Done with Wikipedia

BritannicaIf you can afford fifteen dollars, do yourself a favor and download the Britannica app. We had forgotten how good it is to read a real, edited, encyclopedia entry. Jeremiah used to be a big supporter of Wikipedia. The stimulus for the switch was a recent spate of Wikipedia “vandalism,” but – once you’ve seen the difference, you won’t go back.

Russian hackers changed a Wikipedia entry to say that the jets could fly at the altitude of MH17

The first episode was just good fun. America’s Congress has been banned from editing Wikipedia because, among other pranks, they have identified Sec. Donald Rumsfeld as an alien lizard. More serious was The Economist’s finding that hackers are using Wikipedia for topical propaganda.

It’s not surprising to find that an open source encyclopedia is rife with misinformation. Maybe you could use it for math and science, but certainly not for history. For an example, we compared articles on the Chilean coup. This is from Wikipedia:

Pinochet assumed power in Chile following a U.S.-backed coup d’état on 11 September 1973 that overthrew the elected … socialist government of President Salvador Allende

On Wikipedia, there is no dictator anywhere who was not installed by the CIA. Jeremiah suspects someone has “U.S. backed coup” on a shortcut key. Here is Britannica:

Augusto Pinochetleader of the military junta that overthrew the socialist government of President Salvador Allende of Chile on Sept. 11, 1973

We chose Chile because this month’s issue of Foreign Affairs has the real story. The author, a retired spy, is credible because the CIA admits to a failed coup in 1970 and knowledge of the plot in 1973. Morally, this may not be much of a difference, but – for an encyclopedia, it is an intolerable gaffe. How would you answer the question, “when was the CIA backed coup?”

Wikipedia articles also tend to ramble, sometimes to the point of incoherence, because they’re written by committee. This blights even objective topics, like math and science. It’s much better to have one expert, with an editor, write the article from beginning to end.

Of course, any reference material is going to carry the editor’s bias, but Encyclopedia Britannica is about as clean a source as you’re going to find – plus, no alien lizards!

See also:   Spectacular Acts of Wikipedia Vandalism

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New World Currency

This article in Huffington Post uses the term “new world order” in a novel (and optimistic) sense. Jeremiah has been warning that America will lose our dominance in international finance, and now it is happening. Punitive fines, sanctions, and currency wars are driving the world out of our currency zone.

A multi-polar financial world with new international financial centres emerging in Mumbai and Shanghai will be a more stable world.

The term “new world order” is generally used to describe a conspiracy, in which an international elite aims to create “one world government” with themselves at top. See here, for example.   The new world order described by Dr. Saidi is actually the antidote for one world government. Such are the pitfalls of using labels.

So, what about the new world order of one world government? Does that sound like a good idea to you? As always, we approach the theory by assuming that it is rational – and not a conspiracy.

We alreSorosady have a raft of supranational institutions like the IMF, the WTO, and the UN. The European Union aims to “transcend” the national governments of Europe, and already controls their currency. The leaders of these institutions may reasonably believe they’re doing the world some good. It’s human nature to believe that your outfit ought to have more funding, and more power.

Globalists, like George Soros and his various think tanks, believe that national governments are obsolete. They deny wanting a world government, but they want every issue – from welfare to monetary policy – handled by a global body.

Insofar as there are collective interests that transcend state boundaries, the sovereignty of states must be subordinated to international law and international institutions.

This amounts to world government, for all practical purposes. It promises an end to war, poverty, pollution, etc. People with this much faith in government are statists, by definition, and they believe in utopia.

SutherlandJeremiah does not have that kind of faith. He believes that the more power and personnel a government has – any government – the more despotic it will be. World government, therefore, would be a giant prison with no hope of escape, like The Hunger Games.

With globalism, as with socialism, we don’t want to get hung up on the label. We want to look at specific policies. For example, Soros and his crew want the IMF to issue the world’s reserve currency. This is obviously the enemy of human liberty. Just look at what happened to Greece, with the Euro.

This brings us back to Dr. Saidi and his multi-polar world order. We can no longer hope for the dollar to retain its reserve status. Failing that, we would rather have competing national currencies than a “new world currency” controlled by the IMF.

See also:  CFR Global Governance Program

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Understanding the Gini Index

Now, you can study the famous Gini index yourself – and not have to rely on Jon Stewart. Here is Jeremiah to show you how. Start by downloading the latest individual income data from the IRS Statistics on Income. Use the AGI line to calculate cumulative income, and the number of returns to calculate cumulative filers.

Jeremiah likes to add back the spouses and dependents, because that brings the total close to 300 million, the actual U.S. population. You don’t need to calculate income per capita, because we are only interested in percentages. Plot the cumulative percentage of income against the cumulative percentage of tax filers. Your chart should look like this:

Lorenz1

Individual income for 2012 was roughly $9 trillion, and the tax take was $1.2 trillion. The distribution of income is pretty unequal, as you can see. Twenty percent of income is earned by the top one percent – those earning $200K or more. That’s the IRS wording, “earned income.” Pundits prefer flows to, or “captured by.”

