31 July 2011

No, It Ain't no 401(K)

Both the Lunatic Right and Joe Sixpack say about the same thing: You/I paid into Social Security, so you/I have earned $X of Social Security.  Only one problem with that; it's a lie.

Let's go back to the beginning.  When FDR got Social Security enacted, there was a small problem.  Which problem was paying for those who were immediately eligible (they were 65 or older), and those who would become eligible in short order.  Even if it made sense (it doesn't, see below) to treat SS as an annuity program, for lots of folks there wouldn't be enough "income" earned between now and 65.  In the end, SS was explicitly enacted as a current account program.  Current account is CPA speak for "paid for out of this period's receipts".  The period in question is the fiscal year.

We have one reason why SS can't be an annuity:  too many folks for too long a period of time (45 years, give or take) from inception of SS couldn't earn a nest egg if SS were some sort of annuity system.

But there are more profound reasons.  Hence this epistle.

In recent posts, I have talked about the investment process and the source of return on investment.  From a MBA or CPA point of view, all that matters is cash flow.  If the cash flow exceeds some agreed upon amount, then the application of fiduciary capital is said to be a "good investment"; the cash flow exceeds the "time value of money", imputed.  Buying that stupidity is the base cause of the Great Recession (and the Great Depression, too as it happens).  Real return on invested capital comes not from pure cash flows (Ponzi schemes provide those, don't you know), but from greater production.

Economists and policy wonks and anyone who's tried to prove otherwise, have all had a good deal of difficulty in demonstrating that purely financial investing has a beneficial (and measurable) effect on production.  The post-industrial economy is a myth (well, as an object of desire, at least).  Folks buy stuff; corporations buy services.  Hair dressing and septic tank draining are consumer services.  So are lawyering and doctoring.  Here's your homework:  enumerate all the service jobs which sell *solely to consumers* that provide an upper-middle class income.  How many of those jobs are of recent creation?  As I said, lawyering and doctoring are well paid service jobs (although lawyering doesn't qualify for the homework, since its highest paid work for corporations), but they've been around for more than a thousand years. 

The structure of an economy, whether it skews toward making things or skews toward service, matters.  Real return on investment is essentially non-existent for services.  To the extent that the USofA has drunk the post-industrial KoolAid, financing any retirement program becomes more difficult.

The truth is that "service" jobs with a consumer clientele are overwhelmingly shit jobs which could never support a middle-class family; most of those jobs have been around since the industrial revolution, and have been lower-class grunt work from the get go.  The contemporary archetype is hamburger flipping under the arches.  Build a middle-class life on that?  No.

Let's ask the simple question, then:  if SS *were* to be an annuity (i.e., a program which invests SS deductions by the Government), how would that work, and what might be the problems?

First, let's assume away the timing problem described above; all those less than 45 years from retirement just get paid out of the annual Federal budget (as it's done from the beginning).

Second, we get to the crux of the problem:  what sort of investments can be made?  Joe Sixpack and Lunatic Right, meet the can of worms.  SS currently "invests" in Federal Government "debt" (Treasuries, so called).  Does this make any sense?  I'll just say, NO.  Here's why:  in order for an investment to earn a rate of return, that investment has to increase production of some good (possibly service, but I don't buy that such really can happen) above what's currently possible.  The canonical example is a brand new machine.  And not just new, but new and better than current machines doing the same task.  Needless to say, "investing" in Treasuries is a classic example of robbing Peter to pay Paul.  The Gummint moves a bit of money from one pocket to another, and then moves a bit more back to that first pocket.  Treasury "pays" interest to SS (and anyone buying its bills, of course), but for doing nothing.  Private pension funds generally "invest" in "high quality" Federal debt.  I haven't vetted this posting, but it looks close.  Such "investing" ends up costing money, in the overhead needed to do the money transfers back and forth. 

Time for a thought experiment.  What if SS could invest in anything, in particular private companies like Microsoft and Enron and Exxon/Mobil?  The immediate problem is one of conflict of interest.  Had SS been heavily invested in Enron, or Madoff, how could it possibly carry out its duties to protect the public through DoJ/FBI/SEC/etc.?  The SS investment manager would do all he could to block discovery and prosection, same as private investors and insiders have done.  Would the resulting investments mean that the Federal government was either Socialist or Fascist (pick whichever feels derogatory)?  Of course.  The Lunatic Right cried Socialism with TARP, but, of course, TARP was the furthest thing from Socialism; Socialism means taking care of Joe Sixpack even if that means pissing off the Fortune 100.  TARP was classic Fascism; government aiding corporations at the expense of Joe Sixpack.  The fact that Joe Sixpack watches Fixed News and is easily bamboozled into believing the exact opposite of reality doesn't change reality. 

