This Post Is Brought To You By The Number 3

My friend George has a theory. It is a sound theory with which it is hard to argue. He says the right number of kids is two. Two makes sense, he says. Two kids makes a foursome: great for golf, easy to seat at a restaurant, comfortable to ride in the car, etc.  Two kids means it is easy for them to have their own rooms. Easy to park their cars in the driveway as they get older. 

His kids are now grown and off on their own. I think he is happy as well he should be with the choice he and his wife made. I can find no argument to make with his points. While there is evidence and argument to say he might have been happier if had crossed one more bridge, I have to agree it has worked out well for him and his family. 

All I can say is this (after the jump):

Football vs Basketball vs Soccer

Indulge me for a moment while I think a bit about the differences between these sports.

While there are plenty of fans of all three of these sports, I'm interested in thinking about why some people are strong fans of one or two but not all three. I believe quite a few people fit into this interest group. What about baseball and hockey? We'll get to that in a moment. Personally, I find football fascinating, basketball highly interesting, and soccer mildly entertaining. Wondering why got me to thinking . . .

I believe varying appreciation for these three sports ultimately comes down to a different appreciation for the marginal score--that is, the incremental or additional score. Soccer scoring is too infrequent to produce a sufficiently large enough fan interest from the marginal score alone. If you're watching soccer, it must be for more than just the occasional scoring. Basketball is on the opposite end of the spectrum where scoring is too frequent to produce a sufficiently large enough fan interest. If you're watching basketball, you must be watching it for more than just the frequent scoring. Football is in the middle where the marginal score all by itself becomes a sufficiently large driver of interest.

For these reasons we have support for soccer being called "The Beautiful Game". In basketball on the other hand fans are not looking for the marginal score; instead they're looking for the sensational score. So in a given game whether there are few points scored or many, points won't be the driver of how interesting it is the typical fan. The driver will be how many sensational plays there are from dunks to three-pointers to amazing assists. In football virtually every scoring play is an amazing sensational play. Soccer shares this quality except soccer has way too few points scored.

So, one's appreciation for each sport will relate to how one values marginal scoring--the more one values a marginal score, looks forward to the actual next score to take place, the more one will enjoy football since it offers the most value from scoring itself. As one fades from that peak, it depends on what else they look for to enjoy spectating. If one values more the flow and the back and forth of the game, one is more attracted to soccer. If one values more the impact and style of actually scoring, one leans toward basketball. Looked at this way I see golf and baseball very much like football. I see hockey (obviously, 'soccer on ice') very much like soccer as are gymnastics and wrestling. I see boxing and tennis very much like basketball (think punches equaling baskets made). More parallels could be drawn. Looking at my interest personally shows the limits of this theory. I definitely like basketball more than baseball or golf even though the latter two's close cousin, football, is king for me; so there is surely more going on to determine who is a fan of what. And I am not forgetting that some people are strong fans of all three football, basketball, and soccer.

Remember that my major implication is what type of fan is attracted to each of the three sports. It's why basketball fans may find soccer boring and soccer fans may find basketball redundant. Soccer games are usually not as close as the score would seem to indicate, and basketball fans find this particularly confusing. A lead in basketball is usually not as secure as it would seem, and for this soccer fans are confused. A football game can have nothing sensational leaving basketball fans wanting. On the other hand a football game can be filled with plays that make it seem that one team is throwing the contest. These games with too easy of scoring leave soccer fans wanting.

PS. I don't know and I don't care where Quidditch falls in this analysis.

I'm Gonna Hire You As My Latex Salesman?

I recently returned to my MBA school as a volunteer helping conduct mock interviews. The interview process at the MBA level is fairly grueling. As such, programs hope to give their graduates every advantage which primarily comes from experience. Unlike most college graduates striking out with a bachelor's degree, MBA students generally have some professional experience and in some cases quite a bit. They are hard driven people who take the process seriously.

I was happy to accommodate. But unlike the position they found themselves, highly stressed, I was totally relaxed. They had just finished a final exam that day and were now facing a potential future employer who will both grade their performance and report back to the career services staff as to how capable I feel they are as a candidate which may affect the opportunities put in front of them. I gave an honest effort to put them through the paces and provide constructive feedback. They did very well--much better than I ever did when I went through the program.

Knowing what the process was going to be, this was my fourth time to conduct mock interviews, I thought wouldn't it be fun to give the candidates absurd questions to see how they handled them. They desperately want to succeed in the interview, which means giving a convincing and meaningful answer in a confident manner. I challenged myself and some drinking buddies to come up with the most ridiculous questions we could short of the truly offensive (that would be too easy). Here is the output of our creative effort. (Note: I did not actually use any of these questions in the mock interviews, but I kind of wish I had.)


Mock Interview Questions for MBA Candidates:

Pretend you are a salesperson and convince me to purchase your soul.

Tell me what you regard as your greatest strength, so I will know how best to undermine you; tell me of your greatest fear, so I will know which I must force you to face; tell me what you cherish most, so I will know what to take from you; and tell me what you crave, so that I might deny you.*

What is the most offensive question I could ask you?

As we go through the rest of this interview I would like for you to answer each of the questions alternating between a Queen's Standard English accent and a Cockney British accent.

Solve this puzzle: There are three strands of string of varying lengths each of a different color (red, blue, and yellow) in a sealed box. You can pull only two of the strands out to compare those two for length. There is a wise man who knows the lengths of all three, but you can only ask him two questions. The questions can only be answered yes or no and he lies every fourth time he is asked a question. You are in a long line of people asking him questions about many topics and you cannot hear the other questions but you can hear the answers. You have the option to make one cut of the strand you do not pull from the box to measure making it two pieces. Describe how you can definitely determine that the red strand is longest. You have 30 seconds. Go!

