Ground Truth

Geographers who work with remote sensing data call "ground truth" the final empircal test.  You never know for sure what the instruments are telling you until and unless you go there with your own natural-born senses. 

Over lunch, a couple of months ago, one of my former geography professors told me that despite two years on this field project, one of the graduate assistants became lost when faced with a detour.  Always focused on the vehicle's GPS, the driver had no sense of geographic context.  This is not unsual.

Last month, my wife had a similar experience.  Returning to her apartment from the airport, she told the taxicab driver which turn to make.  Focused on the GPS, the driver insisted on the direct route. Faced with orange barrels, they had to go four blocks around and the difference was the driver's lost tip.  The tip was included; the driver just burned it up. 

This happened to me twice when I first came to Austin.  Eyes nailed on the GPS, drivers from two different companies drove in circles looking for addresses that I could see from the back seat.  They ignored my help - eventually, my pleas.  In the first case, after my meeting, I walked back to the motel, a direct backstreet distance of a quarter-mile that cost me $10 in a taxicab via the freeways, offramps, and access roads.  After the second incident, I decided that I will never take a taxicab in Austin again.  I would rather spend the time waiting for buses, reading a book, than to spend the money on drivers who do not know their city.

I drove a cab three times in the 70s and 80s.  The first time, I was new in town. I depended on the map, of course, but as Alfred Korzybski told us, the map is not the territory.  I made notes.  My third time, though I knew the town much better, I still started out with a fresh map in booklet form, which I annotated, drawing in new subdivisions as I discovered them.  I do not blame a driver for not knowing every street, but I do hold any person morally responsible to use their own senses.

In remote sensing, we learn six ways to create "yellow." 

• A direct radiation of 5600 angstroms.
• Reflection: all other wavelengths absorbed; yellow reflected.
• Full Red and Full Blue with No Green in an RGB display
• Full Yellow and No Cyan and No Magenta in a CMYK display
• Passing White light through a Yellow filter
• Refraction of White light at an appropriate angle

It is a prinicple of objectivism (and empiricism) that the senses cannot be fooled.  When you see an "optical illusion" the trick is in the mind, not the eye.  When you see yellow, yellow is what you see.  However, as the rationalists warn us, we do not necessarily know how the yellow was created.  For that, you need "ground truth."

ALSO ON NECESSARY FACTS
In Suspect Terrain
The Map that Changed the World
Mapping it Out: An Atlas of Contemporary Cartographics
The Philosophical Breakfast Club

The Roots of Poverty

In The Economy of Cities, Jane Jacobs wrote: “To seek 'causes' of poverty in this way is to enter an intellectual dead end because poverty has no causes. Only prosperity has causes.”

As a card-carrying criminologist I study the sociology of crime.  Some claim that poverty causes crime.  It may.  But, others claim, also rightfully, that crime causes poverty.  More cogently, in many instances, the criminal mind-set is the mentality of poverty: criminals are creatures of convenience and habit.  At least, some of them are.  (In a paper on criminological metatheory on my website here, I list the 30 or more theories that explain the 30 or more causes of 30 or more kinds of criminal actions.) 

Overfilled dumpster at my apartment complex.

In Goethe's Faust Part 1, Mephistopheles says: "Ich bin der Geist der verneint."  (I am the spirit that negates.)  The devil cannot create, only destroy.  Criminals are creatures of convenience and habit. Entrepreneurs seek new solutions to previously unknown problems.  They find and reduce inefficiencies.  An entrepreneur will invest all the resources available to make a dream come true.  A manager will not go over budget.  A criminal will not make the effort.  (In the Bible, this is the Parable of the Talents.) 

An empty dumpster was only 30 meters away.

I walked the short path between buildings to the next parking lot and found the dumpster there empty. Anyone who threw the next bag of garbage (or left that dead sofa) could have made the same small effort.  But it was too much work.  In Atlas Shrugged, Ayn Rand painted Starnesville, the town abandoned by its productive citizens.  Those who remained had no time, no energy, no interest in effort. 

The distance is maybe 100 feet, 30 meters.

In fact, there were four or five available dumpters, all within a few hundred feet. 

Sociologists claim that when rich people commit crimes, it is because rich people are crooks; and when poor people commit crimes, it is because rich people are crooks.  The easy claim is that crime among the poor is a response to their oppression.  They retaliate against the ruling class by victimizing each other. At least, that is what I was taught in four years of university education in sociology, 2006-2010.  Myself, as an advocate of laissez faire capitalism, and a defender of so-called robber barons, I can see the landlord as the seamy underbelly of property.  Edison invented.  The landlord only holds.  And yet, the owners of this property invest a lot of money in maintenance.  And it is too little appreciated by the poor criminals who live here.


Maintenance worker picks up around the site.

