Monthly Archives: February 2013

Never mind the AGW, here’s the real problem

We’re going to have to start setting money aside for this right now.  Fortunately, it will have a long time to accumulate interest, so we’ll have some real resources at our commend when crunch time comes.

I hope no one’s going to doubt the word of these Higgs-Boson people.  They’re real scientists, not like those dumb engineers, what do they know.  I don’t want to hear any complaints about the BBC reporter, either.  He’s just trying to make things vivid for us, because what we need is a clarion call to action.

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Rules of thumb and unreliable models

We were discussing below the scourge of U.C.H.  I am referring, of course, to the unintentionally humorous criticism by Dan Kahan of the “unreliable cognitive heuristics” of the unwashed masses.  We just cannot get them to take our word for stuff any more.  They keep relying on their guts to decide whether we’re crying wolf and trying to dazzle them with B.S.  Where’s the trust?

What’s funny is the idea that your average smart Yalie uses something better than rules of thumb to weigh essentially unquantifiable risks for political purposes.  If you’re of a rigorous turn of mind, you can get a pretty good handle on risks in repetitive situations that are susceptible to statistical analysis.  You can’t get anything like a rigorous handle on risks from models of the behavior of chaotic systems that have never met the gold standard of predictions confirmed by observations (and no fair back-fitting with previously unidentified critical factors).  The best anyone could ever get out of an emerging science of prediction is a gut feel, an instinct for where to focus future research.

Richard Feynman analyzed the failure of the Challenger shuttle.  He found that people were sharpening their pencils to an absurd degree and fooling themselves into thinking they had pinpointed risk out to a number of decimal points.  In fact, they were piling probability assumption on probability assumption, when no single assumption had a solid empirical basis:

It appears that there are enormous differences of opinion as to the probability of a failure with loss of vehicle and of human life.  The estimates range from roughly 1 in 100 to 1 in 100,000.  The higher figures come from the working engineers, and the very low figures from management.  What are the causes and consequences of this lack of agreement?  Since 1 part in 100,000 would imply that one could put a Shuttle up each day for 300 years expecting to lose only one, we could properly ask “What is the cause of management’s fantastic faith in the machinery?”

. . .

There is nothing much so wrong with this as believing the answer!  Uncertainties appear everywhere. . . .When using a mathematical model careful attention must be given to uncertainties in the model.

. . .

There was no way, without full understanding, that one could have confidence that conditions the next time might not produce erosion three times more severe than the time before.  Nevertheless, officials fooled themselves into thinking they had such understanding and confidence, in spite of the peculiar variations from case to case.  A mathematical model was made to calculate erosion.  This was a model based not on physical understanding but on empirical curve fitting.”

He concluded with one of my favorite statements, a truly reliable rule of thumb:  “For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.”

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Losing the jackpot

The conventional liberal wisdom is that the capitalist system has to be tightly controlled by a benevolent state in order to prevent the rich from getting richer and the poor from being trapped in poverty.  And yet, anyone reading this post already is more than familiar with evidence that the strongest indicator of poverty is the failure to follow a couple of basic rules:  don’t have children until you’re married, and don’t marry until you finish high school.   Most of the other things you’ll need to do will follow naturally from those humble beginnings.

Oh, but people cry, how can you understand how difficult it is for someone starting from nothing, you heartless silver-spoon types?  I think a more interesting question is how difficult it is even for someone starting with quite a lot, if he doesn’t first absorb some basic precepts for maintaining prosperity.  A case in point is NFL players who hit the jackpot.  An ESPN documentary called “Broke!” found that an astonishing 78% of NFL players go into bankruptcy within two years of retirement.  It’s not a question of never being able to earn enough money to get your head above water, quit living hand-to-mouth, and accumulate some capital for investment.  It’s more a question of learning to live within an income — any income — while taking fully into account what expenses you’re facing now and will likely face in the future.  NFL players are an exaggerated example because the money-spigot starts and stops so abruptly relatively early in life.  Few NFL stars find a lucrative second career.  But the income from their first careers is enough to support any family in security for life, with the most modest attention to simple principles.

(I encountered something new in the article:  “jock taxes.”  These are “stop-and-frisk” state income taxes levied against non-resident professionals who earn well-publicized salaries while traveling around the country.  Even if they live in states without an income tax, like Texas, they may find themselves paying as much as half a million a year in income taxes to various states where their games are scheduled.  While not an athlete, I ran into something like this years ago when I was a partner in an enterprise with offices in New York, and had to pay New York City and state income taxes that would curl your hair.  New York owes me big time.)

Immigrants from entrepreneurial cultures arrive here penniless and build good futures within one generation.  Lucky SOBs from non-entrepreneurial cultures win the lottery and still go broke in a matter of months.  Capitalism and the free market are not the culprit in poverty.  Nor is denial of access to a “good education” the issue, unless we are to imagine that American colleges routinely graduate young people with a grasp of basic economics.

There is no income, private or national, that will cover an infinite wish-list.  When budgets don’t balance, financial systems collapse, whether we’re looking at individuals or great nations.

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He’s from Yale, he must be smart

Dan Kahan of the Cultural Cognitive Project at Yale is getting very meta about the proper evidence-based approach to persuading the public that AGW-ist scientists’ conclusions are evidence-based:

Scientists and science communicators have appropriately turned to the science of science communication for guidance in overcoming public conflict over climate change.  The value of the knowledge that this science can impart, however, depends on it being used scientifically.  It is a mistake to believe that either social scientists or science communicators can intuit effective communication strategies by simply consulting compendiums of psychological mechanisms.  Social scientists have used empirical methods to identify which of the myriad mechanisms that could plausibly be responsible for public conflict over climate change actually are.  Science communicators should now use valid empirical methods to identify which plausible real-world strategies for counteracting those mechanisms actually work.  Collaboration between social scientists and communicators on evidence-based field experiments is the best means of using and expanding our knowledge of how to communicate climate science.

