Sifting Through the FTX Rubble

The sudden collapse of the world’s second biggest cryptocurrency exchange in November 2022 shocked the crypto world and left more than a million creditors hanging, with the 50 biggest being owed a staggering $3.1 billion.

Update, December 12 2022: Bankman-Fried Arrested

2022 has been quite a year for the co-founder of crypto exchange FTX, Sam Bankman-Fried.

In February, Bankman-Fried and 99 million other Americans watched Curb Your Enthusiasm and Seinfeld comedian Larry David stump for FTX during the Super Bowl. During the spring and summer, Bankman-Fried deployed approximately $5 billion in a series of buyouts: crypto player Liquid Global in February. Video game maker Storybook Brawl in March. Canadian crypto exchange Bitvo in June. Crypto exchange Blockfolio in August. Alameda even deployed about $11 million to a tiny rural bank here in Washington State, with aims to help it bootstrap a crypto bank on American soil.

By August 2022, SBF was being hailed by Bloomberg and CNBC’s Jim Cramer as “the JP Morgan of this generation,” a reference to when JP Morgan helped stabilize America’s economy during the panics of 1893 and 1907.

The NFL’s Tom Brady, modeling’s Giselle Bundchen and Shark Tank’s Kevin O’Leary were all singing his praises. The FTX brand was everywhere. It was emblazoned on the enormous Miami Heat stadium, after FTX secured 19-year naming rights in 2021. Major League Baseball Umpires even wore an FTX patch on their uniforms (two patches, actually) all season long.

A Fortune Magazine piece likened SBF to value investor Warren Buffett, something Buffett, a famous crypto-disbeliever, no doubt disagrees with.

And Bankman-Fried himself was popular for another reason: social change. He was an evangelist for the philosophy of “effective altruism“, which posits that the most effective way to do best for people is to spend one’s productive years amassing a huge sum of wealth, and then give as much of it away as possible. The cargo-shorts wearing, Toyota Corolla-driving Bankman-Fried played the part well.

Video blogger Nas Daily flew to the Bahamas to hail him as the “World’s Most Generous Billionaire”:

Bankman-Fried wasn’t about to wait until his retirement years to start spreading the millions around. He dolled out $42 million to Democrats during the 2022 midterms, as its second largest donor.

Sam Bankman-Fried. Image via Inside Bitcoins

Entering into the fourth quarter of 2022, SBF was riding high. He was worth more than $10 billion on paper, and the exchange he created was valued at more than $32 billion. FTX had over 5 million active users, and on average, its daily trading volume in 2021 exceeded $12.5 billion. According to Bankless, it was on track to reach $1.1 billion in revenue for 2022.

It all collapsed in less than one week. The sudden collapse of the world’s second biggest cryptocurrency exchange in November 2022 shocked the crypto world, and left more than one million creditors reeling. According to bankruptcy filings, the 50 biggest creditors alone are owed a staggering $3.1 billion.

As Bankman-Fried put it to the crowd of movers and shakers gathered in NYC at November’s NYT “Dealbook” conference, he has “had a bad month.” FTX and its sister company Alameda Research declared bankruptcy on November 11, 2022, and SBF is at serious risk of federal prosecution that could send him behind bars for a very long time.

Now worth $0, Bankman-Fried is going before any audience he can find, ignoring his attorneys’ advice otherwise, because, well, he wants us to know that he is sorry. That he “fucked up.” That he didn’t pay near enough attention to proper accounting or risk management. But even though he messed up, he will tell any audience who will listen, “I want to work to make this right,” and “I didn’t ever try to commit fraud.”

Bankman-Fried’s implicit message at the moment has been, more or less, that he did not possess mens rea (a “guilty mind”.) To him, he didn’t knowingly co-mingle customer funds with those of his own hedge fund. He didn’t intentionally mislead investors about where their money was going. He didn’t deliberately cause more than $30 billion of paper wealth (and more than $3 billion of actual creditor dollars) to evaporate.

Whether Bankman-Fried commited fraud or not in one of the decade’s biggest corporate collapses so far should be the subject of fierce federal investigation. And while that may well be occurring, there aren’t many visible signs that the feds are on this collapse with the furvor they had for, say, Bernie Madoff or Enron. Bankman-Fried was politely invited to testify before Rep. Maxine Waters’ House Financial Services Committee, and at first demurred.

One can hope this is underway, but it’s been a month, and not much word from federal lawmakers yet.

Tomorrow Sam Bankman-Fried will appear before the House Financial Services Committee. Joining him will be John J. Ray III, whom FTX’s board appointed as CEO to oversee the post-bankruptcy process.

Cynics speculate that the questioning might be fairly light-handed from Representative Maxine Waters (D, CA). Waters appeared with him in photos just a few months ago, and appeared to blow kisses his way at their last appearance in Washington DC.

Happier times: Bankman-Fried and Rep. Maxine Waters in Washington DC (Twitter)

As mentioned earlier, Bankman-Fried was the second largest donor to the Democratic National Committee for the 2022 midterms, at more than $40 million donated. And another senior FTX executive, co-founder Ryan Salame, donated $24 million to the Republicans. They may have bought themselves a bit more time.

Ray’s prepared remarks to the Committee are brutal: “Never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever.”

UPDATE: Sam Bankman-Fried has been arrested in the Bahamas after US Prosecutors filed charges.

FTX and Alameda Research

The world of cryptocurrency is awash in buzzwords which can complicate understanding.

So here is the collapse in its simplest terms. The allegation is that a handful of FTX executives knowingly co-mingled billions of dollars of FTX end-customer funds with its own closely-held hedge fund, run by sister company called Alameda Research. Compounding matters, Alameda made a staggeringly bad set of leveraged bets with those funds, whose downside results were greatly compounded by a crypto-crash in the Spring of 2022.

Through a series of transactions between FTX and Alameda, Alameda amassed a gigantic position in FTX’s own token (called “FTT”), a cryptocurrency which was highly correlated with FTX’s own market value. (In the non-crypto world, you might liken this to shares of its own stock, since it moved in a very correlated fashion to FTX’s own perceived value.) This “worked” for a short while, as FTX’s private market gain and apparent momentum appeared to convey some value in FTT.

But FTT was highly illiquid. Only a little bit of it traded every day. FTT was risky, far riskier than its mere stock price chart showed at the time. That’s because due to illiquidity, the stock price could be sent rapidly down by a big seller dumping it.

On November 2nd 2022, journalists at crypto trade publication Coindesk published a blockbuster piece: Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet. Somehow, Coindesk had come across internal documents of Alameda and FTX which detailed Alameda holdings, and what these documents revealed sent shockwaves through the crypto market.

Coindesk reporters noted that of the nominal $14.6 billion that Alameda had amassed on its balance sheet, more than half of it was in FTT/FTX-related currency.

Why is that bad? Not only is a concentrated position in one asset a large risk factor for any hedge fund, but the asset Alameda owned in gobs and gobs was also highly correlated to FTX’s own company value. While FTT was trading between $25-52 throughout most of 2022, it had pretty low trading volume. Not many people wanted to buy it up. A massive unloading of this currency would therefore send its value plummeting. And if that happened, Alameda would get “margin called” by lenders on its substantial loans and have to liquidate some securities to pay them off.

Any sizable drop in value of FTT would put enormous financial pressure on FTX’s solvency.

The Coindesk report revealed the extent to which FTX and Alameda were intertwined. It caught the attention of Changpeng Zhao (CZ), who owned a very large position of FTT. On November 6th, CZ tweeted “As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.”

He signaled his intent to sell, and proceded to dump a large volume of FTT into a pretty illiquid market, far more than Alameda or FTX could attempt to buy back.

FTX traders and FTT holders alike noticed this, which triggered a “run on the bank,” i.e., causing FTX.com customers (fearing FTX’s bankruptcy) to say “I want my money back!” FTX was at first able to process the first billion dollars or so of redemption requests, but the downward spiral accelerated, taking down the whole house of cards within a 72 hour period.

By November 11th 2022, FTX was filing for bankruptcy protection.

The entire company lasted just five years. Alameda Research was Bankman-Fried’s first venture; he founded it in November 2017. It began with a fairly simple (and legal) business model, making arbitrage trades of Bitcoin between domestic and Asian markets. Bankman-Fried had noticed that the price of Bitcoin would generally be cheaper in the US than in, say, South Korea. So Alameda made a tidy profit for a while automatically buying Bitcoin on the cheap and then reselling those same coins on Asian markets.

By May 2019, Bankman-Fried’s ambitions grew larger, and he decided to create a crypto-trading exchange. He hired a new CEO, Caroline Ellison, a former colleague of his from his brief time at Wall Street’s quant firm Jane Street Research, to run Alameda Research.

