Month: October 2015

Why does the U.S. economy grow so slowly on a per-capita basis? (we have growth in headline GDP, of course, but much is driven by the increase in population size) “In California, Electric Cars Outpace Plugs, and Sparks Fly” (nytimes) may explain a small portion of the stagnation: some of our best-educated and highest-paid citizens are fighting over electric outlets for their taxpayer-subsidized Teslas, BMWs, etc. Presumably the time and energy that they spend arguing over plugs is time and energy that they’re not spending working.

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The Weather Experiment: The Pioneers Who Sought to See the Future is a somewhat tedious book that covers the infancy of weather forecasting. There is an interesting anecdote about a 19th century effort to determine whether or not prayer was effective:

Never one to quake in the shadows of old institutions, [Francis] Galton had turned his mind to the practice of prayer. The question was troubling him. Did prayers work? In his usual methodical way he began to tackle the issue statistically. He started his experiment with a hypothesis: ‘We are encouraged to ask special blessings, both spiritual and temporal, in hopes that thus, and thus only, we may obtain them,taken from Smith’s Dictionary of the Bible. He then devised a way of testing the claim. He found a copy of the Journal of the Statistical Society, which listed the mean life expectancy of kings and queens with those of other classes of people. Galton pointed out that at every church service, Protestant or Catholic, it was customary to pray for the sovereign: ‘Grant him/her in health long to live’. If prayer worked, Galton argued, specifically such targeted and constant prayer as this should result in longer lives for kings or queens. But according to the Journal of the Statistical Society, this was not the case. A member of the royal house lived an average of 64.04 years, while clergy, lawyers, medical doctors and the aristocracy lived much closer to 70 years. ‘The sovereigns are literally the shortest lived of all who have the advantage of affluence,’ Galton summed up. ‘The prayer has therefore no efficacy.’27 Galton’s paper would not see the light of day until it appeared with predictable controversy in the Fortnightly Review in 1872. But its very existence was significant. If he had written such a paper three hundred years before he would have been burnt; two hundred years before he would have been thrown into prison, or a hundred years before into a lunatic asylum. Yet by the 1860s such questions about the power and integrity of religion had found their place in contemporary debate. Galton was only writing what many were already thinking. [emphasis added]

Separately, how is it that medical doctors, constantly exposed to contagious diseases for which there were no effective vaccinations or cures, managed to live so long? Is it that germs were so prevalent that everyone else was equally exposed?

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Pretty much following the libretto of Carmina Burana (e.g.,

Fate – monstrous
and empty,
you whirling wheel,
you are malevolent,
well-being is vain
and always fades to nothing,

), Geoffrey Marcy was celebrated by the New York Times in May 2014 as a Prius-driving save-the-Earth-from-a-comfortable-Berkeley-perch right-thinker (link). The same newspaper today reports that he must resign from his tenured job at UC Berkeley for “groping students, kissing them and touching or massaging them inside their clothes” and then failing to apologize properly (what would have been sufficient?).

Earlier this month I asked where Syrian and Afghan refugees would fit into a U.S. economy with a $15/hour minimum wage. But maybe a harder question is what does a pariah like Professor Marcy do next? Running an astrophysics lab is a pretty specialized skill and the field is small. Could he emigrate to a country where they don’t care about this kind of incident and are willing to set him up with an all-male lab? Presumably no big U.S. company would be enthusiastic about bringing in this kind of litigation risk even if Marcy wanted to debase himself by taking a Java-programming job or whatever.

This reminds me of what a tenured UC Berkeley professor once told me: “I can be fired for any reason… except incompetence.” But, more importantly, I wonder if this calls into question the value of corporate training and groupthink. My physics prof friend is required to spend hours of time each year learning about various things that he is not supposed to think or do around students and colleagues. Marcy grew up in California and received all of his education within the UC system, which is also where he has worked for most of his career. If Marcy didn’t get the message, what is the point of all of those hours that everyone is required to spend looking at PowerPoint slides?

