23 November 2016

We are all in pieces, struggling to create the illusion of a coherent "me" from moment to moment

Fascinating article by Julie Beck at the Atlantic on our inner voice. Excerpt from early on:

Inner speech, Fernyhough writes, isn’t bound by many of the conventions of verbal speech. For one, we can produce it much faster when we don’t have to go at the pace required to use tongues and lips and voice boxes. One researcher the book cites clocks inner speech at an average pace of 4,000 words per minute—10 times faster than verbal speech. And it’s often more condensed—we don’t have to use full sentences to talk to ourselves, because we know what we mean. 
But it does maintain many of the characteristics of dialogue. We may imagine an exchange with someone else, or we may just talk to ourselves. But that doesn’t mean it’s not a conversation. Our minds contain many different perspectives, and they can argue or confer or talk over each other. 
“We are all fragmented,” Fernyhough writes. “There is no unitary self. We are all in pieces, struggling to create the illusion of a coherent ‘me’ from moment to moment.”



22 November 2016

Expanding us

You have heard that Usain Bolt is the world's fastest man. He ran 100 meters in a record 9.58 seconds, which works out to a speed of 23 mph. He's a phenom who deserves to have a new verb named after him. (The t-shirt "walk, jog, run, sprint, bolt" captures it). He is not, however, the world's fastest man.

That honor goes to whoever is riding in the space station. Usain ran 23 mph. The space station travels at 17,150 mph. It orbits the earth every 92 minutes, something that would take Usain 45 days to do assuming that he could find bridges to cross the ocean and could maintain his mad sprint for 6 weeks. In truth, there is no comparison; it's impossible for him to sprint around the world and will be until we've been genetically re-engineered and ocean-crossing bridges that are not even designed yet have been built. 

We love stories of individual achievement but of course what we can accomplish on our own is - at best - akin to what Usain Bolt can do racing against the space station. Progress is dependent on social inventions, social constructs and institutions as varied as language, schools, guilds, and romance. 

The social inventions that are most powerful are the ones that make our world bigger. We have a natural love and concern for our family but that's a pretty small group. In fact, families are getting smaller all the time. Interdependence among families is not enough to get us to our current standard of living.

Religion seems to have been the first social invention that successfully expanded the trusted in-group from kin to something that encompassed not just neighbors but even strangers. The Kaaba in Mecca is the magnetic pull of the pilgrimage of Muslims. Even before Mohammed and the birth of Islam, this was a place that attracted pilgrims who came to worship the many gods within it. (Later, these many idols were destroyed in honor of Allah.) Mecca became a wonderful place for two reasons: one could go to worship and feel wonder and it was a safe and holy place where no war was allowed but trade was. This - safety that allowed trade but not battle - was the stepping stone from nomadic tribes to the rise of an Arab civilization that gave us the zero, algebra and Rumi.

Throughout history one thing has been clear: progress follows from the expansion of our institutions to include more people. The bigger the group, the more specialization, experimentation, creativity and abundance that is allowed. The bigger the group we're a part of, the more abundance. 

I worked with a startup on Google campus this year. One department had hard-to-find specialists who developed robotic sensors. There were only five people in the group but they came from five different countries: South Korea, China, Poland, Turkey, and Iran. This new venture brought in the best people it could find and it drew them in from every country. (Actually, it was the universities that did; robotics programs at John Hopkins, Stanford, and Vanderbilt had already brought these people from their home countries.) If you want the best, you draw from around the world.

Whether it is finding the best programmers in Silicon Valley or best frankincense and myrrh in Mecca, progress means drawing from a wide circle. If you can draw only from a circle 100 miles in circumference "best" will be much less impressive than if you can draw from around the globe.

Progress comes from a more expansive definition of "us." Regression comes from narrowing that definition of us to something smaller, "more pure." Nigel Farage in the UK was a chief voice in the Brexit movement, an attempt to protect the UK from the corrupting influence of immigrants. 


Thandie Newton, the brilliant actor who has starred in films like Mission Impossible and Crash, represents the product of that corrupting influence of immigrants. Her English father diluted his genes with a woman from Zimbabwe and she is the result. She's a reminder there is something even more important about globalization than competition or specialization. 

Specialization is both as profound in its influence on productivity as Adam Smith claimed and is almost incidental to the real prize of globalization. Economic value is an emergent property that doesn't belong in any one place but instead emerges out of the interaction of peoples, ideas, products, and services. The very measure of economic progress is a measure of exchanges, trades, transactions. Value is the little residual of an exchange between two people. The real prize of globalization is the vast numbers of interactions it enables and what that means for the spark of creativity. A friend recently reminded me that cities have described as the place where ideas come to have sex. The product of two ideas is a new idea and those can transform or create an industry, much less a product. 

Value comes from making our world bigger, not smaller. It comes from greater exposure to ideas, some of which even make us uncomfortable, not closing ourselves off from them. 