He also convinced Changpeng Zhao (CZ), the founder and CEO of the world’s largest crypto exchange (Binance) to invest in his new venture. SBF had come to know CZ through his arbitrage trades with Alameda.

What’s a Crypto Exchange? A centrally-controlled crypto exchange like FTX is a place where end-users can go to buy and sell crypto currency, and do trades between “fiat currencies” (like the US dollar or British pound) and various crypto coins. If you were an FTX customer, you’d wire in funds to your account, and then trade those funds with other buyers or sellers of cryptocurrency. FTX would benefit from trading fees.

That’s how an exchange is supposed to work.

But it appears that FTX and Alameda co-mingled customer funds; a fact confirmed by current CEO Ray in his prepared remarks to Congress. For the end customer, their balance might display as owning, say, $100 worth of US currency or $100 worth of some crypto coin (minus trading fees), but the big allegation here is that Alameda was taking some or all of those funds, and betting elsewhere at various times.

Making Alameda’s own JENGA-tower shakier, Alameda appears to have had significant positions in Luna Terra, a “stable coin” which utterly collapsed between May 7-12 2022. Needing to cover losses somehow, there’s speculation on Crypto Twitter that Alameda became quite tempted to dip into customer funds.

It appears as though Bankman-Fried’s two business entities blurred several lines, treating customer funds as their own to bet with. Bankman-Fried often points to a second customer agreement allowing for margin trading between accounts, but it’s quite unclear what fraction of customers opted into this type of agreement. End-user deposits which many customers reasonably thought were isolated were instead deployed for risky bets unrelated to what end-users wanted to do with their own funds.

This not only violates their Terms of Service with customers, it would be a pretty clear violation of traditional securities and exchange laws. As FTX’s own terms of service describe:

  • “You control the Digital Assets held in your Account,” says Section 8.2 of the terms.
  • “Title to your Digital Assets shall at all times remain with you and shall not transfer to FTX Trading.”
  • “None of the Digital Assets in your Account are the property of, or shall or may be loaned to, FTX Trading; FTX Trading does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading.”

So, Bankman-Fried’s life will be pretty interesting in 2023, just not in the same way that 2022 was. He remains ensconsed in the Bahamas, not yet indicted, on a virtual press tour of all press tours. He’s spoken with the New York Times, Good Morning America, George Stephanaplous, numerous Twitter Spaces and podcasts. Anywhere there’s a microphone, he’s out telling his story.

Tomorrow, he’ll be telling his story (or taking the Fifth) before the House Financial Services Committee. And we’re sure to hear that whatever he did, he didn’t mean it.

Financial Systems Come for Your Free Expression: Don’t let them.

I’ve been a PayPal customer for more than a decade, but closed my account last week. 2022 has shown glimpses of what a social credit system might look like in America. Decentralized, yet singular in ideology.

My local bagel store, barbershop and dry cleaner now only accept cashless transactions. Ubiquitous touchscreen displays and tap-to-pay checkouts now happily whisk customers through the line. This long-awaited arrival of a cashless society has been a boon for customer and retailer alike. Mostly, I love it.

But with it has come unprecedented information flow on who we are, and increased temptation by platform providers to start monitoring who can be in their club and who cannot be. While there isn’t yet any grand advance design of a social credit system along the lines of the Chinese Communist Party, I cannot help but worry that we are assembling the ideal toolset for ideological enforcement, monitoring and control should someone, some day, wish to build that out.

Does that sound alarmist? Consider the overall trajectory of these recent stories:

October, 2022: PayPal Attempts to Fine Customers for What it Deems “Harmful” Ideas

On October 7th 2022, PayPal published amendments to its Acceptable Use Policy (AUP), which would have granted the payment provider legal authority to seize $2,500 from customers’ bank accounts for every single violation of what it deemed the spreading of “harmful” or “objectionable” information. The determination of whether something is “harmful”, misleading or “objectionable” would come at PayPal’s sole discretion. These changes were set to go into effect on November 3rd, 2022, but were quietly retracted. PayPal only explained their policy reversal via emails to a few news outlets on October 8th; remarkably, you still cannot find any commentary about this episode on their Twitter feed.

What is harmful misinformation? Well, that’s subjective. We might all agree that businesses that explicitly promote murder shouldn’t be on the platform. But then it starts to get trickier. What if you believe the path of least overall harm was to reopen schools sooner? Or let vaccination be an informed choice, and not a mandate? Is being pro-choice or pro-life more “harmful?” Depends on who is answering the question.

Anything deemed harmful or objectionable by PayPal would be subject to such a fine.

Let’s review several recent statements which were authoritatively deemed “harmful misinformation”:

  • “Prolonged school closure is a mistake. Learning loss will happen, suicide rates might increase. We need to reopen schools urgently.” (Misinformation in 2020, True today.)
  • “Vaccination does not in fact significantly slow spread of COVID-19 to others.” (Misinformation in 2020, True today.)
  • “Naturally-acquired immunity is as strong as immunity acquired through vaccination, if not stronger.” (Misinformation in 2020, True today.)
  • “COVID-19, the most significant public health crisis in our lifetime, might well have emerged from a lab accident.” (Misinformation in 2020, officially declared at least equally plausible by the US government today.)
  • “Hunter Biden’s laptop contained clear and troubling signs of influence peddling.” (Declared misinformation in 2020, yet now verified by New York Times, Washington Post and others.)
  • “For younger males, the risk of myocarditis from vaccination may actually exceed the hospitalization risk of COVID itself.” (Declared misinformation in 2020, yet backed by empirical evidence today.)

Within a brief span of just thirty months, each of these statements has gone from “misinformation” or “harmful-information” as vehemently declared by authorities and name-brand “fact checkers” to now-majority American and empirically-validated viewpoints.

Further, who is paying attention to these stealth changes to terms and conditions? It wasn’t the New York Times, The Verge, nor the Washington Post that brought this major policy change of PayPal’s to America’s attention. It came from the right, who have become the most vocal critics of a creeping state-corporate symbiosis which they call the “Blue Stack.” The Blue Stack includes progressive technocrats, corporate media, and ostensibly independent big tech firms which work to enforce an ideology that inevitably tilts leftward.

The blue stack presents America’s elite with something they’ve always craved but has been out of reach in a liberal democracy: the power to swiftly crush ideological opponents by silencing them and destroying their livelihoods. Typically, American cultural, business, and communication systems have been too decentralized and too diffuse to allow one ideological faction to express power in that way. American elites, unlike their Chinese counterparts, have never had the ability to imprison people for wrong-think or derank undesirables in a social credit system.

Zaid Jilani, The Blue Stack Strikes Back, Tablet

Were it not for Ben Zeisloft, writer for the right-wing website Daily Wire, the public would likely not have known about PayPal’s major policy shift. But once Zeisloft’s piece hit (New PayPal Policy Lets Company Pull $2,500 From Users’ Accounts If They Promote ‘Misinformation’ | The Daily Wire), it caught fire on social media. And PayPal was forced into crisis-response mode, as the unwelcome press and cancellations started pouring in.

This wasn’t misinformation. PayPal’s new policy stated precisely as Zeisloft had identified. #CancelPayPal quickly started trending on Twitter, TikTok and Instagram. The proposed AUP changes are now gone from PayPal’s website, but you can check the web archive:

[image-20221017122727826](https://web.archive.org/web/20220927223312/https://www.paypalobjects.com/marketing/ua/pdf/US/en/acceptableuse-full-110322.pdf)
image-20221017122737706

The company’s former CEO, David Marcus, blasted PayPal on Twitter, saying “It’s hard for me to openly criticize a company I used to love and gave so much to. But @PayPal’s new AUP goes against everything I believe in. A private company now gets to decide to take your money if you say something they disagree with.”, he wrote on Saturday.

PayPal handled this PR crisis very poorly. While they walked it back, they only did so via private emails to publications like Snopes, which dutifully penned “No, PayPal Isn’t Planning to Fine Users $2.5K for Posting Misinfo.” Snopes fails to clearly state that yes, PayPal indeed had.

And PayPal executives have yet to clearly explain to customers how this AUP change even arose. It all gives one the impression that the only “error” with this policy rollout is that someone skeptical noticed it. Their main Twitter handle, @paypal, was and still is silent on the rollout and stealthy walk-back. They reached out one-on-one with a few media organizations to state that it was an error, but they didn’t apprise the public. They didn’t explain how such an “error” could make it onto their corporate website.

October, 2022: JP Morgan Chase Summarily Closes Kanye West’s Accounts

I’ve never been a fan of Kanye “Ye” West’s music, erratic persona, nor many of his MAGA-political views. And his recent clearly antisemitic statements, deserve condemnation. I think they’re abhorrent.

Yet I’m also unsettled by JP Morgan Chase, Inc. summarily indicating they are closing his bank accounts based on his recent speech.

