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Tuesday, March 31, 2009

Would the real Democratic Party please stand up?

"As Congress prepares for a crucial vote on President Obama's budget this Thursday, Republican leaders have been plotting an all-out effort to block it without offering a single specific idea of their own. But we can't allow them to obstruct progress with hollow rhetoric.

Watch this video and donate $5 or more to help us air an ad exposing the GOP's petty politics before Thursday's important vote:"

I did some work for the Obama campaign during the last election and, as a consequence, I am treated to lovely personalized spam in my Inbox from the Democratic National Committee, a group which seems to be suffering from the delusion that the last election was a vote for the Democratic party, which it most emphatically was not. In general, I ignore it (the irony pains me and the begging annoys me), shuffle it into my spam folder or read through it for a good laugh... but today the email caught me in a particularly philosophical mood, and so it made me think.

There is a peculiarity of our government that really does not make any sense. We vote for individuals, who build administrations, which either control, or are controlled by (depending on the potency of the individuals involved) a political party. Effectively we have two of these parties, ignoring the various fringe groups that muddy up the works either strategically (to draw attention to specific issues) or egotistically (Nader). These parties are the Democrats and the Republicans, and they have taken for their respective symbols a loud, stubborn, relatively inexpensive pack animal (you get what you pay for) and a fat, plodding machine that scares every other form of life away from the water hole and turns perfectly good plant matter into poop and Ivory, in order of quantity.

Setting aside the obvious parallels between their symbols and their general party lines, it is generally agreed that both parties are mostly useless, most of the time. Their hands tend to be tied by bureaucratic nonsense and their ability to change the status quo is as limited as their understanding of the forces that drive our universe. This is, of course, why the American system is so stable. For the most part you're guaranteed that things will work pretty much the way they worked last year, because the amount of red tape, ass-kissing and bribery involved in getting that semicolon in paragraph 457 changed to a dash is so monumental that you generally have about five years to prepare for whatever difference that will make in your life.

Generally, it won't make much.

This is fortunate, because when that semicolon is changed to a dash, it is generally presumed that anyone to whom that paragraph pertains will go to their local library, look up a copy of the paragraph in question that is less than 5 weeks old, double-check to make sure the semicolon has not, yet, been changed to a dash, and act accordingly when implementing whatever action (or inaction) the paragraph pertains to. This, of course, does not happen.

In reality, people generally ignore the entire body of the law, assuming that if a law exists that will screw them, the amount of time involved in toeing the line, combined with the effort invested in toeing the line, exceeds the value returned for the investment. Furthermore, it is generally impossible to accomplish anything legally, because American law is precedent-based and consequently contradicts itself rather prolifically. Laws vary state by state, even on big, obvious matters like murder, rape, arson and felony theft.

For the most part, people find that if they ignore the law, the law does them the kindness of ignoring them back, and while periodically you'll run into the bad neighbor who tickets your friends for violating the "resident parking only" areas, or calls the cops because your cocktail party has gotten too rowdy, you can pretty much safely assume that you won't be jailed for a bar-fight and your average ticket-price for ignoring all parking meters will not exceed the total price you would have paid into the meters you ignored.

All of which is a roundabout way of saying that government in America is good government precisely because it is so messy, so thick and so convoluted that you basically have to rob a bank to get a monkey on your back. The inefficiency of our government protects us, and prevents people from doing stupid things when the opportunity presents itself (Though Texas may soon prove me wrong on that count). In fairness I should note that recently, someone did rob a bank in St. Louis and so far, no monkeys have been seen riding him around.

When we vote for an individual for the role of president, however, we are effectively voting for someone to fill the only job perceived as one capable of "getting something done," and we must consider a few different matters... matters which weighed heavily in my decision to work for, and vote for, Obama.

