B Zoellick, president of the World Bank Group, announced: “We are working closely with the authorities and the IMF to help expedite debt cancellation while ensuring that monies released go directly to support poverty reduction.” At the spring meeting of the World Bank and the IMF less than two weeks later, Haiti was judged again as having failed to show sufficient progress towards macroeconomic stability to qualify for debt cancellation. In a surprise move, however, the US government stepped in to cover Haiti’s debt service payments for the rest of this year.

Undoubtedly, the American gift is a boon, and Barack Obama and Hillary Clinton do seem to be making a genuine effort to help. Obama’s tax return for this year revealed a personal donation of $2,000 to a Christian organisation working in Haiti. Clinton has also announced that she will re-examine US policy on Haitian migrants. At the moment, unlike the Cuban refugees who are given asylum, Haitians are considered economic migrants, and are imprisoned and deported.

Haiti’s record on political freedom is far from spotless, though it is in theory now a democracy. The most popular party among the impoverished majority, Fanmi Lavalas, was banned from contesting elections this month on the grounds that its leader, Jean-Bertrand Aristide, did not meet a very short deadline unexpectedly imposed for signing the hard copy of his party’s lists. He could not have done so: he is in exile in South Africa, having been ousted in a highly controversial UN intervention in 2004. There is some hope Clinton will award temporary work permits to Haitian illegals in the US. “But, at the same time,” she added in her announcement, “we don’t want to encourage other Haitians to make the dangerous journey across the water.” Both George W Bush in 2004 and Bill Clinton in 1994 justified military intervention in Haiti, partially on the basis that unmanageable numbers of “boat people” were turning up on their shores. “There is only one solution to Haiti’s problems, and that’s mass emigration,” one senior American foreign-policy expert told me. “But nobody wants to talk about it.” So Haiti remains in debt, relieved for now, but not for ever. And the question of France repaying some or all of the compensation it extracted for Haitian independence is not even on the agenda.

The Artibonite valley is the rural heart of Haiti. The potholed road out of the capital runs north through miles of bleak marshland. We drive past Titayen, a dumping-ground for the bodies of people murdered by political groups or criminal gangs. The hot air is oppressive with the weight of storm clouds. Near the town of Cabaret is a tent-city full of refugees. On both sides of the road, houses are stoved in, with walls and roofs ripped off, and whole floors of concrete folded in on themselves like origami. This is the parting gift left by Fay, Gustav, Hanna and Ike, four storms that devastated Haiti in three weeks last summer. All around the valley rise high mountains. Fifty years ago, these were covered in dense tropical jungle. Now, there is nothing but brownish scrub. Eighty per cent of Haitians live below the poverty line, and cook on charcoal from scavenged wood. As the population has shot up, the forests have been cut down. Haiti is now 98% deforested. The roots of those trees held the land together. Now, every time a hurricane hits Haiti, the rains and floods sweep topsoil and soft clay from these hills down to the valleys and the coast. Arable land is stripped back to barren rubble, while whole towns such as Gonaives — until last August a city of 250,000 people — are buried under sludge.

At a nearby village, Robuste, dozens of excited children ambush me. Not many strangers come here, and they are intrigued. Even in the middle of horrific poverty, the people have not lost their sense of humour. I raise my camera to take a picture, and an old woman immediately begins weeping and howling. Shocked, I lower the camera, and she points at me and roars with laughter. It was a joke, and a clever one: she was satirising the usual news-agency photos. But most of the devastation here is all too real. In the hurricanes, half the houses in Robuste were washed away.

The village pastor takes me into his church, a comfortless hall in which over 200 refugees have been sleeping rough. One woman lies here, suffering from unidentified sickness in the aftermath of the floods. There is no doctor. Her year-old baby is left unattended on the concrete floor. He crawls up to me, wide-eyed. Slavery did not end with the revolution. A grim fate awaits many of the children in Robuste. When destitute Haitian families cannot feed their children, they send them to the towns. There are 300,000 such children in Haiti, around 10% of the entire child population. They are known as restaveks — a Creole word from the French rester avec, to stay with. Host families provide restaveks with food, clothing, shelter and in some cases education, in return for having the child work as a servant. Often these children are beaten, sexually abused, starved, denied medical treatment. In a couple of years the baby in front of me could be given up to this modern form of slavery. Restaveks as young as three have been found in Port-au-Prince. His mother rolls over in her sleep. She looks desperately ill. Soon, nobody in this village will have enough to eat. At that point the sending away of their children will begin.

Even before the hurricanes hit, Haiti was in the grip of a food crisis. A year ago, when the price of rice soared across the world, Haitians began to starve. There were confirmed reports of people being reduced to eating dirt. Cookies made of mud mixed with vegetable oil were all they could scrape together. In the slums of Port-au-Prince, Oxfam is funding community restaurants in an attempt to provide something more nutritious. People bring tin pots and pay 10 gourdes (16p) to have them filled with rice, beans and vegetables. It is thought that charging a small sum preserves people’s dignity, and avoids giving them the impression that they can rely on hand-outs. The restaurant is at a busy intersection, surrounded by a huge mass of people, mostly young men, shouting, banging their tin pots and jostling to get to the front. Food riots are common.

A little boy of about eight wanders up to us. He looks even thinner and more nervous than the other children, and is barefoot, dressed in a worn-out black string vest and threadbare shorts. Ian, Oxfam’s British press officer, is good with children. He leans down, smiles and shakes the boy’s hand. The boy wanders back to join the people waiting for food. He goes to a woman in her late thirties. “Get away from me!” she screams at him, smacking him across the face. “You shook hands with the blanc! Koko rat!” The crowd gasps. The name she has called him is one of the strongest insults in Creole, literally a crude expression for the genitals of a female rat, but the implication is worse. The woman means that the little boy is a traitor. Ian is aghast, but of course it’s not his fault. The little boy runs off. Moments later, he appears beside me again. He looks lost, and wears an expression of unbearable sadness. He had a tin bowl before, but it has gone. “Where’s his bowl?” I ask my Creole translator. She asks him. “Someone took it from him.” “We’ve got to find him another one,” I say. “He hasn’t had any food yet.” “There aren’t any around,” she replies.

It’s true. Nobody has a spare, and everyone here needs to eat. Just down the street, market stalls display mouldy vegetables and half-rotten meat crawling with flies. Even rotting food is too expensive for most slum-dwellers. By now the crowd is getting seriously aggressive. Men are shoving each other, and punches are thrown. The organiser hurries back to us. “We have to leave. Now.” At another roadside stall I see a painting of a pregnant Haitian woman crying tears of blood, while demonic white babies with sharpened teeth scramble to suckle from her breasts.

Graham Greene’s “nightmare republic” has become a literal fact. The next morning I board a bus to make the long journey through the mountains to Santo Domingo, the capital of the neighbouring Dominican Republic. Driving through Haiti, there are almost no trees to be seen. The roads are lined with scrub, thorns and piles of refuse. At the exact point of the border line, the world surges back into life. Suddenly the road is thick with towering mature trees, their branches heavy with lush green leaves, fat blossoms, singing birds. It is beautiful but heartbreaking, a reminder, if any were necessary, that things need not be as they are.

The facts
– last year’s hurricanes devastated more than 70% of Haiti’s agricultural land
– more than 80% of the population lives on less than £2 a day
– some 3.8% of the population is HIV-positive, according to Save the Children; among them 17,000 minors. Medical provisions are scarce. There is one doctor for every 3,000 patients.
– life expectancy at birth is 61 years. The survival rate of newborns is the lowest in the western hemisphere. One-third are born underweight.
– there are 80 deaths per 1,000 live births. The mortality rate for children under five is 120 in 1,000

DIDN’T PRACTICE VOODOO CORRECTLY, DESPITE WARNINGS
http://www.rnw.nl/english/article/benin-voodoo-calm-evil-spirits-haiti
Benin voodoo to calm evil spirits in Haiti
BY Razzack Saïzonou / 15 January 2010

“We are deeply affected and feel solidarity with our Haitian brothers,” said an emotional Queen Djehami following Tuesday’s earthquake in Haiti. Djehami is the wife of Kpodégbé Toyi Djigla, King of Allada, a town in central Benin and one of the largest kingdoms of the country. “We are deeply affected, primarily because I am African, but mainly because I am from Allada. There is a sense of desolation at the palace.”

During the 16th and 17th centuries, Benin played a key role in the slave trade. Thousands of men and women were uprooted and sold as slaves to work in plantations in Europe, the Caribbean and America. Many of them came from Allada, as did the family of Toussaint L’ouverture, who later founded the Republic of Haiti.

Toussaint L’ouverture (1743-1803), nicknamed the Black Napoleon, was born on a plantation in the French colony of Saint Domingue. He was named Breda after the plantation as was the custom for slaves. His master, the relatively humane Mr Baillon de Libertat, encouraged Toussaint to learn to read and write, and appointed him as his coachman and then as his foreman. Later Toussaint led a revolution against slavery and Haiti became the first republic to be ruled by leaders with African ancestry.

Apart from the historical ties between Haiti and Benin, the two countries share the religion of their ancestors: voodoo. This religion is central to the worship and traditions of thousands of Haitians and Beninese. Queen Djehami believes that this week’s earthquake has happened because Haiti’s ancestors failed to carry out sacrifices. She explains that during his trip to Haiti six years ago, King Kpodégbé had warned the then President of Haiti of the need to organise sacrifices to appease angry spirits and ward off evil ones. His trip was part of bicentenary celebrations marking the death of Toussaint L’ouverture.

Although the Haitian authorities probably didn’t ignore the king’s warning, they did put off organising the rituals. “Haiti is profoundly African and these things should not be underestimated,” exclaims Queen Djehami. “His Majesty the King asked for a number of things to be done when we were there, but his wishes were not met. Was it negligence, was it that nobody believed in it?”

In an outburst of solidarity with the victims of the earthquake, the people of Benin and particularly those of Allada have organised traditional ceremonies to appease the spirits and seek the blessing of their ancestors for the Haitians.” A purification ceremony is planned for Haiti and a trip to the devastated island is even possible. We will continue to pray that it never happens again,” says the Queen of Allada.

“HAITIANS are CURSED” [OP-ED]

“TRUE STORY” :PAT ROBERTSON SPEAKS for HIMSELF
http://www.google.com/search?ie=UTF-8&q=pat+roberston+call+800

“call Pat @ (800) 759-0700 to give your opinion of statements on Haiti, or put them on hold + just play music, it costs them money to wait for you”

HOLD MUSIC


COGNITIVE DISSONANCE
(or WHY I AM CALLING YOU A RACIST)
http://www.facebook.com/note.php?note_id=256628482369&comments
Why it’s wrong to label Pat Robertson as a crackpot.
Posted Yesterday [1/14] at 4:12pm

“Pat Robertson has been called crazy, loony, and a crackpot based upon his comments regarding a 200 year old curse placed upon Haiti. This would be an inappropriate label. The story is based upon a myth created to justify a belief in White Supremacy, and has been maintained and repeated by Southern Christians to this day. Robertson was speaking in a code not understood by Northerners and Westerners, so it appears to fall to me to explain the origins off the myth, and the reasons it has survived in the South to this day, and continues to influence our foreign and domestic policy.

The myth is rooted in beliefs regarding the “Mark of Cain” [http://en.wikipedia.org/wiki/Curse_and_mark_of_Cain] which are widely held in the South. Most theologians believe the “Mark” referred to a curse to a nomadic lifestyle, and an inability to grow crops. The belief was used to justify the extermination of Native Americans, because they weren’t using the land profitably, while systematically burning their crops, and stealing their orchards. As long as taking lands could be justified through “making the land fertile” it was theologically justified. The irony of course is that world cuisines would be very different today without basic Native American crops such as potatoes, tomatoes, chili peppers, corn, blueberries, strawberries, and so on. But, that is another history for another day.

The “Mark of Cain” was made into skin color by Southern theologians, seeking to justify slavery. Therefore, to the degree that one’s skin was dark, it designated that person as less than human, and able to be exploited as any other animal with the approval of the Southerner’s God. I must add here, that is was not only the approval, but the destiny supported and guaranteed by the Southern God. When you hear a Southerner say, “Everything happens for a reason,” it means that everything that happens to a person, or a people, because it is their God’s will.

When Haiti achieved independence in 1804, the foundation of that set of beliefs was shaken. The only way to reconcile the belief of White Superiority with a Black Nation achieving independence was the intervention of the Devil. Therefore, a myth was created that said that the Haitians had made a deal with the Devil, and bore a new “Mark,” similar to that of Cain. The fact that Toussaint L’ouverture was an educated man, who fought to retain his freedom becomes obscured by the myth. This belief has influenced our dealings with Haiti, from Thomas Jefferson to the present day. Jefferson’s struggles with how to deal with Haiti have already been published, and I will not go through the history of our foreign policy with respect to Haiti with this entry.

This is not a fringe belief. In 1994, ONE HUNDRED AND NINTEY years after Haiti achieved independence, President Bill Clinton sent peacekeeping troops to Haiti under pressure from the Congressional Black Caucus when a military dictatorship supported by US business interests overthrew the popularly elected Aristede. Before the troops were sent to Haiti, they were briefed by a local expert chosen by the CIA, who said: “The briefing was only partly inexplicable to me. Many of the mindless prejudices of the briefing would resurface later as official documents, from Intelligence, Psychological Operations, and Civil Affairs. It was part of the attempt to minimize American contact with Haitian realities. It is going on to this day, and it is effective. Now, the bullshit is being disseminated by the United States Embassy. The press laps it up and regurgitates it for us uncritically, awed as always to be allowed so near the powerful.”

Robertson’s beliefs are neither crackpot, outside of the norm for many people in positions of power. They also inform the myth-building in Southern States on how to deal with the election of President Barack Obama. The mad scramble for a label from Anti-Christ to NAZI is a reflection of irreconcilable cognitive dissonance between Southern belief systems and reality. Within a day of Robertson’s remarks, a G.O.P. Spokesman stated that all ANYONE needed to do, INCLUDING THE UNITED NATIONS, was to heal the injuries, bury the dead, and GET OUT. This is belief and praxis, naked. Robertson is a GOP operative, and has advised presidents in the past, including Bush, and his bombing of Mayan villages coincided with Reagan’s support of the atrocities committed by the Contras, and by the systematic overthrow of democratically-elected governments in the Caribbean, Central, and South America and subsequent atrocities in this hemisphere.

To fail to recognize the importance of the system of beliefs in the behavior of Southerners, the praxis of those beliefs, and the way in which those beliefs are transmitted is to fail to recognize the danger of the situation. His belief in the Curse of Haiti, is supported by a belief system that cannot reconcile the United States having elected a Black President. The disbelief that Barack Obama is President along with the signs displayed at the various protests in the South, among significant portions of the South are indicative of the cognitive dissonance among that population. The situation parallels the cognitive dissonance caused by the independence of Haiti. It is a dangerous time for Pat Robertson, and that means it’s a dangerous time for all of us.

WHICH GODS HATE HAITI? an ECUMENICAL PRIMER
http://www.albertmohler.com/2010/01/14/does-god-hate-haiti/
Does My God Hate Haiti?
BY Albert Mohler / January 14, 2010

The images streaming in from Haiti look like scenes from Dante’s Inferno. The scale of the calamity is unprecedented. In many ways, Haiti has almost ceased to exist. The earthquake that will forever change that nation came as subterranean plates shifted about six miles under the surface of the earth, along a fault line that had threatened trouble for centuries. But no one saw a quake of this magnitude coming. The 7.0 quake came like a nightmare, with the city of Port-au-Prince crumbling, entire villages collapsing, bodies flying in the air and crushed under mountains of debris. Orphanages, churches, markets, homes, and government buildings all collapsed. Civil government has virtually ceased to function. Without power, communication has been cut off and rescue efforts are seriously hampered. Bodies are piling up, hope is running out, and help, though on the way, will not arrive in time for many victims.

Even as boots are finally hitting the ground and relief efforts are reaching the island, estimates of the death toll range as high as 500,000. Given the mountainous terrain and densely populated villages that had been hanging along the fault line, entire villages may have disappeared. The Western Hemisphere’s most impoverished nation has experienced a catastrophe that appears almost apocalyptic. In truth, it is hard not to describe the earthquake as a disaster of biblical proportions. It certainly looks as if the wrath of God has fallen upon the Caribbean nation. Add to this the fact that Haiti is well known for its history of religious syncretism — mixing elements of various faiths, including occult practices. The nation is known for voodoo, sorcery, and a Catholic tradition that has been greatly influenced by the occult.

Haiti’s history is a catalog of political disasters, one after the other. In one account of the nation’s fight for independence from the French in the late 18th century, representatives of the nation are said to have made a pact with the Devil to throw off the French. According to this account, the Haitians considered the French as Catholics and wanted to side with whomever would oppose the French. Thus, some would use that tradition to explain all that has marked the tragedy of Haitian history — including now the earthquake of January 12, 2010.

Does God hate Haiti? That is the conclusion reached by many, who point to the earthquake as a sign of God’s direct and observable judgment. God does judge the nations — all of them — and God will judge the nations. His judgment is perfect and his justice is sure. He rules over all the nations and his sovereign will is demonstrated in the rising and falling of nations and empires and peoples. Every molecule of matter obeys his command, and the earthquakes reveal his reign — as do the tides of relief and assistance flowing into Haiti right now.

A faithful Christian cannot accept the claim that God is a bystander in world events. The Bible clearly claims the sovereign rule of God over all his creation, all of the time. We have no right to claim that God was surprised by the earthquake in Haiti, or to allow that God could not have prevented it from happening. God’s rule over creation involves both direct and indirect acts, but his rule is constant. The universe, even after the consequences of the Fall, still demonstrates the character of God in all its dimensions, objects, and occurrences. And yet, we have no right to claim that we know why a disaster like the earthquake in Haiti happened at just that place and at just that moment.

The arrogance of human presumption is a real and present danger. We can trace the effects of a drunk driver to a car accident, but we cannot trace the effects of voodoo to an earthquake — at least not so directly. Will God judge Haiti for its spiritual darkness? Of course. Is the judgment of God something we can claim to understand in this sense — in the present? No, we are not given that knowledge. Jesus himself warned his disciples against this kind of presumption.

Why did no earthquake shake Nazi Germany? Why did no tsunami swallow up the killing fields of Cambodia? Why did Hurricane Katrina destroy far more evangelical churches than casinos? Why do so many murderous dictators live to old age while many missionaries die young? Does God hate Haiti? God hates sin, and will punish both individual sinners and nations. But that means that every individual and every nation will be found guilty when measured by the standard of God’s perfect righteousness. God does hate sin, but if God merely hated Haiti, there would be no missionaries there; there would be no aid streaming to the nation; there would be no rescue efforts — there would be no hope.

The earthquake in Haiti, like every other earthly disaster, reminds us that creation groans under the weight of sin and the judgment of God. This is true for every cell in our bodies, even as it is for the crust of the earth at every point on the globe. The entire cosmos awaits the revelation of the glory of the coming Lord. Creation cries out for the hope of the New Creation. In other words, the earthquake reminds us that the Gospel of Jesus Christ is the only real message of hope. The cross of Christ declares that Jesus loves Haiti — and the Haitian people are the objects of his love. Christ would have us show the Haitian nation his love, and share his Gospel. In the midst of this unspeakable tragedy, Christ would have us rush to aid the suffering people of Haiti, and rush to tell the Haitian people of his love, his cross, and salvation in his name alone.

Everything about the tragedy in Haiti points to our need for redemption. This tragedy may lead to a new openness to the Gospel among the Haitian people. That will be to the glory of God. In the meantime, Christ’s people must do everything we can to alleviate the suffering, bind up the wounded, and comfort the grieving. If Christ’s people are called to do this, how can we say that God hates Haiti? If you have any doubts about this, take your Bible and turn to John 3:16. For God so loved the world, that he gave his only Son, that whoever believes in him should not perish but have eternal life. That is God’s message to Haiti.

[ “I am always glad to hear from readers and listeners. Write me at mail@albertmohler.com.” ]

“See also these two articles from the Katrina disaster:”
http://www.albertmohler.com/2005/09/07/god-in-the-storm-part-one/
http://www.albertmohler.com/2005/09/08/god-in-the-storm-part-two/


The only golf course

DON’T MEDDLE [DISSENT]
http://www.huffingtonpost.com/2010/01/14/gop-candidate-chuck-devor_n_423460.html
GOP DeVore’s Spokesman: World Community Should Leave Haiti ASAP / 01-14-10

“Earlier today, I wrote about the push by several major foreign policy voices to ensure that America’s role in restructuring Haiti extends beyond emergency response to the earthquake. The politics seem logical — the impoverished country has endured plenty of socioeconomic chaos in addition to natural disasters in recent history. And now, more than ever, there is a moral and geopolitical imperative for the U.S. to be involved. But rallying domestic support for a long-term U.S. commitment to Haitian affairs has long proved difficult. And here is another example why:

The communications director for California Republican Senate candidate Chuck DeVore tweeted on Thursday that America, the world and even charity organizations should immediately leave the island once immediate and limited recovery is done. “[T]he best thing the int’l community can do is tend the wounded, bury the dead, and then LEAVE. That includes all UN and charity,” wrote Josh Trevino. This seems a bit blunt, even for the most non-interventionist of Republican candidates (DeVore is a Tea Party favorite). But it also is a reflection of Americans’ widespread skepticism about the prospects of building a functioning and stable Haitian society. I asked former National Security Adviser Tony Lake about the problem in sustaining U.S. interest in Haiti during an interview on Wednesday. He didn’t have any specific explanation, but acknowledged that it was problematic. “There are political voices in the United States that have spoken up for the Haitians, including the black caucus,” Lake said. “But generally the political weight of the Haitian community in the United States has been less than the community deserves. And I think that has been a problem in maintaining a consistent American interest.””

MEDDLE [CASE STUDY; under BEST PRACTICES]
http://www.ibiblio.org/prism/May96/haiti.html
Soldier’s testimony: US intervention salvaged the thugs
BY Marshall Valentine (alias)

In September of 1994, when US forces entered the Republic of Haiti, I was the detachment operations NCO for a Special Forces A Team. My team was given the mission of controlling almost a thousand square kilometers in the Northeast Department of Haiti. We were to base ourselves out of Fort Liberte, a political center near the northern Dominican border.

In August of ’94, just one month before the decision was announced to occupy Haiti, we were instructed to attend an intelligence briefing on Haiti that had been coordinated through the 3rd Special Forces Group staff.

Prelude to the dance
This briefing would be the one and only predeployment intelligence briefing we were to receive. For this presentation, the staff had conscientiously avoided using any of the former Haitian nationals that worked and lived in Fayetteville and Fort Bragg. These included a professor of physics at Fayetteville State University, his wife, a Creole instructor at the Special Forces school, and various Haitian-American soldiers on active duty in Fort Bragg.

To ensure that we had a reliable source for this one and only predeployment brief, our intelligence gurus selected an expatriate, white, American, fundamentalist Protestant preacher. This gentleman had occupied himself for the last 11 years, in a small community outside of Cap Haïtien, salvaging the heathen souls of some 300 local congregants. He was an emaciated, blepharitic man, tall and thin, in a black suit, reeking of Calvinist austerity and burning with years of besieged righteousness.

He began his account with a personal introduction and a brief history of his mission. Then came a brief historical account of the nation of Haiti. The account was perfectly informative as long as it confined itself to events, personalities and dates. What followed his synopsis, however, was a bizarre narrative. He flatly declared that the successful Haitian revolution against the French Army was inaugurated with a bargain. Jean Jacques Dessalines, the Haitian leader of the revolution, according to this preacher, had struck a deal with the devil. With complete seriousness, our intrepid young missionary, explained that Satan himself, disguised as a voodoo deity, contracted with Dessalines to assure him a military victory. In exchange for the victory, Satan was to be given control of the new nation for a period of 200 years.

I’m not sure what surprised me the most at that briefing. The outlandish characterization of the first independent black nation in the Western Hemisphere? The fact that an Intelligence Officer on the Group staff had coordinated for his presence? Or the spellbound attention being paid this crackpot by hundreds of allegedly rational grown men who were in the room listening?

The problem was this. Most of the Special Forces soldiers there had no previous interest in Haiti. Most of them harbored cultural and racial preconceptions of Haiti. All had been exposed to the drumbeat of skewed media coverage of Haiti. Many were fans of both the CIA and Jesse Helms, both of whom were staging a concerted venture to shape foreign policy on behalf of the Cedras regime, by fabricating rumors about Aristide. Almost all of them were thoroughly ignorant of both the history of Haiti and the dynamics of the current crisis.

It was easy then, in support of the anti-Aristide sentiment already afoot in the special operations community, for this charlatan to get away with his prevarication. He was positively obsessed with voodoo, which he repeatedly characterized not as a religion (which it is, with components of West African polytheism and Catholicism), but as worship of demons. He stated that Haitians were childlike, and in need of outside direction, morally and spiritually lost, still practicing human sacrifice and cannibalism. The racist echoes were not lost on the largely white Special Forces audience.

Aristide was a particularly hot issue. Aristide was always in the company of voodoo priests and priestesses, he explained, explicitly stating that Aristide’s Christianity was a sham…that Father Aristide, too, was a devil worshipper. Aristide, the minister explained to the audience, was not really a priest, at all. He had been defrocked. This was a sidelong reference to Aristide’s expulsion from his religious order for political action on behalf of the poor. Aristide, also a closet communist, according to our preacher, had personally ordered riots and murders of countless people during his brutal eight month regime. Cedras and Francois showed up just in time to save the country, and any intervention to oust Cedras would be a terrible mistake, not to mention the dangers to young, Christian GIs, of working with HIV-riddled demon worshippers. When questioned about Aristide’s landslide victory in the elections, he said that the election was a fraud perpetrated by Lavalas (the popular movement). He stated that the reports of violence by the Cedras regime were exaggerated. And if they did support Aristide, that demonstrated that they were not yet ready for democracy.

The briefing was only partly inexplicable to me. Many of the mindless prejudices of the briefing would resurface later as official documents, from Intelligence, Psychological Operations, and Civil Affairs. It was part of the attempt to minimize American contact with Haitian realities. It is going on to this day, and it is effective. Now, the bullshit is being disseminated by the United States Embassy. The press laps it up and regurgitates it for us uncritically, awed as always to be allowed so near the powerful. I want to emphatically state that the distortions and prejudices of this one man can not be generalized to any particular group. There are numerous religious groups of many faiths, Protestant included, who have consistently and vigorously supported the Haitians’ rights to self-determination and freedom from violence.

Haitian landing
That said, I entered Port au Prince on the 19th of September, where we were summarily informed, in the wake of the Carter-Nunn-Powell agreement, struck, by the way, in the absence of a single legitimate representative of the democratically-elected government of Haiti, and signed by Emile Jonassaint, the Cedras-installed illegal president, that we would now become the friends, patrons and trainers of the Haitian armed forces, whom I shall refer to as the FAdH. Admittedly, this was during a period of policy confusion, when the Clinton administration couldn’t decide what to do about FAdH soldiers openly clobbering unarmed citizens senseless with ironwood batons in front of CNN’s cameras.

It’s important to note, though long-term objectives in Haiti have become clear, many short-term decisions at that point in time appeared to be typical indecisive bumbling on the part of the Administration. It’s important to remember that Clinton launched the operation under pressure from the Congressional Black Caucus and TransAfrica. These groups were illuminating the gross contradictions between policy toward Haiti and Cuba. By the same token, business interests, represented by Commerce Secretary Ron Brown, whose Madison Avenue public relations firm had a happy and lucrative history of dealings with key Duvalierist elites in Haiti, were strenuously opposing the reinstallation of Aristide.

By the time we escaped from the 10th Mountain Division’s clutches in Port au Prince, a unit that had dauntlessly undertaken to prevent contact between ordinary Haitians and American troops, the guidance had changed. We were instructed to stop all “Haitian on Haitian violence.” Worded this way, we were permitted to interfere with policemen cracking heads, gassing and shooting at anyone they disliked, so long as it was understood that we were protecting the police from civilian violence as well. It was by this bit of verbal legerdemain, that officials managed again to minimize the Haitian military police and paramilitary’s overwhelming share of the mayhem, and to provide support to the prevailing disinformation alleging widespread violence perpetrated by pro-Aristide people.

In a telling analysis of this phenomenon, Catherine Orenstein, anthologized in a highly recommended book called The Haiti Files, edited by James Ridgeway, points out the complete collaboration of the US mainstream press in this gross misrepresentation of Haitian reality. Of the total space devoted to covering Haiti by the popular press, less than 4% was devoted to reporting human rights abuses by the Cedras regime, while it was in power, when between 3,000 and 5,000 people were murdered. Under the Aristide government, human rights violations were reduced by more than 65% in eight months, but no mention of this trend appeared in the New York Times or on CNN. The Times, in the three weeks following the coup devoted three times as much space to allegations of Lavalas violence, by all accounts less than 2% of the total, as it did to massive, ongoing military violence being directed at unarmed civilians. Again, I don’t attribute this to an innate dishonesty on the part of the press, but to their unwavering tendency to truckle around after powerful people and reverently accept everything they say. Reporters who are not good sycophants do not last long in today’s corporate megamedia environment.

Regulating the tropical heat
The question of disarming the paramilitaries was another subject that shifted repeatedly in the conduct of the mission. Before the soft option entry negotiated by the Carter team, military necessity made the question of weapons clear cut. If you carried a firearm, you were hostile. If a weapon were discovered, it was confiscated. But with the permissive entry, the Rules of Engagement stated that we were obliged to behave as police do, demanding that an armed individual relinquish his weapon and giving that individual an opportunity to do so, before employing deadly force. This ROE, as it is known, did not present a great problem. It was the question of seeking out and confiscating weapons that changed.

By the time my detachment arrived in Gonaïves, en route to Fort Liberte, planned searches for weapons caches were put on indefinite hold by Task Force commanders. No reason was ever given. Though we still had the authority to confiscate displayed weapons, we were prohibited from searching buildings and houses, even if we received multiple reports alleging their presence. That prohibition against searches for the purpose of confiscating firearms and other ordnance remains in effect to the end. The eventual justification was that Haitians had a constitutional right to own firearms…even though we were an extraconstitutional force. This would not be the first time that we were subjected to selective interpretations of the Haitian Constitution. And what it ignored was the practical fact, that nearly every weapon in the country was owned by a supporter of the de facto regime, this being the means by which they had retained their power.

By itself, this shift could be interpreted as an error in judgment, which it certainly would be, but other facts on the ground tend to support the thesis that it was part of an overall effort to achieve a specific circumstance. When we left the intrepid 10th Mountain Division in Port au Prince, they had begun fanning out, not into the slums where human rights violations continued to be reported, but to protect the property of the rich in Petionville from anticipated angry mobs who never materialized. The task force set up its headquarters on the factory complex of the second richest family in Haiti.

In Gonaïves, where a series of incidents had strained our relationship with the FAdH, and endeared us to the local population (an eventuality not anticipated by the Task Force commanders), we were obligated to work with a Haitian commander named Captain Castra, originally on our “detain immediately” list as a dangerous and seedy character, a known drug trafficker, and the originator of a massacre of 27 civilians in the slum of Raboteau just three months earlier. He and hundreds of other charming members of the armed forces had been miraculously rehabilitated by the stroke of a pen.

These encumbrances were temporarily removed when four members of FRAPH, the Haitian paramilitary headed by CIA employee Emmanuel Constant, shot and wounded a Special Forces soldier on the 2nd of October in Les Cayes. Independent of the conventional commanders, special operations commanders sent us the order to squash FRAPH. In my own sector, we made three detentions the first day, two the second, and ten the third when we entered Fort Liberte, including Nyll Calixte, former Haitian ambassador to France, and chief financier to FRAPH in the Northeast Department. On the fourth day after the directive, we detained Rene Mozart, Northeast Department president of FRAPH, subordinate only to Emmanuel Constant.

Calixte was released within 24 hours on a presidential order from the United States, with apologies. Mozart was returned in three weeks, with the admonition that FRAPH was now to be recognized as a legitimate political party, kind of like the loyal opposition. All but one of the original detainees were released. We were told to stop all detentions unless we could provide a laundry list of information and evidence that would have daunted the average FBI agent, citing the need for due process. Our argument that due process implied the presence of a functional police force, a forensics capability, a viable court, and a normally operating government, was viewed as evidence of a smart-assed attitude.

With that, our participation in assisting Haitian justice ground to a halt, accompanied by directives to provide support to propaganda efforts pushing the theme of “reconciliation.” I was accused of failing to cooperate on two occasions with Psychological Operations Teams who wished to broadcast feel-good messages in my sector. These were accurate accusations, but in my own defense, our team had established effective rapport with the local population, predicated on our ongoing credibility and our open association with Lavalas, and broadcasting messages that insulted the intelligence of the local population with the transparency of the missive, stood to undermine that credibility.

Miller Time for Democrats
To understand how fragmented certain aspects of the operations were, it is important to explain that individual Special Forces Teams had a great deal of autonomy, much to the chagrin of a host of micromanaging, anal compulsive, career-obsessed commanders. My team, with only eight people on the initial entry, was responsible for hundreds of square kilometers of territory. For this reason, to this day, attitudes of Haitians in various sectors of the country will be wildly divergent with regard to American military. Some teams moved into FAdH garrisons, emplaced concertina wire, and built what appeared to be a Vietnam style firebase. Our team lived in a house, accessible to all, with neighbors on three sides, who listened to music with us on the porch and dropped by for coffee. We shopped at the local market, and drank an occasional Presidente beer from the little street store down the road. It was not at all unusual to shoo chickens out of the house in the morning.

In fact, the presence of beer, though its consumption by Special Forces was widespread in Haiti, was presented to us as a violation of a General Order in December of that year, and I was asked to leave the country. During the investigation regarding the General Order violation, the subject of beer seemed to preoccupy the investigating officer far less than our cozy relationship with Lavalas, to which I credited the remarkable stability of our sector throughout the operation.

The other subject that came up repeatedly was my failure to support the concept of the Interim Police Security Force, or IPSF. The original concept, briefed to us, was that the new police would be organized from the general population, even allowing certain decent, nonabusive gentlemen (and there were a few) from the original force, to continue employment. This sat well with the locals and with us. We were told to vet current members of the garrisons to determine which police had potential, and which were absolutely unacceptable to the general population. We did this, and were succinctly blown off. Instead of dropping the identified thugs from the rolls, a shell game was implemented, where Haitian police were abruptly reassigned to other towns, far away. We knew it. The Haitians knew it. Officialdom never acknowledged it. If I were attracted to conspiracy theories, I might have thought that someone was trying to protect the Haitian military from future legal action by removing them from places where they perchance would be deposed against.

The ostensible military action to restore democracy was launched on the heels of a bargain made with an outgoing military dictator and a phony president. The US military wasted no time setting up their headquarters on the industrial property of the Mev family, first stringers with the ultrarich, ruling elite. The operation advanced at a glacial pace, with emphasis placed on establishing security around the property of the wealthy. Soldiers were admonished not to take aggressive action to round up known criminals, not to search for weapons, and to observe a kind of “due process” in the treatment of former henchmen. US soldiers were given guidelines for detention so stringent that by the 5th of October, 1994, virtually all detentions had ceased. De facto government persecutors so notorious they were on “detain immediately” lists before the Carter-Nunn-Powell deal was cut, were allowed to continue in their present capacities, sometimes with US cooperation. Weapons buyback programs were implemented which allowed unserviceable weapons to be exchanged for money, while the serviceable ones were carefully cached for future use. In my own sector, dozens of reports came to us of large quantities of weapons being packed across the Dominican border, where many de facto criminals were being given sanctuary. The former military were dressed up in new uniforms, after a cosmetic vetting of past activities, and put back on the street with an apprehensive public who continually told American military authorities that this was an unacceptable arrangement. UN/US military policy stressed a “balanced” approach to dealing with Haitians, defining balance as “walking a line” between Lavalas, who represented the overwhelming majority of Haitians, and FRAPH, a terrorist organization working for the elite.

While there is no doubt that without intervention, the Cedras regime would have continued indefinitely, the best thing that could happen in Haiti at this moment would be the discontinuation of American, IMF, and World Bank influence. But, as always with both Democratic and Republican administrations, corporate wishes will prevail in the long term. The greatest miscalculation that the Haitian people can count on now, is the foolish but persistent belief that being illiterate means one is stupid.

Every Haitian has heard the old proverb… ‘You can send a snake to school but it’s hard to make him sit down.”

EARTHQUAKE PENTECOSTAL
http://www.utexas.edu/utpress/books/garpro.html
http://www.religiondispatches.org/blog/international/2190/“biblical”_disaster:_understanding_religion_in_haiti/
“Biblical” Disaster: Understanding Religion in Haiti
BY Michelle Gonzalez Maldonado / January 13, 2010

Note to Pat Robertson: Haiti is not a nation of Vodou practitioners. It is, and continues to be, overwhelmingly Christian. Yesterday morning as I settled onto my elliptical at the gym, I anxiously turned to the television silently playing captioned CNN. It was before sunrise, and I knew it would be a good thirty minutes before daylight would reveal the devastation the 7.0 earthquake had unleashed on Haiti. The man on the neighboring machine, also watching the television, turned to me and said, “You know they killed all the white people after they gained independence … it is that Vodou … they deserve it.” I pedaled along speechless, not sure what shocked me more, that this man would think these things or that he felt comfortable enough with his hatred that he was fairly confident I would agree. I ignored him and I wish I had not. What I wanted to say is that Vodou is not some sort of sorcery, or the product of some “pact to the devil” (thank you Pat Robertson). I also wanted to correct his erroneous assumption that Haiti is a nation of Vodou practitioners. It is, and continues to be, overwhelmingly Christian.

I confess that I have been fairly glued to CNN in the past twenty-four hours, and two things have struck me as I watched the constant onslaught of images of suffering and destruction. The first is the erroneous fact that CNN keeps claiming on its ticker that Haiti is 80% Roman Catholic. The second is the sheer amount of U.S. missionaries on the island. The two are inter-related. Recent studies estimate that the Protestant population of Haiti is somewhere around thirty percent. In Port-au-Prince that number jumps to almost forty percent. The majority of these churches are Pentecostal. These churches are overwhelmingly independent, indigenous Haitian entities, though some are linked to North American denominational Pentecostal churches. Haiti, along with Jamaica and Puerto Rico, is home to one of the fastest growing Pentecostal populations in the Caribbean.

As I watch the drama unfold in Haiti, and feel it here in Miami, the home of the largest Haitian Diaspora in the United States, I cannot help but think of another earthquake, another country. In 1976 a 7.5 earthquake devastated Guatemala, leaving 23,000 dead and over 50,000 injured. My husband, a child at the time, has told me of the silence, the fear that followed this catastrophe. As a scholar of religion, I have often wondered of the theological impact of this natural disaster.

Thankfully, the scholarship of Virginia Garrard-Burnett provides some answers. She correlates the explosion of Pentecostalism in Guatemala, who like Haiti, is an epicenter of Pentecostalism in the Americas, in part as a response to the earthquake. An overwhelmingly high percentage of Guatemalans saw the earthquake as a form of divine punishment and a call for repentance. Arriving in the guise of aid and relief, Protestantism provided an alternative way of being Christian. Yet Pentecostalism primarily emerged in Guatemala, as it did in Haiti, disconnected from North American denominations. Indigenous Pentecostalism, with its apocalyptic theology, also gained momentum among Indigenous Guatemalans.

Haiti had barely recovered from the four devastating storms of 2008 prior to this earthquake. The Roman Catholic Cathedral in Port-au-Prince has collapsed, and Archbishop of Port-au-Prince, Monsignor Joseph Serge Miot’s lifeless body was pulled from the ruins of the diocesan offices. U.S. Secretary of State Hillary Clinton has described the natural disasters that this nation has endured as “biblical” in nature. “It is biblical, the tragedy that continues to stalk Haiti and the Haitian people.” Clinton does not realize that her comments would strike a chord with many Haitians today. Haitian Pentecostals, with their biblical literalism and their certainty that the second coming of Jesus is imminent, could see this time of tribulation as a challenge where the faithful will be rewarded on judgment day. Religion will surely play a role in the manner in which Haitians make sense of this tragedy, and I suspect we will find growing numbers of Pentecostal converts as Haitians attempt to find meaning in what can only be described as senseless and inexplicable suffering.

AND THE UTILITY OF PREDICTION MARKETS

FIRST, A TESTING OPPORTUNITY : 2008 ELECTION ODDS
http://www.fivethirtyeight.com/
http://www.intrade.com/jsp/intrade/trading/t_index.jsp
http://iemweb.biz.uiowa.edu/quotes/Pres08_quotes.html
http://politics.betfair.com/

OBAMA 90+% LIKELY TO WIN
http://www.businessweek.com/investing/insights/blog/archives/2008/11/election_predic.html
Election Prediction Markets Bet on Obama
BY Ben Steverman / November 03 2008

Here’s one rare investment that, at least so far, has paid off
handsomely in 2008: Barack Obama. Various election futures markets
allow traders to make bets on politics. On Nov. 1, 2007, on the Iowa
Electronic Markets, the Illinois senator was given about a 14% chance
to merely win the Democratic presidential nomination. Today, traders
are betting Obama has a 90% chance of winning it all by being elected
president.

Of course, the Republican nominee, Arizona Senator John McCain, could
make a lot of money for certain investors by pulling off an upset on
Nov. 4. As of midday on Nov. 3, the Iowa Electronics Market gives the
Republican a roughly 8.8% chance of winning the presidency. Thus, if
you bet on McCain for a “share price” of $8.80, you get a payoff of
$100 if he wins. That’s a return of more than 1,000% if you’re right.
Intrade also runs a presidential prediction market: It gives Obama a
92% chance and McCain a 9.5% chance of victory. Another site (not open
to U.S. bettors) is Betfair.com, which gives Obama odds of almost 93%
and McCain probability of about 8%.

How accurate are these markets? Many, including the founders of the
Iowa Electronic Markets (see video below for more on IEM), say the
collective wisdom of traders often beat the accuracy of polls in past
elections. Ben Kunz makes the argument for prediction markets — both
in politics and other fields like public health — in this BusinessWeek
piece.

On the IEM, you can bet on each candidate’s percentage of the popular
vote. Right now, that gives Obama about 53.4% and McCain 46.8% of
the vote. A key test of these markets will be how close this is to actual
results. There are plenty of legitimate questions about how well these
markets work. This fall, observers alleged that Intrade’s presidential
futures market was being manipulated, creating odds that were
inconsistent with (and more favorable to McCain than) other markets.
Intrade’s CEO John Delaney investigated and said one institutional
Intrade member had been making big buys that skewed the market.
Delaney said the trader was trying to “manage certain risks.”

Alex Tabarrok at Marginal Revolution didn’t think this called into
question the concept of prediction markets: “This supports Robin
Hanson’s and Ryan Oprea’s finding that manipulation can improve (!)
prediction markets – the reason is that manipulation offers informed
investors a free lunch. In a stock market, for example, when you buy
(thinking the price will rise) someone else is selling (presumably
thinking the price will fall) so if you do not have inside information
you should not expect an above normal profit from your trade. But a
manipulator sells and buys based on reasons other than expectations
and so offers other investors a greater than normal return. The more
manipulation, therefore, the greater the expected profit from betting
according to rational expectations.”

Even if markets get the liquidity they need to work efficiently, they
have yet to prove they’re much more than an entertaining parlor game.
These markets might be able to predict the obvious, but do they really
tell us more than a statistically adept poll-watcher like Nate Silver
or Chuck Todd? If working properly, the markets end up reflecting
conventional wisdom. But they don’t really predict the future. A year
ago, while Obama was given 14% of winning the Democratic nomination,
McCain was given a 7.5% chance of winning the Republican nomination.
Both “predictions” weren’t just wrong, but wildly so.

Furthermore, the usefulness of election prediction markets for
investors as a so-called “risk manager” is questionable. First, the
risks and benefits of an Obama victory should already be reflected in
other markets. For example, health care stocks already have been hurt
by the prospects for a successful Democratic effort to reform health
care. Second, unless you expect to get a job in a McCain or Obama
administration, the direct economic effect of a political outcome is
not easy to determine. The impact of, say, the Indiana gubernatorial
race (which you can also bet on at Intrade) is even harder to detect.

If you’re betting for McCain or Obama, in other words, it’s unlikely
you’re trying to hedge against other losses if you lose. Rather,
you’re probably just a political junkie having fun and trying to make
a little money. More than 100 million people will vote for president,
and each vote will have been determined by a multiplicity of factors.
The complexity of it all is mind-boggling. The only thing that comes
close to complexity of the factors that influence election vote totals
is the many inputs that determine the price movements of a stock or
other investment. And, as the past year has shown in both the
presidential campaign and the stock market, life can be very
unpredictable.

ROGUE TRADER / PROPAGANDIST TRIES TO BULLSHIT MARKET
http://www.whistle-safe.org/article.pl?sid=32/07/20/0833218
http://www.cqpolitics.com/wmspage.cfm?docID=news-000002976265&referrer=js
Trader Drove Up Price of McCain ‘Stock’ in Online Market
BY Josh Rogin / Oct. 21, 2008

An internal investigation by the popular online market Intrade has
revealed that an investor’s purchases prompted “unusual” price swings
that boosted the prediction that Sen. John McCain will become
president. Over the past several weeks, the investor has pushed
hundreds of thousands of dollars into one of Intrade’s predictive
markets for the presidential election, the company said. “The trading
that caused the unusual price movements and discrepancies was
principally due to a single ‘institutional’ member on Intrade,” said
the company’s chief executive, John Delaney, in a statement released
Thursday. “We have been in contact with the firm on a number of
occasions. I have spoken to those involved personally.” After the
internal investigation into the trading patterns, Intrade found no
wrongdoing or violation of its exchange rules, according to the
company. Citing privacy policies, Delaney would not disclose the
investor’s identity or whether the investor was affiliated with any
political campaign. According to Delaney the investor was using
“increased depth” in the Intrade market “to manage certain risks.” The
action boosted the McCain prediction over its previous market value
and above the levels of competing predictive-market Web sites. Pundits
and politicians have used Intrade to track the fortunes of the two
presidential candidates. Through the site, begun in 1999 and
incorporated in Ireland, traders buy and sell “contracts” that
function as stocks, allowing investors to gamble on the outcome of
political, cultural, or even geological events such as the weather.
The company asserts and experts have found that the Intrade market is
generally more accurate in predicting the outcome of major events than
other leading indicators, including public opinion polls. But the
relatively small scale of the market and its lack of outside
regulation could leave the system vulnerable to unscrupulous
investors, scholars of predictive markets say. Justin Wolfers, an
associate professor at the University of Pennsylvania’s Wharton School
of Business, said the trades in question do not follow any logical
investment strategy. “Who knows who’s doing it, it’s obviously someone
who wants good news for McCain,” said Wolfers, who has been following
the situation closely. McCain campaign spokesman Michael Goldfarb
said: “It’s always a good time to buy McCain.”

Ripple Effects
Intrade users first noticed something amiss when a series of large
purchases running counter to market predictions sparked volatility in
the prices of John McCain and Barack Obama contracts. The investor
under scrutiny purchased large blocks of McCain futures at once,
boosting their price and increasing the prediction that McCain had a
greater chance of winning the presidential election. At other times,
according to Intrade’s online records, blocks of Obama futures were
sold — lowering the market’s prediction about Obama’s standing in the
race. According to Intrade bulletin boards and market histories,
smaller investors swept in to take advantage of what they saw as price
discrepancies caused by the market shifts — quickly returning the
Obama and McCain futures prices to their previous value. This resulted
in losses for the investor and profits for the small investors who
followed the patterns to take maximum advantage. The activities of the
trader, dubbed the “rogue trader” on Intrade’s message boards, raised
several questions. For example, the trader purchased large contracts
named specifically after McCain and Obama. There were no similar-sized
investments, however, in separate instruments that predict a generic
Republican or Democratic presidential win — even though both sets of
contracts apply to the same event, prices show. Some political news
sites, such as realclearpolitics.org, prominently display Intrade’s
McCain contract value but do not display the corresponding value for a
Republican presidential win. Similar trading patterns were not found
in competing predictive market Web sites betting on John McCain , such
as the Iowa Electronic Markets or Betfair. This means the trader was
paying thousands of dollars more than necessary to purchase McCain
contracts on Intrade, where the price of betting on McCain was much
higher. On Sept. 24, for example, Obama contracts were trading on
Intrade at a price that predicts a 52 percent chance of an Obama
victory. At the same time, Betfair and IEM contracts equated to about
a 62 percent chance of an Obama victory, according to the political
site fivethirtyeight.com. Intrade records show the trader often
purchased tens or hundreds of thousands of dollars of contracts in the
middle of the night, when activity was at its lowest, and in large
bursts. In a three-day period from Sept. 30 through Oct. 2, four
separate flurries of buying drove the price of the McCain contracts up
by 3 to 5 points each. Those numbers eventually settled when the
market compensated. “These movements over McCain largely occurred at
time when there was no way that any useful information came out that
was pro-McCain,” Wolfers said. “A profit-motivated guy wants to buy
his stock in a way that would minimize his impact on the price, a
manipulator wants to maximize it.”

Rogue Tactics
According to Intrade, the company contacted the investor and used
public and private data held by the company as part of its
investigation. That included an analysis of the trades made by the
investor, tracking of Internet addresses, checking physical addresses
and other information. Intrade released details about its
investigation in a statement on its Web site. Some Intrade users
commented on the company’s message board that the trader may believe
in McCain’s chances for victory, despite trends in recent public
opinion polls. Indeed, bucking conventional wisdom can be a profit-
making strategy. For example, David Rothschild, a researcher and Ph.D.
candidate at the Wharton School, said that during the first two
presidential debates, the trader bet thousands of dollars on a McCain
electoral victory at the same moment that instant polls were
suggesting that Obama would win. “That’s equivalent to buying a
company’s stock just as negative earning reports come out,” Rothschild
said. “It is a bad investment, but may make some observers think that
Mr. McCain won the debate, which, again would be the goal of market
manipulation.” Also, the trader paid a premium of 10 percent to 20
percent on every dollar traded by not placing similar bets on other
Web sites, according to Rothschild’s calculations. Overall, if the
trader’s motive was to influence the Intrade market, he was remarkably
successful, Rothschild said. The trader’s actions help keep the
probability of Obama winning the election on Intrade about 10 percent
lower than Betfair and IEM for more than a month. “If the investor did
this as investment, not to manipulate Intrade, he is one of the most
foolish investors in the world,” Rothschild said.

MARKET MANIPULATION RESEARCH
http://hanson.gmu.edu/biashelp.pdf
http://www.unc.edu/~cigar/papers/ManipIHT_June2008(KS).pdf
http://bpp.wharton.upenn.edu/jwolfers/Press/WSJcolumn/16-Market%20Manipulation%20Muddies%20Election%20Outlook.pdf

PROOF OF CONCEPT?
http://www.fivethirtyeight.com/2008/09/intrade-betting-is-suspcious.html
http://freakonomics.blogs.nytimes.com/2008/10/02/manipulation-in-political-prediction-markets/#more-3145
http://www.marginalrevolution.com/marginalrevolution/2008/01/prediction-mark.html
http://www.marginalrevolution.com/marginalrevolution/2008/10/manipulation-of.html
“This is big news but not for the reasons that most people think.
Although some manipulation is clearly possible in the short run, the
manipulation was already suspected due to differences between Intrade
and other prediction markets. As a result: “According to Intrade
bulletin boards and market histories, smaller investors swept in to
take advantage of what they saw as price discrepancies caused by the
market shifts — quickly returning the Obama and McCain futures prices
to their previous value. This resulted in losses for the investor and
profits for the small investors who followed the patterns to take
maximum advantage.”

This supports Robin Hanson’s and Ryan Oprea’s finding that
manipulation can improve (!) prediction markets – the reason is that
manipulation offers informed investors a free lunch. In a stock
market, for example, when you buy (thinking the price will rise)
someone else is selling (presumably thinking the price will fall) so
if you do not have inside information you should not expect an above
normal profit from your trade. But a manipulator sells and buys based
on reasons other than expectations and so offers other investors a
greater than normal return. The more manipulation, therefore, the
greater the expected profit from betting according to rational
expectations.

An even more important lesson is that prediction markets have truly
arrived when people think they are worth manipulating. Notice that
the manipulator probably doesn’t care about changing the market
prediction per se. Instead, a manipulator willing to bet hundreds of
thousands to change the prediction of a McCain win must think that the
prediction will actually affect the outcome. And if people think
prediction markets are this important then can decision markets be far
behind?”

COLLECTIVE INTELLIGENCE
http://www.prokons.com/prediction-markets/faq
http://flipflopmoney.com/2008/05/11/intrade-making-money-online-not-the-usual-way/
http://www.intrade.com/
http://us.newsfutures.com/
http://www.biz.uiowa.edu/iem/
http://www.fivethirtyeight.com/
http://www.realclearpolitics.com/
http://www.hsx.com/

http://en.wikipedia.org/wiki/Prediction_market
http://en.wikipedia.org/wiki/Election_Stock_Market
http://en.wikipedia.org/wiki/Policy_Analysis_Market
http://en.wikipedia.org/wiki/Futures_market
http://en.wikipedia.org/wiki/Efficient_market_hypothesis

http://www.forecastingprinciples.com/PM/
http://www.midasoracle.org/
http://www.chrisfmasse.com/
http://www.predictionmarketjournal.com/
http://www.pmindustry.org/
http://betting.betfair.com/specials/politics-betting/prediction-markets/
http://www.dmreview.com/bissues/20070301/2600311-1.html?bir=1
http://www.ideosphere.com/
http://www.consensuspoint.com/blog/?m=200809

‘HERD INSTINCT’ AS ECONOMIC MODEL
http://www.forbes.com/2008/10/21/why-bubbles-economy-markets-bubbles08-cx_th_1021harford.html
Why Do Markets Create Bubbles?
BY Tim Harford / 10.21.08

Bubbles are like pornography: Everyone has his or her own opinion as
to what qualifies, but it is impossible to pen a precise definition.
If you wish to push the metaphor further, both are also fun for a
while, if you like that sort of thing, but apt to end up making you
feel deflated and embarrassed. Bubbles are also embarrassing for the
economics profession. It’s not that we have no idea what causes
bubbles to form, it’s that we have too many ideas for comfort. Some
explanations are psychological. Some point out that many bubbles have
been stoked not by markets but by governments. There is even a school
of thought that some famous bubbles weren’t bubbles at all.

The psychological explanation is the easiest to explain: People get
carried away. They hear stories of their neighbors getting rich and
they want a piece of the action. They figure, somehow, that the price
of stocks (1929) or dot-com start-ups (1999) or real estate (2006) can
only go up. A symptom of this crowd psychology is that the typical
investor displays exquisitely bad timing. The economist Ilia Dichev of
the University of Michigan has recently calculated “dollar-weighted”
returns for major stock indexes; this is a way of adjusting for
investors rushing into the market at certain times. It turns out that
“dollar-weighted” returns are substantially lower than “buy and hold”
returns. In other words, investors flood in when the market is near
its peak, tending to buy high and sell low. The herd instinct seems to
cost us money. That is awkward for economists, because mainstream
economic models do not really encompass “herd instinct” as a variable.
Still, some economists are teaming up with psychologists and even
neurophysiologists in the search for an answer.

Cambridge economist John Coates is one of them. He used to manage a
Wall Street trading desk and was struck by the way the (male) traders
changed as the dot-com bubble inflated. They would pump their arms,
yell, leave pornography around the office and in general behave as
though they were high on something. It turns out that they were: It
was testosterone. Many male animals–bulls, hares, rutting stags and
the like–fight with sexual rivals. The winner experiences a surge of
testosterone, which makes him more aggressive and more likely to take
risks. In the short run that tends to mean that winners keep winning;
in the long run, they take too many risks. Dr. Coates wondered if
profitable traders were also running on testosterone, and a few saliva
samples later it appears that he is right. Profitable trading days
boost testosterone levels and tend to encourage more risk-taking, more
wins and more testosterone. When the risks didn’t pay off, the
testosterone ebbed away to be replaced by a stress hormone, cortisol.
The whole process seems likely to exaggerate peaks and troughs. These
psychological explanations are likely to help us understand what goes
on as bubbles form and how they might be prevented. Yet they make me
nervous: It is too easy to blame a bubble on the mob psychology of the
market when a closer look at most bubbles reveals that there is much
more to the story than that.

For example, one famous early “mania” was the Mississippi bubble, in
which countless investors poured their money into the Compagnie des
Indes in France in 1720, and lost it. Yet there was more going on than
a free-market frenzy: The government could hardly have been more
closely involved. The Compagnie des Indes had effectively taken over
the French Treasury and legal monopolies on French trade with much of
the rest of the world (including Louisiana–hence “Mississippi
bubble”). Investors were hardly insane to think that such a political
machine might be profitable, especially since the king of France
personally held many of the shares. But the king sold out near the top
in 1720; within two years, the Compagnie was bankrupt and its
political power dismantled.

The government played its own part in the current credit crunch, too.
For all the scapegoating of deregulation, thoughtful commentators also
point to the Federal Reserve’s policy of cheap money, and Fannie and
Freddie’s enormous appetite for junk mortgages–urged all the way by
politicians trying to make credit available to poor and risky
borrowers. Market psychology was part of the story, but not the whole
story. The idea that ordinary people have a tendency to be caught up
in investment manias is a powerful one, thanks in part to Charles
Mackay, author in 1841 of the evergreen book Extraordinary Popular
Delusions and the Madness of Crowds. Mackay’s most memorable
example was the notorious Dutch tulip bubble of 1637, in which
–absurdity!–tulip bulbs changed hands for the price of a house.

It is the quintessential case study of financial hysteria, but it’s
not clear that there was ever an important tulip bubble. Rare tulip
flowers–we now know that their intricate patterning is caused by a
virus–were worth huge sums to wealthy Parisian gentlemen trying to
impress the ladies. Bulbs were the assets that produced these floral
gems, like geese that laid golden eggs. Their value was no fantasy.
Peter Garber, a historian of economic bubbles, points out that a
single bulb could, over time, be used to produce many more bulbs. The
price of the bulbs would, of course, fall as more were cultivated. A
modern analogy would the first copy of a Hollywood film: the final
copies may circulate for a few dollars, but the original is worth tens
of millions. Garber points out that rare flower breeds still change
hands for hundreds of thousands of dollars. Perhaps we shouldn’t be
quite so sure that the tulipmania really was a mania. Economists are
going to have to get better at understanding why bubbles form from a
heady mix of fraud, greed, perverse incentives, mob psychology and
government incompetence. What we should never forget is that
underneath the apparent hysteria, there is often a cold rationality to
it all.