On the plus side, they’ve given him thirty days’ notice.

I admit on this I’m conflicted — I’m fine with this specific decision, but not what it says about the age we are now it. It is in effect a major bank saying you need to not only be a customer in good standing, but not stray from what its executives think are the norms of good speech. Are they saying it’s not just the bank’s services that set their brand, it’s the collective words and deeds of its customers?

Something feels new here.

Have corporate banking giants been arbiters of what we can and cannot say in our private lives? Do we want them to be? They’re private companies, after all, but who expected investment banks of all entities to be the enforcers of what they perceive to be social acceptability?

It feels absurd for bankers, of all people, to be America’s moral compass. Do you consider bankers to be America’s new home for ethicists, who will be able to determine what is and is not societally righteous?

February, 2022: GoFundMe Deplatforms “My Body, My Choice” Truckers

GoFundMe is the #1 marketplace and payment processor for fundraisers. As you may recall, the Canadian truckers who objected to that nation’s vaccine mandate headed en masse to Ottawa to protest the government’s mandate via what they termed a “Freedom Convoy.”

After raising over $10 million through GoFundMe, from people around Canada and the rest of the world, on February 4th 2022, executives at GoFundMe unilaterally decided to lock the truckers’ fundraising account. Further, in their initial statement, GoFundMe signaled they would distribute those funds to charities of their own choosing. “Given how this situation has evolved, no further funds will be distributed directly to the organizers of Freedom Convoy,” GoFundMe wrote about the decision. “We will work with the organizers to send all remaining funds to trusted and established charities verified by GoFundMe.”

After massive outcry, GoFundMe provided an update and said that they would instead refund donations. Many noticed their initial action and found it indicative of who they are. #BoycottGoFundMe made the rounds on social media for weeks.

Critics are right to point out that GoFundMe has hosted numerous fundraisers for Antifa, CHOP/CHAZ and other protest groups — even those around whom violence has occasionally happened — without cancelation or threats of unilateral fund-seizure. You can see just a few of them by searching PayPal’s site.

[Editorial note: I have stated my own views on vaccination: — I’m in favor of it personally and for most older demographics especially, but believe it to be a personal choice. It is now clear that vaccination does not measurably nor durably reduce spread (one such study here, others corroborate), I think vaccination should be an informed choice. I am firmly opposed to COVID vax mandates.]

PayPal, GoFundMe and JP Morgan Chase are each private companies, and have every legal right to set their own terms and conditions of use. But look also what’s happening at the governmental level.

August, 2022: Massive Increase to IRS budget, Considering Lowering Reporting Threshold to $600

In 1972, the Bank Secrecy Act started requiring banks to report deposits of $10,000 or more (in 1970 dollars.) Together with adjustments made by The Patriot Act in 2002, banks need to report to state and local authorities all deposits or withdrawals of $10,000 or more. (Even multiple transactions broken up into smaller pieces are tracked, and known as “structured transactions,” and that in and of itself is illegal.)

More recently, in 2021, Treasury Secretary Janet Yellen and others started advocating for lowering the threshold to $600. This hasn’t yet been adopted, but it’s being strongly advocated. With inflation, $600 is the new $500, so essentially most critical expenditures, like rent, furniture, car purchases, healthcare, travel and more are on the radar.

We often hear about “87,000 IRS Agents” authorized by the so-called Inflation Reduction Act, but really what the Act includes is a massive $79 billion budgetary expansion of the Internal Revenue Service. The IRS has every incentive and desire to start wiring in end-to-end tracking of cashless transactions.

Should the US want to pursue a social credit system along the lines of the Chinese state, all that really will be needed is the “right” lawmakers to authorize it doing so.

Republican Rep. Jefferson Van Drew has introduced HR 5475, known as the Banking Privacy Act, to stop the Biden Administration’s proposal, which has been referred to the House Financial Services Committee. Should the Republicans win control of the House, it’s possible this will be taken-up.

Of course, as the old saw goes, if you’re not doing anything illegal, you have nothing to worry about. After seeing the way COVID was and is handled, and the creeping power of what writer Zaid Jilani calls the Blue Stack, do you still have that confidence?

Themes

Fast-forward the videotape, and it is plain that without new regulation, we are fast headed to ideological groupthink being enforced by the financial world, who are of course also susceptible to the whims of government leaders. Consolidation and a pandemic-accelerated move to a cashless society are making a social credit system much easier to snap-in some day.

True, these actions are mostly the work of free enterprise. Companies aren’t state-controlled in America the way they are in China, and they are free to devise their own legal terms and conditions. We consumers are free to opt in or opt out. No one has to use PayPal, GoFundMe, JP Morgan Chase, Twitter or Facebook for that matter. I’m not aware of any of these activities being illegal.

But we need to pause a moment and recognize how a cashless society with higher concentrations of information flow and money are extremely tempting components for regulators and authoritarians on America’s political flanks. It’s a far cry from the local savings account that was largely agnostic to your speech.

Increasingly, outside groups, state and local governments and employees from within are pressuring banks, big technology companies and other corporations to take manifestly political/ideological stances, and expel people for wrongthink. Our massive migration toward a cashless society makes this easier.

That’s all fine, you might say, “I support Canada’s vax mandate for truckers, I think Kanye West is reprehensible that JP Morgan has every right to de-bank him from their system, and I think think the IRS’s investment in tracking every $600 will inure to much greater revenue to US coffers.”

But recognize that these monitoring tools and platforms themselves are entirely agnostic tools; their application merely depends upon who is in power. And that can change at any election.

So it’s an important exercise to take a moment to imagine the power which you may now applaud in the hands of your worst ideological foe. Are you still comfortable with how this is all trending?

For me, though I love technology and the convenience it offers, these trends to include speech and behavior in whether people can participate in a platform start to fill me with unease, especially when they are phrased in such a subjective way. After more than two decades as a customer, I closed my PayPal account last week. If you’d like to close your account, you can do it in a few clicks as I explain on Twitter.

And while I’m still fine with debit and credit cards, I’m beginning to suspect this sense of ease might not last forever. It only takes VISA or Mastercard to say “we will fine our customers for harmful misinformation.” For these and other reasons, this long-time advocate of technology is now becoming reacquainted with check-writing. I’m not ready to switch back to paper just yet, but it can’t hurt to re-learn how it worked in the 70’s.

Medicine Should Be About Care, Not Self-Righteousness

On the unwillingness of University of Michigan medical school students to hear views that might conflict with their own.

I am not, nor ever have been, a medical professional. I am also among the 61% of Americans that do not consider ourselves “pro-life.”

But there was something profoundly unsettling about the walk-out of incoming med school students at University of Michigan’s medical school convocation last week:

Dr. Collier is one of the most popular professors at University of Michigan Medical School. That’s why she was selected, by a combination of students and faculty, to be the keynote speaker for the “white coat” ceremony, in which incoming med school students get their symbolic professional jacket.

Why the walkout? It’s because Dr. Collier also happens to be among the 39% of Americans who define themselves to be “pro-life.” OK. That’s a rational, quite common viewpoint on a complex issue.

Now, she didn’t even speak to abortion at all. Her keynote address was far more general, and inspiring. It was that physicians should do everything possible to keep from being a machine. They should not perceive themselves as “task-completers,” but rather a physician, a human who cares. That they should be grateful. Appreciate a team.

She chose not to delve into abortion as a topic at all. But what if she had? What if she had decided to mention (gasp) her own perspective of a pro-life medical professional? Is that so appalling that it must be shunned? Is there no learning that’s possible by hearing that viewpoint out?

As it happened, dozens of students didn’t hear that message, because they preemptively walked out, before her address. Call me old-fashioned, but I believe that medical care should begin with empathy, and empathy begins with listening. We can, and must, tolerate and listen to perspectives other than our own.

More than any generation I can remember, far too many young adults that we are raising seem to be interested in hearing out viewpoints other than their own. They even think it’s noble to shut out those views.

39% of Americans — more than one out of every three — declare that they are “pro-life.”

Recession: What’s in a Name?

The White House kicks off its effort to change the most commonly accepted criterion of recession: two or more successive quarters of negative GDP growth.

In a clear sign that the Administration is anxious about Thursday’s Gross Domestic Product (GDP) report from the Commerce Department, the White House is making an all-out push this week around what constitutes a “recession.”

While it’s true there is no single steadfast criterion for a recession, by far the most common indicator used for recession has been two or more consecutive quarters of negative growth in Gross Domestic Product (GDP.) That’s the accepted shorthand criterion that MBA students like me were taught in our macroeconomics classes. You’ll find it in many economic textbooks, investment dictionaries, and nightly news segments.

And there’s the rub, because the US GDP declined in the first quarter by 1.6%, and signs are pointing to a decline again in the second quarter:

Source: US Bureau of Economic Analysis

No politician wants to go into midterms in a recession.

