Thursday, November 30, 2006

How government creates work -- for itself

The friend I mentioned last weekend called the EEOC today. One of those goddamned agents of Satan poisoned my friend's mind, convincing her to file a sexual discrimination complaint.

But wait just a minute: there was no discrimination, sexual or otherwise. Besides, "sexual discrimination" doesn't explain how a female colleague was getting a lot of work. Nonetheless, my friend has started talking about a "timeline" and how she finally sees a "pattern" of her ex-boss doing this and that. Not once did she mention those to me prior to today. Additionally, I recently asked, while she was still working there, if her boss had tried hitting on her. She said no. I didn't expect her to say yes, thinking it was a very remote possibility, but I wanted to explore anything that might explain her boss' behavior. In fact, now she says her boss was fine until a certain point, but that doesn't jive with her previous complaints (to me) that he never gave her opportunities for work or training.

My friend is still upset and pursuing futile "revenge" (which will get her nowhere even if she "wins") when she ought to be expending her energies in looking for a new job. She could have found a temp job this week, possibly Monday afternoon if she'd called that morning. Or she could find a holiday sales job at a department store. Instead, she's become worse: now she's been suckered in by the EEOC's lies.

When it comes to convincing people that they're "victims," nobody does it better, except maybe Jesse Jackson and Al Sharpton. Of course the EEOC would tell her to file it as sex discrimination! How else do its people have work? Ostensibly it was created to ensure "fairness" in employment -- a power government does not legitimately have anyway. But even if it did, "mission creep" doesn't begin to describe how the EEOC has perverted its stated purpose. Its people are worse than ambulance chasers. They want to drum up as much business as possible because it makes them look good, especially if they can talk to someone like my friend for only 20 minutes and have her submit a complaint. When more complaints are filed, they appear more efficient, they can receive more resources and bigger bonuses next year, and they can hire more staff -- which means more money in the unions' coffers.

I'm trying to talk sense into my friend but seem to be getting nowhere. Deep inside, she must know she's really stretching here, but she'd rather listen to the government than one of her best friends.

Tuesday, November 28, 2006

Superman II: the Richard Donner Cut

I've always loved the first two Superman movies, perhaps the second more than the first. "Come to me, son of Jor-El! Kneel before Zod!" So I was quite anxious to see what Richard Donner intended to the second to be, and I picked it up today. Having just finished viewing it, I love Richard Donner's vision of "Superman II" as much as the original release.


We get to see more of Brando, and his wonderful exchanges with Reeve show that the latter could act. We also get, after all these years, an explanation of what the green crystal did. The lopsided battle at the White House is longer, and what a look on Zod's face when he uses the assault rifle! Also, the fight at the Fortress of Solitude is much improved: the ridiculous Superman cellophane net and Kryptonian disappearing acts are eliminated. That includes Superman's puzzling statement, "We used to play this game in school. He never was any good at it."

There are, however, several parts where I think the Donner-Lester original was better.

The most glaring imperfection was the change to what was presumably the original dialogue, instead of my favorite moment in the entire movie: "General, would you care to step outside?"

The changes to the fight scene were good. The guy laughing on the pay phone was cut, and the new Donner footage/dialogue was good. However, after Superman rejoins Zod with, "I'm not a coward," there's some additional action before Zod declares "Then die as you deserve to!" and throws the cement wall. It would have fit better had Zod said, "Now die as you deserve to!"

I wish Superman and Lois at the Fortress of Solitude could have been a combination of the two versions. Superman picking flowers was unfortunately cut, although Lois' "I'm going to slip into something more comfortable" was also removed. What, Superman just happened to have women's clothing ready for her? I prefer the original sequence of Superman being made to choose while she was changing, rather than his choice coming after they had already made love. The latter, though, explains how Superman got Lois pregnant with a superbaby. That was my biggest problem with "Superman Returns": a pretty good action movie, but it ruined so much of who Superman was, and the new Superman and Lois just didn't have any chemistry. I actually like it less and less the more I think about it.

The new ending was so-so. I thought the original was more touching because of how it pained Lois to see Clark every day, knowing who he really was. Even if it did rely on a sort of Kryptonian hypnosis, I preferred that night of emotional conflict to the "too easy" resolution in the new one: Superman destroys the Fortress, and Lois cries as she promises to keep his secret. Yawn.

Time reversal was bad enough in the first movie, but using it in the second shows a lack of imagination. It's too easy, like a character waking up and realizing that the disaster was just a dream. Part of Superman's lesson was repairing, not undoing, the damage so he could see the consequences of his "selfishness." And was Superman zooming around the Earth reused from the original movie, just like the final shot?

Worst of all, if the time reversal undid the damage Zod & Co. caused, and in fact returning them to the Phantom Zone, then we can also assume it undoes Superman giving up his powers. So when he returned to the diner and took care of the bully, he was in fact seeking revenge for something that never happened. Perhaps the diner owners and customers are glad someone shut Rocky up, but the time reversal makes Superman's "I've been, uh, working out" fall flat. Only the events of the original version made that line work.

Monday, November 27, 2006

Thou shalt not fear false prophets like James Wolfensohn

Wolfensohn, the former head of the World Bank, is warning that China and India's economic growth will leave the West -- particularly the United States -- behind.

