Showing posts with label predictions. Show all posts
Showing posts with label predictions. Show all posts

Saturday, December 26, 2020

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.

Thursday, July 16, 2020

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).

Tuesday, June 23, 2020

The Future of Education Post COVID-19

Tyler Cowen pointed to this “debate”, which I was a bit disappointed in for being too much an untethered discussion. Tyler’s portion I found more meaningful, but still it didn’t do much to advance my thinking.

Since they didn’t really have an objective topic, I guess I shouldn’t be too critical. But I find that a lot of the recent thinking on how things will change in the age of COVID-19 to be like this—not very deep, a combination of wish list and fear. My own view is an attempt at nuance between "most things will change very little" (we will snap back to prior norms) and "this epoch event has accelerated by multiple years that which was already underway" (e.g., teleworking just leapt forward at least 5 years along the prior trendline). To be clear I think holding both views is the best prediction--that is the nuance. Not a lot will change, but that which was already changing has been accelerated. 

Here are some of my thoughts regarding changes in education (both what was already happening and how they have accelerated) as well as the obstacles faced (incumbents and traditionalists don’t go down without a fight).

Elementary and High School

  • The major role of babysitting that school plays for many families has been shown to be replaceable. Schools aren’t as essential as previously imagined.
  • While the pandemic-induced schooling-from-home experience was miserable for most of us forced into it, schooling from home was already widely assumed to be awful. Now many are probably seeing arrangements other than traditional school as decent substitutes.
  • Much of what kids do in elementary school has little to no benefit for them. This is likely much more widely realized or at least considered as parents got a more up-close look at their kids “learning”.
  • For the kids trapped in poor schools, online and other arrangements now look like realistic improvements.
  • Teachers and schools that cannot provide good online options and flexibility have been considerably exposed.
  • For students old enough to not need babysitting and for those capable of learning outside of the regimented classroom (perhaps a large majority of students are in this latter category), questioning the necessity of a 7 to 8-hour daily routine is rising.
  • Unions and bureaucracies will be as formidable obstacles to change. However, they have a conundrum: teachers, administrators, and parents are afraid of the risk of infection. All of this pushes for alternative options to be explored, which drive experimentation toward alternatives that threaten the existing power structure.
  • Status quo bias/inertia are also obstacles. People tend to be very traditional when it comes to choices for their children. It is hard for them to wrap their heads around questioning the conventional wisdom narrative of school as we know it--especially government school.
Higher Education

For higher education I think we should solve for the equilibrium and use a typical university, the University of Oklahoma, as an example.

  • Although non-profits are insulated from market forces, they are still subject to the strength of the underlying economy on which they draw resources as well as the philosophical support of those in power. For universities those in power includes donors, alumni, legislators, employers of graduates, purchasers of research, and the public zeitgeist. So where are these headed? Saying that expectations will be to do more with less is a considerable understatement. Donor money and state funding will be much lower for a long time. However, desires/demands of universities will continue with smaller changes in overall goals. We will continue to virtue-signal about college-education being great hope for the future. So….
  • How does OU do more with less? By outsourcing what is not in their core competency. Why would we have students show up in a gigantic auditorium to watch a professor repeat a lecture he has given every semester for a decade plus? What is the value in having everyone in that room squinting at the board from the back rows and trying to avoid the inherent, multiple distractions? Can’t that be done online without the risk of infection? And once you realize that it can, it is just one more step to realize not each and every university need duplicate the tasks. Rather have grad students available to perform office hours and optional workshops. What is the point in offering the ~100th best programs in this, that, and the other? Partner with other universities for those services especially the undergrad basics. Specialize in only that where there is comparative advantage. For OU that might be areas like petroleum engineering, social networking, and football.
  • Social networking? Yes, with one of the biggest/best Greek life systems in all of higher ed, OU is among those that offer this feature. Even if the benefit is only perceived rather than real, perception matters to consumers. Drinking Gatorade doesn’t make you a better athlete.
  • And football? Yes, the football team is a source of revenue and marketing for the university. OU is great at it. And OU is in a much better position than most now that paying football players for their value contribution is rightfully (finally) trending to be the reality.
  • Thinking more of the general case, these trends lead to barbell effects: niche schools (elite quality where average is very much over) and enormous diploma-producing machines (economies of scale). While this is probably a trend within the realms of both undergraduate and advanced degree programs, it is more so a trend between these levels because . . .
  • The line between high school and undergraduate college will blur greatly while the line between undergraduate and graduate work will likely sharpen. This latter division will resemble the distinction that once existed between high school and major university such that grad school becomes the new, true higher education. 
  • Universities need to maintain their status (true in either the human capital model or the signaling model). To do so will require some exclusivity, which I think comes mostly at the entrance process to grad school--getting accepted to graduate programs becomes much more difficult. 
  • What happens to research? More rent-a-lab, rent-a-brain with corporate interests outsourcing to universities more than ever and universities renting away these resources. 
  • Obstacles? The same forces as above are at work against change here, and they are probably more powerful. But the stakes are higher and the willingness to experiment is probably higher too.
  • The major universities aren't going away, but they may be transforming so much that what emerges over the next ten years is vastly different from what we've known for so long. Imagine "going to" a major university, but not directly taking but a few classes there until upper-division-level work.
P.S., John Cochrane had two great posts recently on this topic (here and here).

