Friday, September 30, 2011

Correspondence

dave.s. writes:
You may be okay, but your links list is moribund. Llama Butchers is gone, so is Dennis the Peasant. And Walter Russell Mead, who seems very compatible with the FLoiG message, does not appear. dave.s.

Both Llama Butchers and Dennis the Peasant have shutdown.

The Mead omission is more complicated as, you see, he's a Groton alumnus and FLG has always been partial to St. Mark's for rather obscure and obtuse reasons. FLG has, however, decided to reconsider his stance.

Thursday, September 29, 2011

Quote of the day

Phoebe:
The way to approach the issue, the more I think about it, is not to care what others think, in life, perhaps, but in this arena especially.

FLG would just like to point to this post he wrote back in December, unsurprisingly, inspired by another post by Phoebe:
FLG has long maintained that basing your personal happiness on the approval, admiration, or acceptance of other people is a futile task. One needs to define their own standards and goals and try to achieve them. And this goes for society as well. FLG contends that the more concerned people are about what societal expectations are, the less likely that person is to be happy. It's a roughly indirectly proportional relationship.

Now, it is admittedly difficult to separate your own goals from those of society or to ignore its demands. FLG understands that. However, to the extent you can approach that ultimately unachievable goal of not caring what other people, or society, say the happier FLG thinks you'll be. Just to be clear, FLG isn't advocating being a self-involved jerk. Be nice. Be polite. Just don't define yourself by the standards of other people.

Beginning Of A Rumor

Since the story about Richard Gere and the gerbil has apparently been disproven, FLG has taken it upon himself, in the interest of promoting entirely unsubstantiated rumor and sex with inanimate objects, to say:
He heard through a friend of a friend of a cousin of an ex-girlfriend who was at 31 flavors in Chicago back in 1986 and overheard a nurse saying that she helped to remove an inflatable gerbil from Richard Gere's rectum.

HT: The Ancient.

Wednesday, September 28, 2011

Dear The Ancient:

Was this your doing?

Sincerely,
FLG

An Aesthetically Unpleasing Word

FLG has always found the word "slacks" aesthetically unpleasing. His father always used the word and each time it was like nails on a chalkboard. They're called pants, trousers, or sometimes, depending on the material, jeans or chinos.

But slacks? Never.

Fairness Of Taxation

FLG has been reading a lot about the capital gains tax and income inequality lately. How this is all very unfair.

Imagine that there are two people, both the same age. Person A makes $40,000 and Person B makes $73,000. Since Person B makes roughly twice as much, then the logic goes that they should pay more. But the argument is often not just more, but at a higher rate.

Moreover, let's imagine not just that Person A makes 40k and Person B makes 73k a year, but that Person B earns that not from the sweat of their brow, but they're that horrible of horribles a rentier who earns their income entirely from investments. Which is to say that one is a hardworking stiff and the other living fat off the land. In fact, Person B has almost $1 million in the bank. Then surely Person B needs to pay more.

As FLG wrote earlier, both Person A and Person B are the same age. Let's say they are 65. Person A has been working for 40 years and, even though Person A made a consistent $40k for each those 40 years, was never able to save anything. Person B, on the other hand, worked for the same number of years and made the exact same amount, but saved 20% of their income, $8000, each year. Assuming a 5% return, at the end of 40 years, that person has $966,398.19. And if we assume they draw that down over 20 years, they can withdraw $73k and some change every year.

So, insofar as fairness goes, is it fair to argue that the person who scrimped and saved over 40 years should pay more taxes than a person who spent every dime?

FLG realizes this is a highly simplistic and stylized example. He's not accounting for tax deferred retirement accounts, etc. He's just making the point that looking at wealth and income and a single point of time and saying that large discrepancies are prima facie unfair is a drastic oversimplification.

Tuesday, September 27, 2011

About FLG's Time Horizons Theory And Empiricalness

Not too long ago, Withywindle called shenanigans on FLG's Time Horizons Theory. Specifically, Withy objected to FLG's idea that liberals' short-term orientation makes them more empirical:
I know where you're coming from, but I still don't think "empirically" best applies to liberals. Conservatives aren't claiming theoretical wisdom from out of thin air, but deriving their claims from experience--empiricism. So far as it goes, I think conservatives do have a longer-term framework in the experience they draw from--historical awareness!--but formally, when he takes the time to revise before posting, a Krugman will claim that he has just as many long-term empirical data points as does a conservative. I think both camps are formally equally empirical, and liberals are practically more short-term in their empiricism; but calling liberals more empirical smacks (in your case) of a private jargon--as opposed to when liberals say it, when it's just self-congratulation.

And then:
I think I'm going to kick strongly against "Conservatives thinking more long run have to rely more upon theory." It's certainly not our self-understanding--we take ourselves (we=some largish number of people who self-identify as conservative) to be anti-theoretical, to rely on a much thicker source of experience--history, tradition--to inform our judgments. One of the interesting winkles is whether "experience" should only be personal experience (a liberal tendency, I would say) or allows the experience of the past as well (conservative!) On this economic front, a great deal of experience has hardened into free-market theory, so it's a nice question as to whether a free-market instinct is experiential or theoretical in nature. I'd say there are a lot of people who take free markets as a theoretical truth; they may be political allies, but I think they are not my philosophical or dispositional kin. (No True Conservatives!--but I break bread with them, so perhaps I shouldn't insist on the point.)

Liberals may rely more on short-term data, but I don't think that makes them more empirical than conservatives who ruminate about Austrian economic policy in 1873, or the pot production of the Roman Empire.

Some of this turns on "data that is relevant." I think you are implicitly defining Roman pot production as irrelevant, which I think assumes the question at issue.

FLG agrees he might have private jargon issue going on here and definitely needs to work out a more lucid articulation. Perhaps, rather than theoretical, rational versus empirical is a more accurate explanation.

Nevertheless, theories aren't created ex nihilo. They necessarily are born out of some set of observations or experiences, especially when we are talking about political and economic theories. Moreover, all arguments require the marshaling of evidence. FLG thinks that short-term analysis is more conducive to empirical and in particular quantitative evidence.

Portfolio Allocation

FLG has learned about the efficient frontier, CAPM, and the modern portfolio theory more times than he can count. However, it was only until recently that something clicked for him.

Okay, so here's the key graph:

FLG'll explain a bit. Basically, an investor wants to be up (higher expected return) and to the left (lower risk). The efficient frontier is the boomerang shaped line. It's calculated using covariance matrices between securities, which isn't really all the important for our purposes right now. In fact, ignore everything except the boomerang for right now. What is important is that line represents the best possible set of choices to buy stocks that maximize reward for any particular level of risk. An investor can choose high risk and high return and be at the upper rightmost point on the boomerang. An investor can choose the far leftmost point and have lower risk and reward. Or they could choose anywhere in between based upon their risk tolerance.

To translate this into real world. If you wanted a lot of return and could tolerate a lot of risk, then you'd be mostly in stocks. Conversely, if you wanted low risk, then you'd be mostly in bonds. This echoes standard personal finance advice one reads online, in newspapers, and even on financial company websites.