Would you rather be stranded on an island where after a couple months you eventually die or wrongfully imprisoned in a maximum security facility in a foreign country where you don't speak the language and you eventually die after 20 years?

Thinking about employee morale, which is definitively more appropriate: enjoyment or pleasure?

What are three reasons Mickey Mouse would be your ideal supervisor?

Could you fire your own mother if I promised you a small bonus to do it.

Fart for me just once.

If you were to put $1 into a vending machine to purchase a $.50 item and both the item and the change dropped down to separate bins at the same time, which would you pick up first and why? I expect a thorough answer.

How big a bubble can you blow?

Describe your first haircut.

Pantomime your favorite textbook.

Give me you most fake, fake laugh.

If you were an NFL player, what are three reasons you would resent and two reasons you would not resent Major League Baseball mascots.

What is your favorite shape and why isn't your favorite shape a triangle?

Describe your ideal workday that ends with you being fired.

Give me directions to a place you've never been and don't otherwise know where it is located.

Imagine you had a twin. Now convince me I should not hire your twin.

Name seven competitive advantages of toothpicks as compared to toothfaires.

If you were to add an eighth deadly sin, what would it be?

Give my shoes a backhanded compliment.

Why didn't you bring me a gift today?



*From Darth Plagueis 

Debatable Points of View

Let me ask a straightforward question with a little setup:

• I work on the eighth floor of a building. 
• There is a lower level below street level, and the levels from the lowest are called: Lower Level, Lobby (this is the street level), 2nd-floor, 3rd-floor, etc. up to the 8th-floor.
• The stairwell in the building is a standard reversing pair with a landing in the middle (i.e., there are ten stairs and then a landing at which point one must do a 180-degree turn when walking up to then go up ten more stairs to reach the next floor).
• There is extra distance between the lobby level and the 2nd level such that in the stairwell there is a complete additional set of stairs (as if there is a story between them) one must climb when traversing between these levels.
• My question: If I begin on the lower level and walk up the stairs to my floor (the eighth floor), what is the halfway point?

Based on the first and second pieces of information, you'd calculate eight flights of stairs from the bottom up and answer "at the fourth floor". This corresponds to point A on the illustration.

If you believe that the distance matters more than the ordinal numbering, then you'd answer "at the middle landing between the third and fourth floors". This corresponds to point B on the illustration. 

If you're thinking like an economist, you'd realize that as I walk up the stairs I grow more tired. The first stair is much easier than the last. In that case you would be wise to answer something like "two-thirds or three-fourths of the way to the top". This might correspond to a point like C on the illustration.

I'm not saying any of these are the right answer, and clearly a case could be made for any. But it underscores how reasoning through an answer is as important as the answer itself--even in a seemingly straightforward, "simple math" question like this. 

So if you're standing at the Lower Level with me and I challenge you to a race "to the halfway point to my floor", you may want some clarification on the finish line. Just don't ask me where the stairs go. They go up.

What's On My DVR--listed in a very particular order.

Here is a list of comedic TV shows I am currently recording/watching listed from best to worst with commentary where I feel compelled to offer it:

1. New Girl - This show is excellent. I laugh out loud at this more than just about all the others combined. I think this show is more in the tradition of Seinfeld, the penultimate sitcom, than anything else on TV. That shouldn't necessarily be the goal for every sitcom, but that is largely because most shows cannot play in that realm. This show is definitely sponge worthy.
2. Modern Family - The ability of this show to have such a great cast of characters who have such amazing chemistry together is why it is an easy pick at the Emmy's every year. Because one should consider such things, I am 2 parts Jay Pritchett, 1.5 parts Phil Dunphy, and .5 parts of each Mitchell Pritchett and Cam Tucker.
3. (tie) Parks and Recreation/The Big Bang Theory - Both of these compete well in the Modern Family style of great chemistry among characters. If I had to break the tie, it would be tough. There is a little Sheldon in all of us; he just dares to fully express what we are all thinking. There hasn't been a stronger secondary character than Ron Swanson in decades. He is the Norm of this generation. Parks & Rec would have to get my nod to break the tie simply because it doesn't have a laugh track--I don't need to be told when to laugh . . . ironically, I am channeling Sheldon Cooper in that response. 
4. [stupid Blogger makes me do this to keep the numbering consistent]
5. Comedians In Cars Getting Coffee - Seinfeld himself couldn't out Seinfeld New Girl, but he comes close with this show. It only loosely fits in the category with these, but blurring the lines of traditional TV is what great TV has always been made of. It is Internet only, so I'm sure to get disapproving looks from Big TV. The hell with it; this one is awesome. My preferred method of viewing: with the wife, drinking bourbon, smoking cigars, in the backyard, after dark.
6. Community - I'm worried about this one. A few seasons back this would have been competing for the top slots. That said, it will have to burn me good to turn my back on it (see HIMYM below). If I know Jeff Winger, he'll have this one back challenging for that tied-up three spot by season's end.
7. Louie - About to start its fourth season in May, this one is edgy and on FX for a reason. And all that is what makes it great. This is an adult's sitcom. Grow up and watch it. It is great. Once it is in season, I may very well be reminded that it should be rated higher on this list. 
8. Family Guy - As opposed to the next show but parallel with the prior show, this one is boundary breaking. If they weren't animated characters, the very serious people wouldn't put up with such insolence. This show makes me cringe occasionally, but it makes me laugh much more often. 
9. The Middle - This is a very solid show. I'm sure it rings a bit hollow for those who aren't parents; although, I see my own parents in the characters quite a bit. As a parent, it is ridiculously on the mark. It is also fairly wholesome--add a laugh track, and this show could be right out of 1990. The fact the writers can pull this off while being consistently funny is impressive. 
10. The Simpsons - This show is still funny, but it is not laugh out loud funny any more. It is still important. Many shows on this list are. Modern Family is disarming those opposed to same-sex marriage. Comedians In Cars Getting Coffee, Louie, and Family Guy is telling it like it is. The Simpsons has been doing all that and more for 25 seasons. I'm seeing this one to the end. It has earned it and continues to deserve it.
11. How I Met Your Mother - This show has jumped the shark. No doubt about it. Do not start it unless you're going back to the beginning, in which case it is probably worth your time. It was amazing once. It is humorous still but tedious now. The flashbacks within the flashback was brilliant and well executed. The magic's gone. The veil has been pierced. We know too much and care too little. I think they let it slip when they made Barney a real person--put him on the straight and narrow. The problem is they sent him there and then brought him back and then sent him again, which is where he needs to go eventually with Robin. But there has been a little too much misdirection. This is true of Ted and the quest to meet the mother as well. We've been too close one too many times. I feel like I have whiplash. The twists and turns were great and made the show, but at some point I just want off the rollercoaster. 