1. Is this person capable of forming complete sentences?
-This is more important than people give it credit for. If your president is an idiot, it is generally presumed that your entire nation is an idiot, and diplomacy proceeds accordingly.
2. Does this person surround himself with people smarter than he is, or dumber?
-This is the most important thing to consider. A president is only as good as his administration, and he must demonstrate the ability to surround himself with independent thinkers. His administration should be the best of the best, whether the best agrees with him or not.
3. Does this person control his party, or does his party control him?

It is the subject of number 3 that I would like to dwell on. The chief reason I voted for Obama was that I noticed that he took control of his political party and caused it to act in a more intelligent way than it otherwise might have. However, the party was only incidental in that equation. It was a tool by which I established the quality of the man and his likely effect upon our government as a whole. The Democratic party (like the Republican party) is not an entity in which I would willingly place my trust.

The email spam is becoming bothersome.

The tone of these emails during the election was to be expected. The propaganda, the annoying turns of phrase and the anger-inducing injections of my name into every godforsaken motherfucking sentence (I can see the board meeting now... "Hey guys, I just discovered scripting! Let's beat the idea to death and then turn the remains into glue!"). I understood the rhetoric and the need for it. It was all part of the game.

The game is over. We won the game. All this rhetorical shit about our opponents' rhetoric is needless, counterproductive, and aggravating. I understand that the Democratic party wishes to milk their boy's good name for every dollar they can before his honeymoon is over (not that he got much of one of those), but I would greatly appreciate it if they could prioritize just enough to understand that there are larger issues to take care of right now, issues that can only be solved as a nation, not as a bunch of bickering idiots with delusions of grandeur who've come to believe their own propaganda.

So let me make this simple (albeit it may be too late for that). The Republicans (or Democrats, respectively) are not your enemy. Everyone wants the economic crisis to end and while the guy you're arguing with might not be right his heart is probably in the right place, so maybe you should try explaining why he's wrong instead of punching him in the nose and calling his arguments "rhetoric." If you can't explain to him why he's wrong, then either he's right or you shouldn't be the one arguing with him anyway, and should find him someone to argue against who is better informed.

We've had quite enough of this shit from both sides of the isle, thank you very much. I don't think the "change" we were looking for was a change of color from red to blue.

Tuesday, March 24, 2009

Geithner as Head Pretzel-Vendor

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." - Marcus Tullius Cicero

Maxwell and I were discussing the current state of affairs in the world, and Maxwell was trying to trying to reconcile a 'debt-consolidation' metaphor he had constructed with the latest act in The Fall of the House of Geithner, and he asked for my take on things. I really tried to avoid doing the requisite blog-post-about-the-financial-crisis, but it seems to have been unavoidable. The following, with some minor cleaning up, are my thoughts on the subject.


Eh, the initial 'bailout' was more like lending your brother money so he can buy gas to go to work, since he's short on cash at the moment. Obviously, if he can't get to work, he can't make any money, so you give him the cash, and hope he pays you back.

But, since you don't actually have the cash on hand (or rather, you do have the cash, but you already have a bunch of loans outstanding to your neighbors (i.e. China, among others), you basically take out another loan so you've still got 'enough' cash on hand. Keep in mind that, in many situations, this actually makes sense (that is, it's not quite as insane as it seems). If your brother is going to pay you back $10 (i.e. a %200 return on your investment, before adjusting for the fact that it'll take some time to get the $10), then it make sense if your neighbors are only charging you, say, %5 interest.

What's going on now, and what was proposed originally, is that your brother bought a bunch of... um... Pretzel Wagon franchises. He thought the franchises would be making him lots of money, and that he'd eventually be able to sell them, but now, because he apparently misjudged how many pretzels people can afford, the franchises are worth a lot less.

Of course, the phrase "worth a lot less" is not really true. What it means is that the franchises are making a lot less money, but your brother is claiming they're still worth, say, $100 each. He's trying to sell them, but everyone else seems to think they're worth $30, so he doesn't want to sell them. Likewise, he doesn't want to admit that they're only worth $30 ('worth X' here meaning, 'people in the market are willing to pay X for them').