Progress doesn't involve abandoning our institutions. It doesn't lie in the direction of Brexit or retreating from trade with other countries. Trying to go it alone means that - at best - we run about 23 mph an hour while those within the comfort of elaborate institutions are traveling overhead about 75X faster than we could ever hope to. It might be that the simplest limit to our level of affluence is the extent to which we can expand our notion of "us."

The Rise (of Japanese Cyber-Virgins) and Fall (of the Japanese Population)

Nearly 20 years ago I was in Japan. People on the subway were staring at their lap and at first I thought they were merely avoiding eye contact, then - when I saw hand movement - wondered briefly about rosary beads (wrong culture) and then was flummoxed. I asked my client about it and he said that they were "texting." "Texting," I asked. "What's that?" He explained but it didn't really make sense. Years later, we adopted the craze and since then I've paid closer attention to Japan, which brings me to this excerpt from Mary Aiken's The Cyber Effect.

A [Japanese] government survey released recently estimated that nearly 40 percent of Japanese men and women in their twenties and thirties are single, not actively in a relationship, and not really interested in finding a romantic partner either. Relationships were frequently described as "bothersome."
Another survey found that one in four unmarried Japanese men in their thirties were virgins. The number of virginal single women in their thirties was only slightly less. At the time, Shingo Sakatsume, who works as a "sex helper" and counsels middle-aged virgins, observed, "In Japanese society, we have so much entertainment beyond love and sex. We have animation, celebrities, comics, game, and sports .... Why do you need to choose love or sex over the other fun things that don't have the potential for pain and suffering? The illusion of a perfect relationship, combined with the Japanese fear of failure, has created a serious social problem."
By 2060, if current trends continue, Japan's population will have shrunk by more than 30 percent.

In 2010, Japan's population was 128 million. By 2082, the number is projected to drop to 64 million, a drop by half. These aren't just projections. Last year Japan's population dropped the most since they began keeping records.

21 November 2016

Kanye West's 2020 Campaign

In 2020, Kanye runs for president. The GOP laughs.
He starts winning primaries. The GOP is dismissive. 
He continues to win. "This is outrageous," Republicans say. "He's incoherent. Sure he's famous and rich but he knows nothing and what he does know is wrong. He's rude. He's crude. There is no way he can win." 

The Chinese start dumping internal Trump administration emails. Kanye rises further in the polls. "A communist government is helping him to win! This is incredible!" Republicans protest. 

The few sane people left in the country acknowledge Republican outrage and say, "Wouldn't you think that all of that would make a difference."

"How did we get here," Republicans ask.

"Yeah," we respond. "How did we get here?"

Kanye's 2020 campaign begins


18 November 2016

Don John and the 1st Amendment

First, Islam is a religion. Like Christians, some Muslims are violent and anti-democracy or opposed to science and most love peace, democracy, and science.

Second, the simplest predictor of terrorism is not Muslim or anything else. It's a question of whether foreign troops are stationed in your country. If you want terrorism, put your troops into someone else's neighborhood. Think that's inconceivable? Imagine the reaction in Dallas to Saudi troops stationed there. Or Boston's reaction to troops from Zimbabwe stationed around Faneuil hall. Or Russian troops ogling our girls at a San Diego beach.

Third, we have religious freedom and more fundamentally, freedom to believe what we choose even if it has nothing to do with - or is even fiercely opposed to - religion. This freedom is foundational to the modern world and bless Spinoza and Johann de Witt and then the Brits who followed the Dutch lead and then our founding fathers for enshrining that right of the individual to hold private beliefs and thoughts that don't require anyone else's approval or acceptance. Nothing. Nothing. Nothing is more essential to the peace, happiness and prosperity of a people than this. It's foundational to every good thing that follows. Every good thing.

Fourth, if you voted for Trump in spite of his disdain for religious freedom and ready willingness to jettison the first amendment in order to mollify people afraid of "others," you need to read some history. There is no limit to the grief that comes from regulating thought or religion and there may be no amendment to our constitution that has done more to fuel progress and happiness than the first amendment.

Fifth, I certainly believe that Trump may be kept from signing any laws that go against the first amendment and I think that is the most probable outcome. Partly because of other people and partly because of how wildly impractical it is to actually enforce laws based on what is inside of people's heads. The fact that you thought it unlikely he could make good on his promise is no excuse for giving him the power to attempt that. Trump has repeatedly demonstrated his ability to do what no one thought was possible.

This, by the way, is the first amendment in its entirety. 

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Two Financial Regulation Models: NFL or WWE

One of the most dangerous things about a Trump presidency is what it could mean for financial regulation.

This weekend millions of Americans will watch football, a sport punctuated by flags, whistles, and officials calling back a run because someone cheated when blocking or granting yards on a failed pass because someone cheated when defending a receiver. The game is fiercely competitive and highly regulated. Americans love it. The teams want your money but they also want to win. All of them. And they have to follow clear rules that ensure that the competition involves football skill, not thuggery.

Far fewer will watch World Wrestling. Entertainment. At the WWE, the officials are props who circle the fighters and hopelessly flail, even when one of the fighters grabs a chair to hit the other over the head. This game is not competitive, as winners and losers are often negotiated beforehand. It's rigged. The wrestlers want your money but winning or losing is just part of their job. It's less about competition than theater.

