Smart Economy

When will the recession end? Part 68 No booming V-shaped recovery in Canada for workers and consumers

Have you noticed? Newspapers in the last several weeks following the Olympics have been promoting a single mantra and  a one track mindset-Canada is booming ! OH JOY !! .It's a V-shaped recovery proclaim the headlines!!  It's easy to get fooled by average or median numers like GDP, unless you delve into the details.   The good news growth stats have come mainly from the supply side (manufacturing, government administration  etc fueled by government subsidies, consumer tax breaks, Olympics spending and manufacturing ramp ups in anticipation of  actual future sales growth  Here the crowd, with the help of the media,  can easily become victims to a number of cognitive, decision-making  and probability biases such as optimism bias (see Nature Leter 2007 at the end of the post), ostrich bias (ignorong negative news), overconfidence bias, superiority bias or illusory superiority (my business will do better then the rest of my comeptitors) , herd instinct, wishful thinking, positive outcome bias and loss aversion-we don't want to miss the boat-just in case the economits are right this time around) and not necessarily any actual real  positive news on the demand side. The big question is will consumers actually start buying what we are starting to produce?  Realistically I'm seeing more evidence on the negative side then the positive side.   ...[...]... hhmmm, sounds like all the same cognitive and decision-making  errors just before the peak of the last business cycle collapse in Dec 2007...that we now admit in hindsight.   Such optimism is justified by one or two data points --the news that GM will recall its third shift of 700 works along with Honda Canada who plans to restore 400 jobs in 2011-next year. On the surface that seems like good news, but in context, we get a different view. That's 1,100 recovered jobs (or 2.89%) of  the 38,000 auto assembly and auto parts manufacturing jobs lost since Dec 2007 in Ontario -which was the start date of the US recession. 2.89% is bare a noticeable blip and far short of a boom.

Stats Canada confirms this today in a report called: Survey of Employment Payrolls and Hours (SEPH). I bet you never heard of it because it's never quoted in the mainstream business media--Walter Derzko.

 

Yes critics will say that employment is a lagging indicator, but if we are in a booming economy, then employment should be booming too.This recession is unique in Canada and the US because we have millions of jobs that have been outsourced overseas. Unemployed workers don't tend to be great consumers.

No V shaped recovery in Canada yet if you look at Total Payroll employment > Stats Can

StatsCan Releases Payroll Employment, Earnings And Hours For January 2010

In January, total hours worked by payroll employees increased by 0.3%.(giving Part timers more work hours) 

 At the same time, non-farm payroll employment was virtually unchanged.

January's most notable job gains were in mining, quarrying, oil and gas extraction; construction; finance; transportation and warehousing; and health care. These gains were offset by losses primarily in the service sector, with the largest declines in public administration; arts, entertainment and recreation; educational services and "other services."

Number of jobs rose in several industries since the summer

In January, payroll employment in the construction sector increased by 2,500. Between August 2009 and January 2010, employment in this sector has steadily increased by 20,100 (+2.5%). The largest gains during this period occurred in building equipment contractors and foundation, structure, and building exterior contractors. Building material and supplies dealers, an industry with ties to construction, also posted modest job gains (+2,900) since August.

Payroll employment in finance industries has continued on an upward trend. Since August 2009, it has increased by 15,700 (+2.3%), with the largest gains in depository credit intermediation (banks and credit unions). Payroll employment was also up in non-depository credit intermediation (credit card and sales financing issuers).

In employment services, which includes placement agencies, temporary services and human resource management services, payroll employment has increased by 4,100 since August. Payroll employment also rose by 3,500 during this time in services to buildings and dwellings.

Since August 2009, there has been a gradual increase of 4,800 payroll jobs in support activities for mining, oil and gas extraction.

Continued gains in health care

Payroll employment in health care increased by 1,600 in January. Since August 2009, payroll employment has risen by 36,700 (+2.8%) in this sector, with most of the gains in offices of physicians, dentists and other health care practitioners; out-patient care centres; and home health care services. At the same time, there were fewer jobs in hospitals and nursing care facilities.

Note to readers

Unless otherwise stated, this release presents seasonally adjusted data, which eases comparisons by removing the effects of seasonal variations.

Annual revision

Every March, as part of the regularly scheduled year-end review of the Survey of Employment, Payrolls and Hours, seasonally adjusted data are revised using the latest seasonal factors. This year, all seasonally adjusted data going back four years (January 2006 onwards) have been revised and are available on CANSIM (Tables 281-0025, 281-0028, 281-0031, and 281-0034). The use of the latest seasonal factors had an impact on the date of the most recent peak of payroll employment, which is now August 2008, compared with the pre-revision peak of October 2008.

In addition, as part of the annual review, there were revisions to a small number of industries for the 2006 to 2009 period. The most significant affects are on the employment data for the following industries: depository credit intermediation; securities and commodity exchanges, and other financial investment activities.

