Friday, October 30, 2009

Coolest Thing I've Seen All Week

So exactly how big is a cell?

Hello America, Here is Your Health Care Reform

Weighing in at 19 pounds and standing 9 inches tall with 1,990 pages, coming straight out of Washington D.C., its YOUR HEALTH CARE REFORM!

The House health care bill unveiled Thursday clocks in at 1,990 pages and about 400,000 words. With an estimated 10-year cost of $894 billion, that comes out to about $2.24 million per word.


And for those who cry “read the bill,” beware. There are plenty of paragraphs like this one:

“(a) Outpatient Hospitals – (1) In General – Section 1833(t)(3)(C)(iv) of the Social Security Act (42 U.S.C. 1395(t)(3)(C)(iv)) is amended – (A) in the first sentence – (i) by inserting “(which is subject to the productivity adjustment described in subclause (II) of such section)” after “1886(b)(3)(B)(iii); and (ii) by inserting “(but not below 0)” after “reduced”; and (B) in the second sentence, by inserting “and which is subject, beginning with 2010 to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II)”.

The section deals with “incorporating productivity improvements into market basket updates that do not already incorporate such improvements,” if that helps.


Republicans aide said a print-out of the bill weighs more than 19 pounds and stands nearly nine inches tall.

If there's anyone out there who thinks this is a good idea, please let me know in a couple years after you finish reading it. Full Text

There is Something Wrong with the Airline Industry

For anyone who has dealt with an airline before, this will come as no surprise.

My brother just dealt with an airline, and afterwards he sent me this email:

I recently booked a flight for a med school interview in New York, but I needed to cancel it.

Airline Operator: The ticket you wish to cancel is a non-refundable ticket, but you will receive an airline credit for the full ticket price of $89.60

Me: Oh...that sucks...but does the credit ever expire?
Operator: No, but when you choose to redeem the credit, you will be charged a re-booking fee of $150

Me: Wait, wait,'re telling me that I can either forfeit the $89.60 completely, OR I can pay $239.60 and get ONLY $89.60 worth of value from it - is that correct?

Operator: umm... yes that sounds about right

Me: So I get to choose between the two STELLAR choices of letting the airline steal $90 from me, OR let the airline steal $150 from me? This is the most ridiculous thing I've ever heard!

Operator: Sir, I apologize, but this is airline policy

Me: You know where you can shove that policy, don't you?

Operator: Yes sir, I do.

Me: Just so we're clear on that.

Luckily we have companies like Southwest putting pressure on the more expensive carriers, but this is just awful.

Wednesday, October 28, 2009

Google's Quest To Conquer the World

Step 1:  Make a Map.

Today, as soon as Google showed off its beta GPS navigator, the stocks of Garmin, TomTom and other companies in that industry fell into the toilet. It's hard to compete with free Google apps, but that's not why they're screwed...

TomTom owns Tele Atlas, who drives the roads of the world in order to make maps, and until recently was a major map provider for Google. Nokia owns the only major competitor, Navteq, who has also provided maps for Google. Look at Google Maps now, though, and you'll see that the entire US bears just one single copyright: Google's.

Street View wasn't just a neat way to get imagery to accompany the data already found in Google Maps. As it happens, it was a way to drive the same roads that were already in Google Maps, tracing them with Google's own road teams, and—through efficiency and brute force—do away with those costly map licenses. Google has mapped the US, and will surely map the rest of the world soon enough.

This is just a timely example of Google's monstrous growth, and the destruction it causes. Any business that trades in data or packages it for public consumption may one day face the same issues. It's not just whether or not to compete with the behemoth, but even whether or not to go into business with it. In either case, there is a chance of being destroyed.
Google entering a business is a good signal that it's time to pack it up and leave, or pray you get bought. As Google continues to conquer every facet of our lives. This blog is even served by Google.

I, for one, welcome our new nerdy overlords.

How the NFL is Changing Television

Despite my deep love of the NFL, I also know it is a money grubbing machine. However their greed, as it so often does, is leading them to innovate.

Their new service "NFL Game Rewind" allows fans like myself to watch every game from this season and last online, without commercials. The only limit is that you can't watch games live, and the system is off while live NFL games are being played. Other than that, it's the equivalent of having every game from this season and last on DVD.

All this, and the cost to me was a paltry $25. I believe this was a reduced, midseason rate, but regardless it is well worth it to a fan like myself.

