Detailed Abstractions

Beethoven is actually known as a piano great.  At one point he figured that how he would earn a living, playing the piano.  & since theft of music was easier back then, before he was well known, he wrote many piano pieces with very, very difficult piano parts in an effort to ensure they couldn’t steal his songs because it was likely they couldn’t even play them.

Juxtapose that history with this, simple, yet complex.  Listen to the way certain notes are played, not just strength of those notes, but in how they come into their sound and how they fade out.

Even on his slower pieces, Beethoven would write notes like “play this part as if the notes are exhausted” to give even the simple and elegant, the depth of truly complex music.

Enjoy.

Responding to a recent increase in self-immolation (suicide by setting oneself on fire in protest) among Muslims, Muslim scholars in Egypt spoke out (here via Jordan Times):

CAIRO — Egypt’s Al-Azhar, the most prestigious centre of religious learning in the Sunni Muslim world, said on Tuesday that Islam bans suicide for any reason.

“Sharia law states that Islam categorically forbids suicide for any reason and does not accept the separation of souls from bodies as an expression of stress, anger or protest,” said Al-Azhar’s spokesman Mohammed Rifa al-Tahtawi in a statement on state news agency MENA.

“Al-Azhar cannot comment on the cases of people who had burned themselves, as these may be suffering from a mental or psychological condition that forced them to do so,” he said.

It might seem odd to some, but the Muslim scholars are actively pushing an idea which devalues the Islamic terrorists’ main weapon, suicide bombings.  & they do so in a very definitive way.  Even though the escape hatch of narrowly aiming their critiques to only self-immolation is obvious, they still don’t speak in political terms or try to limit themselves to suicide by fire.

Instead of taking the easy path; they took the moral one and stated directly that suicide in any form is forbidden under Islam and recent attacks may well involve psychological issues.

Which interestingly enough, brings us back to the Arizona shooting debate (DA post here) where I argue that rhetoric or guns can’t cause a free and moral people to suddenly and irrationally take up arms.  Indeed by proffering so, people are ignoring the fact that America, as well as many other semi-free countries, has a culture whereby the vast majority agree that killing is not an appropriate reaction to someone else exercising their free speech (agree vocally & through our legal system).

I juxtaposed American culture against some religious fundamentalist examples.  One, the Muslim online magazine (Inspire), which in mid-2010 was still pushing for revenge against Danish media for daring to print Mohammed cartoons.  Not only pushing, but the cleric writing the article stated (paraphrased) assassinations, bombings, killings, etc, are all valid responses to religious “slander”.  Additionally, I used the recent assassination of a provincial governor in Pakistan in which clerics (500+) issued decrees that anyone caught grieving for the slain governor can be punished.

The governor’s sin?  Agreeing with the national government of Pakistan that blasphemy laws currently on the books should be repealed.

Both are examples of a different a culture where killing in response to slander or blasphemy (both forms of speech) is acceptable.  Therefore, a culture in which vitriol about the blood of patriots or having to get your pitchforks out means something entirely different than it means in America.

So much in the same way that America isn’t culturally like a lot of Pakistan when it comes to the belief that violence is a respectable tool in almost any case, neither is Egypt.  As Egypt also has a societal belief, proven in their laws and willingness to prosecute terrorists (more…)

In 1998 idiots everywhere, especially those in MO, with full bipartisan support, clamored for one thing.  To see Mark McGwire’s baseball accomplishment of 70 homes run in one year be immortalized in the best way they know how; renaming public works projects, specifically a stretch of I70 in St. Louis.

Yep, it takes a good grasp on reality, a complete understanding of the consistency with which humans fail to properly analyze people, and above all an understanding in the valuelessness of most fads (read: 99%) to have pushed this silly idea in the first place.

But with this firm grasp on reality, and several opinion articles throughout the sports world, MO legislators just couldn’t let the voice of the people go unanswered.  So without much hesitation, they eagerly followed the blind and move quickly; utilizing the power of the state to honor one Mark McGwire.

An Ode to Steroids: Mark McGuire Highway Signage

No worries that when the highway was built in the 1950s, it was named after the venerable and brilliant writer Mark Twain.  Meh, twas but a worn down speed bump on the lemming run to honor greatness, as evidenced by this facts strange absence in most press accounts… but there’s more.

