Lunch at the Labs

Various web links I found to be of interest recently.

• Jim Simons, the Numbers King

  Algorithms made him a Wall Street billionaire. His new research center helps scientists mine data for the common good.

  One thing that Simons did not predict is that Mercer would become one of the most divisive figures in American politics. During the 2016 election cycle, Mercer, a far-right conservative, spent more than twenty million dollars, eventually throwing his weight behind the candidacy of Donald Trump. He is likely the single biggest donor to the alt-right, supplying millions of dollars to Breitbart, the incendiary Web site run by Steve Bannon. Simons described Mercer's current politics as a transformation that has surprised him. "I've talked to him a few times, but he is just very different from me, and I can't change him," Simons said. He added, "I like him."

  Comment: Since the Simons Foundation sponsors research for brains disorders like autism and Alzheimer's, I wish they would try to figure out what are the differences in the brains of Jim Simons and Robert Mercer that can explain their friendship, productive working relationship, and very different political leanings and how they choose to spend their vast wealth.

• The Numbers Game

  Russ Roberts' animated series discussing the challenges of accurately measuring and understanding the economy and economic policy.

  We often hear that the middle class is stagnating and making no economic progress over the last four decades. Those making this claim use statistics to back up this pessimistic conclusion. Yet it is easy to find other statistics that lead to a different conclusion and that show that the middle class's standard of living has in fact been growing. This series explores how different assumptions can easily change our perception of how the economy treats the middle class. The bottom line is that data questions like these are often more complicated than they appear to be.

• Trump won because of racial resentment

  Another study produces the same findings we've seen over and over again.

  Even when controlling for partisanship, ideology, region and a host of other factors, white millennials fit Michael Tesler's analysis, explored here. As he put it, economic anxiety isn't driving racial resentment; rather, racial resentment is driving economic anxiety. We found, as he has in a larger population, that racial resentment is the biggest predictor of white vulnerability among white millennials. Economic variables like education, income and employment made a negligible difference.
  ...
  To this end, the research also shows it's possible to reach out to Trump voters - even those who are racist today - in an empathetic way without condoning their prejudice. The evidence suggests, in fact, that the best way to weaken people's racial or other biases is through frank, empathetic dialogue. (Much more on that in my in-depth piece on the research) Given that, the strongest approach to really combating racism and racial resentment may be empathy.

  Research says there are ways to reduce racial bias. Calling people racist isn't one of them.

• Is 'White Resentment' a Scapegoat for Democrats' Decline?

  Let's set aside the fact that many of the white voters who proved most decisive for Trump's election actually voted for Obama in 2008 and 2012. It turns out that Trump did not mobilize or energize whites towards the ballot box either: their participation rate was roughly equivalent to 2012 (and lower than in 2008). In fact, whites actually made up a smaller share of the electorate than they did in previous cycles, while Hispanics, Asians and racial "others" comprised larger shares than they had in 2012 or 2008.

  This wouldn't, in itself, be devastating for the "white supremacy" hypothesis had Trump won some kind of unprecedented share of the whites who did turn out to vote. He did not. Trump didn't even exceed Romney's 2012 numbers with whites overall. However, he did outperform his predecessor with blacks and Hispanics.

  These are very inconvenient truths: If Trump was the white supremacy candidate, why was such a pivotal component of his base drawn from those who previously voted for Obama (often twice)? Why didn't far greater numbers of whites turn out for Trump than Romney? Why did fewer whites vote for the Republican in this cycle than they did in the last? Conversely, why did Trump win a larger share of blacks than any Republican since 2004? Why did he outperform Romney among Asians and Hispanics as well?

• The real reason American health care is so expensive

  Hint: single-payer won't automatically fix it.

  Americans don't consume more health care than the Germans or the Japanese. We actually go to the doctor less often.

  The real reason American health care is so expensive compared to other countries is that the prices are higher. We pay more for everything from angioplasties to C-sections, from hip replacements to opioids.

  For example, Emergency rooms are monopolies. Patients pay the price.

  We found that the price of these fees rose 89 percent between 2009 and 2015 -- rising twice as fast as the price of outpatient health care, and four times as fast as overall health care spending.

  Overall spending on emergency room fees rose by more than $3 billion between 2009 and 2015, despite the fact the HCCI database shows a slight (2 percent) decline in the number of emergency room fees billed in the same time period.

  For another example see: Why American doctors keep doing expensive procedures that don’t work

  The proportion of medical procedures unsupported by evidence may be nearly half.

