I Was Desperate. Honestly Afraid. And Completely Helpless.

At first it was gradual, and then all of a sudden it was acute. I could be blamed for putting myself in such a position--at least it was somewhat my fault. But live long enough and you'll inevitably find yourself at the mercy of those around you, willing and desperate to take their help, and completely without options. 

It was late. Very late. And I was on a rain-drenched highway. Tired. Unable to go farther. And very hungry. 

I hadn't called ahead because I hadn't planned to be there. But there I was on a highway in the middle of nowhere Texas. To say I was between large cities was both true and meaningless. The middle of the Pacific Ocean is between large civilizations. 

I am a strong believer in the power of the consumer--that if you shop around and negotiate, you can drive a great bargain. But I was at the mercy of the supplier--a mere price taker that night. 

A warm meal, a dry bed, a safe place. My needs were a short list. Yet not fulfilling each would be critically bad. Drive on and the risks grew exponentially. Try to negotiate a better deal, and my only options might evaporate before my desperate eyes. 

Any slightly observant person could see my position of weakness. Any slightly opportunistic person could sense my vulnerability. So how bad did it get?

Not too bad at all under the circumstances. The motel owner had stayed up late, as it turns out, just for me on the off chance I would be there in need of his accommodations. His accent made clear he and I were not born and raised in the same place. I was a stranger on his doorstep, but he welcomed me as one would a good, long-time acquaintance. I paid him $159 for a room with a hot shower and comfortable bed I would use for the next 8 hours. After, he (or his staff) would have to clean it up restocking and doing laundry. I would leave without saying goodbye. 

Before that shower, I needed food. Two in the morning is not when many meals are served as evidenced by the many closed restaurants. No one ever starves missing one meal, but it can be quite unpleasant to do so. And good decisions are not made on an empty stomach and a poor night's sleep from the same. The 24-hour restaurant made sure that wasn't my fate. I was their only customer in the 45 minutes I spent. At least three people (couldn't tell if there were more in the back) gave me nourishment and quiet companionship all for the price of $23.

The morning sun brought a new day and a fresh outlook. My car was safely waiting untouched for my departure. I grabbed coffee and a Danish set out for me at the motel before dashing out the door. A quick fill up at a gas station meant I could be on my way not needing to stop for hours. 

I felt slightly uneasy leaving so abruptly that morning. Guilty would be too strong a word, but I was dashing off having taken so much from so many who were so generous to have provided it for so little in return. I can't imagine I'll ever be back on that same highway, and even if I am, it is unlikely I'll ever stop in that little spot again. I hope someone else can do a little more someday to take care of the people who took such good care of me.

P.S. This post's story is truish. It is a amalgamation of true prior experiences in my travels for the purposes of making a point. Life is tough--use markets.

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It Takes a Cynic

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

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

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

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

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

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

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

Or when he says it more plainly in episode 2: 

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

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

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

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

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

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

— Steve Winkler (@swinkler78) August 10, 2020

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

Walter Williams, R.I.P.

 

Walter Williams, one of the greatest communicators and expositors of freedom and economics, passed away this week. While I never had the pleasure of being in his classroom, he was quite certainly a teacher to me. My first encounters with his work were reading his articles in The Freeman and his republished op-eds in the Conservative Chronicle as well as attentively listening when he would fill in for Rush Limbaugh. Over time as I became enlightened, with no small part guided by Dr. Williams, it was only his moments filling in for Rush that I would find that show meaningful.

He was a teacher directly to many teachers I have had including ones who entered his classroom avid Marxists and exited passionate free-market capitalists. 

I strongly encourage you to read Don Boudreaux's tribute to him in the WSJ as well as watch the short documentary, Suffer No Fools.

For more tributes, see this list.

May he rest in peace, and may his great work, wonderful spirit, and inspirational message live on.

There Should Be A Law!

Partial list of areas where there might be a market failure and I might support government intervention:

• Masks and social/physical distancing rules in a pandemic - I much prefer persuasion in the marketplace of ideas backed by good and plentiful information. That said, in a very serious health crisis a government-enforced policy might keep the peace and prevent very costly experimentation from defectors like a business not complying. Bringing this to the news of the moment--I generally do not think SARS-CoV-2/COVID-19 qualifies. A failure on the part of government (and others) to even properly try the persuasion avenue does not then necessitate the force avenue. Further, compliance with practices consistent with most all of the nonpharmaceutical interventions has been remarkably high and widespread as well as ahead of the mandated institution of the NPIs. This is a point the advocates of force ignore until they wish to defend against the accusation that the economic and other costs have come as a result of forced NPIs. Then they are quick to point out that "it is the virus, not the lockdown". Careful thinkers realize it is both and the latter makes matters on net much worse.
• Zoning - but not in the way most people think. This one really is more of a government failure that perhaps needs collective agreement. Zoning way too typically becomes NIMBYism protecting vested current interests at the expense of potential and less powerful interests. Basically we may need higher-order (federal) laws preventing localities from encroaching in private property rights.
• Certain, limited cases of patents - Here is my prior thinking on this subject.

There are at least two problems with most cases of the discovery of market failure:

1. That you're overlooking some critical factor that negates the market failure condition. There is something else going on here; there are needs being satisfied along an unexplored dimension.
2. The market failure does exist but will be short-lived and thus insignificant. Short-lived might be in the eye of the beholder, true enough, but this is definitely an area where a longer than average point of view is needed (near-far mode if you will). 

[Updated 12/1/2020 adding to the partial list]

• Garbage collection
• Subsidies for under-produced goods (e.g., vaccines, General healthcare, education)
• General city planning such as road layout and utilities, etc.

It is best to think of these as coordination problems where a central actor can potentially lower transaction costs. The word potential here is doing a lot of work. Just because government theoretically can solve a problem doesn’t mean government in any way, shape, or form will solve that problem in a desirable manner. And note also that just because government might be desired to be a participant in the solution it doesn’t mean they have to provide the solution. Funding it can be a much better role for government to play with private actors actually doing the operational work. School vouchers are perhaps the best example of this, but garbage collection among many others fits as well.

Clutch Your Pearls

 

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

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

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

My Futile Desire For People To See The Truth

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

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

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

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

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

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