But that's not all that's on the graph. And this is where FLG, while not quite thrown for a loop, did learn something recently. See where the line hits the vertical axis and it says risk free rate? Good. What's the risk free rate, you ask? Well, it's the return on the risk free asset? What's the risk free asset, you ask? Well, a truly risk free asset doesn't exist and so we use proxies. Many people point to T-Bills and that's what FLG always thought about. But how about if we assumed TIPS to be the risk free asset instead? They have no inflation risk and the default risk, despite the recent unpleasantness, is about as low as one can find on this planet AND unlike T-Bills they come in 5, 10, and 30 year maturities.

Okay, great, FLG. They come in longer maturities and are risk free. What's your point? The point is that the existence of a risk free asset allows an investor to do better than the efficient frontier. Instead, the investor chooses between how much to allocate to the risk free asset and how much to allocate to the portfolio on the efficient frontier that is tangent to the line, i.e. the tangency portfolio. That entire line is higher up and to the left of any point on the boomerang. Thus, the investor is better off.

The choice then is not about how to allocate toward stocks or bonds in one's portfolio, but how much to allocate between TIPS and the tangency portfolio. If an investor is very risk averse, then all TIPS. If they have more risk tolerance, some combination. If they are very risk tolerant and can borrow at the risk free rate, admittedly a questionable assumption for most individuals, then they could take on more risk by allocating greater than 100% of their funds to the tangency portfolio and correspondingly negative portion to the risk free asset to take on more risk.

What does this all mean in real life? What is the tangency portfolio? It means that investors should put the risky portion of their funds in a portfolio diversified internationally and across asset categories by market capitalization, or some approximation thereof keeping costs in mind. And then to manage risk, the investor moves money between that portfolio and TIPS. But that risky portfolio never changes regardless of age or risk tolerance or anything. Nobody should be shifting from stock to corporate bonds to lower their risk.

FLG had learned those models and theories before, but never put two and two together. He already had his portfolio diversified as best he could given costs, but he never really understood how to incorporate TIPS systematically. This makes much more sense.

It's Hard To Teach When Drowning In Politics

FLG realizes it's not a simple binary trade off between good, effective education and politics/social engineering, but there is a trade off.

Via Prof. Mondo, FLG learns of this craziness:
the achievement gap is a social construction, that equity in mathematics means much more than mere access to a rigorous curriculum, and that teaching is a negotiated practice (with students, parents, and others). Gutiérrez argues that a model of knowledge needed for teaching mathematics and addressing equity involves political knowledge. An important component to developing this political knowledge is being able to recognize multiple realities (Nepantla), developing conocimiento with students, becoming comfortable with uncertainty, and seeing tension as a means to birth new knowledge.

And then there's this part about the grant the speaker has been awarded that seeks "to understand what it takes to develop high school mathematics teachers who engage their students in rigorous mathematics and are committed to social justice."

FLG immediately wondered what the fuck that means. Why the fuck are we talking about social justice at all when it comes to math? Can't a teacher who cares about all of his or her students and wants them all to do well and is skilled in teaching fucking math enough?

Unlike most conservatives, FLG doesn't immediately blow these things off as the product of some pervasive liberal conspiracy in academia and especially education shcools.. Well, at least not always. So, he decided to do some more research. Here's the speaker's webpage at U of Illinois:
My current research focuses upon understanding the development of teacher practice and teaching communities that achieve equity in students' mathematics participation and achievement. I strive to situate teacher practice in a socio-cultural and political context of schooling and broader society. I am currently involved in three related research projects. The first project attempts to understand how a partnership between the mathematics department in a Chicago high school and a group of pre-service teachers at the University of Illinois influences the dispositions and practices of those (pre- and inservice-) teachers and their students. A second project is a year-long case study of 2 "secundarias" (middle schools) in Mexico, one of which has a long standing tradition of strong teacher community and student advancement and the other is a more traditional/individualistic teacher environment. The goals of that project are to undertand some of the cultural practices in mathematics teaching in Mexican secondary schools, as well as some of the relationships and tensions between teacher community and individual teacher practice. The third research project is more theoretical in its approach and builds upon the work of scholars in Latina/Latino Studies, specifically the notion of "Nepantla" and "conocimiento" in the work of Gloria Anzaldúa, in order to help reconceptualize what might count as knowledge for equity teaching. A long term goal is to understand what it takes to build equity-based teacher communities in places where they do not already exist.

Okay, if we sit back and think about it for a little bit, "achievement" is a social construct insofar as society needs to decide what "achievement" is. And if you think about it a little harder, then you begin to realize that the way in which this construction happens is socio-cultural and political.

If this were part of the discussion around teaching other subjects, then FLG might be more sympathetic; however, we're talking about math here. A student either knows how to divide, subtract, multiple, derive, integrate, etc, etc or the student doesn't. It's not so much "achievement" as achievement, therefore, when it comes to math. We don't want an engineer calculating the force on a airplane wing based given the socio-cultural influences of his background on the social construction of his perception of fluid dynamics. No multiple realities there. So, FLG thinks we can dismiss the idea that "the achievement gap is a social construction." As FLG said, one can think of it that way, but it doesn't get you anywhere outside of the Ivory Tower. It's a theoretical distinction with little to no applicability. The classic pointy-headed professor stuff.

But, FLG does, there's might be something to the idea that the social construction of the pedagogy of mathematics teaching could disadvantage minorities. Don't get FLG wrong, he doesn't think there's a lot to that, just that there could be something. For example, the dynamics of the teacher community probably do impact knowledge sharing among teachers about effective methods for teaching.

But again, FLG doesn't see how this has to do with social justice or even inequality. If the dynamics of the teacher community effect student achievement drastically, then shouldn't we foster supportive and effective teacher communities everywhere? Shouldn't teachers care about the progress of all students?

Monday, September 26, 2011

Communication Class

FLG has a managerial communication class coming up next. There are a variety of readings, including this text: slide:ology: The Art and Science of Creating Great Presentations, which FLG must admit looks filled with practical tips on making PowerPoint slides more aesthetically pleasing while emphasizing the important information.

That said though, FLG is disappointed that Aristotle's On Rhetoric isn't included at all. At the very least, every communication class should include Book I Part II. And if not even that, then just this passage:
Of the modes of persuasion furnished by the spoken word there are three kinds. The first kind depends on the personal character of the speaker; the second on putting the audience into a certain frame of mind; the third on the proof, or apparent proof, provided by the words of the speech itself. Persuasion is achieved by the speaker's personal character when the speech is so spoken as to make us think him credible. We believe good men more fully and more readily than others: this is true generally whatever the question is, and absolutely true where exact certainty is impossible and opinions are divided. This kind of persuasion, like the others, should be achieved by what the speaker says, not by what people think of his character before he begins to speak. It is not true, as some writers assume in their treatises on rhetoric, that the personal goodness revealed by the speaker contributes nothing to his power of persuasion; on the contrary, his character may almost be called the most effective means of persuasion he possesses. Secondly, persuasion may come through the hearers, when the speech stirs their emotions. Our judgements when we are pleased and friendly are not the same as when we are pained and hostile. It is towards producing these effects, as we maintain, that present-day writers on rhetoric direct the whole of their efforts. This subject shall be treated in detail when we come to speak of the emotions. Thirdly, persuasion is effected through the speech itself when we have proved a truth or an apparent truth by means of the persuasive arguments suitable to the case in question.

