24 September 2013

The Butler Did It

Andrew Ross Sorkin is generally a with-it sort of pundit. Today, he zigs when he should have zagged. He's crying poor mouth for JP Morgan shareholders, thus:
But look closer and scrutinize the S.E.C.'s 15-page description of its findings. Then think about this: When the S.E.C. says that JPMorgan is "paying" a record fine, where is the money actually coming from?

The answer: shareholders. The same shareholders who were ostensibly the victims of the scandal that already cost them $6 billion. The victims, if you want to call them that, become victimized twice.

Come again, Andy? Are you sure you've not changed your last name to Rooney? Whining voice and all that.

Andy has, conveniently, forgotten Citizen's United. JP Morgan is a *person*, so it gets dinked. The notion that Jamie Dimon, or all of Morgan management, could come up with the moolah to pay the fine is ridiculous. Moreover, it ignores the reality of corporate governance and shareholder responsibility. It was the shareholders, in a kangaroo election let's be honest, who installed these clowns and told them to "do as you will" to maximize the moolah flowing to shareholders. Management is hired to carry out the business for the benefit of the shareholders. Management, technically, is just hired help working at the behest of shareholders. Shareholders are the company, by definition; not managers. If shareholders install crooks, it's shareholders who pay the piper. Good on them. If shareholders want to make the decisions, then change charter to partnership.

Sorkin enlists another kook, one John C. Coffee Jr. (a professor of securities law at Columbia Law School) to state the case. They're both shills for the likes of Dimon.
"It is perversely inappropriate. You are adding injury to injury. All we're doing is punishing the shareholders more," said [Coffee]. "This is a case where the victims are the shareholders."

No. They're "victims" of their own perfidy. They want heads I win (Dimon et al get away with it); tails you lose (no one gets dinked for bad behavior). Where's that moral hazard slippery slope all the Right Wingnuts were bitching about during TARP?

Sorkin ends his piece thus:
Ultimately, Mr. Coffee came up with a simple metaphor to describe the case against JPMorgan and the penalty being paid up by shareholders: "This is a case about imposing a fine on someone who suffered a burglary for not taking adequate steps to avoid the burglary."

But, that's not what happened. This was a case of the butler selling the good silver on ebay, with your tacit approval, with the intent of getting lots more for it than it's really worth. If the gag works, you and the butler split the moolah. If you didn't check that the butler was a crook, then you're responsible. You can't go boo hoo-ing. You hired a crook, and got taken. Your own damn fault.

All You Need to Know

Here's all you need to know to understand where the future is going:
According the findings of an IHS report coming tomorrow (but shared with AllThingsD today), Apple spends at least $191 on components to build a 16 gigabyte iPhone 5s. The cost rises to $210 for a 64GB unit. The cost of assembly adds another $8 per unit, bringing the range to between $199 and $218.

The retail of a 16G 5s, no contract, is $649. Lots more in China.

Labor is 1.2% of the retail price. The notion that wages are driving capital out of business is silly.

19 September 2013


Sometimes, truth be told, one is a day late and a dollar short. For the past while, I've been reading up on new and revised stat stuff. And I've rediscovered the angst of dysalgebria. Don't bother running to your on-line dictionary, it's not there. But, as it turns out, I can't claim to have coined it. Dang. Here's a cite for the word:
Dysalgebria -- students with average to above average IQ can master calculations but can not master algebra (Nolting, 2000).

Oddly, perhaps, I fiddled with how to spell a word for the condition; my first inclination was: dysalgia, using only the root. That one appears, other than some vague site references, to be not taken.

Anyway, the condition I'm discussing isn't exactly what Nolting defines, but rather more the Einstein (by legend, in any case) syndrome; needing the assistance of math types to resolve the ideas into math formulae.

So, to continue the saga. I've been mulling over writing up a piece on how it is that so many are math-phobic, even math disdaining, when I read my dead trees Times this morning, and find an op-ed piece nearly on point. Dang. The author's point is not quite what I want to prattle on about, but there's enough meaty quotes to impel the musing.
As a mathematician, I can attest that my field is really about ideas above anything else.

