A surprising new warning on robots and jobs

When even the Economist starts hemming and hawing

about automation and labor markets, it’s time to get worried

A surprising new warning on robots and jobs
(Credit: josefkubes via Shutterstock)

When the Economist magazine starts warning about the threat of robots, it’s high time to grab your survival gear and light out for the back country. Journalism’s preeminent defender of the market wisdom of Adam Smith’s invisible hand rarely questions the forward march of innovation. But in a special report on our fast-arriving robot future published in the print edition this week, the Economist does just that. Kind of.

As headlines go, the warning is hardly definitive: “Job destruction by robots could outweigh creation.” The story itself is hedged so thickly one can barely see the central thesis: Robots might be threatening our jobs, but we’re not really sure. Globalization is also a problem — as is the arrival of women in the workforce. Pick your poison men: women or robots!

But just the fact that the Economist is even asking the question of whether robots could conceivably have a negative impact on labor markets is worth taking notice of. It’s a reflection of a shift in opinion on the part of people the Economist takes seriously — credentialed economists.

Nick Bloom, an economics professor at Stanford, has seen a big change of heart about such technological unemployment in his discipline recently. The received wisdom used to be that although new technologies put some workers out of jobs, the extra wealth they generated increased consumption and thus created jobs elsewhere. Now many economists are taking the short- to medium-term risk to jobs far more seriously, and some think the potential scale of change may be huge.

The Economist also mentions the work of MIT’s Erik Brynjolfsson and Andrew McAfee, who argue that “technological dislocation may create great problems for moderately skilled workers in the coming decades.” (Salon’s interview with Brynjolfsson and McAfee can be found here.)

But the magazine doesn’t go much further than pointing out that there are some new concerns. Far more ink is lavished in this special report on the wonders of the new technology coming down the pike than the potential dangers. There’s even a wave of the hand at everyone’s favorite utopian technological dream: Once robots are doing all the work, our main problem will be figuring out what to do with our abundance of leisure time.



It is even conceivable that the fruits of greater productivity will be distributed so as to allow people to work less and spend more time doing other things. After all, the humor in the double meaning of the message that “Our robots put people to work” depends on understanding that people do not necessarily want to work, if they have better things to do.

Wouldn’t that be nice! The real question is: distributed by whom? The benefits of a potential robot utopia are unlikely to be widely distributed without strong political leadership. Unfortunately, so far, there’s very little evidence to support the notion that governments, anywhere, have a clue on how to steer us through a robot future.

A Better Yardstick for Measuring Inequality

 

Too Much
THIS WEEK
How many of America’s most awesomely affluent would have to come together to create a group with enough combined wealth to equal $1 trillion? Phoenix tax lawyer Bob Lord posed that question last fall. His initial answer, based on an analysis of the September 2013 Forbes list of America’s 400 richest: just 51.

Those 51 deep pockets, Lord calculated in the Arizona Republic, held 1.5 percent of America’s wealth. Back in 1982, the year the annual Forbes 400 list began, that same 1.5 percent share sat in the hands of about 1,500 rich Americans.

And what about today? Bob Lord last week updated his figures, based on the latest available billionaire data. We now need to gather together, he notes, just 37 super-rich Americans to reach the $1 trillion threshold. And to hit $1 trillion 20 years from now, if current trends continue, we’ll likely need only five.

What would have to happen for current trends not to continue? We have some statistical ideas on that score. More on them in this week‘s Too Much.

GREED AT A GLANCE
First we had primaries, contests where candidates chased after real voters. Then came what reporters dubbed the “money primary.” In an ever more unequal America, candidates were first chasing after billionaires, to raise enough cash to prove their “viability.” Now comes what the Washington Post is calling the “Sheldon primary.” The nation has become so top-heavy that candidates today need only corral one billionaire to prove their mettle. For Republicans, Sheldon Adelson, the casino king who spent over $92 million on the 2012 election, has emerged as that one. Adelson is now looking for a horse to back in 2016, and “a lengthy list” of Republican presidential contenders, says the Post, is “jockeying” to win his affections. Last week, four top GOP hopefuls joined Adelson for a VIP dinner at the Las Vegas hangar where Adelson keeps his private jet fleet . . .

