Terry McAuliffe will "create jobs" - cold fusion next?

Terry McAuliffe is priming to run for governor of Virginia. Yes, that Terry McAuliffe.

Politico reports today that the former DNC chairman filed papers to establish an exploratory committee and

The former DNC chairman intends to spend the next 60 days touring the state before officially announcing whether he will run.

Why is McAuliffe running?

I think I can go out and fight for people. I think I can create jobs. I think I can take this state in a new direction, and the thing I’d like to do, too, is to come out with some big, bold ideas.

That's just what Virginia needs, big, bold ideas that will... Wait, what!? How the f*&@ is he going to "create" jobs? Alright kids, gather round to hear something new - politicians do not create jobs. See that punctuation mark at the end of the sentence? That's a period. Politicians do not create jobs. Period.

Grant McCracken touched on this last week, in this strange conflation of Republicans and capitalists:

What [Obama] does not appear to grasp is that, when it comes to markets, politicians do their best work by omission, by staying out of the way.

May I say how strange it is that Republicans and other capitalists have yet to learn how to tell this story.

This nonsense - which is by no means limited to Democrats - undermines the role which government can successfully play in the economy. The government can foster an environment beneficial to job growth, based on sound infrastructure, consistent application of the law, regulation of externalities, etc. But the government does not "create" these jobs. That is the role of the entrepreneur.

The government can create more government jobs, that is, it can hire more people to work for the government. It can hire more contractors. These two strategies have quickly diminishing returns. Thus at the margin they involve creating extra work.

The government - specifically the politician - can entice businesses to move jobs or not move jobs. The [federal] government can create supreme obstacles that make it costly for consumers to patronize far-away businesses. But this is not job creation.

More:

• Bryan Caplan on the "make-work" bias
  
• Frederic Bastiat, the original "make-work" bias, Candlemakers' petition

Photo credit ktylerconk.

Let no one mourn the newspaper

[Cross-posted from Collaborativationalism]

It's really an old story now. Newspaper circulation is dropping and it's dropping fast. There are various and good reasons why this is the case. But they call come down to one thing.

Newspapers - and their core audiences - got hung up on the means and forgot about the end.

There's something enjoyable about paging through a well-written newspaper over a late breakfast, this much I grant. But if what you want is to know what is going on in the world, to gauge the opinion of others, to hear salacious gossip about people you've never met - well then those are your ends, and the newspaper need be the medium no more than a train need be the means to travel between New York and Washington.

We let our irrational fixation on the means steer us away from what really matters. This is the core problem people face with small innovations and advancements.

The Department of The Totally Unsurprised

Today's Wall Street Journal reports (paywall) that the markets' slump has been very good to Nassim Nicholas Taleb:

Separate funds in Universa's so-called Black Swan Protection Protocol were up by a range of 65% to 115% in October, according to a person close to the fund. "We're discovering the fragility of the financial system," said Mr. Taleb, who says he expects market volatility to continue as more hedge funds run into trouble.

Taleb's overall strategy is straightforward, and is described in the WSJ article much as Taleb explained it himself in The Black Swan.

To execute its strategy, Universa buys far-out-of-the-money "put" options on stocks and stock indexes. These are bets that the market will see a sharp, sudden downturn. They become extremely valuable in a market decline of 20% or more in a one-month period.

The lesson? Success lies waiting outside highly dynamic, uncertain systems predicated on a high degree of false certainty.

Thank Yahoo, Google, and Facebook for The Wire and Mad Men

I read Clay Shirky's piece on cognitive surplus about a month ago and it clicked instantly. Only the other day did I manage to watch the accompanying talk (16 minutes and well worth it). Here's the summary: gin was the engine of the Industrial Revolution, enabling a generation to get tanked and thereby deal with the transition from rural to urban society; the analog for the 20th Century is the sitcom; we watch TV for billions of hours each year because we have a grandiose cognitive surplus and need to do something with it; Internet apps, e.g. web 2.0 is a mocked but more productive outlet for this cognitive bias.