Whew.  I can’t help thinking if they put that much effort into ensuring that the climate science that is reaching the public is evidence-based, there wouldn’t be so much public controversy requiring a science-based approach to persuasion techniques.  In a related paper, although he makes hard work of it, Kahan admits that empirical data do not support the conclusion that conservatives are less cognitively sophisticated than liberals.  Instead, he makes the interesting finding that high cognitive scores are associated with the fervency of ideological beliefs on both sides of the political spectrum:

Seeming public apathy over climate change is often attributed to a deficit in comprehension.  The public knows too little science, it is claimed, to understand the evidence or avoid being misled.  Widespread limits on technical reasoning aggravate the problem by forcing citizens to use unreliable cognitive heuristics to assess risk.  A study conducted by the Cultural Cognition Project and published in the Journal Nature Climate Change found no support for this position.  Members of the public with the highest degrees of science literacy and technical reasoning capacity were not the most concerned about climate change.  Rather, they were the ones among whom cultural polarization was greatest.

Kahan tries hard to figure out how this could possibly mean that AGW makes the most sense, but can’t get there.  He fears that ideologues on both sides of the fence are more concerned with fitting in with their tribes than with arriving at truth; he worries about “the tragedy of the risk-taking commons” and the proper “communication” strategies that must be employed by people who know the real score.  He reluctantly concludes that no amount of “clarification” of the AGW position will bring the public around “so long as the climate-change debate continues to feature cultural meanings that divide citizens of opposing worldviews.”  He recommends, therefore, that

communicators should endeavor to create a deliberative climate in which accepting the best available science does not threaten any group’s values.  Effective strategies include use of culturally diverse communicators, whose affinity with different communities enhances their credibility, and information-framing techniques that invest policy solutions with resonances congenial to diverse groups.

And from there he’s back to the need for a “new science of science communication.”

Myself, I hypothesize that AGW science is too weak to win committed converts except among people with a strong social-justice worldview, who are drawn to the most common AGW amelioration schemes, and whose enthusiasm grows the more familiar they are with the schemes.  The suspicion that AGW is junk science in service of a social-justice political agenda, in turn, tends to turn conservatives more rabidly against the AGW hypothesis the more they investigate it.  It’s not necessarily a difference in an approach to pure science at all.  The portion of the public paying the most attention, and best equipped to evaluate the evidence, knows that the science is far from definitive, especially when you consider not only the fact that it is based on predictions generated by emerging models, but also the need to assign definitive blame to human activity and to evaluate a cost-benefit analysis of proposed remediation that itself must be based on highly speculative information.  Given that murky picture, why should it be surprising that the most educated part of the public polarizes primarily around its reaction to the proposed solutions?

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It Isn’t Science

On the whole climate change thing, as far as the science goes, my position isn’t too remarkably different from blogger friend Phil’s. I think it is perhaps measurable lately, due to our inevitably sharpening skills and technology in measuring things, that human activity is having an impact on the environment around us. But not in any way remarkably different from the effect any other species has on its environment, as the environment certainly has an effect on all those species. It is a relationship involving mutual dependence and mutual effect.

This is simply not the question crying out for resolution, I think. Or if it is, then this thing we lately call “science” is clearly not the tool to be deployed in answering it, for we lack certainty in our understanding of what the tool is. You can’t draw a straight line with a straightedge that isn’t straight, and you cannot use one enigma to resolve another. This thing we lately call “science” is different from the science I know, in two meaningful ways. First, at key points in its exercise, it is evidence-immune. Climate models assume a certain warming from carbon, this will release a certain quantity of water vapor, a climate sensitivity is presumed by which this water vapor will continue to heat things further, and by such-and-such a date the temperature will be up so-and-so degrees. It doesn’t happen, so this climate sensitivity number is re-computed with this objective in mind of “Hooray! We’re still doomed!” And so the “science” triumphs. Trouble is, it’s triumphant over reality itself, and when that is the objective then it’s not science anymore.

The other thing is, its foundations are all screwy. Real science is impure and flawed, by nature, since it is exercised by impure and flawed humans. It cannot strive toward purity, it can only strive to maintain awareness of its own flaws and find ways to tamper down the effect of those flaws. I’m hearing this phrase “peer review” thrown around quite a lot; it seems to be lost to history, that this is supposed to be peer review’s purpose, to try to sift the flaws of the human condition away from the work, and minimize the effect of the vestigial remnants that can’t be removed. This thing we lately call “science” seeks to exacerbate the effect of the flaws of the human condition. It uses peer review to keep them in. We saw this in the University of East Anglia e-mail scandal, which isn’t supposed to count anymore because…quite predictably, just like Atlas Shrugged villains…the institutions involved convened a big fancy panel which then cleared the key players of any wrongdoing.

That is, of course, what institutions always do when they prove the Conquest Rule a bit too well (#2, organizations not explicitly right-wing sooner or later become left-wing), and then get caught at it. These elements are constants in the equation. Some blue-ribbon-panel, filled with functionally anonymous VIPs in which the rest of us are supposed to place unlimited trust. Ooh, a panel! And, a clean bill of health from the panel. Well okay then, move along folks. Nothing to see here. Wouldn’t want to question the panel.

But the fact remains. You cannot settle questions in nature or anything else, using an implement to settle the questions that is, itself, questionable. I have no doubt that the climate is changing, none whatsoever. That is what it is supposed to do. Who ever said otherwise? I have a lot of doubts in some of the other things, like the tipping-point concept first and foremost. But when people use the “science” to show me I shouldn’t be questioning this or anything else, I’m noticing the differences between real science and this square-quote “science.” There’s a lot of anti-science and red-dot science involved in this weird brand of science they use. Which is to say, it’s more important to get rid of information than accumulate it, and it’s more important to figure out what’s going on by way of feeling than by way of rational thought. After a time, the only similarity I can see between real science and the “science” being used to convince me of the tipping point, or other things, is the word itself.

And it becomes unavoidable to conclude that we must be studying the wrong thing. Knowns cannot be delivered to us by way of an unknown. Can’t draw a straight line with a straightedge of questionable straightness. The science, itself, must be studied.

