A Plan for Economic Recovery

Posted in Economics, politics, public policy with tags , , on January 12, 2009 by pretnetus

The cries for relief from the economic recession reached a state of pure, irrational cacophony with the recent request by the pornography industry for a government bailout. While many will likely reject the very idea of such a request out of hand, it fits in with the popular focus of how to pull us out of this significant downturn. “Saving jobs” is all anyone seems to care about. While it is annoying and painful to lose a job (I lost my own job in November partially as a result of the crisis), the job loss is the symptom, not the disease. Even the “credit crunch”, which caused so many closures in fringe firms and industries, is still an intermediary between the disease and the symptoms. While I will not get into the precise cause of what I have termed the “disease” here, which has a multitude of possible causes being widely discussed by professional and academic economists, I will go into how the new administration should deal with improving the economy in the medium to long-run over short-run “solutions” that will come back to bite us later.

1. Raise Interest Rates. It is well-documented empirically that it takes somewhere between eighteen and twenty-four months for a change in the money supply to fully work its way through the economy. Interest rats where they stand now are at an unstable level, whereby the Fed is effectively giving money away to banks. That form of subsidization distorts the economic realities banks face. To lower interest rates to the level they are at right now, the Fed continually needs to expand the money supply at ever expanding rates, which results in some of the highest annualized inflation rates in almost two decades (upwards of 6%) that we’ve seen in recent months.

Bernanke must return to the “inflation-targeting” philosophy he has promulgated in the past. While I don’t agree with Bernanke’s economics on any level, the spirit of such a philosophy applies to exactly these types of situations. While he may not be afraid of using the keys to the printing press, inflation above a “normal” level isn’t going to help anything in the medium run.

When he takes office, Obama must not look to the Fed as a revenue source. He cannot expect the excessive liquidity provided by the fed to continue and should support its elimination. Funding of greater government spending must come from taxation, not from the printing presses.

2. Eliminate Public Debt. There have been frequent complaints that the remaining solvent banks have not been willing to loan money as quickly as they have been in the past. The fallacy of such complaints is twofold: One, that the ease to which banks lent in years past was very likely one of the factors that got us here in the first place and what banks are doing right now makes sense, and Two, that the government can easily make a dent in the credit crunch simply by eliminating its debt. The “true” cost to the government borrowing lies in that, through the sale of treasury bills, it takes money (crowds out) from private bonds. The treasury bills, since they are riskless, effectively set the floor below which no private bond will ever be sold. If debt is eliminated and this floor drops, the option of raising money by floating a bond, which beforehand was unprofitable for a firm, may now make sense. Eliminating this debt is very simple and requires no further bureaucracy to get set up; just swap a few items in the treasury’s ledger. While the debt is Bush’s fault and his mess, Obama must be the one to clean it up.

3. Get out of Iraq. We need to reduce military spending drastically. Once that state is stable enough, or it is determined that we can no longer do any good, we need to pull out completely. Each dollar spent there could go towards a tax cut, elimination of our debt, or building infrastructure, all of which improve the economics of taxpayers far more directly than marginal improvements to the security of the new Iraq state. To Keynesians who believe that our spending there helps in the same sense that paying someone to dig a hole and fill it helps unemployment, I disagree since I see little evidence that our economy is in such an extreme situation. A tax cut will go straight towards the areas of consumption taxpayers have had to give up in recent months (such as retail), spurring job growth, or to paying down debt, keeping the banking system solvent and increasing its profitability. Paying down the debt would help growth even more directly through the means I mentioned above. While the current recession may appear more closely to the Great Depression during which Keynesian methods were supposed to have worked versus the cost-push stagflation during which Keynesian methods failed, those methods appear to me to be cosmetic. We are far from needing to resort to spending for the sake of spending, whether it be in the military or in social programs, in the current economic situation.

4. This is an ok time to build infrastructure, but don’t be stupid about it. With all that being said, now does seem to be the time to use government spending to spur internal improvements, but I only say so with significant caveats.

  1. Don’t determine a certain amount of money to spend and keep spending until you hit it. Congress must force good opportunities to come to it instead of seeking them out. We want the public spending first to help citizens in real, genuine ways that private firms have problems providing. We should not be spending arbitrarily just so someone can have a job.
  2. Don’t use this as an opportunity to support green infrastructure. These forms of technology are only asked for right now in areas of relative affluence, and as such, support of them is a subsidy to the rich. Green infrastructure must remain in the hands of local governments in the interests of their constituents rather than a holistic macroeconomic plan.
  3. Don’t do anything the states can’t do themselves. If something only benefits one or some states directly, the state can make the judgment on its own whether it is worth to tax and spend on the infrastructure. Anything else quickly degenerates into pork belly-seeking situations.

