Archive for the ‘quis custodiet ipsos custodes’ category

My New Favorite Judge

July 7, 2014

Would be Bush 41 appointee Richard Kopf*, a member of the Federal District Court bench for in Nebraska.

Why?

Because of this:

In the Hobby Lobby cases, five male Justices of the Supreme Court, who are all members of the Catholic faith and who each were appointed by a President who hailed from the Republican party, decided that a huge corporation, with thousands of employees and gargantuan revenues, was a “person” entitled to assert a religious objection to the Affordable Care Act’s contraception mandate because that corporation was “closely held” by family members. To the average person, the result looks stupid and smells worse.

[h/t Talking Points Memo]

William_Hogarth_004

Judge Kopf elaborates:

To most people, the decision looks stupid ’cause corporations are not persons, all the legal mumbo jumbo notwithstanding. The decision looks misogynist because the majority were all men. It looks partisan because all were appointed by a Republican. The decision looks religiously motivated because each member of the majority belongs to the Catholic church, and that religious organization is opposed to contraception.

Kopf adds both in a disclaimer both truthful and politic that he is not saying that the majority in the Hobby Lobby decision were actually driven by the considerations that it really really looks like they were. But the point is made — and he adds the equally valid observation that there was no actual necessity for the Supremes to take the case in the first place. Such judicial passivism, he says, would have been better than this result.

In that context, the good jurist has the temerity to offer advice to his betters:

Next term is the time for the Supreme Court to go quiescent–this term and several past terms has proven that the Court is now causing more harm (division) to our democracy than good by deciding hot button cases that the Court has the power to avoid. As the kids say, it is time for the Court to stfu**

To which I say, Amen and Amen.

*As the TPM piece linked above reports, Kopf achieved a measure of — fame is not quite the word — notice for an earlier blog post advising young women lawyers how to dress for court.

**I do love the link that Judge Kopf kindly provided for his less internet-meme-familiar readers to that last term.

Image: William Hogarth, The Court, c. 1758. You’ve seen this one before, I know. I generally try to find a new image for every post, but this one so perfectly captures the contempt I feel for the current Court that I just keep coming back to it. Sorry.

Wha’d You Bring Him In Here For?

April 20, 2014

A11336.jpg

Sad news:

Rubin “Hurricane” Carter, the former boxing champion whose conviction for a triple murder was overturned after he served nearly 20 years in prison, has died of prostate cancer. Carter, whose story inspired a Bob Dylan song and a Denzel Washington film, was 76.

Too soon gone; too much life stolen.

Carter fought the good fight — long after his days in the ring were taken from him:

He was active in the movement to free wrongfully convicted prisoners, reports Jon Kalish for our Newscast unit.

“There are far more people who are wrongly convicted than people would like to think about,” Carter said of his activism. “And this is my work because people came to help me when I was in dire need of help.”

Those who talk of post-racial America forget too easily, I think, how ferociously state violence was employed to enforce racial hierarchy here.  For a different story that conveys this, check out Devil in the Grove, and consider how long the sheriff at the heart of the judicial murders documented there held on to terrifying local power.  It’s a little less explicit now — but those days aren’t all gone yet, not by a long shot.  That’s why, in part, Carter’s post prison cause could keep him so fully occupied.

But for now, let us remember Rubin Carter himself.  A 20th century American life.

R.I.P.

Image:  George Bellows, Both Members of This Club, 1909.

In Our Names

July 8, 2013

Titian_-_The_Scourging_of_Christ_-_WGA22826

Driving back from dropping my son off at his first day of summer camp, I turned on the radio in the middle of our local broadcast of the BBC’s World Service.  Almost the first thing up was an interview with director Asif Kapadia, talking about his latest project, a short film starring Yasiim Bey’s (Mos Def).

Bey’s subject: what it is actually like to be force fed, as is now being experienced by detainees at the US indefinite detention camp at Guantanamo Bay.  Bey’s supporting cast included two doctors, volunteering for the roles.  In the camp the procedure is performed by US personnel, working towards the stated purpose of securing the freedom and liberty of the citizens and residents of the United States.

