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Marshall Plan: 70 Years

By Shlomo Maital

   Almost 70 years ago, Gen. (retired) Herbert Marshall gave the commencement address at Harvard University, on June 5, 1947. No such address then or now has had a greater impact. In his talk Marshall, a retired five-star general, offered war-torn war-destroyed Europe generous financial aid, $11-$13 b. (in today’s dollars, about $130 b., or 1.5% of the US GDP then). It was offered to Russia and Eastern Europe, too.

     There was only one condition, Marshall said. Europe has to decide how to divide the money among the member countries. If America decides, there will endless bickering.

     Marshall’s talk was broadcast on the BBC.   British foreign secretary Ernest Bevan heard it, and at once called his French counterpart. A meeting was quickly convened in Paris, a committee was launched, and the wheels were set in motion. The aid soon flowed. The rest is history. Without those resources, European recovery would have taken far far longer, and the German economic miracle would not have happened.   Never in history has a winning nation paid money to the losing nation in war (compare with the Treaty of Versailles, when Britain and France stripped Germany bare, in war reparations for World War I, and directly led to World War II and the rise of the Nazis).

     There is a key lesson in the Marshall Plan, which stands in stark contrast to modern Trumpism.   Marshall Plan indeed put “America First” – but how? By perceiving that only if Europe achieved strong economic recovery, built on market economics but with a strong social component, would Europe remain friends with America. And that was America’s vital interest.   Do you help yourself, by screwing your friends, or by helping them? It’s that simple.

     Today, economists call the Marshall Plan “incentive compatible”. That is, it is a plan that built-in encourages those it intends to help, to engage in constructive appropriate behavior. In the case of Europe: Stop squabbling, and start cooperating. This led directly or indirectly to the European Union.

       We need more plans that are incentive-compatible. Sometimes, what seems like altruism – helping others – is actually exceedingly self-serving. That was the secret of the Marshall Plan.

       And Marshall? He was a five-star general, a genius at organization, deeply bitter and frustrated because President Roosevelt would not send him over to Europe to fight, but instead kept him home to organize the 8 million US troops sent to fight. I need you here, said FDR.   As Secretary of State, Marshall brought great wisdom and skill to the job. The Plan he initiated is his immense legacy, one that changed the world forever.

 

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Understanding Trump: Dunning-Kruger Cognitive Bias

By Shlomo Maital

     Having trouble understanding President Trump?   Read thousands of words and columns, blasting Trump, but you still (like me) do not understand who IS this guy?

     Read David Brooks (Op Ed, New York Times, May 15)….   He has figured it out. Trump has a syndrome. Dunning Kruger Cognitive Bias.

       What is it?   Here is the definition: *

     Across 4 studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although their test scores put them in the 12th percentile, they estimated themselves to be in the 62nd. Several analyses linked this miscalibration to deficits in metacognitive skill, or the capacity to distinguish accuracy from error.

     Meaning?   Incompetent people think they are more competent than they are, precisely because…they are incompetent. Trump highly overestimates his abilities (“best speech ever to Congress on healthcare”,   “how to fix America’s aircraft carriers”, etc.).

       People with Dunning-Kruger, who lead nations, are very very dangerous. Not knowing is one thing. Not knowing you don’t know is quite another. And when you lead the world’s most powerful, wealthy nation?   Disaster. Moreover, people around Trump cannot control him, and are fired abruptly when they oppose him, a corollary of Dunning-Kruger.  Trump is at the summit of Mount Stupid (see diagram), and since January 20, has proven to be there with blunders almost daily.

       What will happen?   Let’s see if America’s constitution and political institutions are capable and resilient enough to deal with this disastrous cognitive bias.

 

* Kruger, Justin; Dunning, David “Unskilled and unaware of it: How difficulties in recognizing one’s own incompetence lead to inflated self-assessments.” Journal of Personality and Social Psychology, Vol 77(6), Dec 1999, 1121-1134.

