Ave Atque Vale, Mr Seeger

So Pete Seeger died last week. I meant to write about this earlier, but didn't.

I always loved Pete's music. Granted, I'm sure I shared virtually none of the man's politics. As Mark Steyn points out, he was a staunch communist until right towards the end. Maybe that should put one beyond the pale. But if one only listened to artists whom one agreed with politically, we conservatives would have pretty slim pickings indeed.

There was more to Seeger than that. I suspect that to people who didn't listen to his music as music, which probably includes many conservatives, all they saw was the politics. But many of his songs weren't explicitly political - even if he was avowedly of the left, and that fed into what he wrote, the songs stood on their own. It's not hard to see how different political outlooks shape the writings of both Asimov and Heinlein. I would probably find more to agree with the latter on than the former, but I love the writing of both of them. So it is with Seeger.

As well as being a wonderful chronicler of all sorts of folk music, political and otherwise, there was still a warmth of spirit. This is something that we on the right often lack. Not all of us - Jay Nordlinger is wonderfully generous of heart without losing conservative principle. (As it turns out, he isn't a fan of Seeger, and for quite fair reasons). Seeger's desire for what he perceived as good for the world was blinded by a blinkered naivete about human nature and the steps needed to implement the ideas he had, which caused him to sympathise with leaders who did terrible things. And yet, as Mr Conrad said about colonialism, the idea alone redeems it (or at least some of it). The warmth of spirit that led him, very unfortunately, to communism, was not thereby totally wasted.

The song of his that best illustrates this is one I like greatly, entitled 'Well May the World Go':

Well may the world go, 
The world go, the world go,
Well may the world go,
When I'm far away.

Well may the skiers turn,
The lovers burn, the swimmers learn
Peace may the generals learn
When I'm far away.

...

Sweet may the fiddles sound,
The banjos play the old ho-down
Dancers swing round and round,
When I'm far away

...

Fresh may the breezes blow
Clear may the streams flow
Blue above, green below,
When I'm far away.

Well may the world go, 
The world go, the world go,
Well may the world go,
When I'm far away.

The point is not the specific list of what one views as the good. Rather, the striking thing is the even more basic presumption - that when one is long dead and gone, and there's no longer anything to gain by it, that one nonetheless earnestly wishes for the world's welfare. That this thought occurred to him so strongly that he wanted to sing about it. Can you think of any song writer today to whom it would even occur to sing about such a thing?

Which is why, when all is said and done, I shall miss the old man. His songs were some of my favorites.

Yes, well may the world go,

Now he's far away.

Optimism

Check out this email from genetic testing company 23andme for the most upbeat corporate email I've received recently. Scroll through to the end and see which bit stands out:

Hmm, what's that tucked away in November? Government f***s our entire business model when the FDA decides unilaterally to extend its authority to include not just medical treatments, but medical tests? And announces this by ordering us to shut down our health-based business model immediately? As part of an illegal power grab not even authorised under legislation whose very existence would give the founding fathers grave concerns about the commerce clause as currently written, or indeed about the wisdom of having a commerce clause at all?

But look, in February we were also on Jeopardy!!!

I'm trying to imagine a similarly cheery email just glossing over an equivalent corporate disaster.

Dow Chemicals Newsletter, December 1984:

What a year it's been! We've had some highs and lows, but we've managed to get through:

February: Dow Chemicals celebrates a 15 year retrospective on its most lucrative contract to date - supplying Napalm to the US government for the Vietnam War. Peace through superior firepower!

April: Dow earnestly supports President Reagan's call for an end to Chemical weapons, stressing that chemical production should be used for peaceful purposes.

July: Our famous company 4th of July BBQ proves a great success. Our illustrious COO wins second prize in the 'best potato salad' competition!

November: Plastics! Dustin Hoffman names Dow Chemicals as a motivating factor behind the famous 'Plastics' line in the movie 'The Graduate'. Plastics division reports record sales increase of 35%

December: Nasty chemical spill at Union Carbide plant in Bhopal, India, poisons half a million people, killing over 8000 immediately, becoming worst industrial accident in history.

December: Christmas! Dow bonuses, pre-approved before the recent unpleasantness, get paid out to all employees


Let's face it, whoever is working PR for these guys is earning their money right now.

Living the Dream!

It seems to me to be a stark reality about human nature that very few (if any) people's lives are actually 'living the dream' when viewed from the inside. The funniest* encapsulation of this sentiment that I remember was on a college t-shirt advertising a boys night out dubbed 'Escape From Reality'. On the back, was the heading in large letters 'Reality', with a picture of Carmen Electra. Underneath it was written 'No matter how good she looks right now, somewhere some guy is sick of putting up with her $#**.'

Salience being what it is, everyone reflects on the problems they have and not the problems that they don't. Are you in poor health? Missing a limb? Do you dislike your family? Are you short of money? Do you have lots of money but hate the job you're in? And if everything else seems pretty much okay, do you still feel a vague sense of purposelessness and ennui?

That's life, my friends. That's everyone's life. Because we live in an age of rampant hedonism and shallowness, the modern ideal of a life well lived is that of movie stars. People ask themselves the question 'would it be fun to change places with Brad Pitt for a while?' The answer is most likely 'Sure!'. But that's a very different proposition from the one that if you had to live like Brad Pitt forever, you wouldn't get sick of it pretty quickly. If you ask Dan Gilbert, it probably would only take you three months to get back to the same level of happiness you were at before. Do you really think that celebrities have no problems in their life that make them miserable? Really? None at all?

There is a certain type of person that goes on dating websites to broadcast how much they LOVE LOVE LOVE their life, their friends, their family, their career! I am always suspicious of these people. I mean, if I thought they were actually this happy, I would be most pleased - there's no resentment going on here. But the first giveaway that something is awry is the forum for this paean - let's just say that the platonic conception of someone whose life is already perfectly arranged probably doesn't include being on a dating website (even if you're just single cruising to meet new people to date - the ideal of that is having lots of friends of friends and meeting them at trendy parties and events).

Rather, it seems like the cult of self-esteem is colliding with the dreary reality of things being not quite right. The message, quite obviously, has nothing to do with the importance of convincing the rest of the dating world that one's life is already perfect (as if that were possible, or even desirable), but much more to do with trying to convince oneself. Cognitive dissonance being what it is, the awful prospect that maybe you made some bad choices has to be blasted away with denial, combined perhaps (in the case of the more introspective) with the sense of putting on a good face.

Personally, I'd be much more convinced by a dating profile with realistic descriptions of one's existence. I sure am REASONABLY HAPPY with the choices I've made so far! My life is quite okay most of the time, other than perhaps one or two respects.

Of course, if people actually started acting this way, facebook would be out of business overnight, as the number of people ritually blasting all and sundry with pictures bigging up their latest trip, party out, or academic year at Oxford would dry up immediately. If you're engaged in 'the dream' and you have a lingering uncertainty that it might not be all you'd hoped, better try to convince everyone else around you that at least you're much happier than they are.

*I say 'funniest' and not 'best' - that title of course belongs to the Great Sage.

Strangely Addictive

'Random Street View'. All these places I've never been and never will go. Also, it reminds you how despite the fact that if you take a randomly chosen person they're probably in a city, if you take a randomly chosen road, it's probably in the country.

Conversational Centres of Gravity

Have you noticed that when sitting at a dinner table, conversations have centres of gravity? Not as in metaphorical centres of gravity about subject matters, but as in physical locations. The centre of the conversation is an actual point in space, usually somewhere on the table.

To find out where, the procedure is simple. Look at where everyone's head is facing as discussion proceeds, and then draw a line out from their eyes, perpendicular to their face. Do this for everyone in the group. The spot closest to where the most lines intersect is the centre of gravity.

Here's an example to show you that you don't need to hear any words to know exactly who has what role in the conversation from body language alone:

The centre of gravity is not actually in the middle of the table - instead, it's slightly in front of and to the right of the girl in the brown top.

