Financial frauds-3: Introducing Bernie Madoff

(For previous posts in this series, see here.)

Bernard Madoff has reportedly swindled investors out of $50 billion of their money. You might have noticed that news stories repeatedly emphasize their surprise that the people who were defrauded were ‘smart’ people. If you look at the stories more closely, you will find that they do not really specify what they mean by smart. What they point to is that they had a lot of money, lived well, moved in exclusive circles, and attended elite schools. These are the measures that most people use to determine whether someone is ‘smart’ or not. It seems to be a basic assumption that rich people who have had extensive formal education at elite institutions cannot, by definition, be fools. Hence they must be ‘smart’.

But there is a difference between being merely conventionally ‘smart’ as determined by these measures and being genuinely smart. The biggest suckers are those who have convinced themselves that they are smart but really are not.

I once watched the magician James Randi give a demonstration of his tricks to a group of physicists and he completely bamboozled them. He said that it is really easy to fool people, and the more well educated people are, the more confident such people are of their own cleverness, the easier it is for magicians and other tricksters to take advantage of them.

Madoff seemed to have taken advantage of four psychological weaknesses that such conventionally smart people tend to have. The first is that he provided attractive and steady returns on their investments, but nothing spectacular. ‘Smart’ people are suspicious of get-rich-quick, something-for-nothing schemes, rightly suspecting that those must be frauds. But here was someone who was providing a slightly above average rate of return of about 10% on investments when the stock market was going up, and still managing to provide good returns when the market was going down. So he was definitely outperforming the market but not by amounts that might make people too suspicious. It seemed plausible that he had some kind of system, although he never said exactly what he was doing that enabled him to be so steady, claiming that doing so would reveal his business secrets.

The second was that he was well-connected, a friend of the elite, a former chair of the NASDAQ stock exchange, a public benefactor. He was a member of the exclusive Palm Beach Country Club where he played golf with many of the people who eagerly sought him out to invest their money. They felt he was one of them, their friend. People tend to trust members of their own class, their own social circle.

Third, he played hard to get so that people were made to feel that he was doing them a favor by taking them on as clients. People sought him out, tried to get their friends to recommend them to him as clients, and sought to curry his favor. And he would turn money and people away, thus increasing his appeal. When people have irrationally set their hearts on achieving a goal, they do not pay attention to the normal warning signs that govern their other actions. (Woody Allen riffs on Madoff’s technique and his victims.)

Fourth, and perhaps most significant, was that he gave people a wink and a nudge that the system he was using was perhaps not quite legitimate, that he was skating close to the edge and using insider knowledge that may have come with being former chair of NASDAQ, and that other people, those ignorant poor saps, were being exploited in order to give them their returns. So those who invested with Madoff felt that they were also financial players, that they were on the same side as him, making money at the expense of suckers like you and me.

These very rich people have no problem with people who take money from those less well off, since they often do so themselves, both legally and illegally. That comes naturally to them. What they found shocking was when it was revealed that Madoff’s targets were themselves. Madoff was playing a classic con game, taking advantage of rich and greedy people’s willingness to take unfair advantage of people poorer than themselves.

It is the same psychology that was used by the small-time conman to lure the big-time gangster into the con in the classic film The Sting. If you have never seen this Paul Newman-Robert Redford film, you have missed a treat. Here is the classic poker scene from it.

Next: How Madoff ran his scam.

POST SCRIPT: What we need is more sports!

The Onion News Network reports on plans to expand the NCAA playoffs to 4096 teams.

Financial frauds-2: The original Ponzi model

(For previous posts in this series, see here.)

Following up on yesterday’s post, Charles Ponzi’s scheme used the fact that a person could legally buy postal coupons in one country using the currency of that country, but in the denomination of the currency of another country. If you mailed the coupons to the other country, the recipient could then exchange the coupons in their post office for stamps.

In 1920, after World War I, the British and German currencies lost value compared to the US dollar. But since postal coupons were based on fixed exchange rates set in 1907 by the International Postal Union and were thus based on a higher value for those currencies, Charles Ponzi saw the chance for a scheme that would work by sending money overseas to buy coupons for American stamps that had greater value than the amount he had sent, and having the coupons shipped back to him. As economist Michael Hudson says, “An American penny could buy foreign stamp orders that could be converted into six cents in U.S. stamps, for a 500 per cent profit.”

But there was a catch.

