The seen and the unseen

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.”

—Frédéric Bastiat, “That Which Is Seen and That Which Is Unseen,” 1850

One look is worth a thousand reports

"[...] I visited the troops near Coutances on the twenty-ninth and found an armored division sitting on a road, while its Headquarters, secreted behind an old church, was deeply engrossed in the study of maps. I asked why they had not crossed the Sienne.  They told me they were making a study  of it at the moment, but could not find a place where it could be forded. I asked what effort they had made to find such a place and was informed that they were studying the map to that end. I then told them I had just waded across it, that it was not over two feet deep, and that the only defense I knew about was one machine gun which had fired very inaccurately at me. I repeated the Japanese proverb: 'One look is worth one hundred reports,' and asked them why in hell they had not gone down to the river personally. They learned the lesson and from then on were a very great division."

War As I Knew It, George S. Patton Jr., Bantom Books (Mass Market Paperpback Edition, May 1, 1983)

 

 

---

 

I've been misquoting this:  Patton said one look is worth one hundred reports; I rounded it up, rather liberally, to one thousand.  I probably confused this saying with 'A picture is worth a thousand words' and that induced the rounding error.

 

Regardless of the magnitude of the value of the reports vs direct experience, the lesson is still valid.  Here are other ways of thinking about it:

• "Don't mistake the map for the territory."  (http://rationalwiki.org/wiki/Mistaking_the_map_for_the_territory);
• The second commandment, "Thou shalt not make any graven images" can be interpreted as "don't confuse the idol with what it represents." ((http://en.wikipedia.org/wiki/Thou_shalt_not_make_unto_thee_any_graven_image);
• And Plato's allegory of the cave, where the shadows are mistaken for reality (http://en.wikipedia.org/wiki/Allegory_of_the_Cave).

A brief selection from Economics in One Lesson, by Henry Hazlitt

Economics in One Lesson is a 218 page book by Henry Hazlitt; my wife has an early edition of it.  (http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232)   I've never read it, because I've never had to get past the initial premise, which is adapted from an essay by Frédéric Bastiat written in 1848: What Is Seen and What Is Not Seen (http://www.econlib.org/library/Bastiat/basEss1.html).  Also 218 pages doesn't strike me as one reasonably sized lesson.  (My wife found her copy and I flipped through it:  "The lesson" is only about 15 pages; the rest of the book is examples of bad policy.)

I would argue that a major goal of systems programming is finding the unseen behaviors in the code; the obvious stuff is easy.  The unseen stuff is hard.  I think you can replace "economist" with "programmer" and "policy" with "module" in the following.

What is money? Nobody knows

From:  Too Different for Comfort, by Louis-Vincent Gave, which you can read here: 

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/01/Too%20Different%20For%20Comfort.pdf

(This post is also about robots!)

Excerpt:

The question of what constitutes money has pre-occupied much finer minds than ours. For example, a wall display in the Bank of England museum notes on the debate on the nature of money between William Pitt the Younger and Charles James Fox that: “Fox argues, quite rightly, that every note issued by the Bank should be backed by gold. Pitt, on the other hand, maintains that the Bank should issue as many notes as are needed.” 

Obviously, times have changed and the “quite rightly” seems somewhat at odds with the philosophy currently prevailing at the Old Lady. The fact that the Bank of England could, two centuries later, feel so differently about the core issue at the very center of its own existence than the faith professed on its own walls is a revelation in itself. By comparison, we doubt that there will ever be a Pope in the Vatican who will state publicly that perhaps Jesus-Christ did not multiply bread, or that he was not born from the Virgin Mary. This illustrates how difficult it is to define the nature of money. For centuries, we have used money to measure value, to store wealth, and to exchange goods, but no-one can really say why money has any value at all; a paradox which has trumped the greatest minds in Western civilization.

Aristotle was the first to try and tackle the topic and expressed the view that money had to have a high cost of production in order to make it valuable, and to allow it to represent a lot of value in a small physical format. He also argued that everybody had to accept money as a means of payment, as a store of value or as a standard of value. This drew Aristotle, the first famous gold-bug of sorts, to the conclusion that only gold and silver could be accepted as money. But even a gold standard leaves us with the quandary of a farmer selling his wheat for something that is essentially useless? Aristotle also does not explain why it would make sense, and generate wealth, for people to spend resources and time to dig up holes in mountains, and then take the proceeds of their efforts to bury them in another hole somewhere else? Even more alarmingly, it seems that the core of the Aristotelian argument is that gold/silver have value because they take a lot of effort to extract; in other words, at another time, Aristotle might have been a paid-up subscriber to the Marxist labor theory of value, a theory that we now know to be an intellectual dead-end.