THE FOUR CONDITIONS OF CROWD-MIND HEALTH
http://kottke.org/04/07/wisdom-of-crowds
The wisdom of crowds you say? As Surowiecki explains, yes, but only
under the right conditions. In order for a crowd to be smart, he says
it needs to satisfy four conditions:
1. Diversity. A group with many different points of view will make
better decisions than one where everyone knows the same information.
Think multi-disciplinary teams building Web sites…programmers,
designers, biz dev, QA folks, end users, and copywriters all
contributing to the process, each has a unique view of what the final
product should be. Contrast that with, say, the President of the US
and his Cabinet.
2. Independence. “People’s opinions are not determined by those around
them.” AKA, avoiding the circular mill problem.
3. Decentralization. “Power does not fully reside in one central
location, and many of the important decisions are made by individuals
based on their own local and specific knowledge rather than by an
omniscient or farseeing planner.” The open source software development
process is an example of effect decentralization in action.
4. Aggregation. You need some way of determining the group’s answer
from the individual responses of its members. The evils of design by
committee are due in part to the lack of correct aggregation of
information. A better way to harness a group for the purpose of
designing something would be for the group’s opinion to be aggregated
by an individual who is skilled at incorporating differing viewpoints
into a single shared vision and for everyone in the group to be aware
of that process (good managers do this). Aggregation seems to be the
most tricky of the four conditions to satisfy because there are so
many different ways to aggregate opinion, not all of which are right
for a given situation.

Satisfy those four conditions and you’ve hopefully cancelled out some
of the error involved in all decision making: “If you ask a large
enough group of diverse, independent people to make a prediciton or
estimate a probability, and then everage those estimates, the errors
of each of them makes in coming up with an answer will cancel
themselves out. Each person’s guess, you might say, has two
components: information and error. Subtract the error, and you’re left
with the information.”

CONTACT
James Surowiecki
http://www.newyorker.com/online/blogs/jamessurowiecki/
email : jamessuro [at] aol [dot] com

HOW CROWDS GET SMARTER
http://www.randomhouse.com/features/wisdomofcrowds/Q&A.html
Q & A with James Surowiecki

Q: How did you discover the wisdom of crowds?
A: The idea really came out of my writing on how markets work. Markets
are made up of diverse people with different levels of information and
intelligence, and yet when you put all those people together and they
start buying and selling, they come up with generally intelligent
decisions. Sometimes, though, they come up with remarkably stupid
decisions—as they did during the stock-market bubble in the late
1990s. I was interested in what explained the successes and the
failures of markets, and as I got further into it I realized that it
wasn’t just markets that were smart. In fact, crowds of all sorts were
often remarkably wise.

Q: Could you define “the crowd?”
A: A “crowd,” in the sense that I use the word in the book, is really
any group of people who can act collectively to make decisions and
solve problems. So, on the one hand, big organizations—like a company
or a government agency—count as crowds. And so do small groups, like a
team of scientists working on a problem. But just as interested—maybe
even more interested—in groups that aren’t really aware themselves as
groups, like bettors on a horse race or investors in the stock market.
They make up crowds, too, because they’re collectively producing a
solution to a complicated problem: the bets of people betting on a
horse race determine what the odds on the race will be, and the
choices of investors determine stock prices.

Q: Under what circumstances is the crowd smarter?
A: There are four key qualities that make a crowd smart. It needs to
be diverse, so that people are bringing different pieces of
information to the table. It needs to be decentralized, so that no one
at the top is dictating the crowd’s answer. It needs a way of
summarizing people’s opinions into one collective verdict. And the
people in the crowd need to be independent, so that they pay attention
mostly to their own information, and not worrying about what everyone
around them thinks.

Q: And what circumstances can lead the crowd to make less-than-stellar
decisions?
A: Essentially, any time most of the people in a group are biased in
the same direction, it’s probably not going to make good decisions. So
when diverse opinions are either frozen out or squelched when they’re
voiced, groups tend to be dumb. And when people start paying too much
attention to what others in the group think, that usually spells
disaster, too. For instance, that’s how we get stock-market bubbles,
which are a classic example of group stupidity: instead of worrying
about how much a company is really worth, investors start worrying
about how much other people will think the company is worth. The
paradox of the wisdom of crowds is that the best group decisions come
from lots of independent individual decisions.

Q: What kind of problems are crowds good at solving and what kind are
they not good at solving?
A: Crowds are best when there’s a right answer to a problem or a
question. (I call these “cognition” problems.) If you have, for
instance, a factual question, the best way to get a consistently good
answer is to ask a group. They’re also surprisingly good, though, at
solving other kinds of problems. For instance, in smart crowds, people
cooperate and work together even when it’s more rational for them to
let others do the work. And in smart crowds, people are also able to
coordinate their behavior—for instance, buyers and sellers are able to
find each other and trade at a reasonable price—without anyone being
in charge. Groups aren’t good at what you might call problems of skill—
for instance, don’t ask a group to perform surgery or fly a plane.

Q: Why are we not better off finding an expert to make all the hard
decisions?
A: Experts, no matter how smart, only have limited amounts of
information. They also, like all of us, have biases. It’s very rare
that one person can know more than a large group of people, and almost
never does that same person know more about a whole series of
questions. The other problem in finding an expert is that it’s
actually hard to identify true experts. In fact, if a group is smart
enough to find a real expert, it’s more than smart enough not to need
one.

Q: Can you explain how a betting pool can help predict the future?
A: Well, predicting the future is what bettors try to do every day,
when they try to figure out what horse will win a race or what
football team will win on Sunday. What horse-racing odds or a point
spread represent, then, is the group’s collective judgment about the
future. And what we know from many studies is that that collective
judgment is often remarkably accurate. Now, we have to be careful
here. In the case of a horse race, for instance, what the group is
good at predicting is the likelihood of each horse winning. The
potential benefits of this are pretty obvious. If you’re a company,
say, that’s trying to decide which product you should put out, what
you want to know is the likelihood of success of your different
options. A betting pool—or a market, or some other way of tapping into
the wisdom of crowds—is the best way for you to get that information.

Q: Can you give an example of a current company that is tapping into
the “wisdom of crowds?”
A: There’s a division of Eli Lilly called e.Lilly, which has been
experimenting with using internal stock markets and hypothetical drug
candidates to predict whether new drugs will gain FDA approval. That’s
an essential thing for drug companies to know, because their whole
business depends on them not only picking winners—that is, good, safe
drugs—but also killing losers before they’ve invested too much money
in them.

Q: You’ve explained how tapping into the crowd’s collective wisdom can
help a corporation, but how can it help other entities, like a
government, or perhaps more importantly, an individual?
A: Well, the same principles that make collective wisdom useful to a
company make it just as useful to the government. For instance, in the
book I talk about the Columbia disaster, showing how NASA’s failure to
deal with the shuttle’s problems stemmed, in part, from a failure to
tap into knowledge and information that the people in the organization
actually had. And in a broader sense, I think the book suggests that
the more diverse and free the flow of information in a society is, the
better the decisions that society will reach. As far as individuals
go, I think there are two consequences. First, we can look to
collective decisions—as long as the groups are diverse, etc.—to give
us good predictions. But the collective decisions will only be smart
if each of us tries to be as independent as possible. So instead of
just taking the advice of your smart friend, you should try to make
your own choice. In doing so, you’ll make the group smarter.

Q: When you talk about using the crowd to make a decision, are you
talking about consensus?
A: No, and this is one of the most important points in the book. The
wisdom of crowds isn’t about consensus. It really emerges from
disagreement and even conflict. It’s what you might call the average
opinion of the group, but it’s not an opinion that every one in the
group can agree on. So that means you can’t find collective wisdom via
compromise.

Q: What would Charles MacKay—the author of Extraordinary Popular
Delusions and the Madness of Crowds—think of your book?
A: He would probably think I’m deluded. Mackay thought crowds were
doomed to excess and foolishness, and that only individuals could
produce intelligent decisions. On the other hand, a good chunk of my
book is about how crowds can, as it were, go mad, and what allows them
to succumb to delusions. Mackay would like those chapters.

Q: What do you most hope people will learn from reading your book?
A: I think the most important lesson is not to rely on the wisdom of
one or two experts or leaders when making difficult decisions. That
doesn’t mean that expertise is irrelevant, or that we don’t need smart
people. It just means that together all of us know more than any one
of us does.

EARLY CROWD EXPERIMENTS
http://www.randomhouse.com/features/wisdomofcrowds/audio.html
http://www.randomhouse.com/features/wisdomofcrowds/excerpt.html
BY James Surowiecki

As it happens, the possibilities of group intelligence, at least when
it came to judging questions of fact, were demonstrated by a host of
experiments conducted by American sociologists and psychologists
between 1920 and the mid-1950s, the heyday of research into group
dynamics. Although in general, as we’ll see, the bigger the crowd the
better, the groups in most of these early experiments—which for some
reason remained relatively unknown outside of academia—were relatively
small. Yet they nonetheless performed very well. The Columbia
sociologist Hazel Knight kicked things off with a series of studies in
the early 1920s, the first of which had the virtue of simplicity. In
that study Knight asked the students in her class to estimate the
room’s temperature, and then took a simple average of the estimates.
The group guessed 72.4 degrees, while the actual temperature was 72
degrees. This was not, to be sure, the most auspicious beginning,
since classroom temperatures are so stable that it’s hard to imagine a
class’s estimate being too far off base. But in the years that
followed, far more convincing evidence emerged, as students and
soldiers across America were subjected to a barrage of puzzles,
intelligence tests, and word games. The sociologist Kate H. Gordon
asked two hundred students to rank items by weight, and found that the
group’s “estimate” was 94 percent accurate, which was better than all
but five of the individual guesses. In another experiment students
were asked to look at ten piles of buckshot—each a slightly different
size than the rest—that had been glued to a piece of white cardboard,
and rank them by size. This time, the group’s guess was 94.5 percent
accurate. A classic demonstration of group intelligence is the jelly-
beans-in-the-jar experiment, in which invariably the group’s estimate
is superior to the vast majority of the individual guesses. When
finance professor Jack Treynor ran the experiment in his class with a
jar that held 850 beans, the group estimate was 871. Only one of the
fifty-six people in the class made a better guess.

There are two lessons to draw from these experiments. First, in most
of them the members of the group were not talking to each other or
working on a problem together. They were making individual guesses,
which were aggregated and then averaged. This is exactly what Francis
Galton did, and it is likely to produce excellent results. (In a later
chapter, we’ll see how having members interact changes things,
sometimes for the better, sometimes for the worse.) Second, the
group’s guess will not be better than that of every single person in
the group each time. In many (perhaps most) cases, there will be a few
people who do better than the group. This is, in some sense, a good
thing, since especially in situations where there is an incentive for
doing well (like, say, the stock market) it gives people reason to
keep participating. But there is no evidence in these studies that
certain people consistently outperform the group. In other words, if
you run ten different jelly-bean-counting experiments, it’s likely
that each time one or two students will outperform the group. But they
will not be the same students each time. Over the ten experiments, the
group’s performance will almost certainly be the best possible. The
simplest way to get reliably good answers is just to ask the group
each time.

A similarly blunt approach also seems to work when wrestling with
other kinds of problems. The theoretical physicist Norman L. Johnson
has demonstrated this using computer simulations of individual
“agents” making their way through a maze. Johnson, who does his work
at the Los Alamos National Laboratory, was interested in understanding
how groups might be able to solve problems that individuals on their
own found difficult. So he built a maze—one that could be navigated
via many different paths, some shorter, and some longer—and sent a
group of agents into the maze one by one. The first time through, they
just wandered around, the way you would if you were looking for a
particular café in a city where you’d never been before. Whenever they
came to a turning point—what Johnson called a “node”—they would
randomly choose to go right or left. Therefore some people found their
way, by chance, to the exit quickly, others more slowly. Then Johnson
sent the agents back into the maze, but this time he allowed them to
use the information they’d learned on their first trip, as if they’d
dropped bread crumbs behind them the first time around. Johnson
wanted to know how well his agents would use their new
information.Predictably enough, they used it well, and were much
smarter the second time through. The average agent took 34.3
steps to find the exit the first time, and just 12.8 steps to find it
the second.

The key to the experiment, though, was this: Johnson took the results
of all the trips through the maze and used them to calculate what he
called the group’s “collective solution.” He figured out what a
majority of the group did at each node of the maze, and then plotted a
path through the maze based on the majority’s decisions. (If more
people turned left than right at a given node, that was the direction
he assumed the group took. Tie votes were broken randomly.) The
group’s path was just nine steps long, which was not only shorter than
the path of the average individual (12.8 steps), but as short as the
path that even the smartest individual had been able to come up with.
It was also as good an answer as you could find. There was no way to
get through the maze in fewer than nine steps, so the group had
discovered the optimal solution. The obvious question that follows,
though, is: The judgment of crowds may be good in laboratory settings
and classrooms, but what happens in the real world?

FINANCIAL LITERACY
http://annalusardi.blogspot.com/
http://www.dartmouth.edu/~alusardi/media.html

GAIN CONFIDENCE
http://www.gametheory.net/dictionary/
http://www.gametheory.net/tests/
http://www.gametheory.net/games/
http://www.gametheory.net/applets/
http://www.gametheory.net/links/academic-journals.html
http://www.gametheory.net/lectures/
http://www.gametheory.net/books/
http://gambit.sourceforge.net/
http://www.strategy-business.com/library/enews
http://www.ics.uci.edu/~eppstein/cgt/
http://kuznets.fas.harvard.edu/~aroth/alroth.html
http://www.perfecteconomy.com/pg-glossary-of-terms.html
http://www-sop.inria.fr/coprin/ISDG/
http://meganmcardle.theatlantic.com/archives/2008/10/recommended_reading.php
http://www.econlib.org/

POSITIVE ECONOMICS
http://en.wikipedia.org/wiki/Positive_economics
http://en.wikipedia.org/wiki/Essays_in_Positive_Economics#The_Methodology_of_Positive_Economics
http://academic2.american.edu/~dfagel/Class%20Readings/Friedman/Methodology.pdf

FRENCH TV DEBATE ON CHARGING ALAN GREENSPAN WITH CRIMES
AGAINST HUMANITY AT THE HAGUE VS. STRINGING HIM UP
http://blip.tv/file/1275755
THIS GUY (PARIS)
http://www.cepii.fr/anglaisgraph/pagepers/stoffaes.htm
vs. THIS GUY (USA)
http://www.karmabanque.com/
http://www.karmabanque.com/modules.php?op=modload&name=FAQ&file=index
http://www.webbyawards.com/webbys/current_honorees.php?season=9
email : max [at] maxkeiser [dot] com

THE DEFENSE

http://www.youtube.com/watch?v=55-A1-D3MR0

AND WHY NOTHING WILL LIKELY HAPPEN
http://www.economist.com/finance/displayStory.cfm?source=hptextfeature&story_id=12480871
Hunting for scalps / Oct 23rd 2008
The pressure for convictions is great but prosecutors have their work
cut out

Americans are turning creative as they strive to make sense of the
crisis. On October 29th a group of artists will stage a “literal
meltdown” by placing a 1,500lb (680kg) ice sculpture of the word
“economy” in Manhattan’s Foley Square. The installation will,
according to one collaborator, “metaphorically capture the results of
unregulated markets.” For many, though, catharsis will come only
through another capture: the arrest and courtroom humiliation of the
erstwhile Wall Street titans the public holds responsible for the
mess. In today’s political climate, the government will feel immense
pressure to put a few moneymen in the dock. The FBI alone is probing
more than two dozen firms. Market regulators, state attorneys-general
and the Department of Justice are also jostling to unearth wrongdoing,
sifting through e-mails and seeking whistle-blowers at firms such as
Fannie Mae, American International Group and Lehman Brothers, the only
Wall Street firm allowed to go bust. At least 17 former Lehman
executives, including Dick Fuld, once its boss, are expected to
receive grand-jury subpoenas.

Investigators are likely to focus mainly on disclosure and valuation.
Ken Lay, boss of Enron, the failed energy giant, was convicted in part
because of upbeat public statements he made even as he knew the firm
was in trouble. Some may try to draw a parallel with Lehman, which
said its capital position was “strong” just days before it filed for
bankruptcy. But to constitute fraud there must be intent to deceive.
Proving that beyond reasonable doubt may not be easy, even to a jury
disinclined to give fat cats the benefit of the doubt. Likewise,
sloppy risk management, though lamentable, is not illegal.
Paradoxically, the severity of the financial storm could help
defendants. “As the crisis has grown, it has become harder for
prosecutors to charge that any single firm has committed fraud,”
argues Robert Giuffra of Sullivan & Cromwell, a law firm. Moreover,
showing that executives deliberately overvalued complex mortgage
securities could be hard. Those accused of masking losses can point to
the continuing debate over mark-to-market rules, which regulators
recently relaxed—though any e-mails that reflect internal doubts about
marks could “create smoke”, says Mary Jo White of Debevoise &
Plimpton, another law firm.

The legal climate has shifted in favour of corporate defendants, too.
Some aggressive tactics used by prosecutors after the bursting of the
dotcom bubble have been curbed: for instance, firms can again cling to
attorney-client privilege—the right to keep their communications
confidential—without it being viewed as unco-operative by the
authorities. New sentencing guidelines means 25-year jail terms are
less likely. In civil cases three Supreme-Court rulings have made
fraud harder to prove. Investigators are yet to turn up clear evidence
of unethical behaviour, let alone anything that warrants a long
stretch in jail. They have a lot more digging to do—witness the
subpoenas just handed to analysts who covered Lehman, requesting
information that might suggest they were misled. They may find dirt—
but it will be harder to make it stick.

SO WHO’S MAX KEISER? (WIKI WON’T SAY)
http://www.maxkeiser.com/
http://www.maxkeiser.net/
http://maxkeiser.net/oracle-pressrelease.html
http://maxkeiser.net/opinion1.html
http://maxkeiser.net/writing.html
http://www.youtube.com/maxkeisertv

SIMPLE SOLUTION TO WIKI ‘NOTABILITY’ PROBLEM:
EVERYONE MENTION MAX KEISER (NOW HE’S FAMOUS)
http://www.midasoracle.org/2007/06/22/the-hollywood-stock-exchange-max-keiser-and-their-wikipedia-entries/
http://en.wikipedia.org/wiki/Max_Keiser
http://en.wikipedia.org/wiki/Wikipedia:BIO
http://en.wikipedia.org/wiki/Wikipedia:Articles_for_deletion/Max_Keiser
a vote to keep: “I added some, not all, of the material on the Max
Keiser entry and there was at one point an explanation of the
significance of the underlying patent on HSX. It was however deleted.
The three underlying patents which are still linked to in the article,
I believe, are the only patents for prediction markets and virtual
currencies. The virtual specialist technology he invented is a
mechanism for creating a price for previously unpriceable things like
fame, popularity, ideas, time spent online, etc. Prediction markets
were called the biggest financial and market trend for the future by
the Economist Magazine (December 2005). So, his virtual specialist
technology is notable to economics and finance even if the average
person doesn’t understand the notability. The debate held between
Keiser and the Hollywood studios in the public during 1999 when Keiser
said studios were going to have to compete with a ‘price point called
free’ was revolutionary at the time. From the Hollywood industry trade
magazines linked to in the article, it is clear to see that no other
person had suggested this publicly at that time and it was considered
heretical as the articles make clear. In terms of Karmabanque not
being relevant, Cheuvreux, a major European bank, only just came out
with a report this month, June 2007, called “Consumer Power: Pricing
Power versus Consumer Power” and the report specifically cites Max
Keiser alone as having innovated a powerful market solution to the
demand side of the consumer / corporation equation with Karmabanque.
And Newsweek Japan is profiling Max Keiser and Karmabanque for the
final issue of June 2007. The Karmabanque Hedge fund concept is the
first ever mechanism for monetizing dissent in a day and age of anti-
globalisation protests where hundreds of thousands protest G8 like
events. Karmabanque has been profiled in the Washington Post, Dow
Jones Marketwatch, Atlanta Journal Constitution and dozens of other
important financial trade magazine and has been included in the
curriculum at universities (Robert W. Benson, Loyola Law School) as
well as legal opinions issued by the Washington Legal Foundation. So,
while it may not be easy for the the average person to understand the
significance at this moment in time, it is notable in financial,
market, banking and academic sectors – all of which also use
Wikipedia. And, finally, Max Keiser is an American presenter for
Aljazeera English. He has made six films for them and most of the
films are linked to in the article. Aljazeera English is a notable
international broadcaster with significance at this moment in
history.”

LIKE THIS:
THE COLLECTED LETTERS (TO EDITOR) OF MAX KEISER

MANIPULATION RUINS (PREDICTION) MARKETS
http://www.ft.com/cms/s/0/49a0ab3e-338d-11dd-ba8a-0000779fd2ac.html
Prediction markets are doomed to fail / June 6 2008

From Mr Max Keiser.
Sir, I predict that if John Authers keeps quoting prediction markets
in his columns (“Recession fears”, The Short View, June 3), their
ability to generate reliable price signals will diminish as those in a
position of power will try to subvert these markets with “spin” and
PR, as they do now on various other markets. I had this experience
when I was running the Hollywood Stock Exchange, the first and most
influential of all prediction markets. When I predicted box office
success, the networks (which also own film studios) would broadcast
that information. When I predicted box office losers, they chose to
ignore it. Naturally, we tended to talk up MovieStocks that looked as
if they were going to be winners, and this ended up defeating the
whole purpose of having a prediction market.

Max Keiser,
75005 Paris, France
Former Chief Executive and Co-Founder, HSX Holdings/ Hollywood Stock
Exchange

STOCK PRICE VACUUMS
http://www.ft.com/cms/s/0/93387884-43e7-11dd-842e-0000779fd2ac.html
June 27 2008

From Mr Max Keiser.
Sir, The opposite of a stock price bubble is a stock price vacuum.
Just as stock prices are inflated to a point where the tiniest prick
of reality can pop the bubble and cause a wave of selling, stock
prices that are driven lower by rampant, unfounded short-selling can
snap back with a rally as soon as the oxygen of buyers emerges to
eliminate the price vacuum.

Max Keiser,
75005 Paris, France

MARKET OPAQUENESS — “OFF BALANCE SHEET”
Transparency is the essence of market economy
By Max Keiser / June 29 2007

From Mr Max Keiser.
Sir, Martin Wolf makes a good case for reforming capitalism (“Risks
and rewards of today’s unshackled global finance”, June 27) but fails
to address the key problem underlying the various inequalities and
distortions he describes. Transparency used to be the hallmark of
market economics. Buyers and sellers had confidence in the “invisible
hand” of multiple self-interested parties seeking maximum utility for
themselves – and, in so doing, inadvertently contributing to fair
prices. Today the business of market-making, the so-called price
discovery mechanism at the heart of every exchange in the world, is
dominated by “black box” algorithmic proprietary trading models of
unregulated hedge funds and private equity that thrive on market
opaqueness. These private funds argue that to become transparent would
mean giving away trade secrets. In other words, the very essence of
free market capitalism, transparency and fair play, has gone “off
balance sheet” as surely as those hundreds of billions of dollars
worth of misplaced synthetic derivatives we keep reading about. Until
these fund managers are forced to disclose the actual risk they carry,
we cannot expect the situation to rectify itself before being forced
to do so with an inevitable “exogenous” repricing event like the one
we saw in October of 1987.

Max Keiser,
Founder and chairman,
Karma Banque,
Paris 75005, France

PONZI SCHEME
http://en.wikipedia.org/wiki/Ponzi_scheme
http://www.ft.com/cms/s/0/c1f8b420-9d54-11dc-af03-0000779fd2ac.html
Problem with banks was insolvency / November 28 2007

From Mr Max Keiser.
Sir, Lawrence Summers needs to wake up and smell the inadequacies of
his analysis (“Wake up to the dangers of a deepening crisis”, November
26). Two months ago (“Beware the moral hazard fundamentalists”,
September 24) he was trying to convince us that the problem with banks
was not insolvency but rather illiquidity. Insightful observers of the
credit markets knew then, as they know now, that the primary source of
revenues for much of the banking industry for the past decade has been
their foolhardy participation in a global Ponzi scheme backed by what
we now know to be largely counterfeit mortgage paper. Therefore it is
insolvency along with its corollaries – opacity, misleading
statements, dishonesty and larceny – that constitute the problem and
illiquidity that is its symptom.

Max Keiser,
Founder and Chairman,
Karma Banque,
Paris 75005, France

MARKET ACTIVISM
http://search.ft.com/ftArticle?queryText=max+keiser&y=5&aje=true&x=8&id=040102000675&ct=0
‘Integrity’ blinding environmentalists
By Max Keiser, Financial Times / Jan 02, 2004

From Mr Max Keiser.
Sir, Allow me to comment on your editorial “Not so great
revolt” (December 30). I started a website 18 months ago that
recommends to all activists, not just shareholder activists, how to
take positions against corporations based on a company’s highest point
of vulnerability, its stock price. To this end, we offer an index that
lists which companies’ stock prices are the most vulnerable to a
boycott, the low-cost weapon of choice for most activists. What I have
discovered during this time sadly confirms what I construe to be the
FT’s findings, that activists are blind when it comes to recognising
the potential of targeting a company’s stock price in their campaigns.
In the case of the environmentalists I have talked to, I can report
that the reason they refuse to look at the world in this way is
because they consider talking about markets and money as the basis for
a campaign to be beneath their integrity as moral guardians of the
ecosphere. They would rather be hauling buckets of sludge and tar off
a beach in Spain or Alaska than working to clean up the environment of
finance, even though companies have proved many times over they do not
care as much about oil-drenched rare birds as they do about their
stock price. Hedge funds, interestingly enough, send me e-mails every
day asking when activists will launch a stock-price targeted campaign
so that they can start shorting shares in these companies – this
implies that activists have an incredible leverage in this economy to
effect change, leverage they are not making use of, simply because
their high-minded definition of the environment refuses to include the
environment of money and markets.

Max Keiser, Chairman and Founder, Karmabanque, Villefranche Sur Mer
06230, France

DECAPITALISED
http://search.ft.com/ftArticle?queryText=max+keiser&y=5&aje=true&x=8&id=030226000849&ct=0
Anti-Americanism: the ‘third way’
By Max Keiser / Financial Times / Feb 26, 2003

From Mr Max Keiser.
Sir, Moisés Naím’s commentary (“Anti-Americanism’s nasty taste”,
February 24) describes two types of pernicious anti-Americanism:
murderous fanatics who want to destroy America; and those who just
want to rant, a group he calls anti-Americanism “light”. Both groups,
he says, create an unacceptable cost of fanning the flames of
animosity towards the US and therefore should be avoided. I
wholeheartedly disagree and offer a third version of anti-Americanism,
one that I feel is necessary now that the US has wilfully abdicated
its leadership role in matters of universal global seriousness, such
as protection of the environment. In my opinion, the US no longer
qualifies for the type of critical exemption suggested by Mr Naím. The
US voluntarily stepped down from the pedestal of moral accountability
when Bush took office and walked away from various international
treaties and organisations. Therefore, it stands to reason that the US
must now deal with the consequences of living in a world that views
its franchise not as a perennial force for good but as just another
economic entity either to buy or to sell. As an American, I am
expressing my anti-Americanism by selling short the Standard & Poor’s
500 and I will continue to do so for as long as America’s rhetoric
about maintaining social contracts such as freedom and democracy races
ahead of its actions in places such as the Gulf. I will gladly cover
my shorts when the US starts to act like a country that believes in
democracy instead of one that just talks about it. If every hedge fund
manager in the world focused his collective market power in this way I
believe the US would be forced to change its behaviour or risk getting
“decapitalised” in a non-violent, non-fanatical way, a third way not
mentioned by Mr Naím in his commentary.

Max Keiser, Co-founder, Chairman, Karma Banque, Villefranche-sur-Mer,
France

MAXIMUM PROFIT
http://search.ft.com/ftArticle?queryText=max+keiser&y=5&aje=true&x=8&id=040526001241&ct=0
NGOs would do well to become more transparent
By Max Keiser / Financial Times / May 26, 2004

From Mr Max Keiser.
Sir, Rational cost accounting, economies of scale and cost-benefit
analysis, as Bjorn Lomborg suggests (“The Copenhagen Consensus will
help save lives”, May 24) comprise a long-overdue development in the
field of activism. Until morality starts trading on one of the main
exchanges it is impractical to think that the moral argument used by
virtually all non-governmental organisations will sway the behaviour
of those who run socially irresponsible companies. Activists arguing
against Mr Lomborg’s ideas seem to think that putting a dollar value
on their activities is tantamount to cheapening the importance of what
they are trying to accomplish. Is this not the inverse of the same
argument corporations use to legitimise their irresponsible behaviour;
that trying to put a dollar amount on morality reduces their ability
to serve shareholders by pursuing, as Milton Friedman might say,
maximum profit? Perhaps activists are being disingenuous. They seem to
be putting up a smoke screen when more transparency is in order. In
other words, is it possible that cost-efficiency, if embraced by the
thousands of NGOs that are now operating without basic economic
principles, might lead to the realisation that the structure of NGOs
themselves is as inefficiently bloated as the corporations they
criticise. NGOs seem to be saying they are against Mr Lomborg’s
methods, but I think what they are really saying is they are against
losing their jobs.

Max Keiser, Chairman and founder, Karmabanque, Villefranche-sur-Mer,
France 06230

HEDGING PROGRESS
http://www.washingtonpost.com/wp-dyn/articles/A25215-2004Dec24.html
Hedge Funds Banking on Social and Moral Issues
BY Thomas M. Kostigen / December 25, 2004

Wealthy British scion Zak Goldsmith and investment activist Max Keiser
want to take down Coca-Cola Co., and they have added a new twist to
the age-old tactic of boycotting: They have opened a hedge fund
designed to profit from any decline in the soft drink conglomerate’s
stock price. “We’re simply picking up on a trend and giving people the
tools to use,” Keiser said. “The Internet allows people, activists,
from all over the world to gather, or swarm, and hit a company where
it hurts most — in their stock price.” Hedge funds are a popular
investment option for the wealthy. But creating a hedge fund with a
specific social agenda, like the one promoted by Goldsmith and Keiser,
is a recent development, according to Doug Wheat, director of business
development at SRI World Group, a financial news and data monitoring
service in Vermont. “There are only five or six hedge funds like
that,” Wheat said. “Meanwhile, there are like 8,000 hedge funds.” A
hedge fund is a type of private investment vehicle for wealthy
investors who choose to pool their money and invest in securities.
Many hedge funds invest in unusual securities in unusual ways. They
sometimes assume substantial risks on speculative strategies. This
sometimes includes “hedging,” or leveraging investments to get the
most gain. Hedge funds are subject to few regulations. The Securities
and Exchange Commission requires only that the investors be
accredited, meaning that they must earn more than $200,000 per year or
have a net worth of more than $1 million. Hedge fund managers are not
currently required to register with the SEC. “We don’t get into who’s
investing,” said SEC spokesman John Heine. But that hands-off approach
may change. Regulators started eyeing hedge funds after the 1998 near-
collapse of Long-Term Capital Management LP, which lost billions in
derivatives trading and created a financial market disaster,
necessitating a private-sector bailout organized by the Federal
Reserve Bank of New York. In October, the SEC voted 3 to 2 to increase
hedge fund oversight by mandating that hedge fund managers register by
February 2006. But on Monday, the head of a New York-based hedge
fund, Opportunity Partners LP, sued the SEC in an effort to block the
registration requirement. In public comments dissenting from the
adoption of the proposed registration rule, the two Republican
commissioners, Cynthia A. Glassman and Paul S. Atkins, questioned
whether the registration requirement would be too rigorous on certain
issues and too lax on others. Heine said that requiring hedge funds to
register with the commission “will not have any effect on the
suitability requirement for hedge fund investors.” Even within the
context of traditional stock and bond investing, hedge funds sometimes
seek out esoteric niches, such as interest rate swaps and
collateralized mortgage obligations, according to Todd Goldman,
managing principal at Walnut Creek, Calif., accounting firm Rothstein
Kass, which serves hedge funds. “The whole point of hedge fund
investing is the ability to specialize,” Goldman said, pointing out
that there are hedge funds producing steady returns that strictly
invest in credit card debt and funds that invest in tax liens. To
date, specialization among hedge funds has meant inventing new
investment strategies within a core group of publicly traded
securities — stocks, bonds, currencies, futures and options. But some
investors are expanding beyond what most people would even consider
investments. Billionaire Mark Cuban, owner of the NBA’s Dallas
Mavericks, for example, said in November that he is preparing to
launch a hedge fund focused on gambling. “This hedge fund won’t invest
in stocks or bonds, or any type of business. It’s going to be a fund
that only places bets,” Cuban said in a posting on his Web log,
MarkCuban.com. He promised in his posting to hire top professional
gamblers to figure out what bets to place or what games to play. Their
performance of gambling wins and losses, of course, will generate the
return for investors, Cuban said. He declined to comment further on
his hedge fund plans in response to an e-mail message from The
Washington Post on the subject. Some funds already invest in the
gaming sector, albeit through trading shares of companies operating in
that industry. The Vice Fund, based out of Texas, for example, is a
mutual fund that invests only in companies with ties to weaponry,
smoking, drinking and gambling. Other funds take great pains to avoid
so-called “sin” stocks. Shariah Funds, managed by Meyer Capital
Partners of New Canaan, Conn., invests according to Islamic law,
avoiding companies associated with gambling, alcohol, tobacco and food
processing (because of dietary restrictions). “We look at a company’s
primary business first, and then we look at their financials,” said
Sheikh Yusuf Talal DeLorenzo, an Islamic scholar and adviser to the
fund. DeLorenzo noted that although Islamic law prevents the taking of
interest and allows investments only in tangible assets, he has
configured a way to hedge using futures and options. The money behind
Shariah Funds comes from wealthy investors in the Middle East and
Asia, DeLorenzo said. Other groups with religious affiliations have
also launched hedge funds. Last year, Catholic Institutional
Investors, a coalition of five Catholic health care organizations,
launched the Good Steward Fund. And the Church of Jesus Christ of
Latter-day Saints has a private investment fund — Ensign Peak
Advisors — to serve its Mormon constituents. Mission-oriented hedge
funds fall into a category known as “socially responsible” investments
that permit investors to grow financially while still adhering to
their own individual social or moral preferences. Investment managers
typically screen potential investments so that they match a client’s
beliefs. Socially responsible investing is one of the fastest-growing
sectors in the financial services industry, with more than $2 trillion
of assets being managed in such fashion, according to the Social
Investment Forum, a District-based nonprofit organization providing
research and education. The anti-Coke campaign has been called by its
founders a “smart boycott.” Goldsmith said he believes he can push
Coca-Cola shares to as low as $22. They closed at $41.51 in Thursday
trading on the New York Stock Exchange. U.S. financial markets were
closed yesterday. “Coke represents the cutting edge of a global
monoculture that is undermining real human diversity,” said Goldsmith,
29, who is the son of a famed British corporate raider, the late Sir
James Goldsmith. With a reported inheritance of about $700 million,
Goldsmith could wage a formidable battle against Coca-Cola via his
family’s magazine, the Ecologist, where he is founding editor. Coca-
Cola has issued numerous statements clarifying its positions on the
corporate issues at which Goldsmith and Keiser are taking aim. “This
so-called campaign is based on blatant falsehoods,” said Ben Deutsch,
a Coca-Cola spokesman. “It’s unfortunate that anyone would attempt to
hurt Coke shareholders . . . without the facts.” Investors in the
unnamed anti-Coca-Cola fund will get a stated annual return akin to a
long-term Treasury bond. But, after a 2 percent management fee, the
rest of profits will go to aid disaffected farmers in India, AIDS
organizations in Africa and human rights monitoring groups in Central
and South America. “We’re now focused on closing a $100 million fund
by the end of 2005,” said Keiser, who founded Karmabanque.com, the
Web site through which the anti-Coca-Cola campaign is being managed.

MAKING A MARKET
http://www.dmreview.com/bissues/20070301/2600311-1.html?bir=1
An Internal Futures Market
BY Robert Charette / March 2007

“The economic problem of society is thus not merely a problem of how
to allocate “given” resources … it is a problem of the utilization
of knowledge which is not given to anyone in its totality.” Friedrich
Hayek, the 1974 Nobel Prize winner in economics, wrote these words in
his 1945 classic essay, The Use of Knowledge in Society, in which he
argued that centrally-planned economies are unable to efficiently
allocate societal resources because their planners, no matter how
smart they were, would never have all the information required to make
the correct decisions. Hayek, on the other hand, asserted that pricing
systems, (e.g. stock markets), which reflect the collective knowledge
of a myriad of individuals is a much better approach for performing
resource allocation decisions. Market systems which signal the value
of a resource through a numerical index (i.e. price), he said, are “a
mechanism for communicating information”, with the “most significant
fact about this system [being] the economy of knowledge with which it
operates, or how little the individual participants need to know in
order to be able to take the right action.”

The problems that Hayek said governments face in best allocating
resources are nearly identical to what most organizations face. How
can the corporate planners have access to all of the information they
need to best allocate scarce corporate resources to increase
shareholder value? And, as Dominic Dodd and Ken Favaro, in their book,
“The Three Tensions,” point out, is the best way to increase
shareholder value to increase corporate profitability or growth?
Allocate resources for results today or tomorrow? Allocate resources
to increase the performance of the corporation as a whole or
performance of standalone business units? Could it be some combination
of all six?

The Future Value of Decisions
The growth of business intelligence over the past decade reflects the
idea that corporate planners – be they on the corporate executive
staff, business managers or line managers – need better information to
make their allocation decisions, and properly structured BI can often
help fulfill this need. However, the focus of BI in many instances
seems to be more on answering questions about “what was” or possibly
on “what is,” data that reflects the past or recent past – rather than
on what will be. The current focus on BI corporate dashboards is an
example. What planners truly need is information about “what might
be.” – i.e., what is the future value of present decisions?

Markets systems fit this bill nicely since they are focused primarily
towards predicting the future. A corporation’s stock price, for
instance, reflects not only information about the corporation’s
current course and speed but also its projected course and speed as
perceived by its current investors and non-investors alike. When a
corporation releases its quarterly earnings and investors react
positively or negatively, for example, they are making a collective
judgment on the corporation’s future financial risks, not its current
state of play.

It has long been recognized that collective judgment provided by
market systems can be very useful in making accurate predictions about
future events, but it has only been in the past 30 years or so that
“maverick” economists such as Vernon Smith (who won a Nobel prize in
economics in 2002), Charles Plott, John Ledyard and Robert Forsythe
have focused on how to use the predictive power of markets for uses
other than for managing financial risk. As detailed in James
Surowieki’s recent book, “The Wisdom of Crowds,” the theoretical work
of these four economists, combined with Internet’s ability to quickly
form markets, has spawned the creation of a number of prediction/
information markets, like Forsythe’s Iowa Electronic Market, which is
used to predict elections, TradeSports in Ireland which focuses
primarily on sporting events, and the Hollywood Stock Exchange, which
focuses on the various goings-on of the film industry.

Market Systems and the Enterprise
In conjunction with using markets for “public” prediction purposes, a
number of economists have investigated the use of predictive markets
that also could be used by corporations internally. Economist Robin
Hanson (who studied under Plott), came up with the concept of the idea
or innovation future market, where specific questions of some future
event could be evaluated for its likelihood of occurrence. One
question of interest, Hansen says, might be the probability that the
greenhouse effect and other causes will have raised the average world
sea levels by 1 meter by 2030. By establishing a market focused on
that question, a rapid consensus – in the form of a probability that
is related to the going market price – can be reached about this
particular issue.

Over the past decade, a small but growing number of companies have
been creating their own internal idea, innovation or prediction
markets. For instance, France Telecom Group created an internal
predictive market called Project Destiny that examines certain
technological trends. A France Telecom employee is able to place bets
concerning different technology questions, for example, will Skype
reach “X” million of users by a given date? France Telecom believes
that by posing questions whose outcome can affect its business,
executives and managers can be better prepared to address them. Of the
18 questions posed, Project Destiny claims its internal market to have
correctly predicted 16 of them.

Similarly, Yahoo, in a joint venture with O’Reilly Media, has created
a prediction market called the Tech Buzz Game. The game is made up of
a number of sub-markets that match a small number of rival
technologies against one another, Internet browsers for instance. The
object of the game is to anticipate a technology’s “buzz” as measured
by the number of Yahoo!Search users seeking information about that
individual technology. Yahoo hopes by conducting this game it can
evaluate whether power of prediction markets can help forecast high-
technology trends.

Google has created an internal predictive market that according to
Google, aims to “forecast product launch dates, new office openings,
and many other things of strategic importance to Google.” Google says
that over 20 percent of its staff has bid in the 100-plus online
markets it has run, covering over 350 events in more than 40 different
topic areas. Google says that the online market prediction accuracy is
about 70 percent.

HP Labs created its own internal market system and supporting software
called BRAIN (Behaviorally Robust Aggregation of Information in
Networks) to help predict certain critical business issues such the
quarterly sales forecast or the price of DRAM memory chips in one,
three or six months. The importance of being right about a forecast
can have major impact. If a chip price forecast is off by just a
couple of pennies, a significant impact on HP’s hardware profit margin
can result. HP has found that its internal market predictions are
often more accurate than the company’s “official” forecasts (for
instance, six out of eight times the market was better at predicting
computer sales). HP is now working with Pfizer pharmaceutical to
create an internal prediction market using BRAIN starting in 2007.

Many other companies are experimenting with or creating different
types of internal prediction markets: Microsoft (for predicting
product ship dates); GE (for discovering new ideas); Eli Lilly (for
discovering new drug candidates); BP Amoco (for reducing carbon-
dioxide emissions); Intel (for allocating computer chip production),
and; Siemens AG (for improving the accuracy of product developments).
As these companies and others report their experiences with the
application of internal prediction markets, it is likely that others
will follow suit.

Making a Market
For internal markets (or any market for that matter) to work well, a
number of requirements must be met. First, there has to be a diversity
of opinion: the more diverse the opinion, the better the prediction.
Second, the market participants need to have independent opinions. If
these first two requirements are not met, you tend to get a “group
think” result. Third, decentralized information sources need to exist,
in other words, unique levels of knowledge should be held by the
market participants. Finally, the information from everyone needs to
be aggregated in some way. A stock’s price, as Hayek says, serves to
aggregate information. If these are not met, then the prediction value
of the market starts to decline.

While the concept of using internal predictive markets is very
seductive, their use should not be seen as end-alls or be-alls. As Max
Keiser, the inventor of the technology that runs the Hollywood Stock
Exchange, warns, “Markets (are) unable to forecast the future with any
certainty.” This can readily be seen from just a couple of the
examples cited above. They are generally better than other predictive
measures, such as polling or Delphi techniques, but they shouldn’t be
endowed with powers they don’t have.

Furthermore, while markets may be good at predicting certain events,
they don’t tell you “why” events are going to happen. For instance,
some companies have used internal markets to predict software delivery
schedules, which proved more accurate than the internal estimates.
However, “the market” couldn’t indicate why the software was going to
be delivered late – or how the development approach could be improved
so that future delivery dates could be met. It may be that by using BI
analytics with prediction markets this issue could be addressed.

As far as I am aware, no one has tried to tie BI in with the use of
prediction markets, but it would seem to be a very natural fit. For
instance, access to BI systems could allow some market participants to
increase the level of decentralized or special knowledge (think
insider trading information), which could help improve market
predictions. Or, BI’s ability to aggregate corporate information in
novel ways could be used to help create interesting questions for an
internal market to contemplate (remember, markets don’t ask questions
– someone else has to). Or, from a risk management perspective, an
internal market used with BI analytics could help increase the
understanding of how to manage the three elemental tensions –
profitability or growth, results today or tomorrow, synergistic or
stand alone performance – better or to create improved contingency
plans based as a result of a set of internal market predictions.

Internal prediction markets are only in their infancy, but I expect
them to become more common in the next decade. For those in the BI
field, now is a good time to see how BI and market information can be
tied together.

COMEDY OR TRAGEDY? MAX KEISER (cont.)

U.S. DOLLAR IS A ‘TOXIC CURRENCY’

http://www.youtube.com/watch?v=cI55epbbtU0

MIDDLE EAST GOLD-BACKED CURRENCY IN DEVELOPMENT

http://www.youtube.com/watch?v=vnfeBKa4FjE

CRASHING THE DOLLAR

http://www.youtube.com/watch?v=4ItC_nT4rS8

BETTING ON IRAN WAR, ETC

http://www.youtube.com/watch?v=J1AMs5o7l-g

CALLED IT

http://www.youtube.com/watch?v=ktBDj8VogPo

THE CARRY TRADE (ICELAND, 2007)

http://www.youtube.com/watch?v=JjglR2KYz5o


http://www.youtube.com/watch?v=MPRoQ7OxZAQ

ONLINE POLITICAL BETTING
http://www.iht.com/articles/2001/07/11/edlet_ed2__2.php
Playing Virtual Markets / July 11, 2001
Regarding the report “Just a Game? Some Virtual Traders Aren’t Playing
Around” (July 7):

It is true that virtual markets are better at predicting outcomes than
polls, but markets are horrible predictors of anything. If the markets
did not continuously defy prediction there would be no risk, and
without risk there would be no speculation, and without speculation
there would be no liquidity, and without liquidity there would be no
markets. The reason markets work as an effective means of raising
capital is precisely because they are so unpredictable, which invites
speculation, which invites liquidity. Anyone who believes that he or
she can predict an outcome by watching virtual markets like
NewsFutures and the Hollywood Stock Exchange does not understand
markets. One prediction that appears guaranteed, however, is that
people who invest in a company that bases its revenues on predicting
outcomes by predicting markets will lose their money.

Max Kieser, Villefranche-sur-Mer, France.

REPUTATION MATTERS
http://www.thing.net/~rdom/ecd/ecd.html
http://www.attac.org/

KARMABANQUE — CONSUMER STOCK BOYCOTTS
http://www.enoughfanzine.com/index.php?cID=96&view=columns_detail

Consider a May 9, 2004 article by Simon Romero in The New York Times,
“War and Abuse Do Little to Harm U.S. Brands.” Romero begins: “When
American troops moved into Iraq last year, European executives at the
Ford Motor Company braced for an adverse consumer reaction.” Niel
Golightly, a Ford spokesman in Cologne, Germany added: “Our sales and
image and market share are things we monitor extremely closely. So the
potential fallout risk from Ford being perceived as a symbol of
America’s foreign policy is something we’re always looking at.” Romero
goes on to claim that U.S. corporations have thus far remained
relatively unscathed by the rampant anti-American feelings across the
globe. “McDonald’s, one of the largest private-sector employers in
Brazil, is sometimes the target of taunts in left-wing demonstrations
on Avenida Paulista, one of Sâo Paulo’s main streets, but it is also
common to see demonstrators eating at McDonald’s after the rallies,”
he explains. “For the most part, boycotts announced against American
products last year have fizzled out.”

An example of this took place just before the U.S. invaded Iraq in
March 2003. “The Muslim Consumer Association of Malaysia called for a
boycott of Coca-Cola,” writes Romero, “and there was a flurry of news
media reports on the sudden popularity of local brands of cola.”
According to Marimuthu Nadason, secretary general of the Federation of
Malaysian Consumers Associations, that boycott was essentially
ignored. “Anyone can call for a boycott,” Nadason said, “but it won’t
work.” Not so, says Max Keiser, founder of Karmabanque (http://
http://www.karmabanque.com), where “the civil disobedience of Gandhi” is
combined with “the financial savvy of George Soros.”

“You don’t need guns or money to destroy American companies-and the
environmental catastrophes they thrive on,” Keiser declares. “All we
ask is that you focus your dissent on one company at a time and we ask
that you focus that dissent/attention on a company that is vulnerable
to the low cost weapon of choice for activists: the boycott.”

Keiser points to the recent “carbohydrate boycott”-and resulting
plummet in the stock price-of Krispy Kreme donuts. “These companies
are not able to defend against a boycott or organized dissent,” he
says. According to Karmabanque’s Boycott Vulnerability Ratio-and
contrary to unsuccessful efforts in Malaysia-Coca Cola is about as
vulnerable to boycott as a corporation can get. “This means that for
every dollar I do not spend on Coke, I am erasing 5 dollars off their
market capitalization (number of shares outstanding times the current
stock price),” says Keiser. The number, he explains, is devised by
dividing market capitalization by trailing twelve-month sales.

The “magic,” says Keiser, occurs when “word gets out to the 800
billion dollar hedge fund industry-beholden to no one-that there is a
very large boycott of Coke’s stock. A big boycott equals loss of
revenues equals lower stock price. Mr. Hedge Fund sells short stock (a
bet that the stock price will go down) in Coke. Sure enough, the stock
price is going down. More boycotters, cost free to them, join the
boycott and more hedge money goes into selling short the stock. Now,
my $1 of dissent, multiplied times 5, is multiplied again thanks to
the hedge money.

“Both hedge funds and activists benefit when a target company’s stock
price declines,” says Keiser. “The hedge funds get dollars, while the
activists get a new way to pressure companies by attacking their stock
price. At some point, the stock price gets so low that the company
cries ‘uncle’ and gives in to the pressure group is some way.”

CONTRARIAN ACTIVISM + LEARNING TO THINK IRRATIONALLY
http://www.stwr.org/global-financial-crisis/get-ready-for-a-financial-tsunami.html
http://www.stwr.org/economic-sharing-alternatives/since-the-brandt-report.html
http://www.stwr.org/climate-change-environment/george-soros-irrationality-and-contrarian-activism.html
George Soros, irrationality and contrarian activism / BY Max Keiser

The typical activist approach of trying to get rich countries and
companies to ‘share the world’s resources’ fails to take into
consideration how the individuals in these countries and companies got
rich to begin with. What activists don’t understand is that the
process of accumulating wealth is rarely a rational, direct path.
Trying to appeal to the rich to act rationally, therefore is, in most
cases, folly.

Activists need to get into the heads of the rich and understand that
in order to create above-average wealth it is necessary for the rich
to think in ways no average (read: poor) person is thinking.
Financiers and speculators call this form of antagonism-for-profit
‘contrarianism’ and it forms the basis of an entire school of finance
that attempts to figure out where the ‘crowd’ is heading, and then do
the opposite. Some quick examples of how this works; 1) the put-call
ratio in the options markets. What this number tells contrarians is
where most of the speculators are making bets in the markets, and as
most speculation ends up in losses it makes sense, according to the
contrarian doctrine, to bet the other way. 2) Another contrarian
speculating strategy is to look at where professional money managers
are placing their bets with their professionally managed funds. Again,
since most professional money managers fail to ‘beat the market,’ it
makes sense to do the opposite of whatever they’re doing.

Probably the king of contrarianism is the most successful investor in
the history of Wall Street: George Soros. He’s taken the contrarian
concept and developed it even further into what he calls his theory of
‘reflexivity’ or the ‘human uncertainty principle.’

What Soros has observed about markets is that contrarianism itself can
breed second and third generations of contrarianism that is self
referential or ‘reflexive’ that, instead of doubling back and ending
up where it started, has the power to change the underlying market
fundamentals in ways that make the contrarian assumption the de factor
market norm. When such situations develop, it’s only a matter of time
before the market realizes it’s ‘smoking its own belly button
lint’ (my expression) and we get what Soros calls, a ‘return to
equilibrium’ i.e., a crash, like we saw in stocks in 1929, 1987 and
2000. For the professional trader, identifying these inflection points
where the market suddenly realizes that its assumptions are worth
zero, great fortunes can be made betting the other way. Soros caught
the crash in the English pound back in 1992 using this technique and
pocketed over 1 billion dollars in one day.

The point I’m making here for activists is that activists’ approach to
changing the way business treats the environment relies almost
entirely on trying to get business people to act more rationally. And
yet, to get to where they got, these business leaders have relied
mostly on obeying the voices in their head that the status quo claims
are irrational. This has set up a paradox making NGO’s lives more
difficult. Whatever an NGO thinks is a good idea, is probably a
terrible way to make money in the minds of most businessmen. They’ll
listen to what an NGO has to say, but only to know what not to do if
they want to continue making money. It’s like what Milton Friedman
advises corporations to do when an NGO walks into their office with a
list of demands, and I paraphrase; ‘listen politely, then figure out
if there’s any money to be made with what’s been said, if not, use the
meeting as a PR opportunity, but that’s all.’

So does this mean NGO’s should give up? No. What it does mean,
however, is that NGO’s should consider adopting new strategies that
will tap into businessmen’s love of the irrational. For
environmentalists, I think carbon trading offers a huge opportunity to
turn the tables on business and use the power of irrationality for a
positive change.

Take a group like Greenpeace for example. They have over 100 million
dollars sitting in the bank collecting money market interest. For all
intents and purposes, this money is what Wall Street would call, ‘dead
money.’ I propose the following. Greenpeace should start organizing a
banking crusade with their money and other NGO money (NGO’s
combined operating budgets are worth 1 trillion dollars) and start
buying Carbon Credits in the open market for the current price of
approximately 8 dollars a ton. (the EU has started a program of
capping carbon emissions for corporations; but giving them the
opportunity to go over their cap by buying ‘credits’ from companies
whose carbon output is below the cap).

This would set up an irrational chain reaction, each part of which
represents a net positive for the environment. First, the price of
carbon credits will be pressured upward thanks to the speculative
buying of a new force in the market, NGO’s. Corporations who are
banking on the price of carbon credits to remain in a certain range
will be forced to recalculate their assumptions and in many cases will
be forced to buy more credits than they had planned to in the short
term to give themselves the kind of hedging protection these carbon
credits offer for their carbon abuse. This will drive the price even
higher. As demand goes up, so does the price and now we get to the
irrational part; higher carbon prices will incentivize companies
across the business spectrum to put forward various carbon-efficiency
schemes as a way to make money with their excess credits. The money a
company makes chasing carbon efficiencies could equal if not eclipse
the profits made burning carbon. The government in turn, has the
ability to lower the carbon caps greasing this contrarian cycle even
more by making carbon more expensive, thus providing more incentive to
produce greater efficiencies.

On paper, activists will look at this and balk. They don’t like the
idea of commoditizing nature. They don’t understand why a company
would engage in such a scheme. They don’t like the fact that the whole
thing seems irrational, but that’s the point. Business today runs on
irrationality and until NGO’s adapt, they’ll always be behind the
curve. You would think NGO’s would have already figured this out. They
know for example that ExxonMobil’s business model is irrational to the
bone. ExxonMobil extract irreplaceable natural resources for virtually
nothing, sell them for a fraction of their replacement costs and then
we burn them without ever having to pay the environmental costs; all
this resulting in parts of CO2 per million in the atmosphere breaching
the ‘can’t go back’ levels where the species (ours) is put on the
extinction watch list. ExxonMobil’s business model is irrational and
suicidal. NGO’s know this, so why do they insist in trying to get
Exxon to act rationally when nothing in Exxon corporate DNA suggests
they even understand what that word means.

Exxon is not rational, but they are profitable. For NGO’s to attack
their rationale is a non-starter because the company knows it’s
irrational and doesn’t care. Environmentalists, to win against this
insanity, must tear a page out of the irrational’s handbook in order
to effectively combat the current trends blighting our futures. The
carbon trading scheme mentioned above is a step in that direction. As
distasteful as it must seem for NGO’s to drink the ‘Koolaide’ that
runs business, not to do so at this point is completely irrational.

TULIPS, FOR THE GENERALIST
http://www.itulip.com/
MARKET REFORM
http://thesanitycheck.com/
ARTHUR PIGOU
http://gregmankiw.blogspot.com/2006/10/pigou-club-manifesto.html
http://en.wikipedia.org/wiki/Pigovian_tax
ANARCHO-CAPITALISM
http://en.wikipedia.org/wiki/Anarcho-capitalism
http://praxeology.net/anarcres.htm#heritage
http://www.ozarkia.net/bill/anarchism/faq.html
MURRAY ROTHBARD
http://en.wikipedia.org/wiki/Murray_Rothbard
http://www.mises.org/about/3249
http://www.mises.org/literature.aspx?action=author&Id=299

PROPOSAL: DECENTRALIZE MONETARY POLICY
http://gregmankiw.blogspot.com/2006/07/how-to-decentralize-monetary-policy.html
How to Decentralize Monetary Policy / July 21, 2006

Today’s Wall Street Journal reports: “Federal Reserve policy makers
raised interest rates last month in part because markets expected them
to do so, and they figured failure to act might hurt their credibility
as inflation fighters, minutes of the meeting suggest.”

Some people might view this response as wimpy–doing what financial
markets want rather than showing real leadership. But one can view
this approach as a step toward decentralizing monetary decision
making. Suppose the Fed has a long-term inflation target. And suppose
the Fed followed this rule: “Look at the market’s forecast of interest
rates and inflation over the next few years. If the market expects
inflation above target, set a path for interest rates a bit higher
than the market expects. If the market expects inflation below target,
set a path for interest rates a bit lower than the market expects. If
the market expects inflation to come in on target, set a path for
interest rates equal to what the market expects.”

This might seem circular: The Fed is responding to the market, and the
market is responding to the Fed. But there is nothing wrong with that.
Economists are used to simultaneity. Of course, the market will catch
on to the policy, but that’s okay. In fact, it is ideal. We end up in
a fixed-point equilibrium in which the market expects the Fed will hit
its inflation target. In this equilibrium, the market’s forecast of
interest rates will tell the Fed what it needs to do to accomplish
what it wants to accomplish.