There's been a good deal of ink, most negative, over sovereign wealth funds.  If SS invested in, say, Brazilian oil fields, would you care?  Would Brazil?  It's not a simple problem.  From a real economics perspective, investing in real capital is more intelligent than investing in fiduciary instruments.  The rate of return on fiduciary instruments is arbitrary and not connected to real economic growth.  All those CDOs which caused the Great Recession depended on payments from folks who had no reasonable expectation of economic growth.  Real capital investment can, but isn't guaranteed to, be productive.

If SS had been invested in American car companies, would there have been any mewling from the Lunatic Right?  Likely not, since then it would just be a case of a motivated investor protecting his investment.

How could this privately invested SS deal with the Great Recession?  Those eligible to retire in the past 3 years would have gotten hammered, as did those who depended on 401(k)s.  Would the Feds make up the deficit?  Or would they just say, "tough luck"?  What do you think?  Remember, Bill Gates's investment income on his billions took some hit, but it had no material impact on his base income need.  His level of capital is not on the edge.  The same is certainly not true of those want to live off a 401(K).  Read this.

Third, is the dirty secret of SS.  Many in the Lunatic Right excoriate Baby Boomers as being, in their kinder remarks, self-absorbed and greedy and stupid.  What the Lunatic Right don't admit is the simple truth:  it was the Boomers who made possible the level of SS (and Medicare) enjoyed by their parents and grandparents.  Since SS is paid for on current account, the Boomers prime earning (and consuming) years dovetailed nicely with the retirement of their parents.  The problem is that Boomers didn't breed its own Baby Boom, although there has been recorded a bit of a Boomlet.  However, without a thriving middle-class, eviscerated by the Lunatic Right aided by white trash morons nation wide, the per capita cash flow to continue SS at the level of the Boomers' parents is scratchy.

Which brings us to the final question:  does it make sense to have annuity systems based on private investment for the purpose of country wide retirement?  The answer, it seems to me, is no.  Again, the basis for this conclusion is that return on investment, real return, is found in productivity improvement.  This also requires a demand side increase in consumption to absorb this burgeoning productivity.  Face it:  if you're the CEO of XYZ, Inc. the only reason to make real capital investment is the certainty that you can shift your increased production.  While you, as an individual CEO, may consider reducing production as a way to gain that increased productivity benefit, from a macroeconomic view the process fails.  Increasing productivity demands increasing consumption, which itself means dispersion of income away from capital to labor. 

Ok, you readers of the Lunatic Right can run off to the ER with palpitations.  Don't come back.

Retirement income, no matter how generated, is a generational transfer.  Labeling *only* SS (or any country's government program) a transfer mechanism is specious.  All retirement programs do this.  Since this is true (trust me on this), the lowest overhead cost lies with a SS type, current account, system.  The issue isn't some arbitrary interest rate compounded annually, determined either by government or market, rather it is increased productivity widely distributed.

29 July 2011

R You Experienced?

Herewith some musings on politics and data.  Don't be afraid, the data doesn't bite.  Those interested in the relationship between the two could find this amusing.

I've always been conflicted:  data for analysis (stats) or data for use (RDBMS)????  I started adult life as an econometrician, and ended up doing the Relational Model.  Until recently, that was OK.  The problem is that the Lunatic Right gets ever more aggressive in its lying.  So, doing good with data is more important than the technology used, although smart database is better than dumb files.

Which brings me to R (a stat language).  I've been working with it for a couple of years, in an informal way.  Unlike SPSS, SAS, PSTAT, and the like, the syntax looks more like C or java than SQL.  Chapter 10 of "R in a Nutshell" is titled "Object-Oriented Programming".  So, a programmable stat language.  It also does graphics very cool.  It has bindings to most languages you'd find in the PC/server world (none for COBOL that I could find), an RODBC driver, an RJDBC driver (they do what you think), and some database specific drivers (Oracle and PostgreSQL, at least).

