Archive for the politics and the public conversation Category

There are two kinds of bullies.

The kind who control the way you play a particular game.   And the kind who insist you play their game.

Most Americans reject the first kind (save for those who like to be BMOP (big man on playground).

But, if truth be told, the first kind is pretty easy to get away with.  You can just walk away.  Life isn’t grade school.  If I think Joe is a bully, I just decide to hang out where Joe isn’t.

It’s the second kind of bully that can be the problem.  The second kind of bully wants to keep you on his playground, playing his way by his rules.

And, unfortunately, our “system” encourages such bullies to get together and seek power.  They know that it’s a lot easier to keep on bullying if you’ve got a gang of bullies who stand with you.

Economics says that a cartel contains the seeds of its own destruction.  That cartel members have an incentive to cheat, since they can reap extra economic benefits from doing so.  But bullies aren’t driven by economic incentives.  They’re driven by the pursuit of power.

That’s why a Constitution of enumerated powers combined with a t Bill of Rights was such a critical thing. The founders knew their would be bullies out there.   Bullies who would see majoritarianism as a tool.

Unfortunately, “we the people” have emasculated both Constitution and Bill of Rights by converting them into a tool of utilitarianism.  And in so doing, we’ve enabled bullying on a huge scale.  Indeed, we’ve converted the greatest innovation in government ever into an unprecedented affirmation of the bullying ethos.  If we don’t like what other people want to do, the solution has become to pass a law to make what they want to do illegal.

We’ve professionalized and legitimated bullying.  Look at your typical Congressperson, your typical President, your typical bureaucrat.  They’re almost all bullies.

They’re just bullies that look good and promise better.   All at the expense of the evil on the other side of them and us.  We don’t want our bullies to be jackbooted thugs.  We want them to be expertly coiffed with business suit and nicely shined shoes.

Why is political correctness such an evil?  Because  it is nothing more than another excuse for type 2 bullying.  To convert taking offense into taking over the schoolyard.

Do I consider some speech offensive?  Sure.  Absolutely.

And as an adult, I have a pretty easy solution available to me:  I can walk away.

But political correctness doesn’t work that way.  If the PC bullies are offended, they’re solution isn’t walking away and associating elsewhere.  They’re solution is that of serfdom.   They want to build a 10,000-volt fence around the schoolyard, and then, when the offending person can’t escape, pummel him unmercifully until he speaks better.

Look at today’s newspapers.  Look at the stories and editorials where people are calling for government action.  Look carefully at what people are asking for.   Are they asking for enforcement of the Constitution and its protection.   Or are they asking for help in bullying other people?

If you have to, start with those whose causes you don’t share.  (It’s always easier to see bullying on the other side.)  But after you’ve identified the opponents’ bullying tactics, move to those who you agree with.  Look in the mirror.  Look real carefully at what is being proposed with respect to the choices of your opponents.   I hate to say this, but more often than not, you’re seeking to take advantage of the same bullying tactics and threats.

This isn’t meant as America bashing.  Bullying using state power has been the default of political action since long before our republic was founded.   Indeed, what made the American Experiment so special is that it attempted to formulate rules that prevented legitimized bullying and that discouraged just the sort of bullying we now practice.

It’s just that we no longer hear the voices of the Founders well enough.   We’re too busy trying to be bullies.


A few days ago I posted for the first time on the blog of perhaps my favorite science fiction writer, L. E. Modesitt, Jr.  (It’s either him or C. J. Cherryh, I go back and forth.)  Mr. Modesitt had posted about an Economist study about the effects of the Internet on social relationships, and the thread got my Gen-Y-apologist knee jerking.

I started by pontificating, “First, not reading tripe (i.e. most newspapers) could be evidence of sanity on the part of the populace rather than the opposite. Even could I abolish sleep, I only have 168 hours a week to work with; whyever should I spend it on what passes for newspaper reporting today?”  And then went into a way-too-extended discussion of Tocqueville on American associationalism.

But it got me thinking about the reading of newspapers.  (Modesitt is a favorite author because he always makes me think!)  After all, despite my comment about “tripe”, I do subscribe to a daily newspaper.  So why do I subscribe?  What do I read?

Today’s Gazette — formerly known as the Cedar Rapids Gazette, the paper now bills itself as “An Independent Newspaper in Iowa’s Technology Corridor” — is in three sections.

Section A — state news mostly, plus editorials, weather and obits.  The section takes just seconds to scan.  I read about four paragraphs about our idiot governor’s idea to run a passenger train from Iowa City to Chicago — a train that would travel at a leisurely 79mph and take 5 hours (assuming Amtrak went against its usual practice and ran on time).  Obits — well, I’m getting old enough that i check these periodically, a tiny bit of evidence that social relationships still matter. Glance at weather — more thunderstorms.  Lovely: my neighbors and I have been helping each other out all weekend after Friday brought not one, but two, hailstorms with quarter-sized hail.  (Actually baseball-sized a few miles southeast of here.  Yech.)  The rest of the section — scanned headlines and done in under a minute.

Section B — sports, national/world news.  When younger I would have spent some time on sports pages — now, the only thing I notice is that last weekend was the British Senior Open and that I’d never heard of the golfer who won it.  The national/world news — under a minute, and that was a waste of time.