ORGANIZING WITHOUT ORGANIZATIONS
http://cyber.law.harvard.edu/interactive/events/2008/02/shirky
http://www.herecomeseverybody.org/
http://www.shirky.com/

FIELD RECORDINGS
http://betting.betfair.com/specials/politics-betting/prediction-markets/the-betfair-prof/whats-the-connection-between-a-1906-poultry-exhibition-and-t-180908.html
What’s the connection between a 1906 poultry exhibition and the 2008 US election?
BY Leighton Vaughan Williams / 18 September 2008

Sir Francis Galton was an English explorer, anthropologist, scientist,
who was born in 1822 and died in 1911. To students of prediction
markets he is best known, however, for his visit, at the age of 85, to
the West of England Fat Stock and Poultry Exhibition, and what
happened when he came across a competition in which visitors could,
for sixpence, guess the weight of an ox.

Those who guessed closest would receive prizes. About 800 people
entered. Ever the scientist, he decided to examine the ledger of
entries to see how clever these ordinary folk actually were in
estimating the correct weight. In letters to ‘Nature’ magazine,
published in March of 1907, he explained just how ordinary those
entering the competition were. “Many non-experts competed”, he wrote,
“like those clerks and others who have no knowledge of horses, but who
bet on races, guided by newspapers, friends, and their own fancies …
The average was probably as well fitted for making a just estimate of
the dressed weight of the ox as an average voter is of judging the
merits of most political issues”.

The results surprised him. For what he found was that the crowd had
guessed (taking the mean, i.e. adding up the guesses and dividing by
the number of entrants) that the ox would weigh 1,197 pounds. In fact,
it weighed 1,198 pounds! The median estimate (listing the guesses from
the highest to the lowest and taking the mid-point) was also close
(1,207 pounds, and therefore still within 1% of the correct weight)
but not as close. Some have argued that Galton himself favoured the
use of the median rather than the mean, and so was double-surprised
when the mean beat the median. Others have argued that the point is
incidental and what this tale demonstrates about the wisdom of the
crowd is more important than such a fine statistical detail.

I think that both these points of view contain some merit. The power
of the market to aggregate information is indeed a critically
important idea. But it is also important to be able to distinguish in
different contexts which measure of the ‘average’ (the mean, the
median, or perhaps some other measure) is more suited to the purpose
at hand.

Take the stream of opinion polls which contribute to the collective
knowledge that drives the Betfair market about the identity of the
next President of the United States. If five are released, say, on a
given day, what is the most appropriate way of gauging the information
contained in them? Should we simply add up the polling numbers for
each candidate and divide by the number of polls, or should we list
them from highest polling score to lowest and take the mid-point. The
convention adopted by sites such as http://www.realclearpolitics.com is to
take the mean. But is there a better measure than the mean of
discerning the collective wisdom contained in the polls, and if so,
what is it? The jury is still deliberating.

CONTACT
Leighton Vaughan Williams
http://www.ntu.ac.uk/research/school_research/nbs/staff/61441gp.html
http://www.ntu.ac.uk/nbs/business/specialist_centres/political_forecasting.html
http://www.predictionmarketjournal.com/
email : leighton.vaughan-williams [at] ntu.ac [dot] uk

COLLECTIVE BEST GUESS CORRECT WITHIN A FURLONG
http://betting.betfair.com/specials/politics-betting/prediction-markets/the-betfair-prof/the-betfair-prof-question-how-do-you-find-a-missing-submarin-080408.html
“Question: How do you find a missing submarine? Answer: Ask the audience”
BY Leighton Vaughan Williams / 8 April 2008

During a car journey between Nottingham and Warwick the other week I
was told a story about the value of crowd wisdom in turning up buried
treasure. The story was that by asking a host of people, each with a
little knowledge of ships, sailing and the sea, where a vessel is
likely to have sunk in years gone by, it is possible with astonishing
accuracy to pinpoint the wreck and the bounty within. Individually,
each of those contributing a guess as to the location is limited to
their special knowledge, whether of winds or tides or surf or sailors,
but the idea is that together their combined wisdom (arrived at by
averaging their guesses) could pinpoint the treasure more accurately
than a range of other predictive tools. At least that’s the way it was
told to me by an economist who was in turn told the story by a
physicist friend.

To any advocate of the power of prediction markets, this certainly
sounds plausible, so I decided to investigate further. Soon I was
getting acquainted with the fascinating tale of the submarine USS
Scorpion, as related by Mark Rubinstein, Professor of Applied
Investment Analysis at the University of California at Berkeley. In a
fascinating paper titled, ‘Rational Markets? Yes or No? The
Affirmative Case’, he tells of a story related in a book called ‘Blind
Man’s Bluff: The Untold Story of American Submarine Espionage’ by
Sherry Sontag and Christopher Drew.

The book tells how on the afternoon of May 27, 1968, the submarine USS
Scorpion was declared missing with all 99 men aboard. It was known
that she must be lost at some point below the surface of the Atlantic
Ocean within a circle 20 miles wide. This information was of some
help, of course, but not enough to determine even five months later
where she could actually be found.

The Navy had all but given up hope of finding the submarine when John
Craven, who was their top deep-water scientist, came up with a plan
which pre-dated the explosion of interest in prediction markets by
decades. He simply turned to a group of submarine and salvage experts
and asked them to bet on the probabilities of what could have
happened. Taking an average of their responses, he was able to
identify the location of the missing vessel to within a furlong (220
yards) of its actual location. The sub was found.

Sontag and Drew also relate the story of how the Navy located a live
hydrogen bomb lost by the Air Force, albeit without reference in that
case to the wisdom of crowds. Perhaps, though, that tale is too secret
yet to be told!

What then, I wonder, would those scientific giants, Karl Pearson and
Lord Rayleigh, have made of it all? It was their correspondence, you
may recall, in the pages of the scientific journal, ‘Nature’, which
answered the classic query of where to find the drunk you left in a
field. “Where you left him,” was the answer. Which is all very well,
of course, if you were sober enough yourself to know exactly where
that might have been!

BIAS BUBBLES
http://en.wikipedia.org/wiki/Futarchy
http://hanson.gmu.edu/vita.html
http://hanson.gmu.edu/ideafutures.html
http://hanson.gmu.edu/policyanalysismarket.html
http://hanson.gmu.edu/futarchy.pdf
Information Successes of Speculative Markets / BY Robin D. Hanson

While democratic policy seems to suffer from information failures,
speculative markets show striking information successes. Most markets
for stocks, bonds, currency, and commodities futures are called
speculative markets because they allow people to bet on future prices
by buying or selling today in the hope of reversing such trades later
for a profit. Such opportunities to “buy low, sell high” occur when
identical durable items are frequently traded in a market with low
transaction costs. Given such opportunities, everyone is in essence
invited to be paid to correct the current market price, by pushing
that price closer to the future price. Such invitations are accepted
by those sure enough of their beliefs to “put their money where their
mouth is,” and wise enough not to have lost too much money in previous
bets. Betting markets are speculative markets that trade assets that
are specifically designed to allow people to bet on particular matters
of fact, such as which horse will win a race. The final values of such
assets are defined in terms of some official final judgment about the
fact in question. By construction, such assets are durable, identical,
and can be created in unlimited supply. Betting and other speculative
markets have been around for many centuries, and for many decades
economists have studied the ability of such markets to aggregate
information. The main finding of this research is that such markets
tend to be relatively “efficient” in the sense that it is hard to find
information that has not been incorporated into market prices (Lo,
1997; Hausch, Lo, & Ziemba, 1994). The main possible exceptions seem
to be long-term aggregate price movements, and a long-shot bias in
high-transaction-cost betting markets.

Many have suggested that asset markets have too much long-term
aggregate price variation, such as stock market “bubbles” (Shiller,
2000). Risk and delay most discourage speculators from correcting such
pricing errors, and irrational traders can actually gain superior
returns (though not utility) from irrationally-large risk-taking (De
Long, Shleifer, Summers, & Waldmann, 1990). Long-term aggregate
prices, however, are also where it is hardest to empirically
distinguish irrationality from rational information about fundamental
economic change (Barsky & De Long, 1993), and where selection effects
most pollute our data (Jorion & Goetzmann, 2000). Even if speculative
markets are distorted by irrational bubbles, it is not clear that any
of our other information institutions do better. For example, no other
information institution in our society, such as academia or news
media, consistently predicted that we were over-investing during the
“dotcom” bubble. Yes some individual academics or reporters so
predicted, but so did some individual stock investors. Over the last
few decades economists have also studied speculative markets in
laboratory experiments, where they have more control over trader
information and preferences. Such experiments find that speculative
markets aggregate information well, even with four traders trading $4
over four minutes, and even when such traders know little about their
environment or other traders (Sunder, 1995). For example, traders can
aggregate information well when they are experienced in their role and
abstractly know the payoffs of players in other roles (Forsythe &
Lundholm, 1990). If the structure of traders’ information is complex
enough relative to the number of assets available to trade, however,
information “traps” can occur where individual traders have no direct
incentive to reveal their information (Noeth, Camerer, Plott, &
Webber, 1999). Such problems are typically, though not always, reduced
by allowing trading of more kinds of related assets.

Absolute accuracy levels, however, are not the key issue. The key
policy question about any institution is how it performs relative to
alternative institutions dealing with the same situation. A few
studies have presented field data on this question, directly comparing
real world speculative markets with other real world institutions for
aggregating information. For example, racetrack market odds improve on
the prediction of racetrack experts (Figlewski, 1979). Florida orange
juice commodity futures improve on government weather forecasts (Roll,
1984), Oscar markets beat columnist forecasts (Pennock, Giles, &
Nielsen, 2001), and gas demand markets beat gas demand experts
(Spencer, 2004). Betting markets beat major national opinion polls 451
out of 596 times in predicting U.S. presidential election results
(Berg & Rietz, 2002). Finally, betting markets beat Hewlett Packard
official forecasts 6 times out of 8 at predicting Hewlett Packard
printer sales (Chen & Plott, 2002; Plott, 2000). Unfortunately, no
studies have directly compared estimates from speculative markets to
estimates from academic-style institutions We do know, however, that
those who do best at betting on horse races are smart in ways they can
not articulate, and in ways unrelated to I.Q. (Ceci & Liker, 1986).
Academic-style institutions, in contrast, seem largely limited to
aggregating articulated knowledge from those with high I.Q. Academic
institutions put a great deal of weight on the opinions of experts
relative to ordinary people. And while speculative markets may put
less weight on experts, it does not seem that they place too little;
if anything, they seem to put too much weight on experts, both public
and private (Figlewski, 1979; Metzger, 1985; Lichtenstein, Kaufmann, &
Bhagat, 1999). How can betting markets beat opinion polls when they
use the same fallible human sources?

A study of election betting markets found that traders overall
suffered from standard biases such as expecting their favored
candidate to win, and seeing that candidate as having won debates.
“Market makers,” however, were found to be on average much less
biased. These were traders who made offers that others accepted,
rather than accepting offers made by others. Compared to other
traders, market makers invested twice as much, traded more, earned
higher returns, and made one sixth as many errors. They also tended to
be more highly educated, and experienced at trading (Forsythe, Nelson,
Neumann, & Wright, 1992; Forsythe, Rietz, & Ross, 1999). Betting
markets seem to meet or beat competing institutions in part because of
the disproportionate influence such markets give to rational and
informed traders. We also know more generally that people with
stronger incentives to be accurate show fewer cognitive biases
(Kruglanski & Freund, 1983). There are costs to create and run
markets, so there is a limit to the number of markets that can be
created. However, while it was once thought that speculative markets
could only be viable if they annually traded millions of dollars, say
10,000 trades of $100 each (Carlton, 1984), it is now clear thatmuch
smallermarkets are viable. For example, laboratory experiments
consistently show the viability of very small markets. Low internet
transaction costs are also now spurring a burst of innovation
exploring a great many new market forms (Varian, 1998; Shiller, 1993;
Hanson, 2003a). Play money web markets are now available where
anyone can create new betting topics, and where a handful of traders
betting play pennies once every few weeks are typically successful at
aggregating information into prices (see, for example, hsx.com,
ideosphere.com (Kittlitz, 1999; Pennock et al., 2001)).

Gambling and securities regulations make it very difficult, however,
to create real money markets like these play money markets. This
regulatory block on financial innovation should not be surprising,
because all of our familiar financial institutions were once
prohibited by laws against gambling and usury. For example, a
thirteenth century decree by Pope Gregory IX prohibited maritime
insurance as usury. The 1570 Code of the Low Countries outlawed life
insurance as gambling (Brenner & Brenner, 1990). In response to
speculation in the South Sea Bubble, in 1720 Britain basically banned
the formation of joint-stock companies (Kindleberger, 1984). And
futures markets were banned as gambling in the late nineteenth century
U.S. (Brenner & Brenner, 1990). The history of financial regulation
can thus be roughly summarized as everything being banned as gambling
(or usury) until an exception was granted for some newly legitimized
higher purpose. For each purpose, such as capitalizing firms, insuring
idiosyncratic risk, or insuring common risk, laws and regulations were
created to ensure that generic gambling could not slip in. We may thus
reasonably hope to someday legitimate, and thereby legalize, markets
whose main function is to aggregate information on questions that
matter (Bell, 1997).

OBJECTIVITY
http://www.aynrand.org/site/PageServer?pagename=reg_ls_capitalism_without_guilt
http://www.aynrand.org/site/News2?page=NewsArticle&id=21639
Ayn Rand Saw This Coming / October 9, 2008
“Despite overwhelming evidence that government policies caused the
current financial crisis, Congress is blaming businessmen,” said Yaron
Brook, executive director of the Ayn Rand Center for Individual
Rights. “What’s worse, the capitalists who have been shackled with
unprecedented regulatory burdens are unable to defend themselves
morally. Though the events are different, this pattern of abuse and
submission is straight out of Ayn Rand’s Atlas Shrugged. “The cycle
starts with government intervening into the economy and imposing
regulations and controls on business. This distorts the free market,
leading to economic dislocations. When the problems caused by these
distortions inevitably follow, everyone blames the free market and its
greedy capitalists. The proposed solution? More government controls.
Over the years, conservative critics of creeping government have
repeatedly exposed this illogic but have always been helpless to
explain why the cycle keeps repeating, decade after decade. “The
pattern keeps recurring because businessmen are willing to take the
blame. From capitalism’s inception, its defenders have been morally
disarmed by the widespread view that self-interest is morally suspect,
and disinterested service to others is a moral ideal. So each new
spate of controls has been grudgingly accepted as a fair price to pay
for society’s toleration of the selfish pursuit of profit. “Atlas
Shrugged depicted a society in economic collapse due to this recurring
cycle, and today’s parallels are obvious. Government manipulation of
money, credit, and lending standards over several decades caused the
mess we’re in. Now, the offered solution is more of the poison that
sickened the economy–more bailouts, more cheap money, more
government-guaranteed loans, and above all, more regulations. “This
chronic cycle will not end until businessmen accept that their production
of profit is neither immoral nor amoral–it is the capstone of moral virtue.
Once they shrug off the role of scapegoat, businessmen can demand with
moral certitude that government punish fraud and enforce contracts but
refrain from interfering with voluntary trades among consenting
adults. “When America’s markets are finally free of all coercion–in
other words, when laissez-faire is achieved–financial crises such as
the one we’re experiencing will never happen again.”

AYN RAND INSTITUTE: ‘GREENSPAN SOLD OUT’
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102300193.html?hpid=topnews
http://www.aynrand.org/site/News2?page=NewsArticle&id=21757
Greenspan Has No Free Market Philosophy / October 24, 2008
“Opponents of the free market are giddy at Alan Greenspan’s
declaration that the financial crisis has exposed a “flaw” in his
“free market ideology.” Greenspan says he is “in a state of shocked
disbelief” because he “looked to the self-interest of lending
institutions to protect shareholder’s equity”–and it didn’t. But
according to Dr. Yaron Brook, executive director of the Ayn Rand
Center for Individual Rights, “any belief Greenspan ever had in truly
free markets was abandoned long ago. While Greenspan long ago wrote
in favor of a truly free market in banking, including the gold standard
that such markets always adopt, he then proceeded to work for two
decades as leader and chief advocate of the Federal Reserve, which
continually inflates the money supply and manipulates interest rates.
Advocates of free banking understand that when the government inflates
the currency, it artificially increases prices and causes booms in
certain sectors of the economy, followed by inevitable busts. But not
only did Greenspan lead the inflation behind the dot-com bubble and
the real estate boom, he blamed the market for their treacherous
collapses. Greenspan should have recognized that what he wrote in 1966
of the boom preceding the 1929 crash applied here: ‘The excess credit
which the Fed pumped into the economy spilled over into the stock
market–triggering a fantastic speculative boom.’ Instead, he
superficially blamed ‘infectious greed.’ “Should it be any shock that
Greenspan now blames the free market for today’s meltdown–rather than
the Fed’s policies, which fueled an inflationary housing boom, which
rewarded reckless lenders and borrowers from Wall Street to Main
Street? Greenspan didn’t mention the word ‘inflation’ once in his
testimony. “Whatever Greenspan’s economic philosophy is, it is not
anything resembling a free market.””

ENLIGHTENMENT HARD TO REGULATE
http://www.wowowow.com/post/greenspan-shrugged-did-ayn-rand-cause-our-financial-crisis-128286
Greenspan Shrugged? Did Ayn Rand Cause Our Financial Crisis?

“Those of us who have looked to the self-interest of lending
institutions to protect shareholders’ equity, myself especially, are
in a state of shocked disbelief.” So said former Fed Chairman Alan
Greenspan in his dramatic testimony before the House Committee on
Oversight and Government Reform, as he was grilled by committee
members on the causes of the nation’s financial crisis. Greenspan,
whose laissez-faire capitalist leanings led him to reject decades of
calls for more robust government oversight of financial markets, was
repeatedly interrupted by the lawmakers in a contentious exchange that
clearly shows the gloves are off in regard to the former chairman’s
legacy. In his startling admission, the former head of the Federal
Reserve reveals that his long-held and controversial notion that
enlightened self-interest alone would prevent bankers, mortgage
brokers, investment bankers and others from gaming the system for
their own personal financial benefit has, as the English say, come a
cropper. Bankers ruled by anything other than greed?

Where did Greenspan ever get that idea? Ayn Rand. To readers of Atlas
Shrugged, Ayn Rand’s 1957 magnum opus, Greenspan’s hands-off
philosophy of marketplace management sounds very familiar. At its
core, the book supports a radically utopian political-economic system
called Objectivism, which suggests that the morality of rational self-
interest, as opposed to religious or government intervention, should
be the foundation of the ideal political structure.

According to a short description of Objectivism given by Ayn Rand in
1962, “The ideal political-economic system is laissez-faire capitalism
… In a system of full capitalism, there should be (but, historically,
has not yet been) a complete separation of state and economics, in the
same way and for the same reasons as the separation of state and
church.” In other words, Ayn Rand’s theory of the “morality of self-
interest” exactly parallels Alan Greenspan’s testimony today about his
now-shaken belief in the ability of “self-interest of lending
institutions to protect shareholder’s equity.”

Early in his career, Alan was an avid Rand acolyte, a frequent guest
at the Manhattan salon of the novelist and philosopher, and those who
gathered to hear the litanies of like-minded notables were loosely
known as “The Collective.” It was there that the Rand philosophy of
Objectivism was discussed in the context of current events, world
markets and religion. Today, 40 years after the heyday of those
gatherings, Greenspan surprised many with his “Yes, I found a flaw”
response to a grilling from the Committee. Responding to the clear
failure of the notion of “enlightened self-interest” to stop the
cascade of financial catastrophies that have roiled world markets, he
said, “That is precisely the reason I was shocked, because I’d been
going for 40 years or more with very considerable evidence that it was
working exceptionally well.”

Greenspan’s critics have long charged that his refusal as Fed Chairman
to impose greater government regulations on mortgage lenders is one of
the causes of the sub-prime mortgage meltdown. Committee Chairman
Harry Waxman (D-CA), in a heated exchange told the former Fed
Chairman that he had “the authority to prevent irresponsible lending
practices that led to the subprime mortgage crisis. You were advised to
do so by many others, and now our whole economy is paying the price.”

REBUTTAL
http://www.huffingtonpost.com/2008/10/24/greenspan-shrugged-how-di_n_137465.html?show_comment_id=17224679#comment_17224679
posted BY CharlesMac
“This always astounds me. Even when writers claim to be very well
acquainted with Rand’s work, they miss the most obvious intellectual
contradiction of Geenspan’s entire career with the Fed. Ayn Rand
considered The Federal Reserve one of the greatest abominations ever
created. She had no problem with the concept of a Central Bank created
by the banks to facilitate that private industry. But to give that
entity manipulative control over the American monetary system was
anathema. A TREMENDOUS threat to her laissez faire capitalism. To her,
a horrific concept made worse by its fragmentation from any direct
connection to the democratic Republic process. This stuff is Ayn Rand
101. And Greenspan would become a major influence and Chair it for 18
years? Greenspan never got his PhD. He would be granted it in 1977
without thesis or dissertation. That is not in any way to cast
dispersions on his qualifications. It is to note that he was Ayn
Rand’s #1 economic student/representative. It was their discussions,
from which Greenspan concluded that the schooling was not in line with
his thinking and a waste of time. That’s how close they were. To this
day, Greenspan has never publicly resolved the intellectual
contradiction of his job at The Fed, with the teachings of Ayn Rand.
The gnarliest supposition being he believed only he could prevent this
innate monster from doing its evil. That’s sad.”

CHECK YOUR PREMISES
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http://www.youtube.com/watch?v=oTf6NK0wsiA

http://www.aynrand.org/site/PageServer?pagename=about_ayn_rand_aynrand_biography
http://www.noblesoul.com/orc/bio/biofaq.html
http://en.wikipedia.org/wiki/Ayn_Rand


http://www.youtube.com/watch?v=FzGFytGBDN8


http://www.youtube.com/watch?v=bUwTHn-9hhU


http://www.youtube.com/watch?v=6N4KbLbGYgk


http://www.youtube.com/watch?v=-q7cje1I3VM


http://www.youtube.com/watch?v=qfqq4VKh1xM

WHO IS JOHN GALT?

http://www.youtube.com/watch?v=YNiJc7yxKHg

A NATION OF INDIVIDUALS
http://www.nyu.edu/projects/sciabarra/essays/randt2.htm
http://www.nationalreview.com/flashback/flashback200501050715.asp
http://ndpr.nd.edu/review.cfm?id=8123
Ayn Rand’s Normative Ethics: the Virtuous Egoist
BY Tara Smith / Reviewed by Helen Cullyer

Those who think of Ayn Rand as the icon of callow youths rather than a
serious moral philosopher are unlikely to recognize the Rand whom
Smith presents to us. Drawing on Rand’s novels, lectures, essays, and
letters, Smith shows that her ethical theory is a form of naturalistic
eudaimonism, which shares some features with the Aristotelian virtue
ethics of Hursthouse and Foot, but differs from them in its
unapologetic ethical egoism. This egoism is, however, as Smith argues,
non-predatory and can accommodate helping others, genuine friendship,
and even in certain circumstances risking one’s life for another.
Ultimately Rand appears as a somewhat paradoxical figure. A veneer of
Nietzschean immoralism conceals the fact that, according to Smith,
serving one’s own interest in Randian fashion entails treating others
in ways that are not as out of line with standard moral thinking as we
may first assume. After tracing the outlines of Smith’s argument, I
will a raise worry as to whether her insistence that the virtuous
agent places non-instrumental value on a variety of social
relationships actually undermines Rand’s egoistic individualism, and
discuss briefly the political implications of Rand’s ethics that hover
just beneath the surface of the book.

In her Introduction, Smith argues that contemporary virtue ethicists
dance around the question of ethical egoism. The reason is that egoism
is usually considered predatory, hedonistic, or subjectivist. Chapters
2 and 3 provide a rigorous discussion of the Aristotelian grounding of
Rand’s project. Humans, just like animals or plants, have certain
objective ends (food, water, safety) that promote our lives, but
humans’ ultimate goal is not only to maintain our lives, but to live
well, which means excellent functioning, both physical and
psychological (32). Such functioning is manifest primarily, as we
learn in Chapter 8, as the active exercise of the virtue of
productiveness, when we transform our natural surroundings in ways
that meet our material and spiritual needs. Since excellent
functioning is the goal of human life, reasons for acting must be
egoistic; a person can only achieve this goal through her own efforts
(33). Egoistic rational principles “stem entirely from their practical
service to self-interest, as that is judged by rational, long-range
standards” (36), and genuine self-interest cannot truly conflict with
the interest of others (39). To be rational is to recognize and accept
“reason as one’s only source of knowledge. . . It means one’s total
commitment to a state of full consciousness awareness, to the
maintenance of a full mental focus” (52). The human capacity for
reason is grounded metaphysically in free will, but to reason well is
to realize the inescapability of general facts about human nature and
also the context-dependent facts of particular situations.

Chapters 4-9 concern the other six virtues (honesty, independence,
justice, integrity, productiveness and pride), which are forms or
aspects of rationality, the “master” virtue (49). Smith’s discussion
of the six is searching and often compelling. In fact, even those who
do not think that egoism is a viable moral theory will recognize the
importance of many of these virtues for the virtuous life. Pride turns
out to be self-respect plus the desire for self-improvement. Integrity
is strength not only in holding onto one’s ideals, but also in making
them practical reality. The egoistic defense of honesty is also
intriguing: pretense is “metaphysically impotent” in that in
misrepresenting reality we cannot change it (79). Moreover, dishonesty
is detrimental to self-esteem and fosters a sense of worthlessness.

Most controversial is the egoistic defense of justice. Smith argues,
following Rand, that it is in one’s own interests to treat people in
accordance with objective desert. This view entails a rejection of
egalitarianism, and Smith sets the Randian conception of justice
squarely in opposition to that of Rawls. But the Randian view is
tempered by three qualifications: (1) desert is contextual, and one
must distinguish between those things over which people do and do not
have control; (2) justice coexists with rights, since “each individual
has a right to his own life and to pursue his own happiness” (171);
and (3) the virtuous egoist will refuse to sanction evil.

In Chapter 10 and the Appendix, Smith moves away from Rand’s
“official” seven virtues and discusses implications for charity,
generosity and temperance, and for loving others. Although the
virtuous egoist will often have no reason to act generously or
charitably, Smith gives examples of many situations where the virtuous
egoist will act in these ways for the sake of some benefit to herself.
In an Appendix, Smith, employing arguments that bear some similarity
to those of Aristotle in Nicomachean Ethics 9.8, argues that the
virtuous agent can in fact love others for their own sake, although
her own happiness remains her ultimate goal.

Before raising an objection to Smith and Rand, it is worth noting
briefly how they differ from other philosophers in the eudaimonistic
tradition, who tend to view the good of the individual as both social
and political. Most Aristotelians think that character is formed in a
social and political context, and that human flourishing cannot be
understood without considering individuals as parts of a community; as
a result of ethical habituation, but also of natural sociality, we
have reason to promote others’ good. Thus Foot argues that humans are
just particularly complex social animals, and she does not take the
agent-centeredness of her ethical theory to entail that all of the
virtuous agent’s reasons for acting are egoistic. [1] Aristotle
himself asserts that the virtuous agent undertakes fine actions for
the sake of the fine (to kalon). While this motivation is not
altruistic, fine actions are just those that are contextually
appropriate for a socially and politically embedded individual. For
Rand on the other hand, the moral self, while existing in a community,
is free of it, self-created, and materially and psychologically
independent; humans are not by nature “social” but they are
“contractual” (130). Smith endorses not only Rand’s principle that it
is never moral to put another’s good above one’s own but also asserts
that “ethics is not essentially social” (284).

Smith works hard, however, to show that the virtuous egoist’s
relationships with other people will be rich and rewarding. The egoist
may even risk her life for another. Consider this example. A man,
Bill, risks his life for the woman he loves, because “for him to
courageously attempt the rescue and not “chicken out” would be in his
interest (assuming that he values the woman’s well-being more valuable
than his life without her)” (194). According to egoism one should not
sacrifice oneself for another (38), but the egoistic defense of the
action is that this woman is one of the things that makes Bill’s life
worth living. Bill is making no sacrifice, but rationally placing her
well-being, which he sees as central to his own happiness, above his
own safety. We should note that Smith makes clear in her Appendix that
the virtuous egoist can love others for their own sake, and not
instrumentally, precisely because “another person might become
valuable by becoming a vital ingredient of a person’s
happiness” (302). But if one’s own flourishing includes the welfare of
others, then we might object that human flourishing is after all a
social rather than individualistic enterprise. For Bill realizes that
his happiness involves loving others and risking himself for them.
Smith will reply that the above example is unusual, and should not be
taken as evidence that morality is somehow social. This kind of love
is the exception and not the norm. It is only moral to put oneself in
harm’s way for another when two self-created, independent, and
rational individuals love each other as friends. Most people will not
merit this treatment. For one must exercise one’s own independent
judgment to figure out who is truly valuable to oneself (130-32).

But in fact Smith recognizes so many social relationships which
enhance the flourishing of the individual (258-61), and which are
based on affection, respect, and shared activity, that the careful
reader may wonder whether Rand’s view that man is a “contractual”
animal, rather than a “lone wolf” or a “social animal” (130) can any
longer be sustained. Smith begins to address this worry by noting that
although generosity is only rational when it represents a fair trade
of one value for another, the return that the benefactor receives in
compensation for his service is not necessarily material: “the return
can take many forms — intellectual, emotional, the pleasure of a
person’s company, the deepening of a relationship” (261). One might
agree with Smith here that if I give away a football ticket to an
acquaintance, I am certainly acting in a way that shows that the value
I place on the relationship is greater than the value I place on the
ticket. I gain from the act of generosity by deepening our friendship,
and ‘trade’ the ticket for something better. But the act of generosity
is not truly a trade with my acquaintance unless I give the ticket to
her with an expectation of receiving a determinate quantifiable and
commensurable benefit in direct return. If I trade a football ticket
for the deepening of a friendship, has ‘trade’ here not become a mere
metaphor? The pleasure of company and the deepening of relationships
are surely benefits to be shared and enjoyed communally, not traded?
If this is the case, then individual human flourishing may turn out to
be activity of the individual who is fully immersed in shared
activities and purposes, rather than the rational trading of benefits
between contractual individuals. The virtuous agent may still be an
egoist formally speaking, in that she realizes that what is really in
her interest is to engage in shared activities and purposes. But the
‘I’ tends to become a ‘we’, and the other and self united in a
relationship that promotes our happiness.

Smith’s discussion of independence (129-30) suggests that one
important aspect of the claim that humans are not social is that the
ethical-intellectual formation of the individual is not dependent on
society. But if social activity is somehow central to the life of a
rational adult, as Rand and Smith admit, might we not object that such
activity is also central to the life of an incipiently rational child
and that it is precisely this social context of human development that
shapes the self? Smith dismisses the idea that individuals’ characters
and actions are determined by the society in which they are raised as
empirically indefensible (129), but there is a more subtle and
convincing position that Smith should address; namely that we are
necessarily influenced, although not determined, by the societies in
which we are raised and that moral and practical reasoning capacities
grow not spontaneously, but out of and in reaction to specific
communities.

Perhaps, however, we can best understand Rand’s and Smith’s position
by putting it into its proper political context. The real claim being
made here is not that humans do not tend towards sociality, but rather
that by nature we are not part of a mutually sustaining political
community or society in which individuals depend on each other. We
must respect others’ rights, but we have no reason to help others whom
we do not know and value personally, although we will trade goods with
many for our own benefit. While altruism is placing others above the
self as a “fundamental rule of life”, egoism does not entail
sacrificing others for the sake of oneself, because the true egoist
recognizes an objective and impartial right of everyone to pursue
their own interest (39).

The coexistence of rights (to life, liberty, and property) and egoism
is crucial to Rand’s ethics and politics. Smith does not try to argue
here that recognizing and respecting the rights of others is directly
or indirectly in one’s self-interest (174-5). In fact, the grounding
of individual rights that she delineates looks rather Kantian: “Every
living human being is an end in himself, not the means to the ends of
the welfare of others. . . ” (171). The respecting of others’ rights,
therefore, looks like it is a constraint on and exception to the
egoistic ethical norm; act in self-interest except when it would
infringe the rights of others. Yet Rand’s theory of rights and ethical
egoism rest on the same teleological basis; since the goal of each
individual is to maintain her life and to flourish, each individual
requires freedom from the predatory actions of others.[2]

Rand’s egoistic individualism supports her libertarian political
outlook, and this is certainly not concealed in Smith’s treatment,
although it is not in the foreground. Rand’s view of the virtuous
egoist as self-created, contractual, and productive provides the
ethical basis of her political ideal of unregulated laissez-faire
capitalism in which government’s only role is to protect basic liberty
and property rights. We should note that Rand’s libertarianism is
consistent in some respects with social liberalism, having no truck
with discrimination on the basis of sex, race, or sexual orientation,
and supporting freedom of speech in all contexts. But if we ask why
the virtuous egoist should not be a social democrat, voting for higher
taxes in order to ensure not only freedom from predation, but basic
opportunities (like healthcare, education, social insurance) which
benefit not only others but also herself, the Randian will reply that
such taxes would violate property and liberty rights, and true
justice. The social democrat’s reply may argue for expanded
conceptions of rights and freedom. But it will also surely attack as
far too stringent Rand’s assumption that virtue requires that each of
us is able to be materially independent, providing for the self “all
the material values that his life requires” (202), and stress that the
libertarian ignores the increased opportunity and power that
individuals enjoy when they act in common. It is not to be taken as a
criticism of Smith’s book that she does not engage more fully with
these issues, given the ethical rather than political focus of the
book. In fact, her 1995 book (see n. 2) does engage with some of these
issues, although not from an explicitly Randian perspective. I raise
the issue of Rand’s politics only to point out that her ethics and
politics are intertwined.

It should be stressed in conclusion that whether one is a fan or a
detractor of Ayn Rand, the issues raised by this book are manifold and
provocative. This book should force a debate of renewed vigor about
what we mean by egoism, whether and how the egoism / altruism
dichotomy should be applied within eudaimonistic ethical theories, and
what our ethical theories imply about our political outlook. Smith
provides us with a version of egoism that will need to be argued
against by those who find it distasteful or misguided, rather than
simply dismissed.

NATHANIEL BRANDEN’S POST-MORTEM
http://www.nathanielbranden.com/catalog/rand.php#
http://www.nathanielbranden.com/catalog/articles_essays/benefits_and_hazards.html
The Benefits and Hazards of the Philosophy of Ayn Rand
A Personal Statement by Nathaniel Branden / May 25, 1982

MILTON FRIEDMAN ON ECONOMICS OF WAR ON TERROR

http://video.google.com/videoplay?docid=7261962210478584499
http://www.hoover.org/multimedia/uk/participants?participantID=2811696&c=y

OH MILTON
http://nobelprize.org/nobel_prizes/economics/laureates/1976/friedman-autobio.html
http://en.wikipedia.org/wiki/Works_of_Milton_Friedman
http://en.wikipedia.org/wiki/Chicago_School_of_Economics
http://www.nybooks.com/articles/19857
http://mfi.uchicago.edu/faq.mfi.shtml

http://www.friedmanfacts.com/institute-controversy/
http://divisionoflabour.com/archives/003456.php
http://www.druglibrary.org/special/friedman/war_we_are_losing.htm
http://www.friedmanfoundation.org/friedman/Welcome.do
http://www.miltonfriedmancores.org/
http://en.wikipedia.org/wiki/Chicago_Boys

FRIEDMAN ON GREENSPAN’S FED
http://online.wsj.com/article/SB116372965543825880.html
http://online.barrons.com/article/SB120917419049046805.html
http://www.hoover.org/multimedia/uk/3001916.html

PREVIOUSLY ON SPECTRE
CROWD-SOURCING THE FUTURE
http://groups.google.com/group/spectre_event_horizon_group/browse_thread/thread/9c5ebd174a3048eb/3d571146a24b0106
MECHANISM DESIGN THEORY
http://groups.google.com/group/spectre_event_horizon_group/browse_thread/thread/91b759cf4f34438/68bf28ae3e81243b
SWARM INTELLIGENCE
http://groups.google.com/group/spectre_event_horizon_group/browse_thread/thread/b41b1e6509387751

FEAR ITSELF

FIRST:  the STARTLE REFLEX
http://scienceblogs.com/neurophilosophy/2008/10/the_staggering_escape_of_the_crayfish.php
“When confronted with threatening stimuli and predators, the crayfish responds with an innate escape machanism called the startle reflex. Also known as tailflipping, this stereotyped behaviour involves rapid flexions of the abdominal muscles which produce powerful swimming strokes that thrust the small crustacean through the water and away from danger. In the struggle for existence, the speed of this response can mean the difference between life and death, and the crayfish has evolved an incredibly fast escape mechanism which can be initiated within well under one-hundredth of a second. This mechanism depends on a process called coincidence detection, whereby the electrical impulses inputs from sensory organs on different parts of the body arrive simultaneously at a specific location in the central nervous system. Although this reflex has been studied intensively, the mechanism by which nervous impulses arrive in synchrony at the central nervous system was poorly understood.”

COINCIDENCE DETECTION
http://en.wikipedia.org/wiki/Coincidence_Detection_in_Neurobiology
‘CELLS THAT WIRE TOGETHER, FIRE TOGETHER’
http://blog.peltarion.com/2006/05/11/the-talented-dr-hebb-part-1-novelty-filtering/
http://en.wikipedia.org/wiki/Donald_Hebb

NOW DOWN the RABBIT HOLE:  FEARING MAKES YOU FEARLESS

http://online.wsj.com/public/article/SB118947349416123314.html
Fear the Roller Coaster? Embrace It
by Dennis K. Berman  /   September 11, 2007

In these markets, everyone’s afraid. It’s your response to the fear that matters most. Are you going to crack up like Howard Dean in 2004? Or detach yourself, analyze and respond like Neil Armstrong in 1969? Astronauts, firefighters and soldiers train to respond to moments of duress. The rest of us are left on our own. And in most cases, the results aren’t good. We generally underestimate the true dangers arrayed against us, overplaying the dramatically violent outcomes over the more insidious ones. And in times when we lack information, we’re prone to imagine the worst, scientists say. We are only as effective as our emotions allow us.

Which is precisely why this current market is so daunting. Consider the unknowns still in play: The choked market for short-term corporate funding. The impossible-to-value mounds of LBO debt and equity. The daisy-chain effect between liquidating hedge funds and the broader market. It’s a far different situation than the market drop of 2001, when the downturn was spurred by the relatively simple concept that technology stocks were broadly overvalued. What’s the best way to handle all of this lingering fear? Some inspiration comes from a group of researchers who have been applying new techniques to get an answer. The researchers have begun studying professional traders as if they were chimps, even using MRI machines to divine how fear affects the brain. “We are responding from a different part of the brain when we are in the midst of calm, clear thought,” says Brett Steenbarger, a psychiatry professor at the State University of New York’s Upstate Medical University, who also trains traders and hedge-fund managers.

That area is the prefrontal cortex, what he calls the “executive” node of the brain that plans and reasons. When we are fearful, blood flows away from the area toward the motor areas of the brain – the ones that produce a flight-or-fight sensation. This is great if you’re confronting a saber-toothed tiger, but not so great if you’re mulling your daughter’s college fund. “You end up making decisions rashly without engaging in research and planning that you might otherwise do,” he explains. Dr. Steenbarger has found that the most important step is to get back to basics: to methodically check whether the hypothesis that got you into an investment still applies or not. The next step of controlling market fear may be to eliminate as much borrowing as possible, he adds. Leverage, he says, magnifies financial results and therefore emotional swings. During times of high volatility, this can become an especially dangerous trap for bad decision making.

Andrew Lo, a professor at Massachusetts Institute of Technology, has observed professional traders in their natural habitats. He’s found that there is some truth to the idea of the Cool Hand Luke. Palms of veteran traders get less sweaty than novice ones. After especially stressful moments, these traders return to a standard physiological baseline. The novices “are all over the map,” Dr. Lo says. He recommends two other means of coping with financial fear. The first sounds simple but is essential – training yourself to recognize fear in the first place. For example, your habit may be to avoid the markets altogether by shunning the newspaper or online stock quotes. The second approach is to prepare for a busted or volatile market,
much like an astronaut rehearsing emergency procedures. This helps neutralize the fear in your decision making, especially in those moments when it seems so easy to succumb.

That’s why it might make sense to decide ahead of time your range of responses if your portfolio loses, say, 10 percent to 20 percent of its value. Research has shown that, unsurprisingly, retail investors are usually the worst at this, adds Dr. Lo. Neil Armstrong’s cool is on vivid display in the wonderful new movie, “In the Shadow of the
Moon,” about the Apollo lunar missions. In one fraught moment, Mr. Armstrong is running low on fuel as he pilots the spacecraft to the moon’s surface. The cameras pan to the smoking, sweating wonks in Mission Control. Piped in by radio, Mr. Armstrong’s voice sounds unshaken, almost blase. His best human trait – his intellect – has subdued his most animal one – his fear. That’s been the experience of 67-year-old Lewis van Amerongen, formerly of private-equity firm Gibbons, Green, Goodwin & van Amerongen. Having pioneered the buyout business, the firm got bogged down in the now-infamous “Burning Bed” purchase of Ohio Mattress Co. in the late 1980s. When the junk-bond market collapsed soon afterward, bank First Boston couldn’t refinance
a $457 million bridge loan and ended up owning most of the company. “Each generation has to go through it and has to emotionally experience it,” Mr. van Amerongen said in an interview. “Without that, it’s just an academic exercise.” In other words, there is no substitute for having survived other fearful experiences. The best
antidote for fear just may be fear itself.

the THREE VICES of TRADING
http://www.turtletrader.com/brett-steenbarger5.html
http://blog.stocktickr.com/2006/04/26/interview-with-brett-steenbarger/
http://www.tradingmarkets.com/.site/forex/contributors/?contributor=Brett%20Steenbarger

CONTACT
Brett Steenbarger
http://www.brettsteenbarger.com/
http://www.traderfeed.blogspot.com/
email : steenbab [at] aol [dot] com

Andrew Lo
http://mitsloan.mit.edu/faculty/detail.php?in_spseqno=70&co_list=F
http://traderfeed.blogspot.com/2007/04/four-insightful-studies-from-dr-andrew.html
http://web.mit.edu/alo/www/articles.html
email : ssalem [at] mit [dot] edu

PSYCHOHISTORY NOW
http://www.businessweek.com/magazine/content/06_08/b3972033.htm
Darwinian Investing – Dr. Andrew Lo’s market theory borrows from
neuroscience, evolution, and econometrics
by Christopher Farrell  /  February 20, 2006
“Can brain science unlock the secrets of success on Wall Street? And if so, will it transform the field of personal finance? These matters fascinate Andrew W. Lo, a finance professor at Massachusetts Institute of Technology’s Sloan School of Management and director of its Laboratory for Financial Engineering. Lo, 45, and a small band of economists are tapping into neuroscience and cognitive psychology to
better understand how investors make financial decisions. In one early experiment, he and a colleague wired up 10 traders in Boston and monitored their breathing, body temperature, perspiration, pulse rates, and muscle activity as they risked real money in the markets. While the most seasoned traders in the group remained relatively calm,
nearly everyone had sweaty palms and quickened pulses when the markets grew more volatile. “Even the best traders have significant emotional responses when they trade,” says Lo. This fights the stereotype of traders as rational, coolly analytical Vulcans of commerce. Lo’s results, along with further studies using more sophisticated magnetic-
resonance imaging on traders, also undercut a dominant theory known as the efficient market hypothesis (EMH), which holds that markets aggregate information efficiently and investors form their financial expectations rationally. The reality may be much messier. Lo, who also serves as chief scientific officer at the hedge fund Alphasimplex, breaks with both EMH and behavioral economics in seeing emotions as
central to survival in the market. But this is just one element in a theory Lo is developing called the Adaptive Market Hypothesis. It shows how investors use trial and error to establish rules of thumb when placing financial bets and then hone their skills amid disruptive changes. Think of the market as an ecosystem made up of hedge funds, mutual funds, retail investors, and other “species,” all competing for
profit opportunities. It’s a Darwinian world where market shifts render some strategies obsolete, resulting in chances missed and money lost, says Lo. “The only way to maintain an edge is to continually innovate.”

Lo is not the first to incorporate the insights of Charles Darwin in his models. Luminaries from Joseph Schumpeter to Gary Becker explored this territory in the past. But Lo’s mingling of neuroscience, evolution, and financial econometrics is highly original. He predicts that the insights of evolutionary psychology will change individual
wealth- and risk-management techniques, right down to how people handle 401(k) portfolios or deal with declining home prices. Prepped with appropriate data from Lo’s research, a simple computer program might one day provide invaluable financial advice. You would punch in basic information, such as family status, life goals, the standard of living you would find acceptable in retirement, and the types of risks
you can or can’t tolerate. An algorithm would then tailor a portfolio for you and help you hedge against unwanted risks, such as a lost job or a wage cut. “Now, it sounds like science fiction,” says Lo. “Not in 10 years.” Sci-fi was an important influence on Lo, whose family moved from Taiwan to Queens, N.Y., when he was 5. Raised by his mother, he became an academic star. He skipped eighth grade, sped through Bronx
High School of Science and Yale University, and nabbed a PhD in economics from Harvard University at age 24. But it was Isaac Asimov’s Foundation trilogy that steered him toward finance economics. Asimov sketched out a branch of mathematics called psychohistory, whose practitioners sample the proclivities of large numbers of people, then accurately predict the future based on what they learn. Sound familiar?”

FEAR is the MIND-KILLER
http://www.marketpsych.com/blog/2007/09/visualizing-market-fear.html
Visualizing Market Fear
by Richard L. Peterson  /  September 26, 2007

“How can you cope with market fear? Many investors consider this a crucial question. Yet it often isn’t until periods of fear and sharp market downturns that investors think, “now I know I shouldn’t sell everything, but it really hurts!” It’s at these times that the
excellent investors and traders stand out. They can muster the courage to buy in such markets, even as the financial news and media pundits are screaming, “The sky is falling!” The MarketPsych Fear Index was displayed on the Wall Street Journal’s C1 Money and Investing page a couple weeks ago. The MarketPsych Fear Index helps investors visualize the fear they are feeling that is affecting their judgment. Studies
show that we’re all affected by market fear, and it takes a lot of courage and experience to step back and see the fear and identify the opportunities that it creates. The first step is understanding that fear is contagious. The second step is identifying where it is and how strong it is. That’s what our Index allows.”

the FEAR INDEX

http://www.sentimentrader.com/subscriber/charts/VIX_FEAR_files/image004.gif
http://www.bloomberg.com/apps/cbuilder?ticker1=VXO%3AIND
http://www.nytimes.com/2008/10/20/business/20vix.html?hp
On Wall Street, Eyes Turn to the Fear Index
by Michael M. Grynbaum  /  October 20, 2008

Fear is running high on Wall Street. Just look at the Fear Index. With all those stomach-churning free falls and sharp reversals in the stock market recently, traders are keeping a nervous eye on an obscure index known as the VIX. The VIX (officially the Chicago Board Options Exchange Volatility Index) measures volatility, the technical term for those wrenching market swings. A rising VIX is usually regarded as a sign that fear, rather than greed, is ruling the market. The higher the VIX goes, the more unhinged the market looks. So how scared are investors? On Friday, the VIX rose to 70.33, its highest close since its introduction in 1993. To some experts, that suggests that the wild ride is far from over. “Right now, it’s an extremely important part of the puzzle,” Steve Sachs, a trader at Rydex Investments, said of the VIX. “It’s showing a huge amount of fear in the marketplace.”

The VIX is hardly a household name like the Dow. But lately, it has become a fixture on CNBC and other financial news outlets, with commentators often invoking an index that most of the general public was blissfully unaware of only a few weeks ago. Some traders think all the publicity has only added to the anxieties that the VIX is intended
to reflect. “The VIX is a self-fulfilling prophecy,” said Ryan Larson, head equity trader at Voyageur Asset Management. “It’s almost adding to the problems.” Speaking on Thursday, when the VIX hit an intraday high of 81.17 before closing lower, he said: “You see the VIX trade north of 80, and of course the media starts to pick it up.” Mr. Larson continued, “It’s blasted on the TV, and for the average investor sitting at home, they think, oh, my gosh, the VIX just broke 80 — I’ve got to go sell my stocks.”

Put simply, the VIX measures the degree to which investors think stocks will swing violently in the next 30 days. It is calculated in real time throughout the trading day, fluctuating minute to minute. The higher the VIX, the bigger the expected swings — and the index has a good track record. It spiked in 1998 when a big hedge fund, Long-
Term Capital Management, collapsed, and after the 9/11 terrorist attacks. Mr. Sachs, with some incredulity, said that the swings in the stock market have reflected the volatility implied by the VIX. “We had a 17 percent peak-to-trough trading range this week,” he said. “It should take two years under normal circumstances for the S.& P. 500 to have that type of trading range.”

The VIX had its origin in 1993, when the Chicago Board Options Exchange approached Robert E. Whaley, then a professor at Duke, with a dual proposal. “The first purpose was the one that is being served right now — find a barometer of market anxiety or investor fear,” Professor Whaley, who now teaches at the Owen Graduate School of
Management at Vanderbilt University, recalled in an interview. But, he said, the board also wanted to create an index that investors could bet on using futures and options, providing a new revenue stream for the exchange. Professor Whaley spent a sabbatical in France toying with formulas. He returned to the United States with the VIX, which gauges anxiety by calculating the premiums paid in a specific options market run by the Chicago Board Options Exchange.

An option is a contract that permits an investor to buy or sell a security at a certain date at a certain price. These contracts often amount to insurance policies in case big moves in the market cause trouble in a portfolio. A contract, like insurance, costs money — specifically, a premium, whose price can fluctuate. The VIX, in its current form, measures premiums paid by investors who buy options tied to the price of the Standard & Poor’s 500-stock index. In times of confusion or anxiety on Wall Street, investors are more eager to buy this insurance, and thus agree to pay higher premiums to get them. This pushes up the level of the VIX. “It’s analogous to buying fire insurance,” Professor Whaley said. “If there’s some reason to believe there’s an arsonist in your neighborhood, you’re going to be willing to pay more for insurance.”

The index is not an arbitrary number: it offers guidance for the expected percentage change of the S.& P. 500. Based on a formula, Friday’s close of around 70 suggests that investors think the S. & P. 500 could move up or down about 20 percent in the next 30 days — an almost unheard-of swing. So the higher the number, the bigger the
swing investors think the market will take. Put another way, the higher the VIX, the less investors know about where the stock market is headed. The current level shows that “investors are still very uncertain about where things will go,” said Meg Browne of Brown Brothers Harriman, a currency strategist who was keeping a close eye on the VIX as the stock market soared last Monday.

Since 2004, investors have been able to buy futures contracts on the VIX itself, providing a way to hedge against volatility in the market. Options on the VIX have been available since 2006. “You have seen more and more investors using it as an avenue toward hedging their portfolios,” said Chris Jacobson, chief options strategist at the Susquehanna Financial Group. In times of crisis, “while you’re losing your portfolio, you could make some money on the increase in volatility,” he said. Some investors are skeptical about the utility of the index. “If you’re trading the markets, you pretty much know the fear, you know the volatility. I don’t need an index to tell me there’s volatility out there,” Mr. Larson said.

CONTACT
Robert E. Whaley
http://www2.owen.vanderbilt.edu/bobwhaley/
email : whaley [at] vanderbilt [dot] edu

NEURO-ECONOMICS
http://www.sciam.com/article.cfm?id=to-trust-or-not-to-trust
http://www.sciam.com/article.cfm?id=is-greed-good
http://www.sciam.com/article.cfm?id=borderline-personality-disorder
http://www.neuron.org/content/article/abstract?uid=PIIS0896627308003279

FEAR  +  HERDING  =  PANIC
http://www.forbes.com/2008/09/24/neuroscience-psycology-money-forbeslife-health-cx_mh_0924brain_slide_2.html?thisspeed=25000&boxes=custom
http://www.forbes.com/2008/09/24/neuroscience-psycology-money-forbeslife-health-cx_mh_0924brain.html

What caused the meltdown on Wall Street? Greed. Lax regulation. Panic. And maybe the very biological makeup of investors’ brains. Eight years ago a handful of brain scientists began using MRI scanners, psychological tests and an emerging understanding of brain anatomy to try and overturn traditional economic theories that assume people always act rationally when it comes to financial decisions. To understand the market, these researchers said, you needed to get inside peoples’ heads. They called their new field neuroeconomics.

If proof was needed that markets can be unpredictable, irrational and cruel, the past few weeks provided it. Bear Stearns and Merrill Lynch have been swallowed up by emergency mergers. The government has bailed out Fannie Mae, Freddie Mac and AIG. Lehman Brothers is bankrupt.  So, can these neuroeconomists shed any light on what went wrong? Surprisingly, yes. “Fear plus herding equals panic,” says Gregory
Berns, a neuroeconomist at Emory University. “You bet it’s biologically based.”

At the core of the market mess are securities that were backed by extremely risky mortgages. The theory was that slicing and dicing mortgages diluted the risk away. But the ratings agencies were being compensated by issuers of the mortgage-backed securities, and neuroeconomics says that created big problems. “You don’t get mistakes this big based on stupidity alone,” says George Loewenstein of Carnegie Mellon University. “It’s when you combine stupidity and people’s incentives that you get errors of this magnitude.”

Consider this forthcoming research by Loewenstein, Roberto Weber and John Hamman, all of Carnegie Mellon. They organized volunteers into partners. One partner is given $10 and told to split it however he sees fit. On average, the deciding partner keeps $8 and gives away $2. Then researchers repeat the game. This time, the decider pays an “analyst” to decide how to split the money fairly. The game continues
for multiple rounds and the decider can fire the analyst. With this change, the decider gets everything. Paying somebody else to ensure assets are divided fairly actually makes things less fair.

Colin Camerer, an economist at Caltech, blames “diffusion of responsibility” for the problems. His own research identifies another problem: Neither investors nor bankers were likely to be considering worst-case scenarios. Camerer conducted experiments in which two people engage in a negotiating game on how to split $5. But each time
they fail to come to an agreement, the value of the pot drops. The negotiators can check the total value of the money by clicking colored boxes on a computer screen. But only 10% look to see what will happen in the worst case.

To make matters worse, hedge funds were bragging about uncanny returns, making the impossible seem possible. But some studies show that these results may have been inflated by a lack of disclosure, Camerer says. Brain imaging studies show that investors as a whole get more and more used to big returns, and thus take bigger and bigger risks in a bull market–and then the bubble pops and stockholders start selling like mad.

One reason: Investors fear losing more than they look forward to winning. According to a 2007 paper, researchers used MRI scans to watch the brains of people as they decided whether or not to take gambles with a 50/50 risk. Gains caused brains to light up in areas that released dopamine (the chemical boosted by Zoloft and Prozac); losses caused those same areas to decrease. Researchers could predict that people would do based on the size of the increases.

Dread, the anticipation of a loss that is expected to happen, is another powerful force. Emory’s Berns has shown that people differ in how they respond to expected pain. He gave electric shocks to people in an MRI machine, and then gave them the option of either getting an intense shock immediately or a less intense shock later. People whose brains started lighting up in areas associated with pain beforehand were more likely to decide to get the pain over with. They also would have sold stock.

So what’s a regulator to do? One argument against big bailouts is moral hazard–the idea that if you bail the banks out now, future bankers will take even bigger risks. Caltech’s Camerer points out that people are naturally shortsighted. People with health insurance do spend more on care, he says, but people who rent cars don’t get in
more accidents, because there are more immediate risks, like bodily harm. But so far the government’s attempts to quell the risk have just reinforced the idea that something is very wrong. If you tell somebody not to think about white elephants, Loewenstein notes, they will do exactly that.

On the other hand, putting a floor in the market for these mortgage-backed securities, as the government’s plan tried to do, could ease investor panic, says Richard Peterson of MarketPsy Capital, who is trying to put neuroeconomic research to work in a $50 million hedge fund. “Things are unknowable,” Peterson says. “That is the X factor
that is causing the risk aversion to accelerate.”

CONTACT
George Loewenstein
http://sds.hss.cmu.edu/src/faculty/loewenstein.php
http://videolectures.net/iarep07_loewenstein_etb/
http://econpapers.repec.org/RAS/plo51.htm
email : gL20 [at] andrew.cmu [dot] edu

Colin Camerer
http://www.hss.caltech.edu/~camerer/camerer.html
http://www.neuro-economics.org/
email : camerer [at] hss.caltech [dot] edu

BETTER LIVING through (UNDERSTANDING) CHEMISTRY
http://www.templeton.org/templeton_report/20080625/

The Chemical Basis of Trust
Trust is essential to healthy social interactions, but how do we decide whether we can trust strangers? An article based on research supported by the Templeton Foundation and published in the June issue of Scientific American argues that the hormone ocytocin enhances our ability to trust strangers who exhibit non-threatening signals.

The article, “The Neurobiology of Trust,” by Paul J. Zak, is based on original research with an experimental situation that the author calls the “trust game.” It is a modification of a similar game developed in the mid-1990s by the experimental economists Joyce Berg, John Dickhaut, and Kevin McCabe. The game allows test subjects to transfer their money to a stranger if they trust the stranger to reciprocate by transferring more back.

When we are trusted, Zak found, our brains release oxytocin, which makes us more trustworthy; the subjects with the highest levels of oxytocin returned the most money to their partners. Moreover, the rise in oxytocin levels, and not the absolute level, made the difference. Zak also found that subjects who inhaled an oxytocin nasal spray were more likely to trust others. Those given oxytocin transferred 17 percent more money than control subjects who inhaled a placebo. Twice as many subjects who received oxytocin gave all their cash to their partners.