I had a chat with some folks, which chat was supposed to be about my data geekiness, but turned out to be about their code geekiness.  Which led to a conversation best described as an oxymoron; McElhone (a math stat I worked for some years ago) would have just said, "happily married".  It's kind of too bad; there's lots of data wonking to be done if 2012 isn't going to be worse than 2010.

Not having heard anything, despite emails saying I'd be kept in the loop, I've spent part of today looking for R topics on point, just to see what might have been.  Turns out, there's bunches.

First, there's R-bloggers, a blog aggregator.  The right hand column goes most of the way down the Yellow Brick Road.  Talk about bunches.  There's also PlanetR, but it's not so user friendly.

Second, there's this blog post I got to from R-bloggers.  This is the second post; the first (linked in the post) discussed the ruby mod which prepares the data.  The problem being solved is rather different (other than being about money, but that's the basis of any politics issue) from the one I attempted to chat about.  What is disturbing:  my interrogators evinced no knowledge of this.  It's more than 2 years ago, tied to ruby (their language of preference), and animated graphics (the sort of eye-candy they alluded to).

To quote:  "The entire process, from extraction to visualization was created in about half a day, so there is obviously more work that could be done."  That includes installing MySql and R; my interrogators didn't do MySql, but some other R compatible database, and didn't seem to know anything about R, although I had mentioned this when we chatted by phone days previously.  A half day.  Repeat, retch, wish one had voted for McCain.

Third, there continues to be, what I'll call, The Brazile Problem:  Democrats not knowing, or worse not speaking, the truth when the Lunatic Right spews self-serving shit.  Only the truth will make us free.

28 July 2011

When Darwinism Fails

The Tea Baggers are just social Darwinists on LSD.  But rather then viewing the world as it was in the 1960s, they view it as it was in 1790, or thereabouts.  Needless to say, the USofA today bears little resemblance to what it was 300 years ago.  Tea Baggers assert that all would be well if only government and society were returned to those halcyon times.

They're lunatics, of course.  The overwhelming driver of American exceptionalism in the 19th century was access (only the natives needed be killed off) to a natural resource endowment never before available.  There isn't now, either, especially in the USofA.  We've squandered them.  It is a saying among midwest farmers:  the soil's only purpose is to hold up the plants, (petro)chemical fertilizers provide what the soil once did.  We're about out of petroleum.  Natural gas, it appears, can be extracted if we don't mind squandering huge amounts of water and fouling what's left.  The same is true of shale oil (mostly in Canada).

The number which matters is resources per capita.  I don't have a hard number as I write.  There likely isn't one, since each resource need be weighted in an index.  Suffice to say: population in 1790 - 4 million, population in 2010 - 308 million.  There's a well known term in demography:  hockey stick.  This refers to what happens to a population once predation fades and before it returns.  Population grows hyper-linearly until food and water run out.  Scientists have done controlled studies of (non-human) animals to prove this, as you may not know.  The desertification of the South, most severely in the Southwest, continues apace.  An electrified fence on the Mason-Dixon line is in order.  Those wastrels should all expire, not with a bang but a whimper.

I recently saw a program on Easter Island (one of the History Channels, I suspect), or you can read the Wikipedia article.  Isolated, pre-industrial (i.e., migrationally difficult) islands are as close as we'll get (well, without Nazis anyway) to controlled experiments with humans.  And, of course, the society chewed through the resources without regard for sustainability until collapse.  I've seen no evidence that the Tea Baggers are any smarter.  Similar conclusions have been made about South American Pre-Columbian societies.

Here's the problem:  Darwinism only works if the stupid expire before they reproduce.  If the manifestation of stupidity (which includes debilitating health problems) doesn't happen until after reproducing, then Darwinism fails.  Think about that for a minute.  Darwinism requires that the "survival of the fittest" happen while it still matters.  Modern societies have removed, by and large, that stricture.  We've vaccinated and drugged and surgeried away all those childhood and young adult maladies.  The Pharma folks continue to develop more of same for ever more arcane fatal and debilitating conditions. 

Now, in order to return to what they consider balance, the Tea Baggers seek to make permanent the gains (well, thievery) of the 1%-ers in the times since Reagan.  Only the rich get health care, for instance.  Just like the inbred, and vitally stupid, hereditary nobles of Europe in the Dark Ages.  We'll spend gobs of money keeping 1%-ers alive for a few months longer, all the while protecting their spawn so that they can get similar.  Such a world to look forward to.

