On Puerto Rican Pride

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It’s that time of year again. Today, thousands and thousands of Boricuas line up alongside Manhattan’s 5th Avenue for the annual Puerto Rican Day Parade, a bombastic celebration of the tiny island and its culture.  A seemingly endless stream of floats trickles down the avenue, with celebrities like Jennifer Lopez and Marc Anthony in tow.  The sounds of salsa, merengue and reggaeton fill the air; people dance in the streets.  Puerto Rican flags wave wildly as far as the eye can see and adorn nearly every article of clothing.

[Image Credit: Adam Pantozzi via Flickr]

Puerto Rican pride is unparalleled.  Observing other parades or even nationalist marches, I have rarely seen such fierce pride demonstrated.  And for Puerto Ricans it really doesn’t end with the parade. After today, the flags don’t disappear, but merely redistribute themselves throughout the city, to be hung on walls, clipped onto bicycle handlebars, draped onto car hoods, stood on desks, or occasionally worn as capes.

I have long wondered about what drives the ferocity of this pride.  For example, Why do I, a Puerto Rican born and raised on the mainland, and countless others possess such glowing nationalism for an island many of us have never lived in?

Perhaps it has something to do with the fact that Puerto Rico is not a nation, but a Commonwealth territory of the United States, a special relationship that is almost entirely unique in the world.  Puerto Ricans receive federal benefits, such as welfare, but have no elected representatives in the U.S. Congress, and thus pay no federal income tax.  Procedural government is almost entirely autonomous on the island – the Governor has all the institutional authority of a president – yet the U.S. government retains military jurisdiction and can enlist Puerto Ricans to fight American wars, as was done in both World Wars, the Korean and Vietnam wars, and countless other conflicts.

Any person from any developing nation that has visited Puerto Rico will comment on what they see as the undeniable benefits the island has received as a result of its special relationship with the United States.  They will marvel at the relatively higher standard of living and invariably make a remark along these lines:  “Puerto Rico reminds me so much of my home country…except the roads are better.”

Of course, Puerto Ricans themselves don’t see it this way.  Ask us about the Ponce Massacre of 1937, when 20 people were killed and hundreds wounded when police opened fire on Puerto Rican nationalist demonstrators.  Ask us about the mass sterilization campaign,whereby the U.S. initiated a program that sterilized 1/3 of all Puerto Rican females by 1965.    Ask us about the 60-year U.S. Naval occupation of the island of Vieques, where explosives testing occasionally took lives and where toxic materials left behind were argued to be causing serious health problems.  Today, ask any Puerto Rican about their island and they will lament the brain drain that has resulted as educated Puerto Ricans freely moved to the mainland, leaving behind an island prone to economic stagnation and crime.  Today, there are more Puerto Ricans in the mainland United States than on the island.

Which makes the whole Puerto Rican pride question all the more interesting.  Formally, the Puerto Rican flag is never flown independently of the American flag.  The Teodoro Moscoso Bridge in San Juan is almost a celebration of the special relationship, with hundreds of American and Puerto Rican flags flanking its edges.  It is this constant juxtaposition, this understanding of Puerto Rico only within the shadow of its American benefactor/exploiter, that fuels the burning pride that blazes up and down 5th Avenue each year, and throughout wholly acculturated Puerto Rican households across the U.S., and on the island daily.

I recently came up with a parallel involving the relationship between Manhattan and its outer boroughs.  Borough residents are all proud New Yorkers, but the undeniable attention lavished upon the borough of Manhattan leads to a sense of discomfort.  The borough communities and cultures are wholly different, and to lump them in with Carrie Bradshaw and Gossip Girl would rightly send shivers down any borough resident’s spine.  As a result, borough pride is through the roof, no matter how much time is spent in Manhattan.  To represent your borough is to celebrate your distinction from the Manhattan ideology, to show that you have your own style, your own food, your own music, your own culture.  Yet borough residents love as much as anyone to bask in the collective glory of New York, while strategically disowning some of the more criticized aspects of Manhattan life.