No worries either that the steroid stories were just getting started, though clearly gaining momentum.

No worries, because time has this way about it.  It has that thing… that quality which is always lurking, the quality of a teacher.  Whether we humans like it or not, time has an infinite ability to show us the error of our ways.  It constantly proves to us that silly actions directed quickly towards cultural fads just don’t have the same end results as deliberate and thoughtful actions directed towards the long term.

& in 2008 time won this battle once again.  While 10 years too late, the MO legislators saw in their infinite wisdom to reverse course and rename Mark McGwire Highway back to Mark Twain Highway (here).

I wonder what Mark Twain would’ve thought about all this back and forth of naming a highway?  It’s pure speculation, but he likely wouldn’t have cared all that much.  If asked, you can almost sense his answer, the short quip, spoken in his long drawl, “Well, at least now it’s named after someone deserving of such acclaim.”

But the problem with idiots is that they have to be constantly challenged.    Left to their own devices, the Paris Hilton & Lindsay Lohan interchange isn’t far behind.

Which is a funny thought and unlikely, but idiots given too much free reign can actually make society poorer overall.

Enter Censorship

Really, the last refuse of the despot and idiot alike.  This time thankfully it’s not despots we fear, but only idiots as they take aim at Mark Twain… again.

Apparently, unbound by rational thought, educators have been pushing for years and have finally succeeded in getting a publisher to censor Mark Twain.

(more…)

For good news – we have more research helping to confirm what true free trade advocates have always believed.  We don’t see a decrease in wages or living standards by trading with developing countries.  Via NBER here:

Concerns that (1) growth in developing countries could worsen the US terms of trade and (2) that increased US trade with developing countries will increase US wage inequality both implicitly reflect the assumption that goods produced in the United States and developing countries are close substitutes and that specialization is incomplete. In this paper we show on the contrary that there are distinctive patterns of international specialization and that developed and developing countries export fundamentally different products, especially those classified as high tech….

Which translated means, the US, one of their main agents in their research, has an economic dynamism (here & here)which results in the US never directly competing with other countries’ lower paid labor:

…Judged by export shares, the United States and developing countries specialize in quite different product
categories that, for the most part, do not overlap. Moreover, even when exports are classified in the
same category, there are large and systematic differences in unit values that suggest the products made
by developed and developing countries are not very close substitutes—developed country products
are far more sophisticated….

& this of course isn’t the only research making such conclusions (here & here).

But that’s not all.  We’ve seen historically that creating obstacles to free trade can hurt us severely (here):

One of the major causes of the Depression was Congress’s passage of the Smoot-Hawley Tariff, which was signed into law on June 17, 1930. Smoot-Hawley placed tariffs on more than 20,000 imported goods. It halted the recovery from the 1929 downturn and resulted in retaliatory tariffs from U.S. trading partners and a decline in U.S. imports and exports of more than 50 percent….

Though not all would say cause (here):

“The best estimates are that the multiplier is roughly 2. In that case, real GDP would have declined by about 3.4% between 1929 and 1931 as a result of the decline in real exports. Real GDP actually declined by about 16.5% between 1929 and 1931, so the decline in real exports can account for only about 21% of the total decline in real GDP.”

Irregardless, the research and economist communities agree on the benefits of free trade (here):

A 1990 survey of economists employed in the United States found that more than 90 percent generally agreed with the proposition that the use of tariffs and import quotas reduced the average standard of living….

Congress’ answer to all of this? A trade war with China (here):

The Democrat-backed bill passed by 348 to 79, and targets countries that hold down the value of their currencies, as many accuse China of doing….

The Senate’s answer?  A trade war with China (here): 

The chairman of the Senate Finance Committee said Wednesday that the upper chamber is “poised” to legislation meant to hammer China for its currency policies…

To paraphrase an axiom:  With economic heavy weights like this as friends, who need enemies… but I’m sure there’s no way they’ll screw up health care, right?

The President? A trade war with China…. sort of no.  While he’s pushing China just as other presidents have (here):

The Obama Administration believes that China needs to take steps on rectifying its currency value, White House Press Secretary Robert Gibbs said….

