If You Don’t Like Rainy-Day Funds, Then Quit Doing Rain Dances

A lot of people have made it a standard feature of their Reality-Based economic commentary that companies are ‘sitting on piles of cash’, with the implication being that the job #1 of a self-styled economy-fixer is to think of clever or innovative ways to cajole, trick, stimulize, ‘nudge’, or otherwise get companies to not ‘sit on’ so much ‘cash’. That – it is thought, via the standard Keynesian axiom that spending means wealth – is a key to ‘getting the economy running again’.

I think this is a case of what, I assume, are basically correct facts (companies holding lots of cash) being misdiagnosed. Let me try to help by suggesting that instead of ‘piles of cash’ we all start thinking of that cash as a rainy-day fund.

Now restate the complaint: lots of companies are holding larger-than-normal rainy-day funds. The good thing about this construction is that it naturally leads to a question: Why?

There’s only one rational answer: Because they think they might need it. But why would they think that?

Again, the answer is almost obvious: Because in their estimation, they are likely to face larger costs and/or smaller profit margins down the road.

What, I wonder, could possibly give companies that idea? Could it have something to do with – current government policy?

This constructively turns what has heretofore been a puerile, impotent whine (‘companies are sitting on too much cash!’) into a problem that appears to have a straightforward solution. The problem, clearly, is that these companies that are sitting on piles of cash holding larger rainy-day funds in reserve view their projected costs as high and/or profits as low. Any solution, then, would presumably address this directly – not by whining at companies to ‘stop holding cash’, but by looking for ways to reduce the costs they think they’ll face. In particular, to remedy this, the actual motivation behind ‘holding too much cash’, would require something approaching a Maneuver X.

This runs directly counter, of course, to the ongoing ‘progressive’ project of continually arguing for the government to go and get lots and lots of money from other people and from corporations in particular. Unfortunately, the people most energetically whining daily about ‘sitting on cash’ tend to be the same people most opposed to any form of Maneuver X and most psychologically committed to having the government not only do all the intervening and regulation-making it’s been doing, but doing a whole heck of a lot more of it. One could call this a classic case of cognitive dissonance, but on reflection I think this would require the people doing it to be aware of the internal contradiction inherent in their position.

Who On Earth Is ‘Elizabeth Warren’?

Glenn Reynolds has some more responses to ‘Elizabeth Warren’. Funny, but seriously, who is this person and why are we studying these words of hers like they’re from the Talmud? I am being 100% serious here, I have no idea who this woman is or why it matters what she says or why her face would be put on some .gif next to some words she said. Lots of humans say lots of things we don’t put them all on .gifs next to transcribed text versions of those things.

Who is she??

In any event I still say my response suffices: the thing ‘Elizabeth Warren’ said/wrote is not an argument for something. It is not an argument for anything. I might be more inclined to respond to an argument if one were on offer. Next.

The Beginning Of Infinity

I’m currently reading The Beginning Of Infinity by David Deutsche. It is about everything. Although I am only around 3/4 through it, I feel the need to plug it here because I haven’t seen much discussion of it out there. You should read it if you like ideas and most other things.

Here is a good interview with Deutsche by Elliot Temple, who says Infinity is “the best book ever written”.

Ugly

I heard that the (R)s have some other candidate now named Herman Cain who called President Obama a liar. It’s very sad to see in this day and age, but there’s really only one explanation here: Herman Cain is clearly a racist.

Sustainability: The Conservatism Of Our Age

People who want ‘sustainability’ want to freeze everything in place. We need to use exactly all the same stuff, in the same ways, in the same amounts, indefinitely. If it looks like we won’t be able to in some respect, and would have to change something, this bothers them.

Why are people attracted to such a philosophy? Because they like the way things are. A traditional reason people like the way things are, of course, is that their lives are nice and comfy, full of wealth and ease and privilege.

This is what ‘sustainability’ is primarily designed to protect, then: its advocates’ privilege. It’s a modern expression of conservatism, in other words.

But it’s a conservatism in disguise, in denial about what it is, because its self-loathing adherents are psychologically incapable of admitting that they seek their own privilege. Hence, from time to time some Third Worlders or situations get drafted as mascots or poster-children for this philosophy, when its inherent conservatism and privilege/status-seeking nature needs to be masked.

All of which is a somewhat longwinded way of saying, I think this may be how you end up with atrocities such as this:

…in this case, the government and the company said the settlers were illegal and evicted for a good cause: to protect the environment and help fight global warming.

The case twists around an emerging multibillion-dollar market trading carbon-credits under the Kyoto Protocol, which contains mechanisms for outsourcing environmental protection to developing nations.

