About That Little Dutch Boy

If you're old enough you know the the story of the little Dutch boy

A short story within the novel has become well known in its own right in American popular culture. The story, read aloud in a schoolroom in England, is about a Dutch boy who saves his country by putting his finger in a leaking dike. The boy stays there all night, in spite of the cold, until the adults of the village find him and make the necessary repairs.

Donald J. Quisling keeps yapping about leaks, generally alleging that the "deep state", aka the civil service, is sabotaging his regime. The problem with this is that it's false ("Averages by Appointment Type Through September 2014") that the upper level of civil service is Obama insurgents: on average they pre-date Obama by some years.

So, what's going on? It looks rather simple. The Intelligence Community understands that Donald J. Quisling is implementing an oligarch regime just as Putin did: passing USofA resources to favored private entities. From a national security point of view, that's a tad anti-democratic. The best way to slow that move down is to get rid of Donald J. Quisling, and put the fear of God into Pence and Ryan.

Not to mention Jared consorting with known Russian spies.

I Wish I Had a Photographic Memory

The attentive reader notes that the quote preamble to these endeavors has changed structure some over the years. These days, the top few are (semi-)permanent, while the middle change every now and again as part of the housecleaning, while the last turns over on Sunday (if I remember!).

Among the permanent is the quote from Ernst Haas, which he spoke while leading a workshop I attended in Maine. The they, as noted, was Magnum Photo. According to the Wiki article, no one was asked to leave, which is the legend I've known, but a rather large number are listed as "Withdrawn". I suspect that's resignation in front of firing. For example, Charles Harbutt's Wiki page says:

He left the group in 1981, citing its increasingly commercial ambitions and the desire to pursue more personal work.

In any case, Haas continued a level of association. My recollection, not in the Wiki article, was that Haas was one of the first members who was not a founder. Which brings us to today. The NYT has an article on the new version of the International Center for Photography in NYC. Alas, Haas isn't mentioned in the article, but I'll offer up Part The Second after I see the show. Anyone within a hundred miles of NYC really ought to go.

The Deplorables

Remember that quote from Hillary?

"To just be grossly generalistic, you can put half of Trump supporters into what I call the basket of deplorables," Clinton said. "Right? Racist, sexist, homophobic, xenophobic, Islamaphobic, you name it."

Well, just toss this one in the basket:

At that point, Gianforte grabbed Jacobs by the neck with both hands and slammed him into the ground behind him. Faith, Keith and I watched in disbelief as Gianforte then began punching the reporter. As Gianforte moved on top of Jacobs, he began yelling something to the effect of, "I'm sick and tired of this!"

Neville Chamberlain Trump's sycophants are Neanderthal. And proud of it. And, if you don't read up on the story, Jacobs was just trying to get an answer to a simple question: what was Gianforte's view of the AHCA with the just released CBO score.

Can You Hear Me Now?

Regular reader will, likely, recall the missives offered in these endeavors to the effect that Neville Chamberlain Trump has always had a simple grift as goal: to implement the Leona Principle, "Only the little people pay taxes!". In particular, that he and the other members of his Billionaires Club object to progressive taxation, now more than ever. Again, the notion of progressivity in income taxation rests on the notion of shared sacrifice, and that such sacrifice should, to some extent, be based on the further notion that those who can afford to pay a bit more should. When income is more or less not starkly unequal, the degree of progressivity need not be stark. It's not full blown Marxism, "from each according to his ability, to each according to his needs", but as income inequality grows ever more stark, the maintenance of a Federal budget which maintains according to the needs of the neediest (viewed per capita, not per budget year expenditure) of necessity means that the 1%'s contribution must, of course, grow, being the only ones with any moolah. Since the 99% have a diminishing share of GDP. The 1% have won. They've gotten the President who will take the pressure off, just like he did with Comey.