First, I think Goldman Sachs' estimate of the U.S. economy is off. The U.S. economy need only grow at an average of 3% per year to exceed 46 trillion by 2050. With a mere 2.5% annual growth rate, it will reach $37 trillion in 2050 -- and 2.5% is pessimistic, considering the trend since the Reagan Revolution. Or maybe Goldman Sachs is assuming a Democrat-dominated federal government from now through 2050, one which taxes the country to hell and back...

I'm not worried. China and India cannot sustain their respective growth rates: eventually they will hit a wall because of their dependency on exports. Any business expands only when its customers' income increases (so that they can afford to buy more), and/or when its customers increase in number. In other words, you can manufacture all you want, but you make money only when people buy from you. The disparity between Asian and Western population growth rates therefore eliminates the possibility of the U.S. and other major trading partners being "left behind." Also, you cannot make money by supplanting your customers' livelihood when your customers cannot find other work to do. Right now, China and India have found the balance by specializing in lower-grade manufacturing, allowing Westerners to pursue higher-tech professions. This leaves everyone better off with overall increased wealth. As the Chinese and Indians prosper, they can buy goods from Americans, like software and high-tech manufactured goods, that they can't produce themselves as efficiently. The reverse would not work very well because of the vast population differences. With a lot of designers and only a few manufacturers, there won't be enough product made for anyone to make a living.

China and India can become economically dominant only through a fundamental change in what they produce: they must start innovating. They are great manufacturers, but not (yet?) good designers, and the latter is just not a significant trait of their modern economies. Should that change in the future and they start innovating, the West will still have not stopped its own development. At the Star Trek TOS episode "A Piece of the Action" (one of the greatest), Kirk, Spock and McCoy feared that the "very bright and imitative" Iotians would dissect McCoy's communicator and advance rapidly. However, they forgot that the Federation already had a massive head start of centuries. Even if the Iotians could grow beyond their mere "copycat" abilities, that would not inhibit the Federation from continuing its own technological advancements.

Similarly, I don't believe that China's military expansion is a threat to the United States. Though the Chinese military is expanding rapidly, the U.S. is still so far ahead in technology and the amount of equipment: because the U.S. military is not standing still in its own development, it would take China several decades before it had might at all comparable. As I've expressed before, I don't think China's goal is a direct conflict with the U.S. What it wants is enough of a military so that when it takes over Taiwan, the U.S. will do nothing because the conflict over one island will be too bloody for Americans to stomach.

I recently thought of an analogy that properly compares the growth rates of China and the U.S., because 10% and 3% are meaningless when the baselines are so different. Imagine that the Chinese economy is like a compact car going 55 m.p.h. one year, 61 the next, then 67, and so on. While it's accelerating faster than other cars in its class, it's still much slower than the rocket-propelled American economy doing 500. Also, the driver of the Chinese car is forcibly squelching his 12 passengers, who dislike the cramped conditions and would like a say in the direction of travel. Since the driver wields an SKS while the rest are disarmed, some of the Chinese passengers just want to get out and hitch a ride with the three Americans. The three Americans travel in style, and though they occasionally squabble, their vehicle runs very well.

Then there's the French Citroën. Nowadays it's traveling a little slower than China, but it can't accelerate any faster now, and the driver Jacque would rather placate the kid in the back instead of preventing him from again setting the trunk on fire...

Labels: ,

Sunday, November 26, 2006

What is a Palestinian cease-fire promise worth?

Not a hell of a lot.

Despite Truce, Palestinian Attacks Go On
Israeli Troops Withdraw From Gaza Strip in Unexpected Truce, but Palestinian Attacks Continue

Money quote: "Palestinian Prime Minister Ismail Haniyeh of Hamas said he had contacted the leaders of all the Palestinian factions Sunday and they reassured him they were committed to the truce." Besides Jimmy Carter, who was ever stupid enough to believe anything that Hamas and Islamic Jihad members say?

Call me a cynic with regard to the "Middle East peace process," but I'm surprised that anyone has ever bid or offered more than zero in Tradesports' "Hamas will recognize Israel by December 31 2006" contract. I should have gotten on it back in July.

Saturday, November 25, 2006

You do not have a right to employment

One of my friends got fired yesterday from a job she'd held for several months. From what she told me, her boss said "it wasn't working out." He hasn't been giving her as much work to do as others, and not even that many practice loans to improve her skills while she waited. There was not enough work across the department for her to have overtime (which she would have liked), but another person had enough projects requiring overtime. Meanwhile, someone new (hired a few months after my friend) was given plenty of work and better resources.

My friend is not be specifically claiming that she's entitled to a job, but her complaint that she "deserved equal opportunity in work" is another way of phrasing the same erroneous argument. Both are based on the belief that there is a "right to employment," which is a mistaken assertion that you have the right to someone else's property. My friend was an "at will" employee, so her employment, as well as the quantity and level of work she is given, was purely at the pleasure of the company's owners and their agents. Was it "fair" or "right" that they fired her, instead of helping her advance in the company? My friend does not believe so, understandably, but the only judgment of "fair" that counts is that of the owners and those to whom they delegate managing authority. Your employer is in no way obligated to give you opportunities, no more than your neighbor is obligated to hire you to mow his lawn even though you'll do it cheaper and better.

Now let's consider my friend's situation from the company's perspective. The first person was a veteran, and I suspect that her expertise was needed on projects that couldn't have been given to my friend, who had not done this job before. The new person already had experience from a previous job, so it makes sense that he would be given better resources to perform the advanced work that a rookie cannot do. Still, it wouldn't matter even were they the most unqualified in the department: it is still the right of the company owners to be stupid with their own property -- provided they do not harm others. Declining to hire someone, or deciding not to continue someone's employment, is not causing harm: if it did cause actual harm, that would imply a right to the employer's property. On the contrary, forcing someone to hire another harms the employer, because it is forcing the owners to dispense with their private property against their wishes.

