Category Archives: History

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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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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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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If We Don’t Hold Them Accountable, Who Will?

Steven Spielberg’s 2017 movie, The Post, relates a devastatingly relevant episode in the recurring conflict between the self-interest of corrupt government officials and the freedom of the press.

In 1976, I enrolled in journalism school just as the movie All the President’s Men was portraying reporters Bob Woodward and Carl Bernstein as superheroes for exposing the Watergate scandal. Director Alan J. Pakula said the two reporters became “a kind of contemporary myth” that affirmed the “American belief that a person or small group can with perseverance and hard work and obsessiveness take on a far more powerful, impersonal body and win—if they have truth on their side.” The book was published three months before Nixon’s resignation and the film version appeared just two years later. Though the release of The Post came more than four decades after the earlier story it relates, the current environment makes it just as timely and its moral just as persuasive.

Like the Watergate story, the publication of the Pentagon Papers (officially titled “Report of the Office of the Secretary of Defense Vietnam Task Force”) in 1971 revealed a massive government cover-up, this one hiding the military’s acknowledgement of the futility of its involvement in the Vietnam War. The New York Times introduced readers to the contents of the classified documents in two front-page stories on consecutive days. When U.S. attorney general John Mitchell asked The Times to stop publishing information from the report, The Times refused and it was served with a lawsuit and a temporary restraining order. The Times complied, but sought legal permission to continue publication of the documents.

The film describes the embarrassing situation The Washington Post found itself in. Following publication of the first Times story, it was forced to write an article taken entirely from their competitor, according to editor Ben Bradlee. “[We] did not have a copy [of the documents], and we found ourselves in the humiliating position of having to rewrite the competition. Every other paragraph of the Post story had to include some form of the words ‘according to The New York Times,’” Bradlee said.

Commenting on the movie’s choice to tell the story from the perspective of the trailing Post, retired New York Times reporter David Dunlap rightly insisted that the story of The Times’ initial scoop “would have made, we believe, for a very good movie called ‘The Times.’” But The Post’s Katharine Graham (played by Meryl Streep) was the first female publisher of a major American newspaper and Bradlee (played by Tom Hanks) had been memorably portrayed in All the President’s Men, so perhaps Spielberg considered their personalities more compelling.

The crux of the plot has Bradlee imploring Graham to join The Times in revealing the depth of the government’s deception, asking, “If we don’t hold them accountable, who will?” Indeed, while serving as United States Minister to France in 1787, Thomas Jefferson wrote, “Were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.” Why? Because of the importance of a free press in keeping government power in check.

In the Supreme Court decision that allowed publication of the Pentagon Papers to continue, Justice Hugo Black’s opinion affirmed that, “In the First Amendment, the Founding Fathers gave the free press the protection it must have to fulfill its essential role in our democracy. The press was to serve the governed, not the governors.”

As it is with all noble principles, the power of the press must be reaffirmed against the attacks of each new aspiring despot of the moment. Taking nothing for granted, of course, The Post reminds us that we’ve seen this story before and we know who won.

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Sisters of the Sun

Henry Draper was a physician, but his passion was astronomy. At age 36, he left his positions as professor and dean of medicine at New York University to spend more time working in his observatory in Hastings-on-Hudson, New York.

On Henry Draper’s death in 1882, Harvard Observatory director Edward Pickering informed Anna Palmer Draper that he intended to carry out her husband’s desire to photograph and classify the stars, and she agreed to support and fund the work. As a result, the observatory’s largely-female staff became pioneers of astrophotography, spectral analysis, and astrophysics.

Dava Sobel’s book, The Glass Universe: How the Ladies of the Harvard Observatory Took the Measure of the Stars, describes how night after night and decade after decade, the women exposed glass plate negatives, capturing a spectrum for each star in the telescope’s field of vision by placing a prism in their telescopes. Annie Jump Cannon grouped the stars in their hundreds of thousands of photographs according to the character of each one’s spectrum and classified them into seven types designated by the letters O, B, A, F, G, K and M.

The 2014 television series Cosmos: A Spacetime Odyssey told of the Harvard women, as well, focusing on Cannon and Cecilia Payne in part of its eighth episode, Sisters of the Sun. Host Neil deGrasse Tyson emphasized not only Cannon’s classification system, but also—more than Sobol—the opposition initially provided for Payne’s important addition to it.

When Payne—an expert in theoretical and atomic physics—migrated from England to the United States in search of academic opportunity as a woman, she joined the Harvard team of researchers—now under director Harlow Shapley—and provided insight into the meaning of Cannon’s categories. Payne determined that, without knowing it, Cannon’s system had classified the stars from the hottest to the coldest.