Richard GonzalezAmerica’s pharmaceutical giants had a real problem a dozen years ago. Their monopoly power had raised drug prices so high that Americans couldn’t afford their prescriptions. But to the rescue came the Bush White House, with legislation that gave seniors taxpayer subsidies to pay for drugs that cost Americans as much as five times what people elsewhere in the world are paying. The latest beneficiary of this generous subsidy: Richard Gonzalez, the CEO of AbbVie, an Abbott Labs spinoff. Gonzalez took in $18.2 million last year, after hitting, says AbbVie, all his “performance targets,” including one goal of getting the firm’s 25,000 employees fired up about the new company’s mission. Hitting that target must have come easy. Nothing, after all, gets employees fired up more than working for a CEO making $18.2 million . . .

Luxury Swiss watchmakers, reports Reuters, have come up with a new way to separate the financially fortunate from tidy chunks of their fortunes. Innovators in the fine timepiece industry are now letting the uber wealthy personalize their wrist wear with just about anything from diamond stars to engraved images of their nearest and dearest. The jewelers at Buccellati, for instance, are offering “a bespoke service where the customer has a say on everything: the material, the case, the dial, the hands.” The cost for this bespoking: a minimum of 100,000 Swiss francs, about $113,000. What’s driving the new personalization push? Industry analyst Mario Ortelli has an explanation: “Customers will pay more if they feel a stronger emotional link to the product.”

Quote of the Week

“The rich can buy more of everything. More food. More cars. More houses. More vacations. More boats. But for a democracy to function properly, they should be forbidden from buying more votes.”
Leo Gerard, president, United Steelworkers, Our Plutocracy Problem, March 25, 2014

PETULANT PLUTOCRAT OF THE WEEK
Howard SchultzHoward Schultz, the CEO of Starbucks, doesn’t think much of the emerging national movement to establish a $15 minimum wage, an effort that’s running particularly strong in his own Seattle backyard. Schultz told reporters earlier this month that “most companies, especially small and midsized companies, would not be able to afford” a minimum set at $15 an hour. Added the billionaire: “I wouldn’t want to see the unintended consequences of job loss as a result of going that high.” Activists at the “15 Now” campaign quickly noted that the billionaire Schultz makes $9,637 an hour. The campaign is urging the Starbucks chief to “stop hiding behind small businesses and pay your own workers 15 now!”

IMAGES OF INEQUALITY
Cook Islands

Sand, palms, breezes. None of these wonders are attracting the world’s wealthy to the Cook Islands, tiny flyspecks halfway across the Pacific. What is? The Cooks, says the International Consortium of Investigative Journalists, have become “a global pioneer in offshore asset-protection trusts,” devices that can shield the assets of the rich from nasty lawsuits back home. Island officials had a Denver attorney write their nation’s trust law, and so far Americans have parked the most money in Cook Islands accounts. Among them: wealthy doctors convicted of Medicaid fraud and execs who’ve bilked employee pension funds.

Web Gem

PolicyShop/ This site, hosted by the Demos think tank, frequently features inequality-related resources, like this chart pack on how “class haunts people from womb to grave, limiting their ability to flourish and pursue the good life as they define it.”

PROGRESS AND PROMISE
Sanjay SanghoeeLawmakers love business tax credits. They hand them out all the time, ostensibly to encourage investment and innovation. Why not use tax credits instead, asks former Lazard Freres banker Sanjay Sanghoee, to rein in CEO pay? Sanghoee has spelled out one approach toward that end in the business magazine Fortune. Under his proposal, a 3,000-worker firm with a 250-to-1 CEO-worker pay ratio would get a credit that equals $1,000 multiplied by 3,000 multiplied by 1/250, the inverse of the pay ratio. Total credit: just $12,000. But if that company’s CEO-worker pay ratio dropped to 25:1, the credit would jump to $120,000, the sort of incentive that might encourage companies to moderate their CEO pay. How to pay for the credits? Start closing, says Sanghoee, the offshore corporate tax loopholes that run $150 billion a year.