Separately, I think that Marcy and Tim Hunt may be examples of how academic science is a crummy career. Marcy was getting paid about one third of what a competent dermatologist or radiologist might earn. Due to America’s desperate shortage of doctors in many regions, the dermatologist who was accused (but not criminally convicted) of sexual harassment in San Francisco could probably get a job in a Great Plains state at a substantial raise. Consider a 22-year-old contemplating investing in graduate school and 15 years of scrambling through post-docs and the tenure race. Perhaps he or she is confident that he or she will not commit any of the sins that are currently firing offenses. But how does that 22-year-old know that, upon reaching middle age, there won’t be some new ways to get fired such that it is impossible to work anywhere else within academia? [The “groping” accusation against Marcy is, of course, way beyond the apparently-not-funny words that ended Nobel laureate Tim Hunt’s career.]

So… readers: where does Dr. Marcy fit into the worldwide workforce now?

Related:

• Kary Mullis shows what a scientist could get away in fairly recent times (the Wikipedia article hints at only about 1 percent of his bad behavior; this 1998 nytimes article mentions a conference talk where “‘His only slides (on what he called ‘his art’) were photographs he had taken of naked women with colored lights projected on their bodies,”
• Tim Hunt
• Women in Science

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“If Anyone Finds MH370, It Will Be the Men on This Ship” is a well-researched Esquire article on the technical details of the continuing search for the missing Boeing 777 (which I expected to have been found already). It turns out that the ocean floor had never been mapped in this part of the world. The fundamental process is then (a) make a reasonably precise map using sonar from the surface, (b) make a more detailed map, including looking for debris, using a towed sonar system roughly 500′ above the ocean floor.

[Separately, the article, starting with the title, implies that the crew of this search is 100-percent male. Yet I have seen no New York Times articles demanding to know why women are being excluded from the job of spending months on a 200′ boat in the world’s heaviest seas.]

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As a child in the 1970s I was told that racial quotas and other affirmative action policies would reduce prejudice in the U.S. One people from Minority Group X were in positions of authority and power, members of other groups would have warmer feelings about Minority Group X.

Today we have a president who identifies as “black.” Yet we are told by newspapers that prejudice against blacks is at a level not previously seen in modern times.

I’m wondering if the purported increase in prejudice is because of rather than in spite of having a black president. Consider that only about half of voters support any person who becomes president of the U.S. Thus it seems safe to assume that whatever actions the president takes will be the opposite of what roughly half of Americans want. If the president were a white male protestant a person might say, in response to these actions, “I hate Democrats” or “I hate Republicans” but never “I hate members of Minority Group X.”

The phenomenon seems to occur at lower levels of government as well. A reader contacted me because he had been sued by his wife in Middlesex County, Massachusetts and had read our statistics in the Massachusetts chapter and this analysis of divorce lawsuits filed in May 2011. Via temporary orders (decisions made within a few months of a lawsuit being filed, typically after a 15-minute hearing with no witnesses testifying) he had lost the house, the kids, and most of his income going forward. According to U.S. Census data from March 2014, this is the expected outcome for roughly 97 percent of fathers in Massachusetts, regardless of the sex, race, etc. of the judge. He was in front of Judge Maureen Monks, whom he believed to be a lesbian (she is identified in this article as “a long-time radical lesbian activist”; this article identifies her as “a founding member of the Massachusetts Lesbian and Gay Bar Association”), and said “I used to have a positive opinion of lesbians, but now I hate them.” If it had been a white male judge he might have said “I hate this judge,” “I hate the Legislature,” or “I wish that I had moved to Arizona or Pennsylvania ten years ago.”

[You might ask what advice I gave to this reader… I told him that temporary orders were de facto permanent in Massachusetts, that there was no way to get around paying his plaintiff every week despite the fact that she earned more than he did, and that he should stop paying his lawyer if the hope was that somehow any aspect of this could be turned around at a trial.]

I’ve also seen this in the private sector. I have heard anti-Mormon grumbling from employees of companies whose CEO is a member of the Latter Day Saints church and who brings in other LDS members for executive and managerial jobs. “I never gave any thought to Mormons before I joined this company,” said one worker bee, “but watching people get jobs and promotions because they are Mormons makes me angry.”

