A Little Whine

Me: "Look what just came in the mail!"

Me: "Wow! $100 off a case of wine. I really like wine. I'll put this to good use."

William Jennings Bryan: "I'm sorry, but you cannot use that voucher."

Me: "Why? Is it a fraud?"

WJB: "No, it is entirely legitimate."

Me: "Excellent! I think I'll start shopping right away."

WJB: "That will do you no good."

Me: "Is the Internet down?"

WJB: "No, the Internet is working fine. But the wine cannot be shipped to you."

Me: "Why? Is there some act of God preventing delivery of packages to my area?"

WJB: "No, the shipping companies are operating. They just cannot deliver wine to individuals in Oklahoma."

Me: "Why are they picking on Okies?"

WJB: "They are not. They would love to deliver the wine to you."

Me: "Is Zagat picking on Okies?"

WJB: "Oh, no. They would love to sell the wine to you."

Me: "Then who is behind this?"

WJB: "Okies. Well, Oklahoma law to be precise."

Me: "But wait, isn't Oklahoma part of America? Or did we get swept up by a twister and delivered to Oz?"

WJB: "Of course you're still in America. In fact there are several states that prohibit the direct distribution of alcohol to individuals who do not have a distributor's license."

Me: "Prohibit? I thought alcohol prohibition ended decades ago."

WJB: "Sadly at the federal level it did. But the states were reserved the right to limit it as they saw fit."

Me: "And the way they see fit is to prevent anyone without a license from having wine delivered to their address? That doesn't sound very consumer friendly. Why would they want to create a monopsony/monopoly situation?"

WJB: "It's great for the distributors. Plus, it's for your own good."

Me: "How is it for my own good?"

WJB: "How would you know the wine being delivered is wine without a licensed distributor verifying it by having it delivered to and promptly delivered out of his warehouse?"

Me: "Well, I could trust the people at Zagat and then when it arrives I could taste it."

WJB: "Oh simple citizen, imagine the chaos if every Larry, Moe, and Curly were having things shipped to their home for direct consumption. We must have licensed professionals as part of the process."

Me: "But we do have thousands of things via Amazon . . ."

WJB: "And what if your children were to go on this Internet and order wine? They could be dead drunk before you knew what happened."

Me: "Like if they got into the wine I have in my house that I purchased at an Oklahoma liquor store but not a grocery store because that is illegal in Oklahoma and not that I purchased on a Sunday because that is illegal and then they drank it all up . . . Do I need a state-licensed person perhaps to have a key to my liquor cabinet to make sure only authorized people consume my wine?"

WJB: "Interesting idea . . ."

Me: "Sigh . . ."

Go On, Take the Money and Run

Almost three years later, I along with tens of thousands of Americans have now received back the money we had on deposit with FullTilt.com. Collectively we had about $80 million that we were using to play online poker. Suddenly on April 15th, 2011 (Black Friday) those funds were no longer available and the website and computer programs used to play poker and transact into and out of player accounts were shut down by our friends in the U.S. Federal Government. Of course, it was for our own good . . . Wish you'd stop bein' so good to me, Cap'n.

It is my understanding that playing real-money online poker has never been illegal--not before passage of the UIGEA, not between its passage then enforcement and the actions taken on Black Friday, and not after including when the DOJ said, "Oops, my bad!"

But my understanding does not matter here. Let us not have a failure to communicate when we say, "Consenting adults playing poker with their own money SHOULD NEVER BE ILLEGAL!" Alas, we do not live in a world of free markets and free minds. And so when the Attorney General of NY took action on Black Friday, he pushed online poker from the shadows and fully into the black market. Throughout this entire affair online poker has always been available to U.S. players. But as the government took a firmer hardline stance against it, the providers (Party Poker who abruptly exited the U.S. market in 2006, FullTilt, PokerStars, Bodog/Bovada, et al.) and facilitators (various third-party money transfer services) some of whom remained in the market became less transparent and less trustworthy. However, FullTilt never failed to fulfill any withdrawal requests I made including one made a few weeks before Black Friday. It remains unclear how at risk player funds were before government action versus how government action created a liquidity risk.

