Former Vice President Joe Biden says he is not prepared to support ending the federal ban on marijuana until science clarifies “whether or not it is a gateway drug.” Taking him at his word, that means Biden, a leading contender for the 2020 Democratic presidential nomination, will never support marijuana legalization.
During a town hall in Las Vegas on Saturday, Biden said states should be free to legalize marijuana but once again reserved judgment about whether national prohibition should be repealed. “The truth of the matter is, there’s not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug,” he said. “It’s a debate, and I want a lot more before I legalize it nationally. I want to make sure we know a lot more about the science behind it….It is not irrational to do more scientific investigation to determine, which we have not done significantly enough, whether or not there are any things that relate to whether it’s a gateway drug or not.”
Contrary to Biden’s implication, there has been a lot of research on this question during the last half-century or so. While studies have consistently found an association between cannabis consumption and use of other illegal drugs, the nature of that relationship remains controversial, and it probably always will.
One possible explanation for the correlation that worries Biden is that the experience of using marijuana makes people more likely to try other illegal drugs. That’s the explanation Biden has in mind when he says marijuana might be a “gateway drug,” a concern he also voiced during the Obama administration. But another possible explanation is that people who use marijuana are different from people who don’t in ways that also affect their likelihood of using other drugs. Pre-existing differences in genetics, personality, and environment could explain both tendencies.
The psychologist Andrew Morral and his colleagues at the RAND Drug Policy Research Center have shown that an underlying propensity to use drugs, combined with the relative availability of different intoxicants, could entirely account for the three phenomena emphasized by advocates of the gateway theory: 1) that people tend to use marijuana before other illegal drugs, 2) that people who use marijuana are more likely to use other illegal drugs, and 3) that the likelihood of progression increases with the frequency of marijuana use. Their mathematical model did not disprove the gateway theory, but it did prove that the gateway theory is not necessary to explain these observations. Morral et al. concluded that “available evidence does not favor the marijuana gateway effect over the alternative hypothesis that marijuana and hard drug initiation are correlated because both are influenced by individuals’ heterogenous liabilities to try drugs.”
Several studies have sought to test the gateway theory by taking into account other variables that may be independently associated with drug use. A longitudinal study of teenagers and young adults in New Zealand, for example, found a strong association between frequency of cannabis consumption and use of other illegal drugs after adjustment for nearly three dozen potential confounding variables. But as Morral et al. pointed out, even such extensive efforts to control for confounders are unlikely to do so perfectly. They calculated that when adjustment for confounding “fails to capture just 2% of the variance in drug use propensity,” marijuana users “appear to have odds of initiating hard drugs that are twice as great as non-users of marijuana.” Hence “it is hardly surprising that controlling for these covariates does not eliminate the association between marijuana and hard drug use.”
Another approach examines this association in twins, who share the same home environment and have similar or, in the case of monozygotic pairs, identical genes. An Australian study found that in cases where one twin had used marijuana before turning 17 and the other had not, the first twin was more than twice as likely to use opioids, regardless of whether the twins were identical or fraternal and even after adjusting for several potential confounders. A similar study based on the Vietnam Era Twin Registry found that subjects who had used marijuana before turning 18 were nearly three times as likely to use opiates as co-twins who had not. In a study of Dutch twins, the risk ratios were even higher: The subjects who had used marijuana at 17 or younger were more than 16 times as likely as their co-twins to report “hard drug” use, for instance.
Even these seemingly compelling results do not rule out the possibility that pre-existing differences account for the associations. Whatever situational factors explain why one twin uses marijuana as a minor and the other does not may also explain why one uses “hard drugs” and the other does not. “The observation that familial factors do not entirely explain the association between early cannabis use and subsequent [drug] use, while suggesting a potential causal role for cannabis use in the development of other illicit drug use, does not prove such an association,” the authors of the Dutch study noted. “There may be other factors, especially aspects of the non-shared environment (e.g., peer affiliations) preceding the onset of cannabis use that might account for the observed associations.”
Even if it’s true that trying marijuana makes people more likely to try other drugs, the policy implications are not obvious. If “the legal status of marijuana makes it a gateway drug,” as a 1999 report from the organization that became the National Academies of Sciences, Engineering, and Medicine surmised, legalizing cannabis could reduce consumption of other drugs. There is some evidence that has happened in states that have legalized marijuana for medical or recreational use.
It’s not clear what sort of research Biden imagines will answer this question once and for all, barring a controlled, randomized experiment with human subjects, which would be unethical as well as impractical. Possibly he is just leaving himself wiggle room to eventually support federal legalization (which two-thirds of Americans and three-quarters of Democrats favor) without alienating voters who are still leery of the idea.
Before New York Gov. Andrew Cuomo decided to support marijuana legalization last December, he likewise worried that “marijuana leads to other drugs, and there is a lot of proof that is true.” Less than two years later, Cuomo changed his mind. The issue was not decisively resolved in the interim.
from Latest – Reason.com https://ift.tt/33Wa2bm
via IFTTT
3 Dead In Oklahoma Wal-Mart Shooting; Suspect At Large
A suspect is believed to be at large after shooting up a Wal-Mart in Duncan, Oklahoma, about an hour and a half southwest of Oklahoma City, according to local media reports.
Officers were called in to handle an active shooter situation at the Wal-Mart Supercenter on Highway 81 Monday morning.
Officials with the Oklahoma Highway Patrol have confirmed that at least three people have been killed, and the suspect is not in custody. The motive behind the attack is unclear.
People in the area have been asked to look out for a suspect wearing all black.
Former Vice President Joe Biden says he is not prepared to support ending the federal ban on marijuana until science clarifies “whether or not it is a gateway drug.” Taking him at his word, that means Biden, a leading contender for the 2020 Democratic presidential nomination, will never support marijuana legalization.
During a town hall in Las Vegas on Saturday, Biden said states should be free to legalize marijuana but once again reserved judgment about whether national prohibition should be repealed. “The truth of the matter is, there’s not nearly been enough evidence that has been acquired as to whether or not it is a gateway drug,” he said. “It’s a debate, and I want a lot more before I legalize it nationally. I want to make sure we know a lot more about the science behind it….It is not irrational to do more scientific investigation to determine, which we have not done significantly enough, whether or not there are any things that relate to whether it’s a gateway drug or not.”