Saturday, June 20, 2020

What I Got Wrong

And what I got right... an analysis of my Trump predictions. 

I made a list of predictions at the very beginning of the Trump presidency. One year later I did an early analysis of them. Now that we are nearing the end of the first (only?) term, I thought I'd look back to see how my predictions fared. 

I was optimistic in three areas: taxes, regulation, and presidential power & authority

On taxes I was doubly right on the surface--the Congress was the key and they have gotten better. Specifically, we got the corporate tax reductions/improvements that Obama wanted but couldn't negotiate along with improvements for deductions (standard deduction increased making future itemized deduction eliminations more likely and SALT was limited making state and local taxes more burdensome thus more resented). Now, one could very correctly counter that the HUGE increases in fiscal spending fully supported by Trump during and especially before the pandemic are simply future tax burdens. This mitigates strongly against my prediction. 

On regulation I was mostly right if not a bit underestimating of the chances of progress

On presidential power & authority I was mostly wrong so far, but that prediction is a long-game idea that remains to be seen. Perhaps we have indeed grown and are continuing to grow more skeptical and reluctant on this front. Still, I see a conservative base that believes ever more in the legitimacy of strong central power and the left is still AWOL on the issue. I get the strong impression that the left still clings to the nonsensical unicorn theory of "if we just get the right person in charge, all will be well . . ."

The recent pandemic and subsequent police abuse protests stand as testament as the left criticized Trump for not being enough of a strongman and then the right rallied around the police state. And consider the reverse of the optimistic take. What if in 50 or so years people look back at things Trump said and somewhat of how he acted and take it way too seriously--like serious at all? For instance when he says I have absolute power, what if people in the future look back to that as a serious proclamation that a president claimed and wasn’t completely challenged on? 

On the initially overlooked judicial and U.S. attorney appointments I was right one-year in to be optimistic overall. Many have been very good to great like the high-profile case of Gorsuch. 

I was pessimistic in ten areas: tradeimmigrationnationalismwardrug policygovernment meddlingfree speechinternet freedomsurveillance state, and gender issues/tolerance

On trade (it took a while) and immigration I was very pessimistic and right on the mark. Being right about these and others is so very depressing.

On nationalism, gender issues/tolerance, and add to that the missing elements of social division and discord (especially the racial element) I was unfortunately wrongly not pessimistic enough--to be clear I would ideally have been wrong for being too pessimistic. He is a mass polluter in this realm. I fear this has knock-on effects for future "outsider" presidential candidates in that we will overvalue pleasantry over policy by mislabeling those who question the establishment as yet another divisive person.

On wardrug policy, and government meddling my initial (one-year in) analysis was that I had been not pessimistic enough. I think the following years have proved me more correct originally as the wrong positions of the Trump administration softened. 

On free speech, internet freedom, and surveillance state we have the reverse case where matters over gotten worse as of late. My predictions are moving from appropriately pessimistic to another unfortunate case of not pessimistic enough. We'll see...

I'll leave it to the reader to assess how my initial overall prediction has held up:
The Trump years (and they will be years despite the hope of so many for impeachment or that he would divorce America to be president of some younger Eastern European country) might be an odd combination of dramatic progress and colossal retreat. I think the eventual decisive factor will be how strong and righteous Congress is. I believe the case for optimism has a greater magnitude than the case for pessimism, but the negative sensitivity is high--meaning prospects are skewed with more downside risk than upside potential while the balance is still to the upside. 
For my grade on the last part (the balance or risk being to the upside), stay tuned for a provocative post comparing our presidential candidates. 

Tuesday, August 6, 2019

We're Doomed, I say. DOOOOOMED!

Is humanity doomed? We certainly don’t lack apocalyptic scenarios: nuclear war, a robot uprising, out-of-control climate change. Unlikely, far-fetched? Not according to scientists and mathematicians who, in recent decades, have found a surprising new source for anxiety about the long-term survival of the human race: probability theory. The so-called “doomsday argument” holds that there is a 50% chance that the end of human life will come within 760 years.
That is the opening paragraph from an essay by William Poundstone in the Wall Street Journal. He also was a recent guest on Michael Shermer's Science Salon podcast discussing the wide implications for this elegant theory.

Also from the essay:
Since it is equally likely that those of us living today are in the first or second half of all past and future human births, let’s say that we are in the second half—which would mean that there are no more than 100 billion births yet to come. There is a 50% chance that is true, which at the current global birthrate (about 131 million a year) translates to a 50% chance that we have at most 760 more years of births. A changing birthrate would modify that estimate, but the calculation is that simple.
A friend forwarded the original link to me and we had a bit of discussion on it basically agreeing that the math and process is compelling, but that it seems to be missing something to make it as much as it seems to be. Specifically, I find it very interesting, but it seems to me like a confusion between or muddling of two different concepts.

One (German tanks) is like a kid turning to a football game on TV randomly and guessing about how much longer in real time (not game time) the game will last. The other (humanity) is like being a kid on vacation who wakes up in a car wanting to know "are we halfway there yet." The second case is much harder to answer if we include a key condition that the destination distance is not known by the kid. Even if he knows he is 100 miles from his house in OKC, he doesn’t know if the destination is Branson or New York City or elsewhere. It is much easier to ascertain where he might be in the football game as opposed to the vacation. A score of 14-7 and a flash of the scoreboard showing "3rd Quarter" is much more revealing than a road sign that has a highway number inside a Missouri silhouette. While he can apply the analysis in both cases, his prediction revisions will be orders of magnitude different as time passes for the vacation as compared to the football game.

