Philip Greenspun’s Weblog

This week’s news was full of stories about residential house construction statistics (example). I’m wondering why we should pay attention to these numbers.

Suppose that an American has a job. He or she is likely to pay for a place to live or a portion of a place to live. Suppose that an American does not have a job or pension. It is unlikely that such a person is paying rent or a mortgage. He or she is probably living with a parent, spouse, or other relative.

If we accept these premises as true, we should be able to predict the number of houses being paid for in the U.S. by looking at employment statistics. If more people have jobs, more mortgage and lease payments will be made. In looking at house construction we would start by looking at employment growth (if any), the number of houses that are so decrepit as to be unmaintainable, and the number of people moving from towns where factories have closed to towns where factories have opened.

I can understand why an architect or builder would be interested in watching these numbers, but I don’t understand why the rest of us would want to. Won’t the number of houses eventually track the number of people with jobs? If so, why not simply watch the number of jobs?

[I understand that one argument economists might make for paying attention to housing is that the government throwing subsidies at the housing market (tax credits, mortgage interest deductions, federal mortgage guarantees, etc.) will cause people to be hired in the construction trades. Those new workers will spend money, magically creating economic expansion. It seems obvious that this strategy cannot work. If more and better houses created sustainable wealth, a poor country could become rich by having 100 percent of its citizens engaged in building fancy houses for each other.]

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On November 1, I posted a question about how the House Democrats could be considered humanitarians while leaving 18 million people living in the U.S. without health insurance. Not to be outdone, it seems that the Senate Democrats propose to spend $1 trillion in order to leave 24 million people without health insurance (nytimes).

The Senate bill should provide a boost to the economy. Hollywood and the cable networks will have 24 million subjects from whom to choose when they want to make a tearjerking documentary about an American dying for lack of funds to pay for an operation. We’ll have as many as 24 million people working productively instead of spending 20 hours per week filling out forms and writing letters trying to persuade insurance companies to pay their medical bills. Finally those 24 million people will boost revenue for airlines when they fly to other countries for low-cost treatments.

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You’ve probably been wondering lately “How can I possibly spend the thousands of dollars that I’ve saved by using Google Docs and Spreadsheets instead of Microsoft Office on all of my desktops and laptops?” If disposing of this excess money has you concerned, you’ll be interested to know that Microsoft has added something very interesting to Excel 2010: Edward Tufte’s sparklines, as described in his latest book Beautiful Evidence.

I’ve always loved and been amazed by Excel, though I can’t use it anymore because I’m addicted to the real-time collaboration of Google Spreadsheets and, in any case, few of my collaborators have Microsoft Office.

http://blogs.msdn.com/excel/archive/2009/07/17/sparklines-in-excel.aspx discusses the inclusion of sparklines and provides examples.

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My September 15, 2009 posting about the Leica M9 attracted a lot of angry comments from rabid Leica enthusiasts. I pointed out the oddness of people being excited by a Leica that comes 7 years later than the comparable Canon and costs nearly three times as much. My assumption in the posting was that Leica had produced something roughly equivalent in image quality to Canon’s mainstream advanced amateur body, the 5D Mark II. The December 2009 issue of Popular Photography arrived in the mail recently and it seems that I was wrong in my assumption. Here’s the update that I added to the September posting…

This issue put the Sony A850 and the Leica M9 through their standardized test protocol. The Sony is the world’s cheapest full-frame digital SLR, selling for $2,000 (compared to about $2,650 for the Canon 5D Mark II). The Leica is the world’s most expensive, at $7,000. How did the cameras compare on Pop. Photo’s test bench? The Sony, with a 24 MP Sony-built CMOS sensor, achieved “low” noise through ISO 1600. This is greatly inferior to the 5D Mark II, which had a very similar noise measurement at ISO 6400 (two f-stops more sensitive). The Sony delivered 3135 lines of resolution and a superb “7.7” on color accuracy, albeit still inferior to Canon’s.

How did the Leica perform, at 3.5X the price of the Sony? Noise from the 18MP CCD sensor became “moderate” at ISO 1600 and “unacceptable” at ISO 2500. The noise of the M9 at ISO 800 was comparable to the Canon 5D Mk II at ISO 6400. Leica’s color accuracy and resolution were significantly inferior to the Sony.

How did Popular Photography deal with the embarrassingly poor image quality results of the $7000 Leica compared to the Japanese cameras? “They’re completely differently tools for completely different styles of photographer. We don’t categorize the M9 as a pro model–think of it as the ultimate (deep-pocketed) enthusiast’s camera.”