When I watched the talk I started thinking a lot more about the substance of the talk, but I also had to give a thought to TV as I know it. Television is all but dominated now by reality shows: dog trainers and LA ne'er-do-wells, island competitors and lovestruck competitors. It's enough to make CHiPs look like small screen genius (maybe it was).

I'd love to sit down with the data and play with it, but I don't have it right now, and frankly I don't feel like digging for it at the moment. Maybe later. But is it coincidental that the reality phenomenon coincided with an increase in Internet participation? Is it a coincidence that as reality television hit it's tipping point that "art TV" started to gain traction? Shows like the Sopranos (never seen it, going on third party adjudication), The Wire, Mad Men, shows written, casted, shot, edited - everything - done with the touch of a feature film. There appears a television bifurcation.

The mainstream acceptance of Internet applications and communities shattered TV's median (sitcoms), which allows networks to get away with putting wash ups on TV and simultaneously partitions the market for ambitious producers.

This is more statement than argument. Comments welcome.

A little story about everyday computing

(Cross-posted from Collaborativationalism. Yes, I started a new blog. I wasn't posting enough at one, so it was clearly time for a second.)

The story starts, I think, with the typewriter. Invented much earlier, the typewriter made its real appearance in the 19th Century. The machine had one purpose, to enable people to type up documents. Straightforward enough. The mechanical typewriter went through iterations of mechanical development before the appearance of the electric typewriter, courtesy of IBM the Blickensderfer Manufacturing Company.

Then in the whiz-bang 1970's the now defunct Wang Laboratories introduced what was really the first word processor. Think electronic typewriter with memory. These evolved through the years - I remember one in my dad's office at one point - but were eventually displaced by the PC. The PC could load a word processing application and connect to a printer and emulate what the single purpose word processor could do, plus a whole lot more.

So we get the PC with the software word processor with which we can create and edit and print documents (oh yes, I remember using Word Perfect on DOS when Word Perfect was an independent company!). As email began to percolate into the workplace it became a way to exchange word processor documents between coworkers; no more printing and exchanging documents and memos before the final draft.

But the problem is that this stream of innovations is entirely concerned with documents. The report that was moved from the typewriter to the hardware word processor to the software word processor was moved about as a document. Each advance was designed to do better what the previous iteration did. But the document doesn't matter. As paper it's a physical means to an abstract end, the advance of ideas, the exchange of information.

This is surely no big deal, but it highlights the problem that we all - that everyone - faces with new technology. We get hung up on the means and all too often the metaphor (file folders, really?) and lose sight of the purpose. That idea doesn't need to be communicated in a document. It can be written up in a blog or a wiki. That message can be sent via email or IM or microblog. We get stuck on the last iteration of our attempt to solve the problem, and forget about the actual problem we were trying to solve in the first place.

Don't believe me?

Do you have a large storage space at the back of your car? (or worse yet, inoperable protective coverings nailed next to your windows?)

Traffic: a lesson in general human interaction

The more stop signs a road has, the more likely drivers are to violate them.

That's a publisher's factoid from Tom Vanderbilt's Traffic: Why We Drive the Way We Do (and What It Says About Us). Yet another pop social science book, it is - so far from my reading - a breezy but genuinely interesting read. More interesting than engineers' and psychologists' insight into why traffic jams form are the lessons these insights can provide for other aspects of our lives.

Vanderbilt contrasts the interaction of pedestrians on a crowded sidewalk and that of drivers in a crowded road. As pedestrians we move quickly, gingerly coordinating our movements so as not to bump into each other. We sense personal space and make eye contact. Once in our cars we approach the other cars on the road like, well, other cars, and not as fellow drivers. Ensconced in our little bubbles of metal and glass we are disembodied, and more importantly, all of the other drivers on the road are disembodied, impersonal machines.

This certainly affects how we treat other drivers and respond to their actions. But it says little about how we drive in general. Vanderbilt spends another section of the book talking about driver feedback. We don't have any feedback when we drive! Without a passenger riding shotgun there is no one, save for the other drive giving the bird, to suggest that "You're driving way too fast and too close to that other car." It's not that we don't know that this is dangerous, but we're not self aware. Self awareness quickly changes our behavior. Whether we're face to face with other people or merely see ourselves in a mirror, we modify our behavior when we see ourselves or anticipate others seeing us. Which is to say we behave.

