Ukraine Tests Fires First-Ever Cruise Missile Aimed At Neutralizing “Russian Aggressors”

On Tuesday, Ukrainian armed forces conducted the first-ever cruise missile test capable of hitting land and sea targets, National Security and Defense Council (NSDC) Secretary Oleksandr Turchynov announced.

According to Turchynov, the cruise missile is locally made in Ukraine by manufacturers of the State Enterprise “State Kyiv Design Bureau Luch” in cooperation with other state and private defense companies.

Turchynov made further arrangements with the NSDC, which coordinates Ukraine’s national missile program, to further “develop not only ground-launched cruise missile systems but also sea- and air-launched.” Turchynov failed to disclose the range of the cruise missile but specified the missile systems are in line with its international agreements.

This is a crucial event for Ukraine, because after the total disarmament of the Ukrainian army in accordance with the Budapest Memorandum, not a single missile was left in the Armed Forces of Ukraine”, said Turchynov.

Today’s tests have opened a new stage of the missile program, according to which our Armed Forces must receive powerful high-performance cruise missiles that can accurately strike hostile targets at great distances,” he added.

Turchynov then suggests the new cruise missile system is an “important deterrent against the aggressor,” i.e. Russian forces in Crimea.

According to the South China Morning Post,

“The missile was not named by the authorities, but has been identified on the Defence Blog media outlet as the Neptune, based on the Soviet-designed Kh-35 introduced to the Russian military in 2003, the Kyiv Post reported. According to the Kyiv Post, the missile can sink warships with displacements of up to 5,000 tons of water – which would include all of Russia’s landing ships and frigates.”

Ukraine is in the middle of fighting Russian-backed terrorists in eastern Ukraine in a conflict that started four years ago after Russia’s annexation of Crimea in 2014.

Lately, the Ukrainian Foreign Ministry warned Russia to withdraw its troops from temporarily occupied territories of Georgia and Ukraine.

The Ministry of Foreign Affairs of Ukraine strongly condemns ratification by the State Duma of the Russian Federation of the agreement on the incorporation of certain units of the army of self-proclaimed South Ossetia into the Russian Armed Forces.

The Ukrainian Foreign Ministry also condemns the opening of a customs office in Akhalgori (Tskhinvali region) by the Russian occupation authorities and the formation of a specialized customs point in Sukhumi in Abkhazia, the Ukrainian Foreign Ministry said in its comments.

“This next provocative step is a continuation of the Kremlin’s policy of destabilizing the situation in the Black Sea region and undermining the architecture of European security. We urge the Russian Federation to fulfill its obligations under international law and withdraw all its armed formations and occupation administrations from the temporarily occupied territories of Georgia and Ukraine, the document says.

The sanctions imposed by the European Union (EU), the United States, Canada, and Japan on Russia to halt aggression against Ukraine have widely flunked. The United States knows it, and that is why Washington made a move to supply Ukrainian forces with anti-tank missiles in late 2017. Now, Ukraine is attempting to level the playing field with Russia with the introduction of supersonic cruise missiles. What could possibly go wrong?

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How Long Before Artificial Intelligence Makes Humans Redundant?

Authored by Daisy Luther via The Organic Prepper blog,

With all of the recent advances in artificial intelligence, are you starting to get worried? You really have to wonder how long it will be before human beings become redundant.

Maybe you should be concerned. In many cases, robots can easily replace humans in the manufacturing industry, the medical system, and even food service. Some theories suggest that offering universal basic income is the first step toward ushering in a world in which robots have all the jobs and humans live off the goodness of the government…for as long as that lasts. (Check out this documentary for more information.)

But losing job opportunities isn’t the only reason for concern. Not only is today’s AI extremely advanced, but it also has the capability to learn. Recently, many people were alarmed when an AI called Alpha Zero learned how to play chess in 4 hours, then beat world champion human chess players using moves never seen before.

It’s almost like the people developing these robots have never seen any of the Terminator movies, in which artificial intelligence overtakes its creators and declares war on the human race. Should we stop worrying about nuclear war with North Korea and worry about the robot apocalypse instead?

It goes even further. Some experts believe that sex between humans and robots could complete replace sex between two humans by 2050. Maybe that is how the human race ends – no one wants to procreate with another human being anymore, so babies just stop being born. And honestly, in this recent age of sexual harassment McCarthyism, you can kind of see why some folks would feel like robot sex is safer than flirting with someone. (Chill out. I’m not suggesting you go purchase a sex robot.)