"What have you got to lose?" was Neville Chamberlain Trump's bait. His first budget is the switch. The 99% will lose a lot. And it didn't take long for the truth to out. But with Right Wingnuts controlling the other 3 branches of government, and the next 2 individuals in the line of succession, dumping Neville Chamberlain Trump for one of them won't fix the problem. The justification, of course, is that the USofA has become two countries: the job/wealth creators and the spongers, and that the Life of Riley enjoyed by the spongers is over. There's a new sheriff in town, and he's kicking ass. Not the Populist Reality promised by the Populist Candidate.

As the dictators which Neville Chamberlain Trump is so enamoured of know, such a bifurcated society can only exist with a Police State. That's close on the horizon.

Will the low information, low education, low skilled voters who did this to the rest of us figure it out? Don't bet on it.

Of course, the top 5 states getting SS disability are Trump States.

Your Order is Shipping

During the campaign Neville Chamberlain Trump made a point of criticising Obambi for his use of Executive Orders. Obambi, by such talk, was the prime abuser of executive power in all the history of the country. Here's a list and you can see that Neville Chamberlain Trump is way, way ahead. On an annual basis or term basis since Truman, Obambi is at the bottom. Another big lie.

And, BTW, the count for the first 100 days is 32 for Neville Chamberlain Trump which puts his annualized total at 116. Another big lie.

Who said we're a data driven society?

At Your Service

A current argument over on "Seeking Alpha" is what Moore's Law means to the notion of innovation. Moore didn't want "Law" associated with his observation.

Despite a popular misconception, Moore is adamant that he did not predict a doubling "every 18 months." Rather, David House, an Intel colleague, had factored in the increasing performance of transistors to conclude that integrated circuits would double in performance every 18 months.

This is what he actually wrote

The complexity for minimum component costs has increased at a rate of roughly a factor of two per year (see graph on next page). Certainly over the short term this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years. That means by 1975, the number of components per integrated circuit for minimum cost will be 65,000.

In simple terms, he observed that the cost of a given circuit halved over time. Since the structure of such circuits obey the laws of physics, which don't change (they are further understood at times, but none have been discarded outright in a very long time), their implementation (generally, TTL) doesn't "improve" per se. But with more transistors available per mm² to produce such a circuit, that was the easy surrogate for the cost curve. So, Moore's became that. It never was. These days, we've seen that ever smaller nodes have been at escalating cost of R&D and the machines to make such nodes.

A Skylake transistor is around 100 atoms across, and the fewer atoms you have, the harder it becomes to store and manipulate electronic 1s and 0s. Smaller transistors now need trickier designs and extra materials. And as chips get harder to make, fabs get ever more expensive. Handel Jones, the CEO of International Business Strategies, reckons that a fab for state-of-the-art microprocessors now costs around $7 billion.

In all, innovation doesn't necessarily follow the accepted wisdom. These endeavors yapped about the notion of growth for some time, but impelled by Gordon's book, have yapped ever more, and what steps governments can take to produce more of it. And see that it gets to the majority, rather than the 1%. Solow has been mentioned as the standard issue economist who ignores distribution issues in growth. There has been an exception, and from Solow's generation, William Baumol. He just passed away. I read him in grad school, but haven't paid any attention to him in decades. Too bad. I just rechecked my Gordon, and he does mention Baumol on page 173. It was Baumol's later writing that leads to that reference (from the NYT obit):

For example, he said, it takes exactly the same number of people and the same amount of time to play a Beethoven string quartet today as it did in, say, 1817. Yet the musicians who spent years studying and practicing -- and still have to eat and live somewhere while doing that -- cannot be paid the same as their 19th-century counterparts. Their wages, too, will rise, even though they are no more productive than their predecessors were. As a result, their work eventually becomes increasingly expensive compared with more efficiently produced goods.

So, what happens when Moore and Baumol meet? Ever slowing productivity, which means that there's ever less increase to worry about distributing:

"What this says is that the quality of life 30 years from now could deteriorate," Professor Baumol said in 1983, "because many of the services that we associate with quality of life will become relatively more expensive while mass-produced things become cheaper and cheaper."