Beyond purely political motivations, naming the beast can plausibly make it worse. That’s because when consumers feel anxious about future employment or wage prospects, they may postpone durable goods orders and cut down spending to the bare essentials. Ditto for corporate boards: as soon as they decide a contraction is here, many will rationally postpone investment and cut back hiring. Chief Executives of Bank of America and Goldman Sachs have each decided that a recession is likely here.

On Thursday, the White House began an effort to get out in front of the Thursday report, releasing How Do Economists Determine Whether the Economy is In a Recession? on the official White House blog. They note that the official recession scorekeeper is the National Bureau of Economic Research (NBER), which defines it as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” But there appears to be no statutory language that officially makes NBER the umpire. It’s a subjective term which has a long-accepted criterion, and the White House is arguing for a softer definition.

Clearly, Democrats do not wish to head into the midterm elections in an official “recession.” To that end, Treasury Secretary Janet Yellen was dispatched to Sunday news shows and downplayed the risk of recession, arguing that consumer spending is growing, that the economy has added an estimated 400,000 jobs, and still has a relatively low unemployment rate of just 3.6%.

Congress? They use the 2-Quarter Definition.

Interestingly, a definition of recession actually does exist in statutory code passed by Congress, in the Gramm-Rudman-Hollings Act of 1985. It adopts the two-consecutive quarter definition:

Source: 2 USC 904, via @PhilWMagness

Warning Signs

Regardless of what we call it when, there are several economic warning signs.

Inflation, of course, is the metric that everyone feels every time they visit the grocery store. Inflation rose 9.1% year over year in June, which is the highest year over year increase in 40 years. Seattle-area prices are on an even bigger tear, jumping 10.1% since last year.

To try to get a handle on inflation, the Federal Reserve has been steadily hiking interest rates, which tends to slow demand. The slowing of demand typically relieves upward price pressure. But the Fed wants to hit the brakes without slowing it so much that it turns the economy into full-blown recession.

This is extremely challenging, because soaring inflation isn’t solely due to Fed actions, but also to factors out of their control, like disrupted supply chains which have caused scarcity of some key goods, the war in Ukraine, energy and particularly refinery constraints and capacity reductions, the trillions poured into the economy through the American Rescue Plan, and more. Inflation, in short, has many fathers.

The Federal Open Market Committee continues to raise interest rates, and the Federal Reserve is tightening access to money, signaling that still more is likely ahead. This does tend to put the brakes on growth, as money itself becomes more expensive to borrow or acquire.

The White House is leaning on “strong labor market” as its main justification as to why we’re not really in a recession.

Press Secretary Karine Jean-Pierre tackled this question today, again emphasizing the “strength” of the labor market:

But specifically on the hiring front, it’s a very interesting and mixed picture. The topline number of employment looks good at first glance. But while labor shortages exist in many essential roles (often lower-wage), the precise opposite appears to be true at the higher end of the wage spectrum.

Seattle presently has critical staff shortages in essential workers, particularly in public safety (police, firefighters, healthcare workers), and also ferry workers, teachers and more. But growth in high-wage, high-tech knowledge-worker hiring is seeing a significant slowdown. In the past three months, tech firms like Microsoft and Google have announced slower hirings. Layoffs at startups appear to be growing. Apple, Meta, Uber and Amazon have also joined the list. Venture funding of early-stage startups (Series A and B rounds) was down about 22% year over year in the second quarter, according to Pitchbook.

Yellen and Jean-Pierre remind us that the nation’s overall unemployment rate is low, as can be seen in this chart from the St. Louis Federal Reserve:

Source: St. Louis Federal Reserve

But the “low unemployment rate” masks a lot. The picture is far more complex, and less rosy than such a chart might initially suggest. That’s because overall unemployment measures the percentage of people in the workforce or seeking to be in the workforce who are unemployed, but the labor force participation rate (i.e., the percentage of all Americans who are in the workforce) must also be considered to get a true picture of America’s current workforce trends.

Looking at the labor force participation rate, notice that the pandemic brought a “Great Resignation,” and many Americans — particularly those in essential jobs (e.g., healthcare hospital workers, firefighters, teachers, warehouse workers, retail) still haven’t rejoined the workforce:

Source: St. Louis Federal Reserve

The noticeable decline in workforce participation rate suggests that people have been living off of household savings. And indeed, that appears to be the case:

These charts tell a story: many opted out of the workforce and have been living off of savings and/or asset appreciation. But these savings are usually tied to assets (stocks, bonds, home valuation etc.) which are likely to deflate as the economy contracts. One of the key risks that doesn’t get enough attention is that it may be very challenging for millions of Americans to try to re-enter the workforce during an economic downturn once they hit the end of their savings.

Is the “let’s talk about the definition of recession” simply a good-faith effort to introduce nuance back into the American political conversation, and curtail an even worse downturn by not naming it? Or is it a cynical attempt to sweep a major political liability under the rug by redefining a long-accepted word? I’ll let you decide.

I’ll be sticking to the colloquial definition of recession — two or more consecutive quarters of negative GDP. But we should recognize that this is likely to be a recession with very unique characteristics, and won’t be easily mapped to recent ones.

Washingtonians, How’s your State of Emergency Going?

Governor Jay Inslee of Washington was the first to declare a State of Emergency, and he may be the last one to rescind it. “Never let a crisis go to waste” has a corollary, and that is: “Preserve the crisis.”

It’s April 12th, 2022. Governor Jay Inslee has had State of Emergency powers for 772 days. He issued his emergency proclamation on February 29th, 2020, more than two years ago. He was the first governor in the nation to do so, making Washington State’s COVID emergency longer than any other.

Come Saturday, we are again completely alone in the Pacific Northwest in our heightened condition. Oregon rescinded its emergency powers declaration on April 1st, 2022. Idaho’s Governor Brad Little is ending their State of Emergency this Friday. Governor Dunleavy ended Alaska’s State of Emergency a year ago. Montana ended its State of Emergency last June.

We are significant outliers not just in the Pacific Northwest, but when compared with the nation as a whole. According to the National Academy for State Health Policy, only Washington State and West Virginia remain in an indefinite State of Emergency. Thirty-seven states either had no state of emergency or those declarations have already expired (lightest green.) Eleven more are set to expire later this month (slightly darker green.) One is set to expire in May (Illinois), and one in June (California.) In West Virginia, the Governor signaled in March that he’d end the State of Emergency soon but hasn’t done so yet. Local West Virginia news suggests that potential loss of federal health insurance money have likely driven him to delay.

Data from National Academy for State Health Policy, updated to reflect April 12th 2022

The question which matters most is: are we in an emergency?

No matter how you evaluate it, the resounding answer is no. Statewide, just 2.04 people per 100,000 are hospitalized with COVID, not even necessarily due to COVID. In our entire state of 7,710,000 people, just 157 of us are hospitalized for any reason with a COVID-positive test, not even because we have COVID. Remember: most hospitals routinely test all patients upon admission in an abundance of caution. Therefore, patients hospitalized due to, say, highway accidents who then also test positive for mild, asymptomatic COVID will be counted in that 157 tally.

Even erroneously counting every single one of these hospitalizations as being caused by COVID, that’s a current hospitalization rate of 0.002% of our population. Are we in any imminent danger of “overwhelming” hospitals? No.

If this is an emergency, then everything is.

Inslee’s emergency declaration included eight “WHEREAS” justification statements. None of them seem timely or relevant at the moment. Better still, in terms of vaccination, we seem among the most prepared states for future waves, be they minor or major. According to the Washington State Department of Health dashboard, fully 81.5% of Washington’s population over 5 years old have received at least one vaccination dose, and 74% are fully vaccinated. Vaccination will be ongoing and at people’s discretion, with many starting to get their second booster shot. Thankfully, that groundwork for optional self-protection for those most at risk has been laid.

How’s hospitalization trending? I tried to get an accurate hospitalization trend chart from the State of Washington Department of Health dashboard, but was greeted by this:

In what kind of Emergency do we shut down reporting of detailed hospitalization trends?

If you look at deaths with COVID (again, not necessarily due to COVID), the folks at 91-DIVOC have a helpful chart. Does this say “emergency” to you?

Deaths with COVID-19, not necessarily due to COVID-19, out of 7.71 million Washingtonians

Even if you look just at case rates, there’s no need for alarm. Omicron is a milder variant, which results in lower severity of outcome:

COVID Case Rates, Washington State
COVID case rate, Washington State, per State Department of Health

Why is this continuing?

The Governor said the quiet part out loud in his response to KOMO’s Keith Eldridge on Monday: “We want to make sure that federal money keeps coming, so it’s important to keep this in place right now.”