Section C:  “Accent”, comics, classifieds.  Haven’t read comics in years.  Classifieds I rarely look at, but I looked at them today — looks like a pretty healthy section, actually — lots of social interaction there.  Though I suppose it doesn’t count since its the social coordination of markets at their best.  (Craigslist, E-bay — all they do is drive us apart, say many know-everything critics.)

And “Accent”.  Well, I suppose it used to be called “human interest” or some such.   Most of the stories today are about health.  One about 72 year-old yoga practitioner.   The rest — basically articles about scientific studies, health risks, what the smarties think us dumbshits should be doing.  Funny thing, isn’t it, the section of the newspaper that one might imagine celebrating social relationships, building them, encouraging them, is doing very little.  There’s a single editorial  about a dad re-uniting with his sons after 3 decades.

Counting writing this blog, I’ve spent about an hour with today’s paper.  I expect that if I had spent an hour randomly surfing the internet I would have seen more, not less, evidence of social relationships being built/developed/strengthened.

How about you, Iterations readers?  How much time do you spend with newspapers?  And what do you spend it on?

Me, tomorrow I expect I’ll be back to “15 minutes or less”.  And to wondering why I keep the subscription.

(p.s. If you want to check out Mr. Modesitt, there’s a link to his website in the blogroll at right. In my opinion, he has a better understanding of economics than just about any science fiction writer out there, even those whom I’m more ideologically simpatico with.)


“That’s just semantics.”

“You’re just playing with words.”

“You know what I mean.”

I’m a big fan of paying attention to the details of language.   And comments like the three above, variations of which can regularly be heard both on- and offline wherever disagreeing people can be found, bother me.

Because, to me, language is never “just words.”  Diction is not of secondary importance to the “real” issues being debated by those disagreeing people.  Rather, it is at the heart of them.  If you get the language right, the disagreements tend to disappear and the issues resolved.  And that’s true whether you’re attending a world summit at some expensive Swiss hotel that us peons can only dream of affording, an obscure academic conference, or arguing draft strategies on some NFL bulletin board.

Not that “getting the language right” is easy.  Because getting the language right is more than proper grammar, logical consistency, and the rest of the usual suspects I and my teaching colleagues use when we mark up student papers.  Getting the language right also demands speaking and listening in what I call “the commons.”  That is, using words, phrases, turns of phrase, idioms, etc, for which speaker and listener agree about the precise meaning at hand.  And within that commons you must somehow combine the grammar, logic, etc., with a shared openness to changing the commons itself.  Even if you and your opponent both strive to get the language right, you’re in for a lot of work.

But easy or hard, language choice matters.  A lot.  As much as any other class of choice we find ourselves having to make on a daily basis.  The late George Orwell had it correct:  sloppy attention to language — as speakers, as writers, and, especially, as listeners — is responsible for most of the great and small evils of the world.

Assuming they recognize the name at all, most people know Orwell as the author of two books seen in school, Animal Farm and 1984.  (I’m not sure the prescient predictor who wrote 1984 would be dismayed or amused by the decline in his own presence in popular consciousness.  I doubt, however, that he would be much surprised that his teachings have gone unheeded.)  Those more historically inclined, or who like me who suffer from a lifelong Anglophilia, know Orwell as one of the great observers of mid-20th century culture.  While he didn’t get everything correct — what journalist or historian does? — I don’t think one can really understand the social fabric of the 20th century unless one at least samples Road to Wigan Pier (history of the working class), Homage to Catalonia (revolution, totalitarianism), or Burmese Days (empire).

But, much as I think each of those books worth reading, and re-reading, Orwell’s single most important work wasn’t a book.  It was a short essay.  Written shortly after the end of World War II and three years before 1984 first hit print, “Politics and the English Language” explains how attention to language matters.  And how the attention that matters is both attention to what you say and attention to what you hear.

It had to have annoyed a lot of readers when it came out.   As its title (“Politics and … “) suggests, it spoke on the political corruption of language.  Though published in 1946, however, it did not focus on the abusive rhetoric of the just-defeated Hitler and Goebbels (who, after all, were poster children for how language can be used for evil), choosing instead to focus upon the diction of those who proved victorious and those who, like the modern academic, prefer the tones of dispassionate science.  Orwell provide not an essay against jackbooted thugs, but against those who would instill fear through use of the “jackbooted thug” label and those who would deny danger by refusing to call jackbooted thugs exactly that.

/begin aside on the ironic

To my knowledge I never used the word “jackboot” in my life until I read Orwell’s use of it as illustrating (i) pretentious diction, (ii) the non-thinking that reading mixed metaphors gives rise to (“the jackboot is thrown into the melting pot”, and (iii) worn-out and useless phrases.)

/end aside

The inattentive use of bad language spoken to combat evil can be as dangerous as the highly attentive use of bad language by evil.  Perhaps more dangerous, for language used by evil can only kill the good.  Inattentive language can corrupt the good themselves.

For, relatively speaking, it easy to see the consequences of bad language used by the pursuers of evil.  Just watch Reifenstahl’s Triumph of the Will, followed by Resnais and Cayrol’s Night and Fog.  (Though substantially shorter, Night and Fog (Nuit et brouillard) is far better, and far more chilling, than the more-known Schindler’s List.)

It’s harder, however, to see the consequences of inattention to bad language used by those (rightly) opposing evil.