And based on all I’ve seen over the years, going back to the beginning of Al Gore’s crusade about this, before his vice-presidency during which time he did little or nothing about it (link goes to video that auto-plays): This doesn’t seem to be science, as we have known it and understood it through the hundreds of years before that time, but a big bundle of pathologies.

In my opinion, we are way too quick to accept the label, to trust it unconditionally. Good science doesn’t demand trust. This “science” does. Well, we should not comply. We should study the pathologies that give rise to it. We should be studying these before we find out what it has to say. We cannot depend on this new-age brand of “science” to minimize the effect of human frailty against its effectiveness in finding the right answers. Because it doesn’t believe in those frailties. First step to reducing the effect of something, is to believe it is there, and this “science” doesn’t reach that first step, so it cannot reach any subsequent one.

I have identified twelve. They are generally distinguished from one another although there are exceptions to this, in that some are strongly related, and in some places overlap considerably. Each one of the twelve could reasonably be described as a personality disorder, with greater logical defense than many other foibles and eccentricities that really are diagnosed as personality disorders. And, on a side note, that has always struck me as a bit odd and weird about the way we do things in this modern day and age: We think of things that are not disorders as disorders, and think of things that really should be considered disorders, as not disorderly. Both with mental and behavioral health, we do this.

But the following should be diagnosable. Diagnosis is the first step toward treatment. Not-diagnosing is the first step toward taking things more seriously than they should be taken, and I think that’s the mistake we’ve been making here.

1. If I can’t have it, neither can you (wealth and income)

This has long been recognized as a telltale sign of mental instability, at least since the heyday of mystery novels during which time many villains sought to eliminate their former belles who found new suitors, with the motivation of “if I can’t have you than neither can he (or anybody else).” We know this is not a proper way to think. And yet much of the global warming legislation proposed, particularly in the international accords, is based on this charter principle of “developing” nations being given waivers to pollute more than the “developed” nations. The public at large, generally, doesn’t understand how bad the situation is.

To be sure, when you start to consider the economic consequences of implementing some of the solutions proposed, it does make sense. In the same way that a waitress making minimum wage would be completely devastated if she was taxed at the same rate as a millionaire, the developing nations would be similarly devastated if called on to implement the same targets as a developed nation. But that’s just justification for the same progressive politics we see with our tax system, and in both cases, progressivism is the point: Those who have more, should be taken down a peg.

If you have tall poppy syndrome and like having it, that’s all very helpful. But let’s be honest, that has nothing to do with saving the planet. If we’re in imminent peril because “humans” have trashed the environment, we wouldn’t be starting with the objective of granting some of those humans a break. That would make no sense. But if we’re out to redistribute resources and re-align the balance of power among nations, then it would make lots of sense. Well, that’s the way climate repair is done. So what really is the mission? What really is the goal?

Climate change “science” hurts people. Because it is supposed to.

2. If I can’t have it, neither can you (sense of purpose)

Where tall-poppy syndrome has to do with taking the advantaged down a few notches, crab mentality has more to do with sharing a fate. “I don’t care whether not I live, so long as you die.” It is said that if you carry a crab to a kitchen in a bucket, you need a lid on the bucket, but if there’s more than one crab then you don’t need to worry about the lid. Every time one starts to crawl out, the others will pull him back in.

Climate change “science,” when it is channeled into political action, invariably fosters an attack on achievement itself. It seeks to elevate the cost of energy, so that it can elevate the cost of building things that help people. It does this under the guise of helping people. This is not just irony; it is derailment of the entire argument, for no responsible or effective thinking can proceed from a point where some meaningful thing is conflated with, and perceived to be identical to, its opposite. The real goal here is to equalize sense of purpose. Some people manage to have one, and some people don’t. The ones that don’t, rather than focusing their energies on coming up with one, seek to attack the productive livelihoods of others.

3. Collectivist organization (lucre)

Upton Sinclair, author of The Jungle and other works, and noted socialist candidate, hit the nail on the head here: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Ayn Rand, speaking through John Galt during the famous fifty-page speech, hit the nail on the head again: “The man who speaks to you of sacrifice speaks of slaves and masters. And intends to be master.” Climate change champions who speak of this “science,” don’t show the curiosity that is associated with real science. Their minds are all made up. They’re in the mode of “when do we get to the fun part, where I tell everyone else what to do and they go do it.” They aren’t seen wanting to learn anything, for a simple reason: They don’t want to. They intend to be the masters. They think the new world order will result in a “salary,” or some other kind of bonus or livelihood, or power.

4. Collectivist organization (creativity inhibit) (partially redundant with #2)

You can tell a lot about people by the way they observe and celebrate human achievement. We’ve got a lot of people walking around among us who make a lot of noise celebrating what key historical figures have done in the past to help us out here in the present; but, they don’t celebrate these things the way normal people do. Just as a sentence can be framed in active voice versus passive voice — “I picked up the ball” versus “The ball was picked up, by me” — inventions and discoveries can be described in the same way. The person who actually did the thing, can be singled out for emphasis, or for de-emphasis. This is essentially the difference between old and new Star Trek episodes: Captain Kirk did this, Captain Kirk did that…fast forward a hundred years, you see “The Federation” has become some umbrella corporation, existing for the purpose of removing individual identity from any notable achievement. “Starfleet scientists” came up with this or that. And you can’t go faster than Warp Five.

We don’t need to wait for the faster-than-light engines to be invented to see this in action. People are scared of individual achievement right now. They find the collectivist lifestyle to be a soothing tonic, because it dulls down the sharpness of human victory. You didn’t build that. Nobody should be able to accomplish anything unless they’re in a group effort.

For the achievements we require tomorrow, we can always count on government. Government is like Starfleet: Safely anonymous. No one individual will get the credit.

5. Turnstyle (you can’t make a living until you punch our dance card)

For centuries, it has been a human ambition we don’t like to discuss, to become a turnstyle in the middle of the linear progress of others. This pathology doesn’t seek to diminish the success of others, or to obstruct it, quite so much as to tax it. And so we have college classes that purport to enhance the future earning capacity of the students that attend them, but don’t do anything to make it happen. We have commission after commission after commission, and board after board after board, awarding and revoking licenses and certificates. These pieces of paper are tickets, in the sense that if you do not have one, then you cannot “enter.” You cannot practice. Some of them are enforced by law, and you can be arrested or fined for doing X without having Y.