Trump has hosted WWE events at his properties and has body slammed a guy whose head he later shaved. He and the Republicans in Congress largely believe that financial markets are self-correcting and don't really need regulation, suggesting that their ideal referee is more WWE than NFL.

Let's review what that means and start with a review of the Great Recession because it is so easy to forget.

The Great Recession
After January 2008, employment fell for 25 straight months - the longest streak since the 1930s. By February 2010, the "job deficit" was 12 million. (The job deficit equals the number of jobs lost plus the number of jobs that would have normally been created during that time. The economy destroyed about 8 million jobs in a period when it would have normally created about 4 million. Add them up and you're short 12 million jobs compared to any normal period.)

Long-term unemployment as a percentage of unemployment swung between 5% and 20% of total unemployment in the period after 1948. By April of 2010, it had hit 45% and would take years to drop to its old level.

GDP growth, too, was slow to recover. After the last two recessions GDP grew 6.2 and 5.6 percent in the years right after the recovery. This time it grew about 2%.

Between housing and financial assets, wealth fell about $18 trillion, an amount equal to annual GDP.

[All of these stats from Alan Blinder's After the Music Stopped: the financial crisis, the response, and the work ahead.]

These seem like cold stats. They're not. They represent millions who were made homeless, had careers and retirement plans derailed, and were unable to do things like help children with a college education or buy a car or pay a medical bill. They represent millions whose lives were set back. According to one study, the trauma of the Great Recession provoked 10,000 suicides and that is just the most extreme emotional consequence of an economy this brutal.


What Caused this Financial Crisis?

I think that a few things caused it.

Martin Wolf writes of the lead up to the 2007 - 8 Great Recession that "risk had been distributed not to those best able to bear it, but to those least able to understand it." Local bankers were less likely to own mortgage loans than remote investors.

Securitization let banks take loans and then turn them into securities that could be sold to investors who did not understand the underlying risk as well as local bankers might have. Coupled with loose regulation that allowed banks to issue NINJA loans (loans to folks with no income, no job, and no assets) that were then sold to largely ignorant third-parties who were misled by credit ratings agencies who called these good risks. (Michael Lewis tells this story in the Big Short.)

Financial innovation led to a rapid proliferation of new products that people didn't really understand. Imagine drug development that required no FDA approval or trials and you get some sense of the potential, unknown danger of these new products suddenly in circulation. The derivatives market exploded between 1998 and 2008; notional values grew from $72 trillion to $673 trillion. (If that sounds like a lot, it is. Total global GDP is about $50 trillion.) The market value of derivatives is considerably less than the notional value but even that grew from $2.6 trillion to a stunning $35.3 trillion by December 2008 at the cusp of the Great Recession. What's a derivative? It's a financial instrument whose value is derived from another, like a bet on a stock price or pork bellies. If a name like "financial derivative" makes your eyes glaze over and - at the same time - makes you feel impressed by the fancy term then it is doing its job; it is great to sell a product that is poorly understood but trusted as high-tech. Again, this is another example of risk being shifted from those who understand it to those who don't.

The rapid innovations in finance helped and was helped by the emergence of a shadow banking system. It was negligible in 1980 but by the early 2000s it had grown larger than traditional, regulated banking. In 2007 this shadow banking sector was about $13 trillion.

[Above facts are from Martin Wolf's The Shifts and the Shocks: what we've learned - and have still to learn - from the financial crisis.]

Banks had become public companies rather than private concerns. This gave them more capital to use but it also made them more accepting of risk. If you are a partner in a private bank, you want to make a good return on your money. But this is your money so you also want to avoid a lot of risk. If someone doesn't pay back your loan, you're out that amount. That was the old world. In the new world, banks were public and the money that bankers loaned was stockholders'. Bankers had incentives to originate loans in order to get big bonuses which often were paid at the time of the transaction, not slowly over time as the loan was paid back. Suddenly, the risk was someone else's and bankers wanting a bonus rather than protecting their own capital had an incentive to pursue returns with less discrimination.

Finally, the whole system was more fragile. The push for greater returns coupled with the ability to off-load risk and use someone else's money had driven the market to leverage more. Once upon a time banks had leveraged investments at a rate of 10 or 20 to 1. By 2008, they were leveraging investments at 50 to 1. That sort of leverage greatly inflates your returns on the way up but it disastrously exacerbates losses on the way down.

When the downturn hit - and downturns always hit - the system was fragile and poised for massive losses. The result has already been mentioned (13 million job deficit, $18 trillion in wealth disappeared, etc.)

"The crisis takes a much longer time coming than you think, 
and then it happens much faster than you would have thought."
- Rudiger Dornbusch

We Americans depend on Wall St. and the banks. Finance is to the economy what oxygen is to an ecosystem. The purpose of financial regulation is not to make the game noncompetitive but instead to ensure that competition is about creating value rather than hiding risk, about creating sustainable returns rather than unsustainable bubbles, and protecting the naive from the manipulative. With good financial systems, people still get filthy rich but fewer people go bankrupt. Someone like Elizabeth Warren understands the importance of NFL style regulation. Trump's sensibilities seem to run more towards WWE. That should have frightened voters last week. It should frighten you now.

