Variant Terrorism and the New York Times

The New York Times has scary red maps of Europe on its front page today (at least in the version we get in AZ) implying mass death from new COVID variants.  Given the prominence of COVID in the news and our lives, there is certainly a story here.  But as usual with American media coverage of COVID, there is absolutely no balance here.  The article highlights new developments in the virus, which is helpful, but does so in a largely data-free manager and simultaneously engages in the crudest of rhetorical tricks to make the situation seem far worse than it is.  Here are a few pointers to how to read through this mess.

  • The use of color on the front page maps is not accidental.  When the media wants you to be scared, it uses red on maps and scales it so that even small changes in variables result in a map going from green or white or blue to solid red and orange.    No exception here.  When one glances at the front page, one likely assumes that this is a map of spread of death or new case counts, but in fact it is merely a map of one new variant as a percentage of other new variants.  It says nothing about death or case counts.

  • The article attempts to use certain rhetorical framings to imply that increases in cases and/or deaths are due to this new variant.  For example:

The variant is now spreading in at least 114 countries. Nowhere, though, are its devastating effects as visible as in Europe, where thousands are dying each day and countries’ already-battered economies are once again being hit by new restrictions on daily life.

and this even more egregious example:

What happened this winter in the U.K. was mass death and deluged hospitals on a scale not seen earlier in the pandemic. Since B.1.1.7 was first sampled in late September, 85,000 people have died. Four million people — one out of every 17 Britons — have recorded infections.

So 85,000 people died from this variant?  Well, they want you to think that -- but they were careful that while implying that (which would not at all be true) they do not actually say that.  When you think about it - especially given that there are now dozens of COVID variants - this sentence means exactly nothing.  It's like saying that since Biden took office, thousands of people have died of cancer.  Here is the UK deaths chart (from Google, not in the NY Times article):

You would certainly never know from this article that deaths in the UK have basically gone to zero.  This chart shows exactly the same seasonal pattern we are seeing everywhere, including in places like Arizona where we have had few if any of this new variant.  This picture has become the great totalitarian Rorschach test of the 21st century, with everyone reading their own preferred causes into these seasonal humps (opened too soon! variants! spring break! evil Republican governor!)

By the way, I will save you clicking through the Times link above that says "mass death and delayed hospitals" in an attempt to see the data.  There is none. Just like with the overloaded hospital meme in the US, the article is quotes from a few harried doctors and funeral home managers and zero data.  The first "overloaded hospital" story I see with actual occupancy numbers compared to the same months in prior years will be the first.   In this case there really is no excuse for this, as the NHS apparently keeps pretty detailed daily hospital records and puts them all online here.  So I looked at the week including January 21, which looks like the peak of critical care at least in the death chart.  On 1/21/21, there were apparently 3 acute and emergency care diverts in the whole of England, and it is not even clear if these were due to capacity issues.  Other days that week were generally on 3 as well (I don't know how they count so I don't know if these are the same 3 people all week or different people each day).  Occupancy of acute and emergency beds was around 87%.  For comparison, the January 2019 report from the same site showed acute and critical care occupancy of 85%.  The site cautions that with the segregation of COVID and non-COVID patients, capacity is harder to manage (a basic tenant one learns in any operations course) but it is hard to gauge by how much.  But all this sort of discussion and outlining of facts that are so easy to find is missing from the article, as the whole point is to scare, not to inform.  After all, reciting statistical facts about vampire incidents is not the best way to tell a scary ghost story around the camp fire.

  • The article keeps saying that this variant is thought to be more transmissible and more deadly.  Towards the very end they get the most specific when they say:

The variant is believed to be about 60 percent more contagious and 67 percent deadlier than the original version of the virus. 

If you follow the link, you have to go through an Easter egg hunt of clicks, but eventually one gets to this metastudy looking at a number of results.   I am not even going to pretend to have expertise in reading and interpreting these results, but I would observe that a) the claimed 67% number seems at the high end of a lot of the results; b) 67% is awfully precise for studies who summarize their study results as this variant "may" and "probably" be more deadly; and c) the sample sizes here are really small and pretty skewed (most seem to be dealing with people already hospitalized or at least showing symptoms).    My personal bet is that we will see a story buried on page 34 in August saying that original relative death studies for this variant appear to have been exaggerated.  When the NY Times is hyping a scare story that increases the power of government, particularly in a Democratic administration, take the under.