The problem was that it would take a truckload of such postal orders to make serious money. A million-dollar investment would involve a hundred million penny coupons – which then would have to be converted into stamps and sold in competition with the U.S. Post Office, presumably at a discount, mainly in immigrant neighborhoods.

This shipping of such huge numbers of coupons from one country to another, and then trying to sell the stamps on the street to get back cash, would have involved hard work and been tedious. So what Ponzi did was simply tell investors that this was his business model for making money, but not actually carry it out.

Focusing on the principle of arbitrage rather than such laborious implementation, Ponzi explained that he could make a 400 per cent gain after expenses. He promised that investors could double their money in 90 days, pretending to take due account of the costs and shipping time from Europe to America.

Ponzi, like every other perpetrator of such schemes since, took advantage of that aspect of human psychology, especially common among greedy investors, that as long as they are getting the interest rate on their money that they were promised, they would not inquire too closely into the details of the business, being satisfied with vague generalities that gave them something plausible to believe in.

Ponzi had noticed this trait much earlier when he had worked at as a teller at a bank that attracted investors by paying higher interest rates than their competitors and used that money to invest in real estate, expecting those prices to rise. When the real estate market took a downturn and their investments went bad, the bank went bankrupt. But while they were making money, the bank’s depositors were quite happy, a scenario that should sound depressingly familiar to people today.

Ponzi promised to double his investors’ money every three months and he delivered, at least at the start. What he did was to pay on schedule to the early investors, who spread the word that this was a good investment. More investors gave money, which Ponzi used to pay the promised interest to the earlier investors. As long as increasing numbers of new investors (or to use a technical term, “suckers”) were coming in with new money, he could pay off the earlier ones, thus creating a pyramid of investors, the ever-growing large base supporting payoffs to the smaller group closer to the top.

When his Securities Exchange Company paid early investors the high returns he had described, they spread the word to others. Ponzi’s inflow of funds rose from $5,000 in February 1920 to $30,000 in March, and $420,000 by May. By July an estimated $250,000 a day was flowing into his firm, mainly from small investors who let their book credits build up rather than taking out their money. Some people put their life savings into the plan, and even borrowed against their homes.

Like other frauds, Ponzi spent money lavishly on himself, living well, buying a mansion, and even bringing his mother over from Italy. And Hudson points out that like the Ponzi schemes of today, there were enough clues that he was running a racket if only financial reporters and investigators took the trouble to look for them. In each case, there were a few people who had stumbled upon the fact that the sheer volume of transactions that would have to be involved to generate such returns did not, and could not, match the reality, and that hence there must be some racket going on.

The financial reporter Clarence Barron (publisher of Barron’s) noted that if he really had invested the money as he told his investors he had done, Ponzi would have had to purchase 160 million postal reply coupons. Yet the post office reported that few were being bought at home or abroad, and only 27,000 were circulating in the United States.

There were similar clues that shady dealings were going on in the Escala/Afinsa stamp fraud of 2006, if only people were willing to look into the actual workings of the business.

The denouement came shortly after Lloyd’s of London withdrew from a 1.2 billion euros policy to insure Afinsa’s stamps. One of its experts noticed that if $6 billion really had been invested, it would have bought up all the investment-grade stamps in the world many times over. The fact that stamp prices did not reflect any such extraordinary buying implied that few bona fide stamp transactions occurred at all, and there had been a massive over-billing.

The same is true for the fraud perpetrated by Allen Stanford, which began to unravel when a Venezualan financial analyst looked into Stanford International Bank (SIB) as a favor to a friend who was thinking of investing in it. “No matter how hard he tried, he could see no way in which SIB’s business model could produce the returns that it claimed to or fund the dividends that it was continuing to pay its investors.”

Bernard Madoff’s scheme was similar, as we will see tomorrow.

POST SCRIPT: Quote

“There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.” (From Kung Fu Monkey.)

Financial frauds-1: Introducing Charles Ponzi

Recently there have been two major fraud scandals in the US, one perpetrated by Bernard Madoff and the other by Allen Stanford, both based on so-called ‘Ponzi’ schemes. These exploded on the financial world as big surprises. But there was a similar huge scandal that took place in 2006 but since its impact was felt mostly in Spain, the media here did not give it much publicity, though doing so might have alerted people earlier as to what Madoff and Stanford were up to. Economist Michael Hudson gives the background on the Spanish fraud.