Every day, the grounds crew picks up trash.  They reload the dumpsters, breaking down discarded furniture.  Contractors come in once a week to sweep the grounds, collecting leaves, mowing the lawn - not much of that with central Texas's drought.... but still they come...

The complex is perhaps 30 years old.  The property management firm owns a range of real estate investments in California, Texas, and other places.  The shrubs are trimmed decoratively.  When we moved in, my wife said, "We have real holly!" And, indeed, we do.  But be that as it may ....


Someone works pretty hard to do this.

No matter how much work the owner invests in the property, those who have no ownership stake take no ownership care.  Look closely under that bush in the foregound and you may notice the beer can.  They are all over the place every morning.  In a previous post, I spoke of the scavengers who come for the aluminum.  In a fascinating display of inherent respect, they do not actually walk the grounds.  I wish they would.  They only come to the dumpsters.  They do not want to intrude on the grounds.  If only all the residents here showed the same sense of propriety and respect and self-respect.



Under the round bush in the foreground,
a Modelo beer can
which someone made an effort to crush
but not to discard.

And yet, the problem is complicated and nuanced.  It has texture.  Today, a woman from an apartment along my walkway was vacuuming out her SUV.  I am fairly confident that she did not toss the beer can under the bush.  This morning, I met my neighbor below.  He has a lunch wagon, a converted pickup.  Every day, he gets up, cooks, loads his truck and goes off to construction sites.  I doubt that the beer cans are his.

BudLite can tossed on the ground, not in a dumpster.

Lacking an objective basis for morality, earlier advocates of capitalism only could say that the millionnaire has as much right to his wealth as the laborer to his hundreds. In the 20th century Ayn Rand delineated productive workers at any income from the looters and moochers.  Common laborers or uncommon inventors alike are to be contrasted against those those who look to Washington or to heaven because they cannot look within themselves to find their motivation.

Like poverty, crime has no 'cause.'  It is the ground state, the default, the lack-of-something.  In metaphysics, we say that "nothing is not a special kind of something."  So, too, in ethics, is poverty not a different kind of productivity. 

"Maybe it's what they don't have."

About halfway through Atlas Shrugged, the weak businessman, Mr. Mowen, sees an anonymous worker lashing down machinery on a flatcar.  The reader knows the worker to be Owen Kellogg.  The production tools are on their way to Colorado.  Mr. Mowen does not understand why a firm would abandon its traditional home.  "What have they got in Colorado?"  he asks.  The worker replies, "Maybe it's what they don't have."

Austin has homeless people living under the freeways; and beggars stand at freeway exits.  Like Michigan, Texas has government offices for handing out grants to businesses that promise to "create jobs."  Unlike Michigan, here is a culture of self-reliance and enterprise.  It's 100 degrees and a woman is standing in a median, selling bottles of water.  You can get 70 cents a pound for aluminum; and poor people walk the streets picking up cans.  (In Michigan, 10 cents a can is not enough incentive any more.)  The other day, when I went down to the dumpster, three guys were were pulling out an iron bed frame to add to the load in their truck.  Saturday night is party night and so Sunday morning, they were back, retrieving beer cans.

The Ann Arbor News closed in July 2009.  Here, I have the Austin American-Statesman, but also, both the Chronicle and The Onion, as well as a slew of lesser banners, more than I can gather up and bring home.  

Texas Gov. Rick Perry has much of the same political baggage as his northern cousin, Michigan governor Rick Snyder.  Rick Perry likes to take credit for the boom here in Texas.  Basically, the governor and the government are irrelevant, except as they reflect a wider culture.  

Monday, I got a haircut for $5.95, half the going rate in Michigan.  Unionization in Michigan pushed up wages past the margin of utility.  I pointed this out to my wife, who countered that waitresses make the same low wages in both places.  But that is not exactly correct.  Here, restaurants cost less.  There, tips are the same percentage, but of a higher dollar total.  Here, $5.95 goes as far as $11.00 there.  The difference is measured in the number of idle people in Michigan waiting for Gov. Rick Snyder to bring them an employer. 

The general truths are easy to find.  I found them recently in an anthology,  The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times, David S. Landes, Joel Mokyr, and William J. Baumol, eds., which I reviewed for The Libertarian Papers here.  Many of the same facts appear in The Economy of Cities by Jane Jacobs and in Max Weber's City.  I simply found a place where enterprise already is active and welcome because here there is less entitlement, less interference, less regulation.  It is not perfect, but it is better.

The Family Business

The classic entities of businesses, households, and governments might be useful constructs for conceptualizing market operations, but, really, like planets, meteors, and stars, they all must obey the same same general laws – and distinctions among them can be blurred easily. In fact, every family is a business. The most successful family businesses are those that perceive themselves as such.  Academic economics - even from "free market" professors - teaches from false assumptions.