I’d like to believe that had Americans, their journalists, and their academics, paid more attention to Orwell’s teaching, they wouldn’t have tolerated, much less provided, the “bipartisan” and “nonpartisan” support in 2001 for the obscenities of the Patriot Act.  Because much as those with selective memory would like us to think, it wasn’t just George Bush running roughshod over civil liberties in the wake of 9/11.  Bush did what he did with the advice and consent of all but one Senator (Feingold of Wisconsin, who, for that moment of courage in 2001, if not much else in his career, should be applauded).  And, more importantly, and far more ominously, he did it with very little criticism from the mainstream media and the “man on the streets.”  And while there may have been occasional bits of criticism from the academy, they inevitably were corrupted by poor diction:  invariably, any criticism coming from the intelligentsia was, and continues to be, couched in the cant of political correctness, the jargon of pedantry, or both.

But for all the necessity of preventing and combatting evil, focusing merely on language because of it’s connection to evil still misses part of Orwell’s point, because most problems of the world aren’t ones that would end if we could manage to get rid of evil people and evil-doing.  For example, if the only problems I (or you) needed to deal with were ones of evil, I would almost never need to work.   I could just laze on my dreamed-of Tahiti beach all day, with my cell phone only set to go off on those rare occasions when James Bond or the Marines or Lara Croft needed my help.

Or, more seriously, while I may not know how to solve the problems of the current economy, I’m pretty sure that a crusade to stop evil won’t.

And all those other problems are affected by inattention to language, too.

Good intentions, and bad diction, pave the road to many places not worth visiting, not just to Hell.  Correct use of language means distinguishing evil from other problems and finding ways to solve both.

If you haven’t read “Politics and the English Language yet, read it now.  The original essay can be found here, or a version reformatted for “easier online reading” here.

And don’t be fooled by the talk that sometimes sounds like your less adept writing teachers, or the “six rules” with which Orwell concludes the essay.  Because those rules aren’t the main point of the essay, as the sixth rule itself makes clear.  (And no, I’m not going to tell you that sixth rule here; you’ll have to at least click on the link above to find it.)  The point is far bigger.  It’s the principle behind all six rules.

Pay attention to language.

Yours, and others’.

Others’, and yours.

Or suffer corruption, and sometimes evil, accordingly.


As we start to deal with “The Recession,” Americans (and for that matter, the rest of the world) must be really careful that their chosen remedies don’t prove to be worse than the disease being treated.

Okay, the economy sucks right now.  I get that.  I got my annual report on my retirement “nest egg” from TIAA-CREF.  It lost 20 % of its value in 2008, over half of that in the fourth quarter.  Okay, the downturn is real.  Changes need to be made.  Steps must be taken. Blah blah blah.

But what we need right now is the economic equivalent of chicken soup and, perhaps, a course of antibiotics.  We don’t need amputation of limbs, or the poison of either radical chemotherapy or FDR-era patent medicines.  The economy probably has more than just a bad cold, but it isn’t suffering from gangrene or third-stage cancer either.

When you’re sick, even with just a cold, you don’t always think clearly.   Be honest here.  How many of us, when that winter cold hits “at the worst of possible times,” make choices that end up making the cold worse or ensuring that it last three times as long as it should.  Instead of taking the old advice of drinking plenty of (non-alcoholic) fluids and getting plenty of rest, we dose ourselves with multiple patent medicines and struggle nobly through going to work and social obligations.  And so, instead of a week or so of miserableness, we spend half the winter coughing and increasing Kleenex sales.  And, with some frequency, we find ourselves susceptible to chronic bronchitis or pneumonia.  All the while spreading our germs around to everyone we know and reducing overall productivity in our offices and communities.

I know, I know, a recession like today’s is more than just a cold.  But contrary to the pontifications of economists and assorted policy-makers and power-mongers, we know less about how to treat a recession than we do about curing the common cold.   Far less:  when it comes to the cold, we’ve at least discovered zinc and chicken soup.

Even though the recession is more than a cold, we might be better of acting as if it wasn’t.  Because the last thing this economy needs is an attempt to retry the ideas that didn’t even work in pre-information economies.

Oh, all ideas in the past aren’t bad ones.  We’d do good with a dose of remembering the Victorian virtues of temperance and saving and finding new ways to develop human capital.  The economic chicken soup remedies.

But the notion that things are going to be better if we adopt the traditional values of agricultural societies,  FDR-style safety nets, and the like?  It’s worse than unsound.  Not only will those prescriptions not “end the downturn”, not only are they likely to make the downturn even worse, but they can threaten long-run productivity.

Because the solution to our ills isn’t bailing out banks and auto companies and airlines and the rest of the detritus of industrialization that have lost touch with what the world (and their customers) really need.  It isn’t in re-empowering labor unions and lobbyists.  It isn’t even, much as my fellow Iowans might want it to be, returning to the values of rural America.  If only on the order of 2% of your economy is agriculture, if only on the order of 20 % of your economy is industrial, you aren’t going to find the needed productivity in pesticides and an oil change.

If you’re going to have a sound economy in the 21st century, you have to keep focused on the fact that productivity comes from innovation and human capital and human ingenuity and information mechanisms. From being able to change and adapt to change with great rapidity.

Joseph Schumpeter (in, e.g., Capitalism, Socialism, and Democracy (1942)), spoke of how processes of creative destruction are the distinguishing characteristic of capitalism.  How, unlike feudalism, unlike socialism, unlike every other economic system, has a capacity for real and sustained economic growth because of the way in which it enables innovation even though innovation brings with it obsolescence and destruction.