Take Action
on Inequality

Tell the nation’s top lawmakers that inequality in the United States has gone “too damn high.” Sign this new petition that proposes a progressive wealth tax and more.

inequality by the numbers
Penthouse prices

Stat of the Week

Business income in the United States sits increasingly in the hands of a few. In 1979 the top 1 percent of America’s households accounted for 17 percent of the nation’s business income, notes economist Paul Krugman. By 2007: 43 percent.

IN FOCUS

A Better Yardstick for Measuring Inequality

We always get what we measure. And if we measure inequality with a yardstick that only wonks can decipher, we’ll end up with a society too confused about inequality to do anything meaningful about it.

Just 85 of the world’s billionaires, the anti-poverty group Oxfam reported earlier this year, hold as much wealth as the entire bottom half of the world’s population, 3.5 billion people in all.

Seven of every ten people on earth today, Oxfam added, live in nations where inequality has jumped since the 1980s. Our richest global 1 percent currently own a whopping 46 percent of the world’s wealth.

Corrado GiniWe can’t blame Corrado Gini for this incredibly extreme global divide. He never set out to create inequality. He just tried to measure it.

This eminent Italian sociologist once ranked as one of the world’s premiere statisticians. Almost exactly a century ago, he developed what would become the most widely accepted default statistic for measuring inequality, a yardstick now commonly known as the “Gini coefficient.”

In Gini’s formulation, a society where one person grabbed all the income would have a value of one. A society with all income shared evenly would have a value of zero.

No nation, of course, has ever had either absolute income equality or absolute income concentration. Most nations end up with Gini numbers like 0.57, the Gini rating for the United States last year, or 0.49, the Gini for Japan.

These numbers tell statisticians a great deal. A rise or fall of a mere 0.1 in Gini values can be a big deal and signify a major change in income distribution. But these abstract numbers mean nothing to the general public and, consequently, essentially do nothing at all to raise inequality’s political profile.

The Gini numbers have other problems as well. Gini ratings say a good bit about a society’s overall level of inequality, but offer no clue about what’s driving changes in that level. Are the rich grabbing more or less of the income pie? Are the poor losing ground? Or households in the middle?

On questions like these, note inequality-watchers Andy Sumner and Alex Cobham, “the Gini won’t be a great deal of help.”

Gabriel PalmaSumner, the co-director of the International Development Institute, and Codham, a Center for Global Development researcher, have been beating the drums for a new inequality yardstick based on the work of Gabriel Palma, a Chilean economist now based at Cambridge University.

In almost every society, Palma’s research shows, the income share of people who make less than the most affluent 10 percent and more than the poorest 40 percent tends to remain fairly stable. Substantial shifts in income share typically only turn up in that top 10 and bottom 40.

The “Palma ratio” addresses this volatility at the edges by defining income inequality as a ratio between the top 10 and bottom 40. In a society with a Palma ratio of 4, the top 10 percent is grabbing four times the income of the bottom 40 percent.

This simple relationship gives every Palma ratio figure a readily understandable meaning. In a society where the Palma ratio has gone from 2 to 3, households in the top 10 percent have gone from making double the income of that society’s poorest 40 percent to making triple the bottom 40’s income share.

Last March 90 noted social scientists urged a key UN economic development panel to place the Palma ratio front and center. The top 10-bottom 40 inequality that Palma stats measure, they argued, really matters. Nations with shrinking Palma ratios, as researchers have detailed, turn out to be three times better at reducing extreme poverty and hunger than nations with rising Palma ratios.

Nobel Prize-winning economist Joseph Stiglitz has just added to this growing push for the Palma yardstick. In a new co-authored paper, he’s asking world leaders to add a new ninth goal — eliminating extreme inequality — to the eight adopted at the UN Millennium Summit in September 2000.

Top-heavy income distributions, Stiglitz and his colleague Michael Doyle observe, “undermine both political equality and social stability” and generate chronic underinvestment in infrastructure, education, and other public goods that make for “long-term economic prosperity.”

Stiglitz and Doyle, a former UN assistant secretary-general, suggest a specific target for ending these top-heavy distributions. By the year 2030, the two analysts advise, all nations should have their top 10 percents taking in no more income than their bottom 40 percents, a Palma ratio of just 1.