"Households produce goods and services for their own consumption and not for the market."
Firms have internal accountants, rather than hiring accounting firms – which they also do. Shipping and receiving, sales, etc., all could be contracted but are produced internally. If nothing else, households export labor – and capital goods such as the lawn mower and dishwasher enable that. Hans Rosling's TED Talk, "The Magic Washing Machine" (here) praises the liberating power of this capital good. We just moved from Ann Arbor to Austin. I have no idea how many fractional horsepower motors I packed – drills, sander, saber saws; mixer, blender. We have several computers networked here. I did not count the obsolete 5.25-inch diskettes I dumped. (My Carmen Sandiego and SimAnt were still pretty fresh.) The tax laws that allow businesses to write off obsolete capital do not apply to households, but they should.

"Households do not exist in an environment that could meaningfully be called competitive."
The Capulets and Montagues would disagree, as would the Rothschilds and Warburgs. They competed against each other and cooperated in joint ventures. Even the families that do not understand this at least must export labor. In that, they compete. 

The two axioms in bold come from a paper by Steven Horwitz and Peter Lewin, "Heterogeneous human capital, uncertainty, and the structure of plans: A market process approach to marriage and divorce," in The Review of Austrian Economics (2008; 21:1-21; available here.) The paper offers much to consider. It nonetheless repeated many of the basic flaws of academic economics, and did so from a middle American point of view. 

 It is true that the institution of marriage in modern America has changed over the past 100 years. However, the authors over-reached by ignoring the many folkways that define "family" and "family business" in other cultures. Dowery and bride price are real and functional economic considerations. In ancient China, a woman’s production of silk cloth was the creation of household savings – and she knew it. In rural America of the 19th-20th centuries, cash income from the sale of butter and eggs was the wife's own.

Feminists rightly pointed out that "women's work" i.e., housework is undervalued: washing, cooking, shopping, caring for children, cleaning, gardening, and all the other tasks are not income; and their costs of production are not tallied. Neither is "man's work." Mowing the lawn, cleaning the gutters, and the other chores are invisible to economists.

This reflects another error in academic economics: confusion about consumer goods and capital goods. Easily, capital goods are tools that are employed to create other goods or services. Of consumables, food is perhaps the paradigm. But food is also the primary capital good.

Capital goods such as machineries wear out; they are abandoned when obsolete.  Also, they can be reconfigured, recombined, or redeployed to other ends. A factory worker may require protective clothing, a capital good. But an office worker also requires special clothing. Yet, the prints and patterns, styles, fads, and fashions are not recognized for their productive power.

We all produce... and consume... The laws of economics are not to be ignored, no matter what convenient labels allow us to isolate actors and their actions.  Governments, businesses, and families are helpful concepts when considering markets, but they are not essentially different from each other in any economic sense.

ALSO ON NECESSARY FACTS

A Man's Home is His Market 

Capitalist Culture 

The Success of the WEIRD People 

Engines of Creation 

Entrepreneurship

Why Evidence is Not Enough

Generally, people rated authors as experts when the views coincided with their own. Kahan and his team created three authors and their books. All three had the same high level of academic standing. (Doctorates from major schools.) In every case, two different, opposing views were written for each author and randomly shown to subjects. The topics were gun control, nuclear power plants, and global warming.

Originally published by the Yale Law School as "Research Paper #205: Cultural Cognition of Scientific Consensus by Dan M. Kahan, Hank Jenkins-Smith and Donald Braman." The paper can be downloaded from the site of our comrades at Mother Jones who offer it here.

This is really just another arithmetic validation of what we know as the "confirmation bias" and the "attribution fallacy." Richard Feynman warned young scientists about the need for ruthless honesty in his famous speech on "Cargo Cult Science." (Available from the CalTech Engineering and Science Library here.)

In short, we tend to agree with and thereby validate experts who agree with us. When presented with facts opposed to our commitments, we denigrate the status of the provider. This ties in with another theme: The Big Sort by Bill Bishop. Over the past generation, Americans have come to socialize only with those who agree with them politically. In the 1960 Presidential election, Kennedy won over Nixon by about 1 vote per precinct, and largely, it was just that: a nation mostly divided narrowly near the middle. Now, precincts tend to be overwhelmingly Republican or Democrat.

It is not just gerrymandering (though there is that), but the fact that people choose to live among those whose political values already mirror their own. The research data show that this correlation is strongest among those with more education. The guys on the bowling team might disagree and still hang out; their bosses on the golf links do not.

Today, perhaps more than a third of working American adults hold bachelor degrees, with the master's being the new bachelor's. University education apparently failed to achieve the lofty goals of Karl Popper and Mark Van Doren two generations ago for a society open to ideas, whose participants benefited from a liberal education embracing literature, mathematics, science, and fine arts.

