Biden O/U Performance Predictions

Admittedly I’m being too vague to be falsifiable, but set some agreeable terms, and I’m willing to bet (#MoneyWhereMyMouthIs #TaxOnBullshit). 

Here is a partial list of what I predict the Biden Administration's performance will be in a number of important areas. Specifically where will it outperform (Over) and where will it underperform (Under) the conventional wisdom’s current estimation. To be clear this is where it will be better/worse from my desired perspective than the conventional wisdom’s current estimation. 

For example, I think the conventional wisdom is that Biden will greatly raise personal and corporate income tax rates, increase capital gains tax rates, and restore the SALT deduction. Mostly all bad items from my perspective. I think it won't be as bad as assumed. Likewise, it is presumed that he will user in a much better world of trade and immigration policy. I think it meaningfully won't be that good. 

Over:
Taxes
Environmental regulation

Other general business regulation

Minimum wage

Under:
Trade
Immigration
Drug policy

Health regulation
COVID

Foreign policy (not including hot wars)

Police reform

On Target (bettingwise = no action):
War (actual hostilities)
Education

Demagoguery and divisive politics

A rose by any other name...

Partial list of things as they really are (these are not all original to me):

• Universities are hedge funds that run research labs and have football teams. 
• Fast food companies are real estate firms with kitchens. 
• Democracies are insurance companies with armies. 
• Public (government) schools are unions that run day care centers. 
• Police departments are unions that run protection rackets. 
• Banks are time-travel machines for assets that tax uncertainty. 
• Home Ownership is tax-sheltered/favored investment masquerading as industrious virtue. 
• Public libraries are intellectual social status symbols with warehouses. 
• Churches are mutual-aid societies that offer moral guidance and tribal solidarity. 

All Aboard!

Apropos of nothing in particular . . . 

Invest with the perspective that we are just passengers on trains. 

We are not the engineer. 

We are not a little kid laying out a model train set. 

We can choose the trains we board and the ones we avoid. 

Some are faster. Some have better safety. Some have more amenities. 

None are perfect, but some combinations are much better at getting us to our destination, and, importantly, we do not all have the same destinations. 

We cannot dictate the trains' schedules, speed, route, etc. 

We just have to accept what the trains before us are offering and decide among that option set--not an ideal, imagined one. 

We do not have to take the most popular trains if they aren't actually the right fit for us. 

Constraints are individual just like goals. For example, even though we both want to go from Los Angeles to Chicago, the Silver Streak may be best for you but not for me because I have a lot more luggage to transport and that train has limited capacity. 

It can be good to have a travel agent to help plan our trip, and a great conductor can help guide the journey. But it is us who have to decide, board, and endure the journey including if the train breaks down forcing us to find alternative options. 

Good Minds Resist Generalizing

Categorization is a natural and helpful way to navigate the world. Yet taken to an extreme it leads to very poor conclusions. Figuring out when the process is benign and helpful versus when it is harmful and nonsensical is high art--there such a fine line between essential black-and-white thinking and destructive stereotyping. 

That is one of my takeaways from listening to Kevin Dutton on The Michael Shermer Show this morning on my drive to work. I might summarize the argument as a distinction between a wise-thinking skeptic and a poor-reasoning lizard brain. 

The lizard brain wants quick, straightforward answers that cleanly divide the world into two dichotomies. It wants jointly exhaustive (all things of this type are found in this model) and mutually exclusive (all things are each in exactly one or the other of the categories). That is not how the world works of course. 

Wise-thinking skeptics adjust their conclusions and update their priors. They allow more latitude for exceptions when the stakes are higher as well as when the evidence is less clear. Consider this graphically:

The lizard brain operates along the red line increasingly generalizing for ever-more important the subject. The wise skeptic is the inverse resisting generalization increasingly as importance rises as shown in the blue line. Notice how the skeptic is not linear as well. For him magnitude matters.

I promise to try to keep this in mind as I go about thinking. 

The Five Tribes of Politics

Inspired by what Arnold Kling has taught me with his Three-Axes Model as formalized in The Three Languages of Politics, I would like to attempt to explain the actual factions in today’s political arena as defined by their constituents. The factions are:

1. Crony Capitalists (CC)
2. Labor (L)
3. Patriots (P)
4. Evangelicals (E)
5. Woke Champions (WC)

Note that to some people at least all five are boo words. I don't mean the labels to necessarily be pejoratives, but I do think it is helpful and instructive that they cut to the core of what motivates these groups. One could easily classify each as a religious movement and analyze within that framework--take that to be as innocuous or incendiary as you like.

I propose that political success (winning elections and maintaining power) largely can be explained by how well parties and candidates gain and retain the support of these constituencies. Getting the support of enough of them allows for electoral success. A key component of that is to figure out which fit together when. 