And that's the key, it seems to me. This past Friday, Maher had both Matt Taibbi and Bill Nye. Taibbi on the panel, and Nye as the fifth chair later. Taibbi made a remark, tied to a recent piece in "Rolling Stone" apparently, that student loans were the next catalyst for collapse. Which led to a short digression on education and cost of same. In the course of that digression, Nye avers (paraphrasing) that we should incentivize the math nimble to make shit as real engineers, rather than wasting themselves in banksterism. Knock me over with a feather. I know of Nye, but have never seen any of his TV bits. He was quite animated. As I've asserted more than once: policy trumps data, and what Nye was pointing at was the perverse incentive that the Western economies have made for the math nimble. One might argue that capitalism has become so productive that we've not much need for further scientists and engineers, so the financial services industries are merely soaking up excess supply. Even so, it's still perverse.

Both mathematicians and educators have been fretting over how to teach math since at least Sputnik (1957). I was a guinea pig for a couple of those experiments: SMSG (Some Math, Some Garbage; as we students called it), and TutorTexts (and here). Neither made it to 1980.

Despite what most people suppose, many profound mathematical ideas don't require advanced skills to appreciate. One can develop a fairly good understanding of the power and elegance of calculus, say, without actually being able to use it to solve scientific or engineering problems.

Or as one recent text put it: you don't need to be able to derive these equations, just understand what they mean.

On a similar note, Nick Carr took issue, in a recent post, with the notion of teaching "thinking" over teaching "facts". As it happens, my self image has long been: mostly cpu, not so much memory.
Why bother to make the effort to cram stuff into your own long-term memory when there's such a capacious store of external, or "transactive," memory to draw on? A kid can google the facts she needs, plug them into those well-honed "critical thinking skills," and - voila! - brilliance ensues.

That sounds good, but it's wrong. The idea that thinking and knowing can be separated is a fallacy...

On the whole, Carr's holistic notion (he never uses those words) is correct. One needs a body of facts in order to reason. The issue is when should fact accumulation taper, and reasoning begin. Another larger issue is whether, and what's the result of, education should be about "critical thinking"? The answer here is, Yes it is. The reasoning is simple: how many plumbers, or any trade worker with at best a high school diploma, discredits the canards from the Right Wingnuts? Or, as all studies have shown, the better educated the more likely to be a Left Wingnut? Or, more specifically, the better educated the more socialized. Obama's difficulty with Syria has been as much from the Left (that doesn't buy the story) as from the Right (which only supports military adventures of Right Wing administrations). If you want a society of facile drones then, what's now called, vocational education is the limit to what you want to provide. Education is really about how to spot the holes. Training is about how to turn the dials. Fleshy robots. Is that Batty around the corner?

Back to math-y parts.
In schools, as I've heard several teachers lament, the opportunity to immerse students in interesting mathematical ideas is usually jettisoned to make more time for testing and arithmetic drills.

Here, I only partly agree. The symptom of dysalgebria is easy to understand: when the text moves from sentences to formula derivation (even one line of chicken scratches, as my Pappy used to say), the brain seems to lock up. The idea gets lost in the notation. The irony, if one is positively disposed, is that real mathematicians find the concision comforting. It's easy to spot a second or third year graduate school math-y textbook (for a full year course) in the shelves: it'll be the thinnest.

How does this happen? The answer seems to be concise: algebra is typically taught in 10th or 11th grade of high school, and never used, per se, much again. Trig and calculus often follow, but the rules of algebraic manipulation aren't consistently exercised. It's as if Goode learned the "Hammerklavier" at 15, but never practiced it again, but expected to be able to perform it (every few years) well for the rest of his life. Not. And, there's the fact that it's all connected, so a stat derivation (or, horror of horrors, a proof) make use of some set theory (or worse a bit of integration through a trig function) you last saw as a freshman. And so on.