Indeed, as the Austrian school amply demonstrated, the labor theory of value (the idea that the price of things should be determined by the amount of effort that was put into producing them) is not worth the amount of time that the classical economists and later Marx spent on the topic. Incidentally, this makes it ironic that so many people who claim to be Austrian economists also happen to be gold bugs. Indeed, one can be a disciple of Aristotle, Ricardo or Marx and be a gold bug; but one cannot claim to be a follower of Ludwig von Mises and argue that gold is the answer. Indeed, the founding stone of Austrian economics is that value is totally subjective. So how can we have a world in which all values are subjective—except one, gold, which would be objective?

The Aristotelian explanation thus falls short. The reality is that gold and silver do not have a value because of the time, resources and cost involved in producing them. Instead, gold and silver have value because everybody believes they do.  This is not at all the same thing and leads us to the second view, namely that of Plato.

For Plato, money is just a social convention and has no intrinsic value except the one that people ascribe to it. This is a lot more acceptable, and very close to the marginal theory of value. Thus, for Plato, money is little more than a social convention and money itself need not have value, except the one that people wish it to have; which only brings us back to the debate between Fox and Pitt immortalized on the walls of the Bank of England and quoted above.

Paul A. Samuelson, Who Reshaped Economics, Dies at 94 - Obituary (Obit) - NYTimes.com

Paul A. Samuelson, Who Reshaped Economics, Dies at 94 - Obituary (Obit) - NYTimes.com: "The textbook introduced generations of students to the revolutionary ideas of John Maynard Keynes, the British economist who in the 1930s developed the theory that modern market economies could become trapped in depression and would then need a strong push from government spending or tax cuts, in addition to lenient monetary policy, to restore them. Many economics students would never again rest comfortably with the 19th-century view that private markets would cure unemployment without need of government intervention."

Too bad this guy died.  I wish he had lived another 10 years so he could see just how wrong he truly was.  But I don't think even directly experiencing how poorly his ideas worked would have convinced him.  Japan has been following this nonsensical teaching for the last 20 years (pushing 30 years now) and all they have to show for it is increased debt and stagflation.  So even in the face of evidence that government can not spend its way out of a recession Dr. Samuelson would still have been a believer.

If you read the whole article you'll see that Dr. Samuelson advised President Kennedy to cut taxes to get out of a recession.  No doubt, leaving money in the economy, even at some cost to the government in terms of interest payments, might actually help, as the economy grows enough to cover the additional interest payments.

But just because it works once in a while and at a small scale does not mean that a government like ours with tens of trillions of dollars in public debt with a constituency with another tens of trillions in private debt can spend its way out of the sinkhole of debt that has been created.  Japan, which 20 years ago had a huge surplus, and was therefore in a much stronger position to potentially stimulate their own economy, has utterly failed at the task.

The reason is simple - governments don't create productivity.  Governments can spend money and governments and print money but governments don't generally create much of anything except paperwork.

Unfortunately the die is already cast.  When the stock market crashes again and everyone once again panics we'll be told that we have a liquidity crisis and only intervention by the central banks can save us.  They will print another couple of trillion dollars and give it to the banks who will use it once again to buy their own stock offerings.  More savings by the middle class will be wiped out and another 10 million people will be out of work.  In the meantime, useless politicians will tool around in limousines and pat themselves on the back for the important work they are doing.  Ugh.


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Obama Lincoln

Obama's Big Sellout : Rolling Stone: "What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside."

*Sigh*.

Obama says he admires Abraham Lincoln and that Team of Rivals was a huge influence.

I guess he paid particular attention to the part where Lincoln and his Secretary of the Treasury discovered a clever way to pay for the Civil War: print money.

I guess The Peace President needs to print a lot of money because we have a number of wars going: The War on Drugs; The War on Poverty; The War in Iraq; The War In Afghanistan; The War against THE CLIMATE; and I'm sure there are more.