27 July 2011

The Myth of Compound Interest

Open up any introductory economics text, Samuelson, for instance, and there'll be at least a whole chapter on interest rates and compounding of same as the salvation of mankind.  The charging of interest isn't, and wasn't, universally accepted.  Islam, famously, sort of prohibits it.  What isn't as well known, due I suspect to outright bigotry is, Judiasm held the same belief

Thanks to Shylock, the dark ages, and discrimination, Jews became synonomous with usury.  But that's another episode.  This one discusses where the notion comes from, and whether it makes sense in the real world.

Economists, famously, define interest as "the time value of money", which just means that *it's obvious* that a dollar next year is worth less than a dollar today.  You can spend the dollar today, today; but not the dollar next year.  So, how much value is "the time value of money"?  Nobody knows.  Is it 1%, 10%, or 30%????  Nobody can say.  The reason is:  it's a different number for each person.  Intuitively, the more money you have, the less need you have for money today, or next year, so, based on need, the wealthier you are, the lower your "time value of money".  Of course, rich folk are mostly the most demanding of interest income.  They're lazy bastards, of course, wishing to have an income without providing any useful output to the society.  That is the basic idea behind Islamic and Judaic bans. 

But, there is a concrete application.  This is, as economists call it, *real investment*.  Economists (Tea Bagger fools excepted) recognize that economies are based on physical production, not financial manipulation.  The issue has been discussed somewhat more since the start of The Great Recession:  the number I recall is that leading up to The Great Recession, 30% of corporate profit was the result of money manipulation (finance, as it's adherents prefer to call it). 

The problem with finance as a source of profit is that finance is a zero-sum game.  Put another way, profit to finance comes from the flow of money from savers to borrowers.  There is no other source.  It is the skim off the top.  Profit to finance means fewer dollars to borrowers, and fewer returned to savers.

So, how do economists justify compound interest?  If one starts with a premise of physical production, then a return on physical investment can be calculated without recourse to "the time value of money".  The return is purely the result of greater production due to the new physical plant/machinery/etc.  Might you see where this is going?  Here, take my hand.

During the subprime housing frenzy, large money flows went into American houses.  They got larger, on larger plots of land.  They cost more to build.  The builders made out like bandits.  Those money flows didn't go into the production of any salable good or service.  Did you know that the USofA is one of the very few countries which subsidizes housing mortgages through the tax code?  Or that most home mortgage holders (households) *don't* get that gratuity because they don't itemize?  "The Tax Policy Center crunched the numbers and found that a complete elimination of the mortgage interest deduction would raise taxes on only 21.5% of middle-income workers, with an average increase of just $215 a year. The bulk of the increase would fall on the top 10% of wage earners. It's about as progressive as it gets."  Cited here.

Krugman quotes himself:  the American economy devolved into selling houses with Chinese money.  There isn't any real return on housing.  The only way to pay the interest on one's mortgage:  buy less other stuff or hope that one's real wages rise over time.  The key here is "real wages".  Real wages only rise when the economy gains productivity and those gains trickle down to wage earners.  Since Reagan, we have had lots of the former but none of the latter.  Thus the subprime juggling.

On the other hand, if Joe's Machine Shop spends $10,000 on a new milling machine, Joe can, if he wants, figure out exactly how much better off his production is.  Now, that calculation gets muddied by various tax code factors.  If the increase in productivity nets Joe more than the vig by the bank, then he might buy the milling machine.  But the decision has nothing to do with Joe's notion of "the time value of money", only whether he sees a net cash flow from the machine.  The amount of vig he owes the bank makes a difference, but this isn't his determination of "the time value of money", only his banker's.

Why should compound interest exist in the real world?  From an accounting point of view, anything can be done.  The rules of accounting are wholly made up by humans.  Humans decided what the rules are (frequently flouted, at that).  The real return on physical investment is a function purely of the production process improvement.  Compounding?  The assumption is that there are an infinite number of real physical investments available for all time.  If that sounds a bit like a Ponzi scheme, you're right.

So, what is "the time value of money"?  My recollection from school, was about 2%; the historical long term average of the long term interest rate.  And, contrary to popular belief, long term rates aren't necessarily higher than short term.  This paper discusses.  It's a read-only, so I couldn't get a juicy quote.

