Job Creators, Two Arguments

These arguments are rather unlike one another, both in form and content. The first is easy to appreciate, brief and visual; the second takes longer, and although it's quite interesting, it deals with brushstroke versions of higher mathematics. They are both pointed in the same direction. They want a society of flourishing wealth.

The video piece is by a successful entrepreneur named Nick Hanauer, who argues that rich men (like himself) are not the real job creators at all. The last thing a business-owner wants to do is create a job, he says: he does it only when consumer demand forces him to hire on another worker. The real thing that makes for flourishing wealth is consumers, which means that you have to have enough distributed wealth to enable the flourishing.

The second article looks at the same problem -- creating a flourishing of economic activity -- from the perspective of the businesses themselves. How much are we able to understand, with our limited algorithms and processing capacity? Where we see real successes in economic flourishing comes from places where we've had leaps in the math:
ORION’s promise was and is clear: For each mile saved, per driver, per year, UPS saves $30 million. The mathematics required to arrive at some solution to the traveling salesman problem, even if approximate, is also clear. But in trying to apply this mathematics to the real world of deliveries and drivers, UPS managers needed to learn that transportation is as much about people and the unique constraints they impose, as it is about negotiating intersections and time zones. As Jeff Winters put it to me, “on the surface, it should be very easy to come up with an optimized route and give it to the driver, and you’re done. We thought that would take a year.” That was a decade ago....

For one thing, humans are irrational and prone to habit. When those habits are interrupted, interesting things happen.... People are also emotional, and it turns out an unhappy truck driver can be trouble. Modern routing models incorporate whether a truck driver is happy or not—something he may not know about himself. For example, one major trucking company that declined to be named does “predictive analysis” on when drivers are at greater risk of being involved in a crash. Not only does the company have information on how the truck is being driven—speeding, hard-braking events, rapid lane changes—but on the life of the driver. “We actually have built into the model a number of indicators that could be surrogates for dissatisfaction,” said one employee familiar with the program.
The two arguments aren't quite opposed to each other, but there's real tension between them. The first argument suggests that UPS' improvements in efficiency are in some sense harmful: they cut into the wealth of middle-class workers like the drivers and mechanics, in order to maximize concentration of wealth in the corporation. The corporation is of course turning around and re-investing much of that wealth (in projects like ORION), but that kind of investment does little for people outside the highly-educated classes.

A compromise position would be to raise taxes on the stockholders of UPS, but not on the corporation itself. That would leave the corporation with money to invest in its information improvements, while still ensuring consumers with enough wealth to buy whatever products are being efficiently distributed from factories to stores.

But a compromise is probably not wanted, because there are moral principles underlying -- and overriding -- the economic arguments. The unspoken moral principle underlying the first argument is that it's OK to take from the rich and give to the less-rich; some kind of ideal of fairness or common-good makes this something other than theft. The second argument has the unspoken moral principle that the people at UPS are working very hard to earn that $30M savings. It's their hard work that is making this possible, and it is very hard work involving the best minds and the fastest computers we know how to make. Naturally they are entitled to keep what they earn by the sweat of their brow, aren't they?

We have a fundamental disagreement on the moral principles, which means we cannot even begin to agree about what to do with the practical questions. There's some sense in which it is obviously true that you need consumers to have a consumer economy, and the first author's talk of a feedback loop between consumers and business is really right. It's likewise true that UPS is making new jobs, and better ones, in part out of the destruction of old jobs. But their efficiency is reflected in part in lower prices, which could drive job creation among small businesses that couldn't afford higher structural prices.

Could we come to a compromise? Yes; the two positions are not logically incompatible. Ought we to? People on both sides of the debate are nearly certain to answer, "No." Whether that preference for morality over wealth is praiseworthy or blameworthy, it is in fact the only point of agreement that unites us.