5. Let the industries and firms fall. If the market says too many cars are getting produced, the government should not be in the business of promoting such a level of production. Not all industries are failing right now; such failure says something about whoever does. An unprofitable business model has no place in society unless someone is willing to support it charitably. Let the market determine where those people are best utilized elsewhere. We have had no problems letting that happen in 2001 with tech firms. Perhaps that was because it was so easy, in hindsight, to see why dot coms were so stupid. If the business models of the auto makers, retailers, financial firms, and pornography studios have been unable to withstand the crisis, the market is rejecting their usefulness. We need to stop looking at the jobs being lost and instead remember that all jobs must ultimately serve a purpose. The purpose of many of the firms within those industries has ended.

The economic downturn is ultimately a systemic problem. However, we don’t have clear evidence has to what exactly caused the system to fail, but we can fix the intermediary factors that contributed to such a failure and avoid screwing it up more. The question should not be about eliminating job loss, but about ensuring that the system is set up in such a way that the remaining private firms can find new, better roles for them as soon as possible without causing further problems later.

The Power of Political Diversity

Posted in philosophy, politics with tags , , , , , on January 8, 2009 by pretnetus

Jared Diamond’s seminal Guns, Germs, and Steel provides a holistic thesis on the origins of all political history from pre-history into the modern era. His argument is a modified form of Climatic Determinism, which means, as he presents it, that environment determines history in the long run. Certain areas of the world, especially Eurasia, possess a greater variety of and more effective crops and livestock. These factors allowed Eurasians to build civilization the fastest and then conquer cultures living on other continents through the accumulation of technology and deadly germs. Crops and livestock allowed technology and germs to develop by facilitating greater population density and classes of people performing work besides the production of food. These factors explain history up to the sixteenth century, at which point European dominance became established.

Diamond stresses history since then far less. The general road history was about to take seemed predestined by the time Spain effortlessly exerted its control over the civilizations of South and Central America. One diatribe he does allow himself is the explanation as to why it was Europe and not China that succeeded in projecting dominance across the world. After all, China had been at the forefront of nearly all technological advance for several thousands of years. It was not until the early modern era that Europe pulled ahead. Diamond asks why that shift took place, given that there were seemingly no environmental factors that would push the societies in opposite directions.

The conclusion Diamond eventually comes to was that the natural political unity of China, which had at times provided ample opportunity for technological innovation, would occasionally stifle change significantly. To make this point, he cites an analogous situation in Japan. At one point in history, Japan had the best firearms in the world. However, culturally, they were scorned since they allowed a lowly peasant to take down a mighty Samurai. This subversion of social custom caused Japan’s government to take action, gradually eliminating guns altogether from the island. The key element to this is the Japanese government’s ability to make such a decision. Elsewhere in the world, such as the Fertile Crescent or Europe, any government that makes such a self-defeating decision (given that guns are innately more effective weapons than even the best sword) is either forced to reverse course at the risk of getting conquered by a nearby competing government. China faced a similar impediment; while it was not an island, China did not face major competition from any other competing, centralized power.

There were points in history that China did begin exploration. In short time, however, a competing faction within the government ended any such experimentation. Exploration was never again allowed until Europeans forced their way in. China’s centralization permitted it to act stubbornly and self-defeating. If there was another nearby competing power, or if China was naturally split into several smaller factions, one of them may have chosen to continue exploration, followed by a run of East Asian dominance throughout the world.

The geography of Europe took its inhabitants on a different path. At no point ever in history has more than half of the continent been held by a single power. While parts of Western Europe are somewhat flat, the geography of the continent is characterized by an unending coast of peninsulas. In contrast to China, this makes conquering every area a difficult task. Europe’s natural condition involves a multitude of competing powers. Again, in contrast to China and Japan, this means that if one begins using guns, they all must begin using guns to defend themselves. All nations are pushed towards progress under threat of destruction.

The best example of this, and one that Diamond cites especially well, is that of Columbus. Portugal, Genoa, and Venice all initially turned the funding for Columbus down. Spain as well left Columbus hanging for two years until finally agreeing to support him. If only a single government ruled Europe, would that single arbiter funded him? Based on Columbus’s experience and the tepid interest in East Asia, such action hardly seems likely.

The force that gave Europe its power was its lack of a single decision-making body speaking for all its peoples. The lack of supernational power gave Europe its power. Such a fact runs completely against the intuition of the historians studying this era, who see centralization of states as the cause of the rise of certain European nations (England, Spain, Austria, and France) over the unorganized states of Germany, Poland, Italy. Yet, this is only the cause of the relative power of states over others. Furthermore, the centralization only pertains to the ultimate subjugation of the noble’s power bases to a single government, not steps of centralizing authority within Europe as a whole. The lack of a central authority within Europe gave each of its members greater strength from and absolute perspective.