The fight goes on. There is strong, widespread support for poker including lobbying by the aforementioned via link Poker Players Alliance (PPA). And there is the fledgling coalition against it led by casino magnate Sheldon Adelson. No fear mongering is beyond the pale for Sheldon's group--"Online gambling funds terrorists!" "It's going to target the elderly and college-aged children, CHILDREN!"

This recent NPR piece shows where the trend is going along with the position the prohibitions are staking. From the story, Sheldon states, "I'm morally against it and I think it will kill the entire industry." Sorry Sheldon, you can't be both the Baptist and the Bootlegger at the same time. Framing it as a moral stand is transparently pathetic. But at least that would be an argument, begging the question that government should enforce your morality positions. That it threatens your business model is never an argument against innovation or for prohibition.

And so we grind on.

Everybody Talks

Listening to a recent Freakonomics Radio episode about gossip got me thinking about journalism and the perhaps unintended role it plays or has played in regulating society some. In the episode we first hear about research by Thomas Corley summarized in his book "Rich Habits" that showed the behavior differences between rich people and poor people. One of the differences he found was that the rich gossip significantly less than the poor. However, the rest of the episode tends to dispute that finding.

What stood out to me was how necessary the role of gossip seems to be for many aspects of society (e.g., norm setting and regulation) and how differently we approach and are affected by gossip. It doesn't seem at all unlikely to me that the wealthy would have different gossip habits and methods than the poor. The rich have different tools--namely, they have journalism. Or at least they had it until those crazy kids started TweetBooking everything.

Here is a theory that probably isn't original to me. I am not completely sold on it myself; it's just a hunch that I think at least partially explains what we've seen.

The rich and powerful have traditionally exerted a lot of control and influence over news media. This part is not in dispute. The creation and growth of news media served two primary purposes: 1) it had an informative value (stock reports, political actions, etc.) and 2) it had an entertainment value (local celebrity news, sports, etc.). But the problem is aside from the cut and dried factual reporting like the price of wheat or the winner of the mayor's race, most news reports have some damaging aspect to them that someone would like to keep quiet. These could range political corruption to a juicy, high-profile divorce to, well, the price of wheat for the guy who is trying to buy at a market discount. When we get down to it, the fact that we have journalism and that the rich and powerful put up with it seems a bit of a puzzle.

So what explains journalism as we know it--journalism that reports the good, the bad, and the ugly for the most part about both the rich and the poor? I think game theory offers a solution. The idea is that journalism is a necessary evil. Basically the job description was artificially created because the role was needed more than it was wanted. This puts it at odds with the idea that journalists are noble superheroes with special investigative and truth-finding powers striving to do good--journalists aren't that special, just don't tell them that. Rather it is as if the rich sat down and played a quick game of MAD where they realized they needed a controlled outlet to realize the informative value and entertainment value of journalism but not have chaotic reporting where the message cannot be controlled. What's more journalism offers what I would call auditor-caused moral hazard--if the auditor doesn't catch it or correct it, then it must be okay. That is a useful if unintentional purpose.

Of course there was not some secret meeting on Jekyll Island where journalism was launched, and the early twentieth century's muckraking shows how different the market for journalism can play out than what the rich and powerful might otherwise like. However, it was some of the rich and powerful on the production side of muckraking. So, no; journalism was not centrally planned or created in the last 200 years. It is a very long-run emergent order. Yet being emergent does not preclude it from my game theory theory or isolate it from powerful guiding influences. I think that my theory well explains how it was nurtured and shaped. Or perhaps captured is the better term. When journalism emerges as powerful enough to threaten the elite, the elite appropriate it for themselves.

With some ebb and flow between a more pure journalism and a more controlled journalism, this all is going along nicely until the Internet comes along. Then chaos. The Internet causes major disruptions to this order by commoditizing the tools of journalism with blogging, smartphones, et al. flattening the business model. The elite did not have this in mind. If the journalists are "us", and all of us at that, then we, elites and all, have to be more honest. We can't control the message or information--at least that control is very greatly weakened. Journalism before served a purpose to tell a story, a version of the truth, to the masses as a few saw fit. Now journalism is telling many stories, many versions of the truth including many with higher truth value than before, to varying numbers of consumers as many see fit. And it is deeper than that. The story isn't so one directional. It is more and more a conversation.

The quickest way to wreck a game theory optimal solution is to change a premise. The Internet is just such a change to the game theoretic outcome that journalism had been for so long.

