TPP, TPA, TAA, Angry Democrats, and “The Week that Obama Won”

I like to say that I am economically liberal. For me that means: globalization and trade liberalization are good. If we can involve more people in global trade that will both help developed nations and developing nations. More people will be lifted out of poverty as they get encircled by the ever growing ripples of influence spread out by global trade flows. Globalization prevents conflict, because no one wants to fight someone who keeps giving them money and stuff. Both corporations and workers benefit because the increased availability of jobs in lower income nations allows impoverished people to gain a leg up and begin to enter the middle class while the blue-collar workers in developed Westernized nations can focus on high skilled labor and on intellectual tasks like inventing the products. Overall people benefit. And, if a country starts failing, there are organizations like the IMF and the World Bank that are there to catch them before they fall. Free trade is good. Tariffs and protective taxes shut out countries from the international competition that fosters growth.

The Trans-Pacific Partnership (TPP), is the largest potential trade deal since the formation of the World Trade Organization (WTO), involving twelve Pacific Rim nations that account for 40% of the world’s economy. It is being negotiated on the precedent of NAFTA (North American Free Trade Agreement), the Clinton Administration’s signature trade legislation. The TPP opens Asian markets to US imports and exports, maintains US influence in Asia, hedging against the rise of China, and has the potential to jump-start stalled negotiations in Doha that the WTO hosted in 2001 to break down trade barriers. Great! I love it! Let’s go!

Wait, what. Negotiations have been going on for 12 years. How hard can it be to write a simple trade deal? If I had my way, the TPP would just say- I’ll give you stuff if you give me stuff. But I guess its not that simple. It turns out that TPP is huge. Its like an omnibus bill in Congress- anyone can add pork-barrel amendments or poison pills. Congressmen who don’t want the FTA to pass or don’t have another way to get appropriations for their state’s newest death-ray laser cannon mounted on a statue of a cat attach riders onto the TPP that everyone is just going to have to swallow if we’re going to liberalize trade. Ok fine. So can I at least see what kind of toxic discharge has been dumped onto TPP? I want to know what damage is going to be done. NO?Apparently no one can even READ what it says! People speculate that its probably pretty bad for us- the liberal Center for Economic Policy Research estimated in 2014 that 90 percent of Americans would see a decrease in real wages as a result of TPP. Where’s my money going? Oh wait, I can’t know. Only corporations with stakes in the text as well as some labor unions have seen the text, not the public, nor, most importantly, Congress. And according to an op-ed from Democratic Reps. George Miller (Calif.), Rosa DeLauro (Conn.) and Louise Slaughter (N.Y.), “this agreement would force Americans to compete against workers from nations such as Vietnam, where the minimum wage is $2.75 a day. It threatens to roll back financial regulation, environmental standards and U.S. laws that protect the safety of drugs we take, food we eat and toys we give our children. It would create binding policies on countless subjects, so that Congress and state legislatures would be thwarted from mitigating the pact’s damage.” Ouch.That’s rough.

So now what? The result has been that even liberal Democrats have run like flies from TPP, siding with labor unions who complain loudly that they’re losing money every time some poor sap in Southeast Asia gets a job that no proud American would want to do. House Democrats sabotaged their own bill, slapping President Obama in the face and voting down the TAA (Trade Adjustment Assistance) portion of the TPP- a program that would provide worker retraining for laborers who lost their jobs in the US as a result of the TPP. It seemed that Democrats, already in the minority in Congress, would get pulled to the left much like the Tea Party pulled the GOP way right in 2010 and 2012. A sad end indeed for the hopes of a lame duck president whose greatest achievement in his second term seemed to be the 2015 Correspondents’ Dinner. But our friend in the West Wing was not to be dismayed. President Obama remembered that there are Republicans in Congress. Sure, they have spent the past seven years loudly disavowing and sabotaging Obama, but apparently Democrats hate him even more now. Obama and John Boehner grabbed each other’s hands and pranced into the sunset. The GOP whipped enough votes on the other side of the aisle to smack down the Democratic insurrection before Nancy Pelosi could get a new gavel printed, and in fast succession, the Senate and then the House gave Obama the “fast track” TPA (Trade Promotion Authority). This legislation allows Congress to vote on trade legislation for TPP only as presented- up or down without any pork-barrels or riders. Fantastic. Oh wait. Not only that, but TPA requires disclosure of any agreement 60 days before its signed and way before Congress gets to vote on it. What a win all around.

Interestingly enough, although this alone would have made the past week pretty good for Obama, dry legislation agreements had no place in the news cycle this week. Liberal Americans were hit with a tsunami of good news- Republicans joining in one voice against the Confederate flag flying over the South Carolina State Legislature, the King v. Burwell decision that cemented Obamacare, the Obergefell v. Hodges and other related cases that legalized same-sex marriage in all 50 states, not to mention Obama’s newfound confidence, with his speech on gun control, eulogy for Rev. Clementa Pinckney, and singing Amazing Grace for 5,500 mourners. With all this hullaballoo- as deserving of such as it may be- the momentous heave forward in TPP negotiations has been largely forgotten. I ask that it not be. This is a big win for liberals, just like Obergefell. Let’s not forget that this week has also had massive ramifications for the liberalization of the entire world, in places that are in dire need of it.

Letter To The Editor of NYT: Wife Bonus

Article: http://mobile.nytimes.com/2015/05/17/opinion/sunday/poor-little-rich-women.html?referrer=

To the editor,

No neighborhood in Manhattan is as highly self-regarded than the Upper East Side. The “UES”, as locals call it, has long been the place for money to congregate in a restricted social circle of wealth. Everything seems as pristine as the new 6-karat Harry Winston’s that an Upper East Side mother bought with her … gulp … wife bonus. A form of servitude, in my opinion, that makes the Upper East Side seem as dated as the cobblestone streets of the hip “Meatpacking.” As a feminist, romantic, and UES native, a wife bonus seems to me like the exact thing that is dating our society 60 years backwards. A man is employing his wife not only to make sure their children are enrolled in elite schools but to ensure that his homes, planes, and boats are looked after. In 2015, a wife should not be an employee, approval rating, or race horse, who, based on her performance, receives a monetary reward reflective of her husband’s happiness. One yearly bonus is a poor excuse for a woman’s economic independence. A Tiffany lock necklace is a glittering disguise for a choke-hold, a locked-in marriage that, if put on the neck of Gloria Steinem, she would rip it off and catapult it back into the past where it belongs.