Of course, my friend is not (yet?) in a mindset to accept what I tried to explain, which does not mean I am unsympathetic. I personally know it's very hard on her that she's out of a job, especially at this time of the year. She has children, and suddenly being out of a job throws a wrench into her holiday plans, but companies after all are in business to make profits for their owners, not provide charity. Charity comes after companies have maximized profits, so that their owners and employees can afford to be charitable.

Hopefully she'll realize that the answer is not pursing a lawsuit, or standing outside their offices handing out leaflets, as she is threatening. She has no basis to sue, and more importantly, she will be wasting energies that she should put into finding a new job. She accused me of accepting a company walking over me, asking rhetorically whether a woman should just accept being raped. That's more than a stretch: that's an absurd comparison. Rape is a violation. Losing your job is merely one party deciding not to continue the commercial transaction.

Moreover, as I told my friend, if one company won't open doors for her, another one will. It's time for her to find a job with someone who wants her to succeed, someone who values what she has to offer, rather than waste her time at a company that grudgingly keeps her on. That's when everything will work out in the end. Her former employer, for whatever reason, has decided to deprive itself of her talents and abilities, and a better company can now make use of her.

How much do you "deserve" in pay?
If your compensation isn't enough, why do you work there?

Thursday, November 16, 2006

RIP: Milton Friedman (1912-2006)

He died today at 94.

I would have completely missed this news if my friend Charlie hadn't called me this morning. While on vacation, I'm wonderfully disconnected (for the most part) from the Internet and news.

Greetings from Sonoma

I'm in the middle of what I think is a well-deserved vacation, visiting my best friend in California. Will be back in a few more days. We're having fun, and for the last two days I've been doing badly needed tuneups and cleanups on her PC.

My body clock is stuck on Eastern time, the first I can recall my internal clock not going by daylight or local time. I'm having trouble staying up past 9 or 10 p.m., and I'm wide awake by 4 to 5 a.m. -- actually a good thing, since my friend was an early riser long before we met.

Saturday, November 11, 2006

More insight into how liberals' (small) minds work

Atrios wants Congress to build more trains. Someone please correct me if I'm wrong to take him and his commenters seriously.

That's how liberal minds' work: "Please government, give us more, regardless of how much it costs, except when we have to pay for it."

Years ago, my father and I used to wonder why American businesses don't use more freight trains. Then I studied Austrian economics and its free market principles, specifically knowledge's distribution throughout society, and entrepreneurship's basis in specialized knowledge. It then seemed so elementary that the private sector overall determined what was a better method of transporting people and goods, and only government could be so stupid to go the opposite way.

Friday, November 10, 2006

What do liberals do when they're bored?

Talk to themselves, I guess. I've seen people with Bush Derangement Syndrome, but it's never before appeared on my blog like this.

Tonight I went to the independent New York Young Republicans Club. It lasted until 10, which really fatigued me after a hard day at work, but the speakers were great. Afterward we went to Margarita Murphy's as usual, but I couldn't stay long. Part of me was tempted to catch the midnight train back home to Westchester, but I took the 11 p.m. so that I could get an extra hour of sleep.

Wednesday, November 08, 2006

My last pre-election Intrade newsletter

My last two haven't been published on, and with their personnel shuffle I mentioned, I can only presume that they were e-mailed out. The following was the one I submitted late Monday night for release Tuesday morning; I'd have posted it here last night, except that I was felt half-dead yesterday and had to go to bed not long after coming home from work.

I'm going to do at least one more for the post-election analysis of how well the markets did. So far, it looks like the individual Senate predictions were perfect -- except Virginia, which is still to be decided. If Virginia does go to Democrat Jim Webb, then every Senate contract would have predicted correctly, with the Senate.GOP.2006 and Dem.House.GOP.Senate contracts being wrong. Also, that would validate the very high activity in the Dem.House.Dem.Senate contract.

So without further ado:


We're finally at the day of the mid-term elections (by the time this is published). Monday night, Dem.House.Over14.5 closed at 81, and Dem.House.Over19.5 closed at 69.4. Since those contracts' October 11th debut, they've shown traders' increasing confidence that Democrats will win enough seats to regain control of the House. The contract prices for the Democrats to pick up over 29.5, 34.5, 39.5 and 44.5 seats show that Democrats are unlikely to win a super-majority to override presidential vetos, but traders are betting they have an excellent chance at majority control and thus control of committee chairmanships.

Just over a week ago, Intrade introduced the new U.S. "2006 mid-term election parlay" contracts. They're based on the four combinations of Congressional control: two contracts for both houses of Congress being under one party's control, and two more contracts regarding how Congress may be split between the parties. Perhaps these were superfluous because of the other available contracts, but they do simplify things for traders by combining two contracts. And, after all, markets work best when there is a variety of choices. Judging by the extraordinarily heavy activity, these were great choices to offer traders. As of Monday night, over 1900 contracts of GOP.House.GOP.Senate had been sold, nearly 1800 of Dem.House.GOP.Senate, over 2500 of Dem.House.Dem.Senate, and very surprisingly, over 750 of GOP.House.GOP.Senate.