Avicenna's Heart Medicine

If any of you are interested in the subject of medieval medicine, you may find the journal article on Avicenna's cardiology to be fun reading.
The mentioned concept is now recognized as “drug targeting” in current medicinal sciences and is an important challenge and field of research in pharmacy. Drug targeting has its starting point just a few decades ago. whereas Avicenna considered the strategy 1000 year ago.
One of the assumptions we tend to make is that we don't need to go back to the old thinkers, at least on scientific or technical issues, because we've incorporated their learning into our own superior work. However, it's usually true that we haven't fully incorporated everything -- there remain important models and ways of thought that didn't get picked up and carried along, but which are there waiting for us to simply rediscover. It's still worth reading Avicenna on medicine, as it's still worth reading Abelard on formal logic and Plato on almost everything.

Political Electrons

A bit ago, I published on these pages an intimation of a breakthrough in quantum physics concerning the negative mass of electrons. 

Maybe not so breakthrough.  Perhaps the empirically observed impact of electrons on my mower battery flows from something else.  Herewith more on my direct observations of electron behavior and my mower's battery.

First, my initial observation, that my battery, discharging (apparently) a large number of electrons over the course of a mowing, gains significant weight, is confirmed.

Second, this time, associated with the tall and wet nature of my grass for this mowing, my battery failed to complete the task, and I had to terminate until the battery is recharged.

Plainly, the weight gain is not due to the loss of negative-mass electrons; it's due to accumulation of potfuls of normal-mass electrons.  But rather than contributing to improving the lot of the remaining electrons in the now resource-depleted battery by replenishing the battery and thereby alleviating the poverty of the electrons' environment, the accumulating electrons just sit around and commiserate with their less fortunate fellows while doing nothing at all constructive for their lot.

Just like Democrats.

Eric Hines

Detroit problem? Nothing to it

Holman Jenkins explains how the Detroit bankruptcy is racist.

Rand & Business

A site called "DeadState" -- I am not familiar with it before today -- has a post claiming that Sears was destroyed because of a CEO who decided to run it according to what he saw as Ayn Rand's principles. I'm not sure they prove their case, though. It sounds like it may be at least as true that trying to run a real business according to Wall Street principles doesn't work: Wall Street may be good at obtaining investment for businesses, and it is certainly good at digesting and re-investing resources tied up in failing businesses. It may not be very good at the long-term outlook required to sustain a successful business.
In 1977, 95 percent of distributions to shareholders came in the form of dividend payments. Today, more than half of the cash returned to shareholders of S&P 500 companies comes from buybacks instead of dividends.

Fortune magazine, in a story about what happens when Wall Street jumps into the retail business, reports that under Lampert, Sears has gone on a stock buyback spree. Between 2005 and 2011, he took what was once the company’s strong cash flow and spent $6.1 billion of it on stock buybacks. During the same time period, only $3.6 billion was spent at Sears on capital improvements. Lampert told investors that upgrades and new stores were not an “efficient” use of capital.
Sounds like a decision that focused on the stock position rather than the stores -- killing the goose that lays the golden egg, as it were.

He Was A Man You Ought To Have Known

In the last good movie but one, A Knight's Tale, a poor herald announces one of the competitors to the joust.
My Lord, the Count Adehmar, Son of Phillip DeVitry, son of Gilles... er... Master of the Free Companies, defender of his enormous manhood, a shining example of chivalry and champagne.
But the father of the man he announced was a real man, one worthy of your knowledge.

He, said to be the greatest philosopher of his age, wrote this:

Most likely he wasn't the greatest philosopher of that age, which produced many great names. But what have you done?

Biography and Philosophy, or, Action and Thought

Is it important to consider the facts of the life of a man, or just what he said and did? Or perhaps, just what he did: Facta non verba, as Eric Blair sometimes phrases it?

The question is raised in reference to Derrida, but with a passing reference to Aristotle, whom Heidegger described thus: "He was born. He thought. He died." The point is that what he thought is divorced from time and space, and to a large degree it really is: we can evaluate him and his thoughts today, and we will in doing so find them highly relevant to our very different world.

Yet that is not the only model from the ancient world. Socrates is the clear counterexample. Plato took pains to establish that he had credentials to speak on matters of virtue such as courage, as he does in the Laches. Hannah Arendt, in the last century, singled Socrates out for special praise among philosophers because he was a man who not only contemplated but did.

