Archimedes’ Hot Tub

The Onion published this trenchant bit of wit, Recession-plagued nation demands new bubble to invest in, back in 2008. It feels more true with time, as we see speculators piling into obvious markets (cash for gold, anyone?) and less obvious ones, like corn, as if indeed trying to find the next bubble. People have tried to speculate since the beginnings of markets (early economists fretted about the shift of investment from agriculture to trading companies, for instance). But I wonder whether we prefer it now as a source of profits. For instance, did derivatives change our appetite for speculation? Invented to manage risk, they get written about enough that they seem like cash cows for Wall Street firms and their wealthy clients. I sometimes mean to look for statistics on derivatives as a percentage of investment activity. Would the stats show that derivatives receive more investments than the useful things they’re derived from? If so, would that explain our seeming economic need for speculative bubbles? In the last fifteen years we’ve seen speculation infect the stock market, much of the major housing markets and commodity prices, quite obviously in oil, less so in basic foodstuffs like corn and even wheat.
I’m thinking about stat-hunting again after listening to an interview on NPR’s Here and Now with Frederick Kaufman on whether Wall Street caused the 2008 food riots in various parts of the world. Kaufman wrote a Harper’s article, which I’ve not yet read, arguing that Goldman Sachs and other Wall Street firms used a wheat commodities index to drive speculation in the food markets. NPR notes a Goldman Sachs rebuttal saying the commodities index fund it created in 1991 built pools of risk capital for wheat farmers to tap. Kaufman is having none of that, though I’m not sure he makes his case, or even could in a relatively brief radio interview. Goldman is certainly correct about the intent of such funds, but that doesn’t make Kaufman wrong in saying that such intent can be corrupted. Kaufman in the end calls for a return to “a much older way of doing things,” setting up a grain reserve to offset the kind of speculation that we saw in the wheat markets. Perhaps that would work, though U.S. oil reserves did little to dampen the incredible speculation in the oil markets in the same period.

I recently interviewed a historian named Mark Valeri, who thinks going back to a time before national grain reserves would be more helpful. His book  Heavenly Merchandize looks at how markets emerged in the pre-Revolutionary America. He shows that markets were created in a time where people were more connected with those around them, and there were expectations that those who made markets would use them not just for their own gain, but with the understanding that they needed to behave in ways that did not damage the broader society, and especially the poor. Valeri shows that it took about 120 years for those ideas to be subsumed and the market came to be seen as having a natural order separate from the personalities of the people within it. Even then, those in the market aimed to behave in ways that were not good only for themselves and accepted what would seem to us like excessive regulation. That ethos sounds quaint.
Or maybe I just have sour grapes. Having sold our house for 22 percent less than we paid for it five years ago, I feel personally poorer for derivative-driven market speculation. I knew, even without knowing about CDOs, that my house wasn’t worth what the market said at the time, and likely wouldn’t be for a long time to come. But I expected we would be in the house for that long time. I didn’t plan on a big new opportunity to arise that would cause me to want to sell the house sooner rather than later. So perhaps I’m feeling a bit sorry for myself, like I transferred wealth to someone at WAMU five years ago, and now can’t get it back. Gads. I’m sounding like I buy into Lester Thurow’s Zero-Sum Society concept, twenty years later. That’s profoundly negative of me. I really should go dig up those stats.

I always thought Michiganders who weren’t Yoopers spoke in pretty much the same made-for-TV flatness of Nebraskans (the ideal TV accent to have, I read once). But all these things listed in The Michigan Accent ring true. I would add two words. If you’re going to put in the Big Beev, anyone who knows Port Huron will tell you have to add Gratiot, as in old Fort Gratiot, pronounced as if the grass were fertilizing itself. I also happened to live ‘Outstate,’ meaning all of Michigan outside the loose semi-circle from Port Huron to Ann Arbor to Midland (or so).

The Harvard Crimson’s Cici Yu has a good write-through on the Hollman Morris visa fiasco. Nieman curator Bob Giles has some good points about how the U.S. should want this guy here.  The Obama administration look like dupes; they’re okay with Morris in 2008, and now he’s a terrorist?