The video below gives us a glimpse of some of the rapid advancement of artificial intelligence that has occurred just over the past year.

Could this become one of the biggest threats we face in our generation?

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Connecticut’s Towns Are Crying For Help: But Will Hartford Listen?

As we’ve pointed out time and time again, the government of the state of Connecticut is sinking into debt at a time when rising interest rates and a shrinking tax base are threatening to crush the state’s economy. The primary culprit? By most accounts, it’s public-sector unions, who have leveraged their enormous political influence in the state to preserve generous retirement benefits, who are  contributing the most to the present economic crisis.



Connecticut Gov. Dannel Malloy

Generous benefits have forced Democratic and Republican governors to defer payments, leaving the system dangerously underfunded.



As the Wall Street Journal editorial board explained earlier this week, Connecticut’s labor laws convey many advantages on public employee unions. Local mayors say their only hope for reining in retirement costs would be for the state to change these laws. At the very least, the Connecticut Conference of Municipalities, a lobbying group for Connecticut’s towns and cities, is asking that some collective bargaining rights be curtailed.

While that request – made in a solidly Democratic state – will likely trigger unfair comparisons to Wisconsin, the fact that it’s even being made tells you something.

Even the Democrats know they can’t tax their way out of this mess.

* * *

Connecticut mayors grappling with rising retirement costs and sinking economies this week issued a distress signal to lawmakers in Hartford: Save us from our public unions.

The state would be in a “stronger position if we don’t negotiate for benefits,” Joe DeLong, the executive director of the Connecticut Conference of Municipalities, told a committee convened by the legislature to restore fiscal stability and economic growth. The conference of municipalities implored the state to end collective-bargaining for pensions and health-care benefits as well as limit binding arbitration when unions and local politicians deadlock during contract negotiations. This usually results in a sweet deal for the unions.

“We’re suggesting it’s very difficult in the state of Connecticut under the current labor agreements and under binding arbitration,” said Waterbury mayor Neil O’Leary, a Democrat. His town’s health care and pension costs make up 30% of its budget.

Gov. Dannel Malloy, after multiple tax increases, last year tried to close the state’s $3.5 billion deficit by shifting teacher pension costs to municipalities. Mayors warned that this would lead to property tax hikes. The legislature punted some pension payments to the future, but mayors are worried that they will eventually be required to pick up more of the bill.

That’s because state lawmakers have little flexibility to cut spending since Mr. Malloy extended collective-bargaining agreements through 2027 despite receiving few concessions from government unions. Meanwhile, tax revenues have been declining amid a sluggish economy and retirement costs are soaring. About 35% of state revenues go to debt service and retirement obligations. Connecticut’s annual teacher pension contribution is projected to quadruple by 2032.

While mayors say they’re willing to pay more for pensions, many want the ability to shift their employees to defined-contribution plans that give them control over the costs.

But will Democrats in Hartford defy their labor friends and rescue Connecticut’s underwater cities? Connecticut voters are only beginning to understand the damage from two terms of Mr. Malloy.

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“We Choose Debt…”

Authored by Simon Black via,

I’ve long held a working theory that US voters are completely predictable in Presidential elections.

The idea is that Americans almost invariably tend to swing wildly every few election cycles, voting for the candidate who is as close to the opposite of the current guy as possible.

Let’s go back a few decades to, say, Jimmy Carter.

In 1976, the country was sick and tired of the corruption, scandal, and disgrace of Richard Nixon’s administration (which at that point had been inherited by Gerald Ford).

Jimmy Carter was pretty much the opposite of Richard Nixon– a youthful outsider versus an aging crony.

After four years of economic disaster, Americans swung in the opposite direction from Carter, choosing an older, polished conservative in Ronald Reagan who represented strength and stability.

That trend lasted for twelve years– two terms with Reagan, and one term with his successor George HW Bush, after which the country swung in the other direction again– to Bill Clinton.

Clinton was another young, energetic liberal, pretty much the opposite of the elderly, curmudgeonly Bush.

After eight year of Clinton and his personal scandals, the country swung again to George W. Bush, a God-fearing, fundamental conservative who wouldn’t cheat on his wife. He represented Clinton’s opposite.