Recession “solutions” that emphasize protection of jobs, of key industries, of “the old way of life” short-circuit those processes of innovation.  Mitigating the symptoms of destruction (providing the chicken soup that helps the suffering of displaced workers) is one thing.  But too often the desire to alleviate pain is accompanied by attempts to prevent the destruction altogether.  Instead of looking for ways to help people take the next step, we strive to protect jobs and companies and industries and “sectors” from having to adapt.

All of which is by way of preface.

In the February 2009 issue of Technology Review  (Parallel Universe), Robert X. Cringely writes about the implications of today’s personal and business computing hardware being built with “multi-core” processors.   These dual-core, quad-core (and on the high-end Apple MacPro I dream about buying, 8-core) machines solve the heat problem mega-millions of computer calculations cause for microchips by using the economic idea of division of labor.  Put one processor to work running the operating system and another your key application.  And do this again and again, thousands of times.

But, as Cringely points out, there’s a catch.  It’s a lot harder to program for parallel processing.  Computer languages tend to be designed to work with linear sequences of tasks, and it’s really hard to organize thousands of processes operating simultaneously into a linear “Do A, then do B, then do C” sequence of commands.

The problem’s so big that, as he puts it on page 56 of the hardcopy version of the article, “companies have called back to service some graybeards of 1980s supercomputing.”  The industry that typifies the notion of constant change and always being focused on the “next” change finds itself  looking back to professors emeritus and the research done by companies dead for over a decade.

Because without the software, all those potential gains from the exponential growth of processing power are going to go unrealized.  The reality is that unless I’m a hardcore gamer (which I’m not) or doing high-end Monte Carlo simulations for economic forecasting or cosmic decay (which I’m not), I’m not going to use anywhere near the capabilities of that dream 8-core MacPro, much less the 64-core chips being conceptualized for the reasonably near future.  Processing power increases only matter to the extent that society has uses and needs for them.

None of this may prove a big deal economically.  One of the annoying things about watching technological change is the difficulty of trying to figure out when particular technological innovations really are going to mean major economic transformation and when they are not.  It’s a lot of fun thinking about the future implications, but “getting the story right” before the story ends … well, that’s going to have a high failure rate no matter how smart or hardworking the prognosticator might be.

The tea leave character of technological prognostication doesn’t make the subject being prognosticated about irrelevant, however.  Because while the economic impact of any particular technological change will be uncertain, it is a fact that rapid technological and institutional change is at the heart of how today’s economy and how it works. Anyone who is concerned with long-run productivity must always keep in mind the flexibility that coping with rapid change demands.  In a world where paradigms shift with great regularity, people and companies must be able to shift with great regularity.

But shiftability (is that even a word?) is not something that can be legislated.  It’s not something to be protected.  It can’t be, because that kind of legislation and protection only works in a world that is as far away from existing as it has ever been, a world where individual tea leaves can actually be read with great accuracy.  In a world where knowing the details of the future is harder than it has ever been, the most that government and other rule-making wannabes can hope for is to enable greater shiftability.

I have no magic bullet for enabling shiftability.  But I’m pretty darn sure you to don’t enable it by encouraging people to avoid shifting.

Much less by trying to institutionalize the avoidance of shifting.


Warning #1:  This blog entry is likely to be quite long.  Decent stories about the economy are rarely short, and the same is true of explanations of economic method.  And this entry strives to be both.

Warning #2:  In my last blog entry, I promised a way to test my claims about the silliness of attempted business cycle forecasting.  But before I get to that main point, let me first respond to David’s two requests for empirical evidence.

1.  Evidence that Mellon/Hoover/FDR had anything to do with the contractionary monetary policy that caused the Great Depression.  I’ll defer to David’s greater knowledge of the subject, and if you say Mellon/Hoover/FDR weren’t involved in the monetary policy decisions of the 20s and 30s I’ll go along with that.  I’m not an expert on the Depression.

But I am convinced the Depression was the result of contraction of the money supply, and that the “guvmint” was involved in the policy choices that exacerbated that contraction.  My point after all was not to decide which policymakers/intervenors (President, Congress, Cabinet, Fed, whoever) deserve particular blame.  My point was to point out that policymakers/intervenors invariably can’t do what they promise to be able to do.

And, secondarily, that if you want to look at the quintessential threat to the long-term growth trend (i.e., the Great Depression), then you see the quintessential period of (misplaced) public conviction in the value of intervention, and the quintessential period of policy makers making things worse.

2. Evidence of recent growth rates of real per capita US income.  Below are two graphs which with a little careful elaboration, I think provide at least hints of the “steepening”.

(The first was made using the data of Angus Maddison and the OECD (Monitoring the World Economy, 1820-1992, 2005. The second used data on USA GDP from the the Bureau of Economic Analysis website  (

I think part of the problem here is that I tend to have a very long term view of things, and for me “recent” means different things than it means for others.  If I want to look at the health of the US economy, I look at 100 years or 200 years.  Hence the first graph, where the change in trend after World War II looks pretty clear.  The USA, along with Canada and Australia, provide the data for the purple “Western Offshoots” curve, which shows a fairly big steepening of the curve.   (The Maddison book is buried in my garage somewhere with all the other books I had to move out of my office when I went on leave, so I can’t give separate numbers for the USA in this one).