 

 

China’s New Silk Road: The New Global Vision

By Shlomo Maital

Chinese President Xi Jing Ping has announced a bold new Chinese plan to rebuild and reinvent the old Silk Road – a road and rail project, linking three continents, Asia, Europe and Africa, guided and funded by China. Major pieces of the new Silk Road are already in place.   (see diagram).   The first cargo train from UK to China has already made a maiden voyage.

   The cost is staggering: one trillion dollars. And the criticism has come thick and fast, much of it from the U.S.

     So let’s put some historical context on this issue.

     In July 1944, world financial experts met at Hotel Washington, in Bretton Woods, New Hampshire, to reinvent the world economy.   They succeeded. At the conference they created all the institutions that led to globalizations, world economic growth and helped Asia in particular grow and prosper.

     There were two competing visions there. One, that of J.M.Keynes, the world’s greatest economist, was to create a World Central Bank that would create a global currency, bancor, to fund world trade and investment. Great idea. The other was that of a US Treasury official, somewhat disliked, Harry Dexter White, who worked closely with Secretary of State Henry Morgenthau. White insisted that the global currency already existed, and was called, the “US dollar’.   But wait — what if American interests wanted more dollars, and global interests required, say, fewer?   Obviously US interests would prevail. That has been the Achilles heel of the global financial system for 70 years. It appeared with a vengeance, when the US printed vast amounts of dollars in the wake of the 2008 financial collapse, probably too many, and caused housing bubbles and instability abroad.

             Bretton Woods was a huge success.   And despite its fixation on the dollar, US leadership in shaping the new global ecosystem was crucial.   Now, 73 years later, it is time to reinvent the global system. America is nowhere to be seen or heard; it’s America First time. History will show this was a huge mistake for America and very costly.

   Now it is China’s turn. China is working hard to advance China’s interests. That is obvious. What country does not!   The US did this unabashedly in 1944.   But the new global ecosystem needs leadership and money, and China is offering both. America has neither. President Trump has no clue about what globalization really is, and his plan to rebuild American infrastructure will take years, leaving no energy, time or money for helping the world. If “America First” prevails, the world comes second. So, forget about America.

         We need to become accustomed to a world in which the global leader, architect and financier is China. It will not be ideal. But when American voters abdicate from the world and choose Trump, there is a vacuum – and China has moved to fill it. So let’s stop whining and make the best of it.

 

Prairie Dogs: Do You Speak “Chien”?

By Shlomo Maital

       Suppose you are a biologist, choosing a topic for research. Would you choose to study, say, how prairie dogs communicate?   Probably not. Well, a Northern Arizona University professor named Con Slobodchikoff did. And what he found is amazing, and may change how we think about, and relate to, animals in general. And it shows how crucial it is for scientists to choose freely what they study – you never know where a breakthrough will come from.

       Prairie dogs live in underground colonies. They come up to forage, and are vulnerable to predators. So they are alert for danger and signal danger vocally.   Here is what Slobodchikoff found (reported in the New York Times, Science section, May 17):

       Prairie dog “warning calls” can identify and communicate the type of predator they spot; they also specify its size, shape, color and speed; they use their calls to structure a ‘message’ informing about a predator they have never seen before; and their calls are rich, informative and flexible.   Slobodchikoff believes this qualifies the prairie dog calls as a language.   It probably developed through evolution — prairie dog colonies better able to signal danger and state its nature in detail survive longer to procreate than less verbal counterparts. 

   The French called prairie dogs “petits chiens” because they thought they sounded like their small pets back home. So, we could call the prairie dog language “chien”.

     And thanks to Slobodchikoff, if we learn their chien language well, maybe we could communicate with prairie dogs someday.   This, in turn, might be helpful, if some day we need to communicate with aliens, in their language.

     How did Slobodchikoff figure out the chien language? Mainly, by having different people and dogs walk through the prairie dog colony, record their warning calls and then study them. He had people wear different colored T-shirts and traverse the colony, and then on a wire, sent different shapes and sizes of figures through it.

     Again, we are learning how sophisticated animals are, and how well they make use of their very tiny brains.   We humans boast of our huge brains – but perhaps we could make better use of them?  

