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The guy in the picture is Mat Best. Language... well, everything warning if you go to watch his videos.

Bakers' liberation

Inflation vs. haircut

When a country borrows more than it can repay, its creditors can lose their investment slowly or quickly:

It's easy to moralize Greece's feckless borrowing, weak tax collection and long history of default, and hey, go ahead; I won't stop you. But whatever the nation's moral failures, what we're witnessing now shows the dangers of trying to cure the problems of weak fiscal discipline with some sort of externally imposed currency regime. Greek creditors and Brussels were not the only people to joyously embrace the belief that the euro would finally force Greece to keep its financial house in order; you hear the same arguments right here at home from American gold bugs. During the ardent height of Ron Paul's popularity, I tried to explain why this doesn't work: "You don't get anything out of a gold standard that you didn't bring with you. If your government is a credible steward of the money supply, you don't need it; and if it isn't, it won't be able to stay on it long anyway."

This goes double for fiscal discipline. Moving to a fixed exchange rate protects bondholders from one specific sort of risk: the possibility that inflation will erode the real value of your bonds. But that doesn't remove the risk. It just transforms it. Now that the government can't inflate away its debt, you instead face the risk that they are going to run out of money to pay their bills and suddenly default. That's exactly what happened to Argentina, and many other nations on various other currency regimes, from the gold standard to a currency peg. The ability to inflate the currency had gone away, but the currency regime didn't fix any of the underlying institutional problems that previous governments had solved with inflation. So bondholders protected themselves from inflation, and instead took a catastrophic haircut.

In financial markets, it is easy to move risk around and change who is bearing it. On the other hand, it's very hard to actually get rid of the risk. The biggest problems come when we think we have -- when we mistake risk transformation for risk avoidance. That's what happened in 2008, and that's what happened with Greece....

Blackwater & Systems Theory

Erik Prince is working for China's African interests, and James Polous wonders what that means.

Whatever your politics, this is a story about the kinds of perils you can best grasp when you set aside a partisan policy lens and pick up the analytical frameworks offered by systems theory. Consider how the contours of our concern about Prince shift when we think of big government as a systems problem instead of an ideological one. It’s a truism that the bigger a system, the harder it falls.... When a system gets so large that its catastrophic threats become as marginal as possible, the nature of those threats becomes difficult to see, understand, and address....

The systems-theory approach to catastrophic risk is not, of course, free from strong criticism. One of the biggest names in systems theory, Nassim Taleb, has been drawn into the political controversy surrounding the potential systemic risk created by US monetary and fiscal policy. For some, there’s a lot at stake politically in theories potentially predicting that very loose money will provoke a collapse of America’s financial system (and the world’s) — or, at least, a lot of inflation.... Rather than using systems theory as a tool for predicting painful events, we should use it as a heuristic for living what Taleb calls an “antifragile” life. Unlikely as it may at first seem, there’s a real connection between the shocking events that shake a system and our personal exercise of anti-fragile habits.

I could lay out an argument trying to persuade you of this, but I think it’s ultimately more powerful to just point back to Prince. After all, his explicit rationale for his new venture is that the US, as a system, has ceased to be anti-fragile, in both political and cultural terms.

We've talked about Taleb's ideas before. I find them insightful and, generally, persuasive. Here's a place where he makes an analogy to the kinetic:

Although I was not yet familiar with gyms, my idea of knowledge was as follows. People who build their strength using these modern expensive gym machines can lift extremely large weights, show great numbers and develop impressive-looking muscles, but fail to lift a stone; they get completely hammered in a street fight by someone trained in more disorderly settings.... I've debated many economists who claim to specialize in risk and probability: when one takes them slightly outside their narrow focus, but within the discipline of probability, they fall apart, with the disconsolate face of a gym rat in front of a gangster hit man.”

There are anti-fragile ways to train the body and the mind, too. Bicep curls build big biceps, but these five exercises train main strength: the body you build will be less sculpted, but stronger throughout. Yoga builds flexibility, but jujitsu builds flexibility and fighting power. Logic, surprisingly perhaps, is highly fragile. It trains the mind to a fine degree, but strict logic turns out to be inapplicable to almost all of human life. Analogical rather than logical reasoning, rhetoric rather than analytics, this helps you grapple with life.

The American legal environment for business creates a strict and ever-changing set of rules. Many of these rules prevent business formation without great expense. Many of the changes can be existential threats to the business. They can even send you to prison. Blackwater became a political liability -- not even an enemy, just a firm the government didn't want to talk about any more -- and thus a target.