Of course, the whole thing is made worse by the fact that, because your brother is worried, he's not opening new franchises, and therefore not hiring people in town, and so people in town have, on average, even less money to spend on pretzels.

So, what do you do? Well, Geithner, as well as a number of other apparently intelligent people, have decided that we're going to hold a garage sale. But not just any garage sale. Here's what we do:

You tell people that you're selling your brother's franchises (at least, the ones that aren't doing well), but that you'll loan them most of the money to buy them. So, say Bob decides that one such franchise is worth $50, but he doesn't have that kind of cash on hand. "That's ok!" you say, and lend him $44, on pretty good terms. What's more, you agree to basically agree to cover half the remaining amount, and give him $6 more, in exchange for a partial ownership in the franchise. The end result is that he ends up putting up about $6 for something (apparently) worth $50.

But this isn't as crazy as it seems -- well, not quite as crazy. First, it assumes that your brother will be ok, once he sells off the bad franchises. Of course, this plan does nothing to address the fact that your brother is apparently an idiot, or at least, managed to a make a LOT of bad calls, all at once. Second, if the $50 purchase price is 'about right' -- that is, if the Pretzel Wagon ends up making about the same amount of money as $50 spent somewhere else, say, on a Mrs. Field's franchise, would have -- then things are pretty much okay. Bob will eventually pay back the loan and you'll get repaid, plus, because of that $3 you put up, you'll end up getting a cut of the profits. Of course, if the thing fails, and Bob never pays you back, or if the franchise ended up only being worth, say, $30, then you're pretty much screwed. Bob's not too upset, especially if he manages to get out of paying back the loan, since he only lost about $3. You, on the other hand, have lost $47. And your brother, who managed to sell off a worthless piece of junk for $50, is loving the whole setup. Stupid freeloader.

Of course, there's always the opposite possibility, where the thing ends up being worth $200, in which case Bob and you are both thrilled, and, in the end, your brother isn't too upset, since he needed cash at the time, and he's just happy to be rid of the whole mess.

And, throughout all of this, your neighbors (China, et al.), are wondering if you've completely lost your mind, or if there's actually something sensible, in an odd, twisted way, about your relationship with your brother. Of course, they'll keep lending you money throughout the whole thing; you may be paying it off for the rest of your life, but they know you'll pay it off. Plus, who's gonna buy the crap at their craft store, if you and your brother are bankrupt?

-- Tiro

Monday, March 23, 2009

Put Down Your Lighters

"I never heard of an old man forgetting where he had buried his money! Old people remember what interests them: the dates fixed for their lawsuits, and the names of their debtors and creditors." - Cicero

Now hold one just a minute.

It is just me, or do other people get the sense that they've had to spend a larger share of their time talking others down from various extremist positions lately?

The concept of money is one of those deliciously complex ideas, which seems so simple at first; the fact that we use it everyday, the fact that it is so familiar, makes us forget what, exactly, we're talking about most of the time. The 'undergraduate explanation,' to borrow a phrase from one of my colleagues, is that money serves three purposes: 1) as a medium of exchange, 2) as a store of value, and 3) as a unit of account.

In other words, farmers use money because it's easier to trade dollars for haircuts than radishes, and because dollars don't go bad, unlike radishes, and because it's easier to tell others how productive your farm is in dollars, rather than in radishes.

There are, of course, other philosophical motivations for money. One of my personal favorites has always been Ayn Rand's, in Atlas Shrugged:

"When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. ... Those pieces of paper, which should have been gold, are a token of honor -- your claim upon the energy of men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money."

Of course, I do take issue with some of Rand's claims (that of a gold standard, mainly), but general point is still valid: we hold money because we believe other people will hold it as well; money has value for me, today, because it has value for others today, and tomorrow as well.

But back to the point at hand -- burning our wallets.

