Piketty Facts

Most Piketty commentary (like the Deridre McCloskey review I blogged earlier) focuses on the theory, r>g, and so on. After all, that's easy and you don't have to read hundreds of pages.

"Challenging the Empirical Contribution of Thomas Piketty's Capital in the 21st Century" by Phillip W. Magness and Robert P. Murphy is one of the first deep reviews of the facts that I have seen. I haven't read it yet, but the abstract looks promising:

Thomas Piketty's Capital in the 21st Century has been widely debated on theoretical grounds, yet continues to attract acclaim for its historically-infused data analysis. In this study we conduct a closer scrutiny of Piketty's empirics than has appeared thus far, focusing upon his treatment of the United States. We find evidence of pervasive errors of historical fact, opaque methodological choices, and the cherry-picking of sources to construct favorable patterns from ambiguous data. Additional evidence suggests that Piketty used a highly distortive data assumption from the Soviet Union to accentuate one of his main historical claims about global “capitalism” in the 20th century. Taken together, these problems suggest that Piketty’s highly praised and historically-driven empirical work may actually be the book’s greatest weakness.

Comments on the paper welcome. If I get a chance to read it I'll post some.

Time use of the non-employed

Source: New York Times

The decline in labor force participation means that a larger and larger fraction of the population, including many prime-age men, are not working and not actively looking for work.

What do they do all day? The New York Times has a lovely article answering that question.

I took a screenshot at left to advertise the post, but go to the Times where the graph is interactive.

Next question, where does the money come from?

Understanding the lives of people in this predicament seems to me a useful step to understanding the big decline in participation.

Strange Bedfellows

Jeff Sachs has written a very interesting Project Syndicate piece on Keynesian economics. It's phrased as a critique of Paul Krugman, but his message applies much more broadly. Krugman was mostly articulating fairly standard views on stimulus, "austerity'' and so forth. (We need a better word than "Keynesian'' for what Jeff calls "crude aggregate-demand management.'' But I don't have one handy.)

This is a good example for people outside economics (and quite a few inside) who think all economists line up on an easy right-left divide. If you expected Sachs to support the standard Keynesian consensus because he's "liberal," or to use his words, in favor of "progressive economics," you would be wrong. He looks at the facts, the forecasts, and the Krugman's curious rewriting of history in a "victory lap," and comes to his own conclusions.

Needless to say, I'm happy to find someone else making many of the basic points in my
Autopsy for Keynesian Economics (ungated version). I'm even more happy that someone of a "progressive" political orientation comes to the same conclusions that I do from a more libertarian orientation.  I'll be curious to see if Sachs comes in for the same sort of venomous personal attacks -- with essentially no attempt to argue the content -- as my piece attracted from the politicized lefty economics blogosphere. Do they treat "friends" more nicely, or "traitors" more harshly? We'll see.

On infrastructure, Sachs writes

To be clear, I believe that we do need more government spending as a share of GDP – for education, infrastructure, low-carbon energy, research and development, and family benefits for low-income families. But we should pay for this through higher taxes on high incomes and high net worth, a carbon tax, and future tolls collected on new infrastructure. We need the liberal conscience, but without the chronic budget deficits.

Here too, we can almost agree. We can agree on the principle that infrastructure spending is important, and should be evaluated on the basis whether its benefits exceed its costs, not on the "stimulative" powers of its spending. Then we can go back to evaluating whether all of these particular investments have benefits greater than costs, and whether those particular taxes merit their distortions.

Carbon Tax or Carbon Rights?

Larry Summers has a very nice Financial Times oped, "Let this be the year when we put a proper price on carbon" Greg Mankiw has also written extensively and eloquently in favor of a carbon tax, for example here.  Jeff Miron has some interesting skeptical thoughts, recently here.

I agree in principle.  But I have some important qualifications, and some suggestions for framing to broaden the appeal of the proposal substantially. I also think that individual rights may be better than a tax. What matters, really, is a carbon price, and there are different ways to bring that about.

I don't want today to get in to the debate about climate science. How big of a problem is human released carbon and other greenhouse gasses? Are the big computer models accurate? I don't want today to debate the larger economic and policy questions:  How much economic cost is there really? Are there mitigation strategies? Are there more pressing environmental or economic problems? (Species extinction due to habitat loss, old fashioned water and air pollution, etc.)