Bey’s video is propaganda in the purest sense. That does not mean it can’t show us something that we should know.

Warning — and pay attention to me here, kids:  This short film is hard to watch — very much so — which is its point.  Don’t hit play if you have a hard time putting images of cruelty or violence out of your mind.  I’m putting it below the fold so that you don’t click on it by accident.

(more…)

Paul Revere’s Metadata

June 10, 2013

This is a sophisticated audience, so I’ve no doubt folks here grasp how intrusive (i.e. revealing) metadata can be.  But even those fully up on network analysis and related crafts may find this from  Kieren Healy amusing — and useful in explaining why this stuff does matter to your friends and family who may be in the “if they’re not listening in, I don’t care” crowd:

Grant_Wood_The_Midnight_Ride_of_Paul_Revere_1931

London, 1772.

I have been asked by my superiors to give a brief demonstration of the surprising effectiveness of even the simplest techniques of the new-fangled Social Networke Analysis in the pursuit of those who would seek to undermine the liberty enjoyed by His Majesty’s subjects. This is in connection with the discussion of the role of “metadata” in certain recent events and the assurances of various respectable parties that the government was merely “sifting through this so-called metadata” and that the “information acquired does not include the content of any communications”. I will show how we can use this “metadata” to find key persons involved in terrorist groups operating within the Colonies at the present time. I shall also endeavour to show how these methods work in what might be called a relational manner.

The analysis in this report is based on information gathered by our field agent Mr David Hackett Fischer and published in an Appendix to his lengthy report to the government. As you may be aware, Mr Fischer is an expert and respected field Agent with a broad and deep knowledge of the colonies. I, on the other hand, have made my way from Ireland with just a little quantitative training—I placed several hundred rungs below the Senior Wrangler during my time at Cambridge—and I am presently employed as a junior analytical scribe at ye olde National Security Administration. Sorry, I mean the Royal Security Administration. And I should emphasize again that I know nothing of current affairs in the colonies. However, our current Eighteenth Century beta of PRISM has been used to collect and analyze information on more than two hundred and sixty persons (of varying degrees of suspicion) belonging variously to seven different organizations in the Boston area.

Rest assured that we only collected metadata on these people, and no actual conversations were recorded or meetings transcribed. All I know is whether someone was a member of an organization or not. Surely this is but a small encroachment on the freedom of the Crown’s subjects. I have been asked, on the basis of this poor information, to present some names for our field agents in the Colonies to work with. It seems an unlikely task.

So what did our humble toiler in the fields find?

…Mr Revere—along with Messrs Urann, Proctor, and Barber—appears towards the top or our list.

So, there you have it.  From a table of membership in different groups we have gotten a picture of a kind of social network between individuals, a sense of the degree of connection between organizations, and some strong hints of who the key players are in this world. And all this—all of it!—from the merest sliver of metadata about a single modality of relationship between people…

I admit that, in addition to the possibilities for finding something interesting, there may also be the prospect of discovering suggestive but ultimately incorrect or misleading patterns. But I feel this problem would surely be greatly ameliorated by more and better metadata. At the present time, alas, the technology required to automatically collect the required information is beyond our capacity. But I say again, if a mere scribe such as I—one who knows nearly nothing—can use the very simplest of these methods to pick the name of a traitor like Paul Revere from those of two hundred and fifty four other men, using nothing but a list of memberships and a portable calculating engine, then just think what weapons we might wield in the defense of liberty one or two centuries from now.

Much more good stuff at the link, showing the steps of a simple network analysis (and offering further links to the underlying data, if anyone wants to play with the idea a bit themselves.  Also, Healy pointed to this paper by Shin-Kap Han (PDF), which performs a similar analysis on the roles of Paul Revere and Joseph Warren in much greater depth.