 

How Life Began on Earth

By Shlomo Maital

urey1urey2

Miller and Urey                         …. And their famous experiment

 

   Stephen Hawking’s brilliant PBS series Genius has a segment on how life began and evolved. In it the amazing 1952 chemistry experiment of Stanley Miller and Harold Urey (U. of Chicago) was described. The experiment shed light on how life began on earth.

     The experiment was beautifully simple. We know now that life is mainly made of proteins, and proteins are made up of amino acids.   But how did amino acids form? And what do amino acids do for us?

  • In the brain, glutamate is the main neurotransmitter (sending signals from one neuron to another, known as thinking) as neurotransmitters;   hydroxyproline is an important component of our connective tissue; glycine is crucial for red blood cells (that carry oxygen to all parts of the body); and another amino acid carries fat cells (lipids).

       Miller and Urey took methane gas, ammonia, and hydrogen gas, the gases prevalent in the earth’s atmosphere billions of years ago; they boiled water to create ‘clouds’ in the atmosphere; and added sparks, representing the lightning then occurring. Basically a very simple simulation of the gases in the earth’s atmosphere as it was when early life first formed, with some electrical energy from lightning.

       They ran the experiment for a week, then opened the flask and checked to see what happened.

         They found that three amino acids were formed. Amino acids are made of carbon, hydrogen, oxygen and nitrogen. The experiment showed how amino acids could have formed in the earth’s atmosphere…and, presumably, life began later, as the amino acids combined and became complex.

           For those who love the Bible, does this demean our faith? Not in the least. I asked a very religious relative about this, and his response was that evolution, and the Urey experiment, confirm the Biblical creation account, rather than deny it.   The beauty and complexity of all the forms of life that evolved from a handful of amino acids are surely inspiringly divine in their nature.

     As a postscript:     After Miller’s death in 2007, scientists examining sealed vials preserved from the original experiments were able to show that there were actually well over 20 different amino acids produced in Miller’s original experiments.  

Our Amazing Brains: It’s All About Connections

By Shlomo Maital

  synapses

Synapses: human brain

    

       Some truly amazing facts emerged from a Horizon documentary featuring British anatomist Professor Alice Roberts.

  • We humans share 99% of our genes with chimpanzees. In fact, we are more closely related to chimpanzees, genetically, than chimpanzees are related to, say, gorillas.
  •    Our brains are very large, relatively. The brain weighs about 3 pounds (1.4 kilo), and has a volume of about 1,200 cm3. But it is not just the size that matters. What makes us smarter than chimps is the connections! A human brain has 100 billion neurons, or nerve cells. These neurons are connected by synapses. There are at least 100 trillion synapses, and maybe as many as 1,000 trillion. That means each neuron is connected to at least 1,000 other neurons, and maybe 10,000.
  • It is these connections that are crucial. The internal network of the brain is what makes us creative, able to think and reason, to link ideas together, and to imagine things that do not yet exist.
  • According to Prof. Walker, geneticists have discovered a key gene, that differentiates between our brains and that of the chimpanzees. This gene controls the size and number of the synapses, or network connections. Chimps have one such gene. Humans have four of them.   When the researchers genetically inserted the gene into mice, the synapses of the mice became thicker and more numerous. So —   humans have evolved to be smarter than chimps, because we have these four powerful genes that build our brainy networks.
  • Brains are ‘neuroplastic’. If part of the brain is damaged, by stroke for instance, other parts can compensate.   To some extent, the brain can reinvent itself, to do tasks normally assigned to brain parts that have been damaged.
  • Walker, an anatomist, dispels the “obstetric paradox” — women’s pelvis must be wide enough to permit birth, but not so wide as to hinder mobility, walking and running. Researchers have shown that in fact, the female pelvis, though angled wider than that of the male, is highly efficient in walking and running.   So why then are babies born at 9 months?  There is another reason.
  • Babies consume large amounts of energy.   Mothers’ ability to supply that energy continually grows, to meet the embryo’s needs – but the rate of growth slows. At 9 months, the ability of the mother to supply energy to the fetus exactly equals the needs of the fetus for energy. If birth were delayed, the fetus would be starved. So nature conspires to initiate birth, right when the supply and demand of fetal energy match.