The blog OrgTheory is written by sociologists of economics, Brayden King, Fabio Rojas, and others. On April 11, 2011, Brayden King posted "When Evidence Isn't Convincing." It summarized research by Daniel Kahan and his colleagues.  Reading that and following the links to the original paper, I posted an earlier version of this blog article to the Objectivist site, Rebirth of Reason.

ALSO ON NECESSARY FACTS
Republican Rebels
Workers Paradise Promised an End to Money
Unlimited Constitutional Government
That Goddam Ayn Rand Book

Hook 'em Horns!

I arrived in Austin on August 31 and started unpacking the 26-foot Penske truck that I loaded in Ann Arbor the previous week. My wife flew down September 3. To meet her, I rented a Cooper Mini Zipcar to be picked up at Gregory Gymnasium near the UT Stadium. As soon as I got on the 1L Bus, I knew I was in trouble: it was game day. We lived in Columbus and Lansing and Ann Arbor; and I should have been more cognizant of the reality of big school football.

Zipcar was nice about extending the rental. Today, waiting for the 1L so that we could have brunch here at the Wheatsville Co-op (where we are now owners), I asked a CapMetro driver how the game went. He said that it was something like 31-6 (34-9 as it turns out). "We were down there," I said. "And the crowd did not seem jubilant." The driver said, "Rice is not really a game. We beat them every year. Baylor, TCU, maybe the Aggies this year." I understood: like OSU versus Ohio; or U of M versus Eastern Michigan. UT vs. Rice since 1914: 71-21-1. (UT Historical scores from Mack Brown here.)

Numismatics informs Economics

If economists actually collected and studied the media of commerce, they would avoid errors common even to advocates of capitalism.  Milton Friedman and the monetists were not much smarter than Keynesians.  In fact, even von Mises and Marx made the same claims about the evolution of gold as the highest form of commodity money.  A numismatist knows better, and knows more.

"Bad money drives good money off the market" is a cliche.  More clarity comes from adding that both moneys must be declared equal by law.  In that case, the markets will operate. People will break (avoid, evade, ignore) the law. The undervalued money will go into other channels (savings, export) and the cheaper overvalued money will circulate.  

Social sciences attempt to mimic physical sciences with concise and precise laws about complicated phenomena.  But, even astronomy is theoretically limited to a two-body universe.  Add more bodies and the nice algebra of theory must give way to laborious numerical approximations.  So, too, with economics.  Gresham's Law applies to two currencies - say the silver dollar and the gold dollar; or to silver dollars of one standard versus minor coinage of another fineness.  Reality is more complicated than that.  As Hayek pointed out, a plethora of moneys circulate.  Economists just focus on one or two issues of the government.


Unfortunately, lacking knowledge of numismatics, Hayek could not state his case empirically.  The Austrian school is rationalist, deriving universal laws from a priori assumptions.  

Spanish 8-reales "dollar" a world trade coin
of the 18th and 19th centuries, this one
chopnarked by Chinese merchants

Many conservatives across the spectrum know that the US Silver Dollar was modeled on the Spanish 8 Reales of the 1780s.   Fewer know that until 1857, Spanish money was one of about a dozen foreign currencies in silver and gold that were legal tender in America, alongside issues of the Federal government.  Many banks of the time issued paper money that promised U.S. federal silver coin in redemption but showed pictures of Spanish and Mexican coins.  (See Spanish Coins on American Notes here.) 


From the beginning of the Federal Mint, there was always a push for alternate currencies to make daily commerce easier.  The US ten-cent dime and 25-cent quarter dollar were not commonly convenient.  Many people relied on worn Spanish pistareens or "fips."  These were approximately half-reales (about 12-1/2 cents when full and new) but circulated at different values depending on circumstances.   That is a basic lesson for economists: to see what people actually do, not to prescribe how they should conduct business. 

In apparent violation of Gresham's Law, presenting a test case for hard money conservatives, the US Mint 3-cent silver and 3-cent nickel circulated side-by-side. The base metal coin did not drive the precious metal competitor from the market.  The same was true of the US Mint 5-cent nickel versus the silver half-dime.  The US Treasury also issued Fractional Paper, an emergency scrip from the Civil War that circulated alongside coinage, even after the apparent necessity was gone.  People could have demanded hard money (as small silver coins), but they did not.  The paper was good enough.  Moreover, fractional coinage - and of course the paper - was a limited legal tender, typically good only for a dollar or two, maybe five, depending on the coins and the laws of the moment. 

Like Europe of the Middle Ages, America also knew apparent "bullion famines" during which times coins were scarce.  They left the country to buy goods from abroad.  That is what money is for.  At other times, with Americans goods being exported and business at home being brisk, merchants sold off their small change at a discount to get rid of the excess.  

