CNBC is still out of touch

More evidence of how and why CNBC helped to ruin our country and journalism.

Money quote:

“Gasparino interjects.

‘Here’s the difference between what’s going on on Wall Street and in the auto industry,” he says, closing his eyes and shaking his head for a split second of contemplation. “The auto industry did not destroy the economy. . . . The auto industry did not destroy the economy. And that’s the problem that Wall Street has. I have so many friends on Wall Street, and I hate class warfare and Larry, you and I had this discussion three years ago when [former Bear Stearns CEO] Jimmy Cayne made $40 million . . . and you and I said, well, based on the numbers, and what he’s done . . . we thought he deserved it! But in retrospect, when you think about what he did, what they did at every firm, the leverage—and it’s not just the leverage but what they leveraged with—and the fact that: they destroyed our economy.'”

High-speed rail, now

How high-speed rail (HSR) will improve the Midwest.

The article did not mention it, but Minneapolis merits a HSR link to Chicago too!

If banks are zombies, does that make the taxpayer their flesh?

I am still convinced that the best approach to this crisis is to be skeptical and assume that the general consensus underestimates the actual problem.  After all, the stress tests were designed to reflect worst-case scenarios, but those scenarios are already our current state; in other words, three months ago our leaders did not (publicly) believe the situation could be than it is currently.

This point dovetails with Matthew Richardson and Nouriel Roubini’s recent opinion piece in the Wall Street Journal. I agree with the all the details of the piece; they again reinforce the intellectual and courage bankruptcy of our financial sector and some of our leaders.  What the piece reveals is just how dangerous we are to sliding into a Japanese era of muddling through; Summers’ policy of treating this as a probablistic crisis which we must suffer through is rather asinine.  We have sat around and waited long enough, but eighteen months later this crisis has not resolved itself.  Our banking system is characterized by zombie banks and this pleases the banks because management still receives their huge salaries.  This is not a game of management thinking it knows better than the government, this is a game of management protecting its oligarchic lifestyle.  That is the most convincing rationale to explain why executives would substitute cheap government capital for more expensive private capital.

Goliath:David::Pakistan:Taliban

Like most young people, I played competitive sports until I entered college.  I was never the best on the team, but I tended to punch above my weight (at 5’9″ and 140, I wasn’t overpowering anyone).  I played baseball primarily, and I had a good friend who was 6’2″ and 200lbs; he played left field and I played first base, but I could toss a ball almost as far as him.  I didn’t have some freakish ability like the kid in Rookie of the Year,  but I had better mechanics than my friend.  He was so muscular that he could take a small step forward, rotate his torso a bit, and chuck the ball whereas I had to, because of small size, be much more conscientious about my form and timing.   In respect to our throwing distance, we were pretty much the same though our natural abilities were much different.

This is basically the story of Malcolm Gladwell’s latest article, “How David beat Goliath,”  in the New Yorker.  It is similar to Outliers in that it focuses on issues of talent and work ethic while probably simplifying his conclusions to make a snappy point.  His basic thesis is that underdogs often beat the favorites by not playing to the favorites’ strengths; exploiting new tactics allows the underdog to decrease or  surmount the talent differential.  Gladwell gets paternal when he then ties this back into work effort, saying “David can beat Goliath by substituting effort for ability—and substituting effort for ability turns out to be a winning formula for underdogs in all walks of life.”  He sounds like a father coaching his girl’s basketball team, a situation which is the driving anecdote of the piece.

This long excerpt is the interesting fact which provides the theoretical underpinning for his anecdotes:

Davids win all the time. The political scientist Ivan Arreguín-Toft recently looked at every war fought in the past two hundred years between strong and weak combatants. The Goliaths, he found, won in 71.5 per cent of the cases. That is a remarkable fact. Arreguín-Toft was analyzing conflicts in which one side was at least ten times as powerful—in terms of armed might and population—as its opponent, and even in those lopsided contests the underdog won almost a third of the time.

In the Biblical story of David and Goliath, David initially put on a coat of mail and a brass helmet and girded himself with a sword: he prepared to wage a conventional battle of swords against Goliath. But then he stopped. “I cannot walk in these, for I am unused to it,” he said (in Robert Alter’s translation), and picked up those five smooth stones. What happened, Arreguín-Toft wondered, when the underdogs likewise acknowledged their weakness and chose an unconventional strategy? He went back and re-analyzed his data. In those cases, David’s winning percentage went from 28.5 to 63.6. When underdogs choose not to play by Goliath’s rules, they win, Arreguín-Toft concluded, “even when everything we think we know about power says they shouldn’t.”

This is a nice message for underdogs, but I think Gladwell gets too carried away.  Even when underdogs adopt an advantageous strategy, they lose a lot of the time.  And Gladwell’s phrasing suggest they lose that much even when the superior opponent does not adopt its tactics to counter the insurgent.  If Goliath wins without changing strategy, we should hesitate to imply that Davids can always win.  