Leica was beaten not just by Canon, its competitor from the 1950s rangefinder days, but by Sony, a company that is relatively new to the still photography market. Now that we taxpayers have purchased GM and Chrysler at a cost of $100 billion, let’s hope that this doesn’t happen in the car market. Just when GM and Chrysler think that they might have something that can sell in competition with a U.S.-made Honda or Toyota, new manufacturers from India and China may blindside them.

[Update: I found a Canon white paper on sensors that says that CCD sensors, especially big ones, consume a lot more power than CMOS. Unless the sensor is cooled, like a CCD used in a physics experiment, the result will be more noise in the image. This may explain the poor high ISO performance of the Leica.]

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This afternoon included a wonderful flight with a guy from France who is working on his CFII-H (helicopter instrument instructor rating). First I would like to thank our government for driving down the value of the dollar to the point that East Coast Aero Club’s prices on the R44 are less than half what flight schools in Europe are charging. Second, I would like to thank Air Traffic Control for some entertainment during today’s flight. Boston Approach called a Cessna and asked “Are you familiar with Boston Class Bravo Airspace?” The pilot responded “Ummm, I think so.” The controller then noted “Well, you’re in it without a clearance. Suggest descending below 3000′.” [Class B airspace protects arrivals and departures at the nation’s busiest airports. Violating Class B airspace is a serious offense, but not likely to be pursued by the FAA in this case because the Cessna pilot was well clear of the airliners.]

My French student was a bit jet-lagged and “behind the aircraft” as they say in the world of fast airplanes. He failed to make a 90-degree turn on a GPS approach and Hanscom Tower called us just as I was asking roughly what heading we would expect to fly when on a Runway 23 approach. Instead of saying “Do you idiots realize that you’re heading for Logan Airport instead of Hanscom?”, the tower controller asked “N171WT… are you inbound to the airport at this time?” (an unusual call to an aircraft that has been cleared for an approach and accepted that clearance). I replied that we were learning how to find the airport.

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As the war in Afghanistan settles into its eighth year, it might be worth asking ourselves how the Taliban and Al-Qaeda can possibly remain so strong. Who has been financing these guys for eight years? What if the answer is “us”?

Let’s consider a homeowner in Kabul. Prior to the U.S. invasion, he might have been able to rent out his house for $250 per month. Whatever his political or religious beliefs, he would not have been able to support any cause because he would need all $250 to feed his family. After the U.S. invasion, dozens of U.S., U.N, and NGO groups moved into Kabul, driving up the market rent to over $1,000 per month (due to overwhelming demand, Kabul is now one of the most expensive cities in the world; see this U.N. report showing that the cost of living in Kabul was higher than in New York City in 2005). Our homeowner now has a $750 per month windfall. What will he spend it on? Depending on his feeling about the U.S. occupation, he may well choose to spend some of that to pay the salary of a Taliban fighter.

The U.S. military buys food and supplies in various local markets in Afghanistan. It pays vastly higher prices for these items than it would pay at a Walmart in Kansas. Some of the higher cost translates into profits for Afghans who sympathize or are connected with the Taliban. When the U.S. trucks in supplies, it pays the Taliban directly not to attack the trucks (source). When a fraction of these supplies go missing from U.S. bases, they are sold by Afghans (source), who may turn over a percentage of their profits to fighters against the U.S.

Let’s consider an aid project in a village. We’ve heard that Afghanistan is one of the most corrupt countries in the world (source) and that at least 50 percent of the money that we’re putting in gets siphoned off by various politicians and their cronies (though perhaps not as much as Wall Street, GM, and Chrysler siphoned from U.S. taxpayers!). If half of those siphoned funds end up in the Taliban’s pockets, that’s enough to support a large army.

Given the high cost of supporting a U.S. soldier in the field, the low cost of paying an Afghan fighter, and the level of corruption and anti-U.S. feeling in Afghanistan, it would not be surprising to learn that every soldier we put into Afghanistan supports ten Kalashnikov-toting Taliban and Al-Qaeda fighters.

Assuming that we cannot win a decisive victory when outnumbered by 10:1, this is a simple recipe for an endless self-sustaining war.

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As you type an instant message, send an email, or have a spirited phone call, have you ever wondered whether the U.S. Government is listening in? And, if so, would they understand that you weren’t serious when you said that you wished some politician would die before he or she could raise taxes again?

Dr. Nidal Malik Hasan, the Fort Hood killer, has done more to assuage Americans’ fears about government surveillance than any official ever could.

The guy exchanged email with Anwar al-Awlak, an outspoken advocate of jihad who moved from suburban Virginia to his ancestral home of Yemen (source).