As to timing of this? I don't know. Glass Steagal was repealed in 1999 and the Great Recession hit within a decade. There is a small chance that Trump and the Republicans have learned the lesson of the Great Recession and won't deregulate. It seems optimistic to assume this. There is a better chance that it takes at least two year for new regulations - or deregulations - to be put in place. And at that point the impact of the return to fragile finance could take a year to manifest or two decades. It's harder to predict than the impact of a rate hike or tax cut.

17 November 2016

A Stimulus, a Boom and White Men Dancing: an economic forecast to the end of the decade

The economy is going to sing for at least the next couple of years. After that, its performance will depend on the extent to which Donald was lying during his campaign.

The following is what I would write if a completely normal, centrist president were coming into office.

First of all, the economy is primed for take-off. Debt servicing as a percentage of household income is at the lowest on record. Initial unemployment claims are too (if measured as a percentage of the labor force). P/E ratios are high but not unreasonably so given how low interest rates are. Unemployment rate is under 5% and last year wages grew more rapidly than any year on record. This economy has been and is doing all the right things. And it will just get better.

The long-term prospect for the economy is even more impressive. The millennials and younger are entering the work force now at a rate faster than baby boomers are leaving it and this new generation of workers is the best educated ever. Also, when the economy has been healthy for five years or more, good things start to happen. Wages grow. Wealth is created. Entrepreneurs become bolder. And speaking of that, entrepreneurship education and awareness continues to rise and a record number of millennials want to become entrepreneurs.

Perhaps the biggest threat is in China where the economy is now going to force government liberalization or the government is going to stifle economic disruption. It's not clear which way that will go but it can make a big difference in global economic growth. Africa and India have the potential to compensate for China's woes but depending on which way it goes, this could still make a noticeable difference.

The next four years will be great and it's perfectly plausible that unemployment will drop below 4% within two to three years. We might even see the uninterrupted run of positive job creation run out another four years, as absurd as that sounds.


Now here is how I would adjust that for Trump. 

Short term, Trump changes this for the positive. Why? Congress will cooperate with him and he'll probably double the deficit from last year. This stimulus in the form of infrastructure spending and tax cuts will be a boost to the economy and could bump GDP growth up another half point or even full point. It is the expectation of this bump that is likely driving stock prices higher right now. The GOP knows that increasing the deficit will stimulate the economy and that is exactly why they wouldn't approve of it while Obama was in office. They don't actually care about deficits but do holler about them whenever they think that a Democrat might get the benefit of one.

Is this stimulus bad? No, but it's not great. The economy can handle the debt and will benefit from the boost. The capacity for debt is huge with interest rates so low and so much capital in search of either returns or a safe home. The problem is, the stimulus doesn't do nearly as much for the economy when unemployment is already under 5%. Party politics aside, it would have been so much better to have given the economy this bump about 3 to 6 years ago. This stimulus will be like white men dancing: the timing is off and it'll be awkward to watch in spite of the joy on the faces of the people doing it.

The stimulus won't be great though because it'll come in the form of tax cuts that mostly go to the rich. If you give a man making $20,000 an extra $1,000, he'll spend it. If you give a man making $2,000,000 an extra $1,000 he's unlikely to change his behavior at all; very little of the extra money is likely to increase spending. It's a stimulus that will do as much to promote income and wealth inequality as it does GDP. And a stimulus does less with the low unemployment we now have than it does with the kind of high unemployment we did have. If the the stimulus went to the poor instead of the rich or went into government programs, it would raise GDP by probably 1%; as it is, it might just bump it by half a percent.

As with George W. Bush, Trump will be running a big deficit with full employment. This is exciting initially but tough on an economy long term. It leaves it vulnerable because if the economy dips a little, there's not much you can do. At that point it's like Scotty calling up from the engine room of the Starship Enterprise saying, "I'm giving her all I've got, captain." And eventually, every boom busts and when it does, the bust is always worse when you've already been running a big deficit.

Meanwhile, Trump may be waving his hands or he may be acting on his campaign promises. If we're lucky he'll just be waving his hands pretending to act and he was lying about what he would do with trade,  with American companies who subcontract work abroad and with illegal immigrants. If he's not, the little boom will become an ugly bust.

It will take at least a year - probably two or three - before Trump can re-negotiate trade deals, begin to deport illegal aliens, and to change laws so that it is harder for American companies to find subcontractors outside of the US. If he's lucky - and it seems that he always is - the negatives of this won't hit until close to or even after re-election time and most people won't believe that he's setting the economy up for trade wars, a loss of 3% of the population and GDP, and an exodus of American companies to other countries. (It would be ironic if American companies re-located to Mexico, a place with low taxes and newly deported people who are great workers, and laws that make it easy to subcontract work to other places - even the US.)

But 3 to 5 years is a long time and when the Trump recession hits, none of his supporters will blame him because things were so good in 2017 and 2018.