South Sudan cries for help, but who hears them?

We are tired of news of conflict. Hotspots have flared around the world, from the Middle East, to China, to the Ukraine and South America. And yet there are more. The African continent roils in chaos, and coup after coup installs dictators on top of dictators. Decolonization has scarred the savannah. Some news has indeed trickled down to the American public, most vividly with the atrocities in Darfur and the terror group Boko Haram’s kidnapping of 200 Nigerian girls in protest of Western education. And yet the worst conflicts are ignored. Sudan’s, Mali’s, Nigeria’s, South Africa’s, the Democratic Republic of the Congo’s, the Central African Republic’s; I have yet to see major news or discussion of. Of the 13 ongoing genocides identified by the Genocide Watch, a human-rights group, seven are in Africa.

The newest nation in the world, South Sudan declared independence only in 2011 following a bloody civil war with Sudan’s Arab north. Born out of chaos, it remains intensely vulnerable. Foreign Policy ranks the country number one on its index of most fragile states. The New York Times reports that 1.5m have fled their homes, nearly half of the population is starving, and although official statistics are impossible to calculate, the dead number in the tens of thousands. South Sudan is in danger of ripping itself apart under the same ethnic tensions that brought about its inception in the first place.

Paradoxically, Africa is the site of most growth. While developed nations grow at rates in the single digits, like the U.S’s 2%, African growth is at an annual rate of 5%. Of the next three billion people to be born on the planet, two billion will be born in Africa. But with that growth comes volatility, some of which is manifested in the nascent South Sudan. download

South Sudan faces a lot of the same problems as the other African nations in the Sahel belt of sub-Saharan Africa. A lack of infrastructure, high temperatures, non arable land, and a dearth of stable government in the wreck of decolonization have combined to exacerbate already existing tensions along ethnic and racial lines. Other countries like Chad and Burkina Faso are also suffering from famine, and Mali is in the middle of a spillover conflict from Libya that has prompted intervention by the French Foreign Legion. Liberia, Guinea, and Sierra Leone have been wracked by the recent Ebola epidemic. And some countries, like Cotê d’Ivoire (the Ivory Coast) are just recovering from devastating civil wars. South Sudan joins the list of listing countries. And developed Western nations would be wrong to ignore yet another country’s plight. In a time when Europe is hit by waves of economic crisis exacerbated by the rise of far-right nationalism as well as heightened threats from the Russian East, and the United States recovers from disastrous missteps in the War on Terror, this is no time to retreat. Everyone has a responsibility to help. USAID, an organization that provides food and resources to crisis spots around the world, has been operating in South Sudan for decades. Its time for the government to help out. The World Bank, International Monetary Fund, and non-government organizations (NGO’s) are there. But nothing has helped, and it would be wrong for the West to stand by. Like it or not, the United States and its allies are the hegemonic power of the world. It is our responsibility to respond to urgent crises because if we do not, we lose two fronts: our own political capital around the world, as well as the lives of our fellow human beings who are in a rough spot and need help. Step up. Raise awareness. And help stop the cycle of violence in an oft-forgot continent that is the cradle of world growth.

SafeWander

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Growing up in a family with three generations, I’ve always been very close to my grandfather. When I was four years old, my grandfather and I were walking in a park in Japan when he suddenly got lost. It was one of the scariest moments I ever experienced, and it was also the first incident that informed us that my grandfather had Alzheimer’s disease.

Over the years, his condition got worse, and his wandering in particular caused numerous accidents and tremendous stress to my family. About two years ago, his wandering out of bed at night became much more frequent, and my aunt, his primary caregiver, struggled to stay awake at night to keep an eye on him and even then often failed to catch him leaving the bed. I became concerned about my aunt’s wellbeing as well as my grandfather’s safety. I searched extensively for but couldn’t find a solution to my family’s problems.

Later, I found out that the struggles faced by my family were just a snapshot of a much larger societal burden. There are 5.2 million Alzheimer’s patients in the U.S., more than 65% of whom wander. Caring for them cost the nation $220 billion in 2013 alone, a number that is expected to multiply five times by the year 2050.

This overwhelming societal challenge, coupled with my concern for my family’s struggles, motivated me to find a solution. But how?

One night, I was looking after my grandfather as I saw him stepping out of the bed. The moment his foot landed on the floor, a lightbulb flashed in my head. I thought: Why don’t I put a pressure sensor on the heel of his foot? Once he steps onto the floor, the sensor would wirelessly send an audible alert to my aunt’s smartphone, waking her up. That way, she could sleep much better at night.

My desire to create a sensor-based system perhaps stemmed from my lifelong passion for sensors. When I was six years old, an elderly family friend fell down in the bathroom and suffered severe injuries. I became concerned about my own grandparents and decided to create a “Smart Bathroom,” a motion sensor system that detects the falls of elderly patients and alerts caregivers wirelessly at their wristwatches. This and other research experience prepared me to create my system.

My seemingly simple idea, however, later proved to be very challenging for me to realize. When I laid out my plan, I found out that I faced three main challenges: creating a sensor, designing a circuit, and coding a Smartphone app that would alert the caregiver.

First, I had to create a sensor that was thin and flexible enough not to affect the comfort of walking. After extensive research and testing of multiple materials, I decided to print a film sensor with pressure-sensitive, conductive ink. Once pressure is applied, the conductivity between the ink particles increases. Therefore, I could design a circuit that would measure force by measuring electrical resistance.

