Robert Whitcomb: Robots Consuming Wall St. Jobs; New Stadium Redux? Temples to the Kennedys

Monday, April 03, 2017

Robert Whitcomb, Columnist

Robert Whitcomb

Robots Consuming Wall St. Jobs; New Stadium Redux? Temples to the Kennedys; Roadside Evolution

"April hath put a spirit of youth in everything."

- - William Shakespeare

The longest golden age on Wall Street – which began in the 1980s with Reagan era deregulation and tax changes – may be closing for many financial-industry denizens.

As with other industries, computers and automation will wipe out many very high-paying jobs. Consider BlackRock Inc., the world’s largest asset manager. It’s shifting resources away from human stock pickers running funds and charging big fees to lower-cost quantitative stock funds run, in effect, by robots. These analyze data and automatically make predictions and adjust investments accordingly.

While some “actively managed’’ (by real humans) investment funds have done well, in general, “passive investments’’ – e.g., money in index funds that reflect the performance of the stock and bond markets as a whole or industry sectors of them – have generally done better and with lower fees.

What this means is that there will be fewer jobs for stock analysts, stockbrokers and so on. This will slam New York City and its suburbs particularly hard after decades of vast wealth accruing to people on Wall Street. Employment in the financial districts of Boston and some other big U.S. cities will also take a hit. Of course, the senior executives of the likes of BlackRock, etc., will continue to make a mint.

This recalls the hollowing out of parts of some other white-collar occupations, such as lawyering, where much of the routine work can now be done by low-paid legal assistants (some working in India) using computers.

Ultimately this computerization may also devastate the tax-prep business; many taxpayers already use such programs as TurboTax. But Congress keeps changing the tax laws in response to lobbying from special-interest groups slows the process. Many of us will continue to need to talk to a human to keep up with the relentless fiddling on Capitol Hill.

It being tax time, I’ll slide in here my annual tribute to the underfunded and understaffed Internal Revenue Service. Taxpayers are always blaming the IRS for their tax problems, including the impossibility of understanding much of the tax-law swamp, which grows every year. But citizens blame the wrong people: It’s Congress, sometimes acting on the recommendation of the president, that has produced our abomination of a tax code as legislators respond to interest groups and overuse the tax code for social, economic and political engineering. A prime example is how they create ever more tax credits instead of doing things in a straightforward way, such as directly appropriating federal money for desired programs.

Anyway, remember Oliver Wendell Holmes’s famous line: “Taxes are the price we pay for civilization.’’

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What will be the PawSox ask

The Pawtucket Red Sox want the State of Rhode Island to cough up some money to help the Boston Red Sox farm team build a new stadium. Current talk focuses on keeping the team in Pawtucket, either as a rebuilt version of the current McCoy Stadium or somewhere else. Pawtucket is attractive because, among other things, it’s close to Massachusetts. (Actually, most of tiny Rhode Island is close to the Bay State. Indeed, many Rhode Islanders drive through parts of Massachusetts daily to get to parts of Rhode Island.)

The new -- and tough -- state Senate president, Dominick Ruggerio, who knows a lot about construction, likes the idea of a new stadium and having the state pay for some of this project, which will benefit some very rich people.

Would it be worth it? Years ago, when I worked in the newspaper business, the line was that while only about 25 percent of daily newspaper readers read the sports pages regularly, that 25 percent is intensely interested in their teams and apt to buy the products advertised in the sports pages (especially car stuff). Should the state spend a lot of money to please the minority of people who are baseball enthusiasts, and in a time when tax revenues are falling behind projections?

Of course there would be perhaps a couple of hundred temporary construction jobs to build a new stadium but only a few dozen permanent ones (if that) at a new stadium.

Still, having a shiny new stadium in a well-landscaped setting and access to public transit might raise some animal spirits in Greater Providence. I think it would be very dubious “economic development’’ from a macro viewpoint. But if it’s to be done, why not get a really exciting design for it and put it where many people could see it from some distance away. That might mean putting it along the water in East Providence.

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Health and Human Services Secretary Tom Price, M.D., is a rich former orthopedic surgeon who until recently at least was being investigated by the U.S. attorney’s office in Manhattan for suspected insider trading in the stocks of medically related companies. President Trump recently fired that U.S. attorney, Preet Bharara, an expert in white-collar crime, after he had had refused to resign.