Too much of the policy discussion focuses on the scientific debate, as if the economic and policy answers follow unequivocably once that is settled. They are not. Let's talk about the second half today.

A Trade

The strongest case for a carbon price is, I think, that if we're going to have anti-carbon policies and energy conservation policies -- and we do, and we are, like it or not -- then a carbon price is a far better way to implement them than direct regulations.

Prices aggregate information. Should you buy a second electric car for short trips? It costs carbon to build a car. Prices tell you. Prices are powerful incentives, which get people to do on their own what they resist by fiat. Prices induce all sorts of creative responses, and regulations induce creative countermeasures. (My daughter, then 8, turned to me one day and said, "Dad, if they make people buy high mileage cars, won't people just move further away from work because it's cheaper to drive?" Proud dad story.) And a uniform price makes sure you spend money efficiently.  If you spend a hundred billion dollars on a high speed train that saves a thimbleful of carbon, that's a hundred billion dollars that could have saved a lot more carbon.

Phrasing the issue my way should help to sell the carbon-price project should to people a bit doubtful about the climate projections. In the extreme, one could argue to the most anti-carbon group, "look, if we're going to waste money, let's minimize the damage."

So I think Larry and the other carbon tax proponents would get further if they were to offer a deal: Let us have a carbon tax, and in exchange we will get rid of all the other horrendously inefficient laws, regulations, tax credits, and other attempts to nag us inefficiently to lower energy consumption and carbon emission.

Accept a carbon tax, and in return, we dismantle gas mileage regulations, electric car lanes, electric car credits (every $100,000 Tesla driving down Sand Hill Road is the beneficiary of $7,500 Federal tax credit), mandates to install recharging stations, ethanol and biofuel mandates, windmill credits, subsidized loans, alternative energy boondoggles, energy efficiency standards on appliances (by which Whirlpool reportedly pays no taxes), solar panel credits, the incandescent light ban, and so on ad infinitum.

A taste from the 2014 tax extenders -- these are only some extenders, not the baseline!

• the tax credit for residential energy efficiency improvements;
• the tax credit for second generation biofuel production;
• the income and excise tax credits for biodiesel and renewable diesel fuel mixtures;
• the tax credit for producing electricity using Indian coal facilities placed in service before 2009;
• the tax credit for producing electricity using wind, biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic renewable energy facilities;
• the tax credit for energy efficient new homes;
• the special depreciation allowance for second generation biofuel plant property;
• the tax deduction for energy efficient commercial buildings;
• tax deferral rules for sales or dispositions of qualified electric utilities; and
• the excise tax credit for alternative fuels and fuels involving liquefied hydrogen.

If you accept a carbon tax, the proposal should be, we will permanently dismantle all of this. Yes, this means dismantling much of the department of energy and EPA.

(We could also stop subsidizing energy use first, including zoning laws that force a lot of needless driving, housing policies that encourage too-large houses, and so forth.)  

Why are some economists still skeptical about carbon-price proposals? I think that many are rightly wary that the carbon tax will just be added on top of this rot, and worse that the proceeds of the carbon tax will be used to funnel more money to crony energy boondoggles. At a minimum, that is a strong reason to offer a revenue-neutral tax rather than to bundle it with plans to spend the revenues on "infrastructure." Let infrastructure live on cost-benefit analysis not a dedicated stream.

To get a carbon tax, I'd like to hear proponents loudly offer this deal, in a way that skeptics will perceive as enforceable.

A Uniform Tax

Larry touches on an important issue that will pollute the debate:

On the other side of the ledger, there has always been the concern that raising carbon taxes would place an unfair burden on some middle- and low-income consumers. Those who drive long distances to work, say, or who have homes that are expensive to heat would be disproportionately burdened.

Economists understand that a tax like this is all about incentives and substitution, not about transferring income. The public and political system see taxes all about transferring income and tend to forget incentives. This will be a big problem.

The natural political life of any "tax," including the carbon tax, will lard it up with exemptions. People who "need" to "drive long distances to work," and "can't afford" new energy-efficient cars, farmers, small business, people who live in cold climates (we already have a home heating oil subsidy), high energy industries (aluminum, concrete), and so on and so forth will all clamor for exemptions. And will get them.