Another problem I have is that the time frame is inversely proportionate to the future population growth rate. If we slow birthrates down to just above replenishment (about 2.1 births/woman), then we extend the time between now and the next 100 billion people. Thomas Malthus and Paul Ehrlich might agree, but Jean-Baptiste Say and Julian Simon (and I myself) would not.  So my complaint boils down to: that when applied to something like humanity and it’s future, this doomsday calculation is not telling us as much as it is purporting to.

Saturday, May 18, 2019

Partial List of Wax On Wax Off

Partial list of things I believe to be waxing and waning in the popular sense of moral, civilized taste. To be clear morality is not determined by vote. And also notice this is not a list of things peak/not peak. This is more a prediction of long-term trending.

  • Marijuana
  • Basketball (as a share of sports-fan attention)
  • Virtue signalling to strangers through condemnation (you shouldn't do this or believe that)
  • Factory farming/eating animals/hunting
  • Tobacco
  • Football
  • NCAA student-athlete amateurism
  • Fossil fuel energy (both superficial (electric cars are ~25% coal cars) and actual)

Tuesday, February 20, 2018

Partial List: Twin Peaks - Wax & Wane

Partial list of peaks...

Some I predict we are in (or recently passed):
  • Garage, driver, and long-haul truck driver
  • Oil, et al. price
  • Professional stock picker
  • Bank (traditional) - regulation and innovation are to "blame"
  • Farm (agricultural land use) - see here & here
  • Storage unit

And some I predict we are not:
  • Local truck driver and this
  • Oil, et al. quantity
  • Index investing (true, pure passive even without the growth of factor-based, which is active)
  • Bond price - relatively low rates as far as the eye can see
  • Reality TV
  • Zoning - the Complacent Class isn't done yet "protecting" us from new ideas and FOOL is all about
  • Authenticity - the desire for this is just building and its continued strength is evidenced by the concern so many have that it is going away.

Monday, January 15, 2018

Trump - One Year In

About a year ago, I posted on Trump looking at what I saw as the reasons to be optimistic and pessimistic. Let's revisit that now that we have a year under our belt.

Overall, I think my predictions were good with some notable variance in a couple areas. Of course, I was vague enough to prevent too much inaccuracy (or accuracy) by design. Here are the areas that standout to me with a look back at my prior comments.

The Good

  • Taxes - this one was somewhat surprisingly good, blemishes and all. [remember with all of these we are grading on a curve] Much like Chance, Trump only gets credit for being there to sign the bill. 
  • Regulation - 1.25 steps forward with 1 step back is still progress. Congress and Trump completely failed to reform much less repeal the ACA (Obamacare). I have low and ebbing faith Dodd-Frank, et al. will be meaningfully changed. Still, there are success stories, and slowing the rate of growth is itself improvement
  • Judicial Appointments - I somehow missed mentioning this previously, and it would have been in the optimism bucket. This one has lived up to realistic (not full libertarian) hope. 
  • Lost Respect for the Sanctity of the Office - yes this is a feature--let the scales fall from your eyes, the emperors have never been well dressed. But . . .
The Bad
  • Presidential Power & Authority - we may be chipping away at the Cult of the Presidency, but I don't yet see the groundswell from the left or the center that I might hope for. They are much to tied up in the emotion of this particular president's actions and words.
  • Immigration - unlike in trade (below), Trump's actions have matched his rhetoric in this area. Here it looks to be an on-going real fight and will perhaps be the most lasting and impactful negative consequence of Trump.
  • Trade - as I mentioned, his administration is a lot of (bad) talk on this, but so far little action. Still, he has many opportunities to make good on his very bad desires.
  • War - I was not pessimistic enough on this. Drone attacks have increased under Trump as the list of places we are at war have grown. The U.S. government with the help of a complicit even if blissfully ignorant populace continues to be wrongfully aggressive. Include in this the surveillance state, but I am fairly certain this one is sadly nonpartisan. 
  • Drug Policy - yep, unfortunately I nailed this one.
The Ugly
  • Hatred, Nationalism, Bullying, etc. - I was not as pessimistic as I should have been in this general area. The downside of losing the always undue respect for the U.S. presidency is that it took this buffoon to get us there. He is at best sloppy and inconsiderate, at worst hateful and demagogic. If you need links on this topic to prove the point, you have been in a coma for 12+ months.
On balance there are reasons to claim "silver linings" and reasons to claim "not so fast".

PS. For a better analysis of the economic policy results of Trump's first year, read Scott Sumner's take

Friday, January 20, 2017

The Age of Trump

Tomorrow one third of the United States' government leadership will change hands from one who once promised hope and change to one who now promises the same but supposedly of a different variety.

The tension around this transition is particularly elevated. Not since Hoover-Roosevelt has a U.S. presidential interregnum been so ugly. How will the final moments play out? Will Obama be gracious or will he smugly toss the football? Will the White House be adorned with golden accents? Will a great wall emerge protecting us from things we'd like to buy and people we'd like to meet? How great shall our greatness be?

Below is a partial list of my areas of optimism and pessimism as yet another self-greatness seeking charlatan proceeds to chase away our ideals.