Notice that the alignments change over time as do the salient forces within each. In the time of George W. Bush the alignment was CC-P-E. During Obama’s time the Woke Champions were tame and not toxic. He enjoyed a successful alignment of CC-L-WC with meaningful support of E. I believe the Great Recession and GFC was a turning point for the CC coalition as Obama's rhetoric was reassuring and McCain seemed rudderless. This left McCain only claiming P as a solid supporting group. 

Trump shifted or enjoyed the shift to where CC-L-P-E was dominant. To the degree he lost favor with CC, perhaps a stronger group for Clinton, he gained L. Before you dismiss this, consider that it is not the CC or L leadership we are concerned with. Those overwhelmingly went to Clinton in the case of L and solidly in the case of CC. Think rather of the membership. Both CC and L share a very common motivation: protection from competition at home and abroad. One big subgroup within CC are all those whose primary political motivation is preservation if not extension of the entitlement-industrial complex (Social Security, Medicare, et al.).

Biden is the leader of CC-L with enough support from P and WC to edge out Trump. There are two ways WC should not be considered a strong faction for Biden: one, there are quite a few WC on the far right; two, he is not the ideal candidate for leftist-WC (the much bigger part of WC). If WC realizes they are on the outside looking in during the next four years, they will turn on him where currying favor with E might be his only refuge (albeit an odd and unlikely one). Notice how this largely but incompletely maps to highly-educated elites (HEEs). 

If you don't find yourself on this grid (I certainly do not), realize that it is not an exhaustive list of political alignment. You are either ignoring your true, primarily political motivations or you are not a member of the significant political class. As a live-and-let-live, small government libertarian I indeed do not have a ideological home within any of these five tribes. Hence, no politician need care about my vote. 

P.S. Yes, I have read Hidden Tribes--I do not find it compelling or complete. Among other flaws, it is two wedded to the left-right duopoly model of politics. 

Three Characters From Bewitched Have Taken Over America

I know this is a hopelessly-dated allusion, but it is important that we remember the great works of fiction and see how they are commentary on real life. 

Although Bewitched first aired a bit before my time, it was in afternoon reruns when I was in my formative grade school years. In addition to the pure entertainment value of this sitcom, it was good for a young kid to learn from some of the characters in this show. Notably, the caricatures of the Larry Tate, Gladys Kravitz, and Endora.

For those who don't know exactly what I'm talking about, let me explain. 

Larry Tate is the boss of the show's main male character, Darrin Stephens. Larry is a rudderless client yes-man obviously willing to do anything and everything a client asks no matter the cost. He will turn on a dime to agree with a client even if it awkwardly and obviously makes him contradicts himself. It is not that the customer is always right. It is that he doesn't really care about the customer's needs. He only wants the customer's business. This means he would gladly let a client make a mistake as long as it meant Larry gets the business. 

Larry Tate is seen today in all those who so willingly and easily succumb to the demands and desires of those in power and authority. Read this how you like, but I see it in those who would wear a mask in the shower if Dr. Fauci so commanded along with those who would believe aliens (space or illegals) voted repeatedly, fraudulently for Joe Biden. 

Gladys Kravitz is the nosey neighbor who thinks everyone else's business is her business. She freaks out about other people and the goings on around her on a regular basis. 

Mrs. Kravitz is seen today in every so-called Karen and other busybody who so much wants to patrol, police, and protect other people's lives. Less someone point out the gaslighting that poor Kravitz endured, I will admit that She Was Right! in her observations at least. But she was not right to be minding other people's concerns. Adults should be allowed to make their own mistakes, and we should defer to others with respect to their own choices. We likely do not know best for other people. Whether she is on the local zoning board or guiding health policy (be it for cocaine and vaccines or for social distancing and ruling business essentialness), Gladys Kravitz doesn't see it this way. 

Endora is the mother of the main character, Samantha Stephens. Endora believes herself to be quite superior to mortals. She would be quite happy to control and command all of her daughter's life as well as any others who got in her way. She wasn't always harsh about it instead using charm and seduction more often than brute force.

Endora is seen today as always in government at so many levels. She will steamroll over the lives and desires of Samantha and Darrin (people everywhere) if it serves her. She seduces the Larry Tates of the world and uses the Gladys Kravitzes of the world preying upon their respective weaknesses. The effect of government is Endora, but the composition of government is individuals. Those individuals are not fully Endora by themselves, but when good intentions are combined with poor incentives and weak principles, the outcome is Endora.

Partial List of Current Practices Future Humans Will Detest as Immoral and Indefensible

I've speculated on this before, as have others. As we sit anxiously awaiting a new year so as to put the current one behind us, this thinking is on my mind. None of these are specific to this year, but I could write and probably will write soon on my hope that many things about this year will someday (hopefully soon but unfortunately not soon enough) be thought of as abhorrent or at least a very, very poor use of cost/benefit analysis.