Imperialism, science, the Industrial Revolution, capitalism, and any small improvement thereof forced its way through Europe, rapidly providing it with the means to rule the globe. This is the power of political diversity. When there are multiple perspectives available, such the differences of opinion amongst the various European despots, a greater variety of strategies and options can be pursued. No matter how a single government attempts to construct itself to remain open to new opportunities, the intrinsic insularity of set single voices will result in bias. At that point in history, any given European nation could decide to begin experimenting with some new form of mercantilism or representative body. In doing so, all of its neighbor nations had the opportunity to gauge independently its effectiveness. While the nation may hope that its commitments and experiments were those that succeeded, its population still gained tremendously when a nation elsewhere found another solution.

The diversity and dissolution of power in Europe as a whole brought it wealth and prosperity. The technological level of the world would be set back seven hundred years had the decentralization of power not existed. These gifts, of course, are ones that can keep on giving. While the mixed-market capitalism and political systems of Westernized nations are all roughly comparable at this point, we still have the opportunity to experiment and watch one another. Perhaps no better modern example is that of the failure of economic planning within China and the Soviet Union. The world as a whole fortunately did not have to resort to a universal change in political philosophy to see it in action. Had Marxism worked, all other nations could then take advantage of that knowledge. Now, even the remaining socialists are able to take into consideration the difficulties the Soviets faced when further developing their own ideas.

While in the past many logistic barriers impeded the spread of a single government over the Earth effectively impossible, it now is seemingly feasible should the peoples of all existing nations accept it. The growth of the EU and the murmurs of a similar (although remarkably unlikely) North American state demonstrate that. Yet, what history tells us about the power of political diversity does not recommend further movement in that direction. The EU has not yet run into this problem very much given their rightful infatuation with subsidiarity, but greater impediments placed on the powers of the member states will quickly inhibit Europe’s -and humanity’s- ability to experiment with different methods in doing anything from escaping the current economic quagmire to achieving greater social justice. At this point in time, whatever our opinions are, we cannot know how to fix our financial mess and grease the wheels of exchange once more. It is an unambiguous positive that there are many independent nations that can seek their own solution to the problem. The importance of this power cannot be understated.

Even more damaging to political diversity is the viewpoint of those such as George Soros who wish to unite the world under a single government. While arguably this could lead to a reduction in war and genocide, it will also strangle our ability to experiment with new social structures. Nothing is keeping a world government from making a self-defeating decision except our hope that its decision makers approach godlike prescience. The current institutional technology we possess such as democracy and the mixed-market economy would be frozen in place, or at the most advance should the single decision making body agree to change. The world may still continue developing marketable technologies as it has done in the past, but there is little possibility in further optimization of the structure of society that facilitates those technologies to begin with.

There is, of course, no hard evidence demonstrating that the systematic improvements continually brought about by political diversity will outweigh the stability and peace which a one world government promises. At the same time, it is a very real factor that separates the affluence of today from the poverty of the early modern era. Any discussion about merging political powers must take political diversity into consideration. The greater number of independant entities there are willing to commit to new societal structures, the more everyone knows about what real effects those structures will have. With more political exploration, even if we’re not the ones doing it, we’re all better off.

Liberty for the Left

Posted in politics with tags , , , on January 6, 2009 by pretnetus

The modern Republican party in America is composed of a well-known coalition brought together by Ronald Reagan. Specifically, those who vote Republican tend to fall into one of three categories: fiscal conservatives, “value” voters, and those who favor a strong, active military.  Obviously there is a significant deal of overlap and there are exceptions, but these categories provide a thoroughly accurate portrayal of the Republican party.

I find it very strange that there is no analogous coalition on the left side of the political spectrum. I know of no attempt to categorize factions of American Democrats in such a way. There are somewhat informal groupings you can throw together ad-hoc, such as socialists, hippies, and left-populists, but those represent ideologies, not voting blocks.  The only group that the press and pundits regularly recognize is perhaps the Greens, but they are a political party themselves.

This may seem silly to get hung up about, but the lack of an accepted classification makes discussing topics about the left unnecessarily difficult. As celebirty chef and TV host Alton Brown once wrote,

To my mind, the greatest analytical tool in the world is classification. Classifying things leads to enlightenment, and enlightenment to deeper meaning. For instance, I used to make really lousy cheesecake until I realized that cheesecake is not a cake, it is a custard pie. Now I treat cheesecake like a custard pie and everything is fine. There was a time when I did not enjoy Steven Seagal movies. Then a friend pointed out that they are all post-modern Jerry Lewis movies. Now I just can’t wait for Glimmer Man III to hit DVD. That’s classification at work.

There has been little effort to frame conversations about American Democrats, and I think that has led to complete ignorance of a large faction of voters who vote Democrat and has left them without a voice. These Democrats are those who fight for a very specific, but also almost entirely inarticulate, brand of liberty.