And it gets worser:

"The real danger is that the nation, mistakenly thinking it must rein in runaway costs, will curtail valuable health services and render them inaccessible for the less affluent. Well-meaning reformers may take the same misstep in education, law enforcement and other handicraft services."

What is striking, to me for sure, is that the notion of service sectors not being on a productivity curve was obvious for some years. Yet I hadn't been aware of Baumol's writings from those years. At least, not consciously. I do remember that "priming the pump" isn't my idea.

The Moore's Law side of things devolves from the observation that much of PC software (the three primary ones being wordprocessing, spreadsheets, and wordprocessing) hasn't led to increases in service sectors' productivity since their original release. The primary reason, which I expect Baumol would agree with, is that such computing doesn't actually maker the user smarter (i.e., productive): I offer up Alt-A loans and London Whales as proof.

His insight about the low productivity growth in services also helped explain why overall growth in an economy increasingly dominated by services can stagnate.

One of the prime notions, again which I think is mine but who really knows, is that FIRE has been the private sectors' way to absorb the college educated in non-productive overhead labor. It may be that Baumol had figured that out too 30 years ago, although perhaps not in such inflammatory words. My bad.

Ya think Orange Julius Caesar, Laffer, or Bannon can figure that out? Don't bet on it. Just dig more coal and make our city air just as bad China cities'. Wonderful.

I Pledge Allegience to the United States of Trumpistan

I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.

Uh Oh!

The title says it all. Here's the latest Q Poll on Orange Julius Caesar. Not that he cares, of course.

The most common responses -- "idiot," "incompetent," and "liar" -- did not reflect well on the president, whose approval ratings from the same poll are near record lows.

The most common words were:

1. "Idiot," 39 times
2. "Incompetent," 31 times
3. "Liar," 30 times
4. "Leader," 25 times
5. "Unqualified," 25 times
6. "President," 22 times
7. "Strong," 21 times
8. "Businessman," 18 times
9. "Ignorant," 16 times
10. "Egotistical," 15 times

Thought For The Day - 10 May 2017

Well, we now know how this works out. Orange Julius Caesar issues pre-emptive presidential pardons to all his turncoat minions. And the obsequious Congress let's it pass. Through further election manipulation, the Right Wingnuts solidify control of Congress, ensuring that Orange Julius Caesar and his chosen successors run the USofA for the benefit of the Billionaire Boys Club.

You read it here first.

The Oracle Gets It Right

A day later, at least in the press I see, and a dollar better. This gem from Buffett:

Everything in valuation gets back to interest rates.

A good proportion of the quant, certainly macro, musings in these endeavors goes back to growth, and how that happens. Which consideration is over and above distribution, that ultimately determines whether growth is sustainable. The short answer to the latter is: if it's hogged by the hogs it dies out soon enough.

When I first mentioned Gordon's book, I was forthright in saying that the asymptote of progress was a concept I'd seen coming for a long time and had mused about in these endeavors. Gordon, between the lines, makes the same argument, which is that the globe is finite in resources and laws of nature. We've certainly found the latter, and are close to the former in the areas that matter. Real growth in economies results from new technologies which boost both productivity and output. An economy grows more prosperous, on the whole, by spreading around that additional output from tech progress. That's where the real interest rate comes from.

The theory of interest, in econ terms, rests on a static view of an economy where holders of wealth choose between consumption and (real) investment on the basis of time preference, not productivity gains. Which term boils down to: how much extra moolah does the holder demand for deferring consumption for the time of the loan? This is a zero sum game, without tech progress; aggregate consumption in the current period (and subsequent term periods) is diminished by the aggregate interest paid. Pure fiduciary investment is the version we have today. And, it's not a one-sided process. The holders of wealth may well want 10 or 20 percent return for the use of their moolah, but they'll only get that vig if the borrowers can make at least that much from real world use of the funds. And that can only happen, in the aggregate, if better mouse traps keep being made. Is the problem getting clearer?