He hasn’t stated he would sign anything and other administration officials are pushing different views (here):

Treasury Department Secretary Timothy Geithner said there was “no risk” of a global currency war during a wide ranging interview with Charlie Rose Tuesday evening….

Intelligently, he’s keeping his options open in this very way.  Though I’m not sure I want to bet that he continues down the road of economics considering his approval ratings., but a smart move overall.

It’s a truism of real leaders since the dawn of time; they find themselves, not from true success and stable times, but rather from adversity and chaos. When faced with those seemingly insurmountable odds, it’s the strongest who remain calm, read the landscape, and discover new answers from which they can seek out continued success.

Though under great stress, we humans tend towards the flight or flight response. True leaders however, can use these difficulties against themselves to provide both motivation and a sense of urgency to gain the ingenuity required for such challenges.

This is understood well in society. Like business leaders who understand innovation can be helped significantly by design constraints (here):

Great designers understand this. Charles Eames says design is all about innovating around constraints. And it’s the constraints – the scarcity – that fires the designer’s creativity. Smart business people “get it” too. Amazon founder Jeff Bezos embraces self-imposed scarcity saying, “One of the only ways to get out of a tight box is to invent your way out.”

They understand that principle of economic scarcity. As do military leaders. Sun Tzu notes in the Art of War:

For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill.

For President Obama, the Tea Party & the Republicans taking back control of the House of Representatives could give him the opportunity to display true deft.

Assuming it does happen as predicted (here via the Philly Inquirer) however, the President is accorded a tough task ahead.

He would now have the body responsible for appropriations bills (all spending bills much start in the House & they are very important. For instance, they can kill health care by simply not funding it….) mainly in place due to running against him. Secondarily, while they don’t wish to be seen as obstructers, their willingness to work with Obama will be small even without their election strategy. Because any bill passed, regardless of how/why, if it turns out to be a good or well liked idea, Obama will naturally take credit to further his chances for re-election in 2012.

& the Democrats know that neither the President nor health care is a selling point for this election, even if they are communicating differently. The facts are that se hasn’t really made many direct candidate speeches, just backyard BBQs in key districts in key states. They are essentially, and correctly, playing against their weakness – his popularity.

Not a bad strategy in the short term, but I think people have heard him speak enough and any celebrity (yes, while the President is certainly more important and more powerful than any normal celebrity, s/he is still a celebrity) runs the risk of over saturation.

Irregardless, with Obama, the question is can he live inside those constraints?

What we know is given a new landscape, the answer for tomorrow’s question will not be the same answer as today’s. I think if he can push himself with a sense of urgency, surveys the landscape to see what he has and what he can accomplish with what he has. Then uses both the sense of urgency and strategic thinking by changing his game plan when the field of battle changes…. well, then we’ll see a real leader who may live up to his Nobel Peace Prize (here).

Or said more succinctly, it’s a crappy state of affairs you might find yourself in Mr. President, but challenges is how leaders prove themselves.

Honestly, I don’t think he’ll be able to do it. I think he’s too insecure (here) about himself and his handlers seem to know little more than an approval ratings drop equals time for Obama to give more speeches. & I don’t honestly think that’s likely to change…. but predictions are better left to Ms. Cleo.

What is likely however is the people around him understand exactly this point.  They do know it. The question is whether their emotions towards their beliefs (see: Confirmation Bias here & here) combined with the difficulty of telling a President who gives great speeches to shut up. Not to mention game theory predicts leaders to surround themselves with “yes men”.

All of that makes significant and required change seem unlikely, but I’d never count out someone who made it to the Presidency, nor, the team that helped him get there.

So Mr. President, here’s your chance.

Over at HBR Amar Bhidé has written an article discussing the housing market and subsequent crash (very interesting – entire thing here) and proposes that among the causes of the crash, a sort of self restriction had taken the market from a vibrant one to one controlled by centralized authority:

The modern economy creates and spreads unprecedented prosperity by drawing on the resourcefulness and enterprise of the many, not by blindly following the dictates of a few. Individuals today make and act on their own judgments to a degree that would have been unimaginable to our forebears….

In recent times, though, a new form of centralized control has taken root—one that is the work not of old-fashioned autocrats, committees, or rule books but of statistical models and algorithms. These mechanistic decision-making technologies have value under certain circumstances, but when misused or overused they can be every bit as dysfunctional as a Muscovite politburo….