And after eight years of war and economic turmoil, the country swung once again to Bush’s opposite– a youthful, charismatic, black outsider.

Eight years later, the 2016 election was won by a man who is as far from Barack Obama as it gets.

Now, however you feel about the current guy, it’s safe to say that the country is probably going to wildly swing in the opposite direction in either 2020 or 2024.

Last night the world got a sneak peak at what that might look like– Congressman Joe Kennedy III, the 37-year old grandnephew of John F. Kennedy.

The young Congressman clearly represents Trump’s opposite and seems to embody so many of the gargantuan social movements that are coming to a head– the Dreamers, #metoo, BlackLivesMatter, etc.

Now, I typically hate talking about something as trite as politics and elections; elections merely change the players. It’s the game that’s rotten.

But in the Congressman’s rebuttal last night after the State of the Union address, he said something that I found quite alarming, almost inconceivable.

He lamented that the government has turned America into a “zero-sum game” where benefits received by one group must come at the expense of another – fund health insurance by cutting funding for education; build new highways by slashing teachers’ pensions.

He cited a number of examples, and then told his audience, “We choose both!”

Given the thunderous applause at that remark, everyone seemed to agree that the wealthiest, most prosperous nation in the world should never have to make a single tough financial decision.

Americans should have everything they want. And somehow, the money to pay for it all will just magically appear.

I found this astonishingly naive. He should have said, “We choose debt!” Because that’s the only way they’ll be able to pay for any of it.

Bear in mind the US government is already nearly $21 trillion in the hole and spending hundreds of billions of dollars each year just to pay interest on the debt.

In Fiscal Year 2017, in fact, the Treasury Department reports that interest payments on the debt hit a new high of $458,542,287,311.80.

That’s about 15% of federal government tax revenue… just to pay interest.

On top of that, the government spent another $2.15 trillion on Social Security and Medicare, and $720+ billion on defense spending.

So– just between interest, Social Security, Medicare, and Defense, they spent $3.3 trillion.

Total tax revenue was only $3 trillion to begin with.

So before they paid for ANYTHING else… National Parks, Homeland Security, infrastructure, foreign aid, or even paid the electric bill at the White House, they were hundreds of billions of dollars in the hole.

On top of that, the federal government has entire trust funds that are completely insolvent.

Both the Federal Highway Fund and the Disability Insurance fund, for example, have been bailed out within the last two years.

And there are several more, from the Pension Benefit Guarantee Corporation to Social Security itself.

This amounts to literally tens of trillions of dollars in liabilities; according to the Treasury Department’s own estimates from Fiscal Year 2016, its long-term liabilities amount to $46.7 trillion.

I find it simply extraordinary how few people in power seem to have a grasp on the magnitude of these long-term challenges.

Instead, the solution is to give everything to everyone without ever having to make a single responsible financial decision.

It’s total lunacy, a new form of American socialism that will be the final nail in the fiscal coffin.

And if history is any indicator, it’s coming… possibly as early as 2020.

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KKR Sees A 100% Probability Of Recession In 24 Months

When predicting the future, there are two types on Wall Street: the majority, who see nothing but blue skies, like Bank of America which forecasts no recession  until 2027 (when the S&P will supposedly be 3,500) resulting in the longest economic expansion in history, and a minority who admit they have no idea what will happen.

And then there is KKR, which not only breaks the cardinal rule of established financial institutions and reveals a bearish forecast in its 2018 outlook, but – in breaking the second rule – it also puts a timeframe on it.

In short: KKR says there is a 100% probability the next recession will hit in the next 2 years.

The Private Equity firm unveils this gloomy forecast when it explains “Where Are We in the Cycle/Expected Returns.” Over the next 12 months, KKR is not especially gloomy, noting that the Trump tax cuts will likely offset the risk of an imminent slowdown…

As many of our readers will know, our base case for some time has been that a modest economic slowdown will occur in 2019. However, with tax cuts taking effect in 2018, the chance of a near-term recession appears quite remote. Consistent with this viewpoint, our proprietary recession model, which we show in Exhibit 64, suggests a limited chance of recession during the next 12 months. According to the model, high interest coverage, tight High Yield spreads, low delinquencies, and a modest consumer obligations ratio all appear to be favorable tailwinds that should sustain economic growth through 2018.