Contrary to Biden’s implication, there has been a lot of research on this question during the last half-century or so. While studies have consistently found an association between cannabis consumption and use of other illegal drugs, the nature of that relationship remains controversial, and it probably always will.
One possible explanation for the correlation that worries Biden is that the experience of using marijuana makes people more likely to try other illegal drugs. That’s the explanation Biden has in mind when he says marijuana might be a “gateway drug,” a concern he also voiced during the Obama administration. But another possible explanation is that people who use marijuana are different from people who don’t in ways that also affect their likelihood of using other drugs. Pre-existing differences in genetics, personality, and environment could explain both tendencies.
The psychologist Andrew Morral and his colleagues at the RAND Drug Policy Research Center have shown that an underlying propensity to use drugs, combined with the relative availability of different intoxicants, could entirely account for the three phenomena emphasized by advocates of the gateway theory: 1) that people tend to use marijuana before other illegal drugs, 2) that people who use marijuana are more likely to use other illegal drugs, and 3) that the likelihood of progression increases with the frequency of marijuana use. Their mathematical model did not disprove the gateway theory, but it did prove that the gateway theory is not necessary to explain these observations. Morral et al. concluded that “available evidence does not favor the marijuana gateway effect over the alternative hypothesis that marijuana and hard drug initiation are correlated because both are influenced by individuals’ heterogenous liabilities to try drugs.”
Several studies have sought to test the gateway theory by taking into account other variables that may be independently associated with drug use. A longitudinal study of teenagers and young adults in New Zealand, for example, found a strong association between frequency of cannabis consumption and use of other illegal drugs after adjustment for nearly three dozen potential confounding variables. But as Morral et al. pointed out, even such extensive efforts to control for confounders are unlikely to do so perfectly. They calculated that when adjustment for confounding “fails to capture just 2% of the variance in drug use propensity,” marijuana users “appear to have odds of initiating hard drugs that are twice as great as non-users of marijuana.” Hence “it is hardly surprising that controlling for these covariates does not eliminate the association between marijuana and hard drug use.”
Another approach examines this association in twins, who share the same home environment and have similar or, in the case of monozygotic pairs, identical genes. An Australian study found that in cases where one twin had used marijuana before turning 17 and the other had not, the first twin was more than twice as likely to use opioids, regardless of whether the twins were identical or fraternal and even after adjusting for several potential confounders. A similar study based on the Vietnam Era Twin Registry found that subjects who had used marijuana before turning 18 were nearly three times as likely to use opiates as co-twins who had not. In a study of Dutch twins, the risk ratios were even higher: The subjects who had used marijuana at 17 or younger were more than 16 times as likely as their co-twins to report “hard drug” use, for instance.
Even these seemingly compelling results do not rule out the possibility that pre-existing differences account for the associations. Whatever situational factors explain why one twin uses marijuana as a minor and the other does not may also explain why one uses “hard drugs” and the other does not. “The observation that familial factors do not entirely explain the association between early cannabis use and subsequent [drug] use, while suggesting a potential causal role for cannabis use in the development of other illicit drug use, does not prove such an association,” the authors of the Dutch study noted. “There may be other factors, especially aspects of the non-shared environment (e.g., peer affiliations) preceding the onset of cannabis use that might account for the observed associations.”
Even if it’s true that trying marijuana makes people more likely to try other drugs, the policy implications are not obvious. If “the legal status of marijuana makes it a gateway drug,” as a 1999 report from the organization that became the National Academies of Sciences, Engineering, and Medicine surmised, legalizing cannabis could reduce consumption of other drugs. There is some evidence that has happened in states that have legalized marijuana for medical or recreational use.
It’s not clear what sort of research Biden imagines will answer this question once and for all, barring a controlled, randomized experiment with human subjects, which would be unethical as well as impractical. Possibly he is just leaving himself wiggle room to eventually support federal legalization (which two-thirds of Americans and three-quarters of Democrats favor) without alienating voters who are still leery of the idea.
Before New York Gov. Andrew Cuomo decided to support marijuana legalization last December, he likewise worried that “marijuana leads to other drugs, and there is a lot of proof that is true.” Less than two years later, Cuomo changed his mind. The issue was not decisively resolved in the interim.
from Latest – Reason.com https://ift.tt/33Wa2bm
via IFTTT
“Despite concerns in the third quarter, bears never had a strong argument for why stocks were overvalued and the major indexes simply traded sideways for much of the last six months, wrote Robert Sluymer, technical strategist at Fundstrat Global Advisors.
“We ‘continue to view the market cycle as being a normal pause in an ongoing secular bull market similar to what developed in 2016, 2011 and the ‘cycle’ pullbacks that developed during the secular bull markets in the 50s-60s and 80s-90s.”
It is an interesting point. The current bull market certainly seems unstoppable, but the question that must be answered, fundamentally, is if this is indeed a “secular bull market,” and if so, “where are we” within that cycle.
What is a “secular market?”
“A secular market trend is a long-term trend which lasts 5 to 25 years and consists of a series of primary trends. A secular bear market consists of smaller bull markets and larger bear markets; a secular bull market consists of larger bull markets and smaller bear markets.”
In a “secular bull’ market, the prevailing trend is “bullish” or upward-moving. In a “secular bear” the market tends to trend sideways with severe drawdowns and sharp rallies.
However, what truly defines long-term secular markets are valuations, and whether those valuations are contracting or expanding.
The chart above shows the history of secular bull market periods going back to 1871 using data from Dr. Robert Shiller. One thing you will notice is that secular bull markets tend to begin with CAPE 10 valuations around 10x earnings or even less. They tend to end around 23-25x earnings or greater. (Over the long-term valuations do matter.)
As noted above, what drives long-term secular “bull” markets is “valuation expansion.” In order to have the magnitude of “valuation expansion” needed to support a secular “bull” market, you must both start at “under-valued” levels and have the economic factors and investor enthusiasm to support a return to “over-valued” levels.
