Showing posts from October, 2012

Don't Try to Fix it Up, Tear it Up

WB is flacking for a David Einhorn argument against QE3 (our third bout of quantitative easing). I happen to not like QE3 much either, but for an opposite reason - it's far to feeble to do much good.

Let's start with a somewhat simplified economic identity Production = Consumption + Savings, or P = C + S. Call that conservation of economic stuff. Note that I neglect any fluxes, which is not locally valid, but close enough globally. Recessions and depressions occur when P stops growing or actually decreases. There are a lot of ways that can happen, including exhaustion of a critical resource (the Harappans?), troubles with those fluxes I neglected (think Spain) and other exogenous factors. Many, however, are like the current financial crisis, endogenous effects of non-linearity in the economy.

A common characteristic of these latter is that consumption drops making it unprofitable to produce much. The economy is saving so much of its production that it becomes a glut …

Class Warfare

Republican's have been quick to play the "class warfare" card, though to date they are the most successful practitioners, having steadily pumped cash to the very rich for nearly two generations now. Chrystia Freeland, in her book Plutocrats, has some hints that Obama's counterattack is aimed at the wrong target. Revolts elsewhere against the power of the super rich have originated mainly in the 1% that Obama targets (and belongs to). Although the 1% make about 15 times as much as the average of the bottom 90%, that pales compared to the factor of 125 multiple for the 0.1% and the much higher multiple for the Romneyesque 0.01%, not to mention the billionaires. The ordinary 1% no they are rich of course, but they are gnawed by envy of the really rich. They have enough money to be in contact with the big rich, but not to enjoy their unique perks. In India, Egypt, and Ukraine, rebellion of the 1% against the special treatment of the super rich oligarchs provided …

International Laughingstock.

The "make your nation a global laughingstock" competitions are always highly competitive, but Italy has shown a Lance Armstrong like dominance in recent history. Their latest entry consists of convicting some seismologists of not predicting an earthquake. I predict that it will be a long time before any scientific seismology or other predictive science gets done in Italy. To fill in the gap, let me just add my own prediction: Italy is a very seismically active region. It will have earthquakes. If you build crappy buildings with heavy walls and little or no earthquake resistance they will fall and kill people. Nobody knows when.

Krugman's Big Mistake

Paul Krugman often seems puzzled that his intellectual opponents fail to grasp the wisdom of his Keynesian policies. I think his big mistake is that he thinks that they are interested the same kind of mean and median social good that he is. From the standpoint of the rentiers, austerity can look darn good, at least until the house burns down. And then they mostly can just move.

Road to the Sea

Romney has been saying - for months, apparently - that Syria is Iran's road to the sea. WTF??? Syria does border the Mediterranean, but it shares no border with Iran, which does border on the Caspian Sea, the Persian Gulf and the Arabian Gulf/Indian Ocean. Romney might be cutting funds for Geography education.


Gold, or at least gold money, is a favorite fetish of the Randists, Ron Paulists, and the right-wing crackpotia in general. Fiat money, or anything that is an emergent property of society (to use Krugman's term) drives them nuts. It overflows their shallow intellectual buffers. Krugman puts them in their place.So what is fiat money? It is, as Paul Samuelson put it in his original overlapping-generations model (pdf), a “social contrivance”. It’s a convention, which works as long as the future is like the past. Obviously, such conventions can break down — but then so can things like property rights. In fact, you could argue that almost every asset in a modern economy owes its value to social convention; green pieces of paper could become worthless, but then so could any paper claim, which is, after all, worth something only because laws say it is — and laws can be repealed. And once you realize that a social convention is not at all the same thing as a bubble, several related fal…

Financial Assets

According to one account, the World total of financial assets is about $200 trillion, or something like $28,000 per person, on average. Of course they aren't distributed anything like that. About 2/3 of these assets are held in the US and Europe, with another quarter in Japan and China. Latin America rates less than 3.5%. Despite these imbalances, recent history has seen a dramatic increase in both overall wealth and a decrease in inequality. In the US and some of the Europe the middle class has taken a hit, but their loss (or stagnation) has been the gain of newly middle class populations of China, India,and other rapidly developing countries. The percentages of the very poor have declined sharply globally, though they still represent billions.