I propose that in reality there are two primary factions on the left. Just as Republican factions do, they share a large overlap on issues, but the emphasis is completely different.

1. Mainstream Democrats, who believe the purpose of government is to ensure the greater common good and provide more equity than what there is on the free market. If something is morally wrong, the government should fix it.

2. Those who are for individual liberty, but do not agree with the traditional concept of liberty.

(2) has an entirely different emphasis. The issues that I see associate with it include pro-choice; anti-organized religion; strong suspicion of corporations; anti-intellectual property; legalization of drugs. The logical extreme of these positions is leftists anarchism. Democrats who fall into group (1) may agree on certain issues such as abortion, but the logical extreme of their emphasis is socialism, a very different outcome.

I do not have any empirical evidence for this and it is entirely based on anecdotal knowledge I’ve built up quizzing friends and acquaintances over the years. (I did, however, once create a political test that would graph you, and a surprising number of people fell into the anti-government/liberal values quadrant) Still, another way to describe group (2) is to say it is those who want the government to stay out of their lives but do not trust capitalism. To me, that seems like an apt description of a significant number of people, especially young adults. [It's easy to call this social liberalism and call it a day, but it's quite a stretch to think of intellectual property and the role of corporations as social issues]

Furthermore, I do not believe this group is even conscious of the fact that they differ in emphasis from mainstream Democrats. It’s easy to find a voice for any group of Republicans (the religious right, the old right, neoconservatives, etc), but who speaks for these Democrats? Nader is the closest I can think of, but that is a huge stretch. What academics or thinktanks out there are formalizing the core of policy issues I listed into a workable theory? Who is fighting for liberty for the left?

With the talk of liberty, it might seem easy to think of them as “Left-Libertarians“, a label I gave them in the political test I mentioned, but upon further consideration, it seems like a pretty poor classification. The “liberty” fought for by left-libertarians maintains a veneer of classical liberalism, whereas (2) has no such groundings. Left-libertarians may feel empathetic towards it, but the sensibilities and goals of their respective liberties differ substantially. Of course, it must still be said that left-libertarianism is an especially amorphous concept with many competing and contradictory definitions. Some of those definitions do in fact align reasonably well with (2)

Regardless, few in the Democratic party are even aware of left-libertarianism and rightly associate libertarianism with capitalism. Furthermore, even the forms of left-libertarianism that share many standpoints with (2) take a very extreme position. Between it and mainstream Democrats exists an enormous void. For Republicans, paleoconservatives and the “Old Right” (e.g. William Buckley, Russell Kirk) eloquently symbolize such values. While conservatives have many avenues of competing paradigms supporting different forms and expressions of liberty, the Democratic party ignores this altogether.

Democrats must stop skirting the issue of which philosophical principles underscore their idea of liberty. All Democrats need not endorse it, but without a discussion of those ideas and serious academic examination, argument with the right on these issues is severely inhibited. The concept of personal property holds the traditional idea of liberty together. What holds it together for the left? By which process is freedom of choice guaranteed amongst the multitude of social interactions within the state? What are the philosophical underpinnings for such a combination of liberty and equity, where each are continually at one another’s throats?

Health Care: The New Castle in the Air

Posted in Economics, Finance with tags , , , , on January 6, 2009 by pretnetus

Back on September 25th, I advised anyone reading this blog to get out of the stock market ASAP and to put any assets they had in something as “real” as possible, preferably a diversified mix of precious metals. Although the market had already begun its perciptuous decline, those (if any) who had followed my advice would have saved a lot of money. Yes, me pointing this out is a bit of both confirmation bias and self-calling, but part of the reason I started this blog was to keep any projection I had permanent both to keep myself honest and to increase my credibility.

In the previously linked-to blog, I claimed that it would be my only investment advice ever. I suppose that was untrue. Despite the recession, I believe a new bubble is forming. Like the housing bubble, tech stocks, tulips, or what have you, semi-informed people have become enamored with this industry. Supposedly, it is fundamentally “different” from any other group of firms, immune to downturn, and about to take advantage of rapidly expanding demand. This industry is health care.

This is not to say that health care has nothing going for it. Certain factors mentioned, such as the coming surge in demand, are in every sense real. However, since everyone is aware of these factors, a sober, rational adjustment has already been made to the prices of those stocks. Further increases in price in the absence of other information will not match the firm’s “fundamental” value (after taking into account a simple “normalization” of the prices of all stocks should overall economic conditions improve). Despite this, health care stocks are poised to increase rapidly in value if confidence can be restored in the economy. In contrast to the “alchemy” of financial firms, hospitals, drug companies, and related firms do something tangible and “real”. With the collapse of both real estate and finance, health care may well appear to be an excelletn place to park one’s money as the population ages.