There are, then, these three means of effecting persuasion. The man who is to be in command of them must, it is clear, be able (1) to reason logically, (2) to understand human character and goodness in their various forms, and (3) to understand the emotions-that is, to name them and describe them, to know their causes and the way in which they are excited. It thus appears that rhetoric is an offshoot of dialectic and also of ethical studies. Ethical studies may fairly be called political; and for this reason rhetoric masquerades as political science, and the professors of it as political experts-sometimes from want of education, sometimes from ostentation, sometimes owing to other human failings. As a matter of fact, it is a branch of dialectic and similar to it, as we said at the outset. Neither rhetoric nor dialectic is the scientific study of any one separate subject: both are faculties for providing arguments. This is perhaps a sufficient account of their scope and of how they are related to each other.

FLG's Theory Of Liberal Education

Withywindle points readers to this Timothy Burke post on this column about a professor who no longer wants to teach Military History because the course now has a therapeutic aspect for some students, particular veterans and military families.

Here's a key passage from that article:
Although my course description clearly states that the class is concerned with military history through the Vietnam War, student veterans or their loved ones came to the class primarily to work through personal issues originating in more recent conflicts. Whether the day's discussion centered on the 17th-century European heritage of the American military, or the managerial revolution of the Progressive Era, it became disturbingly evident that many students could only consider historical questions through the lens of their own personal experiences. I do not blame them one bit, and occasionally their personal insights were relevant. But the emotional needs of those students unrelentingly pushed the class in a direction I was not comfortable with as a historian.

Timothy Burke writes in his post:
But I can’t see the good of saying that scholarly knowledge of military history (or anything else) is inevitably at odds with arriving at an understanding that might be therapeutic, might provide some serenity, or at least connect suffering and uncertainty to a wider, richer human range of suffering and understanding. That’s not just something which might happen in the study of history, it’s something which should happen. We make no promises of healing or peace, but we ought to think that scholarly work is a kind of working through, a vastening of the kind of experiences that can trap and isolate us in a lonely misery and confusion. Why should we imagine that scholarly inquiry develops “cognitive skills” and make that development antagonistic to trying to understand the meaning and feeling of human experience here and now?

Since FLG is an irrepressible egotist, this made him think of his post about the purposes of liberal education. To wit:
First, one particular assumption must be disproven. [...] This assumption is: The experiences that constitute my individual life are representative of the entire human condition.

Then, FLG argues that the best outcome that comes from disproving the Big Assumption is:
The third outcome is when the failure of the Big Assumption leads to the never-ending search for the universal in the human condition. Oddly enough, the second step in a liberal education is exactly the same as the first. The student examines ideas, feelings, beliefs, and experiences via literature, philosophy, art, and history, which are so foreign to their own life that they can find what is universally present in the human condition. This is the ultimate goal of a liberal education. I believe the difficulty in recognizing this goal is that both the first and second step are superficially the same activities.

BTW, rereading that liberal education post reminds FLG that he wants to consolidate all his theories in one post for easy reference. That and edit out his weird ramblings that in hindsight he agrees with but make him seem like a bit of a kook, which he is but doesn't want to advertise.

Saturday, September 24, 2011

Correspondence

Another reader writes in, concerned about the drop-off in blogging, and asks how FLG is doing.

No issues. In fact, I'm super. Thanks for asking.

Friday, September 23, 2011

Correspondence Round-Up

FLG has been slacking off on the blogging lately, and the email has been backing up. So, he's gonna clear some of it out.

First, why did FLG get peaked lapels on the suits he had made in Delhi? If you'd asked FLG six months ago, then he'd have never said he'd gotten peaked lapels. They always remind him of double breasted suits, which he generally doesn't like. But somewhere along the line FLG noticed, even though he does not watch the show, that the flashy partner guy on the show Suits always has peaked lapels. In fact, FLG thinks it's the peaked lapels that make him look flashy. And then FLG noticed that Tom Ford, probably the only fashion designer FLG doesn't think dresses like a wacko, almost always wears peaked lapels no matter what type of coat he is wearing. So, FLG rethought the whole thing.

Second, a reader asks how to break into investment banking and how FLG became so knowledgeable about banking. Uh, FLG has no idea. Doesn't work in investment banking. Never has. Nor is he particularly knowledgeable about banking. He's just read a few books.

Third, another reader asks why FLG doesn't have a way to donate on his blog. Two reasons. Numero uno - FLG has a very generous sponsorship. Be sure to visit Sealand. Numero dos - while FLG certainly isn't rolling in dough right now and you might not have guessed that he has any class, it's just not becoming to pass the collection plate when he's been blogging about bespoke suits and Charvet for fuck's sake.

Fourth, FLG doesn't have a twitter account or handle or whatever. He hates Twitter. Yet, he might just have to give into the Dark Side eventually. He's still holding strong for now though.

Thursday, September 22, 2011

FLG Must Say

...this did make him rethink Fedoras for a second. It's no People of Walmart, but still.

Nevertheless, FLG remains pro-Fedora.

Tuesday, September 20, 2011

Quote of the day

Atlantic:
the declining use of cigarettes across the country -- due to both tightening pocketbooks and new laws (thanks, Mayor Bloomberg) -- accounts for a bigger increase in the obesity rate in the U.S. than any other factor

Smoke 'em if you got 'em.

FLG Still Doesn't Understand

...the assertions by so many people how a return to Glass-Steagall is like this super-awesome way to save the banking system.

FLG was reading this article, when he came to this sentence:
"You've got to break them up," Adam Strauss says of the big banks. "You've got to bring back Glass-Steagall. And you have to put a cap on the size of the banks."

FLG can see the size of the banks being an issue, but doesn't get the investment versus retail break out. Again, Lehman was NOT a retail bank. It was an investment bank. Yet, it still threatened to bring down the entire financial system.

FLG has written this before and probably will write this again, but he thinks much of this pining for Glass-Steagall is born out of a combination of nostalgia and ignorance. Nostalgia as in longing for the days when finance wasn't so complicated. Ignorance because they don't understand those days are never coming back. Information technology presents far too many opportunities in the financial realm.

But then, as FLG was thinking about this, he remembered a report on the BBC about how the Vickers Commission came back with what basically amounts to just short of a Glass-Steagall implementation in the UK. So, FLG decided to pull up the report and see what they had to say. Given that the UK actually had retail bank runs, it is probably pretty interesting, FLG thought to himself. Here's the relevant passage regarding what they call ring-fencing:

Structural reform: principles

A number of UK banks combine domestic retail services with global wholesale and
investment banking operations. Both sets of activities are economically valuable while both
also entail risks – for example, relating to residential property values in the case of retail
banking. Their unstructured combination does, however, give rise to public policy concerns,
which structural reform proposals – notably forms of separation between retail banking and
wholesale/investment banking – seek to address.