But this tax, of all taxes, must be uniform at the margin, with no exemptions. Its purpose is incentives, not revenue raising or redistribution. The planet doesn't care how worthy was the carbon emitter.  People who drive a long way to work should move to smaller more expensive houses closer to work. That's the point of a carbon tax. Or shift to smaller cars, or carpool, or make other unpleasant substitutions. That's the point of a carbon tax. Farmers should find less carbon-intensive ways to plow and plant crops. People who live in cold places in the winter or warm places in the summer should move, and use less energy.  Businesses that have to use a lot of carbon should contract. Those on the margin will close. That's the point of the carbon tax. If this pain is not felt, the change in behavior won't happen.

People are hurt. And they can be helped, just not on the margin. People who are hurt can get lump sum checks, or vouchers. If the overall distribution of income is substantially made worse by carbon pricing, let the regular tax system redistribute more.  (If you think about it, that's pretty unlikely. I don't have numbers, but poor people may well use less carbon. Yes, they drive, but they don't fly and especially not in private jets. And getting rid of crony boondoggles in my deal above would help a lot too.)

Larry makes a good and revealing point about the nature of redistribution:

Now these groups have received a windfall from the drop in energy prices so it would be possible to impose substantial carbon taxes without them being burdened relative to where prices stood six months ago. As an example, the price of petrol has fallen by over $1 per gallon. A $25 a tonne tax on carbon that would raise over $1tn during the next decade would lift petrol prices by only about 25 cents.

That is a  very interesting view of just how short-lived this sense of our political system's desire for insurance and redistribution is. If we bring you back to where you were last year, you won't complain.  It's not about the overall distribution of income -- it's about middle income people's right to the gas price they paid last year.

But I'm dubious. Given how long a debate over something this big will take, and how many people will dislike a carbon tax, I'm not persuaded Larry's argument will be enough.  The demand for "transition assistance" and help to pay the carbon tax will likely not be silenced by "well, it just brings gas to what you were paying in 2013."

Furthermore, it's a good bet that the same forces that will undermine my first caveat will be at work on the second one. If I install solar panels on my roof, can't I get a break on the carbon tax?

In sum, I think the carbon tax proposal needs a second deal to be offered. The  carbon tax will be a uniform tax. Everyone pays the same rate on the margin, the tax does not get riddled with loopholes and exemptions.

To get a carbon tax, I'd like to hear proponents loudly offer this deal, in a way that skeptics will perceive as enforceable.

It's not that unrealistic. Gas taxes and tobacco taxes are administered pretty uniformly.

Tax vs. Rights

The economic point is a carbon price. There are lots of ways to implement a carbon price. Instead of a tax, one can have carbon rights.  The cap and trade schemes are the natural alternative, based on the latter idea. They don't seem to be catching on, for reasons that I won't go in to here.

Instead of the current business focus of cap and trade, suppose that every citizen has a right to emit x tons of carbon per year. In order to emit carbon (methane, etc.), or to sell fuel or electricity that emits carbon, a business must purchase those rights.  You can receive your rights with your annual tax filing, and sell them on electronic exchanges. A market will spring up quickly, offering citizens cash for their pollution rights.

It strikes me that this system obviates many of the political problems with carbon taxes.

• It's by construction revenue neutral, and the flows of money can't go into boondoggles. All the money paid in carbon taxes goes into the pockets of citizens. 
• It's by construction greatly progressive. Everyone gets the same right. Private-jet fliers and McMansion heaters/coolers will be lining the pockets of poor people who don't travel much and live in small homes. Progressives who bemoan the loss of energy policy at least can console themselves with this grand redistribution. 
• Environmentalists and those in pursuit of "climate justice" should like it. Everyone gets rights to a clean planet. 
• If you really don't like carbon, you can choose not to sell. Or buy up other's carbon rights and burn them. (Sorry, compost them.)  
• Every voter will have a strong incentive not to let anyone off the requirements to buy carbon rights. If favored industries come by and complain how much the carbon rights are costing and want a tax break,  every voter knows that money is coming straight out of their pocket. 
• Every voter now is an enemy of command and control energy regulation, which lowers the demand for his or her carbon rights.

The last two forces are imperfect, and it will still be important to pair this system with at least a formal promise to use the carbon (methane, etc.) price as the only instrument of energy policy, and with a formal promise to apply the requirement to purchase carbon rights uniformly. But the concentrated interest of voters will help.

This is no panacea, to be sure. Enforcing that businesses buy rights takes much the same bureaucracy as enforcing tax payments.  Whether our political system does a rights scheme better than a tax scheme is a bit of a conjecture.