Stability in manufacturing since August

There was virtually no change in payroll employment in manufacturing in January. In recent months, the pace of job losses in manufacturing has slowed considerably. Between August 2009 and January 2010, manufacturing jobs have declined by an average of 1,300 per month. This was well below the average monthly decline of 18,000 that occurred between August 2008 and August 2009.

Payroll employment levels have remained stable in motor vehicle assembly, motor vehicle parts as well as body and trailer manufacturing since August 2009.

Manufacturing industries experiencing notable declines in payroll employment since August 2009 include: meat product; pulp, paper and paperboard mills; and printing and related support activities.

During the same period, manufacturing industries with notable gains in employment include: seafood product preparation and packaging; beverage; petroleum and coal product; and plastic product manufacturing.

Growth in year-over-year average weekly earnings

Average weekly earnings including overtime of payroll employees rose to $834.47 in January, up 2.1% from January 2009. This was similar to year-over-year increases seen in early 2009.

Among Canada's largest industrial sectors, average weekly earnings rose in educational services (+5.3%); public administration (+4.6%); health care and social assistance (+4.1%); accommodation and food services (+4.0%); and manufacturing (+2.6%).

During the same 12-month period, average weekly earnings fell 1.5% in retail trade and 0.4% in construction.

Among the provinces, Newfoundland and Labrador experienced the fastest growth in average weekly earnings (+5.3%), followed by Saskatchewan (+4.1%) and New Brunswick (+3.1%). Prince Edward Island was the only province to post a decline (-0.2%).

Comparing Survey of Employment, Payrolls and Hours and Labour Force Survey

These data come from the Survey of Employment, Payrolls and Hours (SEPH). SEPH is a business survey that provides a detailed portrait of employees by industry. It complements information from the Labour Force Survey (LFS), which is a household survey.

Estimates of employment, wages and hours derived from these two surveys differ for a number of reasons.

First, the reference periods are different. LFS data are collected during a "reference week," usually the week following the 15th of the month. For SEPH, the reference period is an entire month.

The LFS includes people who are self-employed, as well as workers who take unpaid leave. SEPH does not cover these groups. Industry coverage for the LFS is comprehensive; SEPH excludes agriculture, fishing and trapping, and religious organizations.

The two count multiple job holders differently. In the LFS, people with more than one job are counted only once as "employed." SEPH is a count of filled positions on payroll, so each job is counted separately.

Finally, national estimates produced by the LFS do not include people living in the three territories or on reserves while SEPH does. LFS estimates are based on where people usually reside. SEPH counts employees in the province or territory where they work, although this has little effect on the comparability at the national level.

Available on CANSIM: tables 281-0023 to 281-0039 and 281-0041 to 281-0046.

Definitions, data sources and methods: survey number 2612.

Detailed industry data, data by size of enterprise based on employment, and other labour market indicators will be available soon in the monthly publication Employment, Earnings and Hours (72-002-X, free).

Data on payroll employment, earnings and hours for February will be released on April 29.

Updated  Mar 31, 2010 Written by Statistics Canada

 

Walter Derzko

===============================

 

Neural mechanisms mediating optimism bias

 

In a Letter / Nature / *450*, 102-105 (1 November 2007) | doi:10.1038/nature06280; by Tali Sharot1,2, Alison M. Riccardi1, Candace M. Raio1 & Elizabeth A. Phelps1

 

 

Abstract

Humans expect positive events in the future even when there is no evidence to support such expectations. 

 

For example, people expect to live longer and be healthier than average, they underestimate their likelihood of getting a divorce, and overestimate their prospects for success on the job market.  We examined how the brain generates this pervasive optimism bias.  Here we report that this tendency was related specifically to enhanced activation in the amygdala and in the rostral anterior cingulate cortex when imagining positive future events relative to negative ones, suggesting a key role for areas involved in monitoring emotional salience in mediating the optimism bias.  These are the same regions that show irregularities in depression3, which has been related to pessimism4.  Across individuals, activity in the rostral anterior cingulate cortex was correlated with trait optimism.  The current study highlights how the brain may generate the tendency to engage in the projection of positive future events, suggesting that the effective integration and regulation of emotional and autobiographical information supports the projection of positive future events in healthy individuals, and is related to optimism.

 

...[...]...

People tend to make overly confident, positive predictions about the future, which are often inaccurate1,2.  The tendency to expect good things in the future is known as optimism.  Extreme optimism can be harmful as it can promote an underestimation of risk and poor planning5.  In contrast, a pessimistic view is correlated with severity of depression symptoms3.  A moderate optimistic illusion, however, can motivate adaptive behaviour in the present towards a future goal, and has been related to mental6 and physical7 health.

Why are some people more susceptable or resilient to stress? New brain cell formation embeds stress memory

Researchers at SouthWest University have found new clues that might help explain why some people are more susceptible to stress than others.

In a study of mice, the researchers determined that weeks after experiencing a stressful event, animals that were more susceptible to stress exhibited enhanced neurogenesis – the birth of new nerve cells in the brain.  Specifically, the cells that these animals produced after a stressful event survived longer than new brain cells produced by mice that were more resilient.