Ocytocin is best known as the hormone that induces labor in pregnant women. But Zak maintains that its role in the development of trust has implications for a range of important issues, from the growth of wealth in developing countries to the nature of diseases such as autism to the physiological basis of virtuous behaviors. A professor
of economics and founding director of the Center for Neuroeconomics Studies at Claremont Graduate University, Zak also serves as clinical professor of neurology at Loma Linda University Medical Center. His new book, Moral Markets: The Critical Role of Values in the Economy, was also supported by JTF, and was published by Princeton University Press this year.

the NEUROBIOLOGY of TRUST
http://www.neuroeconomicstudies.org/pdf/Zak%20neurobiology%20of%20trust.pdf
http://www.neuroeconomicstudies.org/media/paul_zak.html

CONTACT
Paul J. Zak
http://www.neuroeconomicstudies.org/
email : paul [at] pauljzak [dot] com

FICTIVE LEARNING
http://www.pnas.org/content/104/22/9493
http://www.bcm.edu/fromthelab/vol06/is6/0807-4.html
‘Might have been’ key in evaluating behavior
by Ruth SoRelle  /  August 2007

“What might have been,” or fictive learning, affects the brain and plays an important role in the choices individuals make – and may play a role in addiction, said Baylor College of Medicine researchers and others in a report that appeared in the Proceedings of the National Academy of Sciences. These “fictive learning” experiences, governed by what might have happened under different circumstances, “often dominate the evaluation of the choices we make now and will make in
the future,” said P. Read Montague Jr., Ph.D., professor of neuroscience at BCM and director of the BCM Human Neuroimaging Laboratory and the newly formed Computational Psychiatry Unit. “These fictive signals are essential in a person’s ability to assess the quality of his or her actions above and beyond simple experiences that
have occurred in the immediately proximal time.”

Blood flow reflects brain’s response to risk and reward
Using techniques honed in previous experiments that studied trust, Montague and his colleagues used an investment game to test the effects of these “what if” thoughts on decisions in 54 subjects. Using functional magnetic resonance imaging (fMRI) to measure blood flow changes in specific areas of the brain, they precisely measured
responses to economic instincts. These blood flow changes in the brain reflect alterations in the activity of nerve cells in the vicinity. In this case, they measured the brain’s response to “what could have been acquired” and “what was acquired.” This newly discovered “fictive learning” signal was measured, localized and precisely parsed from the brain’s standard reward signal that reflects actual experience. Each
subject took part in a sequential gambling task. The player makes a new investment allocation (a bet) and then receives a “snippet” of information about the market – either the market went up and the investment was a good one or the market goes down and the play had a loss. Each subject received $100 and played 10 markets, making 20 decisions about each.

Regret affects future decisions
Montague and his associates found that fictive learning – the “what might have happened” – affected the brains of the subjects and played an important role in their decisions about the game. This effect manifested as a distinct selective activation signal in a part of the brain called the ventral caudate nucleus. The emotion of regret for a path chosen or not taken can be strongly influential on future decision-making. The fictive learning signal discovered by Montague and the team of researchers does not necessarily manifest as such a conscious “feeling” but contributes to the brain’s computation and planning operations in a robust way that is now available to rigorous
experimental analysis in health and in diseases of the brain/mind. “We used real world market data – the crash of 1929, the bubble of the late 1990s and so on – to probe each subject’s brain response to fictive signals (what could have been) as they navigated their choices. This means we now have a kind of neural catalogue of how
famous stock market episodes affect signals in the average human brain,” said Montague. He plans to use the findings from this study to explore the balance of choices between actual and fictive outcomes.

New tool for studying addiction
“These results provide a new tool for exploring issues related to addiction,” Montague said. “For example, why does a person choose using a drug even though he or she can imagine the bad consequences that can result? We now have a way to measure quantitatively the balance between reward-seeking (like seeking a drug) and the thoughts that could intervene.”

“The brain has a well-defined system for pursuing actual rewards based on actual outcomes,” said Terry Lohrenz, Ph.D., instructor in the neuroimaging laboratory and the report’s first author. “The system is complex, but recent research has begun to dissect them in great detail. The importance of that work is that the reward guidance
signals are exactly those hijacked by drugs of abuse. “Identifying real neural signals to fictive outcomes now positions us to understand how our more abstract thoughts – the way we contextualize or frame our experience – guide our behavior,” Lohrenz added.

CONTACT
P. Read Montague
http://neuro.neusc.bcm.tmc.edu/?sct=gfaculty&prf=30
http://www.hnl.bcm.tmc.edu/
email : readm [at] bcm.tmc [dot] edu

Terry Lohrenz
http://www.hnl.bcm.tmc.edu/fellows.html
email : tlohrenz [at] hnl.bcm.tmc [dot] edu

WIRED FOR IT
http://seedmagazine.com/news/2008/08/a_new_state_of_mind.php
Has evolution essentially bootstrapped our penchant for intellectual concepts to the same kinds of laws that govern systems such as financial markets?
by Jonah Lehrer  /  August 8, 2008

Read Montague is getting frustrated. He’s trying to show me his newest brain scanner, a gleaming white fMRI machine that looks like a gargantuan tanning bed. The door, however, can be unlocked only by a fingerprint scan, which isn’t recognizing Montague’s fingers. Again and again, he inserts his palm under the infrared light, only to get the same beep of rejection. Montague is clearly growing frustrated — “I can’t get into my own scanning room!” he yells, at no one in particular — but he also appreciates the irony. A pioneer of brain imaging, he oversees one of the premier fMRI setups in the world, and yet he can’t even scan his own hand. “I can image the mind,” he says. “But apparently my thumb is beyond the limits of science.”

Montague is director of the Human Neuroimaging Lab at Baylor College of Medicine in downtown Houston. His lab recently moved into a sprawling, purpose-built space, complete with plush carpets, fancy ergonomic chairs, matte earth-toned paint and rows of oversize computer monitors. (There are still some technical kinks being worked
out, hence the issue with the hand scanner.) If it weren’t for the framed sagittal brain images, the place could pass for a well-funded Silicon Valley startup. The centerpiece of the lab, however, isn’t visible. Montague has access to five state-of-the-art fMRI machines, which occupy the perimeter of the room. Each of the scanners is hidden
behind a thick concrete wall, but when the scanners are in use — and they almost always are — the entire lab seems to quiver with a high-pitched buzz. Montague, though, doesn’t seem to mind. “It’s not the prettiest sound,” he admits. “But it’s the sound of data.”

Montague, who is uncommonly handsome, with a strong jaw and a Hollywood grin, first got interested in the brain while working in the neuroscience lab of Nobel Laureate Gerald Edelman as a post-doc. “I was never your standard neuroscientist,” he says. “I spent a lot of time thinking about how the brain should work, if I had designed it.” For Montague the cortex was a perfect system to model, since its incomprehensible complexity meant that it depended on some deep, underlying order. “You can’t have all these cells interacting with each other unless there’s some logic to the interaction,” he says. “It just looked like noise, though — no one could crack the code.” That’s
what Montague wanted to do. The human brain, however, is an incredibly well-encrypted machine. For starters it’s hard to even know what the code is: Our cells express themselves in so many different ways. There’s the language of chemistry, with brain activity measured in squirts of neurotransmitter and kinase enzymes. And then there’s the electrical conversation of the cortex, so that each neuron acts like a
biological transistor, emitting a binary code of action potentials. Even a silent cell is conveying some sort of information — the absence of activity is itself a form of activity.

Montague realized that if he was going to solve the ciphers of the mind, he would need a cryptographic key, a “cheat sheet” that showed him a small part of the overall solution. Only then would he be able to connect the chemistry to the electricity, or understand how the signals of neurons represented the world, or how some spasm of cells caused human nature. “There are so many different ways to describe
what the brain does,” Montague says. “You can talk about what particular cell is doing, or look at brain regions with fMRI, or observe behavior. But how do these things connect? Because you know they are connected; you just don’t know how.” That’s when Montague discovered the powers of dopamine, a neurotransmitter in the brain.
His research on the singular chemical has drawn tantalizing connections between the peculiar habits of our neurons and the peculiar habits of real people, so that the various levels of psychological description — the macro and the micro, the behavioral
and the cellular — no longer seem so distinct. What began as an investigation into a single neurotransmitter has morphed into an exploration of the social brain: Montague has pioneered research that allows him to link the obscure details of the cortex to all sorts of important phenomena, from stock market bubbles to cigarette addiction
to the development of trust. “We are profoundly social animals,” he says. “You can’t really understand the brain until you understand how these social behaviors happen, or what happens when they go haywire.”

And yet even as Montague attempts to answer these incredibly complex questions, his work remains rooted in the molecular details of dopamine. No matter what he’s talking about — and he likes to opine on everything from romantic love to the neural correlates of the Coca-Cola logo — his sentences are sprinkled with the jargon of a neural cryptographer. The brain remains a black box, an encrypted mystery, but the transactions of dopamine are proving to be the Rosetta Stone, the missing link that just might allow the code to be broken. The importance of dopamine was discovered by accident. In 1954 James Olds and Peter Milner, two neuroscientists at McGill University, decided to implant an electrode deep into the center of a rat’s brain. The
precise placement of the electrode was largely happenstance: At the time the geography of the mind remained a mystery. But Olds and Milner got lucky. They inserted the needle right next to the nucleus accumbens (NAcc), a part of the brain dense with dopamine neurons and involved with the processing of pleasurable rewards, like food and sex.

Olds and Milner quickly discovered that too much pleasure can be fatal. After they ran a small current into the wire, so that the NAcc was continually excited, the scientists noticed that the rodents lost interest in everything else. They stopped eating and drinking. All courtship behavior ceased. The rats would just cower in the corner of
their cage, transfixed by their bliss. Within days all of the animals had perished. They had died of thirst. It took several decades of painstaking research, but neuroscientists eventually discovered that the rats were suffering from an excess of dopamine. The stimulation of the brain triggered a massive release of the neurotransmitter, which
overwhelmed the rodents with ecstasy. In humans addictive drugs work the same way: A crack addict who has just gotten a fix is no different from a rat in electrical rapture. This, then, became the dopaminergic cliché — it was the chemical explanation for sex, drugs, and rock ‘n’ roll. But that view of the neurotransmitter was vastly oversimplified. What wasn’t yet clear was that dopamine is also a profoundly important
source of information. It doesn’t merely let us take pleasure in the world; it allows us to understand the world.

The first experimental insight into this aspect of the dopamine system came from the pioneering research of Wolfram Schultz, a neuroscientist at Cambridge University. He was originally interested in the neurotransmitter because of its role in triggering Parkinson’s disease, which occurs when dopamine neurons begin to die in a part of
the brain that controls bodily movements. Schultz recorded from cells in the monkey brain, hoping to find those cells involved in the production of movement. He couldn’t find anything. “It was a classic case of experimental failure,” he says. But after years of searching in vain, Schultz started to notice something odd about these dopamine
neurons: They began to fire just before the monkeys got a reward. (Originally, the reward was a way of getting the monkeys to move.) “At first I thought it was unlikely that an individual cell could represent anything so complicated,” Schultz says. “It just seemed like too much information for one neuron.” After hundreds of experimental
trials, Schultz began to believe his own data: He realized that he had found, by accident, the reward mechanism at work in the primate brain. “Only in retrospect can I appreciate just how lucky we were,” he says. After publishing a series of landmark papers in the mid-1980s, Schultz set out to decipher this reward circuitry in exquisite detail. How, exactly, did these single cells manage to represent a reward? His experiments observed a simple protocol: He played a loud tone, waited for a few seconds, and then squirted a few drops of apple juice into the mouth of a monkey. While the experiment was unfolding, Schultz was probing the dopamine-rich areas of the monkey brain with a needle that monitored the electrical activity inside individual cells. At first the dopamine neurons didn’t fire until the juice was delivered; they
were responding to the actual reward. However, once the animal learned that the tone preceded the arrival of juice — this requires only a few trials — the same neurons began firing at the sound of the tone instead of the sweet reward. And then eventually, if the tone kept on predicting the juice, the cells went silent. They stopped firing altogether.

When Schultz began publishing his data, nobody quite knew what to make of these strange neurons. “It was very, very tough to figure out what these cells were encoding,” Schultz says. He knew that the cells were learning something about the juice and the tone, but he couldn’t figure out how they were learning it. The code remained impenetrable. At the time Montague was a young scientist at the Salk Institute, working in the neurobiology lab of Terry Sejnowski. His approach to
the brain was rooted in the abstract theories of computer science, which he hoped would shed light on the software used by the brain. Peter Dayan, a colleague of Montague’s at Salk, had introduced him to a model called temporal difference reinforcement learning (TDRL). Computer scientists Rich Sutton and Andrew Barto, who both worked on models of artificial intelligence, had pioneered the model. Sutton and Barto wanted to develop a “neuronlike” program that could learn simple rules and behaviors in order to achieve a goal. The basic premise is straightforward: The software makes predictions about what will happen — about how a checkers game will unfold for example — and then compares these predictions with what actually happens. If the prediction is right, that series of predictions gets reinforced. However, if the prediction is wrong, the software reevaluates its representation of the game.

Montague was entranced by these software prototypes. “It was just so clearly the most efficient way to learn,” he says. The problem was that TDRL remained purely theoretical, a system both elegant and imaginary. Even though computer scientists had begun to adapt the programming strategy for various practical purposes, such as running a bank of elevators or determining flight schedules, no one had found a
neurological system that worked like this. But one spring day in 1991, Dayan burst into Montague’s small office. “He was very excited and shoved these figures from some new paper in my face,” Montague remembers. “He kept on saying to me, ‘What does this look like? What does this look like?'” The figures were from Schultz’s experiments
with dopamine neurons, and they showed how these cells reacted to the tone and the juice. “I thought he had faked the data,” Montague says. “Dayan was a big prankster, and I assumed he’d photocopied some of our own figures [on TDRL] just to tease me. It looked too good to be true.” Montague immediately realized that he and Dayan could make sense of Schultz’s mysterious neurons. They knew what these dopamine cells were doing; they had seen this code before. “The only reason we could see it so clearly,” Montague says, “is because we came at it from this theoretical angle. If you were an experimentalist seeing this data, it would have been extremely confusing. What the hell are these cells doing? Why aren’t they just responding to the juice?” That
same day Montague and Dayan began writing a technical paper that laid out their insight, explaining how these neurons were making precise predictions about future rewards. But the paper — an awkward mix of Schultz’s dopamine recordings and equations borrowed from computer science — went nowhere. “We wrote that paper 11 times,” Montague says. “It got bounced from every journal. I came this close to leaving the field. I realized that neuroscience just wasn’t ready for theory, even
if the theory made sense.”

Nevertheless, Montague and Dayan didn’t give up. They published their ideas in obscure journals, like Advances in Neural Information Processing Systems. When the big journals rejected their interpretation of monkey neurons, they instead looked at the nervous systems of honeybees, which relied on a version of TDRL when foraging
for nectar. (That paper got published in Nature in 1995.) “We had to drag the experimentalists kicking and screaming,” Montague says. “They just didn’t understand how these funny-looking equations could explain their data. They told us, ‘We need more data.’ But what’s the point of data if you can’t figure it out?” The crucial feature of these dopamine neurons, say Montague and Dayan, is that they are more concerned with predicting rewards than with the rewards themselves. Once the cells memorize the simple pattern — a loud tone predicts the arrival of juice — they become exquisitely sensitive to variations on the pattern. If the cellular predictions proved correct and the primates experienced a surge of dopamine, the prediction was reinforced. However, if the pattern was violated — if the tone sounded but the juice never arrived — then the monkey’s dopamine neurons abruptly decreased their firing rate. This is known as the “prediction error signal.” The monkey got upset because its predictions of juice were wrong. What’s interesting about this system is that it’s all
about expectation. Dopamine neurons constantly generate patterns based upon experience: If this, then that. The cacophony of reality is distilled into models of correlation. And if these predictions ever prove incorrect, then the neurons immediately readjust their expectations. The discrepancy is internalized; the anomaly is remembered. “The accuracy comes from the mismatch,” Montague says. “You learn how the world works by focusing on the prediction errors, on the events that you didn’t expect.” Our knowledge, in other words, emerges from our cellular mistakes. The brain learns how to be right by focusing on what it got wrong.

Despite his frustration  with the field, Montague continued to work on dopamine. In 1997 he published a Science paper with Dayan and Schultz whose short title was audaciously grand: “A Neural Substrate of Prediction and Reward.” The paper has since been cited more than 1,200 times, and it remains the definitive explanation of how the brain parses reality into a set of accurate expectations, which are measured
out in short bursts of dopamine. A crucial part of the cellular code had been cracked. But Montague was getting restless. “I wanted to start asking bigger questions,” he says. “Here’s this elegant learning system, but how does it fit with the rest of the brain? And can we take this beyond apple juice?” At first glance the dopamine system
might seem largely irrelevant to the study of human behavior. Haven’t we evolved beyond the brutish state of “reward harvesting,” where all we care about is food and sex? Dopamine might explain the simple psychology of a lizard, or even a monkey sipping juice, but it seems a stretch for it to explain the Promethean mind of a human. “One of the distinguishing traits of human beings is that we chase ideas, not just
primary rewards,” Montague says. “What other animal goes on hunger strike? Or abstains from sex? Or blows itself up in a cafe in the name of God?” These unique aspects of human cognition seem impossible to explain with neurons that track and predict rewards. After all, these behaviors involve the rejection of rewards: We are shrugging off tempting treats because of some abstract belief or goal.

Montague’s insight, however, was that ideas are just like apple juice. From the perspective of the brain, an abstraction can be just as rewarding as the tone that predicts the reward. Evolution essentially bootstrapped our penchant for intellectual concepts to the same reward circuits that govern our animal appetites. “The guy who’s on hunger strike for some political cause is still relying on his midbrain dopamine neurons, just like a monkey getting a treat,” Montague says. “His brain simply values the cause more than it values dinner.” According to Montague, the reason abstract thoughts can be so rewarding, is that the brain relies on a common neural currency for
evaluating alternatives. “It’s clear that you need some way to compare your options, even if your options come from very different categories,” he says. By representing everything in terms of neuron firing rates, the human brain is able to choose the abstract thought over the visceral reward, as long as the abstraction excites our cells
more than apple juice. That’s what makes ideas so powerful: No matter how esoteric or ethereal they get, they are ultimately fed back into the same system that makes us want sex and sugar. As Montague notes, “You don’t have to dig very far before it all comes back to your loins.”

In recent years Montague has shown how this basic computational mechanism is a fundamental feature of the human mind. Consider a paper on the neural foundations of trust, recently published in Science. The experiment was born out of Montague’s frustration with the limitations  of conventional fMRI. “The most unrealistic element [of fMRI experiments] is that we could only study the brain by itself,” Montague says. “But when are brains ever by themselves?” And so Montague pioneered a technique known as hyper-scanning, allowing subjects in different fMRI machines to interact in real time. His experiment revolved around a simple economic game in which getting the maximum reward required the strangers to trust one another. However, if one of the players grew especially selfish, he or she could always steal from the pot and erase the tenuous bond of trust. By monitoring the players’ brains, Montague was able to predict whether or not someone would steal money several seconds before the theft actually occurred. The secret was a cortical area known as the caudate nucleus,
which closely tracked the payouts from the other player. Montague noticed that whenever the caudate exhibited reduced activity, trust tended to break down.

But what exactly is the caudate computing? How do we decide whom to trust with our money? And why do we sometimes decide to stop trusting those people? It turned out that the caudate worked just like the reward cells in the monkey brain. At first the caudate didn’t get excited until the subjects actually trusted one another and garnered
their separate rewards. But over time this brain area started to expect trust, so that it fired long before the reward actually arrived. Of course, if the bond was broken — if someone cheated and stole money — then the neurons stopped firing; social assumptions were proven wrong. (Montague is currently repeating this experiment with a collaborating lab in China so that he can detect the influence of culture on social interactions.) The point, he says, is that people were using this TDRL strategy — a strategy that evolved to help animals find caloric rewards — to model another mind. Instead of predicting the arrival of juice, the neurons were predicting the behavior of someone else’s brain.

A few years ago, Montague was reviewing some old papers on TDRL theory when he realized that the system, while effective and efficient, was missing something important. Although dopamine neurons excelled at measuring the mismatch between their predictions of rewards and those that actually arrived — these errors provided the input for learning — they’d learn much quicker if they could also incorporate the
prediction errors of others. Montague called this a “fictive error learning signal,” since the brain would be benefiting from hypothetical scenarios: “You’d be updating your expectations based not just on what happened, but on what might have happened if you’d done something differently.” As Montague saw it, this would be a very valuable addition to our cognitive software. “I just assumed that evolution would use this approach, because it’s too good an idea not to use,” he says.

The question, of course, is how to find this “what if” signal in the brain. Montague’s clever solution was to use the stock market. After all, Wall Street investors are constantly comparing their actual returns against the returns that might have been, if only they’d sold their shares before the crash or bought Google stock when the company first went public. The experiment went like this: Each subject was
given $100 and some basic information about the “current” state of the stock market. After choosing how much money to invest, the players watched nervously as their investments either rose or fell in value. The game continued for 20 rounds, and the subjects got to keep their earnings. One interesting twist was that instead of using random simulations of the stock market, Montague relied on distillations of data from famous historical markets. Montague had people “play” the Dow of 1929, the Nasdaq of 1998, and the S&P 500 of 1987, so the neural responses of investors reflected real-life bubbles and crashes.

The scientists immediately discovered a strong neural signal that drove many of the investment decisions. The signal was fictive learning. Take, for example, this situation. A player has decided to wager 10 percent of her total portfolio in the market, which is a rather small bet. Then she watches as the market rises dramatically in
value. At this point, the regret signal in the brain — a swell of activity in the ventral caudate, a reward area rich in dopamine neurons — lights up. While people enjoy their earnings, their brain is fixated on the profits they missed, figuring out the difference
between the actual return and the best return “that could have been.” The more we regret a decision, the more likely we are to do something different the next time around. As a result investors in the experiment naturally adapted their investments to the ebb and flow of the market. When markets were booming, as in the Nasdaq bubble of the late 1990s, people perpetually increased their investments.

But fictive learning isn’t always adaptive. Montague argues that these
computational signals are also a main cause of financial bubbles. When
the market keeps going up, people are naturally inclined to make
larger and larger investments in the boom. And then, just when
investors are most convinced that the bubble isn’t a bubble — many of
Montague’s subjects eventually put all of their money into the booming
market — the bubble bursts. The Dow sinks, the Nasdaq collapses. At
this point investors race to dump any assets that are declining in
value, as their brain realizes that it made some very expensive
prediction errors. That’s when you get a financial panic.

Such fictive-error learning signals aren’t relevant only for stock
market investors. Look, for instance, at addiction. Dopamine has long
been associated with addictive drugs, such as cocaine, that overexcite
these brain cells. The end result is that addicts make increasingly
reckless decisions, forgoing longterm goals for the sake of an
intensely pleasurable short-term fix. “When you’re addicted to a drug,
your brain is basically convinced that this expensive white powder is
worth more than your marriage or life,” Montague says. In other words
addiction is a disease of valuation: Dopamine cells have lost track of
what’s really important.

Montague wanted to know which part of the dopamine system was
distorted in the addicted brain. He began to wonder if addiction was,
at least in part, a disease of fictive learning. Addicted smokers will
continue to smoke even when they know it’s bad for them. Why can’t
they instead revise their models of reward? Last year Montague decided
to replicate his stock market study with a large group of chronic
smokers. It turned out that smokers were perfectly able to compute a
“what if” learning signal, which allowed them to experience regret.
Like nonsmokers they realized that they should have invested
differently in the stock market. Unfortunately, this signal had no
impact on their decision making, which led them to make significantly
less money during the investing game. According to Montague, this data
helps explain why smokers continue to smoke even when they regret it.
Although their dopamine neurons correctly compute the rewards of an
extended life versus a hit of nicotine — they are, in essence, asking
themselves, “What if I don’t smoke this cigarette?” — their brain
doesn’t process the result. That feeling of regret is conveniently
ignored. They just keep on lighting up.

Montague exudes the confidence of a scientist used to confirming his
hypotheses. He buzzes with ideas for new experiments — ” I get bored
rather easily,” he says — and his lab is constantly shifting
direction, transitioning from dopamine to neuroeconomics to social
neuroscience. Montague is currently consumed with questions about how
people interact when they’re part of a group. “A mob or a market is
not just a collection of discrete individuals,” he says. “It’s
something else entirely. You would do things in a group that you would
never do by yourself. But what’s happening in your brain? We’ve got
all these sociological studies but no hard data.” Montague’s been
warned that the project is too complicated, that social interactions
are too subtle and complex to pick up in a scanner, but he’s convinced
otherwise. “If I’d listened to the naysayers,” he says, “I’d still be
studying honeybees.”

Montague’s experiments take advantage of his unique fMRI setup. He has
four people negotiate with one another as they decide how much to
offer someone else during an investing game. While the group is
bickering, Montague is monitoring the brain activity of everyone
involved. He’s also infiltrated the group with a computer player that
has been programmed to act just like a person with borderline
personality disorder. The purpose of this particular experiment is to
see how “one bad apple” can lead perfect strangers to also act badly.
While Montague isn’t ready to share the results — he’s still gathering
data — what he’s found so far is, he says, “stunning, shocking
even…. For me the lesson has been that people act very badly in
groups. And now we can see why.”

Such exuberance is well earned. In the space of a few short years,
Montague has taken his theoretical model of learning — a model he
borrowed from some old computer science textbooks — and shown that
it’s an essential part of the human brain. He’s linked the
transactions of a single neurotransmitter to a dizzying array of
behaviors, so that it’s now possible to draw a straight line between
monkeys craving juice and stock market bubbles. A neurotransmitter
that wasn’t supposed to matter is now our most important clue into the
secret messages of the mind and the breakdown of social graces. The
code hasn’t been broken. But for the first time, it’s getting cracked.

CONTACT
Jonah Lehrer
http://www.jonahlehrer.com/
email : jonah.lehrer [at] gmail [dot] com

SEE ALSO
http://www.jonahlehrer.com/articles
http://scienceblogs.com/cortex/
http://www.seedmagazine.com/news/author-jonah-lehrer/
http://www.nytimes.com/2007/11/04/books/chapters/1st-chapter-proust-was-a-neuroscientist.html

WELL YOUR CORTEX THINKS SO
http://www.metafilter.com/74238/The-Limits-of-fMRI
http://www.metafilter.com/72246/MetaCognition

FIDUCIARY NEGLIGENCE
http://en.wikipedia.org/wiki/Fiduciary_duty
“In a fiduciary relation one person justifiably reposes confidence,
good faith, reliance and trust in another whose aid, advice or
protection is sought in some matter. In such a relation good
conscience requires one to act at all times for the sole benefit and
interests of another, with loyalty to those interests. A fiduciary
duty [1] is the highest standard of care at either equity or law. In
English common law the fiduciary relation is arguably the most
important concept within the portion of the legal system known as
equity. In the United Kingdom, the Judicature Acts merged the courts
of Equity (historically based in England’s Court of Chancery) with the
courts of common law, and as a result the concept of fiduciary duty
also became usable in common law courts. When a fiduciary duty is
imposed, equity requires a stricter standard of behavior than the
comparable tortious duty of care at common law. It is said the
fiduciary has a duty not to be in a situation where personal interests
and fiduciary duty conflict, a duty not to be in a situation where his
fiduciary duty conflicts with another fiduciary duty, and a duty not
to profit from his fiduciary position without express knowledge and
consent. A fiduciary cannot have a conflict of interest. It has been
said that fiduciaries must conduct themselves “at a level higher than
that trodden by the crowd”[2] and that “[t]he distinguishing or
overriding duty of a fiduciary is the obligation of undivided
loyalty.”[3]”

SELF-DEALING
http://en.wikipedia.org/wiki/Self-dealing
“Self-dealing trustee, an attorney, a corporate officer, or other
fiduciary that consists of taking advantage of his position in a
transaction and acting for his own interests rather than for the
interests of the beneficiaries of the trust, corporate shareholders,
or his clients. Self-dealing may involve misappropriation or
usurpation of corporate assets or opportunities. Michael McDonald,
Ph.D, Chair of Applied Ethics at The University of British Columbia
provides examples based from this book: “using your government
position to get a summer job for your daughter”.”

UNENLIGHTENED SELF-INTEREST
http://en.wikipedia.org/wiki/Enlightened_self-interest
“In contrast to enlightened self-interest is simple greed or the
concept of “unenlightened self-interest”, in which it is argued that
when most or all persons act according to their own myopic
selfishness, that the group suffers loss as a result of conflict,
decreased efficiency because of lack of cooperation, and the increased
expense each individual pays for the protection of their own
interests. If a typical individual in such a group is selected at
random, it is not likely that this person will profit from such a
group ethic. Some individuals might profit, in a material sense, from
a philosophy of greed, but it is believed by proponents of enlightened
self-interest that these individuals constitute a small minority and
that the large majority of persons can expect to experience a net
personal loss from a philosophy of simple unenlightened selfishness.
Unenlightened self-interest can result in the tragedy of the commons.”

MUTUALLY ASSURED CORRUPTION
http://www.sciencemag.org/cgi/content/full/162/3859/1243
by Garrett Hardin  /  December 1968

Pathogenic Effects of Conscience
The long-term disadvantage of an appeal to conscience should be enough
to condemn it; but has serious short-term disadvantages as well. If we
ask a man who is exploiting a commons to desist “in the name of
conscience,” what are we saying to him? What does he hear? –not only
at the moment but also in the wee small hours of the night when, half
asleep, he remembers not merely the words we used but also the
nonverbal communication cues we gave him unawares? Sooner or later,
consciously or subconsciously, he senses that he has received two
communications, and that they are contradictory: (i) (intended
communication) “If you don’t do as we ask, we will openly condemn you
for not acting like a responsible citizen”; (ii) (the unintended
communication) “If you do behave as we ask, we will secretly condemn
you for a simpleton who can be shamed into standing aside while the
rest of us exploit the commons.”

Everyman then is caught in what Bateson has called a “double bind.”
Bateson and his co-workers have made a plausible case for viewing the
double bind as an important causative factor in the genesis of
schizophrenia (17). The double bind may not always be so damaging, but
it always endangers the mental health of anyone to whom it is applied.
“A bad conscience,” said Nietzsche, “is a kind of illness.” To conjure
up a conscience in others is tempting to anyone who wishes to extend
his control beyond the legal limits. Leaders at the highest level
succumb to this temptation. Has any President during the past
generation failed to call on labor unions to moderate voluntarily
their demands for higher wages, or to steel companies to honor
voluntary guidelines on prices? I can recall none. The rhetoric used
on such occasions is designed to produce feelings of guilt in
noncooperators.

For centuries it was assumed without proof that guilt was a valuable,
perhaps even an indispensable, ingredient of the civilized life. Now,
in this post-Freudian world, we doubt it. Paul Goodman speaks from the
modern point of view when he says: “No good has ever come from feeling
guilty, neither intelligence, policy, nor compassion. The guilty do
not pay attention to the object but only to themselves, and not even
to their own interests, which might make sense, but to their
anxieties” (18). One does not have to be a professional psychiatrist
to see the consequences of anxiety. We in the Western world are just
emerging from a dreadful two-centuries-long Dark Ages of Eros that was
sustained partly by prohibition laws, but perhaps more effectively by
the anxiety-generating mechanism of education. Alex Comfort has told
the story well in The Anxiety Makers (19); it is not a pretty one.

Since proof is difficult, we may even concede that the results of
anxiety may sometimes, from certain points of view, be desirable. The
larger question we should ask is whether, as a matter of policy, we
should ever encourage the use of a technique the tendency (if not the
intention) of which is psychologically pathogenic. We hear much talk
these days of responsible parenthood; the coupled words are
incorporated into the titles of some organizations devoted to birth
control. Some people have proposed massive propaganda campaigns to
instill responsibility into the nation’s (or the world’s) breeders.
But what is the meaning of the word responsibility in this context? Is
it not merely a synonym for the word conscience? When we use the word
responsibility in the absence of substantial sanctions are we not
trying to browbeat a free man in a commons into acting against his own
interest? Responsibility is a verbal counterfeit for a substantial
quid pro quo. It is an attempt to get something for nothing. If the
word responsibility is to be used at all, I suggest that it be in the
sense Charles Frankel uses it (20). “Responsibility,” says this
philosopher, “is the product of definite social arrangements.” Notice
that Frankel calls for social arrangements–not propaganda.

Mutual Coercion Mutually Agreed upon
The social arrangements that produce responsibility are arrangements
that create coercion, of some sort. Consider bank-robbing. The man who
takes money from a bank acts as if the bank were a commons. How do we
prevent such action? Certainly not by trying to control his behavior
solely by a verbal appeal to his sense of responsibility. Rather than
rely on propaganda we follow Frankel’s lead and insist that a bank is
not a commons; we seek the definite social arrangements that will keep
it from becoming a commons. That we thereby infringe on the freedom of
would-be robbers we neither deny nor regret.

The morality of bank-robbing is particularly easy to understand
because we accept complete prohibition of this activity. We are
willing to say “Thou shalt not rob banks,” without providing for
exceptions. But temperance also can be created by coercion. Taxing is
a good coercive device. To keep downtown shoppers temperate in their
use of parking space we introduce parking meters for short periods,
and traffic fines for longer ones. We need not actually forbid a
citizen to park as long as he wants to; we need merely make it
increasingly expensive for him to do so. Not prohibition, but
carefully biased options are what we offer him. A Madison Avenue man
might call this persuasion; I prefer the greater candor of the word
coercion.

Coercion is a dirty word to most liberals now, but it need not forever
be so. As with the four-letter words, its dirtiness can be cleansed
away by exposure to the light, by saying it over and over without
apology or embarrassment. To many, the word coercion implies arbitrary
decisions of distant and irresponsible bureaucrats; but this is not a
necessary part of its meaning. The only kind of coercion I recommend
is mutual coercion, mutually agreed upon by the majority of the people
affected. To say that we mutually agree to coercion is not to say that
we are required to enjoy it, or even to pretend we enjoy it. Who
enjoys taxes? We all grumble about them. But we accept compulsory
taxes because we recognize that voluntary taxes would favor the
conscienceless. We institute and (grumblingly) support taxes and other
coercive devices to escape the horror of the commons.

An alternative to the commons need not be perfectly just to be
preferable. With real estate and other material goods, the alternative
we have chosen is the institution of private property coupled with
legal inheritance. Is this system perfectly just? As a genetically
trained biologist I deny that it is. It seems to me that, if there are
to be differences in individual inheritance, legal possession should
be perfectly correlated with biological inheritance–that those who
are biologically more fit to be the custodians of property and power
should legally inherit more. But genetic recombination continually
makes a mockery of the doctrine of “like father, like son” implicit in
our laws of legal inheritance. An idiot can inherit millions, and a
trust fund can keep his estate intact. We must admit that our legal
system of private property plus inheritance is unjust–but we put up
with it because we are not convinced, at the moment, that anyone has
invented a better system. The alternative of the commons is too
horrifying to contemplate. Injustice is preferable to total ruin.

It is one of the peculiarities of the warfare between reform and the
status quo that it is thoughtlessly governed by a double standard.
Whenever a reform measure is proposed it is often defeated when its
opponents triumphantly discover a flaw in it. As Kingsley Davis has
pointed out (21), worshippers of the status quo sometimes imply that
no reform is possible without unanimous agreement, an implication
contrary to historical fact. As nearly as I can make out, automatic
rejection of proposed reforms is based on one of two unconscious
assumptions: (i) that the status quo is perfect; or (ii) that the
choice we face is between reform and no action; if the proposed reform
is imperfect, we presumably should take no action at all, while we
wait for a perfect proposal.

But we can never do nothing. That which we have done for thousands of
years is also action. It also produces evils. Once we are aware that
the status quo is action, we can then compare its discoverable
advantages and disadvantages with the predicted advantages and
disadvantages of the proposed reform, discounting as best we can for
our lack of experience. On the basis of such a comparison, we can make
a rational decision which will not involve the unworkable assumption
that only perfect systems are tolerable.

MANIC BEHAVIORS
http://www.charlierose.com/shows/2005/03/18/1/a-conversation-with-doctor-peter-whybrow
http://books.google.com/books?id=tDtrlaoINMUC
http://blog.wired.com/wiredscience/2008/10/american-dream.html
American Dream a Biological Impossibility, Neuroscientist Says
by Brandon Keim  /  October 21, 2008

What if people are biologically unsuited for the American dream? The
man posing that troubling question isn’t just another lefty activist.
It’s Peter Whybrow, head of the Semel Institute for Neuroscience and
Behavior at UCLA. “We’ve been taught, especially in America, that
happiness will be at the end of some sort of material road, where we
have lots and lots of things that we want,” said Whybrow, a 2008
PopTech Fellow and author of American Mania: When More Is Not Enough.
“We’ve set up all sorts of tricks to delude ourselves into thinking
that it’s fine to get what you want immediately.”

He paints a disturbing picture of 21st century American life, where
behavioral tendencies produced by millions of years of scarcity-driven
evolution don’t fit the social and economic world we’ve constructed.
Our built-in dopamine-reward system makes instant gratification highly
desirable, and the future difficult to balance with the present. This
worked fine on the savanna, said Whybrow, but not the suburbs: We
gorge on fatty foods and use credit cards to buy luxuries we can’t
actually afford. And then, overworked, underslept and overdrawn, we
find ourselves anxious and depressed.

That individual weakness is reflected at the social level, in markets
that have outgrown their agrarian roots and no longer constrain our
excesses — resulting in the current economic crisis, in which
America’s unpaid bills came due with shocking speed. But with this
crisis, said Whybrow, comes the opportunity to rethink how Americans
live, as individuals and as a nation, and build a country that works.
“We’re primed for doing things immediately. We’re poor at planning for
the future, unless we get into circumstances like these, where we’re
forced to think cleverly about what to do next,” he said. “In a way,
this financial meltdown is a healthy thing for us. We’ll think
intuitively again.”

Foremost among Whybrow’s targets is the modern culture of spending on
credit. “The instinctive brain is well ahead of the intellectual
brain. Credit cards promise us that you can have what you want now,
and postpone payment until later,” he said. Buying just feels good, in
a biological sense — and that instant reward outweighs the threat of
future bills. Of course, many people use credit cards to pay bills and
put food on the table, rather than buy flat-screen televisions and new
computers. “That unfortunate reality,” said Whybrow, “is produced by
an out-of-control economic system” geared toward perpetual growth.
That is no more natural a state for markets than a mall food court is
natural for individuals whose metabolic heredity treats fats and
sugars as rarities. “Once upon a time, this economic system worked.
But for the invisible hand of the free market to function, it needed
to be balanced. And that balance is gone,” he said.

Markets were once agrarian institutions, said Whybrow, which balanced
the gratification of individuals with the constraints of small
communities, where people looked their trade partners in the eye, and
transactions were bounded by time and geography. With those
constraints removed, markets have engaged in the buy-now, pay-later
habits of college kids who don’t read the fine print on their credit
card bills. “You can think about markets in the same way as
individuals who mortgaged their future — except markets did it with
other people’s money,” he said. “You end up with a Ponzi scheme
predicated on the idea that we can get something now, rather than
having to wait. And it all comes back to the same instinctual drive.”
And now that the fundamental excesses of our economy have been so
painfully exposed, with trillions of dollars vanishing from the
American economy in just a few days, we have to think about changing
both the economy and ourselves.

The answers aren’t easy, Whybrow cautioned — but they do exist. People
can think creatively about jumping from the treadmills of bad jobs and
unmeetable needs; and even if this isn’t always possible, they can
teach their children to live modestly and within their means. Urban
engineers can design cities that allow people to live and work and
shop in the same place. Governments can, at the insistence of their
citizens, provide the social safety nets on which social mobility,
stagnant for the last 50 years, is based. And we can — however much it
hurts — look to Europe for advice. “America has always believed that
it was the perfect society. When you have that mythology driving your
culture, it’s hard to look around and say, ‘Is someone else doing it
better than us?'” said Whybrow. “But you can trace the situation we’re
in to our evolutionary origins. Now that we find ourselves in the
middle of this pseudo-abundance, we’re in trouble. And the fantasy
that we can restart the American dream just isn’t true.”

CONTACT
Peter Whybrow
http://www.peterwhybrow.com
email : pwhybrow [at] mednet.ucla [dot] edu

THIS IS YOUR BRAIN on CREDIT DERIVATIVES
http://money.cnn.com/2007/08/14/pf/zweig.moneymag/index.htm
Humankind evolved to seek rewards and avoid risks but not to invest
wisely.
by Jason Zweig  /  August 23 2007

For most purposes in daily life, your brain is a superbly functioning
machine, steering you away from danger while guiding you toward basic
rewards like food, shelter and love. But that brilliant machine can
lead you astray when it comes to investing. You buy high only to sell
low. You try to time the market. You follow the crowd. You make the
same mistakes again. And again. How come?

We’re beginning to get answers. Scientists in the emerging field of
“neuroeconomics” – a hybrid of neuroscience, economics and psychology
– are making stunning discoveries about how the brain evaluates
rewards, sizes up risks and calculates probabilities. With the wonders
of imaging technology we can observe the precise neural circuitry that
switches on and off in your brain when you invest. Those pictures make
it clear that your investing brain often drives you to do things that
make no logical sense – but make perfect emotional sense. Your brain
developed to improve our species’ odds of survival. You, like every
other human, are wired to crave what looks rewarding and shun what
seems risky.

To counteract these impulses, your brain has only a thin veneer of
modern, analytical circuits that are often no match for the power of
the ancient parts of your mind. And when you win, lose or risk money,
you stir up some profound emotions, including hope, surprise, regret
and the two we’ll examine here: greed and fear. Understanding how
those feelings – as a matter of biology – affect your decision-making
will enable you to see as never before what makes you tick, and how
you can improve, as an investor.

Greed: The thrill of the chase
Why is it so hard for most of us to learn that the old saying “Money
doesn’t buy happiness” is true? After all, we feel as if it should.
The answer lies in a cruel irony that has enormous implications for
financial behavior: Our brains come equipped with a biological
mechanism that is more aroused when we anticipate a profit than when
we get one. I lived through the rush of greed in an experiment run by
Brian Knutson, a neuroscientist at Stanford University. Knutson put me
into a functional magnetic resonance imaging (fMRI) scanner to trace
my brain activity while I played a kind of investing video game that
he had designed. By combining an enormous magnet and a radio signal,
the fMRI scanner pinpoints momentary changes in the level of oxygen as
blood ebbs and flows within the brain, enabling researchers to map the
neural regions engaged by a particular task.

In Knutson’s experiment, a display inside the fMRI machine showed me a
sequence of shapes that each signaled a different amount of money:
zero ($0), medium ($1) or large ($5). If the symbol was a circle, I
could win the dollar amount displayed; if it was a square, I could
lose the amount shown. After each shape came up, between 2 and 2½
seconds would pass – that’s the anticipation phase, when I was on
tenterhooks waiting for my chance to win or lose – and then a white
square would appear for a split second.

To win or avoid losing the amount I had been shown, I had to click a
button with my finger when the square appeared. At the highest of the
three levels of difficulty, I had less than one-fifth of a second to
hit the button. After each try the screen showed how much I’d just won
or lost and updated my cumulative score. When a shape signaling a
small reward or penalty appeared, I clicked placidly and either won or
lost. But if a circle marked with the symbols of a big, easy payout
came up, I could feel a wave of expectation sweep through me. At that
moment, the fMRI scan showed, the neurons in a reflexive, or
emotional, part of my brain called the nucleus accumbens fired like
wild. When Knutson measured the activity tracked by the scan, he found
that the possibility of winning $5 set off twice as strong a signal in
my brain as the chance at gaining $1 did.

On the other hand, learning the outcome of my actions was no big deal.
Whenever I captured the reward, Knutson’s scanner found that the
neurons in my nucleus accumbens fired much less intensely than they
had when I was hoping to get it. Based on the dozens of people Knutson
has studied, it’s highly unlikely that your brain would respond much
differently. Why does the reflexive part of the brain make a bigger
deal of what we might get than of what we do get? That function is
part of what Brian Knutson’s mentor, Jaak Panksepp of Bowling Green
State University in Ohio, calls “the seeking system.”

Over millions of years of evolution, it was the thrill of anticipation
that put our senses in a state of high awareness, bracing us to
capture uncertain rewards. Our anticipation circuitry, says Paul
Slovic, a psychologist at the University of Oregon, acts as a “beacon
of incentive” that enables us to pursue rewards that can be earned
only with patience and commitment. If we derived no pleasure from
imagining riches down the road, we would grab only at those gains that
loom immediately in front of us. Thus our seeking system functions
partly as a blessing and partly as a curse. We pay close attention to
the possibility of coming rewards, but we also expect that the future
will feel better than it does once it turns into the present.

A vivid example of this is the stock of Celera Genomics Group. In
September 1999, Celera began sequencing the human genome. By
identifying each of the 3 billion molecular pairings that make up
human DNA, the company could make one of the biggest leaps in the
history of biotechnology. Investors went wild with anticipation,
driving the stock to a peak of $244 in early 2000. Then, on June 26,
Celera announced that it had completed cracking the code. How did the
stock react? By tanking. It dropped 10.2% that day and another 12.7%
the next day. Nothing had occurred to change the company’s fortunes
for the worse. Quite the contrary: Celera had achieved a scientific
miracle. So what happened? The likeliest explanation is simply that
the anticipation of Celera’s success was so intense that reality was a
letdown. Getting exactly what they wished for left investors with
nothing to look forward to, so they got out and the stock crashed.

Greed: The stuff of memories
Researchers in Germany tested whether anticipating a financial gain
can improve memory. A team of neurologists scanned people’s brains
with an fMRI machine while showing them pictures of objects like a
hammer or a car. Some images were paired with the chance to win half a
euro, while others led to no reward. The participants soon learned
which pictures were reliably associated with the prospect of making
money, and the scan showed that their anticipation circuits fired
furiously when those images appeared. Immediately afterward, the
researchers showed the participants a larger set of pictures,
including some that had not been displayed inside the scanner. People
were highly accurate at distinguishing the pictures they had seen
during the experiment and equally adept at recognizing which of those
pictures had predicted a gain.

Three weeks later the participants came back to the lab, where they
were shown the pictures again. This time people could even more
readily distinguish the pictures that had signaled a financial gain
from those that had not – although they hadn’t laid eyes on them in 21
days! Astounded, the researchers went back and re-examined the fMRI
scans from three weeks earlier. It turned out that the potentially
rewarding pictures had set off more intense activation not only in the
anticipation circuits but also in the hippocampus, a part of the brain
where long-term memories live.

The fire of expectation, it seems, somehow sears the memory of
potential rewards more deeply into the brain. “The anticipation of
reward,” says neurologist Emrah Düzel, “is more important for memory
formation than is the receipt of reward.” Anticipation has another
unusual neural wrinkle. Brian Knutson has found that while your
reflexive brain is highly responsive to variations in the amount of
reward at stake, it is much less sensitive to changes in the
probability of receiving a reward.

If a lottery jackpot was $100 million and the posted odds of winning
fell from one in 10 million to one in 100 million, would you be 10
times less likely to buy a ticket? If you’re like most people, you
probably would shrug, say “A long shot’s a long shot” and be just as
happy buying a ticket as before. That’s because, as economist George
Loewenstein of Carnegie Mellon University explains, the “mental image”
of $100 million sets off a burst of anticipation in the reflexive
regions of your brain. Only later will the analytical, or reflective,
areas calculate that you’re less likely to win than Ozzy Osbourne is
to be elected Pope. When possibility is in the room, probability goes
out the window. It’s no different when you buy a stock or a mutual
fund: Your expectation of scoring a big gain elbows aside your ability
to evaluate how likely you are to earn it. That means your brain will
tend to get you into trouble whenever you’re confronted with an
opportunity to buy an investment with a hot – but probably
unsustainable – return.

Fear: What are you afraid of?
Here are two questions that might, at first, seem silly.
1 Which is riskier: a nuclear reactor or sunlight?
2 Which animal is responsible for the greatest number of human deaths
in the U.S.? a) Alligator b) Deer c) Snake d) Bear e) Shark

Now let’s look at the answers. The worst nuclear accident in history
occurred when the reactor at Chernobyl, Ukraine melted down in 1986.
Early estimates were that tens of thousands of people might be killed
by radiation poisoning. By 2006, however, fewer than 100 had died.
Meanwhile, nearly 8,000 Americans are killed every year by skin
cancer, commonly caused by overexposure to the sun.

In the typical year, deer are responsible for roughly 130 human
fatalities – seven times more than alligators, bears, sharks and
snakes combined. Deer, of course, don’t attack. Instead, they step in
front of cars, causing deadly collisions. None of this means that
nuclear radiation is good for you or that rattlesnakes are harmless.
What it does mean is that we are often most afraid of the least likely
dangers and frequently not worried enough about the risks that have
the greatest chances of coming home to roost.

We’re no different when it comes to money. Every investor’s worst
nightmare is a stock market collapse like the crash of 1929. According
to a recent survey of 1,000 investors, there’s a 51% chance that “in
any given year, the U.S. stock market might drop by one-third.” In
fact, the odds that U.S. stocks will lose a third of their value in a
given year are around 2%. The real risk isn’t that the market will
melt down but that inflation will erode your savings. Yet only 31% of
the people surveyed were worried that they might run out of money
during their first 10 years of retirement.

If we were logical we would judge the odds of a risk by asking how
often something bad has actually happened under similar circumstances.
Instead, explains psychologist Daniel Kahneman, “we tend to judge the
probability of an event by the ease with which we can call it to
mind.” The more recently it occurred or the more vivid our memory of
something like it in the past, the more “available” an event will be
in our minds – and the more probable its recurrence will seem.

Fear: The hot button of the brain
Deep in the center of your brain, level with the top of your ears,
lies a small, almond-shaped knob of tissue called the amygdala (ah-mig-
dah-lah). When you confront a potential risk, this part of your
reflexive brain acts as an alarm system – shooting signals up to the
reflective brain like warning flares. (There are two amygdalas, one on
each side of your brain.) The result is that a moment of panic can
wreak havoc on your investing strategy. Because the amygdala is so
attuned to big changes, a sudden drop in the market tends to be more
upsetting than a longer, slower decline, even if it’s greater in
total.

On Oct. 19, 1987, the U.S. stock market plunged 23% – a deeper one-day
drop than the crash of ’29. Big, sudden and inexplicable, the ’87
crash was exactly the kind of event that sparks the amygdala. The
memory was hard to shake: In 1988, U.S. investors sold $15 billion
more worth of shares in stock mutual funds than they bought, and their
net purchases of stock funds didn’t recover to pre-crash levels until
1991. One bad Monday disrupted the behavior of millions of people for
years. There was something more at work here than merely investors’
individual fears. Anyone who has ever been a teenager knows that peer
pressure can make you do things as part of a group that you might
never do on your own.

But do you make a conscious choice to conform or does the herd exert
an automatic, almost magnetic, force? People were recently asked to
judge whether three-dimensional objects were the same or different.
Sometimes the folks being tested made these choices in isolation.
Other times they first saw the responses of four “peers” (who were, in
fact, colluding with the researcher).

When people made their own choices, they were right 84% of the time.
When the peer group all made the wrong choice, however, the
individuals being tested chose correctly just 59% of the time. Brain
scans showed that when the subjects followed the peer group,
activation in parts of their frontal cortex decreased, as if social
pressure was somehow overpowering the reflective, or analytical,
brain. When people did buck the consensus, brain scans found intense
firing in the amygdala.

Neuroscientist Gregory Berns, who led the study, calls this flare-up a
sign of “the emotional load associated with standing up for one’s
belief.” Social isolation activates some of the same areas in the
brain that are triggered by physical pain. In short, you go along with
the herd not because you want to but because it hurts not to. Being
part of a large group of investors can make you feel safer when
everything is going great. But once risk rears its ugly head, there’s
no safety in numbers.

Fear: Fright makes right
I learned how my own amygdala reacts to risk when I participated in an
experiment at the University of Iowa. First I was wired up with
electrodes and other monitoring devices to track my breathing,
heartbeat, perspiration and muscle activity. Then I played a computer
game designed by neurologists Antoine Bechara and Antonio Damasio.
Starting with $2,000 in play money, I clicked a mouse to select a card
from one of four decks displayed on the monitor in front of me. Each
“draw” of a card made me either “richer” or “poorer.”

I soon learned that the two left decks were more likely to produce big
gains but even bigger losses, while the two right decks blended more
frequent but smaller gains with a lower chance of big losses.
Gradually I began picking most of my cards from the decks on the
right; by the end of the experiment I had drawn 24 cards in a row from
those safer decks. Afterward I looked over the printout that traced my
spiking heartbeat and panting breath as the red alert of risk swept
through my body, even though I didn’t recall ever feeling nervous.

Early on, when I drew a card that lost me $1,140, my pulse rate shot
from 75 to 145. After a few more bad losses from the risky decks, my
body would start reacting even before I selected a card from one of
them. Merely moving the cursor over the risky decks was enough to make
my physiological functions go haywire. My decisions, it turns out, had
been driven by fear even though the “thinking” part of my mind had no
idea I was afraid. Ironically – and thankfully – this highly emotional
part of our brain can actually help us act more rationally.

When Bechara and Damasio run their card-picking game with people whose
amygdalas have been injured, the subjects never learn to avoid
choosing from the riskier decks. If told that they have just lost
money, their body doesn’t react; they can no longer feel a financial
loss. Without the saving grace of fear, the analytical parts of the
brain will keep trying to beat the odds, with disastrous results. “The
process of deciding advantageously,” concludes Damasio, “is not just
logical but also emotional.”

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1012738
http://www.jasonzweig.com/brainbook.html#summary
http://www.jasonzweig.com/resources.html

CONTACT
Jason Zweig
http://www.jasonzweig.com
email : info [at] jasonzweig [dot] com / jason.zweig [at] wsj [dot] com /
intelligentinvestor [at] wsj [dot] com

THINKING is DIFFICULT and SOMETIMES UNPLEASANT
http://www.ribbonfarm.com/2008/09/18/predictably-irrational-by-dan-ariely/
Synopsis : Predictably Irrational by Dan Ariely
by George Gibson  /  September 18, 2008

[This detailed, chapter-by-chapter précis of Dan Ariely’s Predictably
Irrational: The Hidden Forces That Shape Our Decisions is a guest post
by George Gibson, a colleague of mine at Xerox. George originally
posted it on our internal blogs as a series, and I found it so much
fun to read, I asked if I could repost it on ribbonfarm. So here you
go.]

Chapter 1: The Truth About Relativity
This was clearly the most interesting of the books from my summer
reading list. Let me be clear that though I don’t buy all of the
points Dan tries to make, I find them all interesting and worthy of
thought. With any luck we can begin a real discussion of his ideas and
observations in the commentary. That means I’ll attempt (not always
successfully) to keep my opinion out of the body of this piece, and
reserve that for any commentary that might develop. The real point
here is to get you interested enough to read the book yourself.

“Most people don’t know what they want until they see it in context.”
Control the context and you can change their decisions. This chapter
is about how our decision making as skewed from what we might think of
as rational by the use of comparisons, anchor points and some about
the magic of “FREE!”. The Economist offered three subscription
options:
* Electronic alone: $59
* Print alone: $125
* Electronic and print: $125

So what would you guess people would choose? Would anyone choose the
Print alone option forgoing a “FREE!” electronic subscription? Not
likely. So, why is it even offered? Testing with 100 Sloan School
students, 16 chose Electronic alone and 84 chose the combined
Electronic and print option. Nobody chose the Print alone option (boy
those Sloan folks are smart aren’t they?). However when the irrelevant
option, the one nobody chose, was eliminated, another, equally bright,
hundred Sloan students divided 68 for Electronic alone and only 32
chose Electronic and print. So…what happened here?

Ariely makes the unpleasant but often correct assertion, “Thinking is
difficult and sometimes unpleasant.” Cues that allow us to establish
the relative value of various offerings, then, reduce the required
thought effort. What the Economist offered was a no-brainer; while we
might not be certain if the print subscription was worth more than
twice the electronic version, the combination of the two was clearly
worth more that the print version alone.

The chapter contains many examples of this effect including movie
script jokes, bread makers, houses, vacations, salaries and even
potential dates. Two general frameworks are noted as particularly
common. First is the inclusion of a slightly degraded offering near
the offering you want the customer to accept increases the likelihood
that he or she will make your desired choice (read the choice of
potential dating partners section of the book for this one). Next is
the pick the middle one strategy in which three offerings are
presented with the middle of them as the sellers preferred choice. So
often the butt of jokes, car companies even provide an interesting
example. What portion of the firm’s profits on most platforms come
from the middle of the line offering?

There are take-aways here for both the seller and buyer. Politely
said, you as a seller can help guide your customer through the
bewildering array of choices by providing helpful contextual
information (I’ll let each of you put your cynical hat on and restate
that one for fun!) As a consumer it is helpful to understand the
framing a seller is likely to present you with and do some of that
nasty thinking work up front deciding whether or not the seller’s
preferred context and yours are the same.

Chapter 2: The Fallacy of Supply and Demand
This chapter is at the heart of Ariely’s argument. Classical economics
says that our decisions about resource allocation reflect our relative
valuation of the various investment alternatives. If I buy more wine
than cheese it’s because I derive greater utility (more than just
usefulness by the way) from the juice of the grape. There are clear
limits of course, I am unlikely to allow myself to starve and will
occasionally buy cheese, or buy cheese when the price is low enough.
But the general point remains, I am willing to pay more for those
things from which I derive greater utility.

Not so says our man Dan. How much a person is willing to pay for
something is determined or at least significantly affected by a
variety of factors which have nothing to do with any benefit that he
or she derives from that purchase. Do you remember what Tom Sawyer did
with his chore, whitewashing a fence? Review that first and you’ll be
more open to these arguments.

He starts with the story of black pearls. There were essentially none
on the market so there was no objective way of establishing price.
What happened was they were shown in advertising and in Harry
Winston’s toney store along rubies and diamonds at a very high price.
This initial association served to effectively anchor the price and
therefore, going forward, future prices were high since the initial
frame in which people were introduced to the product was among high
priced goods.

He likens this anchor price phenomenon to that of imprinting. We are
all goslings, fixed on that first object. He’s done a lot of really
neat experiments to support his point. None of them are completely
convincing but they certainly are thought provoking.

Consider, for example some really interesting experiments suggesting
that thinking about a number – any number – before considering what
you are willing to pay for an item whose market price you do not know
– actually effects what you would be willing to pay for that item. In
one of the experiments described a group of students were asked to
write down the last two digits of their social security number before
they indicated how much they were willing to pay for a bottle of wine,
a cordless keyboard, some imported chocolates. Guess what! The amounts
they were willing to pay actually correlated with those social
security number fragments they had previously written down. I spend
time much time on this particular experiment precisely because the
results are so bizarre.