But take one look at the US tax system. What started in the academic blackboard as the sensible idea "hey, we can all chip in some fraction of our income to pay for the Federal government" has turned in to the monster we see before us. A carbon "tax" also seems nice on the academic blackboard. But I worry that it will suffer the same fate.

Taking a Closer Look at 'Unexplained Phenomena'

Recently, I noticed an article about "the 10 most notorious paranormal hoaxes in history" mentioning Uri Geller, Salem Witches, Crop Circles, Loch Ness Monster photo, and The Fox Sisters, along with some more salient topics such as The Cottingley Fairies and "Alien Autopsy" footage.  In response, this article offers commentary about a comparable number of 'paranormal' topics, including some that have been previous subjects at this blog.  Hopefully, these perspectives will be informative even for readers who consider themselves a 'skeptic' yet have an open mind.  Concerning the 'Salem Witches,' superstitious fears were aroused by some unusual afflictions and events as recorded among the narratives of the witchcraft cases yet the label of 'hoax' seems too simple a summation of the diverse circumstances recorded in written accounts and testimonials. 

 

This blog has reported about numerous books and other media that can help people develop their understanding of metaphysical subjects.  Data sources are mentioned so that readers can research the documented cases in greater depth if interested.  Upon doing so, even formerly closed-minded sceptics and 'denialists' may find that fear of the unknown and social conditioning has influenced their perceptions of occurrences sometimes referred to categorically as 'paranormal' or 'unexplained phenomena.'

 

1. Eileen Garrett (trance medium, 1893-1970; previous articles: 1, 2)

 

In the book by Abduhl Latif trance-channeled through medium Eileen Garrett Health: Its Recovery and Maintenance (1929), the transcendental communicator was asked what accounts for men having no grasp of intelligence in the afterlife.  Here are some of the thoughts from the response that was spoken.

From the very oldest days there has always been the philosopher, who, because he can see no further than his sense, has said: "that is a fact," and there has always been that feeling in the mind that has been well-trained and well-grooved and becomes what you call academic.

 

Your professors, your advocates, your great men work on that which is organized, and when you organize a thing remember that you are stopping up possible sympathetic chunks of light . . .

 

. . . you have shut the door to all the simple truths that are inside you.

 

You go to your great academic orator and because somebody has said this and somebody has said that and he has found nothing, because he dare not, he disagrees . . .

 

That is why the simple-minded man, believing that the day is, and that the night was meant for sleep, and that God is in His Heaven, and that he is part of that God, has no "ologies" or "isms" to rid himself of.

 

2. John of God (contemporary trance channeling/spiritual healing case; previous articles: 1, 2, 3, 4)

People with only a casual knowledge of Brazil's John of God don't realize the vast amount of existing documentation about this case.  In one You Tube video, an American doctor is seen making an investigation.  Emma Bragdon wrote in Spiritual Alliances (2002): "João de Deus has been studied by teams of legitimate scientists from Russia, Germany, the USA, Japan and France . . . The scientists who studied João are convinced of his capabilities, but bewildered as to how to handle the information."

3. Enfield 'Talking Poltergeist' Case (1977-1979; previous articles: 1, 2)

Television news media interviews of people who have experienced anomalous phenomena have been known to feature skeptic 'detractors' as a customary practice.  One example may be observed in a You Tube clip entitled "This Morning Enfield Poltergeist Janet Interview" from a March 2012 UK talk show telecast.

As show guest Janet Winter reflected about experiencing the so-called 'poltergeist' events as a child, disinformation was given by a TV subtitle designating her as "Allegedly possessed by a poltergeist."  Author Guy Lyon Playfair (subtitled "Poltergeist Expert") then commented about how he became involved with the case.  More disinformation resulted when the interviewer asked Janet about "a voice that came out of your mouth.  It felt like it was coming from behind you."  There was another question about "these words were coming out of your mouth uncontrolled or controlled by you?"  Janet explained, "It felt like it was behind me, not within me."  However, an incorrect impression has already been fostered and is bolstered as Playfair momentarily mentioned his own "vocal folds" theory.  Then the moderator said to "skeptic and author" Deborah Hyde: "So Deborah, for reasons of balance, obviously you are a skeptic and you don't believe any of this."  As Deborah provided an example of 'denialism,' Playfair spoke up: "That's a complete misinterpretation."  Janet said to the denialist, "You wasn't there, love.  You don't know.  You don't know what I went through or how I feel today."  The segment concluded without any mention that there is available a book by Playfair that provides a detailed chronicle of events in the Enfield case, This House Is Haunted (1980); and today people online can listen themselves to the Enfield Tapes of anomalous voice recordings.