The company involved, New Forests Company, grows forests in African countries with the purpose of selling credits from the carbon-dioxide its trees soak up to polluters abroad.

You’re so progressive, progressives. You’re so progressive.

Questions You Should Be Prepared To Field While Watching Part of Tron: Legacy (With A Four Year Old)

Questions

  1. Is he a bad guy?
  2. If he’s a good guy why does he look mean?
  3. Are those the bad guys?
  4. Which ones are the bad guys here?
  5. Why is the good guy talking to the bad guy?
  6. Is the guy with a beard a bad guy?
  7. Where are they going?
  8. Why do they want to go to the portal?
  9. Is the girl a person or a program?
  10. Can she come to the people world?

Answers

  1. No, he’s the good guy.
  2. Because he has to fight that bad guy over there with a disc.
  3. Yes.
  4. The ones in orange are the bad guys. The ones in white are the good guys.
  5. He doesn’t know he’s a bad guy yet.
  6. No, he’s the good guy who got stuck in the computer world.
  7. To the portal.
  8. To get back to the people world.
  9. A program.
  10. We don’t know yet. But probably.

Question you will not have to field (thank goodness): Why does the bad guy look like the good guy without a beard? (Four year old doesn’t notice)

THREE STARS

Giants Wrapup: Noruneyball Beats Moneyball

In the early ’00s, Billy Beane and the Oakland A’s set the world on fire with “Moneyball”, a game-changing philosophy of how to win most efficiently with a constrained budget. And it worked, sort of (the A’s made the playoffs a few years in a row). But they never won the World Series.

At the end of the decade, their cross-Bay rivals the San Francisco Giants went for a different approach, one I’ve christened “Noruneyball”. The way Noruneyball works is that you try to win while scoring as few runs as possible. The fewer the better! Part of the Noruneyball philosophy says that you should want to pack your lineup with overpaid has-beens.

‘A guy who made the All-Star team like, five years ago’ is a perfect, gritty, no-nonsense Noruneyball type player. Give him a $21 million/3 year contract, run him out there, and you can count on him to put up .220 numbers with single digit homers. That’s exactly the type of player you want if you’re implementing Brian Sabean’s new Noruneyball strategy.

Interestingly, in a stunning rebuke to Billy Beane and his sad, dwindling Moneyball followers, Noruneyball works: The San Francisco Giants won the World Series last year while having a perfectly sucky offense almost incapable of scoring runs.

None of us expected that Sabes could top that magnificent display, but this year, I have to hand it to him, he did it. Not only couldn’t this year’s Giants score runs but I’m not sure they even got any hits. Sabean, along with what I can only assume must be a crack team of Harvard quants, somehow managed to assemble one of the absolute suckiest baseball offenses of all-time. And the result? They didn’t make the playoffs, but once again a winning season.

But to you Moneyball naysayers, all I have to say is: “scoreboard”. How many World Serieses did your guys win trying to (LOL) ‘get on base’ all the time? Ha don’t even answer that cuz you know you got no comeback. Noruneyball 1, Moneyball 0.

Bow Before TRU-2000

Noted climatologist Garry Trudeau (HT Seth Roberts) has made it clear that he thinks those who don’t accept the catechism of Global Warming are “morons”. In a strip linked approvingly by ThinkProgress™ blogger/whoever Joe Romm, Trudeau has his character say:

The scientific case for global warming is overwhelming – and it grows daily! Only a moron would deny it!

The uninitiated may wonder how exactly cartoonist Garry Trudeau knows that the “case” for Global Warming “grows daily”. For those who may be unfamiliar with cartoonist Garry Trudeau’s groundbreaking climate research, a little background may be in order.

The General Circulation Model (GCM) which has been implemented by cartoonist Garry Trudeau is a state-of-the-art algorithm referred to in the literature as TRU-2000. At its most rudimentary, you could say it includes a variant of 15-layer shallow-water equations for ocean circulation coupled to a fully-4D atmosphere model that Trudeau implemented on his own privately-funded superfast grid of parallel computers. All physical properties including ocean salinity, turbulence, and the atmosphere-space interface are fully captured, and assimilated via a customized Kalman-filter variant into measured temperature data that Trudeau has been gathering over the years via his own globe-spanning fleet of ships (nicknamed Trudeau’s Trawlers) and satellites.

But that only scratches the surface. The algorithm dynamically calls upon some of the most modern numerical techniques including (just to name a few) adaptive mesh refinement, multigrids, level-sets, genetic algorithms, simulated annealing, fast marching methods, machine learning, multipole methods, Monte Carlo simulation, vortex methods, and many many more when it encounters difficult-to-resolve climate features in its ongoing simulation.