  • My understanding is that most deadly viruses tend to mutate over time to be less rather than more deadly.   More transmissive but less deadly is the ideal for a virus trying to spam copies of itself across the globe.  I have yet to see any discussion in any article of this fact along with any hypothesis of why COVID might be behaving differently (since according to the media every damn variant is more scary than the last one).  There may be a reason, and it would be an interesting discussion -- as well as an obvious on of interest to readers -- but I have yet to see it.

I really should not get that worked up about all this -- after all, my blog certainly is not even-handed.  But my concern is

  1. The undercurrent of all these stories is essentially "so shut up and obey."
  2. No criticism or skepticism is being allowed by most of the major gatekeepers.  I can say this kind of stuff because I have a small audience, but once one gets any sort of prominence, such skepticism no matter how well-grounded in facts will be memory-holed.  Take this story.  The claim that children don't need masks is perfectly justifiable for a disease that is deadly for octogenarians but milder than the flu for kids.  We could have a discussion about this and people can disagree, but it is a totally reasonable topic for public discourse.  To ban this can't be due to science, it can only be a quasi-totalitarian deference to authority -- President Biden says we need masks so no one should publicly disagree with him.

Be warned -- totalitarians have not missed the significance of this nor that the government seems to be getting away with it.  You are going to see a spate of issues all reframed as public health issues -- guns, race, climate, immigration -- with folks claiming that newly established COVID-related dictatorial powers need to be applied to their pet issues as well,

I don't think in the history of this country the general populace** has been subjected to the sorts of limitations to individual freedoms that have been imposed over the last year, often by executive order without even involvement of the legislature.  Sometimes by public health officials who are not even elected.  Even in wartime I can't think of any affront to individual liberties that was as bad as the combination of lockdowns, school closures, and business closures.  To have all that happen is bad enough.  But to have the gatekeepers of the public discourse declare that not only are we going to do all these unprecedented authoritarian things, but we are not even going to allow public skepticism of them --that is really scary.  Historically, all the worst ideas have been accompanied by bans on public criticism.

** Clearly minority populations have been subjected to worse.  Enslavement of African-Americans, internment of Japanese-Americans, and near-genocidal actions taken against various native American groups come to mind.

Free Speech: Congress Shall Make No Law.... But Does That Include Threats and Blackmail?

From Glenn Greenwald, whose email blast is well worth the money:

Over the course of five-plus hours on Thursday, a House Committee along with two subcommittees badgered three tech CEOs, repeatedly demanding that they censor more political content from their platforms and vowing legislative retaliation if they fail to comply. The hearing — convened by the House Energy and Commerce Committee’s Chair Rep. Frank Pallone, Jr. (D-NJ), and the two Chairs of its Subcommittees, Mike Doyle (D-PA) and Jan Schakowsky (D-IL) — was one of the most stunning displays of the growing authoritarian effort in Congress to commandeer the control which these companies wield over political discourse for their own political interests and purposes.

As I noted when I reported last month on the scheduling of this hearing, this was “the third time in less than five months that the U.S. Congress has summoned the CEOs of social media companies to appear before them with the explicit intent to pressure and coerce them to censor more content from their platforms.” The bulk of Thursday’s lengthy hearing consisted of one Democratic member after the next complaining that Facebook CEO Mark Zuckerberg, Google/Alphabet CEO Sundar Pachai and Twitter CEO Jack Dorsey have failed in their duties to censor political voices and ideological content that these elected officials regard as adversarial or harmful, accompanied by threats that legislative punishment (including possible revocation of Section 230 immunity) is imminent in order to force compliance (Section 230 is the provision of the 1996 Communications Decency Act that shields internet companies from liability for content posted by their users)....

But it is vital not to lose sight of how truly despotic hearings like this are. It is easy to overlook because we have become so accustomed to political leaders successfully demanding that social media companies censor the internet in accordance with their whims. Recall that Parler, at the time it was the most-downloaded app in the country, was removed in January from the Apple and Google Play Stores and then denied internet service by Amazon, only after two very prominent Democratic House members publicly demanded this. At the last pro-censorship hearing convened by Congress, Sen. Ed Markey (D-MA) explicitly declared that the Democrats’ grievance is not that these companies are censoring too much but rather not enough. One Democrat after the next at Thursday’s hearing described all the content on the internet they want gone: or else. Many of them said this explicitly.