In addition, when researchers prevented neurogenesis in both stress-susceptible and resilient mice, the animals previously susceptible to stress became more resilient.

"This work shows that there is a period of time during which it may be possible to alter memories relevant to a social situation by manipulating adult-generated nerve cells in the brain," said Dr. Amelia Eisch, associate professor of psychiatry at UT Southwestern and senior author of the study, available in the Proceedings of the National Academy of Sciences.  "This could eventually lead to a better understanding of why, in humans, there is an enormous variety of responses to stressful situations."

Mice that are susceptible to stress exhibit long-lasting social avoidance and depressive-like behavior after experiencing a stressful event, such as being placed in a cage with a more aggressive mouse.  Resilient mice behave more like unstressed control animals.  This animal model is commonly used in studies of stress and depression, as understanding the changes in the brain and behavior of the mice can shed light on stress-induced changes in the human brain and in human behavior.

In the study, the brain cells of both groups of mice responded in similar ways after a stressful event.  But weeks later, researchers found that mice displaying social avoidance had more nerve cells in a region of the brain called the hippocampus that survived the stressful event than mice that were more resilient.

The study is the first to link the memory of a social experience with neurogenesis in the hippocampus, Dr. Eisch said.  Recently, Dr. Eisch and her team have linked adult neurogenesis with addiction.  Previously, neurogenesis was primarily associated with spatial learning and memory.

In this study, Dr. Eisch and her colleagues exposed some mice to social defeat by having the animals live in the same cage as larger, aggressor mice for five minutes a day, and in the same cage but with a barrier in place the rest of the day.  Researchers then tested the mice to see if they were susceptible to stress.

The researchers labeled the new cells of susceptible and unsusceptible mice so they could see how the cells divided.  Both types of mice produced fewer dividing cells immediately after stress, but in the long run, mice susceptible to stress had more new adult cells than unsusceptible and control mice, who lived in cages with nonaggressor mice.

Dr. Eisch and her colleagues also used radiation to prevent hippocampal neurogenesis in all groups of mice.  Mice susceptible to stress stopped producing new nerve cells and didn't display social avoidance in the long term.

Inhibiting social avoidance also had detrimental effects, however.

"Radiation in susceptible mice led to behavior that might be interpreted as harmful, such as approaching a potential aggressor mouse instead of avoiding it.  We hypothesize that the survival of new nerve cells may be a compensatory event in the brain to allow the mouse to remember a socially relevant aggressor," Dr. Eisch said.  "We are very eager to see if these results carry over to other models of stress in animals and to explore the mechanisms underlying these changes, as these are critical steps to understanding how adult-generated neurons might be modulated to help humans in stressful situations."

Future studies also will help determine which genes are involved with increased survival of new nerve cells in mice susceptible to stress, Dr. Eisch said.

N.B. A similar model has been proposed for fear and anxiety...erasing these new nerve cells has been proposed as a potential future therapy--Walter Derzko

When will the recession end? Part 67 The Titanic of Jobless Recoveries

Insightful eyeopening story from the Atlantic Magazine called "The Mother of All Jobless Recoveries"

...[...]...

This Cleveland Fed report "Are Jobless Recoveries the New Norm?" is a fascinating, lucid and distressing look at why unemployment is still at 9.7% and why it's not going down any time soon. Read the whole thing, if you have time. But here are three keys facts I want to pull out. [N.B. The real hidden US umemployment is more like 21.5% and not 9.7% if you include all the people who have stopped looking for jobs or who are off unemployment benefits. Why is 10% unemloyment significant? Above 10% the government would have to call it a Depression, acording to their definition -which they are trying despirately to avoid.--Walter Derzko]

1. This is no longer a firing crisis. It's a hiring crisis.
Job openings are still in the toilet, CF reports. Here's a chart that makes that point ring loud and clear. These are numbers from the Bureau of Labor Statistics (in thousands). From left to right, we've got job openings, total unemployed in the labor force, and the ratio.

Lesson: hiring is in the dumps. Job openings have fallen year-over-year even after two quarters of positive GDP growth. This, incidentally, is one reason I think extending benefits to people without jobs is still a good idea. Subsidizing unemployment would be much more of risky if job openings weren't near historic lows.

2. More demand won't fix the problem (at least initially).
The smart and common thing to say about jobs is that they will come back when demand for goods and services picks up. That's not exactly true. Demand is a key engine of employment, but the nearer obstacle is the slack in the job market. What do I mean by slack? Consider: If you're an employer and business is getting stronger, you'll think about adding work hours. But that doesn't necessarily mean hiring unemployed workers. It might mean asking more out of your current payroll (average weekly work hours today are at 33.1 hours, and all-time low is 33.0) or making part-time workers full-time. The number of workers working part-time because of the economy (not by choice) has jumped by 4.1 million since December 2007. Before we see that 9.7% figure fall dramatically, the economy will start by absorbing 4.1 million part-time workers.