Puerto Ricans have settled into a nice 2-bedroom apartment in Brooklyn where they can both preserve their culture and embrace that of the United States.  They can go to the MoMa or stay at the Brooklyn Museum.  They can unce-unce in the meat-packing district or hit up a dancehall party in Flatbush.  They can shop chic in SoHo or thrift it up at Beacon’s Closet.  And lest anyone get confused, they’ll never hesitate to let you know where they come from.

Which is all to say that I believe the Puerto Rico Democracy Act of 2010, which paves the way for Puerto Ricans to decide between statehood, independence and the status quo, will end as similar initiatives have in the past, with a resolution to continue as a commonwealth.

Boricuas have carved out a space where we can embrace the best of the United States while preserving our culture,  waving a Puerto Rican flag  and lamenting el tirano.  It may seem funny, but I think we’ll continue to do it proudly.

Posted on June 13th 2010 in ideas, news

The End of Billboards

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Augmented reality, the process of overlaying digital information atop real life vision, seems inevitable to me given the recent direction and pace of technology – the proliferation of smartphones, location-based services, 3D TVs, etc.

Actually, it’s already here. Layar (fig. 1) is a crazy augmented reality browser, available on Android and iPhone, that uses a phone’s camera and superimposes dynamic, sortable content in real time.  Another example comes from the Museum of London, which launched a free iPhone app (fig. 2) that blankets its historical art and photography library atop your view.

[fig. 1: Layar, via Mobile Crunch]

[fig. 2: Museum of London app, via LikeCool]

I recently started to think about how this would play out for driving. I don’t think it’s that far off before GPS augmentation becomes a feature in cars, with special touchscreen windshields capable of displaying semi-transparent turn-by-turn directions on top of the road as you drive.

It’s not hard to imagine what comes next: superimposed ads, like a McDonald’s logo that grows progressively larger as you approach the store. One might even be able to tap out an order a mile in advance to speed up the drive-thru process.

It may sound scary, but I tend to be one to look for the upside of these things. In this case, I feel this could at long last mark the death of the billboard. With ads streaming directly into cars, there would presumably no longer be a need to have those clunky eyesores blocking the view across cities and along interstates. We could at last tear those suckers down.

But at the end of the day we’ll just be trading a physical eyesore for a virtual one. My jury is still deliberating over whether or not that is any better.  What do you think? Is it worth it to rid skylines of physical billboards, or will it make no difference once the ads are permanently beamed into our line of sight?

Artist Keiichi Matsuda provides an awesome, but dreary picture of what this future might look like, taken to its logical extreme:

[Augmented (hyper)Reality: Domestic Robocop from Keiichi Matsuda on Vimeo]

Cool or scary?

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Posted on June 2nd 2010 in ideas, news, OrgWatch

Are you a better judge than a college student?

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Given Supreme Court nominee Elena Kagan’s lack of a paper trail, political analysts have been digging deep into her past for any indication of what her views might be.  The search has inevitably led to her college and graduate school writings.

Two historians reviewed her undergraduate thesis and concluded she displayed “remarkable intellectual maturity” and “wrote quite evenhandedly” and “without evident bias.”  In addition, the Wall Street Journal dug up her masters thesis and noted that she criticized the Warren court and “wrote that Supreme Court justices should rest their rulings squarely on a firm legal foundation, such as statutes and court precedents.”

Call me crazy, but it seems pretty ridiculous to judge someone’s views on the basis of something they wrote 30 years ago at the age of 21.  One would hope that as people gain more experience, are exposed to more people and viewpoints, and generally grow wiser, their views on things would evolve.  I, for one, am mortified at the thought of having my nascent intellectual thoughts torn apart by today’s punditry.

So I’ll do it myself.  Soon I will embark on a new series of posts I am entitling “Benevolution.”  I plan to revisit nearly all of the papers I wrote in college and post them along side some self-reflection on how my views have evolved on the subjects.  I’ll be able to reassess the state and the development sector in the context of my current business education. I’ll be able to revisit my thoughts on global government in the aftermath of Bush and the global financial crisis.  I’ll be able to review my past thoughts on the city now that I have actually lived in one for six years.