Next, I had to design a wearable, wireless circuit. But wireless signal transmission consumes lots of power and requires heavy, bulky batteries. Fortunately, I was able to find out about the cutting-edge Bluetooth Low Energy technology, which consumes very little power and can be driven by a coin-sized battery.

I also had to code a Smartphone app that would transform the caregiver’s Smartphone into a remote monitor. For this, I had to expand upon my knowledge of Java and XCode, and I also had to learn a lot about how to code for Bluetooth Low Energy devices.

Integrating these components, I was able to create two prototypes: a sensor sock and a re-attachable sensor assembly. I’ve tested the prototypes on my grandfather for over ten months now, and they’ve had a 100% success rate in detecting the known cases of his wandering. Encouraged by these results, I decided to form my own start-up, SensaRx, to commercialize my technology and deliver it to those in need.

Over the summer, I beta tested my device at several residential care facilities and am incorporating the feedback to further improve the technology into a marketable product.

Through the beta test, I learned that the usage of Bluetooth Low Energy in my circuit limited the signal transmission range. Therefore, I am working on another solution that uses WiFi to transmit longer-range signals between the sensor and the caregiver’s Smartphone.

I am also hoping to incorporate cloud software into my system to enable better service and big data analytics. For example, the system can collect data about the time and frequency of a patient’s wandering and examine correlations with the patient’s daily activities and diet.

And that’s just the beginning. With wearable technology, we can pave the way for a healthier life in which self-monitoring will enable early diagnosis and prevention of diseases.

I’ll never forget the time when my device first caught my grandfather’s wandering out of bed at night. At that moment, I was struck by the power of technology to change lives. My research has inspired me to unlock the mysteries of the brain and find treatments for those who are suffering from mental conditions. I may not be able to cure my Grandfather of Alzheimer’s disease, but I hope that I can prevent future generations from combatting this tragic illness.

To learn more about SafeWander and to join the interest list for the product, visit

http://www.safewander.com

Aid to New Nations

The newest nation in the world, South Sudan, was created out of a civil war that has engulfed the area of Sudan over the past half-decade. The Sudanese government has been in anarchy during this time. Tensions and government problems as well as a lack of infrastructure have contributed to the situation. Much like the rest of the region, in the Sahel, a sub-Saharan belt of land that includes other volatile countries such as Mali and Burkina Faso, third world conditions are worsening due to conflict, drought, famine, and economic problems. The aid to the Sahel region comes in two general types: military aid and developmental assistance. Many governments have been providing aid in one form or another to Sudan and the greater Sahel region. The EU and US have contributed greatly, in addition to the many efforts of the UN. Non-governmental organizations (NGOs) have also provided valuable assistance.

The African nation of Sudan is situated south of Egypt and west of Somalia. It is relatively large, and is rich in rare earth minerals (REMs) and oil. Military aid is loosely defined as any form of assistance that benefits either military or paramilitary forces in the region, in addition to aiding foreign troops on site, such as UN peacekeepers in Nigeria or the French Foreign Legion troops on peacekeeping operations in Mali. Military aid is often criticized for not addressing the root cause of the problems that exist in nations receiving such aid. To a certain extent, this criticism is accurate. The primary goal of military aid is not to solve all of the issues in the recipient nation. Rather, its goal is to create and preserve stability in the recipient nation, so that developmental efforts may take place. During the Nigerian Genocide, over 44,000 UN peacekeeping troops were deployed in an effort to create and preserve stability. These efforts were incredibly successful. The genocide was effectively over within a span of only a few months, and now that conditions are more or less stable, other organizations may begin to operate in the region and provide developmental assistance.

Developmental aid is much more strictly defined. The Organization for Economic Coordination and Development (OECD) provides the official definition for developmental assistance, stating that developmental assistance must be “provided by official agencies, including state and local governments, or by their executive agencies; and, each transaction of which; is administered with the promotion of the economic development and welfare of developing countries as its main objective; and, is concessional in character and conveys a grant element of at least 25%.” Developmental assistance must have economic development and welfare as its primary goal. For example, humanitarian aid is not considered development assistance because its main goal is to respond to a crisis, not to engage in the development of the economy or welfare.

The debate currently under discussion in countries providing aid of either form to Sudan is which one should be prioritized, or used more often. Military aid is often used as a prerequisite to developmental aid because, if successful, it can lead to stability in the recipient nation and pave the way for peaceful organizations that can implement development aid, such as improvements in industry, agriculture, and infrastructure. Margaret Taylor from the Council on Foreign Affairs writes, “Militaries are indispensable for restoring order and maintaining post-conflict security through multilateral peacekeeping missions. In addition, militaries should take the lead in building the capacity of other military forces to contribute to regional and international peacekeeping efforts [and] should also be involved in security-sector reform.” However, this can be problematic, as it involves arming rebels and other militants on the ground, which can lead to more death and violence rather than paving the way to a safer environment.

Development aid is much safer. It involves NGOs such as Doctors without Borders, and governmental organizations like UNICEF. It spans a broad area of aid and development in third world countries. Like many of its neighboring countries, Sudan lacks effective infrastructure and education, and suffers attacks from terrorist organizations such as Boko Haram, a group of individuals who target hospitals and schools operating out of Sudan and neighboring unstable countries. Development aid can provide a more peaceful approach to preventing and obstructing existing terror groups. Joseph Young of American University and Michael Findley of Brigham Young University published a study that found that, “on average, a one standard deviation increase in education aid is expected to decrease the count of terrorist attacks by 71%… health aid is expected to cause [similar decreases] by 39% [and] governance and civil society aid is expected to cause [similar decreases] by almost 40%.” The Journal of International Affairs “confirms the effectiveness of foreign aid to reduce the number of terrorist attacks originating from the recipient country…[while] foreign military interventions are also counter-productive and seem to be a strong attraction factor for terrorists.”