Here is the short but important list:

• Abortion
• Immigration restrictions (especially for those seeking to escape poverty or tyranny)
• Trade restrictions (to a lesser degree)
• Tolerance for people living (anywhere) involuntarily in a condition of (meaning without a reasonable ability to escape) extreme poverty (coupled with no acceptance for ignorance as to the solution for extreme poverty--we know how to fix this--free markets and free minds)
• Living conditions of the institutionalized elderly
• The death penalty

Short note on abortion (perhaps the most controversial item on the list): Nearly all of the arguments in favor of abortion today sound to me very similar to those arguments made contemporarily to and in apologetic memory of slavery.

It Takes a Cynic

I have long been accused of being cynical, and while I will cop to it, I have always maintained that to the degree I am it is a good thing. 

Think of it as the combination of Hanlon’s Razor and Occam’s Razor: the most obvious, self-centered explanation should be considered the most likely until reasonably ruled out. 

This point of view has its dangerous downside. Namely, one can fall into an ugly attitude or a jaded viewpoint that never sees things with an open mind. I strive to avoid this helped a lot by my natural optimism. 

When done appropriately, cynicism has great benefits. Frankly, it cuts through the crap. And it starts one out from a position of epistemic strength as it protects against the fraud of social desirability bias.

In fact I would go so far as to say any analyst worth his salt takes a cynical approach. Let your mind's eye have a cocked eyebrow--it will help keep you from being duped. 

What first got me thinking about this recently was listening to Steve Levitt's story in a recent episode of Freakanomics about advising a firm years ago regarding their advertising budget. The key part was this: 

LEVITT: They said, “Are you crazy?” It was almost if they found out they didn’t work, it was far worse for these people than it was not finding out it didn’t work. Because then they had to explain why for the last 15 years they had been wasting $200 million a year. So, they were happy to just live in a world in which as long as there were ads in every market, every Sunday, life was good.

Or when he says it more plainly in episode 2: 

LEVITT: If you think about it, no chief marketing officer is ever going to say, “Hey, I don’t know, maybe ads don’t work. Let’s just not do them and see what happens.” So, don’t get me wrong. I’m not implying that advertising doesn’t work. I’m implying that we don’t have a very good idea about how well it works.

Add to that this interesting monologue from Dave Chappelle in which he is arguing, unsuccessfully in my opinion, that we should not watch his former show on any streaming network. The part related to this post is his description of the Three-Card Monty scam and that as a analogy for how the [media] industry works. And also, this point: "Never come between a man and his meal." 

If you want to know what underlying motivation is driving a given set of actions, ask yourself first who is standing to gain (or avoid loss).

My cynical demeanor is probably why The Elephant in The Brain resonates so strongly with me. Seeing that X is not about X is a red-pill superpower. 

It is also why I see recent examples from sports like the gyrations in college football's season cancelled/starting/stopping in 2020 and Duke choosing not to play its remaining non-conference games in 2020-21 basketball season for what they are--selfish ploys by powerful vested interests.

To understand what is going on in college football right now you have to view it all through the lens of a labor dispute, cartel behavior, and game theory. COVID is pretense.

— Steve Winkler (@swinkler78) August 10, 2020

Being cynical has its challenges, but it also has its benefits that are underrated. 

Clutch Your Pearls

 

Partial list of false extreme problems government should not be attempting to “solve”:

• Gender pay gaps
• Income inequality (rather than consumption inequality which can be a real problem that government might play a helpful role in reducing)
• Regional discord, violence, and tensions abroad (this is false in that it is never so straightforward as right vs. wrong, good vs. evil)
• OPP - other people’s patriotism or lack thereof
• Overpopulation
• Student debt and higher-education financing
• Business lending in general and in crises like the COVID pandemic (SBA, Fed backstops of direct lending, et al.)
• Illegal immigration (crime risk) (economic affects)
• Tobacco use, alcohol consumption, sugar composition of food, gun ownership, use of currently illicit drugs, et al. as public health issues
• Food deserts
• Jobs lost to automation

P.S. This clip (and the entire movie) is an allegory for my view on this subject.

My Futile Desire For People To See The Truth

I strive for epistemic humility, and my practice is to consider the confidence with which I hold various beliefs. As such I truly don't hold strongly many views and am quite willing to change my mind. Once I have done the work, though, I am willing to hold a view strongly. And I love to hate conventional wisdom.

Hence, this partial list of things about which conventional wisdom is wrong and about which I very much want people to understand the actual truth. 

The formula for when conventional wisdom is held in error is a seductive, persuasive narrative coupled with readily accessible, salient anecdotes that are not indicative of the broader evidence because that broader evidence is largely obscured.

The following are all beliefs that I hold quite confidently after years of study, analysis, and thought (listed in no particular order). Note that I am still learning about these, questioning my priors, and remain willing to change my mind. It is just that the probability I assign to being wrong for these is now quite low.