The problem with the idea that we are currently in a secular bull market akin to the 1950’s or 1980’s has everything to do with economic growth. Over the long-term, stocks CAN NOT outgrow the economy, as the stock market is a reflection of the companies engaging in the economy. This is why “valuations” are so important. Investors, in their “exuberance” can pay more than a company can generate over the long-term. When this exuberance is realized, valuations “contract” to reflect reality.
For several reasons, as we will discuss, the current “secular bull market,” if you can call it that, is likely more akin to the very brief cycle of the 1920’s.
Interest Rates & Debt
The argument that the U.S. has entered into another “secular bull market” is because interest rates are low. While the chart clearly shows that interest rates have hit the same levels as last seen in 1946, the view rates will rise strongly from current levels assumes that the same economic drivers exist today.
Rising interest rates are a function of strong, organic, economic growth that leads to a rising demand for capital over time. If we refer to the GDP chart above, there have been two previous periods in history that have had the necessary ingredients to support rising interest rates. The first was during the turn of the previous century as the country became more accessible via railroads and automobiles, production ramped up for World War I, and America began the shift from an agricultural to industrial economy.
The second period occurred post-World War II as America became the “last man standing” as France, England, Russia, Germany, Poland, Japan, and others were left devastated. It was here that America found its strongest run of economic growth in its history as the “boys of war” returned home to not only start rebuilding the countries that they had just destroyed, but
But that was just the start of it.
Beginning in the late 50’s, America embarked upon its greatest quest in history as man took his first steps into space. The space race that lasted nearly twenty years led to leaps in innovation and technology that paved the wave for the future of America. Combined with the industrial and manufacturing backdrop, America experienced high levels of economic growth and increased savings rates which fostered the required backdrop for higher interest rates.
Currently, the U.S. is no longer the manufacturing powerhouse it once was and globalization has sent jobs to the cheapest sources of labor. Technological advances continue to reduce the need for human labor and suppress wages as productivity increases. Today, the number of workers between the ages of 16 and 54 is at the lowest level relative to that age group since the late 1970’s. This is a structural and demographic problem that continues to drag on economic growth as nearly 1/4th of the American population is now dependent on some form of governmental assistance.
This structural employment problem remains the primary driver as to why “everybody” is still wrong in expecting rates to rise.
However, this is also why whenever there is a discussion of valuations, it is invariably stated that “low rates justify higher valuations.” The argument is based on an assumption that rates are low BECAUSE the economy is healthy and operating near full capacity.
The reality is quite different. The main contributors to the illusion of permanent prosperity have been a combination of artificial and cyclical factors. Low interest rates, when growth is low, suggests that NO valuation premium is “justified.“
Currently, investors are taking on excessive risk, and thereby virtually guaranteeing future losses, by paying the highest S&P 500 price/revenue ratio in history and the highest median price/revenue ratio in history across S&P 500 component stocks.
Importantly, when talking about “Secular Bull Markets,” the amount of debt in the system plays an important factor. The last time that debt-to-GDP ratios hit such a peak was going into the “Great Depression.” Since debt retards economic growth by diverting savings into debt payments rather than productive investments, it is hard to suggest a “secular bull market” can gain traction given excessive debt levels.
Earnings Reversions
One of the more significant reasons the markets have likely not entered into the next great “Secular Bull Market” is due to the artificial inflation of earnings from massive share repurchases, corporate tax cuts, and excessive liquidity from Central Bank interventions.
Given the current deviation of both earnings from their long-term growth trend, and the deviation from reported profits, as shown below, the eventual mean reversion will likely be brutal.
The Great 9-Year Secular Bull Market
While the idea of a new “secular bull market” is certainly optimistic, it is also a dangerous concept for investors to “buy” into.
As stated above the stock market, over the long-term, is a reflection of the underlying economic activity. Personal consumption makes up roughly 70% of that activity. Given the consumer is more heavily leveraged than at any other point in history, it ishighly unlikely they will be able to become a significantly larger chunk of the economy. With savings low, income growth weak, and debt back at record levels, the fundamental capacity to re-leverage to similar extremes is no longer available.
Let’s also not forget the singular most important fact.
The breakout of the markets in 2013, following the two previous bear markets, was NOT one based on organic economic fundamentals. Rather it was from massive monetary interventions by Central Banks globally.The previous secular bull markets in our history were ones which were derived from extreme under-valuations, washed out financial markets, and extreme negative sentiment.
Such is clearly not the case today.
The “secular bull market” of the 1920’s is probably the best example of the cycle we are in currently. Then banks were lending money to individuals to invest in the IPO’s the banks were bringing to market. Interest rates were falling, economic growth was rising, and valuations were rising faster than underlying earnings and profits.
There was no perceived danger in the markets, and little concern of financial risk as “stocks had reached a permanently high plateau.”
It all ended rather abruptly.
Currently, it is clear that stock prices can be lofted higher by further monetary tinkering. However, the larger problem remains the inability for the economic variables to “replay the tape” of the ’50s or the ’80s. At some point, the markets and the economy will have to process a “reset” to rebalance the financial equation.
In all likelihood, it is precisely that reversion which will create the “set up” necessary to actually begin the “next great secular bull market.”Unfortunately, as was seen at the bottom of the market in 1974, there will be few individual investors left to enjoy the beginning of that ride.
Boris Johnson’s Former Lover Warns She Will “No Longer Keep His Secrets”
Even with polls showing his conservative party with a plurality as high as 44% ahead of next month’s election, UK Prime Minister Boris Johnson is struggling with a scandal that has come straight out of his past to trip him up with the finish line in sight. According to the Independent, London businesswoman Jennifer Arcuri, who allegedly carried on a years-long affair with the prime minister back when he was mayor of London, is angry with Johnson because she feels he has left her to deal with the fallout from this scandal alone.
After all, Arcuri has found herself at the center of an investigation by the Independent Office for Police Conduct, a city agency which has the power to investigate London mayors even after they leave office.