Taken together, the rash of appointments with ties to Bob Rubin may well represent the most sweeping influence by a single Wall Street insider in the history of government. "Rather than having a team of rivals, they've got a team of Rubins," says Steven Clemons, director of the American Strategy Program at the New America Foundation. "You see that in policy choices that have resuscitated — but not reformed — Wall Street."

In fact, Obama is doing what Lincoln did - appointing insiders.  The so-called "Team of Rivals" was Lincoln's cabinet.  It's "ex post facto" storytelling by Doris Kearns Goodwin that Lincoln hired his team because he wanted alternative views.  In fact he wanted insiders to balance his own outsider status ... and if they had conflicts with each other then he resolved them - but Ms. Goodwin gets the cart before the horse.

It's the same for Obama.  He's the outsider but 100% of the people around him are Washington insiders.

Our presidential elections are a no-win situation.  The president is a figure head.  Washington is run by the insiders who have formed a bureaucratic cesspool of toxic insider deals.  I guess as figure-heads go Obama is doing a fine job - he just got the Nobel Peace Prize for not being George Bush.

Today, the great enabler, of course, is the Federal Reserve, working jointly with the banks and the politicians to ensure both groups have plenty of scratch.  Lincoln was on top of the situation in that regard as well, as he created a central bank that printed money to fund the war.  Luckily that bank eventually failed just as the Federal Reserve will.  All paper money eventually fails just as all Ponzi schemes eventually fail.  Figuring out the timing is pretty tricky but one day the people in Bernie Madoff's fund were millionaires and then five minutes later they were completely broke.  When it happens, it happens fast.  Anyone with something called a dollar is a participant in the Federal Reserve Ponzi scheme and when it collapses it will happen very quickly.

It's best to be prepared.  If you can figure out how, that is.  I leave that as an exercise for the reader.
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Dubai [World]

Abu Dhabi’s Silence Raises the Heat on Dubai - NYTimes.com: "Many here had assumed that Abu Dha bi would bail out Dubai’s flagship company, Dubai World, which set off a swoon in global markets last week when it said it was seeking to delay payments on $59 billion in debt. But so far there has been no announcement, and insiders suggest that Abu Dhabi — which already bailed out Dubai to the tune of $10 billion earlier this year — is seeking greater economic or even political control over Dubai as the price for any further assistance.

To make matters worse, the Dubai government distanced itself from Dubai World on Monday. Abdulrahman al-Saleh, the general director of Dubai’s Department of Finance, told Dubai TV that Dubai World was “not guaranteed by the government,” and that creditors needed to take some responsibility. “They think Dubai World is part of the government, which is not correct.”"

So I'm not the only person that's confused about what's what. In my earlier posts I said that Dubai was defaulting. It's actually Dubai World, a separate company. But everyone (including me) assumed Dubai World was basically part of Dubai.

In our country, there was a bank called The Bank of The United States that failed, but everyone thought it was the government that failed. This caused a huge bank run.

Having said all that, it's still the case that there are tightly interwoven relationsips in Dubai since nearly all relationships are blood relationships.

In the US, Fannie Mae and Freddie Mac, and the Federal Home Administration (FHA) have implicit government guarantees, but as Market Skeptics points out, these are not real guarantees. So it'll be interesting to see who is left holding the bag when those agencies finally and completely implode.



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Dubai - Incredible

Dubai is in the news because it's defaulting ("postponing") payment on $60 billion in loans.

So I though I'd fly over the place in Google Earth.

I recommend you do the same. Just fly to "Dubai" and zoom out and you'll quickly find the man-made Palm Islands. Hunt around for the monorail track, the aquatic park, the giant hotel, and the range of homes/apartments, and ... lots of still empty sand.

It's unfrickin' believable.



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Limits

Fed Considers Bank Pay Limits - NYTimes.com:

"The Federal Reserve is preparing what would be the most sweeping rules yet to regulate the pay at banks across the country, people close to the discussions said on Friday.

The rules would apply not just to the compensation and bonuses of top executives but also to traders, loan officers and other employees. But rather than focusing on the specific amount employees are paid, Fed officials will be scrutinizing whether the structure of compensation, like the use of bonuses based on the volume of loan origination, encourages excessive risk-taking."