  The stunning news about stents came in a landmark study published in November, in The Lancet. It found that patients who got stents to treat nonemergency chest pain improved no more in their treadmill stress tests (which measure how long exercise can be tolerated) than did patients who received a “sham” procedure that mimicked the real operation but actually involved no insertion of a stent.

  In 2002, The New England Journal of Medicine published a study demonstrating that a common knee operation, performed on millions of Americans who have osteoarthritis — an operation in which the surgeon removes damaged cartilage or bone (“arthroscopic debridement”) and then washes out any debris (“arthroscopic lavage”) — worked no better at relieving pain or improving function than a sham procedure. Those operations can go for $5,000 a shot.

• How the baby boomers - not millennials - screwed America

  The boomers inherited a rich, dynamic country and have gradually bankrupted it.

  That's the argument Bruce Gibney makes in his book A Generation of Sociopaths: How the Baby Boomers Betrayed America. The boomers, according to Gibney, have committed generational plunder," pillaging the nation's economy, repeatedly cutting their own taxes, financing two wars with deficits, ignoring climate change, presiding over the death of America's manufacturing core, and leaving future generations to clean up the mess they created.

• The World Might Be Better Off Without College for Everyone

  The labor market doesn't pay you for the useless subjects you master; it pays you for the preexisting traits you signal by mastering them. This is not a fringe idea. Michael Spence, Kenneth Arrow, and Joseph Stiglitz-all Nobel laureates in economics-made seminal contributions to the theory of educational signaling. Every college student who does the least work required to get good grades silently endorses the theory. But signaling plays almost no role in public discourse or policy making. As a society, we continue to push ever larger numbers of students into ever higher levels of education. The main effect is not better jobs or greater skill levels, but a credentialist arms race.

• How Email Open Tracking Quietly Took Over the Web

  Tracking clients embed a line of code in the body of an email-usually in a 1x1 pixel image, so tiny it's invisible, but also in elements like hyperlinks and custom fonts. When a recipient opens the email, the tracking client recognizes that pixel has been downloaded, as well as where and on what device. Newsletter services, marketers, and advertisers have used the technique for years, to collect data about their open rates; major tech companies like Facebook and Twitter followed suit in their ongoing quest to profile and predict our behavior online.

  But lately, a surprising-and growing-number of tracked emails are being sent not from corporations, but acquaintances. "We have been in touch with users that were tracked by their spouses, business partners, competitors," says Florian Seroussi, the founder of OMC. "It's the wild, wild west out there."

  Comment: Stop sending (and reading) unnecessary HTML email.

• Superhuman AI for heads-up no-limit poker: Libratus beats top professionals

  We present Libratus, an AI that, in a 120,000-hand competition, defeated four top human specialist professionals in heads-up no-limit Texas hold'em, the leading benchmark and long-standing challenge problem in imperfect-information game solving. Our game-theoretic approach features application-independent techniques: an algorithm for computing a blueprint for the overall strategy, an algorithm that fleshes out the details of the strategy for subgames that are reached during play, and a self-improver algorithm that fixes potential weaknesses that opponents have identified in the blueprint strategy.

• DeepMind's AI became a superhuman chess player in a few hours

  In the paper, DeepMind describes how a descendant of the AI program that first conquered the board game Go has taught itself to play a number of other games at a superhuman level. After eight hours of self-play, the program bested the AI that first beat the human world Go champion; and after four hours of training, it beat the current world champion chess-playing program, Stockfish. Then for a victory lap, it trained for just two hours and polished off one of the world's best shogi-playing programs named Elmo (shogi being a Japanese version of chess that's played on a bigger board).

  One of the key advances here is that the new AI program, named AlphaZero, wasn't specifically designed to play any of these games. In each case, it was given some basic rules (like how knights move in chess, and so on) but was programmed with no other strategies or tactics. It simply got better by playing itself over and over again at an accelerated pace - a method of training AI known as "reinforcement learning."