He cites a number of other experiments and observations that support
not only that an anchoring affect, unrelated to market value or
derived utility. One of the ones he cites that I have experienced
personally is the persistence of old concepts of housing value when
you move from one market to another. When Ginny and I moved here from
Dayton, Ohio fifteen years ago, we went a long time looking for a
house that cost about as much as the one we were leaving. Although
Rochester can hardly be described as a high cost area, real estate was
roughly twice as expensive per square foot here than in Dayton. It
took us literally months to stop looking to replace our Dayton house
with one of similar price here and adjust to the new price scale we
faced.

I won’t spoil your fun and go through all the examples and neat
concepts, “coherent arbitrariness” being among my favorites, but I
will reiterate one of his most powerful points. Knowing that it is
entirely possible that some factors not related to the real value a
product or service crate for you may be affecting how much of that
good you consume and how much you are paying for it, be mindful.
Carefully examine your purchasing behavior and make sure you actually
believe that the money you allocate to consumption of various
offerings really advances your overall well being more than the next
best use of those funds. So when you’re paying for your $4 cup of
coffee at Starbucks (as you know I do), revisit the fundamental
decision – should I be buying cheaper coffee at McDonalds or even
bringing in coffee from home or should I be drinking water, of the
free sort.

But if first anchors are so significant and long lived, how come you
ever bought that first cup at $4 let alone the third? That first day
you walked into Starbucks wasn’t your first experience with buying
coffee. You had plenty of time and experience to establish an anchor
backed my years of repeated experience to reinforce it. Howard Shultz
had to work hard to make Starbucks fundamentally different than the
other places you might by coffee – not just quantitatively but
qualitatively. It just had to be unlike the other places you might
stop when you wanted coffee – you had to get something more. Their
success is the proof of their success there and the most recent
stumbling in earnings can be attributed to some extent as the success
of McDonalds and Duncan Donuts in making it just about the coffee.

Chapter 3. The Cost of Zero Cost
Why We Often Pay Too Much When We Pay Nothing
“Zero is not just another price….zero is an emotional hot button – a
source of irrational excitement.”

The allure of free stuff drives us to make all sorts of irrational
purchasing decisions. “Buy 2 get 1 FREE!!,” motivates a fair share of
people to buy two of something they wouldn’t have bought one of except
to get that free thing. As you’ve picked up by now, Ariely’s MO is to
do experiments to probe economic rationality or the lack thereof. In
this matter the first experiment involved selling chocolate on the MIT
campus albeit in a strange way. Limiting chocolate purchases to one
per customer they offered a choice between Lindt truffle and a Hershey
Kiss. A huge difference in quality reflected in a substantial
difference in price. The truffle sold for $0.15, half off the bulk
retail price, and the Kiss sold for $0.01. Students split on their
purchases with 73% choosing the truffle and 27% choosing the kiss.
Next they lowered the price of each by $0.01; the truffle at $0.14 and
the Kiss was FREE!! Now 69% of students choose the Kiss; same price
difference, same expected benefit or enjoyment from eating the
chocolate but apparently there is an additional benefit of FREE!!

Again my purpose here is to serve as a teaser here not to reiterate
the book, I want you to read the book. Let’s just say that he did this
experiment a variety of ways and each time the proposition that FREE!!
distorts decision making was supported. He has some especially
interesting Halloween experiments and some real Amazon experience
supporting his assertion.

Chapter 4. The Cost of Social Norms:
Why We Are Happy to Do Things, but Not When We Are Paid to Do Them

I’m against wholesale quotations in reviews. So remember that this
isn’t a review, it’s meant to be a précis and teaser. This chapter
leads off with a story so compelling that I just have to present it
verbatim.

You are at your mother-in-law’s house for Thanksgiving dinner, and
what a sumptuous spread she has put on the table for you. The turkey
is roasted to a golden brown; the stuffing is homemade and exactly the
way you like it. Your kids are delighted: the sweet potatoes are
crowned with marshmallows. And your wife is flattered: her favorite
recipe for pumpkin pie has been chosen for desert.

The festivities continue into the late afternoon. You loosen your belt
and sip a glass of wine. Gazing fondly across the table at your mother-
in-law, you rise to your feet, pull out your wallet. “Mom, for all the
love you’ve put into this, how much do I owe you?” you say sincerely.
As silence descends on the gathering, you wave a handful of bills. “Do
you think three hundred dollars will do it? No, wait, I should give
you four hundred.” Please fill in the blank with what you think will
happen next.

The rest of the chapter is devoted to some experiments (of course) and
some anecdotes that describe two separate frames in which we operate:
those of social norms and those of market norms. He compiles evidence
that social norms are more effective at motivating superior
performance than are market norms. The armed forces are an interesting
example. You didn’t really think that those soldiers in Iraq and
Afghanistan were there for the pay and to save money for college did
you? Those are nice perks (well the pay for low rank enlisted soldiers
sometimes leaves their families in poverty) but exactly how much money
would it take for you to risk your life like that? The actions we
barely hear on the news in the car as we travel back and forth to work
or have on as background during dinner, the acts of courage and
heroism are not motivated by the paycheck but by the social norms of
the service. One soldier I know said that you may join for your
country but, in a fire fight, you’re fighting for your buddies. Boy,
now there’s a powerful force. Powerful but, it turns out fragile.
After the dinner above, how long do you think it would be before the
narrator’s mother-in-law went out of her way for him?

In this chapter Dan provided the results of a number of experiments
showing that there is a particularly interesting difference between
the types and performance levels of tasks that can be produced when
the reward system is governed by “social norms.” In one set of
experiments he had people perform a simple computer task. Three groups
were paid varying amounts and one group was asked to do the task as as
a favor to the experimenter. Among those paid, those paid more
generally produced more in keeping with our idea of market behavior.
Those doing the experimenter a favor however, outperformed the highest
paid group. You can imagine all sorts of implications. One more
interesting twist however was that introducing market norms into the
conversation (talking about how much some folks had been paid) before
the volunteers worked destroyed the effect.

The most interesting set of things he explored based on these tenets
was the implications of personal in firm-level behavior: what should
you, and should a firm, leave in the arena of social norms and what in
the realm of market norms. Will extra productivity for a firm be most
effectively produced by market or social reinforcements? How about
employee loyalty in all its manifestations? What effect will a company
making clear that its relationship with its employees is purely
financial have on the performance of that company’s employees and
hence on the company itself. Is this an argument for a return to
paternalism? It seems unlikely. Is it at the heart of the oft vaunted
ability of small firms to “outperform” larger ones in some aspects of
innovation: perhaps.

Chapter 5. The Influence of Arousal
Why Hot is Hotter Than We Realize

One of the things I’ve learned about blogging, although it might not
be apparent, is that it’s a good idea to be brief. As you know I
seldom say in two words what I can say in five, this is an ongoing
challenge for me. This chapter however is one that encourages brevity.
The central hypothesis is that arousal, of all sorts, produces a
significant distortion of decision making. Decisions made in the heat
of the moment are notoriously badly made. Think road rage, think
victory celebration, think extreme thirst or hunger (I’ve always
wondered, just how hungry the first person was that saw a lobster and
thought, “hmmmm, that looks good”). There are all sorts of states of
arousal and given that this is a book by an experimentalist at a
university you can imagine that he describes experiments using
several. ‘Nuff said. You’re simply going to have to read the book to
get the details of what junior was doing in the name of behavioral
economics to supplement the pittance his parents were forcing him to
live on.

The major assertion of this chapter is that when we’re calm and
detached, we repeatably and significantly underestimate the effect of
altered mental states on our decision making. Of course we all know
that when we’re angry or in love or afraid or hot on the trail of a
particularly desirable objective like in a auction bidding war or when
we’ve had one too any drinks our decision making can suffer. Look at
the bad decisions made by the folks at Enron, Arthur Anderson or any
of a host of other companies. We know altered states of many kinds can
cause us to make bad decisions and so, forewarned we are forearmed
right? Not so much it turns out. The experimental subjects in this
chapter recognized that when they were excited they would make
decisions that were significantly different than those they would make
in a in the so called, cold light of day. They were asked to predict
behaviors or alternatives that they expect would change in the grips
of some emotionally charged state. However, when actually provoked and
queried again Dan’s experiments found that they consistently and
significantly underestimated the magnitude of the effect. His
prescription is a prevent defense. If you know that a certain
situations can cause you to make bad decisions, don’t put yourself in
those situations. This is another example of one of the jokes that, as
you know I believe, run the universe. It goes like this.
Patient: Doctor, doctor, it hurts when I go like this.
Doctor: Don’t go like that.

I’ll let you read the details but let’s all ask ourselves this;
knowing that we are highly likely to underestimate how much our
decision making will be changed in states of emotional turmoil of
varying sorts, how will we protect ourselves from being either patsies
of our emotions or manipulated by those willing to exploit this lever
for their gain?

Chapter 6: The Problem if Procrastination and Self-Control
Why We Can’t Make Ourselves Do What We Want to Do

Procrastination is probably the most common source of self-inflicted
wounds you or I are likely to suffer during our lives. Not necessarily
the source of the most significant ones but surely the greatest
number. From the petty (the “people” door on my garage has decayed to
the point that I will have to replace it) to the profound (I kept
meaning to start saving for retirement or dieting and exercising)
procrastination can leave nasty tracks in our lives.

Dan’s experiments here are perhaps the most limited of those he
describes in the book. Given the detail he presents it’d be hard to
judge their import if he turned up something new. Let me describe the
experiment. He compared three groups of students in a graduate
consumer behavior course. Each class was required to turn in three
papers over the course of the semester. One class was given strict and
equally spaced deadlines with a penalty for failing to meet the
deadline, A second class was told that they could turn the papers in
anytime before the end of the semester and that there was no reward
for being early. The third class was allowed to sign up for deadlines
spaced however they liked but, having committed to those deadlines,
there was a penalty for failing to meet them. Guess which group got
the best grades?

The group given the hard deadlines took first. The group with no
deadlines took last. The interesting point is that the other group,
those with self-selected deadlines did nearly as well as the first
group. Apparently, this tool, letting them pre-commit to a performance
standard was nearly as powerful as the externally imposed deadline.
Now since the experimenter graded the papers there is, of course, some
question about bias. There is also a significant degree of randomness
in this sort of grading process. In fact a great discussion of this is
in the other book from my reading list that I strongly recommend to
you, “The Drunkards Walk.” If Dan’s finding was revolutionary then we
might have some significant reservations. Pre-commitment is, however,
a well established technique. Really want to get something done? Write
a $500 check to some campaign or social cause based organization whose
ends you strongly oppose. Then give it to a friend and say, “If I
don’t accomplish X by Y send this check to these folks.” You’d be
amazed at what you can accomplish. This whole tack is a well
established result from game theory. Now let’s talk about some of the
ways Dan pictures using it.

Huge components of our health care costs are the results of
preventable diseases. What if your insurance company withdrew $200
dollars from your paycheck to cover the expense of a regular and
complete physical with the understanding that you would get that money
back IFF you kept your appointment for all of the required testing?
Maybe out on the lunatic fringe of health care thinking but
interesting. In this and other similar situations Dan suggests both
these voluntary pre-commitment models and the alternative of a
Leviathan.
One of the most amusing suggestions he makes regards spending control,
especially credit card use. You may have heard the ice method. Some
people, to counter their impulsive use of consumer credit, put their
card(s) in a glass of water in the freezer. Thawing it (them) out to
use takes time allowing that arousal that we talked about last chapter
to fade. Of course there are simpler ways. Dan actually took one of
these suggestions to the executives of a major NY bank. Why, he said,
can’t a credit card record and automatically react in accordance with
pre-committed spending patterns. When you exceed your chosen limit
(which might be spending category specific) for instance, it would
decline more charges, or generate an email reporting your errant ways
to your spouse. He reports that the executives listened and thought it
was a good idea but never called him back. I would pay cash for a
recording of the conversation they had after he left.

There are lots of other approaches to controlling procrastination of
course. We’ll talk more about these later in the year. I confess that
this is a trait I personally fight. Let me just make two
recommendations other than pre-commitment. One is the time management
tool suite called “Getting Things Done” popularized by David Allen, or
alternately an approach which you can find described in a book called
“Making Work Work.” Julie Morgenstern.

Chapter 7: The High Price of Ownership
Why We Overvalue What We Have

Do you know of anyone whose house stays on the market not just for
months but for years? How about somebody who’s been driving around
with a “For Sale” sign in their car window long enough for you to
think it might actually be an accessory? What these folks have in
common is a valuation of what they are offering that does not match
the value in among the people to whom they are making the offer. These
are two quick examples but it turns out there are lots of other ways
in which we tend to overestimate the market value of the things we
own. It’s been called the investment effect. It might be because we
price in the positive feelings we have derived from owning the object
(we took such great family outings in that car) in ways that are
irrelevant to potential buyers. It may be that we experience the
parting with the object as a loss that prices in those good feelings
and it is well demonstrated that we have a tendency to avoid loss that
exceeds our desire for gains even at constant expected value. I’m not
sure Dan adds a lot new on this topic, although it is certainly a way
in which we evidence irrational consumer behavior, except an
experiment based on a rather peculiar basketball ticketing process at
Duke. None the less, this is useful stuff to be reminded of from time
to time.

I must admit that although one of my nephews is on faculty there, I
had not heard of Duke’s peculiar way of rationing basketball tickets
for important games. I won’t go through the whole thing hear – it’s a
pleasure left for the reader – but suffice it to say that it’s a multi-
day process that involves camping out and jumping through the odd hoop
and that process just gets you into a lottery for a ticket. Dan, who
did his Ph.D. there, and a colleague from INSEAD, contacted folks who
had gotten tickets and those who hadn’t and tried to arrange sales.
All had demonstrated the fervent desire to go to the game by
participating in the ritual described but, while those that had gotten
tickets said they would sell them for (on average) $2400, those who
hadn’t gotten them would only agree to pay (on average) $175.

This effect of ownership, even if it’s temporary (”FREE!! 10 day home
trial”, “return it without charge if you’re not satisfied”) or virtual
(how dare that idiot outbid me for my watch) is quite general.
Merchandisers use it to their advantage all the time. As with many of
these chapters, Dan’s point is, knowing that this effect is real,
examine your behavior when you get in these situations. So doing you
can avoid much frustration and avoid being manipulated into making
decisions that are not really in your best interest.

Chapter 8. Keeping Doors Open
Why Options Distract Us from Our Main Objective

I’m a big options fan. I like real options thinking and have seen it
used to generate real value in R&T environments. I was, therefore, not
wild when I read this title. Was there something fundamentally wrong
with my attachment to options? Well, let’s take a couple of famous
examples. The oldest comes from Sun Tsu in the world’s oldest job
application, “The Art of War,” written in the 6th century BC. I know
I’ve talked about this book before and I assure you I will talk about
it again. If you haven’t read it yet make it next on your list. Master
Tsu advises generals: “do not attack an enemy that has his back to a
hill,”

and further
“do not thwart an enemy retreating home. If you surround the enemy,
leave an outlet; do not press an enemy that is cornered.

Such cornered foes are too formidable. Exploiting this same dynamic he
advises: Throw your soldiers into positions whence there is no escape,
and they will prefer death to flight. If they will face death, there
is nothing they may not achieve. Officers and men alike will put forth
their uttermost strength. Soldiers when in desperate straits lose the
sense of fear. If there is no place of refuge, they will stand firm.
If they are in hostile country, they will show a stubborn front. If
there is no help for it, they will fight hard.”

Indeed, Xiang Yu, in 210 BC, exploited this in Cortez and, doubtless,
many more. Having crossed the Yangtze, he burned his boats and had all
the cooking pots destroyed. Win or die; a clear message for the troops
and one that cleared their minds and free up assets from having to
protect those assets.

As always, Dan and some colleagues run some experiments on students.
They design several computer games in which players had 100 “clicks”
which they could use to choose one of three rooms and once in a room
click to get cash. Different rooms give different pay-offs and
generally people figured out pretty quickly which room paid the most
per click and then spent their time in that room. However, when the
game was changed such that rooms that hadn’t been visited in some
prescribed number of clicks disappeared, players would go back and
click on those rooms to keep them available even though it cost (on
average) 15% of their earnings.

This chapter makes the point that options can serve as distraction as
well as valuable alternatives. Olympic athletes are seldom concert
violinists. Mastery and focus often turn in better results than trying
to be all things to all people. My undergraduate honors advisor was,
and likely is still, a complete success as a chemist. When, as a
graduate student, I took his advanced organic synthesis course, I felt
like I was taken to the top of a tall mountain and shown the vast
landscape of chemical synthesis. He achieved that mastery as the
result of considerable focus. “George,” he said to me at one point,
“you should be spending 80% of your waking hours at the bench.”

This sort of behavior is contrary to much of what our culture offers
us today. Our environment bombards us with variety. You can know more
and more about more with just a few clicks of a mouse. Failure to be
well-rounded is viewed as a significant deficit. On the other hand,
the person who tries to do too many things can end up never doing any
one of them well enough to have impact. Like most things, of course,
there are two ways to get this wrong. Being monomaniacal may have its
benefits but it comes at a price. Having strong family relationships,
for example, can buffer you from the occasional bad days you may
experience at work.

There is another interesting aspect of the sometimes bewildering array
of choices that confronts us; a retreat to systems in which less
choice is allowed. The power and even ascendancy of authoritarian
regimes and rigid philosophical systems are sometimes viewed as
reactions to the world’s increasing complexity. Hardly a new idea,
“Escape from Freedom,” by the philosopher Eric Fromm is probably the
best treatment on the topic. However Dan has an interesting slant,
pointing out that increasing the complexity of a decision makes it
more likely that decision makers will rely on external (hence
manipulable) cues.

While it would be a mistake for us to fail to exploit options thinking
and the development of options for our business and personal lives,
trying to do too many things at once is a clear route to failure.

Chapter 9: The Effect of Expectations
Why The Mind Gets What It Expects

We all know that our expectations affect our experiences. Generally
however, since we are aware of this tendency we “smart people” think
we set that aside for the most part. In this chapter Dan describes a
number of experiments that he performed as well as a number of
experiments by others that point out just how subtle and persuasive
our expectations are.

Setting up shop in the “Muddy Charles,” the pub in MIT’s Walker
Memorial Building, he and collaborators started handing out free
samples of beer. Students were given samples of two types and then
asked to choose which of these they’d like a larger glass. The beers
started with the same brew but a few drops of balsamic vinegar were
added to one. (They actually started with Budweiser but some folks
“objected to calling Budweiser beer” so they switched to Sam Adams.)
They measured how many people ordered each of the samples and then
asked people to describe what they thought about the new beer. Some of
these folks were not told what the difference between the two beers
was, some were told about the vinegar before they tried it and some
were told after. Guess what happened. When they got the information
actually changed their rating of the experimental suds. Knowing it
contained vinegar beforehand changed their described experience when
doing the taste test.

There’s actually a lot more to this experiment and Dan presents a
number of other experiments including some employing functional MRI.
Here in a version of the classic Coke-v-Pepsi challenge it can be
demonstrated that at a brain activity level the experience of drinking
one as opposed to the other id modified by knowledge of which they
were drinking

By far the most interesting examples – and I really can’t bring myself
to spoil the fun you’ll have reading them – have to do with
stereotypes. Especially interesting are those dealing with groups to
whom several “conflicting” stereotypes can be applied. In these case
preconditioning the subjects with certain words chosen to “remind”
them of one or the other of these produced behavior that reflected the
provoked stereotype. You’ve just got to read this stuff trust me.

Chapter 10. The Power of Price
Why a 50 Cent Aspirin Can Do What a Penny Aspirin Can’t

We all know about the placebo effect; that wild and wonderful way in
which our mind affects our perception of, and in some cases our real
experience of the healing effects of one medication or the other. It’s
sort of an extension of the last chapter’s theme; the mind gets what
it expects. You’ll remember that Dan spent a long time in a hospital
burn unit recovering from a serious accident he’d had while training
for the IDF, well you won’t be surprised that he had a lot of time to
think about the placebo effect.

As part of his investigations into the perception of pain, as a newly
minted asst prof, he bought a vice and would crush people’s fingers in
it and ask them things like:

“How much did that hurt?”
“How much would I have to pay you to let me do that to you again?”

(You just can’t make this stuff up!) In this chapter he explores some
aspects of the economic side of the placebo effect. He has
experimenters pose as representatives from a drug company. They gave
people a series of electrical shocks of varying magnitude, asked them
about the pain they experienced. Next they were given a pain reliever,
well vitamin C actually, but they were told either that it was a new
and expensive one or a cheap one. When the shocks were repeated guess
what? Those who thought they were getting the high-priced stuff
reported that it worked pretty well, and much better than the folks
who got the cheap stuff. (Now let’s review what this means for the
spiraling costs of US health care.) By the way, the more recently the
folks had had experience with significant pain the better it worked.
As usual he did a number of experiments like this and I won’t spoil
you fun.

There are two sorts of implications he explores that are worth our
thought. First, how general is this phenomenon? It certainly applies
to food and drink, to cars to a whole lot of things. Does that mean
that we are manipulated into paying higher prices for goods that are
essentially equivalent to lower price alternatives? Would we be better
off if we brought this into our conscious mind as we decide whether
the most recent genes are worth it?

The next thing he brings up is really an ethical question. He cites
several examples where surgical procedures were found to produce no
better results than sham operations. A patient who thinks he or she
received one of these surgical procedure reports just as much benefit
as someone who actually had the procedure. While the medical community
wasn’t actually intending the procedures benefits to derive from the
placebo effect it turns out that’s exactly what happened. There is
also the less dramatic exploitation of the effect that many doctors
practice when they prescribe antibiotics for colds and sore throats,
the vast majority of which are viral. They prescribe, patients get
better and the offending microbe was not at all affected by the active
ingredient. It, of course, turns out, that in some instances at least,
people treated with placebos actually do get better faster than those
untreated. There will be some Nobels given out for figuring out
exactly how that works. So, the interesting ethical questions Dan
brings up are, knowing the placebo effect is real, should doctors use
in intentionally and if so how and when? Also if we want to protect
people from unnecessary surgery do we have an obligation to test
surgical procedures against sham surgery in humans?

Like I have said all along, this book is worth the time, even more for
the questions than for the answers.

Chapter 11: The Context of Our Character, Part 1
Why We Are Dishonest, and What We Can Do About It

Dan starts this chapter with some interesting observations. I haven’t
independently confirmed them but I’m willing to give him the benefit
of the doubt and assume they’re right.

2004
Total loss due to robbery                                   $525M
Average loss per robbery                                $1,300
Total loss to robbery, burglary,
larceny-theft and auto theft                                 $16B
Workplace loss to theft and fraud                   $600B
Loss from fraudulent insurance claims            $24B
Underpayment of income tax (per IRS)         $350B
Fraudulent clothing returns to retail outlets    $16B

Do we think about the people who perpetrate these crimes differently?
In our most fundamentalist moments we’d say no. A theft is a theft.
But do we actually act that way as a society? Let’s change tacks. Does
the self concept of the guy or gal walking out of work with a package
of Post-It™ notes differ fundamentally from the folks speeding away
from the convenience store they’ve just knocked over? How about the
person who keeps the extra cash when they’ve been given too much
change? If we judge by how much attention and cash we pay to catch the
perpetrators and the answer seems clear. Does the amount of loss due
to the actions of people we do not generally think of as criminals
mean that many “honest” people cheat? Bring on the experiments!

Dan and a number of collaborators do a number of varieties of one
experimental theme using his favorite subjects, college students from
around the country. The basic outline of the experiment is as follows.
A control group is established by giving a group of students some
timed test (50 general information questions, 15 math problems,…) and,
allowing them no way to cheat, grade their papers paying them $0.10
per correct answer. The next group has to transfer their answers from
their work sheet to a grid on which the correct answers are
highlighted and they are to write at the top of the grid sheet how
many answers they got correct. The worksheet and the grid are handed
to the experimenter who them pays the student $0.10 for every correct
answer he or she claimed. Another group was treated the same as the
previous but then told to shred their worksheet and grid and then
simply tell the experimenter how many answers they had gotten right at
which point the experimenter paid them as before. A final group tested
as before, was told to shred their worksheet and grid and simply take
the correct amount of money from a jar containing about $100. Guess
what happened and write down your guess.

No really don’t look, guess first. The second experimental group,
which had handed in their work sheet and grid sheet, cheated by about
10%. How about the other groups? Have you got your guess recorded?

They cheated by about the same amount. Even when they could have
simply taken all the money the students cheated just a little. And it
wasn’t the case that there were a few bad apples that drove the
results. The means for the group shifted but the distribution remained
the same. Apparently we are pretty good at rationalizing small amounts
of dishonesty.

Now, same experiment (including the shredding of the work sheet and
the grid) but now the experimental groups are asked to do a little
memory test or given a verbal reminder before the test. One group was
asked to write down a list of 10 books they had read in high school,
another was asked to write down as many of the 10 commandments as they
could remember, a group at Princeton was told that this test was
governed by Princeton’s storied honor code, yet another was told that
the tests were governed by MIT’s honor code (there is, by the way, no
such thing). Have you guessed what happened?

In all of the groups asked to remember something that reminded them of
an ethical benchmark no one cheated. Now these are successful college
students at some of the best schools in the country so you’d hope
they’d had some underpinning in ethics, and of course there was little
at stake so we could expect different results in different groups and
among these groups in different contexts, nonetheless this experiment
is striking. Simply being recently reminded that there is a difference
between ethical and unethical conduct changed their behavior. Dan
draws the comparison with the codes of conduct to which professions of
varying sorts used to ascribe. He asserts that as the professional
societies and identities have become weaker forces in the practice of
their respective crafts, we have passed that boundary he talked about
earlier from the arena of social norms to that of market norms with a
concomitant cost to society.

Unsurprisingly there’s a lot more to this chapter and, as always, I do
not want to spoil the fun you’ll have when you read the book yourself.
But I think that there’s enough here to provoke discussion. If most
“good, honest” people cheat a little what does that say about society
as a whole and how might we actually promote a turn to more ethical
behavior, or has that die been cast?

Chapter 12: The Context of Our Character, Part 2
Why Dealing With Cash Makes Us More Honest

The fundamental finding Dan reports here is encapsulated in the title.
He finds that, in his experiments, people are less likely to steal
cash than they are to run off with non-monetary instruments. Again, he
cites a number of experiments, but the sense of the lot can be summed
up in just one. When he put 6 packs of Coke in MIT dorms they all
disappeared in 72 hours. When instead, he put 6 one dollar bills in
the same refrigerators they all survived. In his usual fashion he
explored just how close to case you had to be to see this effect. If
they were given tokens that you nearly instantly exchanged for cash
would it increase cheating (yes it turns out)?

This is one of his most broadly provocative points. If tokens increase
cheating, how about even more abstract instruments?
* How about credit cards – lots of cheating there
* How about the anonymity granted by the net – lots of cheating
there
* How about stock options – lots of back dating there
* How about cooking the books – lots of cheating there

It seems really likely that Jeff Skilling and Ken Lay would likely
never simply have mugged folks and taken their cash, but somehow
cooking the books was OK. There is clearly, at least for some folks, a
mechanism which allows the incremental dishonesty to creep in without
triggering our “If I do this I’ll be a bad person,” alarm.

On the whole I find this chapter a little depressing. It certainly
points out some things that, if they are truly extensible, should make
us have significant reservations about the increasing abstraction of
vessels of monetary exchange, a trend likely to continue. So I am left
at the end of this chapter with a dilemma I seldom faced in this book,
disquiet with no obvious remedy. I can more carefully examine my own
behavior and I can become more protective in my use of non-cash
instruments but the entire chapter begs for broader experimentation.
I’ll leave you with a quotation from HL Mencken. If you don’t know his
work, dabble some in it. It’s an excellent source for uncomfortable
laughter.

“The difference between a moral man and a man of honor is that the
latter regrets a discreditable act, even when it has worked and he has
not been caught. “
– H. L. Mencken, ‘Prejudices: Fourth Series,’ 1924

Chapter 13: Beer and free lunches
What Is Behavioral Economics, And Where Are The Free Lunches?

There’s an old joke in economics – two economists are walking down the
street and they see a $20 bill on the ground. One begins to bend over
to reach for it, the other stops him saying, “If that were a real $20
bill someone would have already picked it up.”

OK – so there’s a lot of the standard model in a nutshell. It’s sort
of like that classic statement of the second law of thermodynamics,
“you can never win, you can, at best, break even.” There are several
more sets of experiments described in this chapter of course. These
focus on restaurants, people’s behavior in ordering food and beer (a
recurring theme) and their satisfaction with the outcomes. It turns
out that people order different things if they are the first or last
in a group to order. The orders previously given by group members
influence what the remaining members order. You can easily imagine at
least two ways that might happen, a drive toward conformity or a drive
toward displaying uniqueness, I’m not going to spoil your fun by
describing the experiments and the details of the results. Generally,
however, it turns out that you are likely to enjoy your selection more
if you make up your own mind and stick to it. This is, then, a source
of a free lunch. Having information about largely subliminal process
that influence your decision making can allow you to escape the traps
such processes help us fall into. So, order what you like and enjoy it
more. The extra enjoyment is free.

Indeed the real point of the majority of this fun book is just that:
don’t blindly believe that economic rationality prevails at all times.
Study real behavior, make the invisible processes visible to you and
stop being the tool of others – this is the real free lunch. Felix qui
potuit rerum cognoscere causas!

CONTACT
Dan Ariely
http://www.predictablyirrational.com/
http://web.mit.edu/ariely/www/MIT/
http://www.fuqua.duke.edu/faculty_research/faculty_directory/ariely/
email : dan [at] predictablyirrational [dot] com / ariely [at] mit [dot] edu /
dandan [at] duke [dot] edu

SEE ALSO
http://www.predictablyirrational.com/?page_id=17
http://www.predictablyirrational.com/?page_id=8
http://www.predictablyirrational.com/?page_id=7
http://fora.tv/2008/03/04/Dan_Ariely_Predictably_Irrational
http://www.radioopensource.org/dan-ariely-confronting-irrationality/

http://www.youtube.com/watch?v=VZv–sm9XXU

 

LEGISLATING REVENGE
http://marketplace.publicradio.org/display/web/2008/10/01/pm_road_q/
RYSSDAL: Given our motives for revenge, is there a way that Congress
can shape a bill that’s going to make it acceptable to people whose
constituents really want to punish Wall Street?

ARIELY: Yes. So I think we need to include revenge in the bill. There
was discussion about capping CEO salaries, which I think went a small
way into revenge. But I think there are two ways to include revenge in
the bill. One way is to say every time we are going to nationalize
something, we are going to take the stock option of these people in
these banks, right? We will make them pay for nationalizing it. That’s
one approach. The second approach is to build into the system future
revenge. So another thing we can do is we can decide that the bill
will actually force us to create a new code of punishment for people
on Wall Street. And we have an opportunity here, with a meltdown
that’s so dramatic, that we feel that there is a need to go back and
try and reshape the whole system. And that might actually be very,
very useful in the long term.

a TEACHING OPPORTUNITY
http://edge.org/3rd_culture/thaler_sendhil08/class1.html
http://edge.org/3rd_culture/thaler_sendhil08/class2.html
http://edge.org/3rd_culture/thaler_sendhil08/class3.html
http://edge.org/3rd_culture/thaler_sendhil08/class4.html

a SHORT COURSE in  BEHAVIORAL ECONOMICS
http://edge.org/3rd_culture/thaler_sendhil08/thaler_sendhil_index.html
by Daniel Kahneman

Many people think of economics as the discipline that deals with such
things as housing prices, recessions, trade and unemployment. This
view of economics is far too narrow. Economists and others who apply
the ideas of economics deal with most aspects of life. There are
economic approaches to sex and to crime, to political action and to
mass entertainment, to law, health care and education, and to the
acquisition and use of power. Economists bring to these topics a
unique set of intellectual tools, a clear conception of the forces
that drive human action, and a rigorous way of working out the social
implications of individual choices. Economists are also the
gatekeepers who control the flow of facts and ideas from the worlds of
social science and technology to the world of policy. The findings of
educators, epidemiologists and sociologists as well as the inventions
of scientists and engineers are almost always filtered through an
economic analysis before they are allowed to influence the decisions
of policy makers.

In performing their function as gatekeepers, economists do not only
apply the results of scientific investigation. They also bring to bear
their beliefs about human nature. In the past, these beliefs could be
summarized rather simply: people are self-interested and rational, and
markets work. The beliefs of many economists have become much more
nuanced in recent decades, and the approach that goes under the label
of “behavioral economics” is based on a rather different view of both
individuals and institutions. Behavioral economics is fortunate to
have a witty guru—Richard Thaler of the University of Chicago Business
School. (I stress this detail of his affiliation because the Economics
Department of the University of Chicago is the temple of the “rational-
agent model” that behavioral economists question.) Expanding on the
idea of bounded rationality that the polymath Herbert Simon formulated
long ago, Dick Thaler offered four tenets as the foundations of
behavioral economics:

Bounded rationality
Bounded selfishness
Bounded self-control
Bounded arbitrage

The first three bounds are reasonably self-evident and obviously based
on a plausible view of the psychology of the human agent. The fourth
tenet is an observation about the limited ability of the market to
exploit human folly and thereby to protect individual fools from their
mistakes. The combination of ideas is applicable to the whole range of
topics to which standard economic analysis has been applied—and at
least some of us believe that the improved realism of the assumption
yields better analysis and more useful policy recommendations.

Behavioral economics was influenced by psychology from its inception—
or perhaps more accurately, behavioral economists made friends with
psychologists, taught them some economics and learned some psychology
from them. The little economics I know I learned from Dick Thaler when
we worked together 25 years ago. It is somewhat embarrassing for a
psychologist to admit that there is an asymmetry between the two
disciplines: I cannot imagine a psychologist who could be counted as a
good economist without formal training in that discipline, but it
seems to be easier for economists to be good psychologists. This is
certainly the case for both Dick and Sendhil Mullainathan—they know a
great deal of what is going on in modern psychology, but more
importantly they have superb psychological intuition and are willing
to trust it.

Some of Dick Thaler’s most important ideas of recent years—especially
his elaboration of the role of default options and status quo bias—
have relied more on his flawless psychological sense than on actual
psychological research. I was slightly worried by that development,
fearing that behavioral economics might not need much input from
psychology anymore. But the recent work of Sendhil Mullainathan has
reassured me on this score as well as on many others. Sendhil belongs
to a new generation. He was Dick Thaler’s favorite student as an
undergraduate at Cornell, and his wonderful research on poverty is a
collaboration with a psychologist, Eldar Shafir, who is roughly my
son’s age. The psychology on which they draw is different from the
ideas that influenced Dick. In the mind of behavioral economists,
young and less young, the fusion of ideas from the two disciplines
yields a rich and exciting picture of decision making, in which a
basic premise—that the immediate context of decision making matters
more than you think—is put to work in novel ways.

I happened to be involved in an encounter that had quite a bit to do
with the birth of behavioral economics. More than twenty-five years
ago, Eric Wanner was about to become the President of the Russell Sage
Foundation—a post he has held with grace and distinction ever since.
Amos Tversky and I met Eric at a conference on Cognitive Science in
Rochester, where he invited us to have a beer and discuss his idea of
bringing together psychology and economics. He asked how a foundation
could help. We both remember my answer. I told him that this was not a
project on which it was possible to spend a lot of money honestly.
More importantly, I told him that it was futile to support
psychologists who wanted to influence economics. The people who needed
support were economists who were willing to be influenced. Indeed, the
first grant that the Russell Sage Foundation made in that area allowed
Dick Thaler to spend a year with me in Vancouver. This was 1983-1984,
which was a very good year for behavioral economics. As the Edge
Sonoma session amply demonstrated, we have come a long way since that
day in a Rochester bar.

a SHORT COURSE in THINKING about THINKING
http://edge.org/3rd_culture/kahneman07/kahneman07_index.html

AMOS TVERSKY
http://www.j-bradford-delong.net/movable_type/archives/001025.html

CONTACT
Daniel Kahneman
http://www.princeton.edu/~kahneman/
email : kahneman [at] princeton [dot] edu

Sendhil Mullainathan
http://www.economics.harvard.edu/faculty/mullainathan
http://www.povertyactionlab.org/projects/?type=3&sort=3
email : mullain [at] fas.harvard [dot] edu

Richard H. Thaler
http://www.chicagogsb.edu/faculty/bio.aspx?person_id=31455
http://faculty.chicagogsb.edu/richard.thaler/research/
http://www.fullerthaler.com/
email : richard.thaler [at] chicagogsb [dot] edu

Cass R. Sunstein
http://www.law.harvard.edu/faculty/directory/index.html?id=552
email : csunstei [at] law.harvard [dot] edu

NUDGE
http://www.nudges.org/
http://nudges.wordpress.com/
http://magazine.uchicago.edu/0502/features/economics.shtml
http://nudges.files.wordpress.com/2008/04/our-dozen-nudges1.pdf
http://www.econtalk.org/archives/2007/05/sunstein_on_inf.html

PATERNALISM LITE


http://www.youtube.com/watch?v=Dz9K25ECIpU

http://freakonomics.blogs.nytimes.com/2008/04/15/from-push-to-nudge-a-qa-with-the-authors-of-the-latter/
http://www.nudges.org/glossary.cfm
“Libertarian Paternalism: Not an oxymoron. Libertarian paternalism is
a relatively weak, soft, and non-intrusive type of paternalism where
choices are not blocked, fenced off, or significantly burdened. A
philosophic approach to governance, public or private, to help homo
sapiens who want to make choices that improve their lives, without
infringing on the liberty of others. Addendum to skeptics: It is not
pledge for bigger government, just for better governance.”

PILOT ERROR
http://en.wikipedia.org/wiki/Human_error
http://www.eurocontrol.int/hifa/public/standard_page/Hifa_HifaData_Tools_HumErr.html
http://books.google.com/books?id=WJL8NZc8lZ8C
http://www2.owen.vanderbilt.edu/mike.shor/courses/game-theory/docs/lecture02/Thaler.html
Richard Thaler has led a revolution in the study of economics by
understanding the strange ways people behave with their money.
by Roger Lowenstein  /  11 February 2001

It is possible that Richard Thaler changed his mind about economic
theory and went on to challenge what had become a hopelessly dry and
out-of-touch discipline because, one day, when a few of his supposedly
rational colleagues were over at his house, he noticed that they were
unable to stop themselves from gorging on some cashew nuts he’d put
out. Then again, it could have been because a friend admitted to
Thaler that, although he mowed his own lawn to save $10, he would
never agree to cut the lawn next door in return for the same $10 or
even more. But the moment that sticks in Thaler’s mind occurred back
in the 1970’s, when he and another friend, a computer maven named Jeff
Lasky, decided to skip a basketball game in Rochester because of a
swirling snowstorm. “But if we had bought the tickets already, we’d
go,” Lasky noted. “True — and interesting,” Thaler replied.

Thaler began to make note of these episodes — anomalies, he called
them — and to chalk them up on his blackboard at the University of
Rochester, where he was a young, unheralded and untenured assistant
professor. Each of these stories was at odds with neoclassical
economics as it was taught in graduate schools; indeed, each was a
tiny subversion of the prevailing orthodoxy. According to accepted
economic theory, for instance, a person is always better off with more
rather than fewer choices. So why had Thaler’s colleagues roundly
thanked him for removing the tempting cashews from his living room?
The lawn example was even more troubling. Perhaps you dimly remember
from Economics 101 that unlovely term, “opportunity cost.” The idea,
as your pointy-headed prof vainly tried to persuade you, is that
forgoing a gain of $10 to mow a neighbor’s lawn “costs” just as much
as paying somebody else to mow your own. According to theory, you
either prefer the extra time or the extra money — it can’t be both.
And the basketball tickets refer to “sunk costs.” No sense going to
the health club just because we have paid our dues, right? After all,
the money is already paid — sunk. And yet, Thaler observed, we do.
People, in short, do not behave like the pointy heads say they should.

In the ordered world of economics, this rated as a heresy on the scale
of Galileo. According to the standard or neoclassical school
(essentially a 20th-century updating of Adam Smith), people, in their
economic lives, are everywhere and always rational decision makers;
those who aren’t either learn quickly or are punished by markets and
go broke. Among the implications of this view are that market prices
are always right and that people choose the right stocks, the right
career, the right level of savings — indeed, that they coolly adjust
their rates of spending with each fluctuation in their portfolios, as
though every consumer were a mathematician, too. Since the 1970’s,
this orthodoxy has totally dominated the top universities, not to
mention the Nobel Prize committee.

Thaler spearheaded a simple but devastating dissent. Rejecting the
narrow, mechanical homo economicus that serves as a basis for
neoclassical theory, Thaler proposed that most people actually behave
like . . . people! They are prone to error, irrationality and emotion,
and they act in ways not always consistent with maximizing their own
financial well being. So serious was Thaler’s challenge that Merton
Miller, the late Nobelist and neoclassical deity, refused to talk to
him; Thaler’s own thesis adviser lamented that he had wasted a
promising career on trivialities like cashews. Most economists simply
ignored him.

But the anomalous behaviors documented by Thaler and a band of fellow
dissenters, including Yale’s Robert Shiller and Harvard’s Lawrence
Summers, Clinton’s last treasury secretary, have grown too numerous to
ignore. And the renegades, though still a minority, have embarked on a
second stage: an attempt to show that anomalies fall into recognizable
and predictable patterns. The hope is that by illuminating these
patterns, behavioral economics, as it has come to be called, will
yield a new understanding of the economy and markets. Behaviorism,
says Daniel McFadden, the recent Nobel laureate, “is a fundamental re-
examination of the field. It’s where gravity is pulling economic
science.”

Thaler, after years of being shunned, is now a popular, highly paid
professor at the University of Chicago Graduate School of Business,
the traditional nerve center of neoclassicism. His increasing
following is owed in no small part to the fact that behaviorism,
unlike so much of economics, is fun. Although prewar economists like
John Maynard Keynes were literary artists, most writing in the field
since the 70’s has been obtuse and highly mathematical, all but
inaccessible to the lay person. By contrast, Thaler’s papers are rich
with intuitive gems drawn from sports, business and everyday life. In
one paper, he pointed out that people go across town to save $10 on a
clock radio but not to save $10 on a large-screen TV. It’s a seemingly
obvious point — and also a direct contradiction of rationalist
theory.

Thaler loves pointing out that not even economics professors are as
rational as the guys in their models. For instance, a bottle of wine
that sells for $50 might seem far too expensive to buy for a casual
dinner at home. But if you already owned that bottle of wine, having
purchased it earlier for far less, you’d be more likely to uncork it
for the same meal. To an economist (a sober one, anyway) this makes no
sense. But Thaler culled the anecdote from Richard Rosett, a prominent
neoclassicist.

A thickset man of 55, Thaler has a sharp wit and a voluble ego. Many
assume that his years in the academic wilderness have made him
defensive; Thaler denies it. “The last thing I want to do is to sound
embittered about having to struggle,” he told me, easing his Audi
around Lake Michigan toward the Gothic stone campus. But Thaler
doesn’t so much debate opponents; he skewers them. The British
economist Ken Binmore once proclaimed at a seminar that people evolve
toward rationality by learning from mistakes. Thaler retorted that
people may learn how to shop for groceries sensibly because they do it
every week, but the big decisions — marriage, career, retirement —
don’t come up that often. So Binmore’s highbrow theories, he
concluded, were good for “buying milk.”

I met Thaler two days after the election, and he was already
predicting that the country would be willing to accept Bush as the
winner, because “people have a bias toward the status quo.” I asked
how “status-quo bias” affects economics, and Thaler observed that
workers save more when they are automatically enrolled in savings
programs than when they have to choose to participate by, say,
returning a form. Standard theory holds that workers would make the
most rational decision regardless.

Savings is an area where Thaler thinks he can have a big impact. Along
with Shlomo Benartzi, a collaborator at U.C.L.A., Thaler cooked up a
plan called Save More Tomorrow. The idea is to persuade employees to
commit a big share of future salary increases to their retirement
accounts. People find it less painful to make future concessions
because pain deferred is, to an extent, pain denied. Therein lies the
logic for New Year’s resolutions. Save More Tomorrow was tried with a
Chicago company, and workers tripled their savings within a year and a
half — an astounding result. “This is big stuff,” Thaler says. He is
shopping the plan around to other employers and predicts that
eventually it could help raise the country’s low savings rate.

Though Thaler, who comes across as a middling, Robert Rubin-style
Democrat, plays down the connection, such results could provide
ammunition to liberals who think government bashing has gone too far.
Since the Reagan era, a mantra for office seekers is that people know
what is best for themselves. Generally, yes; but what if not always,
and what if they err in predictable ways? For instance, Thaler has
found that the number of options on a 401(k) menu can affect the
employees’ selections. Those with a choice of a stock fund and bond
fund tend to invest half in each. Those with a choice of three stock
funds and one bond fund are likely to sprinkle an equal amount of
their savings in each, and thus put 75 percent of the total in stocks.
Such behavior illustrates “framing” — decisions being affected by how
choices are positioned. Political pollsters and advertisers have known
this for years, though economists are just coming around.

Framing has big implications for the debate on privatizing Social
Security. Neoclassicists say that people should manage their own
retirement accounts, and that the more choices they have the better.
Thalerites are not so sure. “If Thaler is right, it makes the current
dogmatic antipaternalism really doubtful,” says Cass Sunstein, a
prominent legal scholar at the University of Chicago.

Thaler, who grew up in Chatham, N.J., the son of an actuary, wrote his

doctoral thesis at the University of Rochester on the economic “worth”
of a human life (public planners tackle this morbid theme frequently,
for instance, in determining speed limits). Thaler conceived a clever
method of calculation: measuring the difference in pay between life-
threatening jobs like logging and safer lines of work. He came up with
a figure of $200 a year (in 1967 dollars) for each 1-in-1,000 chance
of dying.

Sherwin Rosen, his thesis adviser, loved it. Thaler did not. He had
been asking friends about it, and most insisted that they would not
accept a 1-in-1,000 mortality risk for anything less than a million
dollars. Paradoxically, the same friends said they would not be
willing to forgo any income to eliminate the risks that their jobs
already entailed. Thaler decided that rather than rationally pricing
mortality, people had a cognitive disconnect; they put a premium on
new risks and casually discounted familiar ones.

For a while, Thaler regarded such anomalies as mere cocktail-party
fodder. But in 1976 he happened upon the work of two psychologists,
Daniel Kahneman and the now-deceased Amos Tversky, who had been
studying many of the same behaviors as Thaler. The two had noticed a
key pattern: people are more concerned with changes in wealth than
with their absolute level — a violation of standard theory that
explained many of Thaler’s anomalies. Moreover, most people are “loss
averse,” meaning they experience more pain from losses than pleasure
from gains. This explains why investors hate to sell losers. For
Thaler, their work was an epiphany. He wrote to Tversky, who plainly
encouraged him. “He took me seriously,” Thaler recalled, “and because
of that, I started taking it seriously.”

Thaler began designing experiments to test his ideas. In one, Thaler
told lab subjects to imagine they are stranded on a beach on a
sweltering day and that someone offers to go for their favorite brand
of beer. How much would they be willing to pay? Invariably, Thaler
found, subjects agree to pay more if they are told that the beer is
being purchased from an exclusive hotel rather than from a rundown
grocery. It strikes them as unfair to pay the same. This violates the
bedrock principle that one Budweiser is worth the same as another, and
it suggests that people care as much about being treated fairly as
they do about the actual value of what they’re paying for. Although
“fairness” is generally ignored by neoclassicists, it’s probably a
reason why companies do not lower salaries when they encounter tough
times — perversely, laying off workers is considered more fair.

Thaler’s first paper on anomalies was rejected by the leading economic
journals. But in 1980, a new publication, The Journal of Economic
Behavior and Organization, was desperate for copy, and Thaler’s
“Toward a Positive Theory of Consumer Choice” saw the light of day. “I
didn’t have any data,” he admits. “It was stuff that was just true.”

The response from fellow economists was zero. But the article
eventually caught the eye of Eric Wanner, a psychologist at the Alfred
P. Sloan Foundation in New York. Wanner was itching to get economists
and psychologists talking to one another, and Thaler took the bait.
“He was the first economist who thought hard about the implications
for economics,” Wanner says. “The reaction of mainstream economists
was defensive and hostile. They considered it an attack — an
apostasy.” Wanner, who became president of the Russell Sage
Foundation, started financing behavioral economics, and Thaler became
the informal leader, organizing seminars and summer workshops. In
effect, he turned an idea into a movement. “Dick was like a taxonomist
who goes out and collects embarrassing specimens,” Wanner says. “He
learned that to get anyone to pay attention to him he had to develop a
portfolio of facts that he could be entertaining about and that
economists couldn’t sweep under the rug.”

Thaler’s most original contribution was “mental accounting” — an
extension of Kahneman and Tversky’s “framing” principle. “Framing”
says the positioning of choices prejudices the outcome. “Mental
accounting” says people draw their own frames, and that where they
place the boundaries subtly affects their decisions. For instance, a
poker player who accounts for each day separately may become bolder at
the end of a winning night because he feels he is playing with “house
money.” If he accounted for each hand separately, he would play the
first and last hands the same.

Most people sort their money into accounts like “current income” and
“savings” and justify different expenditures from each. They’ll gladly
blow their winnings from the office football pool, a “frivolous”
account, even while scrupulously salting away every penny of their
salaries.

Thaler and a trio of colleagues went on to document that cabdrivers
stop working for the day when they reach a target level of income.
(Each day’s “account” is separate.) This means that — quite
nonsensically — they work shorter hours on more lucrative days, like
when it’s raining, and longer hours on days when fares are scarce! In
a sense, investors who pay attention to short-term fluctuations are
like those cabbies; if they toted up their stocks less frequently,
they would be better investors. Thaler went so far as to suggest to an
audience at Stanford that investors should be barred from seeing their
portfolios more than once every five years.

Such irreverence reinforced the view among economists that Thaler
could be safely ignored. His anecdotes were fuzzy science, they said,
and examples like the cabbies were easy pickings. Since there is no
way for a third party to profit from a cabbie’s mistake, it’s not
surprising that he would make one. Thaler knew the criticism had
merit, and that to be taken seriously, he had to demonstrate
irrationalities in financial markets, which are the purest embodiment
of neoclassicism. In the markets, one person’s bad decision can be
offset by someone else’s smart one. Across the markets, rationality
should reign.

Thaler set out to prove that it did not. His first effort, a 1985
paper with Werner De Bondt, his doctoral student, showed that stocks
tend to revert to the mean — that is, stocks that have outperformed
for a sustained period are likely to lag in the future and vice versa.
This was a finding that Chicago School types couldn’t ignore —
according to their theory, no pattern can be sustained, since if it
did, canny traders would try to profit from it, correcting prices
until the pattern disappeared.

Then, in 1987, Thaler was hired to write a regular Anomalies column
for a new economics journal, giving him a widespread audience among
his peers. That same year, the stock market crashed 23 percent on a
single day. Thaler could hardly have imagined better proof that the
market was not, well, perfectly rational. More economists began to
mine the data, and by the 90’s there was a rich literature of market
anomalies, documenting, for example, that people can consistently make
money on stocks that trade at low multiples of earnings, or on
companies that signal changes by doing things like hiking dividends.
Documenting anomalies became a popular pastime from Berkeley to
Harvard.

Thaler still has plenty of critics. The harshest one is right upstairs
from his office at Chicago, the curmudgeonly Eugene Fama, a longtime
advocate of the efficient-market school. “What Thaler does is
basically a curiosity item,” Fama snipes. “Would you be surprised that
every shopper doesn’t shop at the lowest prices? Not really. Does that
mean that prices aren’t competitive?”

Thaler periodically invites Fama in to his class to present the other
side, but Fama has not returned the gesture and, indeed, sounds bitter
that behavioral finance is getting so much attention. “One question
that occurs to me,” Fama says, “is, ‘How did some of this stuff ever
get published?”‘ The objection raised most often, from Fama and
others, is that if Thaler is right and the market is so screwy, why
wouldn’t more fund managers be able to beat it? A variation of this
theme is that if behavioral economics, for all its intuitive appeal,
can’t help people make money, what good is it?

Thaler, actually, is a director in a California money management firm,
Fuller & Thaler Asset Management, which, according to figures it
provided, has been beating the market handily since 1992. The firm
tries to exploit various behavioral patterns, like “categorization”:
when Lucent Technologies was riding high, people categorized it as a
“good stock” and mentally coded news about it in a favorable way.
Lately, Lucent has become a “bad stock.” But Thaler, who does not get
involved in picking stocks, stops short of suggesting that investors
versed in his research can beat the market. Mispricings that spring
from anomalies are hard to spot, he says, particularly when the people
looking for them are prone to their own behavioral quirks.

If this sounds muted, it may be because Thaler is ready to declare
victory and join the establishment. The neoclassical model, he admits,
is a fine starting point; it’s misleading only when regarded as a
perfect or all-encompassing description. People aren’t crazy, he adds,
but their rationality is “bounded” by the tendencies that Kahneman,
Tversky, himself and others have studied. What he hopes is that a
future generation will resolve the schism by building behavioral
tendencies into a new, more flexible model.

For now, Thaler is still looking for new miniature applications
wherever he can find them, like on the basketball court recently.
Thaler studied games in which a team trails by 2 points, with time
left for just one shot. What to go for, 2 points or 3? A 2-point shot
succeeds about half the time, a 3-pointer about 33 percent of the
time. But since a 2-point basket would only tie the game (and force an
overtime, in which the team has a 50-50 chance of winning), going for
a 3-pointer is a superior strategy. Still, most coaches go for 2. Why?
Because it lowers the risk of sudden loss. Coaches, like the rest of
us, do more to avoid losing than they do to win. You won’t find an
explanation for that in the mechanical homo economicus of theory. But
it has everything to do with folks Thaler thinks are much more
relevant to the economy — Homo sapiens.

PLEASE JUST MAKE THEM?
http://news.cnet.com/8301-17938_105-10421017-1.html

$75 WATERPROOF COMPUTER w/ CAMERA (SOLAR or CRANK?)
http://www.forbes.com/2009/12/22/tablet-computer-negroponte-technology-cio-network-olpc.html
Take a look at the designs for what could someday be the world’s cheapest PC, and you may start to wish you were a third-grade child in Burundi.
BY Andy Greenberg / 12.22.09

One Laptop Per Child (OLPC), MIT professor Nicholas Negroponte’s non-profit effort aimed at putting cheap educational laptops into the hands of developing world schoolchildren, is working on an upgrade to its so-called XO computer, once known as the “hundred-dollar laptop.” That revamped machine, known as the XO-3 and targeted for release in 2012, is still more of a pipe dream than a product. But early designs for the PC reveal a minimalist slate of touch-powered electronics that drops practically every feature of a traditional computer except its 8.5-by-11-inch screen, a scheme that would shed all of the first XO’s child-like clunkiness without losing its simple accessibility. “I wanted to bring the One Laptop Per Child identity to life in this new form,” says Yves Behar, founder of FuseProject, which designed the both the original and the XO-3. “That meant taking the visual complexity away, bringing tactility and friendliness, touch and color.”

Behar says he hopes to shrink the frame around the XO-3’s display down to practically nothing, opting for a virtual keyboard instead of a physical one, and no buttons. The result, in his mock-ups, is a screen surrounded by only a thin green rubber gasket. “Nicholas [Negroponte] asked for something extremely simple and practically frameless,” he says. “The media or content on the computer will be the prime visual element.” In fact, that new form factor is just the beginning of OLPC’s monstrous ambitions: It aims to make its tablet PC highly durable, all plastic, waterproof, half the thickness of an iPhone and use less than a watt of power, despite an 8-gigaherz processor. The price: an unprecedented $75.

Many of OLPC’s goals, to be fair, are more imagination than road map. And Negroponte has a history of overpromising. The original XO never hit its original goal of $100, (it currently sells for $172) and another touch screen upgrade to the XO that Negroponte announced in May 2008 was quietly scrapped this year based on costs. But in this case, Negroponte’s plan has a twist: As OLPC assembles the components for its dream machine, it plans to open the architecture of the device to allow any other PC maker to take over the project. Negroponte is more interested in pressuring the industry to make cheaper, more education-focused PCs than he is in manufacturing any specific machine. “We don’t necessarily need to build it,” Negroponte told Forbes. “We just need to threaten to build it.”

Regardless of who puts their stamp on the ultra-cheap tablet, OLPC’s biggest task may be getting the various components in line. A typical fragile, glass LCD screen hardly seems a wise choice in the hands of young children, or in countries with unpredictable and scarce electricity. So OLPC hopes to incorporate plastic back-plane components, possibly from Mountain View, Calif.-based Plastic Logic, that would be far more durable. The tablet will also likely use ultra low-power screens from start-up Pixel Qi with both reflective and LCD capabilities, created by former Negroponte disciple Mary Lou Jepsen. If Behar’s design comes to fruition, the XO-3 will feature a camera on the back of the device and a finger-hold ring on the computer’s corner. That loop, a metal cable that runs from the device’s rim and is encased in the same rubber as the screen frame, can be used to steady the computer in the user’s hand or to let it hang at one’s side. Magnets in the loop could also be used to keep it tucked behind the machine, out of the way.

Those simple additions are the only departures from the tablet’s minimalist design: Ideally, the machine won’t even have a charging port. Behar says OLPC wants to use induction to wirelessly charge the battery through its rubber frame. “We wanted to remove all the scars that you typically see on a laptop from Lenovo or HP,” he says. While the tablet isn’t slated to appear until 2012, OLPC has other plans in the meantime. An incremental upgrade of the XO set for release in January will have several times the memory, storage and processing power of the current machine. The next upgrade, in 2011, will boost the machine’s performance again and replace its AMD chip with a lower-power processor from phone chip maker Marvell.

When it comes to his plans for the $75 dream tablet, however, Negroponte admits his track record of lofty promises doesn’t offer much assurance that this latest fantasy machine will appear. But he warns the computer industry not to underestimate OLPC. “Sure, if I were a commercial entity coming to you for investment, and I’d made the projections I had in the past, you wouldn’t invest again,” he says. “But we’re not a commercial operation. If we only achieve half of what we’re setting out to do, it could have very big consequences.”