What do readers think? It seem safe to assume that the reign of the white male Christian will not be reestablished in the U.S. Thus an ever larger percentage of powerful positions will be occupied by people who are members of groups that have minority status. People will never be unanimous regarding what decisions should be made. Can we thus expect ever more inter-group acrimony, contrary to the Age of Aquarius that affirmative action advocates of the 1970s predicted?

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Jennifer Gonnerman writes “A Daughter’s Death” (New Yorker, October 5, 2015) and inadvertently answers the question of what young New Yorkers do when they don’t have to work or study. How large a slice of the NYC population is this?

Murphy and Haynes never called the kids they met “disconnected youth,” but that is how academics and policymakers would describe many of them. (The term refers to young people who are neither in school nor working; the group comprises about twenty per cent of New York City residents between the ages of sixteen and twenty-four.)

It turns out to be quite a contrast with the ever-more-gold-plated Manhattan that most of us see:

Since Chicken’s death, the violence in Grant and Manhattanville had grown worse. A sixteen-year-old was shot in the shoulder, a twenty-one-year-old was shot in the leg, and at least three bystanders were hit. Taylonn, Jr., was still living in the Grant Houses with his mother, and during this time he acquired a rap sheet. At the end of 2012, he was arrested for burglary, after a dispute involving a cell phone; he was charged as a “youthful offender” and put on probation. The next summer, he was arrested again, accused, with four others, of punching a Manhattanville resident and robbing him of a hundred dollars.

At the same time, the neighborhood was rapidly gentrifying. Double-decker tour buses frequently drove by the projects, and passengers took pictures of the residents. “It’s like they’ve never seen people before,” Arnita Brockington said. Meanwhile, a sleek, nine-story glass block, designed by Renzo Piano, was rising right across Broadway. It will house Columbia University’s new science center, the first of sixteen buildings to be erected as part of a six-billion-dollar addition to the main campus.

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The only thing that I like less than watching TV is watching politicians on TV so I didn’t watch this evening’s debate. Did anything interesting happen? Here’s what I can find from the transcript:

I have five daughters. Amy works with disabled veterans, Sarah is an emergency room nurse, Julia is a massage therapist, Emily and Georgia are still in school. My son Jim fought as an infantry Marine on the bloody streets of Ramadi. (Webb)

i.e., nobody in this next generation is doing anything that might result in economic growth. #investinasia

What I’m talking about is this, our middle class is shrinking. Our poor families are becoming poorer, and 70 percent of us are earning the same, or less than we were 12 years ago. We need new leadership, and we need action. The sort of action that will actually make wages go up again for all American families. (O’Malley)

The Great Father in Washington will supply higher wages to Americans; there is no need for anyone to study or worker harder. #investinasia

Today, the scientific community is virtually unanimous: climate change is real, it is caused by human activity, and we have a moral responsibility to transform our energy system away from fossil fuel to energy efficiency and sustainable energy and leave this planet a habitable planet for our children and our grandchildren.

Today in America, we have more people in jail than any other country on Earth. African-American youth unemployment is 51 percent. Hispanic youth unemployment is 36 percent. It seems to me that instead of building more jails and providing more incarceration, maybe — just maybe — we should be putting money into education and jobs for our kids. (Sanders)

If more and more Americans are unemployed, why do we have to worry about our shrinking role in greenhouse gas emissions? What is the CO2 footprint of someone who lives in a government-provided apartment and plays Xbox all day? More money into education? We’ve more than doubled per-pupil spending, adjusted for inflation, since 1970 (source). Can we truly spend our way out of the fact that American companies don’t want to hire a good-sized subset of the U.S. population?

Yes, of course, raise the minimum wage, but we have to do so much more, including finding ways so that companies share profits with the workers who helped to make them. (Clinton)

The folks that Sanders mentioned above that companies don’t want to hire at $8/hour are now going to be priced at $15/hour. Who will figure out which workers actually contributed to a multinational company’s profits and apportion them? What if it turns out that people in Asia and Europe are responsible for most of the profit? Will the central planners in D.C. order the company to pay out most of its profits to folks in China, Korea, and the Netherlands rather than to shareholders in the U.S.?

You were against same-sex marriage. Now you’re for it. (moderator)

Well, actually, I have been very consistent. (Clinton)

Is there a consistent meaning for “consistent”?