Bottom line: it will help me to reflect on how I have evolved into the Benevolent Baron.

This is mainly for me, but it’s also an excuse to do something with my old papers.  It has always bothered me that students put all that research and effort into writing papers that are only seen by one professor (or perhaps just one teaching assistant).  It seems that someone with an interest in these topics might find it useful to see someone else’s research, or at least take a peak at a relevant works cited list.  I consider this a service to to some future Google-crazed college student that may want to write a paper about poverty concentration, pan-Africanism, South Africa’s informal settlements, or the effects of narcotics trafficking on the state.

What you’ll get is the papers in their original form, complete with misguided thoughts, typos and all.  This was college, so please be lenient judges of my writing and naivety.

If you care to share your own evolution, shoot me an email.

Posted on May 28th 2010 in Benevolution, news

FinReg for dummies: the ratings agencies

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[Image source: Tom Toles at Washington Post]

Well, seeing as how the Senate has passed the financial regulation bill, I’ll have to have to continue the FinReg for Dummies series in the context of the bill as it exists.  It won’t change too much, but I guess it means I have to get to it.  Next stop: the ratings agencies.

Ratings agencies are private companies that are credentialed by the federal government to rate the risk of financial investments, such as stocks, bonds and derivatives.  The three major ones are Standard and Poor’s, Moody’s and Fitch.

There are two primary reasons ratings agencies exist.  First, they allow investors who don’t have time to investigate the risk of an investment to have a standardized rating to work off of.  Second, they allow for the establishment of minimum standards to be applied to certain activities.  For example, banks are allowed to take on more debt if they hold a proportionate amount of AAA-rated securities.  Another important example is that more conservative investors, such as pension funds, are legally prohibited from investing in assets that haven’t received a minimum acceptable rating.

There is an argument to be made that the existence of ratings agencies is fundamentally problematic.  If banks and investors do not have to do their own due diligence, then they cannot never truly understand risk of their investments.  And this is exactly what happened.  Banks took any investment that was shrink-wrapped and stamped with a AAA rating, and were thus able to do it with borrowed capital.  It was many of these AAA rated securities, which are supposed to be as safe as U.S. treasury notes, that went sour and caused some banks to collapse.

Thus the role that the ratings agencies played in the financial crisis cannot be understated.  Since investors could not assess the risk of every single mortgage issued, they were packaged together into securities whose overall risk was supposed to be analyzed by the ratings agencies.  So how did we get to a point where investments that were obviously risky – i.e. mortgages given to people who couldn’t afford them – were getting blessed with the highest ratings?

The answer is two-fold.  The first answer is related to the statements you hear about how mortgages were sliced-and-diced into a million pieces.  Here’s how it works: a group of mortgages gets packaged together into a single investment, with the stream of interest payments paying out to the investors.  Within the investment, the mortgages are broken into three risk groups, called tranches.  The least risky investments received AAA ratings, which helped to conceal some of the risk found in the lower tranches.

But the ratings agencies should have seen which assets were being dominated by riskier mortgages, which brings us to the second reason they failed.  The ratings agencies were set up in a fundamental conflict of interest.  They were paid by banks issuing the investments, and the banks were free to shop around for different ratings from different agencies.  Ezra clarifies the absurdity of this:

Imagine a school with three teachers. But this isn’t a public school. It’s a private school testing out an innovative new funding system: The kids write the tests, fill them out and then pay the teachers to grade them. If they don’t like the grade they get, they don’t have to go back to that teacher.

You can imagine how this plays out.  If a bank doesn’t like the rating it gets from one agency, it just moves on to the next until it finds the one that gives it an acceptable rating.  The agencies thus had a profit-driven incentive to rate investments higher.  This reality was confirmed by internal documents at Standard & Poor’s that discussed revising their ratings in response to the threat of losing business.  Crisis seeds planted.