As more and more media make the shift to the Internet I hope we see more innovation like we see in the NFL. I imagine they would stream games live, too, if they weren't hampered by their contracts with the major networks.

Cable companies fiercely resist customer demand to buy shows or channels ala carte, but the Internet may allow us to circumvent them completely.

All because greedy companies like the NFL want to make a few extra dollars.

Tuesday, October 27, 2009

The Self Correcting Market

When college students need a mental boost to study for exams, they often turn to Adderall. These pills, which generally sell for $3 a piece, tend to increase in price to $5 around exam time.

One student reports that in his suburban Dallas hometown, drug dealers, realizing this price variation, speculated by buying up large supplies of the drug at $3 and dumping them on the market during exam time, hoping to sell at $5.

They didn’t realize that this large increase in supply would cause the price to drop below $5. Indeed, so many dealers engaged in speculation that there was a surplus at the usual equilibrium price of $3. Students were able to buy the drug for only $2 as dealers sold off their excess supply. One imagines that the dealers were less enthusiastic about speculation the next year and that the exam-week price stayed above $3.

I wonder where the bailout is for the Adderall dealers who speculated and lost. Apparently they just weren't "too big to fail."

This adds further evidence to my point, that though speculation happens, if you allow it to run its course and speculators face the consequences of their bad decision, they will not make the same mistake again.

Massachusetts Health Reforms Lead to Higher Costs

With so much emotion flying around the health care debate, it is useful to take a step back and look at the issue empirically. Take, for example, the Massachusetts experiment:

Three years after Massachusetts enacted its sweeping health-reform legislation, rising health costs continue to bedevil the state and threaten to derail reform efforts.

Despite a significant restructuring of the state's health sector and dominance of nonprofit health plans, Massachusetts still has the highest health-insurance costs in the nation, averaging $13,788 for a family, according to the Kaiser Family Foundation.

One of the reasons so many people supported the reform effort in Massachusetts is that they were told universal coverage would lead to lower costs. With universal coverage, Massachusetts politicians argued, as many in Washington do today, people would no longer have to pay the medical bills of those who don't have insurance—the "free riders"—and therefore health-insurance premiums would fall, or at least level off.

If more government control can't lower costs, then what is the point?

With health costs are rising so rapidly, Massachusetts has turned to the federal government to cover its shortfalls:

Massachusetts is a problematic model on which to base federal health-care reform because the state relies heavily on Medicaid. Washington in 2008 agreed to provide the state with $10.6 billion over three years as part of its Medicaid waiver request, which allows the state to subsidize insurance for people with incomes higher than Medicaid rules normally allow.

Unlike Massachusetts, the federal government doesn't have a back-up source of funds to help it pay for national health care. Washington might want to see how Massachusetts does in solving these problems before proceeding with a similar model for the country.

We are all now paying for Massachusetts' mistake. Let's not make this a nation wide problem, because there's no one to bail America out if we fail.

Monday, October 26, 2009

Misplaced Anger

In Chicago, protesters march on the banks:

"This is not a financial system," he said. "This is a financial disaster."

Protesters carried effigies of bank executives, including John Stumpf, chief executive of Wells Fargo, and former Bank of America Chief Executive Ken Lewis. Some clutched "Wanted" signs bearing the faces of bank executives deemed "Wall Street Robber Banker[s]." They carried signs with slogans such as "No Bonuses for Big Banks" and chanted sayings like "Bust up big banks!"

The morning protests started at the Chicago offices of Goldman Sachs. A woman on a megaphone shouted, "We're here to tell Goldman Sachs, shame on you! Shame on you for helping bring this country to the brink of a depression!" The crowd, in turn, chanted "Shame on you!" An organizer yelled a list of demands for Goldman Sachs, including that the bank support calls for a consumer-finance protection agency and that it donate the money set aside for bonuses to loan-modification programs.

What I find ludicrous about this situation is that these banks would largely have disintegrated had the government not bailed them out, so where is the anger towards the government and Federal Reserve?

The oft maligned "Tea Partiers" marched on D.C. for this reason, yet these liberal anti-corporate protesters don't see that their tax dollars are going to save the very banks they hate. But for some reason the government escapes their scorn. This is just another example of blind faith in government in the face of massive failure.

Friday, October 23, 2009


Man doesn't let a little thing like "crippling inebriation" stand between him and the beer he loves.

