At Least We Don’t Call Them Panics Any More

The U.S. economy is much less volatile now than it once was

Portfolio manager Ben Carlson had some common sense comments about investing in general, fear of an impending recession in particular, and maybe a reason recessions aren’t called “panics” any more.

The historical record shows that the U.S. has had at least one recession every single decade since the 1850s but not one yet in this decade. What stands out, however, is how much less volatile the U.S. economy is now than it once was. From the 1850s through the end of World War II, the average contraction in economic activity was more than 22%; since then, the average contraction has been just 2.3%. “It’s hard to argue,” Carson said, “that the Fed hasn’t helped the U.S. economy become less volatile over time.”

Despite past experience, timing does not demand that there be a recession at regular intervals. “Expansions don’t die of old age. Economic cycles don’t care who the president is and they certainly don’t care what the calendar says,” he insisted. “Something as complex as economic activity is mainly controlled by human behavior, not rational economic textbook theory,” said Carlson.

Kai Ryssdal, host and senior editor of Marketplace, also pointed out that many macroeconomic statistical models have problems because their predictions don’t account for human behavior and “human beings are not always logical.”

According to University of Chicago professor Richard H. Thaler, said Ryssdal, economists in the 1940s started creating models of highly rational behavior because they weren’t smart enough to develop models of real behavior. As a result, their equations didn’t act like humans do.

As an example, in his graduate thesis, Thaler pondered the answers people give to these two questions:

  1. How much would you pay to eliminate a one in a thousand risk of death?
  2. How much would you have to be paid to take on an extra one in a thousand risk of death?

He contended that economic theory says the questions should have basically the same answer but, in fact, they elicit very different answers from most people.

An increasing number of behavioral economic theories attempts to include these inconsistencies, but forecasting the next recession will remain a problem for the foreseeable future because, as Carlson said, “human behavior isn’t predictable enough.”


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Thinking Like a Scientist?

True knowledge exists in knowing that you know nothing

The hype surrounding STEM (science, technology, engineering and math) education—which claims to develop the skills “to solve tough problems, gather and evaluate evidence, and make sense of information”—has created a false dichotomy between these and other fields, and led to the contention that “the humanities and social sciences are luxuries that employment-minded students can ill afford.”

English professor Aaron Hanlon contended that, “Core analytical methods useful to all knowledge workers” are appropriate for everyone, not just scientists. He insists, “Being inquisitive, weighing the quality and ideological bent of evidence, and changing our minds according to the evidence is not ‘thinking like a scientist.’ It’s the ‘core’ method of humanistic study.”

And according to Elizabeth Minkel, of How We Get to Next, the idea that science is superior because it “comes from a place of pure objectivity is a commonly held assumption—and dangerous one.”

Indeed, warned science writer John Horgan, science’s desire for certainty can become a trap. Socrates said, “True knowledge exists in knowing that you know nothing,” and the humanities:

  • give you uncertainty, doubt and skepticism
  • are subversive
  • undermine the claims of all authorities, whether political, religious or scientific
  • remind us that we have an enormous capacity for deluding ourselves
  • tell us that every single human is unique, different than every other human, and each of us keeps changing in unpredictable ways.

“This skepticism,” Horgan said, “is especially important when it comes to claims about humanity, about what we are, where we came from, and even what we can be and should be.”

“Science is becoming increasingly dogmatic and arrogant in our era,” according to Horgan, “which is why we need the humanities to foster a healthy anti-dogmatism.”

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Warrior or Guardian?

I've always thought this meant the police were my guardians

There are features of modern life that make our lives safer, more enjoyable and more productive that it’s easy to assume have always existed but in fact have only been around for a relatively short time. The ability to “call the police” when the need arises is one example. The first full-time, professional police force was not established until the nineteenth century, and scholars and law enforcement officials continue to differ about the proper role of police.

Perhaps the most common civilian view is that the police have always been expected to function as a guardian, called on “to protect and to serve.” The original ideal of Robert Peel—British Prime Minister in the 1840s and the father of British policing—acknowledged that, “The ability of the police to perform their duties is dependent upon public approval of police existence, actions, behavior and the ability of the police to secure and maintain public respect.”

But rising urban crime rates in the United States in the 1980s, the crack epidemic and the federal government’s war on drugs caused that philosophy to morph, according to Criminal Justice professors Sue Rahr and Stephen K. Rice, “toward a culture and mindset more like warriors at war with the people we are sworn to protect and serve.”

This change is reflected in the emphases in the training of recruits. According to the Bureau of Justice Statistics, training at the nation’s police academies typically spends the most time on use-of-force training—roughly 168 hours—and the least on de-­escalation and conflict mediation—about nine hours.

Seth Stoughton, a former Tallahassee police officer and expert in police training at the University of South Carolina School of Law, says that by internally cultivating and promoting the mindset of a warrior whose primary goal is self-protection, modern police often undermine their own efforts. “Though adopted with the best of intentions,” Stoughton said, “the warrior concept has created substantial obstacles to improving police/community relations.”

