Assorted Links 12/8/09

Larry’s High Silk Hat

Funiculi, funiculà sung by Beniamino Gigli

  • Advanced Legislative Strategies, December 9-11, 2009
  • Research Tools and Techniques: Refining Your Online and Offline Searches, with WiFi Classroom, December 15, 2009
  • Never a Recession in Washington – “For those of you worried about starving bureaucrats, politicians, and consultants clogging the streets of Washington, D.C., don’t be. Everything is fine here! In fact, there’s more money than ever to spend.”
  • Simpson’s Paradox, from Phil McDonnell – “There is a very timely article in the Wall Street Journal that discusses Simpson’s Paradox (a form of aggregation fallacy) and other statistical myths. A brief snippet:”
  • Vengeance – “Vengeance must be the most stupid of all the motives. It is self-destructive, devoid of insight, alarmingly lacking in compassion.
    . . .
    The maudlin lack of pretense, the absence of any attempt to cover up the emotions, the failure to employ self-reflection — all this was fascinating in a depressing way.”
  • Charitable Giving – “Like many of you, I am sure, I was impressed when I heard Goldman was going to donate $500 million to a myriad of small businesses, which are widely perceived to be the primary engines of job creation in our economy. Oh goody, I thought: half a billion bucks mainlined into the veins of those businesses best able to kick start the economy back into rude health. What a coup.
    . . .
    Oh great, Lloyd, that’s just what every small businessman needs: an education. After all, everybody knows what the owner of a chain of dry cleaners or a machine tool factory really needs is “scholarships,” greater “educational capacity,” and mentoring by some half-assed social worker out of an abandoned storefront. Why stop there, though? Why not endow a hundred spots at Harvard Business School in perpetuity so Hmong immigrants can learn to apply CAPM and discounted cash flow analysis to their corner delicatessens?

    Either that, or you could pull your head out of your ass and actually lend some money to these guys instead. Heck, set up a small business lender with half a billion in capital, lever it up ten to one, and loan five billion dollars out to struggling small businesses. You might actually spur some real economic growth, rather than employing an army of aspiring bureaucrats to fill out scholarship applications in triplicate. Plus, you might finally earn some respect from a country which suspects you and your peers are constitutionally incapable of taking a crap without consulting the Harvard Business Review or the McKinsey Handbook of Corporate Obfuscation for instructions.” (footnotes omitted)

  • Resolve to Fire Better – “In yesterday’s resolution I encouraged you to understand what makes your bad clients bad, and avoid taking any more like them. But what do you do with the terrible clients that are already on your books? Fire them!

    Sounds easy, but the reason so many lawyers continue to serve clients they shouldn’t is that it is uncomfortable/awkward/difficult/etc. to let those bad clients go — especially early in the relationship when we know the client is a difficult one, but promise ourselves they’ll improve. Sound familiar?”

  • LETTER TO THE EDITOR. – “I take pen in hand to protest the bill currently before the city council, no. 4241984 if I recall correctly, which would ban the use of electric carving knives while operating a motor vehicle. No doubt the members of city council all come from the leisure classes, but many of us work for a living.
    . . .
    The half-hour I spend commuting is the only time I have alone to carve the roast for my family. Is my family to starve because a few ill-educated drivers are not responsible enough to handle a carving knife while navigating the Boulevard of the Allies? Surely the answer lies in proper education for those who require it, rather than in depriving responsible carving-knife users of their constitutional rights.”
  • Baucus Scandal – “Some commenters think I’m being too harsh on Baucus, given that Senatorial appointments are full of conflicts of interest, personal favors, favoritism to friends, relatives, political allies, donors, friends and relatives of donors, etc. Perhaps. But I suspect that if I knew more of what went on behind closed doors in the Senate, my reaction would not be that this absolves Baucus, but that more Senators should resign, not that Baucus should be off the hook.”
  • Some very good (security) reasons to stay out of Facebook applications – “The problem with many of them is that they offer direct access to your personal information to the people and companies creating the apps. Facebook counts on people to give away their valuable personal information — and they’re getting what they’ve been hoping for. And what’s unfortunate is that all of this is being figured out as the company makes decisions on the fly — like killing off regional networks and changing the way that people have to establish their personal privacy settings.”
  • [hack] No, I Don’t Want to Join Your Mafia – “On the list of worst ideas of the past 100 years, Facebook applications falls between filling the Hindenburg with hydrogen and Pauly Shore’s acting career. While some apps enhance the user experience, most are just fall into dumb and/or annoying categories.
    . . .
    Apart from the annoyance factor, Facebook applications present a security risk. Unless you specifically tell it not to, Facebook will share all of the information you put on your profile with outside affiliate websites and applications. It’s all to better target marketing efforts, but it’s an invasion of privacy. So here are a few ways to reclaim your Facebook sanity and security.