So what math ideas can be appreciated without calculation or formulas?

The op-ed discusses some avenues, but my take is: watch The Science Channel. The formulas exist in order to prove the universe, or some part of it, really exists the way the ideas say it does. That's how the Higgs Boson was found: the formulas said it has to be there. Similarly for much of RM and stat, believe it or don't. Codd was a mathematician by training, and the ad hoc-ness of IMS is what led him to define the RM. On the stat side, it's much longer term. Stat started out as a poor cousin in math departments; MIT still doesn't have a stat department, while Harvard does (by Mosteller, 1957). Moreover, many of the ideas of stat come from math, and many of those are utterly abstract, not tied to things. Unlike physics, which uses maths in a more concrete form. Well, mostly.

Consider the lowly stepchild, ordinary least squares regression. Economics has been living off it for decades. These days, it's at most a chapter. Yes, there are still re-edited textbooks from the 70's still in print but Statistical Learning is the hot topic, and OLS gets a few pages. Oh, the insult. Now, the justification for minimizing squared error to fit some (linear) model (equation) to a bunch of data points can be simply: there's not much choice; you've got a bunch of data points to characterize, and the most logical way to do that (in two dimensions) is draw a straight line through the points. Where to draw that line? In the middle, of course. How to calculate the middle? Well, the line which keeps most of the points mostly near the line. Since some points will be above the line, and some below, taking squares ensures that all points are treated fairly; the negative ones don't cancel out the positive ones, or vice-versa. The best line will be the one that has the smallest amount of overall difference betwixt the line and the bunch of points. That's it. And, oddly enough, much of stat boils down to minimizing squared differences in practice.

But, that's just ad hoc futzing, isn't it? Yes, it is. Is that sufficient backup for pricing CDOs? Well, no; but not that the fancy algorithms were much help either. Viewed as an analytical problem, where the bunch of points is merely hypothetical, what would you do? Sounds like "best" means optimal, for some definition of optimal. Well, this sounds like an optimization problem. And optimization problems are what differential calculus does (way back in either late high school or early college). From there one specifies the functional form, calculate the derivative(s), set same to zero, solve; and voila': the maximum likelihood estimators, which conveniently devolve to OLS calculations for convenient assumptions about actual bunches of data points. Phew!!

Back to the quote. The focus shouldn't be to make math-iness interesting sans math, but to devise a method of pedagogy which improves the uptake of skills needed to not only follow algebraic proofs, but impart the skills to create said. Not so easy, or we wouldn't still be worried about it. Remember Bobby Fischer? When I was a young-un, chess playing and Fischer particularly, was a badge of intelligence. How could a normal person see so many moves ahead? Turns out, the psycho folks figured out the answer, and Nick Carr is more right than might be imagined. Really good chess players don't "think ahead", rather, they've memorized/internalized so many winning games that they identify the pattern of a game as it emerges, and play accordingly. Many general patterns/strategies are named: these are just openings. All those facts (memory), not so much logic (cycles). Activities which appear to be reasoning and math-y aren't always so.

When I was a freshman I had calculus; missed out in high school, where it was just beginning to be offered. The college had adopted a New Math-ish text, which used some au courant notation. The professor, on the other hand, was old and old school, and he insisted on using classic (not that we knew what classic meant, of course) notation in lecture. Same with the TAs. Since understanding math is largely about subvocalizing notation into comprehensible english sentences (that again!!), it was all a puzzlement. Any of you in the teaching/training biz: don't ever do that. It's naughty.

This would be incomplete without a mention of Khan Academy. I've watched a few of the videos, and they looked oddly familiar. Then, I recalled Sunrise Semester. Memory was faulty, in that I assumed it was an educational TV (what preceded PBS) show, but the fact that Springfield didn't have an educational channel, and the Hartford channel was UHF and not easily gotten. Hmmm. Well, as the Wiki piece tells us, it was CBS (and for rather longer than one might expect), and Hartford/CBS was easily received. Old wine, new bottles.