     Humans have one more advantage over chimps, according to the Horizon documentary. Humans cooperate altruistically. Chimps cooperate too, but only to get an individual reward. Human children, even very young ones, cooperate, and then share rewards, if the rewards are given unequally (more to one child than to another).  

     This innate sense of fairness exists in children – but, in modern capitalism, seems to disappear. The very wealthy seem to believe they somehow deserve vast wealth. How then do we restore the innate sense of fairness that exists among young children?

BBC: Origins of US (Horizon).

Restart for Globalization? What Went Wrong? What Might Go Right?

By Shlomo Maital

 globalization

   What went wrong with globalization? Where did we screw it up? My friend Clyde Prestowitz, President Ronald Reagan’s trade negotiator, has summed it up very well in his article in The Atlantic.  

     Put very simply:     America ran up huge trade deficits, $800 b., that lasted for 25 years, borrowing heavily from Asia, mainly. This is known as “living beyond your means”. Why? Americans enjoyed living beyond their means, and Asian countries got a growth engine, from American spending financed by Asian loans.  This is globalization gone awry. Why? Because it cannot be sustained. Eventually trade must be balanced. The system failed, because it did not include ‘balancing mechanisms’ that J. M. Keynes envisioned.

     Here is what Prestowitz envisions for the near term, after the Trump administration begins to change U.S. trade policies:

“The results of the election seem to indicate that-the views of economists and foreign-policy experts notwithstanding-America is about to change course on trade policy. That doesn’t necessarily mean a return to pre-World War II protectionism. It could instead simply mean a revival of the spirit that inspired the foundations of the postwar economic order. That spirit, articulated by the economist John Maynard Keynes, focused on assuring balanced trade-the avoidance of chronic surpluses on the part of some trading partners and chronic deficits on the part of others.”

   So, what will this New Order look like, might look like, in the Age of Trump? Here is Prestowitz’s take:

   “Thus a new order might operate to prevent the misalignment of currency valuations, to abolish or offset the impact of tax subsidies, and to mitigate the implicit subsidization of state-owned enterprises. It has been largely forgotten that one of the key objectives of postwar free-trade policy was to maintain a roughly balanced trade account-a goal that the country is likely about to pursue anew and that will likely affect its policies touching on not just trade, but investments, currency, technology, and labor as well.”  

     Could this story of the ‘restart of globalization’ have a happy end, not just for America but for the world?   An end, without a major crisis?

 

Pontypool: We Forgot Them & We Will Pay a Heavy Price

By Shlomo Maital

  wales

   Journalist Aditya Chakrabortty has been covering the “post industrial” depressed areas of Britain for The Guardian. These are the people who once had good jobs in factories and mines, who have been forgotten and neglected by governments in Britain, the rest of Europe and the U.S.   They became invisible.

       Now, after Trump and Brexit, perhaps we are waking up. Perhaps we are beginning to see them.   Here are parts of Chakrabortty’s vivid description of a once-wealthy Wales town.   If Brexit and Trump act to truncate globalization, it will be because we forgot those who lost because of it, and celebrated only those who gained. Post industrial? “Post” implies something came after ‘industrial’. But what? Poverty? Hardship?

     “The story of Pontypool is a story of riches squandered, of dynamism blocked, of an entire community slung on the slagheap. Sat atop vast deposits of iron ore and coal, it was probably the first industrial town in Wales. For a time, under Victoria, it was richer than Cardiff. Even now, to look along its skyline is to see traces of wealth: the park with its Italian gardens and bandstand; the covered market with its olde price list for snipes or a brace of pheasants; the 25 listed buildings that make this one of the most sumptuous small town centres in Britain.

       “Then look down. On a typical weekday, the indoor market is a desert. Those bits of the high street that aren’t to let are betting parlours, vaping dens and charity shops: the standard parade for hollowed-out towns across Britain. The reason isn’t hard to fathom: the mines shut down decades back; the factories have pretty much disappeared. Those big employers still left aren’t big employers any more. One of the staff at BAE tells me that when he joined in 1982, it had 2,500 workers on its shopfloor; now, he reckons, it has 120.