ENDORSEMENT
http://www.i4u.com/article29451.html
BY Robert Evans / 23 Dec 2009

“One Laptop Per Child is a charity run by Nicholas Negroponte. Their goal is to provide laptops to every child in the developing world. One of the ways they do this is by selling their ultra-cheap machines to Westerners for double the price. That way you get a laptop, and you get to buy a laptop for some kid in Uganda or Somalia. While the current versions of the OLPC are fairly unimpressive, the XO-3, Negroponte’s design for the 2012 OLPC, looks incredible.

Forbes reports that this new OLPC is going to be a totally stripped down, 8.5″-11” tablet PC. The only features of this tablet will be the touchscreen, and a little ring on the side to act as a hand-hold or to loop into a belt. The XO-3 will be simple and durable; it’s going to be made entirely of plastic will be waterproof. It should pack an 8 GHz processor, but will use less than a watt of power. Remember; this thing isn’t scheduled to hit until 2012.

The price is expected to be $75. Whether or not this device will ever launch, let alone at that price, remains to be seen. I really hope it does, though. One Laptop Per Child is an incredibly beneficial charity that allows poor children all around the world to connect to the Internet. It makes possible a level of communication and exposure to information that none of these children would otherwise have.
Plus, the XO-3 is supposed to have a camera. That means Flickr will soon be populated with thousands of shots from OLPC owners in exotic locales all around the world. That alone is worth a donation or two.

CONTACT
Nicholas Negroponte
http://web.media.mit.edu/~nicholas/
http://laptop.org/en/participate/index.shtml
email : nicholas [at] media.mit [dot] edu

ONE LAPTOP PER CHILD
http://laptop.org/en/
http://wiki.laptop.org/go/Regional_groups#20_Active_Groups_for_groups.laptop.org

MASS COMMUNICATION
http://www.kiwanja.net/projects.htm
http://www.ngomobile.org/
http://www.grameenfoundation.applab.org/section/index

http://www.allvoices.com/
http://fellows.rdvp.org/eriksundelof/blog
http://www.campware.org/

http://www.questionbox.org/what.html
http://barcamp.org/BarCampAfrica
http://mobility.kiwanja.net/

http://www.sokwanele.com/map/all_breaches
http://www.sokwanele.com/zigwatch
http://ushahidi.com/
http://mobilesinmalawi.blogspot.com/
http://www.kubatana.net/

http://www.newschallenge.org/freedom_fone
http://www.frontlinesms.com/who/
http://www.frontlinesms.com/download/

SPECTRE TOOLKIT : WHAT IS FRONTLINE.SMS?
http://www.frontlinesms.com/what/
FrontlineSMS is free software that turns a laptop and a mobile phone
into a central communications hub. Once installed, the program enables
users to send and receive text messages with large groups of people
through mobile phones. What you communicate is up to you, making
FrontlineSMS useful in many different ways.

HOW IS FRONTLINE.SMS DIFFERENT?
* It does not require an Internet connection.
* It works with your existing plan on all GSM phones, modems and
networks.
* It is laptop-based so it can be used on the road or during power
outages.
* It stores all phone numbers and records all incoming and
outgoing messages.
* All data lives on a local computer, not on servers controlled by
someone else.
* It is scalable. Messages can be sent to individuals or large
groups.
* It enables two-way communication, useful for fieldwork or during
surveys.
* It is easy to install and requires little or no training to use.
* It can be used anywhere in the world simply by switching the SIM
card.

HOW CAN FRONTLINE.SMS BE USED?
* Human rights monitoring
* Disaster relief coordination
* Natural resource management
* Election monitoring
* Emergency alerts
* Mobilising task forces
* Field data collection
* Conducting public surveys
* Health care info requests
* Agricultural price updates
* Organizing protests
* Mobile education programs
* Coordinating fundraising efforts
* Providing weather updates
* And more

DETAIL
http://www.kiwanja.net/products.htm
http://www.kiwanja.net/mobilegallery.htm
http://www.kiwanja.net/miscellaneous/kiwanja_Musings.pdf
http://www.kiwanja.net/miscellaneous/Microfinance-Insights-kiwanja-2008.pdf
http://www.kiwanja.net/database/kiwanja_search.php
http://www.kiwanja.net/links.htm

CONTACT
Ken Banks
http://www.kiwanja.net
http://www.blogspot.kiwanja.net
email : ken.banks [at] ngomobile [dot] org / ken.banks [at] kiwanja [dot] net

BIOGRAPHY
http://www.kiwanja.net/kenbanks.htm
“Ken Banks, founder of kiwanja.net, specialises in the application of
mobile technology for positive social and environmental change in the
developing world. He combines over 22 years in I.T. with over 15 years
experience living and working throughout Africa in countries including
Kenya, Nigeria (where he ran a primate sanctuary), South Africa,
Mozambique, Cameroon, Zambia, Uganda and Zimbabwe. In 1999 he
graduated from Sussex University with honours in Social Anthropology
with Development Studies.

His vision is to empower others to create social change, and he does
this by developing and providing tools to mostly grassroots
organisations who seek to better use technology in their work. In 2007
he hit headline news on the BBC when his text messaging application –
FrontlineSMS – was used to help monitor the Nigerian Presidential
elections. Since launch the software has been successfully implemented
in over forty countries including Afghanistan, Indonesia, Zimbabwe,
the Philippines and Pakistan.

Ken has recently been interviewed by the BBC World Service, The
Economist, BBC News Online, The New York Times, Nokia, Mongabay.com,
The Africa Journal, White African and the Sussex University Alumni
magazine, among many others, and he was recently invited to take part
in an Aspen Institute round table discussion on the use of mobiles in
activism and civic engagement. Ken has written about his work, and the
wider role of mobile technology, for a number of publications
including Didactics World, BBC News, Boston Review, Vodafone Receiver
and Stanford and Harvard University magazines, and has a regular
online column in PC World. He has also acted as an official judge for
the Global Mobile Awards, the Mobile Messaging Awards and his own
nGOmobile initiative, and is a regional judge for the 2008
Adjudication Panel for the African ICT Achievers Awards Programme.

He has spoken about the application of mobile technology at a number
of conferences, workshops and organisations including Nokia, IDEO,
Stanford University, the MacArthur Foundation, Amnesty International
and the University of Arizona. He has also presented papers at the W3C
Workshop on the Mobile Web in Developing Countries (Bangalore, 2006
and Sao Paulo, 2008) and the 16th International World Wide Web
Conference (Canada, 2007), where he also sat on a specialist panel
discussing web delivery models for emerging markets. Ken also spoke at
the Mobile World Congress in Barcelona (2008), and delivered a keynote
address at Mobile Messaging 2008 in Cannes.

Ken was recently awarded grants from the MacArthur Foundation and the
Open Society Institute (OSI), and has been short listed for two mobile
industry awards for the development of FrontlineSMS. Between 2006 and
2007 he was based at Stanford University as a Visiting Fellow on the
Reuters Digital Vision Program, and in 2008 was named as one of
sixteen Pop!Tech Social Innovation Fellows. He currently spends his
time between Cambridge (UK) and Stanford University in California.”

ICT4D
http://www.eldis.org/go/topics/resource-guides/manuals-and-toolkits
http://en.wikipedia.org/wiki/Information_and_Communication_Technologies_for_Development
http://www.w3.org/2008/MW4D/
http://www.idrc.ca/ict4d/
http://www.ict4d.org.uk/
http://www.ict4wd.blogspot.com/

http://wiki.mobiles.tacticaltech.org/
http://www.tacticaltech.org/
http://www.inveneo.org/
http://www.iconnect-online.org/
http://www.digitalopportunity.org/

http://www.e-forall.org/
http://www.manchester.ac.uk/research/richard.heeks/research
http://tier.cs.berkeley.edu/wiki/
http://sustainabilityfirst.blogspot.com/
http://ictlogy.net/

CROWD-MIND GOES META
http://www.economist.com/world/international/displaystory.cfm?story_id=10219930
Protesters and governments are mastering the tricks of the mobile trade
Cats and mice and handsets  /  Nov 29th 2007

BACK in September, protesters from many parts of the United States
poured into the small town of Jena, Louisiana, to express their anger
over the over-zealous prosecution (as they saw it) of six young
African-Americans on charges of assault. Mobile-phone text messages
played an important role in pulling in the crowd.

But for pioneers of mobile telephony and texts as tools of protest and
dissent, simply summoning people to demonstrations—a technique first
deployed in the Philippines as long ago as 2001—is old hat. The search
is on for ever more creative ways to use this ubiquitous device.

At a recent conference in São Paulo on “mobile activism”—a term that
embraces humanitarian work as well as protest—there was much talk
about how to “go beyond text” when using mobile phones. And it became
clear that exuberant practice was galloping ahead of theory. One
recent craze has been the use of political ringtones. Once again,
Filipinos are in the vanguard. Since 2005 that country’s best-known
tone, especially among youngsters exasperated by corruption, has been
“Hello Garci”—a snatch of taped conversation in which President Gloria
Macapagal-Arroyo seems to be chatting with Virgilio Garcillano, her
election organiser, ahead of the 2004 poll that confirmed her in
office. In Hispanic countries, meanwhile, the latest fashion is a
royal voice saying “Why don’t you shut up?”—the recent outburst of
Spain’s King Juan Carlos to President Hugo Chávez of Venezuela at a
summit in Santiago, Chile.

Mobiles are also being used in more sophisticated ways, to capture and
disseminate images that were never supposed to see the light of day.
Witness, a non-governmental organisation that aims to record and
denounce human-rights abuses, is one pioneer. Instead of merely
posting verbal reports, it invites visitors to its website to the
“Hub”—a collection of harrowing video clips, often uploaded from
mobiles, which depict cruelty in action. On the “Egypt” country page,
there are grainy images showing torture in a prison.

For now at least, expense and technological problems make it hard to
organise any international mobile-based protest. The lack of full
interoperability between mobile systems means that borders are still
difficult to cross. But efforts are under way to get round that
problem. For example, FrontlineSMS, a laptop-based (and thus portable)
technology has been designed for use almost anywhere. Early this year
it was deployed in the monitoring of elections in Nigeria. Voters
texted complaints to a computer where they could be processed and
cross-checked by monitors from international bodies such as the
European Union.

More recently FrontlineSMS was used in Pakistan to get round curbs on
information flowing in and out of the country. Both there and in
Myanmar (Burma) recent disturbances have produced some interesting
insights into the cat-and-mouse games of protesters and political
masters.

In Pakistan the equipment used by local authorities was too cheap to
block the flow of text messages. This helped Pakistani protesters to
stay informed about sympathetic rallies taking place in America and
Britain—and to give the outside world a glimpse of ordinary people’s
reactions to the state of emergency.

During the recent protests in Myanmar, the authorities temporarily
suspended text messaging altogether. That did not stop activists from
using expensive satellite phones, which are harder to shut down. The
political, and above all, economic cost of blocking text messages was
relatively low in Myanmar, because not many people use mobiles. But in
many other developing countries, shutting mobile systems would be
economically disastrous and politically costly, because so many small
businesses depend on them.

In some places, like Belarus, the authorities have refined the art of
blocking mobile coverage in specific places—such as protest venues.
They have also turned text messages to their own uses: by using the
state-owned network to spread warnings that a rally is likely to end
in bloodshed.

For hard-pressed activists in search of new techniques, help may come
from an unlikely quarter. Google, the internet giant, has offered $10m
for the most innovative new application for mobile phones. The offer
extends to ideas that bring humanitarian benefits or contribute to
economic development. Mobile activists have never lacked imagination,
and many of them are already hard at work, thinking of clever new uses
for those little devices—mostly rather crude, five-year-old models—
that have become part of daily life in the poorest parts of the world.

CHEAP HAND-HELD GLOBAL-HUMAN INTERFACE
http://www.economist.com/science/tq/displaystory.cfm?story_id=11999307
Computing: In future, most new internet users will be in developing
countries and will use mobile phones. Expect a wave of innovation
The meek shall inherit the web  /  Sep 4th 2008

THE World Wide Web Consortium (W3C), the body that leads the
development of technical standards for the web, usually concerns
itself with nerdy matters such as extensible mark-up languages and
cascading style sheets. So the new interest group it launched in May
is rather unusual. It will focus on the use of the mobile web for
social development—the sort of vague concept that techie types tend to
avoid, because it is more than simply a technical matter of codes and
protocols. Why is the W3C interested in it?

The simple answer is that the number of mobile phones that can access
the internet is growing at a phenomenal rate, especially in the
developing world. In China, for example, over 73m people, or 29% of
all internet users in the country, use mobile phones to get online.
And the number of people doing so grew by 45% in the six months to June
—far higher than the rate of access growth using laptops, according to
the China Internet Network Information Centre.

This year China overtook America as the country with the largest
number of internet users—currently over 250m. And China also has some
600m mobile-phone subscribers, more than any other country, so the
potential for the mobile internet is enormous. Companies that stake
their reputations on being at the technological forefront understand
this. Last year Lee Kai-fu, Google’s president in China, announced
that Google was redesigning its products for a market where “most
Chinese users who touch the mobile internet will have no PC at all.”

It is not just China. Opera Software, a firm that makes web-browser
software for mobile phones, reports rapid growth in mobile-web
browsing in developing countries. The number of web pages viewed in
June by the 14m users of its software was over 3 billion, a 300%
increase on a year earlier. The fastest growth was in developing
countries including Russia, Indonesia, India and South Africa.

Behind these statistics lies a more profound social change. A couple
of years ago, a favourite example of mobile phones’ impact in the
developing world was that of an Indian fisherman calling different
ports from his boat to get a better price for his catch. But mobile
phones are increasingly being used to access more elaborate data
services.

A case in point is M-PESA, a mobile-payment service introduced by
Safaricom Kenya, a mobile operator, in 2007. It allows subscribers to
deposit and withdraw money via Safaricom’s airtime-sales agents, and
send funds to each other by text message. The service is now used by
around a quarter of Safaricom’s 10m customers. Casual workers can be
paid quickly by phone; taxi drivers can accept payment without having
to carry cash around; money can be sent to friends and family in
emergencies. Safaricom’s parent company, Vodafone, has launched M-PESA
in Tanzania and Afghanistan, and plans to introduce it in India.

Similar services have also proved popular in South Africa and the
Philippines. Mobile banking is now being introduced into the Maldives,
a group of islands in the Indian Ocean where many people lost their
life savings, held in cash, in the tsunami of December 2004.

For the W3C, M-PESA and its ilk are harbingers of far more
sophisticated services to come. If mobile banking is possible using a
simple system of text messages, imagine what might be possible with
full web access. But it will require standards to ensure that services
and devices are compatible. Stéphane Boyera, co-chair of the new W3C
interest group, says its aim is to track the social impact of the
mobile web in the developing world, to ensure that the web’s technical
standards evolve to serve this rapidly emerging constituency.

The right approach, Mr Boyera argues, is not to create “walled
gardens” of specially adapted protocols for mobile devices, but to
make sure that as much as possible of the information on the web can
be accessed easily on mobile phones. That is a worthy goal. But Ken
Banks, the other co-chair of the W3C’s new interest group and the
founder of kiwanja.net, which helps non-profit organisations exploit
mobile technologies in the developing world, points out that simple
services based on text messages are likely to predominate for some
time to come, for several reasons. All mobile phones, however cheap,
can send text messages. Mobile-web access requires more sophisticated
handsets and is not always supported by operators. And users know what
it costs to send a text message.

As countries work their way up the development ladder, however, the
situation changes in favour of full mobile-web access. Jim Lee, a
manager at Nokia’s Beijing office, says he was surprised to find that
university students in remote regions of China were buying Nokia
Nseries smart-phones, costing several months of their disposable
income. Such handsets are status symbols, but there are also pragmatic
reasons to buy them. With up to eight students in each dorm room,
phones are often the only practical way for students to access the web
for their studies. And smart-phones are expensive, but operators often
provide great deals on data tariffs to attract new customers.

Xuehui Zhao, a recent graduate of the Anyang Institute of Technology
in Henan province, explains that a typical monthly package for five
yuan ($0.73) includes 10 megabytes of data transfer—more than enough
to allow her to spend a couple of hours each day surfing the web and
instant-messaging with friends. It is also much cheaper than paying
200 yuan per month for a fixed-broadband connection.

As this young generation of sophisticated mobile-web users grows up,
what sort of new services will they want? Many NGOs and local
governments are trying things out. Several examples were discussed at
a workshop in June organised by the W3C in São Paolo, Brazil. The
government of the Brazilian state of Paraná, for instance, is using
text messages and voice-menu systems to notify the unemployed about
job opportunities and farmers about agricultural prices.

But the workshop also highlighted the limits of what such efforts can
achieve. It quickly became apparent that more or less identical
services are being developed from scratch repeatedly in different
parts of the world. There is clearly room for more co-ordination of
such efforts, which is exactly what the W3C has in mind.

Furthermore, many clever systems are being developed by NGOs with no
apparent interest in setting up commercial services. As Mr Boyera
points out, this raises the issue of sustainability. What happens when
the NGO’s funding runs out? One conclusion from the workshop was that
promoting social development through the mobile web will mean engaging
with businesses. Regulators can also help by fostering cheap mobile
access.

The developing world missed out on much of the excitement of the
initial web revolution, the dotcom boom and Web 2.0, largely because
it did not have an internet infrastructure. But developing countries
may now be poised to leapfrog the industrialised world in the era of
the mobile web.

PREVIOUSLY ON SPECTRE
R U IN JAIL?  [TXTMOB CODER GETS SUBPOENAED]
https://spectregroup.wordpress.com/2008/04/01/r-u-in-jail/
CHARMING BURKA
https://spectregroup.wordpress.com/2008/02/21/charming-burka/
SMS BANKING IN KENYA
https://spectregroup.wordpress.com/2009/07/10/sms-banking-in-kenya/
TELEPHONE WIRE BASKETWEAVING
https://spectregroup.wordpress.com/2006/07/10/telephone-wire-basketweaving/


http://web.media.mit.edu/~tad/img/TXTmob_web.jpg

http://en.wikipedia.org/wiki/TXTMob
http://www.appliedautonomy.com/

TXTMOB CODER GETS SUBPOENAED
http://sourceforge.net/projects/txtmob
http://www.txtmob.com/

http://www.nytimes.com/2008/03/30/nyregion/30text.html

NY City Subpoenas Creator of Text Messaging Code
BY Colin Moynihan  /  March 30, 2008

When delegates to the Republican National Convention assembled in New
York in August 2004, the streets and sidewalks near Union Square and
Madison Square Garden filled with demonstrators. Police officers in
helmets formed barriers by stretching orange netting across
intersections. Hordes of bicyclists participated in rolling protests
through nighttime streets, and helicopters hovered overhead.

These tableaus and others were described as they happened in text
messages that spread from mobile phone to mobile phone in New York
City and beyond. The people sending and receiving the messages were
using technology, developed by an anonymous group of artists and
activists called the Institute for Applied Autonomy, that allowed
users to form networks and transmit messages to hundreds or thousands
of telephones.

Although the service, called TXTmob, was widely used by demonstrators,
reporters and possibly even police officers, little was known about
its inventors. Last month, however, the New York City Law Department
issued a subpoena to Tad Hirsch, a doctoral candidate at the
Massachusetts Institute of Technology who wrote the code that created
TXTmob.

Lawyers representing the city in lawsuits filed by hundreds of people
arrested during the convention asked Mr. Hirsch to hand over
voluminous records revealing the content of messages exchanged on his
service and identifying people who sent and received messages. Mr.
Hirsch says that some of the subpoenaed material no longer exists and
that he believes he has the right to keep other information secret.
“There’s a principle at stake here,” he said recently by telephone. “I
think I have a moral responsibility to the people who use my service
to protect their privacy.”

The subpoena, which was issued Feb. 4, instructed Mr. Hirsch, who is
completing his dissertation at M.I.T., to produce a wide range of
material, including all text messages sent via TXTmob during the
convention, the date and time of the messages, information about
people who sent and received messages, and lists of people who used
the service.

In a letter to the Law Department, David B. Rankin, a lawyer for Mr.
Hirsch, called the subpoena “vague” and “overbroad,” and wrote that
seeking information about TXTmob users who have nothing to do with
lawsuits against the city would violate their First Amendment and
privacy rights.

Lawyers for the city declined to comment. The subpoena is connected to
a group of 62 lawsuits against the city that stem from arrests during
the convention and have been consolidated in Federal District Court in
Manhattan. About 1,800 people were arrested and charged, but 90
percent of them ultimately walked away from court without pleading
guilty or being convicted. Many people complained that they were
arrested unjustly, and a State Supreme Court justice chastised the
city after hundreds of people were held by the police for more than 24
hours without a hearing.

The police commissioner, Raymond W. Kelly, has called the convention a
success for his department, which he credited with preventing major
disruptions during a turbulent week. He has countered complaints about
police tactics by saying that nearly a million people peacefully
expressed their political opinions, while the convention and the city
functioned smoothly. Mr. Hirsch said that the idea for TXTmob evolved
from conversations about how police departments were adopting
strategies to counter large-scale marches that converged at a single
spot.

While preparing for the 2004 political conventions in New York and
Boston, some demonstrators decided to plan decentralized protests in
which small, mobile groups held rallies and roamed the streets. “The
idea was to create a very dynamic, fluid environment,” Mr. Hirsch
said. “We wanted to transform areas around the entire city into
theaters of dissent.”

Organizers wanted to enable people in different areas to spread word
of what they were seeing in each spot and to coordinate their
movements. Mr. Hirsch said that he wrote the TXTmob code over about
two weeks. After a trial run in Boston during the Democratic National
Convention, the service was in wide use during the Republican
convention in New York. Hundreds of people went to the TXTmob Web site
and joined user groups at no charge.

As a result, when members of the War Resisters League were arrested
after starting to march up Broadway, or when Republican delegates
attended a performance of “The Lion King” on West 42nd Street, a
server under a desk in Cambridge, Mass., transmitted messages
detailing the action, often while scenes on the streets were still
unfolding.

Messages were exchanged by self-organized first-aid volunteers,
demonstrators urging each other on and even by people in far-flung
cities who simply wanted to trade thoughts or opinions with those on
the streets of New York. Reporters began monitoring the messages too,
looking for word of breaking news and rushing to spots where mass
arrests were said to be taking place. And Mr. Hirsch said he thought
it likely that police officers were among those receiving TXTmob
messages on their phones.

It is difficult to know for sure who received messages, but an
examination of police surveillance documents prepared in 2003 and
2004, and unsealed by a federal magistrate last year, makes it clear
that the authorities were aware of TXTmob at least a month before the
Republican convention began.

A document marked “N.Y.P.D. SECRET” and dated July 26, 2004, included
the address of the TXTmob Web site and stated, “It is anticipated that
text messaging is one of several different communications systems that
will be utilized to organize the upcoming RNC protests.”

.

CONTACT
Tad Hirsch
http://web.media.mit.edu/~tad/
http://web.media.mit.edu/~tad/htm/txtmob.html
email : tad [at] media [dot] mit [dot] edu

John Henry
Institute for Applied Autonomy
http://www.appliedautonomy.com
email : iaa [at] appliedautonomy [dot] com

.

PROTEST SWARMS
http://web.media.mit.edu/~tad/pub/txtmob_chi05.pdf
TXTmob: Text Messaging For Protest Swarms
BY Tad Hirsch and John Henry

Abstract: “This paper describes cell phone text messaging during the
2004 US Democratic and Republican National Conventions by protesters
using TXTmob – a text-message broadcast system developed by the
authors.  Drawing upon analysis of TXTmob messages, user interviews,
self-reporting, and news media accounts, we describe the ways that
activists used text messaging to share information and coordinate
actions during decentralized protests. We argue that text messaging
supports new forms of distributed participation in mass mobilizations.

SEE ALSO
http://www.themobilecity.nl/langswitch_lang/en/
http://www.themobilecity.nl/program/
http://www.160characters.org/
http://fromgoodtogold.blogspot.com/

CONVENTIONEERS
http://protestrnc2008.org/
http://crashtheconventions.com/

KIWANJA CONTEST
http://www.kiwanja.net/
http://www.ngomobile.org/

Competition to Offer Prizes and SMS Platform to Grassroots NGOs  /
Sep. 17, 2007
http://www.sys-con.com/read/429616.htm
nGOmobile initiative highlights the benefits of mobile technology in
the developing world

CAMBRIDGE, England, Sept. 17 /PRNewswire/ — Mobile technology
organization kiwanja.net has launched its latest non-profit mobile
initiative – nGOmobile, a competition to help grassroots NGOs take
advantage of text messaging.

The explosive entry of mobile technology into the developing world has
opened up a raft of opportunities for the non-profit sector. Text
messaging has proved itself to be remarkably versatile, helping remind
patients to take their medicine, providing market prices to farmers
and fishermen, distributing health information, allowing the reporting
of human rights abuses and promoting increased citizen participation
in government. While the list may be long, not everyone has been able
to reap the benefits.

nGOmobile is a competition aimed exclusively at grassroots non-profit
Non Governmental Organizations (NGOs) working for positive social and
environmental change throughout the developing world. “Behind the
scenes, the often unsung heroes of the NGO community battle against
the daily realities of life in developing countries, where it can take
all day to fulfill the simplest task,” said Ken Banks, Founder of
kiwanja.net. “These people don’t lack passion and commitment, they
lack tools and resources” said Banks.”

Grassroots NGOs around the world are invited to submit short project
ideas explaining how greater access to mobile technology – and SMS
text messaging in particular – would benefit them and their work. The
competition is open from today until 14th December 2007 with the
winners announced in January 2008.

The top four entries, chosen by a distinguished panel of judges, will
each win a brand new Hewlett Packard laptop computer, two Nokia mobile
phones, a GSM modem, kiwanja.net’s own entry-level text messaging
platform – FrontlineSMS – and to top it all, a cash prize of US$1,000.

Sponsors of the competition include Hewlett Packard, Nokia,
ActiveXperts, 160 Characters, Wieden+Kennedy, mBlox and Perkins Coie

Panel of Judges Ken Banks, Founder, kiwanja.net Neerja Raman, From
Good to Gold Mike Grenville, Editor, 160 Characters Micheline Ntiru,
Nokia’s Head of Corporate Social Investment for the Middle East and
Africa Bill Thompson, Journalist/commentator Renny Gleeson, Global
Director of Digital Strategies at Wieden+Kennedy The competition
website can be found at http://www.ngomobile.org/

CONTACT
Ken Banks, Founder
http://www.kiwanja.net
email : ken [dot] banks [at] ngomobile [dot] org

About kiwanja.net: Since 2003, kiwanja.net has been helping local,
national and international non-profit Non-Governmental Organizations
(NGOs) make better use of information and communications technology in
their work. Specializing in the application of mobile technology, it
provides a wide range of ICT-related services drawing on over 22
year’s experience of its Founder, Ken Banks. kiwanja.net believes that
all non-profits, whatever their size and wherever they operate, should
be given the opportunity to implement the latest mobile technologies
in their work, and actively seeks to provide the tools to enable them
to do so.

MEANWHILE

TWO TRILLION SMS IN 2008
http://www.researchandmarkets.com/reports/c84203

TWITTERERS
http://blog.wired.com/27bstroke6/2008/03/san-francisco-a.html

FBI LISTS
http://www.nytimes.com/2005/07/18/politics/18protest.html?scp=1&sq=surveillance+aclu+protesters&st=nyt

PORTLAND ANTIWAR RALLY GOES WIRELESS
http://skylab.org/~plumpy/oregonian.html
BY Jeffrey Kosseff   /  March 25, 2003

At first glance, it looks like a 9-1-1 log or a transcript from the
police scanner:

05:37pm Protesters damage cars on Second and Davis.
05:38pm March spreading north into Oldtown.
05:43pm Morrison Bridge closed again.

But the communications Thursday during antiwar protests in downtown
Portland weren’t from the police. Instead, they were part of 126 text
messages sent out to 65 protesters’ cell phones, pagers and e-mail
accounts.

Protesters say they have long searched for an efficient and quick way
of sharing news of bridge shutdowns, flag burnings and pepper
spraying. And they seem to have found it in a relatively young
wireless technology that is reliable, cheap and instantaneous, sending
short bursts of text onto many cell-phone screens at once.

“It definitely helped spread the news around,” said Michael Plump, a
24-year-old computer programmer who organized a text-messaging system
to improve communication among protesters.

Spreading news of developments takes too long with cell-phone calls
because organizers can reach only one person at a time. Walkie-talkies
aren’t reliable or secure enough. And most people don’t have laptops
with wireless e-mail access.

Plump said that since police pepper-sprayed him at a protest during
President Bush’s Aug. 23 visit to Portland, he has wanted to get more
involved with peace protests. “I wanted to help people know where the
police actions were occurring and where they were pepper spraying so
they could get away from it,” Plump said.

Web of reports

So he developed a Web-based program that allows protesters to enter
their cell phone or pager numbers or e-mail addresses into an online
database, which he promoted on Portland activist Web sites. Most
people received the alerts on cell phones or pagers, though a few
received e-mails.

From 4 p.m. to midnight Thursday, about 15 protesters throughout
downtown Portland phoned or sent e-mail and text messages to Plump’s
friend, Casey Spain. Spain summarized developments into a few words
and sent them on to the 65 cell-phone numbers in the database. Plump,
who was in downtown Portland throughout the protests, said cheers
erupted whenever Spain sent news of activists storming a bridge or
highway.

And even amid the chaos, the protesters found time for text-messaging
sarcasm:

08:27pm Rummor — police may be planning assult from under Burnside
Bridge.
08:28pm Someone plase scout under the bridge please!
08:31pm Police may be eating donuts under the bridge.

Cell-phone text messaging is gaining popularity. According to
Telephia, a California research firm, 24 percent of U.S. cell-phone
subscribers used text messaging in the first quarter of this year, up
from 20 percent the previous quarter.

Verizon service up

Verizon Wireless, which charges 10 cents to send and 2 cents to
receive each text message, has seen its news-alert service double
since January for headlines about the military and Federal Bureau of
Investigation. “A lot of people use text messaging now, and it has
been going up all the time,” said Georgia Taylor, a Verizon Wireless
spokeswoman.

Wireless companies began offering text messaging in the United States
about two years ago, said Goli Ameri, president of eTinium, a Portland
telecommunications consulting firm. It is not yet as popular in the
United States as it is in Asia and Europe. Intel recently ranked
Portland the top city in the nation for the use of wireless
technology, so Ameri said she isn’t surprised that people here are
finding new uses for text messaging.

“Portland is a pretty tech-savvy city,” she said. “That’s why you see
so many of these new technologies get introduced here first.”

{email : jeffkosseff [at] news [dot] oregonian [dot] com}

CELL PHONES, CONT.
http://www.commondreams.org/cgi-bin/print.cgi?file=/headlines05/0413-05.htm

Videos Challenge Accounts of Convention Unrest
BY Jim Dwyer  /  April 12, 2005  /  New York Times

Dennis Kyne put up such a fight at a political protest last summer,
the arresting officer recalled, it took four police officers to haul
him down the steps of the New York Public Library and across Fifth
Avenue.

“We picked him up and we carried him while he squirmed and screamed,”
the officer, Matthew Wohl, testified in December. “I had one of his
legs because he was kicking and refusing to walk on his own.”

Accused of inciting a riot and resisting arrest, Mr. Kyne was the
first of the 1,806 people arrested in New York last summer during the
Republican National Convention to take his case to a jury. But one day
after Officer Wohl testified, and before the defense called a single
witness, the prosecutor abruptly dropped all charges.

During a recess, the defense had brought new information to the
prosecutor. A videotape shot by a documentary filmmaker showed Mr.
Kyne agitated but plainly walking under his own power down the library
steps, contradicting the vivid account of Officer Wohl, who was
nowhere to be seen in the pictures. Nor was the officer seen taking
part in the arrests of four other people at the library against whom
he signed complaints.

A sprawling body of visual evidence, made possible by inexpensive,
lightweight cameras in the hands of private citizens, volunteer
observers and the police themselves, has shifted the debate over
precisely what happened on the streets during the week of the
convention.

For Mr. Kyne and 400 others arrested that week, video recordings
provided evidence that they had not committed a crime or that the
charges against them could not be proved, according to defense lawyers
and prosecutors.

Among them was Alexander Dunlop, who said he was arrested while going
to pick up sushi.

Last week, he discovered that there were two versions of the same
police tape: the one that was to be used as evidence in his trial had
been edited at two spots, removing images that showed Mr. Dunlop
behaving peacefully. When a volunteer film archivist found a more
complete version of the tape and gave it to Mr. Dunlop’s lawyer,
prosecutors immediately dropped the charges and said that a technician
had cut the material by mistake.

Seven months after the convention at Madison Square Garden, criminal
charges have fallen against all but a handful of people arrested that
week. Of the 1,670 cases that have run their full course, 91 percent
ended with the charges dismissed or with a verdict of not guilty after
trial. Many were dropped without any finding of wrongdoing, but also
without any serious inquiry into the circumstances of the arrests,
with the Manhattan district attorney’s office agreeing that the cases
should be “adjourned in contemplation of dismissal.”

So far, 162 defendants have either pleaded guilty or were convicted
after trial, and videotapes that bolstered the prosecution’s case
played a role in at least some of those cases, although prosecutors
could not provide details.

Besides offering little support or actually undercutting the
prosecution of most of the people arrested, the videotapes also
highlight another substantial piece of the historical record: the
Police Department’s tactics in controlling the demonstrations, parades
and rallies of hundreds of thousands of people were largely free of
explicit violence.

Throughout the convention week and afterward, Mayor Michael R.
Bloomberg said that the police issued clear warnings about blocking
streets or sidewalks, and that officers moved to arrest only those who
defied them. In the view of many activists – and of many people who
maintain that they were passers-by and were swept into dragnets
indiscriminately thrown over large groups – the police strategy
appeared to be designed to sweep them off the streets on technical
grounds as a show of force.

“The police develop a narrative, the defendant has a different story,
and the question becomes, how do you resolve it?” said Eileen Clancy,
a member of I-Witness Video, a project that assembled hundreds of
videotapes shot during the convention by volunteers for use by defense
lawyers.

Paul J. Browne, a police spokesman, said that videotapes often do not
show the full sequence of events, and that the public should not rush
to criticize officers simply because their recollections of events are
not consistent with a single videotape. The Manhattan district
attorney’s office is reviewing the testimony of Officer Wohl at the
request of Lewis B. Oliver Jr., the lawyer who represented Mr. Kyne in
his arrest at the library.

The Police Department maintains that much of the videotape that has
surfaced since the convention captured what Mr. Browne called the
department’s professional handling of the protests and parades. “My
guess is that people who saw the police restraint admired it,” he
said.

Video is a useful source of evidence, but not an easy one to manage,
because of the difficulties in finding a fleeting image in hundreds of
hours of tape. Moreover, many of the tapes lack index and time
markings, so cuts in the tape are not immediately apparent.

That was a problem in the case of Mr. Dunlop, who learned that his
tape had been altered only after Ms. Clancy found another version of
the same tape. Mr. Dunlop had been accused of pushing his bicycle into
a line of police officers on the Lower East Side and of resisting
arrest, but the deleted parts of the tape show him calmly approaching
the police line, and later submitting to arrest without apparent
incident.

A spokeswoman for the district attorney, Barbara Thompson, said the
material had been cut by a technician in the prosecutor’s office. “It
was our mistake,” she said. “The assistant district attorney wanted to
include that portion” because she initially believed that it supported
the charges against Mr. Dunlop. Later, however, the arresting officer,
who does not appear on the video, was no longer sure of the specifics
in the complaint against Mr. Dunlop.

In what appeared to be the most violent incident at the convention
protests, video shot by news reporters captured the beating of a man
on a motorcycle – a police officer in plainclothes – and led to the
arrest of one of those involved, Jamal Holiday. After eight months in
jail, he pleaded guilty last month to attempted assault, a low-level
felony that will be further reduced if he completes probation. His
lawyer, Elsie Chandler of the Neighborhood Defender Service of Harlem,
said that videos had led to his arrest, but also provided support for
his claim that he did not realize the man on the motorcycle was a
police officer, reducing the severity of the offense.

Mr. Browne, the police spokesman, said that despite many civilians
with cameras who were nearby when the officer was attacked, none of
the material was turned over to police trying to identify the
assailants. Footage from a freelance journalist led police to Mr.
Holiday, he said.

In the bulk of the 400 cases that were dismissed based on videotapes,
most involved arrests at three places – 16th Street near Union Square,
17th Street near Union Square and on Fulton Street – where police
officers and civilians taped the gatherings, said Martin R. Stolar,
the president of the New York City chapter of the National Lawyers
Guild. Those tapes showed that the demonstrators had followed the
instructions of senior officers to walk down those streets, only to
have another official order their arrests.

Ms. Thompson of the district attorney’s office said, “We looked at
videos from a variety of sources, and in a number of cases, we have
moved to dismiss.”

SMS ELECTION MONITORING
http://mobileactive.org/texting-it-in

Texting It In: Monitoring Elections With Mobile Phones
BY KatrinVerclas  /  August 11, 2007

In Sierra Leone’s national election today, 500 election observers at
polling stations around the country are reporting on any
irregularities via SMS with their mobile phones. Independent
monitoring of elections via cell phone is growing aqround the world,
spearheaded by a few innovative NGOs.

The story starts in Montenegro, a small country in the former
Yugoslavia. On May 21, 2006 the country saw the first instance of
volunteer monitors using SMS, also known as text messaging, as their
main election reporting tool. A Montenegrin NGO, the Center for
Democratic Transition (CDT), with technical assistance from the
National Democratic Institute (NDI) in the United States, was the
first organization in the world to use text messaging to meet all
election day reporting requirements.

Since then, mobile phones have been deployed in six elections in
countries around the world, with volunteers systematically using text
messaging in election monitoring. Pioneered by NDI, SMS monitoring is
becoming a highly sophisticated rapid reporting tool used not just in
a referendum election like in Montenegro, but in parliamentary
elections with a plethora of candidates and parties and complex data
reported via SMS. This was the case in Bahrain, a small country in the
Middle East, where monitors reported individual election tallies in a
series of five to fourty concurrent SMS messages, using a
sophisticated cosding system, with near accuracy.

Today’s election in Sierra Leone is lead by the National Election
Watch (NEW), a coalition of over 200 NGOs in the country. Assisted by
NDI, NEW has monitors at 500 of the 6171 polling stations. Monitors
report on whether there are any irregularities via SMS back to
headquarters. This election is particularly significant for the
country: It is the first presidential election since U.N. peacekeepers
withdrew two years ago. It considered a historic poll that many hope
will show that the country can transfer power peacefully after a long
civil war and military coups. In the run-up to the election there was
sporadic violence in Freetown; making the independent monitoring by
NGOs particularly relevant and necessary.

Election monitoring is a highly technical discipline, with a
sophisticated set of methodologies and extensive volunteer training.
Preparation for an election monitoring exercise involves volunteer
training and advance planning that often starts months before an
election.  Election monitors, typically led by domestic non-
governmental organizations (NGOs) often with the help of foreign
technical assistance providers like NDI, can report on multiple
dimensions.  They may, depending on the election, report on
quantitative data such as real-time voter turnout and even on actual
election results. In those cases, monitors use the data to provide a
“quick count” projection of the election results.  If a “quick count”
is conducted then a statistical random sample of polling places is
carefully selected to ensure the validity of projections.

Monitors also report on qualitative data about how well the election
is executed. This may include information on whether polls are opening
on time, whether there are enough ballots available, whether there is
free access to polling places, and whether there is any evidence of
intimidation or any other irregularities.

Reports are transmitted using an agreed-upon set of codes from a
representative sample of polling places around the country. In Sierra
Leone, for example, there are monitors stationed at 500 polling places
in every part of the country who text in reports at regular intervals.

In many contested elections, especially in emerging democracies, speed
of reporting is of the essence. It is critical that NGOs and
independent civil society organizations report data accurately and
quickly even before official results are released, especially when
fraud is feared. Mobile phones have been an important tool in this
regard. They are, of course, not a new phenomenon in election
monitoring; after all, cell phones have been around for a while now.
But prior to NDI showcasing that SMS is a viable and reliable
communication medium in elections, mobile phones were used merely to
transmit reports verbally that then still had to be transcribed in a
time-consuming and error-prone manual process.

Chris Spence, Director of Technology at NDI recalls: “In 2003, we had
24/7 shifts of college students in five locations across Nigeria
entering data from paper forms that were faxed or hand-carried into
the data centers. Timeliness and quality control were huge issues when
nearly 15,000 forms containing dozens of responses each had to be
manually entered into a database. Today, in the elections where we’ve
used SMS, you watch the data flow into the database directly when it
is time for the monitors to report. The system automatically sends
confirmation messages back to the observer in an interactive exchange
of SMS messages, so accuracy increases. At reporting time, it is quite
amazing to see the numbers change on the screen as the sms messages
pour into the database.”

In addition to increased speed and greater accuracy of reporting, SMS
election monitoring has a noteworthy ancillary benefit: the real-time
ability by headquarters to communicate with observers throughout the
election day by sending text reminders and updates keeps volunteers
motivated and engaged. SMS and phone contact also provides vital
opportunities for security updates should political conditions take a
turn for the worst.  As a result, morale amongst the volunteers soars
there is far less polling station abandonment.

In order for large-scale SMS election monitoring to succeed, a number
of conditions have to be in place. When NDI assisted an Albanian
consortium of NGOs in the local elections there in 2006, all the right
elements were present: NDI was working with an experienced and
reliable local NGO partner; SMS bulk messaging was available for all
of the mobile phone companies; the phone companies worked with the
NGOs and were available and ready during election day to deal with any
problems on the spot; phone companies and the bulk SMS vendors were
able to handle thousands of messages per minute to a few numbers at
reporting times, wireless coverage even in rural areas was excellent,
and the phone companies provided so-called interconnect ability that
allowed monitors to send messages from all of the different carriers
to one reporting number.

In Sierra Leone where most of the carriers lack international gateway
interconnect ability, the NGO coalition there will need to set up a
series of local phone numbers so that observers can text to a number
within their own provider network.  This necessitates a much more
rudimentary and complicated setup: Seven phones are tethered to a
laptop and observers are texting directly to those phones without any
bulk messaging intermediary.  Messages arrive in the phone and are
passed to computer, the software reads it using custom scripts, and
the data is compiled in an Access database ready for analysis.
Concerns about the phones handling a high volume of messages in this
situation necessitates a more complicated reporting strategy whereby
each observer will report all of data in a single text message using a
simple coding scheme.  Because Sierra Leone has more spotty wireless
coverage, election monitors in rural areas will have to travel to
areas where there is coverage to send in their reports at the end of
the day.

An important consideration is the cost of a wide-scale program. To
date NDI has found this method of reporting much more economical than
other strategies.  Pricing for bulk sms from a provider like Clickatel
is relatively inexpensive. In the Albanian election, for example, the
bulk messaging costs for a total of some 41,000 messages received and
sent from 2100 monitors was $2400 US Dollars — an extremely
inexpensive way to receive such massive amounts of data.

NDI uses a software called SMS Reception Center, built by a developer
in Russia and costing all of $69 USD. NDI tweaked the scripts over
time, and paid the developer to improve the product for its purposes
and specific local conditions.

In addition to the technical issues and costs inherent in running a
large-scale operation, Spence notes a number of strategic issues to
consider: The NGO partner on the ground needs to be experienced in
electoral monitoring, the information collected needs to be suitable
for the limited text messaging format of 160 chracters, and text
messaging needs to be commonly used and part of the local culture.
Notes Spence: “In all the countries we have worked, one thing we do
not have to do is train anyone how to text.”

In Nigeria earlier this year, a local NGO, the Human Emancipation
Project, ran a small-scale citizen monitoring program that used
untrained citizen reporters to send in SMS messages to one number. The
NGO compiled and aggregated the incoming messages and issued a report
after the election. Using a grassroots software tool, Frontline SMS,
organizers reported that about 8,000 individuals texted in some kind
of report. This is a very different method from the systematic
election monitoring conducted by NGO observer organizations and their
technical assistant providers where a more rigorous protocol is
adhered to. There is merit in engaging every-day citizens to protect
their country’s elections even if these efforts do not produce
reliable and verifiable election results and reports in the manner
that systematic election monitoring does. The Nigerian effort was
widely covered BBC News, and other outlets.

In the two years since the first large-scale SMS monitoring in
Montenegro, there have been rapid improvements in mobile services as
competition in the wireless industry has increased worldwide, and
there is growing interest and understanding on the part of NGOs that
systematic election monitoring is not as difficult as it first may
seem. As election monitoring via SMS becomes standardized and NGOs
gain experience, there is no reason for mobile phones and SMS not to
play a greater role in other areas of civic participation. For
example, imagine citizen oversight of public works projects where
people might report on whether a clinic is actually built as indicated
in a local budget. Other applications may be monitoring and
accountability of elected officials, and dissemination of voter
registration information such as the address of where to register, or
the nearest polling station. Several pilot projects in the United
States showed promising results in increasing voter turnout by text
message reminders. The future is bright for innovative ways in which
cell phones are used by citizens to participate and engage in their
countries as the mobile revolution unfolds.

COMING SOON
http://www.smartmobs.com/2007/08/27/moving-beyond-nigeria%e2%80%99s-mobile-rough-patch/

Moving beyond Nigeria’s mobile rough patch
BY Judy Breck  /  August 27th, 2007

Reuters is reporting this morning that “Nigeria Aims to Let Mobile
Phone Users Keep Numbers.” The plan is to allow subscribers to keep
their numbers as they switch among providers — hopefully to improve
service through competition. The report includes this description of
the roughness of present service in Nigeria, which is interesting to
realize. Mobile has been making a positive transition in Africa in
spite of the problems described below. When mobile service gets
better, the transition should have important new impetus one would
think.

Nigeria’s booming mobile phone market has grown from scratch to over
30 million subscribers in six years, making it one of the fastest-
growing in the world.

It is seen as having potential for many more years of rapid growth as
Nigeria is Africa’s most populous country with 140 million people, the
majority of whom do not have phones.

However, the quality of service from mobile phone providers has always
been patchy and it has deteriorated over time.

Subscribers often have to dial several times before a call goes
through. Sometimes no calls go through for hours. When they do
connect, the lines are often so bad that callers cannot hear each
other. Calls frequently cut off after a few seconds and text messages
can be delayed by hours.

Mobile operators argue that services are impaired by frequent
blackouts, forcing companies to provide their own power with costly
diesel generators, and constant vandalism and armed attacks on
facilities and staff.

NOT YET
http://www.nytimes.com/2007/10/04/world/asia/04info.html?hp

Monks Are Silenced, and for Now, Internet Is, Too
BY Seth Mydans  /  October 4, 2007

BANGKOK, Oct. 3 — It was about as simple and uncomplicated as shooting
demonstrators in the streets. Embarrassed by smuggled video and
photographs that showed their people rising up against them, the
generals who run Myanmar simply switched off the Internet. Until
Friday television screens and newspapers abroad were flooded with
scenes of tens of thousands of red-robed monks in the streets and of
chaos and violence as the junta stamped out the biggest popular
uprising there in two decades.

But then the images, text messages and postings stopped, shut down by
generals who belatedly grasped the power of the Internet to jeopardize
their crackdown. “Finally they realized that this was their biggest
enemy, and they took it down,” said Aung Zaw, editor of an exile
magazine based in Thailand called The Irrawaddy, whose Web site has
been a leading source of information in recent weeks. The site has
been attacked by a virus whose timing raises the possibility that the
military government has a few skilled hackers in its ranks.

The efficiency of this latest, technological, crackdown raises the
question whether the vaunted role of the Internet in undermining
repression can stand up to a determined and ruthless government — or
whether Myanmar, already isolated from the world, can ride out a
prolonged shutdown more easily than most countries.

OpenNet Initiative, which tracks Internet censorship, has documented
signs that in recent years several governments — including those of
Belarus, Kyrgyzstan and Tajikistan — have closed off Internet access,
or at least opposition Web sites, during periods preceding elections
or times of intense protests. The brief disruptions are known as “just
in time” filtering, said Ronald J. Deibert of OpenNet. They are
designed to quiet opponents while maintaining an appearance of
technical difficulties, thus avoiding criticism from abroad. In 2005,
King Gyanendra of Nepal ousted the government and imposed a weeklong
communications blackout. Facing massive protests, he ceded control in
2006.

Myanmar has just two Internet service providers, and shutting them
down was not complicated, said David Mathieson, an expert on Myanmar
with Human Rights Watch. Along with the Internet, the junta cut off
most telephone access to the outside world. Soldiers on the streets
confiscated cameras and video-recording cellphones. “The crackdown on
the media and on information flow is parallel to the physical
crackdown,” he said. “It seems they’ve done it quite effectively.
Since Friday we’ve seen no new images come out.” In keeping with the
country’s self-imposed isolation over the past half-century, Myanmar’s
military seemed prepared to cut the country off from the virtual world
just as it had from the world at large. Web access has not been
restored, and there is no way to know if or when it might be.

At the same time, the junta turned to the oldest tactic of all to
silence opposition: fear. Local journalists and people caught
transmitting information or using cameras are being threatened and
arrested, according to Burmese exile groups. In a final, hurried
telephone call, Mr. Aung Zaw said, one of his longtime sources said
goodbye. “We have done enough,” he said the source told him. “We can
no longer move around. It is over to you — we cannot do anything
anymore. We are down. We are hunted by soldiers — we are down.”

There are still images to come, Mr. Aung Zaw said, and as soon as he
receives them and his Web site is back up, the world will see them.
But Mr. Mathieson said the country’s dissidents were reverting to
tactics of the past, smuggling images out through cellphones, breaking
the files down for reassembly later. It is not clear how much longer
the generals can hold back the future. Technology is making it harder
for dictators and juntas to draw a curtain of secrecy. “There are
always ways people find of getting information out, and authorities
always have to struggle with them,” said Mitchell Stephens, a
professor of journalism at New York University and the author of “A
History of News.”

“There are fewer and fewer events that we don’t have film images of:
the world is filled with Zapruders,” he said, referring to Abraham
Zapruder, the onlooker who recorded the assassination of President
John F. Kennedy in 1963. Before Friday’s blackout, Myanmar’s hit-and-
run journalists were staging a virtuoso demonstration of the power of
the Internet to outmaneuver a repressive government. A guerrilla army
of citizen reporters was smuggling out pictures even as events were
unfolding, and the world was watching.

“For those of us who study the history of communication technology,
this is of equal importance to the telegraph, which was the first
medium that separated communications and transportation,” said Frank
A. Moretti, executive director of the Center for New Media Teaching
and Learning at Columbia University. Since the protests began in mid-
August, people have sent images and words through SMS text messages
and e-mail and on daily blogs, according to some exile groups that
received the messages. They have posted notices on Facebook, the
social networking Web site. They have sent tiny messages on e-cards.
They have updated the online encyclopedia Wikipedia.

They also used Internet versions of “pigeons” — the couriers that
reporters used in the past to carry out film and reports — handing
their material to embassies or nongovernment organizations with
satellite connections. Within hours, the images and reports were
broadcast back into Myanmar by foreign radio and television stations,
informing and connecting a public that hears only propaganda from its
government.

These technological tricks may offer a model to people elsewhere who
are trying to outwit repressive governments. But the generals’ heavy-
handed response is probably a less useful model. Nations with larger
economies and more ties to the outside world have more at stake.
China, for one, could not consider cutting itself off as Myanmar has
done, and so control of the Internet is an industry in itself. “In
China, it’s massive,” said Xiao Qiang, director of the China Internet
Project and an adjunct professor at the graduate school of journalism
at the University of California, Berkeley.

“There’s surveillance and intimidation, there’s legal regulation and
there is commercial leverage to force private Internet companies to
self-censor,” he said. “And there is what we call the Great Firewall,
which blocks hundreds of thousands of Web sites outside of China.” Yet
for all its efforts, even China cannot entirely control the Internet,
an easier task in a smaller country like Myanmar.

As technology makes everyone a potential reporter, the challenge in
risky places like Myanmar will be accuracy, said Vincent Brossel, head
of the Asian section of the press freedom organization Reporters
Without Borders. “Rumors are the worst enemy of independent
journalism,” he said. “Already we are hearing so many strange things.
So if you have no flow of information and the spread of rumors in a
country that is using propaganda — that’s it. You are destroying the
story, and day by day it goes down.” The technological advances on the
streets of Myanmar are the latest in a long history of revolutions in
the transmission of news — from the sailing ship to the telegraph to
international telephone lines and the telex machine to computers and
satellite telephones.

“Today every citizen is a war correspondent,” said Phillip Knightley,
author of “The First Casualty,” a classic history of war reporting
that starts with letters home from soldiers in Crimea in the 1850s and
ends with the “living room war” in Vietnam in the 1970s, the first war
that people could watch on television. “Mobile phones with video of
broadcast quality have made it possible for anyone to report a war,”
he said in an e-mail interview. “You just have to be there. No trouble
getting a start: the broadcasters have been begging viewers to send
their stuff.”

FLASHMOBS AS ACTUAL PROTEST — “TAKING A STROLL” — “LET’S GO
SHOPPING”
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/25/AR2008012503500.html

Shanghai’s Middle Class Launches Quiet, Meticulous Revolt
BY Maureen Fan  /  January 26, 2008

SHANGHAI — Bundled against the cold, the businessman made his way
down the steps. Coming toward him in blue mittens was a middle-aged
woman. “Do you know that we’re going to take a stroll this weekend?”
she whispered, using the latest euphemism for the unofficial protests
that have unnerved authorities in Shanghai over the past month. He
nodded.

Behind her, protest banners streamed from the windows of high-rise
apartment blocks, signs of middle-class discontent over a planned
extension of the city’s magnetic levitation, or maglev, train through
residential neighborhoods. The couple checked to make sure no
plainclothes police were nearby and discussed where security forces
had been posted in recent days. “Did you take any photos?” the man
asked. Yes, she said, promising to send them to him so he could post
the evidence online. In a minute, the exchange was over, but the news
would soon be added to the steady flow of reports being posted on
blogs and community bulletin boards, as well as in housing compounds
along the proposed extension — which residents contend will bring
noise pollution and possibly dangerous radiation to their
neighborhoods.

The sudden “strolls” by thousands of office workers, company managers,
young families and the elderly in this sleek financial hub are the
latest chapter in a quiet middle-class battle against government
officials. The protesters are going about their mission carefully, and
many speak anonymously for fear of retribution in a country that
stifles dissent. The Communist Party has a massive security apparatus
that closely monitors what it views as subversive activity. The party
sometimes allows public protests if they serve its political
interests, such as the ouster of corrupt officials.

But the protests here have been unusual. They are led by homeowners
and professionals — people who may not previously have had much to
complain to the government about but whose awareness of their
individual rights has grown along with their prosperity. Police, who
have routinely put down rural protests by poor farmers, have found it
more difficult to intimidate an affluent, educated crowd in a major
city.

The demonstrations do have at least one recent precursor, and it is
one Shanghai residents acknowledge using for inspiration. In the
picturesque seaside city of Xiamen, thousands of middle-class
residents have managed at least temporarily to halt the construction
of a $1 billion chemical factory because of environmental concerns.
Demonstrators in that city, in Fujian province, relied on the Internet
and cellphone text messaging to organize strolls and other opposition.
“We learned from Xiamen,” said Gu Qidong, 36, a Shanghai protester and
freelance sales consultant in the health-care industry. “We have no
other way besides this. We once asked if we could apply for a march
permit, and the police said they would never approve it.”

As in Xiamen, Shanghai residents have spent countless hours
researching their cause. They have posted fliers sprinkled with such
phrases as “electromagnetic compatibility” and wooed residents and
news media with slick PowerPoint presentations that question whether a
55-yard-wide safety buffer envisioned for each side of the rail
extension would be sufficient to keep noise and vibration from
reaching their apartments.

They say the existing maglev route, which takes passengers from an out-
of-the-way suburban subway stop to one of the city’s international
airports in less than eight minutes, is a showy waste of money. When
it opened four years ago, they note, the line operated at less than 20
percent capacity; after ticket prices were lowered, it ran at 27
percent capacity.

Armed with knowledge of the law, the Shanghai residents became angry
that public officials had neither given proper notice of their plans
for the extension nor held a public hearing. And so they decided they
had no alternative but to “take a stroll” or “go shopping.” They
started small, and they were careful to say they did not oppose the
government.

First, a small group of protesters met at a shopping center the
morning of Jan. 6, shouting “Reject the maglev!” and “We want to
protect our homes!” They left after an hour, regrouping later in a
neighborhood near where the extension would be built.

A few days later, hundreds of people went to a mall that is popular
with tourists and made an evening stop in another affected
neighborhood. By Jan. 12, thousands of people were gathering at
People’s Square and on Nanjing Lu, both high-profile locations in
downtown Shanghai, shouting “People’s police should protect the
people!” and “Save our homes!”

The growing boldness of the protesters has prompted city officials to
emphasize that residents should find “normal” channels to vent their
unhappiness. “We will forestall and defuse social tensions,” Shanghai
Mayor Han Zheng said in his annual government report Thursday, in what
appeared to be a tacit nod to the protesters’ concerns.

After each stroll, residents upload photos and videos to Chinese Web
sites, which are often blocked by the government, and to YouTube, a
site that isn’t. The project has turned neighbors who did not know
each other into close friends and allies who now compare notes and
strategize. “They can’t arrest everybody,” said Yao, a 58-year-old
protester who asked that his full name not be used because he is a
manager at a state-owned enterprise. “We haven’t done anything wrong,”
said Wang Guowei, 51, a manager in a Chinese-Japanese plastics venture
whose family lives near the planned extension. “We always follow the
Chinese constitution, we never violate the law. And in our many
contacts with the police, they say we are within the law.”

A victory for the protesters here does not seem as likely as the one
activists achieved in Xiamen. Proud city officials hope the maglev
extension will further cement Shanghai’s reputation as the mainland’s
most advanced city when the train connects the city’s two airports and
the site of the 2010 World Expo. City officials have already made some
concessions. An original plan to extend the train from Shanghai to the
city of Hangzhou, for example, was scrapped in May. The new extension
proposal announced Dec. 29 lops almost two miles off the old plan, and
one section of track would be underground. But opponents say such
concessions are small.

Critics of the government plan point out that even some residents who
use the train are skeptical of the usefulness of an extension. “I’d
rather see an ordinary railway connecting” Pudong international and
Hongqiao airport. “It’s cheap, and it’s almost the same convenience,”
said Chen Min, 37, an airline pilot who rides the train each time he
flies abroad. “Does China really need more maglev trains? Does China
really need expensive things?”