His argument is one we’ve heard from the military and other agencies as well – what they needed was more human intelligence on the ground, not more technical complexity from high.

He continues:

…Consider what has just happened in the financial sector: A host of lending officers used to make boots-on-the-ground, case-by-case examinations of borrowers’ creditworthiness. Unfortunately, those individuals were replaced by a small number of very similar statistical models created by financial wizards and disseminated by Wall Street firms, rating agencies, and government-sponsored mortgage lenders. This centralization and robotization of credit flourished as banks were freed from many regulatory limits on their activities and regulators embraced top-down, mechanistic capital requirements. The result was an epic financial crisis and the near-collapse of the global economy. Finance suffered from a judgment deficit, and all of us are paying the price….

Even going so far as to invoke Hayek to make the case:

The great twentieth-century thinker Friedrich Hayek made the classic argument for decentralized choice in his essay “The Use of Knowledge in Society.” The stability of the economy depends on constant adjustments to small changes, he believed—“B stepping in at once when A fails to deliver.” No single individual has the knowledge to make those adjustments; rather, it is widely dispersed across many individuals. But information about “the circumstances of the fleeting moment” cannot be quickly and accurately communicated to a central planner. Therefore, individuals who have on-the-spot knowledge must be allowed to figure out what to do….

Adaptation to changes—the focus of Hayek’s article—is only part of the story. The success of the modern economy also depends on innovation. As it happens, decentralization beats central planning here, too. Innovations are unprecedented, one-of-a-kind developments. Even incremental ones require imagination. An innovator cannot simply rely on historical patterns in placing bets on future opportunities. Knowing what has worked before and what hasn’t is but a starting point. Innovation also requires considerable trial and error. Unforeseen technical problems—or customers not doing what they had told market researchers they would—demand recalibrations that combine on-the-spot observations and historical knowledge with leaps of imagination….

Of course like most writers who seem to espouse the virtues of decentralization, he still thinks some things need centralized control which don’t:

Technologically advanced societies couldn’t function without some centralized control, of course. Governments need to regulate how businesses drill for oil, develop genetically modified crops, and pick the paints they use in toys, for instance….

Either way, he goes on to argue that the financial industry, using mathematical formulas and statistical models, embraced a sort of top-down control giving rise to “Mechanistic Decision Making” & “Robotic Finance”.

This basic line of reasoning isn’t exactly new.  Wired had an article in February of 2009 (here) about the risk formula which killed Wall Street.  The formula worked well for 5 years as investors used it as a way to measure pooled risk in MBSs (mortgage backed securities), but the formula:

…still hadn’t solved all the problems of mortgage-pool risk. Some things, like falling house prices, affect a large number of people at once. If home values in your neighborhood decline and you lose some of your equity, there’s a good chance your neighbors will lose theirs as well. If, as a result, you default on your mortgage, there’s a higher probability they will default, too….

Now while both articles point to specific issues which helped the collapse, like most they conveniently left out all discussion in reference to the government’s role in perverting the incentives, but together I think they present an interesting challenge to those of us who believe in decentralization as a good (DA post on decentralization here).

& that is – can there be mechanisms put into place which actually help foster decentralized control since our history, both long term and recent, seems to indicate humans have a tendency towards centralized control at certain levels of complexity.

We see this through various disciplines such as anthropology, archeology, and history, that over the past 10,000 years or so, humans made a mass migration from the nomadic lifestyle which was practiced for nearly 200,0000 years, to villages, towns, and cities.

Using agricultural knowledge to help spur this transition, humans also started growing in population.  As more land became developed and could support more people, villages and towns grew into large cities & states.

With the advent of these new societal structures, came new power structures.  In nomadic communities, authority is handled from a tribal point of view.

This means that people don’t really have positions of authority which is spelled out by any specific power structure.  Their authority comes from their ability to influence.  So elders with specific knowledge are sought after for wisdom and help, without a formal power structure of say a judicial system.

With the growth of society, came the growth of power structures as they became necessary to handle the population explosion.  Things such as basic sanitation and clean water were large public work projects which required the control of enough resources (labor mostly) which heretofore had been impossible.