Which brings us full circle:  why is there compound interest?  In large part, it is a fiction of the banks.  The only real interest rate is the return on physical investment, which is devilishly difficult to calculate.  There certainly isn't a universal value, and that's the whole point.  The artificial rates created by banks and governments are, by definition, divorced from reality.  The larger problem created by the Right Wingnuts is the conflation of monetary interest rates with real return on investment.  Moreover, interest paid for non-production expenditures (housing, highways, and hand grenades) is money wasted, from an economic point of view.  Dissertations have been written on calculating "imputed interest" for such things as public works.  How much productivity gain is there from a bullet train between Beijing and Shanghai?  Or an interstate highway system in the US?  One might argue that the former does good, while the latter does bad; the argument resting largely on externalities.  The return on financial instruments is equally ambiguous, unless they are explicitly tied to physical investments which increase production; the subprime nonsense makes that quite clear.  Microsoft Word on every company PC isn't necessarily a productive expenditure either; lots of studies have been done, many concluding that fancy word processing actually reduces useful time spent.  The user gets fascinated with eye-candy, ignoring the quality of the content.

With the Fed (and the EU) keeping nominal interest rates near 0, one expects that real investment should soar, shouldn't it?  Put all that cheap money to good use?  Hasn't happened.  Corporates hoard cash, complain about being taxed (lowest in at least 50 years), and do nothing.  Well, wait for massive deflation, of course.  Read about the Phat Man in Famine.

23 July 2011

Lie to Me

No, not the TV show, although the reviews I've seen are positive.  No, the subject is The Big Lie.  For those who don't remember, The Big Lie is a metaphor or description of repeating a statement, known to be not even remotely true, loudly and often.  The point being to convince those who would oppose the course of action explicit or implicit in The Big Lie, to nevertheless act as proponents of that course.  While the epithet is commonly attributed, originally, to Goebbels, it originated with Hitler ( here... ).  The technique depends on group think, for which "The Emperor's New Clothes" is my favourite cite.  Read the wiki article; the origin is not likely what you remember from school.

The Big Lie du jour is that Social Security, Medicare and Medicaid (you do know that most of Medicaid is for middle class old white folks, not brown poor children?  I thought not) are being decimated because "people are living longer".  Very early on in this endeavor, I mentioned this Big Lie in the piece "Modern Lovers".  That was April, 2009.  The liars are still at it.

I don't watch Maher's show as much as I once did; he doesn't have the balls to deal with the right wing lunatics he insists on having on.  I definitely don't watch when he has two or more lunatics.  But I did watch last night.  And the Big Lie went off undemolished.  If it were just Maher (and I've posted the issue on his website) who played dumb, well, it's his show.  But Donna Brazile was on the panel, and she did, too.  That's a Big Problem, since she is head of the DNC, and it's her job to call Bullshit on the Big Lies (yes, there are, boy howdy, more than one).

I mentioned in an earlier post that I had been solicited to apply for a Data Analyst position at the DNC.  One of the required responses was Motivation (300 words or less).  I let it be known that data analysis doesn't seem to be going all that well, in that Democrats generally (and by implication the DNC who are the "thought leaders" for the Party) have been letting these Big Lies skate by all the time.  When the Emperor has no clothes, you have to say so, every time.  They aren't doing that, and I stated that my motivation was to get the data out there.  All the data support the Democratic position; unless you're a lazy ass 1%-er, of course.

Here's how I put it in another post:
Well, demographers know better. The increase in life expectancy *at birth* rose about two decades over the 20th century. It rose by about *2 years* at age 65 over the same period. Read that again. What it means is that more folks were around to fund social security (designed from the start as a current account program), far in excess of their extra few months at the back end.

I will give credit to Obambi, when Boehner bounced, he was explicit that the deficit problem shouldn't be fixed on the backs of those who least caused the mess and are the least able to pay.  Well, he did say the latter, but I don't remember him making the former.  I only heard excerpts, so it's possible he made the whole case.

That last quote says that Social Security (and the rest) are current account funded programs.  There is another Big Lie, which I'll deal with at some point as it's very long and somewhat technical, that retirees "paid into" Social Security for all those years, and so shouldn't be denied.  Well, it was never designed as a collective 401(K), which would be stupid and not something you would want, as anyone who wanted to retire on one found out the last few years.

07 July 2011

I Told You So

One of the pleasures of writing this stuff, is to find the "mainstream" press confirm (much later, of course) my thesis.  Well, campers, it's happened again. Here's the piece.  The original source is "US News and World Report", historically a Right Wingnut organ.  I guess they've gotten hold of a token sane person.