Once you realise that conversation has an actual locus, it's easy to see that the guy in the red shirt is at risk of being excluded. In a loud room, he would likely be at the periphery of the discussion, sitting there looking inwards trying to stay involved. He's already leaning in quite a way, whereas the girl in pink (equi-distant from the physical centre of the table, but closer to the centre of gravity) looks far more relaxed. Generally, I've found that anything more than 1m away from the centre means you're effectively shut out.

It's hard to see in an example like this, but another sure-fire way to almost guarantee exclusion is if the line of sight from your eyes to the centre of gravity has to pass through part of another person's body. The guy in the grey is physically closer to the centre than the guy in the red, but the fact that the girl in brown is leaning forward with her arms out means he's almost shut out. If the girl in brown turned her left shoulder slightly towards the girl in pink, he'd likely be shut out altogether. Even in the current setup, he looks disconnected from the discussion.

I find that when I can see that the nature of the seating arrangement and the dominance of the various personalities means that I'm going to be excluded, I'll often give up early and try to strike up conversation with the person next to me instead. You can only fight gravity with gravity, and try to create another centre that draws in others when their conversation falters. Usually on a long table there'll be multiple centres of gravity, and one or two guys inevitably in no-mans land. The only hope for them is that the other unaligned powers have something insightful to say. Usually, unfortunately, they don't. In the example above, the centre is significantly determined by layout. As the table gets sufficiently long, the focal point all comes down to who's the most interesting or conversationally dominant (either by being bombastic and loud, or being of higher social status).

In case it wasn't obvious, this theory was honed over various accumulated hours of being shut out of discussions by geography and trying to figure out why.

Comedy gold

Oh you dear neglected weblog, I have been most remiss in feeding you of late.

As the blog equivalent of a tasty but not very nutritious chocolate bar, here's some radical videos I saw recently.

First, a British guy giving hilarious uninformed commentary on baseball and football games.





The jokes are even better if you understand both the Commonwealth interpretation and the actual Yank events. Classic stuff.

(via Kottke)

Also, check out this awesome Ikea ad that Spike Jonze did back in the day:



Try doing the Swedish accent at the end, it's highly addictive.

(via Steve Sailer).

Free Startup Ideas – Traffic Predictions and Alarm Clocks Done Right

Here’s an idea for some enterprising engineer (most likely at Google or somewhere else with access to good traffic data) that I’m almost certainly not the first to have thought of.

A good traffic prediction algorithm would let you specify a time of day you need to arrive at a particular destination, a starting point, and tell you when you need to leave. Google Now already does a crude version of this. If you have flight details in your gmail account, it will sent you an alert when you need to leave in order to get to the airport an hour before your flight. But there’s a lot more cool stuff you could do with this.

For instance, it would be great to be able to take the directions in Google Maps and specify a day of the week and time (or day of the year) and see an estimate for how long the trip would take at that particular point in time. Since google has oodles of historical traffic data, they’d be able to get a pretty good estimate based just on historical traffic conditions. Ideally, you’d be able to take the same route and plot out how the expected length of journey varies with the starting time.

This would tell you what times of the day and night to avoid, letting you figure out how to adjust your work schedule to avoid traffic. It would also tell you about a fascinating quantity – the elasticity of time arrived to time left. There are times of the day, such as peak hour, where leaving 10 minutes later might cause you to arrive 15 minutes later (an elasticity of 1.5, suggesting that wasting those minutes is very costly), or at the back end when you can leave 10 minutes later and only arrive 8 minutes later (making those minutes subsidised).

Notably, everything I’ve described (like Google Now in its current form) only speaks of a point estimate of how long things will take, presumably either the mean or median. In reality, there’s much more interesting stuff you can do with the whole distribution.

For instance, lots of unexpected things happen with traffic – accidents, weather, what have you. So for a trip that leaves at 8am on a Monday, there’s actually a distribution of possible arrival times. For someone who knows what a distribution actually means, it would be very useful to be able to specify an acceptable percentage of the time that you would be late (or more than X minutes late), and have the algorithm give you a time that you needed to leave your house in order to get there on time with that probability.

If this were done, you could just subtract the number of minutes you need to get ready each morning, and that’s when you need to set your alarm.

Even more interesting would be to improve these predictions from unconditional to conditional by making use of both current traffic and weather conditions. The overall distribution of, say, Mondays in January, would give you the unconditional distribution of the chances of arriving on time. But you could definitely do better by generating conditional distributions that morning that relied on the local weather conditions and the current traffic conditions relative to the historical distribution. In other words, if you normally need to leave home at 8am, the app could use the fact that traffic at 6:30am is heavier than normal to estimate that you may need to wake up earlier than normal as well.

Done properly, I’d gladly pay $20 for this kind of app. If it really worked, I’d probably value it at much more than that, notwithstanding that an irrational cheapskate instinct kicks in regarding the prospect of paying more than a few bucks for an online app.

As with all Shylock ideas, should the app succeed I insist on receiving either fat royalties or a free t-shirt that says ‘I came up with the idea for [Traffick-ator] and all I got was this lousy t-shirt’. Medium please.

How to make Canadian Football Awesome

When I was in Toronto about a month ago, a friend of mine who lives there told me how there's some suggestion that the Buffalo Bills NFL team may be planning to move to Toronto.

While I don't care a whit about the NFL, there's one surefire way to bolster local support immediately. If the team moves to Toronto, immediately rename them as the Toronto Loyalists.

Firstly, Canadians resolutely love clinging to anything that separates them from America, no matter how anachronistic (the Queen is one thing, but Quebec? Really? They're like a permanent grievance lobby designed to extract rents from the functioning rest of the country. De-annex them, I say). Stoking up vague anti-American sentiment, but in the politest of historical contexts, would be a surefire crowd pleaser.

Secondly, it would immediately create a super popular grudge match whenever they played the Patriots. And since the Patriots tend to be rather good, Americans would love it too because they'd still get to win, just like last time.

When this genius proposal is implemented, I expect fat royalty cheques to be forthcoming. Or a free Toronto Loyalists jersey, which I'd settle for as well.

All the world's a little peer influenced, except for thee and me...

Baaaaa.

Why do you do the things you do?

If you're ever in some trendy cocktail lounge or bar, chances are you'll see somebody drinking an Old-Fashioned. Muddle sugar with bitters (or use simple syrup and bitters), add whisky and a twist of citrus rind (wiped around the edge of the glass, and set on fire with a lighter if the place is fancy), and there you go. I'm not a drinker, but people tell me it's tasty.

Why do they drink it, as opposed to some other cocktail? 

Easy - they like the taste.

Okay, sure, but why did they try it in the first place to find out that they liked it? There's zillions of cocktails, and most people haven't tried most of them.

Probably their friend ordered them one once, or they saw someone drinking one and it looked interesting. 

Okay, so why did that friend order one?

Well now we're into the question of how social trends start. Usually we just have to throw up our hands and say 'peer effects' or 'opinion leaders' or 'fashion' or some equally unsatisfying explanation.

But in this case, we actually have a very definite answer of why you drink Old-Fashioneds.

You drink them because some time in 2006, a writer for the show Mad Men decided that Don Draper, the charismatic man's man main character in the show, would drink them as his drink of choice. The show became a hit, people started asking for them, and a heretofore archaic cocktail was suddenly restored to newfound celebrity.

I would wager that out of the people who drink them, at least 98% of them would swear on a stack of bibles that they drink them only because they like the taste, and not because of a desire to appear trendy.

And yet we reach a very stark conclusion. If that writer had decided that Don Draper would drink Mint Juleps instead, there's probably a high likelihood that you'd be drinking that right now, swearing equally that you just liked them for the taste.

The alternative is that some time around 1960, people's taste buds suddenly changed such that a previously tasty drink became unpleasant, and some time around 2007 they magically reverted back to enjoying them. Want to wager on that one?