Monopoly is the most convenient, and crude, way to generate the vig. Not so good for the public weal, however. Moreover, in the real world of investing, the base return/interest rate is the risk-less government bond. For some decades that's been the Uncle Sugar Bond. Being not entirely stupid, at least in recent perspective, said bonds are sold on auction with a fixed payment, not fixed rate. When, in times as these, there's a tsunami of idle moolah, the auction pricing driven up by excess supply of moolah drives down the interest rate. So long as that tsunami continues to circulate, governments can try to raise those fiat interest rates that they have, precious few and very short term, but there's nothing they can do about long term. The long term rate, if you follow the bread crumbs back to ground zero, is set by tech progress. As Gordon and Your Humble Servant have said, the perimeter of our knowledge of the physical world is, at most, within eyesight. At worst, we're already there, but just haven't felt the bump.

You'll know that the plutocrats have taken total control when they push through law mandating US Treasuries sell at a fixed rate.

The Oracle Gets It Wrong

Warren Buffett had this to say

He said if you go back to about 1960, corporate taxes were about 4 percent of GDP and now they're about 2 percent of GDP. At that time, healthcare was 5 percent of GDP and now it's 17 percent of GDP. "So when American business talks about taxes strangling our competitiveness," he said, "they're talking about something that as a percentage of GDP has gone down from 4 to 2." Meanwhile, medical costs have exploded. "So medical costs are the tapeworm of American economic competitiveness," he said.

In some other reporting, he also said that healthcare would kill the economy. What he ignores, of course, is that healthcare has been, and is, a very strong employment driver. IOW, healthcare does good by doing good. Or, to put it another way, your taxes drive wages and thus inflation by producing un-consumables as nucular bombs and aircraft carriers. Healthcare, OTOH, produces a consumable product. A virtuous circle, as different from the vicious cycle of defense spending.

This time, the Oracle is wrong.

On Death and Taxes

They are said to be the only two unavoidable events in life. Well, your friend and mine Raul Labrador had his 15 minutes of fame this past week, by uttering this gem:

nobody dies because they don't have access to health care.

Funny thing is, morality aside (and economists and Right Wingnuts do so at all times), he's mostly right. Most of the money spent on keeping coggers alive for a few extra months before cancer or heart disease kills them, fits his statement. With or without healthcare, they'll die of the disease that healthcare can't actually cure. "We can't afford it!!!!" Some, Right Wingnuts especially, point to the increase in life span since 1900 (or some similar year) as the reason that Social Security and Medicare must soon collapse. The problem with that assertion is that it's totally false. Yes, average life span at birth is up by a couple of decades since some earlier date, but that increase is almost entirely due to childhood vaccination and antibiotics getting more folks to maturity. In other words, the average/mean life span went up just because more people make it to 65 (pulling the average to the right of the graph), rather than people at 65 living lots of more years.

For those not in the Medicare cohort, mandatory service means that if a 30 year old ghetto junkie gets hit by a bus, he'll be treated at some sort of hospital ER. He may not survive such quality healthcare, and he may spend the rest of his worthless life in destitution being forced to pay back for that service. But he did get healthcare when he needed it. So Labrador isn't fully wrong. The quality of life of those without real healthcare is lots worse than it is with healthcare, but the 1% don't give a shit. And there's a practical reason for that.

This core problem is subtle. As many, including Your Humble Servant, have said, the AHCA is a charade. Rather than being a serious attempt to do what Orange Julius Caesar promised, "everyone, better, cheaper" than Obamacare, it's a bait and switch ploy to give $1,000,000,000,000 in taxes back to the rich folks. Recall, Obamacare included a bit of a tax increase on the upper brackets to defray the subsidies for the poor. Further, Congress has budget rules which make it difficult (modulo another Nuclear Option as Gorsuch) to pass a tax cut without certain preconditions. In sum, by "refunding" the onerous taxes on the rich from Obamacare, the really big cut promised the rich by Orange Julius Caesar is procedurally greased. Who would have thought an avowed Populist would be so thoughtful to the rich? Shit kickers in the Empty States sure didn't, of course.