Eric P. Newman was president of the American Numismatic Society.  With Kenneth Bressett, former president of the American Numismatic Association, Newman wrote The Fantastic 1804 Dollar.  He is less famous generally but perhaps more highly honored among serious numismatists for his many explorations of Colonial and Early US paper money and his many monographs on other topics.  According to one presentation, delivered at a Coinage of the Americas Conference, December 2, 1984, counterfeit copper coins of the colonial era circulated for over fifty years, into at least the late 1830s in the Appalachian villages of western Virginia.  In Canada, these small copper conveniences are known as "blacksmith tokens."  

Earlier this year, Bernard von Nothaus was convicted on federal charges for issuing his own Liberty Dollars.  Any active American coin collector with a Red Book knows that private issues in gold and copper claim a long and proud history independent of the faltering efforts of the U.S. Mint.  Private silver was unnecessary because of the masses of Spanish (and English, etc.) coins circulating at the time.  We know from old records that into the 1830s many merchants in Boston, New York, etc., kept their books in Pounds-Shillings-Pence.  Business with English partners was brisk; and traditions have strength. 

The Pounds-Shillings-Pence system itself was a radical innovation, a conceptual leap, an epistemological creation that remains unappreciated by those who are ignorant of the history of trade and commerce.  In the broad centuries we call the Middle Ages, any local authority with bullion could strike his (sometimes her) own coins. Much of it came from "plate" household goods of silver; much came from new mines. Easily a hundred different kinds of coins, struck to different standards, often of lower debased finenesses circulated.  Broadly, the old Roman pound continued, while the new German mark ascended.  To rationalize the chaos, bankers invented pounds-shillings-pence.  It did not matter how you built up the quantities, when the books were balanced, you needed 240 pence or 20 shillings (12 pence each) to make a pound (or 12 "Troyez" ounces) of fine silver.  Bankers in the Middle Ages invented abstract money of account to meet the demands of competing currencies. 

Silver penny of Hughes of Champagne,
about 1 gram: dameter of a dime.

This was spontaneous order.  No Dumbarton Oaks Agreement was needed.  No theoretical papers were published.  And no general law was enforced on all.  The Big Problem of Small Change by Thomas J. Sargent and Francoise Velde is a chronicle of monetary media in the Middle Ages.  As a time when Europe had perhaps a thousand independent polities, the stories carry meaning for anyone who wants to understand international monetary systems today.  The work has been criticized by economics professors of the Austrian school for its larger (and largely questionable) theoretical framework, but as a compendium, it is unexcelled.  

As I said in the previous post, there is no standard textbook in numismatics.  No one-volume Samuelson makes life easy for freshmen.  Nothing from any Foundation for Numismatic Education delivers "Numismatics in One Lesson" or the "The Cliches of Monetism."  You can start with the Red Book, the Breen Encyclopedia, the Garrett Collection.  But you will soon discover the new works from Whitman and Krause and Stanton.  Numismatics is active and aware, curious about new facts, fascinated by new discoveries, open to new explanations of accepted evidence... and always being tested in the largest unregulated money market on Earth.

Quinarius of Cato the Younger struck at Utica.
"Pro Per: for himself."  His own silver
financed republican resistance to
Julius Caesar.

ALSO ON NECESSARY FACTS

Gresham's Conjecture

Supplies and Demands
Numismatics: the Standard of Proof in Economics

Scripophily: the Study of Stocks and Bonds

Numismatics: the Standard of Proof in Economics

Hayek, Mises, and Rothbard, and of course Friedman,  for all their passion, lacked any understanding of numismatics.  As a result, their theories wanted facts; ultimately, their predictions and prescriptions were weak.  Sometimes, they failed. 

Hayek's Denationalisation of Money relied on Murray Rothbard's flawed monograph, What has Government Done to our Money? which delivered one anemic academic citation on tokens.  Any active coin collector could deliver hundreds of examples of competing currencies, weak and strong, successful and disastrous. 

Most people call it “coin collecting” but numismatics is the art and science that studies the forms and uses of money. This includes stock certificates, bank drafts, military decorations and fine art medals as well as coins.  Numismatics is one of the last unregulated markets. In the USA, there are no government licenses or special regulation. There are few college courses on American campuses. Validation, such as it is, is by ad hoc standards of conduct set within the hobby by private organizations: the American Numismatic Society, the American Numismatic Association, the International Association of Professional Numismatists, and the Professional Numismatists Guild. These groups set standards far above any government laws. For instance an ANA dealer can be banned from membership for selling a single counterfeit item, and ignorance is not an excuse. Two complaints - complaints alone - are enough to cost a dealer his membership.  The ANA offers seminars on its Colorado Springs campus. They also provide a range of self-study materials and grant a master’s certificate in numismatics. 

Of the perhaps six million Americans who claim to "collect coins" only a couple dozen attend ANA seminars each year.  Numismatists are autodidacts. 