The HNWI and the UHNWI

It seems that the rich don't like being called on it - the word does rhyme with "bitch" after all. But investment banks do track them. One of the joys of Plutocrats is learning the vocabulary - the euphemisms of the day. A current segmentation is the HNWI (High Net Worth Individuals) and the UHNWI (Ultra High Net Worth Individuals). These respective worthies are defined by their investable funds or (sometimes, alternatively) annual incomes, with typical minima being,respectively, one million dollars and 50 million dollars. Collectively, they control a very large fraction of the World's total wealth. Credit Suisse counts about 30 million HNWI in the world and about 85,000 UHNWI as of 2011. All these people are rich of course, and the UHNWI are very rich, but you still need to increase your wealth by a factor 20 to make the billionaires club - the peak of the financial pyramid is very sharply pointed.

Plutocrats: A Pre-Review

Those familiar with my book reviewing style may recall that I prefer a sort of lengthy argument with an author - I can't wait until I've finished the book to start the review. So let it be with Chrystia Freeland's: Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. This book could have been another cheesey episode of "Lifestyles of the Really Really Rich" but it isn't, though there are tidbits for the incurable voyeur. Freeland is a veteran economics correspondent who has spent a couple of decades interviewing and hobnobbing with her subjects, but she - so far - is more interested in economics than personalities. After making it clear that she sees us in a new "Gilded Age" she takes a long historical look at the originals: the great industrialists of the late nineteenth and early twentieth centuries, AKA the "Robber Barrons." Andrew Carnegie was one of the princes of that crowd, and more than his fellows in…

Rent Rent Rent Rent Rent

The Romney Ryan plan for privatization of Medicare, like most "privatization" schemes is a scam. Matt Yglesias pointed one big hole: the plan gives new Medicare patients the option of taking a voucher to buy private insurance rather than traditional Medicare - initially a good deal for the youngest and healthiest patients but one that would suck the money out of traditional Medicare. Supposedly, the private insurance policies would offer some guaranteed benefits. Romney-Ryan saves money by making the voucher worth a lot less than the policies are likely to cost. A purported miracle of the free market is supposed to make that happen. The point Matt makes is that what you have really done here is introduce another layer of rent seekers in the stack of those feeding at the government purse. Like providers and beneficiaries, they have a strong interest in keeping their cash flow and profit as high as possible, and like providers and beneficiaries they will add their well f…

For Lubos

I know you've been eagerly expecting this (since you found record low ice extents less convincing): Arctic Sea Ice Anomaly recently reached record negative values. Time for you to adopt a new rationalization.

Man Up

Romney's campaign signaled today that Mitt would ask the Pres to "man up" and accept responsibility for what happened in Benghazi. I think he really should, maybe a bit like this: As President, I'm ultimately responsible for our actions and it's a responsibility that I take very seriously. If there were errors made, I have asked the Secretary and her subordinates to investigate, and do our best to assure that we don't make them next time. But I will remind Mr. Romney that we are engaged in a global struggle where Americans in many places are putting their lives on the line every day to protect him and all of us. When one of them falls, I mourn. Let me also ask Mr Romney to take his own advice. Man up, and admit that it was your party, led by your running mate, who cut 300 million badly needed dollars from State Department security. Man up again, and admit that the reason your tax proposals are all smoke and mirrors is that there is no there there, and th…

For Who The Bell Tolls

Well, actually, it not only "For Whom The Bell Tolls" but that the bell tolls for "whom." It seems that the word is on its way to extinction. The distinction between nominative and objective forms of the personal interrogative is a bit of a freak anyway, or at least I haven't heard of different forms for "what," "how," "where," or "why." I suppose it won't be missed - though my title does grate on my ears. The possessive might not be so easily dispensed with.

Speaking of Debates

Arun and I have a sort of debate going on regarding languages and origins. Now I live on a continent where almost everybody arrived from somewhere else pretty recently and have never known any other, so it doesn't seem very important to me whether Indian civilization is wholly autochthonous or influenced by others, but it is interesting historically. There are two lines of evidence that have a lot of power here, one linguistic and the other genetic. It has long been argued that the linguistic evidence (the existence and structure of the Indo-European language group) favors an invasion and conquest of much of the Eurasian world by horse domesticating agricultural "Aryans" from somewhere. Genetic evidence is much more recent, and, at least according that adduced by Arun, seems to argue for something different. One approach to resolving the contradiction, if contradiction there be, is to devalue the linguistic evidence. If I understand correctly, that's what a coup…