Nobody likes to think that their personal tastes are actually fashions dictated by people whom they never met. But, more than we'd like to admit, they are.

The joys of being a systems programmer

From James Mickens, dubbed 'the funniest man in Microsoft Research', which you might think is a backhanded compliment, but is actually just a compliment. The Night Watch:

Perhaps the worst thing about being a systems person is that other, non-systems people think that they understand the daily tragedies that compose your life. For example, a few weeks ago, I was debugging a new network file system that my research group created. The bug was inside a kernel-mode component, so my machines were crashing in spectacular and vindictive ways. After a few days of manually rebooting servers, I had transformed into a shambling, broken man, kind of like a computer scientist version of Saddam Hussein when he was pulled from his bunker, all scraggly beard and dead eyes and florid, nonsensical ramblings about semi-imagined enemies. As I paced the hallways, muttering Nixonian rants about my code, one of my colleagues from the HCI group asked me what my problem was. I described the bug, which involved concurrent threads and corrupted state and asynchronous message delivery across multiple machines, and my coworker said, “Yeah, that sounds bad. Have you checked the log files for errors?” I said, “Indeed, I would do that if I hadn’t broken every component that a logging system needs to log data. I have a network file system, and I have broken the network, and I have broken the file system, and my machines crash when I make eye contact with them. I HAVE NO TOOLS BECAUSE I’VE DESTROYED MY TOOLS WITH MY TOOLS. My only logging option is to hire monks to transcribe the subjective experience of watching my machines die as I weep tears of blood.” My co-worker, in an earnest attempt to sympathize, recounted one of his personal debugging stories, a story that essentially involved an addition operation that had been mistakenly replaced with a multiplication operation. I listened to this story, and I said, “Look, I get it. Multiplication is not addition. This has been known for years. However, multiplication and addition are at least related. Multiplication is like addition, but with more addition. Multiplication is a grown-up pterodactyl, and addition is a baby pterodactyl. Thus, in your debugging story, your code is wayward, but it basically has the right idea. In contrast, there is no family-friendly GRE analogy that relates what my code should do, and what it is actually doing. I had the modest goal of translating a file read into a network operation, and now my machines have tuberculosis and orifice containment issues. Do you see the difference between our lives? When you asked a girl to the prom, you discovered that her father was a cop. When I asked a girl to the prom, I DISCOVERED THAT HER FATHER WAS STALIN.”

Gold, gold, gold. Read the whole thing.

And when you're done, read the rest of them too.

Belatedly...

I'm back in Oz, hence the drop in recent postings. With punctuality like this in notifying my loyal readers, apparently I shouldn't be in charge of managing a business. Neither fact (skyvving off in Australia and lack of organisation) should be a surprise to those who know me in real life. I should be back to full posting strength (which, as Hector Lopez told me today, has been a bit weak recently) some time around January 8th.

My defense, as always, is that you guys are getting what you paid for. Suckers.

Infidelity as a Commitment Mechanism

I've wondered a few times on these pages about the psychology of married people who begin affairs. As I wrote at the time:

As the length of the affair increases, the probability that your wife will eventually find out converges to 1. The chances that you'll slip up somehow, or get inadvertently found out through some voicemail, missed call, something, are too high.

And when that happens, the results are as predictable as they are horrible.

So how does it make sense to start down this path, rather than go for an honorable divorce now?

It’s entirely possible that the whole thing is just overconfidence, and the people involved think they can beat the odds forever. Maybe they’re just that stupid.

But I think I’ve figured out an alternative.

What if the eventual inevitability of getting caught is the feature, not the bug?

Suppose the unfaithful partner wants to be out of the relationship, but suffers from hyperbolic discounting. Even someone who has grown bored with their partner will still find it painful to tell their husband or wife that they want a divorce. You are wrenching the heart of the person you once loved enough to declare a lifelong commitment to. You want to be free of them, but that doesn’t mean you’re not dreading the process of getting from here to there.

So what will you do if you’re a hyperbolic discounter? You’ll procrastinate. You’ll convince yourself that you’ll leave your wife next month, or next year. And somehow next year turns into this year, and it never happens.

In this view, embarking on an affair is a sign of wanting out eventually, but not having the courage to just end it then and there. The affair is thus a commitment to eventually end the marriage at some unknown point when you get discovered. It functions somewhat like the Thaler and Bernartzi ‘Save More Tomorrow’ plan, or the complaint to the police by a domestically abused woman in a  no-drop jurisdiction. It’s the ‘Divorce More Tomorrow’ plan for those without the courage to tell their husband or wife that they want to leave. 

The indefinite timeline for discovery is also a plus – a known date would cause a lot of stress as it approached, and would create the risk of massive preference reversals. The unknown aspect means in addition that the final choice is taken out of the cheater’s hands, which benefits those who want to feel like the divorce was the process of some inevitable deterioration in the relationship, rather than an active choice by them (we grew apart, things didn’t work out, the knife went in).

My guess is that when the cheater is eventually discovered in their lie, once the initial shock is overcome, the next feeling is relief. Relief that things are finally drawing to the conclusion that they’ve long wanted, but haven’t had the courage to actually ask for.

It seems a strange explanation, but I can’t think of a better one.

A series of mostly rhetorical questions to the people complaining on Facebook about the Indian Supreme Court decision upholding the constitutionality of laws criminalizing homosexual acts

1. The decision itself can be found here. Have you read it, even if only briefly? Did it occur to you to even search for it? Have you read a summary of the main arguments the court advanced? Do you know which protections in the Indian constitution the law was alleged to have violated?

2. In your opinion, is there such thing as a law that is sound policy but nonetheless unconstitutional?

3. In your opinion, is there such thing as a law that is poor policy but nonetheless constitutionally valid?

4. Related to #3, the court stated in its decision:

"It is, therefore, apposite to say that unless a clear  constitutional violation is proved, this Court is not empowered  to  strike  down  a  law merely by virtue of its falling  into  disuse  or  the  perception  of  the society having changed as regards the legitimacy of  its  purpose  and  its need."

Do you agree?

5. If you did not agree in #4, on what basis should the court decide which laws to strike down?

6. If you did agree in #4, how do you personally decide whether you think a law is constitutional or not? How does this relate to your answer to #1?

7. The court concluded its decision with the following:

"While parting with the case, we would like to make it clear that  this Court has merely pronounced on the correctness of  the  view  taken  by  the Delhi High Court on the constitutionality of Section 377 IPC and found  that the  said  section  does  not  suffer  from  any  constitutional  infirmity. Notwithstanding this verdict, the competent legislature  shall  be  free  to consider the desirability and propriety of deleting  Section  377  IPC  from the statute book or amend the  same  as  per  the  suggestion  made  by  the Attorney General."

If you do not like the policy implications of the current decision, why is your displeasure directed at the court, and not the relevant legislature, who has had the power to repeal this law all along but chose not to exercise it? Or the voters for the politicians in said legislature?

8. If a court comes to a decision that supports good policy by utilising arbitrary and shoddy reasoning that departs from what it has stated before, can you think of any negative consequences to this? Do you think these consequences are important or not?

9. Related to #8, what is the value of precedent? Do you think it is important that the likely decision of the court on a particular legal question is mostly predictable in advance to legislators and citizens?

I'm not holding my breath for any answers.

Economists are often astounded at the sheer number of people who have little appreciation for basic principles of economic reasoning. On the other hand, the appreciation for economics is ubiquitous when compared with the legal equivalent - the number of people who have zero conception that a court case has any important dimensions other than whether you personally would have voted to support the law or principle whose constitutionality is being called into question.

It's white, Jim, but not as we know it

What happens when the whitest band in history covers the second whitest band in history?

A whole metric buttload of awesome, that’s what.

\

24 carat solid rolled gold.

Hypothesis Falsified

AL sent me a link to this story about how Jessica Kerr, lately a model for Victoria’s secret, was apparently punted from said job after saying that she didn’t think Taylor Swift had what it took to be an underwear model.

