Borrowing math
October 8, 2014, 7:39 am
Filed under: Uncategorized

Say you know you’ll need to borrow $600/year for each of the next 10 years. You have a lender who will regularly lend to you, as long as you always repay (even if only by taking another loan), in either of two ways:

a) Four-week loan, available weekly
b) Ten-year loan, available monthly

Should you do a) or b)?

Ignore interest. Using a): you borrow $150 every week in year 1, raising $600 in 4 weeks, but the loans week 5 onward are just paying old loans. Then you have to borrow $300 every week in year 2, and so on. By year 10 you’re borrowing $1500 every week. Most of these loans are just going to pay back the loans you took out four weeks earlier, of course. By year 11 you always have four $1500 loans outstanding, one of which you have to pay back each week.

Using b): you borrow $50 each month, throughout the ten years. Only by year 10 + 1 month do you start having to repay anything (the $50 from the very first loan).

Either way your borrowing needs are met. But one of these ways is much different, more disruptive, more risky, and in fact just less practical than the other, thus less likely to arise as a realistic option. Can you tell which?

If so, please go tell Larry Summers.

October 5, 2014, 8:51 am
Filed under: Uncategorized

One of the best blog posts that I have ever read: I Can Tolerate Anything Except The Outgroup. Just RTWT (if you haven’t already).

Judge actually judges
October 1, 2014, 7:34 am
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An Oklahoma judge ruled against the IRS handing some people of their choosing a bunch of money with no basis or authority in law anywhere for doing so. Some passages from his opinion are jarring and shocking to read:

The issue of consequences has been touched upon in the previous decisions discussed. [...] Of course, a proper legal decision is not a matter of the court “helping” one side or the other.
This is a case of statutory interpretation. “The text is what it is, no matter which side benefits.” Such a case (even if affirmed on the inevitable appeal) does not “gut” or “destroy” anything. On the contrary, the court is upholding the Act as written.
As the Act presently stands, “vague notions of a statute’s ‘basic purpose’ are nonetheless inadequate to overcome the words of its text regarding the specific issue under consideration.”

It is a “core administrative-law principle that an agency may not rewrite clear statutory terms to suit its own sense of how the statute should operate.” “But in the last analysis, these always-fascinating policy discussions are beside the point. The role of this Court is to apply the statute as it is written – even if we think some other approach might ‘accor[d] with good policy.’

Now that’s what I can an ass-whooping of all the other judges who ruled Smartly and Correctly on this issue. Why, it’s almost as if this particular judge believes in the rule of law or something. How on earth did he slip through the cracks? Well, whatever the explanation, he clearly must be kicked off the bench at earliest opportunity. We just can’t have judges who believe that the rule of law can trump Smart policy.

September 29, 2014, 8:49 pm
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Slate Star Codex reviews Red Plenty. Got a chuckle out of the ‘what-if’ idea that had things played out differently – like, had well-meaning Smart People been heeded and empowered more, and killed less – the Soviets with their advanced invention of ‘linear programming’ might have solved the allocation problem and passed the West after all. I mean yeah, linear programming works ok in highly controlled, circumscribed situations. You know what’s even better at solving this type of problem when it gets bigger and messier (and less linear) though? The mathematical technique which, when implemented among humans, involves those things we refer to as ‘free markets’ and ‘prices’! Oh but sure, with linear programming you can figure out how many widgets vs. doohickeys your two-item factory should make each reporting period. (IF YOU KNOW THEIR PRICES.)

This pedestrian article asking why Wall Streeters get paid so much (in which we learn, for example, that ‘rents’ means ‘basically profits above and beyond what you’d expect’) got some discussion somewhere, I forget where. Not that I dispute the overall point, but the methodology seems suspect: they followed people (‘longitudinal data’) who worked at the ‘same job’ in finance and in not-finance, ‘controlling for job title, age, gender, and region’. Hmm. 1. A person’s career arc matters (independently of age). Working in finance is – probably – correlated with being in peak career mode, whatever the age. If one does job X in finance and then later does the ‘same job’ in not-finance it’s likely their career is on a downward arc or they chose to, say, prioritize family (otherwise they wouldn’t have left finance!), so they’d make less money for ‘natural’ reasons. If one does job X in not-finance and the does the ‘same job’ in finance, it’s likely that he is moving up in his career (hence getting paid more money for ‘natural’ reasons). You can’t notice either dynamic controlling only for ‘job title’ and ‘age’ is at best a proxy for it. 2. I question this notion of ‘same job’ in the first place. Is a Whatever Job in finance the ‘same job’ as Whatever Job in not-finance? Says who? Because it has the same job title? Nah. Again, these are nit-picks. I gather from this methodology that he would’ve had to exclude, say, job titles like ‘Trader’ and ‘Portfolio Manager’, so, yeah. Wall Streeters do get paid a lot, don’t get me wrong.