Here's the subtlety. A progressive tax system works, the populace buys into it, when most of the money rests with the middle class. They largely are the ones paying for the Damn Gummint services. The rich pay some bit more, but not enough to piss them off. As the income distribution skews ever further right, pulling the average ever higher than the median, the middle contributes a declining amount to the total since they have a declining part of the income pie. The rich, who can and do afford what have historically been public services, have rebelled. Why should they pay for a ghetto junkie's rehab or yet another ghetto kid or a bridge in the Rust Belt that's about to fall down?? It just ain't fair.

Yet more subtlety. If you go spelunk the FRED data, you'll find that the US GDP distribution by sector has changed mightily over the last few decades. In sum: in the past the rich put up with progressive taxation since their businesses depended on the poor having enough moolah to buy the stuff they sold. A quasi-symbiotic relationship. But, these days the GDP is skewing evermore toward services "consumed" mostly by rich folks. The rich are more and more making stuff that is sold only to the rich themselves. Why put up with income transfer if none of it comes back? So, yet another reason to opt out of taxation.

And, Orange Julius Caesar, neo-Populist, and Right Wingnut Congress are happy to oblige. Will the shit kickers in the Empty States ever realize they were lied to and care? Don't bet on it.

Watch Your Headv [update]

Not for the first time, I suppose, but a question: isn't 99.44% of quant work just overhead, not output? And for the .56% that is sold output, well that's just sold to MegaCorp to do overhead tasks that MegaCorp chooses not to do in-house.

The recent United fiasco and Southwest mea culpa got me to cogitating, not for the first time, about whether we're actually making much "progress" in both the technical and cultural meanings; have the last couple of generations of invention produced anything as meaningful as the steam engine or washing machine? Gordon's book gets it right.

My current bete noir is dealing with some tracking of mandatory healthcare consumption, specifically my annual physical. The insurer decided I have to have one, despite the evidence (and more each day) that there's really not much value to an annual physical, as commonly executed; certainly the one I get.

The unequivocal conclusion: the appointments are unlikely to be beneficial. Regardless of which screenings and tests were administered, studies of annual health exams dating from 1963 to 1999 show that the annual physicals did not reduce mortality overall or for specific causes of death from cancer or heart disease. And the checkups consume billions, although no one is sure exactly how many billions because of the challenge of measuring the additional screenings and follow-up tests.

Of course, the fact that I did have said physical, all with Windows based software tracking each and every move, didn't get from my doctor's office to the insurer and/or from the insurer to the third-party nanny nagger. Many a slip twixt the cup and the lip. And, of course, the insurer threatens to charge multiple hundreds of dollars per month for failure to have the physical. Sounds like an opportunity much like Catch-22. Losing notifications along the way is to the insurer's advantage. I wonder whether how many quants in Hartford are calculating how many notifications to lose and stay under the regulatory radar? Do the quants get paid on a commission-only basis? Said commission on the penalty charges?

With cheap diagnostics of mortal conditions (pan can, for example), then annual (or so) screenings make sense. As it is, the resting EKG I got is utterly worthless as a diagnostic of my underlying cardiac health.

The test is not useful in routine checkups for people who do not have risk factors for heart disease such as high blood pressure or symptoms of heart disease, like chest pain.

So, the insurer pays this third-party to track whether I've done my Good DooBees each year. The doctor's office tells the insurer, who tells the third-part, who then tells the insurer. I think that's a decent definition of a circle jerk. Which they've managed to screw up, so to speak.