The Spanish scheme involved the trading of rare stamps by a Spanish holding company called Afinsa that bought up a New Jersey stamp auction firm and combined it with a Spanish auction firm to create Escala, the third largest auction firm in the world, after the much better known Sotheby’s and Christie’s. Their business model was to buy and sell rare stamps for dealers and collectors, making money on safeguarding and curating the stamps while also making profits on the transactions. Since the prices of rare stamps seemed to be always going up, they were able to promise and deliver to investors steady rates of return of 6% to 10%, higher than government bonds and much of the rest of the market, and thus convince investors to put money into the company.

But in May 2006, Spanish police raided the firm and on examining the books, found that the stamps they purportedly had either did not exist or were of much lower value than claimed. The firm was accused of running a pyramid or ‘Ponzi’ scheme.

So exactly what is a Ponzi scheme? Hudson recapitulates the original scheme by Charles Ponzi that has inspired a particular kind of fraud that will be forever associated with his name.

Charles Ponzi was a poor Italian immigrant who arrived in the US in 1903. His stated business model was based on what is called ‘arbitrage’. This is where a person takes advantage of a difference in the price of something in two different markets separated by either space or time, so that if one buys in one market and sells quickly in another market for the higher price, then one makes a profit, often without the nuisance of even having to take possession of the item being bought and sold. (True arbitrage, where the buying and selling is done simultaneously in two different places, is only possible in modern times and with deals that can be transacted electronically, such as securities and currencies and other similar financial products.)

People do this with foreign currency trading if they can predict which way the value of a currency will go. Suppose that at some time a US dollar and a British pound are at parity, meaning that they have equal value. You could buy a dollar with one pound and if the pound later depreciates so that it now trades at two pounds to one dollar, then the dollar that your original pound bought can now be used to buy back two pounds, giving you a 100% profit.

The financier George Soros is supposed to have hugely increased his fortune by betting that the value of the British pound would go down. He sold so many pounds for other currencies that the market was actually influenced by his actions, with other traders thinking that he was betting on something that would actually happen and they also started selling their pounds, causing a run on the currency and driving down its price, and creating a self-fulfilling prophecy.

The catch with this kind of trading is that the differences in trading values in the two markets are usually very small, especially over short time periods and, because of fees and other costs, ordinary people cannot make money from it. One has to be a trader oneself and thus avoid the commissions or have a lot of money to invest in order to make money. But a hundred years ago in Ponzi’s time, there existed something called postal coupons that enabled an investor to make money on what seemed like a sure thing.

Postal coupons are no more (I think) but they were common when I was a student and were essential back in the days when buying and selling foreign currencies was not easy or if you lived, like me, in a country that did not allow you to convert your local currency into foreign ones.

The problem the coupons solved was this. Suppose that you needed someone in another country to mail something to you but you had to pay the cost of postage. One way was to send money to the recipient to cover the cost of stamps. But this meant that either you or the recipient had to convert your local currency into the foreign one, which could be a nuisance or even, as it was in my case in Sri Lanka, impossible except in the black market.

Postal coupons were created to solve this problem. You could legally buy such coupons in your own country in your own currency but in the denomination of the foreign currency to cover the cost of stamps in the other country, and then mail the coupons. The recipient could exchange the coupons in their post office for stamps and mail your package to you.

What Ponzi did was take advantage of the fact that the exchange rate at which postal coupons were valued badly lagged behind the exchange rates of currencies, enabling him to take advantage of the difference.

Next: How Ponzi’s original scheme worked.

POST SCRIPT: Why not calculate the budget on an abacus?

Why is it that members of Congress, during their debates, still prepare large posterboard charts that are then mounted on hard backing and placed on easels? Do they think they are still in middle school? Haven’t they heard that there are things called computers? Projection systems? PowerPoint? Is there some arcane rule that says that Congressional aides must waste their time producing huge charts that might have just one word or one number? The members of Congress using this seem to think that this produces some kind of dramatic effect when all that it indicates is the sense that the speaker is out of touch.

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Religious dogmatism

The Catholic Church, like other rigid religious belief structures such as Orthodox Islam and Judaism or fundamentalist Christianity, does not hesitate to draw lines in the sand, to state clearly what is allowed and what is not, and then follow that policy wherever it leads, even if it leads over a cliff. In the face of derision they are willing to hold on to their position for decades, even centuries, before quietly conceding that they were wrong.