With the investigation puttering on in the background of all this Brexit drama, the public has had other things to focus on in recent months. But Arcuri is getting fed up after months of mistreatment by Johnson, her former beau. Arcuri is questioning why Johnson didn’t officially declare their relationship before now, since not doing so has turned into a liability for the PM.
Believing that she has been wronged by Johnson, Arcuri intimated to the press that she would no longer be keeping the PM’s secrets.
“I’ve been nothing but loyal, faithful, supportive, and a true confidante of yours. I’ve kept your secrets, and I’ve been your friend,” she said.
She insisted that Johnson should have “declared” their relationship to help protect her interests, even though he feared it might “prove controversial. Reports suggest the two dated for as long as 4 years.
She said: “I didn’t know anything about having to declare me.
“Now if you’re asking if he had declared me, would I have preferred that to avoid all of this humiliation? Absolutely.”
She claimed the then mayor had been ”worried” about doing so because he feared it would prove controversial.
A Conservative Party spokesman said: “Any claims of impropriety in office are untrue and unfounded. We consider these are vexatious and politically motivated attacks from the Labour Party in City Hall.
“Previous vexatious and unfounded allegations against the prime minister have been thrown out by the courts. An independent review by the Government Internal Audit Agency showed the claims made by the Labour Party about Ms Arcuri‘s company were false.
“Given that City Hall has made an unfounded complaint to the IOPC, we will not be making detailed comments until that process has finished. Full assistance has been offered to the IOPC so the matter can be quickly resolved.”
Arcuri said that she was particularly incensed when she tried calling Johnson for advice on handling the media scrutiny, only for him to hang up on her.
Ms Arcuri said she had attempted to contact Mr Johnson in recent weeks to ask for advice on how to deal with the media scrutiny, but that he had hung up on her.
She said: “He heard my voice. And I knew it was him. And he hung up. He said, ‘Yes, hello.’ And I simply asked: ‘Why did you block me?’ I wasn’t calling to cause problems, I just wanted a simple … acknowledgement for what had happened.”
To be sure, Arcuri remains a sideshow. As Bill Blain said earlier, UK politics is half-way to Hell in a handbasket.
It would be wrong to trust the polls – because it’s not just politicians are lying. So is the electorate. Everything has been turned on its head. My chum A, who runs a very successful business and is the very model of a small “c” conservative self-made man is so disgusted by the years of Cameron, May, and now Boris, that he’s actually going to vote for Corbyn on the basis it can’t get any worse. N – who has been a lifelong falafel-conservative is going to vote Liberal Democrat to save the UK from Brexit. And me? A lifelong champagne socialist who is likely to vote Tory. What a mess… ! Its really not natural.
According to a poll conducted between Nov. 14 and 16, the Conservatives came in first with 42% (+7), Labour second at 28% (-1), Lib Dems third at 13% (-4) and Brexit Party fourth at 5% (-5).
Fed Says Powell Unexpectedly Met With Trump, Mnuchin On Monday Morning
Moments ago, the Fed announced that in a previously unannounced meeting that was not on the official White House Calendar, Fed Chair Powell met with Trump and Mnuchin at the White House “to discuss the economy, growth, employment and inflation.” That boilerplate statement was followed by another, with the Fed noting that “Powell’s comments were consistent with his remarks at his congressional hearings last week. He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.”
What is notable is the Fed’s addition that “Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”
Considering Trump’s relentless Twitter barrage urging the Fed to cut rates more, and even go negative, as well with Trump’s periodic invocation that the Fed launch QE (which is odd since the Fed did launch QE last month), one can only imagine what Trump really said to Powell.
Statement on Chair Powell’s meeting with the President and the Treasury Secretary
At the President’s invitation, Chair Powell met with the President and the Treasury Secretary Monday morning at the White House to discuss the economy, growth, employment and inflation.
Chair Powell’s comments were consistent with his remarks at his congressional hearings last week. He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.
Finally, Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.
Have they not heard or understand his simple investment philosophy that his made him billions?
When “market geniuses,” who retrofit their analysis to price action, start trashing Buffett for lagging in this silly Tweet-driven, Fed-induced MoMo market it is usually a signal a big bubble is about to burst.
FedEx CEO Slams NY Times “Outrageous Distortion Of Truth”, Challenges Sulzberger To Debate Who Paid Less Taxes
FedEx founder Fred Smith was one of the more visible corporate chieftans delivering media stump speeches in favor of President Trump’s tax-cut plan, which still stands as his administration’s greatest achievement two years later. And in what looks almost like an act of vengeance, the New York Times on Sunday took a paddle to FedEx, accusing the company of campaigning for tax cuts on the promise it would help bolster corporate investment, only to pull back on investment once it got what it wanted, even going so far as to offer buyouts and slow the pace of investment in other projects.
According to NYT‘s analysis of FedEx’s filings, the company reaped big savings, bringing its effective tax rate down from 34% in fiscal year 2017 to less than zero in fiscal year 2018. Technically, the federal government owes FedEx money.
Two years after the law passed, the benefits to corporations like FedEx is becoming increasingly clear: Data compiled by Capital IQ show that there’s no statistically meaningful relationship between the size of the tax cut that companies and industries received, and the size of subsequent investments – meaning that, for all the NYT knows, tax cuts actually encouraged companies to cut their investments.
So far, the tax cuts have saved FedEx $1.6 billion – a huge sum over just 2 years. That’s compared with the $2 billion in taxes that the company has paid over the past 10 years.
A FedEx spokesman told NYT that it was unfair to judge the company by only one year’s investments, and insisted that the boost to investment would manifest over years.
“FedEx invested billions in capital items eligible for accelerated depreciation and made large contributions to our employee pension plans,” the company said in a statement. “These factors have temporarily lowered our federal income tax, which was the law’s intention to help grow G.D.P., create jobs and increase wages.”
FedEx is hardly unique among American corporations, the NYT said. So far, corporations have saved $100 billion more on taxes than companies had anticipated. Meanwhile, FedEx and many other firms have bolstered their spending on stock buybacks by a huge sum. From Q1 of 2018, when the tax law fully took effect, companies have spent nearly 3x as much on dividends and stock buybacks.