Dr. Price, a prominent right-wing Republican congressman until he joined President Trump’s Cabinet, was questioned extensively at his confirmation hearings about his stock purchases in pharmaceutical and medical-device companies while serving on the House health subcommittee and privy to much inside information about possible future changes in federal healthcare law that could benefit him. Dr. Price’s trades overlapped with his sponsorship of bills, advocacy or votes on issues related to those companies or their industries.

Dr. Price is a prime example of why U.S. health care is so expensive. American physicians make by far the most money of any in the world.

Insurance company executives make a pile, too. And despite the whining of some that their firms are losing money on some insurance exchanges set up under the Affordable Care Act, in general managed-care health insurers have profited mightily under the ACA. As a sign of this profitability, health insurers’ stock prices are up about 300 percent since the ACA went into effect. That of the biggest such enterprise, UnitedHealth, which is being sued by the Feds and others for massive Medicare fraud, enjoyed a 480 percent increase.

The money made in the greed-driven health-care sector is astonishing. If only the medical outcomes, now among the worst in the Developed World, could justify the extreme profiteering. Think of how much more resources could be devoted directly to health care if we had a simple Medicare-for-all system.

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Perhaps memories are short, people are just sick of politics or it’s the effect of the failure of the schools to teach civics. Or maybe most citizens don’t want to worship recently departed politicians, even if they’re from a celebrity family.

Ted Kennedy

I’m talking about the taxpayer-subsidized (through its tax exemption) Edward M. Kennedy Institute for the United States Senate, which is next door to another hagiographic temple --- the John F. Kennedy Presidential Library and Museum – on Columbia Point in Boston’s Dorchester section. Promoters of the monument to the long-serving U.S. senator had projected that the facility would draw up to 150,000 a year, but it has only been luring about 62,000.

That’s despite such over-the-top features as replicas of the Senate Chamber (!) and of the senator’s office in the Capitol.

Life speeds on and memories are short, even regarding someone who served in the Senate from 1962 until his death in 2009 and sponsored important legislation, some good and some bad. The Kennedy clan (with its retainers) has long been among the most self-promotional in American history but the number of those who remember and adore it from its glory days is falling fast. Perhaps its latest star, the bright, modest, congenial and hard-working Massachusetts Congressman Joseph P. Kennedy III, can revive the clan’s national fortunes.

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Population growth is slowing in Greater Boston, and expensive housing is said to be at least partly to blame. Housing analysts say that a big factor is the relatively low number of houses for sale in Boston’s inner suburbs. The fear is that this will send too many Millennials out the region, hurting economic growth.

I think that’s an exaggerated fear. Greater Boston’s huge and internationally prestigious higher-education complex and its quality of life will keep these younger adults coming. A bigger threat to the region’s prosperity may be President Trump’s anti-immigrant policies. Immigrants, most of them legal, have played a big role in eastern Massachusetts’s boom. Many of these immigrants are very well-educated and do a disproportionate percentage of the work in the Greater Boston’s powerful technology, engineering and health-care sectors.

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A book worth reading is The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens Our Republic, by Ganesh Sitaraman, an associate professor of law at Vanderbilt University. The central topic is how an ever-richer top sliver of the population can take over the government, disenfranchise the majority of the population and accelerate the top sliver’s (“the 1 percent’’) self-enrichment (see Dr. Price above) through political power. Indeed, that’s what has happened in recent decades, with the help of an easily deluded middle class.

This elite is in an ever-stronger position to assure the wealth and power of their children and their children’s children, in the hereditary plutocracy that increasingly characterizes America. Campaign-finance reform to reduce the bribery for special favors and higher (though far from confiscatory!) estate taxes would help level the playing field a bit.

We need rich people for their capacity to invest in new and established businesses and technologies and we need to offer the prospect of making a fortune to encourage risk taking and innovation. But when their wealth reaches the level of controlling the government, as now, more must be done to preserve democracy. As Louis Brandeis, who served on the U.S. Supreme Court from 1916 to 1939 famously warned: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both.’’

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{image_5}President Trump’s rolling up of the Obama administration’s initiatives to slow global warming caused by burning fossil fuels will not only hurt the environment and public health. It will also harm the economy by slowing U.S. development of technology for clean energy – technology that our international trading partners are working on enthusiastically. A retreat toward more reliance on fossil fuel will make America less competitive. This technology development creates well-paying jobs. GE Chairman Jeff Immelt and other corporate leaders have been eloquent on this subject.

