Powell’s Blunder(s)

By Shlomo Maital

  Jerome Powell (Financial Times)

Jerome Powell is Chairman of the Federal Reserve Board of Governors.  He was elevated to chairman by President Donald Trump, succeeding Janet Yellen in the position. Yellen is now Secretary of the Treasury. Powell was renominated as chair by President Joe Biden on November 22, 2021.  That was a huge mistake.

   Powell expanded the US money supply, in the wake of the COVID pandemic, and lowered interest rates to zero.  As inflation began to rise, he insisted that the inflation was temporary. It was not. He was too late in raising rates.  Now, he is raising them rapidly and excessively – covering his behind, in the wake of his misread of the data.  The result is causing havoc, as other Central Banks follow suit (including in my country, Israel.  The US dollar is rising, other currencies are falling, raising their import prices and ‘exporting’ US inflation.   Powell’s excessive tightening is rattling capital markets, and the Dow Jones is now officially in a ‘bear’ market (20% decline). 

     What is causing US inflation?  Here is an alternate theory to that of Powell. 

     People cut spending radically during the COVID lockdown – virtually, two to three years.  Now they emerge and are playing catchup.  They have money, while wages too are rising.  There is inflation illusion – inflation-adjusted wages are not up that much, but they appear to be higher. 

     At the same time, businesses, that lost heavily during the pandemic, 2020-22, are playing catchup,  jacking up prices, because – they can, as people are willing to pay those prices, because, they have money in their pockets.

     So if this is the cause of inflation, what impact will higher interest rates have? It will kill the housing market, hurt employment.  And perhaps bring recession. 

     What is the alternative?  Recognize that some inflation is not so terrible, while higher unemployment and recession is far far worse.  Moderate the interest rate hikes.  Tax excessive corporate profits (noticed lately the billions the banks and energy companies are raking in,  with low taxes?).  

      Don’t believe me.  Who am I anyway?  Believe Jeremy Siegel,  Professor of Finance at the Wharton School, Univ. of Pennsylvania.  And many other distinguished economists, who believe Powell’s current policy is disastrous, covering an equally disastrous mistake, which he will not admit to.

      Biden could have found a far wiser person instead of reappointing a Trump appointee.  Recall how Ben Bernanke rescued the US during the 2008 financial crash.  Powell is not in Bernanke’s league.  And alas, the people of the United States are paying the price. 

Queen Elizabeth II:  Bringing People Together

By Shlomo Maital

    Queen Elizabeth II died on Thursday Sept. 8.  Today (Sept. 19) is her funeral. Many thousands of people queued to pay their respects, as her coffin lay in state, waiting for many hours, with lines stretching for miles. 

    According to the BBC, the British people waiting in the queue struck up friendships, exchanged phone numbers, and made friendships.  Queen Elizabeth brought people together, even after her death.

    Hearing this, I recalled my own family.  We are scattered, across the US, Canada and Israel.  When someone in the family passed away, we would often gather together, for traditional Jewish rituals.  Despite the sad occasion, there was great happiness in simply being together.  Death brought us together.  At one point, we said, why do we only gather together on sad occasions?  Let’s get together on happy ones.  And we organized family reunions, at least 3 of them, that were truly memorable.

     The Queen brought people together, in friendship and brotherhood/sisterhood, in her lifetime.  And even after her death.  Very few people can say that.   And as half the world view her funeral, as only the British can do it, she reminds us of the core values:  grace, dignity, humility, concern for others, good manners, service to others,  that bring all of us together.   

  

Lubaina Himid’s Questions

By Shlomo Maital

Lubaina Himid

  Last week my wife and I visited the Tate Modern museum, London, and enjoyed the remarkable art work of British artist Lubaina Himid. 

   Most artists seek to make statements, one way or the other, with their art.  Himid, whose work focuses on African culture and heritage, has a different perspective.