SCAM ALERT: Web Site Owners, Do NOT Open These Messages

We have gotten scores of variations on this message in the last 2 weeks from our public contact form -- someone is beating our Captcha, probably just by hiring people in low-wage countries to manually do them.  I have not tried it, but I would sooner have unprotected sex with 20 random people than click on the link (I X'ed out part of the link to avoid anyone screwing up and doing so).  That link is not a web site but a file programmed to download that probably isn't designed to improve your computer's operation.

Hi,

This is Melaenis and I am a qualified photographer.

I was baffled, frankly speaking, when I recognised my images at your website. If you use a copyrighted image without an owner's license, you should be aware that you could be sued by the creator.

It's illegal to use stolen images and it's so сheap!

Take a look at this document with the links to my images you used at camprrm.com and my earlier publications to get the evidence of my ownership.

Download it right now and check this out for yourself:

https://sites.google.com/view/id98430927432698768/home/drive/storage/file/download?FileID=8343XXXXX3081562342  [it is a clickable link in the email]

If you don't delete the images mentioned in the document above within the next couple of days, I'll file a to your hosting provider stating that my copyrights have been severely infringed and I am trying to protect my intellectual property.

And if it doesn't work, trust me I am going to report and sue you! And I will not bother myself to let you know of it in advance.

It is actually sort of a brilliant come-on, given that most small website owners are sloppy about what images they grab for their site and probably have some latent sense of guilt on this score.

People imagine hackers doing  clever electronic things to break into systems, and some times that is the case.  But more often than not -- and this is true all the way back to the early phone phreaks -- they crack systems by social engineering, convincing some rube on the inside to give up a password or click on a bad link.

No One In Power Has The Guts To Declare The Pandemic Over, So I Will: It's Over in Arizona

Half our politicians don't want to declare the pandemic over because they are wallowing in all their new power and having too much fun as petty dictators.  The other half are scared, living in fear that every death after they declare an end will be used as the basis for a Bush-esque "mission accomplished" critique.  Well, people will likely contract and perish from COVID forever.  Heck, people died last year in this country of the whooping cough.  My 25-year-old nephew died of regular old flu.

But if we define the pandemic as a time when a single disease drives excess mortality outside of normal bounds, then this pandemic is over, at least in AZ.   As of this morning, 27% of people in AZ had at least one dose of the Pfizer or similar vaccine, over half of those being in the vulnerable over-65 group.  We don't know how many have gotten the virus, but (non-random) anti-body tests were running over 50% positive last month.  If we assume a third of folks have antibodies from the virus itself, and that there is a 50% overlap between these folks and those vaccinated, this gets us to nearly 45% immunity, rising by several percentage points each week.  Immunity levels in the over-65 population may be over 80%.

As a result, cases have fallen sharply but due to the sensitivity of testing, I am not a fan of that metric.  We will probably always have people testing positive.  The question is whether people are getting seriously ill.  And here are the numbers for that, I use ICU bed occupancy as a proxy for serious illness (because case numbers are exaggerated and death numbers have a crazy lag to them):

I am not cherry-picking -- this is the most useful metric, I think, but all the others show the same thing.

My suspicion has always been that "COVID patients" means "Patients who test positive for COVID," so the number may be a bit exaggerated for true hospitalizations caused by COVID.  Also it is a lagging indicator -- 10 days to incubate and a week to end up in the hospital and perhaps a week stay in the hospital means these are likely folks exposed in early March.   But the result is clear.  Given the sensitivity of testing, these numbers will likely never go to zero.  What we see is a normal hospital load form a seasonal virus, in fact one currently far smaller than what we might get in a normal flu season.  In other words, we are back to normal.  AZ, by the way, last week opened vaccines to everyone over 18.

Postscript:  If you compare the ethnic data on COVID deaths vs. vaccines, it does appear Hispanic and native American groups are under-represented in the vaccine population vs. the population of COVID deaths, though the ethnic information on vaccine administration has a lot of gaps.  This is partly predictable for Hispanic groups as they skew much younger than whites in AZ so the prioritization to over-65 people first is going to skew the racial mix.

That fact may get reported on.  The fact that will not get reported on is the gender skew.  In AZ men were 58% of deaths but are only 43% of those who have been vaccinated.  I guess if I wanted to spend my life being aggrieved about my tribe I could be upset about this, but in fact it is entirely predictable from the vaccine priorities.  Vaccines first went to teachers, health care workers, and old people -- all three of which skew heavily female.