The New York Times published a distorted and factually incorrect story on the front page of the Sunday, November 17 edition concerning FedEx and our billions of dollars of tax payments and billions of dollars of investments in the U.S. economy. Pertinent to this outrageous distortion of the truth is the fact that unlike FedEx, the New York Times paid zero federal income tax in 2017 on earnings of $111 million, and only $30 million in 2018 – 18% of their pretax book income. Also in 2018 the New York Times cut their capital investments nearly in half to $57 million, which equates to a rounding error when compared to the $6 billion of capital that FedEx invested in the U.S. economy during that same year.
I hereby challenge A.G. Sulzberger, publisher of the New York Times and the business section editor to a public debate in Washington, DC with me and the FedEx corporate vice president of tax. The focus of the debate should be federal tax policy and the relative societal benefits of business investments and the enormous intended benefits to the United States economy, especially lower and middle class wage earners.
I look forward to promptly hearing from Mr. Sulzberger and scheduling this open event to bring further public awareness of the facts related to these important issues.
…and challenged the paper’s publisher and its editors to a debate in Washington (Smith and his top people at FedEx vs Sulzberger and his top people at the Times).
THE JOURNAL’S FINDINGS undercut one of Google’s core defenses against global regulators worried about how it wields its immense power – that the company doesn’t exert editorial control over what it shows users. Regulators’ areas of concern include anticompetitive practices, political bias and online misinformation.
Permit to me quote from the WSJ’s takedown at length – although I encourage readers, if possible, to read the entire (paywalled) version, for it contains a wealth of information, as well as lots of cool graphics:
Google’s evolving approach marks a shift from its founding philosophy of “organizing the world’s information,” to one that is far more active in deciding how that information should appear.
More than 100 interviews and the Journal’s own testing of Google’s search results reveal:
Google made algorithmic changes to its search results that favor big businesses over smaller ones, and in at least one case made changes on behalf of a major advertiser, eBayInc., contrary to its public position that it never takes that type of action. The company also boosts some major websites, such as Amazon.com Inc. and Facebook Inc., according to people familiar with the matter.
Google engineers regularly make behind-the-scenes adjustments to other information the company is increasingly layering on top of its basic search results. These features include auto-complete suggestions, boxes called “knowledge panels” and “featured snippets,” and news results, which aren’t subject to the same company policies limiting what engineers can remove or change.
Despite publicly denying doing so, Google keeps blacklists to remove certain sites or prevent others from surfacing in certain types of results. These moves are separate from those that block sites as required by U.S. or foreign law, such as those featuring child abuse or with copyright infringement, and from changes designed to demote spam sites, which attempt to game the system to appear higher in results.
In auto-complete, the feature that predicts search terms as the user types a query, Google’s engineers have created algorithms and blacklists to weed out more-incendiary suggestions for controversial subjects, such as abortion or immigration, in effect filtering out inflammatory results on high-profile topics.
Google employees and executives, including co-founders Larry Page and Sergey Brin, have disagreed on how much to intervene on search results and to what extent. Employees can push for revisions in specific search results, including on topics such as vaccinations and autism.
To evaluate its search results, Google employs thousands of low-paid contractors whose purpose the company says is to assess the quality of the algorithms’ rankings. Even so, contractors said Google gave feedback to these workers to convey what it considered to be the correct ranking of results, and they revised their assessments accordingly, according to contractors interviewed by the Journal. The contractors’ collective evaluations are then used to adjust algorithms.
Biases
Big vs. Small.
One major bias: a preference for big versus small. The WSJ notes that at least for shopping results, Google made the tweak as it believed consumers are more likely to find what they want at larger vendors. But this bias looks to me like it stymies, rather than promotes competition.
The bias is not limited to shopping, as WSJ reader James West noted in comments (agreeing implicitly with my interpretation of the anti-competitive effect of the Google practice):
James West
Our company, an independent publisher of financial coverage of small cap Canadian companies, has routinely been the target of what can only be explained as “manual downgrades” in Google search results. Our tests indicate a persistent pattern where Google is awarding search visibility increasingly to large US media enterprises, even where ours is local to the issue, and more detailed.
Google’s founders Page and Brin have built the company to thwart contact from its users, and now, as evidenced by WSJ’s coverage, there are widespread issues with Google’s monopoly on search. Thanks to WSJ’s coverage, we will commence a request process with Canada’s competition bureau to investigate Google for anti-competitive practices.
This company needs to be more closely regulated, as they are systematically eviscerating entire industries but reserving the bad behaviour it claims to police for its own financial gain.
Political
Conservative sites often claim their sites are disadvantaged compared to “liberal” or “mainstream” sites. This is not exactly news. Yet the bias extends beyond rightwing sites.
New data compiled by the World Socialist Web Site, with the assistance of other Internet-based news outlets and search technology experts, proves that a massive loss of readership observed by socialist, anti-war and progressive web sites over the past three months has been caused by a cumulative 45 percent decrease in traffic from Google searches.
The drop followed the implementation of changes in Google’s search evaluation protocols. In a statement issued on April 25, Ben Gomes, the company’s vice president for engineering, stated that Google’s update of its search engine would block access to “offensive” sites, while working to surface more “authoritative content.”
The World Socialist Web Site has obtained statistical data from SEMrush estimating the decline of traffic generated by Google searches for 13 sites with substantial readerships. The results are as follows:
* wsws.org fell by 67 percent
* alternet.org fell by 63 percent
* globalresearch.ca fell by 62 percent
* consortiumnews.com fell by 47 percent
* socialistworker.org fell by 47 percent
* mediamatters.org fell by 42 percent
* commondreams.org fell by 37 percent
* internationalviewpoint.org fell by 36 percent
* democracynow.org fell by 36 percent
* wikileaks.org fell by 30 percent
* truth-out.org fell by 25 percent
* counterpunch.org fell by 21 percent
* theintercept.com fell by 19 percent
I’m glad to see Taibbi speaking out in this Real News Network interview on this issue of growing censorship by Facebook and Google and hope that more journalists join him. With the help of so many of your readers sharing our post and encouraging your friends and family members to check us out, we’ve managed to stay on an even keel, while other “deemed to be leftie” sites have taken a traffic hit due to Google downgrading non-MSM sites greatly in their search rankings. Even the Intercept, hardly a blog-scale operation, got whacked.
