June 2017


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With no material change to our investment outlook, I’ll keep this comment brief. On the basis of the most reliable valuation measures we identify (those most tightly correlated with actual subsequent 10-12 year S&P 500 total returns), current market valuations stand about 140-165% above historical norms. No market cycle in history, even those prior to the mid-1960s when interest rates were similarly low, has failed bring valuations within 25% of these norms, or lower, over the completion of the market cycle. On a 12-year horizon, we project likely S&P 500 nominal total returns averaging close to zero, with the likelihood of an interim market loss on the order of 50-60% over the completion of the current cycle.

As I’ve observed for decades, even a richly overvalued market can move higher, providedthat investors remain inclined to speculate, which we infer from the uniformity of market action across a broad range of market internals (when investors are inclined to speculate, they tend to be indiscriminate about it). In prior market cycles across history, however, even favorable market internals were overruled once extreme “overvalued, overbought, overbullish” syndromes emerged. The half-cycle since 2009 was different. In the face of zero interest rates, yield-seeking speculation persisted even after those extreme syndromes emerged. The best indication of that speculative mindset is that market internals remained uniformly favorable during most of the period prior to mid-2014. Importantly, even since 2009, the S&P 500 has lost ground, on average, in periods when extreme overvalued, overbought, overbullish syndromes were accompanied by deteriorating market internals. That’s the situation we observe at present.

Put simply, with market internals unfavorable and interest rates off the zero bound, the two main supports that made the half-cycle since 2009 “different” have already been kicked away. From here, we expect the dynamics of this market cycle to resemble other periods when offensive valuations and extreme overvalued, overbought, overbullish syndromes were joined by deteriorating market internals (particularly when interest rates were off their lows). Short term market outcomes are anybody’s guess, but across history, that overall combination has typically defined crash dynamics.

Notably, we’ve observed a widening of internal dispersion in recent weeks. For example, weekly NYSE new lows have averaged about 4% of traded issues recently, with nearly 6% last week, even with the S&P 500 near record highs. Meanwhile, nearly 40% of stocks are already below their 200-day averages. I’ve noted before that raw “Hindenburg Omens” (days when both NYSE new highs and new lows exceed about 2.5% of traded issues) are typically not ominous at all. The exception is where they are accompanied by a broader syndrome of tepid market breadth even with the major indices still elevated, when multiple signals appear in close succession, and when market internals are unfavorable on our own measures. On that note, we’ve observed 4 such daily signals in recent weeks, with two last week alone. We saw similar widening of internal dispersion in December 1999, July and November 2007, and July-August 2015. Still there are a few signals such as 2006 and 2013 that were followed by only minor hiccups. That improves the average outcome, though the average is still negative overall.

Overall, our current market outlook remains strongly negative, but we would be inclined to adopt a more neutral outlook if our measures of market internals were to improve. As I’ve often observed, the most favorable market return/risk profile we identify typically emerges when a material retreat in valuations is joined by an early improvement in market action. Whether that occurs after a moderate correction, or after a market collapse, that’s the combination most likely to move us to a constructive or aggressive outlook, depending on the status of valuations and other conditions at that point. The most extreme overextended syndromes we identify are now accompanied by deteriorating market internals and interest rates that are well off the zero bound. My impression is that without a shift back to uniformly favorable market internals, the continued faith in monetary support may prove to be the same awful bet it was during the 2000-2002 and 2007-2009 collapses, both which were accompanied by aggressive monetary easing all the way down.

We’ll take our evidence as it arrives.

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Computers don’t exist in a vacuum. They serve to solve problems, and the type of problems they can solve are influenced by their hardware. Graphics processors are specialized for rendering images; artificial intelligence processors for AI; and quantum computers designed for…what?

While the power of quantum computing is impressive, it does not mean that existing software simply runs a billion times faster. Rather, quantum computers have certain types of problems which they are good at solving, and those which they aren’t. Below are some of the primary applications we should expect to see as this next generation of computers becomes commercially available.

 

Artificial Intelligence

A primary application for quantum computing is artificial intelligence (AI). AI is based on the principle of learning from experience, becoming more accurate as feedback is given, until the computer program appears to exhibit “intelligence.”

This feedback is based on calculating the probabilities for many possible choices, and so AI is an ideal candidate for quantum computation. It promises to disrupt every industry, from automotives to medicine, and it’s been said AI will be to the twenty-first century what electricity was to the twentieth.