Image:  Grant Wood, The Midnight Ride of Paul Revere, 1931

An Open Letter to Scott McNealy

June 10, 2013

Dear Mr. McNealy,

We’ve never met, but I was fascinated to read your tech overlord’s take on the NSA leaks:

In 1999, Scott McNealy, the chief executive of Sun Microsystems, summed up the valley’s attitude toward personal data in what became a defining comment of the dot-com boom. “You have zero privacy,” he said. “Get over it.”

MusÈe Bonnat - PsychÈ et l'Amour endormi - Peter Paul Rubens (ca. 1636)

Mr. McNealy is not retracting that comment, not quite; but like Mr. Metcalfe he is more worried about potential government abuse than he used to be. “Should you be afraid if AT&T has your data? Google?” he asked. “They’re private entities. AT&T can’t hurt me. Jerry Brown and Barack Obama can.” An outspoken critic of the California state government, and Mr. Brown, the governor, Mr. McNealy said his taxes are audited every year.

Really?  Well, probably:  AT&T or Google probably can’t do much to you.  But they can do a lot to the rest of us, not least in the framing of information — about politics, say — based on data gleaned from our internet habits.  They can or not serve given ads to us — including political speech — and so on.  And there is in essence no way, nothing even as seemingly rubber-stamp-ish as the FISA court, available to  any individual harmed by such behavior, even in the unlikely event one would be able to detect it.

The problem, as the article in which you were quoted  describes, is that creating a no-privacy regime on the internet served Silicon Valley capital well.  But it was supposed to be no secrets for me but plenty for thee, and it seems to shock you that you too, might be subject to review.  But hell, Scott — if you’ve done nothing wrong with your finances, you’ve got nothing to fear from an audit, right?

The bathos is rich with this one, in other words — but, amazingly, your argument gets worse as your quote goes on:

But arguing that computer makers have some role in creating a surveillance state, he said, “is like blaming gun manufacturers for violence, or a car manufacturer for drunk driving.”

The problem, Scott, is that gun manufacturers do bear significant responsibility for gun violence, given that the NRA, the leading enabler of unrestricted gun use in this country is essentially the gun maker’s lobbying arm, not to mention their marketing habits.

The auto line is a nice dodge, by the way.  Guns and Google, used as designed and within the law, put people or their privacy at risk.  Cars, used as designed, within the law, pose real risks that are deterred and/or insured against in various ways.  If there are defects in design, then yeah, the auto companies are responsible (Exploding Pintos, anyone?)  Drunk driving is not such a use, and throwing that up there conveniently shifts the argument away from what private industry has done with our privacy to their profit.

But the telling moment for me, Mr. McNealy came with your last quoted remark:

The real problem, he said, is: “The scope creep of the government. I think it’s great they’re looking for the next terrorist. Then I wonder if they’re going to arrest me, or snoop on me.”

Everything the government does is fine…until it may in some way impinge on the perfect life of one Scott McNealy.

I’m not saying that there’s no problem with the expansion of the security state.  I think there is, a big one, and I think it’s been building for a long time (at least 65 years, if not more), and I think it’s gotten much more acute since 9/11.  I do think that Obama has brought the security state much more in line with the forms of law than his predecessor — but I also don’t have much faith in such legal frameworks when they are themselves secret.

But I also think that a bunch of DFHs have been saying for a long time that the internet will not set us free, that, instead, absent real privacy protections it would become too easy to turn it into the most effective tool for state surveillance of its citizens ever imagined (insert “panopticon,” “Big Brother” or “digital Stasi” here, as you please).  You’ve been the poster child, or at least the most pithy slogan-maker for those who told us all to shove such concerns where the sun never shines.

In any event, Scott, wonder no more.  Yup, they are going to snoop on you.  They almost certainly already have.  Just like the rest of us.

Sucks to be in with the plebes, doesn’t it.

Yours,

Tom Levenson

(PS:  I’ll withdraw this snark and bile if and only if you do something meaningful to ensure your own and everyone else’s digital privacy.)

Image: Peter Paul Rubens, Psyche spying on sleeping Cupid, c. 1636.