The problem is only getting worse. The WSJ notes that Google is increasing the aggregate number of changes to its algorithms, to about 3,200 tweaks in 2018, up from more than 2,400 in 2017, and further from about 500 in 2010.
Influence of Advertisers: Blacklisting; Paywalled Sites
The WSJ investigation discusses how Google caters to the interests of big advertisers:
Some very big advertisers received direct advice on how to improve their organic search results, a perk not available to businesses with no contacts at Google, according to people familiar with the matter.In some cases, that help included sending in search engineers to explain a problem, they said.
In another incident, the WSJ documents how Google reversed a decision that demoted the search results of certain e-Bay pages, in response to lobbying by the company, a significant advertiser.
It’s no longer paranoid to say that “they” are out to kill news. First it was the Internet almost entirely displacing classified ads, which had accounted for roughly half of newspaper industry revenues in the US. The Internet also turned most people save those who are now oldsters off print newspapers, even though nothing is so efficient to scan, taking with it higher subscription rates and display ads. Then Facebook and Google sucked most online advertiser revenues to themselves.
To add insult to injury, Google implemented algos hostile to smaller sites, first targeting those that did what Google deemed to be too much aggregation, like our daily Links feature. Google deemed those sites to be “low quality”. One wonders if the real issue was that they competed with Google News. Then Google downgraded sites it deemed not to be “authoritative,” whacking not only many left and right leaning sites but even The Intercept. Facebook’s parallel action was to change its search and newsfeed algos, supposedly to combat fake news, but also hurting left-leaning publishers.
Now, as the Wall Street Journal reports, many major advertisers have created blacklists, nixing ad placements that appear next to or in stories with headlines using naughty words like “bomb” that amount to a partial or total ban on news content. It isn’t isn’t just fluffy feel good brands that want to steer clear of controversy. Startlingly, even some financial services companies like Fidelity want to stay away from hot words like “Trump” even though “Trump” appears regularly in business news headlines, such as ones discussing his China trade spat, his tax cuts, his deregulatory efforts, and today, his interest in buying Greenland.
In the interests of keeping my post short, I’ve limited my quotation; I encourage interested readers to read Yves in full.
Despite maintaining in Congressional testimony that it doesn’t use blacklists, the WSJ account found that Google does. Google tries to wiggle around this apparent contradiction by relying on a narrow interpretation of what constitutes a “political” blacklist:
Google’s first blacklists date to the early 2000s, when the company made a list of spam sites that it removed from its index, one of those people said. This means the sites wouldn’t appear in search results.
Engineers known as “maintainers” are authorized to make and approve changes to blacklists. It takes at least two people to do this; one person makes the change, while a second approves it, according to the person familiar with the matter.
The Journal reviewed a draft policy document from August 2018 that outlines how Google employees should implement an anti-misinformation blacklist aimed at blocking certain publishers from appearing in Google News and other search products. The document says engineers should focus on “a publisher misrepresenting their ownership or web properties” and having “deceptive content”—that is, sites that actively aim to mislead—as opposed to those that have inaccurate content.
“The purpose of the blacklist will be to bar the sites from surfacing in any Search feature or news product sites,” the document states.
The process for creating such blacklists is opaque, so it’s difficult to determine whether there is indeed a political motivation for so doing.
And finally, the Journal discussed its own efforts to change a Google policy to disfavor outlets, such as itself, that charge for subscriptions:
(The Wall Street Journal is owned by News Corp, which has complained publicly about Google’s moves to play down news sites that charge for subscriptions. Google ended the policy after intensive lobbying by News Corp and other paywalled publishers. More recently, News Corp has called for an “algorithm review board” to oversee Google, Facebook and other tech giants. News Corp has a commercial agreement to supply news through Facebook, and Dow Jones & Co., publisher of The Wall Street Journal, has a commercial agreement to supply news through Apple services. Google’s Ms. Levin and News Corp declined to comment.)
The Bottom Line
To sum it all up: Thomas Ferguson notes in an email “the last third of the WSJ article basically describes ‘electronic corporatism’ in which big private tech concerns look out for each other. Everyone else can’t even get an answer.”
What Is to be Done?
Some if not much of this info is well known to at least some antitrust regulators. Yet by publishing it, the WSJ increases pressure on them to address the problems Google’s dominance raises. The company currently captures more than 90% of the market share for all search engines.
Last week, state attorneys general, led by Texas and New York, announced investigations into Google and Facebook for possible antitrust violations. This is a big deal. No society has ever centralized control of information as we have in big tech, and this is the first real American strike at the problem. As Scott Galloway frequently notes in his podcast with tech journalist Kara Swisher, the big tech breakup has finally begun.
Note that this is one of many areas where Trump inattention or inaction doesn’t really matter. The feds aren’t the only game in town, and attorney general from US states, as well as the EU and many other countries, are on the case – not to mention Congress critters. Over to Stoller:
Normally, antitrust enforcement would come from the federal government, but Trump enforcers have proved irrelevant at best. Instead these investigations are being led by the states. The Republican attorney general of Texas and the Democratic attorney general of New York are informal leaders, meaning that the investigations are bipartisan. The state attorneys general complement an important investigation by the House antitrust subcommittee led by David Cicilline. Such leadership suggests the rule of law, absent from American business for several decades, may be on its way back. There are also important investigations, hearings or cases by enforcers in Germany, France, the European Union, Israel, India, Singapore, Russia, Mexico and Australia, among others.
This is a terrific piece of Journalistic work – just when I thought the WSJ no longer was capable of it, comes this which is a Pulitzer class expose’. It is fair and objective., and introduces strong evidence.
A 4th Grader could easily discern that Google search results are sharply biased and shaped to suppress legitimate Conservative speech that Google doesn’t like (that is, most all of it) from search results.