Thanks in large part to Al Franken, the financial regulation bill attempts to fix this.  Instead of letting banks shop around for ratings, the SEC will now randomly appoint approved ratings agencies to rating assignments.  They will still be paid by the bank, but there is no longer an incentive to inflate ratings to get business.  Instead, as Edmund Andrews explains, they now have an incentive to compete on the accuracy of their ratings.

What a concept.

Posted on May 21st 2010 in news

Cracks in the wall

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Somewhat quietly, the Democrats came out with their immigration plan at the end of April.  I have to say, it disappoints.  Similar to the Bush approach in 2005, the bill emphasizes enforcement, then reform, a wholly misguided effort that will not resolve the issue and will result in billions in wasted taxpayer funds.  Some supporting thoughts are rounded up.

The American Prospect sums up the bias towards enforcement:

Their proposal is 26 pages long, and 17 of those pages detail ways of improving enforcement [...] The last three pages include the Holy Grail of immigration-reform advocates: a “path to citizenship” for undocumented immigrants.

[...] the framework specifies that the enforcement provisions must take place before the legalization process begins. Broadly, the enforcement plan calls for hiring thousands of new border patrol agents, building more Immigration and Customs Enforcement facilities, and installing “high-tech ground sensors throughout the southern border.”

The first problem is the emphasis on the border.  Since approximately 45% of undocumented immigrants did not enter the United States illegally, but merely overstayed their visas, the proposal at best deals with half of the issue.

Overall, Lexington says border security is futile; it’s simply a supply and demand issue:

[...] it is impossible to secure a 2,000 mile land border against economic migrants. So long as there are jobs to come to, they will find a way. The only way to relieve pressure on the border is to allow a realistic number of migrants into America, ie one that bears some resemblance to the demand for their labour. When demand falls, (as in the current recession) fewer come, and many go home.

In the medium term, trying to secure the border before you address immigration reform is like trying to stop dust flying into your vacuum cleaner without turning off the suction.

While we’re talking analogies, at Cato, Daniel Griswold likened it to prohibition:

Requiring successful enforcement of the current immigration laws before they can be changed is a non sequitur. It’s like saying, in 1932, that we can’t repeal the nationwide prohibition on alcohol consumption until we’ve drastically reduced the number of moonshine stills and bootleggers. But Prohibition itself created the conditions for the rise of those underground enterprises, and the repeal of Prohibition was necessary before the government could “get control” of its unintended consequences.

Illegal immigration is the Prohibition debate of our day. By essentially barring the legal entry of low-skilled immigrant workers, our own government has created the conditions for an underground labor market, complete with smuggling and day-labor operations. As long as the government maintains this prohibition, illegal immigration will be widespread, and the cost of reducing it, in tax dollars and compromised civil liberties, will be enormous.

On “compromised civil liberties,” Andrew Sullivan puts it quite nicely, speaking of the Arizona bill:

This bill will thereby punish “suspicious”-looking legal immigrants as well, because they will all feel under surveillance. A society where one minority feels under surveillance is not a truly free society. This is beneath America.

Funny how immigration was the top concern for 2% of Americans before the Arizona bill and all of a sudden it’s top for 10%.  I am now pretty sure that if America’s best friends jumped off a bridge, 8% of us would jump after them.

We’ll need someone to replace that labor.  Hmm, where will we look?

Posted on May 19th 2010 in news

Google Laws

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There is a common debate that resurfaces whenever it is time to appoint the next Supreme Court justice.  To some, humanism matters, because it is the real effects on humans that should be taken into account when interpreting the law.  On the other hand, strict constructionists tend to believe the job of a judge is to apply the text of the law only as it is written, without regard to any external conditions.  They leave no room for the empathy of Sonia Sotomayor.

I have recently been led to wonder, if it is indeed the written text of the law that governs, why then would we even need judges?  Couldn’t Google do all the legwork at this point?  I can see it now: a case comes to the docket, prosecution and defense attorneys feed their arguments into the search bar – include a couple keywords like abortion, immigration, and habeus corpus – and wait 0.32 seconds for Google to scan through centuries of laws and legal opinions…presto!  Instant ruling based solely on the written text.