• Thoughts on "Net Neutrality"

  by Maria Schneider, composer/bandleader

  What's worse, Google is really just the pot calling the kettle black. Google is desperate to have Verizon declared as a "common carrier" so that Verizon is legally required to provide this open set of highways to all, at NO COST to Google. Google does so by scaring us ordinary folks, saying Verizon could somehow set up fast lanes, or other prioritizations, if they aren't called "common carriers." But the irony of this - and the hidden truth - is that Google does just that by building what are called "content delivery networks" or CDNs, that enable them to deliver content, at lightning speeds in collaboration with the ISPs. Talk about "fast lanes" - that is like Google having its own private HOV lanes on the open highway system for its own Ferraris. How ironic it is that by 2011, Google was carrying 6.4% of ALL worldwide internet traffic on and through its own CDNs. That's just astounding. Google is actually acting more like an ISP than the ISPs. Google is the behemoth data lord that owns us all. But somehow, we're willing to vilify the cable company instead, and give Google a free pass. It's like punishing the shipbuilders who build the pirate ships, while idolizing the pirates themselves. It's ludicrous.
  ...
  Let's not forget what this is all about. Google isn't here for the altruistic ideal of helping ordinary people. Google's number one goal with "net neutrality" is to guarantee robust "pipes" are in place, so that we, the billions of YouTube and Google search users, can send all of our "user data" back to Google. It's fair to say that they need the ISP pipes maybe more than we do. Companies like Google, Amazon, and Facebook, are only rich and powerful because we, collectively and stupidly, have agreed to send them (via the ISPs) all of our valuable data (our constant GPS locations, our buying and listening habits, our everyday needs and whims, our opinions, our political leanings, our personal information, medical information, our search history) - all of it and more, for free. Each of us has become a data-transmitting drone for Google and the like. And all of that data travels through Verizon's (or the ISPs') pipes.

Some links related to the effectiveness of tax cuts and income inequality.

• Taxes and growth - a cautionary graph

  The basic point: There have been huge changes in taxes throughout US history with virtually no observable shift in growth rates.

  Details at, Effects of Income Tax Changes on Economic Growth.

• Not Much Evidence That a Corporate Tax Cut Boosts Wages

  First, corporations have reported record profits. The lack of investment is not due to the lack of funds.
  ...
  Second, businesses have been saying to whoever will listen that it does not plan to invest a windfall from lower taxes.
  ...
  There may be other reasons that some may support the corporate tax cuts, but spurring investment and wage growth are not compelling or convincing arguments. The kind of investment that may be more necessary, and can boost wages and productivity is public investment, but the tax reform proposals will leave little room for an infrastructure initiative.

• Watch CEOs admit they won't actually invest more if tax reform passes

  John Bussey, an associate editor with the Journal, asks the CEOs in the room, "If the tax reform bill goes through, do you plan to increase investment - your companies' investment - capital investment," and requests a show of hands. Only a few hands go up, leaving Cohn to ask sheepishly, "Why aren't the other hands up?"

  Out of 42 top economists, only 1 believes the GOP tax bills would help the economy The first question was straightforward. Would they agree that if the US passed a tax bill "similar to those currently moving through the House and Senate," GDP would be "substantially higher a decade from now"? Of the 42 economists polled, only one thought the Republican bill would boost the economy. The plurality said it wouldn't, and the remainder were uncertain or didn't answer.

• The theory behind Trump's tax cuts is exactly what gave us the failed Bush economy

  An influx of foreign hot money isn't what we need.

  The theory was that by making it more lucrative to invest in American businesses, they would boost business investment in the United States -- making our country home to more factories and offices, driving job creation, and pushing up wages.

  What happened instead was a weak, highly inegalitarian period of economic growth that was associated with the drift of America's manufacturing base overseas and an unsustainable debt-financed boom in house building.

• It's not just the 1%. The upper middle class is oppressing everyone else, too

  The top 20% have set things up to guarantee virtually all of those spoils go to their descendants. Where does that leave the rest of us?

  The author, economics professor and Brookings Institution fellow Richard Reeves, notes that while the US has always had a class system, the upper middle class -- which he defines as those earning $120,000 a year or more -- is not only widening the gap between itself and everyone else, but also hoarding opportunities in a way that makes it difficult for any outsiders to climb up to it. (The 1% is getting richer even more quickly, of course, but there aren't enough of them to hoard opportunities on a mass scale.)
  ...
  Rampant inequality is not the fault of a class of people doing exactly what anyone would do in their position, but a political and economic system that incentivizes and enables them to do so. (Don't hate the player, hate the game.) It follows that the solution is not individual and moralistic, but collective and political.

• Myths of the 1 Percent: What Puts People at the Top

  Dispelling misconceptions about what's driving income inequality in the U.S.

  Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.

  The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.

  Without changes in these largely domestic services industries -- finance, health care, the law -- the United States would look like Canada or Germany in terms of its top income shares.