I say "surprisingly" because with House.GOP.2006 down to around 20 and Senate.GOP.2006 still hovering around 70, people might bet on the reverse of one, but one wouldn't expect a lot of people to bet on both. The two contracts predict about a 6% chance that the GOP will keep the House but lose the Senate. That corresponds to the GOP.House.Dem.Senate price, which has closed anywhere from 2 to 6. Though highly improbable to expire at 100, the contract is still somehow interesting enough that people have traded several hundred contracts of it. Traders' prices put the probability of the GOP retaining control of both houses at anywhere from the teens to the low 20s – not very probable. Traders think it's more probable that the Democrats will retake both houses, although that contract's price is only in the mid-20s, so it's not significantly more probable.

Of the four, the contract most likely to expire at 100 is Dem.House.GOP.Senate, which closed at 56 on Halloween, dipped to 44 on November 3rd, and is now back to 57. That's not a very solid prediction of the most likely outcome, though, is it. That's because traders are also looking at the GOP possibly retaining full control, or the Democrats regaining full control. Those outcomes are less likely than a Democratic House and GOP Senate, but still interesting with a high enough probability that people are willing to wager money on it (indeed, the highest volume is in Dem.House.Dem.Senate, showing traders find it the most interesting outcome of the four). This illustrates the superiority of prediction markets over simple voter surveys: anyone can say anything to a pollster, and there's no incentive to go out on a limb and express a possibility one thinks could come to pass.


Let's do a brief rundown of the important and/or close races that will determine which party controls the Senate.

Maryland: The MD.Senate06.Dem contract closed at 74.8, which in prediction markets is a very strong prediction of victory. Polls show that lieutenant governor Michael Steele, a black Republican, has continued to bridge the gap between himself and Ben Cardin, but the contract prices indicate that traders don't believe Steele's efforts were enough. It could be worse for Republicans, though. A Democrat will win the seat of retiring Democrat Paul Sarbanes, so while it isn't a seat pickup for the GOP to negate another Democratic victory, at least it isn't a seat loss for the GOP.

Missouri: At October's end, the MO.Senate06.GOP contract was in the 50s, and the MO.Senate06.Dem contract was in the 40s. In the last several days, they've actually reversed. This could be a win for the Democrats, a must-win race if they're to gain control of the Senate in addition to the House.

Montana: Polls show this as a close race, and incumbent Republican Conrad Burns has been urging a big Republican voter turnout. However, since mid-July, the MT.Senate06.Dem and MT.Senate06.GOP contracts have predicted this as a likely seat pickup for Democrats.

New Jersey: Republican challenger Thomas Kean's campaign has been broadcasting commercials painting incumbent Democrat Robert Menendez as unethical and corrupt. Menendez has countered with charges that Kean is too close to President Bush. In a heavily Democratic state, the latter has been far more effective: the NJ.Senate06.Dem contract closed at 87.8.

Ohio: It's hard to believe this was a battleground a couple of months ago, with the NJ.Senate06.Dem contract's close at 95. This is an important pickup for the Democrats.

Pennsylvania: Another important pickup for the Democrats. The PA.Senate06.Dem closed at 91, so traders are effectively sending farewells to Republican incumbent Rick Santorum.

Tennessee: last week the TN.Senate06.Dem contract was in the 40s, but it's fallen to the teens. Meanwhile, the TN.Senate06.GOP contract has spiked to a close of 86.7. Assuming that the Democrats were going to win Maryland, Montana, New Jersey, Ohio and Pennsylvania, they had to win both Missouri and Tennesse.

Virginia: Before, it looked like Republican incumbent George Allen would keep his seat. Now the VA.Senate06.Dem contract has surged in the last several days, to a last close of 60.9. The VA.Senate06.GOP contract has commensurately tumbled to 39.8, reflecting traders' belief that Allen's recent campaign tactics (excerpting anatomically explicit passages from Webb's books and accusing him of plagiarism) have backfired. There was also a recent incident of a Webb supporter and known political prankster who pushed his way toward Allen at a campaign rally, which wasn't caught on videotape, but Allen's supporters wrestling him to the ground was captured (and subsequently broadcast all over the Internet).

Conclusion: wow, did a lot change in the last week! Democrats needed to win both Missouri and Tennessee, assuming they didn't win Virginia. Now they have a good shot at Missouri and Virginia, and the latter will substitute for Tennessee. Two-out-of-three will give them the seats to retake the Senate (assuming all other races go as predicted).

Monday, November 06, 2006

Why do we so greatly penalize the Golden Tiger who produces so much?

(Updated 11:45 p.m.)
Woods Starts Golf Course Design Business

Nov 6, 2006 (AP)— Tiger Woods has been conquering golf courses around the world. Now he's going to start building them. Following other players-turned-architects, Woods announced Monday he has formed Tiger Woods Design and will start looking for land to design golf courses.

"My goal is to provide a unique collection of amazing courses all over the world that represent what I love about golf," said Woods, who will be chairman of the company.

He did not say where his first golf course would be, although an announcement is expected by the end of the year and likely will be outside the United States.
What a player, and what a businessman. He knows how to market himself, and he deserves every penny. It's completely immoral that the government takes so much from him, especially when he provides jobs regardless of whether he saves it or spends it. On the other hand, when the government taxes him to redistribute the money, it passes it through its bureaucracy (the very epitome of deadweight loss), then spends it as unwisely as possible. Remember: bureaucrats measure success not by efficiency, but by raw numbers served. That's like McDonalds aiming for twice as many served, even if their Big Macs are of terribly quality and cause food poisoning. At least McDonalds doesn't forcibly compel you to eat there -- try refusing to be a "customer" of the IRS.