It may sound ridiculous, but such capability might not be that far-fetched.  Google Scholar has already gone through the arduous process of posting full text legal opinions from U.S. federal and state district, appellate and supreme courts.  And a team of computer scientists and journalism professors at Northwestern University recently developed a new software that allows computers to sift through data and automatically write news stories, without the need for any human authors.

Google co-Founder Sergey Brin once said in response to privacy concerns, “All we are doing is showing ads.  It’s automated.  No one is looking,” referring to the algorithms used in generating ads.  This is all fine and dandy on the internet, where we would all rather not have any visible connection between search results and our personal search activities.  But laws are immutably connected to the activities of real people, and for that reason we’d never allow an algorithm to write our laws and risk that some cold computer might write opinions that might land innocent people in jail or fail to protect the liberty of civilians.  We rightly insist that justices be watching.

I think this idea is partly behind some of the apprehension surrounding Elena Kagan’s nomination.  The New York Times profile of Kagan paints her as a cold, calculating machine, much like an algorithm.  Each step in her career is framed as though guided by detailed instructions on how to reach the Supreme Court.  Read this.  Join the student paper. Study law.  If not here, then there.  Exclude terms like, “my opinion is…”

This is what so far has put people on edge.  The thought of someone as rationally calculating as a mathematical equation  is quite concerning to anyone who might believe in empathy, or who thinks someone’s actual opinions might matter when writing opinions.  With the stakes so high, we shiver at the thought of someone being led blindly by instruction, like the enslaved ant unwittingly building the anthill.

But perhaps the law is the right place for ants.  After all, we are a common law nation, whereby our laws are not single statutes, but really the mass accumulation of individual opinions piled up like dirt and twigs.  No single opinion is designed to uphold the entire structure, nor does any single ant fully comprehend the shape of the hill being built or believe they have any out-sized role in ensuring its stability.  They just carry the dirt in their mouths and drop it where they understand it must lay.  The shape of the law becomes clear.  Slowly.

I can support such caution on the court, as long it it is what Ezra describes as “a personality type” and not a life-long political move to hide the public from any of her real views.  Because the ant who only wants to be queen – particularly the one without any experience writing judicial opinions – might just lay a shoddy foundation for the hill.

*I am far from a legal scholar, so your more informed comments are encouraged.  Any reasoned opinion works too.  No spam.

Posted on May 17th 2010 in news

FinReg for Dummies: derivatives

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If I hear the term ‘complex financial instrument’ without any further elaboration one more time, I am liable to throw something at the television. I wish that I could use my Wii remote to launch tomatoes at news anchors who seem to believe their motto is, “We report. You go look it up.”

How can we possibly think we stand a chance of adequately regulating the financial sector when no one can even explain exactly what it is we are regulating?

The most blatant example of things-we-should-fear-but-need-not-understand is derivatives. Given the scarcity of descriptions that go beyond, “they’re complex,” I imagine you’d be hard-pressed to find one non-banker that can explain them.  Yet they are central to this regulation, so let’s try to break it down.  Deep breath…

A derivative, at its most basic level, is a financial instrument that derives its value from another asset, hence the name. There are various types of derivatives – options, swaps, futures, etc. – but they all share this common trait; they cannot exist without the presence of some other underlying asset.

In contrast to what Congressional theatre would have you believe, derivatives are fundamentally valuable to the process of mitigating risk. The easiest way to explain this is through commodity futures, a type of derivative that allows someone to buy something tomorrow, at a price determined today.  Many businesses could not survive without these arrangements.

Take orange juice futures, with oranges being the underlying commodity.  If you are an orange juice producer, the sustainability of your business is highly susceptible to the price of oranges.  So if you are worried that Florida might have some of the coldest temperatures on record, as it did this past winter, you might be willing to pay a fee lock in a price, just in case.  Because if the frost settles, and the orange crop yield is cut in half, prices will go through the roof.  Your gross profit margin will drop and you may fail to recover all of those fixed operating costs.  Without a degree of certainty, no OJ producer would make the investments necessary to get from harvest to glass.