Before I begin, a quick look at the optimism/pessimism I predicted about one year ago when Trump was but a surprising front runner though still a dark horse.
Optimistic - Shows why we should lose (and should have lost a long time ago) our reverent awe for the U.S. Presidency; prevents major government action/intervention/meddling on any number of issues by being a circus act writ large (his administration's priorities will be prestige and showmanship rather than policy accomplishment); forces a meaningful debate and action on limiting executive power (a little bit in tension with the previous prediction as this one mitigates a Trump administration that is actually trying to do something).
Pessimistic - Engages in major international war actions (beyond the high amount the each of his opponents would do anyway); sets back trade freedom and immigration substantially; creates strong racial, ethnic, nationalistic, and gender divides.
Overall - I estimate the optimistic possibilities are more likely than the pessimistic possibilities. 

  • Taxes - As with many of these, Trump himself is not really the source of optimism. Rather the Republican Congress is the new hope. Trump is just the chance that a good reform will be drafted with the expectation that he will sign it into law.
  • Regulation - He continues to talk strongly about reducing the monstrous regulatory burden our federal empire exerts. The areas of particular expectation are banking & finance (Dodd Frank) and health care/medicine/insurance (ACA/Obamacare), but also environmental; although I am less sanguine about the prospects there. 
  • Presidential Power & Authority - This one is borrowed my original. I believe the return of the left is long overdue in this area. Perhaps it will take this time... doubtful. The same can be said for the anti-war movement. Their 8-year hibernation is now over. Remy puts it well in the second verse. 
There is no doubt these are important areas; yet, so are those I put in the pessimistic camp.

  • Trade - Astute readers will notice how many of these in the pessimism category are related. Is his rhetoric enough to satiate the unintentional, populist desire to be poorer? Our trade deficit/capital account surplus is not some phantom menace plaguing our economic well being. Is he really so dense as to believe the nonsense he speaks on this issue? . . . based on the rest of his behavior . . . Okay, good point.
  • Immigration - The free exchange of labor is every bit as important a contributor (perhaps even a greater contributor) to our economic wealth as is the free exchange of goods and services. His attack on those not from around here is both disgusting and discouraging. Again, I hope this is a clone of the prior item where it is all about rhetoric and not action.
  • Nationalism - We don't need more tribal thinking in this world. Unfortunately, he nurtures this toxin. He wants revenge on those not allowing us to be great.
  • War - Here my outlook is just slightly negative. I'm grading on a curve based on the past two Commanders in Chief. I think he will tend to reduce the areas of conflict where both Bush and Obama took us. However, the risk he runs of allowing an awoken force from Russia or China is elevated compared to the prior administrations. Think reduced magnitude across the bulk of the probable war fronts but with increased risk in the extremes (tail risk).
  • Drug policy - I suspect he views drugs in the traditional simplistic framework (good versus evil). Drug users are rogues who must be dealt with. The first one to tell him he can't win the war on drugs will seal our fate in continuing the evil work that is that battle.
  • Government Meddling - From the Carrier deal to GM to you name it, the picture so far is bad for economic growth specifically and bad for liberty in general.
  • Free Speech - For as much as he deplores PC, he certainly can't take criticism. He has flat out said we need to reign in speech. 
  • Internet freedom - This may be a small issue, but perhaps it is a litmus test for how he will govern overall. He said we need to look into 'closing that Internet up'. His nominee for Attorney General, Jeff Sessions, as well as his vice president, Pence, are outspoken in their disdain for internet poker. They want to keep us safe . . . from ourselves and our choices.
  • Surveillance State - I suspect no relief. 
  • Gender Issues/Tolerance - While I actually think he actually takes a lot of unfounded and unfair flack regarding areas like race and sexual orientation, his sexism is undeniable. He is not just crude. He is misogynistic. It is hard to be very trusting that this strong character flaw and his errors in judgment don't and won't extend beyond objectifying women. 

The Trump years (and they will be years despite the hope of so many for impeachment or that he would divorce America to be president of some younger Eastern European country) might be an odd combination of dramatic progress and colossal retreat. I think the eventual decisive factor will be how strong and righteous Congress is. I believe the case for optimism has a greater magnitude than the case for pessimism, but the negative sensitivity is high--meaning prospects are skewed with more downside risk than upside potential while the balance is still to the upside. 

Thursday, January 28, 2016

Presidential Optimistic/Pessimistic Outlooks

We are on the cusp of phase two of the great American game: Who Wants To Spend A Million Million Dollars?

Phase one, you might remember, is when every third American denies he or she is running for office and then promptly announces they'll give it a go.

Phase two is the more sensible phase where a small collection of obscure states get to pick who will make it to the more substantially populated states who will then determine who makes it to the finals.

Phase three is the finals where two nearly identical twins argue about trivia while basically agreeing they like good things, are against bad things, and have a vision of how to either "keep us on course for greatness" or "turn it all around to restore greatness" depending on if people are happy or upset in general.

Let's run down the current leading contenders to see what the optimistic case and the pessimistic case is for each (from my point of view, of course). Keep in mind these are scenarios where optimistic and pessimistic are generally but not necessarily mutually exclusive (we could get some of both).