For example, when they decided that Church doctrine required the belief that the Sun orbited the Earth, they pulled out all the stops to force people to oppose the Copernican model, in 1616 banning the teaching of the heliocentric model and in 1633 putting Galileo under house arrest and forcing him to recant his view under threat of torture by the Inquisition.

Of course, that didn’t work, with even Catholics rejecting that absurd policy. The church quietly reversed that position only hundreds of years later, in 1992 when Pope John Paul II lifted its edict of Inquisition against Galileo. But the Pope then went on to claim that Galileo may have been divinely inspired, saying: “Galileo sensed in his scientific research the presence of the Creator who, stirring in the depths of his spirit, stimulated him, anticipating and assisting his intuitions.” This was a rather pathetic effort to recover some dignity from an embarrassing debacle for religion.
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God save us from the Queen

One of the things about America that most endeared it to me when I first arrived for graduate studies was the lack of stuffiness in personal and business relationships. There was an easy informality, casual yet respectful, friendly yet polite, that I liked and found easy to get used to. I put this down to the American revolution, that decided that along with getting rid of direct rule by the English king, they also decided to get rid of all the pomp that went along with the English court. It seemed to reflect a sturdy democratic and republican (small ‘d’ and small ‘r’) spirit.
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The stem cell issue-2: The ethics

Yesterday, I discussed the science involved in stem cell research. Today I want to discuss the ethics.

The ethical problems associated with stem cell research occur because although the fertilized eggs were not created for the purposes of research but to help infertile couples, since the method of in vitro fertilization for the treatment of infertility has not been perfected, more fertilized eggs are created than can be used to actually generate pregnancies, and the question of what to do with these extra frozen stored embryos is problematic.
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The stem cell issue-1: The science

The decision by the Obama administration to reverse the Bush-era policy of banning the use of federal funds for stem cell research has created some controversy. The earlier policy had led to some frustration in the scientific community.

Bush’s policy was intended to be a compromise: it banned the use of federal funds for the creation of new embryonic stem-cell lines while allowing scientists to study 21 lines that had already been created. But researchers say those lines aren’t diverse enough and they have been eager to study hundreds of other lines, some of which contain specific genetic mutations for diseases like Parkinson’s. There have been practical challenges as well. The restrictions forced scientists to use different lab equipment for privately funded and government-funded research; some even built entirely separate lab space. One of the most disconcerting aspects, researchers say, has been the negative effect on collaboration, a hallmark of the scientific process. Researchers supported by private money haven’t been able to team up with scientists funded by the government, potentially holding back new insights and advances.

Stem cells are those that have three properties. Unlike most cells like muscle or blood or nerve cells, 91) they are capable of replicating themselves for a long period (making them a valuable source to regenerate the body by replacing cells that die), (2) they are unspecialized, and (3) when they reproduce they can produce either more stem cells or become specialized cells like muscle or nerve or bone (a process known as differentiation). The National Institutes of health has an informative FAQ page on this topic.

The two main kinds of stem cells are the embryonic ones and the non-embryonic ones. The embryonic ones can proliferate for a year or more in the laboratory without differentiating while the non-embryonic ones cannot do so for very long, but the reasons for this difference are not known as yet. The embryonic stem cells are capable of eventually differentiating into any type of specialized cell, and are called pluripotent. Such pluripotent cells are valuable because they can be used to repair tissue in any part of the body as needed. But eventually they need to differentiate into specialized cells in order to perform the functions that those specialized cells carry out in the body. The process by which stem cells differentiate is still not fully understood, but part of it involves interaction with the external environment in which the stem cell finds itself.

Adult stem cells are one form of non-embryonic cells and are found amongst the differentiated cells that make up the tissues of the body, such as the brain and heart and bone marrow, and they are the cells that are used to maintain and repair those tissues by differentiating when needed to produce new tissues. Some adult stem cells seem to have the capacity to differentiate into more than one type of specialized cell though the range is limited, unlike in the case of embryonic stem cells. Such cells are called multipotent.

For example, some multipotent stem cells found in the bone marrow can generate bone, cartilage, fat, and connective tissue. Stem cells taken from umbilical cord blood and the placenta seem to also have multipotent properties and thus in the future it may become routine that a stock of umbilical or placental cells will be taken after every birth and preserved for possible future use. Adult stem cells have some uses but working with them is much more difficult since they are harder to obtain and are less flexible.