In the non-comedy category I am almost caught up with the epic Boardwalk Empire. I can't say enough about how good this drama is. I've been reading Daniel Okrent's Last Call coincidentally during this time. The TV show's ability to capture the history and the drama of the era is remarkable. While I didn't see it from the beginning but may go back and start, I have been watching Mad Men recently. If they gave awards for really good dramas, it would probably win a lot . . . oh, wait.

Shows I plan on starting from the beginning:

• Downton Abbey - actually I have seen the first two episodes
• Breaking Bad
• The Americans
• The Goldbergs - actually I might only pick it up where it lies

Ranking College Football Programs

If nothing else, sports enthusiasm is great for generating passionate debate about esoteric topics and hypothetical arguments. Within this realm lies the ever popular, hair-splitting activity of determining who is the greatest of all time. And college football is perhaps the most well attended of these masters of the universe feuds--for there can be only one.

You don't have to search for long to find many lists each with there own methodology. Here is one. Here is another. Here yet another. These all came from a quick Google search and all happen to have the Sooners at the top, but you probably can find lists with different results. 

Thinking about this topic myself but trying not to take too seriously any particular method of ranking (including my own), I have developed a ranking that is different from any I've ever come across. However, I believe it is more elegant and more defensible. My method uses historical average margin of victory to determine who's better, who's best. 

The reason this method may have a lot of credence is margin of victory (MoV) is a powerful determinant in predicting college football outcomes. In fact a simple MoV model adjusted for field neutrality can explain about 63% of the outcome in a typical FBS college football game. Keep in mind that this is not just predicting who will win but also by how much.*

So what did I do? Using the amazing data source from James Howell's page along with some supplemental data from the NCAA and College Football Stats, I compiled all the scores from all the college football games involving a Division I-A school for the past 43 years. Why start in 1970? Because that is when I started . . . but there is some foundation as that is around the beginning of the modern era of college football. Around that time saw the evolution of dynamic offensive strategies, the rise and proliferation of black athletes, the end of one platoon football (1966), and the beginnings of a more intrusive NCAA in the name of competitiveness. 

The results:

Since 1970, Nebraska is the clear leader. 

I include it through the top 26 since some would want to exclude Boise State from the rankings due to limited games played in the top level of college football.

Since 1998 (the BCS era):

Check out the workbook for yourself tweaking the constraints as you see fit. You can change the time period examined, the minimum number of games played to be included in the rankings, and the statistic you wish to sort by. 

*The out of sample prediction accuracy falls off some and the magnitude of the variance of outcomes matters such that the ability for such a model to beat Vegas (>~53% necessary prediction accuracy against the spread) is low (actual prediction accuracy ATS of between 51%-58%). 

Highly linkable

What a country!

I've suspected this for some time, and I don't think it will be very controversial before too long except maybe among old-timers.

Mungowitz at KPC had a couple of very good ones worth reposting. Here is the first--graffiti unchained. Here is the second--close calls.

A few years back I did a 180 on antibacterial soaps, et al. because of reading and learning and doing some thinking about what makes the most sense biologically/evolutionarily. Megan McArdle has more to that end. (If I had been doing it back then, this could have been the fulfillment of my continual New Year's Resolution.)

Here is a very good summary on why we MUST END the senseless, horrific war on drugs.

I want to go to there.

I, for one, welcome our new robot overlords

This article (HT: Tyler Cowen) got me to thinking about the coming dystopia where the robots take our jobs, eat us, etc. As bad as it will be, we are bound and determined to bring on the singularity . . . So, what to do about it or rather how to do it right?

What if we put sufficient distance between us and the new life form and shrouded its creation in enough mystery that they wouldn't come looking for us? And what if we still had some method of observing them unbeknownst to them and perhaps an ability to interact in their world--affect change here and there? Not a lot, just when they needed a miracle or a little sign they weren't alone.

Yes, this isn't exactly what the singularity is all about, but I'm just spitballing here.

WWCF: Computerless companies or Flipped companies?