People in positions of power probably think to themselves that journalists are basically terrorists, even if they won’t go so far as Richard Perle, a prominent Republican official who applied the term publicly to Seymour Hersh. But Colombian journalist Hollman Morris Rincon had his visa denied by the U.S. government, as this piece by the Nieman Lab’s Joshua Benton outlines apparently because he is considered a terrorist. Morris is, like me, a 2011 Nieman Fellow at Harvard, though his status now stands in jeopardy. The visa situation perplexes me. It’s not just Nieman-related people who wonder what’s going on. This blog post at IJ Central, U.S. denies visa to human rights journalist, [which borrows a little too liberally from the Associated Press piece on Morris] delves into why a prominent journalist who has received many international awards might get placed on a U.S. terrorism list, and also says Morris has been given documents allegedly from Colombian security about a campaign to smear him. Among its goals: get Morris’s visa revoked.
I don’t understand Spanish, so I can only speculate here. It looks like Morris was critical enough of both sides to be seen as an honest broker. At one point that was useful to the Colombian government, but with FARC in retreat, it no longer cares. Yes, Morris may possibly have become a proxy for the FARC guerrillas, as Colombian politicians reportedly say. But that belies FARC’s lengthy history of human rights violations. See, for instance, this line from a 2005 report issued by the United Nations Office of the High Commissioner of Human Rights:

The illegal armed groups, particularly the FARC-EP and the paramilitaries, continued to commit serious and numerous breaches such as attacks on the civilian population, indiscriminate attacks, homicides, massacres, hostage-taking, acts of terrorism, forced displacements, use of antipersonnel mines, recruitment of minors, slavery, and attacks on the personal integrity and dignity of women and girls in the context of acts of sexual violence.

It seems unlikely that a human rights journalist would suddenly take sides with such an organization while continuing to expose the similar ill deeds of government-approved paramilitaries.

Governments, however, grab opportunities to damage opponents and critics. Latin America is rife with current examples, but Americans should avoid feeling smug; our internment of Japanese-Americans during World War II and the McCarthy-era blacklists are egregious examples of similar behavior. Colombia’s political establishment has a history of targeting human rights defenders. The UN Human Rights Commission this March issued a report on Colombia’s human rights situation that highlighted a multi-year campaign by the Colombian government to discredit journalists and others who pointed out human rights violations. Morris doesn’t even rank as the first Colombian journalist to be denied a visa on grounds of consorting with terrorists.

The Commission noted that Colombia’s president and other officials routinely accuse people who defend human rights in Colombia of being terrorists.

[its actual language: “The Special Rapporteur was shown video footage of public statements made by the President of Colombia in which human rights defenders were portrayed as colluding with terrorists or guerilla members. In addition, in early 2008, a presidential advisor, José Obdulio Gaviria, publicly accused human rights defenders who were taking part in a peaceful demonstration of supporting FARC. The judicial police, the army and regional units of the Attorney-General’s Office reportedly made similar statements.”]

The UN’s March report, which was written well before Morris was named a Nieman, also noted that the government appeared to be hounding him, and that he has previously had to flee Colombia because of death threats.
Morris may well have become expendable to a government that felt it had quelled FARC. Or he may simply have published one too many stories exposing the ties of Colombian politicians to paramilitary organizations that behave as brutally as FARC. For this, we deny him a visa? We should be offering him asylum.

This being so close to the Fourth of July, I re-read the Declaration of Independence. What’s happening to Morris makes me wonder whether we Americans elect people who give more than lip service to the political ideals espoused in it. In this case, it seems more like our country is committing acts defining a Tyrant.

My feature-writing swan song heading into my Nieman year appears in the current issue of Fast Company (an issue filled with vibrant business writing). Take us to the river looks directly at why the big music labels aren’t dead yet, and might be getting better. It also provides an indirect glance at the future of my industry, and any other industry enduring the digital onslaught. I would love to revisit this piece in two years; I suspect it will be worth twice as much space (if we still have ’space’ in two years). I don’t know that it will yet be a happy story for musicians, but it’s clear that the Internet has yet to prove a boon for most of them.
I like the piece, of course. It also was blessed with faint praise from the usually vitriolic Bob Lefsetz. The Billboard writer Glenn Peoples stopped short of calling it a puff piece and found some things to praise in it. (I found out about Peoples’ comments when someone I know who reads him misread Peoples’ sarcastic use of ‘fantastic’  to describe the piece, and wrote me to tell me it really was fantastic.) About what I would have done when I was a trade reporter, unconcerned by how the nuances that matter to trade writers affect the eyelids of readers who don’t care a lick about the subject.

A piece I wrote on E-Ink and its challenges gets a mention in Dan Bloom’s This ink is for reading, a look at PrimeView, the company that bought E-Ink. PrimeView grew out of a company that got its start making toilet paper in the 1930s. There’s a real spirit of innovation there.