For no practical purpose, since the members of the board do not have the confidence of anybody. Oh, the board does, but the people on them who make the actual decisions, do not. For the most part, nobody involved even knows their names. But their decisions are supposed to be infinitely wise, and therefore, unquestioned.

It is true that a certification process can be used to elevate quality, enhance order and diminish chaos. That has the possibility of being the intent, and also the effect. It does not necessarily follow that these are the case. Certifications can be used by big companies to keep little (newer) companies out of the market. And they can be used against the big companies, too, by their governments.

Some people are motivated by this. Obviously, if that is the motivation, it isn’t too helpful to anybody else, so it’s fair to call it out when the possibility exists.

6. Repent for the End of the World is Nigh (partially redundant with #5)

Another sad thing about human faults and frailties that we’ve seen for centuries, is this curious thing: A lot of people look forward, with breathless anticipation, to the end of the world. I mean, the imminent end of the world. Months or weeks from now. Curiously, never “sometime today” or “this coming Thursday” or anything like that. There has to be at least enough time for a media sensation to slowly build so people can become famous. It’s been going on so long that it is impossible to declare some constant window of time, since the history of “here comes the end of the world” stretches backward deep into the middle ages, and further, to when information flowed much more slowly. But throughout all that, it’s a constant that people look forward to the last page of human history being turned in the great massive book, and that they should be among the ones around to see it.

And it seems once they get that far off the beaten path, most of them continue onward to include this other vital ingredient: “We” caused it. Yes, God’s pissed at something we did, or we’ve been hurting the environment…I remember when it was we were endangering the species and doing a lot of littering, and we wouldn’t have any water to drink. Nowadays, we’re spewing stuff into the atmosphere and making it hotter.

The fear that these people don’t want to face, is this: In this massive dusty diary of human existence, from its birth to its eventual demise, we are somewhere in the middle. That notion fills them a dread they cannot even fathom, can’t keep it in their heads for a microsecond. For that means, there is nothing exceptional about us, save for the good and bad things we do. We won’t be around to sing Amen. You and I won’t be around to see the back cover slammed shut. We’re just insects, living for a season, and if we want to be immortalized as special insects then we’d better get busy.

These people fancy themselves as being imbued with some special power to appreciate human mortality, thinking themselves keenly and uniquely aware while everyone else stumbles around in ignorance, with false delusions of immunity from eventual death. The truth is the exact opposite of this.

7. Look at Me! I’m Doing Good!

Virtue junkies.

8. Look at Me! I’m Doing Good! And You’re Not! (#7 is an absolute, this is a relative)


9. Look at Me! And Stop What You’re Doing! Right Now! Do What I Say! Or We’re All Screwed!

This is the central plank of modern liberalism itself. We saw it with ObamaCare and a whole bunch of other progressive ideas throughout the last hundred years. Here, I’ll describe it, and you should take note of how detailed I can get as I describe it — and yet, you cannot tell from my detailed description exactly which legislation I have in mind, or even if I have one in mind, since it applies to all of them.

There is a plan. The plan is going to involve some benefits, along with some obligations. Those who are to enjoy the new benefits are not necessarily to be the same as those who labor under the new obligations, but that’s just the way things are going to have to be. We are all to be put under the protection, and effect, of the plan. The plan is very important. A crisis awaits if we do not implement the plan. The plan will cost, but the cost of doing nothing will be considerably greater. We must “act,” as soon as possible, and this action has to involve invoking the plan, right now. There is to be no opt-out from the plan. It must affect everybody whether they want it to or not. The plan cannot be tested out in a sandbox. It has to affect everyone, on the production floor as it were…we’re pretty sure it’s going to do what it’s supposed to do, or in any case, you should not be allowed to suggest otherwise.

Even though the plan should be imposed on everyone, only a few people among us should have any say in figuring out further details of the plan. Some people will have to leave the room, because they lack the “qualifications” to suggest anything constructive. They lack understanding, and/or sanity, and/or good pure clean motives. They should leave so we can have our grown-up talk. Yes, the plan applies to the commoners, but only the elites can say what the plan is going to be. In fact, that is most of the plan; a lot of monologuing about who can’t shape the plan. We are not allowed to point this out in mixed company lest an argument ensue, but those who have the greatest faith in the plan, seem to believe most strongly in that aspect of it. Some loathed people among us should be stripped of any & all influence, particularly with the details of this plan that has not yet been fully formed.

But on their way out of the room, could they please leave their wallets and purses behind. We like their money. Just not them.

10. It Are Science. I Talks Science. It Makes Me Teh Smarts.

In the same way a guy with a little dick feels the need to drive a big, impressive-looking, cherry-red sports car…some people feel the need to discuss scientific findings in great detail, even as they demonstrate highly questionable understanding of what those findings really mean, or of the way science really works. One wonders why they feel the need to do this. It obviously has to do with defining their identities, just like the guy with the sports car. They’re compensating for something. I don’t know what, exactly. I imagine the answer to that would vary from case to case.

11. Creation vs. Destruction

It’s easy to define this problem; it’s done through the defining. If you like to go through the motions of building something big and grand and remarkable, but can’t define what exactly it is, then you’re probably afflicted with this personality disorder. If your enemies would be able to easily define what it is you seek to destroy, and you in large part would agree with them about this, then that pretty much settles things. You would then be a destructive agent masquerading as a creative force.

There’s a lot of this going around, in this day and age. I’m not sure why. Since I’m already in trouble for using one Star Trek metaphor, I’ll dig deeper by imaging it has something to do with what Spock said in Star Trek II: The Wrath of Khan: “As a matter of cosmic history, it has always been easier to destroy than to create.”

12. I Just Like Winning Arguments

Because it’s normal, natural human behavior to want to win, and not want to lose.