The conditions necessary for a bubble to spontaneously manifest are met. Common people, who only get wrapped up in active portfolio managing during bubbles, are happily perpetuating stories about how getting training in health care is a “smart” move. That may well be the case, but the awareness alone of the growth potential of a certain industry unnnecessarily directs attention and dollars in its direction. Wallstreet and the unarticulated market have already made its judgment on the growth potential of health care firms. Any attention by the non-professional will only skew pricing. Compare your attitude towards health care firms today to what your attitude towards tech firms was in 1997, right before the bubble formally began taking shape. The parallels are likely striking.

This is not to say that I believe that a bubble in health care stocks is inevitably going to form. Systematic errors by the market are exceedingly difficult to identify; as such, my observation here is only anecdotal and conjecture. Regardless, a tactic of taking a small portion of your assets and putting them in a mutual fund built around health care right now seems like a low relatively low cost move. If I’m wrong, which, I’ll face it, with projecting something like this, is a strong possibility, you might lose compared to what you would have made in an index fund. The gains, on the other hand, of getting in right before a bubble forms are staggering. Ultimately, what I recommend is to invest a small portion of your savings into such a mutual fund (or a well-diversified collection of stocks, if you can manage it), and sell it two years from now, no matter what happens. If a bubble is going to form, it will form by then, and it’s better to get out half way through a bubble then after it pops.

What is wrong with isms?

Posted in Morality, sociology with tags , , , , , on December 24, 2008 by pretnetus

In one famous scene of Ferris Bueller’s Day Off, the titular hero remarks to the audience,

[My history test is] on European socialism. I mean, really. What’s the point? I’m not European. I don’t plan to be European. So, who gives a shit if they’re socialists? They could be fascist anarchists and it still wouldn’t change the fact that I don’t own a car. Not that I condone fascism. Or any “isms”. “Isms”, in my opinion are not good. A person should not believe in an “ism”. He should believe in himself. John Lennon said it on his first solo album. “I don’t believe in Beatles, I just believe in me.” A good point there. After all, he was the Walrus.

Bueller, the ostensible epitome of libertine individualism for the materialist eighties, gracefully sweeps aside all ideologies -isms- as being distant, impractical, and destructive to the dignity of an individual’s ego.

Twenty years later, South Park echoes very nearly the same point. In one especially far-fetched episode, the character Cartman freezes himself to skip the following weeks because he cannot wait until the Nintendo Wii comes out. Unfortunately, he doesn’t awake for another thousand years, during which Earth is embroiled in a civil war – between different factions of atheists. The atheists fundamentally agree with each other. but are fighting the war over what the name of the atheist organization should be. Through a series of convoluted and equally far-fetched situations, Cartman eventually changes the past from his place in the future, keeping the world from becoming universally atheist.

Cartman:      Wait… Isn’t… everybody at war over atheism?
Shvek:     Atheism? No. We’ve learned to get rid of all the isms in our time.
Medic:     Yes. Long ago we realized isms are great for those who are rational, but in the hands of irrational people, isms always lead to violence.
Cartman:     So there is no war now in the future.
Blavius:     Of course there’s war. The stupid French-Chinese think they have a right to Hawaii.
All:     Yeah!

The events of the episode can best be seen as a criticism of Richard Dawkins (who is featured and satired extensively during the show) and Christopher Hitchens. Coming from very different directions, Dawkins, an evolutionary biologist, and Hitchens, a political pundit, independently published two similar books shortly before the episode aired (namely, The God Delusion and God is not Great, respectively). Part of their theses is that war and irrationality is an inevitable result of any form of theism, and that atheism will bring an end to so many of our troubles. South Park creators Matt Stone and Trey Parker retort that the problem lies not in the specific doctrine of any form of theology, but rather in the very concept of an “ism” itself. People are irrational and their irrationality is amplified when arbitrary, rhetorical lines, such as “atheist”, “agnostic”, and “theistic”, are superimposed over them. Just as “Christendom” Europe fell into an unending war between Catholics, Anglicans, Lutherans, and Calvinists in the early modern era, any unified atheism will eventually deteriorate into an equally irrational insurrection between rival atheists.

Bueller’s off-quoted observation and the anti-ism sentiment of Stone and Parker dovetail to form a very specific brand of anti-intellectual populism (which of course, is an ism itself). Each human is indescribable on a very base level. If people consciously accept any particular ism, they stop thinking for themselves and lose part of themselves. Socialism, atheism, capitalism, and theism are arbitrary constructs dreamed up by academics unconcerned with the practical concerns of the everyday lives of individuals. This position has perhaps not been articulated rigorously, but it has a certain common-sensical appeal.

