All posts by drbellbooks

“Animal Farm” and Life in the former Soviet Union

“All animals are equal, but some animals are more equal than others” – I read this Orwell’s masterpiece after I have left the land of victorious proletariat and was struck by how well it captured the essence of the Soviet order.

In fairness, life in the Soviet Union was not too difficult if one followed the rules:

  • Accept the corruption. There are different rules for little people and for big people
  • Outwardly, accept the political correctness. Of course our Soviet society is the most fair and inclusive. Be careful what you say,  surveillance is ever present. Differing opinions deserve no respect, only condemnation. If someone disagrees that’s because they are bad people with ulterior motives
  • Most of the problems are created by an officially sanctioned enemy that possesses almost mythical powers (it was, of course, the United States back then).

From what I read, life in the Nazi Germany also was OK for most people that followed the “rules” and didn’t belong to one of the officially persecuted groups. At least until Herr Hitler decided to get some “lebensraum” in the East, wars tend to turn out not how one plans. And Nazis had their all-powerful enemy in Jewish women and children.

Are we getting to be like the Soviet Union? We are not there yet but for someone who came from behind the Iron Curtain the trajectory is not encouraging:

  • Some are more equal than others? Check. Top 0.1% have as much wealth as the rest of the country – do you think your view matters as much as that of Qatar’s sheik paying Bill Clinton $1MM for 5 min of his time (really, Bill?). And what do you think would have happened to a “little person” that was grossly negligent with the government’s confidential information? If you have any doubt that he or she would have paid a much higher price than just saying “I accepted responsibility”, I want to have whatever you are smoking. But we’ve gotten so cynical about corruption at the highest level, we just shrug it off as expected. Different rules for different folks.
  • Political correctness, lack of tolerance for differing views, massive surveillance? Check. Do you really believe that the government respects your privacy? And if you prefer a different political candidate, you are a “deplorable” (Clinton), a welfare leach (Romney), racist (Obama) or sexist (Clinton). Tolerance and ability of self-critical evaluation were not common traits amongst Communist Party bosses. These traits seem to be missing in many US politicians now.
  • Officially sanctioned enemy with mythical powers? Check. Anything we don’t like is Putin’s fault. Jullian Assange’s WikiLeaks have been exposing the corruption of ruling elites for a long time, but now we know that they’ve always been Putin’s agents hell-bent on destroying Hillary Clinton (the case that their disclosures has never been showed to be falsified is so-o-o irrelevant; really, why bother with facts?)

I can go on and on. The media that doesn’t even pretend to be objective. Disappearance of the middle class. Government agencies such as IRS targeting political opponents of the regime. Even previously respected FBI is being tainted. The national debt is totally out of control. Inequality is reaching critical levels.

But most of us know that something’s broken. That’s why we just saw two deeply flawed candidates – Sanders and Trump – take the establishment to the edge even with the deck of media and political and financial interests stacked against them.

No, we are not like the Soviet Union yet. But as Orwell showed us, a transformation from a democracy to oligarchy and to outright tyranny is gradual. We are in the oligarchy stage now. The trend is not our friend.

Each of us chooses what to do. I personally decided to vote Libertarian. This is not about 2016: I live in California and it’s going for Clinton by a huge margin. It’s about getting a party not called Democratic or Republican over the 5% limit to qualify for electoral funding in the future. We’ve had the same two parties for over 150 years. At this point I question whether either of them truly represents us “little people”. It’s time for change. The real one, not the “hope and change” we were sold in 2008. In the meantime, I’ll keep my fingers crossed that the likely President Clinton won’t push us into war with Russia and China. I mean, I don’t see their soldiers on our borders while there are plenty of ours near theirs.