Which will come first?

 Most major U.S. corporations do not have company-owned personal computers 

or
Most major U.S. corporations have "flipped" the work week

Here is some explanation. My prediction is that at some point in the future many firms will find it unnecessary and undesirable to have the firm own and maintain computer hardware for individual employees. Instead the firm will just have some company servers hosting software/apps/websites that employees can tap into to do their job using a computer device(s) they own themselves. With technology ownership comes the burdens of keeping the technology running and safe. And increasingly employees use the technology for personal purposes blurring the lines between who that machine really serves. In fact many if not most are already practicing BYOD(evice) through smart phones and tablets. It seems it is just a matter of time before a company's technological connection with employees is more like the current connection between companies and customers. 

For this half of the WWCF to come first, we need to see a majority of major U.S. corporations adopt this policy on near company-wide scales. And this might be close at hand. IBM is offering advice on the idea. And reading between the lines of a few studies suggests we all but may already have a winner. These seem premature. I think for this to be fully achieved we would need a bit of a cultural change--employees will need to see not having their own computer/device(s) used as the way to connect to the firm and do their jobs as an antiquated concept. We are not quite there yet.

As for a "flipped" work week, I am referring to the idea that workers have fewer days in the office than days out of the office. This might mean workers would do the bulk of their work away from the office, or this might mean just a few highly concentrated days of uninterrupted work surrounded by multiple leisure days. In any event less time spent in the office leads economist David Levinson to believe we are nearing the end of auto traffic (and while we're off on this tangent, here is Reihan Salam's take on Levinson's vision). But back to the point. While I agree this indeed is a trend, I'm not sure Levinson's quick timeline is accurate. All the more so since a majority of major U.S. corporations is the benchmark. 

Getting there in either case means fighting against culture, bureaucracy, and conventional wisdom not the least of which includes that which has worked should not be hastily disregarded. In my estimate these inertial forces push back our winner until after 2033 (20 years from today). And I think BYOD will be the winner. Both the firm and the employee will tend to like this outcome. As for being at the office, it's an increasingly nice prison. And from the firm's perspective, the power of "being there" is real and difficult to replace. You can ask the gardener to bring his own shovel, but you can't ask him to weed from home.

Highly linkable

Back from bi-coastal travel with a backlog of blogs to write. Let's start with some links to get us caught up:

What is probably most amazing about this is that we don't find it as amazing as it is. (HT: Steven Landsburg)

Art Carden is demanding action "FOR THE CHILDREN" a la, Helen Lovejoy, in this first of what will perhaps become an on-going series (there have been three posts in this meme so far).

The United States is incredibly and perhaps paradoxically wealthy.

Caplan shows how Game of Thrones makes the case for pacifism.

The EA Sports proposed settlement in the on-going legal battle between college players and the NCAA cartel is a both a win for the players as well as a win for consumers as pointed out by Sports Law Blog's Rick Karcher. Probability of a strike or other work-stoppage demonstration is rising. A couple of years ago it was rumoured that a team in the NCAA March Madness tournament was planning on a demonstration including perhaps refusal to play if they made the Final Four. The team was eliminated in the Elite Eight round.

Posts like this one make me understand why I relate to Scott Sumner. Perhaps I should discount somewhat my agreement with his views on monetary policy fearing I have an unconscious bias.

Is the magnitude of U.S. gun violence evidence of civil war warranting international intervention? I think not so much. This article is hyperbolic and the arguments within fallacious I believe.  I found the biggest problem with the lumping of suicide deaths by firearms, accident deaths, and violent crime deaths. Those are quite different subjects. Attacking firearms is attacking the particular method and not the underlying conditions. Crimes aided by guns and accidents are the cost side. The benefit side, crimes reduced or prevented (including government-committed) and the joy of gun ownership, is completely ignored. But the article was thought-provoking, nonetheless.

Highly linkable

Google, the great disruptor, is at it again this time targeting TV.

All those beauty queens may finally get their wish.

This one from Megan McArdle is heavyweight great. Far too often the simplistic analysis of policy advocates fails miserably to fully appreciate the nuances and complexities of life and its tradeoffs.

Angus points to a paper showing that 401(k) plans can have hidden and unavoidable pitfalls.

More sharing is made possible through technology. This time it involves ad hoc tasks. The future isn't plastics as much as it is butlers and maids for the masses. (HT: Mark Perry at Carpe Diem)

Far be it from me to advocate more regulation, but the NCAA is a government sanctioned and subsidized monster that may need some babysitting. Here is a nice start.

John Cochrane raises some quibbles but largely agrees with Greg Mankiw's take on Au.

Steven Landsburg shows us one awesome version of the Game of Life. (Warning: the nerd indications are high on this one.)

Here at MM we love sports ticket intermediators (pejoratively also known as "scalpers"). Here is a great video arguing our point.

Highly linkable

John Cochrane points us to a painting depicting the history of trade. We see the (symbolic) beef, but I'm left wondering where's the gold?

Noam Scheiber of The New Republic says we're about to lose another Big.

Steven Landsburg brings us another great riddle whose solution I did not reach on my own. My downfall was a knee-jerk reliance on the ubiquity of the Monty Hall Problem.

Finally, if you want some good ideas of places to go to get away from it all (including people), check out this.

photo by Mark Stevens

Those were the days . . .