Maxwell brings up an important problem, one that was especially common back in the days of gold-(and other 'scarce resources)-backed currencies. The easiest way to think of it is this:

A country has a fixed amount of resources at any given time(i.e. 'stuff'), and some production technology (i.e. means to make more 'stuff') which allows for unbounded growth (i.e. over time, the amount of 'stuff' keeps going up). If the country has a fixed amount of money, each unit will become worth more over time. On the other hand, if the amount of 'stuff' goes down drastically - or if the quantity of money available drastically increases - then each unit becomes worth less.

This, in and of itself, isn't necessarily a problem. One example of this is Milton Friedman's concept of a 'helicopter drop' -- if the government were to simply give everyone more money, nothing would change, in relative terms. The price of a loaf of bread might double, but, if your salary (and the price of milk, eggs, haircuts, etc.) doubles as well, it doesn't matter.

The problem Maxwell mentions, with the candy, is an artifact of the discrete world we live in - things like indivisible units, transaction costs, and so on. Of course, there are cases in which this doesn't matter: the other major form of currency we use is electronic currency, which, theoretically, can be divided as much as we want. And, in other cases, there may be other issues: recently, there's been much discussion about retiring the penny from use in the US, with supporters claiming that the cost of producing and using the coins far outweighs the cost of potential issues (like those described above!).

Which brings us, again, back to the original point -- burning out wallets.

If there was ever a time to burn our wallets, this is most definitely NOT the time to do it. If anything, the value of the cash in your wallet may actually be going up, given current circumstances.

The concept of inflation is relatively well-known to most of us - the idea that money, over time, becomes less valuable. Intuitively, the 'inflation rate' is the rate of interest you'd have to be getting on your money for it to maintain its value over time. Usually, this is calculated using what is known as the Consumer Price Index, or CPI. The CPI is a measure of how much a 'standard bundle of goods' costs, in dollars, at some time. So, since the CPI in January of 1991 was 134.6, and in February was 134.8, we know that things 'cost more,' in a very specific, quantitative way.

So, why is this interesting right now? According to most measures, we're in a period of deflation at the moment.

In 2008, the CPI slowly crept up, from 211.080 in January, to a high of 219.964 in July. But then it began to fall, dropping to 215.303 in December. The CPI went up from January to February, but February's numbers were still a good deal lower than the peak last July, coming in at 212.193.

Now, I'm not predicting that this trend will continue, and that in a few months, $5 will buy you a new car, but I think it's safe to say that it's not quite time to reach for the lighter yet...

- Marcus Tulius Tiro

A side note: I meant to talk about more current events, and some of the other reasons (and there are many) that we shouldn't be burning our wallets (but why it might still be a good idea for Maxwell to be telling you all to do so), but I managed to get a bit off track. Hopefully, this means I'll be posting again soon!

Wisdom 11-20

11. Overkill works.

12. Never share a cockpit with someone braver than you are.

13. If everything is going according to plan, start looking for the ambush.

14. No plan survives the first contact with reality.

15. The fuse is always shorter than you think.

16. Teamwork gives the enemy someone else to shoot at.

17. The enemy diversion you are ignoring is the main attack.

18. The shortest distance between two points is always a trap.

19. Your greatest regrets will be the things you did not do.

20. Most of the things you regret not doing would have killed you or ruined your life.

Saturday, March 21, 2009

Wisdom, 1-10

Because everyone needs a dose.

1. Fly only what you can afford to lose.

2. If a fight is fair, someone did not plan well enough.

3. If you are going nowhere, be sure to travel in good company.

4. Do what you will, death will do as it wishes.

5. Truth is often sad, but there is much fun to be had in making light of it.

6. Few things are more dangerous than an incomplete education.

7. No education is ever complete.

8. Make few rules. Enforce all of them.

9. You can either learn to win, or learn not to lose. These paths lead to entirely different life experiences.

10. With enough guns, you can destroy the universe, but they will not rebuild it for you.