For example, Lockheed Martin plans to use its D-Wave quantum computer to test autopilot software that is currently too complex for classical computers, and Google is using a quantum computer to design software that can distinguish cars from landmarks. We have already reached the point where AI is creating more AI, and so its importance will rapidly escalate.

Molecular Modeling

Another example is precision modeling of molecular interactions, finding the optimum configurations for chemical reactions. Such “quantum chemistry” is so complex that only the simplest molecules can be analyzed by today’s digital computers.

Chemical reactions are quantum in nature as they form highly entangled quantum superposition states. But fully-developed quantum computers would not have any difficulty evaluating even the most complex processes.

Google has already made forays in this field by simulating the energy of hydrogen molecules. The implication of this is more efficient products, from solar cells to pharmaceutical drugs, and especially fertilizer production; since fertilizer accounts for 2 percent of global energy usage, the consequences for energy and the environment would be profound.

Cryptography

Most online security currently depends on the difficulty of factoring large numbers into primes. While this can presently be accomplished by using digital computers to search through every possible factor, the immense time required makes “cracking the code” expensive and impractical.

Quantum computers can perform such factoring exponentially more efficiently than digital computers, meaning such security methods will soon become obsolete. New cryptography methods are being developed, though it may take time: in August 2015 the NSA began introducing a list of quantum-resistant cryptography methods that would resist quantum computers, and in April 2016 the National Institute of Standards and Technology began a public evaluation process lasting four to six years.

There are also promising quantum encryption methods being developed using the one-way nature of quantum entanglement. City-wide networks have already been demonstrated in several countries, and Chinese scientists recently announced they successfully sent entangled photons from an orbiting “quantum” satellite to three separate base stations back on Earth.

Financial Modeling

Modern markets are some of the most complicated systems in existence. While we have developed increasingly scientific and mathematical tools to address this, it still suffers from one major difference between other scientific fields: there’s no controlled setting in which to run experiments.

To solve this, investors and analysts have turned to quantum computing. One immediate advantage is that the randomness inherent to quantum computers is congruent to the stochastic nature of financial markets. Investors often wish to evaluate the distribution of outcomes under an extremely large number of scenarios generated at random.

Another advantage quantum offers is that financial operations such as arbitrage may require many path-dependent steps, the number of possibilities quickly outpacing the capacity of a digital computer.

Weather Forecasting

NOAA Chief Economist Rodney F. Weiher claims (PowerPoint file) that nearly 30 percent of the US GDP ($6 trillion) is directly or indirectly affected by weather, impacting food production, transportation, and retail trade, among others. The ability to better predict the weather would have enormous benefit to many fields, not to mention more time to take cover from disasters.

While this has long been a goal of scientists, the equations governing such processes contain many, many variables, making classical simulation lengthy. As quantum researcher Seth Lloyd pointed out, “Using a classical computer to perform such analysis might take longer than it takes the actual weather to evolve!” This motivated Lloyd and colleagues at MIT to show that the equations governing the weather possess a hidden wave nature which are amenable to solution by a quantum computer.

Director of engineering at Google Hartmut Neven also noted that quantum computers could help build better climate models that could give us more insight into how humans are influencing the environment. These models are what we build our estimates of future warming on, and help us determine what steps need to be taken now to prevent disasters.

The United Kingdom’s national weather service Met Office has already begun investing in such innovation to meet the power and scalability demands they’ll be facing in the 2020-plus timeframe, and released a report on its own requirements for exascale computing.

Particle Physics

Coming full circle, a final application of this exciting new physics might be… studying exciting new physics. Models of particle physics are often extraordinarily complex, confounding pen-and-paper solutions and requiring vast amounts of computing time for numerical simulation. This makes them ideal for quantum computation, and researchers have already been taking advantage of this.

Researchers at the University of Innsbruck and the Institute for Quantum Optics and Quantum Information (IQOQI) recently used a programmable quantum system to perform such a simulation. Published in Nature, the team used a simple version of quantum computer in which ions performed logical operations, the basic steps in any computer calculation. This simulation showed excellent agreement compared to actual experiments of the physics described.

“These two approaches complement one another perfectly,” says theoretical physicist Peter Zoller. “We cannot replace the experiments that are done with particle colliders. However, by developing quantum simulators, we may be able to understand these experiments better one day.”

Investors are now scrambling to insert themselves into the quantum computing ecosystem, and it’s not just the computer industry: banks, aerospace companies, and cybersecurity firms are among those taking advantage of the computational revolution.