• The general causes of and problems in the Great Recession as well as the housing crisis before, during, and after the Great Recession.
• The labeling asset prices as being "bubbles" (e.g., tulip mania, dotcom tech, housing markets--see above, et al.) is neither useful nor helpful. The term is loose, vague, and indeterminate. A classic case of seeming to say something, but being so obscure as to be unfalsifiable. It is the modern financial economics equivalent of blaming disease on the imbalance of humors.
• The current and historical lack of parity in college football and other sports—my first great example of things not being what is so commonly believed in the conventional wisdom. Big firms like regulation and so do big sports programs. The NCAA benefits the blue bloods at the expense of the lesser schools.
• The cause and nature of the Great Depression and the subsequent recovery (it wasn’t WWII).
• The cause and nature of long-term economic progress as told by McCloskey, et al.; the true nature of economic inequality (consumption versus income); how good things actually are and how much they have actually improved.
• The shallow and near emptiness of news journalism and that watching and reading the main-stream media is a form of entertainment done at the expense of one’s intellect.
• The immorality of conducting and impossibility of 'winning' the drug war. One can extend this to all prohibitions on victimless crimes, activities and trades done by consenting adults that are labeled crimes not because of a violation of anyone's property or personal rights but because society has deemed it taboo, immoral, or otherwise contemptible (e.g., organ sales, prostitution, price gouging, etc.). 
• The harm and unintended consequences of price controls in all there guises: minimum wages, rent controls, anti-price gouging laws, restrictions on compensating college athletes, et al.
• The injustices that exist and persist in the world, how good it could be in terms of justice and wealth for all of us, and the multiplicative benefits of free markets and free minds.
• The economics especially and general state of the science concerning environmental policy.
• The policy responses to the COVID pandemic.

I should probably take a cue from Bryan Caplan and call “Impasse” more often. It would give my head a chance to recover from its battle with the wall. 

Breaking Professions Down Into Three Essential Roles

I think one can categorize most professions into a small number of distinct roles--let's explore this idea and arbitrarily limit the number of roles to three in each case. It is my contention that few of the people practicing these professions are good at more than one role, and many are not very good at any of the roles. Consider:

• Lawyers: navigator, firefighter, bodyguard
• Financial advisors: tour guide, travel agent, psychologist
• Medical doctors: band-aids, antibiotics, placebo
• College professors: inspirational speaker, revealer of truth (model explainer), advancer of truth (researcher)
• Elementary school teachers: babysitter, basic skills tutor, etiquette shaper
• Catholic priests: moral consigliere, charity executive director, art museum curator

No One I Know Committed Voter Fraud

This is not a post about recounts and pursuit of truth. It is not a post about probability. It is a post about imagination.

I don't know 1 million people, much less 70+ million. I cannot even imagine what 1m people looks like. I've been to football games with 100,000 people. One million is like (checks notes) ten times that. 

I can imagine 1 million pieces of paper--dollar bills, pages in books, ballots, etc. 

I know some people who voted for Biden, some for Trump, and some of us (bless our hearts) who still believe in freedom who voted for Jorgensen. But remember, I don't know and cannot even imagine 1m people in any form much less 1m people who all wanted to vote for Biden (or Trump, but that isn't important right now). 

Okay, so I actually can imagine it, but it is a bit hard if I want to concretely think about 1m people showing up and filling out a ballot for Biden. It is much harder still to imagine them all showing up together at one time and doing so. 

But that is what the ballot counting looks like especially after the fact. Boom, X-thousand for Biden, Y-thousand for Trump, etc. 

I've seen enough TV to be able to imagine what a fraud looks like. I can imagine easily a vague picture of what a million or so ballot fraud looks like. Truck pulls up to the back of the warehouse, doors open and a sinister fella peeks out, coast is clear, truck gate is lifted revealing fat stacks of freshly-minted fraudulent ballots, dollies unload the loot...

Add to this that perhaps I have motivated reasoning--I would love (hypothetically) to discover that Biden "won" because of fraud. Combine that with my natural and defensible lack of imagination that millions of people see the world differently than I do and in a way that I think is very significant (it was, after all, the most important election of our lifetime). 

Do you see how it seems more likely, perhaps much more likely, that fraud is at play in the 2020 election? What is more likely, that something I can barely imagine happened or something that I can easily conceive of happened? I'm just asking questions here.

Unfortunately, "seems more likely" is equivalent to "is more likely" for many, many people. The Monte Hall problem contains an amazing paradox. The probability is dependent on the perspective of the chooser; however, the perspective that matters is not the chooser's imagined framing of the problem. It is the fact that from the perspective of the chooser and the new information he now has, the probability assignment has changed in a way for him that it has not changed for an uninformed observer--for the chooser it is 2/3 vs 1/3 (i.e., 67%/33%); for the uninformed observer it is still 50%/50%. 