This is so stupid. The easiest way to keep anyone from excessive risk taking is to raise interest rates. The source of all the excessive risk taking was the low interest rates created by the Federal Reserve itself.

But you won't hear the Federal Reserve take any responsibility for the meltdown even though they are the source of the original bubbles that cause so much pain and suffering.

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Hitler rants about Avatar Movie Preview

OMG. These Hitler things ... they defy Godwin's Law! Maybe the law is more of an observation within a certain set of constrained parameters than an actual law?
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North to the Future

I watched Shatner doing Palin today:





It's not clear from the editing if Shatner is doing Palin literally or following the editing of the clips.

I found the full transcript of Sarah Palin's Farewell Address over at the Huffington Post and in fact Shatner is doing the second paragraph, word for word. So that mystery is cleared up.

But ... WTF? It's an amazing speech, really, if you give her the benefit of the doubt, and disable any critical thinking ... you might even enjoy some of her sentiments.

"Be wary of accepting government largess."

Good advice - there are always strings attached.

But then ... why get a per diem for working from home?



Doesn't that seem ...

"And we have come so far in just 50 years. We're no longer a frontier outpost on the periphery of the world's greatest nation. Now, as a contributor and a securer of America, we can attain our destiny in the promise of our motto 'North to the Future.'"

North to the Future. North to the Future.

Right.

North ... to ... the ... future. Well, that's actually their motto! You can't blame her for that, can you?



Don't we need to go "Back to the Future" before we can go North to the Future?



I'm so confused.

But anyway, she'll be the backbone of the formation of the stream that is a river that I'm so thankful and grateful and will become a new political party and it will dominate because of the stream of babies it will produce.

Or something.

Actually, let's quit kidding around and jump straight to the facts. The facts are these: David Letterman and Conan O'brien have teamed up to underwrite Sarah Palin's political career. The reasoning should be obvious - the loss of revenue caused by the removal of Bush from office could cripple the humor industry and its only with this kind of stimulus that late night TV can retain it's rightful place as a part of every American's day.

Am I rambling? I'm just so inspired by Ms. Palin that whatever small amount of editing goes into this blog just seems like overkill.

Okay! G'night all!





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Governor's Mansion

This is the Governor's Mansion in Juneau, Alaska. Normally Sarah Palin would come out at 2:00 p.m. and model an outfit for a few minutes but the actual duration of the legislative "season" in Alaska is quite short and anyway she had announced her resignation already and the first thing to go was the daily modeling. What a shame.

Okay, I made that up, but this really happened: as we approached the mansion, a ten year old girl ran up and said, "I'll pretend I'm Sarah!" I couldn't tell if the kid was making fun or serious but on reflection I'm going with serious.

This is also true - that totem has a flea in it - the part with the big thin nose (I guess technically it would be a proboscis). I'm told it's the only totem in Alaska with a flea in it. Totems are like family crests and don't have any religious meaning. They supposedly tell a story. I don't know the story of the flea and the Governor's Mansion though.



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Sidebar - A Reticent Justice Opens Up to a Group of Students - NYTimes.com

Clarence Thomas says:

“I have to admit,” he said, “that I’m one of those people that still thinks the dishwasher is a miracle. What a device! And I have to admit that because I think that way, I like to load it. I like to look in and see how that dishes were magically cleaned.”

I agree!

And I think I agree with his statement that we have too many rights ... that's actually impossible, but I think he really meant there are too many entitlements from government.

It's sad because when someone says, "Clarence Thomas," all I can think of is ...

One of the oddest episodes I remember was an occasion in which Thomas
was drinking a Coke in his office, he got up from the table at which we
were wording [sic], went over to his desk to get the Coke, looked at the can and
asked, "Who has put pubic hair on my Coke?"

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60 days

King County Department of Assessments:

"The King County Department of Assessments January 1, 2008 valuation change notices were mailed to all property owners during 2008. The opportunity to appeal the value is limited by state law to 60 days from the mailing date of the notice."

Like I don't have better things to do than evaluate this evaluation as soon as it arrives. Also, this notice about the appeal rules is not on the form - it's on a website link on the paper form that looks extremely optional.

Communists.

But on a happy note, back in California we successfully petitioned to get our house valuation lowered.

So it can be done. Just not within a reasonable time frame in King County.