Gladwell should have also analyzed when Davids lose even once they adopt their advantageous tactics.  He does this at the very end when the underdog basketball team loses because of a biased referee.  But surely Davids can and do lose when there is not evidence of cheating.  It’s a classic example of looking at the successful examples and seeing what they have in common but not finding unsuccessful examples which also have those traits.    (What is the name of this sampling error?)  Jim Collins, author of Good to Great, is called out for this a lot (as is most business journalism).

Like a lot of people, I can’t help but thinking about Pakistan right now.  According to news reports, the army of Pakistan and the Taliban are about to confront each other in the Swat Valley.  This is good news for the Pakistan army because it is going to hold an advantage in conventional warfare; likewise, confronting the Pakistan army so brazenly will probably cause the Taliban to suffer heavy casualties, much like the Vietnamese in 1951.  The fact is that the army of Pakistan is still much stronger than a militia provided the army wants to fight.  But as it stands now, it appears that the Taliban thinks it is a Goliath – hubris and miscalculation if you ask me.

Overall, the article is quite interesting and very encouraging.  I do wish Gladwell had focused more on when Davids lose despite their innovative tactics.

Dunuhnuhnuhnuhunuh Bachmann!

Michelle Bachmann is crazy.

Granted, some of the examples and quotes seem selectively picked and too removed from context.  Nonetheless, I believe the compilation gets the gist right.  I would add, however, this clip too.

Is Bluetooth gendered?

I’ve been in a corporate environment for almost 9 months now (eek!), and it seems to me that a large majority of Bluetooth users are men.  Though I work at a firm with more men than women, my client is a retail firm, so I think I have a gender-balanced sample representing a wide range of demographics.  Has anyone else felt that men seem to prefer Bluetooth more than women?  Any reasons why?

Anecdote.  I received a cheap Bluetooth headset during the holidays, and I love it.  My car is a stickshift, so I can drive safely.  (Talking while driving is more dangerous than just driving regardless of how many hands are being used.)  But I really love being able to do mindless chores – folding laundry, cooking, grocery shopping – while maintaining full use of my hands.  My mom, however, has had 2 headsets and never liked either of them.

Framing and Progressivism

I just finished this interesting article by Russell Shorto about his previous eighteen months living in Amsterdam.  As one who prefers relative equality, universal access to quality healthcare, good education, and modern infrastructure, I enjoyed this article.  As Matt Yglesias points out, Shorto is already well-off by American standards, so his improved standard of living is much less than it would be for a poor American who would gain access to preventive healthcare, a quality education, childcare support, and accessible public transport.  There are two critiques to make about our society’s disdain for the social welfare model, and I want to focus here on how I think our hesitation derives more from poor framing on the part of liberals than any intrinsic adversion to the ends of social welfare states.

[As Yglesias also mentions, it’s important to point out that there is a huge different between high-performing social welfare states such as the Netherlands and Scandinaiva on one hand and Italy/Portugal/France (to a lesser extent).]

As Shorto points out, a “Dutch person” will probably not hesitate to pay an extra $500 in taxes when s/he is told its purpose.  The same person’s reaction will be strongly negative if their taxes are cut $500 and they are told to spend that money on whatever service the government no longer provides.  Asking, “Do you want your taxes raised so an unemployed person can have a gastric bypass?” would elicit a “Yes” response of 5%.  Rewording the question as, “Do you worry about going into bankruptcy because of an unforseen medical procedure?” would elicit a “Yes” response of 95%.  Same if the question were, “Do you want to visit the doctor and receive the necessary medications without worrying about the cost?” My questions are biased, of course, but that’s exactly the point: I can think of few people who enjoy the high bills, stress, and uneven care that our system produces.  (Moreover, I would not be surprised if you counted the expected costs of health care for an individual in America over their lifetime and found that it significantly exceeds the cost of taxes a Dutch person pays for their health care.)

The same logic applies to education.  Few people would, without reflecting on the question, respond positively to, “Do you want higher taxes  to expand the government’s role in education our children?”  But few people would respond negatively to this: “Should your kid have access to a worse education than other Americans?  Should your kid learn in new or well-maintained schools from up to date textbooks?”  Of course, the latter would require higher taxes, but the key is to frame the positive effects of those taxes.

The issue of framing is a basic one in any political discourse and one which any student of Statistics 101 knows.  I have exaggerated the questions to make a basic point, which is that few people would disagree with the goals, and often the ends, of the social welfare state.  This is a strong claim, but I’ll go out on a limb that most people enjoy their health, want their children to live better lives than themselves, enjoy long vacations, and do not like potholed roads.  Of course Holland is not a utopia, but I believe they have reached a much more satisfying equilibrium than we have here.  Well, they have unless you are the top 1% here; the problem is that the other 99% have trouble exerting control over the oligarchy.