Mr. Trump has seemed quite obsessed with appealing to the dwindling number of people who mine coal or otherwise profit from this poisonous material, even as he also said he’d boost fracking for gas and oil, which would hurt the coal industry. Gas is providing an ever higher proportion of the energy to power electricity plants because it’s cheap and plentiful and far less polluting than coal.

But then, don’t look for coherence from Donald Trump or deep research by his followers. But it’s clear that what we can expect in his (first?) term is a modest increase in coal-mining, with more miners dying of black lung and cancer or in mine collapses, more environmental devastation of parts of Appalachia (poisoned streams, sheared-off mountaintops, etc.) and the continued transmission of mercury, sulfur dioxide and other poisons into the air from coal-fired plants.

But not for long. This filthy way of extracting and using energy is doomed, whatever Donald Trump’s appeals to the desperate and hidebound people of Coal Country.

In the not-too-distant future, most Americans will get their electricity from solar, wind and other nonpolluting energy generated close to where they live; the coal mines will all be shut and Appalachia will begin the long process of healing their ravaged land and building a diversified economy.

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The biggest threat to citizens from the new law allowing Internet Service Providers (principally AT&T, Comcast and Verizon) to avoid asking consumers’ permission to store, and then sell data from, their browsing histories to advertisers isn’t so much that these huge enterprises have access to this personal data. More dangerous is that hackers, probably including those working for President Trump’s pals in the Kremlin, will inevitably get into the vast ISP information banks and use it for blackmail or worse.

The Republican law overturns rules set under the Obama administration that would have required explicit consent from consumers if sensitive data — such as financial or health information, or general browsing history — were to be shared or sold by ISPs.

The ISP backers have complained that the rules wouldn't have applied to the likes of Google, Facebook or other big Internet companies, which are also massive collectors of personal data, which they use to sell ads. But you can easily quit those companies in favor of other sites, while switching Internet Service Providers is hard.

And remember that Facebook and Google (which have opt-out tools) can track only while you’re using their services – ISPs can track everything you do online.

Consider hiring an expert to set up your computers to protect your privacy from ISPs and whoever might hack them.

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WNPR, a Public Radio station in Connecticut, ran an intriguing little feature the other week headlined “Along Highways, Wildlife Appears to Be Breaking Evolutionary Speed Limit’.’ READ MORE

The story, which focuses on New England ecology, looks at “how roads, and the salts and chemicals we put on those roads, impact nearby nature. Some impacts are visible: think road kill and fragmented habitat.’’

Steven Brady, an evolutionary ecologist who has been working with a Dartmouth College-led research group, reports:

"Individual plants that are living right next to a road, in a couple different cases, have evolved the ability to deal with higher concentrations of things like lead, from fuel’’.

Mr. Brady has studied how roads affect amphibians in northeastern Connecticut. He notes that rapid evolution has a time element but also plays out in isolated pockets of space. Across ‘’just tens of meters, scientists are seeing differences in how one group of amphibians evolves compared to another nearby population,’’ the text with the broadcast says.

Colin Donihue, a postdoctoral fellow at Harvard University who studies how lizards evolve in human-dominated landscapes, said that species are evolving within human life spans makes conservation more of a moving target.

"That idea that ecology and evolution happen on commensurate time scales and can actually feed back and forth to affect each other is a really powerful new way of looking at the interplay of ecology and evolution," Mr. Donihue told WNPR.

"The things we do to the planet -- even when they seem minimal, like a road through a forest -- are not only causing this impact on how well a population does, but it's fundamentally changing the biology of the organisms that live there,’’ Mr. Brady said.

That evolution is happening fastest in places where global warming is fastest.

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{image_6}I ordered a ride on Uber the other day late at night in the middle of Brooklyn. It’s an area where you’d be very hard-pressed to get a taxi, in part because of the perception (more than the reality) that it’s a dangerous place. The car was very clean and comfortable and the driver, of Arab origin, was very polite, intelligent and interesting. I ordered an Uber ride the next night in Manhattan but the driver screwed up my location and never showed up.

Uber and its competitors fill a need in some places. But there have been Uber horror stories, too – including bad behavior by drivers and that they’re cheated by the company’s rapacious bosses. These services need to be overseen like the public utilities they are.

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Kudos for the attractive blue and white signs in downtown Providence that point walkers and drivers to important sites in the city. Just a few years ago such signage was virtually nonexistent. This is the kind of little thing that brings in people and business.