First, structural separation should make it easier and less costly to resolve banks that get into
trouble. By ‘resolution’ is meant an orderly process to determine which activities of a failing
bank are to be continued and how. Depending on the circumstances, different solutions may
be appropriate for different activities. For example, some activities might be wound down,
some sold to other market participants, and others formed into a ‘bridge bank’ under new
management, their shareholders and creditors having been wiped out in whole and/or part.
Orderliness involves averting contagion, avoiding taxpayer liability, and ensuring the
continuous provision of necessary retail banking services – as distinct from entire banks – for
which customers have no ready alternatives. Separation would allow better-targeted policies
towards banks in difficulty, and would minimise the need for support from the taxpayer. One
of the key benefits of separation is that it would make it easier for the authorities to require
creditors of failing retail banks, failing wholesale/investment banks, or both, if necessary, to
bear losses, instead of the taxpayer.

Second, structural separation should help insulate retail banking from external financial
shocks, including by diminishing problems arising from global interconnectedness. This is of
particular significance for the UK in view of the large and complex international exposures
that UK banks now have. Much of the massive run-up in bank leverage before the crisis was in
relation to wholesale/investment banking activities. Separation would guard against the risk
that these activities might de-stabilise the supply of vital retail banking services.
Third, structural separation would help sustain the UK’s position as a pre-eminent
international financial centre while UK banking is made more resilient. The improved stability
that structural reform would bring to the UK economy would be positive for investment both
in financial services and the wider economy. The proposed form of separation also gives
scope for UK retail banking to have safer capital standards than internationally agreed
minima, while UK-based wholesale/investment banking operations (so long as they have
credible resolution plans, including adequate loss-absorbing debt) are regulated according to
international standards. Without separation there would be a dilemma between resilient UK
retail banking and internationally competitive wholesale and investment banking.
Moreover, separation accompanied by appropriate transparency should assist the monitoring
of banking activities by both market participants and the authorities. Among other things it
should allow better targeting of macro-prudential regulation.
Separation has costs however. Banks’ direct operational costs might increase. The economy
would suffer if separation prevented retail deposits from financing household mortgages and
some business investment. Customers needing both retail and investment banking services
might find themselves with less convenient banking arrangements. And although global
wholesale and investment banking poses risks to UK retail banking, there are times when it
might help cushion risks arising within UK retail banking.
In addition, the cost of capital and funding for banks might increase. But insofar as this
resulted from separation curtailing the implicit subsidy caused by the prospect of taxpayer
support in the event of trouble, that would not be a cost to the economy. Rather, it would be
a consequence of risk returning to where it should be – with bank investors, not taxpayers –
and so would reflect the aim of removing government support and risk to the public finances.
For these reasons, the Commission regards structural reform as a key component of reforms
aimed at enhancing the long-run stability of UK banking. This leads to questions about its
design and implementation.

Structural reform: practical recommendations
How should the line be drawn between retail banking and wholesale/investment banking?
Should separation be total, so as to ban them from being in the same corporate group? If not,
what inter-relationships should be allowed, and how should they be governed and
monitored?

The Commission’s analysis of the costs and benefits of alternative structural reform options
has concluded that the best policy approach is to require retail ring-fencing of UK banks, not total separation. The objective of such a ring-fence would be to isolate those banking
activities where continuous provision of service is vital to the economy and to a bank’s
customers. This would be in order to ensure, first, that such provision could not be threatened
by activities that are incidental to it and, second, that such provision could be maintained in
the event of the bank’s failure without government solvency support. This would require
banks’ UK retail activities to be carried out in separate subsidiaries. The UK retail subsidiaries
would be legally, economically and operationally separate from the rest of the banking
groups to which they belonged. They would have distinct governance arrangements, and
should have different cultures. The Commission believes that ring-fencing would achieve the
principal stability benefits of full separation but at lower cost to the economy.
Scope of ring-fence

Which activities should be required to be within the retail ring-fence? The aim of isolating
banking services whose continuous provision is imperative and for which customers have no
ready alternative implies that the taking of deposits from, and provision of overdrafts to,
ordinary individuals and small and medium-sized enterprises (SMEs) should be required to be
within the ring-fence.

The aims of insulating UK retail banking from external shocks and of diminishing problems
(including for resolvability) of financial interconnectedness imply that a wide range of
services should not be permitted in the ring-fence. Services should not be provided from
within the ring-fence if they are not integral to the provision of payments services to
customers in the European Economic Area1 (EEA) or to intermediation between savers and
borrowers within the EEA non-financial sector, or if they directly increase the exposure of the
ring-fenced bank to global financial markets, or if they would significantly complicate its
resolution or otherwise threaten its objective. So the following activities should not be carried
on inside the ring-fence: services to non-EEA customers, services (other than payments
services) resulting in exposure to financial customers, ‘trading book’ activities, services
relating to secondary markets activity (including the purchases of loans or securities), and
derivatives trading (except as necessary for the retail bank prudently to manage its own risk).
Subject to limits on wholesale funding of retail operations, other banking services – including
taking deposits from customers other than individuals and SMEs and lending to large
companies outside the financial sector – should be permitted (but not required) within the
ring-fence.

The margin of flexibility in relation to large corporate banking is desirable. Rigidity would
increase the costs of transition from banks’ existing business models to the future regime.
And it would risk an asset/liability mismatch problem if, for example, retail deposits were
prevented from backing lending to large companies. Mismatch could give rise to economic
distortion and even to de-stabilising asset price bubbles.

The Commission’s view, in sum, is that domestic retail banking services should be inside the
ring-fence, global wholesale/investment banking should be outside, and the provision of
straightforward banking services to large domestic non-financial companies can be in or out.

The aggregate balance sheet of UK banks is currently over £6 trillion – more than four times
annual GDP. On the criteria above, between one sixth and one third of this would be within
the retail ring-fence.

Again, FLG thinks the permitting of derivatives trading "except as necessary for the retail bank prudently to manage its own risk" is a big hole in the ring fence, but an important one. 

>Look, as FLG has said before, much of the debate surrounding financial regulation consists of political hobbyhorses.  The issue is leverage.  If the UK wants to have its investment banks commit to Basel III leverage limits and capital requirements, but require even more conservative leverage ratios for their domestic retail banks then more power to them.  FLG just isn't sure what it buys the UK.  

Are people, upon hearing Bank A is in trouble, going to sit back and say, well, you know, Bank A is in trouble, but it's only Bank A's investment banking subsidiary, not it's retail banking subsidiary, no need to get my money out?   Doesn't seem like it would stop runs.  Although, FLG guesses the underlying solvency would be pretty secure if regulated properly, so then it's merely a matter of providing liquidity during the crisis.

Let's say that the retail sector is actually safe, leaving the problems of misperceptions among the public causing runs anyway aside.  FLG has written it before and will write it again, Bear and Lehman were investment, not retail banks, and they threatened to bring down the whole system.  So, it's not like the problem of moral hazard or risk to financial system, economy, or  taxpayer goes away because retail banks are safe.