Orange juice producers thus use orange futures to protect against the uncertainty of the weather.  All the other derivatives, no matter how complicated, are similarly used as protections against uncertainty in the underlying assets.  CEOs are paid in stock options because shareholders are not certain management will increase the value of the underlying stock.  Businesses that invest in other countries use currency swaps to protect against uncertainty in the value of the underlying foreign currencies.  Banks use interest rate swaps to protect against fluctuations in underlying interest rates.

But if derivatives are so important to the process of mitigating risks, why are they most often associated with speculation?  The fact of the matter is that for derivatives to do their job of mitigating risk, someone has to take the other side of the bet.  Our orange juice producer cannot protect against his uncertainty without someone on the other side willing to bet that it will be a perfectly normal winter.  It’s all speculation, but one person’s nay-saying is another person’s insurance.

As you likely have heard, credit default swaps were at the center of the financial crisis.  They are very similar to insurance, in that they pay out to the buyer in the event of a negative outcome.  Their good side is that they allow lenders to insure themselves against the default of their borrowers, but again, the counterparty tends to put us on edge.  Whoever takes the other side of that bet is essentially speculating that the borrower will default.

But when we talk about regulation, the issue is not the speculation, it is transparency.  Most derivatives are not traded on public exchanges, but instead are traded “over-the-counter“.  What this means is that no one aside from the two parties involved in the trade know the terms of the trade, which is where we ran into problems in the financial crisis.  In the absence of the transparency seen on public exchanges, no one understood who was exposed to who or how a domino effect of defaults could tear through the economy.

This is why getting derivatives regulated on exchanges is so important, because it could actually help stave off crises by bringing all the relevant information to light and allowing for some insight on future risk.  One of my finance professors used to say, when vacationing in Florida, he would take changes in the price of orange juice futures over the weatherman’s forecast any day.  Sure enough, orange juice futures shot up in the days leading up to those unusually cold days in Florida.

The argument that has been made is that, if more derivatives had been openly traded, we would have had a much greater understanding of the risks facing the housing market.  If Paulson’s bets against the housing market (the ones at the center of the Goldman Sachs fraud case), had been more transparent, other investors would have picked up on his insights.  As more and more followed suit, investors would have become much more skeptical of the housing boom.

In Congress, both sides of the aisle seem far too ideological on the topic.  Democrats would love to limit derivatives trading, but that ignores the value they hold for individual businesses as well as their potential to foreshadow risks.  Meanwhile, Republicans pretty much don’t want to allow any regulation of anything, and have been particularly protective of derivatives, likely because over-the-counter currently earns their supporters higher fees.

The central plan of the bill is to get all derivatives onto regulated exchanged, and all trades to go through a central clearinghouse to assure investors have enough capital to cover their bets.  To me, that sounds good.  Any efforts to reach beyond that will limit the benefits derivatives offer.  Any efforts to keep certain derivatives off these exchanges will increase the risks of limited information.

I find that I like my financial sector like I like my democracy: all-inclusive, because more information is better.  The more trades that pass through a central clearinghouse, the more we are able to deal with problems of uncertainty.

Perhaps there’s a derivative for that.

Posted on May 15th 2010 in news

Biking with Android

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Android finally brought me bicycling directions on Google Maps.  I let it take me on a tour across Brooklyn today.  It works quite nicely for stop, check where I am, and move on, but I’m yearning for the day it becomes my perfect biking GPS.  It’s not quite there yet.

First, you can’t navigate with bike directions in the way you can with driving directions, which is unfortunate.  I can’t imagine it would be that difficult to replicate that functionality, so I suspect it won’t be too long, perhaps in the Android 2.2 update, code-named Froyo.  In the meantime, I’m gonna be ready.  Project: $5 Handlebar phone mount, courtesy of Lifehacker.