Optimistic - Shows why we should lose (and should have lost a long time ago) our reverent awe for the U.S. Presidency; prevents major government action/intervention/meddling on any number of issues by being a circus act writ large (his administration's priorities will be prestige and showmanship rather than policy accomplishment); forces a meaningful debate and action on limiting executive power (a little bit in tension with the previous prediction as this one mitigates a Trump administration that is actually trying to do something).
Pessimistic - Engages in major international war actions (beyond the high amount the each of his opponents would do anyway); sets back trade freedom and immigration substantially; creates strong racial, ethnic, nationalistic, and gender divides.
Overall - I estimate the optimistic possibilities are more likely than the pessimistic possibilities. 
Optimistic - Is a strong ally of free trade in goods and services with a relatively good view on immigration; offers a serious challenge to some aspects of cronyism like ethanol subsidies, the Ex-Im Bank, and Net Neutrality; promotes a less interventionist military policy on balance; gets meaningful progress on tax reform. 
Pessimistic - Fails to get past a vision of a secured border leaving immigration policy languishing; allows military spending and engagements to grow substantially; uses executive power to similar ends as Obama and Bush. 
Overall -  Pessimistic are slightly more likely than optimistic.
Optimistic - Advances immigration freedom substantially (this would be a major political advance for the GOP helping its demographic problem); promotes free trade well; gets meaningful progress on tax reform.
Pessimistic - Engages in major international war actions while strengthening government surveillance; extends the actions of executive power in defiance and weakening of the Constitution; proves that just as a he could be bought as a Florida politician (e.g., Big Sugar) he can be bought in the White House (i.e, cronyism). 
Overall - Optimistic are slightly more likely than pessimistic. 
Optimistic - Creates an era of gridlock not seen since the first Clinton administration keeping government at bay; allows for meaningful immigration progress; allows the drug war to recede while not actively doing much to bring about its demise.
Pessimistic - Engages in major international war actions while strengthening government surveillance; dreadfully extends the actions of executive power in defiance and weakening of the Constitution; makes good on her technocratic promise to bring government involvement to new realms while deepening it in familiar places.
Overall - Pessimistic are more likely than optimistic.
Optimistic - Allows meaningful retreat in the drug war; sets back the cause of socialism by giving it power and identity; greatly reduces military involvement and spending while curtailing government surveillance; produces government sclerosis by getting lost in the wilderness of the endless desire to "do something" about each and every apparent malady.
Pessimistic - Gives power and identity to socialism in policy; accelerates greatly the growth of government spending; sets back free trade and immigration; creates new social divides and fosters greater identity politics.
Overall - Optimistic are slightly more likely than pessimistic.
What does it all mean at this point? Not much. Remember phase three... But for what it's worth, I would like to see a Cruz vs. Sanders finals. However, if we extend the field some (but unfortunately not enough to include Rand Paul), my preference among the awful alternatives is Bush vs. Sanders (this is definitely a minimax analysis).

Make no mistake about it. Each of these people would be horrible presidents when judged against the standards of liberty and the Constitution. But what else is new?

P.S., Sorry for all the parentheses.

Sunday, March 8, 2015

WWCF: Ultra-Luxury Shopping Malls or Widespread, Pervasive Free Samples?

Which will come first?

Ultra-Luxury Shopping Malls


Widespread, Pervasive Free Samples

We've been hearing about the death of malls for some time.

Evolution of shopping: It used to be an expensive luxury to go shopping--imagine Christmas shopping downtown in the big city in a black and white movie. The economies of scale both in production (better machines allowing low-cost labor to be more productive) and marketing (a big umbrella venue in the form of the traditional mall) worked for decades to make shopping more and more affordable. Malls couldn't exist until these factors reached a critical threshold. Then they became prolific. But something funny happened on the way to the Ridgemont Mall stereo store. 

Now shopping is again becoming too expensive for malls to provide it but not because of resource limitations but because of better alternatives. In both cases (the pre-mall and soon post-mall eras) opportunity cost are high (remember, opportunity cost is the only economically meaningful way to look at cost). It used to be that one needed to purchase a lot and purchase wisely given one's time investment in going shopping along with the goods offered for sale being a relatively big sacrifice. In steady progression the falling cost of goods and the improved experience meant that malls could command our shopping attention because they lowered the opportunity cost. Malls generally offered a more efficient alternative; although, the entertainment value of the mall cannot be overlooked. The mall was a big tent, bundled package much like a newspaper. It had a little bit of everything and could afford to accommodate nearly every taste because of the volume. Certain high-margin sales, which translated into profitable leases for the landlords, created opportunities for many low-margin sales--the marginal cost of adding costume jewelers and Orange Julius is pretty low once the mall is built and being paid for by anchor department stores.

However, today we have reached a state in which the alternative method of shopping, ordering online, dominates the efficiency of physical shopping by many orders of magnitude.* Compounding this problem for malls is the fact that there are many alternative forms of entertainment that make hanging out at the mall seem fairly dull. Hence, today the resource limitation is the ever-growing value of our time.

Are malls dead? Only malls as we knew them and in such numbers as we knew them. I predict a resurgence of destination shopping with and because of vastly enhanced luxury experiences. The retailer or landlord who masters this will enjoy rewards some will find surprising. These may not be the one-stop shop where "this mall has everything" and "the people of today's world hang out," but they will attract our time and wallet in a way that today's shopping malls cannot. I am thinking the magnitude of these differences will approach the differences between a day at Harrod's versus a trip to Wal-Mart and the experience at Bass Pro Shops and Cabela's versus the local bait shop. 