If I had the answer, after at least 50 years of professionals' failure, I'd be a rich man.

Since I've let this piece simmer on a back burner for some days, I just saw this piece that claims dyslexia is ameliorated by e-reader/phone type of display. My immediate reaction: "bollocks". And that is because I've, in the past, tortured myself with Great Books books. For those unfamiliar; the Great Books were/are printed much as bibles tend, with two narrow columns of text on a standard-ish form factor vertical page. I get headaches trying to read these. I guess I'm not dyslexic. On the whole, I don't buy this "cause" of dyslexia. Have I mentioned that the 80-column line zealots, in these days of ever wider screens, make me want to throttle them?
There is a controversy over what role visual attention problems play in dyslexia, [Lorie Humphrey, an assistant professor of neuropsychology at the University of California, Los Angeles] says. Many experts say the real problem is a difficulty in linking individual and groups of letters with the sounds they correspond to. The e-reader method wouldn't help much with that problem, Humphrey suspects.

Note the allusion to failure to subvocalize. That's the key to both dyslexia and dysalgebria.

10 September 2013

Nice Threads, Part The Third

One never knows when a thread will appear. "Paging Dr. Poisson!" Two days in a row, sort of. Sitcoms aren't my cup of tea these days, but I do admit to watching most of an episode or two of "The Big Bang Theory"; there's likely some cop show or "Top Gear" on opposite. Anyway, the Times has an interview with Eric Kaplan, a writer. Which was interesting enough to garner two entries in the quote file; one has already made it to the top of page.

For the purposes of threads, there's this
The idea that you're more interested in the amazing problems that life offers than in some kind of status game was genuine there, and that's what we try to convey about the characters on the show.

One of the stereotypes, justly earned, of these United States is that smart people inhabit the North and Coasts while knuckleheads (those of God, Guns, and Gold) inhabit the South and Interior. I make no apology; all the data support this bifurcation. No Big Bang in Lynchburg.

Well, now there's some more data; sort of. One of the re-posters on r-bloggers (appears to be a new entrant) links to here. At face value the maps show, always a dangerous tack but suitable to my argument, that God's Country is awash in porn stalkers and but not those God hating humanists of the coasts. Meth is also from God's Country, so I guess there is structure after all.

09 September 2013

Nice Threads, Part The Second

Another installment of the continuing saga of Nice Threads. One of the main themes of these endeavors is that Policy trumps Data whenever the two disagree. I'm not happy about, but what are you going to do? Although this happens more on the Right than on the Left, since the Left doesn't abide by such as "We're an empire now, and when we act, we create our own reality", widely understood to be Rove, although I've never found a cite where he admits to it. As to empire, it's the 30th anniversary of Reagan's penis growing exercise in Grenada next month. Talk about reality stretching. The Grenada politician who "asked" for US intervention is reported to have died. Karma, or what?

So, first we have Krugman on wonks,
How many Republicans know, for example, that government employment has declined, not risen, under President Obama? Certainly Senator Rand Paul was incredulous when I pointed this out to him on TV last fall. On the contrary, he insisted, "the size of growth of government is enormous under President Obama" -- which was completely untrue but was presumably what his sources had told him, knowing that it was what he wanted to hear.

For that, surely, is what the wonk gap is all about. Political conservatism and serious policy analysis can coexist, and there was a time when they did. Back in the 1980s, after all, health experts at Heritage made a good-faith effort to devise a plan for universal health coverage -- and what they came up with was the system now known as Obamacare.

Krugman gives the Right Wingnuts more credit than they deserve. It's not that their wonks aren't any good, but that the Wingnuts don't care what the data say, and will assert their policy position without regard to data, in the first (and second and last) place. They simply don't care. Anything that the 1% says endangers them (even if the 1% too stupid to figure out otherwise), is therefore and everafter, evil to be destroyed. Fact is, even the 1% will need Obamacare. The arithmetic of healthcare will only work for the .1% without it (or something so much like it the distinction has no difference).