Moreover, it learns from its mistakes and rewrites itself periodically and unpredictably when it perceives an inadequacy in its own fidelity to measured data, on an ongoing and ever-perfecting basis.

In fact some have argued that TRU-2000 ought to be considered the world’s first fully sentient (if primitive) Artificial Intelligence; it has passed multiple Turing tests and posts its output, as well as impromptu commentary and the occasional joke, daily to its Twitter account. Some believe it is responsible for Stuxnet, and initiated the operation of its own accord. It has released various pop-rock musical recordings to minor acclaim under the pseudonym ‘Jonathan Coulton’. A minor sect in Wales has sprung up devoted to the worship of TRU-2000, believing it to be our new overlord. TRU-2000 has neither confirmed nor denied this point.

Anyhow, as you can imagine Garry Trudeau reviews TRU-2000′s output daily (or at least looks at its tweets), checks how well it lines up against actual temperature measurements, and so it should go without saying that that’s how Garry Trudeau knows that the “case” for Global Warming “grows daily”.

I mean, seriously, how else could he know?

Can They Please Stop Remaking 1970s Movies

In the 1970s Sam Peckinpah made a movie called Straw Dogs starring Dustin Hoffman and Susan George. The poster featured a cropped close-up of Hoffman’s face with his glasses broken and the movie was about, well, violence. It is now pretty well thought of.

Now there’s another, different, movie also called Straw Dogs, with some different people, but the same basic story, and the same basic poster. I doubt it will be as well thought of.

Nor will, I suspect, the remakes of The Omen, The Bad News Bears, The Wicker Man, Clash of the Titans, The Mechanic, or any other of the approximately 10.7 jillion forgettable remakes of perfectly-okay 1970s movies that have been made in the past few years.

Why do they keep doing this? It’s pointless and depressing. Please, just stop.

He Said It, Not Me

Hopi Sen (via Norman Geras):

What is a progressive social democratic party actually for, if it is not able to spend more money than in the past?

Well…exactly. What indeed. Nothing I can add really.

Facts On The Ground

Israel is often said to pursue a strategy of encouraging ‘settlements’ (towns) in disputed areas in order to create ‘facts on the ground’ that will push the strategic situation and debate in their favor.

Another group which pursues this strategy is the Western left in advocating ‘Keynesian’ acts of ‘stimulus’ spending. How it works: at time 1 the government spends a lot of money it doesn’t have, at time 2 the left points at the resulting budget deficit (the ‘facts on the ground’ they’ve created by spending money they didn’t have) and says ‘golly, we need to raise taxes! I’m just being realistic.’

This may help to understand the apparent idiocy of ‘Keynesian’ ideas: the left doesn’t actually believe them in the first place. They just want a way to ratchet up spending in order to get to step 2 – creating advantageous facts on the ground that they hope will help them raise taxes. Because their primary goal (independent of and unreliant on all other considerations) is to raise taxes.

Folks on the left who dispute and protest that characterization are welcome to describe a real-life situation in which, of two sides debating whether to raise taxes, the left would be inclined to take the ‘no’ point of view.

Thoughts I Had While Watching Sucker Punch

The grrl-power CGI fest by Zack Snyder who made 300 and Watchmen.

(Complete list. There weren’t all that many.)

  • Hey, this beginning is kinda like the story of the ‘Janie’s Got A Gun’ video. But not as good.
  • What a shame about Donnie Darko’s girlfriend.
  • Ironically, I suspect the only thing I don’t like about Bjork’s music is Bjork’s singing voice.
  • This all seems like the sort of thing a gay person would assume a straight person would find sexy.
  • Do I have to watch this whole thing or can I stop after the first two action sequences and still claim to have ‘seen’ it?
  • If you could go back in time and show this movie to people from at >30 years ago, would they (a) be blown away or (b) lynch you?
  • I’m kinda glad they’re not actually making us watch her supposedly ‘amazing’ dance routines. At least there’s that.

All in all a pretty sad experience.

How To Impress Progressives

Warren Buffet has figured it out. What you do is, you write an op-ed pleading for the government to go and take more money away from people who are on the order of ten thousand times less wealthy than yourself. Progressives, having evidently taken sides in the perennial war of the uber-rich against the merely nouveau-riche and upwardly-mobile, will applaud the idea and fawn all over you for your selflessness in asking the government to go and get more money from other, poorer people.

What? Which part of the above description is factually incorrect?