Maddison (2005) data on world GDP
Of course, when one looks at that trend, there is no change visible in that slope (hence the black trend line that fits the entire curve well).    However, if one looks closer at what is being plotted, it is not “real GDP per capita” but merely “real GDP”.  In short, it doesn’t account for the fall in population growth over the same period.


Little bit of math trivia here:  The “rate of GDP growth per capita” is equal to the “rate of GDP growth” less the “rate of population growth”.

And so, since the graph shows GDP growing at a relatively constant rate and the rate of population growth is falling, this means that the rate of GDP growth per capita is actually bigger now than it used to be.

Now, my guess is that David or someone else will point out here just how fragile my quantitative analysis is here.  And they’d be right.  I can think of half a dozen points I would make myself, were I so inclined.

But, it seems to me, that just makes my main point from “Why I hate business cycle talk, part one” all the stronger.  Because empirical evidence about business cycles, and how we go about  predicting their future, is even worse.  The stories I want to tell about the long term trend is like my predicting I’m going to be cussing about my snow shovelling more than once between now and next April.  The stories people tell about business cycles are the equivalent of predicting that I’m going to be cussing on January 14th.  At 8:43 a.m.   Because the snow plow went by at 8:25.  And dumped the residue of a 5.8″ snowfall between 9:02 on the 13th and 2:48 on the 14th.

Which brings me to my promised “test”.  Well, here it is, a fairly easy test to illustrate the empirical difficulties that those who would predict and manipulate business cycles are up against:

[Warning  #3:  What follows is an Economics 101-level "simulation." It is, I think, straightforward, but unlike listening to the pontifications a TV news wonk, it isn't quick.  It will take you a bit of time to work your way through the details. Economics is like that.]

Step AStart by choosing a 6-18 month period from some time in the past.  Either near past or distant past, though the farther back you go the more difficulty you will have finding data.  I would recommend staying sometime in the last 25 years or so.

Step BFigure out what your favorite news source or politician was saying about the economy during that period.   Not what they are saying now about back then, but what they actually said back then. (This is another reason to stay reasonably close to the present day; by Googling your expert and a bit of judicious link-following, the archives of the web are a lot quicker to access than wandering library shelves and staring into a microfilm reader.)

What you need to do is find and distinguish are two kinds of claims:

(i) Claims about how the economy is doing at the time the claim is made.  Statements that the economy is in recession or on a downturn or inflating or whatever.  The key here is that the claim is about the claimant’s present.  It isn’t a claim about what happened three months before, or a claim about what will happen in the future.

(ii) Claims about how the economy will do.  These are claims about the unemployment or inflation or recession that are going to happen.  These claims are sometimes unconditional: e.g., “It’s inevitable.  We’re headed straight for another Depression.”  More often they are contingent upon a particular policy choice being made or not made:  “If we don’t do X, we’re going to see massive layoffs across the economy.”

For purposes of this test, we’re only concerned with type (i) and unconditional type (ii) claims.  The kinds of claims that cannot be washed away with a “well I would have been correct if you had just followed my advice.”

You also want claims that concern the path of measurable economic variables.  For example, a claim about “unemployment” might be thought of as “measured” by the unemployment rate or by total plant closings in the the nation.  Inflation might be measured by the Consumer Price Index.  Income might be measured by gross domestic product (GDP), national income, personal income.  And so on.

Step CFind some data on a “national aggregate”.  Something that people cite as evidence of how an economy is doing.  One of the variables listed in the last paragraph, for example.  You want something for which you can find at least quarterly data.  Monthly is better, and weekly better still, but progressively more difficult to find.  A good place to start is where I started when I started thinking about an answer to David’s question — the Bureau of Economic Analysis website at

Step DPut the data into your favorite spreadsheet.   Generate an X-Y line graph with dates on the horizontal axis and the aggregate on the vertical.  Make sure the dots are connected so you can see when the upturns and downturns occur.

(Aside:  You can get by with linear scaling (any spreadsheet’s default) as long as the claims you are looking at are ones about the direction of movement (“upturn”, “downturn”).  However, if they’re about the speed of change (“slowing”; “accelerating”), and more often than not they are, then you need to check the chart/graph options and choose log scaling or you’ll run into the same kind of problem I ran into with graph 1 above.)

Step ENow see how accurate your prognosticator got it.

How close were they in their estimates of what was happening (type (i) claims)?  Did they have their current numbers right, or were they wrong about where the economy was at the time they were talking?  Were they off by 1 percent or 10 percent or 50 percent?

How good were they at predicting the future (type (ii) claims)?  Did they get the direction of change right?  The magnitudes?  The speed and timing of change?   How much were they off?

I think you’ll be depressed about the results.  Because even if prognosticators are close with regard to magnitude, they’ll be off in the timing or direction.  Or both.  Or all three.

And if you do the exercise more than once, you’ll find that they aren’t even consistent in their errors.  One time they’ll be close on the magnitude, but be months or years off in the timing.  The next, they’ll have the timing better, but they’ll be way off on the size of the change.

There’s a reason Warren Buffett very rarely gets trapped into thinking about the short run.  That his investment advice — and his own investment practices — have focused on the long term.  He knows his limitations.

And compared to predicting short run fluctuations in the macroeconomy, predicting short run fluctuation of individual investments is a piece of cake.