If liberals had their way, Tiger and other very wealthy individuals would be taxed even more under the socialist belief that no one should have more than anyone else. Tiger and others of great wealth would then have no incentive to produce as much, and "produce" literally means creating wealth. Wealth is not finite: wealth grows according to what each person produces, and the fact that one person earns more money than before does not deprive anyone else of the money.

Let's think of a small pre-industrial economy. Jim is a farmer, his wife Mary is a seamstress, Peter is a lumberjack, and Thomas is a fisherman. They all specialize in their own professions and trade with each other. One day, Jim decides he'll plant another acre of crops this growing season. It's still economic growth whether he sells it locally or to a neighboring village, and it encourages even more growth by encouraging the buyer to produce more himself: he might want to increase his purchasing power so he can buy more, rather than reallocating his consumer preferences. Whichever he chooses, there will be more competition among sellers, forcing them to innovate new, more efficient ways of producing.

So Jim earns more money, some of which he uses to hire newcomer Eli (that name was not picked coincidentally) to make a machine more efficient at harvesting or processing crops. Mary uses some of the extra money too, to invest in better sewing equipment. With the additional money, they can buy more wood from Peter to expand their home, and Peter can hire Eli to build him better tools. Thomas is not forgotten, because everyone else can afford to eat more fish (far tastier than the same old vegetables and bread), and Thomas can use the extra money to build a better boat and fashion better nets.

Now let's throw in government. One day, Paul, Harry, Nancy, Charlie and Hillary come onto the scene. They don't really produce much of anything, but they helped form an unnecessary government that takes money from Jim, Mary, Peter, Thomas and Eli. Then that money goes to certain friends, acquaintances and supporters (voters) of Paul, Harry, Nancy, Charlie and Hillary, especially people who go around to collect "contributions" from Jim, Mary, Peter, Thomas and Eli. Because the "collectors" have access to superior firepower and can imprison people, Jim, Mary, Peter, Thomas and Eli have no choice but to hand over half of what they produce. The money often goes to pay others to build roads and buildings that nobody would have paid for if they were paying for it themselves. These people wouldn't have made as much if they had to be worthy of their own hire, so at every election they naturally want to see Paul, Harry, Nancy, Charlie and Hillary win again.

Well, it doesn't take too long for the four hard-working people to realize, "Geez, I worked more so I can have more things that please me, but I got so little in the end because of this stupid thing called a 'higher tax bracket.' Why should I bother when my money goes to people who don't produce as much as I do?" And so they cut back on their work, because the extra income after taxes is less valuable than their free time, and government revenues fall. Then Paul, Harry, Nancy, Charlie and Hillary accuse Jim, Mary, Peter, Thomas and Eli of "not paying their fair share," and Jim, Mary, Peter, Thomas and Eli are made to "contribute" even more.

What I've described is my own expansion of Say's Law, the basis of supply-side economics: supply must come before demand, because "products must be paid for with products." Say formulated his ideas 130 years before John Maynard Keynes started us on the road to hell, and it's how an economy really works. It's all the same whether Jim plants crops or writes computer software, whether Eli builds a better crop harvester or a better C++ compiler, etc. More specifically, what I've described is capitalism. Contrary to all the socialists' malignment, capitalism does not imply "exploiting" workers. It's merely the reinvestment of profits back into the business so that it can expand. Expansion means more jobs, more production, and more prosperity.

Forget all the Keynesian tripe you've ever heard, especially Krugman's ridiculous economic model (so absurd and simplistic that if anyone else had written it, I'd have thought he had to be joking). This is the modern "economics" that Don Luskin rightfully calls a "weapon." Yes, it's very much a weapon, one used by politicians and pseudo-economists to justify the central planning of people's lives, rather than letting people make their own decisions.

Note one thing about the basic economy: there's no need for a central bank, no matter what form of money is used. None whatsoever, not even "to increase the money supply to maintain price stability." Money in any form is merely a medium of exchange, and its value is therefore purely relative. It's so relative that whether the villagers are transacting between themselves, or with another village, the participating parties are perfectly capable of figuring out any "exchange rates" by themselves. Note that I'm not arguing against a standardized currency, since government's coin can have the advantage of reducing the information cost of each transaction, but I emphasize that people should still be free to use whatever medium of exchange they want. A problem arises, though. Even if government does not have a true monopoly on currency (by prohibiting and punishing the use of any other), its illusory image of "trust" creates a huge barrier to market entry for anyone who wants to compete with government's "legal tender." Most people are familiar with the saying, "Trust is earned, not bestowed," but a central bank, as an agent of government, is viewed as implicitly trustworthy because most people don't know enough to question its powers.

So getting back to Tiger Woods, let's modernize the economy and include him. If he earns a million-plus dollars from winning a tournament, does that deprive you or me of my income? Not in the least. Tiger earns his money courtesy of tournament sponsors, who produce products that you and I buy. True to Say's Law, we work to buy those, and then more if we overtime or obtain better employment. And what does Tiger do with his money? He buys whatever he wants, which creates employment for people who build things like luxury houses and yachts (very well-paying jobs), then saves the rest. However he saves (stocks, bonds or a savings account), it's all returned to circulation in the economy. Not one dollar is lost. Based on Bastiat's description of the "broken window" fallacy and how money circulates, I term this "Bastiat's Law of the Conservation of Money."