Scandinavian nations already at or near this Palma ratio level, the pair adds, are benefiting from an “equality multiplier” that has left them not just more “equitable and stable” economically but more “efficient and flexible” as well.

“Sustainable development,” Stiglitz and Doyle sum up, “cannot be achieved while ignoring extreme disparities.”

And shoving Gini aside for Palma might make that ignoring all the harder.

Want to learn more about Palma ratios? Check this two-minute video.

New Wisdom
on Wealth

Ryan Cooper, Free Money for Everyone, Washington Monthly, March/April 2014. In an unequal America, the old tools for managing the economy no longer make much impact.

Doug Henwood, Capital in the Twenty-First Century, BookForum, March 25, 2014. An important review of Thomas Piketty’s new take on the long-term reign of the 1 percent.

Helaine Olen, Self Help is no help for inequality, Reuters, March 25, 2014. How the self-help industry is poisoning our politics.

Tony Atkinson and Salvatore Morelli, The chartbook of economic inequality, Vox, March 26, 2014. A new summary of changes in inequality for 25 countries over more than 100 years.

Paul Caron and James Repetti. Revitalizing the Estate Tax: Five Easy Pieces, Tax Prof, March 27, 2014. The estate tax could again make a difference.

Dan Rodricks, With Democrats like these, who needs GOP? Baltimore Sun, March 27, 2014. A Democratic-dominated legislature is throwing millions at millionaires.

Paul Krugman, America’s Taxation Tradition, New York Times, March 28, 2014. The demonization of anyone who talks about really taxing concentrated wealth reflects a misreading of both the past and the present.

Stein Ringen, Is American democracy headed to extinction? Washington Post, March 29, 2014. In Athens, democracy ended when the rich grew super rich and undermined the polity, a point the United States has now reached.

John Cassidy, Forces of Divergence: Is surging inequality endemic to capitalism? New Yorker, March 31, 2014. Another solid write-up on Piketty’s new blockbuster.

The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class cover

Now online: the full Introduction to Too Much editor Sam Pizzigati’s new history of the triumph over America’s first plutocracy.

NEW AND notable

Must Taxpayers Pay Tribute to Wall Street?

No Small Fees reportNo Small Fees: LA Spends More on Wall Street than Our Streets, A Report by the Fix LA Coalition, March 25, 2014.

Wall Street banks handed out $26.7 billion in bonuses last year, the New York state comptroller recently informed us, to some 165,200 execs and staff.

This same $26.7 billion, an Institute for Policy Studies analysis noted earlier this month, would have been “enough to more than double the pay” of all 1,085,000 Americans who work full-time at the current federal minimum wage.

And where did all those bonus billions come from? A hefty share came directly from America’s taxpayers, this clever new study makes outrageously plain.

No Small Fees drills down deep into the finances of a single city, Los Angeles. L.A. city officials, the study details, are annually passing Wall Street at least $204 million in financial fees, for everything from managing the city’s pension funds to selling the city’s bonds.

Some perspective: Last year L.A. spent only $163 million on its own streets.

The difference between what Los Angeles pays for its own streets and to Wall Street actually runs wider than these numbers suggest. The Wall Street total doesn’t include city dealings with private equity and hedge funds, exchanges, notes the Labor Institute’s Les Leopold, that don’t have to be publicly disclosed.

Nationwide, estimates Leopold, “the fees Wall Street extracts from public entities could total more than $50 billion a year — enough to provide free tuition at every public college and university in the country.”

We have, adds Leopold, distinct alternatives to Wall Street’s gouging of America’s public entities. State public banks — with modestly salaried executives — could save localities big-time on fees. North Dakota already has one.

The Federal Reserve could also “directly purchase municipal bonds from cities and states,” as the Fed is already doing with the toxic mortgage securities held by Wall Street’s largest banks. That move would save states and localities billions in fees and also “dramatically reduce municipal interest rate costs.”

Conclude the labor, religious, and community groups in the Fix LA Coalition: “City leaders have a choice: invest in our streets or Wall Street.”