Probability is in the eye of the beholder. But the beholder doesn't get to invent out of whole cloth the critical elements governing the probability (subjective though they may be).

I lied, this is a post about probability.

List of Ambivalence

 Partial list of things I am ambivalent about:

• Chick-fil-e’s Sunday Policy -- I am disappointed from the point of view as a customer; I am very much in support of their ability to choose to do this and I am impressed by the choice.
• The Trump Presidency -- not Trump himself, who I find quite objectionable. There are just some things to like and some things to very much dislike. I had the same appraisal of Obama, Bush, Clinton, . . . 
• Deplatforming by social media, other tech companies, and financial processing firms/networks -- It is certainly within their rights in almost all cases, but I am fairly sure it is not good ethically or pragmatically in all but the most isolated cases.
• Hunting -- I am not sure it is always morally objectionable, but it is often enough. 
• The National Anthem before sporting events -- Notice how we don’t see this practiced at high brow events like the philharmonic, etc.
• Separating activities, clubs, etc. by boys and girls and by men and women (e.g., Boy Scouts, Girl Scouts, Men’s Grill, Lady’s Auxillary, etc.) -- Is this socially healthy? Is it logical? I think in some cases it certainly is, but there is a slippery slope. 
• Roundabouts (aka, circle, traffic circle, road circle, rotary, rotunda, and island) -- These are unfairly criticized in many cases, but they are also irresponsibly used and often inappropriately built.

The Electoral College by Private Land Mass

One of the ways voting used to be limited was property ownership. Specifically, there were property qualifications where only property owners with sufficient holdings (along with other qualifiers like race and sex--i.e., white males) could vote. 

This got me thinking: what if the U.S. Constitution's provisions for the composition of the House of Representatives and thus that portion of the Electoral College had been designed around private land ownership rather than population?

Sooo.... I created a model for how that might look today given the amount of private land ownership by state. Now, this would have created the strong incentive to maximize private land ownership resulting in a much different picture than that below. But working with the lay of the land today, the crazy result would obviously be a huge boon to large western states and residents in them. Notice how Alaska doesn’t get a big lift and Nevada actually shrinks as a result of how much of each state is owned by the government. 

To further the thought experiment, I applied Eli Dourado's election model to see how the current Presidential election might be affected. Spoiler alert: This looks very good for Republicans.

This is a rough model—so I very well may have made mistakes. (Sources are in the linked spreadsheet.)

Oh, you left out a bunch of stuff.

The quick versus the dead. And a more complete review.

Imagine various conversations at a board of directors meeting of a major corporation. For example: Trying to save money by paying women less, trying to please customers by not hiring blacks, contemplating intellectual-property theft, discussing a new found way they can literally defraud customers, etc. These would all obviously be wrong and would not be within the scope of fiduciary duty or any reasonable ethical framework. I put cronyism in the same category. Contemplating how to get special favor and rent seeking from the government is unethical.

I've been thinking about this post for some time. It started five years ago reading this article.

Recently there have been several things that have me thinking on this again--making this as fine a time as ever to actually complete this post. 

Michael Munger has been thinking about this for some time. This EconTalk is a great discussion with him laying out the problem. And this more recent appearance on Free Thoughts is great as well. Still another discussion highlighting the nuances and difficulty of this topic is with Rebecca Henderson recently on EconTalk. 

The question that I think doesn't get asked enough is: At what point does activity like developing and utilizing business relationships, networking, and advocacy cross over to be cronyism? It is difficult to disentangle behavior and results between these two worlds. In fact people participating in the activity during or after the fact would find it quite challenging even if they could put their natural bias to the side--the bias to believe they were acting in good faith and to good ends using good information and sound logic. 

Use of other people's money is a big key, but it isn't necessarily a smoking gun. For example, Facebook uses cash (shareholder funds) to hire lobbyists to advocate for A) onerous regulations for social media companies or B) a continuation of the protections it enjoys under Section 230 of the CDA. The first case (A) is likely a blatant attempt to use the power of government to prevent startup competitors from challenging their market position. The second case (B) is likely a reasonably good protection of their shareholder's and other stakeholder's interests as well as actually a good protection of free speech and enabling force for social media in general. 

Other people's money can come not just from taxpayers and owners (shareholders in public companies most commonly but not exclusively) but from employees as well. Imagine employees of Facebook being asked to participate in a letter writing campaign to Congress. 

It is not so simple to assume that a company can or should endeavor to right the wrongs of society. Not everyone sees the problem the same way. And not everyone will agree on the means even when they agree on the side to take in the cause. I higher a business to do what they do best--make shoes, install tires, store my money, serve me food, etc. I will do my own charitable giving, thank you very much. This is one of many reasons why Friedman was right. 

How do we get out of this downward spiral? I don't believe it is easy. In fact it is quite challenging. Education and communication are likely keys. Transparency helps as well. But as long as government is both powerful and trusted, these problems will persist. 