The good news is that the next couple of years at least will be great. The bad news is that people will think this is proof that Trump's bad ideas were good rather than realize that an economy's momentum is such that today's realities are almost always a function of policies and actions taken at least a year - and often a decade - earlier. (And I'm not just talking about government policies. They're also the product of corporate policies that define next generation products, factories, and R&D initiatives years earlier.)

If Trump does what he promised, he'll blow up the economy. Even that will take at least 3 years. If he waffles on his promises, the economy could do pretty well in both the short term and long.

I don't say this because I am a fan of Trump. Putting aside the morality of it, deporting 11 million aliens alone is enough to set off a recession; that's nearly 4% of the population and that kind of exodus will disrupt home prices, sales, and entire industries. If he starts trade wars or attempts to control multinational corporations ability to buy and sell in other countries, he'll knock employment and GDP growth for a loop yet again. Longer term, his stance on immigrants is going to make the next Sergey Brin - the co-founder of Google - think twice about coming to the US for education and stay for a startup. Further, his rejection of climate change as a real issue won't just set us back on addressing what is the most important issue of our time but it'll set us back on the industries that will become to the 21st century what oil was to the 20th century. And of course his rejection of the first amendment in the form of a ban on Muslims will have all sorts of negative consequences. Sadly, these issues play out on a time scale that almost no one evaluates when making decisions about who to vote for and may not be fully evident in four years.

The central problem with the above forecast, of course, is that no candidate has entered office surrounded by more uncertainty. 80% of what he said while campaigning was somewhere between a half-truth and a pants-on-fire lie, so it's almost impossible to know what he'll do after the tax cuts are put in place. We can hope that he's limited by practical concerns; of course if he is, it'll be a first for him and the people around him but it'll be great for an economy so ready for a long boom.

**********
There are a few added layers of uncertainty in the above forecast. The first is the unpredictability of what Trump will do. The second is what Ryan and Congress will let him do. The third is the general reaction of global markets to his Twitinomics, or policy by late night tweets.

16 November 2016

Why You Should Marry a Republican

"My brother kept us safe," Jeb Bush said, offering a common Republican quote.
"Except for 9-11," Trump said. And just like that, Trump let it be known that while he was running as a Republican he wasn't bound by its past. It was a curious test to see how much of what Republicans claimed to believe or believe in would actually make a difference in their support.

Over the years Republicans have offered a variety of reasons for voting for one candidate vs. another. It turns out, they were all negotiable in spite of the passion they brought to the topic at the time.

*

Republicans couldn't vote for Clinton because of his womanizing. 
Trump is a serial adulterer who eventually marries one of the women he's cheating with and meanwhile brags that he can grab any woman by the pussy. 

Oh well, say the Republicans.

*

Republicans wouldn't vote for Carter or Kennedy or Clinton because they were too ready to negotiate with dictators and foreign countries who were hostile to our interests.
Trump colludes with Putin to hack emails from the Clinton campaign and release those to the press, timing those releases for maximum damage to Clinton's candidacy. 

Well it's not like Putin is a communist, say Republicans. I mean, that's why we didn't like Russians.

*

I can't vote for Obama. He's the junior senator from Illinois. He has no experience!
Trump is the first president in history to have neither military nor government experience of any kind. He wasn't even a dog catcher or private in the army, much less governor or general.

But he's made so much money, Republicans say.

*
Republicans didn't vote for Obama because deficits were out of control. 
Trump's plan to stabilize (perhaps increase) government spending even while slashing taxes will cause the deficit to balloon by an extra $5 trillion according to various neutral analysts. 

Well no, Republicans say. The economy will grow so much that there will be no deficit. Those forecasts are wrong because it assumes that GDP growth will be no higher than its average over the last 50 to 100 years. As a matter of fact, it'll be terrific. Just amazing.

*

Republicans wouldn't vote for Clinton because she's a liar.
Nearly 80% of what Trump said at rallies and in debates was false, a record for a modern candidate.

Harumph, says your Republican friend. As if we can trust data from the media. We can't even trust government data. Those fact-checkers are rigged.

*

Do you vote Republican because you believe in free trade and corporations ability to trade and outsource as best works for them? 
Trump wants to put an end to trade that will export jobs and stop corporations like Apple from doing things like making their phones in China rather than Sunnyvale.

Well he didn't mean that, Republicans say. Didn't you yourself just point out that most of what he says is false?

*

And do you vote  Republican because you believe in the sanctity of the church and religious freedom? Trump wants a religious test for any immigrants. He wants to jettison the first amendment.

Well its just for Muslims, say Republicans. That's not a true religion so it's not protected y the first amendment.

*

He's even attacked other Republicans. Threatened to turn his voters against them if they don't back him. He's shown his willingness to bring down the party if they don't support him.

The media is making too big a deal of this, says Republicans. It's just politics.

*

He won't even accept a loss at the polls. He doesn't even support democracy.

Well I don't believe that. He's just protecting himself from a rigged election.

*

He talks casually about re-negotiating the government debt, as if that wouldn't set off a financial crisis that would make 2008 seem tame. The dollar would collapse and so might any number of markets.