While quantum computing is already impacting the fields listed above, the list is by no means exhaustive, and that’s the most exciting part. As with all new technology, presently unimaginable applications will be developed as the hardware continues to evolve and create new opportunities.

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This will form the foundation:

(Phys.org)—Researchers have built a new type of “neuron transistor”—a transistor that behaves like a neuron in a living brain. These devices could form the building blocks of neuromorphic hardware that may offer unprecedented computational capabilities, such as learning and adaptation.

The researchers, S. G. Hu and coauthors at the University of Electronic Science and Technology of China and Nanyang Technological University in Singapore, have published a paper on the neuron transistor in a recent issue of Nanotechnology.

In order for a transistor to behave like a biological neuron, it must be capable of implementing neuron-like functions—in particular, weighted summation and threshold functions. These refer to a biological neuron’s ability to receive weighted input signals from many other neurons, and then to sum the input values and compare them to a threshold value to determine whether or not to fire. The human brain has tens of billions of neurons, and they are constantly performing weighted summation and threshold functions many times per second that together control all of our thoughts and actions.

In the new study, the researchers constructed a neuron transistor that acts like a single neuron, capable of weighted summation and threshold functions. Instead of being made of silicon like conventional , the neuron transistor is made of a two-dimensional flake of molybdenum disulfide (MoS2), which belongs to a new class of semiconductor called .

To demonstrate the neuron transistor’s neuron-like behavior, the researchers showed that it can be controlled by either one gate or two gates simultaneously. In the latter case, the neuron transistor implements a summation . To demonstrate, the researchers showed that the neuron transistor can perform a counting task analogous to moving the beads in a two-bead abacus, along with other logic functions.

One of the advantages of the neuron transistor is its operating speed. Although other neuron transistors have already been built, they typically operate at frequencies of less than or equal to 0.05 Hz, which is much lower than the average firing rate of biological  of about 5 Hz. The new neuron transistor works in a wide frequency range of 0.01 to 15 Hz, which the researchers expect will offer advantages for developing neuromorphic hardware.

In the future, the researchers hope to add more control gates to the neuron transistor, creating a more realistic model of a biological neuron with its many inputs. In addition, the researchers hope to integrate neuron transistors with memristors (which are considered to be the most suitable device for implementing synapses) to construct neuromorphic systems that can work in a similar way to the brain.

 

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All of his bankruptcies, court cases, divorces, have only [seemingly] made him stronger. Currently with the special investigation ongoing, he continues to tweet, arguably making his case weaker, vitriolic press, yet, still he endures as POTUS.

I don’t see him resigning, being impeached, or any other impediment unseating him from power before he would need to seek re-election.

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Police can take your money or property and keep it, even if no charges are filed. Clarence Thomas is famously taciturn on the bench. But his few words carry a great deal of weight. Though the matter has not yet come before the Supreme Court, Justice Thomas is very much at the center of a federal case with a name that sounds like it ought to have come from a William Gaddis novel: United States v. Seventeen Thousand Nine Hundred Dollars in United States Currency. The case has the potential to help rein in one of the most abused powers enjoyed by American government: asset forfeiture. The case involves a New York couple, Angela Rodriguez and Joyce Copeland, who lost the above-mentioned $17,900 to police in a case in which no charges were ever filed against them. They sued for recovery of their money, and — incredibly — a federal court found that they lacked standing to sue for possession of their own assets.

The D.C. Circuit Court sees things differently and has ruled in favor of allowing Rodriguez and Copeland to at least have their day in court and attempt to reclaim their money. Current asset-forfeiture practice, like much that is wrong with U.S. law enforcement, has its roots in the so-called war on drugs. The practice of seizing assets is ancient: It dates back at least to 17th-century maritime law, under which ships illegally transporting goods would be seized, along with the contraband inside.

Asset forfeiture was used against bootleggers during Prohibition, but it really came into its own in the Reagan era, when the Comprehensive Crime Control Act of 1984 empowered federal and local law-enforcement agencies to take property from drug kingpins for their own use. The sudden, unlikely inventory of exotic cars and yachts possessed by law-enforcement agencies inspired that great cultural document of the 1980s: Miami Vice.

Asset forfeiture creates an obvious conflict of interest for law-enforcement agencies: Because the proceeds go into their budgets, they have a vested interest in maximizing the use of forfeiture in their jurisdictions. You will be less than surprised to learn that this has produced some serious abuses, and the law-enforcement tool intended to be used against centimillionaire cartel bosses inevitably ends up being used to harass — and loot — nobodies in East Funky.