And here a few quotes:

It's still possible that the Fed's critics might be right, with all that extra money--which is mostly sitting on banks' balance sheets--working its way into the real economy and producing problematic levels of inflation. But for that to happen, wages need to start going up as well, since a spike in wages is usually what triggers prolonged inflation at the consumer level. Anybody gotten a big raise lately? Hardly.

The Fed used quantitative easing to boost demand for stocks and other risky assets, by buying up many safer investments, such as treasury securities and other types of bonds. That left investors with little choice but to put their money into the stock market, and the Fed's program did in fact coincide with a huge bull market in stocks.

In sum:  all that TARP and stimulus and QE money went straight to banks and corporations, who've decided to keep it, rather than expand; supply side once again revealed to be a Right Wingnut scam, no jobs of course.  These are times when I wish I were wrong.  Alas, no.

04 July 2011

I Wave the Flag [UPDATE]

What's the appropriate theme for Independence Day, 2011???  How about, equity?

Equity has never been much promoted as a reason to be American.  In fact, through convenient fiction (e.g. Horatio Alger, et al) the Right Wingnuts have been able to convince the stupid class that America is the fount of generational progress; that anyone can become completely better (in terms of the size of your purse) than everyone else.  Not that this is true, of course.  See this study.  There are lots more.

I watched some TV yesterday, and saw an interview with Eli Pariser (C-SPAN2), who's written "The Filter Bubble", and bits of episodes of "The Revolution" (one of the History channels).  Both were about, although I suspect neither of the creators knew it, equity.

Pariser's book, and the substance of his interview, was that the controllers of the InterTubes seek to sell ads.  Period.  (I wasn't sure that he quite got the point of his thesis.  He may be more clear in his book.)  Now, that's been my assertion for quite some time.  Google isn't in the search business, or the cloud apps business, or anything else.  They are a mammoth ad agency, pure and simple.  Their profits come from providing a "superior" ad to those willing to buy ads.  They used ads as a way to monetize search services, and thus support providing search results.  I'll concede that Google might have been motivated as a search company very, very early on before they figured out that they had to find a way to fund Google without direct user payment.  But quite soon, the true business of the business became apparent.

Today's Google, and Facebook, and Yahoo!, etc. are ad agencies.  They use various MacGuffins to entice entry, but the point is to get users to buy somebody else's stuff.  (I'll add, out of necessity, that AdBlock Plus is effective in removing ads, and has the side benefit of speeding InterTube use by not downloading all that ad crap.  You should get it.)  Google, the powers that be at least, have been aware for sometime that the cash nipple is fragile.  To my knowledge, they've never said so explicitly.  But their behaviour has been crystal clear.  Google gets taken down, not by a better search engine, but by a better ad delivery system.  Now, that could be search, but it would be a waste of effort to make such a direct assault.  Google stumbled (I'm convinced it was not on purpose) on its money engine.

Any activity which depends on ads is fragile.  The activity isn't selling its wares for fee.  It's selling ads to producers.  *Any* vehicle which sells more of the producers' stuff destroys the titular business.  Google should know this by now.  The enemy is everywhere, and nowhere.  By the time Google finds out who the enemy is, it will be too late.  Just as it was for newspapers.

If search and cloud apps and such were the product being purveyed, they'd do so in a way which maximizes coverage; much like a newspaper.  The shotgun approach, so to speak.  In an email I sent to Mr. Pariser, upbraiding him for being a naive' twinky (I didn't use those words, but that's what I meant), I allowed as how Google is implementing "narrowcasting", and that I'd run across the term decades ago.  I wrote that extemporaneously, but, after typing, took a moment with WikiPedia to see if I were right.  I was.

Google, et al, are in the business of divide and conquer.  So far, at least, this has been for commercial purposes.  But fascism isn't necessarily the result of expressed political motivation, as did Mussolini (he invented the word).  It can creep in on little cat's paws (look it up).  There have been reports of the Feds using private snooping when it was not convenient to get authorization.  For Google, they seek to divide the users into ever more homogeneous clusters, down to the individual, in order to offer advertisers a more potent target.  If you want to sell assault rifles, people who search for Greenpeace aren't likely buyers.  People who search for Tea Party, but not Tea Bagger, likely are.

