Saturday, September 17, 2011

Forget 9/11

The tenth anniversary of 9/11 was last weekend, and it was full of exhortations to remember the event, as if merely remembering it were a patriotic act. Apparently, taking care of the first responders and volunteers who cleaned up afterward isn't so patriotic, as demonstrated by the ongoing refusal to pay for those victims' cancers, just in case one of those illnesses wasn't actually caused by the event and taxpayers get saddled with someone's medical expenses unjustly.

To illustrate our reverence for the event, if not for the victims, pieces of the World Trade Center are being shipped to build memorials around the country just so we never forget. Which makes me wonder - why is it so important to remember it? If you were a terrorist, what would be more rewarding than to have your victims build monuments to remember your deeds? Wouldn't a more effective, and probably healthy, response be to take care of the victims who still live, remember those who died, and forget the rest?

Monday, May 30, 2011


When I started putting money into a 401K plan, the conventional formula assumed that a conservative investment mix would deliver about 8% per year.


This was back when real estate values were expected to never retreat, the stock market was presumed an almost sure bet, and bonds were suggested as a kind of seasoning to the recipe, basically a head-nod to the faint possibility of risk, a demonstration of being a responsible investor rather than a speculator pinning one's star to the flighty fancies of the stock market.

According to US News, the average 401K account balance is now back to about where it was in 2007, before the latest financial unpleasantness. That's about $70,000, up about $20 K from the low in 2008. Of course, only a few people had the foresight to bet against the housing bubble and subprime mortgage gold rush. The breadth and depth of the bailouts required to keep the world's economy afloat are pretty strong evidence that most investors failed to see the end coming.

Efficient market theories assume that the price of an asset always reflects the perfect balance of valuations by informed investors acting out of rational self interest. Market behaviorists have recently shown that most investors don't qualify as perfectly rational or informed, and this is certainly even more true among the amateurs who make up the bulk of 401K owners. Since most actively managed funds fail to beat the market, even the experts get it wrong more often than right.

Recently, Steve Levitt and Thomas Miles at the University of Chicago demonstrated that poker is a game of skill rather than strictly one of chance. They showed that high performing poker players continue to perform well from year to year, while mutual fund managers' successes and failures are random.

It's ironic that online poker is outlawed in the US because it's considered to be gambling, while investments in mutual funds are a mandatory part of retirement planning.

Sunday, February 6, 2011


Sarah Palin, speaking at a celebration of Ronald Reagan at the Reagan Ranch Center, proclaimed that the US was on the "road to ruin" because of mounting debt. Being the astute student of history that Sarah is, I'm sure she was fully aware of the irony.

Thursday, January 27, 2011

Persecution Complex

"I want my life back." - BP CEO Tony Hale, complaining about the inconvenient effects of the Deepwater Horizon accident, which killed eleven people, on his own life.

"...journalists and pundits should not manufacture a blood libel that serves only to incite the very hatred and violence that they purport to condemn. That is reprehensible." - Sarah Palin, confusing criticism of right wing confrontational rhetoric with persecution of her personally.

"...I’m getting bludgeoned from one end to the other." - Don Schmierer, one of the American evangelicals who visited Uganda in 2009 to urge passage of legislation condemning homosexuality there, complaining that he had received over 600 messages of "hate" mail related to his visit. His complaint was voiced in reaction to the beating death of David Kato, one of the leading gay rights activists in Uganda.

Tuesday, January 25, 2011

Industrial Policy, Again

In the official Republican response to tonight's State of the Union address, Representative Paul Ryan stated, "Depending on bureaucracy to foster innovation, competitiveness, and wise consumer choices has never worked – and it won't work now."

Actually, the microprocessor and the internet are two technologies that developed specifically because of government sponsorship. In the early 1960s, the US military bought large numbers of nascent microprocessors at prices designed to stimulate further development of the technology, in effect creating an artificial market to prop up the technology until it got a foothold in the broader commercial market. Without that assistance, the US wouldn't have become the center of microprocessor manufacturing that we became: no Intel, AMD, Texas Instruments, Microsoft, Apple... and the personal computer revolution would have come later and, probably, somewhere else. The PC revolution created countless jobs and became a new infrastructure-level productivity enhancer that increased US competitiveness and, I think, pulled us out of the early '80s recession.