       “Swaths of Pontypool and the surrounding region of Torfaen now rank among the poorest in all Britain. On part of one of its housing estates in Trevethin, 75% of all children under four are raised in poverty. Over half – 53% – of all households who live on that stretch are below the poverty line. With that come all the usual problems: families that can’t pay the rent, that are more likely to fall prey to a whole range of sicknesses, from mental health to cancer. Those people can expect to die 20 years before their near-neighbours in some of the better-off areas in Pontypool. First the economy died out, now its people are too.

     “Pontypool is like the rest of south Wales, like many other parts of Britain I have reported from. It’s what politicians and economists call “post-industrial”. That term, though, implies something coming after; here, hardly anything has come after. A few years ago Pontypool town centre was declared on the verge of death by a local councillor, who bore a coffin lid in a mock funeral procession.”

World Economy: Loop the Loop!

By Shlomo Maital

 ifo

     From time to time, I answer a questionnaire distributed by a German research institute, called Ifo World Economic Survey. Based on that survey, Ifo publishes a “business cycle clock” for the global economy. The latest one is shown above.

     To explain: the X axis is the current situation: good or bad; the Y axis is the change, improving or deteriorating.   The ‘clock’ starts in 2007, just before the 2008 subprime mortgage crisis that began in the US and spread around the world.

     What we see is this: First, a huge ‘loop the loop’ cycle, stretching from 2007/8 to 2011, with a very deep recession. Then, two smaller loops, 2012-13 and 2014-15 cycling around ‘no change’ and ‘average situation’. The cause?   Weak Chinese growth, and very weak EU growth.

       Once the global economy had a powerful locomotive tugging it upward. First, the locomotive was the US economy, whose appetite for goods created enormous demand and pulled the Asian economies into high growth. Then, the locomotive was China’s economy, whose rapid growth spread to surrounding countries, as China imported components.

       Today? The global freight train has no locomotive. Not the US, not EU, not China. Until a locomotive emerges, and one may not, the world economy will continue to do these small ‘loop the loops’, like a stunt plane, around the average.

       Have you strategized this rather gloomy forecast?

Quantum Computer: Breakthrough?

By Shlomo Maital

qubit

       After my blog declaring the repeal of Moore’s Law, and as semiconductor technology ‘hits the wall’, here comes a breakthrough, “the next big thing”. It’s very esoteric based on quantum physics. Here is the very well-written report by Ido Efrati from the Israeli daily Haaretz:

   Four experts at the Technion devise a step toward production of a quantum computer, in research recently published in the prestigious journal, Science. Their recent article, entitled, “Deterministic Generation of a Cluster State of Entangled Photons,” already praised by fellow physicists, represents a scientific breakthrough in quantum theory. The innovation was developed in the laboratory of Prof. David Gershoni of the Technion’s Faculty of Physics, in cooperation with doctoral students Ido Schwartz and Dan Cogan, and Prof. Nathaniel Lindner   and has the potential to influence the future of communications, encryption and computerization.

   Gershoni and his colleagues have tackled a major problem in attempts to develop quantum computers, coming closer to resolving the issue of how to create qubit units in an initiated and controlled manner to enable construction of such a computer.

Physicists and technology firms have pursued the idea of producing a quantum computer for about three decades, in hopes of transporting the world of information and computers to entirely different worlds. The idea goes back to physicist Richard Feynman who proposed the idea of quantum computerization in the 1980s. In effect such a machine would process data but in contrast to a classical computer, it would utilize the characteristics of quantum mechanics.    

   The difference is that whereas in the classical computer the basic unit of information is a bit,  (zero or one);  a quantum computer uses a quantum bit known as a “qubit.” The difference between the two units is enormous. (See Diagram above).

A quantum computer can more quickly calculate what could take the fastest conventional computers millions of years, if not more, to resolve. It can potentially contribute greatly to the fields of medical research, advanced artificial intelligence, securing information and developing codes, “and in effect any field where calculating power is of significance,” Gershoni said.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
November 2017
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