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Apparently that means "fuck you"

Offset Time Zones - An Overview of Offset Time Zones:

"India, the world's second most populous country utilizes an offset time zone. India is a half-hour ahead of Pakistan to the west and a half-hour behind Bangladesh to the east. Iran is a half-hour ahead of its western neighbor Iraq while Afghanistan, just east of Iran, is an hour ahead of Iran but is a half-hour behind neighboring countries such as Turkmenistan and Pakistan."

Apparently a country gives itself a half-hour timezone offset as a way of saying "fuck you" to its evil neighbor.
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Netflix

Netflix

"Netflix, Inc., reserves the right, from time to time, with or without notice to you, to change these Terms of Use in our sole and absolute discretion."

And people wonder why businesses aren't always trusted.

Surely, Netflix should at least try to tell you if they are raising their rates to a million dollars a month. Don't you think?
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The top 25 Bushisms of all time. - By Jacob Weisberg - Slate Magazine

The top 25 Bushisms of all time. - By Jacob Weisberg - Slate Magazine:

"15. 'It's important for us to explain to our nation that life is important. It's not only life of babies, but it's life of children living in, you know, the dark dungeons of the Internet.'—Arlington Heights, Ill., Oct. 24, 2000"

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snopes.com: Christmas Superstitions

snopes.com: Christmas Superstitions

Oh my.

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All that is necessary for the triumph of evil is that good men do nothing

All that is necessary for the triumph of evil is that good men do nothing

The link is to an essay about how Edmund Burke's quote has been rewritten across the Internet. It then proceeds to dissect what it might actually mean and how the various versions make subtle changes to the meaning.

I was reminded of this famous quote while driving. I was trying to decide if I should listen to The Portable Atheist audiobook or some Christmas music.

As I considered the famous quote, and Christopher Hitchens' compendium of agnostic and/or atheist literature, a modification of Mr. Burke's quote came to me:

All that is necessary for the triumph of evil is for an omnipotent being to do nothing.

I think that about sums it up.

BTW, I chose the Christmas music.

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Deconstructing the Federation of Star Trek - Giant in the Playground Forums

Deconstructing the Federation of Star Trek - Giant in the Playground Forums

Quite amusing and insightful.

The Federation is a bloated, corrupt communist bureaucracy. The directives are conflicting and often ignored in favor of getting things done or employing the teeming mass of unemployed. Safety regulations are ignored, especially in engineering where jury rigging due to inefficient parts manufactured by hand to give the population a 'job' failing constantly, and 'red shirts' are basically drafted into the service to give them something to do and suffer from a lack of basic weaponry and armor, not to mention the callous treatment at the hand of the 'lifer' officers who honestly couldn't care if they survive.

Technology is advanced but actual understanding of how it functions and efficient use of it is starkly limited due to being manufactured from crap components and restrictive, often times retarded, directives, and a relatively small number of people who know how it works and jealously guard their jobs and knowledge. The poor parts result in infamously lethal working environments - the panels are so under safety regulations that they actually have been known to *explode* during use under stress, killing those nearby. The power transmission systems throughout the ship and its completely unsafe dilithium crystal reactor are known to be death traps to the rest of the galaxy, who stopped using them for safer but less out-put systems that have a smaller chance of randomly killing the users in power surges under duress. The Federation continues to do so due to mining deals worked out with various corporate interests and the fact that the power generated gives their weaponry a distinct edge in combat, as well as powering stronger than usual shields. The equipment is more valuable than the replaceable crew for the most part, and the Star Fleet is fully satisfied with its lethal performance.

War is common despite the proud declaration that the Federation has no warships and is always peaceful in intent. They meddle constantly in affairs to make the outcome in their favor, especially on less advanced worlds, with loose rationals. They get by the 'no warship' clause by having a 'science fleet' that is bizarrely heavily armed for mere exploration vessels.

The corruption of the Star Fleet has resulted in a laissez faire style of captainancy in their ships - a ships captain can get away almost anything short of starting an actual war as long as it looks good and profits the Federation. Acts of piracy, treaty violation, and sexual indecency are fairly common. Bridge crews often conspire to cover up or edit reports to the central command. As a result, Federation ships are infamous for bringing disaster in their wake.

There is more amusement in the entire thread at Giant in the Playground.
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