Life and Fiction

The Outer Circle, the last part of The Counterpoint Trilogy, is set in 2024. Some of the events described there seem to be taking place much sooner. In the book a populist third party politician is rising by blaming other countries – we have Donald Trump (at the moment he is running as a Republican but he already indicated he’ll consider an independent run). In the book, a mainstream political candidate thinks he is above the law – we have Hillary “what e-mails?” Clinton. In the book, China is experiencing internal problems and a conflict is brewing in the South China Sea – we see problems in China and increasing China vs. US tensions in the South China Sea. In the book, corporate and government surveillance is pervasive – we have the latest most popular computer operating system monitoring everything you do and the issue of government surveillance was a hot button in the Republican debate. In the book, blockchain technology powers thriving underground economy – we see hundreds of millions flowing into blockchain-related startups. In the book, continental Eurasia coalesced into an economic superpower driven by the China–Russia rapprochement and non-Western financial structures – we have beginnings of the new “Silk Road” and the Asian development bank.

I am not claiming any particular insights. The trends are in the open if we want to look beyond the immediate surface. When only 20% of people trust our government to do the right thing, populists will rise. When a privileged political class emerges and special interests rule – as more and more people notice – politicians start considering themselves above the law. When government and corporate leaders think that only criminals desire privacy, they don’t worry about taking yours away – and people react by trying to protect what’s left of their privacy. When we act in an imperial fashion, other countries will form blocks to oppose us.

The spectacle of Donald Trump is all over the media. Could you have imagined him being a front-runner ten years ago? He is likely a precursor of a coming storm. Study after study shows that if there is one thing that Americans hate, it’s unfairness. When millions suffered through the Great Recession but those that caused it walked away with hundreds of millions, it’s not fair. When the inequality keeps rising and the middle class steadily erodes, that’s not fair. Vast majority of the Americans now believe that we are on a wrong track. Our ruling elite seems to be missing the point that popular discontent is building. Like many others before them, they must think that the populace will be sated with bread and circuses (and we do have the endless entertainment “circuses” galore). Like those others, they will be wrong. Major dislocations rarely go smoothly and dangerous people often come to power during times of discontent.

The Legacy of Alan Greenspan

Saw a clip of Alan Greenspan speaking on CNBC last week. I have noticed a few recent appearances of his where he diplomatically raised some red flags: the dangers of our financial situation, failure of the current monetary policies, upcoming market disruption, and more. Some of you may remember that Alan Greenspan chaired the Federal Reserve from 1987 to 2006. He was called “the Maestro”, the central figure in the “Committee to Save the World” back in 1999. Turned out that the world had to be saved from that committee. After he turned the Fed over to Bernanke, the Maestro was promptly thrown under the bus, blamed – deservedly so – that his famed “Greenspan Put” and ultra-low interest rates have provided fuel for the market bubbles in 2000 and 2007. While he can’t be directly blamed for the mid-90’s financial deregulation that removed protections against reckless speculation and rise of financial “crony capitalism”, he was influential enough to meaningfully oppose it – and have not done so.

But there are certain ironies in this situation. Firstly, Greenspan’s monetary policies look outright conservative compared to what his successors wrought. In 2004, Greenspan lowered the Federal funds rate to 1% for one year. Bernanke and Yellen had the rate at zero or so for six years now. The “Bernanke Put” made Greenspan’s look like a joke. Greenspan at least was cognizant of the growing bubbles, warning of “irrational exuberance” before the dot-com fiasco and of the real-estate bubble in 2007. Bernanke, on the other hand, even in July of 2007 claimed that there is no real estate bubble and that the economy will grow in 2008. Bernanke was anointed a hero that saved the global economy. The history will judge, just like it judged Greenspan. I am quite sure that after the next crisis Bernanke and Yellen will be thrown under the bus for their policies. Which they will deserve even more that “the Maestro.”

The second irony is that Greenspan used to believe in responsible monetary policies, limiting politicians’ ability to print money at will. Why did he turn away from his earlier views while at the Federal Reserve? Partly might have been his naiveté: Greenspan himself had admitted that he underestimated self-destructive ability of unchecked finance and inability/unwillingness of regulators to properly oversee the industry. More likely, like most humans he was seduced by the power of his position and adjusted his views to serve the needs of the government that was re-appointing him every four years.

I may well be wrong but from his recent appearances it seems that Greenspan may have come some of the way back to his earlier views, lobbing occasional grenades at our addiction to debt, ultra-loose monetary policies, growing inequality, etc. But his careful, diplomatic jabs are drowning in the “all is well” symphony of the economic profession that by-and-large has been captured by the state. Nobody’s paying attention.