4. JZ Knight/Ramtha (contemporary channeling case; previous articles: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19)

Another well-known contemporary channeler whose numerous public appearances have been recorded is JZ Knight, through whom Ramtha shares his philosophy.  These orations occur at events sometimes called 'assays' (a word associated with trials and tests) — Ramtha sometimes uses remarkable words in his speech.  There is a good reason Ramtha has told students to listen and think about what he says: "You have to be awake to see the runners and the miracles when they manifest."

I occasionally watch videos on You Tube to better understand some of the sources of information or disinformation about events associated with 'unexplained phenomena.'  This summer while writing articles about the Ramtha case, I viewed the 1988 ABC News report telecast about JZ Knight and Ramtha on "20/20" entitled "The Voice from Beyond".  The segment is a corporate media perspective of channeling and 'The New Age Movement' at the time and undoubtedly influenced many people's perceptions of these subjects.  Hugh Downs nonchalantly introduced the segment by saying about Ramtha's followers, "Who are they really following?  An immortal wise man, a fake or, as some believe, is this the Antichrist, whose presence among us means we're on the eve of Armageddon?"  Then Barbara Walters took her turn reading from the teleprompter: "Ramtha is one of the biggest stars of the New Age Movement.  She's enthralled a lot of people . . ."  Thus, in the opening sentences confusing information had already been presented as Ramtha is a male entity who speaks through JZ Knight, who herself has no knowledge of the interludes (at least, not until viewing or listening to the recordings made).

Judd Rose was the reporter assigned to offer an overview of the case and did so with a somewhat cynical tone of voice, explaining how she "goes in to a trance.  And, finally, after several minutes, this 40-year-old woman says she has turned into a 35,000-year-old man."  Actually, JZ the woman is no longer in control of her body and another personality is speaking.

One of the first images was of JZ's Rolls Royce and a mansion under construction.  The selected clips of Ramtha made it evident that moments of visual novelty had been edited together from who knows how many hours of footage.  What Rose said about Ramtha is incorrect: "Channels say they can summon forth long-dead spirits from other dimensions."  Transcendental communicators are not 'dead' but are living beings who after an Earth life have made the transition to another realm of existence.

After clips of "Ramtha Followers," some denialist perspectives of the case were offered, including from a university professor and a Colorado woman known as 'Linda.'  Rose reported, "Raschke calls the Ramtha movement a sort of collective mass hypnosis . . ." and 'Linda' agreed: "Those [audio] tapes put me under hypnosis and put me through a personality change that no one would have ever guessed or could imagine can happen to someone."  The accusation of hypnosis delivered via a TV program seems ironic to me, especially after reading about the case of trance channeler Mark Probert.

Viewers may not have paused to consider that JZ could have turned down the interview if there was anything she wasn't willing to discuss.  Considering her wealth, is it appropriate to judge a channeler or anyone on that basis?  Today there are numerous inexpensive books and recordings that document the JZ Knight/Ramtha case. 
 

In the "20/20" segment, when Rose reported about a bizarre incident described by a high school classmate in a video tape, the resulting demonic association offers a microcosm for the phenomena of channeling being misunderstood as "demonic possession."  There are people who have had no introduction to the concept of the spiritual Christ Force becoming comprehensible through incidents known categorically as supernatural or 'paranormal phenomena.'  Ramtha also brought up this matter during a 2014 interview: ". . . by the way, don't let any crazy get on and tell you those were demons.  Please.  It's only their reality.  It has nothing to do with ours.  You can only see a demon if it exists in you and, certainly, that is not in you.  That is the need to be relevant.  It doesn't add to the conversation.  It is an admission of superstition.  The sooner we get rid of demons the sooner we close the books on the back story."

If one notices a "verbiage contradiction" (an expression once coined by Ramtha) in these remarks, this will provide an indication of the complexities of this case.  Ramtha doesn't want students to exalt him.  He wants them to each recognize God "within your being" and awaken to a state of Christ Consciousness.

 

During the 2014 interview, Ramtha said: "Any time that there is a freedom of thought it threatens someone.  I am only interested in those who are ready to get over their 'box' . . . When they find that isms don't work is when they find me.  And I am all about telling them that God not only loves them but is at the heart of their essence."