Now Tiger Woods is lending his phenomenal skills to the construction of new golf courses, which will create even more jobs for those with suitable skills, and again not depriving anyone of a single dollar. Well, there are those who will lose: those who are uncompetitive and now won't sell as much, and who will not be lent as much. Tough luck, eh?

Ned Lamont, you idiot, get staffers who can quote things right

This evening I saw a Ned Lamont commercial showing an old man driving a car into a brick wall, then another, and another. Each brick wall had different graffiti: "Lost 50% manufacturing jobs," "Iraq," and "Privatize Social Security." The old man, who's supposed to be Joe Lieberman, gets out of the car and says, "Stupid car!" Then Lamont appears: "If the definition of insanity is doing the same thing expecting a different result, why send Joe Lieberman back?"

Ned, here's a free clue. Einstein actually said, "Insanity is doing the same thing over and over, expecting a different result." Commercials are limited to 30 seconds, Ned, but you could have had your people trim something to provide the quote correctly.

Lamont and his staff are either willfully dishonest or willfully ignorant. The only thing he could rightfully accuse Lieberman of is supporting the war in Iraq, but polls show that that single issue won't be enough for Lamont to win. As far as the others, Lieberman opposes privatizing Social Security, and how has Lieberman been responsible for these "50% manufacturing jobs" lost? Presumably Lamont means to overseas labor markets, but the fact is that protectionism first harms the country trying to protect its domestic industries, and technology has "destroyed" far more jobs than outsourcing. China has lost many more millions of jobs than the United States because of modernization, so what is Ned Lamont's solution? Going back to hand-operated looms, hand-cut wood and any other muscle-powered processes? After all, it fits the Keynesian bunk of "creating employment."

Your ass is getting creamed tomorrow night, Ned. Hope you have a nice concession speech ready. You know, the standard 21st liberal kind where you charge "voter irregularities" and accuse the winner of having more money. It's too bad, Ned, that it might have worked in other circumstances: this time, you're a millionaire who'd be accusing a fellow Democrat.

Labels: ,

My Intrade/Tradesports newsletters

You can find my first three here, including the "audition" that I provided. It wasn't put on, but it was e-mailed out to test the waters.

There was a little personnel shakeup at Intrade, and I was simultaneously suffering from a very bad, very debilitating cold. My newsletter for the week of October 23rd never got published after I submitted it mid-week, so I updated it for October 31st. It still hasn't been published (sigh), but someone has published it for Intrade. You can find it here.

Corporate ethics

Compliance can be pretty mundane, but along with Internal Audit, we're the oversight for the rest of the firm. There are some interesting circumstances once in a while, though nothing I can really discuss -- a big reason I rarely talk about my job. Tonight I wanted to take a minute and talk about how my employer (who I don't even name, for various reasons) really makes every effort to maintain the highest ethical standards possible.

Recently, one of our employees wanted to do a trade, specifically a large sale of an individual security. Compliance could finally approve it because there were no more sale orders from our clients. That part is very important: we can't have one of our employees helping to drive down the price by selling when our clients are trying to sell, or driving up the price by buying when our clients are trying to buy. Our own employees' orders come after our clients', and that's an inviolate rule. Actually, there are a couple of exceptions I won't detail here, but even those are themselves based in hard rules.

My boss is one of our legal counsel, and part of his job is to ensure that every request for a personal trade is properly reviewed. He saw that, for a reason I also won't detail, the person's preclearance request would not have gone to her department manager for approval as it should have. We knew that her reviewer and backup reviewer had both given verbal approval for the trade, just not through our formal tracking system. Still, my boss ensured that they had to do the latter, and it's part of his job to make sure every request is properly reviewed. He did that knowing it would delay the trade until the next day, because we knew both of her reviewers were in meetings and couldn't give the required approval before the daily cutoff time.

Now, we could have let this one trade go by, then set things properly thereafter. Her reviewers would have had no problem with it, but even so, it's our duty to uphold the highest ethical standards possible, and to comply with the letter and spirit of our own rules. This is very important to the SEC when they audit us, but more so to our clients. We want our clients to know that they come first, and that we're extra rigorous about approving and surveilling our own people's trades.

Around the same time, I was talking with someone who wanted to sell his shares of a commonly held security (a very big, well-known firm). The only problem is that our clients are always buying and trading this particulary security, thus it's hard for our employees to get a "window" for their own transactions. I told the fellow that it's ok for him to keep contacting me to see if he can do the trade, so he started e-mailing me every morning. Once, he called me fairly early, just after he could submit a trade request. It looked like the security wasn't on our clients' order list for that day, but I knew it had to be. There's never a day when our clients don't trade that security (often both directions), so I concluded that it must not have been put on the order list just yet. Sure enough, it appeared about 10 minutes later. We could have approved the trade, and we'd have technically been compliant with all our policies and procedures, but it would not have been fair to our clients. Upholding your fiduciary duty to your clients goes beyond stated rules and procedures.

My boss and I have been talking about our firm's very restrictive policies regarding employee trades. We're far tougher than most firms, let alone what the SEC requires, and I think I think our Chief Compliance Officer has the correct philosophy. It was summed up in a newsletter my boss gave me a copy of: "Personal trading is a privilege, not a right." You don't have the right to demand that your employer let you smoke in the office, give you a minimum amount of vacation time, or let you make personal investments according to what you think is proper. If you don't like the conditions, don't work there.