As well as economic problems, the nations of the Sahel and specifically Sudan do not have infrastructure that can support an economically developed nation. Infrastructures are in serious need of aid. According to President of the African Development Bank Donald Kaberuka, “the current needs of infrastructure in Africa are about U.S. $92 billion a year. At the moment we can monetize from all sources only half that amount – about $50 billion.” According to Tim McCully of the Huffington Post, “If we are ever going to break the cycle of hunger and malnutrition that threatens lives every few years in West Africa, we have to scale up the investment in resilience, starting with stable and strong agricultural foundations in vulnerable communities.” And according to African Union Commission Chairperson Dr. Nkosazana Dlamini Zuma, “If we connect communities and countries through infrastructure and market linkages…we will create the conditions for lasting peace, prosperity and the renaissance of the Sahel.”

Even though developmental assistance has a lot of benefits, it is very difficult to implement and execute. According to Martin C. Steinwand of Stony Brook University, “aid flows are often unstable and uncertain. Foreign aid revenues are up to forty times more volatile than government revenue.” This volatility in the aid itself destabilizes the dependents of this aid, as they are unable to function without it. As a result, recipient governments are put in a tenuous position, without reliability in promising future resources. According to Richard A. Nielson for Political Science, “During aid shocks, potential rebels gain bargaining strength vis-à-vis the government. To appease the rebels, the government must promise future resource transfers, but the government has no incentive to continue its promised transfers if the aid shock proves to be temporary. With the government unable to credibly commit to future resource transfers, violence breaks out.” In fact, recipient governments will even abuse donor nations for their own corrupt benefit. Sudan, being in a civil war, is simply too unstable to support developmental assistance without military aid being implemented first in order to promote stability. The two need to be used in conjunction in order to be effective.

The United States, the EU, the UN, and NGOs provide billions of dollars a year in aid to Sudan and Africa. Most of it is split between military and development aid. As time goes on, we will see which form of assistance proves most effective; for now, both forms have had beneficial effects, whether in conjunction with each other, like in Cote D’Ivoire (the Ivory Coast, a nation in the west of Africa), or alone, such as the military operations in Mali and Nigeria and development assistance efforts in Burkina Faso. Sudan will require both forms of aid, as it is in a turbulent period of history. It is the duty of the organized nations of the world to provide aid to stabilize Sudan and create a nation that may develop into an industrialized economic force.

The Dolla’ Makes Me Holla!

An article I wrote a while back on U. S monetary policy and the international economic system.

The United States Dollar has held the position of the world’s reserve currency since the implementation of the Bretton-Woods System after the Second World War. Many pundits and other Very Important People Who Know Stuff have often used the term “dollar hegemony” to describe this situation. Currently, two-thirds of the world’s foreign currency reserves are currently held in dollars, and nearly half of international foreign debt securities are held in dollar-denominated assets. Simply put, the U.S dollar is the world’s primary reserve currency. As such, the United States is able to exert a high influence on international financial markets and gains other economic benefits— in other words, “Dollar Hegemony” = Good. However, there is evidence that suggests dollar’s status as a reserve currency is being slowly and systematically diminished. So, this article suggests—ever so sweetly—that in order to maintain the U.S led global economic order and the benefits we receive from it,  our nation’s policymakers must take concrete and substantive action in order to maintain economic supremacy. Ultimately, the “economic order” which governs  growth and development must change to reflect the ever-changing international economy. We don’t seek to do away with the Washington consensus, rather we seek to modify it.

What are these mysterious reserve currencies you speak of?

Countries all over the world hold financial reserves in the form of bonds or money mark instruments denominated in some other currency. Reserves help a country do many things like conduct monetary policy. Nations also hold gold and often Special Drawing Rights issued by the International Monetary Fund. If a country is in poor financial state, international speculators might sell their own holdings of the country’s currency. This will depress the value of this countries’ currency and will result in negative economic impacts. If a country has foreign reserves, it could buy its own currency and sell its foreign currencies to pay for purchases. A currency, which is backed by substantial reserves, is stable and secure. For this reason, most countries are heavily invested in foreign exchange reserves.

The U.S dollar is the most common currency for international reserve because the market for dollar-denominated securities is deep and liquid—treasury securities can be sold quickly, which in a hypothetical financial crisis could help a foreign nation avert disaster. In addition, a substantial amount can be sold or bought without drastically affecting its price; so the value of the bond is not volatile—it won’t shoot up or fall. All in all, the dollar is quite a stable currency, making it an attractive reserve currency, which explains–partly— why even after the fall of Bretton-Woods and the Nixon shock, the U.S remained the world reserve currency.  However, if our country defaulted on its debt, or if our credit was further downgraded, the price of U.S Treasury securities would decrease, since they would be perceived, and rightly so, as more unstable. Why would a country hold a bond or a security if the country which issued the bond is not likely to pay back the money that they borrowed. So, countries would prefer to hold their reserves in another, more valuable asset.

So what’s in it for us? ( Read in the voice of an Italian mobster)

In order to understand why maintaining dollar hegemony is so important, one must first understand the benefits the United State’s gains from it. The dollar’s status as the world reserve currency triggers substantial demand for our securities—foreign countries hold about thirty percent of United State’s debt. Without this demand for United State’s treasury bonds, the interest rate the U.S. Treasury pays would be significantly higher causing private-sector borrowing costs to rise as consumer and corporate debt compete with public debt for investor’s holdings—i.e “crowding out.” Thus, among many many things, the dollar’s status keeps United State’s interests rates low.

Interest rates, on a very basic level, can be understood as the “price” of money. It is the price a borrower pays for the use of loaned money. The rate is represented as a percentage of the principle amount of money borrowed. If interests rates are high, borrowing money would be expensive, and individuals would be discouraged from lending money. However, if interests rates were low, individuals would be encouraged to lend and borrow money. By keeping interests rates low, the dollar’s status as the world’s reserve currency ultimately promotes growth and financial security within the United States. If the Dollar would lose this status, there would be massive inflation, higher interest rates, substantial increases in the cost of food and gasoline, and it would be much more difficult for the United States to finance its debt.