What do you think?

Glad I moved away

H/t Eric Kayne Photography.

Genetics and Photography

Now here's an interesting photo essay.

Questions no one should be asking

If Detroit files the inevitable bankruptcy, how in the world will it ever get back into a position to borrow massively again in the future?

Its population has shrunk from 2 million to 700,000.  It has no economic base.  Its own inhabitants are burning it down much faster than it could be rebuilt even assuming someone were trying to rebuild it.  Detroit's remaining inhabitants are refugees who just don't know it yet.

"I still don't understand what Trayvon Martin was supposed to do."

The Crimson Reach has a suggestion:  don't punch a stranger on the street.  It's not necessary to run away.  Stand your ground, if you like.  Call 911 with that phone you've been chattering into all evening.  Just don't punch the stranger, straddle him, and pound his head into the pavement.  Almost anything but that, and your chances of surviving a human contact in Racist America are excellent.

Even if you suspect he's a gay man trolling for partners, and that makes you mad.

Through the looking glass

The President asserts executive authority he doesn't have to alter the terms of a bill that Congress passed, and that he himself signed into law.  The House proposes a new bill to achieve exactly the same alteration (this time through incontestably legal means), and what does the President do?

Obviously, he threatens to veto it.

The bill, of course, is Obamacare (hey, even Harry Reid calls it that now), while the amendatory bill renders into constitutionally acceptable form the President's illegal unilateral attempt to delay the employer mandate for a year.

Nor is that all the House is up to today:  it's also considering a companion bill to delay the individual mandate for the same period.  House Democrats are working furiously to figure out how to avoid the consequences of voting either way on either bill.

Fantasy football on trial

The trial of the year for finance nerds isn't Zimmerman, it's the SEC vs. Fabrice Tourre, the young ex-Goldman Sachs rising star who had the misfortune to have used metaphors in emails to his girlfriend that were as vivid and comprehensible as the subject matter of his financial work was dull and impenetrable.

Before the Great Crash, Goldman not only traded in mortgage-backed securities but in investment vehicles called "synthetic" securities.  The securities were called "collateralized debt obligations" or CDOs, an unhelpful name that actually refers to nothing more complicated than a grab-bag of jillions of ordinary mortgages.  Packaging mortgages together like this is called "securitization," and it has the advantage of converting a pile of unique, individual, hard-to-trade mortgages into something homogeneous that can be split into standardized pieces that are more easily priced and sold.  As this helpful site explains, it's like turning irregular piles of meat and mystery bits into standardized link sausages.

So what's a "synthetic" CDO?  It bears the same relationship to an actual CDO that fantasy football bears to actual football players.  It's a bet on the performance of a list of real CDOs.   The gamblers don't buy the CDOs themselves; they simply bet on whether the whole list will increase or decrease in value.  Like every bet, it requires matching up two willing participants:  one to bet on one result, and one to bet on the opposite.

Tourre's alleged crime (actual a civil violation, which exposes him to fines and sanctions but not jail time) was to ask a hedge-fund trader to participate in the selection of the mortgage securities on which the synthetic-CDO participants would place their bets, and then fail to disclose the trader's role in the prospectus given to potential bettors.  To make matters worse, the trader then placed his own bet on the synthetic CDO--gambling that they would decrease in value--and won big time.  (Goldman itself bet on an increase in value and lost.)

It's never a good idea to fail to disclose the role of anyone involved in a deal, but I'm having real difficulty with the harm-causation theory here.  I think the idea is that the trader was particularly good at spotting which mortgages were most likely to fail, which gave him an unfair advantage; other bettors might have been unwilling to place their own bets--or might have insisted on betting the opposite way--if they had known of his involvement and his bearish stance.  On the other hand, to use the fantasy-football analogy, this was like asking a skillful scout or industry analyst to choose fantasy league players, and then allowing him to bet that the team would end up in the cellar.  Is that unfair to other bettors?  Should the other bettors be told who chose the players to include in the league, and that he intended to bet that those players would blow their season?  It's not as though he has any power to affect their games.  It's only a question of whether he's better than most at guessing how they'll play.  Perhaps to be more precise, it's a worry that he has inside knowledge of which players have been hiding an incipient knee injury or drug problem.