    She asks us questions.  Her questions appear in a wall poster, on cloth hangings, which she calls ‘speaking cloths’ and in her brochure.   Here are Lubaina Himid’s list of questions, for us to ask as we view her paintings and as we live our lives.

    Food for thought.

   What is my plan?  What will I learn about myself here?  What would I do in this situation?  How is my life the same as this one?  What does this setting offer me today? Which questions am I asking?  How fast do I want to go?  Who do I want to be?  What can I hear? What do I want to say?  Who could I work with?  What would a sharing of space mean?  Can we do this together? What makes me happy?  What am I frightened of?  How much power can I have and what will I do with it?  Where shall we go together?  What does love sound like?  What do I really want?  Is this enough?  How much time do I need?  What difference can I make? What can an understanding of language do? Is this really what I want to do?  How should it end? 

The Insanity of Weapons Spending

By Shlomo Maital  

Scrapped German battle tanks

      “Insanity is doing the same thing over and over and expecting different results.”  This quote is often attributed to Einstein.  Whoever said it – it applies today.  Here is what I mean.

      The world faces a climate crisis, famine, an endemic pandemic, floods, and vast poverty.  And a hot war in Ukraine, and a burgeoning Cold War between the West and Russia/China/Iran.

      Resources are scarce for improving life for billions of people.  We can’t even find a few bucks to buy math textbooks for poor kids in Bangladesh, who want to learn math.  We need many billions of dollars for climate disaster mitigation. Parts of the world swelter, as I write this; parts (Afghanistan, Pakistan) face devastating deadly floods.

      Yet consider this.  Even in the face of the global pandemic, defense spending has continued to rise, totaling a staggering $2.1 trillion in 2021 –the entire annual output of South Korea.  This was a 6% rise.

      In 1980 military spending was $366 b. [All the data come from SIPRI, Swedish International Peace Research Institute, a respected source].  So since then, in 42 years, defense spending has doubled twice, and then rose half again. 

     By my calculation, in the past 42 years, despite the end of the Cold War, collapse of the Soviet Union, and global trade and finance —  the world has spent a staggering $48.2 trillion on ‘defense’.  This is 2.4 times the US’s annual GDP – the largest GDP in the world. 

      And for what?  Yet rain or shine, peace or war, defense spending continues to grow almost everywhere. 

     I live in Israel, a country living in a bad neighborhood.  We face threats continually.  Yet even in Israel, massive spending exists on heavy weapons that seem like dinosaurs, in an era of asymmetric warfare featuring cheap drones and improvised explosive devices.

    Imagine, as John Lennon dared to sing.  Imagine – if just a small part of this wasteful spending were put to good use – to feed, house, clothe, and educate people everywhere.  Why?  Because inequality, a global pandemic on its own, leads to conflicts that seem to justify defense spending.

    Is anyone trying to think about arms races, the insanity of them?  Yet they are heating up, as US-China rivalry grows alarmingly.  And modern weapons?  Somehow, when they exist, they seem to get used, alas.

    One F-35 fighter costs $136 million, including spare parts. Imagine what good could be done with the cost of just one of these gold-plated planes.

    Consider Russia.  The lives and resources wasted by the demonic delusions of a crackpot will cost, have cost, the people of Russia heavily, and will for decades.  Much of its fossil fuel wealth has gone into weaponry.  It is not just a waste.  It has encouraged a military adventure that will impoverish, ultimately, the nation. 

     Yet year by year, defense spending keeps growing.  Globally.  We need to change the words.  “Defense”?  Is Russia’s war on Ukraine defense?  China’s threats to Taiwan defense?   Let’s call it what it is.  Wasteful moronic insane weapons spending, ultimately destined for what you see in the photo – the scrapyard.

      In every country, strong military establishments lobby for more and more money.  Politically, they are irresistible.  Those who oppose them, sound like crackpots.  And the military appetite grows, as military technology gets more and more costly, far more than the rise in the cost of living.