That is why academic economists overlooked the very study which tests, proves, or discards their theories.  As a hobby, the engagement is personal, direct, participatory.  There is no standard textbook.  As hobbyists, we allow ourselves whimsy which academics apparently misunderstand.  One of the foundation books about early American copper cents is called Penny Whimsy. The author, psychologist William Sheldon, was a charlatan and thief.  The leading research organization is a club called the Numismatic Bibilomania Society.  Their "journal" is the Asylum.  Their weekly email list is the E-Sylum.  The Paper Money Collectors of Michigan know more about the actual history, forms, uses, successes and failures of circulating notes than any coterie of bankers.  They call their 8-page newsletter The Ragpicker. Their current president, William Brandimore, is also an editor of one of the most authoritative compendiums of United States Paper Money.  

All is not lost.  academic economist George Selgin's work, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821, came out in 2008.  He provided a thrilling, yet accurate narrative, backed by citations. His research explains the catalog of facts long known from Dalton & Hamer's The Provincial Token-Coinage of the 18th Century (1910).  The standard compendium for American tokens was Lyman Lowe's Hard Times Tokens (1899), which has been continuously updated by new research by Russell Rulau.  Rulau also edits a more general book on American merchant tokens through the 19th century.  

Other specialists have devoted their passions to stock certificates, wildcat banknotes of Ohio, Indiana, Wisconsin, etc., ancient Greek, Roman, Jewish, Turkoman, and Celtic coins, as well as American and Canadian emergency scrip of the 1930s,  and, of course, the full array of U.S. government coins and notes.  From the copper crosses of Katanga to Chinese cash and Siamese gambling tokens, and the rich array of Arab-Islamic issues across 1000 years on three continents, even the monetary uses of woodpecker scalps and cacao beans have been studied and reported in print and at conventions by "coin collectors."  (Conventions feature judged, museum-quality exhibits touting arcane and abstruse subdisciplines.)

Hayek's Denationalisation of Money could have used some evidence.  He relied on Murray Rothbard's monograph, What has Government Done to our Money? which delivered one anemic academic citation on tokens.  Any active coin collector could deliver hundreds of examples of competing currencies, weak and strong, successful and disastrous.  

To be fair, numismatists could benefit from an infusion of free market economics.  It is true that our convention bourse floors put Wall Street to shame.  However, I stopped visiting one collecting discussion board when we had a disagreement first over Morgan-Stanley's naked shorts on silver futures, then over coal mine tokens. Some writers found general support for their declamations against greed, profiteering, and the exploitation of workers.  I was left the odd man out for defending speculators and industrialists.  I found that ironic in a hobby that buys and sells money.

New research continues.  Whitman Publishing and Krause Publications release new titles every month.  Their smaller competitors such as Stanton and Money Tree are active as well.  Some of these standard references, known now for 100 years, are sirens - at once lures and warnings - for the limitations of academic economics.  

Also on Necessary Facts:

Mere Gold is Not Enough: Hayek's "Denationalisation"

Numismatics Informs Economics

Debt: the Seed of Civilization

Electronic Money: Coins without Realms

Response to "Global Warming Cooling Off?"

I followed my bachelor's in criminology with a master's in social science because that let me tailor some cognate electives to my interests in global crime and modern criminology.  In addition to classes in international monetary systems and multinational enterprises, I had geographic information systems and remote sensing.  The other day, I met William F. Welsh, my professor for remote sensing, for brunch.  Bill directed me to the RealClimate blog which carried a rebuttal to the "Misdiagnosis" paper by Roy W. Spencer and William D. Braswell.  (See the post immediately before this one.) 

“Misdiagnosis of Surface Temperature Feedback”
Filed under: Climate Science— mike @ 29 July 2011
Guest commentary by Kevin Trenberth and John Fasullo
The paper’s title “On the Misdiagnosis of Surface Temperature Feedbacks from Variations in Earth’s Radiant Energy Balance” is provocative and should have raised red flags with the editors. The basic material in the paper has very basic shortcomings because no statistical significance of results, error bars or uncertainties are given either in the figures or discussed in the text. Moreover the description of methods of what was done is not sufficient to be able to replicate results. As a first step, some quick checks have been made to see whether results can be replicated and we find some points of contention.

About the site, it says: "RealClimate is a commentary site on climate science by working climate scientists for the interested public and journalists. We aim to provide a quick response to developing stories and provide the context sometimes missing in mainstream commentary. The discussion here is restricted to scientific topics and will not get involved in any political or economic implications of the science."

This Mastodon was found in Rush Township in 1944
and has been called the 'Owosso Mastodon'.
The bones are on display at the Exhibit Museum
at the University of Michigan in Ann Arbor Michigan.

Over the past year, Bill Welsh and I have had many short exchanges on this, but never been able either of us to lay out fully our understandings and questions.  Ultimately, it is complicated. 