[thanks rastian77]

Wednesday, October 21, 2009

Social Security is Unconstitutional

Check it:

The Roosevelt Administration feared that the Court would rule that the Constitution did not permit federal tax-financed old-age insurance. While the Social Security bill was in Congress, the Court invalidated the Railroad Retirement Act, which resembled Social Security. So the Administration’s allies on the House Ways and Means Committee weeded the insurance language out of the bill and physically separated the tax and benefits titles in the text so they wouldn’t look like an insurance program.

Meanwhile, the Supreme Court hammered the New Deal. On May 27, 1935, in a crushing defeat for Roosevelt, it voided the National Industrial Recovery Act and the Frazier-Lemke Farm Bankruptcy Act. It struck down the Agricultural Adjustment Act on January 6, 1936, the Guffey Coal Act on May 18, and the Municipal Bankruptcy Act and a New York state law setting minimum wages for women on May 25.

Enraged, Roosevelt decided to subdue the Court. His megalomania inflated by his 1936 landslide, on February 5, 1937 he abruptly asked Congress to enact a bill empowering him to appoint one additional Justice for every one who turned 70 and did not retire, for a maximum of six, thus enlarging the Supreme Court from nine Justices to up to fifteen.

If you're interested in Contitutional Law (and why wouldn't you be?) then read the whole thing. You will (I hope) come to the same conclusion I did, which is that most Federal welfare programs are unconstitutional and illegal. You would think Obama, a former professor of Constitutional Law, would already know this.

Banks to Charge Fees for Paying Off Credit Card Every Month

Avoid doing business with these companies:

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

These fees are the credit card industry's response to credit card legislation that will, among other things, restrict credit card issuers' ability to raise interest rates on existing balances. Credit card issuers are looking for ways to raise income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier, according to Synovate Mail Monitor, a credit card direct-mail tracking service.

I have a Citi card that I rarely use, and now I could be charged a fee for not using it. However, if I close my account it could hurt my credit score.

In an effort to soften the blow to deadbeats, new regulation is shifting the costs to responsible borrowers. That's in addition, of course, to the many billions of dollars we've given to these banks to save them from their own mistakes.

Only the Federal government could take a system that is totally broken and make it worse.

Tuesday, October 20, 2009

How American Health Care Killed My Father

The consequences of our current system.

He said it perfectly. The reason the health care market is so messed up is because individuals aren't the customers. This is due to a combination of natural human proclivities and government market distortions, namely those distortions that encourage the insurer-centric system we have in place now.

When we stop subsidizing insurance, we will see the real cost of health care and work much harder to improve it on every level. By hiding the costs now, we set ourselves up for a world of hurt later.

The consequences are now upon us.

Omar Epps Reveals He Is Head Coach Mike Tomlin

Mike Tomlin.jpg

In a surprise move, actor Omar Epps revealed his double life as head coach Mike Tomlin of the Pittsburgh Steelers. Epps, who co-stars in the popular Fox show "House," has lead the Steelers to a Superbowl title and is now 2nd place in the AFC North, behind the Cincinnati Bengals, with a record of 4-2.

Exxon Invests $600 Million in Biofuels

Oil companies see dollar signs in going green:
Among the oil companies, BP PLC and Royal Dutch Shell PLC have been the most active investors in the sector. But it's even beginning to attract more-conservative companies like Exxon Mobil Corp., whose chief executive, Rex Tillerson, once famously dismissed corn-based ethanol as "moonshine." Exxon announced in July it was investing $600 million in an algae-to-fuel start-up, Synthetic Genomics Inc.
"It was a major signal to the biofuels industry," says Bruce Jamerson, chief executive of Mascoma Corp., a producer of cellulosic ethanol, which is made from inedible plant materials.

The world economy is shifting, in part due to organized government action.
The answer is the low-carbon policies now being put in place across the developed world. In the U.S., for example, the Renewable Fuels Standard mandates growth in annual sales of biofuels through 2022. The Department of Energy expects U.S. production of biofuels to increase from less than half a million barrels a day in 2007 to 2.3 million barrels a day in 2030. Inevitably, that will erode the oil majors' conventional business.
"The oil companies…see a world of restrictions coming on high-carbon fuels, and they need alternatives," says Mr. Jamerson.