It’s not normal to make that a central, primary objective though. To lust so strongly after the “me smart, you dumb, me win, you lose” thing that you support the realignment of international balances of power, toward the benefit of complete strangers, just so you can win an argument. That’s as much a personality disorder as anything else. Well, just about anything else.

Cross-posted at House of Eratosthenes and Right Wing News.

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Who put the “liar” in “liar loans”?

Megan McArdle has a fine post up at the Daily Beast on the housing market collapse. I’ve read far too much about how the big banks caused the problem. That’s true in a sense; they certainly rode a bubble all the way up, then presented us all with a scary prospect when it seemed they might all fail at once, precipitating a liquidity crisis.

But I find too few articles looking closely at how fraud happened. Most writers completely miss the function of interest rates in allocating risk in a lending market. You can stop reading right away if an author starts talking about interest rates and monthly payments that give borrowers a “fair” chance of buying the house we all think they deserve as a human right.

Likewise, there’s almost no talking to anyone who thinks that someday there’s going to be discovered a substitute for people actually repaying the debts they incur. This problem is particularly acute in the home mortgage context, because most buyers don’t seem to understand that the bank didn’t loan them a house; it loaned them cash to pay to the seller of the house. The seller walked away with the cash. The bank is out the cash. It is not fundamentally the bank’s problem if the house later drops in value, any more than the bank is entitled to a windfall if the house rockets up in price. The buyer/borrower really, truly owes the cash to the bank, even if he’s disappointed in his expectations of a flourishing housing market, even if he loses his job, and even if he has to move to another city. Am I unsympathetic to a homeowner in this situation? Of course not. But I’m not inclined to say it’s the bank’s problem to bear the cost, either. That’s just another way of saying we’re so tender-hearted that we want charity for a guy in a tough spot, but we want someone else to pay for it. (This is my nomination for the social-policy error that creates the great confusion and damage while permitting the maximum preening by people who want to look and feel altruistic at no personal expense.)

Anyway, I liked McArdle’s article because she looked carefully at the incentives for writing the garbage loans to begin with. Her commenters chimed in with more clear thinking about the incentives further down the chain of investment, all the way to the government-sponsored entities (GSEs) whose limitless appetite served as the vacuum pressure back up through the supply pipe, to the would-be homeowner.

Now, if the GSEs had been purely private investors, all that would have happened is that they would have gone broke when it turned out they had been buying garbage loans in a bubble market. But the GSEs weren’t quite private. They had powerful friends in Congress who implied all along that they could count ultimately on taxpayer bailouts, because we have to ensure stability, and everyone (in both parties) knows that homeownership is part of the American Dream. Those same friends in Congress never missed a chance to bully banks into loaning money to whatever members of their constituencies weren’t actually qualified for a big loan in the harsh light of soulless financial calculations (a/k/a “the Man”). Without the GSEs standing at the far end of the pipeline ready to soak up whatever came through the spigot, Congress would have had limited ability to force banks to make loans that were unlikely to be repaid (or to be more accurate, to buy packages of bad loans that independent “originators” put together). Yes, the banks could bundle the bad loans up and sell them off in strips to investors of greater or lesser sophistication, but the investors in turn had a big appetite only because of the GSEs standing down at the end of the pipe.

Wait, you say, wasn’t it the fault of the rating agencies? Shouldn’t they be accused of fraud for rating garbage as triple-A? Well, what are the odds they would have stuck to the triple-A ratings without the presence of the GSEs, with their implied (and later actual) taxpayer underwriting?  Look at the abuse they took when they finally started to hedge about the wisdom of giving a triple-A rating to anything that could be said to have U.S. government support.

But although this is a big, multifacted picture, the fraud element is not as complicated as much of the press over the last five years would lead you to believe. The fraud all boiled down to lying about the ability of homeowners to repay their loans. Buyers fudged their creditworthiness so they could get a loan.  Originators fudged the buyers’ creditworthiness so they could qualify the loan. When the originators sold the loans in bundles, they lied to the banks about the same thing. Buyers of the loan packages theoretically shouldn’t have lied to themselves about it, but individuals within buyer institutions had a big motive to lie to other individuals within the same institutions, to close the deal, get the annual bonus, keep the job, and so on. It wasn’t their personal money, right? And then those buyers bundled up the packages of loans and sliced them various ways and sold them again — and at that stage the same kind of lying occurred again.  By the time the pipeline had grown really long and the investment instruments had grown really intricate, investors simply persuaded themselves that the risk couldn’t possibly be that great, and boy, look at those yields!

At some point, you’re supposed to reach a buyer whose own skin is in the game, and who is motivated to stop listening to lies and stop lying to himself about whether all those homeowners could repay, because that’s what the risk boils down to at every stage in this domino structure. The beauty in this system is that you never reached that person with skin in the game until you came to the taxpayers. And then the taxpayers (not an outstanding bunch in the area of financial acuity) were persuaded that the problem lay almost anywhere you can imagine except with the practice of lying about the homeowners’ credit.  Because who wants to be mean to people who are being thrown out of their houses?

The McArdle article goes further than most, by identifying some empirical investigation into just who knew the most about homeowner creditworthiness, and how they let it affect either their willingness to close or their willingness to set a low interest rate.  She was also lucky enough to attract this intelligent commenter, “circleglider”:

People follow rules because those rules are congruent with their morals or because the risk/reward ratio of any sanction is unfavorable.

When governments regulate otherwise private economic transactions, they necessarily create principal-agent problems.  Rules – especially arbitrary ones – only exacerbate agency costs.

This is one of the many reasons why command and control economies fail.  And the diversion of ever more resources into rule enforcement is a signal step in their decline.

In those rare cases where true market failures exist, the most effective interventions are those that minimally impact incentives and consequences.  The U.S. housing finance system operates almost entirely contrary to these principals.

. . .

The vast majority of markets work just fine.  “Economic crashes” are separate from market failures and may or may not be exacerbated by them; government intervention is almost always the causative factor.  There are few true monopolies or oligopolies outside of those created by government (hint: try naming any that constitute even 10% of the U.S. economy).  Asymmetric information, while technically a type market failure, can be and is often rectified by private actors.  And by definition, the Tragedy of the Commons only occurs where market forces are not allowed to operate – otherwise, the commons could not exist.

