Archive for category: emptywheel

As I noted, DOJ’s Inspector General has finally liberated the report on Section 215 use through 2009 that it finished almost a year ago. The key takeaway is that FBI continued to blow off privacy protections required by Congress in 2006 until 2013.

This will be a working thread on the rest of the report. Page numbers will be PDF.

For ease of access, here’s my table on Section 215 orders by year.

PDF 7: There was some double digit number of requests withdrawn.

PDF 7: The report breaks out how many were submitted by other agencies and how many by the FBI.

PDF 7: FBI was already getting a lot of Internet collex in 2009.

PDF 7: 3 reasons why the numbers of USPs is not the same affected: those who weren’t subjects of investigation, those who fit into weird def of USP, and those who were incidental.

PDF 7: FBI is clearly getting a lot of this voluntarily.

PDF 7: As you read the blacked out numbers of non-FBI requests, remember that the number of phone dragnet orders for that period is public: 15. If they just had one other bulk collection program (the Western Union CIA one?) that would be another 15 orders.

PDF 9: I think I’ll start to call Section 215 the “Gigabytes of Metadata and Other Electronic Information” program.

PDF 11: Report notes that NSD submits all applications to get around the statutory gig.

PDF 15: It’s clear the government at first told IG that no one had ever challenged an order, but the modified that (presumably after Snowden).

PDF 16: They use the “FISA Management System” to apply. Which probably means that’s where the data goes in?

PDF 16: “Some Section 215 requests originate from FBI Headquarters.” This may mean they use requests to parallel construct something else, as stuff that arises there often does.

PDF 19: Big redaction on USP data that exists in NSI guidelines. May mean default non-USP, same way 702 MPs work.

Read more →

Several commenters have pointed out definitional problems with the term “utility” as used in neoclassical economics, including Tarheel Dem, rg and Alan. As I noted in the linked post, Samuelson and Nordhaus are careful to call utility a “ scientific construct”, and not a measurable thing. Philip Mirowski is very helpful in clarifying what this remarkable notion might mean. I’ve referred several times to this paper, Physics and the “Marginalist Revolution”, in which Mirowski offers a brief, perhaps too brief, explanation, which he incorporated into a dense, perhaps too dense, book, More Heat Than Light: Economics as Social Physics, Physics as Nature’s Economics. I’m slowly making my way through the book, but the paper is probably enough for a decent understanding of one issue.

Mirowski says that the four most important neoclassical economists were hooked on the physics of the day. All of them, Jevons, Pareto, Walras and Edgeworth, were trained in math and physics, and all had at least some acquaintance with the work of Jeremy Bentham. They were also quite explicit that their ideas were congruent with the emerging understanding of energy as a mathematical basis for a number of expanding areas of physics. He quotes Jevons as follows:

Utility only exists when there is on the one side the person wanting, and on the other the thing wanted… Just as the gravitating force of a material body depends not alone on the mass of that body, but upon the masses and relative positions and distances of the surrounding material bodies, so utility is an attraction between a wanting being and what is wanted. Citation omitted.

Jevons repeatedly uses language suitable to calculus to explain his derivation of economic laws. He refers to the effect of the increase in utility that comes from the addition of an “infinitesimal” increase in the amount of the commodity consumed; the use of that term, which could not possibly arise in the real world, is intended to make it appear that standard integration rules are applicable to his theory, and he draws smooth curves instead of stairstep lines to show the consumption of goods and services. Samuelson and Nordhaus do the same thing, though a bit more subtly. Economics, 2005 ed.

This is hardly the only inaccurate use of math. Consider this drawing from the Mirowski paper:

In this picture there is a point particle moved from point A to point B in a two-dimensional plane by a force F (vectors are usually indicated by bold-face; I’m also using italics). We can rewrite F as the combination of F_x and F_y the components of the force vector along the x and y axes. For a quick brush-up on this point, see this. The equation in the drawing gives the kinetic energy of the particle, denoted by T. If the expression F_xdx + F_ydy is an exact differential, then there is another function U that meets this requirement:

The U in this equation is identified as the potential energy of the particle. The particle moves along a path such that the sum of T and U remains constant; usually this is written as T – U = 0. The point of Mirowski’s example is that we are looking at a force field, an energy field that describes the energy at each point by amount and direction. The function F does not have to be a simple equation as it would be in the first example; it can map out complicated curves. But F and each of its components have to be the exact differential of some other equation, which puts some constraints on them. Finally, we should note that this idea can be generalized to any number of dimensions.