      The US engaged in a pointless war in Vietnam.  Apart from lost lives, billions of dollars were wasted.  Was the lesson learned?  No.  The US did it again, for 20 years, in Afghanistan.  What would Afghanistan’s citizens enjoy today, if those military resources were invested in improving their lives?  $300 million per day, or $2 trillion total. Again: the whole South Korean annual GDP.

               Yet the insanity goes on. And likely will.   We can only join with Bob Dylan, who sang, despondently, when will they ever learn?  Ever? 

Immigrants’ Children Rise to the Top

By Shlomo Maital  

   As a child of immigrants, imbued with the need to achieve by my parents, I have known for decades why immigrant kids do so well.  Now comes  a study based on “the first set of truly big data about immigration”, by Prof. Ran Abramitzky (Stanford) and Prof. Leah Boustan (Princeton).  It is summarized by New York Times opinion writer Peter Coy.

   Here is the bottom line:  “The economists found that on average the children of immigrants were exceptionally good at moving up the economic ladder.”

     Contrast this with the fear-mongering lying trash-talking anti-immigrant words of Republicans and Fox News. “Joe Biden’s open border is killing Ohioans”.  “…a place where large numbers of immigrants have been moved into a poor community…it’s become poorer.”  (The latter: you guessed it, Tucker Carlson). 

    Israel absorbed a million immigrants, from Europe and the Mideast, in its first years as an independent country, while defending its borders and building a nation.  They gave Israel its culture of ‘make-do’ and ‘improvise’, now bedrocks of a thriving hi-tech industry that employs one person in 10 (the highest ratio in the world).  Israel absorbed one million immigrants from Russia, 1990-2000, doctors, scientists, engineers – who fueled hi-tech.  And their kids are outstanding.  Putin, belatedly, is trying to shut down Jewish out-migration.  He’s too late.  Some 20,000 Russian Jews have already emigrated to Israel since the Ukraine War began on Feb. 24. 

     What’s the formula?  Aspiration – aim high.  Perspiration – work hard.  Those are the values immigrant kids get from the parents.  And in the background – Desperation,  leaving a place that became unlivable, with infinite gratitude to the newly-adopted country.  You are being given an opportunity others do not have.  Do not waste it.   That was the message. 

      I pay close attention to the names of NPR (National Public Radio) journaists.  Chakrabarty.  Khaled.  And…well, unpronounceable (I think, Ping, Tong, etc.).  Kids of immigrants.  Top journalists.  And the amazing couple in Germany (from Turkey) who gave us the COVID mRNA vaccine.. etc…

      If far-right Republicans continue to bad-mouth immigration to pander to their white extremist supremacist base… I think they will do much more badly in November elections that many predict.  Hope so. 

The Perils of Free Choice

By Shlomo Maital  

    Today’s New York Times (August 18 – int. edition) has an opinion piece by Benjamin Storey and Jenna Silber Storey, scholars at the American Enterprise Institute (AEI), a right-wing conservative think tank in Washington.  The title:  “The art of choosing what to do with your life.”

    They include a quote by Alexis de Tocqueville, who observed that people who have freedom and plenty but lack the art of choosing will be restless in the midst of their prosperity.”  This French aristocrat turns out to be the leading interpreter of American politics and society, in his books   Democracy in America (1835 and 1840) and The Old Regime and the Revolution (1856).  Outsiders always have keen insights on the behavior of insiders.

    Conservatives are big fans of freedom of choice.  There is even a House caucus, the House Freedom Caucus, with far-far-right members.  And they are supported by economists, whose mathematical theories prove that more choice is better than less – because you can always decline an option, so more choices can only improve life.

    But psychologists know this is false.  Choice brings anxiety, regrets (damn, I picked the wrong cereal box), and wastes time.  I once published a research paper, showing that people often constrain themselves, and improve their wellbeing by doing so – less is more. 

     The authors of the opinion piece recommend that “colleages…prioritize initiating students into a culture of rational reflection”.  Really?  What about educating capitalist CEO’s against filling the shelves (to muscle out more space) with endless varieties of salad dressing, cereals and shampoos, of basically the same damn product. 