Mr. Greenspan, if you truly believe that the current policies are wrong, that – as 17 Nobel Laureates in Economics argue – these policies are destroying the future of our children, take off the gloves, raise your voice. You are still “the Maestro”, people will listen if you speak loudly and with conviction. Like King Theoden in the LOTR, ride out one more time. You are 89. What legacy are you going to leave?

More on Impact of Extreme Inequality

In the earlier post I talked about dangers of extreme inequality: economic problems, “oligarchization” of the political order, unrest. The Spirit Level by Wilkinson and Pickett argues that high degree of inequality – more so than absolute levels of per-person income – lead to lower societal trust, increased instances of mental illness, higher mortality, obesity, lower educational performance, higher crime and reduced social mobility. They show statistical correlation based on the data from the World Bank, the World Health Organization, the United Nations, etc.

As any controversial topic, their study found detractors as documented in the link provided. Complex subjects always do. As the famous saying goes, “there are lies, damned lies, and statistics.” Still, in the end the numbers and their conclusions appear to be valid: extreme inequality damages societies. I’ll re-iterate that this is not an argument for imposition of equality but rather a reminder that this pendulum have swung too far the other way. I think that most of us intuitively understand this.

19 Minutes a Day

A recent study from the U.S. Bureau of Labor Statistics has found that the average American spends only 19 minutes a day reading. As opposed to 3.5 hours a day watching TV and playing games.

Back in the late 1970’s I remember sharing with friends a worn-out samizdat copy of Solzhenitsyn’s The Gulag Archipelago. Simple possession of the book, if caught, meant an all-expenses paid trip to Siberia for a few years. The Soviet government knew that books are dangerous, that they help people think for themselves. So did the Nazis, burning books with “unGerman” ideas by Freud, Einstein, Thomas Mann, Jack London, H.G. Wells and many others. The people in Ray Bradbury’s classic Fahrenheit 451 do not read books – books are considered evil and burned because they make people question and think. Instead, people receive their information from television.

In 2015, there is no need to burn books. We, as a society, stopped reading on our own. Actually, it’s worse than “19 minutes” because the average number is skewed by people 65 and older who read close to an hour per day. The “Millennials” (15 to 34 year olds) read only eight (yes, eight) minutes per day on average. They are busy playing video games. As a side note, there is no question that the Millennials have been given a raw deal by the older generation. But perhaps they should take a look at themselves as well: a group that collectively does not read and has an attention span less than a goldfish. If you escape into games and dystopian movies and don’t learn to focus and think for yourself, someone else will make decisions for you.

Perhaps reading is overrated. Perhaps I am a Luddite that does not understand the incredible educational value of gaming and binge TV-watching. But then the National Endowment for the Arts raised this issue eight years ago in To Read or Not To Read: A Question of National Consequence. To quote:

To Read or Not To Read confirms—without any serious qualification—the central importance of reading for a prosperous, free society. The data here demonstrate that reading is an irreplaceable activity in developing productive and active adults as well as healthy communities. Whatever the benefits of newer electronic media, they provide no measurable substitute for the intellectual and personal development initiated and sustained by frequent reading.”

Things have only gotten worse since then. As Thomas Jefferson observed, “if a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.”

Dystopian Fever

It’s hard to miss a certain dystopian obsession in our culture: The Hunger Games, Divergent, The Walking Dead, The Silo Series, and more. In some of these wildly popular novels (and movies) young heroes live in – and fight against – a totalitarian society. In others they escape into a virtual environment because reality is too depressing (Ready Player One). Why have dystopian genre become so representative of our society? Where does all the doom and gloom come from? Different explanations have been offered but it’s hard to deny that they are a reflection of a certain amount of despair.

These stories feature oppressive governments, hopelessness, hostility towards authority – because no one in the position of power can be trusted. But these are just entertaining stories and when we close the book or leave a movie theater, we give a sigh of “thankfully, it’s totally different for us” relief and return to our divergent (pun intended) reality where we feel quite differently. Or do we?