This is from the Mirowski paper:

Walras insisted that his … equations resembled those of the physical sciences in every respect. We may see now that he was very nearly correct. Simply redefine the variables of the earlier equations: let F be the vector of prices of a set of traded goods, and let q be the vector of the quantities of those goods purchased. The integral ∫F•dq = T is then defined as the total expenditure on those goods. If the expression to be integrated is an exact differential, then it is possible to define a scalar function of the goods x and y of the form U = U(x,y), which can then be interpreted as the “utilities of those goods. In exact parallel to the original concept of potential energy, these utilities are unobservable, and can only be inferred from theoretical linkage to other observable variables. P. 368

In other words, utility is a scientific construct. I hope this from the book will make this somewhat clearer.

Suppose we have a person with a supply of two goods that can be traded, designated by x₀ and y₀. The point A is the intersection of the two goods. In neoclassical economics world, our hypothetical person is presumed to know how much of each good the person would purchase with an infinitesimal increase in money. The person is presumed to know this for every point in the commodity plane. This example can also be expanded into multiple dimensions to cover multiple commodities.

The math goes on from here, but we don’t really need to follow it. We can see that this doesn’t really make good sense, the idea that we would know what to do with an infinitesimal part of a piece of money. But even the math doesn’t make sense, as Mirowski explains in tedious detail. The equations aren’t solvable unless there are certain kinds of constraints. The physics problem is solved by assuming that the energy of the system is conserved, or at least it was when Walras and Jevons were writing, and we still use that idea today for simple local problems, like mechanics in physics. But that constraint isn’t available in economics: T is the equivalent of money, and U is utility, and the two are measured in different units. The term T – U doesn’t mean anything. Neither do other possible constraints, as Mirowski explains. The math fails at every level, including the levels Mirowski plumbs and I won’t.

One of the problem this creates for economics is that it undermines the claim that markets are demonstrably a superior form of organization. Recall from this post that Jevons makes this claim explicit. There are other problems, as Mirowski explains in section 5 of the paper and at much greater length in the book.

The standard response to the deconstruction of the basis of the model is to say it doesn’t matter. The models work, so who cares how or why. This was Milton Friedman’s view, as in this excerpt from Essays From Positive Economics from 1953. This raises a host of fascinating questions, but for now, here are two thoughts.

1. Lots of important problems can be solved with simple Newtonian analysis. If I want to figure out how a ball will roll down a ramp or how the moon revolves around the earth, I don’t need anything more complicated to get really close to the correct answers. But there are many other problems for which relativity theory is necessary. There are others that cannot be solved without quantum mechanics. The fact that some kinds of economic problems can be solved with simple neoclassical models doesn’t mean that all economics works that way, or that there might not be other and much better ways to figure out how to organize a society for production and allocation of scarce resources.

2. Economics is not a normative field. The rules of a society must deal not only with economic efficiency and utility of individuals at a point in time, which seem to be the subjects of neoclassical market theory, but many and broader aspects of being human, including our interest in the future, the impacts of our behavior on other people, fairness, social justice, and a host of other concerns. The neoliberal program seeks to erase those concerns in search of homo economicus, the consuming person, as the sole exemplar and highest form of being human. When we talk about society, we are told by Margaret Thatcher that there is no such thing. Not only is there a society, there is a government, which is a tool for society to arrange things as we see fit. We don’t have to live like the solitary selfish solipsistic homo economicus. We have plenty of choices.

I’ve put up several weedy posts explaining my view of the terms Market and Market Economy. In this post I pull back to see how this all fits in with neoliberalism. The basic idea of 19th Century liberalism was stated by Milton Friedman in this essay:

This development, which was a reaction against the authoritarian elements in the prior society, emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society. It supported laissez faire at home as a means of reducing the role of the state in economic affairs and thereby avoiding interfering with the individual; it supported free trade abroad as a means of linking the nations of the world together peacefully and democratically. In political matters, it supported the development of representative government and of parliamentary institutions, reduction in the arbitrary power of the state, and protection of the civil freedoms of individuals

… Whereas 19th century liberalism emphasized freedom, 20th century liberalism tended to emphasize welfare. I would say welfare instead of freedom though the 20th century liberal would no doubt say welfare in addition to freedom. The 20th century liberal puts his reliance primarily upon the state rather than on private voluntary arrangements.

Friedman prefers 19th Century liberalism, or as he calls it “new liberalism”, which focuses on the freedom of capital, and the economic liberty of the rich. Friedman takes up the misery of the working class and the poor in 19th C. England, and the solutions of Bentham.

The relation between political and economic freedom is complex and by no means unilateral. In the early 19th century, Bentham and the Philosophical Radicals were inclined to regard political freedom as a means to economic freedom. Their view was that the masses were being hampered by the restrictions that were being imposed upon them, that if political reform gave the bulk of the people the vote, they would do what was good for them, which was to vote for laissez faire. In retrospect, it is hard to say that they were wrong. There was a large measure of political reform that was accompanied by economic reform in the direction of a great deal of laissez faire. And an enormous increase in the well-being of the masses followed this change in economic arrangements.