However, when KKR extends the projection horizon to 24 months, things get ugly.

Interestingly though, when we extend the model from 0-12 months to 24 months, the risk of recession increases materially. One can see this in Exhibit 65. We link the uptick in the model’s cautionary outlook in late 2019 and beyond to a structurally peaking U.S. dollar, a flattening yield curve, higher unit labor costs, and some reversion to the mean in both consumer confidence and home building expectations.

The above should not come as a surprise: the current expansion is already third longest in history:

Finally, KKR pulls no punches when making another warning: about the stock market.

Importantly, irrespective of where we are in the cycle, we believe that – compliments of central bank intervention – the current prices of many financial assets appear more cyclically elevated than current economic conditions might otherwise support. Indeed, as we show in Exhibit 67, the S&P 500 has been up for nine consecutive years, despite a U.S. economic recovery that has been lackluster by most standards. This performance feat by the U.S. equity market is quite extraordinary, as it has occurred only one other time on record – the 1991-1999 period.


And at the risk of pointing out the obvious, all of this is expected to hit in 2019/2020, just in time to make the next presidential election especially interesting.

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North Korea Dials Back Military Exercises As Shortages Of Food And Fuel Worsen

Last week we noted the surge in North Korean officials ransacking homes and raiding farms in order to feed their starving army, and now North Korea’s armed forces have reportedly scaled back their winter military exercises, which US officials have cited as a sign that the economic pressures brought by international sanctions are finally finding success, according to the Wall Street Journal – though North Korea has carried on a brisk black-market business with many countries, including China, despite these restrictions.

South Korea recently agreed to suspend military exercises until April after the warring neighbors agreed to a detente ahead of the Winter Games in PyeongChang. In one of the most significant gestures of unity between the two countries in decades, South Korean President Moon Jae-in and North Korean leader Kim Jong Un agreed to field a joint women’s field hockey team at the upcoming games.


As WSJ points out, the military exercises, which typically run from December through March, were slow to get started and are less extensive than usual, according to American officials familiar with intelligence reports and experts outside the government.

On one hand, the North, which has one of the largest standing armies in the world, could be trying to conserve resources after the UN Security Council passed sanctions last year banning the export of North Korean coal while severely restricting imports of oil, which the council hoped would help constrain the North’s nuclear program.

Already, observers are saying skimping on the exercises could detract from the army’s “ground readiness.”

“Where this will have an effect is on ground force readiness,” said Joseph S. Bermudez Jr. , a military analyst for 38 North, a website on North Korean affairs run by Johns Hopkins University’s U.S.-Korea Institute. “Military units have to train to maintain their proficiency.”

To be sure, the sanctions have done little to forestall the North’s nuclear and missile programs, which CIA Director Mike Pompeo recently warned are just “a handful of months” away from being able to build and ICBM capable of reliably striking targets within the US.

Indeed, during a New Year address, North Korean leader Kim Jong Un called on his generals to “mass-produce nuclear warheads and ballistic missiles.” North Korean officials have insisted that recent talks with Seoul center on Pyongyang’s participation in the Winter Olympics in South Korea, rather than on its nuclear program.

However, a wave of defections across the DMZ – something that hadn’t been seen in nearly a decade – and an upswing in executions against political officers for corruption are signs of strain, according to the Wall Street Journal.

“We are seeing defections happening in areas where we don’t generally see them, for example crossing the DMZ,” said Gen. Vincent K. Brooks, the top U.S. commander in South Korea, referring to the demilitarized zone that divides the Korean peninsula.

“We’re seeing some increase in executions, mostly against political officers who are in military units, for corruption,” the general said. He said the moves “are really about trying to clamp down as much as possible on something that might be deteriorating and keeping it from deteriorating too quickly.”

Foreign diplomats in the capital Pyongyang say these factors haven’t begun to seep into daily life in the country’s showcase capital. While there are no signs of instability yet, some indicators of stress are beginning to emerge.

North Korea’s armed forces have long struggled with tight budgets and antiquated hardware. A declassified 2015 report by the US Army on North Korea’s military noted that “the amount of time spent on larger exercises pales in comparison to most Western militaries.”

Still, North Korea retains what military sources described as “asymmetric” capabilities, which will help offset deficiencies in its army and air force. These include chemical weapons, artillery capable of hitting the South Korean capital, special-operations forces and Pyongyang’s missile and nuclear programs.