Throughout history and across the globe today, there is an inescapable inverse relationship between economic growth rates and government interference in private economic affairs.

Most alleged market failures are simply outcomes that some person or group finds objectionable.  Indeed, some of the most often decried outcomes are those that represent markets doing what they do best — facilitating mutually beneficial trade and allocating resources to their best and highest uses. Markets are where people come together to do what they do best:  self-organize.

Those who work and live in the private economy rarely see markets fail.  Those who work and live in the public sector rarely seem them work.

This sorry spectacle should make us take especially careful note of what California public entities are getting up to lately in the way of issuing bonds.  They really need the money, and they really don’t have it.  They’ve already tried borrowing it, but they need to commandeer more than the resources of the the next few years of taxpayers.  What they really need is the resources of taxpayers forty years from now.  But they’d be thrown out of office if they tried to get next year’s taxpayers to start paying on a forty-year obligation for this year’s schools or pension obligations, so they came up with a brainstorm:  balloon bonds!  Pay nothing now, and then the payments will mushroom later, much later, don’t even worry about it.  Sound familiar?  When that structure crashes, will people remember that the problem was that the public entities should have known right from the start that they were borrowing more than they could possibly afford to repay?  Or will there be a confused scramble to sue the Big Banks that helped structure the deals?

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I Made a New Word LXII

Not too pleased with the idea of creating potentially a third thread-that-won’t-die, when I already have two. But this thing needs naming, and it needs naming rather badly:

Anti-Science (n.)

Whereas real science is a disciplined accumulation of knowledge, toward a more useful and complete understanding of the world around us, this is the exact opposite. It starts at the opposite end and runs perfectly backwards. The conclusion comes first, and then as evidence arrives it is compared to this conclusion. If the evidence doesn’t support the desired conclusion, an elaborate anti-treatise will be prepared giving reasons why the evidence has to be discarded. There is an extremely low bar of adequacy for this anti-treatise. It can be entirely an appeal to emotion, or an appeal to authority, a bunch of ad hom attacks, or it can be a complaint that some paper making entirely legitimate points was not properly “vetted” or peer-reviewed, or that its author is “on the take” from the oil companies. Or, has never written up an article that has been published in a peer-reviewed journal. But the common and indispensable element to the anti-treatise is that the problematic information has to be discarded. It is like a lawyer arguing that evidence has been contaminated and is not to be allowed in court.

By way of these anti-treatises that remove information while pretending to add it, anti-science anti-learns about nature and the world around us, by pretending to learn it. It functions exactly the same way as a sculptor creating an image of a horse by starting with a block and removing everything that doesn’t look like a horse.

The “color wheel” is never too far from my mind when I get in these arguments with liberals. When you create colors by way of pigment, you subtract some colors from solid white, to leave a residual which is the antithesis of what you’ve removed. Do it some more, and you leave a smaller residual. When you create colors by way of light, you add some colors to form others. Pigment subtracts, color adds. This turns everything around: You overlay a blue film over a yellow film you get green, so green seems to be a composite color. What a simple experiment, and what a certain result you have. It’s right in front of you, how can you deny it? But in reality it’s the yellow that is a product of the green and the red. Green is not a product, it is a primary color. Things look entirely upside-down when you take things away, as opposed to putting them together.

Now it is certainly true that in real science, certain disciplines have to be followed. That’s where a lot of the effort goes. Entire experiments have to be started over again, with their data sets thrown out, after it’s discovered something wasn’t done quite right. Anyone who’s ever conducted a phone survey, is going to understand this. It can be truly exasperating. But only in anti-science is there this obligation to pretend something never happened, when it did, and even though there is arguably some kind of tainting that happened it still means something. Only in anti-science do things start to resemble a courtroom, in which the judge sternly lectures the jury to disregard the testimony.

The Zachriel objected to my noticing that science was being hijacked, and we had this exchange:

mkfreeberg: But when the theory says something, and practical experience says the opposite, and the science starts to “preach” much like a religious order would preach, that this observed practical experience should be invalidated, discarded, discredited, nudged aside, whatever is necessary to make the dogma come out right…that is an event that has the virtue of being testable.

Zachriel: …modern climate science does not meet your definition of “faux-science”. As we said, climate scientists collect observational evidence, often under difficult conditions, work across multiple disciplines, providing important cross-checks, subject their hypotheses to rigorous empirical testing, publish for their peers, and change their positions as new data becomes available. That’s contrary to your definition.

Line by line, I demonstrated the obvious: Not a single one of these glittering-generality statements about the noble work of the climate scientists, is mutually exclusive in any way from my testable complaint about this chisel-from-the-block-of-marble anti-science, that I called “faux science.” I’m sure counterfeiters do hard work across multiple disciplines in difficult conditions, too. And yet The Zachriel came back with a mixture of squid ink and “not sure what you mean by.”

Observation to be made here — and it is meaningful, for The Zachriel are not alone in doing this, by any means — in the course of denying there is any such thing as this counterfeit science, which “proves” things by taking knowledge away instead of by gathering it…they use this process to make their point. I point out the obvious and they come up with some kind of anti-treatise to “block” the information. Starting with the block, chiseling down to the horse. In exactly the same moment, in the same sentence, as insisting that is not what the climate scientists do.

It’s like yelling into a microphone to deny the existence of microphones.

What we’re seeing practiced with anti-science is not science at all, but modern liberalism. Information is treated as a contaminant, with the weird understanding in place that true wisdom is a vestigial remnant to be left standing, like the horse, after all the undesirable knowledge has been stripped away. Yes, our friends the liberals seem to think you are wiser when you know less. And learning, therefore, is a disciplined process of forgetting. Once one achieves wisdom in this way, by forgetting enough stuff, one is supposed to see the light and spread the knowledge around, by dissuading others from ever learning in the first place, what the original “learner” spent all that effort to forget. I know. Quite bizarre. But it explains quite a few of the things they do.

Cross-posted at House of Eratosthenes.

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What else might that apply to?