There are always people that don’t trust the government, the “extremists” as our leaders label them. Well, turns out that according to both Gallup and Pew Research only about 20% of the Americans now trust our government to do the right thing at least “most of the time.” It was not always this way. There was a time, forty to fifty years ago, when it was just the opposite: 70-80% of the Americans have trusted the government to do the right thing. I am not making this up, these are facts, check them for yourself by following the links above. We have lots and lots of “extremists.”

What happened? How did we get from a vast majority of Americans trusting the government to a vast majority distrusting it? Perhaps it’s the sense that the government is now run for the benefit of a ruling elite, that it is no longer serving We The People, that we evolved into a de facto oligarchy? That we robbed our young and sold their future by saddling them with unsustainable debts? Or perhaps it’s the massive government surveillance that creates the distrust? Interestingly, the 18-29 adults were pro-Snowden by almost 2:1 margin while our tone-deaf officials claimed – and some continue to do so – that only “extremists” support Snowden. The point here is not about Snowden but about the trust – or rather lack of it. Trust, once lost, is hard to get back. Especially when those that lost it seem to be rather oblivious to the fact.

So perhaps the “dystopian fever” and hostility towards authority is not just a distraction, perhaps it is a reflection of a real, tangible mistrust in the government institutions on the part of the younger generation. After all, how morally legitimate is the government that is trusted by only 20% of its subjects? I bet King George III was more trusted by his North American subjects in 1775.

The Emerging Sino – Russian Alliance or How to Make Enemies

One of the premises in The Counterpoint Trilogy is the Sino-Russian alliance against the U.S. For example, in The Outer Circle, China and Russia are conducting joined naval maneuvers designed to oppose the American navy. In the “life imitates fiction” manner, a recent newspaper headline announced: “Chinese, Russian Navy to Hold Drills” (see This is the first time ever that Russia and China will conduct joint naval exercises. But probably not the last time.

The China – Russia alignment has accelerated in the past year, partly driven by geopolitical tensions between Russia and the West and the conflict in Ukraine. Other factors pointing to the rapid formation of a Sino-Russian alliance are the $456 Billion gas deal, cooperation on advanced weapons, high-speed rail, satellite navigation systems, large infrastructure projects, Chinese investments in Russia, and the Shanghai Cooperation Organization (sources:, many others).

I am both surprised and dismayed by the views on the current tense Russia vs. the West standoff expressed by the Western political elite and the media. It’s easy to say that “our leaders know what they are doing, trust them.” Given our recent invasion of Iraq, this seems like a dangerous assumption. Do we always fully understand what the battle is about? What drives the other party? What comes to mind is Robert McNamara’s interview in The Fog War documentary, the part where he remembers meeting North Vietnamese foreign minister Nguyen Co Thach and being told: “You must never have read a history book. If you had, you’d know that we weren’t pawns of the Chinese or the Russians. We were fighting for our independence. And no amount of bombing, no amount of U.S. pressure would ever have stopped us.” Ideology, together with ignorance of history, blinded McNamara and the whole U.S. administration of the time, to the fundamental issue at hand. Countless lives were lost. And so was the war.

Sadly, this reminds me of our approach to Russia. No, Putin is not a pleasant character. But portraying him as someone feeding misinformation to his citizens that otherwise would not support his policies and that a bit of economic pressure would lead to his downfall is a dangerous fallacy. Putin has 86% approval rating at home precisely because the population there believes that they are defending themselves. Russians believe that the U.S. broke promises it made after the fall of the Soviet Union and that it is deliberately undermining Russia. Numerous participants in the Malta summit of 1989 and in subsequent discussions confirm that there was a promise to not expand NATO to Russia’s borders. See, for example, “Superpower Illusions” by Jack F. Matlock, Jr., 2010 by Yale University ( Also “NATO Enlargement: Illusions and Reality” edited by Galen Carpenter and Barbara Conry, 1998 by the Cato Institute, especially “The Perils of Victory” by Susan Eisenhower ( Instead, NATO has steadily marched to Russia’s borders. Russians’ approval of the United States collapsed from 60% to low 20’s. In Russia, we are facing a nightmare of a determined opponent convinced that they are fighting for their independence. It’s a nightmare of our own making.