The Defense Advanced Research Projects Agency is famously responsible for the development of the internet in the 1970s, which blossomed 20 years later and created another infrastructure-level increase in productivity and competitiveness. Again, I think that technology pulled us out of the recession in the early 1990s.

Today, there's no similar technology emerging from the labs, ready to conquer the world and make us all more productive, create millions of new jobs, etc. If Ronald Reagan hadn't pulled the plug on government-sponsored technology programs, particularly in environmental technologies, we might have such a new technology ready to create jobs and maintain our competitiveness. Lacking such a technology, we're left to compete with few advantages in a world full of lower cost producers, some of whom also have more natural resources. Republican demonizing of industrial policy has basically disarmed us economically.

Monday, January 17, 2011

Missing the Points

The current national dialog about and coverage of the recent shootings in Tucson has left out some points that I think are important. In no particular order:

1. The controversy over gun control ignores the fact that when guns are readily available, they're readily available to mentally ill people too. A short list of victims besides those in Tucson includes Ronald Reagan and Jim Brady, John Lennon, students at Virginia Tech and Columbine, and Darrell Abbott, one of the best and most underrated (in my view) electric guitar players in the world.

2. Many are expressing hope that the shootings in Tucson will wake people up to the destructive, hyperbolic rhetoric that poisons our political process. But we had a far worse incident, the terrorist attack against the Alfred P. Murrah Federal Building in Oklahoma City, that killed 168 people and was directly precipitated by right wing rhetoric about "jack booted government thugs" from J. Gordon Liddy and other talk radio hosts. If that didn't do it, this won't either, particularly since the connection between rhetoric and action is far more tenuous in Tucson than it was in the Oklahoma City incident. Then, as now, those same right wing commentators are slinking away from the scene of the crime with their hands open saying, "It wasn't me." But in the case of Tucson, that's probably accurate, and soon we'll be back to business as usual, if we're not already.

3. Articles and commentary about the Tucson shootings and the toxic, hyperbolic rhetoric in our political discussion usually claim that such rhetoric comes from both sides, that the left is as guilty of inciting violence as the right is. Why doesn't anyone challenge this bromide? Throughout the Clinton and Obama administrations, right wing commentators have made claims of tyranny, socialism, and even murder (completely ignoring that both administrations were moderate by almost any objective measure). These commentators included the religious, political, and thought leaders of the Republican party: Gingrich, Limbaugh, Beck, Pat Robertson, Jerry Falwell, Sarah Palin. When did any of the Democratic equivalents of these people ever say anything equivalent about a Republican politician? When did Nancy Pelosi call Bush a Fascist and compare him to Hitler? When did Harry Reid ever mention "second amendment remedies" in reference to a political opponent? When did Jon Stewart, Arianna Huffington, or Bill Maher ever urge violent revolution against the Republican administration? And when did a Democratic member of Congress ever call the President a liar during a State of the Union address? The false equivalence of rhetoric between the left and right shouldn't go unchallenged.

4. Speaking of the right wing vendetta against Obama and the lies that Fox News and others like it continue to manufacture, why doesn't anyone remind all these so-called Christians that one of the Ten Commandments prohibits bearing false witness against your neighbor? Is it because all these so-called Christians don't actually, um, know what the Ten Commandments actually are?

5. In all the controversy over Sarah Palin's use of the phrase "blood libel" in reference to criticism of her own level of rhetoric and her use of gun sights to target swing districts, no one seemed to notice that she recast legitimate criticism of rhetoric that incites violence against liberals as itself a kind of hate speech against conservatives. How can THAT go unchallenged?

6. Speaking of Palin, her video response to that criticism continued the conservative tradition of casting themselves as victims. In fact, several conservative commentators have claimed that they, in fact, were the true victims of this event, because people are starting to (albeit timidly) criticize them. Hasn't anyone noticed a pattern here? Christians are continually persecuted in this country (even though they're by far the majority, every US president has been a practicing Christian, and they control the political agendas at every level of government). Furthermore, the anti-abortion crusade is the equivalent of the equal rights movement, and the taxes that pay for our roads and public services are tyrannical impositions of an oppressive government. How much longer can the dominant US political movement of modern times continue to claim the advantages of oppression and persecution?