All told, FLG thinks this proposal helps to the extent that it limits the amount of leverage in the banking system and allows some prepositioning for unwinding of failing banks.  What he worries about is the perception that this type of regulation therefore solves the problems of systematic risk in the banking system, because it does not.  

FLG doesn't see how the UK could allow, let's say, Barclays investment banking division to fail even if the retail bank division has adequate reserves.  He thinks there'd still be a run on the retail side and the counter-party problems would be huge for other investment banks.

There's just no way to go back to whatever it is people think we'd be going back to if there were separate investment and retail banks.   Financial products and services are just too intertwined today.  Heck, let's remember that AIG was not even a bank, but an insurance company.  Yet, the counterparty problems its failure created in the banking system were mind-boggling.

Monday, September 19, 2011

Quote of the day

I spend way too much time on the computer[...]," he says. "There's an underlying problem of this screen life taking over all of your life. It's easy to keep in touch with people, some of whom I wish I'd never kept in touch with. But there they are on Facebook! You can spend a lot of time on that when you should be doing something else.

Who said it? Answer here.

FLG is currently listening to

Presidential politics always gets him thinking of this song:

FLG is currently listening to

International Talk Like A Pirate Day

FLG had meant to prepare a swashbuckling post for today. Unfortunately, as The Ancient points out, FLG the Archpirate has been slacking on his piratical responsibilities.

So, FLG has decided to link to an old international talk like a pirate day post over at Patum Peperium with promises to do better next year.

Friday, September 16, 2011

Time Horizons: Global Warming Edition

Via ACE

Y'all know how FLG loves him some long time horizons.

Marketplace Last Night

Last night's Marketplace touched on a couple of FLG's hobbyhorses:

FIRST:
Green jobs ain't gonna help with the recovery. FLG does go further and argue that green jobs as awesome economic engine is in fact bullshit.

Take a look at this section:
Kate Gordon, from the progressive think-tank Center for American Progress, says there's been another set of roadblocks for green jobs. Simply: demand.

KATE GORDON: We have not put into place any of the national policies that other countries that other countries that are beating the tails off of us in this area have put into place.

We don't have any national guidelines about how much of our electricity should come from renewable sources. We don't have any sort of carbon tax to encourage greener choices.

GORDON: My concern is that we're getting as far as we can right now, but we're not going to be able to really ramp this up until we make some of those commitments.

As FLG has written countless times before, if we have to issue guidelines or taxes that force people to make s choice they otherwise wouldn't, then he has a hard time believing people would be better off economically because of them.

Think of it this way: if we initiated a 100% tax on black shoes and used the proceeds to support brown shoes, then there'd be a bunch of jobs "created" making brown shoes. But are we really better off because of this? Probably, people who were making black shoes now just make brown shoes. People who like black shoes are screwed. And since they don't like brown shoes as much will probably buy less of them.

Replace black shoe versus brown shoes with dirty versus clean energy. Sure, these jobs are "created," but other jobs are destroyed. Now, in complete fairness, the color of the shoes example misses an important wrinkle. Carbon emissions from fossil fuels have negative externalities. So, we as a society could be better off if we include quality of life, health, and environmental effects if a carbon tax shifts us to greener technology.

Look, FLG has repeatedly mentioned that he is on-board for a carbon tax. What he has a massive fucking problem with is the idea that the economy will be better off because of this change. That these so-called green jobs are some sort of panacea to our economic woes. They're not. For that to happen, these jobs would have to be in an industry that people willingly purchase products and services from without a tax, subsidy, or regulation.

FLG guesses that some of you are saying right now, "wait, FLG lots of industries benefit from some form of taxes, subsidies, or regulations." Benefits from is one thing; requiring them for the existence of the industry another.

And spare me the infant industry argument. Green energy is going to be an infant for a long time. So long, in fact, that FLG doubts there will be an positive net present value for these policies, unless of course you include the reduction in negative externalities in the return.

SECOND:
Time horizons and Keynes.

Ryssdal: I suppose you can't really talk the history of economics and economists without talking about John Maynard Keynes, right?

Nasar: Mmm.

Ryssdal: He is, of the moment -- has been for a couple of years now -- both praised and criticized a lot for his ideas of stimulus spending.

Nasar: He is often castigated, but it wasn't that he didn't understand the long run -- it's that he refused to take the attitude that the short run didn't matter. And why? Because he saw in the aftermath of World War I, which destroyed the prosperous globalized economy that had developed before World War I, and he saw that democracy and free markets absolutely could not tolerate extreme inflation or extreme unemployment. So in the Great Depression, he said this is a short run problem; it doesn't mean that the long run dynamism has died out, but we need to deal with this.

Thursday, September 15, 2011

Quote of the day

Esquire:
Bud Light is even worse as a solid than a liquid.

BRIC Countries

FLG was listening to Marketplace last night on the commute home when there was a piece about BRIC countries deciding to contribute to the developed nations in crisis. The interviewee was a professor from SAIS, which usually bodes well, at least in FLG's experience.

But then this came up:
Ryssdal: [...] I wonder if you can explain how it is that they are doing so well after a global recession -- not just the Brazilians, but the Chinese and Indians -- and the rest of us are still struggling?

Roett: I think a large part is a matter of regulation. It's a matter of transparency. The United States went through a long period beginning in 2000/2001, basically tearing up the regulatory framework that had been put into the place: the Securities Exchange Commission was hollowed out basically. Not much responsibility on the part of the private commercial banks. The same thing happened in Europe where countries year after year overspent, under-saved and then found themselves in a position where they had to be bailed out. The Brazilians, on the other hand, were fiscally responsible, as were the other BRIC countries.

FLG immediately thought, "Oh fuck. This guy isn't an economist. It's a political scientist talking about economics."

Look, if you look at development in terms the Solow Growth Model, then it becomes much clearer. But you don't even have to know all that. Put it even more simply -- Brazil, India, and China are doing better in terms of growth because they are developing. Their growth rate will naturally be higher. The question is not whether they are doing relatively better right now vis-a-vis the developed world because their growth rate ought to be higher than the developed world pretty much always in the foreseeable future. It's just that when we're growing at 4-5% we don't care so much that they're growing 10-12% or whatever.

This isn't to say that political decisions by the BRIC countries, well, except Russia, don't help things. There are political and policy reasons why China, India, and Brazil are growing and sub-Saharan African countries aren't. But when it comes to developed versus BRIC we're talking about apples and oranges. Even if his statements about regulation and overspending/undersaving were entirely true. They're partly true, but FLG thinks misses the big picture, which is, again, they BRIC countries have a growth rate for the foreseeable future. Economic growth makes all sorts of problems easier to tackle, including savings and investing because they can turn into a nice virtuous circle.

Anyway, FLG went home and looked the guy up. Sure as shit. Political scientist.

Wednesday, September 14, 2011

Catnip For FLG

Over the years, FLG has thrown a lot of shit Reihan's way. But posts like this one are why FLG still reads him.