To be clear a qualifying "luxury mall" would have the following qualities:
  1. It would be a destination unto itself not just a shopping trip--many customers would go for the experience with no expectation of buying anything.
  2. It would offer a large variety of goods rather than a single theme.
  3. It would have a significant common space independent of any particular retailer.
  4. It would make past generations of mall goers feel completely out of the shopping league.

That was a long way to go to get to the first half of this WWCF. The second half will come quicker. Goods are getting fantastically cheaper as is shipping. Our time and attention continues to be scarce--in fact, it grows more scarce as our options of what to do with our time improve. One solution for marketers is simply giving the goods they wish to sell away for trial. Instead of targeted advertising to demographically attractive households, how about targeted distribution of the goods themselves? I am thinking a $100 purchase of household items from Amazon will come with a curated box of complementary items for free. The first of the month brings an unsolicited trial supply of "things you never knew existed and cannot possibly live without." Eventually, many households will come to expect this as the primary way to discover new, perishable goods. 

Which comes first? The adaptations to the mall experience have a bit of incumbency advantage being that the mall has a more symbolic and established position in our shopping lives. However, the sampling idea may have a faster ramp up. To make the competition more determinable I'll say the creation of the fifth luxury-type mall (new construction or massive renovation of existing space) competes against the regular delivery of unsolicited free sample goods to >500,000 households. These thresholds hopefully capture an established trend rather than a one-off beta test. I predict the free sample idea to come within 10 years and just before the luxury mall idea can qualify, but I believe both will spur along the other making it a quick finish. 

*Don't be misled by statistics that show only a small effect coming from online sales. I contend that heterogeneous-consumer, high-fixed costs businesses are generally very sensitive to small decreases in demand because they rely on a diverse, network-effect customer base that is harder to understand (hence, harder to regain once it begins to slip) and they cannot scale downward effectively. 

Monday, February 9, 2015

Thoughts on Tyler Cowen's OU Talk

I had the privilege of hearing Tyler Cowen speak at OU this evening. It was a very good lecture and the Q&A after was equally rewarding. I was impressed by the OU students' questions. My thoughts follow.

He began by saying how his job is to view the world "weirdly"--to look beyond the obvious in a way many find weird. As such he wanted to discuss three basic contentions or predictions (my apologies for any butchering from poor memory):

  1. Globalization will decline. 
  2. There is a myth of the rational autocrat.
  3. "Fortress (North) America" will see a continuation of the current stagnating trend. 

To be fair he qualifies these predictions with the caveat that they may be the most likely of many altogether unlikely outcomes. Perhaps there is a 30% chance of one being correct where that is still the most likely outcome possible. 

Much of what he predicts I agree with, and part of the thesis supporting his three contentions is too vague in my understanding for me to form sharp disagreement. In fact I think he is wrongly maligned because of inferences people create from The Great Stagnation and Average Is Over that are not his actual argument. Nevertheless, I find some disagreement in how significant the trends he sees are or how meaningful they are as a guide to the near future. 

Thinking back over the past 115 years in American history I can think of a few periods where change and trends would lead one to make very similar arguments to The Great Stagnation and Average Is Over, but in each of those cases the future turned out quite a bit different (better in fact). My question going into tonight was if he had a testable hypothesis (i.e., how will we know if he was wrong 20 years from now?). In his talk he did give some specificity to the three contentions, but it was not as definitive as I would have liked.

My thoughts and questions on each contention:
  1. Globalization will decline, which he defines this as cross-border trade as a percentage of global GDP declining (peak trade).
    • Isn't this a natural process as wealth grows, as local markets get deeper? Local economies seem to import the good until they can import the technology to do the work themselves--sort of a territorial vertical integration. Oklahoma can produce a lot now that it used to import from more developed states. The division of labor is limited by the extent of the market--hence, a larger market allows for greater division within it.
  2. There is a myth of the rational autocrat. 
    • I was confused by what he meant here thinking "rational" meant responding to incentives in self-beneficial ways, but instead I think he means rational to be peaceful or choosing or agreeing to good outcomes. 
    • I think he is largely correct that it is wrong to assume autocrats will choose or can be made to choose good outcomes.
  3. "Fortress (North) America" will see a continuation of the current stagnating trend. 
    • He looks at 1999 as a turning point stating that real median income has declined since then. This one I was able to discuss with him briefly afterwards. I asked how many (if any) 15-year periods over the past 115 years would match this pattern. He said there were some. And he agreed that we are probably in the beginning half of a ~40 cycle between the major advancements of a technology and the benefits reaching the entire economy. It is just that he sees the interim as quite painful for many and not as typically fulfilling for most as in previous cases. 
    • We were specifically comparing the early automobile and today's tech sector. What became clear is how he was focusing on the labor implications while I was considering the consumption implications. To me he is caught up in considering labor income, but that is a cost. The economic benefits of a technology are not how it employs people; it is how it enriches their lives.
    • Related to this I had another question I didn't get to ask. He stated that median, male, real income was lower today than in 1969. But isn't this a data-mined straw man? If the typical man can get by (and really thrive) in 2015 vs 1969 because his wife works or stuff is cheaper or his family wealth from prior generations allow, isn't this progress to the good? I fully agree that the patterns to labor, the risk factors to labor, the options for labor have changed and are changing dramatically. I am just not convinced it is necessarily bad for labor or that we can tell with any reasonable certainty.
Again, it was a very engaging and educational talk. 