If you wanted to create an environment in which it was wise to set up American businesses for international ventures, you'd deregulate and shrink the bureaucracies that are constantly creating new regulations. You'd reduce the setup costs for a new business, and the danger that the rules might change in destructive ways. Is that what we're doing?

Love Songs, Considered

The eternal thing, the sacred thing: or, as the article puts it, the inevitable thing, the ordinary thing, the indispensable thing.

Talking About the Queen Again

Organizers said accused Charleston shooter Dylann Roof wasn’t an “isolated actor,” but a “product of a consistent pattern of state-sponsored terrorism and radicalized dehumanization in America.” The event originally was aimed at burning the Confederate flag, but later changed to focus on the stars and stripes....

“There will be no peace until we tear down this system of oppression...

"We do not believe the ideals of America are anything to be revered. We are building something that will be much better than America. While the so-called patriots yell that we should just leave, we instead choose to dream. We dream of what real freedom looks like: freedom from paramilitaries occupying our communities, beating and killing our sons and daughters; freedom from our communities being destroyed by the speculative capital of gentrification; freedom from mass surveillance; and freedom from systemic racism.

“So, we will burn the American flag, a symbol of oppression and genocide, and in the same action, dismantle our stunted, cynical expectations of what is possible in the world."

They're right, after a fashion. It was the stars and stripes that flew over the slave ships, which the Confederate Battle Flag never did. They were mostly American ships sailing out of Northern harbors, under the American flag, all the way up until Lincoln. Just ask Allen West.

It's gonna be Independence Day. At some point, maybe we need some independence from old hates. It's a bad history all the way around -- the British are no better, as they were slavers before they finished building their industrial revolution, just as the North were the leading slave traders until they had built theirs. Either we have to burn it all down, and not just the flags but the whole thing: or we've got to find a way to forgive. And forgive not each other, for none of us made this. What we've got to do, somehow, is forgive our ancestors. You have to. No matter how bad your father and mother were, no matter how bad your grandparents were, if you can't forgive them you'll always end up hating a part of yourself. Hating your country and your heritage is the same way. If you can't forgive it and find the good in it, there will always be a part of yourself that you hate too. Forgive them, and you'll find that you've freed yourself.

Minimum Wage?

How about a "state-imposed Maximum Wage?"

Of $20 a month? That's setting your sights a little low, isn't it?

"Due to the Lateness of the Hour..."

"...I don’t know that they were going to be going to church the next morning.”

Competing Brokeness

Puerto Rico and Greece. Which one will work out better, do you think?

A More Democratic and Considered Move on the Flag

Unlike last week's mad rush, the South Carolina legislature has been considering the issue with regard to the feelings of the people. And people, even those who see the flag as essentially about history and heritage, have been moved by the events and grace at Charleston.

Among whites, 39 percent said the incident made them less likely to support the flag flying at the State House while 18 percent said the incident made them more likely to support it.... The Free Times/Crantford Research poll also found that South Carolina voters are optimistic about the prospects for the shooting to bring residents closer together: 41 percent believe the incident will ultimately improve race relations, compared to 16 percent who believe it will make matters worse. Black voters were somewhat less optimistic than whites; 38 percent of African-Americans and 43 percent of whites thought the incident would lead to better race relations.

This, I think, is the best result we can get from such a tragedy. Not that everyone should come to agree that the flag is a symbol of (and only of) hatred and oppression, but that those who disagree can come to consider and respect the views of those for whom it cannot be otherwise.

The Legislature is reconvened for the debate, though early indicators suggest the votes are there.

College of Charleston political science professor Gibbs Knotts said he was a bit surprised at the strong support in the conservative Legislature to remove the flag. But he said it likely reflects a “big public shift” that has taken place recently in South Carolina...

[T]he bills are expected to be channeled through committees, potentially delaying a final vote for several weeks.

One hopes that, to some degree, the shift works in both directions. "Heritage, not hate" is a great concept as long as it's real. This offers some evidence that it is real, that where it cannot be perceived except as hate, supporters of the flag as heritage are prepared to compromise without surrendering their view. America could learn a lot from that.

UPDATE: On the other hand, there's always the vocal (and young) minority.

Iran Deal Predictions

From Havok Journal:

5) The next US President will support the deal: H + however many days until January 2017L Despite early misgivings, courtesy of freshman senator Tom Cotton (R – Arkansas), Congress has signaled that it ultimately wants the deal to go through, as long as it gets its say. This Congress is clearly looking towards the next election and what the presumptive frontrunners will want. Instead of running interference, they’ve chosen a strategy (albeit a begrudging one) of demanding transparency in exchange for support.