Reihan mentioned a theory called "economics of becoming." The word becoming made FLG immediately think of Plato, and you all know how much FLG loves him som Plato.

Turns out, however, that it's not Plato, but "Nietzsche and the Economics of Becoming." http://www.bepress.com/cas/vol4/iss1/art3/

Almost as interesting to FLG as Plato. But then...oh..but then, there's this:
These theories, taken together, constitute a profound attack on the foundations of neoclassical models in which individuals maximize the discounted flow of gratification they expect to receive. Scattered through Nietzsche's writings, we can find an alternative description of intertemporal choice motivated by overcoming obstacles.

The key words here are "discounted flow" and "inter temporal choice." Why? TIME HORIZONS!

FLG so needs to read up on all this.

Quote of the day

Quatremer:
Si la zone euro éclate, l’Union européenne n’y survivra pas et la guerre pourrait rapidement faire son retour sur le vieux continent. Le ministre polonais des Finances, dont le pays, qui n’est pas membre de l’euro, assure la présidence tournante de l'UE, Jacek Rostowski

Translation:
If the eurozone breaks up, the European Union will not survive it and war could quickly return to the Old Continent. So says the finance minister of Poland, a country that is not a member of the euro.

FLG wishes he could effectively translate the sarcasm. There's just something about the use of "dont le pays" that really tickles FLG's funny bone.

Correspondence

FLG doesn't quite know what it is (the phase of the moon or something?), but every 3-6 months he receives an angry email about how his blog is rude, trashy, uncouth, boorish, classless, or churlish. Use your preferred synonym.

Oddly, FLG always feels compelled to respond. What should be obvious to everybody, but apparently isn't, is that Fear and Loathing in Georgetown is written with the most deliberate care. Moreover, FLG possesses uncommonly exquisite taste. It's beyond reproach. By definition, those who question these things have ghastly judgment and a repellent demeanor. They probably smell too.

A Question FLG Has Asked Countless Times Before Finally Answered

What the heck are those weird green brain fruit?

FLG is currently listening to



FLG isn't quite sure to make of this cover. Original here for those of you who have been living in a cave on Mars with your fingers in your ears for the last decade or so.

Continuing On The Topic Of Morals

Yesterday, FLG highlighted a sentence from a David Brooks column:
Alasdair MacIntyre has written about emotivism, the idea that it’s impossible to secure moral agreement in our culture because all judgments are based on how we feel at the moment.

This morning, FLG was reading this post by Tim Kowal about abortion and slippery moral slopes in which he references the story of a a Canadian girl who killed her newborn and threw the body over a fence into a neighbor's yard. The comments by the judge in the case might seem appropriate to many, but appall FLG. Words like sympathize and grieve for the mother sound a lot like emotivism. But this:
The judge noted that infanticide laws and sentencing guidelines were not altered when the government made many changes to the Criminal Code in 2005, which she says shows that Canadians view the law as a "fair compromise of all the interests involved."

Regular readers will know how much FLG hates the word "fair." As he has said before, fair is entirely relative and subjective and in the eye of the beholder. Ultimately, it's a therapeutic word for those who use it.

But this comment is what really pushed FLG over the edge into apoplexy:
People please, move past your emotional reactions. Look up infanticide on Wikipedia. You'll find a link to Postpartum psychosis:

"Several nations including Canada, Great Britain, Australia and Italy recognize post partum mental illness as a mitigating factor in cases where mothers kill their children."

We are complicated animals, and understanding and compassion must take into consideration what we have learned about ourselves and the brain.

Your black-and-white views on morality and justice are holding us back.

Now, in complete fairness, this comment is in response to some tirades, but the idea that black-and-white views of morality are holding us back when we are talking about a mother killing her newborn baby is rage inducing.

Look, FLG gets that there is such a thing as post-partum depression. But he is equally sure that the moment society is accepting of it or any justification for mothers killing their children, then that's pretty much the beginning of the end of the society. If there's anything society is founded upon it's parents taking care of their children. We start shrugging it off when they kill them, that's bad.

FLG gets there are extenuating circumstances. She's a young girl. Maybe she had post-partum. Whatever else you want to put in there. So, maybe she doesn't get the full sentence. But there is something very wrong when the Canadian justice system seems to be deciding between zero and a grand total of 16 days for killing a person.

Tuesday, September 13, 2011

Time Horizons: Morals Edition

FLG found this sentence fascinating:
Alasdair MacIntyre has written about emotivism, the idea that it’s impossible to secure moral agreement in our culture because all judgments are based on how we feel at the moment.

He found it fascinating not because this was some new concept to him, but because it combines a discussion that happened around here a few days ago and the idea of short time horizons, ex. gr. "at the moment."

Monday, September 12, 2011

Mission Accomplished Two?

Look, FLG was skeptical of the Libya campaign from the get-go and for a variety of reasons. No US national interest. And of course fucking NATO ought to be disbanded not be used as an excuse to pressure Italians for base access to bomb Libya. Anyway, when he read this NYTimes editorial, along with other articles by supporters, a couple of weeks ago, FLG couldn't help but think they might be pulling a premature Mission Accomplished sign out.

And then, today, FLG reads this:
Libya is in danger of falling into the hands of Islamic extremists if a stable government is not rapidly established, Nato’s secretary-general warned last night.

Great. Thanks for thinking ahead Americans, Brits, and French.

Doesn't Ring True To FLG

Over at Paper Bullets, Julia posted a Phillip Roth quotation about misjudging and misconceiving people.

FLG, on the other hand, feels like his ten second snap judgments about people are pretty much spot on the vast, vast majority (let's say 95% of the time). So, he doesn't really get this problem. People just don't often surprise him.

FLG pondered this for a bit and came up with several possible explanations:
1) FLG is some sort of freakish savant when it comes to conceiving perceiving people.
2) Some sort of bias where FLG ignores either people he doesn't understand or evidence contrary to his snap judgments.
3) FLG is a self-involved asshole who doesn't give a shit about other people.
4) FLG is insane.
5) All of the above.

Nevertheless, people rarely surprise him. Well, except for Mrs FLG when she jumps out of the bedroom door and yells "Boo!" when FLG is coming out of the bathroom. He never sees that coming.

FLG is currently listening to

FLG is currently listening to



Which reminds FLG that he had meant to drink a Pina Colada at Trader Vic's when he was in London, but didn't get around to it even though he walked right by the hotel it's in.

The Illusion Of Objectivity

FLG has little patience for so-called objectivity and fairness in news reporting. In fact, he believes it's more a conceit than anything by liberals, again whom FLG believes are more short-term and empirically focused than conservatives, working in news outlets. GEC had a great post about this a few years ago.

Anyway, today, FLG was reading a long article on the front page of the WaPo that contains so much weaselly language just to conform to so-called objectivity standards. Here are some examples:
The rates on capital gains — which include profits from the sale of stocks, bonds and real estate — should be a key point in negotiations over how to shrink the budget deficit, some lawmakers say.