    First, disable Beacon and Facebook Connect. Beacon allows third party websites to send stories about your actions to Facebook. And Connect sends your profile information from Facebook to outside applications. Without sounding too paranoid, both are essentially information-harvesting tools. By going to Settings > Privacy Settings > Applications > Settings > Select ‘Don’t allow friends to view my memberships on other websites through Facebook Connect’ and ‘Don’t allow Beacon websites to post stories to my profile.’ This minimizes the security risk associated with applications.”

  • Requiem for the Dollar – “As it is today, dollars are piled higher and higher in the vaults of America’s Asian creditors. There’s no adjustment mechanism, only recriminations and the first suggestion that, from the creditors’ point of view, enough is enough.
    . . .
    Anyway, starting in the early 1970s, American monetary policy came to resemble a game of tennis without the net. Relieved of the irksome inhibition of gold convertibility, the Fed could stop worrying about the French. To be sure, it still had Congress to answer to, and the financial markets, as well. But no more could foreigners come calling for the collateral behind the dollar, because there was none. The nets came down on Wall Street, too. As the idea took hold that the Fed could meet any serious crisis by carpeting the nation with dollar bills, bankers and brokers took more risks. New forms of business organization encouraged more borrowing. New inflationary vistas opened.
    . . .
    In no phase of American monetary history was every banker so courageous and farsighted as Isaias W. Hellman, a progenitor of an institution called Farmers & Merchants Bank and of another called Wells Fargo. Operating in southern California in the late 1880s, Hellman arrived at the conclusion that the Los Angeles real-estate market was a bubble. So deciding–the prices of L.A. business lots had climbed to $5,000 from $500 in one short year–he stopped lending. The bubble burst, and his bank prospered. Safety and soundness was Hellman’s motto. He and his depositors risked their money side-by-side. The taxpayers didn’t subsidize that transaction, not being a party to it.

    In this crisis, of course, with latter-day Hellmans all too scarce in the banking population, the taxpayers have born an unconscionable part of the risk. Wells Fargo itself passed the hat for $25 billion. Hellmans are scarce because the federal government has taken away their franchise. There’s no business value in financial safety when the government bails out the unsafe. And by bailing out a scandalously large number of unsafe institutions, the government necessarily puts the dollar at risk. In money, too, the knee bone is connected to the thigh bone. Debased banks mean a debased currency (perhaps causation works in the other direction, too).

    Many contended for the hubris prize in the years leading up to the sorrows of 2008, but the Fed beat all comers. Under Mr. Bernanke, as under his predecessor, Alan Greenspan, our central bank preached the doctrine of stability. The Fed would iron out the business cycle, promote full employment, pour oil on the waters of any and every major financial crisis and assure stable prices. In particular, under the intellectual leadership of Mr. Bernanke, the Fed would tolerate no sagging of the price level. It would insist on a decent minimum of inflation. It staked out this position in the face of the economic opening of China and India and the spread of digital technology. To the common-sense observation that these hundreds of millions of willing new hands, and gadgets, might bring down prices at Wal-Mart, the Fed turned a deaf ear. It would save us from ‘deflation’ by generating a sweet taste of inflation (not too much, just enough). And it would perform these feats of macroeconomic management by pushing a single interest rate up or down.

    It was implausible enough in the telling and has turned out no better in the doing. Nor is there any mystery why. The Fed’s M.O. is price control. It fixes the basic money market interest rate, known as the federal funds rate. To arrive at the proper rate, the monetary mandarins conduct their research, prepare their forecast–and take a wild guess, just like the rest of us. Since December 2008, the Fed has imposed a funds rate of 0% to 0.25%. Since March of 2009, it has bought just over $1 trillion of mortgage-backed securities and $300 billion of Treasurys. It has acquired these assets in the customary central-bank manner, i.e., by conjuring into existence the money to pay for them. Yet–a measure of the nation’s lingering problems–the broadly defined money supply isn’t growing but dwindling.
    . . .
    On the matter of comparative monetary policies, the most expressive market is the one that the Fed isn’t overtly manipulating. Though Treasury yields might as well be frozen, the gold price is soaring (it lost altitude on Friday). Why has it taken flight? Not on account of an inflation problem. Gold is appreciating in terms of all paper currencies–or, alternatively, paper currencies are depreciating in terms of gold–because the world is losing faith in the tenets of modern central banking. Correctly, the dollar’s vast non-American constituency understands that it counts for nothing in the councils of the Fed and the Treasury. If 0% interest rates suit the U.S. economy, 0% will be the rate imposed. Then, too, gold is hard to find and costly to produce. You can materialize dollars with the tap of a computer key.