To understand the ethical issues involved in using embryonic stem cells, one should be aware that creating embryonic stem cell lines for research requires extraction of cells from the blastocyst. This is the stage reached by a fertilized egg after about three to five days when, after repeated cell division and duplication, there are about 70-100 identical cells in the shape of a hollow ball containing an inner clump of cells. The inner clump becomes the embryo and the outer hollow ball becomes the placenta. When this occurs in the uterus, this stage is reached before this collection of cells gets implanted in the uterus wall. Sometimes implantation does not occur, in which case the pregnancy is spontaneously terminated.

This video explains what stem cells are and how they work.

The embryos from which embryonic stem cells are taken are produced during treatment for infertility when a woman’s egg is taken from her body and fertilized and grown to blastocyst stage in a culture outside the woman’s body. In the very early days after the egg is fertilized and the cell starts splitting and reproducing itself, all the cells are identical. Embryonic stem cells are obtained from that inner clump of cells and thus the blastocyst has to be destroyed in the process. The cells from a single blastocyst can be used to generate millions of embryonic stem cells that can be divided among researchers, and these are the stem cell ‘lines’ that are referred to. The cells in a single line are all genetically identical.

While there are promising new ways of creating embryonic stem cells using adult skin cells (called induced pluripotent stem cells), they have their own ethical issues.

Since tissues created from a person’s stem cells have the same genetic information as the host, the host body will not reject the implanted tissues as a foreign body, thus overcoming one of the biggest hurdles in organ transplants. While the possibility of growing tissues and entire organs for transplant purposes is often publicized as the biggest potential benefit of using stem cells, there are other more immediately realizable potential uses for embryonic stem cells.

One is that it enables the process by which cells differentiate into their specialized forms to be studied. Another is that by creating cells that have a particular disease, say Parkinson’s or Lou Gehrig’s, one can observe under a microscope even the earliest stages of the progression of the disease and thus hope to develop better treatments. Another use is to test the effects of drugs on cells before testing them on a real person. That would enable you to see if they are toxic to a particular individual, creating a level of personalized medicine that we do not currently have.

The potential benefits of embryonic stem cells in research are clear, even though it is very early days yet and there is still a long way to go before we can hope to even begin realizing those benefits. The key question is how to balance the ethical concerns involved in using such cells with the benefits.

This question will be examined in the next post.

POST SCRIPT: The Daily Show on stem cells

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Are religious people reliable allies on the environment?

Evolutionary biologist E. O. Wilson gave Case Western Reserve University’s annual Distinguished Lecture on March 3, 2009 in Severance Hall, the magnificent building where the equally magnificent Cleveland Orchestra plays, was packed for the occasion. It seemed to underscore the community’s support for, at least interest in, the theory of evolution.
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The colonial experience-8: The rise of nationalist feeling

(For previous posts in this series, see here.)

While colonial powers needed to create an educated, elite class to act as surrogates for them and help them rule the country, providing access to that education created its own problems. While some in the educated elite were happy to play the role of junior partner to the colonialists and enjoy the rewards, others became, as a result of this western education, more aware of the political currents that were sweeping the world as a result of the Russian and Chinese revolutions, and the rise of anti-colonialist nationalistic sentiment following World War II.

These people returned from their education abroad to organize trade unions, form political parties, and agitate for independence. Ho Chi Minh in Vietnam returned from France to lead that country’s liberation struggle against the French. English-educated Jawaharlal Nehru and Mahatma Gandhi led similar struggles in India, and Sri Lanka had its own counterparts. All these leaders tended to have socialist leanings, having visions of creating a society that was just and egalitarian and non-racial.

But as we have sadly seen, the centrifugal forces that were unleashed by the divide-and-rule policies in the colonies based on long-standing inter-tribal suspicions were too strong to be overcome and almost all countries succumbed to ethnic clashes following independence. Those leaders in the fight for independence who were non-racial were often swept aside by pandering politicians only too eager to use ethnicity as a wedge to inflame passions and ride to power on racial issues. As a result, India has seen terrible Hindu-Muslim-Sikh violence, Sri Lanka has similar conflicts between Sinhala and Tamil people, and the ethnic violence in African countries are too many and well-known to list.