Related: 

Just how captured is our economy?

Rent seeking: who is to blame?

The Age of Fear

We live in an era characterized by fear as a dominating narrative and influence. The beginning of this era can be formally dated to September 11, 2001, but it began developing years prior. It continued and strengthened with the Great Recession. The fear of inequality drove both the Tea Party and Occupy movements. No proposed public policy solution escapes this phenomenon.  The Patriot Act, Sarbanes Oxley, the Affordable Care Act, Dodd-Frank, Trump's immigration actions and policies, are but some of the most notable examples. The Fed along with the macroeconomics profession and finance upper echelons has so feared inflation that we regularly get stagnant and slow recoveries.

At each turn we increasingly choose safety and security over the obvious risk and potential opportunity. Insurance in all forms is overvalued and desired especially at the expense of someone else. Bastiat's apt observation that "The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else" has evolved into the state as the fictitious entity whereby everyone's risk is absorbed and destroyed at the expense of no one.

Now COVID-19 dominates our decision making. And the opportunists are always there to fulfill their portion of the bootleggers and Baptists story. 

Tyler Cowen has seen this developing for some time. We are not the little engine that could. Where are the people not just chanting but demanding that "the show MUST go on"? 

I am not arguing that fear and risk should be ignored. And it is not lost on me that our growing wealth and well being has dramatically changed the risk calculus for society--this is a good thing. But all risk analysis must be properly constructed, weighted, and continually reconsidered. Otherwise, costly errors will occur and compound.

As always, the future belongs to those willing and able to take and bear risk.

Eulogy for my father-in-law

In loving memory of Robert Douglas:

The annual Fourth of July firework show in the backyard at my house was not the most extraordinary show you’ll ever see. It featured two kids: one of them my son and one of them my father-in-law. I always thought the basic goal was to try to set my backyard on fire and at the same time joyfully attempt to see who could be rushed to the emergency room first. Of course, it was really just two pals having a great time together like they always did.

Thank you for coming today to this celebration of the life of Robert Douglas. Today we remember a man who always showed us nothing but love. A man who made up for what he didn’t possess with the gift of being there for us in countless ways. A man who was Always Present.

Always there to be a friend to his kids and especially his grandkids, Tyler, Nicholas, Eva, Max, and Elise. He wanted nothing more than to experience life with them and to be their companion. In spirit he was truly just an overgrown kid in so many good ways. He had a big imagination, playfulness, and a love for toys. So many toys. Boxes and boxes and boxes and boxes of toys. If you could think of a unique toy from history, and I mean any time in history, he had one of them. And if he had one of them, he actually had several of them. While some were in mint condition stored away waiting to one day be sold, in most cases they were not perfect. As Max liked to say, “all of papa’s stuff is just a little bit broken.” A pristine, brand-new toy right out of the box is ideal. But that is not reality. Reality is being able to play with the toy you have and use your imagination to fill in for that which is missing. Having the toy that is slightly broken is better than not having a toy at all. Being there matters. Present and imperfect is infinitely better than absent and completely gone. 

Robert was a wise man of few words. But when he spoke, it was meaningful. He had seen a lot of life. He was accomplished, well traveled, scholarly, and street smart. He was a collector of many treasures of an astonishing variety. He had an eye for quality and great instincts for trade—an arbitrageur and bargain hunter extraordinaire. Truly a renaissance man. 

He was a dreamer. His wondering, optimistic mind always hopeful for what might be next. It led him to many dead ends and dreams left unfulfilled. But it also took him on many adventures. Each one starting with little more than a hopeful destination and a willingness to try something new. Such is the life of a wandering writer, which he very literally was. He left behind many journals, poetry, screenplays, and an unfinished novel we hope to publish someday soon. 

As much as he wanted to take that trip around the world completing travels he had begun decades ago and as much as he wanted to do so many, many other things that he was not too proud to ponder aloud, economic reality constrained him. But another inertia kept him moored as well—loyalty to his children and a desire to always be a part of their lives. Always present. 

He was not ever in any way a complainer. His toleration of pain was matched with his toleration of the worst conditions. When he traveled with us on vacation, he happily would volunteer for the worst bed or couch to sleep on, the chore of babysitting at night after a long day on the beach, and any other sacrifice to make sure he was doing his part and never in the way. He had a strong desire to always be needed and helpful. This desire included small kindnesses like driving grandkids to practice and patiently keeping watch. It also included selfless acts of great generosity. When Eva’s father, Brian, was diagnosed with cancer, Robert immediately without hesitation volunteered to do anything April needed including moving to Chicago to be there directly and permanently to help. 

