Daniel Lubetzky

It may be that your sole purpose in life is simply to be kind to others..

-Anonymous

I’ve shared before how technology, media and politics can be (and often are) hijacked by the passionate extremes. In a recent article, Tyler Cowen argues that the “median voter theorem” posits that politicians can’t ultimately stray too far from the mainstream where citizens live.

by Adeena Schlussel on behalf of Daniel Lubetzky

Tom Friedman wrote an interesting article about a period that he sees as a turning point in Islamism.  He tells the story of Islamic Fundamentalism but strikes a hopeful tone.

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A lot has been written on the "Too Big to Fail" problem: the perception that some firms are so large that their failures would lead to systemic failure for the entire economy; the related conclusion that companies in that category should be bailed out to prevent a massive breakdown of the financial system; and the resulting moral hazard problem – that these big firms then can take all the risks in the world knowing there is no downside to them.  A direct result of this problem has been that many Wall Street insiders profited at the expense of American taxpayers when they were bailed out by the US government.

But a no less serious problem is that some of these firms are "too big to lose." They wield so much influence over the economy that they can manipulate the outcome of their trades.  It’s as if the President of the United States could short a particular market and then use his bully pulpit to scare the market to move in his direction.

A case in point is what Goldman did with mortgage securities.  Gretchen Morgenson of the New York Times wrote an incisive article about the Goldman conflict with AIG.  In it, she details how Goldman bet against the mortgage market by buying insurance from AIG on certain products that would pay if the underlying mortgage securities went south.  There is nothing wrong with that – so far.  For years, many (including me) also feared that a bubble had formed in real estate.  Goldman’s Jonathan Egol and Ram Sundaram were smart and arguably even visionary to anticipate it and bet against mortgage securities. But the problem is what they did next.  They proceeded to bully A.I.G., other business partners, and even the Federal Government, to pay them at valuations THEY arbitrarily set.  The perception that Goldman bankers are the smartest bankers in the room helped them create the momentum that led to the devaluation from which they benefited. 

Wall Street sharks will go where they smell the blood, and you cannot change that.  It is a necessary feature of a market economy – which is the worst of all economic models, except for all other options, to paraphrase Winston Churchill.

But Paul Volcker’s call to structurally protect against these financial behemoths must be heeded.   In this opinion piece he walks through some of the prescriptions that are necessary, including regulating which risks the different financial institutions can take, separating commercial banks from investment banks by reversing the recent decision to allow them to perform the same function and gamble with their account-holders’ savings, and limiting the leverage these firms can have.

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Not lost in translation!

I have noticed over the years that every incident, every data point, every fact, and certainly every news story is interpreted differently by Israelis and Palestinians, each time suspecting bias against them.  Here is a study that explains the psychology behind the perceived partisan bias towards the other side.

We’d do well to listen to former Fed Chairman Paul Volcker on the structural reforms the U.S. economy and financial sector need. I only hope politicians will rise above special interests and do what the nation needs to build a solid future.

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Michelle Obama is poised to highlight the need for society to tackle and overcome the childhood obesity epidemic.  Many forces are arrayed at her, including socio-cultural, as well as economic.  She will need all the help she can get.

The following article lists a lot of ideas for how to fight childhood obesity. But one of the most effective ways is for responsible food companies to craft and market truly healthful products that taste good and are good for you, and that are attractive to kids.  It is not easy. But it can be done.

To those who wonder if the Israeli-Palestinian conflict will ever end and who think it is truly “intractable”, I thought I’d share a note from my colleague John Lyndon, Executive Director of OneVoice Europe:

I know that this is off-topic, but just thought I’d draw people’s attention to a not-entirely-unrelated news story: The ‘final piece in the jigsaw’ was put into place in Belfast, Ireland last night, with the finalising of twenty year long process of negotiations, for a seven hundred year long conflict. The DUP and Sinn Féin (the two most extremist political parties in modern Irish history) have agreed the last details of a power sharing agreement.

Strong, patriotic and at one time violent leaders of both communities sat down and thrashed out a deal that looks like putting to bed most of the grievances that resulted in decades of violence and thousands of deaths. Conflicts do end, the wishes of the moderate majority bear fruit, and extremists eventually come into the political mainstream.

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Manipulation of serving sizes is a serious problem. At the end of the day consumers need to use common sense and look for nutritionally rich foods and not hide in ’100 calorie’ claims of products with empty calories – ie chips, soda, etc. But it would help society if reasonable standards were enforced so that unscrupulous food companies wouldn’t post silly claims about calorie count or sodium content in the front of the labels, that only a careful observer would realize assumes consumption of a fraction of the product.

This article describes the FDA’s efforts to zero in on the problem. But it doesn’t mention what most of the world – except the US – does. They require every product to list nutritional impact per 100 grams. I used to think that is confusing because you don’t necessarily consume 100 grams of that product. But it creates a benchmark that is easy to compare. And it doesn’t have to exclude an additional column for nutritional facts per portion.