These beginning power structures, would eventually evolve into the world in which most of us find ourselves today: a world in which more of our daily lives are coming under scrutiny from centralized power structures.

& we’ve seen what these power structures are capable of doing, both good and bad.  While it allowed for greater sharing of knowledge through vibrant cities which pooled resources in denser areas, it also allowed for the pooling of resources for war.

Either way, in this case the centralized authority we can normally blame was there in multiple areas, but for this specific factor it was self imposed.

Indeed in looking at human history, it seems given some level of complexity we seek out centralized forms of control.  It might seem today as if humans would never pick governments and politicians as idiotic and with as much power as they have today, but these were gradual changes over generations.

Taken with the most recent example of self selected centralization, it may be we need to consider the possibility that humans tend towards this direction with or without institutions directly promoting centralized control.

More thoughts on complexity here

Well, the verdict is in. The Republicans are being cast as the party of no.  The party without ideas.  The party of obstruction.

Please make no mistake about it, this marketing push isn’t really about obstruction, but about the upcoming elections.  Just as President Clinton did brilliantly prior the 1996 elections when he cast all Republicans as following Newt Gingrich and obstructing spending laws, the Obama administration is moving forward in much the same pattern.

This is possible because the White House, regardless of occupant, has historically been able to control the news cycle.  In my opinion, this should be an indictment on journalism as a whole when alternatives which exist aren’t being reported, but simply put:  when the President talks, news happens.  When your normal representative talks, you’re lucky if you even hear about it.

It worked during the Clinton Administration on spending, it worked during the Bush (43) Administration on the Patriot Act, & it certainly might work again this time. Irregardless, the campaign is back and in high gear (here via USA Today):

…”Too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress,” Obama said. “And that has very real consequences.”…

Or here via NY Times blog, here via WaPo, & on and on and on…

From a critical point of view however, obstructionist should not automatically be a pejorative.   Without analyzing what exactly is being obstructed, this is little more than name calling.

As an example, if say in the 1940s Congress was actively trying to “obstruct” the internment of thousands of innocent Japanese-Americans, this would not only be a moral good, but any thoughts to compromise solely to be seen as a non-obstructionist would be wrong.  What would be a compromised alternative?  House arrest?

Additionally, we have to be on the lookout for the differences between the marketing of bills and their actual language.  Think of the new health care legislation.  President Obama’s promises of more health care for all at cheaper prices, simply don’t seem to be fulfilled by the 2500 page law passed… or maybe they are being fulfilled, but like the Patriot Act, no one really knows what the new legislation actually means (here via Cato):

…The Patient Protection and Affordable Care Act represents the most significant transformation of the American health care system since Medicare and Medicaid. It will fundamentally change nearly every aspect of health care, from insurance to the final delivery of care.

The length and complexity of the legislation, combined with a debate that often generated more heat than light, has led to massive confusion about the law’s likely impact….

Or on yesterday’s Meet The Press Rep. Van Hollen stated (transcripts here via MSNBC):

…The frustration is there are lots of important bills to push for jobs that are sitting over in the Senate.  But it’s not the fault of the Democratic leadership in the Senate.  I mean, frankly, you know, John Cornyn and his allies have been trying to block a whole lot of very important jobs measures.  We in fact sent a piece of legislation over very recently that would remove these perverse tax incentives to ship American jobs overseas, that give American corporations a bonus if they ship American jobs overseas….

Just like health care, the basic idea that our representatives are working on private job creation incentives is a good one.  But just like the Obama Administration’s promises on health care, Rep. Van Hollen is selling us a job creation bill which has little chance of actually creating jobs.

To translate – what they mean by “removing incentives” is to increase taxes on businesses who outsource.  Now, some may want this to happen for various reasons, but the economics are pretty straight forward.  Tax increases have never increased jobs & forcing a tax such as this could actually result in companies simply moving their head quarters as well.

To be fair, there are bills I don’t believe the Republicans should block, for instance the extension on unemployment benefits (though it seems likely to pass soon: here via The Hill).

Yes, the point isn’t that the Republicans are doing the right thing and the Democrats are failing at every single step, the point is only intended to remind us of the old saying about representative governance:

The people will get the government they deserve.

& so long as we allow marketing campaigns to have more force in elections than critical analysis does, we will likely continue to be disappointed.