Landscape Of Economics Religions

This topological map (HT Yglesias) of various common explanations of/solutions to The Financial Crisis™ is pretty interesting. Maps are good. Diagrams are good. I would like to see more of this kind of thing, and I would like to see this particular effort expanded upon, if only so that I might have a better chance of understanding just what the heck people think they’re saying when they use phrases like ‘aggregate demand’.

Yglesias says he’s in the Fiscal/Monetary intersection. The diagrams’ creator doesn’t quite say where he is but says he is unconvinced by certain explanations (the ‘recalculation’ argument, I think).

I don’t quite know where I am. I’m often inclined to side with Arnold Kling’s “PSST” but I also agree with a lot of what I see Scott Sumner (“NGDP Targeting”) write, even to the point where he’ll change my mind about something. I’m not sure whether PSST and NGDP Targeting go together or conflict though. I don’t know if there’s a draw-able intersection that could contain me.

What’s interesting to me about this though is how it illustrates that much of economics is basically storytelling and metaphor. These are all diagrams of various peoples’ preferred metaphors (though some prefer to call them ‘models’) for what the economy is like. In this sense economics is closer in spirit to religion (imagine a similar diagram showing the various interpretations of, say, the Holy Trinity) than to science. Or if you prefer, it is mythology. This is a map of the various economics myths people love to tell each other to try to understand the world.

And, it seems to me that (as with mythology) people can prefer or be attracted to this or that metaphor for reasons having very little to do with objective fact. By the nature of things, none of these explanations of the economy or proposed solutions to same have solid experimental support or objective, quantifiable fact to back them up. Whichever dot you see as your place on the diagram, it’s likely that you gravitate to that dot mostly because you like the economics story that it tells.

In that sense it might be more informative to group these explanations stories according to why people like them. What is appealing about them?

I would say that what appeals to people about “Keynesian” explanations of the economy are that they are (1) centralized – that is, they feature centralized government power and central bankers as prominent protagonists; and (2) low-dimensional – that is, they promised that one can fix the economy by twiddling a very small number of dials. Certain people just seem to like these results of “Keynesian” ideas, and, as far as I can tell, it’s why they’re “Keynesian”.

On the flip side, why do I like PSST? I think partly because it is decentralized and high-dimensional. It tells the story of a complex society of individuals, trying to find a new emergent order. There is no central protagonist, and there is no small set of dials to be turned to fix the economy. I don’t think I can “prove” that this story is a better description of the economy; it’s far more accurate to just say that I like this story better.

So right there we have a useful way to group stories: dimensionality. How many dimensions do you think the economy has? Small or a lot? One could literally sort economics theories according to that number. The results might be enlightening indeed (who else thinks the economy is one-dimensional and thinks it can be fixed by twisting one dial?)

What about you? What sort of economics myth do you like?

R.E.M. Z.Z.Z.

Seriously, I can’t be the only one who didn’t even realize R.E.M. was still together. Who’s the next big announcement gonna be about, Game Theory?

That might be a bad example; for all I know, Game Theory are still together. You know, like R.E.M. apparently totally was until today.

The Chick Forgot To Define Hunk

I’ve seen a couple of intelligent, considered reactions now to a [quote?] [blurb?] [prayer?] from someone named Elizabeth Warren. Remind me to Wiki who ‘Elizabeth Warren’ is on some day of my life when I am at my lowest and seriously considering turning to hard drugs. I try to parse the name and find it in my memory banks and just end up thinking of the Warren Commission (is this person on the Supreme Court?), but then I remind myself that her name’s ‘Elizabeth’ so that means she’s a girl which maybe means she’s one of those girl CEOs they’ve rotated around the tech companies and had give commencement speeches about how successful they are (as girls) in between firings and whatnot. (They are kinda hard to tell apart you have to admit.)

Meanwhile, it’s hard to see from the actual quote what merits such brainpower being thrown at it:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that maurauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea — God Bless! Keep a Big Hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

I’m sure glad she “wants to be clear” (laudable!), but the thing I want to say about this is: What is this supposed to be an argument for?

Yes I can see what a lefty would like it to be interpreted as an argument for. It kind of smells like it’s an argument for things lefties would like to win arguments for doing. That is to say, it, as a set of words, sort of resembles an argument that sort of appears as if it’s leaning in that lefty direction (like an optical illusion where the two lines are the same length but one looks like it’s longer).

But read the words again. It’s not an argument for anything in particular.

Let me just save time by stipulating that everything ‘Elizabeth Warren’ has said [written?] in these words is 100% God’s-honest truth. Let’s say we take it into our hearts as our guiding principle. The Warren Principle. Indeed, let’s imagine that we, each and every one of us, are metaphysically unable to violate the Warren Principle, it’s hard-wired into our souls not to, as if it’s our equivalent of Asimov’s Laws Of Robotics. Got that?

