Detailed Abstractions

To me, and indeed historically, that a fear society & freed society are mutually exclusive.

& like all consistent lessons from history, we haven’t seemed to have learned this lesson and seem to be determined to repeat it.

Towards that end, the Wall Street Journal online published two articles on Friday, under the shared title, Undressing the Terror Threat. The first article by Paul Campos & Nate Silver explains correctly:

…The world’s greatest nation seems bent on subjecting itself to a similarly humiliating defeat, by playing a game that could be called Terrorball. The first two rules of Terrorball are:

(1) The game lasts as long as there are terrorists who want to harm Americans; and

(2) If terrorists should manage to kill or injure or seriously frighten any of us, they win.

These rules help explain the otherwise inexplicable wave of hysteria that has swept over our government in the wake of the failed attempt by a rather pathetic aspiring terrorist to blow up a plane on Christmas Day. For two weeks now, this mildly troubling but essentially minor incident has dominated headlines and airwaves, and sent politicians from the president on down scurrying to outdo each other with statements that such incidents are “unacceptable,” and that all sorts of new and better procedures will be implemented to make sure nothing like this ever happens again.

Meanwhile, millions of travelers are being subjected to increasingly pointless and invasive searches and the resultant delays, such as the one that practically shut down Newark Liberty International Airport last week, after a man accidentally walked through the wrong gate, or Tuesday’s incident at a California airport, which closed for hours after a “potentially explosive substance” was found in a traveler’s luggage. (It turned out to be honey.)…

The authors make a very good point here, though I do object to the term “rather pathetic aspiring terrorist”… as I saw on a blog somewhere in retort “What you really need are suicide bombers with experience!”.

Beyond that, they then try to take some statistics too far.  Using murder & suicide rates to show how are fears aren’t lined up with a real assessment of risks, they write:

…The country’s homicide rate is approximately six times higher than that of most other developed nations; we have 15,000 more murders per year than we would if the rate were comparable to that of otherwise similar countries. Americans own around 200 million firearms, which is to say there are nearly as many privately owned guns as there are adults in the country. In addition, there are about 200,000 convicted murderers walking free in America today (there have been more than 600,000 murders in America over the past 30 years, and the average time served for the crime is about 12 years)….

Taking those numbers, they conclude that which doesn’t follow:

…Given these statistics, there is little doubt that banning private gun ownership and making life without parole mandatory for anyone convicted of murder would reduce the homicide rate in America significantly….

& Even though they aren’t advocating such a policy, they basically state that the number of guns in private hands necessarily affects either homicide or suicide rates.

I think this ignores the historical evidence that governments typically ban weapons prior to mass murdering their own citizens, but it also isn’t proven by the numbers they give.  Because regardless of how people kill themselves or others, removing the primary instrument doesn’t necessarily means those actions will halt.  Lastly of course, even that assumes the government has the ability to remove the primary instrument in question, which is highly unlikely.

Either way, overall they use the example that is hysteria over terrorism to show parallels to the war on drugs, traffic accidents, and other risks to conclude:

…What then is to be done? A little intelligence and a few drops of courage remind us that life is full of risk, and that of all the risks we confront in America every day, terrorism is a very minor one. Taking prudent steps to reasonably minimize the tiny threat we face from a few fanatic criminals need not grant them the attention they crave….

The thing is that I agree with the authors’ basic premise, or what seems to be their basic premise, that fear based policies are wrong, even though I disagree with the facts they’ve lined up and think that using terrorism as too narrow an example has severely undermined their case.

First, while it’s certainly true that the gap between objective terrorism threats and hysterical policies seems large, there are valid reasons for that.  They discuss one, which is we need to focus money on preventing mass catastrophes such as a nuclear detonation, but they fail to mention the organizations themselves and how they differ from murder in general.

It’s true, that in any free society, a lone nut, bent on killing others, will have the opportunity to do so and there’s little we can do, while maintaining a free society to prevent that from happening.

However, were terrorism and even gangs, the mob, and other criminal organizations differ is that we have to attack those organizations directly.  Dealing with each instance of terrorism as non-related criminal events is exactly what allows their organizations to gain grounds on operational abilities.  Ignoring the organization therefore, seems to dictate a increase in the likelihood of a major incident.

Outside these specific critiques however, I think our society has become very easily motivated by fears instead of reason and logic.  When we allow victims of drunk driving incidents dictate the driving laws, or say a murdered victim’s family members to seek emotional healing through a policy of revenge, or use those in the most destitute of scenarios to control medical policy… whatever it is, if  we allow fear to take a hold of our government policy, new legislation, or even on a personal level, allowing fear to control our own lives… if we allow this, we should at least be doing so with the knowledge that it’s not conducive to freedom.