Bitter Lemons

March 22, 2013

From Paul Murphy, writing at the Financial Times Alphaville blog (h/t and lifted bodily from Krugthulu).

Big depositors in Cypriot banks stand to lose circa 40 per cent of their money here, which has drawn plenty of fury and veiled threats from Russia.

Victor_Dubreuil_-_Barrels_on_Money,_c._1897_oil_on_canvas

But what exactly can the Russians do about this? Sell euros? Tear up double taxation agreements? Murder Cypriot bankers? Medvedev and co could not have played a worse hand during this crisis — and it’s not immediately clear why.

Cyprus now has a binary choice: become a gimp state for Russian gangsta finance, or turn fully towards Europe, close down much of its shady banking sector and rebuild its economy on something more sustainable.

The choice is obvious.

Forgive me if I’m just too dense to live, but isn’t this how capitalism is supposed to work?  Yo! Russian travelers:  that citrus you just sucked may be bitter indeed, but you put a bunch of money at in play, and sometimes you lose it.  That has a lot to recommend to our banking sector, of course, but really, if we are ever to have a financial sector that does what it is supposed to do (allocate capital within the real economy and hedge –insure — risk) then we kind bankers to actually bank, and not view themselves as money lenders and casino operators.  I’ve sat in on quant conference tasks (ever want to learn how to trade on derivatives of volatility measures?  Me either), and it’s all fun and games until someone loses an eye.  Cyprus and naughty Russians are just far out enough on the periphery to stand at ocular risk.  But I do think we would be better off if our galtian overlords had just a bit of healthy fear back-crossed into the breed.

Image:  Victor Dubreuil, Barrels of Moneyc. 1897  And yes, I have used this one before.  Works here too.

“A Tradition Of Service”

February 7, 2013

That would be the motto for the Los Angeles County Sheriff’s Department. And it contains your full USDA recommended level of irony for the day.

Via BoingBoing’s Xeni Jardin, we learn that the murder (so far) of three people by an ex-cop, which sparked a remarkable outbreak of shooting of folks accused of DWDBT (Driving While Driving A Blue Truck) is not the only news to come out of LA law enforcement this week. Get your heads around this:

Seven Los Angeles County sheriff’s deputies have been notified that the department intends to fire them for belonging to a secret law enforcement clique that allegedly celebrated shootings and branded its members with matching tattoos, officials said.

The Times reported last year about the existence of the clique, dubbed the Jump Out Boys, and the discovery of a pamphlet that described the group’s creed, which required aggressive policing and awarded tattoo modifications for police shootings.

Investigators did not find that the seven had actually, you know, killed anyone with their arquebuses whilst on night patrol…

The_Nightwatch_by_Rembrandt

…but I can’t say anyone who might be on the receiving end of “aggressive policing” would feel much comfort on that:

One member, who spoke to The Times and requested anonymity, said the group promoted only hard work and bravery. He dismissed concerns about the group’s tattoo, noting that deputies throughout the department get matching tattoos. He said there was nothing sinister about their creed or conduct. The deputy, who was notified of the department’s intent to terminate him, read The Times several passages from the pamphlet, which he said supported proactive policing.

“We are alpha dogs who think and act like the wolf, but never become the wolf,” one passage stated, comparing criminals to wolves. Another passage stated, “We are not afraid to get our hands dirty without any disgrace, dishonor or hesitation… sometimes (members) need to do the things they don’t want to in order to get where they want to be.”

…”We do not glorify shootings,” he continued. “What we do is commend and honor the shootings. I have to remember them because it can happen any time, any day. I don’t want to forget them because I’m glad I’m alive.”

The only good news out of this is that the Sherrif’s department does seem serious enough to actually fire these guys. I suppose you could file that impulse under “damage control,” but hell, I’ll take it.

I’ll add one more thing: being a cop is a terrifically hard job. It’s made harder by the unbelievable availability of firearms for any bad guy (or gal) to wield — which is why so many in law enforcement favor gun control.