And what democratic socialism is about is saying that it is immoral and wrong that the top one-tenth of 1 percent in this country own almost 90 percent — almost — own almost as much wealth as the bottom 90 percent. (Sanders)

Why stop at the border? There are a lot of low-wealth folks beyond the U.S. border. In a globalized economy why is the interesting analysis just within the U.S.?

I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people. (Sanders)

Denmark is a country that has a population — Denmark is a country that has a population of 5.6 million people. (moderator)

Nobody is willing to consider the possibility that Scandinavians are, on average, smarter, better educated and/or harder working than Americans. (See schools in Finland; schools in the U.S.) And are Americans actually prepared to live like Scandinavians? What politician is going to support reducing the profit opportunity from collecting child support from its current level down to between $2,000 and $8,000/year (see the International chapter)? How would Americans who currently collect $50,000 or $100,000 per year in tax-free child support transition to the Danish or Swedish upper limit?

You don’t consider yourself a capitalist, though? (moderator to Sanders)

Another English language puzzle. If a person is providing capital to businesses then he or she could be considered a “capitalist.” How are politicians, who spend money rather than invest money, “capitalists”? Maybe a politician could have a friend who was a capitalist or support the idea of capitalism.

You’re looking at a block of granite when it comes to the issues. (Chafee)

An odd way to describe oneself. What is the distance between this statement and “dumb as a rock”?

In one year alone, though, 100,000 arrests were made in your city [Baltimore], a city of 640,000 people. (moderator to O’Malley)

#investinasia

Senator Webb, in 2006, you called affirmative action “state-sponsored racism.” In 2010, you wrote an op/ed saying it discriminates against whites. (moderator)

I have always supported affirmative action for African Americans. What I have discussed a number of times is the idea that when we create diversity programs that include everyone, quote, “of color,” other than whites… (Webb)

He is not going to be invited to Sheryl Sandberg’s house! But even if sorting school and job applicants by race is to be done, isn’t it getting harder for people to agree on what is an “African American”?

Also I believe, and I’ve fought for, to understand that there are thousands of people in this country today who are suicidal, who are homicidal, but can’t get the healthcare that they need, the mental healthcare, because they don’t have insurance or they’re too poor. I believe that everybody in this country who has a mental crisis has got to get mental health counseling immediately. (Sanders, in response to questions about guns)

Is there any evidence that the Americans who have gone on recent rampages were lacking in health insurance or access to psychotherapy? Or evidence that psychotherapy reduces the incidence of mass shootings? The era of mass killings seems to have coincided with a rise in the number of psychotherapists per capita. Webb points this out:

… the shooting in Virginia Tech in ’07, this individual had received medical care for mental illness from three different professionals who were not allowed to share the information. … But we have to respect the tradition in this country of people who want to defend themselves and their family from violence. … There are people at high levels in this government who have bodyguards 24 hours a day, seven days a week. The average American does not have that, and deserves the right to be able to protect their family.

If we are going to argue over this forever, wouldn’t a young skilled American concerned about gun violence be better off simply moving to a country with lower tax rates and lower rates of violent crime? Wikipedia shows that a lot of low-tax nations have a homicide rate less than 1/10th that of the U.S. Click to rank by “rate” and Singapore, Switzerland, South Korea, etc. jump out.

We don’t want American troops on the ground in Syria. I never said that. What I said was we had to put together a coalition — in fact, something that I worked on before I left the State Department — to do, and yes, that it should include Arabs, people in the region. (Clinton)

We should be putting together a coalition of Arab countries who should be leading the effort. (Sanders)

Mercenaries and puppet governments are going to do our military work for us, i.e., the same plan that we had in Vietnam and, more recently, in Afghanistan.

We are live in Nevada, in Las Vegas, at the Wynn Resort (moderator)

We are going to talk about the need to use energy efficiently, conserve water, and make middle class Americans richer in an enormous city built in the middle of a desert, rapidly depleting an underground aquifer, and consuming insane amounts of energy for air conditioning so that middle class Americans can lose whatever money they previously managed to save.