Google took a dark turn, in my view, 2-3 years ago. I do not believe that their many great mid-level employees are the reason. They changed out the Sr. management team 3 years back. Now, two immense anti-trust investigations underway.
Google has also turned sharply arrogant, e.g. on Jan 1st shifting all support calls – even from Agencies, to barely-trained staff in India.
Breaking up Google into 2 or 3 regulated entities would be great for Google, it’s employees AND consumers. Although they enjoy a dominant market position, Google is a commodity – EASILY replaced.
To repeat what I said above, the political bias extends beyond downranking conservative sites, to obscuring the output of other sites that also may have something to say.
THE JOURNAL’S FINDINGS undercut one of Google’s core defenses against global regulators worried about how it wields its immense power – that the company doesn’t exert editorial control over what it shows users. Regulators’ areas of concern include anticompetitive practices, political bias and online misinformation.
Permit to me quote from the WSJ’s takedown at length – although I encourage readers, if possible, to read the entire (paywalled) version, for it contains a wealth of information, as well as lots of cool graphics:
Google’s evolving approach marks a shift from its founding philosophy of “organizing the world’s information,” to one that is far more active in deciding how that information should appear.
More than 100 interviews and the Journal’s own testing of Google’s search results reveal:
Google made algorithmic changes to its search results that favor big businesses over smaller ones, and in at least one case made changes on behalf of a major advertiser, eBayInc., contrary to its public position that it never takes that type of action. The company also boosts some major websites, such as Amazon.com Inc. and Facebook Inc., according to people familiar with the matter.
Google engineers regularly make behind-the-scenes adjustments to other information the company is increasingly layering on top of its basic search results. These features include auto-complete suggestions, boxes called “knowledge panels” and “featured snippets,” and news results, which aren’t subject to the same company policies limiting what engineers can remove or change.
Despite publicly denying doing so, Google keeps blacklists to remove certain sites or prevent others from surfacing in certain types of results. These moves are separate from those that block sites as required by U.S. or foreign law, such as those featuring child abuse or with copyright infringement, and from changes designed to demote spam sites, which attempt to game the system to appear higher in results.
In auto-complete, the feature that predicts search terms as the user types a query, Google’s engineers have created algorithms and blacklists to weed out more-incendiary suggestions for controversial subjects, such as abortion or immigration, in effect filtering out inflammatory results on high-profile topics.
Google employees and executives, including co-founders Larry Page and Sergey Brin, have disagreed on how much to intervene on search results and to what extent. Employees can push for revisions in specific search results, including on topics such as vaccinations and autism.
To evaluate its search results, Google employs thousands of low-paid contractors whose purpose the company says is to assess the quality of the algorithms’ rankings. Even so, contractors said Google gave feedback to these workers to convey what it considered to be the correct ranking of results, and they revised their assessments accordingly, according to contractors interviewed by the Journal. The contractors’ collective evaluations are then used to adjust algorithms.
Biases
Big vs. Small.
One major bias: a preference for big versus small. The WSJ notes that at least for shopping results, Google made the tweak as it believed consumers are more likely to find what they want at larger vendors. But this bias looks to me like it stymies, rather than promotes competition.
The bias is not limited to shopping, as WSJ reader James West noted in comments (agreeing implicitly with my interpretation of the anti-competitive effect of the Google practice):
James West
Our company, an independent publisher of financial coverage of small cap Canadian companies, has routinely been the target of what can only be explained as “manual downgrades” in Google search results. Our tests indicate a persistent pattern where Google is awarding search visibility increasingly to large US media enterprises, even where ours is local to the issue, and more detailed.
Google’s founders Page and Brin have built the company to thwart contact from its users, and now, as evidenced by WSJ’s coverage, there are widespread issues with Google’s monopoly on search. Thanks to WSJ’s coverage, we will commence a request process with Canada’s competition bureau to investigate Google for anti-competitive practices.
This company needs to be more closely regulated, as they are systematically eviscerating entire industries but reserving the bad behaviour it claims to police for its own financial gain.
Political
Conservative sites often claim their sites are disadvantaged compared to “liberal” or “mainstream” sites. This is not exactly news. Yet the bias extends beyond rightwing sites.
New data compiled by the World Socialist Web Site, with the assistance of other Internet-based news outlets and search technology experts, proves that a massive loss of readership observed by socialist, anti-war and progressive web sites over the past three months has been caused by a cumulative 45 percent decrease in traffic from Google searches.
The drop followed the implementation of changes in Google’s search evaluation protocols. In a statement issued on April 25, Ben Gomes, the company’s vice president for engineering, stated that Google’s update of its search engine would block access to “offensive” sites, while working to surface more “authoritative content.”
The World Socialist Web Site has obtained statistical data from SEMrush estimating the decline of traffic generated by Google searches for 13 sites with substantial readerships. The results are as follows:
* wsws.org fell by 67 percent
* alternet.org fell by 63 percent
* globalresearch.ca fell by 62 percent
* consortiumnews.com fell by 47 percent
* socialistworker.org fell by 47 percent
* mediamatters.org fell by 42 percent
* commondreams.org fell by 37 percent
* internationalviewpoint.org fell by 36 percent
* democracynow.org fell by 36 percent
* wikileaks.org fell by 30 percent
* truth-out.org fell by 25 percent
* counterpunch.org fell by 21 percent
* theintercept.com fell by 19 percent
I’m glad to see Taibbi speaking out in this Real News Network interview on this issue of growing censorship by Facebook and Google and hope that more journalists join him. With the help of so many of your readers sharing our post and encouraging your friends and family members to check us out, we’ve managed to stay on an even keel, while other “deemed to be leftie” sites have taken a traffic hit due to Google downgrading non-MSM sites greatly in their search rankings. Even the Intercept, hardly a blog-scale operation, got whacked.
The problem is only getting worse. The WSJ notes that Google is increasing the aggregate number of changes to its algorithms, to about 3,200 tweaks in 2018, up from more than 2,400 in 2017, and further from about 500 in 2010.