I got in a heated twitter battle with one of the myriad Internet Self-Anointed Econo Dudes who assume they are experts on climate modeling for some reason.

This piece (HT Kling) by two authors, one of whom (Jason Richwine) I knew I recognized, explains the insanity of FCRA accounting when it comes to how the federal government values the student loans that it, in its infinite wisdom, decided to start making a few years ago. This is a very important point few seem to talk about, which is why we get the Elizabeth Warrens of the world (dumbly) claiming the government makes ‘obscene profits’ on it.

I admire Nate Silver’s 538 for trying to figure out whether QE3 was a success, but it seems kind of hopeless. What does ‘success’ even mean? Compared to what? They observe that it didn’t seem to bring long-term rates down. But what about ‘term premiums’? Maybe rates would’ve been higher otherwise? (Lisa Simpson’s rock did keep tigers away, after all.) Also, maybe it wasn’t supposed to bring rates down then, just later. Or earlier. Or ‘expectations’ of rates. Or something. See, the Fed can move the goalposts all they want, they’re the ones who made them up in the first place.

My answer to the Thiel question
September 21, 2014, 9:22 pm
Filed under: Uncategorized

Via Arnold Kling, apparently Peter Thiel asks this interview question:

“What important truth do very few people agree with you on?”

It’s a bit hifalutin but admittedly it’s better than the questions I tend to ask (“How’s it goin’?”, “Why did you quit/leave/Why do you wanna work here?”, followed by another 29 minutes of small-talk).

Anyway, here’s my answer to the Thiel question:

Property is a fundamental human right.

Very few people, left or right, appear to believe that.

Rain-dance scheduled
September 21, 2014, 10:37 am
Filed under: Uncategorized

Activists Taking to the Streets to Fight Climate Change

When humans go out and stand/walk on streets in large numbers, that is ‘climate change’ being ‘fought’. The climate is less likely to change due to this activity.

It’s like a rain dance. (Well, isn’t it? What’s the difference?)

“The goal of the march is to show world leaders something needs to be done,” said Negesti Cantave, a field organizer for Sunday’s march. “There needs to be a call to action.”

And a good, scientific goal that is. If there’s anything that ought to be done, it’s Something. The recommended course of action is Action.

The parade will stop at 11th Avenue and 34th Street. There a block party will allow marchers to listen to music, eat food, and speak to local community representatives.

In other words, ‘fight climate change’. Yes, yes.

I bet there will be kebabs and funnel cakes.

September 19, 2014, 8:40 pm
Filed under: Uncategorized

As I’ve been saying on Twitter – mostly tongue-in-cheek – I think? – the flourishing of ISIS and President Obama’s response are nothing other than the foreordained fruits of shrewd, far-reaching plans set in place by Team Bush a decade ago.

President Obama may believe he is the President and is making the decisions, but he merely dances on puppet strings being manipulated out of the past by George W. Bush from circa 2003-4. His actions and decisions are no more his own to make than a mouse being led through a maze, with doors being closed behind him; he no more has free will than an automaton marching forward along a pre-programmed trajectory.

How else to explain that by 2014, the very same Barack Obama who in 2008 inspired millions of not-racists by running on “hope and change” and The Iraq War Was Wrong would be bombing Syria & Iraq, sending troops there and pitching further warfare to a reluctant Congress?

You have to hand it to Bush. Like Hari Seldon, he computed the psychohistorical dynamics of the Middle East; like Paul Atreides, he had visions of the possible-future-paths and selected from among them, coldly but with a sympathetic intelligence placing humanity on the least-unacceptable path that he saw. The fruit of his insights was the Honeypot Strategy.

And it’s working like a charm.

We read stories daily about Westerners making or trying to make the trip to Iraq/Syria to fight on the jihadi side. Which is exactly where we want them. Right? Where else do you want all these people – murderers, psychopaths, bitter dead-end losers, schizophrenics, sadists, maladjusted sexual perverts – to be? Australia, the UK, Scandinavia? The U.S.?

Am I the only one who remembers “we fight them over there, so we don’t have to over here”?

The sad irony is that Bush will never get the credit for all this. But he doesn’t need it. There he sits on his Crawford porch, nodding sagely at Laura over the morning paper, a twinkle in his eye.

Because it is all as he foresaw.

Why am I the only one with the insight to connect these dots and to point out the obvious like this? Well that’s why you read me. It kinda has to be.


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