The more of a belly the blue line has, the more unequal the distribution. The red line represents total equality. To get the Gini index, calculate the area under the blue line, subtract it from the area under the red line (50%) and then divide the area of this lens-shaped region by one-half. It would make more sense simply to compare the two integrals, but then we’d have a positive measure of equality.

In our example, the Gini index is 54%, and worse than the official statistics. Those are based on a survey by the census bureau, and here we are working from tax data. The census bureau reckons the index around 45% and they don’t publish their raw figures. There’s a reason we prefer to use IRS data.

Next, let’s look at who pays their fair share of the $1.2 trillion. We run the same figures as before, only this time we calculate the cumulative percentage of the nation’s personal tax burden.

Lorenz2

The distribution of tax payments is even more unequal than the distribution of earned income. The Gini index for this chart is 73%. That same one percent, who earn 20% of the income, pay 35% of the tax – and 50% of Americans pay next to nothing.  Inequality is an awful thing. Someone should protest.

See also: Selected Measures of Household Income Dispersion

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Draining the Swamp

Here is a provocative post by Charles Hugh Smith in which he asserts that no fixes are possible, the system must inevitably crash and burn, etc. Charles is part of a cottage industry that has been making this prediction for, in his case, about ten years. Jeremiah recalls hearing the same predictions during the civil rights struggle, then again during the eighties, and – of course – the millennium.

Virtually none of the thousands of emails I receive present a few policy tweaks as credible fixes.

We write “provocative” because, while Jeremiah often feels America has passed the tipping point – his goal is to find solutions. Here are four big ones that all attack the root cause, namely too much money available to too many crooks in Washington.

  • Repeal the federal income tax. The central government should be funded by tax collection at the state level. That’s how America worked for the first hundred years. This would reduce the size and power of the central government.
  • Bring back Glass-Steagall, or something like it, to keep retail banks from speculating. Allow investment banks to go under, if they make bad bets. If they’re “too big to fail,” then break them up under monopoly law. This would avoid a repeat of 2008, and also curb some moral hazards.
  • Speaking of Carter Glass – end the Fed’s dual mandate and restore its original role as a lender of last resort. No “taming the business cycle,” inflation targeting, or other hocus pocus. This would curb moral hazards like hedge fund welfare, and also make it harder to hide bad fiscal policy.
  • Transition Social Security toward a defined contribution system. That way, the account would follow the contributor, and the system wouldn’t depend on a permanently young population. This would deprive Washington of a big slush fund, and also avoid a fiscal crisis.

Charles is correct insofar as no one has the political will to make these changes, but – there’s a difference between lacking ideas and lacking nerve. Our job as voters and activists is to keep the solutions top of mind, and then demand leaders who will implement them.

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Gini Index Revisited

We have reported on income inequality before, and linked to Ironman’s wonderful chart, here. Now, since Nick Hanauer has warned of an impending revolution, we felt we should take another look at the data.

Gini2012

This is twenty years of data, adding the latest two points. It is from the census bureau’s table H-4, household Gini for all races. Note that this is zoomed a little, since the range is actually 0.00 to 1.00.

Does this look like “pitchfork time” to you? No, it looks much more like Martin Armstrong’s view – inequality is a scapegoat for the government’s mishandling of economic policy.

The pensions created for those in government drive the cost of government up exponentially with time

The bureau’s own language is telling. For 2011, they describe a 1.5% increase in inequality (from 0.470 to 0.477). Don’t panic – the “annual percentage rate of change in inequality” fell back to zero for 2012. Can “seasonally adjusted” be far behind?

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Drubbed by China, Again

The OECD is back with another of these humiliating studies. This one is on “financial literacy” among high school students. The U.S. summary is here, the full report is here, and this nifty chart is from the Financial Times. The OECD bar chart, like the one we presented before, is on page 62 of the report.

FinLitScores

The report states, quite reasonably, that high school students are about to face important financial decisions. For example – if you spend six figures on a degree in journalism, how long will it take you to pay off the loan? If high school teaches nothing else, it should teach how to make that decision. Jeremiah described the college education scam here, and here.

More than one in six students in the United States does not reach the baseline level of proficiency in financial literacy.

The funny part is – China is notionally a communist country. Nothing in Marxist Leninist theory teaches how (or why) to compute Net Present Value. We are reminded of that Economist piece in which the interviewer asks, pace John Cleese, “not much of communism is it?” to which the party spokesman replies – communism is what we say it is.

See also: The Road from Serfdom

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Gaza News Roundup

Jeremiah always encourages you to find diverse news sources and different points of view. Regarding the ongoing violence in Gaza, you can hear the Israeli bias on Fox, and the Palestinian bias on NPR. An evenhanded roundup of opinions is here, at Al-Jazeera.

The firing of rockets from the Gaza Strip has led to a situation that threatens to cause a spiral of violence and counter-violence

For the record, Jeremiah tends to agree with the Germans. Gaza suffers for the provocations of Hamas. Al-Jazeera tends toward the other opinion, but they deserve credit for presenting both.

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