As a result of these problems exacerbated by the colonial powers, many countries descended into authoritarian rule with ruthless dictators, the worst examples being Mobutu Sese Seko in what was then called Zaire and is now called the Democratic Republic of Congo, Idi Amin in Uganda, and Robert Mugabe in Zimbabwe. These tragic post-independence developments enabled colonial powers like the British to smugly claim that they were the ones who kept the peace between the warring groups, and that thus their presence was beneficial, when in reality, they were the ones who helped fan the existing tensions and suspicions into flames. While the post-independence political leaders of those countries share a huge amount of blame for the degeneration of their countries, the colonists also have blood on their hands.

One bright spot in Africa was Tanzania under its founding president Julius Nyrere. An interesting intermediate case in Asia is Singapore, where an authoritarian leader Lee Kuan Yew kept a tight lid on ethnic divisions and successfully led a program of modernization and industrialization that has made that small country a world leader in commerce and resulted in Singapore having one of the highest standards of living in the world.

So coming back to Jared’s original question about how it could be that he, the only non-Indian in a class that dealt with British colonialism in India, could see the negative aspects of it, it comes down to the depth of one’s understanding of the political history of the colonized countries. Attitudes amongst the people of the former colonies towards the colonial experience depends on, I think, the politics and background of the family from which the person comes.

Most of the students who come to the US are probably like me, the products of a relatively small, urban, English-educated elite, and thus come from the group favored by the colonial powers. There is absolutely no doubt that having the benefit of an English education has opened our minds to a world of knowledge and enabled us to go abroad and experience much more than we would have otherwise. Knowledge of the English language and its associated literature has enabled us to more easily absorb western culture and science, which are both dominant in the world today. There is no question that this particular legacy of the colonial experience has been good for us personally.

Making broad generalizations, those who left the colonial country because of the turmoil that followed independence, tend to think of the pre-independence colonial times as one of peace and prosperity, at least for the urban elite to which they belonged. This is especially likely in the case of ethnic and religious minorities who bore the brunt of the post-independence backlash by the marginalized majority against those whom they perceived as unfair beneficiaries of colonial largesse.

Against that group are those who grew up in households or communities that were more politically aware at a deeper level. I have said that my grandfather’s view of British colonial rule was positive, although he knew that they considered brown-skinned people like him as ultimately inferior. They were sufficiently nice to him and rewarding of his services that overall he thought they treated him well, and that he fared better than he would have at the hands of the majority community.

My father, on the other hand, lived during the time of transition to post-colonial rule, with almost exactly half his life growing up in a British colony and the second half in an independent state. So he grew up with all the privileges of being English educated but at a time when anti-imperialist sentiment was strong and nationalist fervor was high, especially in the universities and amongst what used to be referred to as the intelligentsia. He belonged to both and his political leanings were influenced by that experience. So he did understand the negative aspects of colonial rule while at the same time being a beneficiary of it.

The next generation, mine, is entirely post-colonial and where we stand in relation to our colonial past is also mixed. The more politically aware can see both the long-term benefits as well as the damage that colonialism has done, and we are ambivalent towards it. Others who do not go into it as deeply may have a rather one-sided view depending on their own personal situation and how colonialism affected their own lives. Those who come from families that benefited, the urban English educated class, see it as mostly a good thing while the rest may see it as largely negative.

This series had its genesis the attempt to explain to Jared why it was that the Indian students in his colonialism class seemed to have a positive view of that experience. I suspect that most émigrés are those from the English-educated urban classes, since they are the ones who have access to the means for going abroad and they, I suspect, are the ones who dominated Jared’s class. So this post ends my long-winded answer to his question.

POST SCRIPT: Interesting talk today

Jeff Hawkins will be speaking today (Tuesday, March 31, 2009 from 4:30-5:30) on the topic On Intelligence: What Intelligent Machines Can Learn From the Human Neocortex.
Hawkins is co-founder of two computer companies, Palm and Handspring, and is the architect of many computing products such as the PalmPilot and Treo smartphone, and the author of the book On Intelligence (2004).

The talk will be given in the Wolstein Auditorium on Cornell Road on the campus of Case Western Reserve University. For more details, see here.

Road rants

It is time for another edition of Road Rants where, after going on a road trip where I have time to think of these things, I note the driving practices I see that annoy me and make suggestions for improvement. The previous rants were here, here, and here.

Turning on lights

On the highway several times I came across a sign saying that there was construction ahead and to turn on the headlights. In each case there were about six or seven cars ahead of me, not one of whom bothered to turn on their lights. On the other hand, when there was a sign saying that we were about to enter a tunnel and to turn on the lights, everyone did so, though some only after entering the tunnel.
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