3. Get ready for another jobless recovery.
The unemployment rate tells us what percent of the labor force does not have a job. It does not tell us whether Americans are unemployed because they just lost their job (indicated by a high job separation rate), or because they have been out of job for an extended period of time (indicated by a low job finding rate). Today half of unemployed 9.7% has been out of work for more than 27 weeks, the highest number on record. This graph helps to explain why.

More than 95 percent of the change in the unemployment rate since the beginning of the recession is due, not to job separation, but record-low job finding. "During the past three recessions," CF explains, "the decline in the job finding rate has been playing a bigger role in unemployment rate fluctuations. Relative to the change in separations, the job finding rate changed (declined) much more in the last three episodes." In other words, what we're looking at is something like the mother of all hiring crises.

 

Another related post from HBR:

 

Where the Boomers Will Find Jobs

If you're an older manager who's been laid off (or is under threat), the future probably looks pretty bleak. Do you take a job at Walmart or work part time? You might lie awake at night and stare at the ceiling, asking yourself: What will happen to my family? My savings? My way of life? You may also recall — with a bit of bitterness — all the rosy projections of think tanks and experts ... CONTINUE READING

Walter Derzko

When will the recession end? Part 66 Mixed conflicting signals

In the next month or two watch for overly optimistic newspaper articles that cherrypick favourable economic data or titbits of news and ignore or discount continuing negative trends and news.

The Globe and Mail newspaper in Toronto on Saturday March 27, 2010 made the following front page pronouncements:

• "The economy is in overdrive"
• "Canada is on the brink from moving from recovery to expansion"
• "Unlike the US Canadian companies have been hiring."
• "the domestic side of the economy has come flaring back almost to where it was before the recession began." -nice quote but unchallenged y the reported &  unsupported by any data.
• "Many companies are enjoying an enexpected rebound and feeling better about their prospects"
• "The road is clear for the rest of the year"

Most of the economic activity was based on expanding the supply side(depleted inventory) and not necessarily a great uptick on the demand side.

In Canada recent job growth came mostly from government and the Olympics, not from the private sector. In the USA, we will see a similar blip when the US government hires thousands of people for the census this spring-a temporary make work project. In the US private sector executives in the Business Roundtable are more cautious and have not yet announced any great hiring spree. Expect over $1.4 Trillion in more bailouts and goverenment spending prior to the mid term US congressional elections in the fall.

A booming Toronto housing market, (just another bubble fueled mostly by  speculators and foreign buyers), GM's third shift and glowing profits from LuLuLemon Athletica are sighted as signals that we are back on track again. I'm not so convinced, when I see the bankrupcy and foreclosure page in the Sunday paper that is still a half page long and multiple for lease commercial real estate signs up and down many commercial streets.

Canada is still too closely tied to the fortunes of the US economy, that has many more asset bubbles that could still burst (ie "under water" commercial real estate-just a matter of time, a steady stream of failed zombie US regional banks, growing national debt, state budget defaults etc ) and the NBER has not declared the recession over yet!

The Coincident Economic Indicator Index for various states is still heading south, so there is no sign of real economic growth yet. (ie Truck Tonnage in Feb is down, not up as expected in a recovery)

The article noted that "we can diverge from the US for so long."

Both maverick and mainstream economists are now surprisingly offering the same warnings:  

A skeptic Nouriel Roubini, Chairman of RGEMonitor.com sees a downside risk to the economy in the second half of calendar year 2010 when the fiscal stimulus is going to fade away. “You avoided a free fall and that’s why risk aversion has reduced and there is a recovery of the economy. But in spite of this policy stimulus, the economy today should be growing at 6-7% rate. In stead of that we are debating if it will grow at 2.5% or 3%. Once the policy stimulus goes away, we will have to see if there is enough robustness in private demand to have a sustained economic recovery.”

Economists Expect GDP To Falter In 2011 24/7 Wall St. Results from the poll used to create the Blue Chip Economic Indicator show that economists believe that US GDP will grow at a slower rate than they had ...

  Walter Derzko, Smart Economy, Toronto

When will the recession end? Part 65 Designing a more robust, resilient economic system

Many people are starting to think wholesale system change when it comes to the western economy and not just treating the symptoms and it's back to business as usual. Here are some of my thoughts using China as the most current example of a potential boom and bust cycle (N.B. China is still in the pre-peak boom stage.)

Rethinking and redesigning and more Robust or Resilient Economy.