I’m sorry, Governor, but how is that not fraud? I know, that’s a pretty bold accusation, but let’s open the dictionary. Fraud is defined as “wrongful deception intended to result in financial gain.” This is clearly deception. There’s no COVID emergency currently in our state, and there hasn’t been for months.

Or, we can put aside the dictionary, and simply look to legalese. How does Washington State Law define an “emergency?”

The Revised Code of Washington (RCW) 38.52.010 states:

Emergency or disaster‘ as used in all sections of this chapter except RCW 38.52.430 means an event or set of circumstances which: (i) Demands immediate action to preserve public health, protect life, protect public property, or to provide relief to any stricken community overtaken by such occurrences; or (ii) reaches such a dimension or degree of destructiveness as to warrant the governor proclaiming a state of emergency pursuant to RCW 43.06.010.”

Do these conditions still exist?

Every Washingtonian knows that the conditions since 2020 have dramatically changed. We are no longer in lockdown. We are no longer required to wear masks. Kids have been back in school in every district in our state for months. County cases and hospitalizations are low and have been for months.

Bit by bit, the various mandates which were imposed during the State of Emergency are being rescinded. Inslee’s decided that drivers license renewal and learner permit extensions can now expire (proclamation April 1st 2022). He’s decided a mask mandate isn’t necessary; that ended March 12th 2022. Even Seattle’s City Council let the long-lasting eviction moratorium imposed during COVID finally expire.

Adding to the absurdity, both Inslee and his Lt. Governor went on vacation recently. I have no problem with them taking time off, but how can one possibly take a vacation during a state of emergency?

Former White House Chief of Staff Rahm Emmanuel had a famous quip: “Never let a crisis go to waste.” For Inslee, this appears to have a corollary: Preserve the crisis.

We Need to Talk About The Crisis in Young American Men

There’s a conversation we’re not having. How are the young men doing in your life?

My wife and I are parents of two sons and a daughter, who are now in their teens and twenties. As we come out of COVID isolation and reconnect face-to-face with other parents, I can’t help but notice a theme. A surprisingly high number of parents of boys describe young men who are — for lack of a better term — struggling to chart their next step. Yet at the same time, most parents of daughters do not generally echo this concern.

There’s something going on with young American males in their “life’s launchpad” years, and few Americans wish to speak about it.

These young men attended the same schools as their sisters. They have loving, intelligent, driven and attentive parents. We’ve known many of these kids from a young age. And now, twenty years on, so many of the boys are opting out. They’re searching. Some are still in extended gap year. Three have dropped out of college. Those who aren’t in college don’t yet have full time jobs. They’re not apprenticing. In many cases these boys are living at home, or in apartments funded by mom and dad. In short — as they now hit their twenties, what Dr. Meg Jay calls the “Defining Decade,” they haven’t found their trail.

The daughters, by and large, are on a more determined path. They’re engaged at college. They’ve landed summer jobs. They have outlets and direction.

This is a very small sample size, and it could just be a unique snapshot. So try this. Know a parent whose kids were born around 2000-2005, who are now high school grads? Ask those with adolescent boys to give an honest assessment of how their son’s friends and peers are doing. Have they found purpose? Are they on the taxiway ready for liftoff? Then, ask parents of adolescent daughters how their friends are doing. Statistically, you’re likely to hear a very different picture.

Zooming out, the data from Pew, the Census Bureau the CDC and more tell a pretty consistent story. America’s young men are in a crisis which is worsening.

Boys’ high school graduation rates are 6% lower than females, and in some states 15% lower. Boys are twice as likely to have a substance use disorder. Boys are more than twice as likely to be diagnosed with attention-deficit/hyperactivity disorder, according to the CDC, which likely says something both about boys, and our tendency to intervene, medicalize and label otherwise normal-spectrum behavior a “disorder.” Boys are five times as likely as girls to spend time in juvenile detention. While females are more likely to exhibit suicide ideation, American males are 3.5 times more likely than American females to actually commit suicide.

Across the country, college women now constitute 60% of the student body, and are also now clearly outpacing men in graduation:

A line graph showing that women in the U.S. are outpacing men in college graduation
Source: Why the gap between women and men in college graduation? Pew Research

Pew’s survey reveals that a significant driver is personal choice: “Roughly a third (34%) of men without a bachelor’s degree say a major reason they didn’t complete college is that they just didn’t want to. Only one-in-four women say the same.” Younger respondents are also far less likely (33%) than older Americans (45%) to say that college experience was “extremely useful” in helping them develop skills and knowledge which could be used in the workplace.

Male labor force participation rates have been on a steady decline since the 1980’s, while women’s has been on the rise. In 1960, 93% of men aged 25-34 were in the labor force; by 2021, that figure had fallen to 68%.

Not only are the snapshot statistics worrisome, but nearly every single one is trending in the wrong direction. The consequences for America are grave. NYU Professor Scott Golloway puts it starkly: America is producing too many of “the most dangerous person in the world: a broken and alone man.”

This isn’t just bad for men. 78% of American females report that a steady job is very important to them in selecting a spouse or partner. And fully half report that their mate must have equal or better education than them.

And yet, to sound the alarm — or worse, attempt to diagnose or work through whether any of this has cultural, sociological or pedagogical roots — brings out the pitchforks and vitriol.

Andrew Yang wrote a piece about this in the Washington Post in February, The Boys Are Not Alright. The most upvoted comment, from user IrisClover, is typical of the rejoinder: “I love the chorus of dudes proclaiming that male failure to thrive (i.e., to be superior) is all about an unfair system or current social conditions. Rampant violence against women, poverty, unfair pay, females doing nearly all unpaid labor, unequal representation for centuries…oops, they didn’t notice that.” Whew. Well, that conversation went well, didn’t it?

Far too many have conflated discussing the clear crisis in young men with rejection or pushback against the many wonderful advances for women, or a denial of celebration for all that’s been achieved.

But it should be possible to discuss the worrying trends without setting off bad-faith conversation about “what this really means.” Perhaps it means that the boys are in crisis, and we need to diagnose why. Perhaps it means that after three decades of focusing on female empowerment, we also need to ask, do men still have enough heroes, role models, and realistic goals they’re motivated to achieve? Perhaps an “oh, they’ll be fine” response isn’t quite hitting the mark.

We need to bring this conversation to the fore, and engage in it maturely, eggshells and all. It affects every single one of us. Somehow, through a combination of culture, parenting, schooling and more, we are exacerbating very bad trendlines for the future. Perhaps we should actually discuss it cogently, with data, and brainstorm some ways out of it.

After two decades of cultural emphasis on female empowerment, we need to add back to the conversation why and how tens of millions of young American males are opting out, standing on the sidelines, or otherwise falling through the cracks.

Seattle’s 50,000 School Kids Are Odds-On Favorite to be Last on the Planet to Unmask

When A demands something of B and withholds the freedoms of C to get it, don’t we call that a hostage situation?

Since 2020, the United States has been uniquely aggressive in its masking of public schoolchildren. Most of Europe never required masking in schools. In fact several European health agencies explicitly advised against it for elementary school-age kids. The World Health Organization also advised against masking children Kindergarten-age and younger.

In the United States, few areas have been more aggressive in masking than reliably deep-blue Washington State. As state after state ended all mask mandates in January and February 2022, Washington held out for weeks. Finally, Governor Inslee, who still hasn’t relinquished State of Emergency Powers, joined the crowd to allow indoor masking to be optional in public spaces starting March 12th, 2022.

But this relaxation of mandates didn’t apply to public schools. Governor Inslee left the policies for unmasking up to each school district, as informed by their local public health directives.

In a nod to each County’s power dynamics and local conditions and bargaining agreements between the schools and teachers unions, he let each district fight it out at the district/county level.

Predictably, just as with remote schooling, the school districts with the most powerful left-leaning (and arguably outright leftist) unions are now demanding that the student-harming interventions continue. This is despite any evidence of efficacy, or that mandatory masking is worth the harm it imposes.

Sorry kids. At this writing, no date for you to uncover your face is set. You must mask-up 6 hours per day, 5 days per week, indefinitely. The far-too-powerful teachers unions are lobbying for forced masking to continue until “at least May 1st 2022,” an arbitrary date untethered to any kind of concrete conditions, measures or goals. And Seattle Public Schools, for its part, has conceded that any change to the mask guidance requires “bargaining with our labor union partners.”

Seattle’s 50,000 K-12 students are my odds-on pick to be the very last kids on the planet, literally on planet Earth, to be permitted to go mask-optional.

Perhaps Los Angeles Public Schools will pull out a late “victory,” as LA Unified is still pushing back on a date, but even California bellweather San Francisco finally caved to public pressure and set March 12th as their mask-optional date. (More on Los Angeles here.)