Our Current Situation

Despite the fact that the greenback has long been considered a stable and secure currency, it has become ever more apparent to economists worldwide that the dollar’s domination of international currency reserves is coming to a conclusion. This is representative of and a result of an international rejection of United States economic policy. Policies, that are based on the philosophy of market fundamentalism, the idea that free markets, naturally provide the most efficient outcomes. This economic philosophy was popularized during the Clinton administration, in which policymakers dismantled Depression-/era financial constraints. However, current foreign interpretation like that of Beijing states that this new policy created a “Washington-Wall Street” environment of unsupervised securitization in which the U.S. financial sector became larger, more concentrated, and riskier. From 1980—/2002, U.S. manufacturing fell from 21 percent of GDP to 14 percent, but finance (the biggest and fastest growing) increased from 14 percent to 21 percent. It is this risky and unconstrained growth, which foreign nations believe will continue undermine the security of dollar denominated assets. However, certain economists and politicians have claimed that a different macroeconomic factor is responsible for the decline in the dollar’s power. They find that the FED’s policy of Quantative Easing artificially cheapens the dollar, and reduces its purchasing power. This reduction in the active purchasing power of the dollar is, they claim, the reason for the decline in the dollar’s power. This view centers around one basic belief: that foreign countries are using other currencies because of this reduction of power. However, foreign nations have repeatedly stressed that the reason for utilizing alternate reserve currencies is due to their mistrust of American monetary policy and the doubtfulness concerning the stability of the dollar. It is not the reduction in purchasing power caused by Quantative Easing which in turn causes the diminution of the dollar’s power, but the instability Quantative Easing causes.

Evidence for the decline of the U.S dollar’s power is as follows: China and Japan have struck a deal which will promote the use of their own currencies (rather than the U.S. dollar) when trading with each other. The second reason was taken from the magazine, The Economist, “The five major emerging economies of BRICS — Brazil, Russia, India, China and South Africa — are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade, which will enable credit facility in local currency for businesses of BRICS countries.” The BRICS countries will shift from utilizing dollars in trade to using their own local currencies. Thirdly, China and Russia already use their own currencies when trading with each other. Furthermore, the United Nations and the IMF continue to push for a new reserve currency. A UN report stated that, “the international community envisions a new global reserve system…that no longer relies on the United States dollar as the single major reserve currency.” U.S power is facing new macroeconomic constraints that derive from a basic and generally underappreciated shift in U.S. engagement with the global macroeconomic order.

What to do, then?

Even if one does not accept the opinion that current policy is flawed, foreign countries perceive that it is. This opinion, will lead to the diminution of the dollar’s influence. States will start to have divergent preferences about the global financial order, something that will reduce U.S. influence, making cooperation on the governance of money and finance more problematic. In particular, many states will search for ways to insulate themselves from the dangers of unmediated global finance. It is the responsibility of United States politicians, economists, and the FED to craft international and domestic economic policies, which will reaffirm the credibility of the dollar as a stable and effective reserve currency.

The FED must first gradually phase out its policy of Quantative Easing. Quantative Easing seeks to keep interest rates low by having the Fed change the composition and sometimes the size of its balance sheet. Renowned economists Paul Krugman explains,” To think of Fed policy in our current situation, once can imagine a financial equilibrium in which there are three assets: short-term Treasuries/monetary base — which are equivalent and yield an approximately zero rate of interest; long-term Treasuries; and mortgage-backed securities. There are two interest rates that clear the markets — the rates on Treasuries and MBS (the third rate is fixed at zero).” In this situation, to boost the economy the fed must reduce private-sector borrowing rates by swapping short-term assets for MBS (mortgage backed securities). However, the FED currently has been buying long-term treasuries. This should theoretically indirectly reduce interest rates on MBS, however in practice this reduction is not adequate enough, and does not function effectively as a policy.

Some Sources:

http://econlog.econlib.org/archives/2013/10/the_relative_un.html

http://www.forbes.com/sites/billconerly/2013/10/25/future-of-the-dollar-as-world-reserve-currency/

http://ipsnorthamerica.net/news.php?idnews=1713

http://www.munknee.com/shift-from-u-s-dollar-as-world-reserve-currency-underway-what-will-this-mean-for-america/

http://www.economist.com/node/16064067

http://www.federalreserve.gov/monetarypolicy/openmarket.htm

http://www.beaufortobserver.net/Articles-NEWS-and-COMMENTARY-c-2013-05-29-267125.112112-US-dollar-losing-ground-as-worlds-reserve-currency-What-does-that-mean-to-your-children-and-grandchildren.html

http://www.economist.com/node/16064067

http://www.dailywealth.com/2416/dollar-usd-world-reserve-currency

http://seekingalpha.com/article/1731772-government-shutdown-threatens-u-s-dollar-world-reserve-currency-status

http://business.financialpost.com/2013/10/15/us-dollar-supremacy-decline/

http://www.humanevents.com/2013/10/14/how-much-longer-will-the-dollar-be-the-worlds-reserve-currency/

http://www.nber.org/papers/w11336

http://articles.economictimes.indiatimes.com/2013-10-16/news/43107179_1_reserve-currency-treasury-bonds-debt-ceiling

http://internationalinvest.about.com/od/foreigncurrencies/a/What-Is-A-Reserve-Currency.htm

Social Insecurity and Other Bad Puns

Full disclosure, this was an article I wrote my freshman year and as such it is less than amazing. That said, it still is an interesting take on Social Security Insolvency.

Social Security, the very system that provides vital benefits for elderly and disabled American citizens, is expected to go bankrupt as early as 2018—though most estimates report a later date. If the United States government does not take any action before this point, the elderly and disabled of the US will be effectively deprived of their benefits¬—which, might I add, they worked to deserve. What is at risk here is our economic stability and the integrity of the social compact that has existed since the inception of the program. Policymakers are faced with a unique situation: Social Security ought to be rendered solvent yet it must be maintained is such a manner that Americans are not deprived of their benefits.

What is Social Security? Why do I care about it?