Postscript #2: One interesting thing that I have not seen reported -- I don't know any men, including myself, who had any substantial reactions from the vaccine.  My wife and daughter, however, were really knocked out for a day.  This is partly random, but also partly the inevitable result of having a singles-size dose for everyone.  The ladies in my family have much smaller body mass than I but got the same dose, which may explain why it hit them harder.

 

Thanks to the War on Drugs, I Am Wasting 7 Hours of My Vacation

My company is taking over a new campground in Washington State.  In that small town, and anywhere near it, there is only one bank, a Keybank branch.  So I need to open a business checking account there so we have somewhere to put our weekly cash revenue deposits.

Unfortunately, many banks have crazy paranoid lawyers.  Years ago the US Government implemented "know your customer" rules making sure banks are dealing with a real person and not some fake entity meant to launder drug profits to Columbia, or something.  A lot of banks, including Keybank, have interpreted the rule as meaning that a business owner has to physically walk into a branch before they will open an account.  That is fine for the pet grooming business next door, but if one runs a multi-state business, it is a royal pain in the ass.

Note that I have completed all the paperwork for the account on the phone.  They have copies of my drivers license and all my corporate paperwork.  I am looking at my unsigned signature card.  But Keybank insists I go into a branch to complete the transaction.  Literally I have to just tag a branch for 5 minutes to make the lawyers happy.  Because making me travel across the country to walk into a bank branch makes the country safe from terrorism.

Keybank has no branches in AZ.  So I was going to have to take an entire day to fly to Utah or Colorado or Washington in order to create the account, which is obviously expensive and time-consuming.  I am actually on vacation soon in Florida, and I see Keybank has a bank in south Florida, so my current plan is to drive 3 hours on my vacation, tag the branch, and then drive back.  Good times.

By the way, if you want a business bank that a) is not insanely arrogant and b) actually wants your business, consider Enterprise Bank in the St Louis area.  I have shifted a lot of my corporate and treasury stuff there and have not regretted it.

Conversation With A Phone Company

Phone company: To make your suggested change, we need your PIN first

Me: I don't know that I have a PIN, though since we opened the account 18 years ago I may have forgotten.

PC:  We only started using them about 5 years ago

Me:  I don't remember being asked to set a PIN 5 years ago

PC: No, you probably would not have.  On old accounts they were simply assigned by computer

Me: So I can't possibly know what it is.

PC:.... I need your PIN before I can process the change your have requested

Credit Where It is Due -- Our County's Vaccination Effort is Pretty Impressive

Last week I volunteered, along with 100+ other people, for an 8-hour shift at the Phoenix area's largest vaccination station, located at State Farm Stadium (the oft-name-changing home of the Arizona Cardinals football team).  Someone really did it right.

I often criticize public efforts for their inefficiency and poor performance, but this one is certainly an exception.  Granted, it is being run as a public-private partnership and my gut feel is that the Blue Cross Blue Shield folks have a lot to do with the success, but partnering for expertise is a perfectly reasonable way to get a job done and the government seldom is willing to admit it needs help.

The entire operation uses one section of the stadium's massive flat parking lots.  They have created an assembly line for those being vaccinated to move through the process without ever leaving their car.  The whole setup has the feeling of a Disney ride or an assembly line.  Those being vaccinated are greeted at the first station and checked in against their reservation.  Their reservation number is written on grease pencil on their window.  They then proceed station by station to get their vaccine and to get checked for any negative reactions on the way out.  In between volunteers with ipads walk car to car in the queue for each station, asking screening questions, gathering data, or at the end making appointments for second vaccine.  The number on the windshield allows these volunteers (I was one) to quickly access the relevant portion of that visitor's records.  It is clear someone has load balanced the stations, because there might be 12 of one sort of station followed by 8 of another that cycle faster.  From front to back the process requires about 30 minutes, including the mandatory 15 minute wait for negative reactions.  Patients have an email waiting for them with their selected appointment time for a second shot before they even drive off the property.

The whole process never stops, running for 24 hours a day.  We volunteers get the training we need through a 15-30 minute overlap with the last person doing the job (most of us are on our feet with the iPads or with parking flags).  The biggest staffing bottleneck are the trained medical professionals needed at the vaccination station and at the end to monitor for negative reactions.  Thus all the rest of the process is designed to leverage these folks, to make sure they are doing only medical tasks -- a large force of volunteers without medical skills (eg me) do all the rest under the supervision of a surprisingly small permanent management team.  The medical folks for example at the actual vax station are not asking background questions or managing records -- this is all done with non-medical volunteers -- so they can focus on sticking needles in arms.  This is important because the medical professionals are the most limited resource and the hardest to keep deployed 24 hours a day.   I really have a lot of love for those folks because it is a long, long shift, rivaling any in a Chinese sweat shop.  Those of us non-medical volunteers just did it once or twice, these folks are doing it day after day.