Tuesday, January 20, 2015

Highly Linkable

Is that a Lite-Brite? No, it's NYC.

Have you heard the country song? It seems there is only one.

Five exam hacks to help you ace the final.

I tend to be an optimist about the future including and because of technology. I welcome the coming singularity. But I have to admit this concerned me and kinda shook me a little. More here.

How do you find something when a Google search isn't enough? Lifehacker suggests some options.

Looks like I need to change my views on flossing--and revise some other oral hygiene practices while I'm at it. (HT: Tyler Cowen)

The "coach who never punts", Kevin Kelley was interviewed recently on the AFA podcast. I predict in 10 years much of his heterodoxy will be orthodoxy.

Kevin Erdmann has a very good grip on housing policy. He Zoro's Shiller in a single paragraph and then proceeds to tear down all of the housing lobby's sand castles.

While we're calling out iconic economists, John Lee of Open Borders challenges Krugman greatly and Cowen to a lesser extent.

John Cochrane continues the craze taking on Keynesianism.

You might read this first before getting right to Pete Boettke answering Noah Smith's question on if economics swings left.

The zero-interest-rate environment succinctly explained with myths debunked by Scott Sumner.

Don Boudreaux offers some new year's advice on bad habits he wishes the government would break.

(UPDATE: housing policy link restored.)

Sunday, August 3, 2014

Highly Linkable

Andy Schwartz has penned the best analysis that I have ever read of the NCAA, its position as cartel, and the situation before it. Read it to understand the problem(s) and choose a side: Team Market (my group), Team Reform (the bootleggers and Baptists coalition of paternalist progressives and traditionalist conservatives), or Team Cartel (the NCAA today). I believe only Team Market is fully on the ethical and logical high ground. Team Reform's advocated position is not sustainable--the economic incentives will break it down as teams depart the model. Team Cartel might be sustainable in the medium term provided it can unconditionally win the multiple-front legal war it faces. I am being an optimist predicting that Team Market wins decisively and soon. I am simply being logical predicting that Team Market wins eventually.

Speaking of predictions, Randal O'Toole, the Antiplanner, discusses planning for the unpredictable as it relates to city planning and self-driving cars. And Mark Rogowsky makes some predictions about the business side of robo-cars, et al.

More predictions: Scott Sumner discusses some things that can't but will go on forever along with making some interesting predictions.

Here is a prediction that I will make in light of this excellent analysis (HT: Barry Ritholtz): Over the next 5 years hedge fund/alternative asset investment strategies will change A LOT while significantly falling out of favor among institutional money managers (anything outside of the retail brokerage level). I'll predict that in five year average fees are half what they are today and allocations are one-third lower. (UPDATE: To clarify, I am predicting that average fees collected are half as high in five years. If you think about how the average is affected, you'll realize this isn't as bold a prediction as it may seem.)

That's enough predicting for one post.

So Bryan Caplan has basically been following me around chronicling my strategy for success on my terms in life and in business.

Art Carden points out that while there are many negative aspects to poverty and most transcend time, fortunately a low income in absolute terms isn't one of them. Nothing gets you nothing . . .

I had the same reaction as David Henderson to this otherwise good personal finance article by Megan McArdle. People almost always misunderstand the tradeoff between 15 and 30-year mortgages as well as how to figure the cost-benefit of a refinancing decision. It's not about the time to payback on the closing costs and the likelihood of moving in the future. It is a comparison of two (or more) streams of cash flows discounted appropriately. Those other factors are just part of the input variables that must be included.

Like I said recently, the public doesn't understand inflation; Scott Sumner suggests the Fed may be coming around to understanding this and, hence, moving beyond inflation targeting.

Tuesday, July 29, 2014

WWCF: Sea To Shining Sea - Pot Freedom or Marriage Equality?

Which Will Come First?

50-State Legalization of Marijuana


50-State Licensing of Same-Sex Marriage

Let's be clear: both of these are coming and soon. Let's be clear as well on our position: it is a good thing. The magnitude of the first is substantially larger in terms of causing good. Ending this significant front in the evil War on Drugs will bear much fruit. The magnitude of the second is substantially larger in terms of indicating good. That society and its institutions are nearing a point of accepting and dare I say celebrating the choices and joys of others says volumes about where we have arrived morally and intellectually. Before we move on to the prediction side of this post, let me lay one more point down: one does not have to morally agree with either the use of marijuana or the act of homosexuality to still reach the moral conclusion that we (individually or through the government) have no right to use force to disallow either one. The first-best solution is for the government to play no role in either one of these peaceful activity/association.

It may seem obvious to some that a U.S. presidential candidate will campaign on legal pot for every chicken quite soon giving marijuana the upper hand. After all, the New York Times now supports it. Indeed as their new series puts it 37 states representing about 76% of the U.S. population current have liberalized marijuana laws. But in order for this race to declare a winner, the subject must be fully legal and recognized both within each state and federally. It is just a matter of time before Colorado or Washington residents see just how illegal marijuana still is within their borders. Oh, wait, it already happened...

Still, the trend is undeniable on the marijuana front. And when one looks at the state-by-state prohibition of state recognition of same-sex marriage, one sees significantly more opposition (see the chart at the bottom of the link). Yet, the trend here is both certain and strong. 