For those who do not know, Social Security is an insurance program—in a rough sense—that provides monetary benefits to American citizens. The system is funded through payroll taxes, taxes based upon and taken from an individual’s wage, and is also the largest expenditure of the federal government’s budget. The benefits that the program provides are divided into three categories: old age, disability, and spouse benefits. These benefits are calculated according to the individual’s income; a worker earning over $110,000 pays 3.4% of his or her payroll while a worker earning under that amount pays 6.8% of his or her payroll. In theory, Social Security is tax neutral. Under such a system, the money given to the US government in the form of the payroll tax will be the same amount given out in benefits to US citizens. In reality, the expenditures of the US government exceed its revenues; the US government is effectively losing money. Each year the US government loses money, for many reasons, like the retirement of the ‘baby boomers’. These losses, simply put, deplete the amount of money in the trust fund. There are many criticisms of the Social Security system other than its fiscal insolvency: it has a regressive tax system that penalizes the poor and a low rate of capital formation. However, despite its flaws, Social Security’s strengths are much more potent. It allows workers to accrue human capital and, in doing so, boosts the economy. The program even helps spur investment and entrepreneurship. It provides an invaluable safety net for the lower and middle class, and improves quality of life for all Americans. It does this provides benefits for the elderly, the retired, and the disabled who may not be able to pay for various necessary expenses. With these benefits in mind, we can conclude that it must not be eliminated despite its insolvency. Instead, it must be reformed so that it becomes an economically feasible policy.

Social Security is not a Ponzi Scheme.

A misconception people usually have about the social security system is that the system is a Ponzi scheme. Pundits throw the term around in order to describe the program’s insecurity—but the use of the word does not tell us anything about the program…and the term isn’t even appropriate. Ponzi schemes are frauds in which the operator promises or credits investors with exceptional returns, supposedly based on the performance of the assets purchased. The organizer acquires no assets, pays maturing promises or other withdrawals with funds from new depositors, and skims money off the top to support lavish personal consumption. Social Security isn’t a Ponzi scheme, as unlike in a Ponzi scheme it does not require continued growth to sustain it…not to mention the obvious fact that there is no intentional fraud. The social security system can be better envisioned as a trust fund rather than a Ponzi scheme. Social Security functions like a trust fund as it provides benefits for an individual when he or she reaches a certain age. It’s not anything like a Ponzi scheme.

So what do we do?

The United States government must stop the annual loss of money. They can do this two fundamental ways: increasing revenue by raising the payroll tax, or decreasing expenses by taking away or reducing benefits. Both these ways will theoretically rebalance the Social Security system. There are many ways, however, to either lower expenses or raise revenues. For example, recently, many congressmen have been supporting a change to private social security accounts, which would theoretically reduce expenditures. There are as well countless ways to reform the social security tax that could increase tax revenues. In looking at which of these solutions is favorable, the stance of the Democratic Party has traditionally been that the benefits provided by the social security should not be harmed or reduced in any way and that the revenues of the social security system should be increased by having the rich shoulder much of the tax. On the other hand, the Republican Party believes that reducing the benefits given by the system should lower the expenditures of the system. Republicans and Democrats have often clashed on the issue of social security and the current United States Congress has been known to be slow in the passing of legislature due to a very apparent lack of bipartisanship. Hopefully, Republicans and Democrats will be able to do the seemingly impossible and compromise on the issue of Social Security before the system goes bankrupt.

How the Rosetta Mission Works

Comets light up our night sky and inspire wonder in children and adults alike.  Their burning up in the atmosphere creates a light-show for everyone to admire.  Today, scientists know that the lightshow we see whenever comets hit our atmosphere is actually the result of the intense heat generated by hitting dense air at high speed. The outer layers of the comet then combust and burn away. Some scientists postulate that organic molecules may have reached earth in its formative period by hitching a ride onto comets. Little is known about comet formation; however, scientists believe that most of today’s comets formed around the time that the gas giants of our solar system, Jupiter and Saturn, were beginning to condense from the disk of gas that surrounded our sun.  Since we know so little about comets and their age, a team at the European Space Agency (ESA) in collaboration with the National Aeronautics and Space Administration (NASA) designed a mission that would land a spacecraft on a comet to study its composition and test for organic matter.  This mission was named “Rosetta” and recently succeeded.

Goals and Areas of Investigation

Rosetta has just completed its ten year mission of catching the comet “67P/Churyumov-Gerasimenko” (C-G).  It became the first spacecraft to land on a comet and also the first spacecraft to observe this specific comet from such a short range.  Rosetta will closely study how the Sun’s heat transforms the comet, changing the block of rock and ice. Aside from observing changes in the comet, another primary goal of the Rosetta mission will be to document the typical makeup of the comet and investigate the possibility of organic compounds underneath the comet’s surface.

One of the main objectives of the Rosetta mission is to develop a better understanding of the “nucleus” of a comet, or its dense inner core.  In order to realize this aim, Rosetta will be carrying radar and microwave equipment that will attempt to “see” deep into the comet without directly drilling through it.  Additional thermal and spectroscoping imaging will investigate the levels of noble gases in the core of the comet.

The possibility of finding organic molecules on C-G excites proponents of the theory that life on earth originated from building blocks brought in from outer space on comets that burnt up in the earth’s atmosphere.  Rosetta’s Philae lander will test for the potential presence of nucleotides, similar to those that make up DNA and RNA, and amino acids, which are the molecules that make up proteins. Additionally, the lander will carry out an experiment to determine the “handedness” of molecules, identifying if left-handed or right-handed (Left-handed and right handed merely refer to the way atoms arrange themselves around an asymmetric carbon) isomers are more common on the comet.  Life on Earth, due to what appears to be a strange fluke, uses only left-handed isomers. Many theories circulate about why this is true, the most well supported says that this bias might be the result of light shining on these molecules in space.  Light waves behave similarly to corkscrews, meaning they can twist in either of two directions. Light circularly polarized one way can preferentially destroy molecules with one kind of handedness, while light circularly polarized the other way might suppress the other handedness.