The whole point of quant, in the profit making world at least, is that the cost of a quant exercise brings greater value than the cost of the exercise. We see, may be, this with the overbooking scandal. On the one hand, airlines claim they overbook, and do some calcs to set the percent of such overbooking:

Ms. Owens, along with her main job of setting various fares on a single flight, tweaks the overbooking numbers. Then, each week a report comes out that lists all US Airways flights that bumped 10 or more people. The analyst with the most flights on the report is stuck with a stuffed toy crow for the week. And occasionally they hear from angry airport workers who handled the bumping.

On the other hand, the airlines sell "unbooked" seats through discount brokers, which pretty much guarantees more butts than seats. That text is from 2007, if you noticed, so perhaps the quants have gotten more stats since then, but I doubt it. There's really no penalty for not doing the job smart. Well, a toy crow isn't much punishment.

Not the best use of all the data available as mentioned in an earlier missive. The airlines know that the consumer traveller, with those early and last minute bought tickets, are in no refund land. The discretionary no shows are nearly always business junket guys (and, I suppose, gals) on expensive tickets, so they'll lose far more than just the revenue of the high priced ticket: the cost of the bump has to be included. Not to mention that those steeply discounted broker tickets don't come close to making up the difference.

Could the airlines be bumping out Ma and Pa Kettle who just got excess, cheap tickets from a broker to accommodate Mr. Master of the Universe who just found out he has to get to Orlando for a sales meeting and is willing to pay full freight? What do you think?

So, back to the healthcare situation. In my callow youth, I worked on a Progress application called Optimed (it was bought a few times since I left and before it was sold by the company that bought it, so I don't know if it's still around) which was (is?) a pre-qualification screener. The clients would add rules for certain procedures, based on some, sort of, established criteria shipped with the application. The point, of course, was an ever more elaborate ring-around-a-rosy to justify denying services. Welcome to health as profit. So, the value of quant in this sort of case is cost avoidance. I remain convinced that, modulo fraud avoidance, it's likely cheaper to allow physicians to be doctors, and fire all those $100K/annum quants. YMMV.

The idle educated keep taking more of GDP for nothing gained. What a way to run a country?

[update]
Turns out, the subtitle of one version of these endeavors (penned nearly a decade ago, BTW), "It's the Distribution, Stupid" is gaining some traction:

"The 'jobs of the future' are likely to be performed by robots," said Nathaniel Borenstein, chief scientist at Mimecast, an email company. "The question isn't how to train people for nonexistent jobs. It's how to share the wealth in a world where we don't need most people to work."

Fruit Pies

Let's do some dot connecting.

1 - United Airlines has some rent-a-cops manhandle a elderly doctor out of his seat and off the plane. United eventually settles for an, as yet, undisclosed sum.

2 - Southwest says it will cease overbooking. The same report also says that, at 15,000, Southwest had more passenger bumps than any other airline.

3 - Airline reservation systems, computer division, go back to the 1950's, but the most well known, ACP (some might argue SABRE, but that's just a specific implementation), goes back to the mid-1960s. Of note, it continues today, in much modified form, as TPF.

The distinguishing feature of both ACP and TPF is that they're, at heart, assembler programs with bespoke "transactions" embedded in OS files. Very lean, very fast. According to reports from 2001, SABRE was going to port to Compaq machines.

Much has been made here about the many failures of quant methods when dealing with human systems/processes. When doing data from Mother Nature, who doesn't change the rules every now and again, quant works rather well. In the human realm we get The Great Recession.

So, the dot connecting exercise leads one to conclude that the quants doing computer reservation haven't paid much attention for the better part of 60 years. It's an exercise one might (well, can, actually) find in an upper-level undergraduate program (11.128): on a per-flight basis, calculate the percent overbooked such that only 5% or 1% or 10% of flights actually bump passengers. What might be called low hanging fruit.

The airlines have all the data needed to accomplish the exercise. They know the actual load for each flight going back forever. They know the external factors which affect variability of load: holidays, weather, conventions, and so on. So, why the United and Southwest experiences? The only logical answer is simple: airlines have found that they can get away with not paying attention. Where's a competent data scientist when we need one?