Mixing Prohibition with Russian roulette

Russians are stereotypically hard drinkers, with possibly millions of alcoholics. It was bad enough that the Soviet Union encouraged drinking, and that so many Russians today are still so poor that they drink what we'd consider "moonshine." Now the regulations of Putin's government are pushing people toward truly poisonous forms.
Alcohol Deaths Spark Debate in Russia

MOSCOW Nov 3, 2006 (AP)— In a country renowned for hard drinking, most people aren't surprised to hear that 42,000 people die from counterfeit alcohol in Russia each year.

Perfumes, aftershave, cleaning liquids and other fluids have been passed off by counterfeiters as vodka for decades, and have long been on the drinks list of Russia's more desperate alcoholics.

But recent poisonings have grabbed unusual attention in a nation where many are numb to the problem of alcoholism. The cases have dominated news reports and Cabinet meetings, fueling debate about a malaise that has helped lower Russia's average life expectancy rate to 66, 14 years shorter than the European Union average.

There is no clear explanation for the sudden attention. Some blame the recent deaths on bungled regulatory measures that caused a shortage of real vodka, driving even more people to buy bootlegged products. Others suggest that heavy coverage on state-run television is a propaganda push to pave the way for creating a state monopoly in the vodka market.

The government this week reported 19,000 deaths from surrogate alcohol so far this year and has kept the public updated on the latest rash of cases. But that's actually 4,000 fewer than last year, adding to the mystery surrounding the heightened attention.

Some people believe the government released the statistics all at once to garner support for creating a state monopoly in the alcohol market. President Vladimir Putin's government has moved to increase state control over strategic industries like oil and gas, and some observers believe vodka is next.

"What they are saying about a wave of poisonings is...aimed at creating an additional feeding trough for officials," said Andrei Shurikhin, president of the S.P.I. Group, which controls the foreign trademark rights to Stolichnaya vodka and owns the biggest spirit producer in Russia.

Police and prosecutors have been swift to show they are cracking down on counterfeiters. Nurgaliyev said special police units had been deployed in 14 regions to clamp down on plants that covertly produce "vodkas" containing methylated spirit with names like "Ray of Light."

"They may have a pleasant brand and name...but they are essentially poison," the minister was quoted as saying by the ITAR-Tass news agency.

Last week, police in the central Voronezh region confiscated 600 tons of liquids with a 95 percent ethyl alcohol content, apparently aimed at drinkers. Police said they contained cleaning fluids, window deicers and chemicals used for removing rust.

Some argue that delays in issuing new tax labels for imported alcohol, along with glitches in a new automated database to track sales and supply, provoked a shortage that counterfeiters were more than happy to fill. Tens of thousands of bottles sat in warehouses unable to be registered in the new system, which was meant to prevent bootlegging.

The delays led to a 13 percent fall in legal production levels, said Dmitry Dobrov of the Union of Alcoholic Goods Producers, which represents manufacturers that produce 40 percent of the nation's vodka. He estimated that about a third of the vodka sold in Russia last year was counterfeit.

A ban on Georgian and Moldovan wines widely regarded as Kremlin punishment for the pro-Western path taken those countries contributed to the shortage of affordable legal drinks....

The agriculture minister called for a state control over the sale of ethyl alcohol, while the head of the upper house of parliament said the government should monopolize production. Boris Gryzlov, the head of the Kremlin-backed United Russia party said the state should control the entire alcohol retail trade....
I remember about six years ago when Putin's Cabinet announced higher taxes on vodka. Putin was acting president then, and with an upcoming presidential election, he of course did not want to anger vodka drinkers. So he distanced himself from his Cabinet, though not enough that he resisted raising taxes on all alcohol beverages later in the year.

It doesn't take a great deal or a great depth of thinking to realize that when many Russians could no longer afford as much alcoholic beverages, they naturally turned toward cheap moonshine. Then police cracked down on "illegal" distillers, and the real alcoholics would resort to dangerously unpotable substitutes. not so much to "protect" the people, but because Putin's government wants every ruble of excise tax revenue it can squeeze from drinkers, smokers and any type of consumer. On the income tax side, Putin may have instituted a flat tax, but that wasn't for maximizing tax revenue by promoting economic growth -- it was merely for maximizing tax revenue, economic growth be damned.

History repeated itself when Putin's government banned the imports of Georgian and Moldavian wines, and when it established the insane new system of tax labels. Who is truly surprised that more impoverished Russian alcoholics turned to lethal products to satisfy their addiction? The solution is for Putin to lift the imported wine ban, which would have to happen after someone extracts the dead bug lodged in his sigmoid colon. Next, the Russian police need to stop harassing distillers, so that people can make their own crude moonshine. The rough distillates aren't the best for their health, but then again neither is 20 liters each year of "quality" 100-proof vodka. At least either would take years of liver damage to kill a person, rather than outright poisoning from deicer fluid.

Now, a little bit of my family history. My father, his two brothers and their mother were very poor during the Depression. Bleeding hearts today throw out "poverty" like it means anything what it once did. Forget any modern connotation you know: my father's family was poor. He was a great track athlete but gave it up to work after school, not so he could have a car like teenagers today, but so his family could afford to eat. He came home from school at least once and was told by his mother, "I'm sorry, there's nothing to eat." Nothing at all, not even bread.

