The Supreme Court rulings

Today’s Supreme Court ruling on gay marriages was more or less what I expected. Federal Appellate Courts had divided on this issue, but clearly one can’t have marriages recognized in one state but not another, so now that gay marriage is legal in a majority of the states the Supreme Court was bound to rule in favor of uniformity across the nation. And in fact I think it was the right thing to do morally, despite the howls of protest from the far right. But the dissents were interesting – Justice Roberts argued the Federalism case; that this was an issue that should be left to the states to decide. Justice Scalia was disturbed that such a large social issue was being decided by a group of unelected judges, rather than by the democratic process. Both are valid worries.

But yesterday’s Obamacare decision worries me. The ruling sets a bad precedent – that an agency can decide for itself what a law “is supposed to mean”, even if that isn’t what the wording of the law says. The Affordable Care Act (ObamaCare) was hastily written and not even read in its entirety by most of the Democrats who voted for it, and contains lots of inadvertent errors. By rights these should have been corrected by Congress as they were found, but of course politically this was not possible – not least because in ObamaCare the Democrats very unwisely forced through a major social and economic change with absolutely no bipartisan support – not a single Republican vote. But even so I don’t think it is proper to allow a government agency to unilaterally decide to interpret a law in a way other than the way it is written. This precedent will quite likely be abused in the future.

In the previous ObamaCare ruling I also think Justice Roberts was off base. He saved ObamaCare by ruling that the penalty for not buying insurance (the “individual mandate”) was not really a penalty, but rather a tax legal under the taxing power of Congress. That despite the vigorous arguments by the President during the pre-vote debates that this was not a tax. The Courts have a principle - correct I think - to defer to the wishes and intents of the legislature to the extent they can discern them, but I think this was stretching that principle a bit too far. In both these cases the Justices saved Congress from its own sloppy work, but I don’t think that is what the Supreme Court should be doing.

Recommended: So what if Greece leaves the European Union?

George Will had a good piece yesterday in the Washington Post: So What if Greece leave the European Union?  It is a bit acerbic in tone, but accurate in content. I like the Margaret Thatcher quote: "The problem with socialism is that you eventually run out of other people's money.” 

We will see if the fact that Greeks took €4 billion out their banks last week is enough to get the new Greek government to rethink its stubborn position or not. They are rumored to have made new offers this morning, but I would guess they haven't offered anything like enough real reforms to convince the IMF and the EU to pour more more down that black hole.

Hacking government records

What is more appalling than the fact that someone (probably the Chinese) has hacked into US government, military and intelligence files is that fact that the US government’s system security  is so bad that someone COULD hack into them.  It is hard to make current internet-connected systems completely hack-proof, because the commercial software used has many flaws.  But it can be done, and certainly for military and intelligence systems it should have been better.

Cases like Edward Snowden’s are different. Systems are always susceptible to insiders accessing them.  But there is no excuse for remote users in another part of the world, without inside access, to be able to hack into these systems.  I assume it is just another case of government ineffectualness.  They probably don’t pay enough to get the best IT people, they probably don’t fund the security efforts adequately, and no doubt the whole thing is fraught with the usual bureaucratic turf battles and infighting.

UPDATE

A little more research found this information:

The OPM (Office of Personnel Management, one of the groups that was hacked) had no IT security staff until 2013, and it showed. The agency was harshly criticized for its lax security in an inspector general’s report released last November that cited its lack of encryption and the agency’s failure to track its equipment. Investigators found that the OPM failed to maintain an inventory list of all of its servers and databases and didn’t even know all the systems that were connected to its networks. The agency also failed to use multi-factor authentication for workers accessing the systems remotely from home or on the road........

At the time, OPM said the breach was discovered as the agency “has undertaken an aggressive effort to update its cybersecurity posture, adding numerous tools and capabilities to its networks.” But four people familiar with the investigation said the breach was actually discovered during a mid-April sales demonstration at OPM by a Virginia company called CyTech Services, which has a networks forensics platform called CyFIR. CyTech, trying to show OPM how its cybersecurity product worked, ran a diagnostics study on OPM’s network and discovered malware was embedded on the network. Investigators believe the hackers had been in the network for a year or more

Unbelievable!! But will anyone get fired for this????  Probably not.

3 Foreign Policy Options for America

Ian Bremmer, president of Eurasia Group, has written an excellent book entitled Superpower: Three Choices for America’s Role in the World, in which he argues that American foreign policy for the last several decades has been reactive, not driven by a coherent vision. He proposes that we need desperately to have a rational national debate about which of three possible roles we want America to take in the future.

A recent online article in The World Post, 3 American Foreign Policy Options That 2016 Presidential Candidates Need to Choose Among, does a good job of summarizing the alternatives, and is well worth reading.  In the book, Brenner gives each of the alternatives its best and strongest argument, summarized as follows in the article:

Independent America

Instead of squandering lives and resources on poorly planned foreign policy adventures, it's time for Washington to mind its own business, and let other countries accept greater responsibility for their own security and prosperity. Rebuild this nation's strength from within. Invest the billions we've squandered abroad in American education, innovation and crumbling infrastructure. Take much better care of our veterans, the men and women who have paid the highest price for our post-Cold War superhero foreign policy. Leave more dollars in the taxpayer's pocket to power the American economy forward.

Moneyball America

If the U.S. is to remain secure and prosperous, there are a few foreign challenges that must be met, and it's in America's interests for Americans to meet them. We can't afford to intervene in so many trouble spots at once, but nor can we retreat and expect others to pick up the slack. Focus less on selling American values and more on enhancing America's value. Stop treating the rest of the world as if they are "Americans at an earlier stage of development." Set aside pointless arguments about how "exceptional" we are, and build a foreign policy designed solely to make America more secure and more prosperous. Mind the cost. Set priorities and stick to them.