You're just saying that. He wouldn't do that and besides it wouldn't do what you think it would.

*

It sort of looks like he stands against everything you've claimed to be for. So, will you vote for him?

Will it shut you up if I tell you that I'll vote for Gary Johnson?
You will?
Hmm. Sure. 

*

Meanwhile, from fivethirtyeight, Harry Enten reports this


Trump won 90 percent of self-identified Republican voters, a higher percentage than Clinton won of Democratic voters.

As it turns out, even though Trump promised things that should have alienated evangelicals, free traders, pro-corporate folks, and social conservatives, he still won the hearts and minds of Republicans. What does this suggest? Either the only thing that actually matters to them is tax cuts or that you could put a dog in a sweater, call it the Republican nominee, and Republicans would still vote for it. It's a loyal bunch who is not going to leave you for silly reasons like policy. My advice? Marry a Republican because apparently there's nothing you can do to alienate them.

Post-Apocalypse Question

After the apocalypse, when we're hiding from feral animals and hominids, scraping by on 900 calories a day, going months between showers, and living in conditions that would make our ancestors feel nothing but pity, we're going to spend a lot of time reminiscing.

"Do you remember just going into your own house and putting up your feet and getting onto the internet?"
"Yeah."
"You could literally find any book, movie, photo, painting, song that existed. And just enjoy it right there in your living room while drinking iced tea."
"Yeah."
"And if you wanted to, you could travel to another city or country and you'd still be safe. All over the world, just about, it was safe."
"Yeah."
"And we wasted so much time just whining about things. What were we so angry about?"
"I don't remember. Tell me again about getting ice straight out of your refrigerator. Right there in your own home."
"Yeah ...."

15 November 2016

The Political Value of Media Coverage

In retrospect, it seems like the most obvious thing in the world to master reality TV before running for president rather than wasting time on policy papers.

This from near the close of  Daron Acemoglu and James Robinson's rich and insightful Why Nations Fail.

Peru's Fujimori, President 1990 to 2000
Authoritarian regimes are often aware of the importance of a free media, and do their best to fight it. An extreme illustration of this comes from Alberto Fujimori’s rule in Peru. Though originally democratically elected, Fujimori soon set up a dictatorial regime in Peru, mounting a coup while still in office in 1992. Thereafter, though elections continued, Fujimori built a corrupt regime and ruled through repression and bribery. In this he relied heavily on his right-hand man, Valdimiro Montesinos, who headed the powerful national intelligence service of Peru. Montesinos was an organized man, so he kept good records of how much the administration paid different individuals to buy their loyalty, even videotaping many actual acts of bribery. There was a logic to this. Beyond just recordkeeping, this evidence made sure that the accomplices were now on record and would be considered as guilty as Fujimori and Montesinos. After the fall of the regime, these records fell into the hands of journalists and authorities. The amounts are revealing about the value of the media to a dictatorship.
A Supreme Court judge was worth between $5,000 and $10,000 a month, and politicians in the same or different parties were paid similar amounts. But when it came to newspapers and TV stations, the sums were in the millions. Fujimori and Montesinos paid $9 million on one occasion and more than $10 million on another to control TV stations. They paid more than $1 million to a mainstream newspaper, and to other newspapers they paid any amount between $3,000 and $8,000 per headline. 
Fujimori and Montesinos thought that controlling the media was much more important than controlling politicians and judges. One of Montesinos’s henchmen, General Bello, summed this up in one of the videos by stating, “If we do not control the television we do not do anything.”

Through April, mediaQuant estimated that Trump had received $2.8 billion in free media coverage, a multiple of his opponents within the Republican and Democratic parties.  Trump understood better than anyone the media's desperate need for content that would drive ratings. He delivered for the media and it delivered for him.

Of course this leaves him vulnerable. If a stripper enters the race in 2020, he could lose re-election.

10 November 2016

The Good News Is That We're Only 6 Years Away from Republicans Blaming Democrats For Taking Too Long to Repair the Economy

We're about six years away from the Republicans tapping their foot impatiently, glancing at their watch, complaining to anyone who will listen that the Democrats are taking too long to repair the wreck they had made of the economy.