Climate change: Apocalyptish

“THE four horsemen of the apocalypse”: that was the disparaging appraisal by Richard Tol of the University of Sussex of a report published in Yokohama on March 31st by the Intergovernmental Panel on Climate Change (IPCC), a group of scientists (including Dr Tol) who provide governments round the world with mainstream scientific guidance on the climate. Every six or so years, the IPCC produces a monster three-part encyclopedia; the first instalment of its most recent assessment came out last September and argued that climate change was speeding up, even if global surface temperatures were flat. The new tranche looks at the even more pertinent matter of how the climate is affecting the Earth’s ecosystems, the economy and peoples’ livelihoods.

Profoundly, is the headline answer, even though temperatures have warmed by only 0.8°C since 1800. They are likely to warm by at least twice that amount (and probably much more) by 2100. The report—the first since the collapse in 2009 of attempts to draw up a global treaty to reduce greenhouse-gas emissions—argues that climate change is having an impact in every ecosystem, from equator to pole and from ocean to mountain. It says that while there are a few benefits to a warmer climate, the overwhelming effects are negative and will get worse. It talks of “extreme weather events leading to breakdown of…critical services such as electricity, water supply and health and emergency services”; about a “risk of severe ill-health and disrupted livelihoods for large urban populations due to inland flooding”; and sounds the alarm about “the breakdown of food systems, linked to warming”.

Behind such headline scares, though, lies a subtler story, in which the effects of global warming vary a lot, in which climate change is one risk among many, and in which the damage—and the possibility of reducing it—depends as much on the other factors, such as health systems or rural development, as it does on global warming itself.

Compared with previous IPCC reports—the last was in 2007—the new one is confident about its assessment of damages, and more willing to attribute the harm to human influence on the climate. Take the rise in sea levels, which (pushed up by thermal expansion) has been increasing more in the 14 years of this century than it did from 1971 to 2000. The report reckons that, at current rates, average sea levels could rise by another half a metre or more by the end of the century, if greenhouse gases are not significantly curtailed. That is nothing but bad news for the people living in cities vulnerable to flooding from the sea: they now number 271m, and may increase to 345m by 2050, says the IPCC (some estimates put the figures higher). Nor are there any benefits from ocean acidification (caused by the absorption of carbon dioxide in seawater) which the report calls “a fundamental challenge to marine organisms and ecosystems”.

Equally stressed are terrestrial ecosystems facing sudden and irreversible change: climate “tipping points”. In the Arctic, for example, which is warming faster than any other large environment on earth, new shrubs and plants are invading formerly inhospitable areas. The vast boreal forests or Siberia and Canada are dying back faster than was expected in 2007, and may be more sensitive to warming than was then thought.

On the other hand, there are substantial areas where the influence of the climate is modest compared with other factors. Health is one. Pollution from factories adds to global warming and causes health problems directly: a new report by the World Health Organisation linked around 7m deaths to air pollution. In a warmer world, some diseases, such as malaria, will spread their range. Heat-related deaths will rise but cold-related ones will fall. In parts of the world where there are more cold-related than heat-related deaths, such as northern Europe, warmer temperatures could actually reduce the number of early deaths. By and large, the report says, the negative impacts will outweigh the positive ones but, for good or ill, the climate is not the dominant influence on mortality and morbidity. Public health and nutrition matter more.

Something similar is true for civil conflicts. Poverty and economic shocks help cause conflicts and are themselves influenced by climate change. Global warming can bring about changes in land use, reduce water supplies, and push up food prices, all of which contribute to riots (arguably, all this happened in Darfur). But it is hard to show that climate change has had a direct impact on levels or patterns of violence. If anything, it is the other way around: conflict reduces peoples’ ability to cope with climate change by, for example, laying mines in farmland. Surprisingly, global warming does not seem to be the culprit in most extinctions, either. With the exception of some frog species in Central America, no recent extinctions have been attributed to climate change.