That is the nature of such innovations in government. It is why the city won’t fix your potholes but the revenue-producing red-light camera is never on the fritz for long. (Here’s a prediction: In a fashion similar to that of the weapons in the war on drugs, the tools created for the so-called war on terror are going to present acute problems for Americans in 20 years — far beyond what they already have — as their metastatic spread throughout government continues.)

The spreading use of forfeiture has of course drawn resistance amid concerns about due process and outright abuse. The Supreme Court declined to hear a high-profile forfeiture case, Leonard v. Texas, for procedural reasons. But Justice Thomas issued a statement on the case that was both erudite and blistering. It was also very humane: Justice Thomas has a keen interest in the literary details as well as the legal ones. He wrote: This system — where police can seize property with limited judicial oversight and retain it for their own use — has led to egregious and well-chronicled abuses.

According to one nationally publicized report, for example, police in the town of Tenaha, Texas, regularly seized the property of out-of-town drivers passing through and collaborated with the district attorney to coerce them into signing waivers of their property rights. In one case, local officials threatened to file unsubstantiated felony charges against a Latino driver and his girlfriend and to place their children in foster care unless they signed a waiver. In another, they seized a black plant worker’s car and all his property (including cash he planned to use for dental work), jailed him for a night, forced him to sign away his property, and then released him on the side of the road without a phone or money. He was forced to walk to a Wal-Mart, where he borrowed a stranger’s phone to call his mother, who had to rent a car to pick him up.

These forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings. Perversely, these same groups are often the most burdened by forfeiture. They are more likely to use cash than alternative forms of payment, like credit cards, which may be less susceptible to forfeiture. And they are more likely to suffer in their daily lives while they litigate for the return of a critical item of property, such as a car or a home.

The issue, Justice Thomas wrote, is “whether modern civil-forfeiture statutes can be squared with the Due Process Clause and our Nation’s history.” Because these asset-forfeiture proceedings are civil rather than criminal actions, their targets do not enjoy the ordinary procedural protections that they would if they were charged with crimes, the most important of those being jury trials and the heightened standard of evidence demanded in criminal proceedings. Forfeiture cases in effect allow police to punish people for committing crimes without having to go to the trouble of proving that they have committed those crimes. And the fact that the police get to keep the money does not exactly discourage them.

The fact that the practice is a longstanding one does not mean that it is a constitutional one. The fact that the practice is a longstanding one does not mean that it is a constitutional one. We are not seizing the unflagged vessels of smugglers at colonial ports; and even if we were, it is not clear, as Justice Thomas notes, that those seizures were permitted to advance as purely civil matters unconnected to any underlying criminal charge. Due process does not have a great many friends just now: Congressional Democrats have made a campaign out of revoking the civil rights of Americans put on secret government terrorism watch lists, even if those people have never been charged with, much less convicted of, any actual crime.

These episodes are a constant reminder that what conservatives intend to conserve, and what progressives intend to progress away from, is Anglo-American liberalism, with its individual rights, procedural justice, and rule of law. Leonard wasn’t the case that will be used to sort out forfeiture, but Justice Thomas’s Leonard statement was repeatedly cited in the ruling for the plaintiffs in United States v. Seventeen Thousand Nine Hundred Dollars in United States Currency. Justice Thomas may not say very much on the bench, but he has made it clear that when forfeiture finally does come before the nation’s highest court, at least one gimlet-eyed justice is going to be skeptical.

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BEIJING — What worries you about the coming world of artificial intelligence?

Too often the answer to this question resembles the plot of a sci-fi thriller. People worry that developments in A.I. will bring about the “singularity” — that point in history when A.I. surpasses human intelligence, leading to an unimaginable revolution in human affairs. Or they wonder whether instead of our controlling artificial intelligence, it will control us, turning us, in effect, into cyborgs.

These are interesting issues to contemplate, but they are not pressing. They concern situations that may not arise for hundreds of years, if ever. At the moment, there is no known path from our best A.I. tools (like the Google computer program that recently beat the world’s best player of the game of Go) to “general” A.I. — self-aware computer programs that can engage in common-sense reasoning, attain knowledge in multiple domains, feel, express and understand emotions and so on.

This doesn’t mean we have nothing to worry about. On the contrary, the A.I. products that now exist are improving faster than most people realize and promise to radically transform our world, not always for the better. They are only tools, not a competing form of intelligence. But they will reshape what work means and how wealth is created, leading to unprecedented economic inequalities and even altering the global balance of power.