	Current Fragility  Model	New Robustness or Resilience Model
1.0	Great Hype- investment debacles generally start out with a compelling growth story- (The China Dream, Dot.com, Green tech, Clean tech)	Modest growth projections close to historic norms or fundamentals; aim for robustness and resilience
2.0	Blind faith in the competence of the authorities (The Communist Party of China We Trust. Mother Russia knows best, The Federal Reserve will protect us)	Non partisan Watchdog institutions in place
3.0	General increase in investment (Chinese investment Boom) CDS, options, derivatives	Decouple risk and banks (separate risky investment vehicles i.e hedge funds and banks who are caretakers of public money)
4.0	Corruption (rampant in China, Russia)	Oversight, transparency, watchdogs
5.0	Easy money (Money supply grew by nearly 30%, interest rates maintained well below nominal growth rates).	Tight capital
6.0	Rampant credit growth (new bank lending increased by nearly RMB 10 trillion, a sum equivalent to 29% of GDP)	Stricter lending guidelines
7.0	Fixed currency regimes (Chinese currency, the renminbi, is pegged to the U.S. dollar)	Floating currency, or a new single international trading currency for everyone
8.0	Private Banking System taking hidden risks; Precarious financial structures (Chinese banks are particularly reluctant to report problematic loans	Nationalized Transparent Banks
9.0	Bank bonuses tied to profits	Bank bonuses linked to resilience
10.0	Moral hazard (China’s leading banks, among the world’s largest by market value, are seen as too big and too complex to fail)	No bailouts for anyone, swim or sink
11.0	Strong credit growth and rapidly rising property prices (a widespread belief that the property prices can only go up)	All assets can go through boom and bust cycles. Early warning systems to reduce volatility from norm or fundamentals i.e. An early warning system for  asset bubbles> https://www.mckinseyquarterly.com/ Financial_Services/Banking/An_early _warning_system_for_asset_ bubbles_2518
12.0	Anti-regulation, off-the-balance sheet accounts, Invisible market hand controls the market, government secret Comprehnsive Annual Finacial Reports (CAFR) accounts	Oversight, Viable System Modeling
13.0	Same people who said they didn’t see the crash coming still in charge of banks	Automatic turnover clauses in governance statutes
14.0	Same politicians and regulators who didn’t see the crash coming are still in government	Dismissal, remove from office

 Walter Derzko

The Deception Economy: The week in review: Lies, Revisions, False Hope, Manipulation

Lies: The Catholic Church

Pope Benedict for covering up sex abuse scandals in Ireland, Germany and the USA

 

 

Revisions: GDP

US real gross domestic product (GDP) increased at a 5.6% annualized pace in the fourth quarter, revised down from the 5.9% pace reported a month ago. (as I predicted)

 

 

False hope/ Running out of steam: U.S. Treasuries & Detroit Homes

NEW YORK, March 26 (Reuters) - U.S. Treasuries slid on Friday, keeping benchmark yields near nine-month highs, as the market remained under pressure in the wake of poorly-bid debt auctions this week. This week's $118 billion trio of auctions rekindled fears over the burgeoning U.S. debt, especially after benchmark 10-year notes began trading at a discount to private sector credit in the swap market.

Detroit will raze 10000 empty homes  "A city survey indicates there are 30,000 vacant properties in Detroit"

 

Manipulation: JP MorganChase

Whistleblower Exposes JP Morgan's Silver Manipulation Scheme  On March 23, 2010, GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Maguire is a metals trader in London. He has been told first-hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets, and they have bragged  how they make money doing so.

 

Smoke & Mirrors: More Big Banks to Collapse:

Lehman Chief Warns Of More Big Bank Failures

Handelsblatt newspaper : you are handling the largest bankruptcy in human history. Can anything like this happen again? Bryan Marsal: It is even likely that a case like Lehman’s will repeat itself – in any event, as long as nothing fundamental changes in financial regulation and in financial institutions. Wall Street has not really learned a lot from the situation. There is still too much leverage in the market, and credit default swaps remain completely unregulated. Even with regulators and in the companies little has been done after the global catastrophe. HB: But financial regulators around the world are now pulling in the reins …Marsal: Oh, really? That’s just for show. The regulators are overworked and underpaid. Someone who earns $80,000 a year cannot seriously compete with someone who gets $400,000 for finding ways to get around the system. And so far no one from the regulators at the SEC, at the FDIC or our government has asked  how the Lehman collapse could have been avoided and what countermeasures could be taken to prevent a recurrence...[..]...

 

[Banking Trivia- Goldman Sachs derivative liability = 33,823% of assets..yes that's thirty three thousand !!-Walter Derzko]

 

HB: What should have been done? Marsal: You see, Lehman was not too big to go bust, rather too complex. An orderly bankruptcy with the assistance of the U.S. government would have saved investors losses in the order of 75 to 100 billion U.S. dollars. A similar global meltdown could be prevented only if there were global regulations for companies that are also as complex and global as Lehman was. Lehman saw itself as an American institution, but worked in 40 states and had more than 900 subsidiaries. Consequently, we have to deal with 80 different types of insolvency proceedings in 20 different jurisdictions. There is simply a lack of an overarching coordination of the regulatory bodies in the international financial markets. Banks are growing globally, but die locally, that’s the problem.

HB: And no one anticipated this? Marsal: The Treasury Department miscalculated. Nobody there had counted on the global consequences of the Lehman collapse, and therefore no one had taken a well-prepared liquidation of the company into consideration. HB: What do you mean?