However, contrast this with the collectivist-historicist schools of the nineteenth century to see just how great of a departure such a paradigm is from the mainstream thinking of not so long ago. According to thinkers such as Hegel and Tolstoy, the events of the history, led by isms, determine the choices of individuals. Attempting to escape from the grand scheme of history is pointless, as whatever occurs in one’s life is brought about solely by forces outside one’s control. Even a reasoned desire to escape from or remain ignorant of isms can be construed as an inevitable historical movement itself. Above, I mention that I believe it to be best understood as a form of populism and individualism. If anti-ism becomes a more complete source of thought, there is nothing keeping us from giving it a real name.

With the historical radicalism of rejecting the ascription to any ism in mind, consider what isms are more literally. Merely, they are words and a method of categorizing people and ideas. Ultimately, any legitimate criticism of isms must be a criticism of categorization. If we categorize everyone by two sets of political beliefs, Conservativism and Liberalism (as defined in the US), we lose a tremendous amount of information. Yet, don’t we gain more in this perverse oversimplification than if we had done nothing at all? Neoconservatives, the religious right, and paleoconservatives all share strands of similar political beliefs, however strained the relationship between the groups may be this moment. In categorizing, we give ourselves the ability to communicate abstract ideas rapidly without the need to lay out every political opinion one has. To say that one is a conservative is to say that one is probably against abortion, probably in favor of the War in Iraq, probably in favor of smaller government, and so on. If we open our vocabularies beyond such a false verbal dichotomy to our full range of named isms, we only are all the better able to quickly communicate our complete array of political preferences. Isms are the vehicle allowing us to do that.

All of this on a certain level is completely banal, but it must be said. To say that you don’t believe in an ism and that you only believe in yourself sidesteps what the ism actually is. An ism is not a set of sworn precepts to which one must adhere. It is merely a signpost pointed roughly in one’s political direction. Refusing to use signposts because they are not a perfect representation of who you are is nonsense. Socialism, fascism, and anarchism will not get Ferris his car, but they are useful for understanding history.

In the jargon I just used a second ago, South Park creators Stone and Park argue that isms cause people to swarm around sets of core beliefs and become irrationally fanatical about them. For example, the existence of the Republican and Democratic parties in America in effect arguably pushes their members towards the party lines and causes them to hate the other party all the more. The factual validity of this is mixed.  Compare such a generalization to religious history. On the one hand, the Catholic Church once required strict adherence to its dogmas with the very real threat of excommunication and interdiction… only to have its powered neutered by the continuous splinter groups who first disagreed on specific issues and later were demarcated with an ism (Lutheranism, Calvinism, etc) representing those beliefs. Again, for example, it is strange to view the ism in Lutheranism as what caused the German nobles to revolt against the Holy Roman Empire when the word “Lutheranism” scarcely existed, even as they used Luther as a pretext. Collectively, they radicalized, but the root of that has been established historically as the nobles’ desire to decentralize authority, rather than their consciousness as a separate group known as Lutherans.

In general, religions and political parties are far more plural than the ilk of Stone and Park give them credit for. History, especially recent history, is only oversimplified by thinking in terms of “Christians attacked Muslims in Holy Land; Muslims eventually won”, or “Muslims attacked Christian/Atheist West; West retaliated”. The Muslim community is diverse in its opinion and tolerance of the West, from the fully acculturated to those living peacefully in Turkey to some burning American Flags. Even the arguably most dogmatic of the Christian sects, Catholicism, has a broad array of theological view points, from the ultra-conservative curia or the liberation theology socialists. The lushness of such dissent in both groups greatly undermines the notion that the creation of the ism caused the sins of their members. We would expect singlemindedness, not schism.

While a certain validity remains in the idea that collectivizing individuals causes chaos, a “mob mentality” does not inevitably develop in every ideology. Any number of factors at any particular time in history determine whether that will take place. Bigotry has been the status quo for much of world history, but for that bigotry has only spordically coalesced  into widespread virulent fanaticism. That is to say, hatred and insularity is widespread around the world, but genocide is not. It takes an extreme set of circumstances to get us from mistrust and prejudice to the Holocaust, Bosnia, or Sudan. No evidence is offered as to how isms gets a society over that “hump” from prejudice to genocide. If you wish to blame isms on prejudice itself, that is again impeached by history, where isms have nearly always existed merely to represent pre-existing differences in religious practice, political opinion, or what have you. The history of the very concept of nationality, the most basic “ism” of all, demonstrates this most emphatically; we have always been fearful of those different from ourselves, even before we had a name for those who are different.

Categorization and generalization are essential communicative cornerstones without which our basic abiliy to think inductively is destroyed. While I focused on the pop culture examples of Ferris Bueller and South Park, similar arguments have appeared elsewhere. Specifically, the well-recieved 2005 film, Kingdom of Heaven, portrayed a very analogous message. Former New York Times journalist Chris Hedges wrote the semi-popular I Don’t Believe in Atheists, which provided many strangely parallels to South Park (it was published after the episode aired, in case you jumped to the conclusion that South Park simply transplanted Hedges’ ideas).  This fear of isms has ingrained itself on certain aspects of our culture, but the fear is unfounded. While we should by no means pigeonhole ourselves where unnecessary or uncritically follow any ism with which we generally agree, our ability to discuss any abstract matter intelligently is severely impaired if we renounce isms altogether.