The guy posted pro-suicide bombing arguments to Islamic Web sites using his own name, “Nidal Hasan” (source).

The guy stood up in front of a group of U.S. Army officers and said that “non-believers should be beheaded and have boiling oil poured down their throats.” (source; original slides)

Was this guy arrested? Harassed by federal agents? No. In fact, despite poor job performance, he was promoted to Major in the U.S. Army! Instead of summonses to tedious court proceedings, the government sent him paychecks.

The bad news is that the same government that determined Dr. Hasan was a prime candidate for military promotion is trying to teach America’s children math and English as well as run most of our health care system. The good news is that it would appear our free speech rights are stronger than we imagined.

[Separately, as noted in this Telegraph article, the incident with Dr. Hasan calls into question the efficacy of psychiatry:

Selena Coppa, an activist for Iraq Veterans Against the War, said: “This man was a psychiatrist and was working with other psychiatrists every day and they failed to notice how deeply disturbed someone right in their midst was.”

The American Psychiatric Association says that it is “science-based”. If the discipline demonstrably lacks predictive power, is it fair to say that it is somehow scientific? (I am not saying that I agree with Ms. Coppa’s assertion that Dr. Hasan was “deeply disturbed”, only that if expert psychiatrists could not predict that Dr. Hasan was likely to act on his stated beliefs, it would be nice to know what psychiatry can predict.)]

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Almost a year ago, I wondered if extending unemployment benefits made sense. This month Congress was at it again, taxing the working to pay the non-working and borrowing from America’s children to pay the currently middle-aged (H.R. 3548). I had dinner Friday night with a very capable 40-something woman. She stayed home with her three children until 2006, then found an entry-level job at an architecture firm. Due to her intelligence and energy, she was quickly given additional responsibilities. However, she found herself laid off in the fall 2008 economic collapse. What has she been doing for the past 12 months? “I go to a Web site every week and answer five yes/no questions by clicking the mouse,” she answered. “They don’t ask me if I’ve actually looked for a job, just if I’ve been available for full-time work. Then they send me a check.”

How do her unemployment checks compare to her former earnings? “I had downtown parking fees deducted from my payroll checks, plus a bunch of other stuff. The difference in take-home pay is only about $100 per month. Because I get health insurance through my husband’s employer, I have no financial incentive to look for a job.”

Related: My July 2008 review of The Forgotten Man, a history of the Great Depression that shows that “virtually every action by Hoover, Roosevelt (FDR), and Congress hindered the U.S. economy”.

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An 82-year-old friend recently woke up with a slight fever. Living right next to some of America’s best hospitals, he decided not to take any chances with his health and went down to Massachusetts General Hospital (“the massive genital” as my MD friends call it). As an American citizen on Medicare’s fee-for-service system, he was a prime candidate for a battery of expensive tests. They decided to start with a CT scan, enhanced with a dye. The test did not reveal any pathology, but it did provoke a near-fatal allergic reaction that resulted in him being hospitalized. He was fortunate to escape the fate of the 1 in 75,000 patients who receive this test and die (source). Having gone over to Mass General with a slight flu, my friend emerged after 12 days hovering on the edge between life and death. The taxpayer was stuck with a bill of at least $20,000 for an illness that was entirely caused by the test.

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Most of the news from Washington should be scary to investors. The federal government is expanding at about the same pace that it did during World War II and running huge deficits. Nobody has a credible story for how the debts being accumulated now are going to be repaid. Ridiculous promises are being made to public employee unions, pensioners, Social Security recipients, Medicare patients and providers, and, through health care reform, everyone else in the U.S. Yet the stock market is climbing. How is this possible? Let’s consider one result of the government promising things that it has no way to pay for: some percentage of people won’t believe the promise.

Looking at the numbers for Medicare and Social Security, for example, a citizen might believe that the age of eligibility for both programs will be increased and benefits reduced. He or she would act on that belief by saving more money now against the day when Congress reneges on all of the current promises. Where can he put those savings and get some protection against inflation, the collapse of the dollar against foreign currencies, as well as the promise of a bit of a return? The stock market. The more recklessly the U.S. government behaves, the more comforting will be an ownership stake in a multinational company such as Intel or GE.

This is a reformulation of the standard observation that people in countries with untrustworthy economies and/or governments tend to save more.

[Of course, I recognize that perceived recklessness by the U.S. government may have some negative consequences for the market as well, but this posting is to point out one positive factor. A reckless U.S. government would provide an even bigger boost to foreign stocks and bonds, which I believe have also been doing quite well lately.]

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