What really puts same-sex marriage ahead of the game is the fact that it has been scoring victories in the courts, and that really gets to the heart of this WWCF including why this isn't a fair fight. Marijuana is still the outcast. It is the humorous back story in the R-rated movie. Same-sex marriage is the lovable story line in the family-TV comedy

The ultimate force driving same-sex marriage ahead in this race is that while it literally needs governmental approval to exist, marijuana only needs governmental tolerance (or impotency in the face of economic forces more powerful than puritanical desires). The fight for marijuana legalization relies much on the unseen (the benefits of ending prohibition). The fight for same-sex marriage relies much on the seen (the people denied benefits).

I give the edge to same-sex marriage and I predict we'll have both realized (nation-wide, state and federal) within a decade. Freedom wins! Freedom wins! Freedom wins!

Cross posted at

Sunday, July 20, 2014

How The Worms Might Turn

Political thought experiment/prediction: In an effort to stay politically relevant and viable, Republicans become the party steadfastly and openly defending the old-age entitlement state (Social Security, Medicare, et al.). Democrats visit the Wizard and come away with courage, a brain, and even a heart for those truly needy. They shun the process of robbing from the young and non-white to give to the elderly (especially white elderly who tend to be of above-median wealth). All the easier for Democrats as the programs undeniably become cash-flow insolvent.

The demographic trends for Republicans are not good. They are the newspapers of political parties as their supporting base is growing older (hence, dying off). We've already seen a glimpse how quickly this prediction's premise can play out.

Democrats are the cable television of political parties as their supporting base is somewhat locked in, but they continue to disappoint. They aren't seeing the growth either, but they've managed to avoid major depletion. This might change given a disruptive enough force (perhaps libertarians can drive a large enough wedge between cronyism and the Occupy sympathetic).

Saturday, January 4, 2014

WWCF: Self-Flying Plane or Self-Driving Car

Which will come first?

Self-flying aircraft commonly used over American airspace
Self-driving cars commonly used on American roads

This post is inspired from conversations with a colleague. We agree that these innovations are coming and that it will probably be in stages. I believe our ultimate predictions are in alignment as well.

The technology will likely be out in front of the legislation as is commonly the case, and the legislation will probably be waiting on public and special interest opinion as it commonly my contention. Yet encouraging signs have been seen. The FAA has approved test sites for aerial drones (a step toward but still shy of the subject here since today's drones are piloted albeit remotely). Similarly, Nevada, Florida, California, and to some extent Michigan have approved autonomous car testing on their public roadways. 

As for advancement coming in stages, my thinking is that regarding both public opinion and legislation there are fewer hurdles for package transportation than there are for human transportation. The first stage will be the delivery of cargo via self-guided vehicle. This might mean one method paves the way for the others and the other three follow suit together (e.g., a self-flying plane delivers packages for FedEx and then sometime after that self-flying planes for commercial passengers comes about just as self-driving delivery cars and personal cars/taxis are made available). 

That last example lends itself to my ultimate prediction on WWCF. Large-scale cargo shipments via plane have perhaps the most to gain with the least to risk in the self-guided future to come. Among the advantages are the economies of scale offered (routes no longer limited to pilot availability and scale in both vehicle and network), the limited natural enemies (taxi unions and personal-injury lawyers are more formidable than are the pilots potentially displaced), and the concentration of benefits (a few package delivery firms). 

I think self-flying planes will be with us to some significant extent within a decade and cars will follow ten years after that. The planes will carry cargo only for the first five years. 

So I predict we will soon be saying, "Look! Up in the sky. It's a bird! It's a plane! Yup, that's exactly what it is. A plane that self flies like a bird."

Update: I am reminded by the colleague mentioned above that there is another facet of self-flying planes that might in fact precede cargo delivery. That would be crop dusting. Search and rescue would be another use. The low risk of danger to bystanders might help these types of uses be the first mover.

Wednesday, March 13, 2013

On the road again

I've been tearing up the Oklahoma interstates and toll ways the past several days. In one business-week's time, last Friday through Thursday tomorrow, I will have traveled over 1,000 for work. All of it driving having taken me southwest, north, northeast and finally southeast.

Besides the $.55 per mile reimbursement, the windshield time has enabled me to catch up with many of my podcast backlog. Especially helpful is Downcast's feature allowing 1.5x playback speed.

Two of the podcasts I listened to over this stretch along (Robert Pool on How to Build Infrastructure During an Age of Sequester from ReasonTV and Freakonomics Radio on The Downside of More Miles Per Gallon) with catching up with the latest installment of Chunka Mui's analysis and prognostications about Google's driverless car led me to do some predicting of my own.

In 30 years we will want to privatize and it will seem as obvious to privatize the roads as we want today to privatize and it seems obvious to privatize the US Postal Service. This applies to all roads from interstate highways to major metro arteries to lesser used neighborhood and rural roads. The impetus and obviousness of privatization as the natural solution decreases as we go down that list. Yet I predict that will indeed be the majority opinion held by those who seriously and objectively consider the situation. There will be strong doubters. It will probably prove to be a politically incorrect position. There will be entrenched special interests.

That is all to say that in 30 years we will be about 5-10 years away from road privatization -yes, that is indeed a prediction about the USPS today as well.

I have 80% confidence in all these predictions. I give a 75% probability that in 10 years the USPS will be gone or very largely gone as we know it today. I'll give the same probability about public roads (funding, maintenance, ownership, etc.) for the year 2053. Check back then . . .

Wednesday, January 30, 2013

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 . . .