That Earth's climate changes is obvious.  That weather patterns and weather cycles change is also true by observation.  That cities have microclimates different from the surrounding countrysides is fact.

Dr. Welsh remains committed to anthropogenic global warming.  I remain unconvinced.  Unlike others who debate this, we are able to have brunch and talk about other things, as well. 

Has Global Warming Cooled Off?

Despite record tempertures across the continguous USA, especially in the upper and lower Great Plaines, advocates of anthropogenic global warming (AGW) have been reticent.  With drought gripping Texas, the opportunity seems too good to miss.  Yet, the news is bare.  Perhaps the paper by Spencer and Braswell in Remote Sensing is the cause.  Perhaps the over-riding economic news pushed the story away.  Maybe, like climate and weather, the causes of this "hole in the reporting layer" are many, perhaps unrelated, and not well understood.

Apparently, there was a conference in Lisbon July 11-14.
"Evidences that global Earth temperature is on the rise are mounting together with signs that the Earth system may go through significant forcing. This offers a great opportunity to update the views about the Earth system, think globally, take a new look to old problems, seek for new ideas and solutions, challenge current paradigms of energy use, and of land and ocean resources exploitation."

More attention came to the paper by Spencer and Braswell in Remote Sensing.
"NASA satellite data from the years 2000 through 2011 show the Earth's atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing." New NASA Data Blow Gaping Hole In Global Warming Alarmism by James Taylor, Forbes, Wednesday, July 27, 2011.

That story from Forbes, linked from Yahoo News,  echoed loudly in conservative, libertarian and Objectivist blogs and discussion boards.  The article itself was less sanguine. 
From the Abstract: "Here we present further evidence that this uncertainty from an observational perspective is largely due to the masking of the radiative feedback signal by internal radiative forcing, probably due to natural cloud variations. That these internal radiative forcings exist and likely corrupt feedback diagnosis is demonstrated with lag regression analysis of satellite and coupled climate model data, interpreted with a simple forcing-feedback model."

In other words: We don't know.  No hole was blown in climate theories. Any of the AGW models theories may be right... or wrong...  The immediate data from Spencer and Braswell only suggest that more study is needed. 

It is concluded that atmospheric feedback diagnosis of the climate system remains an unsolved problem, due primarily to the inability to distinguish between radiative forcing and radiative feedback in satellite radiative budget observations.

In simple terms, radiative changes resulting from temperature change (feedback) cannot be easily disentangled from those causing a temperature change (forcing).
[A]ll of the IPCC models therefore exhibit net positive feedbacks. Also, since all climate models have net feedback parameters greater than zero, none of the climate models are inherently unstable to perturbations.

Note that the differences ... exist not just at zero time lag, which is where feedback estimates from these regression coefficients have previously been made, but for several months when radiative flux leads and lags temperature. Also, note the change in sign of the radiative imbalances ... depending upon whether radiation leads or lags temperature. As we will see, this behavior gives us clues about the relative roles of forcing versus feedback in the data.

[W]e are still faced with a rather large discrepancy in the time-lagged regression coefficients between the radiative signatures displayed by the real climate system in satellite data versus the climate models. While this discrepancy is nominally in the direction of lower climate sensitivity of the real climate system, there are a variety of parameters other than feedback affecting the lag regression statistics which make accurate feedback diagnosis difficult.

We hypothesize that changes in the coupled ocean-atmosphere circulation during the El Niño and La Niña phases of ENSO [El Niño/Southern Oscillation] cause differing changes in cloud cover, which then modulate the radiative balance of the climate system. ... [F]or the ocean-only data, the signature of radiative forcing is stronger over the oceans than in the global average, suggesting a primarily oceanic origin.

Read it for yourself.  "On the Misdiagnosis of Surface Temperature Feedbacks from Variations in Earth’s Radiant Energy Balance," Roy W. Spencer  and William D. Braswell, Remote Sensing,  2011, 3, 1603-1613. Online here.

Hacking

Def Con makes the news.  This 19th convention wins more attention than the first one did.  Now billions of people own computers, and are online - even nominally poor people.  For years, the mainstream media have reported breaches of financial information revealing the personal details of millions of people. Successful attacks against the computers of government agencies - Defense, the FBI, the Senate - are only passing news.  And then there was Wikileaks.  