Highly linkable - on high-minded steriods

I want to go to there. And while we're at it, here too.

So let's talk about misled people doing selfish things. But perhaps it is not as bad as it seems.

Here is a different example of the same kind of high-minded nonsense as above. I particularly like the quote: "It’s time for the altruists to get over themselves. We cannot afford the price of their convictions."

The high-minded Fed controls interest rates, right? Wrong.

Just how bad are the effects of rent control--one of many forms of high-minded real estate planning? Maybe to the tune of about $1 billion dollars on a $3 billion neighborhood. Dr. Evil would be proud.

Lenin was a prohibitionist!?! Shocking . . . well, no; that makes sense. He was high-minded enough to want to help every aspect of Russian life.

Speaking of turn of the 20th century garbage, apparently my Spidey Sense was correct when it picked up on something rotten in Downton. The George Will piece quoted in the previous link deserves its own link. Still a good show; let's just not romanticize how hard life was for most everyone in prior generations.

Enough negative stuff, for the moment. Let's think about a cool new business idea. While we're at it, let's think about how fabulously wealthy cool new business ideas continue to make us.

Okay, moment's over. You know, college football isn't a business; hey, stop laughing! Like all NCAA sports, it is about pure amateurism.

Sticking with sports, I think I am being consistent when I believe both (1) that Oklahoma State's Marcus Smart was potentially justified in pushing a Texas Tech fan (if the fan had been injured and I was on a jury, I would be giving heavy consideration to a self-defense argument in favor of Smart) and (2) people in public (state-owned) spaces or attending official-state-functions have wide latitude to say nearly whatever they want in the act of cheering. The First Amendment doesn't have a carve-out exemption for your or my high-minded respectfulness or proper etiquette. You don't like cussing, hatefulness, and otherwise ugly slurs coming from the crowd? Quit funding sports arenas and sports teams with taxpayer money.

When it comes to sports and high-mindedness, you don't get any higher than the Olympics. And you'd have to be high not to see through the veil of virtue and right into the corruption, state run-amok wastefulness, and panglossian denial of oppression that is the Olympic gathering. I very much like the stories of so many of the athletes. I like the history of competition. I detest the desire to pretend there hasn't been and doesn't continue to be intense nationalism (an illogical and evil conception) at the heart of The Games. Don't get me wrong. I root for Team USA, but I also root for others. These sports aren't my sports, and some aren't even sports. These are interesting curiosities that viewing for just a few moments will satisfy my interest for four years at least. But if you're really into it, great! Just don't tell me we are obligated to root for our country. And don't tell me it is "us" versus "them". And PUH-LEASE don't tell me how great The Olympics are for world peace, the economy, or NBC ratings.

Saving the best for last, Megan McArdle busts the high-minded bubble of paint-by-numbers educational excellence cum success. "Let your kids fail!" is perhaps the best advice one can give a parent.

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 

Partial List time . . .

As you may remember, I am fond of partial lists. Here below is another.

Partial list of tasks that life is too short for/my time is too valuable to use it doing these things.

• Checkbook and credit card reconciling
• Seeking out cheap gasoline
• Regularly flossing
• Watching the local TV news
• Voting
• Ironing (This includes owning dress shirts that require ironing; wrinkle-free makes ironing or paying for laundry ironing ridiculous.)
• Finishing books that have lost my interest
• Sending out Christmas cards
• Painting my house interior or exterior
• Some cooking--the complexity, skill required, or mess created imply outsourcing is the right call
• Clipping grocery coupons (any level of search costs negate the potential savings)
• Household recycling

PS. This may be the year that mowing the yard goes on this list. I am close. I enjoy it or at least I like that I do a good job on it. Summoning my inner economist . . . we'll see. 

Highly linkable

Let us begin with some stunning photographs that should help to put all of our little problems into some better perspective.

Speaking of perspective, Scott Sumner shows in this post how subtle the relationship is between interest rates and the Fed with implications for monetary policy, et al.

And Arnold Kling has a different perspective on how Austrian macroeconomics should be framed. I agree, and I think there is more agreement between Kling's macro views and Sumner's macro views than I think either of them believe.

New thinking needs to kill the TV news star according to Jeff Jarvis as his perspective has him as mad as hell about TV news. I agree, and I'm not gonna take it any more . . . see the next post.