Marsal: Banks in trouble cannot be saved in the sense of a ongoing concern (?) forecast. We thus need some kind of global emergency parachute. If banks want to grow beyond national borders, regulators need to agree in advance on a single procedure in the event of bankruptcy. In the absence of such agreement between individual states, banks should not receive any authorization for cross-border expansion.

 

Walter Derzko

Economist debate: Do governments boost or hinder innovation?

The Economist magazine hosts a series of debates on current questions and issues. The current debate expores the timely question-Do governments help or hinder innovation? As of today the public vote is split evenly 50% for PRO and 50% for CON. What do you think?

Here are the details:

Does government help or hinder innovation?

Live dates: March 22nd-28th

Current round: Opening

Dear Reader,

Does government intervention stifle creative thought or does it play a pivotal role in bringing new technologies to life? Our debate starts today and our speakers have posted their opening arguments. Now we want to hear what you have to say.

Moderator's comments
What is the right role for government in spurring innovation? One side often argues that governments inevitably get it wrong when they get too involved: picking the wrong technology winners, say, or ploughing subsidies into politically popular projects rather than the most deserving ones. The other rebuts that given the grave global challenges we face today, governments need to do much more to support innovation.

This time, both sides have some exciting new arguments that will breathe life into this age-old debate. So please don't sit on the fence—tell us which side you stand on and why.

Pro: Amar Bhidé
"Entrepreneurial leaps into the dark are best sustained by great caution in expanding the scope of government intervention." Read more

Con: David Sandalow
"Governments spur innovation. Governments shape innovation. Many of the most important innovations in recent decades grew from the work of governments." Read more
==========================================

Current round: Rebuttals

Dear Reader,

Our debate on innovation has got off to a fiery start. Our speakers have posted their rebuttal statements and now we want to hear what you've got to say. Get involved and tell us where you stand.

Moderator's comments
Despite minor gestures of conciliation, it is clear that neither debater is really willing to concede much ground. The battle lines are drawn. Our combatants are intellectually clear on their differences, and not afraid to attack the other side's weaknesses. Which side do you believe has the upper hand? Cast your vote now.

Pro: Amar Bhidé
"Revolutionary advances—Darwin's research on evolution, for example—occurred even when government funding for scientific research was minimal." Read more

Con: David Sandalow
"Government functions such as basic research, education and patent protection are central to innovation. Would innovation work best with less of such things? Quite the contrary." Read more

================================

Current round: Closing

Dear Reader,

Today our speakers have posted their closing statements in our debate on innovation, making this your last chance to have your say. Get involved and tell us which way you're voting and why.

Moderator's comments
Our debate is drawing to a close, and it is running neck and neck. The side in favour of the motion started off on the back foot, but has gained enough ground to keep this an unusually close affair. The side opposite has lost a bit of the initial starting advantage, but remains just as well positioned to pass the post first. Both debaters have ginned up their final arguments in the hopes of emerging the winner. Cast your vote now, as this debate promises to be a nail-biter. Read more

Pro: Amar Bhidé
"People must see their government play the role of an even-handed referee rather than be a dispenser of rewards or even a judge of economic merit or contribution. Picking winners—this technology or that developer—makes us all losers." Read more

Con: David Sandalow
"Government has unique capabilities and a full toolbox for helping spur the innovative process. There may be times when government should do less, but there will never be a time when it should do the 'least'." Read more

This is your final opportunity to post your comments and vote on The Economist online. You can also discuss the issue on our Facebook page, or stay updated via Twitter.

Vijay V. Vaitheeswaran
Debate Moderator
Correspondent
The Economist

Current voting

Pro 50%

Con 50%

Debate Schedule

March 26th
Closing statements

March 28th
Winner announcement

Neutragenomics Add flaxseed to your porridge, expect cholesterol shortage but cholesterol level drop seen only in men not women

A new study from Iowa State's Nutrition and Wellness Research Center study found that men who consumed at least 150 milligrams of flaxseed lignans per day decreased cholesterol by just under 10 percent over the three months that they were given the flaxseed.

 

Suzanne Hendrich, an ISU professor in food science and human nutrition, led a study that examined the effects of flaxseed lignan in 90 people diagnosed with high cholesterol.  The results showed that consuming at least 150 milligrams of flaxseed lignans per day (about three tablespoons) decreased cholesterol in men, but not women, by just under 10 percent over the three months that they were given the flaxseed.

 

While Hendrich admits that's considerably less than the expected outcome from cholesterol-lowering drugs -- approximately 10 to20 percent for three months, depending on the individual -- it's still enough to make flaxseed a more natural option for some men.

 

"Because there are people who can't take something like Lipitor, this could at least give you some of that cholesterol-lowering benefit," Hendrich said.  "The other thing is, there are certainly some people who would prefer to not use a drug, but rather use foods to try to maintain their health.  So this potentially would be something to consider."

 

Americans suffer from high blood cholesterol According to the Centers for Disease Control and Prevention, about 17 percent of Americans suffer from high blood cholesterol -- a fat-like substance found in the body that can clog arteries and contribute to heart disease.