The rest of the volunteers are frankly easy to get, despite it being a really long shift (especially the 10pm - 6am one), because folks who work a couple of shifts get the vaccine on the way out.  So soliciting volunteers mostly consists of running a sign up site and handling the deluge of traffic in the first 5 minutes after new spots open.  I will say it was a pretty amazing volunteering opportunity.  First, the number of well-organized volunteer efforts are, in my experience, really limited and these guys totally had their act together.   I worked at the end of the process, walking the line of cars waiting out their 15 minutes, scheduling appointments.  It was not unusual to have an older person crying and telling me they could finally go see their grandchildren after 12 months of isolation.

I thought a bit about whether to even bother, as I have never been very worried about COVID risk, but I have to travel a lot and I worry about whether the Biden Administration may put vaccine requirements on travel at some point.  Plus I work with about 800 folks over 60, so at the end of the day it made sense for me.  However, the second vaccine really has me in a quandy.  New reports have first dose effectiveness at 92+% vs two dose at 95%.  Are they really going to put this scarce resource in my arm for +03% effectiveness  (probably in the error bar of the studies)?  On the other hand, they have already scheduled me for x day and time for #2 and its part of the process that you agree to come back for the second.  I will think about it, but frankly I will be happy if the state decides to delay second doses for a while.

Are the Woke a False Flag Operation of White Supremacists?

It is hard for me to imagine anything that white surpremacists could do to permanently impoverish African-Americans than some of the things the woke are supporting.  Case in point is this story from Oregon:

The Oregon Department of Education (ODE) recently encouraged teachers to register for training that encourages "ethnomathematics" and argues, among other things, that White supremacy manifests itself in the focus on finding the right answer.

An ODE newsletter sent last week advertises a Feb. 21 "Pathway to Math Equity Micro-Course," which is designed for middle school teachers to make use of a toolkit for "dismantling racism in mathematics." The event website identifies the event as a partnership between California's San Mateo County Office of Education, The Education Trust-West and others.

Part of the toolkit includes a list of ways "white supremacy culture" allegedly "infiltrates math classrooms." Those include "the focus is on getting the 'right' answer," students being "required to 'show their work,'" and other alleged manifestations.

"The concept of mathematics being purely objective is unequivocally false, and teaching it is even much less so," the document for the "Equitable Math" toolkit reads. "Upholding the idea that there are always right and wrong answers perpetuate objectivity as well as fear of open conflict."

Steve Martin used to have a comedy routine where he would say something like, "wouldn't it be funny to teach your kids how to talk wrong.  On their first day in Kindergarten class they would walk up to the teacher and exclaim, "Mumbo dogface in the banana patch!"  That had a certain dark humor to it but teaching kids to do math wrong in real life is simply insane.

There are a lot of things that set the groundwork for this, and I am not an expert on post-modernism and critical race theory.  But one factor that is not often credited is a cargo cult mentality.  Folks look at successful white people and observe they all went to college, and then infer that if we just get all the black kids into college, they will be successful too.  Their resulting plan is to reduce or eliminate standards that are perceived to be keeping black kids out of college.

The problem of course is that college is not the cause of prosperity, but a marker (with prosperity) of other traits -- focus on long-term goals, discipline, hard work, and yes knowing 2+2=4.  This sort of woke BS just makes it worse, because it attacks the real roots of prosperity.  There are real barriers to poor blacks achieving prospecity -- eg how do you focus on long-term goals when you don't know where you are sleeping tonight or when you have no role models who do so -- but the purity and objectivity of math is not among these.

This sort of cargo cult thinking can be seen all the time in Progressive economic proscriptions.  The government push for home ownership is another -- middle class people own homes so if low income people owned homes they would become middle class.  Now, this has a bit of accuracy in that, like the stock market, the elite have goosed the housing market to always go up.  But leaving that aside for a moment, owning a home vs renting is a terrible decision for many people -- it piles on a lot of financial risk but perhaps more importantly it limits geographic mobility which used to be critical to lower-income people improving their lot.