Shanghai municipal officials declined requests for comment. At a news
conference this week, government spokeswoman Jiao Yang said Shanghai
Maglev Transportation Development Co., the Shanghai Academy of
Environmental Science and the Municipal Urban Planning Administration
would analyze public opinion “seriously.”

Without the entire city united against the project, residents concede
they are not optimistic the extension will be scrapped. “But we must
insist on our position. We require our government to respect the law,
and public construction must follow a legal framework and the right
procedure,” said the 54-year-old businessman who asked another
protester for her photos. “Our action is a way to wake up people’s
awareness of their civil rights.”

THIS SWINGS BOTH WAYS — FACEBOOK V. FARC
http://www.csmonitor.com/2008/0204/p04s02-woam.html
Facebook used to target Colombia’s FARC with global rally

Internet site to spawn protests in 185 cities Monday against rebel
group’s methods
BY Sibylla Brodzinsky  /  February 4, 2008

Bogotá, Colombia – Hundreds of thousands of Colombians are expected to
march throughout the country and in major cities around the world
Monday to protest against this nation’s oldest and most powerful rebel
group.

What began as a group of young people venting their rage at the
Revolutionary Armed Forces of Colombia (FARC) on Facebook, an Internet
social-networking site, has ballooned into an international event
called “One Million Voices Against FARC.”

“We expected the idea to resound with a lot of people but not so much
and not so quickly,” says Oscar Morales, who started the Facebook
group against the FARC, which now has 230,000 members. Organizers are
expecting marches in 185 cities around the world.

The event is another example of how technology – such as text
messaging on cellphones – can be used to rally large numbers of people
to a cause. Some observers say it’s less a response to the FARC’s
ideology than it is global public outrage over kidnapping as a weapon.

Colombia continues to be the world’s kidnapping capital with as many
as 3,000 hostages now being held. Anger over the practice has risen in
recent months after two women released by the FARC last month after
six years in captivity recounted the hardships they and other hostages
endured.

Monday’s protests have the support of the government, many
nongovernmental organizations, and some political parties but its main
battle cry of “No More FARC” has also polarized some Colombians rather
than bringing them together.

While few Colombians support the Marxist insurgent army that has been
fighting the Colombian state for more than 40 years, many people are
uncomfortable with the message of Monday’s rally. They would prefer a
broader slogan against kidnapping and in favor of peace and of
negotiations between the government and the rebels to exchange
hostages for jailed rebels. The leftist Polo Democratico Party said it
will hold a rally in Bogotá in favor of a negotiation but would not
march. Some senators say they will march against Venezuelan President
Hugo Chávez, and other participants say they will be marching in favor
of Colombian President Alvaro Uribe.

Consuelo González de Perdomo, one of the two women released by the
FARC on Jan. 10 said she would not be marching at all.

The families of the 45 remaining FARC hostages will not march either.
“The way the march was called aims to polarize the country,” says
Deyanira Ortiz, whose husband, Orlando Beltrán Cuéllar, has been held
by the FARC for six years. “It’s not for the freedom of the hostages
but against the FARC. And that doesn’t serve any purpose.”

Instead, the families and released FARC hostages will gather in
churches to pray for the release of their loved ones and for a
humanitarian agreement.

Rosa Cristina Parra, one of the original organizers of the march said
the position of the hostage families is “completely understandable”
and will not detract from the importance of the event. “We cannot
forget the other victims of the FARC, the land-mine victims, the
displaced people,” she says.

LAW BEHIND CURVE, AS ALWAYS
http://www.smartmobs.com/2007/10/20/sorting-out-student-mobile-rights-and-smarts-at-school/

NICK TURSE V. THE CITY OF NEW YORK
http://www.tomdispatch.com/post/1574/nick_turse_on_republicans_in_green_zone_manhattan
http://www.tomdispatch.com/post/1786/nick_turse_on_the_new_homeland_security_state
http://www.tomdispatch.com/post/174843/turse_the_mean_streets_of_the_homeland_security_state_let

NYC, the NYPD, the RNC, and Me
Fortress Big Apple, 2007  /  BY Nick Turse

One day in August, I walked into the Daniel Patrick Moynihan
United States Courthouse in lower Manhattan. Nearly three years before
I had been locked up, about two blocks away, in “the Tombs” — the
infamous jail then named the Bernard B. Kerik Complex for the now-
disgraced New York City Police Commissioner. You see, I am one of the
demonstrators who was illegally arrested by the New York City Police
Department (NYPD) during the protests against the 2004 Republican
National Convention (RNC). My crime had been — in an effort to call
attention to the human toll of America’s wars — to ride the subway,
dressed in black with the pallor of death about me (thanks to
cornstarch and cold cream), and an expression to match, sporting a
placard around my neck that read: WAR DEAD.

I was with a small group and our plan was to travel from Union
Square to Harlem, change trains, and ride all the way back down to
Astor Place. But when my small group exited the train at the 125th
Street station in Harlem, we were arrested by a swarm of police,
marched to a waiting paddy wagon and driven to a filthy detention
center. There, we were locked away for hours in a series of razor-wire-
topped pens, before being bussed to the Tombs.

Now, I was back to resolve the matter of my illegal arrest. As I
walked through the metal detector of the Federal building, a security
official searched my bag. He didn’t like what he found. “You could be
shot for carrying that in here,” he told me. “You could be shot.”

For the moment, however, the identification of that dangerous
object I attempted to slip into the federal facility will have to
wait. Let me instead back up to July 2004, when, with the RNC fast-
approaching, I authored an article on the militarization of Manhattan
— “the transformation of the island into a ‘homeland-security state'”
— and followed it up that September with a street-level recap of the
convention protests, including news of the deployment of an
experimental sound weapon, the Long Range Acoustic Device, by the
NYPD, and the department’s use of an on-loan Fuji blimp as a “spy-in-
the-sky.” Back then, I suggested that the RNC gave New York’s
“finest,” a perfect opportunity to “refine, perfect, and implement new
tactics (someday, perhaps, to be known as the ‘New York model’) for
use penning in or squelching dissent. It offered them the chance to
write up a playbook on how citizens’ legal rights and civil liberties
may be abridged, constrained, and violated at their discretion.”
Little did I know how much worse it could get.

No Escape

Since then, the city’s security forces have eagerly embraced an
Escape From New York-aesthetic — an urge to turn Manhattan into a
walled-in fortress island under high-tech government surveillance,
guarded by heavily armed security forces, with helicopters perpetually
overhead. Beginning in Harlem in 2006, near the site of two new luxury
condos, the NYPD set up a moveable “two-story booth tower, called Sky
Watch,” that gave an “officer sitting inside a better vantage point
from which to monitor the area.” The Panopticon-like structure —
originally used by hunters to shoot quarry from overhead and now also
utilized by the Department of Homeland Security along the Mexican
border — was outfitted with black-tinted windows, a spotlight,
sensors, and four to five cameras. Now, five Sky Watch towers are in
service, rotating in and out of various neighborhoods.

With their 20-25 neighborhood-scanning cameras, the towers are
only a tiny fraction of the Big Apple surveillance story. Back in
1998, the New York Civil Liberties Union (NYCLU) found that there were
“2,397 cameras used by a wide variety of private businesses and
government agencies throughout Manhattan” — and that was just one
borough. About a year after the RNC, the group reported that a survey
of just a quarter of that borough yielded a count of more than 4,000
surveillance cameras of every kind. At about the same time, military-
corporate giant Lockheed Martin was awarded a $212 million contract to
build a “counter-terrorist surveillance and security system for New
York’s subways and commuter railroads as well as bridges and tunnels”
that would increase the camera total by more than 1,000. A year later,
as seems to regularly be the case with contracts involving the
military-corporate complex, that contract had already ballooned to
$280 million, although the system was not to be operational until at
least 2008.

In 2006, according to a Metropolitan Transit Authority (MTA)
spokesman, the MTA already had a “3,000-camera-strong surveillance
system,” while the NYPD was operating “an additional 3,000 cameras”
around the city. That same year, Bill Brown, a member of the
Surveillance Camera Players — a group that leads surveillance-camera
tours and maps their use around the city, estimated, according to a
Newsweek article, that the total number of surveillance cameras in New
York exceeded 15,000 — “a figure city officials say they have no way
to verify because they lack a system of registry.” Recently, Brown
told me that 15,000 was an estimate for the number of cameras in
Manhattan, alone. For the city as a whole, he suspects the count has
now reached about 40,000.

This July, NYPD officials announced plans to up the ante. By the
end of 2007, according to the New York Times, they pledged to install
“more than 100 cameras” to monitor “cars moving through Lower
Manhattan, the beginning phase of a London-style surveillance system
that would be the first in the United States.” This “Ring of Steel”
scheme, which has already received $10 million in funding from the
Department of Homeland Security (in addition to $15 million in city
funds), aims to exponentially decrease privacy because, if “fully
financed, it will include…. 3,000 public and private security
cameras below Canal Street, as well as a center staffed by the police
and private security officers” to monitor all those electronic eyes.

Spies in the Sky

At the time of the RNC, the NYPD was already mounted on police
horses, bicycles, and scooters, as well as an untold number of marked
and unmarked cars, vans, trucks, and armored vehicles, not to mention
various types of water-craft. In 2007, the two-wheeled Segway joined
its list of land vehicles.

Overhead, the NYPD aviation unit, utilizing seven helicopters,
proudly claims to be “in operation 24/7, 365,” according to Deputy
Inspector Joseph Gallucci, its commanding officer. Not only are all
the choppers outfitted with “state of the art cameras and heat-sensing
devices,” as well as “the latest mapping, tracking and surveillance
technology,” but one is a “$10 million ‘stealth bird,’ which has no
police markings — [so] that those on the ground have no idea they are
being watched.”

Asked about concerns over intrusive spying by members of the
aviation unit — characterized by Gallucci as “a bunch of big boys who
like big expensive toys” — Police Commissioner Raymond W. Kelly
scoffed. “We’re not able to, even if we wanted, to look into private
spaces,” he told the New York Times. “We’re looking at public areas.”
However, in 2005, it was revealed that, on the eve of the RNC
protests, members of the aviation unit took a break and used their
night-vision cameras to record “an intimate moment” shared by a
“couple on the terrace of a Second Avenue penthouse.”

Despite this incident, which only came to light because the same
tape included images that had to be turned over to a defendant in an
unrelated trial, Kelly has called for more aerial surveillance. The
commissioner apparently also got used to having the Fuji blimp at his
disposal, though he noted that “it’s not easy to send blimps into the
airspace over New York.” He then “challenged the aerospace industry to
find a solution” that would, no doubt, bring the city closer to life
under total surveillance.

Police Misconduct: The RNC

As a result of its long history of brutality, corruption, spying,
silencing dissent, and engaging in illegal activities, the NYPD is a
particularly secretive organization. As such, the full story of the
department’s misconduct during the Republican National Convention has
yet to be told; but, even in an era of heightened security and
defensiveness, what has emerged hasn’t been pretty.

By April 2005, New York Times journalist Jim Dwyer was already
reporting that, “of the 1,670 [RNC arrest] cases that have run their
full course, 91 percent ended with the charges dismissed or with a
verdict of not guilty after trial. Many were dropped without any
finding of wrongdoing, but also without any serious inquiry into the
circumstances of the arrests, with the Manhattan district attorney’s
office agreeing that the cases should be ‘adjourned in contemplation
of dismissal.'” In one case that went to trial, it was found that
video footage of an arrest had been doctored to bolster the NYPD’s
claims. (All charges were dropped against that defendant. In 400 other
RNC cases, by the spring of 2005, video recordings had either
demonstrated that defendants had not committed crimes or that charges
could not be proved against them.)

Since shifting to “zero-tolerance” law enforcement policies under
Mayor (now Republican presidential candidate) Rudolph Giuliani, the
city has been employing a system of policing where arrests are used to
punish people who have been convicted of no crime whatsoever,
including, as at the RNC or the city’s monthly Critical Mass bike
rides, those who engage in any form of protest. Prior to the Giuliani
era, about half of all those “arrested for low-level offenses would
get a desk-appearance ticket ordering them to go to court.” Now the
proportion is 10%. (NYPD documents show that the decision to arrest
protesters, not issue summonses, was part of the planning process
prior to the RNC.)

Speaking at the 2007 meeting of the American Sociological
Association, Michael P. Jacobson, Giuliani’s probation and correction
commissioner, outlined how the city’s policy of punishing the presumed
innocent works:

“Essentially, everyone who’s arrested in New York City, in the
parlance of city criminal justice lingo, goes through ‘the system’….
if you’ve never gone through the system, even 24 hours — that’s a
shocking period of punishment. It’s debasing, it’s difficult. You’re
probably in a fairly gross police lockup. You probably have no toilet
paper. You’re given a baloney sandwich, and the baloney is green.”

In 2005, the Times’ Dwyer revealed that at public gatherings since
the time of the RNC, police officers had not only “conducted covert
surveillance… of people protesting the Iraq war, bicycle riders taking
part in mass rallies and even mourners at a street vigil for a cyclist
killed in an accident,” but had acted as agent provocateurs. At the
RNC, there were multiple incidents in which undercover agents
influenced events or riled up crowds. In one case, a “sham arrest” of
“a man secretly working with the police led to a bruising
confrontation between officers in riot gear and bystanders.”

In 2006, the Civilian Complaint Review Board (CCRB), reported
“that hundreds of Convention protesters may have been unnecessarily
and unlawfully arrested because NYPD officials failed to give adequate
orders to disperse and failed to afford protesters a reasonable
opportunity to disperse.”

Police Commissioner Kelly had no hesitation about rejecting the
organization’s report. Still, these were strong words, considering the
weakness of the source. The overall impotence of the CCRB suggests a
great deal about the NYPD’s culture of unaccountability. According to
an ACLU report, the board “investigates fewer than half of all
complaints that it reviews, and it produces a finding on the merits in
only three of ten complaints disposed of in any given year.” This
inaction is no small thing, given the surge of complaints against NYPD
officers in recent years. In 2001, before Mayor Bloomberg and Police
Commissioner Kelly came to power, the CCRB received 4,251 complaints.
By 2006, the number of complaints had jumped by 80% to 7,669. Even
more telling are the type of allegations found to be on the rise (and
largely ignored). According to the ACLU, from 2005 to 2006, complaints
over the use of excessive force jumped 26.8% — “nearly double the
increase in complaints filed.”

It was in this context that the planning for the RNC
demonstrations took place. In 2006, in five internal police reports
made public as part of a lawsuit, “New York City police commanders
candidly discuss[ed] how they had successfully used ‘proactive
arrests,’ covert surveillance and psychological tactics at political
demonstrations in 2002, and recommend[ed] that those approaches be
employed at future gatherings.” A draft report from the department’s
Disorder Control Unit had a not-so-startling recommendation, given
what did happen at the RNC: “Utilize undercover officers to distribute
misinformation within the crowds.”

According to Dwyer, for at least a year prior to those
demonstrations, “teams of undercover New York City police officers
traveled to cities across the country, Canada and Europe” to conduct
covert surveillance of activists. “In hundreds of reports, stamped
‘N.Y.P.D. Secret,’ [the NYPD’s] Intelligence Division chronicled the
views and plans of people who had no apparent intention of breaking
the law, [including] street theater companies, church groups and
antiwar organizations, as well as environmentalists and people opposed
to the death penalty, globalization and other government policies.”
Three elected city councilmen — Charles Barron, Bill Perkins and
Larry B. Seabrook — were even cited in the reports for endorsing a
protest event held on January 15, 2004 in honor of Dr. Martin Luther
King Jr.’s birthday.

In August, the New York Times editorial page decried the city’s
continuing attempts to keep documents outlining the police
department’s spying and other covert activities secret:

“The city of New York is waging a losing and ill-conceived
battle for overzealous secrecy surrounding nearly 2,000 arrests during
the 2004 Republican National Convention…. Police Commissioner Ray
Kelly seemed to cast an awfully wide and indiscriminate net in seeking
out potential troublemakers. For more than a year before the
convention, members of a police spy unit headed by a former official
of the Central Intelligence Agency infiltrated a wide range of groups…
many of the targets … posed no danger or credible threat.”

The Times concluded that — coupled with Mayor Michael Bloomberg’s
efforts to disrupt and criminalize protest during the convention week
— “police action helped to all but eliminate dissent from New York
City during the Republican delegates’ visit. If that was the goal,
then mission accomplished. And civil rights denied.”

Police Commissioner Kelly had a radically different take on his
department’s conduct. Earlier this year, he claimed that “the
Republican National Convention was perhaps the finest hour in the
history of the New York City Department.”

Police Misconduct: 2007

“Finest” might seem a funny term for the NYPD’s actions, but these
days everyone’s a relativist. In the years since the RNC protests, the
NYPD has been mired in scandal after scandal — from killing unarmed
black men and “violations of civil rights” at the National Puerto
Rican Day Parade to issuing “sweeping generalizations” that lead to
“labeling almost every American Muslim as a potential terrorist.” And,
believe it or not, the racial and political scandals were but a modest
part of the mix. Add to them, killings, sexual assaults, kidnapping,
armed robbery, burglary, corruption, theft, drug-related offenses,
conspiracy — and that’s just a start when it comes to crimes members
of the force have been charged with. It’s a rap sheet fit for Public
Enemy #1, and we’re only talking about the story of the NYPD in the
not-yet-completed year of 2007.

For example, earlier this year a 13-year NYPD veteran was
“arrested on charges of hindering prosecution, tampering with
evidence, obstructing governmental administration and unlawful
possession of marijuana,” in connection with the shooting of another
officer. In an unrelated case, two other NYPD officers were arrested
and “charged with attempted kidnapping, armed robbery, armed burglary
and other offenses.”

In a third case, the New York Post reported that a “veteran NYPD
captain has been stripped of his badge and gun as part of a federal
corruption probe that already has led to the indictment of an Internal
Affairs sergeant who allegedly tipped other cops that they were being
investigated.” And that isn’t the only NYPD cover-up allegation to
surface of late. With cops interfering in investigations of fellow
cops and offering advice on how to deflect such probes, it’s a wonder
any type of wrongdoing surfaces. Yet, the level of misconduct in the
department appears to be sweeping enough to be irrepressible.

For instance, sex crime scandals have embroiled numerous officers
— including one “accused of sexually molesting his young
stepdaughter,” who pled guilty to “a misdemeanor charge of child
endangerment,” and another “at a Queens hospital charged with
possessing and sharing child pornography.” In a third case, a member
of the NYPD’s School Safety Division was “charged with the attempted
rape and sexual abuse of a 14-year-old girl.” In a fourth case, a
“police officer pleaded guilty…. to a grotesque romance with an
infatuated 13-year-old girl.” Meanwhile, an NYPD officer, who molested
women while on duty and in uniform, was convicted of sexual abuse and
official misconduct.

Cop-on-cop sexual misconduct of an extreme nature has also
surfaced…. but why go on? You get the idea. And, if you don’t, there
are lurid cases galore to check out, like the investigation into
“whether [an] NYPD officer who fatally shot his teen lover before
killing himself murdered the boyfriend of a past lover,” or the
officer who was “charged with intentional murder in the shooting death
of his 22-year-old girlfriend.” And don’t even get me started on the
officer “facing charges of conspiracy to distribute narcotics and
conspiracy to commit robberies of drugs and drug proceeds from
narcotics traffickers.”

All of this, and much more, has emerged in spite of the classic
blue-wall-of-silence. It makes you wonder: In the surveillance state
to come, are we going to be herded and observed by New York’s finest
lawbreakers?

It’s important to note that all of these cases have begun despite
a striking NYPD culture of non-accountability. Back in August, the New
York Times noted that the “Police Department has increasingly failed
to prosecute New York City police officers on charges of misconduct
when those cases have been substantiated by the independent board that
investigates allegations of police abuse, officials of the board say.”
Between March 1, 2007 and June 30, 2007 alone, the NYPD “declined to
seek internal departmental trials against 31 officers, most of whom
were facing charges of stopping people in the street without probable
cause or reasonable suspicion, according to the city’s Civilian
Complaint Review Board.” An ACLU report, “Mission Failure: Civilian
Review of Policing in New York City, 1994-2006,” released this month,
delved into the issue in even greater detail. The organization found
that, between 2000 and 2005, “the NYPD disposed of substantiated
complaints against 2,462 police officers: 725 received no discipline.
When discipline was imposed, it was little more than a slap on the
wrist.”

Much has come to light recently about the way the U.S. military
has been lowering its recruitment standards in order to meet the
demands of ongoing, increasingly unpopular wars in Iraq and
Afghanistan, including an increase in “moral waivers” allowing more
recruits with criminal records to enter the services. Well, it turns
out that, on such policies, the NYPD has been a pioneering
institution.

In 2002, the BBC reported that “New York’s powerful police union….
accused the police department of allowing ‘sub-standard’ recruits onto
the force.” Then, just months after the RNC protests, the New York
Daily News exposed the department’s practice of “hiring applicants
with arrest records and shoving others through without full background
checks” including those who had been “charged with laundering drug
money, assault, grand larceny and weapons possession.” According to
Sgt. Anthony Petroglia, who, until he retired in 2002, had worked for
almost a decade in the department’s applicant-processing division, the
NYPD was “hiring people to be cops who have no respect for the law.”
Another retiree from the same division was blunter: “It’s all judgment
calls — bad ones…. but the bosses say, ‘Send ’em through. We’ll
catch the problem ones later.'”

The future looks bright, if you are an advocate of sending the
force even further down this path. The new choice to mold the
department of tomorrow, according to the Village Voice, the “NYPD’s
new deputy commissioner of training, Wilbur ‘Bill’ Chapman, should
have no trouble teaching ‘New York’s Finest’ about the pitfalls of
sexual harassment, cronyism, and punitive transfers [because h]e’s
been accused of all that during his checkered career.”

In the eerie afterglow of 9/11, haunted by the specter of
terrorism, in an atmosphere where repressive zero-tolerance policies
already rule, given the unparalleled power of Commissioner Kelly —
called “the most powerful police commissioner in the city’s history”
by NYPD expert Leonard Levitt — and with a police department largely
unaccountable to anyone (as the only city agency without any effective
outside oversight), the Escape from New York model may indeed
represent Manhattan’s future.

Nick Turse v. The City of New York

So what, you might still be wondering, was it that led the
security official at the federal courthouse to raise the specter of my
imminent demise? A weapon? An unidentified powder? No, a digital audio
recorder. “Some people here don’t want to be recorded,” he explained
in response to my quizzical look.

So I checked the recording device and, accompanied by my lawyer,
the indomitable Mary D. Dorman, made my way to Courtroom 18D, a
stately room in the upper reaches of the building that houses the
oldest district court in the nation. There, I met our legal nemesis, a
city attorney whose official title is “assistant corporation counsel.”
After what might pass for a cordial greeting, he asked relatively
politely whether I was going to accept the city’s monetary offer of
$8,500 — which I had rejected the previous week– to settle my
lawsuit for false arrest. As soon as I indicated I wouldn’t (as I had
from the moment the city started the bidding at $2,500), any hint of
cordiality fled the room. Almost immediately, he was referring to me
as a “criminal” — declassified NYPD documents actually refer to me as
a “perp.” Soon, he launched into a bout of remarkable bluster,
threatening lengthy depositions to waste my time and monetary
penalties associated with court costs that would swallow my savings.

Then, we were all directed to a small jury room off the main
courtroom, where the city’s attorney hauled out a threatening prop to
bolster his act — an imposingly gigantic file folder stuffed with
reams of “Nick Turse” documents, including copies of some of my
disreputable Tomdispatch articles as well as printouts of suspicious
webpages from the American Empire Project — the obviously criminal
series that will be publishing my upcoming book, The Complex.

There, the litany of vague threats to tie me down with
depositions, tax me with fees, and maybe, somehow, send me to jail for
a “crime” that had been dismissed years earlier continued until a
federal magistrate judge entered the room. To him, the assistant
corporation counsel and I told our versions of my arrest story —
which turned out to vary little.

The basic details were the same. As the city attorney shifted in
his seat, I told the judge how, along with compatriots I’d met only
minutes before, I donned my “WAR DEAD” sign and descended into the
subway surrounded by a phalanx of cops — plainclothes, regular
uniformed, Big Brother-types from the Technical Assistance Response
Unit (TARU), and white-shirted brass, as well as a Washington Post
photographer and legal observers from the National Lawyers Guild —
and boarded our train. I explained that we sat there looking as dead
as possible for about 111 blocks and then, as the Washington Post
reported, were arrested when we came back to life and “tried to change
trains.” I asked, admittedly somewhat rhetorically why, if I was such
a “criminal,” none of the officers present at my arrest had actually
showed up in court to testify against me when my case was dismissed
out of hand back in 2004? And why hadn’t the prosecutor wanted to
produce the video footage the NYPD had taken of the entire action and
my arrest? And why had the city been trying to buy me off all these
years since?

Faced with the fact that his intimidation tactics hadn’t worked,
the city attorney now quit his bad-cop tactics and I rose again out of
the ditch of “common criminality” into citizenship and then to the
high status of being addressed as “Dr. Turse” (in a bow to my PhD).
Offers and counteroffers followed, leading finally to a monetary
settlement with a catch — I also wanted an apology. If that guard
hadn’t directed me — under threat of being shot — to check my
digital audio recorder at the door, I might have had a sound file of
it to listen to for years to come. Instead, I had to be content with
the knowledge that an appointed representative of the City of New York
not only had to ditch the Escape from New York model — at least for a
day — pony up some money for violating my civil rights, and, before a
federal magistrate judge, also issue me an apology, on behalf of the
city, for wrongs committed by the otherwise largely unaccountable
NYPD.

The Future of the NYPD and the Homeland-Security State-let

I’m under no illusions that this minor monetary settlement and
apology were of real significance in a city where civil rights are
routinely abridged, the police are a largely unaccountable armed
force, and a culture of total surveillance is increasingly the norm.
But my lawsuit, when combined with those of my fellow arrestees, could
perhaps have some small effect. After all, less than a year after the
convention, 569 people had already “filed notices that they intended
to sue the City, seeking damages totaling $859,014,421,” according to
an NYCLU report. While the city will end up paying out considerably
less, the grand total will not be insignificant. In fact, Jim Dwyer
recently reported that the first 35 of 605 RNC cases had been settled
for a total of $694,000.

If New Yorkers began to agitate for accountability — demanding,
for instance, that such settlements be paid out of the NYPD’s budget
— it could make a difference. Then, every time New Yorkers’ hard-
earned tax-dollars were handed over to fellow citizens who were
harassed, mistreated, injured, or abused by the city’s police force
that would mean less money available for the “big expensive toys” that
the “big boys” of the NYPD’s aviation unit use to record the private
moments of unsuspecting citizens or the ubiquitous surveillance gear
used not to capture the rest of the city on candid camera. It wouldn’t
put an end to the NYPD’s long-running criminality or the burgeoning
homeland security state-let that it’s building, but it would, at
least, introduce a tiny measure of accountability.

Such an effort might even begin a dialogue about the NYPD, its
dark history, its current mandate under the Global War on Terror, and
its role in New York City. For instance, people might begin to examine
the very nature of the department. They might conclude that questions
must be raised when institutions — be they rogue regimes, deleterious
industries, unaccountable corporations, or fundamentally-tainted
government institutions — consistently, over many decades, evidence a
persistent disregard for the law, a lack of accountability, and a deep
resistance to reform. Those directly affected by the NYPD, a nearly
38,000-person force — larger than many armies — that has
consistently flouted the law and has proven remarkably resistant to
curtailing its own misconduct for well over a century, might even
begin to wonder if it can be trusted to administer the homeland
security state-let its top officials are fast implementing and, if
not, what can be done about it.

.

Nick Turse is the associate editor and research director of
Tomdispatch.com. He has written for the Los Angeles Times, the San
Francisco Chronicle, the Nation, the Village Voice, and regularly for
Tomdispatch.com. His first book, The Complex, an exploration of the
new military-corporate complex in America, is due out in the American
Empire Project series by Metropolitan Books in 2008. His new website
NickTurse.com (up only in rudimentary form) will fully launch in the
coming months.

BEST PRACTICES
http://help.riseup.net/security/about/
Why security matters

Every email takes a perilous journey. A typical email might travel
across twenty networks and be stored on five computers from the time
it is composed to the time it is read. At every step of the way, the
contents of the email might be monitored, archived, cataloged, and
indexed.

However, it is not the content of your email which is most
interesting: typically, a spying organization is more concerned by
whom you communicate with. There are many ways in which this kind of
mapping of people’s associations and habits is far worse than
traditional eavesdropping. By cataloging our associations, a spying
organization has an intimate picture of how our social movements are
organized–a more detailed picture than even the social movements
themselves are aware of.

This is bad. Really bad. The US government, among others, has a long
track record of doing whatever it can to subvert, imprison, kill, or
squash social movements which it sees as a threat (black power, anti-
war, civil rights, anti-slavery, native rights, organized labor, and
so on). And now they have all the tools they need to do this with
blinding precision.

We believe that communication free of eavesdropping and association
mapping is necessary for a democratic society (should one ever happen
to take root in the US). We must defend the right to free speech, but
it is just as necessary to defend the right to private speech.

Unfortunately, private communication is not possible if only a few
people practice it: they will stand out and open themselves up to
greater scrutiny. Therefore, we believe it is important for everyone
to incorporate as many security measures in your email life as you are
able.

Email is not secure

You should think of normal email as a postcard: anyone can read it,
your letter carrier, your nosy neighbor, your house mates. All email,
unless encrypted, is completely insecure. Email is actually much less
secure than a postcard, because at least with a postcard you have a
chance of recognizing the sender’s handwriting. With email, anyone can
pretend to be anyone else.

There is another way in which email is even less private than a
postcard: the government does not have enough labor to read everyone’s
postscards, but they probably have the capacity and ability to scan
most email. Based on current research in datamining, it is likely that
the government does not search email for particular words but rather
looks for patterns of association and activity.

In the three cases below, evidence is well established that the
government conducts widespread and sweeping electronic survillence.

full-pipe monitoring
According to a former Justice Department attorney, it is common
practice for the FBI to practice “full-pipe monitoring”. The process
involves vacuuming up all traffic of an ISP and then later mining that
data for whatever the FBI might find interesting. The story was first
reported on January 30, 2007 by Declan McCullagh of CNET News.com.

AT&T
The Electronic Frontier Foundation (EFF) filed a class-action
lawsuit against AT&T on January 31, 2006, accusing the telecom giant
of violating the law and the privacy of its customers by collaborating
with the National Security Agency (NSA) in its massive and illegal
program to wiretap and data-mine Americans’ communications.

Because AT&T is one of the few providers of the internet backbone
(a so called Tier 1 provider), even if you are not an AT&T customer is
is likely that AT&T is the carrier for much of your interent traffic.
It is very likely that other large internet and email providers have
also worked out deals with the government. We only know about this one
because of an internal whistleblower.

Carnivore
For legal domestic wiretaps, the U.S. government runs a program
called Carnivore (also called DCS1000).

Carnivore is a ‘black box’ which some ISPs are required to install
which allows law enforcement to do ‘legal’ wiretaps. However, no one
knows how they work, they effectively give the government total
control over monitoring anything on the ISP’s network, and there is
much evidence that the government uses carnivore to gather more
information than is legal.

As of January 2005, the FBI announced they are no longer using
Carnivore/DCS1000 and are replacing it with a product developed by a
third party. The purpose of the new system is exactly the same.

ECHELON
ECHELON is a spy program operated cooperatively with the
governments of the United States, Canada, United Kingdom, Australia,
and New Zealand. The goal is to monitor and analyze internet traffic
on a wide scale. The EU Parliament has accused the U.S. of using
Echelon for industrial espionage.

Call database

On May 10, USAToday broke the story that the NSA has a database
designed to track every phone call ever made in the US. Although this
applies to phone conversations, the fact that the government believes
that this is legal means that they almost certainly think it is legal
to track all the email communication within the US as well. And we
know from the AT&T case that they have the capability to do so.

.

http://help.riseup.net/security/measures/
You can do something about it!

What a gloomy picture! Happily, there are many things you can do.
These security pages will help outline some of the simple and not-so-
simple changes you can make to your email behavior.

* Secure Connections: by using secure connections, you protect
your login information and your data while is in transport to
riseup.net.
* Secure Providers: when you send mail to and from secure email
providers, you can protect the content of your communication and also
the pattern of your associations.
* Public Key Encryption: although it is a little more work, public
key encryption is the best way to keep the content of your
communication private.

See the next page, Security Measures, for tips on these and other
steps you can take. Remember: even if you don’t personally need
privacy, practicing secure communication will ensure that others have
the ability to freely organize and agitate.

Practice secure behavior!
These pages include a lot of fancy talk about encryption. Ultimately,
however, all this wizbang cryto-alchemy will be totally useless if you
have insecure behavior. A few simple practices will go a long way
toward securing your communications:

1. Logout: make sure that you always logout when using web-mail.
This is very important, and very easy to do. This is particular
important when using a public computer.
2. Avoid public computers: this can be difficult. If you do use a
public computer, consider changing your password often or using the
virtual keyboard link (if you use riseup.net for your web-mail).
3. Use good password practice: you should change your password
periodically and use a password which is at least 6 characters and
contains a combination of numbers, letters, and symbols. It is better
to use a complicated password and write it down then to use a simple
password and keep it only in your memory. Studies show that most
people use passwords which are easy to guess or to crack, especially
if you have some information about the interests of the person. You
should never pick a password which is found in the dictionary (the
same goes for “love” as well as “10v3” and other common ways of
replacing letters with numbers).
4. Be a privacy freak: don’t tell other people your password. Also,
newer operating systems allow you to create multiple logins which keep
user settings separate. You should enable this feature, and logout or
“lock” the computer when not in use.

Use secure connections!
What are secure connections?

When you check your mail from the riseup.net server, you can use an
encrypted connection, which adds a high level of security to all
traffic between your computer and riseup.net. Secure connections are
enabled for web-mail and for IMAP or POP mail clients.

This method is useful for protecting your password and login. If you
don’t use a secure connection, then your login and password are sent
over the internet in a ‘cleartext’ form which can be easily
intercepted. It is obvious why you might not want your password made
public, but it may also be important to keep your login private in
cases where you do not want your real identity tied to a particular
email account.

How do I know if I am using a secure connection?

When using web browser (Firefox, Safari, etc.)
If you are using a web browser to connect to Riseup, you can look at
three things to check to see if you are using a secure connection.

The first is easy, are you using Internet Explorer? If so, switch to
Firefox. The security problems with Internet Explorer are too numerous
to mention and making the switch to Firefox is an easy step in the
right direction.

Secondly, look up at the URL bar, where the address is. If it starts
with “https://” (NOTE the ‘s’), then you have a secure connection, if
its just “http://” (NO ‘s’), then you are not using a secure
connection. You can change that “http” to “https” by clicking on the
URL bar and adding the ‘s’ and then hit to load the page securely.

The third way to tell is by looking for a little padlock icon. It will
either appear in the URL location bar, or in the bottom corner of the
window, it should appear locked, if the lock doesn’t exist, or the
lock picture looks like it is unlocked, you are not using a secure
connection. You can hover your mouse over the padlock to get more
information, and often clicking (or sometimes right-clicking) on the
lock will bring up details about the SSL certificate used to secure
the connection.

If you click on the padlock, you can verify Riseup’s certificate
fingerprints, this is a very good idea! Follow these directions to
verify our fingerprint.

When using a mail client (Thunderbird, Outlook, etc.)
For POP and IMAP, your mail client will have the option of enabling
SSL or TLS. For sending mail (SMTP), both SSL and TLS will work, but
some ISPs will block TLS, so you might need to use SSL. For more
specific, step-by-step configurations for your mail client, see our
mail client tutorials and SMTP FAQ.

The limits of secure connections

The problem with email is that takes a long and perilous journey. When
you send a message, it first travels from your computer to the
riseup.net mail server and then is delivered to the recipient’s mail
server. Finally, the recipient logs on to check their email and the
message is delivered to their computer.

Using secure connections only protects your data as it travels from
your computer to the the riseup.net servers (and vice versa). It does
not make your email any more secure as it travels around the internet
from mail server to mail server. To do this, see below.

Use secure email providers
What is StartTLS?

There are many governments and corporations who “sniff” general
traffic on the internet. Even if you use a secure connection to check
and send your email, the communication between mail servers is almost
always insecure and out in the open.

Fortunately, there is a solution! StartTLS is a fancy name for a very
important idea: StartTLS allows mail servers to talk to each other in
a secure way.

If you and your friends use only email providers which use StartTLS,
then all the mail traffic among you will be encrypted while in
transport. If both sender and recipient also use secure connections
while talking to the mail servers, then your communications are likely
secure over its entire lifetime.

We will repeat that because it is important: to gain any benefit from
StartTLS, both sender and recipient must be using StartTLS enabled
email providers. For mailing lists, the list provider and each and
every list subscriber must use StartTLS.

Which email providers use StartTLS?
Currently, these tech collectives are known to use StartTLS:

* riseup.net
* resist.ca
* mutualaid.org
* autistici.org/inventati.org
* aktivix.org
* boum.org
* squat.net
* tao.ca
* indymedia.org
* eggplantmedia.com
* so36.net

We recommend that you and all your friends get email accounts with
these tech collectives!
Additionally, these email providers often have StartTLS enabled:

* universities: berkeley.edu, johnhopkins.edu, hampshire.edu,
evergreen.edu, ucsc.edu, reed.edu, oberlin.edu, pdx.edu, usc.edu,
bc.edu, uoregon.edu, vassar.edu, temple.edu, ucsf.edu, ucdavis.edu,
wisc.edu, rutgers.edu, ucr.edu, umb.edu, simmons.edu.
* organizations: action-mail.org, no-log.org
* companies: speakeasy.net, easystreet.com, runbox.com,
hushmail.com, dreamhost.com, frognet.net, frontbridge.com, freenet.de,
blarg.net, greennet (gn.apc.org)

What are the advantages of StartTLS?
This combination of secure email providers and secure connections has
many advantages:

* It is very easy to use! No special software is needed. No
special behavior is needed, other than to make sure you are using
secure connections.
* It prevents anyone from creating a map of whom you are
communicating with and who is communicating with you (so long as both
parties use StartTLS).
* It ensures that your communication is pretty well protected.
* It promotes the alternative mail providers which use StartTLS.
The goal is to create a healthy ecology of activist providers–which
can only happen if people show these providers strong support. Many of
these alternative providers also also incorporate many other important
security measures such as limited logging and encrypted storage.

What are the limitations of StartTLS?
However, there are some notable limitations:

* Your computer is a weak link: your computer can be stolen,
hacked into, have keylogging software or hardware installed.
* It is difficult to verify: for a particular message to be
secure, both the origin and destination mail providers must use
StartTLS (and both the sender and recipient must use encrypted
connections). Unfortunately, it is difficult to confirm that all of
this happened. For this, you need public key encryption (see below).

Use public-key encryption
If you wish to keep the contents of your email private, and confirm
the identity of people who send you email, you should download and
install public-key encryption software. This option is only available
if you have your own computer.

Public-key encryption uses a combination of a private key and a public
key. The private key is known only by you, while the public key is
distributed far and wide. To send an encrypted message to someone, you
encrypt the message with their public key. Only their private key will
be able to decrypt your message and read it.

The universal standard for public-key encryption is Pretty Good
Privacy (PGP) and GNU Privacy Guard (GPG). GPG is Free Software, while
PGP is a proprietary product (although there are many freeware
versions available). Both work interchangeably and are available as
convenient add-ons to mail clients for Linux, Mac, and Windows.

For information configuring your mail client to use public key
encryption, see our mail client tutorial pages. In particular, see the
tutorials for Apple Mail and Thunderbird. Otherwise, you should refer
the to documentation which comes with your particular mail client.

Although it provides the highest level of security, public-key
encryption is still an adventure to use. To make your journey less
scary, we suggest you keep these things in mind:

* Be in it for the long haul: using public-key encryption takes a
commitment to learning a lot of new skills and jargon. The widespread
adoption of GPG is a long way off, so it may seem like a lot of work
for not much benefit. However, we need early adopters who can help
build a critical mass of GPG users.
* Develop GPG buddies: although most your traffic might not be
encrypted, if you find someone else who uses GPG try to make a
practice of communicating using only GPG with that person.
* Look for advocates: people who use GPG usually love to
evangelize about it and help others to use it to. Find someone like
this who can answer your questions and help you along.

Although you can hide the contents of email with public-key
encryption, it does not hide who you are sending mail to and receiving
mail from. This means that even with public key encryption there is a
lot of personal information which is not secure.

Why? Imagine that someone knew nothing of the content of your mail
correspondence, but they knew who you sent mail to and received mail
from and they knew how often and what the subject line was. This
information can provide a picture of your associations, habits,
contacts, interests and activities.

The only way to keep your list of associations private is to to use an
email provider which will establish a secure connection with other
email providers. See Use secure email providers, above.

.

http://help.riseup.net/security/certificates/
What are certificates?

On the internet, a public key certificate is needed in order to verify
the identity of people or computers. These certificates are also
called SSL certificates or identity certificates. We will just call
them “certificates.”

In particular, certificates are needed to establish secure
connections. Without certificates, you would be able to ensure that no
one else was listening, but you might be talking to the wrong computer
altogether! All riseup.net servers and all riseup.net services allow
or require secure connections. It can sometimes be tricky to coax a
particular program to play nice and recognize the riseup.net
certificates. This page will help you through the process.

If you don’t follow these steps, your computer will likely complain or
fail every time you attempt to create a secure connection with
riseup.net.

What is a certificate authority?
Certificates are the digital equivalent of a government issued
identification card. Certificates, however, are issued by private
corporations called certificate authorities (CA).

I thought you were against authority?
We are, but the internet is designed to require certificate
authorities and there is not much we can do about it. There are other
models for encrypted communication, such as the decentralized notion
of a “web of trust” found in PGP. Unfortunately, no one has written
any web browsers or mail clients to use PGP for establishing secure
connections, so we are forced to rely on certificate authorities. Some
day, we hope to collaborate with other tech collectives to create a
certificate (anti) authority.

Your certificate is not recognized – what should I do?
We recently installed new certificates that should solve this issue
for webmail and mail client users. However, users accessing the secure
pages for lists.riseup.net, help.riseup.net, we.riseup.net and
user.riseup.net will still receive this annoying error message. The
problem is that these servers use a CA Cert root certificate, which is
not on the list of “trusted” certification authorities. So, in order
to use the certificates without receiving the error message, you will
need to import the CA Cert Root Certificate.

What are the fingerprints of riseup.net’s certificates?
Some programs cannot use certificate authorities to confirm the
validity of a certificate. In that case, you may need to manually
confirm the fingerprint of the riseup.net certificate. Here are some
fingerprints for various certificates:

—–BEGIN PGP SIGNED MESSAGE—–
Hash: SHA1

1. SSL fingerprint for mail.riseup.net
* sha1: BA:73:F5:45:E0:98:54:E5:6D:BA:5C:4B:98:EF:1A:A9:4B:C1:47:9D
* md5:  88:12:94:4D:D5:43:FE:22:84:4E:67:C9:0C:1E:DC:DA

2. SSL fingerprint for tern.riseup.net
* sha1: F2:1D:DC:23:89:36:15:F9:1B:2C:66:F0:93:99:6E:C8:EB:2C:43:BB
* md5:  A1:3E:38:19:39:70:DA:F0:0E:B1:58:D9:1A:67:41:AD

3. SSL fingerprint for petrel.riseup.net
* sha1: 13:C8:86:19:53:52:C7:A1:B8:03:B0:53:1A:E9:DA:FF:AD:A9:BB:24
* md5:  84:32:84:43:81:13:16:56:0F:CE:68:A9:CF:29:4D:8D
—–BEGIN PGP SIGNATURE—–
Version: GnuPG v1.4.6 (GNU/Linux)

iD8DBQFHIWAyxOALs3NV+v8RAnyjAKCcrOPwP6xkvSoqd50cCprASMuFfACfe0WO
FtzEyPg6MjDgC2hLdTpm7O4=
=DO3k
—–END PGP SIGNATURE—–

When should I verify these fingerprints?
You should verify these fingerprints whenever they change, or you are
using a computer that you do not control (such as at an internet cafe,
or a library). Verify them if you are suspicious, be suspicious and
learn how to verify them and do it often.

How do I verify these fingerprints?
To verify these fingerprints, you need to look at what your browser
believes the fingerprints are for the certificates and compare them to
what is listed above. If they are different, there is a problem.

In most browsers, the way you look at the fingerprints of the
certificate that you were given is by clicking on the lock icon that
is located either in the URL location bar, or in the bottom corner of
your browser. This should bring up details about the certificate being
used, including the fingerprint. Some browsers may only show the MD5
fingerprint, or the SHA1 fingerprint, some will show both. Usually one
is good enough to verify the validity of the fingerprint.

I want to learn more

Great, this is an important topic and we encourage you to read this
piece which clearly articulates in a non-technical way the problems
involved in certificate authorities as well as outlining some
interesting suggestions for ways that the existing architecture and
protocols can be tweaked just a little bit to change the situation for
the better.
http://lair.fifthhorseman.net/~dkg/tls-centralization/

.

http://help.riseup.net/security/

Policy at riseup.net
We strive to keep our mail as secure and private as we can.

* We do not log your IP address. (Most services keep detailed
records of every machine which connects to the servers. We keep only
information which cannot be used to uniquely identify your machine.)
* All your data, including your mail, is stored by riseup.net in
encrypted form.
* We work hard to keep our servers secure and well defended
against any malicious attack.
* We do not share any of our user data with anyone.
* We will actively fight any attempt to subpoena or otherwise
acquire any user information or logs.
* We will not read, search, or process any of your incoming or
outgoing mail other than by automatic means to protect you from
viruses and spam or when directed to do so by you when
troubleshooting.

.

LINKS
http://help.riseup.net/security/resources/

Security resources for activists

This site contains a quick overview of email security. For more in-
depth information, check out these websites:

http://security.resist.ca/
Helping activists stay safe in our oppressive world.

http://secdocs.net/manual/lp-sec/
A series of briefings on information security and online safety for
civil society organizations.

http://www.activist.ca/guide/encrypt.html
Guide to Email Security Using Encryption and Digital Signatures

http://www.madisoninfoshop.org/compsecurity.pdf
Computer Security for the Average Activist

http://www.backspace.com/action/
An introduction to activism on the internet

AND FINALLY — NEXTEL BUGS
http://www.news.com/FBI-taps-cell-phone-mic-as-eavesdropping-tool/2100-1029_3-6140191.html

FBI taps cell phone mic as eavesdropping tool
BY Anne Broache and Declan McCullagh  /  December 1, 2006

The FBI appears to have begun using a novel form of electronic
surveillance in criminal investigations: remotely activating a mobile
phone’s microphone and using it to eavesdrop on nearby conversations.

The technique is called a “roving bug,” and was approved by top U.S.
Department of Justice officials for use against members of a New York
organized crime family who were wary of conventional surveillance
techniques such as tailing a suspect or wiretapping him.

Nextel cell phones owned by two alleged mobsters, John Ardito and his
attorney Peter Peluso, were used by the FBI to listen in on nearby
conversations. The FBI views Ardito as one of the most powerful men in
the Genovese family, a major part of the national Mafia.

The surveillance technique came to light in an opinion published this
week by U.S. District Judge Lewis Kaplan. He ruled that the “roving
bug” was legal because federal wiretapping law is broad enough to
permit eavesdropping even of conversations that take place near a
suspect’s cell phone.

Kaplan’s opinion said that the eavesdropping technique “functioned
whether the phone was powered on or off.” Some handsets can’t be fully
powered down without removing the battery; for instance, some Nokia
models will wake up when turned off if an alarm is set. While the
Genovese crime family prosecution appears to be the first time a
remote-eavesdropping mechanism has been used in a criminal case, the
technique has been discussed in security circles for years.

The U.S. Commerce Department’s security office warns that “a cellular
telephone can be turned into a microphone and transmitter for the
purpose of listening to conversations in the vicinity of the phone.”
An article in the Financial Times last year said mobile providers can
“remotely install a piece of software on to any handset, without the
owner’s knowledge, which will activate the microphone even when its
owner is not making a call.”

Nextel and Samsung handsets and the Motorola Razr are especially
vulnerable to software downloads that activate their microphones, said
James Atkinson, a counter-surveillance consultant who has worked
closely with government agencies. “They can be remotely accessed and
made to transmit room audio all the time,” he said. “You can do that
without having physical access to the phone.”

Because modern handsets are miniature computers, downloaded software
could modify the usual interface that always displays when a call is
in progress. The spyware could then place a call to the FBI and
activate the microphone–all without the owner knowing it happened.
(The FBI declined to comment on Friday.) “If a phone has in fact been
modified to act as a bug, the only way to counteract that is to either
have a bugsweeper follow you around 24-7, which is not practical, or
to peel the battery off the phone,” Atkinson said. Security-conscious
corporate executives routinely remove the batteries from their cell
phones, he added.

FBI’s physical bugs discovered

The FBI’s Joint Organized Crime Task Force, which includes members of
the New York police department, had little luck with conventional
surveillance of the Genovese family. They did have a confidential
source who reported the suspects met at restaurants including Brunello
Trattoria in New Rochelle, N.Y., which the FBI then bugged.

But in July 2003, Ardito and his crew discovered bugs in three
restaurants, and the FBI quietly removed the rest. Conversations
recounted in FBI affidavits show the men were also highly suspicious
of being tailed by police and avoided conversations on cell phones
whenever possible.

That led the FBI to resort to “roving bugs,” first of Ardito’s Nextel
handset and then of Peluso’s. U.S. District Judge Barbara Jones
approved them in a series of orders in 2003 and 2004, and said she
expected to “be advised of the locations” of the suspects when their
conversations were recorded.

Details of how the Nextel bugs worked are sketchy. Court documents,
including an affidavit (p1) and (p2) prepared by Assistant U.S.
Attorney Jonathan Kolodner in September 2003, refer to them as a
“listening device placed in the cellular telephone.” That phrase could
refer to software or hardware.

One private investigator interviewed by CNET News.com, Skipp Porteous
of Sherlock Investigations in New York, said he believed the FBI
planted a physical bug somewhere in the Nextel handset and did not
remotely activate the microphone. “They had to have physical
possession of the phone to do it,” Porteous said. “There are several
ways that they could have gotten physical possession. Then they
monitored the bug from fairly near by.”

But other experts thought microphone activation is the more likely
scenario, mostly because the battery in a tiny bug would not have
lasted a year and because court documents say the bug works anywhere
“within the United States”–in other words, outside the range of a
nearby FBI agent armed with a radio receiver.

In addition, a paranoid Mafioso likely would be suspicious of any ploy
to get him to hand over a cell phone so a bug could be planted. And
Kolodner’s affidavit seeking a court order lists Ardito’s phone
number, his 15-digit International Mobile Subscriber Identifier, and
lists Nextel Communications as the service provider, all of which
would be unnecessary if a physical bug were being planted.

A BBC article from 2004 reported that intelligence agencies routinely
employ the remote-activiation method. “A mobile sitting on the desk of
a politician or businessman can act as a powerful, undetectable bug,”
the article said, “enabling them to be activated at a later date to
pick up sounds even when the receiver is down.”

For its part, Nextel said through spokesman Travis Sowders: “We’re not
aware of this investigation, and we weren’t asked to participate.”
Other mobile providers were reluctant to talk about this kind of
surveillance. Verizon Wireless said only that it “works closely with
law enforcement and public safety officials. When presented with
legally authorized orders, we assist law enforcement in every way
possible.” A Motorola representative said that “your best source in
this case would be the FBI itself.” Cingular, T-Mobile, and the CTIA
trade association did not immediately respond to requests for comment.

Mobsters: The surveillance vanguard

This isn’t the first time the federal government has pushed at the
limits of electronic surveillance when investigating reputed mobsters.
In one case involving Nicodemo S. Scarfo, the alleged mastermind of a
loan shark operation in New Jersey, the FBI found itself thwarted when
Scarfo used Pretty Good Privacy software (PGP) to encode confidential
business data. So with a judge’s approval, FBI agents repeatedly snuck
into Scarfo’s business to plant a keystroke logger and monitor its
output.

Like Ardito’s lawyers, Scarfo’s defense attorneys argued that the then-
novel technique was not legal and that the information gleaned through
it could not be used. Also like Ardito, Scarfo’s lawyers lost when a
judge ruled in January 2002 that the evidence was admissible. This
week, Judge Kaplan in the southern district of New York concluded that
the “roving bugs” were legally permitted to capture hundreds of hours
of conversations because the FBI had obtained a court order and
alternatives probably wouldn’t work.

The FBI’s “applications made a sufficient case for electronic
surveillance,” Kaplan wrote. “They indicated that alternative methods
of investigation either had failed or were unlikely to produce
results, in part because the subjects deliberately avoided government
surveillance.”

Bill Stollhans, president of the Private Investigators Association of
Virginia, said such a technique would be legally reserved for police
armed with court orders, not private investigators. There is “no law
that would allow me as a private investigator to use that type of
technique,” he said. “That is exclusively for law enforcement. It is
not allowable or not legal in the private sector. No client of mine
can ask me to overhear telephone or strictly oral conversations.”

Surreptitious activation of built-in microphones by the FBI has been
done before. A 2003 lawsuit revealed that the FBI was able to
surreptitiously turn on the built-in microphones in automotive systems
like General Motors’ OnStar to snoop on passengers’ conversations.
When FBI agents remotely activated the system and were listening in,
passengers in the vehicle could not tell that their conversations were
being monitored.

Malicious hackers have followed suit. A report last year said Spanish
authorities had detained a man who write a Trojan horse that secretly
activated a computer’s video camera and forwarded him the recordings.

GIVEN THAT

http://www.utahbirds.org/BirdFestival/Starling4.jpg
http://www.snopes.com/photos/animals/carwash.asp
http://www.utahbirds.org/BirdStory.htm

“Bill owns a company that manufactures and installs car wash systems.
Magic Wand Car Wash Systems just in case you want to buy one. Bill’s
company installed a car wash system in Frederick, Md. for a gentleman.
Now understand that these are a complete system including the money
changer and money taking machines.

The problem started when the new owner complained to Bill that he was
loosing significant amounts of money from his coin machines each week.
He went as far as to accuse Bill’s employees of having a key to the
boxes and ripping him off. Bill just couldn’t believe that his people
would do that. So they setup a trap for the thief.

Well they caught the thief in the act!
The bird had to go down in the machine and back up to get to the
money! That’s three quarters he has in his mouth! Another amazing
thing Bill told us is that it was not one bird there were several
working together. Once they identified the thief, they found over
$4000 in quarters on the roof of the car wash and more under a nearby
tree.”

TRAINING CROWS TO SHOP
http://www.ted.com/speakers/joshua_klein.html
http://gadgetoff.com/2007/video-klein.html
http://itp.nyu.edu/thesis/spring2007/stream.php?movieID=437
http://itp.nyu.edu/projects_documents/1178924278_thesis_final_050607.rtf
http://gizmodo.com/gadgets/genius%21/crow-vending-machineas-foretold-by-hitchcock-260018.php

MUTUAL BENEFIT
http://www.wireless.is/projects/crows/

“The goal of this project is to create a device that will autonomously
train crows. So far we’ve trained captive crows to deposit dropped
coins they find on the ground in exchange for peanuts. The next step
is to see how quickly we can get wild crows to learn the system, and
then how quickly they can learn it from each other.

Once we’ve got system down for teaching coin collection we’ll move to
seeing how flexibly they can learn *other* tasks, like collecting
garbage, sorting through discarded electronics, or maybe even search
and rescue. The crows continue to amaze us with their abilities, so
who knows?

In the meantime, the idea of mutually beneficial synanthropy is
gaining ground. That’s the concept that we can have mutually
beneficial relationships with animals adapted to human ecologies.
We’re doing some consulting with companies that have animal-related
problems to find animal-related solutions – instead of just bombing,
shooting, or poisoning them.

Based on established Skinnerian training principles the action of the
device is divided into four stages. These are:

Stage One: Food and Coins Available on Departure.

At this stage the device pushes a few peanuts and one or two coins
onto the feeder tray whenever a crow *leaves* the device. This ensures
that the device always has food whenever it is examined by a potential
feeding crow. It also ensures that both the sound of the device and
its mechanical operation occur in close proximity to the feeding act
so as to aclimate the crow. By having this noise occur as the crow
leaves it prevents startling a potential feeder away from using the
device.

Stage Two: Food and Coins Available On Landing.

Herein the action of the device is identical except that food and
coins are issued when a crow arrives. At this point the crow should be
comfortable with the sound of the device and is now being trained to
wait for its reward when arriving at the machine. Note that the
feeding tray is slanted such that coins will pile up and prevent
peanuts from being available until the crow cleans them away – a
typical behavior of crows is to sweep things out of the way with their
beak, and in this case this causes the coins to fall down the funnel.
This should help reinforce the connection between coins going down the
funnel and peanuts being produced..

Stage Three: Coins Available On Landing, Food Available on Deposit

This is the highest-risk segment of the machine’s operation. At this
point coins alone are made available whenever the bird lands on the
perch. However, should a bird peck or sweep coins off the tray and
cause a coin to fall down the funnel, the device then produces some
peanuts. This stage is designed to cement in the crows’ mind the
relationship between coins going down the funnel and peanuts being
made available.

Stage Four: Food Available On Coin Deposit

Finally we shift the device into its intended, and long-term state of
only providing peanuts when coins go down the funnel. Nothing is
otherwise provided aside from coins scattered around the device at the
beginning of the project.