Detailed Abstractions has more articles about fear based policies here, here, & here.

With the recession ending (@MSNBC):

WASHINGTON – More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy….

Or maybe a double-dip (@Politico.com):

…All that’s enough to convince some observers that the economic recovery is faltering and could be heading for a “double dip” recession. And that would mean the recent green shoots of recovery turn out to be just a pause in a much longer economic slide….

& a stimulus which has saved jobs (@USA Today):

WASHINGTON — States have reported using stimulus money to create or save more than 388,000 jobs so far this year, buttressing the Obama administration’s claim that the $787 billion plan has had a significant impact on the economy….

Or maybe not (@WashingtonExaminer):

…Even if we take at face value the White House claim that it created or saved all these jobs with approximately $150 billion of the economic stimulus money, a little simple math shows the taxpayers aren’t getting any bargains here: $150 billion divided by 650,000 jobs equals $230,000 per job saved or created. Instead of taking all that time required to write the 1,588-page stimulus bill, Congress could have passed a one-pager saying the first 650,000 jobless persons to report for work at the White House will receive a voucher worth $230,000 redeemable at the university, community college or trade school of their choice. That would have been enough for a degree plus a hefty down payment on a mortgage….

Maybe some perspective is needed.  To truly put it in context, let’s look at the Great Depression (@Cato):

…According to most accounts, the stock market crash of October 1929 was the spark that sent the economy spiraling downward.

How could this be? After all, by November 1929, the stock market had started to recover, and by mid-April 1930, it had reached its pre-crash level. Contrary to the received wisdom, massive government failure — not the stock market crash — pushed the United States into the Great Depression….

As written here before (here, here & here), economic predictions are inherently tricky and the government does a very poor job because politics always gets in the way of objective truths.  NBER who is usually the group society follows for when a recession starts and ends told us in December of 2008 that December 2007 was the beginning of the dive demonstrating that most “objective” economic truths are only found in hindsight.

In fact, some brilliant legal minds have made just this point to contemplate delaying financial regulations intended to mitigate similar future scenarios in which we might find ourselves (here).  Richard Posner’s analysis:

The Report is premature in two respects. The first is that it advocates a specific course of treatment for a disease the cause or causes of which have not been determined. Now it is not always necessary to understand the cause of something you don’t like in order to be able to eliminate the effect. If you have typical allergy symptoms you may get complete relief by taking an antihistamine; it is not necessary to find out what you’re allergic to. But generally, and in the case of the current economic crisis, unless the causes of a problem are understood, it will be impossible to come up with a good solution. The causes of the crisis have not been studied systematically, and are not obvious though they are treated as such in the Report. (Remember, the Great Depression of the 1930s ended 68 years ago and economists are still debating its causes.)…

Note – this doesn’t mean that we don’t understand basic incentives and most likely results.  Like chaotic systems in which minor changes in the beginning state of a system can show drastic changes in the end results, our economic system is so complex as to defy attempts to model very specific changes.  Though with hindsight and true analysis, we can get to a point where we know with probabilities what has happened and what will likely happen given specific policies.

For instance, if we make houses cost less by giving tax breaks or whatever, sales will increase for the time that incentive exists.  If the incentive is timed, then some sales will just be premature sales and show corresponding decreases in future quarters.

Meaning, we can use a basic understanding of incentives in order to gauge most likely results, but today only with hindsight can we show real numbers on very specific things such as the stimulus bill’s impact on house sales or jobs.

& even then, given the inherent difficulty in defining a “saved” job and politicians willingness to ignore any data contrary to any rosy picture they wish to present, any economic predictions or numbers coming from politicians should be suspect by default.

That giant economic think-tank known as Google just announced their 3Q numbers.  Not only were the results good, but they had wonder news for all those worrying:  the recession has bottomed out:

SAN FRANCISCO, California — Google on Thursday declared the worst of the recession over and paved the way for a return to heavy spending on expansion as it reported a surprisingly strong 8 per cent jump in net revenues in its latest quarter….

Fear not friends – they aren’t basing this just on themselves, but all that economic data they have:

The optimism reflected what the company said was an across-the-board recovery in online advertising, with even the struggling financial services sector showing a return to growth….