Frankly, this didn’t seem like such a disrespect – the number of women who do have what it takes is surely extraordinarily small. Have you read about what they have to go through before a show? No solid food for 9 days before the show, and no liquid for 12 hours before. Ye gads! Every single excess pound is on display for the whole world, and your career depends on looking absolutely flawless to as many ogling eyes as possible. It’s perhaps not a surprise that this is not dissimilar from playing sport at an elite level, in terms of success requiring both extraordinary commitment and rare natural talent.

So my first hunch was that the Taylor Swift comments were mainly a pretext, and Victoria’s Secret was looking to ditch Kerr anyway. I was guessing it was an age thing – she was just close to the end of what is surely a very limited shelf life for underwear models.

According to the only reference anybody consults anymore, Kerr is 27. Bingo! Surely that’s got to be at the upper end of the range, right?

It turns out, not so much.

A vast and grueling dedication to scientific truth lead me to ascertain that the current list of Victoria’s Secret Models has a much wider age range than I thought. In ascending order:

Karlie Kloss – 21

Erin Heatherton – 24

Behati Prinsloo – 24

Candice Swanpoel – 25

Lily Aldridge – 28

Doutzen Kroes – 28

Lindsay Ellingson – 29

Miranda Kerr - 30

Adriana Lima – 32

Alessandra Ambrosio – 32

32!!! Remarkable, huh? Admit it – when you started reading this article, you would have thought it inconceivable that 30% of the most famous currently employed underwear models on the planet have ages starting with a ‘3’.

Part of the value in economics training is not the logic of economic reasoning itself, but simply the dedication to empiricism. You have a hunch about the world? Great! Find some data that will test said hunch, and see if it’s true or not.

The first thing you will learn is that it is amazing how often your hunches about the world turn out to be wrong.

The second thing you will learn, more by way of conversation, is how tiny the number of people is who actually regularly test their ideas about the world in a systematic way and update accordingly.

More’s the pity.

Much more, actually. 

Get your lack of money for nothing, and your lottery tickets for free

I've come to the conclusion that a large amount of existence of small local bands can be explained by option value.

The bands themselves exist because of the out-of-the-money option that they’ll strike it big and become the next U2. In the meantime, they’re playing in tiny venues to small crowds of people, and making no money. I have no particular stats on that, but plausible McKinsey job interview style estimates of revenue from a 200 person show suggest that even if the margin is really high, hourly wages are going to be pretty damn low. Steve Levitt famously argued that there’s a reason the average drug dealer lives with his mum. To follow the same logic, there’s a reason that small bands on tour are looking to crash at random people's houses – they’re poor.

But perhaps less appreciated is that option value probably explains a lot of the audience presence too. Their option is that maybe if the band becomes big then they’ll be able to boast that they heard them first and listened to them in a tiny venue for no money before anyone knew about them. The more insufferable ones will also go on to complain about how they were much better before they sold out. I have a family friend who once went to a concert in Liverpool in the sixties that featured both the Beatles and Gerry and the Pacemakers before either of them were big. (Apparently the concert cost £1 to attend, or something equally hilarious). It’s a pretty rad story. But you’re going to listen to a lot of no-name bands before you hear the next Beatles.

Sure, some people just like live music, and prefer small venues, and want to support small acts, and actually just enjoy that type of music. But those are boring and obvious hypotheses. Freakonomics taught me that when you really understand the world, the truth will always turn out to be both hilarious and counterintuitive, in a way that makes for great cocktail party conversation.

Song lyrics that annoy me

From Robin Thicke’s ‘Blurred Lines’

‘I feel so lucky
You wanna hug me,
What rhymes with “hug me”?’

Really? You’re rhyming ‘hug me’ with ‘hug me’, and referencing it as if it’s a pun? Rhyming a word with itself is the absolute cheapest, most pathetic way of satisfying the technical requirements of rhyme.

I understand that you’re trying to create an hilarious joke by suggesting the word ‘f*** me’ as the implication of what follows ‘hug me’, but a) this doesn't even rhyme, and b) loads of other things do.

To answer the question, you can write obvious lyrics that make sense in context using  ‘bug me’, ‘mug me’, ‘drug me’, or ‘dug me’, slightly offbeat lyrics using  ‘plug me’, ‘slug me’, and ‘tug me’, and if you’re willing to go more absurdist then ‘chug me’, ‘lug me’, ‘shrug me’, and ‘pug me’, work in a pinch as well.

The main alternative to a failed intended meaning of implying ‘f*** me’ is that he knows that lots of things rhyme with ‘hug me’, and he’s instead openly giving you, the listener, the middle finger by shamelessly not being bothered to finish the rhyme, with the knowledge that you’ll still listen to it anyway.

Either way, what a clown.

Australia as a Triumph of Reversion to the Mean

Not many people really understand the idea of reversion to the mean in the context of genetics. If it’s discussed at all, it’s usually in terms of the rich smart guy having an idiot son who ruins the family business. But there’s more to it than that.

The first part you need to realise is that it’s often unhelpful to think of your genes as a deterministic set of instructions that will be replicated over and over in your children unless mutations.

Instead, one crude metaphorical way to think of the process of Mendelian Inheritance is that your genetic outcomes are the process of a random variable that is drawn from the joint distribution of your mother’s family and your father’s family. Combined, you can think of this as your family genetic distribution.

Your particular genes contain information both about you (i.e. the one particular realization of that variable) and the overall distribution of traits in your family (the possible range of other realizations of you and your siblings). When you have children, each child is a realization of the joint distribution of your family traits and your husband or wife’s family traits. If you have enough children, you’ll start to see the outlines of the whole distribution of possible traits – ranges of height, ranges of facial features, ranges of hair colors, etc.

So what this means is that when it comes to whether your children will be smart, the question is not just whether you and your wife are smart. The question is whether you and your wife come from families that are generally smart. If you and your wife are both smarter than the rest of your families, unfortunately your children will probably be less smart than either of you. They’ll be closer to the average of the joint distributions, whereas you two are closer to your respective maximums.

So what’s this got to do with Australia?

Australia was a society settled from the dregs of British society. Not the absolute dregs, mind you – it didn’t take too much to get the gallows in those days, but mid-level crime like larceny or burglary might get you transported. But it’s fair to say that the convicts getting transported were likely below average for Britain at the time, like most convicts in most societies.

Suppose you take a cross-section of people from the lower end of the genetic distribution and put them in an environment with British laws and institutions. What happens next?

 The crucial part is that we’ve got people who are probably below their familial averages. But these cases get the benefit of mean reversion – if you’re dumber or more aggressively antisocial than your family average, your children will be on average smarter and less anti-social than you.

Run this forward a few generations, and you’re basically back to where you started. The convict starting point still lingers a little in terms of anti-authoritarian cultural attitudes, but that’s about it. You can take the dregs of society, but the next generation won’t be the same dregs. Thankfully. Mean reversion taketh away, but mean reversion giveth as well. So while the British who were sending convicts to Australia probably thought they were going to create a permanent colony of antisocial idiots, what they actually ended up creating was Britain #2, but with much better weather. The joke’s on them, really.

The practical punch line, of course, is that if you’re worried about how your children might turn out, pay close attention to the extended family, not just your partner. A son or daughter who’s not too bright but who has lots of doctors and lawyers and scientists in the family is still a pretty good bet.

Currency as a Paper Standard

People often make a distinction between asset backed currency, (where each dollar is a claim to some physical good, such as the gold standard), and fiat currency (where each dollar is simply a government printed piece of paper).

The distinction that people generally draw is that fiat currency can be produced in arbitrarily large amounts (i.e. printing tons of paper money), while asset backed currencies limit the sovereign's wealth to his stocks of the asset in question (unless he wants to dilute the currency, by reducing the amount of gold in each coin if it's literally a commodity currency, or reducing the amount of gold that each piece of paper is claim to for an asset backed currency).