5. Mark Probert (trance medium, 1907-1969; previous articles: 1, 2, 3, 4, 5, 6, 7).

 

Mark Probert once commented about his trance mediumship: "Some of the people who communicate through me are said to be very eloquent and learned, and I wish I could hear them for myself . . . The talk is mostly philosophical and scientific, and since I never had more than a sixth grade grammar school education, it is quite beyond my own normal knowledge and vocabulary."

Probert worked as a bellman or 'bellhop' before he became a trance medium (or what today would be known as a "channeler").  Probert thus has something in common with Ted Serios, in whose presence anomalous photographs were intermittently taken as detailed in the 1967 case study The World of Ted Serios by Jule Eisenbud, M.D.  Serios had been employed as a bellhop at the Conrad Hilton Hotel in Chicago. 

6. Baron Albert Von Schrenck Notzing (mediumistic phenomena investigator, 1862-1929; previous articles: 1, 2)

As with channeling cases, seance room phenomena manifests aspects of a spiritual Force interacting with humanity.  One noticeable teaching in transcendental communication cases is spiritual Oneness, as previous blog articles have shown.  

 

Some scientists in their published case studies have attempted to correct misunderstandings that have arisen concerning anomalous phenomena.  One such scientist is Baron Albert Von Schrenck Notzing with a passage in Phenomena of Materialisation (1920) about bizarre stages of phenomena associated with a materialization medium in a trance state (page 97).  Numerous photographs in the book document the array of manifestations witnessed in the presence of hypnotized French medium 'Eva C.'

This is a photo of one of the many surprising materializations documented in Phenomena of Materialisation (1920) by Baron Von Schrenck Notzing (translated from the first edition in German).  This is how Schrenck Notzing described the formation seen in this photo of what is now often called 'ectoplasm': "The photographs show a remarkable half-finished structure arrested in its development . . . The whole thing looks like a half-finished sketch of a female face-mask from nature, composed of pulp and softened cardboard and fragments of veil-like material, or perhaps made of a special mass resembling plasticine."

7.  William Crookes (physicist, chemist, investigator of spiritual phenomena, 1832-1919)

William Crookes's research pertaining to spiritual phenomena is chronicled in the book Crookes and the Spirit World, a 1972 collection of writings by him or concerning his work.  Crookes was confronted with the criticism of denialists in 1871, as he commented in a science journal article:

When I first stated in this journal that I was about to investigate the phenomena of so-called Spiritualism, the announcement called forth universal expressions of approval.  One said that my "statements deserved respectful consideration"; another expressed "profound satisfaction that the subject was about to be investigated by a man so thoroughly qualified as," etc.; a third was "gratified to learn that the matter is now receiving the attention of cool and clear-headed men of recognized position in science"; a fourth asserted that no one could doubt Mr. Crookes's ability to conduct the investigation with rigid philosophical impartiality; and a fifth was good enough to tell its readers that "if men like Mr. Crookes grapple with the subject, taking nothing for granted until it is proved, we shall soon know how much to believe."

These remarks, however, were written too hastily.  It was taken for granted by writers that the results of my experiments would be in accordance with their preconceptions.  What they really desired was not the truth, but an additional witness in favour of their own foregone conclusion.  When they found that the facts which that investigation established could not be made to fit those opinions, why—"so much the worse for the facts."  They try to creep out of their confident recommendations of the enquiry by declaring that "Mr. Homes is a clever conjurer, who has duped us all."  "Mr. Crookes might, with equal propriety, examine the performances of an Indian juggler."  "Mr. Crookes must get better witnesses before he can be believed."  "The thing is too absurd to be treated seriously."  "It is impossible, and therefore can't be."* (*The quotation occurs to me—"I never said it was possible, I only said it was true.")  "The observers have all been biologised (!) and fancy they saw things occur which really never took place," etc., etc.

These remarks imply a curious oblivion to the very functions which the scientific enquirer has to fulfil.

 

8:  Arthur Conan Doyle (author, investigator of spiritual phenomena, 1859-1930)

Arthur Conan Doyle’s famous character Sherlock Holmes is known to have been inspired by Dr. Joseph Bell, a teacher at the medical school of Edinburgh University where Doyle received a medical degree in 1881.  Among Doyle’s nonfiction books is History of Spiritualism (1926) that features a profile of the Fox sisters who are associated with the beginning of the movement in 1848 as it is often defined historically; however, Doyle began his first chapter with the statement: "It is impossible to give any date for the early appearances of external intelligent power of a higher or lower type impinging upon the affairs of men."