…if you don’t have schools that are able to meet the needs of the people, or good housing, there’s a long list… We need a new New Deal for communities of color… (Clinton)

Aren’t the things on her list already run by the government? People who are poor generally live in a government-provided house and send their children to a government-run school. Clinton herself has been right near the top of that government since 1992. How could a government-run New Deal be different than the government-run Old Deal for these communities?

And 0.6 percent of Americans are at the top echelon, over 464,000, 0.6 Americans. That’s less than 1 percent. But they generate 30 percent of the revenue. And they’re doing fine. So there’s still a lot more money to be had from this top echelon. I’m saying let’s have another tier and put that back into the tax bracket. And that will generate $42 billion. (Chafee)

Budget deficits were over $1 trillion per year from 2009-2012. The last full fiscal year deficit was $500 billion (WSJ). $42 billion sounds like a lot, but where will the rest of the money to plug the deficit come from?

A college degree today, Dana, is the equivalent of what a high school degree was 50 years ago. (Sanders)

Finally a statement that is supported by facts! #investinasia

We’re here in Las Vegas, one of the most sustainable cities in America, doing important things in terms of green building, architecture and design. (O’Malley)

I guess he didn’t visit Lake Mead during his trip (National Geographic on aquifer depletion).

I remember as a young mother, you know, having a baby wake up who was sick and I’m supposed to be in court, because I was practicing law. I know what it’s like. And I think we need to recognize the incredible challenges that so many parents face, particularly working moms. (Clinton)

So an economically rational young woman would seek to have sex with a high-income guy and harvest the child support rather than work? Why would it make sense to take on “incredible challenges” of simultaneously working and parenting when the same spending power can be realized without working?

Every other major country on Earth, every one, including some small countries, say that when a mother has a baby, she should stay home with that baby. We are the only major country. That is an international embarrassment that we do not provide family — paid family and medical leave. (Sanders)

What if we look at child support as an extended maternity leave? Suppose that a woman goes to a bar in Massachusetts and has sex with a dentist earning $250,000/year. She is now entitled to $40,000 per year in tax-free child support, which is roughly equivalent to median household after-tax income in Massachusetts. The cash will flow for 23 years and she can double this income, if desired, by finding a different dentist to have sex with in order to produce a second cash-yielding child. If “family leave” or “maternity leave” is defined as “payments received because of the birth of a child that do not require going to work” then couldn’t we consider the 23 years of child support to be an extended “maternity leave”?

When asked about legalizing recreational marijuana, you told her let’s wait and see how it plays out in Colorado and Washington. It’s been more than a year since you’ve said that. Are you ready to take a position tonight? (reporter to Clinton)

No. I think that we have the opportunity through the states that are pursuing recreational marijuana to find out a lot more than we know today. I

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“It’s Financial Suicide To Own A House” has some great explanations for why you don’t want to buy a house:

The other day my sink broke. …

My house is 150 years old. It used to be a hotel. Things break. Pipes crumble in the hands of the plumber.

I email the landlord, who calls a plumber, who gets new pipes that are paid for by the landlord. The landlord wasn’t expecting it but that’s what they signed up for.

Meanwhile, I read a book on the couch in the other room.

The same thing when Hurricane Sandy came over the river. People were canoeing in the street outside my house. The water filled two feet in my house.

“This is the first time in 100 years the water got this high,” the landlord told me. So he ripped up floors, cleaned out mold, fixed furniture, and took care of it.

This time I was upstairs reading a book.

…

It’s a lot of work to own a house also. Have you ever spent time in the Death Star? I mean Home Depot. That place is huge. And I only need that one special color of paint.

But where is it? The stormtroopers at Home Depot are never around when you need them.

And what about that “snake” that can clean my toilet. Where is it? And how do I use it? And is it gross? Why do they call it a snake?

It’s no wonder that plumbing is one of the highest paid professions in America.

And how long does it take to paint a house. Or who do I go to? And will they overcharge me if they pave the driveway?

Did I calculate that into my total cost of owning a house?