Next, Apple, which is widely held to be announcing both another high-end iPhone, and a middling one on the morrow. As both of these endeavors have asserted for some time: a corporation can't grow its market if it targets the 1%. While it can suck up coin in the beginning, it soon runs out of customers. The iStuff saga is actually not all that old, and Apple has been in Red Queen status since it stopped being a computer company and being a toy company: running ever faster in order to remain in place. There are other parts to the problem. One is that, having added functions to phones (thus making them smarter) that have nothing to do with making phone calls, what more can be done to continue with planned obsolescence? Just as PC owners (outside of some Fortune X00 corporations) have discovered that XP and Office 2000 fully meet their needs, so too are phone users.
The company's profit growth has slowed in response to a saturated handset market in America and parts of Europe. Many people already own a smartphone and are not upgrading to new devices as often as before.

Sound familiar? You read it here a while back. If you read here, of course. Will Apple heed the data? Time will tell, but so far they haven't.

China, with its huge population, is an attractive target for Apple. But Timothy D. Cook, Apple's chief executive, said recently in a call with investors that the company was puzzled about why sales of its products were struggling in China. Sales there fell 4 percent in the second quarter compared with the same quarter last year. And Apple's sales in Hong Kong were down about 20 percent.

Well, do'h!!! China's 1% just isn't as large or as rich as the USofA's. Further, it's clear now (at least to Your Humble Servant) that Chinese government is beginning to understand that it really does have a huge domestic economy, and being beholden to round-eyes is not such a great idea. Nixon went to China to get cheap labor, not markets, for American corporations. The Chinese aren't stupid, and are turning the game around. Their biggest problem is to channel all that savings into more productive uses than building apartment blocks.

Finally, some data from Anthony Damico, who has been discussing various government data dumps. This installment is one of the business surveys (actually two of them). And he makes the following observation in his post:
the [public use microdata sample (pums)] contains records representing 97% of all firms, but since larger businesses have been disproportionately tossed, firms included in the pums employ only 48% of all americans in the labor force and represent only 40% of all payroll and 36% of all commerical revenue nationwide.

Census anonymizes the data, but Big Corps can be gleaned, as he explains, so they're not part of the public data. Of interest: there are those who continue to assert that the USofA is (or, at least, should be) viewed as the Jeffersonian eden of 1800 (lots of small farms with no need of government) or the Randian meritopia of 1950 (or thereabouts, with the best and brightest running things). If you do the arithmetic, even if there's some loss of precision, a reasonable inference is that 3% of corporations control more than half of the USofA economy.

There's a good bit of divide and conquer in the Right's messaging. The notion that 401(k) retirement, and individually funded healthcare, are but two of the memes they pump. Get the Little People to fight over crumbs, and pay taxes, while we build yet more and bigger estates in the Hamptons. That link is to an acerbic take on the NY Times article. I thought that might be more fun. He's got the link to the Times piece, if you want the simple tale.

06 September 2013

They Be Preverts

Them preverts are taking over the economy. In today's headlines:
09:01 am : [BRIEFING.COM] S&P futures vs fair value: +8.50. Nasdaq futures vs fair value: +13.70. The S&P 500 futures hover near their highs with a gain of 0.6%. Futures jumped to their best levels of pre-market action after participants viewed the disappointing August nonfarm payrolls report as not strong enough to support lowering the pace of asset purchases in the immediate-term.

I wonder how the quants and policy wonks will model such perversion! Welfare queens of Wall Street just can't get by on one house in the Hamptons (yes, the real estate market out on The Island is booming), so they'll pout if Uncle Sugar doesn't keep sending them monthly assistance checks. Today isn't the first time such a headline has appeared, either. Been happening for months. The problem with giving money to those who just turn it over to cheapen their current indebtedness (you can check recent missives) is that the macro effects are de minimis. That was fine with Dubya, since that serves his overt constituency. Not so much for Obambi, since he's been trying desperately to finesse the situation. It will all end badly.