Before it got any further belated, I wanted to give proper mention to what was a great TV show that ended this spring--"The Office". This is another show from my top 50 of all time and this one would make the top 10 I am guessing. Here are some thoughts:

• "The Office" was path breaking (both the original British and the American versions). Like "Survivor" in the reality genre, it brought an idea mainstream (sorry, "The Real World" was about as mainstream as "Girls Gone Wild"). "Moonlighting" 20-years prior made use of the direct dialogue to the camera and then some, breaking the so called Fourth Wall. The idea of merging the reality concept with a scripted sitcom was brilliant allowing dynamic elements never before possible.
• Incidentally, I think this show did more to accelerate the trend away from laugh tracks than any other. 
• I felt this show had somewhat run its course when Michael, Steve Carell, left. But they were able to avoid jumping the shark ever so narrowly--aside from Nellie, the Cousin Oliver of Scranton.
• I saw every episode of this show. Watching every moment, I regret nothing. That's what she said.

While this show ended continuing the trend of me losing more shows than gaining, there are several ideas recommended to me: "The Americans", "Breaking Bad", and a few others. My official TV advisor is reconstructing my portfolio. If I can simply learn to take his advice, perhaps I will stop making mistakes like "Up All Night". I stayed with that one far too long. I've started "Downton Abbey" and dabbled in "Mad Men". Both are shows followed and loved by my wife. I probably will catch up with both and continue along. 

At least one show will still be around that I had not counted on. The prototypical overachieving, underappreciated show "Community" received a reprieve from the gallows. I am afraid its ultimate, untimely fate lies there. I anticipated its demise and began thinking about a post using it as an example; it lives, but I will use it anyway. 

I used to lament how many shows I felt were very good that were cut down early into existence. Many didn't make it past a first season. While I won't work so hard as to try to recall them, the pain being too much, I will mention one of the most famous since it has been resurrected in a way, "Arrested Development". This show was similarly overachieving and under appreciated. It also was path breaking. Its return via Netflix says a lot about my more developed thoughts on TV show evolution. 

Remember how I said, "I used to lament . . ."; well, that is because it dawned on me one day that economics teaches us to roll with the changes rather than mourn for what will no longer be. Schumpeter's Creative Destruction is alive and well here. When a new show is ahead of its time or just not mainstream enough or simply not well marketed, etc., the death of the show does not mean the death of the creative, desirable, inventive elements that drew its too few fans in. Those same writers, producers, and actors are still out there trying again. The process of success and failure leads to better and better products down the line. Consider this as an anecdote against bailouts and the moral hazard that accompanies them. Better to let "Community" die, than to prop up its existence artificially. 

What's more, the overwhelming trend in this medium is to profitably broaden the scope and narrow the target audience. "Arrested Development" is back on but not on Fox, its original network. It is web based essentially. As the movement to a more and more decentralized and individualized market in television entertainment continues, more and more opportunities emerge. Consider this as an anecdote against monopolistic protections.

PS. "Futurama" would have been another example of a show resurrected. 

Escape from New York

I've returned from a jam-packed trip to NYC that was part business and part pleasure. I always find it hard to leave New York without feeling that leaving is a mistake. It is such an amazing place. Very few places on Earth can boast the same wide-range of risk/return opportunity sets. Here are some thoughts:

• To my impression, by a wide margin no other American city is as much an international city. This is an underappreciated quality.
• It is a shame people tend to be too uncreative to appreciate experiences that are not "tourist traps". 
• The success of the city, largely a reflection and exacerbation of the success of American free enterprise, disguises and minimizes the drag of being in the People's Democratic Republic of Bloomberg [insert any prominent former or future mayor as well]. It is hard to see the forest of unintended consequences when dealing so directly with the trees of real-world problems. Viewed in this lens, it becomes easier to excuse the frequent acquiescence to bureaucratic and technocratic power.
• If your only impression of life in NYC was from television sitcoms, you would be missing 75% of it. If it were only from movies, I'd say you are still missing 50%, and most of that corresponds to the prior missing 75%. 
• Goldman Sachs, the business portion of my adventure, is a first-class organization. I am often a critic of the revolving door between government regulators of GS and executive positions at GS along with other regulatory capture issues. Being in the heart of the dragon, one sees clearly how that cozy relationship maintains harmony. Literally, the janitors at GS exude more confidence and professionalism than I've seen among bank presidents. Uniformly both in informal conversations and formal presentations, every representative of GS was quite impressive--not cocky or arrogant, but definitely assured of themselves and their organization and certainly serious. They can and do laugh (when appropriate), but I am certain they physically lack the ability to giggle. 
• I appreciate Goldman for having me as a guest at what was a very good conference filled with good information and entertainment. I now have more respect for them as a money manager, and it is with more confidence that I consider investments with them for my clients. 
• Here is a random thought I had during the conference: Does corporate paternalism and generosity breed acceptance for governmental paternalism? This is similar to the forest/trees thought referenced above. People in these companies are very well taken care of with all ancillary needs provided or sourced, they are used to showing ID cards and having limited access within their firm and even on their floor or in their business group, they work in "safe" environments insulated from the "chaotic" world outside, etc. 
• Depending on your perceptive sensitivity to any given behavior, you can get the feeling that "everyone" in NYC matches that given behavior. For example, everybody jogs. Of course, everyone doesn't. But it is easy to be misled being that there are countless examples of any behavior, activity, etc. to be found. That is one thing >60,000 people per square mile will get you. This goes a long way to explain misconceptions visitors come away with.
• Being in the beautiful jungle of so many choices, a thought I have had previously occurred to me again. A key to happiness is being easy to please. If you can see the good in things (be optimistic) and if you can refrain from pickiness (see things as highly substitutable), you can greatly expand your happiness. In economic terms, the flatter your indifference curves and the looser your budget constraint, the greater your utility potential. 
• Nearby our hotel was a Whole Foods grocery. We have a Whole Foods store in Oklahoma City, but the store in NYC, as a microcosm of so much else, is quite different from the store in OKC. The selection was larger in scope and scale, and the services included delivery for a flat $10 fee. No such delivery option is available in OKC. Discussing this with my wife dovetailed with other grocery economics discussions we have had. We've thought before about the intrinsic differences among stores like Whole Foods and Central Market versus Safeway and the local Crest Market versus Sam's Club and Costco. Not to get too far off on tangents, but this thought problem brings up the difficulty of finding a comparable basket of goods for inflation as well as other comparisons. Back to the central idea, what are people getting out of food shopping? The joy of bargain hunting (optimizing $/calorie) versus the joy of elegant shopping (optimizing the experience per se) could be generalized extremes along what seems a reasonable dimension of quality/quantity tradeoffs (optimizing selection and discovery). At what point is the only physical grocery shopping we do that done as an entertainment (elegant shopping) with the remainder done online including preprogrammed? 
• Enough random thoughts. Here are some pictures from a great trip. Enjoy!