The phrase "some lawmakers say" is carte blanche for the authors to write whatever the fuck they want. For example, UFOs exist, some lawmakers say. Or perhaps, the rates on capital gains — which include profits from the sale of stocks, bonds and real estate — should NOT be a key point in negotiations over how to shrink the budget deficit, some lawmakers say. (FLG is sure he could find some if he bothered to look.)

And then we have this:
Advocates for a low capital gains rate say it spurs more investment in the U.S. economy, benefiting all Americans. But some tax experts say the evidence for that theory is murky at best. What is clear is that the capital gains tax rate disproportionately benefits the ultra-wealthy.

Some tax experts say? Not a lot. Not most. Not a majority. Just some.

And then there's this:
But others said that regardless of the economic arguments, the steady cutting of the capital gains tax rate reflects the political power of the rich, who are more likely to contribute to politicians and benefit from the work of lobbyists. In other words, inequality of wealth can lead to inequality of representation.

And so, in the end, they say ignore the economic arguments. This capital gains thing is a political issue that undermines democracy.

Look, FLG isn't going to sit here and say that the captial gains rate shouldn't be on the table when it comes to deficit reduction. Sure, like Greenspan, FLG thinks the ideal rate would be zero, but he's not unreasonable. He could live with something higher than the current rate.

To tell you the truth, his problem here is not even about the capital gains issue. It's the lie that the Washington Post and other news organizations like it are fair and objective. This article was clearly written by two people who are upset about income inequality and want the capital gains tax raised. That's fine, but put that on the Op-Ed page. It's far more honest to say:
We believe the rates on capital gains — which include profits from the sale of stocks, bonds and real estate — should be a key point in negotiations over how to shrink the budget deficit.

Rather than tacking on "some lawmakers say."

Now, in complete fairness, they did provide quotes from specific lawmakers and specific tax experts. But the entire thing was an opinion piece disguised as a news piece.

Sunday, September 11, 2011

Saturday, September 10, 2011

The Big Assumption

E.D. Kain:
“suffers a little too much from what I think of as “information class myopia”, in which writers about technology, who spend most of their days involved with gadgets and electronic media while creating intellectual property for a living confuse their own experiences with universal ones.”

Friday, September 9, 2011

It Finally Stopped

..the rain that is, but not soon enough.

This was FLG's backyard last night:

Needless to say, the basement suffered some flooding. FLG has spent most of the day ripping up the padding under the carpet and going to town with a shopvac. Not very fun.

Rumor has it more rain is on the way tonight. FLG is so excited. He's tempted to start pacing off 300 cubits.

Dear dave.s:

Way ahead of you, buddy.

Sincerely,
FLG

Thursday, September 8, 2011

FLG is currently listening to



And I wonder still I wonder who'll stop the rain...

Green Tech And The Broken Window Fallacy

FLG has long maintained that environmental policies, like the tax credits to replace windows with more efficient ones, are akin to the broken windows fallacy.

Via Noah Millman, FLG learns that Krugman argued that in a liquidity trap the broken windows fallacy ceases to be a fallacy:
something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment.

FLG doesn't think Krugman explains why it's no longer a fallacy. Liquidity trap or no, if you break a window it stimulates spending and raises employment and makes society poorer. In fact, FLG would argue that destroying wealth is one of the easiest ways to stimulate economic activity. The problem is society is worse off because of it.

Noah Millman then makes the point that environmental regulation isn't like the broken windows fallacy at all:
this isn’t a “broken” windows situation at all, where you’re destroying something in order to force someone to spend money to repair it. This is what you might call a “storm windows” situation – you’re ordering people to spend money to make what amounts to a capital improvement with a positive return (assuming you believe the ozone regulations will lead to better health and a more pleasant environment).

FLG's usual response is that if there were a positive return, then people wouldn't need an incentive. They'd do it.

Millman writes:
the long-term returns from improved air quality matter to the decision.

This is the most obvious rebuttal to my reply. Rational, utility maximizing individuals aren't going to fully internalize an externality like improved air quality. Thus, we get a suboptimal investment in this infrastructure.

Here is where FLG states that it's far better to internalize that externality through a carbon tax and let people and companies make their own decisions about how to adapt. Maybe they invest in more efficient equipment. Maybe they dial back on their energy in some other way. But that, not government subsidies and regulations, is the best way to maximize the probability that the investments made have a positive return.

Than again, and in fairness, FLG's solution is looking at it from the perspective of what would be, in his opinion, the most efficient and effective economic means of dealing with the environmental issue. It would take time and the introduction of a carbon tax would depress rather than stimulate the economy.

Krugman and Millman, on the other hand, are arguing that we need to stimulate, for reasons entirely unrelated to the environmental issues, but if that is the case then might as well get some environmental bang for our stimulus buck. That makes sense. FLG guesses his greatest concern would be that the environmental policies designed with the priority of short-term stimulus would create a distortionary path dependency that would be unhelpful for long-term environmental regulation. However, it may be that this issue, balancing short-term versus long-term issues, is always present and FLG is worried about nothing.

Wednesday, September 7, 2011

Uncertainty One More Time

Last week, there was some debate on this blog whether the creation of policy uncertainty by this administration leading to slow economic growth was a valid criticism. Detractors argued that there's always uncertainty and so it's unfair to blame administrations for creating it. FLG countered, eventually, that the level of uncertainty or at least the perception about the level of uncertainty does vary and has an adverse effect on economic investment.

Last night, FLG was listening to Marketplace and they had a story on the economic effects of 9/11. One portion mentioned a Stanford economist's studies of economic uncertainty. Fortunately, they even provided charts.

Overall economic uncertainty spiked in 2008. It's hard to tell exactly when, but FLG assumes right around the Lehman collapse. Not too surprising.

Uncertainty in both economic and policy news coverage spiked at that same time. More interesting to FLG is that they both spiked again in late 2009-early 2010, right about the time the health care reform debate was going on. Now, some uncertainty is to be expected, but the scale of is roughly equal to spike in late 2002-early 2003 that FLG assumes is the run-up to the Iraq War.

Tuesday, September 6, 2011

Print Your Blog

FLG noticed somewhere on Blogger an advertisement for this service that creates books of your blog. FLG knows what you are thinking -- why would you want to print your blog?

Great question. And the answer is posterity, baby!

Think about a gazillion years in the future when there's some archaeologist digging up an old computer. Think he'll be able to log onto the Internet and pull up your witty post? NOT! But if you had a fine, hard bound book made, well, that's a different story. You could be the primary source future scholars have of pre-zombie apocalypse life.

"Students, what we know from the archeological record, is that life before the Great Unpleasantness consisted primarily of studying Plato, pirates, listening to music, and sex with inanimate objects."

Being That Labor Day Weekend Just Ended

...it reminded FLG of the time that Mrs. FLG and he went to New Orleans probably 8-9 years ago over the long weekend.

For those of you who don't know, as the FLGs didn't until they showed up in the French Quarter, there's a massive gay event that occurs every Labor Day weekend there. Now, obviously the FLGs have no problem with all that and they had a great time. There was, however, this one particularly memorable moment.