It is imperative that we turn our attention to these imminent challenges.

What is artificial intelligence today? Roughly speaking, it’s technology that takes in huge amounts of information from a specific domain (say, loan repayment histories) and uses it to make a decision in a specific case (whether to give an individual a loan) in the service of a specified goal (maximizing profits for the lender). Think of a spreadsheet on steroids, trained on big data. These tools can outperform human beings at a given task.

This kind of A.I. is spreading to thousands of domains (not just loans), and as it does, it will eliminate many jobs. Bank tellers, customer service representatives, telemarketers, stock and bond traders, even paralegals and radiologists will gradually be replaced by such software. Over time this technology will come to control semiautonomous and autonomous hardware like self-driving cars and robots, displacing factory workers, construction workers, drivers, delivery workers and many others.

Unlike the Industrial Revolution and the computer revolution, the A.I. revolution is not taking certain jobs (artisans, personal assistants who use paper and typewriters) and replacing them with other jobs (assembly-line workers, personal assistants conversant with computers). Instead, it is poised to bring about a wide-scale decimation of jobs — mostly lower-paying jobs, but some higher-paying ones, too.

This transformation will result in enormous profits for the companies that develop A.I., as well as for the companies that adopt it. Imagine how much money a company like Uber would make if it used only robot drivers. Imagine the profits if Apple could manufacture its products without human labor. Imagine the gains to a loan company that could issue 30 million loans a year with virtually no human involvement. (As it happens, my venture capital firm has invested in just such a loan company.)

We are thus facing two developments that do not sit easily together: enormous wealth concentrated in relatively few hands and enormous numbers of people out of work. What is to be done?

Part of the answer will involve educating or retraining people in tasks A.I. tools aren’t good at. Artificial intelligence is poorly suited for jobs involving creativity, planning and “cross-domain” thinking — for example, the work of a trial lawyer. But these skills are typically required by high-paying jobs that may be hard to retrain displaced workers to do. More promising are lower-paying jobs involving the “people skills” that A.I. lacks: social workers, bartenders, concierges — professions requiring nuanced human interaction. But here, too, there is a problem: How many bartenders does a society really need?

The solution to the problem of mass unemployment, I suspect, will involve “service jobs of love.” These are jobs that A.I. cannot do, that society needs and that give people a sense of purpose. Examples include accompanying an older person to visit a doctor, mentoring at an orphanage and serving as a sponsor at Alcoholics Anonymous — or, potentially soon, Virtual Reality Anonymous (for those addicted to their parallel lives in computer-generated simulations). The volunteer service jobs of today, in other words, may turn into the real jobs of the future.

Other volunteer jobs may be higher-paying and professional, such as compassionate medical service providers who serve as the “human interface” for A.I. programs that diagnose cancer. In all cases, people will be able to choose to work fewer hours than they do now.

Who will pay for these jobs? Here is where the enormous wealth concentrated in relatively few hands comes in. It strikes me as unavoidable that large chunks of the money created by A.I. will have to be transferred to those whose jobs have been displaced. This seems feasible only through Keynesian policies of increased government spending, presumably raised through taxation on wealthy companies.

As for what form that social welfare would take, I would argue for a conditional universal basic income: welfare offered to those who have a financial need, on the condition they either show an effort to receive training that would make them employable or commit to a certain number of hours of “service of love” voluntarism.

To fund this, tax rates will have to be high. The government will not only have to subsidize most people’s lives and work; it will also have to compensate for the loss of individual tax revenue previously collected from employed individuals.

This leads to the final and perhaps most consequential challenge of A.I. The Keynesian approach I have sketched out may be feasible in the United States and China, which will have enough successful A.I. businesses to fund welfare initiatives via taxes. But what about other countries?

They face two insurmountable problems. First, most of the money being made from artificial intelligence will go to the United States and China. A.I. is an industry in which strength begets strength: The more data you have, the better your product; the better your product, the more data you can collect; the more data you can collect, the more talent you can attract; the more talent you can attract, the better your product. It’s a virtuous circle, and the United States and China have already amassed the talent, market share and data to set it in motion.

For example, the Chinese speech-recognition company iFlytek and several Chinese face-recognition companies such as Megvii and SenseTime have become industry leaders, as measured by market capitalization. The United States is spearheading the development of autonomous vehicles, led by companies like Google, Tesla and Uber. As for the consumer internet market, seven American or Chinese companies — Google, Facebook, Microsoft, Amazon, Baidu, Alibaba and Tencent — are making extensive use of A.I. and expanding operations to other countries, essentially owning those A.I. markets. It seems American businesses will dominate in developed markets and some developing markets, while Chinese companies will win in most developing markets.