The conversation in 2022

"Oh sure," the Republicans will say. "The economy is creating jobs. But what kind of jobs? I've heard that they're not even good jobs. This recovery is so slow."
"We don't really have data on that yet but indications are that they are not much different than the jobs we created last time."
"They're part-time jobs."
"Well, we are creating about 200,000 jobs a month again. That's a lot better than losing 400,000 jobs a month like it was at the end of your guy's term."
"Oh sure. Blame him for your problems. Take responsibility. You're in charge now and the economy is growing very slowly."
"Yeah. It can do that after it's been gutted."
"That's history."
"Well, the recession lasted nearly two years and just ended months ago. At least the economy is now growing even if it is growing slowly."
"You know that the American people will hate you for this slow growth, right? They're going to blame you for every bad thing in the recession because the fall was quick and the recovery slow. And we are so going to beat you in your re-election bid because we're going to tell them that we need change."
"Even though the recession started on your watch and the recovery was on mine?"
"Oh please. That's easy. After the economy created 23 million jobs under Clinton, we talked the country into change."
"Yeah. Quite the change. Dubya presided over just a tenth of that number of new jobs. And left Obama with an economy that destroyed 800,000 jobs in just his first month alone. 5 million in his first year."
"Sure. And then in his second term the economy created 10 million jobs."
"Something it had done in only two terms before, both of them Clinton's. See. You agree it got better under a Democrat."
"Doesn't matter. After that term we talked the American people into change again."
"And blew up the economy. Again. The third Republican administration in a row and the third recession in a row."
"So."
"So how do you think the American people will be suckered into changing yet again from what's working to the party that keeps blowing up the economy?"
"Because recessions take a long time to recover from and they'll be hungry for change. They won't be happy with your paltry recovery. I'll be able to tell them that this is all your fault and they'll believe me because their memories only go back about three to six months, tops, and the problems they had with us happened years earlier.  You know I'll win again."
"Yeah. I do know that."
"But don't worry. We'll bring you in for clean up again in four to eight years because it makes such a lasting image, you surrounded by debris, up to your elbows in high unemployment rates you only gradually whittle back down. It's a picture that will help us to win again."
"Yep. I know that too."

09 November 2016

Science - and Policy - Proceeds Upon Death

Louis Pasteur championed germ theory. He was able to collect data that rather conclusively proved that if only doctors washed their hands between working with patients that infections dropped significantly. This saved lives.

Sadly, his fellow doctors dismissed the data and his theory. They kept doing the same thing and patients continued to die at the same rate.

Pasteur then gave up on his peers and took his message to med students who had no habits or preconceptions. These students readily adopted his suggestions and death rates rapidly dropped.

Observing the big difference in the willingness of his peers and the students to adopt the new approach, Pasteur supposedly quipped, "Science proceeds on the death of scientists."

It seems to me that voter ideology proceeds in the same way. There is a window between about 13 and 30 when - for probably 2 to 4 years - a person forms a worldview. After that, the software loaded up in the form of biases, processes, habits and preconceptions, the work of learning is largely done. The software in the form of memes (customs, mores, philosophy, norms, etc.) becomes hardware, something that is unlikely to ever again change.

Once your worldview is set, the world changes but you don't. You become increasingly dated in your worldview. You think the world should be based on kin and clan, not tribe or city. Or you think that women belong at home and not in the office. Or you think that wealth is zero sum and we need to seize and conquer rather than collaborate and create.

Memes are the set of norms and policies that define us as a people. Wearing Levis. Holding doors for women. K-12 education. Like genes, memes carry information that shape us. Genes shape biology. Memes shape society.

Memes proceed on the passing of generations.

If we still had people with us from 1600, we would still have kings and not presidents. If we still had people from 1850 instead of 1950, we'd still have child labor rather than public education. If we still had people from 1950 instead of 2005, we'd still have blacks in separate schools and unable to vote.

I've known and discussed politics with a lot of people. Not once have I witnessed a conversion experience of anyone over 30. (Probably even 25.) Software becomes hardware past the age of 30.

The Epic of Gilgamesh dates from about 2000 BC and is considered the earliest surviving work of literature. Gilgamesh learns at one point that while man is mortal, mankind is immortal. Each generation regenerates itself. And given the story includes a character - Enkidu, who emerges from the wild, raised by wild animals and ignorant of civilization - who has to be civilized, it suggests that the city of Babylon could turn you into a human and then make you immortal. One big difference after the Enlightenment is the notion that this process that transcends any one person also transcends any one way of living; progress replaced tradition. But progress is tough.

It's lovely to think that people learn or update their memes. And some do, bless their heart. But most of us do not and for that reason, social progress depends on people dying and the next generation coming along, willing to adopt new ways in part because all ways are new to them at the start.

Which brings us to millennials.

Of the 250 counties with the most old men, 241 voted for Trump. (Of the 250 counties with the most white people, 249 voted for Trump. Race is an even better predictor of voting than age.) Millennials, by contrast, voted overwhelming for the first woman president, as you can see in this map:


You almost wonder if the rapid pace of social change that defined earlier times has slowed because people live longer or if it has sped up because we have more education. In either case, it's obvious that the things millennials are comfortable with - minorities, same-sex marriage, public funding for universities, public healthcare - freak out the elderly who voted overwhelmingly to make America great again.

The Awkward Truth About the Fourth Economy

Roughly a quarter of a century ago I dreamed up the fourth economy. Since then, the idea that we're in an entrepreneurial economy rather than an information or industrial economy has become more plausible and it sometimes feels as though I've gone directly from incomprehensible to obvious in my claims. Still, there is so much about an entrepreneurial economy that we have yet to fully realize.

One reality that I've taken quite awhile to admit is that we're not going to find our next meal on the menu. We'll have to make it ourselves.

I still believe that within a generation employees will be more entrepreneurial in the same way that everyone over the last half century has become more reliant on information technology to do their work. It will simply be the new normal and most employees will expect to have the opportunity to create more wealth or revenue by taking entrepreneurial initiative.