To be sure, you can find some scattered parental support for King County teachers unions’ position. Just drop by a Seattle Public Schools parental group on Facebook or even a school board meeting, and you’ll see one or two speakers argue for continued compulsory masking. But with tens of thousands of parents on the other side, they are in an extreme minority. Add to this that there is a strong feeling among some parents I’ve heard from online that their child will be retaliated-against if they speak out against the wishes of this powerful union.

Let’s be clear. The only institution demanding the continued forced masking of 5-18 year olds in King County’s Public Schools are the teachers unions. You’re not hearing this pressure from a broad coalition of parents or students. You’re not hearing it from the Governor. You’re not even hearing this demand come from health agencies organically.

Think about that. Your kid might want to go mask-optional. They have done all things asked of them by adults over the two years of this highly disruptive pandemic.

But because there exists a highly organized, well-funded institutional lobbying group, it probably won’t happen until some arbitrary date. This force is paid for, ultimately, by our tax dollars. This body is not a scientific body. Nor does it offer any evidence the forced masking intervention is effective, or certainly not the path of least harm, when you factor in all the downsides of masking. They don’t offer evidence this policy reliably lowers case-counts or hospitalization when employed in school settings. I really marvel at that. Any kind of illusion that they’re looking out for your student’s mental health, enjoyment, achievement, opportunity or outcomes should be shattered at this point.

Look. We don’t have to guess. We have now run thousands of natural experiments in this nation, and around the world, over two years. Through it all, there is not a single school district you can find which, when it went unmasked or even mask-optional, experienced any noticeable upticks in hospitalization, or even major outbreaks tied to the unmasking decision. Why is that? Should we follow the science, or nah? Do we expect students not to notice?

The mechanics of this are somewhat complex. There’s a State Level order which is expiring March 12th. There’s a County level order which is also expiring March 12th. There’s a Department of Health Face Covering Guidance which is also expiring March 12th.

Regarding that Department of Health order, last week, the heads of local teachers unions here in King County, Washington sent the letter below to Interim County Director of Public Health Dennis Worsham and chief medical advisor Dr. Jeffrey Duchin, lobbying to keep the mask-mandate in place for school kids through “at least May 1st.” See if you can spot the citation of any scientific studies in their advocacy:

But this still leaves the contract between SPS and the union, outlined by the Memorandum of Understanding (MOU) between Seattle Public Schools and the Seattle Education Association (SEA). It mentions masks/masking/mask 21 times. Thus, the reason Seattle kids will be required to mask-up deal with a contractual agreement between two other parties. Rumor has it that bargaining has begun this week (and just this week) on relaxing these terms, but this could well open up a new can of worms, as SEA will likely “demand” things in return for “conceding” and “allowing” students and families to make their own choices on masking.

Got that? Party A wants something from B, and so they’re withholding something from C to get it. Don’t we call that a hostage situation?

Turning back to the union letter above, for months and months these same leaders no doubt urged us to “follow the science” when setting policy. Yet they don’t cite a single study which shows that mask mandates in schools change outcomes, certainly not to the extent that they are worth reductions in social connection, learning loss, or even just enjoyment of school.

Typically, the way to reduce scientific uncertainty in situations like this is to conduct randomized cluster trials. Two randomized cluster trials have been done regarding masking, and neither of them say that mandating masks is a statistically significant way to reduce hospitalization or spread. Dr. Tracy Beth Hoeg has been looking at two very similar and nearby school districts: Fargo ND and West Fargo ND — one required masks and one did not — comparing case rates. The results do not make the mask-mandaters case very strong:

The UK government commissioned a close look at the efficacy of masks in school settings. It failed to identify any clear evidence in favor of this practice.

But the teachers unions have their own reasons. Their stated “rationale” focuses on:

  • “First, we believe it could result in significant anxiety for many students, families and educators, and exacerbate the mental health crisis for them.”
  • “Second, we believe the negative impacts of lifting the mask mandate would be most heavily felt by our Black, Indigineous and People of Color communities as well as by people with disabilities.”
  • “Finally, we believe it could result in a significant number of students and/or educators choosing to go on leave, which would worsen our current educator staffing shortage and unusually high number of student absences”

The first reason these “educators” cite is that somehow making masking optional “could exacerbate mental anxiety.” Any studies to back that up? And if it is even true, whose fault is it that somehow returning to normal is anxiety-producing?

The risk to kids is low. It always has been. Since the start of the pandemic, over two full years, the CDC notes that the number of 0-17 year olds who have died with COVID (not even due to COVID) is 865, as of this writing. That’s out of 74 million kids in that age group:

It’s not like the danger of severe outcomes posed by COVID is higher here. King County’s vaccination rate is among the very highest in the nation, with 95.6% of those 12 and older receiving at least 1 dose, and 87.8% who have completed vaccination series.

This is the county that teachers unions characterize as risky to unmask before “at least May 1st”

The teachers unions insist that somehow letting kids and their families decide whether to mask up or not doesn’t “center the need of BIPOC communities.” What? Can you help me understand that? Where is it decided that all people of certain identity groups wish their kids to remain masked? If you want to make an identity-based argument, surely it should start with the fact that minority students’ test scores have dropped the most alarmingly during the two years of interruption of schooling? And another major disparity of outcome is between public and private schools — soon, they will be able to compare the mask-free private schoolers with the mask-wearing public schoolers. What signal does that amplify? Do the adults think that kids don’t notice, or talk about it with their friends?

The actions these teachers unions are taking here decrease enjoyment of school and widen disparities of outcome. Already, Washington State families have pulled kids out of public schools during the pandemic — enrollment levels are down more than 4% from 2019. Between October 2019 and October 2019 alone, 39,000 fewer students enrolled in public school in Washington State. Parents are choosing private school, homeschooling, or to leave the state. It’s already likely to result in a $500,000,000 hit to school budgets. The longer we keep kids from normalcy, the more this will increase.

The Seattle Educators Association one of the unions which demanded that teachers get priority vaccination but then kept schools closed more than just about any other district in the nation. In fact, even while they were lobbying for vaccination priority, 74% of them said that even full vaccination wasn’t enough to return to in person learning.

Survey results in February 2021 from Seattle Education Association

What happened next was that the Seattle Education Association and the Seattle Public School Board together kept kids locked out of in person learning longer than just about any district in the nation. Predictably, math and other test scores dropped at a record pace for ‘20-21. The teachers unions who were pushing hardest for prolonged remote schooling haven’t even acknowledged this was a mistake.

Meanwhile, adults (including many teachers) will go to grocery stores, restaurants, bars and more… entirely unmasked this spring. Sorry kids.

There is direct evidence that masking reduces the ability to be heard and understood. After 2 years of social isolation, restoring connection matters. Burden of proof is on those who demand this intervention, not on those who want to make it optional.

A better approach

We have known for some time now that one-way masking works. A well-fitting N95 or KN95 is nearly as good as multi-way masking. Masking should be optional, and everyone’s choice should be respected.

These are the adults we have hired, and that we taxpayers pay, to help educate the next generation. They should be concerned with student outcomes, but these outcomes are not looking good. After two full years of interruption of schooling, why is it that the mask mandates are still on those least at risk? Prolonged social isolation is sure to lead to higher dropout rates, poor academic performance, even suicide ideation.

Once we allow the kids to go unmasked, we need to look into just how it is that we’ve allowed these labor unions to hold tens of thousands of kids social connection, music, theatre, sport, academic excellence back. A child gets maybe twelve years tops of childhood. Adults fighting amongst one another for power has ripped away two of those twelve years for an entire generation of Seattle-area kids. Truly, and I mean this sincerely: shame on us for allowing it to continue.

Growing Number of Firms Take Action on Russia-Ukraine

Here’s a current list of what some major corporations are (and are not) doing vis-a-vis Russia’s invasion of Ukraine as of Friday, March 4th 2022. This is rapidly changing, of course, and I cannot guarantee I’ll be keeping it up-to-date. Be sure to double-check their latest policies.

As Russia’s attack on Ukraine heads into its second week, corporations around the world are taking unprecedented action. Here are some of the more notable actions as of this writing. This is changing rapidly, and far from comprehensive; I encourage you to verify directly with the companies what their current policy is.

UPDATE, March 5th 2022: Visa just announced they are suspending all Russia operations.

Want the latest? Here’s a preformatted Google query you can use: (“suspends” + “russia” + “ukraine”). Drag it to your Favorites and glance at it every now and then. Pretty remarkable.

Apple: The global tech leader has paused product sales in Russia. It’s limited access to its mobile payment service Apple Pay. It has disabled traffic and live updates Apple Maps. And on its App Store, it has restricted the availability of Russian state media apps, including RT and Sputnik, for download outside Russia.

Microsoft: President and Vice Chair Brad Smith stated on Friday that Microsoft is “horrified, angered and saddened” by the images coming in from the war in Ukraine, and condemns the action as unjustified and unlawful. It suspended all new sales of Microsoft products and services in Russia. In addition, they have already blocked cyberattacks and pledged continuing work with Ukraine on cybersecurity.