China’s ambitions to become a superpower to rival and eventually overcome the United States are well known. China and Russia are not natural allies, they fought wars, they are suspicious of each other. But both now view the U.S. as the enemy and, as a saying goes, “enemy of my enemy is my friend.”  Together, China and Russia own most of Eurasia, with massive population and natural resources. They are afraid of the U.S., they need each other in order to oppose the U.S., and they are moving closer together.

Surveillance vs. The Right to Privacy

Some of you may have seen The Minority Report directed by Steven Spielberg, In the year 2054, criminals are apprehended before they have a chance to commit a crime and people’s movements are continually tracked in order to advertise to them and keep them under surveillance. While pre-crime does not look feasible anytime soon, potential for the constant surveillance – and accompanying loss of privacy – has almost arrived. Not only that, privacy is no longer viewed by some as an important right. To quote then-Google CEO Eric Schmidt: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” Rather astounding lack of comprehension that desire for privacy is not the same as desire to break the law and that privacy is an essential component of liberty.

As described in The Outer Circle, surveillance has both business (“to sell you things”) and security (“to make sure you don’t do bad things”) components. But these components are not entirely separate as businesses routinely share the information they collect with the government:

“Thousands of technology, finance and manufacturing companies are working closely with U.S. national security agencies, providing sensitive information and in return receiving benefits that include access to classified intelligence…”

Microsoft has collaborated closely with US intelligence services to allow users’ communications to be intercepted, including helping the National Security Agency to circumvent the company’s own encryption…”

And many more.

Anything you do with Google-provided services (search, e-mail, maps, etc.) will be combined into targeted advertising. This is not to single out Google – all companies are trying to collect as much information about you as they can. Google just happens to be, by and large, better at it.

The government snoops on phone, email and text records of virtually every US citizen – with the forced cooperation of US telecommunications companies. PBS program United States of Secrets describes how the government spies on its citizens and how technology companies feed into the dragnet. According to some of the NSA technologists interviewed by PBS, it was possible to protect the privacy of the citizens by anonymizing the data – however, the NSA chose not to do this.

In The Great Game, the heroes were tracked down by their cell phone. A few years ago that was a fairly novel suggestion, a province of conspiracy theorists. Now, it’s an established fact. If a cell phone is turned on, it constantly registers its location with cell phone networks. All cell phone carriers implemented location-based services (LBS) that rely on this capability. Anybody who gains computer access to cell phone networks infrastructure technically can track active phones in real time. It is widely known that the government (FBI, police departments) track cell phones, possibly without a warrant: Some people assert that a phone can be tracked even when it’s turned off, e.g.,, Only removing the battery and/or placing the phone into an environment where electromagnetic waves can’t penetrate would assure that your phone can’t be followed.

In 2007, there were estimated 30 million surveillance cameras in the US. The number is certainly much higher now. The size of the smart surveillance and video analytics global market is estimated at $13.5 billion in 2012; it’s expected to reach $39 billion by 2020 (source: But now, we are coming to the Age of the “Internet of Things,” where internet-connected devices will monitor every aspect of the environment. By 2024, the setting of The Outer Circle, there will be billions of internet-devices that people wear or have in their homes. Iris scanners, portrayed in The Minority Report, are being built into inexpensive devices including smartphones. “See-through-clothing” terahertz imaging, which is already familiar from airport security checkpoints, is coming to police scanners near you.

These things will make our lives more convenient and possibly safer. They will also destroy whatever little remains of our privacy as the data they collect will add to the giant pool of information that will be collected and analyzed in order to sell you things, to protect you and – if needed – to bring you to justice. But what would be so bad about increased convenience and protection? Well, if you are an average American you commit three felonies per day [source:]. Unwittingly, of course. Life is complex, technologies changing fast, the laws don’t always keep up. There is no place to hide – under constant surveillance, everyone is a criminal.