In reality, all these arrangements are arbitrary - money works because people believe other people will accept it, and the gold and paper and whatnot are just coordination mechanisms to help us agree on what to accept.

The idea that the key distinction is the ability to print more money obscures a second aspect of asset-backed currencies that was less prominent historically but is actually more relevant today - the fact that people are accepting a notional instrument as a claim to some other less convenient instrument that they would say that they value more.

With gold, it was inconvenient to actually carry it around, so people were happy to carry around convenient pieces of paper that were claims to a fixed amount of gold, as long as everybody believed that the paper system was always going to work and be accepted. Eventually people got sufficiently used to the paper that the fiction of convertability was unnecessary. The Supreme Court took it away, and people barely noticed.

The parallel today is that we have a 'paper standard'.

The real money in today's society is ones and zeros in bank accounts, in SWIFT computers, and in Federal Reserve bank deposits.

Just like the gold standard before it, people are happy to transact in this fully abstract money because each digital dollar is a notional claim to a piece of paper printed by the US treasury. You can go to the bank and redeem your digital dollars for paper dollars whenever you want.

In the modern world, the digital dollar is vastly more convenient than the paper dollar, just as the paper dollar was more convenient than the gold bar. And while people do still withdraw dollars for some purposes, it's becoming increasingly rare. Can you imagine someone actually taking all their wealth out of the bank and leaving it in dollars under the mattress? The vast majority of the cash holdings for the vast majority of people are already in digital form.

At the moment though, people still like the fiction that they might convert all their digital dollars to paper dollars. If things were entirely on computers, what would happen if the computers crashed?

In reality, that ship sailed decades ago. If the computers crashed, the rich would be left with their houses and that's about it. But most people don't worry about this, just like most people in the 90s in America didn't worry about the government printing zillions of paper dollars, even though people in 1800 would have viewed this insouciance as insane naivete.

It seems likely that eventually the fig leaf of paper convertability will be removed. Young people already would be comfortable with this - they barely use cash, it's all credit cards. Eventually, the anachronism of paper money will be removed altogether.

When that happens, it will raise a number of intriguing economic possibilities.

The biggest of these is that there will no longer be any binding zero lower bound on interest rates. The biggest obstacle to negative interest rates is that people have the option of just hanging onto their dollars and earning zero. When the dollars are only in the bank, that's trivial to change. Every dollar in your account is depreciating at a continuously compounded interest rate equal to 3% per year.

If you could do that, the 2008 recession might have been a damn lot shorter. You don't want to spend and are trying to deleverage and hoard liquid assets? Does your answer change if those liquid assets are earning you -8% a year? Hell, even a Porsche doesn't depreciate much more than that - why not just enjoy the car instead? Hey presto, spending is back.

Don't get me wrong, there will likely be a huge psychological obstacle to negative interest rates. People will view it as the government or the bank taking their money (in a way that they don't view it as the government giving them money with positive interest rates). If the fed wants to do it, there's not much choice though - where are you going to take your money instead when there's no paper to redeem it for? If probably would fuel asset inflation, as people rush to put their assets into anything that will hold its value.

In addition, the difference between fiscal and monetary policy becomes much harder for the average person to see. If the government is taking out 1% per month from your account, does it really matter whether that amount is getting transferred to the government's account (under a tax) or destroyed altogether (under a negative interest rate)?

The eventual disappearance of paper money seems like it will only be forestalled by civilisational collapse or a massive change of governing arrangements. When the first government has the balls to announce negative nominal interest rates is another question.

I suspect that you and I may well live to see this reality.

Miscellaneous Joy

-Things that make me want to learn computer science - a visual depiction of different sorting algorithms




-Genius!



-An awesome SMBC on Evolution. Comedy gold!

-In the annals of redneck engineering, Terminal Cornucopia documents all the ways you can make improvised weapons out of items you buy inside airport security. Several of them seem to involve dismembering a lithium battery, exposing it to water to create a heat source, and then having that explode a deodorant can. My favorite is the Blunderbussiness Class, although they gloss over the fact that the video suggests that if you were actually holding it when it fired you'd get your hand blown off.

-An excellent War Nerd column on the Congo. His thesis that the western intelligentsia simply hates the Tutsis seems ex ante implausible (I can't believe most people in the west even know who was killing whom in the genocide), but it seems strangely parsimonious as an explanation of what they actually do. Click it now, because it's only available for 48 hours!

The Benefits of Having Smoked

Back when I was in high school, it seemed important to do something cool to get rid of my nerd image. In the fertile logic of the teenage mind, the obvious answer was to take up smoking. My older sister smoked at the time, so clearly this was a good decision.

None of my friends were interested in joining, and lacking any social aspect it was never particularly enjoyable. This was especially so given that I never really liked it much - I enjoyed blowing smoke (The Couch: You still do, actually), especially smoke rings, but the actual inhalation part was never that pleasant. So the whole process went as follows:  *puff*...This is so stupid ...*drag*... *puff*... This is probably giving me cancer... etc.

As you can imagine, this phase lasted about 3 months before the absurdity finally became too much - I had to not smoke for a week on a chemistry trip (yes, really), and I never bothered restarting when I came back.

Let's take it as given that I'm deeply glad that I gave up when I did.

Yet strangely enough, I'm actually glad that I smoked a little bit. And the reason is that it left me with a vague appreciation for the smell of cigarette smoke. I find it somewhat pleasant. Not in every situation, of course, and definitely not when you smell it on your clothes after a night out at a smoking venue. But if I walk past someone who is smoking, it doesn't cause me any discomfort, and sometimes smells quite nice.

I never used to have this feeling before I smoked - I just had the classic non-smoker's reaction of instant revulsion. 3 months, however, is sufficient to give you an appreciation for it.

Which is nice, because in life you're going to come across people smoking, and it's a relief to not be bothered by it. Otherwise you might end up like one of those unbearable busybodies, noisily complaining every time someone nearby is smoking. "Can you please not smoke around my child?", you'll hear them ask. I always thought an appropriate response would be "Well, I was here first, lady. Can you please not disrupt my smoking break with your bratty child?"

If you want to see how much the anti-smoking brigade has descended into a joyless, liberal scolding parody of itself, look at the reaction to e-cigarettes. They're basically a cigarette that doesn't cause the vast majority of the nasty health side effects. So celebrate! Except the anti-smoking brigade doesn't. Because, you know, kids might start smoking e-cigarettes, and then decide that they really want cancer as well as nicotine and so now start on the real thing. Despite the fact that the vast majority of substitution is likely to be away from real smoking towards e-cigarettes, not away from nothing towards e-cigarettes (as Slate Star Codex pointed out ).

I find myself siding with the smokers most of the time. The world would be better off if fewer people smoked, but most of the anti-smoking movement is just status signalling against a dis-favored group.

The fastest way to irritate anti-smoking types is to tell them "I'm a big supporter of taxes on cigarettes, because they're a heavily regressive tax. Not only is it the same dollar amount per pack for rich and poor, but since poor people smoke more than rich people, we're clawing more money out of the poor. Which I like, because our tax system is far too progressive."

Keeping Calm and Carrying On

How might brands work if there's no intellectual property protection?

Ordinarily, it's hard to know. Most works are protected by copyright restrictions until long after they've lost all interest to the public. That means that by the time you can replicate them and make parody versions of them, nobody's much interested.

An unusual thing happened though with the 'Keep Calm and Carry On' posters. They were made by the Ministry of Information in Britain in 1939 and not actually released to the public at the time. But they only reached commercial success starting in 2000 when a couple in Britain who'd purchased one of the original posters started making copies.

I would have guessed based on my crude reading of what the internet tells me about UK copyright law, as an anonymous work the copyright extends for 50 years after being made available to the public. So by 1989 anybody could make versions of it. Life is never that simple, of course, and as sure as we live in an overlawyered society, some clowns have tried to trademark it, failing in the UK but succeeding elsewhere.