CONTACT
josh [at] wireless [dot] is
http://www.wireless.is/index.php

SKINNER
http://www.bfskinner.org/brief_survey.html
http://www.bfskinner.org/video_audio.html

‘SUPERSTITION’ IN THE PIGEON
http://psychclassics.yorku.ca/Skinner/Pigeon/

CASE AGAINST
http://www.chomsky.info/articles/19711230.htm
http://en.wikipedia.org/wiki/B._F._Skinner

“Perhaps Skinner’s best known critic, Noam Chomsky published his
review of Skinner’s Verbal Behavior soon after it was published.[23]
The review became better known than the book itself. It has been
credited with launching the cognitive movement in psychology and other
disciplines. Chomsky also reviewed Skinner’s Beyond Freedom and
Dignity, utilizing the same basic motifs as his Verbal Behavior
review. Among Chomsky’s critiques were that Skinner’s laboratory work
could not be extended to humans, that when it was extended to humans
it represented ‘scientistic’ behavior attempting to emulate science
but which was not scientific, that Skinner was not a scientist because
he rejected the hypothetico-deductive model of theory testing, that
Skinner had no science of behavior, and that Skinner’s works were
highly conducive to justifying or advancing totalitarianism.”

THE WISDOM OF CROWS
http://feedblog.org/2008/01/27/crow-intelligence/
http://news.nationalgeographic.com/news/2006/06/060606-crows.html
http://news.nationalgeographic.com/news/2004/12/1209_041209_crows_apes.html


http://www.youtube.com/watch?v=dbwRHIuXqMU


http://youtube.com/watch?v=Ny661wLDSn8

http://www.orenhasson.com/EN/bait-fishing.htm
http://users.ox.ac.uk/~kgroup/tools/photos.shtml

SPECIES MANAGEMENT
http://www.theglobeandmail.com/servlet/story/RTGAM.20071214.wlcrows14/BNStory/lifeMain/home?cid=al_gam_mostemail
http://fwie.fw.vt.edu/rhgiles/SpeciesSSM/Crows.htm

GREAT CROWS IN HISTORY
http://ww2.netnitco.net/users/legend01/raven.htm

.

SEE ALSO:

MONKEY MONEY
http://www.nytimes.com/2005/06/05/magazine/05FREAK.html?ex=1189310400&en=4896f2298577fd52&ei=5070

SPOILER ALERT :

INCIDENCE OF PROSTITUTION DURING MONEY-INDUCED MONKEY RIOT

Monkey Business
By STEPHEN J. DUBNER and STEVEN D. LEVITT  /  June 5, 2005

Keith Chen’s Monkey Research

Adam Smith, the founder of classical economics, was certain that
humankind’s knack for monetary exchange belonged to humankind alone.
”Nobody ever saw a dog make a fair and deliberate exchange of one
bone for another with another dog,” he wrote. ”Nobody ever saw one
animal by its gestures and natural cries signify to another, this is
mine, that yours; I am willing to give this for that.” But in a clean
and spacious laboratory at Yale-New Haven Hospital, seven capuchin
monkeys have been taught to use money, and a comparison of capuchin
behavior and human behavior will either surprise you very much or not
at all, depending on your view of humans.

The capuchin is a New World monkey, brown and cute, the size of a
scrawny year-old human baby plus a long tail. ”The capuchin has a
small brain, and it’s pretty much focused on food and sex,” says
Keith Chen, a Yale economist who, along with Laurie Santos, a
psychologist, is exploiting these natural desires — well, the desire
for food at least — to teach the capuchins to buy grapes, apples and
Jell-O. ”You should really think of a capuchin as a bottomless
stomach of want,” Chen says. ”You can feed them marshmallows all
day, they’ll throw up and then come back for more.”

When most people think of economics, they probably conjure images of
inflation charts or currency rates rather than monkeys and
marshmallows. But economics is increasingly being recognized as a
science whose statistical tools can be put to work on nearly any
aspect of modern life. That’s because economics is in essence the
study of incentives, and how people — perhaps even monkeys — respond
to those incentives. A quick scan of the current literature reveals
that top economists are studying subjects like prostitution, rock ‘n’
roll, baseball cards and media bias.

Chen proudly calls himself a behavioral economist, a member of a
growing subtribe whose research crosses over into psychology,
neuroscience and evolutionary biology. He began his monkey work as a
Harvard graduate student, in concert with Marc Hauser, a psychologist.
The Harvard monkeys were cotton-top tamarins, and the experiments with
them concerned altruism. Two monkeys faced each other in adjoining
cages, each equipped with a lever that would release a marshmallow
into the other monkey’s cage. The only way for one monkey to get a
marshmallow was for the other monkey to pull its lever. So pulling the
lever was to some degree an act of altruism, or at least of strategic
cooperation.

The tamarins were fairly cooperative but still showed a healthy amount
of self-interest: over repeated encounters with fellow monkeys, the
typical tamarin pulled the lever about 40 percent of the time. Then
Hauser and Chen heightened the drama. They conditioned one tamarin to
always pull the lever (thus creating an altruistic stooge) and another
to never pull the lever (thus creating a selfish jerk). The stooge and
the jerk were then sent to play the game with the other tamarins. The
stooge blithely pulled her lever over and over, never failing to dump
a marshmallow into the other monkey’s cage. Initially, the other
monkeys responded in kind, pulling their own levers 50 percent of the
time. But once they figured out that their partner was a pushover
(like a parent who buys her kid a toy on every outing whether the kid
is a saint or a devil), their rate of reciprocation dropped to 30
percent — lower than the original average rate. The selfish jerk,
meanwhile, was punished even worse. Once her reputation was
established, whenever she was led into the experimenting chamber, the
other tamarins ”would just go nuts,” Chen recalls. ”They’d throw
their feces at the wall, walk into the corner and sit on their hands,
kind of sulk.”

Chen is a hyperverbal, sharp-dressing 29-year-old with spiky hair. The
son of Chinese immigrants, he had an itinerant upbringing in the rural
Midwest. As a Stanford undergraduate, he was a de facto Marxist before
being seduced, quite accidentally, by economics. He may be the only
economist conducting monkey experiments, which puts him at slight odds
with his psychologist collaborators (who are more interested in
behavior itself than in the incentives that produce the behavior) as
well as with certain economist colleagues. ”I love interest rates,
and I’m willing to talk about their kind of stuff all the time,” he
says, speaking of his fellow economists. ”But I can tell that they’re
biting their tongues when I tell them what I’m working on.”

It is sometimes unclear, even to Chen himself, exactly what he is
working on. When he and Santos, his psychologist collaborator, began
to teach the Yale capuchins to use money, he had no pressing research
theme. The essential idea was to give a monkey a dollar and see what
it did with it. The currency Chen settled on was a silver disc, one
inch in diameter, with a hole in the middle — ”kind of like Chinese
money,” he says. It took several months of rudimentary repetition to
teach the monkeys that these tokens were valuable as a means of
exchange for a treat and would be similarly valuable the next day.
Having gained that understanding, a capuchin would then be presented
with 12 tokens on a tray and have to decide how many to surrender for,
say, Jell-O cubes versus grapes. This first step allowed each capuchin
to reveal its preferences and to grasp the concept of budgeting.

Then Chen introduced price shocks and wealth shocks. If, for instance,
the price of Jell-O fell (two cubes instead of one per token), would
the capuchin buy more Jell-O and fewer grapes? The capuchins responded
rationally to tests like this — that is, they responded the way most
readers of The Times would respond. In economist-speak, the capuchins
adhered to the rules of utility maximization and price theory: when
the price of something falls, people tend to buy more of it.

Chen next introduced a pair of gambling games and set out to determine
which one the monkeys preferred. In the first game, the capuchin was
given one grape and, dependent on a coin flip, either retained the
original grape or won a bonus grape. In the second game, the capuchin
started out owning the bonus grape and, once again dependent on a coin
flip, either kept the two grapes or lost one. These two games are in
fact the same gamble, with identical odds, but one is framed as a
potential win and the other as a potential loss.

How did the capuchins react? They far preferred to take a gamble on
the potential gain than the potential loss. This is not what an
economics textbook would predict. The laws of economics state that
these two gambles, because they represent such small stakes, should be
treated equally.

So, does Chen’s gambling experiment simply reveal the cognitive
limitations of his small-brained subjects? Perhaps not. In similar
experiments, it turns out that humans tend to make the same type of
irrational decision at a nearly identical rate. Documenting this
phenomenon, known as loss aversion, is what helped the psychologist
Daniel Kahneman win a Nobel Prize in economics. The data generated by
the capuchin monkeys, Chen says, ”make them statistically
indistinguishable from most stock-market investors.”

But do the capuchins actually understand money? Or is Chen simply
exploiting their endless appetites to make them perform neat tricks?

Several facts suggest the former. During a recent capuchin experiment
that used cucumbers as treats, a research assistant happened to slice
the cucumber into discs instead of cubes, as was typical. One capuchin
picked up a slice, started to eat it and then ran over to a researcher
to see if he could ”buy” something sweeter with it. To the capuchin,
a round slice of cucumber bore enough resemblance to Chen’s silver
tokens to seem like another piece of currency.

Then there is the stealing. Santos has observed that the monkeys never
deliberately save any money, but they do sometimes purloin a token or
two during an experiment. All seven monkeys live in a communal main
chamber of about 750 cubic feet. For experiments, one capuchin at a
time is let into a smaller testing chamber next door. Once, a capuchin
in the testing chamber picked up an entire tray of tokens, flung them
into the main chamber and then scurried in after them — a combination
jailbreak and bank heist — which led to a chaotic scene in which the
human researchers had to rush into the main chamber and offer food
bribes for the tokens, a reinforcement that in effect encouraged more
stealing.

Something else happened during that chaotic scene, something that
convinced Chen of the monkeys’ true grasp of money. Perhaps the most
distinguishing characteristic of money, after all, is its fungibility,
the fact that it can be used to buy not just food but anything. During
the chaos in the monkey cage, Chen saw something out of the corner of
his eye that he would later try to play down but in his heart of
hearts he knew to be true. What he witnessed was probably the first
observed exchange of money for sex in the history of monkeykind.
(Further proof that the monkeys truly understood money: the monkey who
was paid for sex immediately traded the token in for a grape.)

This is a sensitive subject. The capuchin lab at Yale has been built
and maintained to make the monkeys as comfortable as possible, and
especially to allow them to carry on in a natural state. The
introduction of money was tricky enough; it wouldn’t reflect well on
anyone involved if the money turned the lab into a brothel. To this
end, Chen has taken steps to ensure that future monkey sex at Yale
occurs as nature intended it.

But these facts remain: When taught to use money, a group of capuchin
monkeys responded quite rationally to simple incentives; responded
irrationally to risky gambles; failed to save; stole when they could;
used money for food and, on occasion, sex. In other words, they
behaved a good bit like the creature that most of Chen’s more
traditional colleagues study: Homo sapiens.

{Stephen J. Dubner and Steven D. Levitt are the authors of
”Freakonomics: A Rogue Economist Explores the Hidden Side of
Everything.”}

.

CONTACT
Keith Chen
keith.chen [at] yale [dot] edu
http://www.som.yale.edu/Faculty/keith.chen/index.html

http://www.som.yale.edu/Faculty/keith.chen/papers/Final_JPE06.pdf
http://www.som.yale.edu/Faculty/keith.chen/papers.htm
http://www.som.yale.edu/Faculty/keith.chen/datafilm.htm
http://www.som.yale.edu/Faculty/keith.chen/articles.htm

.

PREVIOUSLY ON SPECTRE — MONKEYS DEMAND ECONOMIC JUSTICE
http://groups.google.com/group/spectre_event_horizon_group/browse_thread/thread/c7d26b91d3bf7bcf/89c6e02eefe5485d?lnk=gst&q=monkey#89c6e02eefe5485d

HUMANS ALL WEIRD ABOUT MONEY
http://www.latimes.com/news/opinion/la-op-schermer13jan13,0,1195880.story?coll=la-opinion-rightrail

Why people believe weird things about money

Evolution accounts for a lot of our strange ideas about finances.
BY Michael Shermer  /  January 13, 2008

Would you rather earn $50,000 a year while other people make $25,000,
or would you rather earn $100,000 a year while other people get
$250,000? Assume for the moment that prices of goods and services will
stay the same.

Surprisingly — stunningly, in fact — research shows that the
majority of people select the first option; they would rather make
twice as much as others even if that meant earning half as much as
they could otherwise have. How irrational is that?

This result is one among thousands of experiments in behavioral
economics, neuroeconomics and evolutionary economics conclusively
demonstrating that we are every bit as irrational when it comes to
money as we are in most other aspects of our lives. In this case,
relative social ranking trumps absolute financial status. Here’s a
related thought experiment. Would you rather be A or B?

A is waiting in line at a movie theater. When he gets to the ticket
window, he is told that as he is the 100,000th customer of the
theater, he has just won $100.

B is waiting in line at a different theater. The man in front of him
wins $1,000 for being the 1-millionth customer of the theater. Mr. B
wins $150.

Amazingly, most people said that they would prefer to be A. In other
words, they would rather forgo $50 in order to alleviate the feeling
of regret that comes with not winning the thousand bucks. Essentially,
they were willing to pay $50 for regret therapy.

Regret falls under a psychological effect known as loss aversion.
Research shows that before we risk an investment, we need to feel
assured that the potential gain is twice what the possible loss might
be because a loss feels twice as bad as a gain feels good. That’s
weird and irrational, but it’s the way it is.

Human as it sounds, loss aversion appears to be a trait we’ve
inherited genetically because it is found in other primates, such as
capuchin monkeys. In a 2006 experiment, these small primates were
given 12 tokens that they were allowed to trade with the experimenters
for either apple slices or grapes. In a preliminary trial, the monkeys
were given the opportunity to trade tokens with one experimenter for a
grape and with another experimenter for apple slices. One capuchin
monkey in the experiment, for example, traded seven tokens for grapes
and five tokens for apple slices. A baseline like this was established
for each monkey so that the scientists knew each monkey’s preferences.

The experimenters then changed the conditions. In a second trial, the
monkeys were given additional tokens to trade for food, only to
discover that the price of one of the food items had doubled.
According to the law of supply and demand, the monkeys should now
purchase more of the relatively cheap food and less of the relatively
expensive food, and that is precisely what they did. So far, so
rational. But in another trial in which the experimental conditions
were manipulated in such a way that the monkeys had a choice of a 50%
chance of a bonus or a 50% chance of a loss, the monkeys were twice as
averse to the loss as they were motivated by the gain.

Remarkable! Monkeys show the same sensitivity to changes in supply and
demand and prices as people do, as well as displaying one of the most
powerful effects in all of human behavior: loss aversion. It is
extremely unlikely that this common trait would have evolved
independently and in parallel between multiple primate species at
different times and different places around the world. Instead, there
is an early evolutionary origin for such preferences and biases, and
these traits evolved in a common ancestor to monkeys, apes and humans
and was then passed down through the generations.

If there are behavioral analogies between humans and other primates,
the underlying brain mechanism driving the choice preferences most
certainly dates back to a common ancestor more than 10 million years
ago. Think about that: Millions of years ago, the psychology of
relative social ranking, supply and demand and economic loss aversion
evolved in the earliest primate traders.

This research goes a long way toward debunking one of the biggest
myths in all of psychology and economics, known as “Homo economicus.”
This is the theory that “economic man” is rational, self-maximizing
and efficient in making choices. But why should this be so? Given what
we now know about how irrational and emotional people are in all other
aspects of life, why would we suddenly become rational and logical
when shopping or investing?

Consider one more experimental example to prove the point: the
ultimatum game. You are given $100 to split between yourself and your
game partner. Whatever division of the money you propose, if your
partner accepts it, you each get to keep your share. If, however, your
partner rejects it, neither of you gets any money.

How much should you offer? Why not suggest a $90-$10 split? If your
game partner is a rational, self-interested money-maximizer — the
very embodiment of Homo economicus — he isn’t going to turn down a
free 10 bucks, is he? He is. Research shows that proposals that offer
much less than a $70-$30 split are usually rejected.

Why? Because they aren’t fair. Says who? Says the moral emotion of
“reciprocal altruism,” which evolved over the Paleolithic eons to
demand fairness on the part of our potential exchange partners. “I’ll
scratch your back if you’ll scratch mine” only works if I know you
will respond with something approaching parity. The moral sense of
fairness is hard-wired into our brains and is an emotion shared by
most people and primates tested for it, including people from non-
Western cultures and those living close to how our Paleolithic
ancestors lived.

When it comes to money, as in most other aspects of life, reason and
rationality are trumped by emotions and feelings.

CONTACT
mshermer [at] skeptic [dot] com
http://www.michaelshermer.com/

http://www.youtube.com/user/MichaelShermer
http://en.wikipedia.org/wiki/Michael_Shermer
http://www.sciam.com/search/?i=1&q=SCHIRBER&submit=submit&submit.x=0&submit.y=0&u1=q

http://www.skeptic.com/lectures/category/upcoming/
http://www.skeptic.com/

Michael Shermer is the publisher of Skeptic magazine, a columnist for
Scientific American and the author of “The Mind of the Market:
Compassionate Apes, Competitive Humans, and Lessons from Evolutionary
Economics.”

WHY PEOPLE BELIEVE STRANGE THINGS
http://www.ted.com/index.php/talks/view/id/22
http://www.youtube.com/watch?v=71nsZABqoi8
http://www.ted.com/index.php/speakers/view/id/23

Why you should listen to him:

“As founder and publisher of Skeptic Magazine, Michael Shermer has
exposed fallacies behind intelligent design, 9/11 conspiracies, the
low-carb craze, alien sightings and other popular beliefs and
paranoias. But it’s not about debunking for debunking’s sake. Shermer
defends the notion that we can understand our world better only by
matching good theory with good science. Thus, in order to explore a
conspiracy theory that pre-planted explosives caused the World Trade
Center towers to fall on 9/11, the magazine called on demolition
experts.

Shermer’s work offers cognitive context for our often misguided
beliefs: In the absence of sound science, incomplete information can
powerfully combine with the power of suggestion (helping us hear
Satanic lyrics when “Stairway to Heaven” plays backwards, for
example). In fact, a common thread that runs through beliefs of all
sorts, he says, is our tendency to convince ourselves: We overvalue
the shreds of evidence that support our preferred outcome, and ignore
the facts we aren’t looking for.”

THE MIND OF THE MARKET
http://www.michaelshermer.com/the-mind-of-the-market/

“How did we evolve from ancient hunter-gatherers to modern consumer-
traders? Why are people so emotional and irrational when it comes to
money and business decisions? Bestselling author Michael Shermer
believes that evolution and evolutionary psychology provides an answer
to both of these questions through the new science of evolutionary
economics.

Drawing on research from neuroeconomics, Shermer explores what brain
scans reveal about bargaining, snap purchases, and how trust is
established in business. Utilizing experiments in behavioral
economics, Shermer shows why people hang on to losing stocks and
failing companies, why business negotiations often disintegrate into
emotional tit-for-tat disputes, and why money does not make us happy.
Employing research from complexity theory, Shermer shows how evolution
and economics are both examples of a larger and still somewhat
mysterious phenomenon of emergence, where one plus one equals three.

Along the way, Shermer answers such provocative questions as, Do our
tribal roots mean that we will always be a sucker for brands? How is
the biochemical joy of sex similar to the rewards of business
cooperation? How can nations increase trust within their borders?
Finally, Shermer considers the consequences of globalization and what
will happen if nations allow free trade across their borders.

Throughout this entertaining and surprising book Shermer considers the
morality of markets in a discussion of what he calls virtue economics.
Although we are selfish and altruistic, cooperative and competitive,
peaceful and bellicose, in the main the balance is heavily on the side
of good over evil. For every random act of violence that makes the
evening news, there are 10,000 nonrandom acts of kindness that go
unrecorded every day. Markets are moral and modern economies are
founded on our virtuous nature. The Enron model of business is the
exception and the Google motto of “Don’t Be Evil” is the rule.”

EXCERPT
http://www.michaelshermer.com/the-mind-of-the-market/excerpt/

The Mind of the Market
Prologue — Economics for Everyone

In Jesus’ Parable of the Talents, recounted in Matthew 25:14-29, the
gospel author recalls the messiah as saying in the final verse: “For
to everyone who has, more shall be given, and he will have an
abundance; but from the one who does not have, even what he does have
shall be taken away.” Out of context this hardly sounds like the
wisdom of the prophet who proclaimed that the meek shall inherit the
earth, but in context, Jesus’ point was that properly investing one’s
money (as measured in “talents”) generates even more wealth. The
servant who was given five talents invested it and gave his master ten
talents in return. The servant who was given two talents invested it
and gave his master four talents in return. But the servant who was
given one talent buried it in the ground and gave his master back just
the one talent. The master then ordered his risk-averse servant to
give the one talent to the servant who had doubled his investment of
five talents, and so he who earned the most was rewarded with even
more. And thus it is that the rich get richer.

Jesus probably had in mind something more than an economic allegory
about selecting the right investment tool for your money, but I want
to employ the story as a parable about the mind of the market. In the
1960s, the sociologist of science Robert K. Merton conducted an
extensive study of how scientific ideas are discovered and credited in
the marketplace of ideas — in this case treating science as a market —
and discovered that eminent scientists typically receive more credit
than they deserve simply by dint of having a big name, while their
junior colleagues and graduate students, who usually do most of the
work, go largely unnoticed.1 A similar well-known effect can be seen
in how both innovative ideas and clever quotes gravitate up and are
given credit to the most famous person associated with them.2

Merton called this the Matthew Effect. Marketers know it as Cumulative
Advantage. In a broader economic context I shall refer to it here as
the Bestseller Effect. Once a product gets a head-start in sales it
signals to consumers that other people want that product and therefore
it must be good thereby causing them to desire it as well, which leads
even more people to purchase the product, sending more signals to
other consumers that they too must have it, and so it climbs up the
bestseller list. Everyone in business knows about the effect, which is
why authors and publishers, for example, try so fervently to land
their book on the New York Times bestseller list. Once you are on the
list bookstores move your title to the “bestseller” bookcase
(sometimes even labeled “New York Times Bestseller List”) and to the
front of the store where copies of the book are stacked like cordwood.
This sends a signal to potential book buyers entering the store that
this must be a good read, triggering an increase in sales that gets
reported to the New York Times book review editors, who bump the title
up the list, sending another signal to bookstore buyers to order even
more copies, which secures the title more time in the bestseller list
that increases sales even further, and round and round the feedback
loop goes as the richest authors get even richer.3

To find out if the Bestseller Effect is real, the Columbia University
sociologist Duncan Watts and his collaborators Matthew Salganik and
Peter Dodds tested it in a web-based experiment in which 14,000
participants registered at a Web site where they had the opportunity
to listen to, rate, and download songs by unknown bands.4 One group of
registrants were only given the names of the songs and bands, while a
second group of registrants were also shown how many times the song
had been downloaded. The researchers called this the “social
influence” condition, because they wanted to know if seeing how many
people had downloaded a song would influence subjects’ decision on
whether or not to download it. Predictably, the Web participants in
the social influence condition were influenced by the download rate
figures: songs with a higher download number were more likely to be
downloaded by new participants, whereas subjects in the independent
group who saw no download rates, revealed dramatically different song
preferences.5 This is not to deny that the quality of a song or a book
or any other product does not matter. Of course it does, and this too
is measurable. But it turns out that subjective consumer preferences
grounded in relative rankings by other consumers can and often does
wash out the effects of more objective ratings of product quality.

Markets that traffic in rankings, ratings, and bestseller lists seem
to operate on their own volition, almost like a collective organism.
In fact, this is only one of many effects we shall see in this book
that demonstrate just how much the mind influences the market, and in
a broader sense how markets seem to have a mind of their own. Consider
another economic parable with an evolutionary lesson related to the
Bestseller Effect.

Imagine that you are a banker with a limited amount of money to lend.
If you advance loans to people who are the poorest credit risks, you
are taking a great gamble that they will default on their loans and
you will go out of business. This sets up a paradox: the people who
most need the money are also the worst credit risks and thus cannot
get a loan, whereas the people who least need the money are also the
best credit risks and thus once again the rich get richer. The
evolutionary psychologists John Tooby and Leda Cosmides call this the
Banker’s Paradox, and they apply it to a deeper evolutionary problem:
to whom should we extend our friendship? The Banker’s Paradox, they
suggest, “is analogous to a serious adaptive problem faced by our
hominid ancestors: exactly when an ancestral hunter-gatherer is in
most dire need of assistance, she becomes a bad ‘credit risk’ and, for
this reason, is less attractive as a potential recipient of
assistance.”6

If we think of life as an economy, and if we count resources as
anything we have that could help others — including and especially
friendship — by the logic of the Banker’s Paradox we have to make
difficult choices in assessing the credit risk of people we encounter.
In evolutionary theory the larger problem to be solved here is
altruism: why should I sacrifice my genes for someone else’s genes?
Or, more technically, an altruistic act is one that lowers my
reproductive success while simultaneously raising the reproductive
success of someone else.

Standard theory suggests two evolutionary pathways to altruism: kin
selection (“blood is thicker than water”) and reciprocal altruism
(“I’ll scratch your back if you’ll scratch mine”). By helping my kin
relations, and by extending a helping hand to those who will
reciprocate my altruism, I am helping myself. Thus, there will be a
selection for those who are inclined to be altruistic … to a point.
With limited resources we can’t help everyone and so we must assess
credit risks, and some people are better risks than others. Here again
is the Banker’s Paradox: those most in need of assistance are the
least likely to be given help, and so yet again the rich get richer.
But not always, because fair weather friends may be faking their signs
of altruistic tendencies and later fail to come to our aid when the
weather turns decidedly stormy. By contrast, true friends are those
who are deeply committed to our welfare regardless of the potential
for reciprocity. “It is this kind of friend that the fair weather
friend is the counterfeit of,” Tooby and Cosmides continue. “If you
are a hunter-gatherer with few or no individuals who are deeply
engaged in your welfare, then you are extremely vulnerable to the
volatility of events — a hostage to fortune.”7 The worse the
environment the more important it is that we have true friends, and
the environment of our evolutionary past was no picnic.

Evolution, it is suggested, would have selected for adaptations to
work around the Banker’s Paradox dilemmas, including selecting us to

1. seek recognition from our fellow group members for our
trustworthiness and reliability,
2. cultivate those attributes most desired by others in our group,
3. participate in social activities that recognize and reinforce
such pro-social attributes,
4. avoid social activities that lead to untrustworthy actions and
therefore a negative reputation,
5. notice similar attributes of trustworthiness in others, and
6. develop the ability to discriminate between true and fair
weather friends.

Thus, Tooby and Cosmides conclude, the Banker’s Paradox leads us to an
evolved psychology where “if you are unusually or uniquely valuable to
someone else — for whatever reason — then that person has an
uncommonly strong interest in your survival during times of
difficulty. The interest they have in your survival makes them,
therefore, highly valuable to you. The fact that they have a stake in
you means…that you have a stake in them. Moreover, to the extent they
recognize this, the initial stake they have in you may be augmented.”8
Through such augmentation can the poor become rich through the evolved
foundation of friendship.

If this sounds like I have reduced human relationships to nothing more
than credit calculations and reciprocal relations, in my previous
book, The Science of Good and Evil, I demonstrate how kin selection
and reciprocal altruism led to the evolution of deep and real moral
emotions that include love, friendship, and trust, because it is not
enough to fake being a good and faithful spouse, friend, or partner;
you actually have to believe it yourself, and actions follow beliefs.
Thus it is that morality is real and transcendent, and human relations
genuine and deeply ingrained in our nature.

In 1859, Charles Darwin’s On the Origin of Species was published. The
book was so controversial that in 1861 the British Association for the
Advancement of Science devoted a special session of its annual
conference to it. Talks were given, pro and con, with one critic
carping that Darwin’s book was too theoretical and that he should have
just “put his facts before us and let them rest.” In attendance was
Darwin’s friend and colleague, the political economist and social
activist Henry Fawcett, who wrote Darwin to report on the theory’s
reception (Darwin did not attend such meetings, usually due to ill
health and family obligations). Darwin wrote Fawcett back, explaining
the proper relationship between facts and theory:

About thirty years ago there was much talk that geologists ought
only to observe and not theorize, and I well remember someone saying
that at this rate a man might as well go into a gravel-pit and count
the pebbles and describe the colours. How odd it is that anyone should
not see that all observation must be for or against some view if it is
to be of any service!9

This quote was the centerpiece of the first of my monthly columns for
Scientific American, in which I elevated it to a principle I call
“Darwin’s Dictum,”10 as identified in the final clause: all
observation must be for or against some view if it is to be of any
service.

Darwin’s Dictum encodes the philosophy of science of this book: if
observations are to be of any use they must be tested against some
view — a thesis, model, hypothesis, theory, or paradigm. Since the
facts never just speak for themselves, they must be interpreted
through the colored lenses of ideas — percepts need concepts. Science
is an exquisite blend of data and theory — percepts and concepts —
that together form the bedrock for the foundation of science, the
greatest tool ever devised for understanding how the world works. We
can no more separate our theories and concepts from our data and
percepts than we can find a truly objective Archimedean point — a
god’s eye view — of ourselves and our world.

One view that I am writing against in this book, ironically, is the
belief that Darwin and the theory of evolution have no place in the
social sciences, especially in the study of human social and economic
behavior. Whereas scientists are up in arms about attempts to teach
creationism and Intelligent Design in public school biology classrooms
(see my book Why Darwin Matters), and are distraught by the dismal
state of science education and the lack of acceptance of Darwin’s
theory (less than half of Americans believe that humans evolved)11,
most scientists — especially social scientists — have resisted with
the emotional intensity of a creationist any attempts to apply
evolutionary thinking to psychology, sociology, and economics. The
reason for this resistance — understandable at the time — was the
equation of evolutionary theory with Social Darwinism and especially
the extreme hereditarian views that led to enforced sterilization of
the mentally retarded in America, and to the Nazi eugenics program
that led to the Holocaust. As a consequence, post-World War Two social
scientists steered a wide course around any attempts to employ
evolutionary theory to the study of human behavior, and instead
focused almost exclusively on socio-cultural explanations.

A second view that I am writing against is the theory of Homo
economicus, which holds that “Economic Man” has unbounded rationality,
self-interest, and free will, and that we are selfish, self-
maximizing, and efficient in our decisions and choices. When
evolutionary thinking and modern psychological theories and techniques
are applied to the study of human behavior in the marketplace, we find
that the theory of Homo economicus — which has been the bedrock of
Traditional Economics — is often wrong or woefully lacking in
explanatory power. It turns out that we are remarkably irrational
creatures, driven as much (if not more) by deep and unconscious
emotions that evolved over the eons, as we are by logic and conscious
reason developed in the modern world.

A third view that I am writing against is the belief, first propounded
in 1849 by the British historian Thomas Carlyle, that economics is
“the dismal science.” For the next century and a half most people
thought of it that way, seeing only a field bogged down in
mathematical models, financial analyses, and theoretical
representations of people as rationally calculating and maximally
selfish machines. In reality, when we examine all three of these views
together, we find that economics is anything but dismal. First, it is
undergoing the most dynamic revolution since Adam Smith founded the
science in 1776 with his book The Wealth of Nations. Rich
transdisciplinary hybrids are emerging to breath new life into an old
science, such as evolutionary economics, complexity economics,
behavioral economics, neuroeconomics, and what I call virtue
economics. Second, and more important, people, companies, and nations
care deeply and passionately about their finances, and they always
have. On this level, economics has never been dismal. Put a couple of
liberals and conservatives in a room together and ask them to
dispassionately discuss the economics of universal health care, the
privatization of social services, the cost-benefits of foreign aid, or
the relative merits of a flat tax versus a progressive tax, and see
just how quickly the tone of the conversation will escalate into a
state that is anything but dismal.

I have spent thirty years in science dealing with such controversial
topics as evolution, creationism, global warming, Holocaust denial,
racial differences in I.Q., racial differences in sports, gender
differences in cognitive abilities, conspiracy theories ranging from
Pearl Harbor and 9/11 to the JFK, RFK, and MLK assassinations,
alternative and complimentary medicine, reincarnation and the
afterlife, and even God and religion. Yet, it has been my experience
that as ruffled feathers go, economics is second to none in emotive
volatility. If ever we need impartiality in our assessment of the
facts — especially when the facts do not just speak for themselves —
it is in economics. We must study the laws of human behavior in
economies as the physicist, chemist, or biologist studies the laws of
nature; and when we do so, because we are dealing with a subject to
which most people are emotionally invested, we must make a ceaseless
effort not to ridicule, bewail, or scorn human actions, but to
understand them. Allow me to explain how I came to this subject.

In the mid-1970s, I was an undergraduate at Pepperdine University, a
Church of Christ institution with a strong conservative bent at a time
when liberals ruled academe. I matriculated there because I was an
evangelical Christian who wanted to be a college professor, so
theology seemed like the most appropriate field and Pepperdine had a
strong theology department (it didn’t hurt that the campus is located
in the majestic Malibu hills overlooking the Pacific Ocean). I soon
discovered, however, that in order to earn a Ph.D. in theology one had
to master four dead languages — Hebrew, Greek, Latin, and Aramaic —
and since I found even Spanish to be taxing, this career choice was
problematic. When my advisors also warned me about the questionable
university job market for theologians, and my parents began to wonder
aloud what I was planning to do for a living, I switched to
psychology, where I discovered the language of science, in which I
flourished. Theology is based on logical inquiry, philosophical
disputation, and literary deconstruction. Science is founded on
empirical data, statistical analysis, and theory building. For my
style of thinking the latter was a better fit.

My introduction to economics came in my senior year when many of the
students in the psychology department were reading a cinderblock of a
book entitled Atlas Shrugged, by the novelist-philosopher Ayn Rand. I
had never heard of the book or the author, and the novel’s size was so
intimidating that I refused to join the ranks of the enthused for
months, until social pressure pushed me into taking the plunge. I
trudged through the first hundred pages (patience was strongly
advised) until the gripping mystery of the man who stopped the motor
of the world swept me through the next thousand pages.

I found Atlas Shrugged to be a remarkable book, as many have. In fact,
in 1991 the Library of Congress and the Book of the Month Club
surveyed readers about books that “made a difference” in their lives.
Atlas Shrugged was rated second only to the Bible.12 Rand’s philosophy
of Objectivism was based on four fundamental principles:

1. Metaphysics: Objective Reality;
2. Epistemology: Reason;
3. Ethics: Self-interest;
4. Politics: Capitalism.13

Although I now disagree with her ethics of self-interest (science
shows that in addition to being selfish, competitive, and greedy, we
also harbor a great capacity for altruism, cooperation, and charity),
reading Rand led me to the extensive body of literature on business,
markets, and economics.

I cannot say for certain whether it was the merits of free market
economics and fiscal conservatism (which are considerable) that
convinced me of its veracity, or if it was my disposition that
reverberated so well with its worldview. As it is for most belief
systems we hold, it was probably a combination of both. I was raised
by parents who could best be described as fiscally conservative and
socially liberal. Products of the depression and motivated by the fear
of falling back into abject poverty, they skipped college and worked
full time well into their later years. Throughout my childhood I was
inculcated with the fundamental principles of economic conservatism:
hard work, personal responsibility, self-determination, financial
autonomy, small government, and free markets. Even though they were
not in the least religious (as so many conservatives are today), my
parents were exceedingly generous to those who were less fortunate —
greed is good, but charity is better.

After Pepperdine, I began a graduate program in experimental
psychology at California State University, Fullerton, by which time I
had abandoned my religious faith and embraced in its stead the secular
values of the Enlightenment and the rigorous methods and provisional
truths of science.14 But after two years of enticing rats to press
bars in proportion to the frequency and intensity of the
reinforcements we gave them, my enthusiasm for practicing this type of
science waned while my wanderlust for the real world waxed.15 I went
to the campus career development office and inquired what I might do
for a living with a Master’s degree. “What are you educated to do?”
they inquired. “Train rats,” I replied sardonically. “What else can
you do?” they persisted. “Well,” I searched, “I can research and
write.” The employment book included a job description for research
and writing at a trade magazine of the bicycle industry, about which I
knew nothing. My first assignment was to attend a press conference
hosted by Cycles Peugeot and Michelin Tires in honor of John Marino, a
professional bicycle racer who broke the transcontinental record from
Los Angeles to New York. I fell in love with the sport, entering my
first race that weekend, and for the next two years I learned the
business of publishing, the economics of sales and marketing, and the
sport of cycling. I wrote articles, sold advertisements, and rode my
bike as far as I could. At the end of 1981, I left the magazine to
race full time, supported by corporate sponsors and an adjunct
professor’s salary from teaching psychology at Glendale College.

One day in 1981, during a long training ride, Marino told me about
Andrew Galambos, a retired physicist teaching private courses through
his own Free Enterprise Institute, under an umbrella field he called
“Volitional Science.” The introductory course was V-50. This was Econ
101 on free market steroids, an invigoratingly muscular black-and-
white world where Adam Smith is good, Karl Marx bad; individualism is
good, collectivism bad; free economies are good, mixed economies are
bad. The course was popular in Orange County, California (labeled by
our neighbors in L.A. County as the “Orange Curtain”), and the time
was right with Ronald Reagan as President and conservatives on the
ascendant. Where Rand advocated for limited government, Galambos
proffered a theory in which everything in society would be privatized
until government simply falls into disuse and disappears. Galambos
identified three types of property: primordial (one’s life), primary
(one’s thoughts and ideas), and secondary (derivatives of primordial
and primary property, such as the utilization of land and material
goods). Thus, Galambos defined capitalism as “that societal structure
whose mechanism is capable of protecting all forms of private property
completely.” To realize a truly free society, then, we have merely “to
discover the proper means of creating a capitalist society.” In this
free society, we are all capitalists.16

Galambos’s story is not unusual in the history of the oft-fringy
libertarian movement. He had a massive ego that propelled him to a
successful career as a private lecturer, but led him to such ego-
inflating pronouncements as his classification of all sciences into
physical, biological, and his own “volitional sciences.” His towering
intellect took him to great heights of interdisciplinary creativity,
but often left him and his students tangled up in contradictions, as
when we all had to sign a contract promising that we would not
disclose his ideas to anyone, while we were also inveigled to solicit
others to enroll. (“You’ve got to take this great course.” “What’s it
about?” “I can’t tell you.”) And he had a remarkable ability to
lecture for hours without notes in an entertainingly colloquial style,
but when two hours stretched into three, and three hours dragged into
four, his audiences were never left wanting for more. Most
problematic, however, was any hope of translating theory into
practice, which is where the rubber meets the road for any economic
principle. Property definitions are all well and good, but what
happens when we cannot agree on property rights infringements? The
answer was inevitably something like this: “in a truly free society
all such disputes will be peacefully resolved through private
arbitration.” This sounds good in theory and makes for a nice just-so
story, but I would like more data from real world social experiments.

Galambos had a protégé named Jay Stuart Snelson, whom I met shortly
after taking V-50. Snelson taught courses at the Free Enterprise
Institute, but after a falling out with Galambos (a common occurrence
in Galambos’ social sphere that also plagued Ayn Rand and other
libertarian leaders), Snelson founded his own Institute for Human
Progress. To distance himself from Galambos and bring his ideas more
into line with mainstream economic theory, Snelson built on the
shoulders of what is known as the Austrian School of Economics, most
notably the work of the Austrian economist Ludwig von Mises. Snelson
demonstrated through a series of economic principles and historical
examples that free market capitalism is unquestionably the most
effective means of optimizing peace, prosperity, and freedom, and that
the privatization of education, transportation, communications, health
services, environmental protection, crime prevention, and countless
other areas would produce the greatest good for the greatest number.

During this time Marino and I (and our cycling partner Lon Haldeman)
turned our cycling passion into a business called the Race Across
America — a 3,000-mile nonstop transcontinental bicycle race — with
corporate sponsors and a contract from ABC Sports. Several appearances
on Wide World of Sports gave me the recognition and confidence to open
Shermer Cycles, a bicycle shop in Arcadia, California. Meanwhile, I
expanded my teaching duties by creating new courses in evolutionary
theory and the history of ideas at Glendale College.17 I also
developed a monthly seminar reading group called the “Lunar Society” —
after the famous eighteenth-century Lunar Society of Birmingham —
centered on discussing such books as Human Action, which inspired me
toward the lofty goal set by its author, Ludwig von Mises: “One must
study the laws of human action and social cooperation as the physicist
studies the laws of nature.” I call this Mises’ Maxim, and it is one
of two principles that guide my thinking in this book.18

In 1987, I decided that if I wanted to make an impact on the world
through ideas I was going to have to give up my competitive cycling
career and complete my graduate studies. I switched fields from
psychology to history, and in 1991 I graduated from Claremont Graduate
University with a Ph.D. in the history of science. I began teaching at
Occidental College, a prestigious four-year liberal arts college in
Los Angeles, and since I was interested in broader issues in science,
particularly the growing threat of pseudoscience and irrationality in
our culture, in 1992 I co-founded (along with my wife Kim and the
artist Pat Linse), the Skeptics Society, Skeptic magazine, and our
public science lecture series at the California Institute of
Technology.

The motto of the Skeptics Society is the second guiding principle of
this book, and it comes from the Dutch philosopher Baruch Spinoza’s
1667 treatise on politics penned just before his death, Tractatus
Politicus, in which he explained his methodology for studying such
emotionally-charged subjects as politics and economics:

That I might investigate the subject matter of this science with
the same freedom of spirit as we generally use in mathematics, I have
labored carefully not to mock, lament, or denounce human actions, but
to understand them; and to this end I have looked upon passions, such
as love, hatred, anger, envy, ambition, pity, and the other
perturbations of the mind, not in the light of vices of human nature,
but as properties just as pertinent to it as are heat, cold, storm,
thunder, and the like to the nature of the atmosphere.19

A pithier translation of the key phrase reads: “I have made a
ceaseless effort not to ridicule, not to bewail, not to scorn human
actions, but to understand them.” I elevated it to Spinoza’s Proverb,
a standard toward which to reach when dealing with such emotionally-
laden topics as science, religion, and morality, which encompass my
belief trilogy: Why People Believe Weird Things, How We Believe, and
The Science of Good and Evil20. It is no less so with this, the
product of an intellectual journey whose purpose is to improve our
understanding of the mental, moral, and material nature of humanity.
To that end, economics is for everyone.

REBUTTAL INCLUDED
http://www.666ismoney.com/LetterstoRaquel.html
posted by Raquel Baranow  /  January 28th, 2008

“Someone sent me an email several years ago with Rand’s Money Sermon/
Rant without identifying the source. I thought the person who sent me
the email was the author, so I responded, sentence by sentence to
Rand’s Rant here:”

SAMPLE COMEBACK: “Money is made possible by magic. It is intrinsically
inert, unnecessary or no real value (most of the gold and silver
supply is consumed in jewelry).”

Ayn Rand on money
From ATLAS SHRUGGED, by Ayn Rand, page 387:

Rearden heard Bertram Scudder, outside the group, say to a girl who made some sound of indignation, “Don’t let him disturb you. You know, money is the root of all evil–and he’s the typical product of money.” Rearden did not think that Francisco could have heard it, but he saw Francisco turning to them with a gravely courteous smile.

“So you think that money is the root of all evil?” said Francisco d’Aconia. “Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

“When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor– your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is this what you consider evil?

“Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions–and you’ll learn that man’s mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

“But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is MADE –before it can be looted or mooched– made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can’t consume more than he has produced.

“To trade by means of money is the code of the men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except by the voluntary choice of the man who is willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them, but no more. Money permits no deals except those to mutual benefit by the unforced judgment of the traders. Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss–the recognition that they are not beasts of burden, born to carry the weight of your misery–that you must offer them values, not wounds–that the common bond among men is not the exchange of suffering, but the exchange of GOODS. Money demands that you sell, not your weakness to men’s stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they offer, but the best your money can find. And when men live by trade–with reason, not force, as their final arbiter–it is the best product that wins, the best performance, then man of best judgment and highest ability–and the degree of a man’s productiveness is the degree of his reward. This is the code of existence whose tool and symbol is money. Is this what you consider evil?

“But money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires. Money is the scourge of the men who attempt to reverse the law of causality –the men who seek to replace the mind by seizing the products of the mind.

“Money will not purchase happiness for the man who has no concept of what he wants; money will not give him a code of values, if he’s evaded the knowledge of what to value, and it will not provide him with a purpose, if he’s evaded the choice of what to seek. Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money. Is this the reason why you call it evil?

“Only the man who does not need it, is fit to inherit wealth–the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him. Did it? Or did he corrupt his money? Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one, would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve that mind that cannot match it. Is this the reason why you call it evil?

“Money is your means of survival. The verdict which you pronounce upon the source of your livelihood is the verdict you pronounce upon your life. If the source is corrupt, you have damned your own existence. Did you get your money by fraud? By pandering to men’s vices or men’s stupidity? By catering to fools, in the hope of getting more than your ability deserves? By lowering your standards? By doing work you despise for purchasers you scorn? If so, then your money will not give you a moment’s or a penny’s worth of joy. Then all the things you buy will become, not a tribute to you, but a reproach; not an achievement, but a reminder of shame. Then you’ll scream that money is evil. Evil, because it would not pinch-hit for your self-respect? Evil, because it would not let you enjoy your depravity? Is this the root of your hatred of money?

“Money will always remain an effect and refuse to replace you as the cause. Money is the product of virtue, but it will not give you virtue and it will not redeem your vices. Money will not give you the unearned, neither in matter nor in spirit. Is this the root of your hatred of money?

“Or did you say it’s the LOVE of money that’s the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It’s the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money–and he has good reason to hate it. The lovers of money are willing to work for it. They know they are able to deserve it.”

“Let me give you a tip on a clue to men’s characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it.

“Run for your life from any man who tells you that money is evil. That sentence is the leper’s bell of an approaching looter. So long as men live together on earth and need means to deal with one another–their only substitute, if they abandon money, is the muzzle of a gun.

“But money demands of you the highest virtues, if you wish to make it or to keep it. Men who have no courage, pride, or self-esteem, men who have no moral sense of their right to their money and are not willing to defend it as they defend their life, men who apologize for being rich–will not remain rich for long. They are the natural bait for the swarms of looters that stay under rocks for centuries, but come crawling out at the first smell of a man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of the guilt–and of his life, as he deserves.

“Then you will see the rise of the double standard–the men who live by force, yet count on those who live by trade to create the value of their looted money–the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law–men who use force to seize the wealth of DISARMED victims–then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

“Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion– when you see that in order to produce, you need to obtain permission from men who produce nothing –when you see that money is flowing to those who deal, not in goods, but in favors– when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you– when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: ‘Account overdrawn.’

“When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, ‘Who is destroying the world?’ You are.

“You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it’s crumbling around you, while your damning its life-blood–money. You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men’s history, money was always seized by looters of one brand or another, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves– slaves who repeated the motions once discovered by somebody’s mind and left unimproved for centuries. So long as production was ruled by force, and wealth was obtained by conquest, there was little to conquer. Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers–as industrialists.

“To the glory of mankind, there was, for the first and only time in history, a COUNTRY OF MONEY–and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time, man’s mind and money were set free, and there were no fortunes- by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being–the self-made man–the American
industrialist.

“If you ask me to name the proudest distinction of Americans, I would choose–because it contains all the others–the fact that they were the people who created the phrase ‘to MAKE money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity–to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.

“Yet these were the words for which Americans were denounced by the rotted cultures of the looters’ continents. Now the looters’ credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, like the pyramids of Egypt. The rotter who simpers that he sees no difference between the power of the dollar and the power of the whip, ought to learn the difference on his own hide-as, I think, he will.

“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns–or dollars. Take your choice–there is no other–and your time is running out.”

.

HISTORY
http://en.wikipedia.org/wiki/History_of_money
http://www.neatorama.com/2007/10/16/funny-money-strange-currencies-of-the-world/
http://secure2.moneymuseum.com/frontend/moneymuseum/en/tTgfz8aS0yEykbQK/GuideTours/list

CIGARETTES AS CURRENCY
http://books.google.com/books?id=8t8CEnOhQeEC&pg=RA2-PA306&lpg=RA2-PA306&dq=cigarettes+prison+currency&source=web&ots=WPyHkLb9lV&sig=9S-5k7J-FQwA-hVUrNO-QJnNmt4
http://caracaschronicles.blogspot.com/2002/09/reinventing-hyperinflation-wheel.html

‘Soon after his release, Radford described the system that developed
in a classic paper entitled “The Economic Organization of a POW Camp,”
a write-up that’s much appreciated by undergraduates everywhere for
its skill at explaining the mysteries of monetary systems. What
interested Radford the most was the way that cigarrettes, as a means
of exchange, were subject to all of the fluctuations of normal
currency.’

–  [thanks to http://faceofthemoon.blogspot.com/]

“SPACE-SAFE” QUASI UNIVERSAL INTERGALACTIC DENOMINATION — IF ANYONE
TAKES IT
http://news.bbc.co.uk/2/hi/business/7029564.stm

New currency for space travellers  /  5 October 2007

Scientists have come up with a new currency designed to be used by
inter-planetary travellers. It is called the Quasi Universal
Intergalactic Denomination, or Quid. It is designed to withstand the
stresses of space travel and has no sharp edges or chemicals that
could hurt space tourists.

It was designed for the foreign exchange company Travelex by
scientists from the National Space Centre and the University of
Leicester. “None of the existing payment systems we use on earth –
like cash, credit or debit cards – could be used in space,” said
Professor George Fraser from the University of Leicester. “Anything
with sharp edges, like coins, would be a risk to astronauts while the
chips and magnetic strips used in our cards on Earth would be damaged
beyond repair by cosmic radiation,” he added.

Using any sort of technology that involved sending and receiving
information from Earth would also be impractical because of the
distances involved. Quids are made of the polymer best-known for its
use in non-stick pans. The Quid “coins” have moulded edges so that
they will not damage anything if they accidentally float free in zero
gravity.

National Space Centre scientists predict that regular trips into space
will be commonplace in the next five years and that tourist facilities
on the Moon are a distinct possibility by 2050. Professor Fraser told
BBC News: “With an inflatable space hotel, from Bigelow Aerospace,
under development in the US, and Virgin Galactic developing
SpaceShipTwo, there will be better access to space than there has
been.

“In the fullness of time we will have to adopt a universal currency if
we are going to carry out serious commerce in space. It’s an
interesting initiative.” Travelex said: “It’s only a matter of time
before people will be walking up to our shops and asking for Quids for
their two weeks in a space hotel.” It is currently quoting the
currency at £6.25 to the Quid.

CREATE YOUR OWN EXCHANGE RATE
http://www.ragandbone.com/blogger/2007/07/world-currency.html
http://www.artichokeyinkpress.com/phons/archive.php
http://members.cox.net/crandall11/money/
http://www.dream-dollars.com/
http://www.justinesmith.net/moneymap.html


http://artich.fatcow.com/alternate/images/art-wag-chuck.jpg

http://artich.fatcow.com/alternate/images/art-ckw-ganesh.jpg
http://www.alternatingcurrency.com/
http://www.kcshop.com/imagegallery/Antarctica.htm

http://images.google.com/images?um=1&tab=wi&client=firefox-a&ie=utf-8&oe=utf-8&rls=org.mozilla%3Aen-US%3Aofficial&q=J.S.G.%20Boggs
http://www.pbs.org/wgbh/nova/transcripts/2314secr.html
http://www.bluespike.com/boggsqanda.html
http://en.wikipedia.org/wiki/J._S._G._Boggs
http://www.reason.com/news/show/27822.html

BY Jesse Walker  /  October 2000

“Artist J.S.G. Boggs is famous for drawing intricate but slightly
skewed versions of the national currency, asking businesses to accept
one of these bills in lieu of ordinary dollars, then asking for the
correct change. Anyone willing to take this leap of faith and accept
the bill will soon find collectors offering him thousands of Treasury-
approved dollars for it. In a sense, Boggs is issuing his own
currency, backed by the full faith and credit of the fickle art
market. If it sounds a bit like a confidence game, that may be because
it’s public confidence that gives money value in the first place.

Critics and journalists love Boggs’ work, but lawmen are sometimes
less tolerant. In 1986, the British government charged him with
counterfeiting, even though he has never represented his work as
“real” money. He won that case, but that hasn’t kept other police
forces from harassing him. Late in 1992, the U.S. Secret Service
raided his workshop, confiscating drawings, receipts, even press
clippings. Eight years later, they’ve neither filed charges against
the artist nor returned his property.

More recently, Boggs has designed an electronic image–or rather, a
rapidly shifting flux of images–for an encrypted online currency to
be unveiled later this year by Blue Spike Inc. And the University of
Chicago Press has published an excellent book about the man, his art,
and the issues his art raises: Boggs: A Comedy of Values, by Lawrence
Weschler.”

Q: What’s the status of your conflict with the Secret Service?

A: They confiscated over 1,300 items of my property. But when I went
to collect them, there were only a couple of hundred items in the box–
and they wouldn’t even allow me to inventory them. So I’m going to
have to go back to court.

Q: Isn’t there a sense in which fights like that magnify the point
your art is making?

A: It magnifies several points. One is that art in this country is not
properly understood, respected, or valued. Another is the discrepancy
between what we represent as our beliefs and what we actually
practice. In this country, we’re supposed to have due process, and
we’re supposed to have respect for private property.

Q: If I drew a dollar bill and signed your name to it, would I be a
forger or a counterfeiter?

A: A forger. I don’t make money; I make works of fine art.

Q: Have you ever drawn a currency that was subsequently devalued?

A: Yes.

Q: Did the price of your drawing drop after the devaluation?

A: No–my work has a nasty tendency to keep appreciating.

Q: What’s the oddest thing you’ve ever bought with a Boggs bill?

A: I’ve bought everything with Boggs bills. Hot dogs, watches,
airplane tickets, rent, clothing, jewelry–anything.

Q: Have you ever drawn a campaign contribution?

A: No, but I’ve drawn a charitable contribution. I drew a $1 bill,
which I gave to the New York Dance Company as a donation valued at $1.
They put it up for auction and sold it for $5,000. The person who
bought it sold it for 10,000. Last I heard, the current owner was
offered $25,000 but declined to accept it.

.

PRE-CASH SOCIETY
http://www.newscientist.com/channel/sex/mg19726374.100-macaque-monkeys-pay-for-sex.html

Macaque monkeys ‘pay’ for sex  /  02 January 2008

SEX has probably been a commodity for as long as human society has
existed, and perhaps even longer. The “oldest profession” seemingly
has pre-human evolutionary roots. “When the opportunity arises, male
macaque monkeys groom females to ‘pay’ for sex,” says Michael Gumert
of Nanyang Technological University, Singapore.

Gumert looked at research on a 50-strong group of long-tailed macaques
in Kalimantan Tengah, Indonesia, that covered a 20-month period. He
found there was an increase in sexual activity after bouts of male-to-
female grooming. On average, females had sex 1.5 times per hour, but
immediately after being groomed by a male partner, this rate jumped to
3.5 times per hour. After grooming, the female was also less likely to
offer herself to males other than her grooming partner (Animal
Behaviour, DOI: 10.1016/j.anbehav.2007.03.009).

“My interest in this study stemmed from Trivers’s theory of reciprocal
altruism,” says Gumert. In the early 1970s, Robert Trivers suggested
that an organism will provide a service benefiting another, as long as
it gets something back at a future date. But Gumert suspected that if
the payback involved sex, the value would vary depending on the
context – like all commodities in economics – a finding not predicted
by reciprocal altruism. Sure enough, if there were several females in
the area, the value of sex would drop – a male could “buy” a female
for just 8 minutes of grooming. But if there were fewer females than
males in the area, a male would have to groom his partner for up to 16
minutes before sex was offered.

A two-player interaction, such as is usually considered in reciprocal
altruism studies, doesn’t make sense in this “general mating market”,
says Ronald Noë of the University of Strasbourg, France. Noë and Peter
Hammerstein of Humboldt University in Berlin, Germany, formulated
biological market theory to better explain the kind of social
behaviour Gumert identified in macaques. Market forces have a powerful
influence on behaviour, says Noë. “There is a very well-known mix of
economic and mating markets in the human species itself,” he says.
“There are many examples of rich old men getting young attractive
ladies.”

Yet prior to Gumert’s study, the evidence that market forces influence
mating in nature has been scant – the only other clear example was in
wood mice. “Many studies that fail to find biological market effects
were performed in captivity,” says Gumert. “It is quite possible that
the confinements of captivity alter or remove the effects of a social
market.” For instance, there is no migration within captive
communities, so the value of commodities such as sex remains stable,
which makes market forces difficult to identify, he says.

Gumert says macaque males are very “short-termist” in their thinking.
“Some work is showing that monkeys really don’t have the capacity to
wait for long-term trades and therefore trades probably only occur in
the immediate sense,” he says.

CONTACT
Michael D. Gumert
email : gumert [at] ntu [dot] edu [dot] sg
http://www.hss.ntu.edu.sg/search/psychology_staff_details.asp?userid=gumert

Ronald Noë
email : ronald [dot] noe [at] c-strasbourg [dot] fr
http://iphc.in2p3.fr/-R-Noe-.html
http://ronald.noe.googlepages.com/markets-main

ABSTRACT
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W9W-4R2HKSW-1&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=5737f8f8f412bcd0d8c43ef98c777175

Payment for sex in a macaque mating market

aDepartment of Biology, Hiram College, Hiram, OH, U.S.A.
bDepartment of Psychology, Hiram College, Hiram, OH, U.S.A.
Received 18 September 2006;  revised 26 October 2006;  accepted 13
March 2007.  MS. number: A10560R.  Available online 5 November 2007.

“In primate sexual relationships, males and females can cooperate
through social trade. Market-like trading of sexual activity has been
theorized, but no data have yet been presented that clearly show its
existence. I collected data to test whether biological market theory
could account for exchanges of male-to-female grooming and sexual
activity in longtailed macaques. I explored male-to-female grooming,
rates of sexual activity, and grooming-mating interchanges, which were
male-to-female grooming bouts that directly involved mating. Male-to-
female grooming mainly occurred when females were sexually active, and
males groomed females longer per bout when mating, inspection, or
presentation of female hindquarters was involved. Moreover, male-to-
female grooming was associated with an increase in female rates for
all forms of sexual activity, where in contrast, female-to-male
grooming was associated with decreased rates of mating in the groomed
males. Males did not preferentially mate with swollen females or
invest more grooming in them during grooming-mating interchanges, as
swellings did not seem to be a reliable indicator of female fertility.
Rank status was correlated with grooming payment during grooming-
mating interchanges in favour of higher-ranked males and females. In
support of a biological market interpretation, the amount of grooming
a male performed on a female during grooming-mating interchanges was
related to the current supply of females around the interaction. The
results provided evidence of a grooming-mating trade that was
influenced by a mating market.”