A TBTF TARP exchange

Over the past two weeks I've been having an on-going conversation with a colleague at work debating the virtue of TARP back in the fall of 2008. While the colleague agrees with me on virtually all points related to the problems with Too Big Too Fail (TBTF), the government's role in creating the financial crisis, the problems with the responses, etc., he disagrees that TARP could/should have been avoided. He tends to see it as TARP or catastrophe  Because I thought it was interesting, I've included here some of our exchange as conducted over email. Some names have been changed to protect the innocent.

From me:

I see the case against TARP as follows:

•  The common pro-TARP narrative is basically fiction.

• We were not at the edge of doom (at least there is next to no evidence for this view)

• It was not approved as originally sold nor implemented as approved

• TARP rewarded through bailout those who had made very poor economic decisions.

• TARP did not and could not ease credit conditions nor bring liquidity to the system. That responsibility was The Fed’s and if they had done their job, the recession would have been a bump rather than a crater, and the financial crisis would have been short lived if nonexistent. The financial crisis was 80% an effect but only 20% a cause.

• TARP was an avoidable mistake in that there was ample time to come up with alternative solutions even if we assume the basic premises supporting TARP’s passage.

• There were weeks before the first TARP bill and between the initial failure and eventual passage.

• There were alternative ideas and other methods to buy time such as suspension of mark-to-market accounting, bankruptcy options including “speed bankruptcy” whereby equity is wiped out and creditors become the new equity holders, et al.

His response (in red):

I see the case against TARP as follows:

•  The common pro-TARP narrative is basically fiction. DISAGREE

• We were not at the edge of doom (at least there is next to no evidence for this view)  DISAGREE (DEPENDS WHAT DOOM MEANS)

• It was not approved as originally sold nor implemented as approved  AGREE

• TARP rewarded through bailout those who had made very poor economic decisions.  AGREE

• TARP did not and could not ease credit conditions nor bring liquidity to the system. That responsibility was The Fed’s and if they had done their job, the recession would have been a bump rather than a crater, and the financial crisis would have been short lived if nonexistent. The financial crisis was 80% an effect but only 20% a cause.  DISAGREE WITH THE FIRST SENTENCE (AT LEAST THE FIRST PART), AGREE WITH THE SECOND SENTENCE AND UNSURE AS TO THE THIRD.

• TARP was an avoidable mistake in that there was ample time to come up with alternative solutions even if we assume the basic premises supporting TARP’s passage. AGREE

• There were weeks before the first TARP bill and between the initial failure and eventual passage.  

• There were alternative ideas and other methods to buy time such as suspension of mark-to-market accounting, bankruptcy options including “speed bankruptcy” whereby equity is wiped out and creditors become the new equity holders, et al.

So we’re in agreement, then, to separate investment banking from “traditional” banking....

My response:

I think you have to separate “doom” for the big, problem banks and “doom” for us all. They are and were not the same.

That applies as well to the credit easing part. Did it ease credit between the problem banks (banks as a broad term where financial institution is more appropriate)? Possibly this was helped by TARP, but even that is debatable. It is not clear that TARP made anyone more willing to lend to those bad banks.

Are you unsure of my 80/20 probabilities or unsure about what I mean in general. I believe the monetary contraction beginning in 2007 created the financial crisis largely. That is what I mean by 80/20 effect/cause. I am not firmly committed to exactly 80/20 . . . I know you know that.

I see little to no help in separating “investment” and “traditional” banking. If any financial institution gets into trouble, we did and will bail them out. If you can wall them off and credibly commit that we will only bailout the banks that fit a specific description (maybe only those who qualify for and pay into the FDIC), then maybe I could come around. But that is a second-best solution at best with lots of potential for major downfall.

He then asked me under what circumstances would I condone or authorize a bailout. I emailed my response:

quick answer to the "who would I bailout" question

On a personal level, I would bailout my kid. But think of [a person] who obviously has severe financial problems. Assuming the bailout(s) from her father are just simply money gifted, they don’t really help her. They only kick the can down the road. Bailing out the kid doesn't really count as a solution.