If you're having trouble following this scenario, you're not alone.  Apparently the judge, jury, lawyers, and witnesses are confused, too.  The SEC started out with a reasonably helpful analogy to a ship that takes on water and then sinks.  The equity investors are in the bilges.  Mezzanine investors are in steerage.  First-class passengers have the nice cabins with portholes.  When the water pours in, equity is submerged first, but if things get bad enough they are soon joined in their misery by mezzanine investors and even the masters of the universe sunning in their deck chairs.  Eventually the whole ship plunges to Davy Jones's Locker.  But then the judge, trying to be helpful, butted in with the opposite aquatic metaphor, a "waterfall."  In complex financial deals, the "waterfall" or "cascade" refers to the detailed directions for the application of income streams.  Favored investors get the first dollars, followed by junior debt, and equity gets whatever is left over.  This, of course, is the exact reverse of the doomed-ship scenario.  In the midst of this confusion, the judge reportedly asked why the prosecution's first witness had to go over the 90 minutes originally slated for his testimony, especially in view of the pole-axed expressions of the jurors.

I'm no litigation ace--much more of a back-office toiler--but even I know it's a bad idea to bore the beans out of the trier of fact.  One way or another, the prosecution and the defense had better find a way to connect all this law and evidence to something the jurors can evaluate in their guts.  The prosecution starts with an advantage, of course:  they can just keep repeating "rich people bad."  I'm guessing that the defense's best hope is for the presence of some sophisticated gamblers in the jury box.

H/t Rhymes with Cars & Girls

Fear The Gray Chili

I was amused to see the Daily Caller invoking the lair of the chili pepper. RateMyProfessors is a social media site that allows students to post comments and ratings on professors and teaching assistants at their various colleges. One of the ratings students apparently give is whether the professor is hot or not. The hot ones get red chili peppers by their ratings.

It's also worth viewing the videos at the Professors Strike Back page. Some of them are humorless, but not all.

UPDATE: "I don't like to think of myself as cruel and mean..."

Get More:

Math is harrrrrd

An amusing story about outrage based in math confusion.  How can North Carolina be 39th in wealth and 12th in child poverty?  Ummmmm. . . .

Perhaps even more interesting to me is the dim woman's initial question.  "How can it be legal to have so much poverty in such a wealthy state?" asks the financially comfortable commentator flying home to her comfortable home and job.  Oh, I don't know:  the same way it's legal for you not to have given 90% of your income to those poor kids?  The same reason Massachusetts and Connecticut (fourth and fifth in income and famously liberal) don't voluntarily send foreign aid to North Carolina?

It's a strange way to think about "poverty" and "legality."  It's always someone else's responsibility to help.  Bad, politically incorrect someone elses!  What can account for them?

Salve Regina

'Swords Against Death!', Or, 'Humanities Against the Academy!'

I don't know if they read Fritz Leiber in the English Department, but he was one of the better writers of the last century -- if you like writers who spin a good tale, have deep roots in classical and romantic material, and can build worlds and images that you will not forget. Perhaps it is better if they don't, the Wall Street Journal suggests.
Every other academic subject requires specialized knowledge and a mastery of skills and methods. Literature requires only that you be human. It does not have to be taught any more than dreaming has to be taught. Why does Hector's infant son, Astyanax, cry when he sees his father put on his helmet? All you need to understand that is a heart.

So you see, I am not making a brief against reading the classics of Western literature. Far from it.
Why does Hector's son cry?

Not staying in the car

This teen was part of the solution.

The Problem With Rewarding Novelty in Scholarship

If you want to get hired or tenure, you have to get published. If you want to get published, you need to say something novel. Thus:
No art historian has ever put forward an alchemical interpretation to the representation of St George slaying the dragon...
Indeed, I imagine not.