My hat’s off to Michelle Rhee.  While she still identifies as a Democrat, she has taken (apparently a while back) a huge first step in seeing the 500 lb gorilla in the room when she noted that our public school system was failing students.

Here’s the question we Democrats need to ask ourselves: Are we beholden to the public school system at any cost, or are we beholden to the public school child at any cost? My loyalty and my duty will always be to the children.

Not everyone bought it. In fact, most of my Democrat friends remained adamantly opposed to vouchers. It was interesting, though: they were always opposed to the broad policy, but they could never reconcile their logic when thinking at the individual-kid level.

Talk like that is likely to get you thrown out of the party, under the bus.

If you haven’t watched Waiting for Superman, you should.

But here’s what stuck out at me in that quote.   Given the fact that they at some level know that this broad policy, however well meaning, is bad for the individual — do you think maybe they’re anywhere near the next step?  That being the realization that this might not just apply to education?

That all this talk of individual liberty isn’t just a bunch of shuck and jive by angry, racist, Bible-thumping gun-clingers?


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QUILTS #3 – Do You Lock Your Door?

Here’s a question I‘d like to see answered: when you leave your home, do you lock your door?

I can’t answer for you, but I do. The phrase, “a man’s home is his castle” certainly applies to me, and I rule here as a benevolent monarch, just as long as my wife allows me. I don’t lock up my house because I hate people, but because I want to know who is in my home. People have no right to enter my home without permission to do so.

“You’re just one of those weird types who hates people!” Ah, no, I just said I don’t. I just simply believe in boundaries, and no one should enter my home without being invited in first. Just like vampires. But if you’re invited, then you’re more than welcome in my home. Several years ago, I received a request from a friend passing through town. She wanted to know if she could crash for the night. I happily told her that she should consider herself at home, but she’d have to let herself in since we were out of the state at the time. I trusted her to be a good guest in our home and to make sure it was properly locked up once she left. She didn’t disappoint.

So you need to be invited to enter my home. I don’t care whether you come in to steal my stuff or just to clean things up, like Sue Warren.

Police in Westlake say Sue Warren of Elyria broke into a home last week and began tidying up, but she didn’t take anything. They say she then wrote out a bill for $75 on a napkin and included her name and address.

One officer says Warren told him she does it all the time. Only now, she’s in jail on a burglary charge.

Wow. Imagine being arrested for burglary, just for doing jobs that people don’t want to do. OK, that’s a little snarky, but I think you can see where I’m going. Just as my home is my castle, and I reserve the right to admit only the people I choose, this same principle extends to the borders of the United States. We have rules in place to determine who may enter and who may stay. We may choose to amend these rules, but if we simply ignore them and turn a blind eye to those who break them, it sends a clear message to scofflaws and squatters that they can trespass with impunity. If this goes on, eventually certain parts of our nation may become too dangerous for law-abiding citizens to inhabit.

Let me be clear about this: I don’t care where you came from. American citizens came from all over the world. We’re proud mutts, and most of us can trace our ancestry to half a dozen nations or more. Since America has always selected its citizens for excellence, the result has been astounding diversity, and we’re better and stronger for it. But would-be citizens have always had to go through the process of naturalization. We want more Americans, but we want them to be here legally. We welcome visitors from other nations, but they must maintain valid visas to stay here.

Bob Gorrell - Your house is my house

This Thursday will be our second Soup Night of the year. The last time we made three soups and had about ten people to gobble them up. So far we’re on track to entertain many more this time. We supply the soup at these gatherings, but people are responsible for bringing their own bowls and spoons, and maybe some bread, too. Since it was well received last time, we’ll probably continue Soup Night every month or two just because it’s fun. My wife reminds me it’s also delicious. But if we ever reach a point where total strangers start walking into my house, picking up bowls and scarfing down food like Goldilocks, we’ll stop having Soup Night.

I can’t speak for everyone, but I love guests, whether in my home or in my nation. But people who break in, regardless of their motive, get my dander up. It’s nice that some of them are cleaning up and doing chores around the place, but that doesn’t change the fact that they broke the law to get in. Such “guests” need to be shown the door. And if we lock our door at home, it makes sense to lock the nation’s door as well.

Cross-posted at The Captain’s Comments

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Me, about three weeks ago…

And that gets into a fifth perception-discrepancy that arouses conflict, the perception of time. Liberals do not view time the same way normal people do. But that is truly a post for some other day.

Looks like the time has come. The Limbaugh Letter arrived last night, and on page twelve there’s a critical review of the Affordable Care Act, starting off with some bizarre quotes like “lower costs for young adults” from an official fact sheet, “How Health Insurance Reform Will Help Young Adults.”

As we around these parts noticed last year, and many times since then, libs are awfully free and easy with that word “will”:

…[A]s humans are warming the globe, and this warming will cause disruption of agriculture, inundation and salinization of arable lands, increased desertification, mass extinction, human migration with its attendant political destablization, and as this is avoidable, most people would combine these scientific findings with their personal morality to try and find solutions, especially as those solutions are readily available, and have many other salubrious effects. But that’s just ourselves. We happen to be rather fond of the little apes you call humans. Call it a peccadillo.
[D]eveloping nations will have to learn to control their emissions too. Ignoring the legitimate concerns of each nation will never lead to joint agreement. The obvious solution is for the developed nations to develop and export new technologies to the developing world. And that is what is going to happen. However, the longer the delay, the more expensive the solutions, and the more damage done to the environment.
[T]he sooner people address the problem, the cheaper the transition and the less the damage to the environment.
The accumulation of carbon currently in the atmosphere is primarily from the U.S. and other industrialized countries, not China. China is emitting much less than the U.S. per capita.

However, all countries need to begin making the transition as soon as practical.