Cry, Cry, Baby Now

More than a few are now taking the Democratic Crybaby class to task. One of the milder reproofs comes via Josh Marshall: From TPM Reader LW … Wondering if you heard the quote from a pollster that EJ Dionne mentionned on (I think) the Rachel Maddow Show. Anyway, the pollster, according to Dionne, said, “Whwn I come out with a poll with bad news for Republicans, they want to kill me. When I come out with a poll that’s bad for Democrats, they want to kill themselves.” I think that comes really close to explaining the difference between the two parties and what has been happening since that first disastrous debate.If nothing else, it shows the psychological advantage of being a member of the reality denying class. As a certifiable Democratic crybaby, I think I can acknowledge that our hysteria is counterproductive for the cause. Even the hysteria King, Andrew Sullivan, would probably admit it. So from now on, I'll being singing "Message Discipline Uber Alles," and putting…

Why Do Speak So Many Languages*?

* Inspired by a recent Arun Post. As has been well documented, human languages are all underpinned by the same neural substrate - the same language instincts - and are largely equivalent in expressive power, at least in the relevant contexts. So why, having invented language, would we go crazy by inventing mutually incomprehensible variants for every group of a few hundred speakers (before farming and the rise of large civilizations). Well, it could be purely accidental, but I suspect a darker motive. Readers of the Hebrew Bible or of Steven Pinker's The Language Instinct might recall the story of the Shibboleth. Having won a certain battle, the Lord's elect had to sort out their side from those that God had selected for slaughter. Gilead then cut Ephraim off from the fords of the Jordan, and whenever Ephraimite fugitives said, 'Let me cross,' the men of Gilead would ask, 'Are you an Ephraimite?' If he said, 'No,' they then said, 'Very well, say &q…

Why Can't We All Just Get Along?

Veteran readers can guess my answer: We are creatures who have always had to compete against each other for survival. Competition and conflict are built into our genes. Fortunately, we are also descended from creatures whom, for the last few million years, have had to get along with a lot of our fellows in order to survive. These are the poles of our dilemma and the hope of our future. Can we expand cooperation and channel competition into things less destructive than war and murder?

Biden Schools Ryan

Biden schooled a whiny Ryan. Hope Obama was paying attention. Also hope he has prepared some concise bits on taxes. And how about a vision or a plan.


For those wondering whether Obama's sleep walking through the first debate constituted shooting himself in the foot or something more drastic, the new Pew Poll has an answer: a gut shot or worse. They see a twelve point turn around for Romney from earlier in September. How much is due to the actual debate and how much to media hysteria is an open question, but their is no doubt that Obama's performance crushed Democrats and thrilled Republicans. Can the damage be repaired in further debates? TBD, but I'm not optimistic. The big question is whether Obama has it in him to smoothly and politely call out a liar face to face.

Philosophy and Psychology

I'm not sure exactly where I acquired my deep suspicion of philosophers and their product, but it might have been in my first undergraduate Philosophy of Science course. Maybe it was the professor's attitude toward my arguments. Or maybe it was just the fact that my friend the philosophy major not only got the cutest (and smartest) girl in the class but could also routinely beat me at chess. In any case, I have a antipathy to the notion that thought can get you very far without experiment. Gary Gutting, a philosophy prof at Notre Dame, has a critique of Jonathan Haidt's recent book The Righteous Mind in the NYT. His core argument is that Haidt is too dismissive of Plato's analysis of morality, but an obvious subtext is that philosophy is not irrelevant even in the modern age. Now it is possible that Haidt, himself a disillusioned former philosophy major, underestimated the subtlety of Plato's argument, but I think his core critique of philosophy is right on: 2000…


Since the President's staff apparently wasn't up to the task, or may just wasn't paid attention to, a critique and some advice from an old high-school debater. (1)Pick a strategy: rope a dope didn't work. Either attack or propose something new, dramatic and specific, or better both. Romney has been a mass of contradictions, home in on that. (2)Your naturally elliptical speaking style may be useful in some contexts, but debate isn't one of them. Practice and memorize some concise and pointed critiques. Some examples: -Mr. Romney has promised some changes to the tax code, cutting everybody's rates by 20% and his own already low rates to near zero. He has also promised to do this in a revenue neutral way, which sounds like not cutting taxes at all, or maybe just moving taxes from guys like him to guys like you. When we ask him how he will perform this miracle, he won't tell, it's a secret, you see. These are details, we should concentrate on his pri…