If the comet also contains a majority of left-handed organic molecules, this discovery could give credence to those scientists who believe that life originated from the organic matter brought to earth by comets.

Behind the Name

The Rosetta mission is named after the famous Rosetta Stone, used by historians and archeologists to decipher Egyptian hieroglyphics.  Scientists hope Rosetta, similar to its namesake, will illuminate the language of the universe and improve understanding of Earth’s origins as well as those of comets.

Early Results

Since Rosetta has reached its target comet, it has already begun to take readings of levels of various compounds on and inside the comet.  Most notably, Rosetta has first started to measure H2O levels on C-G.  Why H2O?  The answer lies in Earth’s oceans.  The origin of the Earth’s oceans has yet to be determined.  The sheer amount of water on Earth suggests that the planet was bombarded by comets and asteroids that delivered water when they collided with its surface and early atmosphere.   In order to determine where the water came from, Rosetta will analyze at the proportion of deuterium – a hydrogen isotope –  in relation to normal hydrogen.  Preliminary results show that the D/H ratio is two or three times greater than in Earth’s oceans.

“This surprising finding could indicate a diverse origin for the Jupiter-family comets (The family that C-G is in) – perhaps they formed over a wider range of distances in the young Solar System than we previously thought,” claims Dr. Kathrin Altwegg, principal investigator on the Rosetta mission.  Moreover, previous comets from this family have contained varying Deuterium/Hydrogen (D/H) levels, with only one comet ever showing D/H levels similar to those of the earth’s oceans.  These findings suggest that asteroids, not comets, were the primary contributors to the formation of our planet’s massive oceans. 

Conclusion

As Rosetta follows C-G into the inner solar system and observes how the comet changes as it approaches the sun, it will continue to deliver valuable data back to scientists in Germany.  Even though its journey is far from over, it has already has a massive impact.  The launch of the mission was one of the most ambitious in history for the ESA, requiring years to plan and build. Already, that effort has paid off due to meaningful results that have allowed us to more fully understand our origins and the origins of elements from the natural world. Furthermore, the landing of Philae on C-G demonstrates the feasibility of comet mining in the future by demonstrating that it is feasible to land on fast moving comets with landing probes. 

How Place Cells Will Change Neuroscience As We Know It

Neuroscience is the fastest developing field in medicine.  It seems as though everyday there is a new discovery about how, or why our brains work the way they do. On Monday, October 6, the Nobel Prize for Medicine was announced. Researchers John O´Keefe, May-Britt Moser and Edvard I. Moser were awarded the prize jointly for their combined efforts in identifying how the brain understands and processes information about location. Their discoveries open many doors for future Alzheimer’s research and for researchers eager to exploit the brain’s spatial mapping for anti-nausea drugs. However, to understand how these fields will utilize the research, we first must understand the original research.

In 1971, Dr. John O’Keefe published a paper titled “The hippocampus as a spatial map. Preliminary evidence from unit activity in the freely-moving rat.” This title may seem nondescript, but it utilized novel methods to study the brains of moving subjects. Rats were anesthetized before having a microdrive assembly placed upon their heads. Reaching through the skull and into the upper layers of the cortex of the rat, the assembly was able to measure the electrical impulses inside the rat’s brain as it moved around freely. This research was soon followed up by another study in 1976. O’Keefe had identified areas in the rat’s brain that he called “place units,” which he defined as placeswhere the rat’s position on the maze was a necessary condition for maximal cell firing. Some of these place units fired maximally when the animal sniffed in a certain area, either because it found something new there or failed to find something that was usually there. Displace units increased their rates during behaviors associated with theta activity, strong oscillations in brain waves, in the hippocampal slow waves. In general these were behaviors that changed the rat’s position relative to the environment. The results are interpreted as strong support for the cognitive map theory of hippocampal function. The “cognitive map theory” stated that the brain created its own map from which it was able to place the body.

After these early discoveries of “place units” in a mammalian brain, May-Britt Moser and Edvard I. Moser followed up by researching how information is represented in the interface between the hippocampus and the neocortex, part of the cerebral cortex. This area is known as the entorhinal cortex, and it contains billions of entorhinal neurons. After several trials, it was determined that near the postrhinal-entorhinal border, entorhinal neurons had discrete place fields. They were predicting the rat’s location as accurately as place cells in the hippocampus. This discovery confirmed that the human brain creates a directionally oriented, topographically organized neural map of the spatial environment in the dorsocaudal medial entorhinal cortex (dMEC). In other words, the human brain tracked direction, height, and placement simultaneously in the same cells. This neural map uses a type of cell the research duo dubbed “grid cells.” These cells are activated whenever the animal’s position in space coincided with vertexes of a regular grid of triangles spanning the surface of the environment the rat was placed in. This grid creates a hexagonal pattern. This research, however, begged the question of whether information about location, direction and distance is integrated into this complex neural map and how. This time, the researchers focused their efforts on the medial entorhinal cortex (MEC). They recorded from each principal cell layer of MEC in rats that explored two-dimensional environments. These two dimensional environments were often mazes or just an open floor. They found that grid cells were changed by head direction cells, meaning that direction and speed did indeed affect the brain’s neural map. The combination of positional, directional, and translational information in a single MEC cell type enables grid coordinates to be updated during navigation just like a GPS.

The discovery of real time updating neural maps in mammalian brains opens up many possibilities for the future. One of the brightest fields of research lies in cures for Alzheimer’s. Problems with spatial memory and navigation are known to be early indicators of Alzheimer’s disease, a deadly neurological disease that leads to memory loss and death. Researchers compared patients with Alzheimer’s and those without any neurological impairment and found that patients with Alzheimer’s were significantly more likely to get lost. These demonstrations showed that misfiring place cells are early and regular indicators of Alzheimer’s disease. Place cells can be used not only for early diagnosis, but also as a target for next generation drugs and therapies.