By analyzing the chemical composition and physical state of the stars, Payne discovered that the stars are made almost entirely of hydrogen and helium; unlike on earth, all the other elements were present only in trace amounts. This contention was so stunning that it was initially disparaged by Princeton University professor Henry Norris Russell, the dean of American astronomers at the time, and Payne backed off the central claim of her thesis. But four years later, Russell affirmed that Payne was right.

Cosmos used this delayed acceptance to make a strong point about the uniqueness of the process of scientific discovery: “The words of the powerful may prevail in other spheres of human experience,” Tyson said. “But in science, the only thing that counts is the evidence and the logic of the argument itself.” Payne was quoted as saying, “I was to blame for not having pressed my point. I had given in to authority when I believed I was right. If you are sure of your facts, you should defend your position.”

The overriding impression of Sobol’s account of the work at Harvard Observatory is of passionate curiosity in the face of staggeringly tedious work which achieved a number of significant scientific discoveries:

  • By Henrietta Leavitt:
    • The brighter the magnitude of a star, the longer the period of its variation. Known as the period-luminosity relation, this became the fundamental method for determining the distance to a star.
  • By Harlow Shapley:
    • The universe is not centered on the sun, is magnitudes bigger than previously thought, and contains many other galaxies besides the Milky Way.
  • By Cecilia Payne:
    • The ratios of hydrogen and helium in the stars is a million times higher than on earth.
    • The stars are similar to one another in chemical composition, but vary in temperature.

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Getting Better, VII

From Future Crunch: Storms, Earthquakes, Fires and Floods Aren’t Nearly as Dangerous as They Used to Be.

It’s easy to exaggerate the frequency and magnitude of events that have happened recently.

Tragically, almost 10,000 people died in 2016 in natural disasters around the world. Yet that number almost surely would have been much greater without the development and implementation of better early warning systems, GPS, mobile phones, television, radio and the internet.

Just 50 years ago, twice as many people typically died in natural disasters as do today, and a 100 years ago, twenty times as many:

The number of people being killed by natural disasters has declined over the last century despite about five billion people being added to the planet; this is because the human race is a lot better off than we used to be:

  • More people in the path of a hurricane are able to evacuate in time.
  • Wildfires aren’t the mortal threat to entire communities that they used to be.
  • Services like water and sanitation, shelter and food are restored more quickly after a disaster, in the US and poorer countries.

Death tolls from natural disasters in Africa and Asia are still higher than in the West, but they’re far lower than they used to be.

Fewer people die in natural disasters than ever before. It’s important for us to acknowledge that, and celebrate it. Humanity does get things right sometimes.

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Knowledge Against Ignorance

In the sixteenth and seventeenth centuries, man’s understanding of his position in the universe was changing. But neither the mathematical calculations of Copernicus nor the observations of Galileo had provided proof that the Earth moved. Empiricism demanded a demonstration.

In his book, Pendulum: Léon Foucault and the Triumph of Science, Amir D. Aczel describes how the French physicist’s simple experiment exasperated the scientific elite and earned him a place among them by solving “the most persistent scientific problem of all time.”

After working for months in his Paris cellar, Foucault succeeded in 1851 in suspending a five-kilogram brass bob from a two-meter steel wire so that it was free to move in any direction around the vertical. As the pendulum swung in a fixed plane, Foucault was able to view how the rotation of the earth caused its orientation to shift.

Galileo had insisted in his Dialogue Concerning the Two Chief World Systems, that “all experiments practicable upon the earth are insufficient measures for proving its mobility, since they are indifferently adaptable to an earth in motion or at rest,” but the untrained Foucault had shown otherwise.

After viewing a demonstration of Foucault’s pendulum at the Paris Observatory on February 3, 1851, the mathematicians and physicists of the French Academy of Sciences could not deny that they did “see the world turn.” But they quickly became incensed that their lifetimes studying rotations, gravity and astronomy had not led them to imagine and perform what many of them called Foucault’s “beautiful experiment.” Refusing to give Foucault his due because he was not one of them, they scrambled to justify their own shortcoming and minimize Foucault’s achievement, barely mentioning his work in technical reports of the year’s scientific activity.

It is likely that Foucault would never have received the recognition he deserved, including nomination to the Academy of Sciences and the Legion of Honour, without the support of President/Emperor Louis-Napoléon Bonaparte, who had a deep personal interest in science and was devoted to progressing the nation by promoting scientific ideas.

But ultimately, according to Aczel, “Foucault’s great triumph is a triumph of the human mind. It is a double victory of knowledge against ignorance. First, Foucault’s great achievement showed how physical intuition, engineering skills, and perseverance can win against the hubris of mathematics detached from the real world. More important, Foucault’s landmark experiment spelled the end of speculations and persistent false beliefs. As such, Foucault’s definitive proof of the rotation of the earth helped vindicate Galileo, Copernicus, and Giordano Bruno.”

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