 

Hendrich developed the study with ISU master's student Kai Ling Kong and doctoral graduates Zhong Ye, Xianai Wu, and Sun-Ok Lee to determine whether the main lignan in flaxseed, secoisolariciresinol diglucoside, could lower cholesterol.  They'll be presenting results of the research at the American Society for Nutrition's annual meeting at Experimental Biology 2010, April 24-28, in Anaheim, Calif.

 

The study's 90 subjects -- which included twice as many men as women -- all had high cholesterol, but no other underlying health conditions.  The participants were divided into three groups and were randomly assigned to daily consume tablets that contained zero, 150, or 300 milligrams of flaxseed lignans for 12 weeks.

 

It's the flaxseed lignans -- a group of chemical compounds found in plants that are known for their protective health effects -- that may help lower cholesterol, according to Hendrich.  These compounds are converted to their bioactive forms by gut microbes.  Hendrich reports that they made a healthy conversion in the subjects in this study, with no adverse health consequences.

 

No cholesterol-lowering effect in women

 

While the study found that the flaxseed lignans lowered cholesterol in men, it did not produce a significant change in women.

 

"We're really puzzled about that because we were looking at post menopausal women and these lignans are known as plant estrogens, so they have a very weak but measurable estrogen effect," Hendrich said.  "So potentially, they would have a mild effect for substituting some estrogens in women.  It's really hard to know why [there was no effect in women] and whether these substances are counteracting, possibly, some testosterone in men, which of course women don't have.  It's definitely something we'd like to investigate further."

 

Hendrich reports the flaxseed lignan tablets used in this study are not currently available in the U.S. to her knowledge.  In the absence of tablets, she says flaxseed can also be sprinkled on cereal, or added in a muffin mix or bread, although whole seeds are not very digestible.  Ground flaxseed meal can also provide the desired cholesterol-lowering lignans, according to Hendrich, but it will oxidize over time and could potentially affect the flavor of the foods that it's in.  She points out that the oxidation of the product also would diminish the flaxseed's omega-3 fatty acids, which can prevent heart attacks, so freshness is important in the product's impact.

 

The ISU researcher hopes to publish the study in a professional journal.  She also plans further investigation on whether flaxseed can be taken in combination with other known cholesterol-lowering substances, and whether it could prevent high cholesterol in the first place.

 

The $190,000 research study was jointly funded by the Archer Daniels Midland Company and Grow Iowa Values Fund.

Walter Derzko

Fault Correction Opportunities. Self-healing nanomaterials could prevent future leaks in nuclear plants

From a media release from Los Alamos National Laboratory in the USA:

Safer nuclear reactors could result from Los Alamos research-'Loading-unloading' effect of grain boundaries key to repair of irradiated metal

Self-repairing materials within nuclear reactors may one day become a reality as a result of research by Los Alamos National Laboratory scientists.

In a paper appearing today in the journal Science, Los Alamos researchers report a surprising mechanism that allows nanocrystalline materials to heal themselves after suffering radiation-induced damage.  Nanocrystalline materials are those created from nanosized particles, in this case copper particles.  A single nanosized particle—called a grain—is the size of a virus or even smaller.  Nanocrystalline materials consist of a mixture of grains and the interface between those grains, called grain boundaries.

When designing nuclear reactors or the materials that go into them, one of the key challenges is finding materials that can withstand an outrageously extreme environment.  In addition to constant bombardment by radiation, reactor materials may be subjected to extremes in temperature, physical stress, and corrosive conditions.  Exposure to high radiation alone produces significant damage at the nanoscale.

Radiation can cause individual atoms or groups of atoms to be jarred out of place.  Each vagrant atom becomes known as an interstitial.  The empty space left behind by the displaced atom is known as a vacancy.  Consequently, every interstitial created also creates one vacancy.  As these defects—the interstitials and vacancies—build up over time in a material, effects such as swelling, hardening or embrittlement can manifest in the material and lead to catastrophic failure.

Therefore, designing materials that can withstand radiation-induced damage is very important for improving the reliability, safety and lifespan of nuclear energy systems.

Because nanocrystalline materials contain a large fraction of grain boundaries—which are thought to act as sinks that absorb and remove defects—scientists have expected that these materials should be more radiation tolerant than their larger-grain counterparts.  Nevertheless, the ability to predict the performance of nanocrystalline materials in extreme environments has been severely lacking because specific details of what occurs within solids are very complex and difficult to visualize.

Recent computer simulations by the Los Alamos researchers help explain some of those details.

In the Science paper, the researchers describe the never-before-observed phenomenon of a "loading-unloading" effect at grain boundaries in nanocrystalline materials.  This loading-unloading effect allows for effective self-healing of radiation-induced defects.  Using three different computer simulation methods, the researchers looked at the interaction between defects and grain boundaries on time scales ranging from picoseconds to microseconds (one-trillionth of a second to one-millionth of a second).