Is Freedom of Association Fascism?

Posted in Baseball, politics, public policy with tags , , , , , , , on December 6, 2008 by pretnetus

The New York Yankees in recent years have upset very many people with their policy of enforcing “patriotism” during the Seventh Inning Stretch. Security forces every patron in the ballpark to remain still while “God Bless America” is sung. The blogosphere has generally condemned such draconian measures, as this requirement apparently struck a nerve. For example,

Yankee Stadium security deserves no benefit of the doubt here, nor in this instance does the Steinbrenner family if they’re the ones who have ordered the policy be implemented. Forcing paying customers to stand at rapt attention during a song isn’t some cute little attempt at patriotism to bolster the legacy of Mr. Born on the Fourth of July Steinbrenner, it’s FASCISM. Roughing them up over their failure to stand still during a canned recording of a song that’s been drained of all meaning by its endless repetition is in diametric opposition to what the song and the country it so proudly celebrates stand for; this is about as un-American as you can get.

The author (Jaffe) complains in very strong words about the rights of those that dissent from the requirement to pay respect. Essentially, he argues that the requirements curtail his Freedom of Speech. Freedom of Speech, Jaffe implies, is not simply about government censorship, but an entitlement to express one’s personal opinions, whatever the circumstances.

This broad interpretation of Freedom of Speech erases the power of its close cousin, Freedom of Association. Yankee Stadium is not the public square; it is private property. If the owner of that private property requires that you perform some legal action (e.g. paying respect during a patriotic song) in order to stay therer, you must do it, if we are to say that the owner is really “free”. As the oft-quoted 19th century judge said, “The right to swing my fist ends where the other man’s nose begins.” During a decade where ostentatious displays of patriotism are in the vogue, Freedom of Association may annoy liberals in circumstances such as these, but there is little grounding for referring to it as Fascism. Whether Jaffe likes it or not, Steinbrenner has just as much right to throw people out of the stadium for appearing unpatriotic as Jaffe does to throw someone out of his house for voicing, for example, Neo-Nazi propaganda. Freedom of Association is Fascism only in a world where all humans have an indelible right to take a shit in their neighbor’s yards. There really isn’t another way to spin it.

There are complicating factors to the specific issue; the circumstance that set off Jaffe above involved an anecdote where security allegedly manhandled a fan out of the stadium without a refund. To my understanding, the ticket gave the fan a license to be in the stadium and a refund would have been necessary to legally kick him off the property. Obviously, the actions taken by the security officer were also over-the-top, as Freedom of Association is not Freedom to Assault. Yet, these issues were not the crux of any argument I’ve seen on the blogosphere; instead Jaffe and his ilk have used them almost solely as an embellishment to the outrage they feel for needing to pay respect during the song. Nonetheless, the anecdote is just that, an anecdote, and one that was voiced by a fan who was likely drunk at the time and who had every reason to punch up his story a little bit. It’s not fair to form generalities on that type of thing.

The more theoretical criticism I can see of this policy is whether Yankee Stadium should be considered purely “private property”. Major League Baseball teams have long been run almost as public trusts rather than a classic, profit-seeking enterprise. New York City has substantially subsidized a new stadium for the franchise, which is set to open next year. If one considers the new stadium public property, the question changes drastically, although it is still not cut-and-dry. Public property still does not immediately imbue one with the right to voice any opinion whatsoever, and I do not mean that in the banal, “yelling fire in a crowded room” sense. There is no reason why a town hall cannot throw someone out for yelling obnoxiously, and of course, liberals themselves harshly denounce religious statements on public property. This is not to say that this circumstance neatly falls into any of those categories, but the door is open for discussion. My standpoint, although it is not a very firm one, is that the Yankees can continue this practice until the city uses the funds as a gateway to instruct them otherwise.

Freedom of Speech, and more generally, Freedom of Expression, are negative rights, not a positive ones. Censorship occurs when the government explicitly stops you from doing something you could do with your own means. Referring to two private parties (you stand during the song and pay me $80 in exchange for being here) as censorship is both dishonest and a complete non-sequitur. Analogously spurious and deceitful are claims that stem-cell research is banned in the United States (it’s legal, but “failing to fund” is construed as “banning”) or that failing to increase funding for public broadcasting is censorship. All of these arguments make the preposterous assumption that Freedom of Expression is somehow an entitlement rather than a protection from government coercion. To put it another way, these views reprehensibly argue that freedom to choose gives those who invoke it the inalienable right to express their values or beliefs through the property of others, whether literal or through taxation. From that perspective, equating a failure to provide a positive Freedom of Expression to Fascism is nonsensical. No society can function that way without becoming duplicitous or lawless.