Still, the relatively opaque ownership has made it relatively easy for parody versions to spring up everywhere. 'Keep calm and X Y' is now ubiquitous, for various values of X and Y - Party On, Fight On, Huck On, Chive on (?!), whatever takes people's fancy.

On the one hand, there's a tragedy of the commons effect going on - the life span of the design will surely be shortened as it becomes almost a meme. Everyone overuses it for their lame jokes until it becomes a cliche.

But on the flip side, there are lots of different creative interpretations. Moreover, the design ends up being way more widespread as a result, at least for a shorter period of time.

It's the difference, in other words, between a gold mine where Rio Tinto owns the land, and a Gold Rush on public land where everyone descends to mine the obvious bits as quickly as possible.

You may think that a massive short term exploitation of an idea is undesirable, but you don't even know the half of what undesirable is. Undesirable is the Disney Corporation successfully lobbying Congress to get endless copyright extensions passed so that their damn Steamboat Willie cartoon never passes into the public domain, thereby ensuring that no book written after 1926 will ever pass into the public domain in the US. Man, !#$% Disney. I struggle to keep calm when reflecting on rent-seeking that egregious.

My instinct is to nearly always make copyright terms shorter. When a good is non-rival, copying it is, at a first-approximation, nearly always welfare increasing. If there's a big societal gain that we could be securing by making the distribution of versions of  'Keep Calm and Carry On' restricted to the discretion of its original designers, I can't honestly see what it is.

Irony

The Mask




The face behind the mask:

"Excess ain't rebellion,
You're drinking what they're selling.
Your self-destruction doesn't hurt them.
Your chaos won't convert them.
They're so happy to rebuild it.
You'll never really kill it."

Cake, Rock and Roll Lifestyle

Blagh

You know how sometimes you just don't seem to have any anything to contribute? I mean, I'd seen these billboards about 'No Kill Los Angeles', trying to eliminate animals being killed in shelters. The name and the billboard made it sound like one of those magic lefty schemes whereby people just mandate that some action can't happen any more without any idea how to make that happen or who's going to pay for it. Killing shelter animals is now illegal! That means that shelter animals won't be put down, but will just be fed endlessly and housed indefinitely with all of the money that we don't have. So... they'll starve to death but won't be killed? They'll be left on the streets?

But no, it turns out that, despite their name, No Kill Los Angeles actually seems jolly reasonable and are just trying to encourage people to donate money and adopt out shelter animals and spay and neuter pets. Don't you want that to happen, you monster? And then I started to feel mean and cynical for wanting to hack on them just to write a blog post about lefty naivete. Lord knows there's enough of that going around, but none of it seems interesting enough to write about. Government spends $160m to make a website that doesn't work! Nobody saw that coming!

Meanwhile, as I started to write this post I began to feel vaguely guilty that all I thought of when I saw their poster was leftist politics, but the actual fact of animals dying didn't rouse me at all. So then I felt I owed NKLA ten bucks as a cosmic apology, but they very cleverly set the minimum suggested donation button at 25, and now I'd feel too cheap if I checked the 'other' radio button and put in 10. Well played, NKLA. It's a classic Paul Newman in the Hustler maneuvre - act clueless until they've raised the stakes, then BAM!, they're getting taken for all they're worth. So now this has turned into a $25 blog post, and when you divide this by my five readers, each one of you had damn well better be getting $5 of enjoyment right now or this morning is going to turn into a total writeoff.

So, yeah, that's me. In the mean time, here's some great stuff taken from Morlock Publishing's twitter feed 

-The two types of Grad School Barbie

and

-Wondermark on who can punch harder

The war on dying is going poorly, but at least the war on "dying" is succeeding.

We live in an age where people go to enormous lengths to not contemplate mortality – either their own, or anyone else’s, really.

In the current present tense culture, people don’t even realise how much this shift has occurred. Today's moral fashions are not only correct, but self-evidently so. This mindset is imbibed so deeply, in fact, that most people don't even find it necessary to contemplate why things weren't always the way they are now. To the extent that other cultures and periods felt differently, the aberration is all on their side. The past is a foreign country, all right. And people's attitudes towards it resemble those they hold to real life foreign countries: namely, we'd rather read the latest news about Miley Cyrus than give a rat's @$$ what's going on there or why.

But every now and again, subtle language choices creep in to remind us how recently the current attitudes came about.

Take, for instance, the use of the present participle verb form ‘dying’.

It used to be common to say that an old person was ‘dying’. This would refer to known terminal illnesses (‘Dad is dying of cancer’), as well as people just in very poor health and probably going to eventually lose out to something or other. To the extent that it wasn’t known exactly when things would happen, sometimes there was uncertainty (‘I think he’s dying’).

Now, to apply the term to someone with a serious illness but not currently on life support is sufficiently rare that it sounds jarring, even anachronistic. Which is ironic, because death sure ain't getting any more anachronistic. (The disappearance of the concept of 'dying of old age' is highly related).

People will still use the phrase occasionally, of course. But usually only at the absolute last possible moment when it's absolutely clear that nothing can be done. The medical profession aids and abets this view, not wanting to deliver bad news any earlier than necessary, focusing instead just on the treatment options.

The part that stands out today is just how far away from the moment of death people used to be willing to make this observation (months, typically), and how matter of fact the whole thing was. Certainly in the case of terminal diseases, where the end result was known. The only time I’ve read this expression used in any sort of recent memory was the opening sentence of Mencius Moldbug’s pre-death eulogy to Larry Auster:

In case you haven't heard, Larry is dying.

Not coincidentally, Moldbug has perhaps the strongest sense of historical perspective of almost any writer around today. The second most honest description was from John Derbyshire. Make from this what you will.

The reason nobody uses the word any more, I suspect, is that people will do everything in their power to deny the possibility of death until the last minute, when the Titanic is already half-submerged and the orchestra has fallen into the ocean. We can fight this thing! The cancer has metastasized, but they're trying a new treatment! There's still a chance!

I would wager that there are plenty of people who will never be willing to use the word 'dying' to refer to a loved one. Dad is never dying, he's just going along, right up until he's 'dead'. That bit they'll acknowledge, if only for the absurdity of the alternative. To highlight the Nelsonian artificality of all this, doctors and nurses have very little difficulty telling when a patient is nearing the end - that's how they know to tell you to call the relatives. I have little doubt that if you asked them three months ahead of time, they'd be able to give similarly accurate prognoses, but nobody ever does ask them.

The only circumstances where modern man will rouse himself to use the present participle form are in metaphorical circumstances that have nothing to do with mortality. So Mum may be 'dying of boredom', 'dying of laughter', 'dying of embarrassment', but she's never just 'dying'.

This online diary has an entire label dedicated to 'mortality'. I have no doubt that in the scheme of modern society, this makes me morbid and weird. 

I maintain, however, that the strangeness is not mine, but today's world.

Nevertheless, it ends.

Disappointment

They made a movie called Don John? At last! Someone else read the Chesterton poem and thought it was as awesome as I did, and wanted to make a movie about the Battle of Lepanto. Gun upon gun, ha! ha! Gun upon gun, hurrah! Don John of Austria, Has loosed the cannonade! This is going to be AMAZING!!!

Wait, what? It's instead a movie where Joseph Gordon-Levitt plays a sex addict?

God damn it. Never mind.

Dropping the Mask on Invasive TV Screens

The surest sign cementing my status as a curmudgeon is my annoyance at the creeping spread of TV screens into places that didn't have them before. It was bad enough when they started introducing them into taxis - they would turn on automatically, blaring worthless nonsense at you, and you had to turn them off manually.

But the world has continued to find fresh ways to vex me, the latest being TV screens at petrol pumps. There's no way to turn them off. They're just blaring at you, volume high through tinny computer speakers. Given that the clientele of a petrol station includes nearly all of society, it would be a tough challenge for a well-meaning program director to come up with content that would be interesting to most viewers, given they're only going to be watching it for 3 minutes or so. Whatever you put is likely to be annoying to a lot of people.