Investments in biofuels, however, account for but a small fraction of total capital investments
Shell, for example, has spent about $1.7 billion on alternative energy and carbon-emission-reducing technologies like CCS in the past five years, while its total capital investment budget last year was $32 billion. BP's investments in alternative energy totaled $1.4 billion last year, about 6% of its capital-expenditure budget for the year, and will fall to between $500 million and $1 billion this year as the global economic slowdown saps demand for energy.
What I want to know is Shell's total investment in R&D. A lot of capital spending could be going to building infrastructure or buying machinery, but I don't think its public information what fraction of the research money is going to renewables. I would imagine a lot, but who knows, oil still has decades. But they know the change is coming.

To reduce carbon in the atmosphere efficiently, we must assign it a specific cost, because oil is terribly convenient from an energy perspective. It will take a long time before renewables catch up, and even longer if there is no change. Carbon credits are inefficient paperwork nightmares, and ultimately add up to a tax, so why not skip the middle man and call a spade a spade, and a tax a tax.

Monday, October 19, 2009

The Federal Government Treats States Like Adults


In a memorandum to federal prosecutors in the 14 states that make some allowance for the use of marijuana for medical purposes, the department said it was committed to the “efficient and rational use” of its resources, and that going after individuals who were in “clear and unambiguous compliance” with state laws did not meet that standard.

“It will not be a priority to use federal resources to prosecute patients with serious illnesses or their caregivers who are complying with state laws on medical marijuana,” Attorney General Eric H. Holder Jr. said in a statement accompanying the memo. “But we will not tolerate drug traffickers who hide behind claims of compliance with state law to mask activities that are clearly illegal.”

About goddamn time.

Murdoch Pwns the White House

How not to discredit a news organization.

Obama's Nobel: The Real Story

This makes way more sense.

Quote: Thomas Jefferson

TJ had it figured out 200 years ago.
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing. I know that to pay all proper expenses within the year would, in case of war, be hard on us. But not so hard as ten wars instead of one. No generation should contract debts greater than may be paid during the course of its own existence. For if could, then the earth would belong to the dead and not to the living generations. It is incumbent on every generation to pay its own debts as it goes and consider ourselves unauthorized to saddle posterity with our debts. A principle which if acted on would save one-half the wars of the world.
Wish we had more people like him around today.

Sunday, October 18, 2009

Dirty Dish Apocalypse

It's like Wall-E come to life. This does not bode well for the human race.


Saturday, October 17, 2009

Paranormal Activity

Paranormal Activity

Just got back from seeing Paranormal Activity, a movie made for $15,000 by high school dropout Oren Peli, and it is one of the scariest movies I've ever seen. It's a great audience experience, and should definitely be seen in the theater. The mockumentary style film follows Katie and Micah, a couple who, after experiencing inexplicable sounds in the night, decide to buy a camera to document the "paranormal activity." It's scoring 86% on Rotten Tomatoes, and I give it 4 out of 5, so go see it already.

Friday, October 16, 2009

Deficit Hits $1.4 Trillion

The fiscal year has ended, the deficit has been calculated, and it's actually lower than expectations:

At $1.4 trillion, the actual deficit was slightly lower than each had expected in August, when the White House budget office projected a $1.8 trillion deficit and the Congressional office $1.6 trillion.

Your share of last year's debt is $4,605, courtesy of the U.S. Government.

Thursday, October 15, 2009

On Engaging Iran

Shirin Ebadi, an Iranian and a real Nobel Peace laureate, offers her take on Iran:

So it was startling this week to hear Ms. Ebadi say bluntly that the Obama administration has gotten some things backward when it comes to Iran. It's not that engaging with the government is a mistake, she said during a visit to The Post. But paying so much more attention to Iran's nuclear ambitions than to its trampling of democracy and freedom is a mistake both tactical and moral.

Iran's President Mahmoud Ahmadinejad "is at the lowest level of popularity one can imagine," Ms. Ebadi said. "If the West focuses exclusively on the nuclear issue, Ahmadinejad can tell his people that the West is against Iran's national interest and rally people to his cause. But if the West presses also on its human rights record, he will find himself in a position where his popular base is getting weaker and weaker by the day."
No argument here. We must engage Iran where they are most receptive, not where they are most combative.