Robert wandered long to find a home. He served honorably in the United States Army. He worked for the U.S. Foreign Service as a translator and codebreaker. For many years he taught at various public and private schools. Entrepreneurially, he tried his hand at professional photography, one of his many skills, owning and operating a studio and engaging in many freelance projects with large clients. There were many other endeavors. All had their moments, but none were the right fit. Some combination of discontent or an itch for something new would send him along a new path.

At the age of 70 he finally found his place at All Saints Catholic School. For the first two years he taught grammar and English. This year finally and for the first time he was embarking on teaching literature, one of his many passions. He was greatly looking forward to it. This was one of his dreams coming true. 

I think he knew that he was in really bad shape this past week. He emailed April early last Friday morning saying that he was going to need help leaving school that day. Later in the emergency room she asked him why he hadn’t just asked her to come get him right away that morning. He said it was because he wanted to see all of his students before going away. We’re not sure if he meant to see them once more expecting to return after a while or one last time forever. 

The limits of life are hard. One papa only has so many chances to be with five grandchildren. Robert did the best job he could to give his time and his love to his kids and grandkids. I’d like to think that now he gets the endless pleasure of being able to be witness, to be silently present with all of his grandkids all of the time not having to make any sacrifices among them but being able to just watch them live life. He will forever be in our hearts and always present.

The Wisdom of a Small Child

From about the time he was five years old, my son Max had four favorite sayings/shouted responses: 

1. IT DOESN'T MATTER!
2. QUIT RUSHING ME!
3. QUIT WASTING MY TIME!
4. IS THAT REALLY NECESSARY? 

He always has said them emphatically and authoritatively. And he doesn't back down. 

I have had this post in my notes for years (he will soon be 11). Although I am late in posting it, it remains true and relevant today. He has added to his repertoire: 

• No, Dad, that's not how it works.
• Look, just let me do it.

He has a point in each case that I really can't argue with. In fact, these are probably phrases we should all employ more often, if only with a bit less volume. Let me explain.

It doesn't matter - this is true for most everything. I don't mean so in an extreme philosophical sense of if you take a long enough perspective, it all fades into meaninglessness. But I do mean that a longer-run and bigger-picture perspective is the right approach. Most things in the here and now just don't matter too much. Go with the flow of life. If almost every problem is essentially small, the proper response is generally essentially modest. 

Quit rushing me - this relates to most things not mattering. What is the hurry? Rushing introduces added risk of error. How often are we neglecting this cost for some illusory goal of doing it faster? If it matters, it can wait. If it needs haste, speed will naturally follow. Perhaps we who realize a particular need for urgency need to inform others who are unaware or impress upon ourselves this demand, but the slip from alert to panic is a quick one. Almost nothing is actually on fire.

Quit wasting my time - time is our most precious asset. In a sense it is essentially the true unit of account. How much time a given action or inaction requires is a very underappreciated cost. And we only vaguely are aware of the value of our own time much less the value of someone else's. Our tolerance for wasting another's time or another wasting our own should be quite low. Our tolerance and appreciation for someone guarding preciously their own time should be quite high. Be polite, but don't let time be wasted.

Is that really necessary? - If it doesn't matter (usually to a large degree) and we shouldn't be rushed and we should not waste time, this question becomes imperative. So many times were these phrases shouted back to me as I struggled to get him to put his shoes on (among so many other similar trivialities). Getting the shoes on was necessary but . . . it kinda didn't matter, I didn't need to rush him, yelling at him do it rather than helping him wasted everyone's time, and none of that was really necessary.

No, Dad, that's not how it works & Look, just let me do it - I'm glad he is outspoken and very eager to try things for himself. He will make many, MANY mistakes in this journey. But I owe it to him to allow him this dignity. 

Paul Graham offers more (better) wisdom.

What Explains The Low Death Rate of COVID-19?

Perhaps that title has you scratching your head, or perhaps it has you filled with indignant rage. In any case your first question should be: low in comparison to what? 

There is good evidence about how low the risk is for some (young especially but middle-aged and otherwise healthy in general) and how high it is for others including the very old. 

What I want to do here is put down my current assumptions about what is driving the death rate from COVID-19. These are not just subject to change, but I plan to revise my thinking (whether or not I get a chance to formally update this post or make a similar future post). I invite the reader to do the same--putting down one's thoughts in precise numbers is a very good exercise for cutting through shallow thinking.

Let's start with the assumption that everyone who gets COVID-19 will die from it and everyone will eventually get it. Let's limit this analysis to the United States. Formally stated:

probability(Death) * probability(Infection) = 100% * 100% = 100%

We know those two probabilities are not true (at least not yet!). So what is mitigating against each? Below are my thoughts on the factors reducing each including the amount they reduce the probability. Keep in mind these are for the average case. Obviously there would be greatly differing answers for various subgroups, and the answers would vary greatly over various periods such as March versus July of this year. Also note that I am simplifying the math by assuming the factors are mutually exclusive, which assumes that a factor is assigned responsibility (the associated percentage) when it is the dominant factor (e.g., While a therapy and general healthiness might help to save a given patient's life, if it was in fact the patient's own T cell immunity that was the most important factor, T cell immunity would in that case be assigned as the decisive factor.).