Oh well, can't win, don't try! The obvious response is to just make the programming almost non-stop ads. Because that's what you want when filling up your car - a TV screen tuned totally to ads. Every now and again, some crappy 7 second football clip will be displayed, then it's back to finding out about some new snack product. The ratio of advertising to actual content is perhaps higher than any other medium I've come across. The same holds true for the world's crappiest radio station, the 'Gas Station Radio Network'. (Ugh).

This whole phenomenon reminds me of the worst websites, which automatically start playing a video clip or ad, and you have to hunt around to find what's making the noise. Except here there's no way to turn it off.

There is simply no pretense that this is something customers are meant to enjoy, unless these people are complete fools. Or I'm falling victim to the false consensus effect, which is always possible, and the world is actually full of people finding fulfillment in the Gas Station Radio Network. Hey, did you know they sell cheeseburgers here?

I can't tell which possibility is more depressing.

/rant.

Bravo, Mr Fama!

So Eugene Fama was finally awarded the Nobel Prize in Economics, along with Lars Hansen and Robert Shiller. All of them are thoroughly deserving. I suspect in part that the committee might have felt like a parent finally caving to their child's demand for chocolate - it was easier to give Fama the prize than keep dealing with the implicit mockery when his name topped the list of prospective prize winners year after year after year.

I've written about the excellence of Mr Fama before. What I will note, however, is the interesting nature of the prize. It was awarded to the three economists for "for their empirical analysis of asset prices". Both Hansen and Shiller did their most famous work in this area - the Generalized Method of Moments in the case of Hansen, and the excess volatility of prices with respect to dividends in the case of Shiller.

But curiously, Fama's most famous work is developing the idea of market efficiency - that an efficient capital market is one where prices fully reflect all available information. This can work at several levels - weak form, which covers all past price and volume information, semi-strong form, which covers all public information, and strong form, which covers all information, both public and private.

Simple, right? But people hadn't thought about it in that way.

Market Efficiency was a Nobel Prize worthy insight. More importantly, it was a Nobel Prize worthy insight even if markets are not, in fact, efficient. This is because the concept of market efficiency crucially changed the way the debate was framed and the evidence understood. The people that bang on about how markets obviously aren't efficient because of the 87 crash, or the financial crisis, or whatever, still implicitly accept the framework that Fama laid down. It is very difficult to conceive of what asset pricing would look like without Fama.

Of course, people confuse the real contribution of market efficiency with the related point that markets are actually mostly efficient (which Fama has made statements in support of, though by no means universally or dogmatically). But this is the secondary part - the real genius is the idea, regardless of whether efficiency is 'true' or not. The better way of phrasing the question is how efficient markets are, rather than the boo-hiss pantomime of 'all efficient' or 'all inefficient'.

If you come up with a brilliant idea simple enough for people to understand, they'll dismiss it as obviously wrong and unimportant. If you're like Lars Hansen and do something totally brilliant that nobody outside economics will ever understand the importance of, people will assume that your reputation is deserved.

And hence they didn't give Fama the prize for market efficiency directly - they gave it for his body of work on empirical asset pricing. Which is fair enough, as it gets to the main point. By including Shiller, they also added someone whose work tends to suggest that markets may not be efficient, although again by performing novel tests to examine this question. Don't get me wrong, Shiller is a totally deserving recipient. But it still seems to me that Fama's work is the most central of the three, in the same way that Leonid Hurwicz was arguably the most central in the mechanism design prize of 2007. It seems like the addition of a behavioral person in the empirical asset pricing prize was partly a way of saying that the committee doesn't necessarily think markets are efficient (a totally fair opinion), and also, along with the prize label, to insulate themselves somewhat against clowns who misunderstand the importance of market efficiency.

Still, this is all by the by. A great day for Chicago.

It's been a while since anyone has been inducted into the Shylock Holmes Order of Guys Who Kick Some Serious Ass, but Eugene Fama is most deserving of the honour. Congratulations! Apparently some guys in Sweden rate your work too, but that's not so important.

Odd Hedges Against Modern Worst-Case Scenarios

File this one under “it’s probably still a bad idea, but it’s not clear exactly why”.

The idea of a hedge is to take steps that are (typically) costly today in order to get better payouts in bad states of the world. Unemployment insurance and health insurance are classic ones, well understood by most people.

But there are plenty of other disasters in life that people don’t think much about how to hedge.

There are, for instance, plenty of possible states of the world where civil society breaks down altogether. Frankly, the best argument for gun ownership is for the eventuality of some extended civil emergency where government disappears for weeks or months on end. If the police aren’t coming to save you any more, you’ll probably wish you’d bought that shotgun. And antibiotics. And water. Lots and lots of water. You’re laughing at the preppers now, but that’s to be expected – until the disaster comes, they’re the weirdos buying insurance that never pays out.

The most unorthodox life hedge that I’ve been musing about (only in abstract terms, of course) is that of faking low level symptoms of mental illness. Go to a doctor, and complain that you’ve been hearing voices. They’re not saying alarming or violent things, just other voices in your head. When you get referred to a psych, they can disappear. Maybe they come up again in a few years. Or if you’re worried about appearing crazy, complain about chronic sleepwalking and other dissociative states. 

What, you’re probably wondering, is this a hedge for?

Credibly establishing an insanity defense if you’re charged with a serious crime, particularly a capital crime.

Courts have a good ability to sniff out people who are bogusly claiming insanity to get out of prison sentences. It’s no good to just claim after the fact that you were mad. But if there’s a paper trail of psych evaluations starting several years earlier, it becomes much easier to run an insanity defense.

Obviously, as any good lawyer will tell you (and as I've written about before), you generally don’t want to plead insanity, since this means getting locked up in a psych ward forever, which may or may not be better than getting locked up in prison forever. It probably is better than the chair, though.

That’s where sleepwalking comes in. Some jurisdictions will accept various dissociative states (like sleepwalking, being concussed, that kind of thing) as indicating a lack of intent, but not indicating enough craziness to get you institutionalised. I don’t know how likely this is to work, but it’s a possibility.

Of course, the down side is that you will have a medical history of mental illness, which might cause all sorts of problems I don't understand. That said, for better or worse (and it's often for worse), modern society is reluctant to forcibly institutionalise mentally ill people who haven't committed a crime and aren't an immediate threat to other people's safety, so I don't know how big the costs of being diagnosed as schizophrenic would actually be. Of course, after you're charged, all bets are off.

These actions fulfill the big point of the hedge – if you find yourself being charged with a capital crime, you may well wish you’d done it. I personally doubt this will ever happen to me, so the chance of it paying off is low, and the potential other costs of being diagnosed as mentally ill are large. So it’s probably a bad idea. Plus, I don't want to lie in general, let alone commit fraud, so I wouldn't be doing it in any case. But it’s still interesting to think about.

Only a hobo, but one more is gone

The massive fire engine drove past me down the narrow street, sirens wailing, and turned down towards the parking lot next to the beach. 'Typical', I thought to myself. 'This city is massively oversupplied with emergency fire services, so they get dispatched for every little nothing. Perhaps the sand is on fire?' As I walked towards the beach, I saw a lifeguard 4WD racing across the sand to the site of the conflagration, where a few other emergency vehicles were already gathered.

It soon became apparent that, oversupplied though they may be, this was no false alarm. A crowd was gathered around at a distance of perhaps 10m, circling a crowd of several lifeguards and a couple of fire department paramedics. The emergency services workers appeared to be huddled over a figure, partly concealed by a small concrete wall.