Regarding the Cottingley Fairies, Doyle began the narrative of his book The Coming of the Faeries (1922) with a statement declaring the possibility of the series of incidents representing a hoax.  His predicament was evidently influenced by the knowledge that seance room materializations at times encompassed bizarre representations of 'spirits' (including what was known as a 'simulacrum' or, plural, 'simulacra'). 

Since the days of the Spiritualism movement, some of the most publicized denialists of unexplained phenomena have been magicians.  Nandor Fodor cited examples in his Encyclopaedia of Psychic Science (1966) yet also reported, "Some of the most famous magicians acknowledged to have witnessed genuine phenomena."  One of the "magician-opponents of spiritualism" was Harry Houdini, who became a subject of reflection for Arthur Conan Doyle in The Edge of the Unknown (1930) with revealing details, such as: ". . . he admitted that he saw ectoplasm both come and go [with medium Eva] without being able to explain it."

9.  Arthur Ford and Houdini's Message

 

When Harry Houdini made his transition from Earth life to the ascended realm in 1926, clairaudient and trance medium Arthur Ford (1896-1971) communicated a code message from him to his widow, Beatrice.  An account of what happened is provided in Ford's 1958 autobiography Nothing So Strange written in collaboration with Margueritte Harmon Bro. 

 

Ford related that when Houdini died after dedicating his life for many years to exposing mediums as fakes, he left behind a widely publicized message that if there was survival after death he would contact his wife with a code message that only she could decipher.  Ford was a medium who would go into a trance to allow his 'control' Fletcher to serve as "interlocutor between the invisible and visible visitors who came to talk together through my intermediacy."

On February 8, 1928, Fletcher communicated a message from Houdini's mother offering the cord word "forgive" and declaring that Beatrice Houdini would declare it to be the true message that had been long awaited.  Houdini's widow confirmed that he had waited in vain to hear this message communicated from his mother by a medium during his lifetime.  

Beginning in November 1928, the spelling out of Harry Houdini's message to his wife came through during portions of eight sittings of Ford with, on one occasion, five explanatory words being given in French.  After the final code word was delivered, Fletcher said that Houdini instructed that the ten-word code message be taken to his wife.  The first word in the code was the name "ROSABELLE."

At Fletcher’s request, the message was signed by each person present.  Fletcher commented that Houdini stated, "I know that she will be happy, because neither of us believed it would be possible."  Houdini requested through Fletcher that upon receiving the message Beatrice set a time to sit with "this instrument" (Ford) so that Houdini could repeat the message via Fletcher and receive a supplement code from her — "and the two together will spell a word which sums it all up, and that word will be the message which he wants to send back."

When Beatrice was contacted the following day, she read the report and said it was right.  Beatrice arranged a sitting with Ford that occurred one day later.  Ford went into trance and Fletcher relayed Houdini's conversation with his wife, referring to her as 'Bess.'   The code was explained and the message that Houdini wanted to send back to his wife was revealed to be "ROSABELLE BELIEVE!"

In conclusion Fletcher repeated Houdini's final words. "He says, 'Tell the whole world that Harry Houdini still lives and will prove it a thousand times and more.'   He is pretty excited.  He says, I was perfectly honest and sincere in trying to disprove survival, though I resorted to tricks to prove my point for the simple reason that I did not believe communication was true, but I did no more than seemed justifiable.  I am now sincere in sending this through in my desire to undo.  Tell all those who lost faith because of my mistake to lay hold again of hope, and to live with the knowledge that life is continuous.  That is my message to the world, through my wife and through this instrument."

 

Ford explained that the code had been a handy device employed in Houdini's instructions to his wife during their stage act.  No one except Houdini and herself knew the cipher, or the key, and its application.

From the moment that Mrs. Houdini pronounced the message genuine there began a flood of attack ranging from the ludicrous to the vicious.  Mrs. Houdini's veracity was questioned; she was accused of giving the code to someone who then gave it to me—as if there could be any comfort for her in securing a message she already knew from a source she did not believe existed.  She was also scored for selling out her own husband who had so widely publicized his conviction that all mediums were fakes.  Consistently she avowed the genuineness of the messages and defended having made them public.  "It was what he wanted me to do, and I am doing it."