Limiting factors on p(Death):

1. General healthiness = 50%--which, again, is to say that general healthiness reduces the death rate by 50%.
2. Therapies (not including a vaccine) = 15%
3. T cell immunity = 15%
4. Virus weakening over time to be less potent = 10%
5. Other natural immunity = 9.5%
6. Residual (i.e., an infection does result in death) = 0.5%

(Note: I have not included a vaccine since one does not yet exist.)

Limiting factors on p(Infection):

1. Good hygiene (active resistance to introducing infection) = 20%
2. Personal preventing factors (natural resistance to infection) = 20%
3. Social distancing (voluntary & intentional as a change from baseline normal behavior) = 20%
4. Natural physical isolation = 15%
5. Virus mutating to become more/less contagious = 10%
6. Government-imposed lockdowns = 5%
7. Residual (i.e., one does become infected) = 10%

(Note: The virus mutating to become more contagious could mitigate infection if it meant a faster burnout before 100% population infection. The virus mutating to become less contagious could mitigate if it meant that it changed the baseline for the other factors such that they were now more effective.)

The product of the two residuals gives us the population death rate. 

Residual(death) * Residual(infection) = 0.5% * 10% = 0.05%

This implies I am predicting 0.05% of the U.S. population or about 165,000 people will die directly from the virus. 

The ultimate accuracy of this calculation is not in any way my aim here. Rather I want to be constructive and precise about what I believe is actually driving the pandemic outcome. So it is the list of factors, which I very well may need to revise to at least add some or clarify existing, and the percentage share contribution I assign to each.

Notice that I believe lockdowns and their ilk, which could be construed broadly as involuntary, coerced social distancing, are responsible for a very small decrease in infection rates. However, I believe they have a very large economic and human cost (reduced happiness, reduced liberty, reduced agency, reduced dignity, reduced wealth, reduced health otherwise, et al.). 

Updated (7/25/20): I am seeing more and more evidence that the IFR may be lower than my estimate of 0.5%. If so and if the death level remains where it is today (about 150,000) growing less and less, then that implies the infection rate is higher. For example, at 150,000 deaths and an IFR of 0.5%, infections would be about 30,000,000. If the IFR is 0.25%, then infections would be about 60,000,000 or about 18% of the U.S. population. As for where I am wrong in the IFR, I have no guess--even though it is a factor of 50% perhaps (0.5% should be 0.25%), MAGNITUDE MATTERS! Any single factor is in that case just slightly off to get that new residual result. As for the infection rate, I can make a meaningful guess (and so can you disagreeing with mine for sure). I would guess social distancing explains a lower amount (e.g., 20% becomes 10% or so).

Well, We're Movin' On Up

What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca Cola, and you know that the President drinks Coca Cola, Liz Taylor drinks Coca Cola, and just think, you can drink Coca Cola, too. A coke is a coke and no amount of money can get you a better coke than the one the bum on the corner is drinking. All the cokes are the same and all the cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.  –Andy Warhol

Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort. [...] [T]he capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.  –Joseph Schumpeter*

Partial list of goods and services that the Forbes 400 cannot have a better version of today than can the middle class in the U.S.—measured by quality, effectiveness, or status:

• Mobile phones
• Umbrellas
• Personal computers
• Toilet paper (notice how it required a pandemic and government intervention to make this temporarily drop off the list)
• Cloud storage
• Fast food and fast casual
• Casual clothing
• Payment processing
• Individual consumer-level tools (but not tool collections)
• Basic plumbing
• Video and music entertainment content
• Online shopping (especially important in quarantines)
• Corrective eye surgery such as LASIK
• Small package shipping speed
• Email
• All but the most exotic of beverages from bottled water to soft drinks to tea to coffee to beer to wine to liquor
• ... I could go on and on, but Qwern already has done so for me...

This shouldn't be surprising given that I am, as most of us so fortunately are, richer than Rockefeller. 

Related question: As a proportion of all goods and services available, are there more or fewer things like this today than there were 50, 100, 500, 1000, etc. years ago? I would submit that there are considerably more even with all the abundance and variety that we enjoy today. In the past the inequality separation between the super rich and the middle class (or closest approximation) was vastly larger. Add to that the fact that movement between classes was virtually impossible. It is telling that only in a modern fairy tale are lyrics like this conceivable. Today we enjoy the hockey stick of human progress.

Understanding what is going on here takes more nuance than the typical person allows. Russ Roberts has a good, short video series that explores this nuance. 

*The paper at this link, Manifesto for a Humane True Libertarianism by Deirdre McCloskey, is well worth reading. It is where I most recently read the Schumpeter quote.