But that job becomes harder, IMHO, not easier, the more you militarize the civilian act of policing. Such militarization doesn’t merely include weaponization, tactics and all that; it’s a culture too. And cultures can go very bad.

So I’m not calling down snark and thunder on everyone who does law enforcement. I am saying that as in so much else humans undertake, being a good cop, or department is a matter of eternal vigilance and all that.

Image: Rembrandt van Rijn, The Company of Frans Banning Cocq and Willem van Ruytenburch, known as the ‘Night Watch’, 1642

Just In Case Anyone Was Worried About A Sudden Shortage…

January 13, 2012

…one more thought on Truth-Vigilante-gate.

I certainly agree with what seems like every front pager at my other bloggy home  Balloon Juice (some more than once!)* feels about the ludicrousness of anyone even having to ask whether or not it might make sense to call out lies in print.  But it still seems to me that for all the fun at the expense of the Grey Lady, one key element in the story has been underplayed.

That would be that covering politics today is actually a genuinely different and more difficult task than it was back when folks like me (folks I knew) first got into the business at places like the Times.

The problem is really simple.  The current Republican elite simply has no problem lying.

In this short post I’m not going to retail even a tithe of the examples available, instead outsourcing just a taste of the tsunami of bullshit that constitutes GOPster public argument to Steve Benen, who himself confines his review to the bullshit spewed by the current frontrunner, that 3-dimensional caricture of Eliot’s trope, one Willard Mitt Romney.

He/they lie all the time.  About anything.  But — and this is the key — for all the “politics ain’t beanbag” and “they all do it” reflexes, this really is a new (ish) phenomenon.

Now, I’m not saying that American politics hasn’t included a lot of lying for a very long time.  But the difference now is that it’s not just the agents — John Adams’ rumoristas or the Swift Boat scum — but the principals themselves who are now willing to retail and repeat direct falsehoods into microphone after microphone.

That’s hard to confront, even for experienced hacks:**  most of us don’t think people will flat out lie to our faces — especially when the lie is easily checked.  When I got started as a reporter, I was certainly trained to expect sources to spin, dissemble, shape their accounts.  But the idea that they would default to flat out lying, as opposed to retreating to it when pressed — that really wasn’t the expectation.

The goal was to write a story in which the spin was unwound.  If you could do that — demonstrate through the totality of your reporting how, say, jobs lost to downsizing were either corporate raiding at its worst or the best outcome for what would otherwise be a bankrupt business — then you’d done your job.

So, yes:  to the question of whether the Times or any journalistic operation should become  “truth vigilantes,” the answer is, obviously, yes.  Still, it’s important to remember that the Times  and its reporters face this problem specifically because the Mitt and his merry men have made the gap between what they say and what actually is so deep and so wide.

I’m not trying to absolve anyone here.  But it is important to condemn the greater sin as well as the lesser. It is genuinely difficult for the individual journalists tasked with the job of covering the election this year to do that job well  because a forty+ year campaign to derange our politics has come to full flower in the Romney campaign.  (Not to mention in GOP politicking and governance across the country.  Think Scott, Daniels, Kasich, Walker, Perry, and all the rest.)

Root causes matter.

*Plus, it seems, all those others on ‘branes in the bloggy multiverse.  I’m not even going to bother to link; throw a rock in this quarter of Blogistan and you’ll hit something relevant on every bounce.
**I’m using the word here in its Fleet St. sense, with love.
Image:  Henri de Toulouse-Lautrec, In the Cafe, 1898

It Really Is A Village

October 19, 2011

Via Bloomberg (h/t TPM):

Federal employees whose compensation averages more than $126,000 and the nation’s greatest concentration of lawyers helped Washington edge out San Jose as the wealthiest U.S. metropolitan area, government data show.

The key fact to extract from the data:

In recent years Washington has attracted more lobbyists and firms with an interest in the health-care overhaul and financial regulations signed into law by President Barack Obama, according to local business leaders.