  And as for choosing what to do with your life:   At age 18, I had to choose a major in college. I chose economics, randomly, because I did well on an exam.  It was a profession for which I was unsuited.  But after a Ph.D., it was too late.  And I did not realize how unsuited I was for economics until mid-life.   Economics has changed – it has become behavioral.  I had a minor role in this, with my psychologist wife. * But I wish I had made a better choice at age 18.

  • See Minds Market and Money (Basic Books:  New York 1982).
  • B. Storey, J. S. Storey, “The art of choosing what to do with your life”. NYT Aug. 18/2022.

Right to (a Good) Life?!

By Shlomo Maital   

  A heartbreaking piece of news earlier this year:  “For millions of children, January has been the cruelest month, thrusting them back into poverty and leaving their families uncertain about how they will keep a roof over their heads and put food on the table.   The temporary expansion of the child tax credit expired Dec. 15 and is expected to increase childhood poverty from 12 percent to 17 percent in January, the highest since December 2020, according to research by the Center on Poverty and Social Policy at Columbia University. Black and Latino children will be hit harder, with poverty rising to 1 in 4 kids”.  (NBC News).

    I have a question for the right-to-life supporters, many deeply religious Christians,  who claim that a fetus is a life, at any age in the womb.  Your beloved Republican representatives, and senators, prevented the Child Tax Credit, enacted by the Biden Administration, which at a swoop cut child poverty in half !!, from being renewed.

      Let me understand.  You believe the fetus, every fetus, no matter how created, now matter what the mother’s desire or need is,  has a right to life.  OK.  Now – does that fetus have the right to a good life?  A proper life?  To education, food, healthcare?    When it becomes a viable child?

       If so – how come your political party has blocked the single measure that has hugely improved children’s lives?  Why?  How do you justify it? How do you support it?

        How in the world can intelligent, moral, value-driven people support that destruction of a single measure, CTC, that had such a powerful and tragically short-lived impact on the lives of children?  Including new-borns.

        Want to find consistency and logic among Right to Life?  You will need an electron microscope. [1]


[1] The American Rescue Plan Act (ARP) of 2021 significantly expanded the child tax credit for one year, allowing qualifying families to offset $3,000 per child up to age 17 and $3,600 per child under age 6. It also made the credit fully-refundable and offered the option of receiving half of the credit as six monthly payments. 39 million households, covering 88% of children in the United States, began receiving these payments automatically beginning July 15, 2021.  The child tax credit has a significant effect on child poverty. In 2016, it was estimated to have lifted about 3 million children out of poverty. In 2021, a Columbia University study estimated that the expansion of the CTC in the American Rescue Plan Act reduced child poverty by an additional 26%, and would have decreased child poverty by 40% had all eligible households claimed the credit.

Benjamin Choi: 17-Year-Old Invents Pathbreaking Prosthetic Arm

By Shlomo Maital

Benjamin Choi & His Invention

  On Ira Flatow’s Science Friday podcast, Benjamin Choi was interviewed this week.

   This amazing young man will enter Harvard this Fall.

    Flatow observed:  “Artificial limb technology has come a long way since the first prosthetic—a big toe made of wood and leather developed in ancient Egypt.   Today’s cutting-edge robotic limbs use mind-control and even give users a sense of touch, helping them feel sensations like a warm cup of coffee or a mushy banana. Still, these state-of-the-art prosthetics often involve invasive brain surgeries and can be exorbitantly expensive.   Hearing of these issues, one teenager set out to create a solution. Seventeen-year-old Benjamin Choi has developed a non-invasive, affordable prosthetic arm. His Star Wars-inspired technology reads a user’s mind with only two sensors—one on the forehead and the other clipped to the earlobe. And he doesn’t plan on stopping there. He sees his work in artificial intelligence expanding to help ALS patients, wheelchair users, and beyond.”