One obvious sign that winter exercises have been toned down has been a drop in public appearances by Kim at training events and bases. By this time last year, Kim had been observed at a winter river-crossing maneuver, an artillery exercise, and an air-combat competition.

This has inspired speculation that Kim might cancel the rest of the exercises altogether.

A third reason behind the cutbacks could be a drought that has limited food supplies in the notoriously isolated nation.

Bermudez of 38 North cited two reasons for the downturn in winter training. “One probable reason for it is the impact of sanctions because military exercises require fuel, which is a tight commodity now,” he said. “Another factor is that they are facing food shortages due to floods and drought.”

Meanwhile, the US Navy is pushing to begin “hail and query” searches of ships suspected of illegally transferring oil or other goods to North Korean ships in violation of the sanctions.


Still, Kim appears to be riding high, thanks to the tremendous propaganda victory that warming relations with the South represents. Satellite imagery has shown extensive preparations for a large military parade in Pyongyang that US and South Korean officials believe will be held on the eve of the Winter Olympics’ opening ceremony next week.

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76 Illegal Immigrants Found Crammed Into Tractor-Trailer In Texas, Including 13 Children

Border patrol agents found 76 illegal immigrants inside a tractor-trailer during a traffic stop northeast of Laredo, Texas last week. 

The agents pulled the truck over on U.S. Highway 83 to question the driver about his immigration status, according to the Border Patrol. Upon opening the rear of the trailer, 76 people from Mexico, Honduras, El Salvador and Guatemala were discovered – including 13 unaccompanied children. 

The driver, who turned out to be a U.S. citizen, was arrested by Customs and Border Protection agents and had his truck seized. 

These criminal organizations view these individuals as mere commodities without regard for their safety,” said Gabriel Acosta, assistant chief patrol agent for the Laredo border patrol sector. “The blatant disregard for human life will not be tolerated. We will continue to work with our law enforcement partners to disrupt and dismantle these organizations and prosecute those responsible.”

The US Customs and Border Protection Agency has been stepping up efforts to curb illegal immigration – taking such measures as searching a record number of cellphones and other devices at US points of entry last year while hunting for smugglers and terrorists – much to the chagrin of the ACLU. 

In fiscal year 2017, which ended Sept. 30, the government searched the devices of 30,200 people, the vast majority leaving the country, up from 19,051 in fiscal year 2016. More than 80% of the devices belonged to foreigners or legal permanent residents, with less than one in five owned by a U.S. citizen.

In this digital age, border searches of electronic devices are essential to enforcing the law at the U.S. border and to protecting the American people, said John Wagner, deputy executive assistant commissioner for the agencys Office of Field Operations. –WSJ

In early January, the agency released a new written policy outlining procedures for searching and seizing electronic devices at the border. The new guidance makes clear that agents can only examine information stored on the device, not data stored in the cloud thats accessible from the device.

Last year, the American Civil Liberties Union and the Electronic Frontier Foundation sued the administration on behalf of 10 US citizens and one legal permanent resident whose devices were searched or seized at the border. The groups argue in their suit that the government should be required to have a warrant to look at a travelers electronic devices.

Among the plaintiffs is a NASA engineer who said he was forced to unlock his phone and give customs agents access to its contents when he returned to the U.S. from Chile on Jan. 31, in the midst of chaos at airports from the fallout of President Donald Trumps original travel ban. Sidd Bikkannavar is an American-born engineer for NASAs Jet Propulsion Laboratory in California.

Last July, National Border Patrol Council President Brandon Judd told C-SPAN that a sharp dropoff in the number of illegal border crossers coming into the United States from Mexico is “nothing short of miraculous.”

As far as the Trump administration’s efforts on immigration, this is something they campaigned heavily on.

We have never seen such a drop that we currently have.

There’s a vibe, there’s an energy in the Border Patrol that’s never been there before in 20 years that I’ve been in the patrol.  –Brandon Judd via Washington Examiner

Judd went on to say that Trump’s two Executive Orders instructing border agents to fully carry out laws is in sharp contrast to the Obama administration, which kept agents from performing their sworn duties.

At the time Washington Examiner reported a 53% decrease in apprehensions at the Southwest border compared to 2016 – a 6 year low:

The NBPC President added that a southern border wall was necessary for select parts of the border, however he added that the entire border between the U.S. and Mexico does not need a full fence.