So climate change has been powerful (in the oceans) and secondary (in health). But there is a third category: areas where the climate has had a large distributional effect, which may be good or bad, but usually appears to be negative. Fish are the most mobile of creatures and as the seas warm, marine animals and plants follow the cooler waters, migrating from the tropics to temperate latitudes. Benthic (bottom-feeding) algae are moving polewards at a rate of 10km per decade; phytoplankton are moving at over 400km a decade. The result, says the report, is that by 2055, fish yields in temperate latitudes could be 30%-70% higher than they were in 2005 (assuming there are any fish left by then) whereas the tropical fish yield will fall 40-60%. A similar distributional change, the scientists argue, is affecting the hydrological cycle: the rate at which groundwater is recharged is likely to increase in temperate climes and fall in tropical ones, leading to further drying of the soil in the dry tropics.

The most important distributional change, the IPCC reckons, concerns food, especially cereal crops. A warmer climate, in principle, should lengthen the growing season, since it becomes warm enough to plant seeds earlier. More carbon in the atmosphere should increase the rate of photosynthesis. Both these influences should mean that some plants will do better in a world with higher temperatures and more carbon dioxide. The previous IPCC assessment thought the world’s main cereals—wheat, rice, maize and soya—would see improved yields in temperate climates, offsetting yield declines elsewhere. Some climate sceptics have used this to argue that, at least until the middle of the century, a modest amount of global warming might be good for the world.

The new report pours cold water on that. It confirms that tropical cereals suffer declining yields when temperatures rise 2°C but finds that the benefits to temperate-climate crops are smaller than was thought. Rainfed or water-stressed crops, which were once thought to respond well to higher levels of carbon dioxide, now seem not to. Plants—especially maize—may like a long growing season but they hate temperature spikes more: even one day above 30°C may be enough to damage them. And it turns out that rates of photosynthesis in maize, sorghum and sugarcane are not responsive to changes in concentrations of CO2, so the effect of more carbon on temperate crops is patchy. Whether more heat and carbon produce yield increases seems to depend mostly on local conditions.

Meanwhile, the impact of other negative influences is more important than was thought. Weeds seem to benefit more than cereals at temperate latitudes, so they provide more competition to food crops for water, sunlight and nutrients. Greater concentrations of ozone are more damaging than was thought: the new report reckons high ozone levels cause an 8-15% reduction in yields compared with normal crops. Perhaps most important, higher CO2 concentrations reduces the quality of cereals, that is, their protein and starch content, taste and mineral components (and hence nutritional value). This is particularly significant for forage crops: with poorer quality grains, animals are smaller and less healthy. Cattle are suffering anyway because they are being bred for meat yield alone, which, in practice, has made them more heat-sensitive: a double burden.

At the moment, the report concludes, wheat yields are being pushed down by 2% a decade compared with what would have happened without climate change; maize is down 1% a decade; rice and soyabeans are unaffected. Over time, though, this could worsen. If you look at studies of likely cereal yield in the next decade, roughly half of them forecast an increase and half a decline. But for the 2030s, twice as many studies are forecasting a fall as a rise.

So how much might all these influences affect the world economy? The IPCC’s surprising answer to that is: hardly at all. A 2°C rise in temperature, it says, could result in worldwide economic losses of only 0.2% to 2% of GDP a year. The trouble is, as the IPCC also says, this figure is misleading. GDP is a bad measure of climate impacts and the economic models used are hopeless (“completely made up”, said one recent critic). GDP does not account for catastrophic losses, which may be the most important kind. As an income measure, it gives less weight to the poor—but the poor are more vulnerable to climate change than the rich. That is true both between countries (Bangladesh is more vulnerable to floods than the Netherlands) and within them (richer Bangladeshis live in safer areas). The models do not take account of things like “tipping points”; do not care if carbon concentrations go sky-high and assume that if an economy were ravaged by drought or floods, it would suddenly have lots of “spare capacity” that could be redeployed.