Oil leaks into the Gulf of Mexico from the end of the pipe that was supposed to pump oil from the sea floor before the Deepwater Horizon oil rig exploded Photo: AP

The audacity of writers will never cease to amaze me and today is no exception.

In a piece at Salon.com, authored by Andrew Leonard, and titled Gulf oil spill gas price blackmail Mr. Leonard tries to make the case that the Obama Administration should:

Ignore critics of regulation who warn of rising pump prices. They are obsessed with the wrong bottom line.

Though his only reasoning seems to be that the opponents of new regulations only came to be after a major crisis. First, he starts with some of the current opposition statements:

The International Energy Agency is frightened, reports the Financial Times that “a knee-jerk reaction by regulators, banning new offshore licensing altogether,” in response to the Gulf oil spill, will end up increasing costs for the oil industry, and “therefore oil prices.”….

This helps us understand why he uses words like blackmail and frightened…. because these people are only looking at the bottom line.   From here, now that we understand these people are greedy and uncaring for anything other than money, he moves quickly into the timing of this opposition:

…it’s impressive to see how quickly the clamor advising the White House not to go overboard on offshore regulation has flared up. The parallels with the financial crisis are irresistible: A massive failure of markets and government oversight leads to a disaster, but before the wreckage has even been cleared away, we are told that regulatory overkill will be bad for business….

What he seemingly fails to grasp is, well, with all due respect to Mr. Leonard, he is failing to grasp the obvious – people generally don’t oppose or support regulations when they aren’t being proposed at all. So this argument about timing is completely irrelevant.

Logically, people, groups, communities, companies…. all of us have enough to worry about that we don’t usually worry about those things that aren’t happening.

It’s possible the author is unaware, but most of the pro-life movement didn’t really exist until 1973 as it wasn’t necessary prior to that. Maybe he finds this suspect as well?

But logic be damned, he uses this to springboard into the current investigation to explain why drastic changes in regulations are needed right now:

…But focusing only on the bottom line without taking into account the larger picture of what could go wrong — and what is going wrong — is exactly how we ended up with a giant Gulf oil slick in the first place….

Ironically, & potentially unwittingly, he then gives reasons why major regulation change should be avoided. By trying to conflate some idea of greed into this, but still keep the appearance of some factual stance, he states some of the issues clearly and properly notices that we don’t yet know what happened.

The main reason we don’t know – the only real people currently talking are those with a stake in not being blamed and there are 3 primary private actors and a multitude of government actors. Independent investigators will sort through all parties statements, responsibilities, duties, actions, and all the rest and hopefully come to some answer as to what really took place. Until then, any newly proposed regulation will be premature and wholly inconsistent with wise decision-making.

Additionally, he never refutes the words used by opponents, because he simply can’t. Economics shows us without emotion or emotion-filled words such as “blackmail” that regulations cost businesses money and those costs have to be borne out by the consumers.

The one interesting thing he noted was about the parallel to the financial market, but here he sees reverse of reality. The parallel Mr. Leonard should easily see is that we have a government bent on adding more and more power at the federal level attempting to use fear of another crisis to grab more power before even understanding why the crisis happened in the first place. Instead, of fearing this, he seems to be concerned only for some hypothetical lack of regulation, as if that has been the problem all along.

The reality is there. Going back historically, let’s say, going way, way back to… how about 6 months ago? When fear of another financial crisis was & is still being used to add regulations on entities such as pay-day loan companies, on investment vehicles such as derivatives, on compensation of employees, and many, many more things which had absolutely nothing to do with the current crisis, his concern for lack of regulation seems oddly misplaced.

After all, this is not only the same administration which is pushing for specious financial regulations, but they are also the same group which after years of railing against the Patriot Act, when the time came to do something, they did. They reauthorized its use to maintain their power.

Please note though – it’s not just this administration. Historically, governments seek to expand their power, they use crises to do so, and once those crises are mitigated, they keep the power they promised us was only necessary under the circumstances.

Whether a terrorist event, an economic crisis, or even an oil spill by greedy business people, allowing the government to take more and more powers before we even have an idea of what took place is the perfect move for those who want reduced freedoms.

As Hayek stated:

‘Emergencies’ have always been the pretext on which the safeguards of individual liberty have been eroded.