Rahr, a former sheriff, believes that training officers to communicate properly and stay calm can defuse most situations. She implemented training at the Washington state police academy designed to create guardians of the community, not warriors on a battlefield. “The changes I’ve made,” Rahr said, “really get us back to what policing was originally intended to be.”

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Work for Truth

Galileo's 'somewhat shriveled, spindly finger' preserved in the Galileo Museum in Florence

Alice Dreger, a medical social advocate and bioethicist, titled her book Galileo’s Middle Finger for the actual digit preserved in the Galileo Museum in Florence, Italy. She considers it a symbol of “Galileo’s contentious nature, his belief in the righteousness of science, his ego, his burning knowledge that he and Copernicus were right.”

In GMF, Dreger describes the necessity of insisting on empirical truth for the establishment of justice:

The activists who founded the United States—the Founding Fathers—understood the critical connection between freedom of thought and freedom of person. They understood that justice (freedom of person) depends upon truth (freedom of thought), and that the quest for truth cannot occur in an unjust system. It’s no coincidence that so many of the Founding Fathers were science geeks. These guys were rightly stoked about the idea that humans working together had it in their power to know and to improve the world—scientifically, technologically, economically, politically. These were men of the Enlightenment who had broken through dogma into a fantastic new vision for humankind: crowdsourcing. No longer would knowledge and power flow from top down, following archaic rules of authority and blood inheritance. In science as in political life, the light of many minds would be brought to bear to decide together what is right and is just. In such a system, a man arguing for a new vision of the universe could never be arrested merely for the argument, no matter how much it threatened those in power….

If we have any hope of maintaining freedom of thought and freedom of person in the near and distant future, we have to remember what the Founding Fathers knew: That freedom of thought and freedom of person must be erected together. That truth and justice cannot exist one without the other. That when one is threatened, the other is harmed. That justice and thus morality require the empirical pursuit….

As Dreger insists, “If you want justice, you must work for truth.”

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The Hunting of a Man

In Emile Gaboriau’s The Widow Lerouge, considered by some to be “the first detective novel,” amateur detective Père Tabaret gushed about the thrill of solving a crime:

“I shrug the shoulder when I see a foolish fellow pay twenty-five francs for the right of hunting a hare. What a prize! Give me the hunting of a man! That calls the faculties into play, and the victory is not inglorious! The game in my sport is worth the hunter. He has against him intelligence, force and cunning. The arms are nearly equal. Ah! if people knew the excitement of these parties of hide and seek which are played between the criminal and the detective, everybody would be wanting employment at the bureau of secret police.”

But for the last 50 years, despite steady advances in forensic technology like DNA profiling, digital fingerprint matching and bullet fragment analysis, the percentage of US homicide cases that are solved has been decreasing, from 90 percent in 1965 to 64 percent in 2012.

Three reasons are typically given for this change:

  1. A shift in the profile of the typical murder
  2. A decline in the resources devoted to crime solving
  3. Worsening relationships between the police and the public

During the 1960s and ’70s, “crimes of passion,” where the victim knows the killer, accounted for about 70 percent of US homicides. Some criminal investigators claim, however, that an increase in drugs and gangs means the crimes now more often involve strangers and are thus harder to solve than those between family members or friends. A fear of retaliation can also make witnesses to these crimes reluctant to cooperate, according to a study by three FBI researchers.

Others point to decreased emphasis on the police work needed to solve cases. “The crime waves of the 1970s and ’80s pushed police departments toward prevention strategiesbroken-window patrols, more officer visibility in high-crime areas, stop-and-frisk—and solving crimes became secondary,” according to Michigan State University criminologist David L. Carter.

Decreasing the initial response time and raising the number of detectives assigned to solving a case can lead to more homicide arrests, according to a 1999 Maryland study. But cuts in municipal budgets have made many cities unable to reduce investigators’ homicide investigation caseloads to manageable levels.

Additionally, mistrust of the police and a corresponding unwillingness to cooperate with investigators can make the new forensic techniques less effective. Houston police Sergeant Mike Peters insisted, “Technology is great, but it’s the ability to get people to talk that’s important. That solves cases.” As the author of the definitive manual on homicide investigation said, “If there is a distrust of the police themselves and the system, all of these scientific advances are not going to help us.”

Data compiled by the Murder Accountability Project points to a clear correlation between the number of crimes that are solved and the number that are committed. It shows that in cities where the percentage of crimes solved is above average, the murder rate is just over half that of cities where the percentage solved is below average.

What would it take to imbue more police departments with Monsieur Tabaret’s excitement for the pursuit of criminals and to convince their communities that, indeed, they are pursuing justice?

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Mystery & Crime Novels for $800, Alex

Snow and ice are a perfect setting for a noir story

I was prompted to read Peter Høeg’s 1992 novel, Smilla’s Sense of Snow, when Jeopardy! featured a question about it (“When a boy falls to his death, ‘Smilla’s Sense of Snow’ in this Scandinavian country helps prove it was murder”). I had no idea that the book has been the subject of one of the show’s clues—as Ed Rooney saidnine times, each in a different category:

  • 1990s FICTION

The book is considered part of the “noir” crime genre and, since it’s set in Denmark and Greenland, one of the best examples of a subgenre known as Nordic noir (or Scandinavian noir).