Quote: Frederic Bastiat

This came up in a discussion about the Sixteenth Amendment:

As long as it is admitted that the law may be diverted from its true purpose -- that it may violate property instead of protecting it -- then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder. Political questions will always be prejudicial, dominant, and all-absorbing. There will be fighting at the door of the Legislative Palace, and the struggle within will be no less furious. To know this, it is hardly necessary to examine what transpires in the French and English legislatures; merely to understand the issue is to know the answer.

-Frederic Bastiat

Well said, brother, well said.

Between Genius and Insanity

There lies a very fine line:
But no pursuit at Cambridge was followed with nearly so much eagerness or gave me so much pleasure as collecting beetles. It was the mere passion for collecting, for I did not dissect them and rarely compared their external characters with published descriptions, but got them named anyhow. I will give a proof of my zeal: one day, on tearing off some old bark, I saw two rare beetles and seized one in each hand; then I saw a third and new kind, which I could not bear to lose, so that I popped the one which I held in my right hand into my mouth. Alas it ejected some intensely acrid fluid, which burnt my tongue so that I was forced to spit the beetle out, which was lost, as well as the third one.

-Charles Darwin

Government Forecasts

One could make the argument that the Recovery Plan is in fact hurting the economy by increasing unemployment. I'm not making that argument since it is far more likely that the government is just bad at predicting the economy.

Tuesday, October 13, 2009

Obama to Enter Diplomatic Talks With Raging Wildfire

Obama To Enter Diplomatic Talks With Raging Wildfire

The Public OPTION

With 77% of the population in favor of some kind of public option, why not give it to them?

Crazy right? Only we need to keep it a true option, meaning if I opt out of coverage, I also opt out of paying for other people's health care. Additionally, no government funds will be used in this program other than those collected  specifically for the purpose of the health care insurance via premiums.

Basically, it is an independent, non-profit, nationwide insurance company. It could be run like a co-op, with each policy holder also being a shareholder, voting on company leadership.

But this program could not be backed by the federal government. No Fannie Mae/Freddie Mac, AIG, or Postal Service style bailouts. Once it fails, it's done.

This would of course have to come in conjunction with new legislation shifting the regulation of insurers from the state to federal level, breaking up state monopolies and encouraging national competition, in addition to other reforms.

This way all the bleeding heart liberals can pay for poor people's health care without it impacting my personal bottom line or our national deficit.

A similar idea is gaining traction in Washington.

Mexicans Sweeping the Nation

I'm going to hell. [The Onion]

The Baucus Bill Approaches

The Individual Mandate plan has passed through the Senate Finance Committee and is working its way to the floor. The bill would force millions of healthy Americans to purchase health insurance or face hefty fines.

The bill will also be expensive, but will be offset by taxes and reduced Medicare payments:
The $829 billion will be spent mainly in two ways. More than half will go to help lower-income people buy health insurance. Much of the rest—about $340 billion—will expand existing government programs that cover children and the really poor. In other words, the bill's costs are mainly associated with giving insurance to those who don't have it.
To pay for the bill, Baucus is looking in several places. He'll raise about $200 billion by taxing expensive insurance plans, and additional money by fining people who refuse to buy insurance. But the bulk of the money, more than $400 billion, will come from curbing government payments to hospitals and doctors who treat Medicare patients.
One key here is the $400 billion saved from reducing payments from Medicare. Medicare already pays a reduced rate, about 80% of what private insurers must pay. Care providers must either absorb the cost or pass it along to their privately insured customers. Guess which one they choose.
It got a major boost last week when Congress's number crunchers, said it would in fact lower the federal budget deficit by $81 billion over the next 10 years. The bill's overall cost is $829 billion, significantly lower than the other bills floating around Congress.
You know we're in trouble when our best plan is to follow Massachusett's example of forcing everyone to buy insurance while subsidizing those who can't. It's done nothing to control costs, the extra tax burden has hurt their economy, and doctors are over worked and underpaid, forcing some hospitals to close.

Come one guys, let's try a little harder.

What Is Wrong With Education

I'll tell you what's wrong. A principal should be able to fire a teacher for being terrible:

The district wanted to fire a high school teacher who kept a stash of pornography, marijuana and vials with cocaine residue at school, but a commission balked, suggesting that firing was too harsh. L.A. Unified officials were also unsuccessful in firing a male middle school teacher spotted lying on top of a female colleague in the metal shop, saying the district did not prove that the two were having sex.