Just as defenders of the Second Amendment point out that the instrument is not the offender, so, too, is there another side to hacking.  The moral high ground does not get much attention.  Steven Levy’s Hackers: Heroes of the Computer Revolution first came out in 1984.  (It enjoyed a 10-year and then a 25-year publication.)  Hacking is only figuring things out, reverse engineering.  Hacking is the discovery of new aspects to the known.    Knowing how big computers worked, they invented the little ones we have today.  Way back when, even in science fiction (for instance the World of Null-A by A. E. van Vogt, or Isaac Asimov’s Multivac stories), the expectation was for one or a few large machines. Expectations of personal computing were rare, until the advent of “cyberpunk” also about 1984, defined perhaps by the release of the Apple Macintosh.  (See the iconic commercial here. )  

Today, our community colleges teach computer literacy, computer programming, computer repair, computer security, website design, e-commerce, and many more permutations.  In 1984, you had to figure it out for yourself.  And, largely, you stlll do.  The leading edge of computing moves ahead of college classes.  It must, by definition.

As for those breaches in security, revelations of weaknesses are better than a fallacious faith in non-existent strengths.  You know that when you shut off your computer, except for the clock and few other things, most of what is in memory is lost.  RAM is volatile.  

Working on a master’s degree at Princeton, J. Alex Halderman (blog here) figured out the “cold boot attack.”  Pour liquid nitrogen on an electronic circuit and when power is removed, you still have time to physically transfer the circuit and re-power it.  

Today, Dr. Halderman teaches at the University of Michigan.  His latest hacks involve voting machines.  He remotely programmed one in Washington DC to play the Wolverine fight song, “Hail to the Victors.”  En route to a conference in India, the police of the world’s largest democracy detained him at the airport for several days, and then shipped him back, not allowing him to speak to the  convention.  Voting fraud is nothing new; but the means of carrying it out are.  You need to know that.  Your governments are not going to tell you about it.  Someone else will.

The upside to hacking can be pure whimsy.  At a meeting of ArbSec (formerly DefCon 734), one of the attendees demonstrated a desk telephone with a cellular telephone built in.  We see people walking and driving on their phones all time, but a desk phone catches your eye.

We accept our wifi connections without a second thought.  There was a time when telephones were a monopoly.  The average home paid about $8 a month and the average business about $35 a month - and a “data grade” line cost even more.  You never owned your equipment: it belonged to Ma Bell (or other); and you leased it.  

Hackers invented the hardware such as the Hayes Smartmodem and software such as Xmodem that enabled ordinary homes to use their voice grade lines to carry computer messages.  FidoNet was born - and vigorously opposed by telephone monopolies that attempted to bring the full power of state regulation down on the creators and users of BBSes (electronic bulletin board systems).   Ultimately, they failed.  The Modified Final Judgment broke up the Bell monopoly.  Fax machines go back 100 years, but only became common after 1984.  Our cellphones were the “car phones” and “radio phones” of a previous generation - available only to the wealthy.  Answering machines were advertised in the early 1950s, but no one could afford them.  

But if we enjoy the technical wonders, we also know that we are left exposed.  Banking, credit, and medical information are all vulnerable to inadvertent (or intended) compromise.  That applies also to corporate information, of course.  

A few years ago, I guarded a jewelry factory.  Employees exited through a metal detector.    One evening on her way out the door, one of the computer people stopped at our desk.  She waved her cellphone at us.  “Which is more valuable,” she asked, “an ounce of gold or next season’s designs?”  

Hackers are not interested in stealing fashion designs.  However, they are very competent at warning us that the computers on which we write, draw, and communicate, are not secure.  Google is one company that pays rewards to hackers who find security flaws.  More should.

In security, we often run “red team” exercises where someone attempts physical access.  Sometimes overzealous managers whose pass keys, gate cards, and passwords let them in think it proves something to sneak up on a guard.  It proves that the manager is misdirected.  But the concept is valid.  

Cryptographers know a historical narrative in which clever people made up "unbreakable" codes and ciphers which skilled analysts (those with “cipher sense”) broke easily.  Cryptographers know that only someone who has broken codes and ciphers is qualified to design them.  So too, with computer security, or security in general: “Set a thief to catch a thief.”

From my curriculum vitae:

Quoted on computer hacking in “A sociology of hackers,” Sociological Review Vol: 46 Issue: 4 (11/1998) by Tim Jordan and Paul Taylor; and in Hackers: Crime in the Digital Sublime by Paul Taylor, London: Routledge, 1999; and in Hacking: Digital Media and Technological Determinism by Tim Jordan, Cambridge: Polity Press, 2008.

“Protecting Data With Cryptography,” (2-part series) NADGUG Focus, Austin, Texas, April 1994 - May 1994.

“Online with the Super Hacker,” Loompanics Annual Catalog, Port Townsend, Washington, , January 1994.

“Property Rights in Cyberspace,” Loompanics Annual Catalog, Port Townsend, Washington, March 1993.

“Did Thomas Jefferson Wear Mirrorshades?” Loompanics Annual Catalog, Port Townsend, Washington; , January 1991.

“Software viruses,” Data General Review, September, 1989.

The Code Book, 3rd edition, Loompanics Unlimited, Port Townsend, Washington, 1987.

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