In the same guise, bailouts in the larger world only address one part of bigger problems. To the extent our problems are magnified by past behavior and bailouts (moral hazard), the problem only grows bigger. In the continuum of the economy we end up favoring one group (those living now who supposedly benefit from the bailouts) at the expense of another group (the future who has to deal with the next bigger problem and who has to pay the debt incurred along the way).

Would I bailout Illinois, California, Europe? What does it mean to bail them out? Make others pay for their mistakes (promises that now can’t be kept)? I would not. No bailouts. Workouts, yes. Bailouts, no.

TARP was a bailout. Very far from a workout. I just can’t see the existence of TARP in the vacuum of this or nothing. That doesn't make sense to me.

A very long (and good in my opinion) discussion followed a few days later where another colleague was pulled in. I enjoyed the two-versus-one debate as the other colleague opposes my negative view on TARP as well. If anything, this colleague is even more convinced that it was the end of days but for TARP. Neither colleague likes TARP, they just don't see that there were other solutions available. When all we can muster is cronyism, we have fantastically failed. I see TARP as the creation of corrupt interests with the backing of plainly unimaginative, pitifully ignorant, and foolishly panicking leaders--leaders in name only as they were devoid of leadership.

I want to go to there.

This past week the sitcom "30 Rock" aired its final episode. I believe I saw every one. I'd rank it on my favorite list in the top 50 but not the top 10. I was a fan. Some thoughts:

• Though I'm sorry to see it go, it had run its course. It is good to see a show end in stride rather than jump the shark. And of course some jump the shark, get up, and jump the shark again. Another show still on the air that comes to mind is "How I Met Your Mother". HIMYM is dangerously close to getting on a surfboard. It is also a show in my top 50 if not in my top 10. It definitely has had top 10 moments as did "30 Rock". Put in that same category "The Office". I still like it and watch it, but I believe the shark may have been jumped some time around the departure of Michael Scott.
• While most of the shows I like tend to have multiple very good characters that nearly stand on their own, I felt like this show was dominated by two: Liz Lemon played by Tina Fey and Jack Donaghy played by Alec Baldwin. These characters were brilliant. Their lines were consistently laugh-out-loud funny and clever and their delivery was tremendous--not surprising given the quality of those actors. Tracy Morgan's character Tracy Jordan, Jane Krakowski's character Jenna Maroney, and Jack McBrayer's character Kenneth Parcell were at a few times awesome but at most times only good. Probably the design of the show to have them and so many others as extreme caricatures limited their reach. 
• The extreme caricatures was fine for most characters, but I found it problematic in one respect. I thought that Jack Donaghy versus Liz Lemon was a bit of unequal caricatures. Jack was generally all knowing and a step ahead, but he was portrayed in a way that was less charitable to his supposed political group, rich Republicans, than Liz's supposed political group, progressive Democrats. Of course, Alec Baldwin and Tina Fey are both rich Democrats. Perhaps the unbalanced approach was intentional. If so, I think it was unwarranted. But my hypothesis is this treatment where a more disdainful side comes out in one character is what I would expect if I asked a person not well versed in opposing viewpoints to create a satirical portrayal of two politically opposed characters. For a more thoughtful approach, I point to "Parks and Recreation" where the libertarian Ron Swanson is equally shown against the progressive Leslie Knope. These characters are truer to their represented group and the comedy and satirical exaggeration does not show contempt for either's group.
• I was always impressed by how far they could go on the show toward satirizing if not denigrating GE and NBC. This was to the parent company and the network's extreme credit to allow such self-deprecating comedy. I believe FOX gets credit for breaking this barrier back in the early days of "The Simpsons".

Expect more on this topic of TV shows. It seems that many of my shows are ending and several are getting up there in age, but I have started very few in the past few seasons and none in the current season going back to the fall. Perhaps I will find more time to read . . . and blog.

Some crazy scheme in order to make a profit

I want to boost traffic on this site. I know incentives work. Here is the plan:

• I want all my readers to forward links to this blog.
• To incentivize you please, inform everyone you send a link that they owe you $1. 
• Also, inform them that they too are entitled to $1 for every link they send owed by the recipient of the link. 
• It does not matter if the recipient has already received a link. In fact, that is an important part of building this network and realizing the fringe benefits.

This should create a fairly efficient Ponzi-like scheme by taking out the middle man. Based on my cursory reading of Keynesian economics, it should also boost 2013 GDP by at least 10% and bring us full employment in short order. From my cursory reading of rational expectations, just by publishing this post all the benefits should arise. From my cursory reading of monetarism, all U.S. dollar-based economies will soon be the next Zimbabwe.

I say shame, shame, shame, shame, shame, shame, shame, shame on you

A while back a Scott Sumner post titled American Shadows got me thinking about current practices, policies, and conditions in our society today that will horrify future generations. I have been planning on doing a post on it along with a sister post about current practices, policies, and conditions that will make future generations laugh, roll their eyes, and shake their heads. This week Sumner had another post along the same theme re-inspiring me. I have decided to combine the posts and will add to these lists as new items occur to me.

I grant that a case can be made for an item to be included on the opposing list or both lists. To the extent that this is a prediction (my primary goal), these are all arguable. To the extent that this is a personal commentary passing judgment on our society (a secondary goal), these are all again arguable, but for different reasons.

These are in no particular order, and I am concerned here with western society in general and the United States in particular. Considering the entire world would be a much, MUCH longer list.