What this really means, though, is that the systems you encounter as customer, employee, student, or citizen are less likely to have what you want on the menu. You'll have to create it.

What unified Sanders and Trump supporters in this election was a deep-seated frustration with the system. What does that really mean? Among other things (and there are a number of other things), it means that they aren't satisfied with the current options, with the choices they have now.

What are the responses to that?

The ineffectual responses include

  • Whining
  • Holding protest rallies
  • Writing blog posts

The effectual responses include
  • Creating an option that you do like
As it turns out, we have to create our way out of our frustration with the situation.

I follow a woman on Twitter who made a major break with her tribe in this election. I really admire her for that. She's a religious conservative who was appalled that her tribe embraced the amoral Trump. She broke away, which is not an easy thing to do. But I don't know that it has yet dawned on her that she may well have to create the party or faction or group that does express her sensibility. It's a ton of work to create a movement but she doesn't have the option to find a movement that fits her. She's take the first two steps in creating a life, the steps of realizing how the current system falls short of what she needs and then breaking away. That's hugely courageous. But she'll be adrift if she doesn't take the next step; at a minimum it means finding a new tribe or system to be a part of and at the most it means creating that tribe. To the extent that she represents a next step in evolution, a creative response, she will have to create what's next. It's so much harder to step into the kitchen and prepare something than it is to just say, "I'll take the No. 5."

What is the awkward truth about the fourth economy? As we become more animated by realization than basic needs, we'll find it more necessary to create our way out of present realities. If we're expecting the systems as they're now configured to realize those needs, we'll find ourselves increasingly frustrated.

Or so it seems to me.



Confusion About Probabilities and An Alternate Universe

Fivethirtyeight put Donald Trump's odds at about 29%. Today, so many people are shocked because the odds were in Clinton's favor.

What does 29% probability mean? It means that if the universe were to suddenly diverge into 1,000 different universes, in 290 of those Trump would be president. We might personally be shocked at this but there is nothing shocking about a 29% probability coming true. We just ended up in the wrong universe. Even if Clinton had won, there would have been 290 parallel universes in which she'd lost. If you won the lottery, it is still true that the odds were a million to one before you won. The odds weren't wrong, you just beat them.

08 November 2016

Stunning Election Results from San Diego

Today I went into my wife's class and held an election for 23 second graders. 7 year olds, most of them. Everyone at this San Diego city school qualifies for free lunch. The class isn't all Hispanic. There are two African-Americans.

They were intrigued with the process. I let them choose between four candidates: Jill Stein, Gary Johnson, Hillary Clinton, and Donald Trump. We discussed each candidate. I made the argument for each one. (Jill Stein wants to protect the environment, air and water, etc.) We talked about voting and hard choices (broccoli vs. candy), etc. They had some good questions (What's the difference between government and the president?) And opinions. (Trump just wants to make the rich richer.) They certainly know who Trump and Clinton are.

They voted in private at their desk, checking a box next to the candidate and his / her picture and name before folding up their ballot and handing it in.

Johnson, Stein, and Trump had a three-way tie.
Clinton got every single vote.

Nate Silver might dismiss this as both irrelevant and statistically insignificant. I think it's an indication of the trouble Trump faces with Hispanics.

You Can't Praise Democracy Without Praising Those Other Idiots

We all are subject to the conceit that our own intelligence and morality is superior. And it's one of the reasons that so many people are afraid of what democracy will bring. It's stylish to decry the stupidity of "them," a group that ultimately means people who don't vote like us.

One of the many miracles of economics is that it coordinates the efforts of strangers. People I don't even know helped to make my shirt and my computer. They got money from me, a person they don't even know.

Democracies are similar to markets in that they enable strangers to agree to policies.

Democracies flourish for the same reason that markets do: it let's the common person choose. Ultimately our government - like our malls and farmer's markets - is shaped by individual choice. No system has done more to sustain innovation and progress. As it turns out, those [liberals / conservatives] who horrify you are smarter than you think and they care as much about the country as you do. You're not unique in your intelligence or altruism. Nobody is. Inevitably there are unintended consequences of policies and laws and inevitably there is someone who irritates you who points that out. That's why you are not the only one we let vote and why we let so many other people vote. They may be idiots but they make you smarter.

There are problems with democracy. For one, I believe that systems do so much to define our world that we need to make systems thinking as common and as required as reading. Thomas Jefferson thought education was essential to a functioning democracy. Today, a good education should emphasize system dynamics as much as it does grammar or multiplication. Democracy is impossible with an illiterate population; it's problematic with a population that doesn't appreciate or understand systems. (What do  I mean by systems? Ecosystems. Economies. Financial systems. Education systems.) This and other problems with democracy can be addressed though.

Also, elections are also terribly contentious. And for good reason. We are one nation but on election days we settle the current argument about how we'll define that nation. That's not a trivial conversation or one we're happy to lose.

That said, there is no substitute for the voice and values of the people. And that is why we have democracies.

Today is a happy day.