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Six Years After Bankruptcy, Stockton Is Preparing To Start Handing Out Free Money

Almost six years after a judge declared Stockton, Calif the most populous US municipality to ever declare bankruptcy, the city has struggled through a painful Chapter 9 restructuring, but its primarily agriculture-based economy remains mired in poverty.

As KQED News explains, Stockton residents are struggling with stagnant wages, rising home prices due to the city’s proximity to Silicon Valley and a loss of middle class jobs – all against a backdrop of the looming threat of automation. The city first filed for bankruptcy in 2012.

The pervasive poverty in his city is what led Stockton Mayor Michael Tubbs to announce last year that the city would soon begin an interesting social experiment.

Starting later this year, a random sample of 300,000 Stockton residents will receive $500 every month with no strings attached. The program is set to become the US’s largest experiment with a policy that has become a favorite topic of Mark Zuckerberg and his Silicon Valley peers: Universal Basic Income.



Mayor Michael Tubbs

UBI was famously first proposed by Richard Nixon as a way to soften the impact of post-industrial job losses. But the American left is increasingly discussing it as one method for curbing widening income inequality. Tubbs hopes to begin making payments as soon as August.

And as mayor, Tubbs says it’s his duty to help Stocktonites lift themselves out of their dire circumstances.

“I feel that as mayor it’s my responsibility to do all I could to begin figuring out what’s the best way to make sure that folks in our community have a real economic floor,” Tubbs said.

“I think Stockton is absolutely ground zero for a lot of the issues we are facing as a nation,” Tubbs said.

To the relief of Stockton’s taxpayers (and lenders), the project is receiving private funds: Dorian Warren co-chairs the Economic Security Project, which is contributing $1 million to the initiative. He told KQED that the goal is to gather data on the economic and social impacts of giving people a basic income. In addition to tracking what residents do with the money, Warren said they will be monitoring how a basic income affects things like self-esteem and identity.

“What does it mean to say, ‘Here is unconditional guaranteed income just based on you being a human being?’ ” Warren asked.

The hope is to demonstrate UBI’s potential and encourage other cities to give it a try.

Michelle Anderson, a Stanford law professor, said Stockton may discover it gets more economic stimulus by giving money to its citizens rather than corporations it hopes will bring in jobs and tax revenue.

“The UBI that is being proposed in Stockton now is very small compared to the big corporate subsidies that cities like that engage in,” Anderson said.

However, nothing has been said about the fate of the experiment once private funding runs out: And there’s probably a good reason for that.

As the city’s mayor admits, Stockton has racked up millions in debt on development projects in the past.

“We’ve overspent on things like arenas and marinas and things of that sort to try to lure in tourism and dollars that way,” he said.

Tubbs thinks the UBI experiment will show that Stockton’s best bet is to invest in its own people.

But not everybody agrees.

* * *

In what he describes as a “radical critique of Universal Basic Income”, Charles Hugh Smith explained in a post we published back in June how UBI – far from staving off widening income inequality – would instead lead to de facto “serfdom”.

But a radical critique must go much, much further, and ask: is UBI the best that we can do? If we provide the basics of material security – the bottom level of Maslow’s hierarchy of human needs – what about all the higher needs for positive social roles, meaningful work, and the opportunity to build capital?

This critique reveals the unintended consequences of UBI: rather than deliver a Utopia, UBI institutionalizes serfdom and a two-class neofeudalism in which the bottom 95% scrape by on UBI while the top 5% hoard what every human wants and needs: positive social roles in our community, meaningful work that makes us feel needed, and the opportunity to build capital in all its manifestations.

UBI is the last gasp of a broken, dying system, a “solution” that institutionalizes all the injustices of serfdom under the guise of aiding those left behind by automation. We can do better–we must do better–and I lay out how to do so in this book.

A radical critique must also examine the widely accepted assumption that automation will destroy most jobs. Is this assumption valid? It turns out this assumption rests on a completely false understanding of the nature of work, the economics of automation and the presumed stability of an unsustainable global economy.