More Debate

Republicans are understandable ecstatic about Romney's drubbing of the President, but it's a great exaggeration to say that his performance was superlative. Rather, Obama's performance was awful. It hard to guess why he was so truly terrible, but a few theories are out there. (1)Obama really really hates confrontation, and couldn't bring himself to confront Romney. I think this is right, and it's been the besetting sin of his presidency. He let Congress walk all over him and never used the bully pulpit to fight back. I wonder if he can escape this habit of a lifetime. (2)He rarely does press conferences and is out of practice handling critical questions. True and also probably tied to the first critique. (3)He was afraid of being seen as the angry black man. This is number one again. (4)He was tired and didn't prepare. Hard to believe, but hard to disbelieve either. He spends hundreds of hours talking to voters a few thousand at a time and couldn&#…


Obama hates confrontation and hates to attack. Romney exploited this by spouting nonsense and lies all night, and Obama's failure to call him out was big.

Disaster Movie*

Impressions: Romney has become a very good bullshitter, and it's very easy. Just promise everybody everything. Tax cuts for everybody, more money for Medicare and Defense, a balanced budget, and magical jobs - and he'll pay for it all by cutting off NPR. Obama really really sucked. He should fire his debate prep team. Or maybe he just fired himself. Does he really have no clue as to what he should have been doing? He was verbose, wandered into trivialities, and sulked when he should have been attacking. Romney didn't like being attacked, so Obama avoided it studiously. Lehrer is a stinko moderator - mushy questions, no follow-up. *My original title, though apropos for this wimpy debate, was just too wimpy.

Your Programming Language Sucks

That goes double for your code development environment. And if you teach or study programming, triple and quadruple for your learning environment and the preceding two. Bret Victor explains why.Although he mentions some things that could fix all of the above, he leaves the actual work as an exercise for the student. Here is hoping somebody takes him up on it.

Angry Obama

Drudge has unearthed an old video of an Obama speech to Hampton University that has the nut-o-sphere jumping through their own ********. Their fevered brains think this slightly edgy Obama is some kind of silver bullet against him. I listened to the whole thing and thought "that's the Obama I voted for!" I can't read the mind of the electorate, but I think Drudge et. al. are absolutely nuts. Obama attacks Bush's "colorblind incompetence," the Iraq war, and the legacy of racism and neglect. I suppose some dim-witted crackers might be offended by being reminded of this history and reality, but who else, really?

Duolingo down the Drain

For reasons I can't fathom, duolingo has changed its format into a form I find nearly unusable.

He just might be back.

WB, I mean.


Chrystia Freeland has a great article on America's aggrieved billionaires in the New Yorker. Leon Cooperman seems to be the leader of this courageous band of freedom fighters: One night last May, some twenty financiers and politicians met for dinner in the Tuscany private dining room at the Bellagio hotel in Las Vegas. The eight-course meal included blinis with caviar; a fennel, grapefruit, and pomegranate salad; cocoa-encrusted beef tenderloin; and blue-cheese panna cotta. The richest man in the room was Leon Cooperman, a Bronx-born, sixty-nine-year-old billionaire. Cooperman is the founder of a hedge fund called Omega Advisors, but he has gained notice beyond Wall Street over the past year for his outspoken criticism of President Obama. Cooperman formalized his critique in a letter to the President late last year which was widely circulated in the business community; in an interview and in a speech, he has gone so far as to draw a parallel between Obama’s election and the rise …

The Cave

Plato's allegory of the cave is one that a lot of physicists have been exposed to. The dwellers in the cave are so constrained that they see only shadows of objects in the external world that pass by the entrance projected on their walls (link). Mathematicians and physicists seem fond of taking an ontological point - the notion that the reality we see is just a crude image of the real world. If you watch the video at the link, though, I think you will see that Plato's central point was not ontology but morality - the obligation of those who see to try to enlighten those who don't, even at the risk of their own lives. In my town, as in many places, we have something called "Great Conversations," which consist of people sitting in a circle discussing some topic of current or perennial interest. There are rules - no rudeness, domination of the conversation, interruption, insults, disrespect and so on. Last night's topic was the Allegory of the Cave. It'…