The first sign that something was seriously awry was the bobbing motion of one of the lifeguards as he performed CPR. I stood and watched for a minute or two, and the CPR continued. I'm no medical expert, but I know enough to know than when they have to perform CPR on you for several minutes straight, this is a Very Bad Sign. We were far enough from the water that this didn't look like a drowning situation. Eventually, curiosity got the better of me, and I sidled around until I could get a look at unfortunate subject of everyone's attention. Was it an old person, perhaps, having a heart attack? As I got closer, eventually I saw that it was a youngish man, perhaps in his 30s, with shaggy hair and short beard. His shirt had been removed, and he looked somewhat haggard - I thought I could see the outline of his rib cage, and he was wearing some shapeless khaki pants. I got embarrassed from staring too intently, and I shied away to a greater distance.

I started going through the possibilities in my head, and they looked grim. No obvious friends or relatives around, as the only people close by were the emergency services guys. Add in the disheveled clothes and the fact that he was getting CPR while looking young, and it seemed very likely he was homeless. Possibly overdosed, possibly drank himself comatose. Given they were administering CPR, he obviously had no pulse now, and probably had none when they arrived. To make matters worse, a homeless guy on his own lying on the sidewalk without a pulse could lie there for quite a long time without attracting attention. People would likely just presume he was sleeping, or drunk, or passed out.

Minutes passed, and the CPR continued. By this point, I was beginning to suspect that the man was simply dead, and the CPR was mostly a hail mary, a vain prayer to deaf heaven. The main ambulance arrived, and the paramedics brought the stretcher. My worries were supported by the fact that, even though the lifeguards were still performing CPR, the ambulance workers didn't seem to be showing a sense of urgency in their motions. I kept watch to see if they were going to get a defibrillator out, but they didn't. I remember reading once that, contrary to how it's often portrayed in the movies, CPR doesn't generally restart your heart. It's just a stopgap measure to prevent brain death from lack of oxygen until they can get a defibrillator. Perhaps they were going to do it in the ambulance. But it didn't look good.

Eventually, they placed the man onto the wheeled stretcher, and rolled him to the ambulance. The lifeguard was still performing CPR, but it looked to me more and more like defiant optimism against the rapidly diminishing odds. Those with the most experience of death, the fire paramedics and ambulance paramedics, moved slowly and somberly. It was only the lifeguards still working feverishly.

More power to them, of course. If you stop it, he's dead for sure, and the ambulance is surely better supplied with things to revive pulseless patients. But it seemed like the CPR was partly for the crowd. It was the physical manifestation of the vain hope that his heart might somehow restart. It let all but the more medically minded folks believe that what they were witnessing was merely a medical emergency, rather than a death scene.

I have lived over three decades on this planet, and had never seen a dead body before today. This kind of situation is inconceivable in almost any other period of human history. You leave in an ambulance as a man with a medical condition. You arrive in the hospital as a corpse, taken in the back entrance. Death is shielded from our sight altogether, unless you happen to be there at the end for a loved one. Otherwise, the acknowledgement of how we all end might be the ghost haunting the feast. Hence the charade. Exeunt, pursued by an ambulance. Even when you suspect that the person is dead, the flurry of last ditch treatment serves to maintain the fig leaf that maybe the person wasn't really dead - that maybe death can be warded off indefinitely, and our days will always be in the sun.

The ambulance pulled away up the hill, sirens blaring but driving carefully, and the crowd started to disperse. The show was over. I wandered down to the beach, and bodysurfed in the waves with my thoughts as company. I walked back up the hill, and passed the spot where the scene had occurred. Nothing beside remained. The bustle of the boardwalk continued, as if the man had never been there at all.

Does it take much of a man to see his whole life go down
To look up on the world from a hole in the ground
To wait for your future like a horse that’s gone lame
To lie in the gutter and die with no name?

Only a hobo, but one more is gone
Leavin’ nobody to sing his sad song
Leavin’ nobody to carry him home
Only a hobo, but one more is gone

I come here not to bury the Silk Road, but to praise it.

Two days ago, the Feds finally shut down the Silk Road, the online marketplace for drugs, guns, hitmen and other miscellaneous highly illegal items. They arrested a man, Ross William Ulbricht, alleged to be the founder of the site. He went under the alias 'The Dread Pirate Roberts'. This name is taken from the movie 'The Princess Bride', and is actually a pretty excellent alias given the nature of his work:

A pirate of near-mythical reputation, the Dread Pirate Roberts is feared across the seven seas for his ruthlessness and swordfighting prowess, and is well known for taking no prisoners.

It is revealed during the course of the story that Roberts is not one man, but a series of individuals who periodically pass the name and reputation to a chosen successor. Everyone except the successor and the former Roberts is then released at a convenient port, and a new crew is hired. The former Roberts stays aboard as first mate, referring to his successor as "Captain Roberts", and thereby establishing the new Roberts' persona. After the crew is convinced, the former Roberts leaves the ship and retires on his earnings.

If you believe the allegations about Ulbricht contained in the various affadivits, he is (to quote Stephen Hawking's memorable description of Sir Isaac Newton), by all accounts, not a pleasant man. He allegedly tried to organize not one but two attempted murders - first of a former employee that was likely to squeal to the FBI, and second of a person trying to blackmail him by threatening to release information about Silk Road drug suppliers.

(As a side note, the latter reminds me of the Morgan Freeman quip in The Dark Knight):

Let me get this straight. You think that your client, one of the wealthiest, most powerful men in the world, is secretly a vigilante who spends his nights beating criminals to a pulp with his bare hands; and your plan, is to blackmail this person? Good luck.

So it's not hard to see what's ugly and destructive about the Silk Road. Having never been interested in purchasing drugs, murder-for-hire services, guns, or anything else on the site, I had no interest in its continuation. To the extent that the world would be better off with fewer murders and illegal guns (and probably with fewer drugs as well), it's a good thing that it's gone.

But let's just pause for a moment and appreciate what a truly astonishing feat of engineering and business the Dread Pirate Roberts was able to pull off. 

This was a website that let you buy drugs off the internet and ship them to your house via the postal service. 

It did this with remarkable success, facilitating more than a million transactions between strangers. Estimates of its revenues are as high as $1.2 billion, with commissions of almost $80 million.

That's a pretty darn serious business operation right there. How many celebrated startups ever generate revenues of $1.2 billion in their first two years? Or ever?

And think about the constraints the business was operating under. 

As I wrote about in March, anonymous drug sales over the internet have perhaps the steepest challenges of information asymmetry and moral hazard of any market I can imagine. How do you stop people shipping grass clippings instead of marijuana? Or ensure that customers pay when shipments may not arrive? Or convince people to give out their postal address to strangers when ordering drugs online, not knowing whether they're sending it to a federal agent?

Here's a great essay on how they managed to solve these problems. But suffice to say, it's pretty impressive. 

This is also a business that's going to be incredibly difficult to get off the ground in the first place. Suppose you're the chief of marketing for an online drugs site. How exactly are you going to run your campaign? You can't call up Saatchi and Saatchi and arrange a billboard campaign paid from the company checking account. And who do you even contact for customer and supplier outreach? Drug sellers are somewhat cagey about putting their email addresses up to be contacted. Even if the idea of an online drug marketplace seems feasible once it's already going, it would be a nightmare trying to get it started.

What about other challenges from the business environment? If you're creating your hypothetical startup, making the AirBnB of self storage, or the Dropbox of the pets world or whatever, you might get competitors trying to undercut you, or unpredictable shifts in the regulatory environment that make it hard to compete. 

Here, you have every law enforcement agency in the world furious at your existence, sparing no expense to try to hunt you down. You need to run the entire business while being completely anonymous. Remember, this whole site was operating within plain sight of the FBI for over two years. Charles Schumer complained about it back in June 2011. The continued existence of the Silk Road was a massive embarrassment to the US Government, and hell hath no fury like the US Government scorned.

I'll say this - you don't need to like drugs at all to recognise that the Dread Pirate Roberts was a God damn genius. I wish he'd turned his efforts to something more socially useful than selling drugs online. But be that as it may, the Silk Road is one of the most remarkable startup stories in the history of the internet.

(previous Silk Road discussion here)