Another one of the exciting possibilities for place cells research is in lessening the effects of Post-Traumatic Stress Disorder (PTSD). A group of researchers has recently succeeded in changing the memories associated with certain areas from positive to negative. Even though these experiments were done in rats, these results are immediately applicable to human patients who suffer from place-related PTSD.

Additionally, place cells may hold importance in the study of aging. It has been observed that the function of place cells changes with age. Older rats are less likely to remember paths they have learned recently and are less likely to learn them in the first place. It has also been observed that younger rats have a “plasticity” in their place fields that senile rats do not. When running along a path, younger rats are able to strengthen the links between place cells and allow for faster firing when the route is traversed again. Work has been done to attempt to restore some sort of place-field plasticity to aged rats. Different drugs have been developed that target neurogenesis, the creation of new neurons. However, these drugs have had mixed results, sometimes becoming detrimental when too many neurons are produced.

Scientists across the world are slowly solving the mystery that is place cells. The recent Nobel prizes will add publicity to this already exciting field of research. From Alzheimer’s drugs to PTSD treatment to reversing the effects of aging, place cells hold promise as a way to make some of the most debilitating and inevitable illnesses a thing of the past.

UK General Elections: Why The Models Were Wrong

The United Kingdom went to the polls on May 7th to vote in a general election for whom would be the occupant of 10 Downing Street.  Would it be the incumbent Conservative David Cameron or Labor’s Ed Miliband?  There was much excitement by the news media prior to the election as all of the major polls had the two politicians and their respective coalitions within one percentage point of each other, even down to election night.  However, all of that polling and almost every statistical forecast by almost every modeler called the election wrong.  The final results had the Conservatives winning not only their predicted 270 seats, but 330, securing a marginal majority without a coalition with the Liberal Democrats.  Speaking of the Liberal Democrats, they are now similar to the Northern White Rhinoceros: not technically extinct, but will require many decades of breeding in captivity before they are seen in the wild again.  In fact, their performance was so bad that the party leader, Nick Clegg, resigned.  The party’s performance was worse than even the worst prediction by any pollster.  Labor’s Ed Miliband joined Nick Clegg by retiring, as did UKIP’s divisive leader Nigel Farage.  All three leaders were confronted with disappointing vote totals.   Why were so many polls wrong?  The answer lies in failure to adjust and not giving proper emphasis to the likelihood of error.

The most accurate forecast for the UK General Election were by Steve Fisher at ElectionsEtc.  538, one of the largest forecasters of the election, adjusted polling numbers to account for polls overstating changes from the last election (They believed that the polls would overstate Labor’s rise from the previous election’s failure).  This adjustment meant that the tories (Conservatives) were to win by 1.6 percentage points (as per 538’s predictions).  What Fisher did differently than 538 and other major pollsters was not only adjusting for polls overstating changes, but also making additional adjustments that were party specific.  This adjustment was based off historical data of last minute swings such as the infamous 1992 election which had pollsters reporting a dead heat between the two parties even though the tories came out a whopping 7.5% points ahead.  This party specific adjustment moved Fisher’s 95% confidence interval upwards of those of other forecasters.

On the topic of error, 538 was quick to zero in on its flaws as was Fisher of ElectionsEtc.  National polling error was immediately identified as suspect as it did not reflect final exit poll results which showed a swing towards the Conservatives.  The massive forecast miss of the 1992 general election was accounted for in all adjustments to the polling error; however, that was apparently not enough to introduce significant variance in polling data.  Aside from national polling, it seems as though constituency level (akin to congressional district) polling was not accounted for properly.  This year’s polling on the constituency level was sponsored by Lord Ashcroft, a Conservative billionaire who sponsored polls in small districts that would otherwise never be under statistical scrutiny.  Ashcroft, with his financial backing of widespread polling, has acknowledged that publicized constituency level polls might induce voters to vote tactically in Britain multiparty system rather than true to their beliefs e.g. voting for the conservative candidate if they hear that Labor might win their constituency instead of voting for their original far-right choice of UKIP.

Ashcroft asked two voting-intention questions in all his constituency polls. The first was the “generic” question that is widely used: “If there was a general election tomorrow, which party would you vote for?” This was followed up with a more “specific” question: “Thinking specifically about your own parliamentary constituency at the next general election and the candidates who are likely to stand for election to Westminster there, which party’s candidate do you think you will vote for in your own constituency?” The Liberal Democrats did far better in the latter question, particularly where they were incumbents.  Many forecasters used the latter question as a better indicator of parliamentary success to their detriment, overestimating the Liberal Democrats’ voting share.

The final problem that lay in every forecaster’s model was an inadequate way for accounting for the possibility of substantial error.  Simply put, no model successfully captured the fickleness of the general public and the tendency for last minute swings.  No one predicted that the level of error recorded in the national polling data would ever be close to that recorded in 1992.  Therefore, cumulative seat totals were calculated on the incorrect assumption that nationwide, Labor and Conservatives had reasonably equal levels of support when the opposite was true. 

Interestingly, Labor did in fact have a 1 point swing vote advantage over the Conservatives in key constituencies.  However, why did this not convert to MP’s as predicted by models?   One of the key reasons is that they were fighting against first-term incumbent MPs that won their seats from Labour in 2010.  Most statisticians are aware of a phenomenon known as the “sophomore surge” whereby new incumbents build up a substantial personal vote and thus buck any attempt at predicting voting behavior.  The Conservatives utilized this effect to maintain a grip, although tenuous, over key districts in Wales particularly.

Overall, the 2015 General Elections were a statistical disaster.  Most forecasters called the election correctly, predicting David Cameron keeping his residence at 10 Downing Street; however, over-predicted both Liberal Democrat and Labor performance.  This was because they either failed to account for historical error in national polling data, weighted certain polling responses over others, or ignored established statistical phenomenon such as the sophomore surge.  We can only look forward to a more exciting 2016 election as Hillary Clinton faces off with the Republican primary candidate.  With this experience under their belt, we can only expect better and far more accurate predictions from the forecasting community.