I was likewise accused of fraud, of course, and was once also approached by an ingenious blackmailer.  Then a man impersonating me fabricated a newspaper story, which only one tabloid printed, after which he confessed his hoax under promise of immunity from criminal prosecution.  Three individuals brought charges to the United Spiritualist League of New York City that I had been in cahoots with Mrs. Houdini and the press.  The president of the board of trustees of the First Spiritualist Church redeemed my character, Mrs. Houdini stood her ground, and the respectable press was meticulously fair.

 

Martin Ebon reported in True Experiences in Communicating with the Dead (1968) about a 1967 Arthur Ford seance that was seen on television from Toronto and "created a worldwide sensation."  Reverend James A. Pike was seen engaged in a dialogue with his son, who had committed suicide in 1966 at age 22.  Ford's control Fletcher related the son's conversation along with messages from others who had made the transition from Earth life.  Ebon wrote that Pike concluded: "Everything matched up.  All the long-forgotten facts and details matched up . . . I feel the whole thing is sufficient for an affirmation that there is continuity with people who have passed on."

  

10.  Ray Brown/Paul (contemporary trance channeling/spiritual healing case)

 
The "Ray, Gillian & Paul" episode of the UK series "Trust Me, I'm a Healer" (broadcast in 2007) can be watched on You Tube.  The series was produced by Rachel Bell.  More information about this case is available at raybrownhealing.com
 

Interest-paying money is not inflationary

(With credible fiscal policy, of course.)  Another interesting case, from JP Koning's Blog "Moneyness"

RBNZ decided to 'flood' the system with balances to make things more fluid. This involved conducting open market purchases that bloated the monetary base (comprised of currency plus deposits) from around NZ$6 billion in mid-2006 to just under NZ$14 billion by December of that year. See chart below. 

(Note that the RBNZ's problems began far before the credit crisis and were due entirely to the peculiar structure of the clearing system, not New Zealand's economy.)

Koning describes the lack of inflation as a result of the perceived "permanence" of the increased reserves. I think it comes from the fact that reserves pay interest -- as they do in New Zealand. Either way, the point is that banks and people are happy to sit on interest-paying money, in enormous quantities, just as they are on bonds.



The corresponding inflation and interest rates:

Source: Reserve Bank of New Zealand
http://www.rbnz.govt.nz/statistics/key_graphs/inflation/

Source: Reserve Bank of New Zealand
http://www.rbnz.govt.nz/statistics/key_graphs/90-day_rate/

More Cash and Zero Bound

In my last post I started thinking about how options other than currency enforce a zero bound. Imagine there is no more currency, and the Fed tries to impose -5% interest rates. You put in a dollar, you get out 95 cents. What other ways are there to guarantee that if you put in a dollar you get back a dollar? (In my last post, I also pointed out that in each case rules or laws could be changed, but that the magintude of the required changes was pretty big.)

 From Kenneth Garbade and Jamie McAndrews in a nice Liberty Street Economics blog post

• Certified check. Go to the bank, tell the bank to write you a $10,000 certified check. Put it in your sock drawer. (More: "Certified checks, which are liabilities of the certifying banks rather than individual depositors, might become a popular means of payment, as well as an attractive store of value, because they can be made payable to order and can be endorsed to subsequent payees.")

Or, inspired by that: 

• Don't cash checks. Every 90 days, call up, say you lost the check, ask them to reissue it. 

Clumsy. But as Ken and Jamie point out, it's very easy for a company to get started that does this, and offer fixed-value accounts to clients, beating the -5% at banks. Or, even in today's super-regulated environment, maybe banks could figure out to do this. After all, the Medici figured out in the 1400s to write offsetting bills of exchange to synthesize interest.

So, the project will mean changing the rules and laws governing checks, going back hundreds of years.

An earlier post by Todd Keister:

• Money market mutual funds.

Currently money market funds promise fixed value, and pay positive interest.  They are not set up to charge negative interest, or to allow capital losses. Maybe they should -- I've argued for floating NAV -- but they don't. The Fed kept the 0.25% rate on reserves precisely so banks and money market funds didn't have to reinvent themselves in ways that allow capital losses or negative rates. 

Miles Kimball has also been writing in favor of negative nominal rates and thinking about the zero bound. One post is here.