Apparently though, Google forgot to tell Bank of America about its wonderful news (BoA 3Q):

CHARLOTTE, North Carolina (Reuters) – Bank of America Corp posted a $1 billion third-quarter loss as consumer credit woes eclipsed investment banking earnings, underlining why the bank remains on a government respirator….

I’m sure they just missed that… wonder what a really big blue chip company might be doing?  GE?:

General Electric’s third-quarter results showed just how fragile the U.S. economy remains, as its troubled financial unit dragged down earnings 44 percent, despite gains in divisions that make wind turbines, household appliances and broadcast television shows….

Not only are GE, BoA, and the 9.8% unemployed unaware of this great news, but even Google insiders don’t seem to know.  Looking at the public record, Google Insiders Sales, shows recent transactions for all senior officers dropping approximately 5% of their current Google holdings just last month.

Call me a raving skeptic if you will, but I’m thinking that you need to evaluate your decision making skills if you take your economic news directly from Google press releases.

Don’t get me wrong here, they make a great product and innovate better than almost anyone.   They are and will continue to be a force in computing for sometime to come because of their agile nature combined with some of the best minds in the world.  & I remember webcrawler… wow things are sooooo much better.

Regardless of their product however, it seems their investments into economic modeling & research in respect to business cycles is limited to zero.  I would add that if you’re an investor, that’s a good thing.  Better to let them do what they do best.

Why the press release then?  The only ones who know are those who drafted the press release and those with editing decisions prior to its release.  Without any information directly from one or more of these people, then reasoning is simply impossible to prove.

We can however ask some questions to try to find the likely answer.

(To be fair) The first possibility is simple honesty & stupidity.  Someone might have intended the “recession worst over” as a marketing technique to further enhance their aim to be seen as a very smart company.  All without realizing that overly simplistic analysis, based mainly upon very recent stock market activity and their profits do not make for effective proof.  Really, it’s just another anecdote that Google’s employees share.

Another, far more concerning possibility is their politics and desire to wish to see the President do well.  For years they have given most of their political donations to one particular party.  In 2008, Democratic candidates received 5 times more money than their Republican counterparts from Google.  Their employees, including top executives, gave 10 times more money to Democrats the Republicans.

Additionally, their search site has self-imposed constraints for arbitrary reasons.  For instance, Google refuses to allow gun dealers to advertise.   As a little experiment, slip over there real quick and run a quick search on swords or strippers.  Take note of the small advertisements to the right side of your search results.  Now do the same for guns and see what ads show up… I’ll wait.

They state their policy is to not allow advertising of weapons, but I think swords should qualify.

That could be an outlier, so let’s move forward assuming their ban on gun adverts is a true policy against weapons in general.

Then why did they also restrict advertising by Pro-life groups until forced by a judge to change their policy:

After a legal conflict between Google and The Christian Institute, filed when one the of religious foundation’s ads were rejected from the Google Adwords system, Google has changed their religious advertising policy to allow pro-life advertising to appear along with their secular and pro-choice advertising…

They did change their policy, but only after being sued.  Even giving them some credit for reversing their decision, their originally stated policy reeks of political and personal opinions:

The decision changes the former Google policy which excluded any ad containing a combination of “abortion and religion-related content“…. [emphasis added mine]

Putting all of this together, it’s hard not to reach the conclusion that Google is using its outstanding press relations due to their history as a vibrant and smart company to help those with which they agree.

Which is completely and totally their right.  It’s their right to put their money where they wish, to make internal policies as they see fit, and to accept contracts for advertising from those they want for any reason they want.  None of this freedom for me, but not for thee crap.  Let them do as they will I say.

Just make sure your informed and know who you’re doing business with as well.

PS:  If you’re not doing anything on a Saturday night and there’s positively nothing on TV including uninteresting infomercials about idiots unable to use blankets, then you can check out some pretty heavy economic think tanks.  First and foremost, the recognized economic powerhouse, generally recognized as the institution who makes the call on things like, when is it a recession?  When did it start?  When did it end?

NBER, or the National Bureau of Economic Research, has long been the a standard bearer in economic research in all kinds of aspects of life ranging from health care to labor studies.  They are the largest non-profit economic research organization in the US and boasts about the great minds working there.  In fact, 16 of the 31 American winners of the Nobel Prize in Economics, have been associates NBER, including one of my heroes: Milton Friedman.

PSS:  They could turn out to be right.  The luck of life sometimes means you can do the wrong thing and end with the correct result and vice versa – you can do the right thing and end with the wrong result.  Therefore, to correctly analyze thought patterns over time, any one result isn’t necessarily a deterministic factor.