Oracle is halting its Russian operations.

Exxon has announced it is halting its Russian oil operations, and it will “make no further investments in the country.”

Boeing has ceased providing parts, maintenance and technical support services to airlines in Russia. Boeing has also closed its offices in Moscow and in Ukraine’s capital of Kyiv.

Nike is its closing stores and pausing operations in Russia.

Meta: The rebranded social network that owns Facebook, Instagram, and WhatsApp restricted access to RT and Sputnik within the EU and prohibited Russian state media from running ads or monetizing on its platforms anywhere in the world. Facebook also refused to stop fact-checking and labeling content from Russian state-owned news organizations — a move that the country called “censorship.”

Amazon has not yet said it is altering operations, but has pledged $5 million in donation to on-the-ground organizations, and will match up to $5 million more in employee donations.

Alphabet: Google’s parent company has removed Russian state-funded media, including RT, from its news-related features and the Google News search tool. It also paused Russian state media services’ ability to monetize through Google Ads on its websites and apps. In addition, it has banned Russian state media from using Google tools to buy ads and from placing ads on Google services, like Gmail. Google Pay, the company’s digital wallet, blocked several Russian financial institutions from its network. Google temporarily disabled Google Maps live traffic data in Ukraine, following reports it was being used to track the movements of Ukrainian civilians and soldiers.

A widely circulated photo on Twitter appears to have confirmed that Google Pay and Apple Pay have been restricted:

Image
Source here.

IKEA has shut its 17 stores in Russia and is suspending exports and imports in and out of both Russia and Belarus.

Cogent Communications, a major long-haul Internet provider, said today it will begin shutting down Russian customers’ access to its services. This will be effective Friday March 4th, 12PM Eastern time. The CEO said their decision was swayed by signs that Cogent’s network may have been used in carrying out some cyberattacks.

SpaceX‘s Starlink terminals arrived in Ukraine on Monday, the country’s vice prime minister confirmed.

Ford has closed its three plants in Russia indefinitely.

T-Mobile has extended waiving international long-distance and international roaming charges for calls made to/from US and Ukraine, Belarus, Hungary, Moldova, Poland, Romania, and Slovakia for T-Mobile and Sprint postpaid consumer and business customers through March 9, and T-Mobile Prepaid and Metro customers through March 9. They are also making two text-to-give codes available to two specific non-governmental organizations (NGO’s), which can be found here.

General Motors has suspended operations in Russia.

Jaguar Land Rover, Aston Martin and Rolls-Royce have halted deliveries of vehicles to Russia.

Twitter has restricted ads and other content from Russian state media.

Meta and YouTube have restricted content from certain Russian media outlets.

At this writing, McDonalds, Starbucks, PepsiCo and Coca Cola have not announced any changes to sales in Russia, and are under increasing pressure from activists online. Some have announced they are donating food to those in Ukraine.

Shell announced it would end its $3 billion partnership with Russian state energy company Gazprom.

Netflix said it would not broadcast 20 state-run propaganda channels in Russia, defying a Russian law on “must-carry” channels.

In the world of sport, FIFA and UEFA have suspended Russian clubs and national teams from all competitions. The International Skating Union, the body which runs that sport around the world, declared that no Russian or Belarus athletes shall be invited to competition. Skiing, rowing, badminton federations have all banned Russian and Belarusian participation. Major tennis bodies have not yet restricted competitors from Russia.

BP said it is divesting its $14 billion stake from Russian oil giant Rosneft over the invasion.

Disney, Sony and Warner Bros. are pausing planned film releases in Russia.

J.P. Morgan Asset Management suspended trading in two of its equity funds with Russian ties, per a spokeswoman.

France’s Societe Generale warned on March 3rd that Russia could strip the French bank of its local operations and assets. Their $20 billion exposure in Russia is among the largest of Western banks.

FedEx and UPS have suspended shipments into Russia.

Half of the world’s container ships will no longer go to and from the country.

Airbnb announced free accommodation for 100,000 Ukrainian refugees. The company said that more than 25,000 people had visited the link for hosts since. Several consumers are using Airbnb to send money directly to “hosts” in Ukraine and neighboring countries.

New HHS Reporting Guidelines Risk Stoking Greater Worry About Pediatric COVID

The department of Health and Human Services is dropping the requirement that hospitals report daily COVID deaths, yet adding a bunch of pediatric metrics which will make pediatric problem look much larger.

On January 6th 2022, the Department of Health and Human Services (HHS) made significant changes to the guidelines by which hospitals report COVID-related statistics. New fields were added, and several fields were dropped. HHS mandates that these new changes be complied with by February 2nd. But these changes don’t seem benign to me — they risk misinterpretation and overstatement of the level of worry we should have about serious COVID in America’s youngest. And two full years into the pandemic, HHS missed yet another easy, obvious opportunity to help us better distinguish between worrisome and non-worrisome cases.

HHS has required that hospitals report key indicator data for a long time. They make adjustments to what is required from time to time. That, in and of itself, is not new. What is new is that they are now requiring several additional fields related to pediatric patient statistics that in aggregate risk the creation of alarming new headlines in a month or two, specifically about pediatric COVID. At the same time, HHS is also dropping the requirement that America’s hospitals report daily COVID-19 deaths. Yes, you read that right; it’s a very surprising directive; we’ll get to that in a moment.

The net result of these changes is that it is we will likely soon see media reports along the lines of “Pediatric COVID Hospitalizations Rise Alarmingly,” and “Pediatric ICU Beds Near Capacity,” when the underlying truth is that worrisome COVID among our youngest adults has been, and remains, extremely low — at the level we should worry about seasonal influenza.

What new data does HHS now want? They’re highlighted in blue in the screenshot below [source: COVID-19 Guidance for Hospital Reporting and FAQs (hhs.gov).]

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COVID-19 Guidance for Hospital Reporting and FAQs (hhs.gov)

Needless to say, the downstream impact of overstating the severity of pediatric cases can be very significant. It “bolsters” the case for unnecessarily prolonged mandates, school and college restrictions, elimination of activities, mandated boosters, masking, and yanking yet more childhood away from those who have always been least at risk of severe outcomes. Kids have inarguably already paid an enormous price in their childhood and mental health toward COVID mitigation, and it’s important that we get the most accurate picture of risks to them to chart the path of least overall harm. This reporting change and the downstream misinterpretations are quite likely to prolong it.

The risk to 0-18 year-olds of severe outcome due to COVID is exceedingly low. At this writing, of the more than 850,000 Americans who have died with or from COVID, the number of 0-18 year-olds who have died with or from COVID stands at fewer than 900. Kids are at greater risk of dying from suicide and vehicular accidents than COVID. They’re not at zero risk, but their infection fatality rate due to COVID is below 0.003%. Every day, when we drive our kids on the highway, we’ve decided that the risk/reward tradeoff is worth it, and that while highway danger is present, it’s not so alarming as to keep everyone home forever.

Overall, risk of fatality due to COVID is lowest for our youngest. Luckily, we as a society now generally understand that. But we still greatly overestimate just how age-weighted COVID is.

Number of COVID-19 deaths in the US as of January 12, 2022, by age. Statista.com. Keep in mind that this is death WITH COVID, not necessarily DUE TO COVID.

The New York Times visualized CDC mortality risk data this way, back in May of 2021:

But now, because hospitals are being required to report pediatric ICU beds and the number of pediatric patients in ICU with COVID, it will tend to make for easy, alarming click-bait headlines.

How so? Well, let’s say you’re operating a medium-sized hospital. More than a year ago, your hospital wisely instituted a policy during this infectious pandemic: all admitted patients are to be tested for COVID, regardless of whether they show symptoms.

That’s precisely as my own local hospital has instituted (see purple highlighted text); I encourage you to take a moment to check your own:

UW Hospital Tests All Admitted Patients. Stop for a moment, and check your own local hospital.

That’s a wise policy; I have no problem with that.

But here’s how that, plus the new metrics above, add fog. Let’s say you have 5 ICU beds dedicated to your pediatric wing. A recent icy weekend has caused four of those beds to be occupied: two by kids with broken bones for serious injury, one for a grave car accident, and one who has presented for appendicitis. Note that zero of them presented to the hospital because of COVID, but upon mandatory routine testing, it was detected that four of them are asymptomatically COVID-positive because there’s an outbreak in your region at the moment.