[this is crucial, as texting while biking is set to become a problem.  Last summer, I watched a kid texting on his bike run right into a parked car and clip off the rear view mirror.  Dude just kept going]

It also won’t be a complete experience until I can drag and drop points on the route, like you can on the web, with real-time adjustments to the route.  When that hits, I’ll be ready to roll, phone strapped to the handlebar, grabbin’ speaker phone conversations as the street names pass under me on the navigator.  Sweet.

One cool thing now is that you can add the terrain layer on your directions and check out where the hills are around you.  But it doesn’t do much for me; it basically had all of Brooklyn flat.  Park slopes don’t count.

All in all, though, I am just pleased to have it.  It is pretty on-point with choosing routes and finding all the bike lanes around the city, miles of which have emerged over the past couple years and bumped NYC up to the second-most bike friendly city in states, according to National Geographic.  Loving it.

Posted on May 13th 2010 in news

Financial Regulation for Dummies

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I consider myself of a former finance dummy.  I studied social sciences in college and worked in non-profit.  I had no clue about how financial markets worked until I enrolled in business school and started taking courses in the unknown, mostly out of curiosity.  After two years of coursework, I now feel like I have at least a proper foundation to start thinking about how the world of finance should be regulated.

But the scary reality is that most of the people charged with writing the financial regulation bill never bothered to take the class.  When Senator Levin went on his public tirade against Goldman Sachs, it was clear that he didn’t understand the difference between trading and making markets.  Yet the public and Congress are clearly moved by these theatrics – shortly after the Senate hearing, the financial regulation bill began moving forward, all of a sudden buoyed by that ever-elusive relic, bipartisanship.

Regulating finance is enormously difficult because it’s never about individual actors.  Sure, there is the occasional Bernie Madoff and Fabulous Fab Tourre, but they don’t bring down entire markets.  These are serious collective action issues, which makes them all the more difficult to regulate.  Imagine if the government tried to regulate trending topics on Twitter.  Though I would welcome it, I really doubt they could find a way to stop those damn Justin Bieber tweets.

I worry, because no regulation founded on fundamental misunderstandings can ever be effective.  So I will attempt to do my part, with a brief series to explain what I think are the most important elements of financial reform: derivatives, the ratings agency, the resolution trust authority, and the consumer financial protection agency.  As someone with no ties to Wall Street, I only hope to demystify these things in a way that both recognizes the risks involved as well as some of their benefits.

so stick around.  derivatives are up first…

Posted on May 13th 2010 in news

Immigration in perspective

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One of the things that drives me absolutely bonkers about debates surrounding immigration is how devoid it is of historical perspective.  Anti-immigration advocates that argue for more control over immigration universally tend to overlook the historical reality that the relatively recent existence of immigration controls is the only reason one can even speak of an increase in illegal immigration.

One common argument you hear from anti-immigration advocates is that, yes, we are a nation of immigrants, but that our ancestors came to this country legally.  But the fact of the matter is that the concept of “illegal” immigration did not exist until the end of the 19th century.  Prior to 1875, the United States allowed a virtually unrestricted flow of immigrants, with the only requirement for legality being physical presence.  Basically, as long as you found a way to set foot in America, it didn’t matter how you got here.  You were a legal permanent resident.

And 1875 didn’t change much except bar the entry of convicts and prostitutes.  You have to go to 1921 to find the first time the United States ever put any real limits on the number of people allowed to enter the country (shocker: it was motivated by xenophopia, the law actually attempted to implement proportional immigration quotas by country in order to keep the existing ethnic balance intact).

So for all those that claim that their ancestors came legally, before you go praising their virtues, keep in mind that they didn’t really have much of a choice; there was no such thing as illegal entry.

Now imagine what the situation would have looked like if we had today’s limits on entry.  The majority of our nation’s ancestors might never have been allowed in.  Though I have a hunch that, with the hope that their future generations might grow up in America, some of them might have hopped over a fence to make it happen.

Posted on May 12th 2010 in news
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