The district fared no better in its case against elementary school special education teacher Gloria Hsi, despite allegations that included poor judgment, failing to report child abuse, yelling at and insulting children, planning lessons inadequately and failing to supervise her class.

Not a single charge was upheld. The commission found the school's evaluators were unqualified because they did not have special education training. Moreover, it said they went to the class at especially difficult periods and didn't stay long enough.

Four years after the district began trying to fire Hsi, the case is still tied up in court, although she has been removed from the classroom. Her lawyer declined to comment on her behalf. The district's legal costs so far: $110,000.

The LA Times reviewed cases from the last 15 years and found that:

* Building a case for dismissal is so time-consuming, costly and draining for principals and administrators that many say they don't make the effort except in the most egregious cases. The vast majority of firings stem from blatant misconduct, including sexual abuse, other immoral or illegal behavior, insubordination or repeated violation of rules such as showing up on time.

* Although districts generally press ahead with only the strongest cases, even these get knocked down more than a third of the time by the specially convened review panels, which have the discretion to restore teachers' jobs even when grounds for dismissal are proved.

* Jettisoning a teacher solely because he or she can't teach is rare. In 80% of the dismissals that were upheld, classroom performance was not even a factor.

Obviously teachers unions have gone to far, and any real education reform must address this if we are to give our kids the best chance possible.

Wednesday, October 7, 2009

The Gold Standard 2.0

For the longest time, I have disagreed with Ron Paul's call to return to the gold standard. I thought, how can this possibly work? In order for our economy to grow we must have a growing money supply, right?

Maybe. But it's impossible to accurately measure and predict economic growth, so we can't grow the money supply at exactly the same pace. So to be on the safe side we print a little extra each year, which decreases the purchasing power of each dollar already out there, and we call it inflation.

In a gold system, as the economy grows, instead of regular inflation we would have regular deflation, as the purchasing power of our gold steadily increases.

A cursory Google News search turned up some interesting analysis:

Now, a small amount of gold can go a long ways - global trade in 1913 was huge, and not matched until the mid-1990s. (I know that may seem hard to believe, but things fell a long ways down due to WWI and then the Great Depression). It was based on a 90-day instrument called a Real Bill, backed by gold held in the Bank of England. This Bills could be used to borrow against, and traded multiple times. A merchant in England contracted for cotton in the US to be shipped to a plant in China to be manufactured and shipped back to a store in London. The same, single Bill would be used at each step and often got traded or ‘discounted’ over 20 times. It all got cleared within 90 days and everyone paid off their debt - the many swaps down the chain simply paid off each other. (If you play with the math you can see it works.) As long as the balance of trade of the Bank of England was even, no net gold went in or out; it simply got shuffled in the vault from one bin to another. A small pile of gold could support a huge and growing trade system.


[Real Bills] were an emergent property of capitalism, arising early-on in the Italian city states, and hence were a very resilient system. Yet they died during WWI and have been largely lost to economic history. Instead we have commercial paper and other short-term instruments to finance trade, and are beholden to the whims and fancies of the banking sector.

The gold standard has been used for thousands of years. This recent fiat business is a scam perpetrated by governments trying to avoid their debts, and we're all paying for it.

Consider This


Because of inflation the dollar is worth less than 4 cents compared to 1913, the year the Federal Reserve was created.

See the value of the dollar change over 200 years.

Tuesday, October 6, 2009

An Eye for an Eye

Game theory has produced many strategies of dealing with competing interests, and through these games we can find new perspective on the difficult issue of Afghanistan.

First we need to define the players. Obviously we, the United States and our western allies are player 1. Player 2, and this is important, is not Afghanistan. We are not at war with the people of Afghanistan, we are trying to help them. No, we are at war with global Muslim extremism, which on 9/11 was based in caves in Afghanistan. So player 2 is Muslim extremism, which is a nebulous concept I know, but they are a nebulous group, united in bombing western nations, so we'll lump them together.

Also important to note is that this is not a one-off game with a single interaction, but rather multiple games played over time. Luckily a bunch of smart guys have used computers to model the possible strategies in a multiple game scenario, and those simulations find the Eye of an Eye strategy, or Tit for Tat, is the most effective:

Tit for Tat
1. Unless provoked, the agent will always cooperate
2. If provoked, the agent will retaliate
3. The agent is quick to forgive
4. The agent must have a good chance of competing against the opponent more than once.