But in some ways, the IPCC’s new assessment also explains why all this does not really matter. Models are useful for calculating costs and benefits: you invest this much in new capacity and earn that much as a result. But, as the report implies, climate change is not a problem just because its costs outweigh its benefits. Rather, it matters because it increases risk, causes unpredictable interactions between climate and social or factors and because it manifests itself as extreme events (floods, heat waves) which inflict huge damage in a flash. Previous IPCC reports are looked at particular parts of this picture. The new assessment for the first time looks at climate change not just as a problem in its own right but as something that is merely part of an even bigger context.

http://www.economist.com/blogs/newsbook/2014/03/climate-change-0?fsrc=nlw|newe|3-31-2014|8191566|37449986|

Daylight Saving Time Linked To Heart Attacks

http://i.huffpost.com/gen/962414/thumbs/o-HEART-ATTACK-WOMEN-facebook.jpg

 

Switching over to daylight saving time, and hence losing one hour of sleep, raised the risk of having a heart attack the following Monday by 25 percent, compared to other Mondays during the year, according to a new U.S. study released on Saturday. By contrast, heart attack risk fell 21 percent later in the year, on the Tuesday after the clock was returned to standard time, and people got the extra hour of sleep. The not-so-subtle impact of moving the clock forward and backward was seen in a comparison of hospital admissions from a database of non-federal Michigan hospitals. It examined admissions before the start of daylight saving time and the Monday immediately after, for four consecutive years. Researchers cited limitations to the study, noting it was restricted to one state and heart attacks that required artery-opening procedures, such as stents.

~Slashdot~

Bitcoin is legally property, says US IRS.

 Does that kill it as a currency?

The cryptocurrency was struck a blow by the powerful Internal Revenue Service. Is it as bad as some fear?

Bitcoins are now property, according to the IRS.
Bitcoins are now property, according to the IRS. Photograph: Alamy

The news that bitcoin is to be treated as property by the IRS has sparked fear among fans of the cryptocurrency. But many of the concerns are overblown.

America’s Internal Revenue Service ruled on Tuesday that bitcoin should be treated more like stock than cash. On the one hand, that means that people who buy bitcoin and then sell it at a profit are potentially liable for lower taxes than they would otherwise be.

On the other hand, it renders bitcoins significantly more difficult to use as a currency. Spending bitcoin on a product counts as cashing out, and so there would potentially be a capital gain to record in the user’s accounts. In the simplest terms, if a bitcoin bought for $5 appreciates in value enough to be used to buy a $1,000 PC from Overstock.com, the customer would have to declare and pay tax on a $995 profit.

That’s concerning, but not the end of the world for bitcoin’s hopes as a currency. But some fear that this ruling is even more damaging than it first seems.

Adam Levitin is a law professor at Georgetown University, and he believes that the ruling means that bitcoin can never be treated as “fungible” – a term from economics which refers to the fact that particular instances of a good are interchangeable. So, for instance, crude oil is fungible, because if a trader buys a gallon of it, they don’t care which gallon they get. Fine art is not fungible, because which work they get matters a huge amount.

After the ruling, “the price at which a particular Bitcoin was acquired (and this is traceable) determines the capital gains on that particular bitcoin when spent,” Levitin argues. “If I spend bitcoin A, which I bought at $10, but is now worth $400, I’ve got a very different tax treatment than if I spend bitcoin B, which I bought at $390.

“This means Bitcoins are not fungible, and that makes it unworkable as a currency. If I have to figure out which particular Bitcoin in my wallet I want to spend and what the tax treatment will be, Bitcoin just doesn’t work as a commercial medium of exchange.”

But in the absence of further advice from the IRS, some called foul on Levitin’s claim. Even stocks and bonds, the archetypal financial property, are allowed to be accounted for on an “average cost” basis, which involves paying tax on the profit made from the average purchase price of the financial instrument. Such a measure, if applied to bitcoin, would restore fungibility to the currency.

However bitcoin is unique in that, even if average cost accounting weren’t allowed, it could be technologically forced. Similar to the way “tumblers” allow users to spend bitcoins without being traced, by mixing hundreds of bitcoins together in the same wallet before passing them on to merchants, it is trivial to exchange one bitcoin for another.

A user with two bitcoins, bought for $5 and $10, could simply hand them both over to pay for a good worth one bitcoin, and receive one bitcoin as change. That would force both the spent bitcoin and the one received as change to be accounted for at the average cost of $7.50, since it would be impossible to tell which was which.

The treatment of bitcoin as property will still have some irritating effects for those who want to use it as currency, requiring much better record-keeping and raising the prospect of having to include a coffee purchase in your tax return.