This isn't a big surprise to anyone who has read or participated in internet forums or IRC channels. With anonymity and no reputation at stake there is nothing holding us back from unnecessarily mocking other users in a way we would never countenance in meatspace. We're not self-aware. But what if you attach a name and a face to everything you say?

This is the secret to why social media networks work the way they do. Everything you say on that network is attached to your identity. This works to a degree even without a connection to your real life persona - the online persona has a reputation worth saving quite often - but when our online identities are connected to our real life identities we become self-aware of our interaction with other people.

The banking crisis and what to do (in 5 minutes)

Worried that I'll just sit on another post until it gets too stale to add, I'm just sharing some notes.

AIG offered 85bb loan to keep afloat; Fannie Mae and Freddie Mac both "nationalized"; WaMu fails; key economic problem due to super risky loans; able to take greater risk because of more advanced financial modeling; also securitization; latter allows portfolios of lending assets get created and sold/exchanged; risk is averaged (?) is security; creates adverse selection problem (real risks hidden); calls for action include greater regulation of banks; tighter lending practices; bailing out banks and borrowers; these are dressing over underlying problems; what are incentives for risk, both lenders and borrowers?; tighter lending practices counterproductive to fed policy subsidizing mortgages; better idea demolish tax incentives to borrow for buying house; many other good reasons (stupid, stupid policy); next sell of fannie and freddie assets, liquidate; congress needs pass this, never happen; too much stupid law to support stupid policy to encourage people to buy houses; problem on banking side isn't securitization (although does create challenges); banks took lending strategies they would have never taken years prior; betting with other peoples money - principle-agent problem; need better corporate governance; for long run's sake shareholders should bear all risks; where was oversight by boards? remove executives from boards, past executives; small start but important.

Addendum: I said Lehman Brothers and not AIG (corrected). A downside of posting initial notes.

Lawmakers crack down on salvia

Salvia’s Popularity May Thwart Medical Use - NYTimes.com

The Times reports that with rising popularity, including user videos on YouTube, lawmakers around the country are starting to crack down on hallucinogenic salvia. One Texas legislator was so shocked by the videos that he introduced a bill banning the substance. Mind you, the DEA hasn't been able to come to a decision after 10 years of research over whether to add this herb to its portfolio of controlled substances, but state legistlatures are moving ahead anyhow. The problem is that researchers believe the active hallucingenic compound has a lot of pharmaceutical potential, at the very least for derivative drugs.

What's most interesting though is the logic behind the legalistic reactions. Neither the DEA nor the Department of Justice - not exactly bastions of ravers and hippies - have come down in favor of criminalizing salvia. The military hasn't prohibited it's use. The article claims that most users try it only once because of its strong effects. And yet a series of videos - hardly beyond the antics of legally drunk college students - is warrant for prohibition?

The Times reports two instances of death both linked to salvia use, a depressed teenager who committed suicide following salvia use and a middle aged man who [accidentally] shot himself to death while tripping on salvia. In the first instance, the coroner listed salvia as a contributing factor to the boy's death. But if in the same instance alcohol had been the drug of choice it is unlikely there would be a call to likewise prohibit alcohol. Societal constraints notwithstanding, the focus would have remained on the sufficient factor, which was depression. The Delaware legistlature passed a bill banning salvia following the death. Unknown whether the same legislature earmarked state funds for mental health initiatives.

I'd love to see saliva become popular, almost mainstream, just for the comparative data its use might yield. We could compare salvia users with marijuana users and drinkers, and see what kind of damage is really done to users' health and to society. If kids are going to try hallucinigens it makes a lot more sense to allow them a high with short duration, no side effects, and little chance of additional use rather than something like LSD or...

Do what is best for the USG

That's one of the ethical obligations of bloggers on the intelligence/defense community's Intellipedia system, "Do what is best for the USG," not, "Do what is best for your country." Something to ponder.