It is the model most people use to get by, and by extension, most countries. There is even a special variant for geopolitics called the Peace War Game, or the "provokable nice guy" strategy. This follows Tit for Tat, with nations cooperating until one side becomes aggressive, triggering retaliation by the other side.. Basically, the player does what his opponent did on the previous move.

According to Tit for Tat, after 9/11 we should have run into Afghanistan (or arguably Saudi Arabia, but that's beyond the scope of this article), made a grand attack that shook the Muslim extremist to their core, and left shortly thereafter (quick forgiveness).

As a man who loves empirical data, I would have been on board with the invasion plan I just laid out based on the strategy's success through history. However, it soon became clear that we are engaged with an enemy unlike any we have faced before.

Muslim extremism is not a country, it is a decentralized network of like minded individuals, sometimes completely independent of the main hierarcy. Many of these people are willing to blow themselves up simply to make a statement. And we respond in turn by sending our soldiers to find other extremists and neutralizing them. Yet they keep coming, despite our best efforts to discourage them.


The advantage of "tit for tat" thus pertains only to a Hobbesian world of rational solutions, not to a world in which humans are inherently social. However, the fact that this solution does not work effectively against groups of agents running tit-for-tat does illustrate the strengths of tit-for-tat when employed in a team (that the team does better overall, and all the agents on the team do well individually, when every agent cooperates).

A one-time, single-bit error in either player's interpretation of events can lead to an unending "death spiral". In this symmetric situation, each side perceives itself as preferring to cooperate, if only the other side would. But each is forced by the strategy into repeatedly punishing an opponent who continues to attack despite being punished in every game cycle. Both sides come to think of themselves as innocent and acting in self-defense, and their opponent as either evil or too stupid to learn to cooperate.

As evidenced by their respective simulations, Tit for tat and the Peace War game are ideal when dealing with organized teams of (mostly) rational actors. It is clear that this is not the situation we are engaged in, as our enemy is highly decentralized (thus disorganized) and fairly irrational (suicide bombers). Also, the extremist movement considers our very existence a punishable offense. Tit for tat will fail to give us the ideal outcome.

Therefore our military leadership appears to have put us on a different strategy, the Grim trigger (Tit for tat is also a trigger strategy).

As the name suggests, the Grim trigger game is no fun. A nation involved in the Grim trigger strategy responds to aggression with indefinite retaliation. This is costly and less effective than a Tit for tat strategy, but we are left with few options. That being said, we cannot realistically continue this war forever, so now we move into the realm of deterrence.

Deterrence, or more specifically Massive retaliation, is the use of overwhelming force in reponse to aggression, and thereby discouraging future aggression. In a way, we're back to Tit for tat, except this time a huge Tit for each tat.

We even have the forgiveness component, as we have shifted gears from rooting out Al Qaeda and the Taliban to civilian protection mode.

"Tit for Tat with forgiveness" is sometimes superior. When the opponent defects, the player will occasionally cooperate on the next move anyway. This allows for recovery from getting trapped in a cycle of defections. The exact probability that a player will respond with cooperation depends on the line-up of opponents.

Mixed with intelligence gathering and law enforcement to catch the highly irrational actors, we have a comprehensive strategy to fight this ideological aggression. It's not perfect, and it won't work 100%, but considering the circumstances it is our best bet. Plus, we have the possible added bonus of Afghanistan becoming a free market democracy.

Regardless, if stopping terrorist attacks is our main goal, which it is, we really don't have any other options.

Monday, October 5, 2009

European Style Equality

Ross Douthat, the lone conservative voice on the New York Times' op-ed page, puts the Democrats on the spot for fixing the inequality they so often blame on Republicans:

This landscape will put liberalism to the test. Since Ronald Reagan was elected nearly 30 years ago, Democratic politicians have promised that their program could reverse the steady post-1970s growth of income inequality without sacrificing America’s economic dynamism.

With Barack Obama as president and Democratic majorities in the House and Senatee, we'll see if the Democrats can actually do what they promise.

There is, however, one way that a Democrat majority can plausibly bring down inequality: Just let government keep growing.

This is the lesson of Western Europe, where the public sector is larger and the income distribution much more egalitarian. The European experience suggests that specific policy interventions — the shape of the tax code, the design of the education system — may matter less in the long run than the sheer size of the state. If you funnel enough of a nation’s gross domestic product through a bureaucracy, the gap between the upper class and everybody else usually compresses.