I think few things frustrate me more about public discussion of economic matters than the pride of place given to business cycle talk. When I see a story about a “downturn” or “upturn” in the economy, I know that there is a better than 90 percent chance that that story is going to be filled with crap economics.

Let me be clear at the outset by what I mean by a “business cycle”: I’m referring to the short-term fluctuations in the economy as a whole. The upturns and downturns that are usually pointed to as evidence of “recession,” “recovery,” and the like, for the economy as a whole. I am not talking about what might be happening to an individual company or its employees, to a specific market, or even to what might be happening in one industry or locality.

I understand the frustrations, the human toll, that layoffs, changing relative prices, and the like, can have on people. I in no way want to minimize the negatives of what a lot of people are going through right now.

But just because life sucks for some families and some companies and some towns and even some regions doesn’t mean it sucks for everyone in the United States.

And I’m not talking about the long term trend in the economy (since with just one significant exception in the history of the United States, all changes in the long term trend of economic health have been positive). I’m only referring to the month-to-month, quarter-to-quarter, even year-to-year fluctuations in the economy as a whole.

I’m talking about the endless pontificating about economy-wide downturns which dominates the news. About stories that look at some segment of the economy and tell a story about how the entire economy is going into the toilet.

Anyone recall the doom and gloom that surrounded us when, a few months ago, gas prices shot past $4/gallon? Now that gas prices have fallen to under $2, is the economy saved? Neither the doom and gloom scenarios nor the salvation story should have any legs to them.

Frankly, one has more chance of getting rich at Vegas blackjack tables by following the advice of astrologers than one has of getting business cycle stories right by listening to CNN, The Nightly Business Report, either the front page or the editorial page of the NYTimes, or any national politician of either political party.

Or, for that matter, any past or present chair of the Fed.

Were this just another case of Sturgeon’s law in action, however, none of this would matter. Anyone who has spent as much time reading crap science fiction over the last 40+ years as I have has no business chiding others just for watching and reading crap economics.

But, unfortunately, the consequences of all this attention to bad economics are significant. It makes us susceptible to, it makes us willing to go along with, the proposals of charlatans and ignoramuses and really-smart-people-who-sound-like-they-know-what-they’re-talking-about-but-have-no-more-clue-than-the-rest-of-us about how the economy can be moved in the short term.

And when we listen to those proposals, there is a real possibility that that long-term trend is going to be threatened.

The crash of 1929 was not the disaster for the American economy. The disaster for the American economy was what we now call the Great Depression or, more precisely, the Great Contraction. And that disaster was caused and deepened, not by the market failures that culminated in people on Wall Street jumping out of windows in 1929. It was caused by the hubris of people like Hoover and Mellon and FDR, people who thought that the money supply and national income could be manipulated like the sand in their childhood sandboxes.

And it isn’t just the politicians who act bone-headedly when talk of business cycles gains too much prominence. Look around you. Look at the all the companies out there who are jumping on the “need to tighten our belts” and “need to layoff n thousand people” and all the rest. And then look more closely at their markets. Has anything really changed with their market’s fundamentals? Has the need for their product changed? Has the productivity of their workers changed?

The correlation between economy-wide business cycles and the fundamental supply/demand conditions for any company’s good and services is highly attenuated and nearly impossible to establish. Even if I was willing to accept the notion that company CEOs have better info on business cycles of the “economy” than the rest of us — which in my opinion is a bizarre notion, since even Nobel laureates have insufficient information to make that kind of specific prediction with any degree of accuracy — they should be focusing on matters closer to home. Things like why people don’t like their products, or why their employee productivity isn’t high enough, or what the new competitor from Montevideo or Dubai is doing.

John McCain took a lot of flack in the campaign when he talked about the underlying soundness of the economy. But unlike those ridiculing him, he *was* looking at the right questions.   He understood the difference between telling a story about how the economy is doing and telling a story about how individual people or companies or regions are doing.

Plot GDP or another measure of “national” economic activity for the last 50 or 100 or 200 years, and you see just how trivial temporary downturns prove to have been compared to the steady upward trend of things.

And plot it on semilog paper while you’re at it. The slope of a curve plotted on semilog paper reveals the rate of change as you progress along that curve (the steeper the slope, the greater the growth rate). And when you do, you’re going to see an amazing thing: the slope has been getting steeper. Not just for places like China or India. But for places like the US of A.

Are there fluctuations about that trend, moments when the curve gets flatter or even goes downward temporarily? Absolutely. I’m not saying there aren’t business cycles. I’m not saying economies don’t have downturns.

I’m saying that we don’t know enough to smooth those downturns out on a case-by-case basis. We only know enough to make things worse.

I’m saying that we’ve got better things to be doing, more important things to be worrying about, than what we should do to correct a “downturn” in “the economy.”

* * *

Still think I’m exaggerating? That Bernanke or Greenspan or your favorite economic editorialist or politician, all of whom are indeed probably a lot smarter than me, know a lot more about these things than Wade the no-name blogger does?

Well, in my next blog entry, I’ll show you a way you can test my claims.


I’m a pro football fan. It’s really the only major sport I follow at all anymore.