The FLGs were walking down North Peters Street behind a family of four. The girl was around twelve and the boy about ten. All of a sudden, FLG hears the boy say, quite loudly, mind you, and completely out of the blue, "Daddy, look, I can see his nutsack." His mother quickly and probably through gritted teeth said "Billy!"

FLG, needless to say, was confused. Until, a few seconds later, a gay couple clad walked by and one could, as a matter of fact, see one of the two gentlemen's nutsack.

Again, the FLGs had a great time and he wouldn't avoid Labor Day weekend in New Orleans. That being said though, you can call FLG a prude or something, but he'd rather not see the wrinkly skin of a man's scrotum while walking down the street.

Time Horizons: Stimulation Of Greater Length Required

Tyler Cowen:
For all the talk of a “large stimulus,” you don’t hear much about a “longer stimulus.”

FLG surmises that this is because the people who are in favor of the stimulus are, generally speaking, on the political left. And, as regular readers of this blog know, FLG asserts that these people have a personal discount rate. Thus, they are extremely short run oriented and the idea of a stimulus that tries to work over several years rather than fixing the problem RIGHT NOW is unappealing to them.

FLG Loves

...this Charvet tie, but not for $185.

Sorry to my readers who are confused or bored by the recent focus on haberdashery, but it's FLG's blog and he'll post what he likes.

FLG is currently listening to

Quote of the day

Noah Millman:
In my view, therefore, the response to the short-term economic dislocation should be to focus on the long-term. Get long-term real growth expectations to rise, and the economy will recover as businesses react to take advantage of the opportunities afforded by that projected growth.

Time Horizons: Empirical Versus Rational

As many of you are keenly aware, FLG's Time Horizons Theory stipulates that people of the Left focus relatively more on the short-term and concomitantly are relatively more empirical; People of the Right are more long run oriented and focus on the theoretical.

So, FLG needs to think about this passage from The Constitution of Liberty read by Jacob T. Levy as part of a talk:
As a result, we have had to the present day two different traditions in the theory for liberty: one empirical and unsystematic, the other speculative and rationalistic-the first based on an interpretation of tradition and institutions which has spontaneously grown up and were but imperfectly understood, the second aiming at the construction of a utopia, which has often been tried but never successfully. Nevertheless, it has been the rationalistic, plausible, and apparently logical argument of the French tradition, with its flattering assumptions about the unlimited powers of human reason, that has progressively gained influence, while the less articulate and less explicit tradition of English freedom has been on the decline.

FLG hasn't read The Constitution of Liberty. He'll have to pick it up soon. Although, he attributes the French penchant for top down reorganization of society less to their rationalistic philosophical approach and more to the hierarchical nature of the Catholic Church.

But what does FLG know? Nothing. Something to give some thought to nonetheless.

FLG is currently listening to



Love that movie.

Sunday, September 4, 2011

Quote of the day

Sarah Palin:
Polls are for strippers...

Saturday, September 3, 2011

Just Wait A Fucking Second

Dave.s. clued me into some fucking ripoff artists.

Both Michael Munger and some guy named Daniel Barton, over at Cracked, have decided to tiptoe into the object sex blogging realm. (In fairness, the Cracked piece is old. It's more the Munger issue.)

Look, assholes, FLG has been on this beat for a long fucking time. Sure, this is a couple of giggles for you when you are low on material, but FLG takes this whole thing a shitload more seriously. FLG laughs his fucking ass of all the time at these people. He will not sit idly by and let you try to horn in on his racket. FLG has not talent. Object sex reporting is basically the only reason he has any readers at all. So, back the fuck off.

Sincerely,
FLG

PS. You have been warned.

Awesomeness

So, FLG was in a toy store today, and ran across this Ben Franklin action figure. And then FLG saw this Oscar Wilde one and figured they couldn't get any cooler. He was wrong. Wolfgang Amadeus Mozart. Johann Sebastian Bach Wilhelm Richard Wagner.

And then FLG figured he'd reached the pinnacle of awesomeness. How can you beat Wagner? Oh, that's right. Edward Teach. And, saving the best for last, Alexander the Great.

Friday, September 2, 2011

Note To Self

FLG:

You shouldn't buy one these hats right now, but definitely make note of it for future purchasing.

Sincerely,
FLG

Quote of the day II

The other day while running, FLG was watching Anthony Bourdain in Cajun Country. As regular readers will know, FLG is a big fan of metaphors and similes in particular. Well, Anthony Bourdain threw one out during that episode that almost made FLG fall off the treadmill:
The pig now as smooth and hairless as a pole dancer's taint...

Quote of the day

Telegraph:
This makes it virtually impossible to tell the difference between a psychopath and a genuinely good boss,

FLG isn't sure he buys this. For a short while, okay, maybe FLG agrees, but in the long run you'll know if your boss is a psychopath. FLG is less certain that one can determine their subordinate is a psychopath.

Thursday, September 1, 2011

Time Horizons

TNC is making a different point here, one about slavery, but FLG found this interesting vis-a-vis his time horizons theory:
The Left has long believed that a significant swath of the working American electorate does not vote their interests. But this defines "interests" in a narrow and crude terms.

Part of your "interests" may well be in the maintenance of a financial aristocracy which looks culturally familiar to you. (Think Wal-Mart.) Part of your interests may be the dream -- however slim -- that your kids may one day enter into that aristocracy. Indeed, there's a way of looking at the American Dream as precisely that -- the Dream of fighting your way into the aristocracy.

If you imagine yourself as a future homeowner, or your children as such, if you actually believe that the Dream is possible, you might well support tax-breaks for such people. After all, you're going to be among them some day. That this vision is flawed is important to note, but isn't uppermost when it comes to the work of trying to understand how people think.

FLG would argue that the problem isn't that "interests" are defined in narrow and crude terms, but specifically with short time horizons. If somebody believes, in the long run, that they'll be a homeowner, then they are more amenable to support tax-breaks for home ownership.

Quote of the day

Dan P. Lee:
Each wore a disguise: Brando, a pair of Groucho glasses, nose, and mustache; Taylor, after dousing herself in White Diamonds, a pair of gigantic sunglasses and a giant floppy hat; Jackson in a red kimono, long blond wig, surgical mask, sunglasses, and black umbrella.

FLG Almost Lost His Shit

On Monday, FLG was listening to the radio on his way home when this phrase reached his ears:
Taylor guesses there's more than $200,000 worth of inventory damage and $100,000 worth of damage to the building. He says several businesses are completely decimated.

FLG began yelling at the radio like a madman and damn near crashed on the Key Bridge.

Last night, a feeling of serenity overcame him as he listened to the mailbag section:
Last word this week goes to the grammarians, and our use of the phrase "completely decimated" in a story Monday talking about the effects of Hurricane Irene on businesses in Vermont. Joe Kesselman of Arlington, Mass., was one of several to correct us. Decimated, he wrote, means literally to reduce by one-tenth. By definition, there is no such thing as "completely decimated."

Amen, Brother.
 
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