This does not mean that the government is an evil, ill-intentioned force, ready to strike at you. That’s not the point. Every government always asked its citizens to trust it without question because it has the country’s goodwill at heart. But even best intentions do not guarantee good results. If there is one maxim that held through the ages, it’s that power corrupts. And giving someone ability to completely track our lives is to hand them an enormous power. Privacy is precious because it’s integral to liberty. Is free speech even possible in the absence of privacy? We would be well advised to remember what Benjamin Franklin said 260 years ago: “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” And would likely lose both.

Destructive impact of extreme inequality

The American middle class that once was more than half of the country’s households has declined to about 40% of the households, mostly due to many falling into poverty. It is projected to continue to decline. Median income has been falling since it peaked in 1999. This is happening despite growing economy and rising profits – because increasingly larger share of the wealth flows to the top, especially the upper 0.1%.

In 2014, Emmanuel Saez and Gabriel Zucman from National Bureau of Economic Research published Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data (at: Wealth concentration has been high early in the 20th century, fell for fifty years, and started rising again thirty five years ago. While the relative wealth of the top 0.1% tripled, the share of the bottom 90% was cut almost in half. By 2012, these lines intersected: the top 0.1% of the US households had as much wealth as the bottom 90%. The top 0.01% – only 16,000 families – have more wealth than the bottom 130 million families.

Also in 2014, Michael Porter and Jan Rivkin from Harvard Business School published their The Economy is Doing Half Its Job study (at: They found a troubling divergence in the American economy: while large companies and a minority of highly-skilled individuals prosper, small businesses and middle- and lower-class individuals are struggling. Their conclusions are blunt: such a divergence is not sustainable.

Extreme economic inequality is proven to lead to political inequality, “oligarchization” of the political order. Similar, although not as extreme, trends appear in other developed countries. The global inequality is getting worse (source: The last time such wealth disparity existed was during the 1925 – 1937 period. We all know the upheaval that followed. Perhaps it’s no accident that many hedge fund managers are buying airstrips and farms in remote places, thinking that they need a getaway (source:

How will the emerging Internet- based and robotics technologies affect the rising inequality? Past industrial revolutions disrupted existing economic models but benefited societies in the end. However, there is no guarantee that the outcome of the ongoing technological revolution will be the same. Unlike in earlier economies, in the digital age even a small relative advantage often leads to an absolute domination – the “winner-takes-all” markets. So far, the result has been acceleration of inequality: in just the past ten years, the wealth share of the top 0.1% jumped over 50% while that of the bottom 90% dropped by 25% (source: Saez and Zucman). Technology is bringing about a very different world and the question is whether we’ll adapt our policies to benefit everyone or continue with the status quo where more and more people lose ground and face a possibility of another upheaval? Erik Brynjolfsson and Andrew McAfee raise these issues, and warn of consequences of not taking action, in their bestselling The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

This post by no means argues for a utopian equality. Some degree of inequality is our natural state. But this does not mean that we can ignore the growth of inequality as benign. Throughout history, economic stratification commonly resulted in collapses and revolutions. To quote from a recent study:

“Collapses of even advanced civilizations have occurred many times in the past … the two features that seem to appear across societies that have collapsed: the stretching of resources due to strain placed on the ecological carrying capacity, and the division of society into Elites (rich) and Commoners (poor) … Given economic stratification, collapse is very difficult to avoid and requires major policy changes, including major reductions in inequality …”  Safa Motesharrei, Jorge Rivas and Eugenia Kalnay, Human and Nature Dynamics (HANDY): Modeling Inequality and Use of Resources in the Collapse or Sustainability of Societies, 2014,

This time is never different.


I get asked “How do you write? Where do you come up with this stuff?” I don’t know how it works for others, but for me it’s like pulling on a strand. I get some basic idea of a story, when it takes place, what are the underlying themes. I would start reading, learning more a particular event or time period or technology. This leads to something else, some other topic. I think it’s important to let yourself wander around, hitting dead ends until something starts feeling right.  To quote Bilbo Baggins “It’s a dangerous business, Frodo, going out your door. You step onto the road, and if you don’t keep your feet, there’s no knowing where you might be swept off to.” Well, sometimes you just have to let yourself be swept into the story and it’ll find you.