I wonder what Simon Johnson has to say?

05 September 2013

A Blit's Tale

Whilst working for Dr. McElhone, he of the sugar cone quote, I learned yet another, somewhat scatological, observation. Do you know what a blit is? Five pounds of shit in a four pound sack. I was reminded of this observation whilst reading two, again threaded, pieces today.

First, we have the India mess. And, of course, a quote (which has been added to the quote pile):
"There is a fear, and the fear is the labor laws," said Mr. Bandukwala, who is also a regional leader in the Confederation of Indian Industry.

If you read the piece, Mr. Bandukwala is a minor league capitalist, and Darwinist.

Thus, second, food stamps, aka SNAP, and, of course, yet another quote:
"The role of citizens, of Christianity, of humanity, is to take care of each other, not for Washington to steal from those in the country and give to others in the country," Mr. Fincher, whose office did not respond to interview requests, said after his vote in May.

Fincher is a farmer, of unknown acreage, but nice subsidies, which he also voted to increase.

What both men, and the articles, have in common: Darwin must be served.

The India issue is more interesting, if only because it is more recent. Food is an issue in India, of course,
Arun Prajapati, 21, a migrant worker at a fabric fusing machine at Challenge, said that he earned about $100 a month, just a fifth of what Chinese workers earn these days.

He pays $9 a month for rent and electricity for his sleeping space on the floor of a 10-foot-by-10-foot room that he shares with five other migrant workers in a nearby shanty. He spends $38 a month for a subsistence diet of roti bread, lentils and, once a week, some chicken or eggs. He sends his meager savings to his widowed mother in their home village in central India.
[my emphasis]

What's a blit got to do with these two articles? India and China, though the former less than the latter by most accounts, are both trying to harness huge populations to 19th century western capitalist practices in order to steal markets in the USofA. Cheap, perhaps slave and certainly indentured, labor tied to minimalist machinery. Not much different from the New England mill towns of the 19th century. Products sent elsewhere. It's a blit; there's five pounds of IC population fighting over four pounds of US real demand. Again, historically it's the smaller countries with excess production, above and beyond what can be consumed domestically, that export to large countries. The Brits up to the end of the 19th century, were the archetype. They also went the extra mile, so to speak, to invade many of the countries to which they sold. Now, in the days of specie currencies, mercantilism (the economist's term for capitalists economies taking advantage of lesser economies) would sort of work because the exploited countries had no real control over their currencies. An ounce of gold was worth the same the world around. The Brits ran the global monetary system much as the USofA did in the heyday of Bretton-Woods.

Today, the rupee is crashing. For Greece, it's essentially in the position of 19th century India, tied to the currency of a far more powerful adversary. Wars have been fought over this sort of behavior.

So, the BRICs keep trying to fill the four pound sack with more shit (exports to the West). It's not working anymore. Apple is said (as I type, the story isn't told yet) to be going down-market with cheaper iStuff, what with having saturated the market of the 1%. Henry Ford figured out the answer to the problem more than 100 years ago. But, there weren't 7 billion humans on the globe, and there was still lots of iron ore, coal, and little environmental pollution.

On the last point: the BRICs complain that they're being held hostage to environmentalism, but the West wasn't. And that's, on the whole, true. But it's not the West's fault (well, may be a tad) that we got to fill the shitter first. And we've got the A-bombs and drones and New Gold to enforce cleaner behavior the world over. Well, may be the rest of the world. Not 90210, of course.

It's not possible for all countries to export xStuff to the USofA (and the EU) in hopes of snagging valuable New Gold ($$$). In due time, and since the world is not linear (according to Dr. McElhone), sooner than one may think, only the .1% will be able to afford the fruits of cheap labor. As the US/EU middle classes fade into the lime pit, and the .1% cohort gets ever more exclusive, real demand vanishes. Labor become subsistence, and capital earns virtually nothing. Have a happy day.