   So what exactly is the advantage of Choi’s prosthesis?   Today prosthetic arms exist that are moved and operated by the brain. But this involves brain surgery, to insert electrodes in just the right spot.  Expensive, a bit risky.

    Choi had a different approach.  He places an electrode on the forehead, externally. No surgery. Then he prepared an artificial intelligence algorithm (!) that reads the massive brain signals and interprets which are directed toward moving the arms and fingers.  It is 95% accurate, he observes.  Because it learns, and learns quickly.  And this electrode communicates with the prosthetic arm and moves it. 

    Choi already has some funding from a hi-tech firm.  He is seeking more.  I look forward to tracking his career and observing how he changes the world. 

Desiderata

By Shlomo Maital  

. Taken from the wall of Old St. Paul’s Church, in Baltimore, dated 1692, posted on my own wall:

   Go placidly amid the noise & haste & remember what peace there may be in silence. As far as possible without surrender be on good terms with all persons. Speak your truth quietly and clearly and listen to others, even the dull and ignorant; they too have their story.  Avoid loud and aggressive persons, they are vexations to the spirit. If you compare yourself with others, you may become vain and bitter, for always there will be greater and lesser persons than yourself. Enjoy your achievements as well as your plans. Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time. Exercise caution in your business affairs; for the world is full of trickery. But let this not blind you to what virtue there is; many persons strive for high ideals; and everywhere life is full of heroism. Be yourself. Especially, do not feign affection. Neither be cynical about love, for in the face of all aridity and disenchantment, it is perennial as the grass.  Take kindly the counsel of the years, gracefully surrendering the things of youth.  Nurture strength of spirit to shield you in sudden misfortune.  But do not distress yourself with imaginings.  Many fears are born of fatigue and loneliness.  Beyond a wholesome discipline, be gentle with yourself. You are a child of the universe, no less than the trees and the stars; you have a right to be here. And whether or not it is clear to you, no doubt the universe is unfolding as it should.  Therefore be at peace with God, whatever you conceive Him to be, and whatever your labors and aspirations, in the noisy confusion of life keep peace with your soul. With all its sham, drudgery and broken dreams, it is still a beautiful world.  Be careful.  Strive to be happy.

Solutions Journalism: Looking on the Bright Side

By Shlomo Maital    

  I regularly sent my magazine columns to my late mother.   Often, she would tear a strip off me.  “Doom and gloom, doom and gloom!” she would say.

  She was right.  I had fallen prey to the endemic virus of modern journalism – looking for doom and gloom, as sensational as possible. 

   I mended my ways.  I tried hard to find stories of people who change the world with creativity and hard work.  Not every column is ‘happy talk’ – but certainly more than one in two. 

    And now, comes “Solutions journalism”,  which I just heard about thanks to CNN.  Solutions journalism is defined as “focuses on the response to social issues, as well as on the problems themselves”.  The idea?  Give people a more complete view of these issues, to “drive more effective citizenship”.

    Example?  Journalists David Bornsstein and Tina Rosenberg created the “Fixes” column for the New York times Opinionator section.  Weekly it reports on the response to an urgent social problem.  Bornstein cofounded the Solutions Journalism Network, seeking to make “solutions journalism a part of mainstream practice in news”.

    So what’s so hard about this?   Sure, report urgent social problems.  But out there, there are people of skill and will trying hard to find solutions.  Cover them too.  Don’t ignore the solutions part of the challenge.  There will be dividends.  You will have more readers.  And the word will spread – for instance,  “harm reduction” (measures that reduce the harm from drugs, for addicts) got strong publicity from a successful radical experiment in Vancouver, BC – and I now heard that word, harm reduction, all over the US, especially Public Radio.  

    Like many people, I’ve found that turning off Cable News is highly favorable for mental health. It need not be so.  An informed citizenry is crucial.  Journalists —  open your windows.  With a little effort, you can tell us about solutions – and not just deep-rooted intransigent problems. 

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

Pages