The other challenge for many countries that are not China or the United States is that their populations are increasing, especially in the developing world. While a large, growing population can be an economic asset (as in China and India in recent decades), in the age of A.I. it will be an economic liability because it will comprise mostly displaced workers, not productive ones.

So if most countries will not be able to tax ultra-profitable A.I. companies to subsidize their workers, what options will they have? I foresee only one: Unless they wish to plunge their people into poverty, they will be forced to negotiate with whichever country supplies most of their A.I. software — China or the United States — to essentially become that country’s economic dependent, taking in welfare subsidies in exchange for letting the “parent” nation’s A.I. companies continue to profit from the dependent country’s users. Such economic arrangements would reshape today’s geopolitical alliances.

One way or another, we are going to have to start thinking about how to minimize the looming A.I.-fueled gap between the haves and the have-nots, both within and between nations. Or to put the matter more optimistically: A.I. is presenting us with an opportunity to rethink economic inequality on a global scale. These challenges are too far-ranging in their effects for any nation to isolate itself from the rest of the world.

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Anyone who has endured back pain knows it is an erratic dictator. It takes hold of your psyche, demanding your attention and devotion before all else—before you can plan a hike, return to a work routine, pick up your child for a hug. So when someone offers to make that dictator disappear, it’s hard to resist—no matter what the price.

“People in pain are poor decision-makers,” says the investigative journalist Cathryn Jakobson Ramin, author of a new book, Crooked: Outwitting the Back Pain Industry and Getting on the Road to Recovery.

Millions such bad decisions, she argues, have fueled a $100-billion-per-year back pain industry in the US—one that’s largely selling Americans wrong and even dangerous responses to back discomfort. These include unnecessary painkillers, injections, surgeries, and chiropractic “adjustments.”

About 80% of Americans are expected to suffer from at least one episode of lower back pain in their lifetime, and millions with chronic pain are already lost in the industry, subjected to pseudo-interventions, or taking unnecessary and addictive opioids like Vicodin or Oxycontin, then doubling down on the drugs as their tolerance and the pain escalates. (In some cases, the increased pain is actually caused by the opioids.)

The truth is, as Ramin’s extensive research indicates, all that most people need to do is keep moving.

From diagnosis to treatment, a dearth of evidence

It’s hard to choose one data point from Crooked that lays bare all the misrepresentation and snake oil in the back pain industrial complex, but a few key statistics that Ramin has collected stand out.

Spinal fusion surgery, for instance: Involving the removal of worn-out or injured discs, then the fusing together of the vertebrae above and below that disc with metal screws and cages, this is the form of elective surgery that people spend the most on in the US, costing a total of $40 billion per year. The problem is, it rarely works.

The procedure, with a price tag averaging $80,000, has a success rate of about 35%. Those most likely to benefit are the young, trim, and athletic, not the typical surgery candidates, whose average age was 54 in a 2008 study by the Spine Research Foundation. (Smoking, being overweight, and taking opioids before the surgery each also reduce the likelihood of a positive outcome.) Even its “successful” patients often end up on painkillers two years after the surgery, according to studies, Ramin writes.

Such conclusions should have shut down the market for unnecessary fusion surgeries, she proposes. Instead, the number of operations performed every year increased 600% between 1993 and 2011, jumping from 61,000 annual procedures to more than 465,000.

Also consider this: In a poll at a 2009 conference in Bonita Springs, Florida, 99 out of 100 surgeons who were asked whether they’d elect to have lumbar fusion surgery if it were recommended to them said “absolutely not.”

They were too keenly aware of the odds, and they would have known that after the invasive operation, the spinal sections around the welded-together vertebrae are more likely to weaken, since they’re forced to compensate for the unnatural immobility of their neighbors. Some surgeons recommend a second or third revision operation, with the rates of success dropping each time.

The procedure itself is risky, too. When you go in through the abdomen for any spinal surgery, Ramin tells Quartz, “you have to go through muscle. You detach muscles, you detach ligaments, and ligaments in particular don’t regenerate quickly at all, so you weaken the entire system.” Even when the surgeon enters the patient’s body through his or her back or side, the actual fusing is done perilously close to the spinal cord.