    Let me interrupt myself to say that I am not now making a bullish investment case for gold (I happen to be bullish, but it’s only an opinion). The trouble with 0% interest rates is that they instigate speculation in almost every asset that moves (and when such an immense market as that in Treasury securities isn’t allowed to move, the suppressed volatility finds different outlets). By practicing price, or interest-rate, control, the Bank of Bernanke fosters a kind of alternative financial reality. Let the buyer beware–of just about everything.

    . . .
    Collateralize the dollar–make it exchangeable into something of genuine value. Get the Fed out of the price-fixing business. Replace Ben Bernanke with a latter-day Thomson Hankey. Find–cultivate–battalions of latter-day Hellmans and set them to running free-market banks. There’s one more thing: Return to the statute books Section 19 of the 1792 Coinage Act, but substitute life behind bars for the death penalty. It’s the 21st century, you know.”

  • *What Works in Development?* – “Usually essay collections are of low value but this is the single best introduction (I know of) to where development economics is at today. Contributors include Dani Rodrik, Simon Johnson, Michael Kremer, Lant Pritchett, Ricardo Haussmann, and Abhijit Banerjee, among others. Even better, there are two published (short) comments on each essay, a practice which should be universal in every collection, if only to establish context.”
  • Anchovy Fishing! – “Note the classic, ‘the visionary failed because others lacked idealism’ story. Meanwhile the visionary is off on an anchovy-fishing expedition.”
  • A True Tale of Canadian Health Care–Why some patients need to go to the U.S. for surgery – “Proponents of Canadian-style health care should meet Cheryl Baxter, a Canadian citizen who waited years for hip-replacement surgery, only to be told that her operation would not happen any time soon. Instead of waiting, Baxter did what an increasing number of Canadians are doing: She flew to a clinic in the United States, paid out of pocket, and had a life-altering surgery in a matter of weeks rather than years.”

The Big Discombobulation

  • Why This World: A Biography of Clarice Lispector, by Benjamin Moser. – “I loved this book. She’s an interesting writer with a fascinating biography, plus the book doubles as a history of Brazil and a history of Judaism in 20th century South America. This is one of the sleeper books of the year. ”
  • The First Step Towards Getting Out of Debt – “If you’re not willing to completely stop using debt and to spend less than you earn every single month, no debt repayment plan of any kind will help you.”
  • The Value of Ayn Rand to the Freedom Movement – “I have a favorite Nathaniel Branden quote I like to drag out every time I’m in the middle of the Ayn Rand war zone, which can be found on page 542 of my book. Branden was noting that Rand’s detractors rarely deign “publicly to name the essential ideas of Atlas Shrugged and to attempt to refute them. No one has been willing to declare: ‘Ayn Rand holds that man must choose his values and actions exclusively by reason, that man has the right to exist for his own sake, that no one has the right to seek values from others by physical force–and I consider such ideas wrong, evil and socially dangerous.” ”
  • What to do about an ungrateful adult child? – “If he’s an adult, you’re not obligated to do anything for him, he needs to do things on his own now.
    . . .
    You don’t owe your adult child your life.”
  • Ungrateful (Adult) Kids – “Does an adult child blame you for how their life may have turned out? Were you divorced? Too kind? Tried to be a friend vs. a strict parent? Does their attitude continually push you away? If you are a victim of an adult-child’s animosity then let’s talk about it to problem-solve the issue.”
  • Realizing Freedom: Libertarian Theory, History, and Practice – Video “Featuring the author, Tom G. Palmer, General Director, Atlas Global Initiative for Free Trade, Peace, and Prosperity, and Senior Fellow, Cato Institute; with comments by Tyler Cowen, Professor of Economics, George Mason University, and General Director, Mercatus Center.”
  • Palmer and Cowen on Libertarianism – “On Tuesday I hosted a Book Forum for Tom Palmer’s new book, Realizing Freedom: Libertarian Theory, History, and Practice. You can see the video here. I thought Tyler Cowen’s comments were very astute, so I reproduce an abridged version here:”
  • Our Present Anxieties – “But what is different from past Presidents is the serial, incessant whine of ‘poor me’, ‘Bush did it’, ‘we have to hit the reset the button’ with the Russians, the Arabs, the Iranians, the Europeans, etc. I thought all this would have the usual shelf-life of 6 months. But here it is nearly a year and we are getting more, not less of it. We are back to the lamentations of Jimmy Carter, who, 30 years after his disastrous leadership in 1979-80 on the Iranian hostage crisis, is still talking about how others would have done worse, and how he had saved thousands of lives.
    . . .
    Obama’s legacy is to reduce the word ‘trillion’–which used to be a mind-boggling concept–to the equivalent of ‘billion’, as in a ‘trillion here, a trillion there.’