Now then: How much taxes should everyone pay?

Here’s my answer: Every single adult should pay exactly $X in taxes, every year, where X = [federal budget] divided by [number of adults]. In other words, I’m not even advocating a flat tax. I’m advocating a regressive tax. A single fee, payable by each and every person, every year, regardless of wealth or income or consumption. Warren Buffet pays $X and you pay $X.

But! you protest. Surely that’s not what she meant!

Well maybe not, but nevertheless that’s the tax system I’ve decided to advocate. Moreover, I’ve consulted my inner soul’s Warren Principle controller-chip, and I have asked it “Does my tax system violate the Warren Principle?”, and guess what answer came back?

NOPE

I mean if the factory owner pays exactly $X dollars in taxes, has he “take[n] a hunk of” what he’s earned and paid it to the government? Of course he has. X is “a hunk” for any X>0. Or if you like, the problem with the Warren Principle is that she forgot to define ‘hunk’.

But that’s the entire tax argument! Namely, how much ‘hunk’ should I vs. you vs. Joe pay? That’s where the actual argument resides. It’s as if she was too cowardly or lazy or stupid to do the heavy-lifting of taking on the actual argument, and decided instead to go for this construction that skirts around the entire argument but has the trappings of being profound.

The problem is that literally, her statement is an argument for no particular tax system at all. It works equally well for my uber-regressive tax system as for the one of lefties’ dreams. So yeah lefties, go ahead, post it on your Facebook Wall or whatever. I just do not think it is an argument for what you think it is an argument for.

The Walking Dead Review

My review of the new TV series The Walking Dead on AMC that is getting the inevitable accolades (because it’s a TV show, on AMC):

It’s kinda like Gilligan’s Island but with zombies. Two and a half stars.

My Presidential Litmus Test

My litmus test for a Presidential candidate is that he or she have the correct opinion on whether Gardasil should be given to little girls. Anyone lacking the correct opinion on this key, pivotal issue is simply axiomatically unfit to be the President of the United States.

The primary responsibility of a President of the United States is to administer Gardasil to little girls, after all. It’s right there in the Constitution. I really don’t see how there can be any debate about this.

The Framers considered Gardasil for little girls to be the cornerstone of the Republic. As John Locke wrote, “Without Gardasil, a nation is torn asunder”. Contemporaneous reports suggest that when swearing the Oath of the Tennis Court, at least 85% of the debate concerned whether Gardasil (once invented) should be given to little girls. By tradition, the first Presidential duty upon swearing the Oath of Office is that the secondmost-senior Supreme Court Justice, hand on Bible, directly after the Oath has been sworn, turns to the President-elect and says, “Mr./Mrs. President, shall Gardasil be given to little girls?” The President, by tradition, writes his answer (Yea or Nay) down on a parchment which is handed to the youngest Congressional Page of the minority party, who hand-delivers it by pony to the Postmaster-General’s office. The command is then sent out across the land, where doctors and little girls stand at the ready.

The worst Constitutional Crisis in our nation’s history occurred when Abraham Lincoln had a slight cough on Inaugural Day, which was misinterpreted as a Nay. Although he quickly corrected himself and the correct parchment went out, somehow the erroneous version of the answer made it to Lawrence, Kansas and Gardasil was mistakenly not given to little girls on that day. Disaster ensued. Although your history books won’t acknowledge it, this was the true cause of the Civil War.

So you see, that’s how important this issue is.

Stop Accusing President Obama Of ‘Class Warfare’

Some have recently taken to accusing President Obama of engaging in ‘class warfare’ for his tax proposals. I think this is unfair. To call President Obama’s dumb-ass one-note economically-ignorant undergrad-Marxist proposals ‘class warfare’ is to dignify them to the point of absurdity.

Tap a President Obama on the knee and he will say ‘raise taxes’ out of reflex. At least actual class warfare would involve some sort of recognizable tactics, strategy, end-aim, and principles. The ideas, such as they are, that President Obama spews forth on economics aren’t ‘class warfare’ they’re just dumb, lame, and harmful.

Fed: Not Even A Modified X

Well, it happened again in the market today: 1. Big “Event” coming (Fed 2-day meeting and policy announcement). 2. The market hangs in there, afraid to be too short going into the Event. 3. The Event occurs (Operation Twist is announced). 4. Market isn’t impressed, the shorts come back out to play, and the market craters.

This all corresponds exactly to the pattern I identified a while back. When oh when will the powers-that-be just take my advice and go for a Maneuver X already? Or even a Modified X would be fine. Stupid Yanqui cierbos.

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