Even the strong conservative holdouts who famously co-signed a letter to the Majles have backed away from the opposition camp. Interestingly, the only Senator not to affirm the transparency resolution, Tom Cotton, was one of the strongest opponents of the initial deal. The resolution also gives new Senate Majority leader Mitch McConnell (R – Kentucky) an opportunity to reign in some of the rhetoric by Tea Party upstarts like Cotton. Perhaps McConnell sees a need to tone down some of the language of his fellow party members leading into 2016.

Advice for Young Men

This is not a bad piece.

I was not aware of the fedora phenomenon until I encountered the famous SlateStarCodex piece worrying over the way in which this kind of young man is being punished. Since then, I've seen a few examples of the intense mockery from young women that these young men endure. I can understand the point the author at SSC was trying to make.

That it is unkind to the young men is true, as they are as he says just trying to emulate the most courtly behaviors they have ever encountered in literature or film. Whether it is unfair to them is another question.

In any case, if you are one or know one, and don't understand the mockery, read the article. It might help you out.

Taste Test: Surströmming

A traditional Swedish dish whose name means soured herring. "As long ago as the 16th century, surströmming was supplied as army rations in the 30 years war. Swedish soldiers who did not come from the area where this was staple food, as well as foreign conscripts, refused to eat it."

If it smells so bad that people were refusing to eat it during the Thirty Years' War, it smells pretty bad.

Defiance

Sen. Cruz says that states should simply defy the Supreme Court on gay marriage. I don't see how that could possibly work out well, as it didn't even work in cases (such as segregation) in which there was intense and unified opposition to the Supreme Court's ruling among the polities of many states. The American population has responded to years of all their favorite Hollywood entertainers endorsing this, combined with years of Federal court rulings all pointing in the same direction, by shifting its opinion to support for the practice. There are probably no states that can put together the unity against gay marriage that characterized the Southern Democrats' rejection of anti-segregation rulings.

On the other hand, segregation was immoral. If this set of arguments is even close to plausible, public opinion may well shift again in the coming years. In that case, the defiant will be remembered kindly by history rather than as the bigots they are portrayed as being in the contemporary press.

Much depends on what comes next. For the moment, Sen. Cruz is taking the lead boldly down a dark road. Whether that road ends in darkness, or whether joy comes with the morning, is far from clear.

Changing Sides in the Supreme Court

In the term just ending, is it true that the liberal justices voted as a bloc, while the conservatives often voted according to their judicial philosophy instead of their party interests? Yes, according to SCOTUSblog, but only if you're talking about the most important cases:

In the 26, a Justice on the left voted with the right a total of 3 times. In 2 cases, those votes determined the outcome and produced a more conservative result, because Justice Kennedy or one of the conservatives voted for the more liberal result.

In the 26, a Justice on the right voted with the left 14 times. In 6 cases, those votes determined the outcome and produced a more liberal result, because Justice Kennedy voted for the more conservative result.

I also considered the 10 cases I consider most significant. Of those, the left prevailed in 8. Those included the first 7 of the Term. (I mention the early cases to give a sense of how the results must have appeared inside the Court as the Term went along.) The right prevailed in 2, both in the final sitting of the Term.

In the 10, no Justice on the left voted with the right; the four Justices on the left voted together in every one of those cases. A Justice on the right voted with the left 4 times. Those votes determined the outcome in 2 cases, because Justice Kennedy voted for the more conservative result.

This Is Going To Be A Problem For My Hoped-For Jim Webb Candidacy

Bernie Sanders overtaking Hillary in the Democratic primary's momentum. It's true that all my left-leaning friends are huge fans of Bernie. I've yet to find anyone else willing to consider voting for Webb: Democrats want someone farther to the left of Hillary, and Republicans want a full-time Republican.

Well, I've never picked a winner yet: why break the streak?

This Guy Really Is A Priest

It's a trivial matter, sort of, except that the event at which this dishonorable action occurred was supposed to be all about equality of human dignity. He certainly showed some dignity, though not an equality of it.

The $100 million lesson

Noah Kagan was one of the earliest employees at Facebook, but was fired before it went public.  He describes what he learned from the experience.

EPA must consider costs

Today's third opinion reverses a D.C. Circuit decision, and rules that the EPA interpreted its authorizing statute unreasonably when it concluded it need not consider costs in implementing environmental regulations concerning power plant pollutants, especially mercury. The usual suspects dissented, making it a 5-4 split. The case is captioned Michigan v. EPA but normally is referred to as "Utility Air."  The EPA will still have discretion in how to consider costs; the Court ruled, for instance, that it need not conduct a formal cost/benefit analysis, whatever that means.  We'll find out on remand, I guess.