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Misleading With Numbers: It’s Worse When The Government Does It

Authored by Gary Galles via The Mises Institute,

Major international comparisons have long concluded that Americans’ ability to effectively utilize mathematics is inadequate. Such conclusions divide students, parents, teachers and administrators into camps that share little more than blaming others for the problems. However, it is unclear whether all the finger-pointing indicates a real desire to overcome our innumeracy. In fact, we systematically misuse numbers to distort reality because we want to fool ourselves, making our ineptitude no surprise.

One of today’s most obvious misleading number games is grade inflation. Teachers have accommodated student desires for higher grades to the point that the median GPA of graduating college seniors has risen around a full grade point since it was about 2.2 in 1965. At some schools, almost everyone now gets As and Bs, and who is valedictorian has become a question of how many “perfect” students will share that title. Students have also pushed to allow A+ grades that count more.

High schools have gone even further. Many make advanced placement or community college courses worth an extra grade point. This has created a competition among students to take as many such GPA-padding courses as possible, especially ones they discover are actually easier than the corresponding high school courses. These and other policies (e.g., statewide comparisons crafted to show that, as in Lake Woebegone, all children are above average) have, however, thrown away much of the useful information such evaluations once contained.

Price inflation is another form of ego-building by manipulating comparison numbers. For most of us, if we want to brag that, say, we make more than our parents did, enough years of inflation can make it so. On the other hand, older Americans use it to “prove” how much better things used to be (e.g., “I remember when bread was a nickel” or “I only paid $22,000 for my house”).

Statistics and percentages are subject to the same abuse. Statistics are routinely manipulated, as with attempts to make insignificant changes appear significant. Instead of saying some drug increases the probability of some form of cancer from 0.00001 to 0.00003, reports scream that it triples your risk (from almost zero to almost zero). And “giving it 100%” was once going all out, but that has now frequently been eclipsed by claims of giving it 110%, 150%, 200%, or even 1000%. I’m 1000000% sure such inflated hyperbole is misleading.

We manipulate clothing sizes. Adults want to feel thinner, so what was a given size dress years ago is now a smaller size. Parents, however, want their children to be “ahead of the curve,” so some children’s sizes have changed to accommodate their “Lake Woebegone” desire for everyone to have children that are above average.

We manipulate numbers to fool themselves in other areas as well. So, if we were honest about our numerical dishonesty, perhaps we should conclude that, while we would like to handle numbers more deftly, most of us are unwilling to invest the time and effort necessary. And in many cases, we simply don’t want to “do it right,” because that would force us to abandon self-delusions we want for the reality we wish to avoid or deny.

As concerning as Americans’ numerical self-deceptions are, government deceptions are worse. They are worse because government’s fingers invade an almost uncountable number of areas, often with trillions of dollars involved, but especially because our “public servants” mislead us rather than us misleading ourselves when we choose. And misrepresenting issues to create political support, following the old adage that “figures don’t lie, but liars figure,” is a far surer path to reducing citizens’ general welfare than advancing it.

Abuse of Numbers in Politics

Examples of political abuse of numbers are abundant. So consider just a few examples.

One of the most common misrepresentations of the costs of government spending is ignoring what economists call the excess burden of taxation. In addition to the resources taken from citizens to fund spending, tax wedges between what buyers pay and what sellers receive destroy productive trades and the gains they create. A 20% tax would destroy those trades generating less than $1.20 in value per dollar spent; raising it to 30% would also destroy trades generating between $1.20 and $1.30 in value per dollar spent. In 2006, Martin Feldstein estimated the excess burden at 76 cents per dollar of added tax revenue. This estimate (not the highest proposed) means one more dollar of government spending would cost society $1.76. That is, every dollar of additional government spending would have to generate more than $1.76 in benefits to even conceivably improve Americans’ general welfare. But I have never seen an official government project evaluation that included those costs.

Another huge deception involves government trust funds. For instance, the over $2 trillion in the Social Security trust fund buttresses claims that serious solvency problems are small enough and far enough in the future to pretend away for now. But the excess “contributions” have already been borrowed by the Treasury, and the money spent, leaving a trust fund of IOUs from one government pocket to another, unbacked by any real assets.

Imagine saving for a purchase by putting $100 in a cookie jar each week. But each week, you take the money back out and spend it, replacing it with an IOU from you to yourself. The only way your fund can finance the intended purchase is if you make your own IOUs good from other sources of income. How can Treasury redeem its cookie jar of empty promises? Massive future tax increases.