“Wall Street has moved to K Street,” said Barbara Lang, president and chief executive officer of the DC Chamber of Commerce, referring to the Washington street that’s home to prominent lobbying firms. “Those two industries clearly have grown in our city.”

Which isn’t to say that the concentration of high end civil service and appointed jobs doesn’t have an impact: 

Update (see the explanation below):  Bloomberg also suggests that well paid (is the suggestion overpaid?) civil servants help drive DC’s rise to the top of the wealth tables:

Total compensation for federal workers, including health care and other benefits, last year averaged $126,369, compared with $122,697 in 2009, according to Bloomberg News calculations of Commerce Department data. There were 170,467 federal employees in the District of Columbia as of June.

Update: As several commenters at the mirror post at Balloon Juice have pointed out (with the usual BJ reticence) this is a red herring, the more so for the conflation of benefits with salary to come up with a compensation figure.

A ruling elite economically and emotionally disconnected from the reality that most Americans recognize.  Which is one of the reasons that both policy and the coverage of and discourse coming out of the center of government is so unbelievably bad.

Update: As noted, several commenters at Balloon Juice pointed out that the reference to highly paid civil servants is a red herring at best, and a slander at worst.  And I agree with that, or at least with the notion that such an implication could be drawn from the above.  What I meant to do by including that last block quote was to include the survey results, but not to suggest that the GS14 working at the Dept. of Commerce is screwing up policy or its presentation to the American people.

The real point I think this very coarse bit of data allows us to draw is that it has become exceptionally lucrative to buy and sell influence…to the point that it becomes very hard to see how to construct a disinterested policy apparatus.  When your exceptionally good living depends on not knowing stuff, or knowing things that ain’t so…well, we’re living with how that ends.  And when the decision makers — Congress, and senior staffers there, and top folks at the agencies, top “journos” (scare quotes to indicate the distance such folks have traveled from actual journalism) — all know exactly how it’s possible to live in this policy-making/policy-influencing nexus, you get a Village with both experience and skin in the game that disconnects them from everyone and everywhere else.

Image:  Simon Vouet, Wealthbetween 1635 and 1640.

Pretty Boy Floyd Had Nothing On These Guys

October 18, 2011

Towards the end of last week, John pointed out the clueless sociopathy of Jay John Carney’s view of insider trading as a victimless crime.  (Here, the string “Jay John Carney” should be read as “your liberal media at work.”) [Update:  oops.  Apologies to the distinguished White House press sect'y.  How do you spell brain bubbles, anyone?]

I just want to add that John’s reaction — that someone using private information to gain an advantage in a two-party trade has got a victim all lined up — is not merely obvious; it’s been studied.

That is: you can imagine a hand waving argument that because each party has their own reasons to enter a transaction, then even the “outsider” on an insider trade gains what he or she desires from the exchange, otherwise they wouldn’t make the deal.   Since that motivation is untouched by the knowledge that the counterparty possesses and they do not, what’s the problem?  That’s my rough approximation of the glibtard case, at least.*

The problems with this crayon-level argument are pretty plain, I’d say, the most glaring, to me, is that assumes that each choice exists only within the narrowest possible slice of time.  Or, as an economist friend of mine put it in response to Carney’s “reasoning” (sic!):

The argument that trades are voluntary so everyone benefits is clearly only true ex ante – that is to say on the basis of the original biased information.  The guy who gets stiffed clearly wouldn’t have made the trade if he’d had the same information as the insider.  You might as well make this argument to justify dodgy second hand car sales or street trading swindles.  The guy who buys a lemon from the dealer who has hidden its faults expected to make a gain but that doesn’t mean he actually does or that the dealer isn’t a crook.

Beyond any mere ridicule of the rich-people-can-do-no-wrong that defines the Village view, the point I think John was making is that insider trading has both individual victims — those who were cheated out of what they would have gained had there been full knowledge of what was going on for both parties to a trade — and systemic costs that we all bear.

