29 April 2019

Conservatives Very Odd and Highly Improbable Belief

Yascha Mounk has an interesting podcast on the BBC in which he traces the rise of populism along the old iron curtain in Europe.

A Polish conservative he interviews makes the most curious set of statements. First he talks about immigrants, pointing out that Poland took in a lot of Ukrainian refugees and saying that they have no problem with refugees but instead just with Muslims. The problem is, he says, that Muslims have beliefs that are too dated for Poland. Later he talks of Western Europe and how the Poles don't like their values. They're too modern.

Conservatives seem to get that norms and institutions change over time. What could get you burned at the stake in one century can become admired in another. They get that. Sort of. But in spite of the fact that they realize there are communities "behind" them in the progress of values and "ahead" of them in lifestyles and acceptance, they seem to believe that they are the only instant in time that has it just right. They don't want to return to the crude norms of the 1800s but they also don't really like these jarring norms of the 21st century.

The curious thing about conservatives is this: of all the times to be born in history, they were lucky enough to hit just the right time, the perfect mix of tolerance and tradition. It seems improbable - but obvious to them - that with thousands of years of history and thousands of years of future, they hit the evolution of society at just the right instant. It's almost like a miracle and they don't want to spoil it with change.

24 April 2019

Fed Appointments and Trump's Tenuous Grip on Reality

Trump wanted to appoint his friend Herman Cain to the Fed. He's still pursuing the appointment of Stephen Moore.

As it comes out, Trump likes two things. He wants someone supportive of loose money policy even with unemployment under 4%. And he likes the gold standard. Those are not just two very bad ideas. They are also mutually exclusive. It's not enough that he's stupid. He's also incoherent.

16 April 2019

How Podcasts Could Reverse the Influence of Talk Radio

During his thirty-year career, Martin Luther produced 544 separate books, pamphlets, or articles, slightly more than one every three weeks. He was responsible for over a fifth of the entire output of pamphlets by German presses in the 1520s, the master of the possibilities that the Gutenberg press had unlocked.

That changed religion in the West. The Protestant Revolution shifted power from church to state.

In 1987 the Reagan Administration repealed the Fairness Doctrine that meant broadcasters were no longer obligated to dedicate programming to public interest or to represent opposing points of view. This was a boon to conservative talk radio. Between 1987 and 1992, the number of talk radio stations in the country rose from 240 to 900, and Rush Limbaugh came along, the master of advocacy reporting.

That changed politics in the US. From 1931 to 1995, Democrats had controlled congress 30 out of 32 sessions. After the rise of talk radio, Democrats controlled the House in only 2 of 12 sessions. The 2018 election made it 3 out of 13.

The 2018 election was the first post-podcast election. It was a blue wave. Obviously there is a lot more going on than podcasts (in the same way that a lot more was going on in politics after 1995 than talk radio) but the long-form of podcasts might do for wonky politics what talk radio did for conservative politics, giving an edge to the folks who take longer than 4 minutes between commercials to make their point.

Stephen Moore and His Odd Belief in Gold

"I like the idea of a gold standard and, you know, restoring value to the dollar," Stephen Moore says in this clip.

Trump has appointed Stephen Moore to the Federal Reserve and his compliant Senate is likely to approve him.  This should worry you.

Moore has said that a gold standard for our dollar would be better than what we have now but what he really wants is a basket of commodities to drive the value of a dollar. This is to economics what the belief that the sun orbits around the earth is to astronomers.

Commodities. Sigh.

There are so many ways to highlight how absurd this is but I'll just use two.

One, commodities have marginal impact on the economy. (Obviously if we suddenly lost all grains or  water or precious metals or oil, the impact would be enormous. Our economy is built on a layer of commodities and credit and a sudden threat to either could crash the economy. There is a difference, though, between saying that we'd starve without food and saying that food production should be the basis for prices in all sectors.) In 2016, mining employed 0.4% of the population and "agriculture, forestry, fishing and hunting" employed 1.6%. So, between them, these professions that harvest commodities like silver, iron, corn, or elk employ 2% of our workforce. It would make more sense to base our currency on health care and social services (that sector employs 12.2%), letting our currency move in response to the price of medical devices or drugs rather than commodities.

Two, there is nothing more real about using "hard" objects to determine price levels than "soft" objects. It's true that gold is a solid object and, say, wages or the consumer price index (CPI) are softer, more abstract things. But the fact that you can weigh the gold to a precise amount is a very different matter than saying that we can peg its value to a gallon of gasoline or 50 minutes of a therapist's time or a year's supply of an engineer's career or a house in San Francisco or Detroit. When your currency is backed by gold, your economy will get an infusion of new "money" when new gold mines are discovered and be short of money when no new gold is discovered. There is NO correlation between when you discover new gold and when your economy needs to grow because of new population, new technologies or new products. The intuition that gold is "real" and that CPI is not is akin to the intuition that the sun orbits around us.

Trump is all folk tales and fear, loud noises and intimidation. For this, Moore is a perfect fit for his worldview and policies. For our modern economy, though? Not so much.