Perhaps this quote is unfair; this is just a short paper. However a quick review of the google on this issue shows absolutely nothing of the sort. Here’s a typical example of what Bentham thought of the Poor Laws of 1834. Since the greatest good would be produced by the lowest taxes, this author says Bentham supported cutting poor relief to the bone.

Nevertheless, this quote seems to capture a central difference between Friedman’s new liberalism, and 20th Century liberalism, characterized by a willingness to use government to solve problems and rejecting the use of “private voluntary agreements” as solutions. Given the takeover of the mainstream Democratic Party by a version of Friedman’s new liberalism, (maybe changing, huh Rahm?) the current version of that view is largely the province of progressives, by which I mean those who question the prevailing economic discourse of neoliberalism.

Friedman tells us that neoliberalism values freedom, which he says has two parts, economic and political freedom. He claims that economic freedom supports political freedom by establishing a counterweight to the strength of government.

It is important to emphasize that economic arrangements play a dual role in the promotion of a free society. On the one hand, “freedom” in economic arrangements is itself a component of freedom broadly understood, so “economic freedom” is an end in itself to a believer in freedom. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.

Nobody doubts that economic freedom benefits the rich. The harder problem for Friedman is to explain how economic freedom for the rich benefits the rest of us. At the same time, most of us can see that political freedom can be a tool to make our lives better. We benefit from a well-run government that provides a common infrastructure on which we can build our lives: physical infrastructure like water and sewer services, roads, bridges, and health services; intellectual infrastructure like schools and colleges, research and development, and record-keeping and statistics; and security, in the form of police, fire, EMTs and military. The harder part is to explain how these benefit the very rich, who think they are exempt from such mundane needs; at least, they don’t want to pay for them.

To explain how the 99% benefit from economic freedom, Friedman and his neoliberal colleagues say that the market benefits all of us by allowing us to maximize our personal individual utility in exchanges of various kinds. They claim that the market will always maximize the utility of the individual, and will do a fabulous job of allocating scarce resources. This argument rests on neoclassical economic analysis from the likes of William Stanley Jevons. I think that argument is facially wrong, in part for the reasons I discuss here. There are no competitive markets in the sense Jevons uses the term. The idea that individual benefit at each point in time is the correct measure of utility is silly. It ignores the free rider problem, the problem of the tragedy of the commons, and the simple fact that most of us value our friends and family and neighbors, and want them to have good lives too. I’ll discuss various measures of utility in another post, I hope.

Deeper than this, there is a conflict at the heart of Friedman’s analysis. He claims to favor political freedom, but he argues that it must not be used to infringe on economic freedom. For example, he says:

The citizen of the United States who is compelled by law to devote something like 10% of his income to the purchase of a particular kind of retirement contract, administered by the government, is being deprived of a corresponding part of his own personal freedom.

There isn’t any question that Social Security has worked well to provide minimal support for all of us and our families and the disabled. When Friedman says that it abridges freedom, he is asserting that the only interest of any person is their personal utility at a given moment, which is to pay no taxes. He ignores, as Jevons does not, the personal utility for me in providing for the future, and for taking care of other people today. He is saying that if you disagree with this assessment of utility, you are being damaged by being forced to participate in the system, and that’s a denial of freedom. It’s obviously not political freedom, because Social Security is a valid law. It must be a violation of economic freedom. Or maybe it doesn’t matter.

The essence of political freedom is the absence of coercion of one man by his fellow men. The fundamental danger to political freedom is the concentration of power. The existence of a large measure of power in the hands of a relatively few individuals enables them to use it to coerce their fellow man. Preservation of freedom requires either the elimination of power where that is possible, or its dispersal where it cannot be eliminated.

Again, I’m citing a short paper by Friedman, and perhaps he has a more sophisticated argument, but this is patently absurd. The whole point of government is mutual coercion of all of us not to do things that damage us or the things we share in common, like air and water and safety, and to do things together that we cannot do by ourselves in the exercise of our maximum economic freedom. Friedman is arguing that preventing people from dumping nasty chemicals into rivers from which we drink is an abridgment of personal freedom; and that letting our neighbors die poor and sick is fine as long as we don’t coerce anyone to do anything.

Perhaps the danger of concentrated wealth in the hands of a few thousand people wasn’t paramount in Friedman’s mind, and if he were writing today he might rethink the italicized sentence in that quote. But the plain fact is that one of the best parts of democracy is our ability to protect ourselves from the power of a few rich people. As examples, Elizabeth Warren, Chuy Garcia, and Net Neutrality. Doing so requires a new way of thinking about the economy, because this one isn’t working for anyone except the rich. The first step on that road is knocking down the existing framework of discourse about the economy. And that is the goal of this series of posts.