The Residual Fallacy

Posted in Baseball, Epistemology with tags , , , on November 16, 2008 by pretnetus

For hardcore baseball fans, the “Pythagorean” record, called such for its ostensible appearance to the Pythagorean formula, represents how many games a given team “should” have won over the course of a season. The formula uses nothing but a team’s runs scored and runs allowed and spits out out a winning percentage that very closely correlates with the actual win total of a team. Even more surprisingly, this Pythagorean record correlates closer to the following year’s win-loss record than the previous year’s record does. This strongly suggests, although hardly definitively, that runs scored and runs allowed are a better indicator of team quality than win-loss percentage itself.

Amateur analysts have taken this as a very happy research opportunity. Some looked at how many games a team has won over its Pythagorean record as proof of a team’s strength in ways not measured using runs scored or runs allowed alone. The differential has been used to put numbers to statistical bugaboos like team chemistry, the effectiveness of the coaches, and the usefulness of the running game. However, these methods have fallen out of practice as those variables have failed to exhibit any year-to-year statistical significance in explaining the differential. The only objective factor that has been shown to explain any of the differential is the strength of a team’s bullpen, and that effect is not strong.

We’re lucky that in baseball, unlike real life, we have an amazing degree of data capture and an embarrassment of historical riches, with nearly complete yearly records going back more than 125 years. Retrosheet even has made available full play-by-play data for every season for more than forty years. Every play, every action, of all 162 games, (now) all 30 teams… it is a bewildering accomplishment. This treasure chest of data, an ostentatious auric ensemble of empirics, allows analysts to respond to numerical questions with genuine answers.

Yet, that’s not all. In baseball, every action is discrete. A hitter smashes a home run. A second baseman fields a ball and throws out the runner. Each event is distinct and countable for all to see. Furthermore, the data encapsulates what is important, which is why the pythagorean records work as well as they do. If the subjective, uncountable variables were what really drove a record instead of runs scored and runs allowed, the pythagorean record would not have its predictive power.

The subjective, uncountable variables like team chemistry likely have some effect to a team’s final record, but we have no idea what the effect is. It is now widely accepted to be a fool’s errand to try to tease anymore meaning from the differential. Yet, outside of baseball analysis, the problem of identifying the cause of residuals appears in far more important matters. However, since real-life data rarely possesses the ideal characteristics found in baseball statistics (gratuitous amount of data, countability of actions, importance of objective factors over subjective ones), we cannot take the same logical positivist approach to analysis; that is to say, we cannot ever rely on data to confirm any hypothesis definitively. We may be able to identify correlations for objective causes with some certainty, but we would only be lying to ourselves to think we had captured everything important.

Thomas Sowell has pointed out such presumption in what he calls The Residual Fallacy. The fallacy states that if we control for every objective variable we can find, that persistent statistical significance of a “soft” variable proves that the “soft” variable was directly responsible. But, as stated above, in real life, we don’t have a full picture of everything important. Imagine if in baseball, we only had the number of home runs hit and the average height of the players and were asked to use it to estimate the team’s win-loss record with such information. Without information about the other things that matter, we might pick up on some statistically significant relationship between win-loss record and, for example, average attendance. Would it then be fair to conclude that we have taken everything important into account, and that large crowds cause teams to win more often by cheering?

Yet this is what we do, routinely, including academics and scholars. Courts accept it as evidence. The example that Sowell points to is “proving” racism empirically. It is a fact that, in most industries, if you adjust for age, years of education, marital status, and everything else for which data is easy to collect, Asians make more than Caucasians and Caucasians make more than Hispanics and Blacks. Does this prove racism and put a dollar number on it? Of course not. It is likely that there are additional subjective differences between the groups. This does not mean it’s an INNATE difference or that the groups are somehow better than one another; it means that there probably exist other explanatory variables that analysts cannot capture. At the same time, this does not disprove racism, either. It could well be true that if we could somehow control for literally everything important, race would still be a persistent factor. The point is that we do not know and can’t know in any meaningful sense by throwing everything objective in a regression and seeing what sticks. It just isn’t evidence.

Baseball is a weird case, a rare human event where we can boil down most of what’s important to a few numbers. Still, this doesn’t turn the minds of baseball traditionalists -especially reporters- who spend years with the team and believe team chemistry to be an essential part of a winning organization. They could be well be right; if we could measure chemistry meaningfully, it may explain both some of the differential between the actual and pythagorean records and a reason why the team scored those runs in the first place. Yet, it is strange that some hold standards higher for baseball, where there is evidence that we have captured everything important, than in sociological questions with enormous political ramifications, where believing we no everything is nonsense.


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