Another common operation, decompression surgery, or a discectomy, has better evidence to support its outcomes, especially to resolve leg pain, Ramin acknowledges. But she says even this cheaper and less invasive procedure, which eases pain by removing bone or tissue that’s putting pressure on a spinal nerve, may not be necessary for many patients.

“The problem is, when you look at the studies, two years out, the outcomes from having that procedure [for a disc herniation] and not having that procedure are the same,” she explains. “Because there is a lot of rehab involved if you do have it, and the natural history of a disc herniation is that it will go away and disintegrate within a month or so, and disappear.”

It also carries similar risks as fusion surgery. Ramin points to Steve Kerr, coach of the Golden State Warriors NBA team, who underwent decompression surgery two years ago: it apparently led to a spinal fluid leak, which caused debilitating headaches and nausea.

Even the diagnosis of back pain can involve some chicanery. Spine surgeons told Ramin that in an estimated 80% to 85% of cases, they can’t point to a person’s source of pain with accuracy, although they can see something abnormal on an X-ray or MRI. That’s because studies have shown that most people are walking around with bulging or worn out discs, but feel nothing, so these indicators on an MRI aren’t always meaningful.

As Ramin writes in Crooked, “The ambiguity inherent in diagnosing back pain makes it possible for surgeons to do practically anything they want.”

Finally, bad news for those who have turned away from modern medicine and toward chiropractors (practitioners of a drug-free approach that has gained mainstream approval): Ramin also spends a chapter debunking traditional chiropractic, that which involves cracking and “adjustments.”

Her summary of the treatment’s roots certainly inspires skepticism:

A self-proclaimed healer born in 1845 near Toronto, Daniel David Palmer was the father of chiropractic. He began as a revival tent mesmerist and entertainer who could make people fall asleep, dance wildly, or tumble into convulsions. Later, he described a “vitalistic force” or “innate intelligence” that existed in the spine; it could organize, maintain, and heal the body. But vertebral subluxations could derail that energy, with dire physiological consequences.

Subluxations are said to be spinal joints that have slipped out of alignment, and some chiropractors will explain that they lead to back pain, digestive issues, mood disorders, and more. Ramin reports that they are impossible to point at on an x-ray, because they don’t exist; a dislocated joint in your spine would be the result of a horrendous injury that sends you to the hospital, she explains, not to a massage table.

Chiropractic manipulation combined with other treatments, such as heat applications and massage, has been found to offer short- to medium-term relief for lower back pain and disability. Critics say, however, that the the forceful thrusts that chiropractors apply to the spine push the vertebral joint beyond its natural range of motion, and the World Health Organization says the modality is counter-indicated for several conditions (PDF).

If someone feels less pain after a chiropractic visit, it’s usually the result of a rush of endorphins, which eventually run out, Ramin said in a Canadian Broadcasting Corporation radio interview. Typically, the pain returns. If it doesn’t, there’s a chance a person would have had the same outcome without care.

Importantly, there are non-conventional chiropractors who have walked away from “adjustments” and other questionable therapies over the past decade or so. “They have restyled themselves as rehabilitation specialists,” which means they’re training patients in effective back-strengthening exercises as a reliable physical therapist would, she tells Quartz, “and are doing a great job with it.”

A back pain folk hero is born

Ramin wasn’t fully aware of spinal surgery’s poor rates of success when she decided to see a back surgeon for her own chronic back and leg pain nearly a decade ago. Then a freelance journalist, having just published a book on memory in middle age, she was frustrated and baffled by her own lack of progress, and her questions led her stumbling into a public health story that would take more than 600 interviews and eight years to write.

Crooked weaves together her compelling personal story and those of compatriots in back pain of all ages. It also follows the money, revealing the hidden motivations of many industry players: workers compensation insurance companies, pain management specialists, the drug companies that make narcotic painkillers, personal injury lawyers, spinal device makers, and spinal surgeons, especially the ones who advertise late at night, often touting their laser surgery. All appear to make a living by exploiting the “fix me” pleadings from people in pain.

This is not to suggest that all spine surgeons or specialists are villains, of course. Sometimes surgery is necessary, though many top spine specialists interviewed for Crooked agreed that surgery is overused. A spinal surgeon at Cedars-Sinai Medical Center in Los Angeles, Hyun Bae, explained why this might be, saying, “It’s not only a financial conflict. It’s an emotional conflict. We get paid to do the work. We want to make the patient better. So we concentrate on the good results and we dismiss the bad results.”