The absence of a “real” trust fund means that the day of reckoning will not be when the trust funds are exhausted, but whenever the Treasury must transfer resources to the program. And that has been going on for years, with results seriously deteriorating in the future.

The 14- or 15-digit unfunded liabilities in the Social Security and Medicare programs (and plenty more at federal, state and local levels), which dwarf the official federal debt, are also almost universally ignored. One exception is in the fine print of Social Security statements. My latest one said that “The law governing benefit amounts may change because, by 2034, the payroll taxes collected will be enough to pay only about 79 percent of scheduled benefits.” In other words, the real cost must include the fact that mega-trillions of dollars of promises will simply be reneged on in the future.

Another area of government number abuse is how benefit cost analysis is used. It has morphed from a technique to organize and clarify our judgements on projects to a systematic way of misrepresenting reality in the desired political direction. Excess burdens are ignored, as discussed above. But that is compounded by counting multiplier effects where government spends money but assuming that raising the money has no similar effect in the opposite direction. Double counting of benefits is endemic (e.g., counting jobs created and income generated as if they are separate benefits, when those are really two different ways of counting the same thing twice. In fact, jobs actually represent the burdens borne in order to receive the income–costs, not added benefits. Costs and completion dates are massively underestimated as a matter of routine,, overstating benefits (that don’t start until later than promised) and understating costs (California’s bullet train offers an excellent current example).

When misrepresentation is piled upon misrepresentation, “analysts” who are clearly aware that “you will never work in this town again unless you get what I consider the right answers,” can reverse-engineer assumptions necessary to produce those answers as forecasts.

But those forecasts are so vastly separated from reality that they provide virtually no useful guidance.

The dishonest marketing of Obamacare also provided some examples of “inside baseball” ways numbers get twisted into huge misrepresentations.

Obamacare’s designers used their knowledge of the Congressional Budget Office’s methods to manipulate public perceptions. This is the genesis of the program’s mandates. Jonathan Gruber said “The bill was written in a tortured way to make sure the CBO did not score the mandate as taxes. If the CBO scored the mandate as taxes, the bill dies. OK, so it’s written to do that,” to take advantage of “the stupidity of the American voter.”

The manipulation also extended to the timing of Obamacare’s implementation, as CBO rules specify that one must only go out ten years in estimating costs. That made the end date 2019. But Obamacare cost almost nothing until 2013, which allowed six years of costs to be presented as if it was actually comparable to ten year’s worth of benefits. That is how a ten-year CBO cost estimate of $848 billion became $2 trillion, once time erased the four-year cheat.

Many varieties of nudgers, paternalists and would-be dictators have claimed that their superior understanding should be substituted for individuals’ own choices, “for their own good.” Examples of individual innumeracy make up part of their “listen to me instead” promotional toolkit. And real world people do sometimes deviate from the always profit- or utility- maximizing “homo economicus” caricature. That may be because people cannot accurately recognize all the incentives involved in a given scenario, their calculating abilities may not be up to the task, or even that we sometimes prefer better self-regard to added income or self-deception to some aspects of reality.

However, we must recognize that behavior which may include violations of the “homo economicus” artificial standard is not necessarily inferior to the relevant alternatives in the real world, rather than that imaginary one. In practical applications, those always involve some coercive displacement of individuals’ voluntary choices by self-assessed experts, with allegedly superior understanding. And those who want us to follow their lead do not know us or our relevant circumstances better than we do, nor care for us more than we do for ourselves, however loudly they trumpet supposed altruism. They are unwilling to trust that simply better “educating” us is sufficient if it leaves the choices of how to respond in our hands. Further, such well-wishing does not explain much of the actual behavior of those toward whom they profess to care so much, nor does the history of such efforts have an untarnished track record.

However, even more ominous is the overwhelming extent to which government, supposedly the means to be used to improve our well-being, routinely relies on multiple misrepresentations in almost every area within its Brobdingnagian reach. Such intentional lying advances others’ interests—theirs–not ours, because, as Thomas Sowell has put it, “When you want to help people, you tell them the truth.”

Combined with the frequency with which government policies are enacted and supported through the alteration and/or wholesale abandonment of the truth, this justifies massive suspicion rather than a presumption of efficacy for such polices and trustworthiness of their promotion, which makes the magnitudes of our mathematical limitations and self-created foibles insignificant in comparison. 

via RSS Tyler Durden