Surprise! That turns out to be something people actually know something about

I’m not going to claim that the clutch of papers I turned up in a swift surf through the literature  is anything remotely like an authoritative review of the current state of research on insider trading.  But what struck me is how easy to come up with a bunch of different angles on the problems insider trading produces for markets as well as individual investors.  Here’s an old analysis — it dates from 1991, which amounts to not much more than a mathematical formalization of a penetrating glimpse of the obvious:

In the absence of insider trading, and as long as managers’ salaries arepositively corelated with their firms results,managers will make such choices efficiently, and consequently such choices have previously received little attention, we show that, in the presence of insider trading, managers may make such choices inefficiently…More generally, the analysis of this paper suggests that the extent to which insiders may trade in their firm’s shares has considerable effects on the agency problem in corporations….

…ya think?  Snark aside, the important point is that an insider’s actions don’t begin and end with the transaction. One set of victims in an insider trade are those who hold some share in whatever enterprise or instrument is being traded.  It’s not just that insiders have more information than a counterparty, but that they have power to affect what their companies do — which means their incentives no longer align with everyone else connected to that enterprise.  In other words:  direct victims of insider trades include not just counterparties, but shareholders (or analogous parties-of-interest) in any given setting.

Then there’s this study from 2003.  Here, Julan Du of the Chinese University of Hong Kong and Columbia’s Shang-Jin Wei report on the impact of insider trading on market volatility — basically how insider trades affect how fast (and how much) prices change on a market.

They conclude:

More insider trading is found to be associated a higher market volatility even after one controls for the volatility of the real output growth, volatility of monetary and fiscal policies, and maturity of the stock market. Moreover, the quantitative effect of insider trading on market volatility is also big when compared with the effect of the volatility of other fundamentals.

But who cares, or who should?

All of us. Wild changes in prices driven by insiders taking advantage of their privileged position undermine the entire purpose of capital markets.  Du and Wei again:

Market volatility affects the incentive to save and to invest. In almost any model with a representative agent maximizing utility under uncertainty, the more volatile the asset market, holding the average return constant, the less the agent will save, and hence the less the investment will be. A certain degree of market volatility is unavoidable, even desirable, as one would like the stock price fluctuation to indicate changing values across economic activities so that resources can be better allocated. However, precisely because stock prices are supposed to serve as signals for resource allocation, excessive volatility that is not related to economic fundamentals would diminish the signaling function and impede resource allocation.

Or, to translate out of econ-geek speech:  markets are supposed to allocate capital, sending investor cash to support productive investment.  Mess with that, and the sorting function of the market, “the invisible hand,” to steal a phrase, starts to fail.  Investment decisions are distorted and we end up with a less productive economy as a whole than we would have without the thumb on the scales applied by greedhead wealthy corporate insiders seeking yet more loot than they already possess.

__

All this is the long way ’round of saying that when our Galtian overlords f**k with market mechanisms in any of the splendid variety of ways they have schemed innovated, there are certainly individual losers involved.  But the more consequential reality is that messing with the financial markets threatens the real economy — and that’s where all of us live.  The foreclosure crisis begins as a financial disaster.  It brings us to ruin because now 15 million actual homes are underwater in cities and towns across the United States…and that guts the whole damn country.

It’s not that eleven years in jail is too much for one misunderstood genius.  Rather: just one financial felon behind bars is orders of magnitude too few.

*Here’s that case from the horse’s ass mouth — which would be Jay John Carney himself, from the piece to which John originally linked:

But are they [insider trader Raj Rajaratnam’s opposite numbers) really harmed? Of course not. No investor was ever induced by Rajaratnam to sell a stock. Stock market transactions take place impersonally, without regard to who is on the other side of a trade.

Saying that investors wouldn’t have sold if they had Rajaratnam’s information doesn’t make the sellers victims of Rajaratnam’s trading. Even if Rajaratnam hadn’t bought the stock, they still would have sold while being in a position of relative ignorance compared to him.

Oy.

Images:  Francisco de Goya, Robbery, c. 1794

Jan Provoost, Death and the Miser, before 1529.


Follow

Get every new post delivered to your Inbox.

Join 8,395 other followers