Your accurate reporting to HHS, under these new guidelines, will be that 80% of your pediatric ICU beds were taken up by COVID patients. Now, sum that same scenario up from thousands of hospitals across the country, and render it on a nice-looking dashboard. Journalists from around the country will read the dashboard and rush to their media feeds with semi-accurate but extremely misleading headlines: “80% of Pediatric Beds Taken Up By COVID Patients,” or “Alarming Rise in Serious COVID Cases in Young Adults.” Animated infographics will show that pediatric COVID is on a sharp rise because, at a minimum, hospitals weren’t required to break out this data before. Scary infographics will course through social media, and be trotted out by the largest teachers unions and other “let’s close the schools” advocates.

Most maddeningly, HHS is entirely passing up an easy opportunity to actually differentiate between worrisome cases and non-worrisome cases. It’s as simple as this: Did the patient present to the hospital because of COVID-like symptoms, or not? Doctor, nurse or even patient — check a box. Then, allow the slicing and dicing based upon that key variable. Yet here we are, two years into this pandemic, and HHS is not even attempting to ask hospitals to start reporting whether patients are in the hospital because of COVID, or whether they incidentally tested positive.

It’s not like this is some kind of secret revelation, unknown to officials. People like me have been pointing the “with vs. from” distinction out for more than a year. And finally, even Dr. Fauci admitted in late December 2021 that these two conditions, incidental vs. causal, are quite different, explaining it as though it were a new concept:

It’s not just what HHS is adding, it’s what reporting requirements they are dropping. I want to draw your attention to these five in particular:

HHS is removing the requirement that hospitals report the prior day’s death with COVID-19. Daily deaths will still flow through to the CDC via a separate process, but removing daily death counts will make it much harder to separate worrisome cases from non-worrisome cases, because we won’t be able to see infection-fatality-rates for same-hospital data. We also won’t be able to know that zero patients are on ventilators, for instance — another (old) indication of severity.

Note too that HHS is shielding from reporting the need for hospitals to disclose anything about staffing shortages — both the quantity and explanatory fields. It cannot go unnoticed that a substantial cause of many staffing shortages (NPR) at hospitals and elsewhere has been the imposed mandates that they be vaccinated. More here (Business Insider, and here (WSJ).

So, why these changes? As always, I must ask — who benefits by obscuring this picture? I have some hypotheses. But I’ll leave that exercise for now, to the reader.

The Filter Bubble, Lenses and Belonging

Being willing to update one’s prior assumptions in the face of new evidence is the essence of learning. If you haven’t changed your mind on something important in the past five years, check your filter bubble.

My friend and long-time Pacific Northwest journalist Joel Connelly penned a thought-provoking piece this morning, “Distress: I’m Watching Friends Fall for Inexplicable Conspiracy Theories.” In it, he reflects upon the regrettable turn that several of his friends have taken, embracing right-wing conspiracy theories. I agree with very much of his piece, but it gave me a moment to reflect upon Blue Shibboleths and Red Shibboleths, and offered some response in the comments. Those thoughts are expanded upon below.

With rare exception, members of Team Red don’t want to confront Red Shibboleths (stolen election, QAnon, anti-vaxxers, that January 6th was somehow benign, etc.) The excommunication costs are very high. Just witness Ted Cruz’s pathetic groveling on FOX a few nights ago. Or tune into Glenn Youngkin’s and Ron De Santis’ nuanced dance with Trump, doing everything to stay close to his base, but never directly calling him out on his many lies and bullying attempts.

So, mostly, we agree. But the beef I sometimes have with pieces like Joel’s are that members of Team Blue, long-ago convinced that They Are Science Itself, too often don’t even want to acknowledge that there are any Blue Shibboleths at all. Usually, the formula involves invoking “QAnon” to show their comparative adherence to the truth.

But eventually, the whiplash arrives. The camera zooms out. We get to see the unedited video, and we realize that the initial portrayals weren’t quite as we were told. Or in other contexts, thousands of natural experiments are run in the real world, and cloth masks, which for months we elevated into a tribal signifier of our very righteousness and compassion, don’t seem to stop or even slow the spread of an aerosol-borne virus. Or multiple large-scale studies (1, 2) start to trickle in which show that vaccination does not in fact durably reduce transmission, entirely undermining the ethical justification for vaccination mandates, vaccine passports and forced-masking of extremely low-risk young adults.

[N.B., I support vaccination, and am fully vaccinated and boosted myself, as is my family of five. It’s a step we can take that very clearly seems to lessen the risk of severe outcomes. But I do not support that they be mandated. I support informed choice.]

The question is, what do we do in the face of new evidence? Do we double-down and seek the comfort of our tribe, or are we willing to update our priors, and change our minds? And what is preventing us from this change-of-mind? It’s not solely mental inertia. It’s desire, too. Desire to belong, yes, but also avoidance of the pain which is sure to follow if someone dares to confront the momentum and belonging of one’s own tribe.

Belonging is an essential human need. That’s why solitary confinement is among the cruelest punishment.

We in America have destroyed many of the cultural institutions of belonging, from churches to scouting to national pride to even, at times, the family itself. Opportunities for belonging have changed. Today, the greatest sense of belonging comes from cultural affiliation and political tribes, which are increasingly one and the same. Virtue-signaling is a way to say “See, I’m one of you. I belong with you, and you belong with me.” But for far too many of these churches of belonging — you’ve got to buy into the whole enchilada or none at all. Technology has been all too happy to oblige. It’s never been easier or more effortless to wall oneself into an information silo, where no contravening fact may penetrate, and you’re engulfed by information affirming both your correctness and your righteousness.

So, I’m independent, and have been all my life. It’s lonely, but one great luxury of never donning the red or blue jersey in the first place is that we can look at the -evidence- for and against something, and update our priors based on new evidence. In fact, updating our prior assumptions in the face of new evidence is, I’d argue, the very essence of learning. We feel no compunction to buy into the entire panoply of ideas. It’s liberating. It allows me to support both responsible gun control legislation and more clearly assess actuarial risk to, say, K-12’s to advocate for paths of their least harm, even in a pandemic. It allows me to initially support masking and even remote schooling in March 2020, but then look at the data from areas which did not do these interventions along about June 2020, and admit that I was wrong, and come to the conclusion that this was not the path of least harm, and that we should update our approach.

Many popular Red Shibboleths and Blue Shibboleths really need to be put to the “does it stand up to the preponderance of the evidence?” test. For me, the evidence from November 3rd, 2020 onward pretty thoroughly confirms that Joe Biden is our duly elected 46th president:

Despite dozens of legal efforts, there’s still no credible evidence whatsoever that the election was “stolen” in any way. And evidence debunks essentially all the whacky, corny, absurd shibboleths at the heart of QAnon.

But facts are stubborn things, and they don’t favor team red or team blue.

The preponderance of the evidence suggests that the Steele “Dossier” was a political hit job, initially undertaken by a Republican Trump opponent but then expanded upon by the Clinton campaign. And then, somehow, this completely unsubstantiated document found its way into the highest levels of the FBI and consumed much of the blue press — and therefore us — for three full years, until Robert Mueller was finally able to say there was nothing really there, there. No collusion.

The preponderance of the evidence also strongly suggests that the greatest pandemic in our lifetime may very well NOT have sprung spontaneously from wildlife, but perhaps accidentally from a lab in Wuhan. Twenty-plus year NYT Science writer Don McNeil’s piece is well worth a read, if it’s escaped your own filter bubble: “How I Learned to Stop Worrying And Love the Lab-Leak Theory.” I don’t know how anyone can read that piece, or many others on this subject (or the book “Viral,” by Matt Ridley and Alina Chen), and not come to the conclusion about where the preponderance of the evidence. Proof beyond a reasonable doubt? No, not yet. Preponderance.

Accidents happen, even hugely consequential ones. Just as it was important to know precisely how Chernobyl happened, it is vital to know how the worst crisis in world health came to be. And in that process, we have to ask the questions that we still haven’t yet gotten good answers to, such as, how, precisely, did US gain of function research techniques from UNC and elsewhere find its way to Wuhan, despite an explicit moratorium against it? After following the evidence pretty closely, it’s not clear to me that Dr. Fauci deserves his fiercely-defended hagiographic status, because he’s been very unwilling to open the books on just how this happened. And he’s not been forthright about it in Congress.

There’s also very substantial evidence (also here and here) that Fauci worked with Collins at NIH to shut down reasonable scientific debate about a different mitigation strategy than the one he favored. Is that what a scientific researcher should do, or should he rather invite reasonable scientific debate in the open? In particular, if you think Fauci has been nothing but a saintly actor, read this piece from one of Fauci’s targets, Stanford MD/PhD Dr. Jay Bhattacharya, co-author of the Great Barrington Declaration.

I think the “focused protection” model Bhattacharya advocated shouldn’t have been tarred and shut down from public discourse. In fact, in hindsight, a pretty strong case can be mustered that it was, in fact, the path of least overall harm.

So no, I’m not sure those who criticize Fauci deserve to be tossed in with the crazies — that’s just not what the evidence currently suggests.