As an aside, it’s ironic that the C-suites at pharmaceutical companies decry greater regulation because it will kill their companies’ innovation, but these same captains of industry praise the inventiveness and agility of American capitalism.  There is logical tension between the claim that American capitalism is great and the fear that they cannot adapt.  Surely those executives are not saying they are incompetent.

Sometime soon, I will post my second critique.  The gist is that our government is not as small as we think, it’s resources are just devoted to the wrong areas.

Corr [Neuroenhancers in college, lack of focus] = 1

This article by Margaret Talbot from the New Yorker about neuroenchancers – primarily Ritalin and Adderall – has received a fair amount of play in the blogosphere.  I think it is a well-written, thorough account of its subject, and I agree with one of its primary arguments, namely that such drugs do more to turn the mediocre slightly less mediocre than the mediocre into superstars.

As a recent graduate of one of the country’s most competitive research universities, I am the demographic Talbot profiles.  And I think her analysis of the college trend is correct: smart, well-adjusted people without AD(H)D do not pop neuroenhancing drugs (caffeine excepted).  The people who do are the drinking like a fish Greek kids with poor time management skills; I had plenty of Greek friends who led an active academic and extracurricular life, but they did not drink to stumbling frequently.  I double majored, wrote a 100 page thesis, was president of the Model UN team, wrote a column for the student paper, and was in two clubs; I also had a 10 hr/week job.  I went out with friends on the weekend, occasionally got sloshed, and sometimes lit up, but I did it all with nothing more than coffee and a normal sleep schedule.  (Normal in college being 3-9 a.m.)

My roommate freshman year was much different.  He had much more innate intelligence than me, so he spent more time partying, less time in class, and less time studying.  Instead, he would pop Adderall the day before an exam and cram.  Sometimes this worked, sometimes it didn’t; he sometimes went to the exam groggy because he had trouble falling asleep, and he received As and Cs.  Another friend also utilised neuroenhancers because he spent most of his evenings and nights playing online poker; his grades were fine but not stellar.

Plenty of my friends also wrote theses and partook in extracurriculars: one ran my school’s political magazine, another ran the YMCA, others debated, some ran their own clubs, and they led a moderated social life.  We don’t feel like we missed out on our youth, unless by youth you mean puking in bathrooms, going high to class, or having random sex you don’t remember the next morning. 

Any frequenter of a school’s library knows what an annoyance exam time is.  We have been in the library all semester studying and respecting library etiquette, yet, for one week each semester, in traipse Ugg boots, Seven jeans, athletic sweatshirts, matching sweatpants, and aviator sunglasses.  The cafe gets more crowded, and no computers are ever available; when they are, the poseur before you has forgotten to log out of facebook.  Aside from the overpriced costume, the easiest tell is that this crowd spends more time complaining about how much work they have than actually completing it.  “God, last night was so much fun.  I can’t believe what Carl said!  Shit man, I really need to cram for this exam and finish this paper, and they’re both due tomorrow evening.  Thank God I came to the library to focus.”  Those people, those are the ones who use the pharmacological crutches; the others, those who roll their eyes in mutual annoyance, those are the ones who know how to balance their lives.

An inside look at New York Magazine

Here is an article written by Chris Lehmann, a former staffer at New York Magazine, the magazine which wrote the article I linked to here.  The New York article catalogues the reactions of Wall Street after their Icarusian decade, and Chris provides an inside account of the magazine’s social insecurity. What is most striking to me, however, is that he interprets the New York piece as defending the monied class, whereas I assumed, given the absurd nature of the included diatribes, it was satire.  As Chris worked at the magazine and knows its orientation better than I, I defer to his interpretation.  Assuming he is right, it is incredible that this is the most sympathetic defense the oligarchs can muster.  And though Chris never states as much, surely the editors and publishers realize that they are not members of the same social class as their subjects but, rather, groupies anxious to experience the lifestyle.  Reading between the lines, the leaders of the magazine sound like high school journalists who wrote about football since they did not make it on the varsity team.

America is like a developing country, pt. 2

This Washington Post article from March 29th does another good job of summarizing my feelings.

In addition to what’s been written about how our sociopolitical structure resembles that of a developing nation, I believe the analogy is extendable to other aspects of our country.  We rely on old, polluting technologies to generate our power when the developed world is clearly progressing towards clean energy (wind and nuclear especially).  Our roads are actually in pretty bad shape; instead of maintaining them, we just build new ones.  Our heavy mass-transit systems are remnants from a century ago, and our profusion of bureaucracies, special interests, and NIMBYers always makes it difficult to expand that necessary infrastructure.  Our water infrastructure is also decrepeit.