Related:

• Rick Santorum’s “flat tax” proposal in the Wall Street Journal, whose central feature for personal income tax turns out to be … encouraging Americans to keep buying houses by preserving the mortgage interest deduction (up to $25,000 per year)
• Economists: Homeownership leads to unemployment
• Economist magazine argues against tax-deductible debt

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My basic investing article cheerleads for index funds, largely based on Burton Malkiel’s 1973 research (subsequently updated and currently available as A Random Walk Down Wall Street (11th Edition)). “How Some Investors Get Special Access to Companies” is a September 27, 2015 Wall Street Journal article that should encourage a little doubt among the indexing believers.

Public companies are allowed to meet with favored investors privately:

The result is a booming back channel through which facts and body language flow from public companies to handpicked recipients. Participants say they’ve detected hints about sales results and takeover leanings. More common are subtle shifts in emphasis or tone by a company.

Access usually is controlled by brokers and analysts at Wall Street securities firms, who lean on their relationships with companies to secure meetings with top executives. Invitations are doled out to money managers, hedge funds and other investors who steer trading business to the securities firms, which in turn provide the investors with a service called “corporate access.”

Investors pay $1.4 billion a year for face time with executives, consulting firm Greenwich Associates estimates based on its surveys of money managers. The figure represents commissions allocated by investors for corporate access when they steer trades to securities firms.

A recently published paper in the Journal of Law and Economics analyzed the trading behavior of dozens of investors who met during a 5½-year period with senior management of a company listed on the New York Stock Exchange.

While the paper doesn’t identify the company or investors, researchers concluded that the investors who got face time with management made better trading decisions. Several large hedge funds met the company as frequently as once a quarter.

Brian Bushee of the University of Pennsylvania’s Wharton School and two other academic researchers concluded that trading volume picked up around the time of the private meetings. Trades made then were more likely to be profitable than trades made at other times.

Along the same lines, but not obviously actionable for the typical investor… “Insiders Beat Market Before Event Disclosure: Study” (WSJ, September 14, 2015):

Corporate executives and board members regularly make market-beating returns from buying and selling their companies’ stock in the days before disclosing a significant event, according to a study that says it has found a link between insider knowledge and investment profits.

On average, the officials netted about 0.4 percentage point over a broad market index between the time of their trades and the market close after the disclosure. These gains, realized over the span of a few days, would be much larger on an annualized basis.

When officials bought shares outright—rather than by exercising options received as compensation—the gains were even better, at about 1.6 percentage points over the index.

The longer companies waited to make disclosures, the better the returns, according to the study. When companies used the full four-business-day window, the average excess profit rose to 1.95 percentage points.

What does it look like in practice? “Towers Watson CEO Sold Stock Before Big Deal:
John Haley netted nearly $10 million on preannouncement sales” (WSJ, September 23, 2015):

In early March, when merger talks were under way between Towers Watson and insurance broker Willis Group Holdings PLC, Mr. Haley exercised 106,933 stock options and sold the underlying shares for a $9.7 million profit, according to regulatory filings. The sale was Mr. Haley’s first in more than a year and shed 55% of his stake in Towers Watson…

When the roughly $9 billion deal was announced on June 30, Towers Watson shareholders criticized it, sending the Arlington, Va., company’s stock down nearly 9% that day. Their beef: the deal’s price tag, which valued Towers Watson at $125.13 a share, or about 9% less than the prior day’s close.

Maybe the future of efficient investing has to include some managed funds that are big enough to pay for and acquire access to inside information?

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The one thing that Lisp programmers can agree on is how much better Lisp is than C and similar languages. I was talking last week to some programmers who use the Clojure version of Lisp and it made me wonder “If Lisp is so great, why did this guy have to build a slightly different version instead of building a popular application program in an existing version of Lisp, such as Common Lisp?”

What do readers think? We accept the proposition that C is feeble and yet there are only three major variants of C: C, C++, and Objective-C. Over the same period of time there have been at least the following: MacLisp, Interlisp, Lisp Machine Lisp, Common Lisp, Scheme, Emacs Lisp, AutoLisp, Clojure (perhaps readers can think of others). Yet Lisp has fewer programmers and completed programs. Thus the ratio of popular installed computer programs to versions of the language is vastly higher in C than in Lisp.

Who loves Clojure and why? And why hasn’t the C world turned into a similar Tower of Babel?

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