But the really interesting problems will come when a similar treatment is applied to criminal law.

In many legal systems, receipt of stolen property is treated very differently to receipt of stolen money. If a pawn shop accepts a stolen bike, its operators are expected to return it to its rightful owner if discovered, without reward. If a coffee shop takes a stolen fiver, it can keep it.

Until someone brings a case to court, it’s impossible to say definitively which version would happen with bitcoin. But the IRS ruling suggests that, in America at least, it could be the former.

In other words, if you think the hassle of having to file taxes on your bitcoin is bad, just wait til the shop you’re spending them in has to check to make sure they aren’t stolen before you can make a purchase at all.

 

http://www.theguardian.com/technology/2014/mar/31/bitcoin-legally-property-irs-currency

 

Is Single-Serving Coffee Really Worth All the Waste It Creates?


Nearly 1 in 5 coffee drinkers is too lazy to make coffee, and those little serving pods they discard add up.

Photo Credit: Rob Hainer / Shutterstock.com

I know I shouldn’t be, but I am shocked by Americans’ laziness.

We look for the closest parking spot to the gym so that we don’t have to walk those extra few steps. We indulge in watching more cooking shows, yet actually cook less than ever. We invented the drive-thru.

Now, nearly one in five American coffee drinkers is too lazy to make coffee.

There are foods that are very complex and difficult to make. Coffee isn’t one of them. I understand why someone wouldn’t want to make homemade butter or those little French macarons. I get why my mom only made her cheese blintzes for very special occasions. That stuff takes work.

I dread my annual tomato sauce canning marathon, and I only do it because the amazing sauce that results makes easy, delicious meals all year long. And once I put all that work in, I don’t share my sauce with just anyone.

But, coffee?

I make it several times a day. And I’m pretty lazy — I’ve been known to eat whole unpeeled carrots Bugs Bunny style to avoid cutting and cooking them. If I can make coffee, anyone can.

A traditional drip coffee maker requires a few steps. Add water. Measure coffee. Grind coffee. Add filter. Place grounds in filter. Press “on.” Wait. Your coffee is ready.

You can further reduce the required work by purchasing pre-ground coffee, or – better yet –getting a coffee grinder that does the measuring for you.

For lots of folks, that’s still too much work.

Nearly 20 percent of coffee drinkers now use coffee pods. With specialized coffee makers and compatible “pods” of individual serving sizes of pre-ground coffee, one reduces the task of making coffee to: Add water, insert pod, press start, throw pod away. Fancier machines also let you add milk to make various espresso drinks.

These newfangled coffeemakers don’t come cheap. A Keurig will run you $80 or more, and Nespresso makers start at $149. Once you’re invested, you have to buy the related brand of pods — K-cups for Green Mountain Coffee’s Keurig or Nestle’s Nespresso. That alone would be my deal-breaker, because I don’t like either brand of coffee.

In their defense, Keurig offers a refillable pod for $15 (the price of my entire coffee maker) so you can add your preferred type of coffee. Which puts the onerous work of measuring and grinding back into your coffee-making process.

While it’s easy to make fun of Americans’ drive to save time in the kitchen, there’s nothing inherently wrong with it. In fact, sometimes time-saving steps constitute efficiency and ingenuity, not laziness. But in this case, the new pod systems result in a staggering amount of waste and may potentially harm your health.

According to a recent Mother Jones article, all of the K-cups sold in 2013 could circle the earth 10.5 times. And every single one now resides in a landfill. Nespresso’s pods are aluminum. They have a program to collect and recycle used pods, but unless their customers actually take them up on this, it’s little more than good PR.

Then there are the health questions generated by making your coffee in little plastic pods (in the case of K-cups). The cups are made of #7 plastic, a catch-all category of “Other” plastics not included in numbers 1 through 6. Keurig refused to tell Mother Jones what type of plastic it used, or whether or not it contained possibly-carcinogenic styrene.

These new brewing systems are little more than a clever method a few companies have discovered to sell more of their own crappy coffee, without regard for the trash they create and their potential impacts on their customers’ health.

Let’s take the waste and potential health hazards out of our coffee. We don’t need to trash the planet just to get a morning buzz.

 

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