Having divided, Google conquers through more "effective" ads.  We lose privacy and autonomy in the result.  The younger generation doesn't care.  Both corporate and political fascists have found the ultimate wet dream.  But it's real, not a dream.  BushII brayed about No Child Left Behind, but his agenda *depends* upon people having no higher order thinking.  The dumber they are, the better.  And Americans are getting dumber.

Which brings me to the History channels.  Years ago, the shows were mostly about history.  Today, they're mostly about stupid Americans doing 18th century tasks ("Swamp People" is my favorite title), mostly in the South.  It's quite reactionary.  Roger Ailes defeats Durant (not Kevin).  There is a series about history, entitled "The Revolution".  There being nothing else more interesting, I caught a bit of two episodes.  I learned something (or re-learned, I don't remember).  Turns out that the ignition point of the revolt, The Stamp Acts, weren't exactly what common wisdom says.  While the colonists brayed about taxation and representation, the Brits had a different view.  It turns out that the Brits had spent 60 million pounds defending us from the French and their Indian allies (I learned it as The French and Indian War, but it's also called The Seven Years War) in the preceding years.  The Brits thought, rightly so, that the colonists should pay up.  We remained free of the French thanks to the Brits after all.

If that sounds kind of familiar, think Iraq and Al Qaeda.  Or Afghanistan and Taliban.  Or Cuba and Russia.  And so forth.  The Brits merely wanted equity.  Their men and munitions had protected us, so we should do our part.  Equity.  Those self absorbed colonists didn't see it that way.  This was all ours, for the taking.  Remember that until the end of the 19th century, the USofA was still stealing land from Indians and Mexicans, so the notion of going somewhere else if you didn't like the way things were, was still possible.  What made the USofA great wasn't some better notion of politics or American spirit or any other jinogistic pablum.  What made America great was access to the richest bounty of natural resources the world had ever seen.  Most of it is gone now, of course, squandered.  Like it or not, we're becoming more like Europe, resource constrained.  We either live like they do, or perish.  But I digress.

Google seeks to remove equity.  Google seeks to take for itself all data which permits it to sell more ads for more money.  Google's problem, of course, is that search is only the last big thing to attract masses of humans.  Newspapers and magazines preceded, and were defeated by Google and Craig's List.  The point is, Google/newspapers/magazines aren't about selling a product to the titular buyers (the users), but about selling a service to advertisers.  That there is a "Chinese Wall" between editorial and ads in print media is an artifact of old fashioned morals.  There is no law, and all of MurdochWorld makes this clear, mandating that corporate ad interests may not pollute the editorial product.

Will Google and the rest explicitly get into bed with Murdoch and the Tea Baggers?  That is, will Google and the rest admit that what they're about is making as much money, but not about making society a better place?  That's the $64 question.  Here's the conundrum:  in order for Google to make lots o money, it needs to sell lots o ads.  Will smart people use AdBlock, and similar, to avoid ads?  Likely.  Will Dumbshit Rednecks?  Not so likely.

So, then, who's the target of Google's ads?  Dumbshit Rednecks, of course.  If it were only a case of Google putting 10 times as many assault rifle ads as those for pinot noir, I couldn't care less; it wouldn't make a dime's worth of difference to the country.  But the problem is:  Google *shapes the world view* presented to its users, to conform to the prejudices of those users.  To some extent, I get lefty news (from where anymore?).  The Dumbshit Rednecks get Dumbshit News.  This is not surprising.  The mechanism of advertising is *to reinforce prejudice*; it isn't to convince people to do a 180, or even consider that their worldview might be a tad askew.  It's a very old book, but folks should (re)read Vance Packard's "The Hidden Persuaders", an outing of the ad industry.

Google has shown no interest, and has none, in getting into bed with MoveOn or other left leaning organization; not enough bodies.  The problem is, there are more right wing numbnuts out there than left wing elitists.  To the extent that numbnuts can earn more than the highly educated, is the extent to which the USofA is up Shit's Creek without a paddle.  Inverting reward leads to an inversion of society.  The mob, sort of, wins.  The fascists who end up really running the place will suck in evermore of national income; the 1%-ers absorb evermore of national income.  When the numbnuts finally begin to notice that their lives haven't improved under The Great Leader, they'll demand that the bad people who did this to them be punished.  At that point, we'll see a Mao-ist destruction of the intelligentia.  How will Murdoch and his friends explain why it is that they're following in the footsteps of Mao, that awful Communist?  They won't have to.  Thanks to No Child Left Behind, the numbnuts won't even know who Mao was or what he did.