Indispensable America

In a profoundly interconnected and dangerous world, America can't remain safe unless we work to ensure that governments everywhere answer to their citizens. Americans must fight for democracy, rule of law, human rights and open markets because the world -- and therefore the U.S. -- will never know sustainable security and prosperity without them. Someone must lead the alliances that manage conflict, prevent terrorists from gaining access to the world's most dangerous weapons, contain threats in cyberspace and lead the fight against transnational crime and the worst effects of climate change. Who but America can do these things? Who but America can lead?

Bremmer himself reserves his own opinions until the last chapter of his book, where he argues  for the Independent America approach.

I think he is right, we in America need to decide which of these courses we want our political leaders to follow. And I guess I agree with his own conclusion, spelled out in the last chapter of the book – that we need to tend first and foremost to our own internal difficulties – crumbling infrastructure, decaying inner cities, exorbitant higher education costs, substandard early education, growing income inequality, etc, etc, etc. We have wasted a lot of lives and money in recent decades trying to remake the world in our image, and frankly it hasn’t worked very well.

This is not an argument for American isolationism, but rather for a more realistic assessment of what we can and can’t do in the world, and how much other nations have to take responsibility for their own problems in their own areas of the world.  

Greece – Getting real

It’s like watching a train wreck in slow motion. Greek politicians buy votes for decades by creating lots of unnecessary public sector jobs and promising inflated pensions (retirement at 50 with pension at 100% of final salary!).  Greek taxpayers regularly evade taxes. Corruption is endemic. Then Greece gets into the Euro by cooking its books so it looks healthier than it is. Not surprisingly, Greece gets into serious financial trouble living beyond its means, to the tune of about €360 billion Euros of debt, and depends on the rest of the EU, principally Germany, to bail it out.  The EU and the IMF do that,  to the tune of €80 billion Euros thus far,  on condition that Greece attack some of its fiscal profligacy by trimming down the bloated bureaucracy and inflated pensions. 

Geek voters can’t take the pain, so they vote in a far-left government that repudiates the reforms.  The EU, not surprisingly, isn’t inclined to pour good money (another €8 billion Euros) after bad, especially since it is obvious they are never going to get paid back, which leads to the current impasse.

 

Probably the Greek government will refuse to budge, because they would promptly get voted out of office if they backed down on their election pledges.  Probably the EU and the IMF will refuse to pony up more loan money they know they will never get back. Probably Greece will eventually default, and probably have to leave the Euro.  Hardly a disaster, because Greece probably wouldn’t have been accepted into the Euro zone in the first place if people had known the true state of their finances.

This of course is the fundamental flaw in the current EU in the first place – monetary union without fiscal union.  It’s like putting everyone in the family on a single credit card, with no controls over who spends how much.

  

Of course some cities (like Chicago) in the US have pulled the same game, and are in exactly the same sort of trouble.

Strongly recommended: The Accidental Superpower

Peter Zeihan was for 12 years STRATFOR’s vice president for analysis. His new book The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder is a blockbuster, well worth reading and thinking about.  In essence he argues that the past 70 years of worldwide growth and (relative) stability was due to the Bretton Wood agreements of 1944, and as America withdraws from these agreements (largely as a result of our unexpected new energy independence from fracking) much of the world will face a grim future while America and a few of its close allies will ride out the storm relatively unscathed.  Moreover, the predicted American success will not come from any brilliance among our politicians, but from the simple dumb luck of favorable demographics and geography.

His arguments are buttressed with an overwhelming amount of supporting material about geography and demographics and trade figures (I’ve had to reread the book several times to absorb it all). But his conclusions are heavily based on highly predictable things, since geography doesn’t change, nor do demographics change very quickly.  This is an important book, particularly as it counters the current Washington hysteria about threats from Russia and China, neither of whom currently has the military or economic potential to be more than annoying, and shortly will be in dire straits themselves.

Recommended: A Net Assessment of Europe

Another recent George Friedman article is worth reading: A Net Assessment of Europe. It follows the two articles of his I recommended a few days ago, and it appears he will be doing a series of these covering different regions of the world.

More on Hi-Fi and suckers

For those interested in a more detailed science-based (as opposed to just unsupported opinion-based) discussion of why some of the expensive high-end trends in hi fidelity audio equipment are just marketing hype, read 24/192 Music Downloads are Silly.

As the author notes, it is not our ears that get fooled but our brains. We expect the more expensive equipment to sound better, so it does. We want the very expensive equipment we just bought to sound better, so it does. And as for the frequent advice to just go the store and listen to the equipment, any competent audio salesperson knows how to make the equipment with the higher profit margin sound more impressive by boosting the bass and/or treble a bit, or boosting the volume a little. In fact, it often only takes a bit of subtle suggestion from the salesperson  – “now listen to how much better this expensive amplifier sounds” – to convince the listener that they hear a difference. Humans are after all highly suggestible, as politicians and advertisers  prove every day.

The only valid test is a true double blind A/B test, where the same music, at the same volume and with the same equalization, is compered without either the listener or the tester knowing which sample is which.  Such tests reveal that in fact hardly anyone can reliably tell the difference between moderate quality equipment and expensive high-end equipment (though really cheap equipment can often be detected), nor between CD-quality recordings and “higher fidelity” 24-bit 192kHz recordings.  In fact, almost no one can even tell the difference between raw CD-quality WAV files and compressed 320kbs MP3 files, and few can even distinguish a difference in 192kbs MP3 files.