Influence of Advertisers: Blacklisting; Paywalled Sites
The WSJ investigation discusses how Google caters to the interests of big advertisers:
Some very big advertisers received direct advice on how to improve their organic search results, a perk not available to businesses with no contacts at Google, according to people familiar with the matter.In some cases, that help included sending in search engineers to explain a problem, they said.
In another incident, the WSJ documents how Google reversed a decision that demoted the search results of certain e-Bay pages, in response to lobbying by the company, a significant advertiser.
It’s no longer paranoid to say that “they” are out to kill news. First it was the Internet almost entirely displacing classified ads, which had accounted for roughly half of newspaper industry revenues in the US. The Internet also turned most people save those who are now oldsters off print newspapers, even though nothing is so efficient to scan, taking with it higher subscription rates and display ads. Then Facebook and Google sucked most online advertiser revenues to themselves.
To add insult to injury, Google implemented algos hostile to smaller sites, first targeting those that did what Google deemed to be too much aggregation, like our daily Links feature. Google deemed those sites to be “low quality”. One wonders if the real issue was that they competed with Google News. Then Google downgraded sites it deemed not to be “authoritative,” whacking not only many left and right leaning sites but even The Intercept. Facebook’s parallel action was to change its search and newsfeed algos, supposedly to combat fake news, but also hurting left-leaning publishers.
Now, as the Wall Street Journal reports, many major advertisers have created blacklists, nixing ad placements that appear next to or in stories with headlines using naughty words like “bomb” that amount to a partial or total ban on news content. It isn’t isn’t just fluffy feel good brands that want to steer clear of controversy. Startlingly, even some financial services companies like Fidelity want to stay away from hot words like “Trump” even though “Trump” appears regularly in business news headlines, such as ones discussing his China trade spat, his tax cuts, his deregulatory efforts, and today, his interest in buying Greenland.
In the interests of keeping my post short, I’ve limited my quotation; I encourage interested readers to read Yves in full.
Despite maintaining in Congressional testimony that it doesn’t use blacklists, the WSJ account found that Google does. Google tries to wiggle around this apparent contradiction by relying on a narrow interpretation of what constitutes a “political” blacklist:
Google’s first blacklists date to the early 2000s, when the company made a list of spam sites that it removed from its index, one of those people said. This means the sites wouldn’t appear in search results.
Engineers known as “maintainers” are authorized to make and approve changes to blacklists. It takes at least two people to do this; one person makes the change, while a second approves it, according to the person familiar with the matter.
The Journal reviewed a draft policy document from August 2018 that outlines how Google employees should implement an anti-misinformation blacklist aimed at blocking certain publishers from appearing in Google News and other search products. The document says engineers should focus on “a publisher misrepresenting their ownership or web properties” and having “deceptive content”—that is, sites that actively aim to mislead—as opposed to those that have inaccurate content.
“The purpose of the blacklist will be to bar the sites from surfacing in any Search feature or news product sites,” the document states.
The process for creating such blacklists is opaque, so it’s difficult to determine whether there is indeed a political motivation for so doing.
And finally, the Journal discussed its own efforts to change a Google policy to disfavor outlets, such as itself, that charge for subscriptions:
(The Wall Street Journal is owned by News Corp, which has complained publicly about Google’s moves to play down news sites that charge for subscriptions. Google ended the policy after intensive lobbying by News Corp and other paywalled publishers. More recently, News Corp has called for an “algorithm review board” to oversee Google, Facebook and other tech giants. News Corp has a commercial agreement to supply news through Facebook, and Dow Jones & Co., publisher of The Wall Street Journal, has a commercial agreement to supply news through Apple services. Google’s Ms. Levin and News Corp declined to comment.)
The Bottom Line
To sum it all up: Thomas Ferguson notes in an email “the last third of the WSJ article basically describes ‘electronic corporatism’ in which big private tech concerns look out for each other. Everyone else can’t even get an answer.”
What Is to be Done?
Some if not much of this info is well known to at least some antitrust regulators. Yet by publishing it, the WSJ increases pressure on them to address the problems Google’s dominance raises. The company currently captures more than 90% of the market share for all search engines.
Last week, state attorneys general, led by Texas and New York, announced investigations into Google and Facebook for possible antitrust violations. This is a big deal. No society has ever centralized control of information as we have in big tech, and this is the first real American strike at the problem. As Scott Galloway frequently notes in his podcast with tech journalist Kara Swisher, the big tech breakup has finally begun.
Note that this is one of many areas where Trump inattention or inaction doesn’t really matter. The feds aren’t the only game in town, and attorney general from US states, as well as the EU and many other countries, are on the case – not to mention Congress critters. Over to Stoller:
Normally, antitrust enforcement would come from the federal government, but Trump enforcers have proved irrelevant at best. Instead these investigations are being led by the states. The Republican attorney general of Texas and the Democratic attorney general of New York are informal leaders, meaning that the investigations are bipartisan. The state attorneys general complement an important investigation by the House antitrust subcommittee led by David Cicilline. Such leadership suggests the rule of law, absent from American business for several decades, may be on its way back. There are also important investigations, hearings or cases by enforcers in Germany, France, the European Union, Israel, India, Singapore, Russia, Mexico and Australia, among others.
This is a terrific piece of Journalistic work – just when I thought the WSJ no longer was capable of it, comes this which is a Pulitzer class expose’. It is fair and objective., and introduces strong evidence.
A 4th Grader could easily discern that Google search results are sharply biased and shaped to suppress legitimate Conservative speech that Google doesn’t like (that is, most all of it) from search results.
Google took a dark turn, in my view, 2-3 years ago. I do not believe that their many great mid-level employees are the reason. They changed out the Sr. management team 3 years back. Now, two immense anti-trust investigations underway.
Google has also turned sharply arrogant, e.g. on Jan 1st shifting all support calls – even from Agencies, to barely-trained staff in India.
Breaking up Google into 2 or 3 regulated entities would be great for Google, it’s employees AND consumers. Although they enjoy a dominant market position, Google is a commodity – EASILY replaced.
To repeat what I said above, the political bias extends beyond downranking conservative sites, to obscuring the output of other sites that also may have something to say.