    There are solutions, of course. Don’t laugh: the ridiculous can become the real when the money runs out. We can furlough federal employees 1 -5 days a month. We can inflate our way out by expanding the money supply. (I started farming with 12% inflation, and 19% interest rates and 10% unemployment, and watched the price of raisins go from $1,350 a ton to $480 in a single year: ergo, anything, I learned, is possible. [There is really no ‘they’ who will step in and save us.])

    E.g., we can default on Social Security and Medicare–as in saying ‘those who make over $150,000 will not be eligible for Medicare’ or have 50% of their Social Security withheld as tax. Don’t laugh, worse may be in store.
    . . .
    How odd that amid all the reset slurs, no one has mentioned just one thing that went well from 2001-9–not one?

    What is so hard about winning wars you begin, paying debts as you go, and keeping taxes and government small? (Is the antithesis really that appealing: quit conflicts you begin, borrow every year, raise all sorts of new taxes for new questionable government expenditures?) One is a Roman republican, the other a late imperial, ethos.”

  • Wheat Ridge High School Class of 1970 – “The reonion committee is working away planning the 40th reunion the weekend of August 13-15, 2010. Wheat Ridge, Colorado”
  • Who Wins Today’s Godwin Award? – ” Is it … Senate Majority Leader Harry Reid, talking on Capitol Hill today about health care obstructionistas?
      You think you’ve heard these same excuses before, you’re right. When this country belatedly recognized the wrongs of slavery, there were those who dug in their heels and said, slow down, it’s too early. Let’s wait. Things aren’t bad enough.

    Nope! It’s old-timey media futurist Douglas Rushkoff, recipient of the Neil Postman award for Career Achievement in Intellectual Activity (no, really!) talking about–shudder–free journalistic content online:”

Safe Routes to School

Are You Thankful?

  • Of Course Defense Analysts Are Biased – “Funds and access aren’t the only things that encourage defense analysts to support hawkish foreign policy decisions. I would add social pressure and jobs. The hawkish consensus in DC is reinforced by social convention. Put a guy from Berkeley in Washington, and I bet his social milieu alone would drive his stated views right. Political ambition is even more important. High-level foreign policy jobs in both parties go to those within the establishment consensus. Smart, ambitious people know that. It affects their stated views early.

    What irritates me about this situation is not that analysts aren’t truly independent, it is that so many insist that they are. No politics here, they say, just us technocrats. Why not just admit it? Think tanks are political, especially when they take government money. That limits what you can say.”

  • Don Draper’s Guide to Being a Better Lawyer – “One of the hottest shows the past few years has been Mad Men, a show about a 1960s Madison Avenue advertising agency. Despite the show being on the air for a few years, I only recently got around to watching. I crammed three seasons into my nightly tv viewing. Not surprisingly, I have developed a strange craving to smoke Lucky Strikes, drink whiskey at breakfast and call every woman I see ‘doll face’. I find it difficult to resist the overwhelmingly urge to slick back my hair with pomeade. Though I do not recommend cheating on your spouse, getting drunk during a three martini lunch, sexually harassing everyone you see or smoking yourself into oblivion, I think the show can offer some tips you can apply to your own law practice.”
  • 21st Century Innovation: Disaster Ready Baby Carriage – “Earlier this year Samsonite invited designers to develop products that would make it easier for people to travel with their babies. One submission came from Iranian designer Pouyan Mokhtarani who suggested a pod that can be used for casual travel or even during disaster scenarios.”

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