And the biggest story in pro football the last few days has been Plaxico Burress. It appears that Mr. Burress, a sometime star wide receiver (he caught the winning TD in the last Super Bowl), is in more than a little legal trouble. If the consensus of rumors proves correct, Mr. Burress appears to have been out at a night club in the wee hours of the morning when he accidently shot himself in the leg with a concealed handgun for which he lacked the appropriate permits. And, NY being NY, this means he’s being prosecuted for a felony that carries a mandatory prison sentence of a minimum of 3.5 years.

Now if these facts prove true, it is pretty clear that Mr. Burress is a bonehead of the first degree. Were I a NY stand-up comic, I’d be tempted to tell an X-rated joke about not being able to know which gun he was playing with in his pocket. Perhaps more likely is that he was there, there was some tension in the air, and he was simply being prepared in case that tension went too far in a certain direction. But there’s a good probability that we’re just talking about someone who doesn’t have much of command over the basics of handgun safety, just another dumb, spoiled pro athlete being just another dumb, spoiled pro athlete.

Yet, I find myself more bothered by the intrusiveness of the NY law than by the idiocy of the football player. My guess is that shooting yourself in the leg and surviving is itself a pretty darn good lesson about the virtues of paying attention to the dangers of mixing weapons and alcohol. (Especially since I’m sure doctors and everyone else is going to be telling him just how lucky he was not to have nicked a femoral artery.)

Yeah, Burress may well have been a bonehead of the first degree. But, well, putting someone in the pen for 3.5 years because they are a bonehead strikes me as a bit of overkill in the name of public safety. I mean, if we put away every bonehead out there, well, we’d need more concrete to build prisons than there is on the planet.

But my biggest problem with this isn’t even New York and its idiotic approach to concealed carry. We’re talking New York and the East Coasters after all. I don’t expect them to share my views on the Second Amendment, guns, or, for that matter, on just about anything.

What bugs me more is the deafening silence so far about that idiocy across America. I mean, sports fans, especially here in the Midwest, aren’t universally chardonnay-and-Harvard liberals. You’d think, at least among the watchers of ESPN or FoxSports, there’d be some real bitching and moaning about the non-proportionality of sentencing anyone, even a spoiled rich athlete, to three-and-a-half years of showering according to the timing of the Man and the rules of Bubba the Knife.

It’s not just that people aren’t out there quoting the Second Amendment. I understand that people differ in their opionions about what it’s protections involve. I can see where someone might argue that NY’s concealed carry law is still constitutional. I’d disagree, but never mind that.

It’s that people aren’t even out there complaining about how utterly stupid a law is that has to put a person in jail because he boneheadedly used an unregistered weapon to shoot himself in the leg.

No, it’s not the Second Amendment that’s puzzling the crap out of me today. It’s that Americans in general can’t seem to be able to see just how whacked-out our approach to laws is. How ill it reflects on *us* (not on Mr. Burress, not on Mr. Bloomberg, but on us, Joe Fan/Citizen). How stupid *we* are when we fail to see how stupid it is to put people in jail for 3.5 years because they reveal their stupidity by shooting themselves with an unlicensed weapon. How we fail to understand that jail time is how we punish people who commit real offenses against society, not for people who are offensively stupid.

Because I’ve heard virtually none of that reaction.

Perhaps the reaction has only been delayed until Mr. Burress and his lawyers start the pre-trial legal maneuvering. Maybe But given the reaction so far, my gut tells me that Joe Fan is going to be more “he’s getting what he deserves for being a bonehead.”

And, putting the whole Second Amendment thing aside, that would be just…well, even more boneheadedness.

Even more proof that the problem with America isn’t the Bushes, Obamas, or Bloomberg’s of the world.

It’s us.

If there’s a 1-10 scale for boneheadedness, Mr. Burress probably deserves an 8 or 9.

But America? We, collectively, appear to be off the scale.



I guess I just don’t get it.

I don’t get why fear continues to triumph.

We live in a world with unprecedented economic prosperity.  More and more areas are developing to levels that even fifty years ago were the province of Western Europe and its offshoots.  Technological and cultural change and the creativity of the last two generations offer us new possibilities and new opportunities on a daily basis.

Yeah, sure, there are more unemployed people than in a long time. Yeah, sure, there is more corporate venality and more consumer wastefulness than ever before.  Yeah, the national debt of the USA keeps climbing into the stratosphere.

But the world economy is climbing even higher and doing so even faster.

Yes, there are things that oughta be changed.  But for crying out loud, stop listening to the fearmongers.  Most of them are just covering up their own incompetence, trying to con you out of more of your wealth, or both.

Instead of believing the hype about how we’re spirallng down into the next Great Depression, do a little research on the actual standard of living and quality of living that prevailed in the year of your birth.  Unless you were born recently enough that you haven’t learned to read yet, you’re going to find that you are amazingly better off today than the average adult living “back then”.

And it’s not even close.

Yeah, we’ve got some problems to deal with.  Yeah, we’re wasting a lot of valuable economic resources on things like presidential elections, corporate golden parachutes, and a hundred different ways of packaging refined sugar and flour as breakfast cereal.

But the sky isn’t falling.

It’s just more reachable than its ever been before.


What a coup for ESPN!  Both major presidential candidates are being interviewed at halftime of Monday Night Football.

Give me a break.  If you had any doubt that the American political system is irretrievably broken, this should resolve the question.