But economic growth often compresses along with it. This is already the logic of our current fiscal trajectory: ever-larger government, and ever-slower growth.

This reminds me of a Churchill quote, "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery."

Favre Plays His Alma Mater

Brett Favre and the 3-0 Vikings face off against Aaron Rodgers and the 2-1 Packers in what should be an emotional performance by both teams. The Onion's in depth analysis breaks this game down:

Three Americans Share Nobel Prize for Medicine

From the New York Times:

This piece of basic biology soon turned out to have important implications for aging and cancer. Telomerase is usually active only at the beginning of life; thereafter the telomeres get shorter each time a cell divides. When they get too short, a cell is thrown into senescence, meaning that it is prevented from dividing again.

Short telomeres are known to play a role in certain diseases of aging, and may be of more general importance. Telomeres are also important in cancer, a disease in which control of cell proliferation is lost. Cancer cells need to reactivate the telomerase gene, or their telomeres will get steadily shorter, forcing them into senescence. In some 80 to 90 percent of human cancer cells, the telomerase gene has been switched back on, Dr. Blackburn said. Clinical trials are under way to see if cancers can be treated by inhibiting telomerase.

So we've pretty much cured cancer. But don't forget, the American health care system is horrible and in need of a government takeover.

Sunday, October 4, 2009

Black vs. White

As a server, it's my duty to post this:
A new study finds many waiters and waitresses feel that black Americans generally tip less than restaurant diners who are white. The study, by a researcher at Cornell University's School of Hotel Administration, found that blacks tip on average 20 percent less than whites. In addition, restaurant workers of all races dislike waiting on black people because they assume the tips will be less no matter how good the service. NPR's Juan Williams reports.

The study found that 63 percent of blacks and 30 percent of whites didn't understand that the standard restaurant tip in the United States is 15 to 20 percent. The difference between how blacks and whites view tipping has serious ramifications for restaurants, including lawsuits and lost profits, Williams reports.

"The average tip from a black customer is about 13 percent of the bill. The average tip from a white customer is about 16.5 percent of the bill," says Dr. Michael Lynn, the study's author.
The only thing that surprises me about this study is that black tips average 13 percent of the bill. I would have guessed lower.

Friday, October 2, 2009

It's Gonna Get Worse

Before it gets better.

WASHINGTON -- Employers eliminated more jobs than expected last month as the unemployment rate climbed to 9.8%, another sign that a rapid recovery in the labor market is unlikely.

Nonfarm payrolls declined by 263,000 in September, the Labor Department said Friday, noting that the largest job losses were in construction, manufacturing, retail trade and government. Economists surveyed by Dow Jones Newswires survey had expected a 175,000 decrease.

The unemployment rate, calculated using a survey of households as opposed to companies, grew 0.1 percentage point to 9.8%. Just last year, in July 2008 for example, the unemployment rate was under 6%.

Congress and the Fed can throw as much money as they want at the problem, a fundamentally unsound economy is a fundamentally unsound economy, and the only way to deal with it is to ride it out.

Paul Krugman is, of course, calling for even more deficit spending, but I ask to what end? It kills the value of our dollar (we should be facing a massive increase in purchasing power, but we aren't), increases our interest payments, and does nothing but prop up a crumbling economy. All in the name of 'helping people.'

It's throwing good money after bad, and it has to come to a stop. We are in for tough economic times, but if our government simply stays out of the way we will make it through and be better for it.

Thursday, October 1, 2009

How to Sink Health Care Reform

Make it cover abortions. That'll get the much needed conservative vote.

In a rational system of medical care, there would be virtually no restrictions on financing abortions. But abortion is not a rational issue, and opponents have succeeded in broadly denying the use of federal dollars to pay for them, except in the case of pregnancies that result from rape or incest or that endanger a woman’s life.

These restrictions, which constitute an improper government intrusion into Americans’ private lives, apply to the joint federal-state Medicaid program, the health insurance exchange that covers federal government employees, and health programs for military personnel, American Indians and women in prison, among others. This approach disproportionately harms poor women, who often can’t scrape together enough money for the procedure until delay has made abortions more costly and more risky.

This could only come from the geniuses at the New York Times. I guess it's the Democrat's turn to grossly overstep their bounds and force the pendulum back the other way.