Noir literature is typically characterized by:

  • Simple language, i.e., without metaphor
  • Bleak settings
  • Tension between a calm social surface and the violence beneath
  • Dark and morally complex moods
  • Social criticism

The plot of these stories often contrasts with the classic British “whodunit” where the reader and the detective try to identify the criminal as the plot progresses (à la Agatha Christie and Sherlock Holmes). Instead, they tend to follow an inverted detective story form—sometimes called a “howcatchem”—where the reader knows the villain’s identity in advance (à la Columbo) and watches the detective bring him to justice.

More fundamentally, “noir”—Nordic or not—conveys a different worldview and features a different type of protagonist:

“The classic crime story…takes place in an essentially orderly universe, with a common understanding of good and evil. Crime here is a dangerous anomaly, but order can be restored by a hero-detective who investigates and, eventually, unmasks the criminal.”

The world of noir, on the other hand, is “chaotic, baroque and hypocritical. Crime doesn’t disturb this world, it’s foundational to it. Noir stories give the stage to criminals and their motivations, which range from unspeakable passions to a firm conviction that their particular crime serves a greater good. A detective may pursue such a criminal, but noir reveals the line between them to be a product of chance and circumstance—if, indeed, such a line exists at all.”

“In noir, the problem is not an individual: the problem is the world. Institutions are corrupt, public moralities hypocritical, the watchmen un-watched. One person may pull a trigger, but that act is part of a sprawling web of mendacity and exploitation. No one gets away clean.”

Noir depicts “a universe more like the one we live in than the one we imagine for ourselves…[It is] powerful because it [is] a tiny bit true.”

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Profile in Courage

During the first two and a half years of President John F. Kennedy’s administration, he struggled to develop a bond with Martin Luther King Jr. and to come to grips with the civil rights movement. In his book, Kennedy and King: The President, The Pastor, and the Battle Over Civil Rights, Steven Levingston described the “often clashing but always respectful” relationship between the Irish Catholic politician and the Southern Baptist preacher.

As a candidate for President in 1960, Kennedy had coveted King’s support, knowing the favor it would bring him among black voters. But after meeting with Kennedy in June 1960, King still believed that the candidate had only an intellectual commitment [to civil rights], not an emotional one. King diplomatically insisted that he declined to offer a political endorsement because it would be inappropriate for him to do so.

Shortly before the election, however, Kennedy made a private phone call expressing his concern to King’s pregnant wife Coretta while King was incarcerated. When word of the call got out, it “reverberated within the black community” and helped him narrowly defeat the Republican candidate Richard Nixon.

But as President, Kennedy disappointed King and the other leaders of the civil rights movement by failing to prioritize their struggle as a national issue. The president was pressed relentlessly to “confront racist Southern politicians and end the indignity of segregation” in American society, but his attention was repeatedly drawn to other issues.

King believed that, like some other politicians, Kennedy saw the Cold War expediency of removing segregation and discrimination as stains on the nation. But he accused the president of not insisting on their removal simply because they were “morally wrong.”

By the time some of the most brutal confrontations of the civil rights campaign occurred in Birmingham, Alabama in late 1962, however, the movement’s leaders had come to believe that Kennedy was different from previous presidents. They believed that a “tacit alliance” had developed between the Kennedy administration and their cause, and that if they could arouse public support, “this administration would hear it and respond.”

On June 11, 1963, after watching Governor George Wallace refuse admission to black students at the University of Alabama, Kennedy determined to deliver a nationally televised speech that night. “As Wallace left the doorway,” remembered Kennedy advisor and speechwriter Ted Sorensen, “the president turned around and said to me, ‘I think we’d better give that speech tonight.'” Kennedy’s political advisors opposed a public speech calling for civil rights legislation, but his brother Attorney General Robert Kennedy argued for it and won.

Acting with “unusual impulsiveness,” Kennedy told his Commerce Secretary Luther Hodges, “I may lose the legislation, or I may even lose the election in 1964, but there comes a time when a man has to take a stand and history will record that he has to meet these tough situations and ultimately make a decision.”

In what The New York Times called “Kennedy’s Finest Moment,” the president empathized with the suffering of black citizens as never before, committing his support to them, and calling on all Americans to do the same. For the first time, he called civil rights a moral issue (“as old as the scriptures and…as clear as the American Constitution”) in sharp contrast to the refusal of his predecessor to do so.

Following the speech, which laid the foundation for the Civil Rights Act of 1964 and the Voting Rights Act of 1965, King exclaimed, “That white man not only stepped up to the plate, he hit it over the fence!” US Congressman John Lewis gave King much of the credit for persuading Kennedy to take a stand, saying, “The very being, the very presence, of Martin Luther King Jr. pricked the conscience of John F. Kennedy.”

King said Kennedy in 1963 became a leader who was “willing to stand up in a courageous manner” to address moral issues. And Kennedy ultimately recognized the role King had played in his decision to embrace the struggle of blacks for civil rights when he said to King, “It often helps me to be pushed.”

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