Like Severian said,

I’m trying to recall the last time I’ve heard a liberal say “I don’t know” about any matter of consequence. Ask ‘em where the nearest post office is or the price of rice in China, and they’ll happily admit ignorance. But ask them what we should do about genocide in Darfur, or the regulation of the entire world economy, or the navy’s defensive doctrine on the Pacific rim, and all of a sudden they’ve got all the answers…. [ellipses in original]

Of course, in a sophisticated world economy like what we have today, it is very rare that a consumer is directly involved in acquiring the thing he wants to consume. This makes it worth the effort to categories the commodities according to how much we care about the bringing, once they’ve been brought. A gold ingot or a share of stock, these things are fungible, entirely interchangeable with their equals, possessing no sentimental value. If you have the gold ingot delivered to your front door for some reason, once it’s there all you care about is that it’s there. Maybe the guy lost it while he was bringing it to you, and then found it again. As long as the delivery is made, it doesn’t matter to you. Such knowledge might affect your decision to order another ingot by the same means, but that’s out of scope, this order is complete.

French Toast isn’t like that.

A lot of other commodities are not like that. Information isn’t like that. It’s much closer to French Toast; you want to know what happened to it while it was in the process of being produced, before you consume it. It can be important.

Especially when predicting future events. The example under our inspection is health care costs being lowered. In this case, and many others, liberals are absolutely sure of what is going to happen. Health and Human Services Secretary Kathleen Sibelius demonstrated the mania anew a few weeks ago on the White House website:

January is the perfect month for looking forward to new and great things around the corner.

I’m feeling that way about the new Health Insurance Marketplace. Anticipation is building, and this month we start an important countdown, first to October 1, 2013, when open enrollment begins, and continuing on to January 1, 2014, the start of new health insurance coverage for millions of Americans…
The Marketplace will offer much more than any health insurance website you’ve used before. Insurers will compete for your business on a level playing field, with no hidden costs or misleading fine print.
There is still work to be done to make sure the insurance market works for families and small businesses. But, for millions of Americans, the time for having the affordable, quality health care coverage, security, and peace of mind they need and deserve is finally within sight.

But reality says otherwise. Note that this article is nearly three years old; we’ve had our warning for awhile now.

One of the promises of Obamacare has been that it would reduce health care costs. The day after the House passed the Senate’s version of health care reform, this headline says “Health Care Companies Pull Stock Market Higher.” Clearly, money is being bet on health care costs increasing, putting more money, not less, into the health care sector.

That should not be surprising. In a free market setting, individuals decide how much they want to spend on various services, including health care. With increasing government control, spending on health care will increasingly be a political decision, not the aggregation of individual decisions. Health care companies already have their lobbyists, who pull for more generous reimbursements. Consumers (the elderly on Medicare, the poor (and increasingly middle class) on Medicaid, etc.) will exert political pressures for more benefits. Political allocation of resources will surely increase costs.

Taxpayers won’t like the idea of higher taxes, already a part of Obamacare, so expect the bulk of the increased cost to push the budget deficit higher. Essentially, Congress has looked around the world and decided they’d like to shape our public sector to be more like Greece. At least, by not being on the leading edge here, we can see what’s coming.

The post contains a link to the original article, which doesn’t work anymore. But there are other copies lying around the Internet, like here for example. The article makes a lot of attempts to explain the stock price up-tick. It contains a lot of rosy language about a “string of improved economic reports,” which hasn’t aged very well, and there are a few litanies about uncertainty being lifted. This can have a buoyant effect on stock prices. But the logic remains: When the stock price goes up, there has to be demand. Demand means, someone is putting money in. Why would they be putting money in if they thought the industry, as a whole, was going to be sucking up less money? Is this more of the liberal fantasy about businesses being regulated into more profitable operating models, which left to their own devices, they wouldn’t be smart enough to reform on their own? Or was it a matter of these investors believing in that, and that’s why they were buying the stock?

If that’s your explanation, you can keep it. Yes, I could be wrong…but…I don’t think that’s it.

I previously identified time as one of the five pillars of STACI, the implicit guarantee that liberal ideas will always fail. Indeed, the evidence that they’re winning most-to-all of the elections lately, is our assurance that liberals never apply the same policies toward their own objectives that they insist the rest of us apply to ours. When they run political campaigns they behave like perfect little war-hawk, take-no-prisoners, “yes this IS the hill I want to die on” conservatives. I’ve often had the view that this one paragraph I scribbled together about the time thing, deserved more attention.

The future, to them, is as clear as our own past is to us. Clearer, even. There’s no Rashomon Effect; you ask a hundred liberals what the climate will do over the next century, you get back more-or-less the same answer. But the past, on Planet Liberal, is murky, much like our own future is to us. Detroit elected a bunch of lefty politicians and the place went to Hell, but of course, the truth has to be more complicated and nuanced than that — even if it isn’t. Even though, as you take the time to look into more and more metropolis cities that dogmatically elected liberals everywhere for generations at a time, the result is constant, and after a time becomes rather predictable. It doesn’t matter. Things are still foggy.

Like the narrator says at the beginning of Braveheart, “Historians from England will say I am a liar, but history is written by those who have hanged heroes…” See, that’s part of the problem. When it comes to crafting an argument, on Planet Liberal quantity trumps quality. Say it enough times from enough different directions, and after a time it becomes true that Franklin Roosevelt singlehandedly brought an end to the Great Depression. Not only that but you become an idiot, and evil too, for even daring to question it.

If I were a Republican strategist, trying to implement my doctrine of driving a wedge between liberals and casual-consumer-of-news centrists they are trying to recruit, I would concentrate my resources toward the perception-of-future thing, and away from the perception-of-past thing. Liberals muddying up the past, making simple things appear complicated and complicated things appear simple, sound like they know what they’re talking about. And the stuff they’re saying, is just repetition of what’s been heard many times before already, so it certainly sounds true. It isn’t immediately revolting to the low-information voter. The same cannot be said about the liberal waxing lyrically about future events, how it’s all going to go down. The lack of uncertainty about any of it, that thing Severian was talking about — it’s just creepy.

I believe this is the hole in their armor. Because they don’t think there’s anything wrong with this; they think they’re scoring points, coming off as confident and strong. But I think, on average, they’re freaking people out. Again, lest I be guilty of the transgression I reveal in others…I’m fully aware I could be wrong about this. But it would be nice to see it tested.

Cross-posted at House of Eratosthenes.

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