On the shorter timescales, radiation-damaged materials underwent a "loading" process at the grain boundaries, in which interstitial atoms became trapped—or loaded—into the grain boundary.  Under these conditions, the subsequent number of accumulated vacancies in the bulk material occurred in amounts much greater than would have occurred in bulk materials in which a boundary didn't exist.  After trapping interstitials, the grain boundary later "unloaded" interstitials back into vacancies near the grain boundary.  In so doing, the process annihilates both types of defects—healing the material.

This unloading process was totally unexpected because grain boundaries traditionally have been regarded as places that accumulate interstitials, but not as places that release them.  Although researchers found that some energy is required for this newly-discovered recombination method to operate, the amount of energy was much lower than the energies required to operate conventional mechanisms—providing an explanation and mechanism for enhanced self-healing of radiation-induced damage.

Modeling of the "loading-unloading" role of grain boundaries helps explain previously observed counterintuitive behavior of irradiated nanocrystalline materials compared to their larger-grained counterparts.  The insight provided by this work provides new avenues for further examination of the role of grain boundaries and engineered material interfaces in self-healing of radiation-induced defects.  Such efforts could eventually assist or accelerate the design of highly radiation-tolerant materials for the next generation of nuclear energy applications.

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The Los Alamos National Laboratory research team includes: Xian-Ming Bai, Richard G. Hoagland and Blas P. Uberuaga of the Materials Science and Technology Division; Arthur F. Voter, of the Theoretical Division; and Michael Nastasi of the Materials Physics and Applications Division.

The work was primarily sponsored by the Los Alamos Laboratory-Directed Research and Development (LDRD) program, which, at the discretion of the Laboratory Director, invests a small percentage of the Laboratory's budget in high-risk, potentially high-payoff projects to help position the Laboratory to anticipate and prepare for emerging national security challenges.  The research also received specific funding through the Center for Materials under Irradiation and Mechanical Extremes, an Energy Frontier Research Center funded by the U.S. Department of Energy Office of Science, Office of Basic Energy Sciences.

Walter Derzko, The Opportunity Clinic, Smart Economy, Toronto

Behavioral Economics. Are we all getting more impatient? Thank fast food exposure

The Rotman Business School at the University of Toronto has an interesting press release yesterday on behavioral economics and unintended consequences.

N.B. Marshall McLuhan fans will recognise all these effects and impacts from his Tetrad Model--Walter Derzko.

Rotman paper finds exposure to fast food can make us impatient

Fast food is not only bad for your body, but may also harm your bank account.

"Eating habits have shifted dramatically over the last few decades--fast food has become a multibillion dollar industry that has widespread influence on what and how we eat.  The original idea behind fast food is to increase efficiency, allowing people to quickly finish a meal so they can move on to other matters.  Researchers at the Rotman School of Management, however, have found that the mere exposure to fast food and related symbols can make people impatient, increasing preference for time saving products, and reducing willingness to save.

"Fast food represents a culture of time efficiency and instant gratification," says Chen-Bo Zhong, who co-wrote the paper with colleague Sanford DeVoe to be published in a forthcoming issue of Psychological Science.  "The problem is that the goal of saving time gets activated upon exposure to fast food regardless of whether time is a relevant factor in the context.  For example, walking faster is time efficient when one is trying to make a meeting, but it's a sign of impatience when one is going for a stroll in the park.  We're finding that the mere exposure to fast food is promoting a general sense of haste and impatience regardless of the context."

In one experiment, the researchers flashed fast food symbols, such as the golden arch of McDonald's, on a computer screen for a few milliseconds, so quick that participants couldn't consciously identify what they saw.  They found that this unconscious exposure increased participants' reading speed in a subsequent task compared to those in a control condition, even when there was no advantage to finishing sooner.  In another study, participants who recalled a time when they eat at a food restaurant subsequently preferred time-saving products—such as two-in-one shampoo—over regular products.  A final experiment found people exposed to fast food logos exhibited greater reluctance for saving —choose a smaller immediate payment rather than opting for a much larger delayed payment.

"Fast food is one of many technologies that allow us to save time," says Sanford DeVoe, "But the ironic thing is that by constantly reminding us of time efficiency, these technologies can lead us to feel much more impatience.  A fast food culture that extols saving time doesn't just change the way we eat but it can also fundamentally alter the way they experience our time.  For example, leisure activities that are supposed to be relaxing can come to be experienced through the color glasses of impatience."

The researchers point out that it's impossible to know whether fast food in part caused the value for time efficiency in our culture or is merely a consequence of it—but it's clear from their findings that exposure to fast food reinforces an emphasis on impatience and instant gratification. 

"Given the role that financial impatience played in the current economic crisis," says Chen-Bo Zhong, "we need to move beyond counting calories when we examine the consequences of fast food as it is also influencing our everyday psychology and behavior in a wider set of domains than has been previously thought."

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The complete study is available at: http://www.rotman.utoronto.ca/newthinking/fastfood.pdf

Walter Derzko, Smart Economy, Toronto