The problems often begin, Ramin tells Quartz, when patients are ill-informed. They might demand MRIs for acute pain, though their primary care doctor discourages it. They might also be influenced by direct-to-consumer advertising from less reputable spine centers. “When they go see his surgeon and the surgeon says, ‘I’m sorry I can’t help you this. There’s nothing I can do for you,’ the tendency is to misunderstand that, and to think ‘You’re not smart enough. You’re not good enough; you don’t have the right high-tech whiz-bang tools,’” she tells Quartz, “and I need to keep looking. I need to find someone who is smart enough to do this.’”

Carol Hartigan, M.D., medical director of the Spine Center and the Spine Rehabilitation Program at New England Baptist Hospital, tells Quartz that she agrees with most of Ramin’s critiques, though she finds the author extreme in her opinions—for example, by saying that a person should never have back surgery. Still, Hartigan says, “She did an outstanding job of researching. She had an eye for looking for flaws in the ‘industry,” and she interviewed the highest level players. She should be commended.”

Most reputable spine surgeons will discourage people from surgery when they don’t think it will be helpful, but “You do see some crazy ways that people are treated by high level clinics,”says Hartigan. They neglect to offer people an option to get better, she asserts, which, in her practice, would involve physical rehabilitation and systemically progressive resistance exercises.

After only a month in bookstores, Crooked began shooting up the Amazon bestseller list, because back pain is so universal and so emotional. “It’s part of the human condition,” Ramin told San Francisco public radio. “Few of us will make it off this mortal coil without it.”

As a person ages, the discs in one’s back naturally dry up, especially when a person isn’t active, and our lifestyles have only become more sedentary and sitting-focused, complicating matters tremendously. A meta-study published in the British Medical Journal found lower back pain to the be the number one cause of disability worldwide, affecting 83 million people globally.

Doctors are now advised not to turn to pain medication for garden variety back pain, but for years, we know too well, powerful painkillers, whose drug companies spent millions on marketing, were over-prescribed for back pain, arthritis and other conditions, creating an environment that made the drugs easy for anyone to access, and led to today’s opioids (and related heroin) crisis.

Dependence comes easy with these drugs: In March 2017, a report from the Centers for Disease Control and Prevention found that when a person takes a narcotic painkiller for one day, there’s a 6% chance that he or she will be still taking that pill a year later. If the prescription is for eight or more days, that probability rate jumps to 13.5%.

The unpopular truth about recovery

The media has raised awareness about the hustlers of the back pain industrial complex before Crooked’s publication. Surgery has been outed as, for many patients, “useless.” When, in early 2017, the American College of Physicians issued new guidelines saying that strong opioids such as Vicodin and Oxycontin should only rarely be prescribed for nonspecific back pain, reporters helped get the word out, while calling out the back pain businesses for their role in the current opioid crisis.

Nonetheless, the prescriptions and surgeries continue, partly because patients want the pain to go away—now. To many it seems counterintuitive that exercise is doable or the right solution when someone is already suffering.

As Ramin also told CBC radio, the psychologists she spoke to for the book talk about a cognitive shift that’s needed to “understand that yes when you start exercising there will be pain. There definitely will be because you are just as out of shape as all get out. But in the right hands, in the hands of a back whisperer, you can get through that and you can get strong and you can get your back muscles and the rest of your body balanced and you can straighten out your gait and you can straighten out your posture.”

The second half of Crooked is a guide to finding those right hands. Ramin shares her tips for tracking down a back whisperer—such as a physiologist or a doctorate-level physical therapist who’s also an orthopedic clinical specialist—to coach you through recovery.

She introduces Stuart McGill, a professor of kinesiology at University of Waterloo, in Ontario, Canada, and a globally recognized “back mechanic,” whose “big three” exercises she does daily:

The author is often asked for her thoughts on certain forms of exercise, such as yoga or pilates, which she also covers on her website. What she tells people, repeatedly, is that “movement is essential.”

“We’re sitting for 50 to 60 hours per week,” she says. We sit at our desks, in our cars, at the dinner table, and we sit to write email messages from bed at night. “We think three hours of exercise on the weekend will undo the problems that creates,” she laments. Even standing desks aren’t the easy out, as standing the wrong way all day can lead to different issues. Her mantra: “The best posture for sitting is always the next posture.”

Unfortunately, even as pro-exercise messages gain more traction here, some of the shadier players of the back pain industrial complex are taking their very different mantra into new markets. Ramin found that in China and Japan, spinal surgeries “are expected to nearly triple in number between 2014 and 2020, and almost double in revenues, with more than a little encouragement from US spinal device manufacturers.”

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