12 April 2019

Entitlement without Taxation

The notion that immigrants are a threat to your job has a few elements, just one that I want to explore here.

If an immigrant is a threat to your job it means that if you were to swap places with that immigrant, you would lose money. That is to say, the immigrant has an incentive to come here to take "your" job because it pays more than "his" job back home. And if you moved to his town to replace him, you would make much less.

So that suggests that there is a wage premium for living here in the US.

Curiously, the voters who assume that they are making more money for living here are also the ones who don't want to pay additional taxes to live here because "they earned it." It's an odd kind of recognition of a system they're reluctant to support.

02 April 2019

The Random Ten Percent

Universities have standards they use to judge whether applicants deserve to join.
We have elections to decide who should serve on city council or in state legislatures.
Venture capitalists and banks have criteria for deciding whether or not to fund a startup or business.

Given that all of those processes can be gamed and all of those processes depend on judgement against a set of criteria that may turn out to be a really poor predictor of success, we should set aside 10 percent of all slots for a randomly chosen group.

This would have a host of benefits.

One, given these people would be randomly chosen from the population, they would be more representative. Right now, more than 90% of money venture capitalists give is given to men. Blacks and Hispanics are under-represented at universities. The folks who win elections tend to be good looking. The processes we use are skewed and a random process would help to partially offset that.

Two, it would be a chance to test the null hypothesis. All of these institutions have theories about what predicts success. Inevitably those theories have flaws. One way to discover those flaws is to compare the success rates of those randomly chosen with those intentionally chosen. To the extent that unpredictable things happen, it will be a chance to update the choice algorithm, throwing out criteria that turn out to be unrelated to success and adding criteria that - surprisingly - turns out to be very predictive.

Three, it would be an experiment to test the notion that access to these institutions will improve anyone's life, and not just the lives of those carefully chosen. Perhaps 4 years of Harvard will improve the life of a kid with a 2.4 GPA at least as much as it will a kid with a 4.2 GPA. Perhaps the community will be improved as much by the startled bartender or civil engineer who learns she or he has been chosen to serve in the state legislature by lottery as any politician capable of getting big financial donations. Institutions are powerful and it is important to better understand how much of the benefit they yield comes from their careful selection of who gets access to them vs. who those people are. That is to say, we need to understand when the goal should be to widen access to these institutions as a means to improve everyone's life or when we should narrow access to make sure that only people with a certain potential should be given access.

01 April 2019

Everyone Gets to Be Offended (even if we're only offended that people take offense at the things that strike us as innocuous)

"I'm [angry, outraged, offended] so you have to take my idea seriously."
"No. Your idea needs to be serious to be taken seriously."

Right now, there are folks getting upset because Joe Biden is too physical. I find this Biden (and before it the Al Franken) thing so frustrating. if you can't tell the difference between rape, molestation, sexual harassment, misogyny, a fumbling sexual advance, a dumb joke, and someone who is demonstrative ... or worse, if you can tell the difference but think they should all be treated the same, you should just leave society. Seriously. Because this world is not pure enough for you and never will be. 

That said, I suspect this is one of those instances in which we're the victim of algorithms. The algorithms that maximize attention and response drive these sort of stupid issues up to the top of the list because they do offend everyone: from the purists who think that Joe being demonstrative is offensive to the rest of us who think that taking offense at that is offensive. Everyone is offended and the "how do I maximize hits?" algorithm wins. Even blog authors write a post about it.

Dee Hock, the Creator of Digital Money Is Now Generating Digital Thoughts

Dee Hock fascinates me. He knew that money had been many things over time, from tobacco leaves to gold bits to pieces of paper - and realized that with the advent of the computer it could be digital bits. As VISA's founding CEO, he dreamed up a system that could turn digital bits into money. VISA became the first organization to ever hit a trillion dollars in transactions in a year. A trillion. Dollars.

He understands business and finance as well as anyone and he's quite the critic of it.

He turned 90 a couple of weeks ago. And I just found out that he tweets. He sounds at turns like some mystical guru and old curmudgeon, self-righteous at times and insightful at others. But always provocative.

Here are a few of his tweets:

  • Watching Trump trying to play President is like watching a walrus trying to play a piano.  
  • Simple purpose and principle give rise to complex, intelligent behavior. Complex rules and regulation give rise to simple, stupid behavior. 
  • When observing the rich and powerful, take care not to confuse cunning with intelligence, avarice with ability, and notoriety with merit.
  • 1st manage yourself, 2nd manage superiors, 3rd manage peers. Hire good people and induce them do the same. Only then do you become a leader.
  • Capitalists invest their money in commercial corporations. Employees invest their lives. Which deserves the greater return?
  • Philosophy of unrestrained capitalism:
    • As few as possible, should take as much as possible, from as many as possible, as often as possible. 
  • Dogma has this to recommend it; the believer is relieved of the struggle for knowledge, understanding and wisdom.
  • Every life is subjectively epic and objectively trivial.
  • The universe is constantly wanting to play with us. Why we greet it with such a grave demeanor, long face, and furrowed brow is difficult to fathom.
You can scroll through his tweets here. It's a deep well.