Current practices, policies, and conditions in our society today that will horrify future generations:

• Immigration restrictions
• Trade policies
• Drug laws and enforcement tactics
• Treatment of homosexuals and homosexuality
• Methods of the FDA, et al. 
• Abortion as birth control
• Pain treatment and management intolerance and limitations
• Law and mores that have kept "amateur" athletes less than fully compensated (the case for this item being on this list is made when viewed in light of injuries and opportunity costs (two separate issues) that compound into life-long set backs). On this front there was a step toward justice today.
• Updated: Our tolerance for torture and other harsh treatments including prolonged, indefinite detention.

Current practices, policies, and conditions that will make future generations laugh, roll their eyes, and shake their heads:

• Government-monopolized postal delivery
• Government-run schooling
• Gambling restrictions
• Liquor laws
• Blue laws in general
• Tax policy (could easily warrant a spot on the first list)
• Regulations that aid existing businesses or other powerful interests
• Our views on many facets of science:
• Genetic alteration of plants and food
• Genetic testing and alterations in humans
• Cloning
• Stem cell research
• Our fears and understanding of climate change
• Updated: The silly ways in which we attempt to be good stewards of the environment such as obsessing about carbon footprints and shallow rationing devices to attain some mythical "sustainability" while ignoring the price system.
• Updated: Our fears of robots, machines, automation, AI, et al. This quote from a recent Econtalk with Kevin Kelly fits: "Your calculator is smarter than you right now in arithmetic. It doesn't freak you out just because it's a different kind of intelligence." 

Additions to come I'm sure . . .

Partial list of my favorite things . . .

Partial List of My Most “Controversial” Views

(in no particular order and subject to change)

1.  Government should ideally exit fully from the activity of funding, administering, sanctioning or otherwise engaging in education. As a second-best solution, the government should only facilitate the funding of education by fixed-amount vouchers issued directly to parents and redeemable by any entity that can demonstrate to a non-government third party that they are an education provider. A qualified third party would be one that a significant number and variety of education providers themselves would recognize as being a legitimate if not desirable third-party evaluator.
2. Free movement of people into and out of the United States of America should be allowed unencumbered and unlimited except for those who are known felons or who are carriers of highly dangerous communicable diseases.
3. As a corollary to the previous, the free movement of goods, services, and investment should also be free of encumbrance except for the most extreme cases of vital national interest with great burden of proof put upon the justification for any such limitation. 
4. The federal government of the United States should eliminate fully the income tax (both personal and corporate), all taxes on capital including dividends and capital gains (short and long term), all excise taxes, and all taxes on estates. There are two desirable replacements for the current tax structure: One is a payroll tax of a certain and consistent (i.e., flat) rate applicable to all employment arrangements whereby the tax is assessed on the fair market value of the total compensation (salaries, wages and benefits) earned by an employee. Another perhaps preferable solution would be a certain and consistent (i.e., flat) rate of sales tax applied to the purchase of all final goods and services. As a method to reduce regressivity, a federal tax rebate could be created whereby all adult citizens are issued a refund equal to the sales tax rate multiplied by the dollar value of the poverty level of consumption and all citizens claiming a dependent would be issued a refund equal to 25% of the sales tax rate multiplied by the dollar value of the poverty level. To aim further in adding progressivity to the system, a marginal 10% payroll tax could be applied to all total compensation above $100,000 with this threshold indexed to grow with inflation. 
5. All narcotics and other drugs should be completely legalized.
6. Nearly all if not all zoning laws should be discontinued and dissolved.
7. Prostitution should be legalized.
8. The state should cease and desist from all activities involving sex offense registries and notification requirements.
9. Copyright laws and rules should be very significantly reduced in scope and scale.
10. Patent protection should be considerably rethought with the aim to greatly reduce their anticompetitive and antidevelopment characteristics.
11. There should be no occupational licensure enforced by law.
12. Most not-for-profit, charitable activities are slightly counter-productive at best, highly destructive at worst.
13. Price controls are an extremely poor solution that fails on efficiency as well as liberty grounds. They should be avoided to every extent especially in times of emergency and crisis. 
14. Central banking should be replaced by free banking (first-best solution), replaced by a gold standard as described by George Selgin, et al. (second-best solution), conducted with fixed rules in a regime of NGPD level targeting as described by Scott Sumner, et al. (third-best solution).

New Year's Resolution

Last year my New Year's Resolution was to change a strongly held personal belief. I definitely changed my mind about quite a few things, but one stands out as truly qualifying: I changed my belief about the direction and implications of Federal Reserve policy. Basically, I adopted Scott Sumner's view that The Fed has been too tight in monetary policy, despite the phenomenal explosion in base money, reversing my previous view that The Fed was recklessly expanding the money supply with an accommodative policy that was creating an imminent threat of significant inflation. As a corollary to this change came an understanding that this tight-money Fed action was a significant contributor to the financial crisis and recession and slow recovery.

My thinking in choosing this resolution is my belief that we all tend to error in not changing our minds enough, not challenging the beliefs we hold, and not being open minded in general. This is the major contribution of Freakonomics to the human race. We need to do more self-critical thinking. Much of what we believe is to some degree factually wrong or weakly understood often to the point of being shallow drivel.

To continue and expand the progress, my New Year's Resolution for 2013 is to either 1. Change or significantly modify a strongly held personal belief or 2. Find a completely new and significant rationale in support of a strongly held personal belief. 1 is preferable to 2, but having both keeps me searching and thinking more.

On a blog-specific note, I seek to expand upon my Nov. 10, 2012 declared intention of referencing a movie in every blog post. I will expand the allusions to books, television, and other art forms. Coming up with just movie references was stretching my Swiss-cheese brain to its limits. These leaps are getting harder.