Anyone with half a brain (and most with far less) have already decided who they are voting for.  Yet what do we we see.  Endless nyah nyah nyah and yadda yadda yadda in sound bite commercials from candidates for every race, from dogcatcher to Incompetent Interfering Busybody in Chief.  None of which contains meaningful information new to any pea-brained moron. Every meal interrupted by obnoxious “research surveys”, no matter that I have a supposed unpublished number.

Yes, I’ve already voted, assholes, though every commercial and intrusive telephone call makes me wonder whether I should have given any attention at all to you who feel compelled to spend hundreds of millions of dollars of money and waste so much of everybody’s time with your incessant appeals — appeals that you don’t even bother reaching up to aim at the so-called “least common denominator.”

No, the nature of the American political system is that all the dollars not being spent on stupid bailout boondoggles and stupider regulatory proliferation have to be spent on pandering to so-called “undecided” voters.

Said pandering all taking place under the assumption that people are undecided because they are complete, unthinking, impulse-buying idiots.

I’m sorry.  The situation sucks whether that assumption is empirically justified or not.  If the assumption is not justified, we’re putting our “faith in democracy” in marketing morons.  Which sucks.  Or, if the assumption is justified, we’re putting our faith in manipulative scumbags.

Yeah, I voted.  And unlike 2004, I didn’t write in “None of the Above” this time. Yay for me.

I’ve also probably spent $50 on PowerBall tickets in the last year. Even though I know my chances of winning are … well, about the same as my chances of seeing any significant sanity out of Washington any time soon.

Rest in piece, George and Thomas and James.

After all, being dead guys, you no longer have to smell the mountains of “fertilizer” we keep shoveling atop your graves.

Lucky bastards.


In a word:  No.

Okay, no one is going to be satisfied with a one word answer here unless it is “yes.”  But “yes” is the wrong answer, and here’s why.

People don’t vote because, for one reason or another, their perception is that it isn’t worth their effort.   A low voter turnout is a statement by the electorate that a lot of people consider the act not worth their time.

This is a problem only if you are convinced that a lot of people can’t be trusted with decisions about what is “worth it” and what is not.

Now, I understand.  In a way the entire principle of  having government decide things via law and regulation and executive order is built upon notions that, in this case or that case or that whole bunch of cases, people can’t be trusted to value things well.

Well, personally, I think it’s a pretty good sign when more and more people seem to be staying home each election.  Because that says more and more people realize that those being elected simply aren’t worth it.  That those we elect to make laws and hire government bureaucrats simply don’t create much value.

Yes, I’m going to vote this time.  And, no, I’m not going to tell you who I’m voting for, except to say that my decision has nothing to do with the quality of party convention speakmaking.  (Because, IMO, nothing said at political conventions has provided real value in at least 20 years, and so I didn’t bother listening to any of the speechmaking this year.)  But I’ll tell you that deciding to vote was a lot harder decision to make than the decision of who to vote for.
Because the guy I’m voting for  == well, let’s just say that the tens or hundreds billions or so that his various fundraisers  and advocates have spent aren’t going to be providing value of anything approaching those tens or hundreds of billions.

Not by at least an order of magnitude.

The fact that his opponent will provide even less value for the billions his supporters have spent doesn’t change that.

The fact of the matter is that the American political “system” has become a colossal waste of natural and human resources.

Part of America has been engaged in a very public debate the last several weeks about a $700 billion or so bailout of various borrowers and/or lenders. Actually, I’m with David who, in another thread, suggested that the total cost could well be twice that.  But whether it’s $700 billion or $1700 billion, the reality is that this bailout represents just a tiny fraction of the wealth our political “leaders” have squandered in my lifetime.

Those who don’t vote, in my opinion, shouldn’t be chastised.

This is not about who, McCain or Obama, I think is the better man.  That, to me, is an easy choice.   It’s not even about who, McCain/Palin, or Obama/Biden, I think represents the better ideas.  That, to me, is also an easy choice.  I have no doubt that anyone who knows anything at all about my economic/political philosophy knows who I’m going to be voting for.

This is about whether that better choice is worth any significant effort to vote.  And there, I’m sorry to say, I think my answer has to be “no.”

The economic history of American political institutions over the last half century or so makes the people who have put their entire life savings into slot machines one quarter at a time look like the epitome of temperance and responsibility.   Congress, state legislatures, executives, cabinet level department, etc. — these are institutions that have proven, over and over and over again, not up to any task worth doing in the last several decades.

And this squandering of wealth happened despite decades with no shortage of fine and noble Mr. and Mrs. Smiths who have gone to Washington to reform and to change things.  The result, even when those individual Mr. and Mrs. Smiths played true to the values of the character played by Jimmy Stewart rather than those played by Brad Pitt and Angelina Jolie?  Less gas mileage than a stadium parking lot full of recreational vehicles; and the result,

No, I don’t think it’s those non-voters who should be chastised.

As Pogo might say, look in a mirror.  It’s us.  The ones who keep voting and contributing to the coffers of the Republican and Democratic parties.  We who keep voting are the ones needing chastisement.

We’re the ones who keep acting like someone with a real gambling problem.  We’re the ones who, despite decades worth of losing hands, keep hoping that this time will be different.  That this will be the big score America needs.

We’re the ones who keep shoving the quarters in even though we ought to have figured out by now that the house always wins.

And uses the proceeds in ways that would make the builder of penthouse suites on the Vegas Strip blush.

All content of this blog, except comments added under names other than "Wade," are copyright © 2008, 2009 Wade E. Shilts