How many people do you know ever had to go without a meal because they couldn't afford it? Today, "poor" and "having a tough time making ends meet" don't include hunger. Now, states and the federal government release estimates that a certain number of people, especially children, are "hungry." But as Thomas Sowell and others have pointed out, the government merely estimates how many need public assistance for food, subtracts the number who do receive assistance, and concludes that the rest must be "hungry." There's no consideration that those people receive other forms of help, and let's face it: in today's America, it almost takes effort to die of starvation.

According to my father, who rarely spoke of her, his mother worked as a saloon waitress. During Prohibition, then, she was selling illegal beverages. It still wasn't enough. One day, one of those when there was literally nothing for her and my father to eat for dinner, her boss stopped by to buy a drink. He knew that my grandmother made and sold "bathtub gin" on the side, and I suspect he knew they were particularly hard up at the time. He paid five dollars for just one drink. Five whole dollars!

My grandmother participated in peaceful commerce that harmed no one (note that the violence around alcohol arose only because of Prohibition), and curses on any person who faults her for breaking the law -- an unjust law -- to feed her family. She did what she had to do, damn it. Had she obeyed the law, in fact the Supreme Law of the Land (the 18th Amendment to the Constitution), her family would have starved to death. And Franklin Roosevelt would have gone on, smiling with his cigarette holder at a "jaunty angle," oblivious to what was really happening.

Wednesday, November 01, 2006

What's so bad about expecting workers to come on time?

The latest bullshit criticism about Wal-Mart has arisen because (gasp!) Wal-Mart will now enforce its policy that workers need to come on time:
Wal-Mart's Attendance Policy Criticized

NEW YORK Nov 1, 2006 (AP)— At Wal-Mart these days, snowy weather is no longer an excuse for lateness. It had better be a natural disaster like a hurricane or blizzard. And being 10 minutes or more tardy for work three times will earn you a demerit. Too many of those could get you fired.

It's all part of a revised attendance policy implemented earlier this fall that makes Wal-Mart Stores Inc. hourly workers more accountable for excessive unexcused absences and formalizes such penalties.

The new rules already are drawing fire from critics who claim they are the latest attempt by the nation's largest private employer to weed out unhealthy and costly long-term workers as it seeks to cut labor costs.

John Simley, spokesman for Wal-Mart, calls the charges by labor-backed groups "invalid" and said the changes are an enhancement of the company's prior policy.
I'm still trying to figure out why Wal-Mart is so wrong in its shocking expectation that workers are to come in on time. Nowadays I take the train into the city, which is generally ok, but when I commuted by car to Connecticut or White Plains, I would leave early if bad weather warranted it. That's common sense, or so I thought.

The article is just more typical hyperbole from the liberal media. Wal-Mart workers are actually in no danger of getting fired until their tardiness and absences reach "excessive" -- just like any other company that wants to make a profit, so in fact Wal-Mart has been giving its workers a break. And it isn't only Wal-Mart that wants to avoid employing people who are frequently late and/or sick. Why is it so wrong for a company to want healthy, productive workers, rather than sickly workers who force a company to charge more for its products and/or services? That's called competitiveness, a word that has yet to appear in liberals' vocabularies.

When 25,000 people apply for 325 jobs at a new Wal-Mart outside Chicago, something must be desirable about those jobs. It's not that the people are desperate for jobs: U.S. unemployment is at a perfect low, with no tech bubble looming over us, and a housing bubble that still hasn't popped five years after the doomsayers first started talking about it. The ratio of applicants to available positions also shows that if you aren't willing to come in on time and do the job, there's always someone else to replace you. If you don't like the conditions, then find another job that suits you. Just don't cry to the rest of us like a certain grad in NYC did, "I just want to be happy and find something I can enjoy doing!"

I'll say again that this is the United States of America, not France. You do not have the right to a job, let alone the right to waltz into your job whenever you feel like it. Let's make a quick comparison, shall we? The United States has 4.6% unemployment, strong economic growth, and it is the economic backbone of the world. France has 8.8% unemployment, and its anemic economic growth is the envy only of the likes of Zimbabwe. You have stories of Americans who work hard, smart and resourcefully; you have stories of lazy French who quit their jobs to collect unemployment.

In the United States, most jobs are "at will," so you actually have to do the job in order to keep it. In France, well, labor laws make it nearly impossible to fire anyone. Who is surprised which one is prosperous and which one is stagnant?

Even so, there are workers in the U.S. who abuse laws and company regulations, creating mini-Frances around them. I've worked with two. One was the most incompetent computer technician you ever met, and she frequently called in sick, was late, or forgot her building access card. However, whenever a manager threatened to fire her, she'd threaten to sue for sexual harassment, because she once caught a supervisor (who was fired) surfing for pictures he shouldn't have been. The company decided it was cheaper to keep her than risk an expensive court battle. I think it took a year to get rid of her on the basis of excessive absenteeism, except it was more that she was tired of the job and stopped showing up.

The other was my last boss at Morgan Stanley, a real bitch and the worst hypocrite I've ever known. Once or twice a year, she'd go on extended sick leave for some new malady, usually a back problem. A couple of years ago, she was out for six weeks, came back the week before Thanksgiving for a couple of days, then took Thanksgiving week off and the following two weeks. Last year she was gone for a few months, returned to work for one week, then took another vacation. She used the company's virtually infinite medical leave, allowing her to save her vacation time while costing the company far more than she produced. In her absence, it was up to my officemate, who was the de facto operations manager anyway. Her biggest hypocrisy was her racism against whites and Asians, while hinting she'd sue over racial discrimination if she were ever fired. She finally got axed during a round of cost-cutting, which should have happened years earlier.