Why Most Clean Energy R&D Investment is Stupid

We already have an economic, utility-scale electrical generation technology that does not produce CO2 -- nuclear power.  We do not have a second choice that is anywhere close to ready.  Wind is stupid, for reasons I have written about before.   Solar has its uses and I am all for the march of technology on solar panels.  But they are not going to keep the world's economy growing or, more importantly, prevent wholesale poverty and starvation and misery from energy shortages.

Most peoples' negative perceptions of nuclear come because the technology that is still in use is over 60 years old.  It is not one generation out of date but two or three behind the capabilities that currently exist to build safe, clean reactors. I have for years made the argument that government forcing of certain endeavors (nuclear power, space flight, transcontinental railroad) ahead of their natural development curve actually tends to set back the commercial development of them, and I think this was the case with nuclear.  To the extent that waste and safety problems persist with nuclear (and they really don't), R&D to solve them would be much more productive and less expensive than investments in Solyndra.

Of course we probably won't do this, because "knuckling under to the irrational fears of your Left-leaning political base" is the new definition of "following the science."

By the way, here is a way to think about the nuclear waste problem:  We all pay attention to nuclear waste because it and its negative effects are concentrated in small, heavily-impacted sites.  We don't pay attention to coal-burning waste, or didn't until recently, because it is distributed all around the world's atmosphere.  But I would argue the nuclear waste problem is much better, because it is much easier to mitigate harmful problems in a 100-acre site, rather than in the entire Earth's atmosphere.**

 

**Postscript -- pretty sure I first heard this expressed way back in the late 1970s, when US energy policy (under both Ford and Carter) was to promote coal, even to the extent of banning new power plants using cleaner fuels.  I wish I can remember who said it and give them credit because it really was prescient.

The Nazis Also Created Ethnic & Political Litmus Tests For Most Jobs

So apparently Disney and the Mandalorian team have kicked Gina Carano off the show.  In the past she has aggravated the Left by expressing skepticism about modern Transgender ideology.  But according to the WSJ, the immediate cause for the final parting of the ways was this:

On Tuesday, Ms. Carano shared an Instagram story, or a post that disappears, that read in part: “most people today don’t realize that to get to the point where Nazi soldiers could easily round up thousands of Jews, the government first made their own neighbors hate them simply for being Jews. How is that any different from hating someone for their political views,” according to a report in Variety on Wednesday.

Perhaps this is missing some context, but I have a hard time disagreeing much with this statement, much less advocating someone be subject to the modern woke blacklist.  As I understand the modern Hollywood rules,

  • It is wrong to employ any actor for a role, say, as a deaf gay Aleut unless the actor is also deaf, gay and Aleut
  • It is simultaneously wrong to cast a tough, blunt, unsubtle, possibly non-empathetic actress who has  strong feelings on totalitarian governments as a character that is tough, blunt, unsubtle, not particularly empathetic, and has strong feelings about the totalitarian Imperial government.

Of course, another thing the Nazis did was blacklist Jews from the public square and most any sort of employment.

Point of Sale System Bleg

I just bought a company with a few seasonal gift shops and camp stores but they have this expensive kludgy NCR Point of sale system they use.  It reminds me of doing business with IBM in the 80's.   Apparently every piece of hardware costs a fortune -- I kid you not an add-on credit card chip reader was priced at $1000 -- and they have to have their own server somewhere running software rather than a cloud solution.

I want a simple cloud-based POS system that might be appropriate to a 3000-sq-ft store with a half million in sales a year.  Anyone have good experience with one.  Hit the contact button or email me at coyote - at - this blogs name dot com.   Needs to be more capable than square, maybe several hundreds sku's, but not some mainframe system that might have been developed for Sears.  I am not a merchandising / retail guy at heart so I don't even know where to start.

Today's Dispatches From Businesses Who Have Forgotten How to Serve Customers -- @FISGlobal and @USBank

COVID has not been easy, but our service business has managed to continue to serve customers in the same ways we always have.  As I have written before, other companies in the service sector seem to have a different attitude and to be mailing it in, with the average loss of corporate IQ being about 20 points, and probably 40 points in the financial services sector.  I have been working every day until after midnight because I have to spend my 8-5 job tediously coaching service providers through their jobs so our company can get what it needs.  I have a 40+ person reminder list on my desk of service providers I have to call every day to remind them they owe me something.  I then start my real day in the evening, getting done the actual work I have to do for my company.

Here are two stories from this morning:

@FISGlobal, formerly Worldpay and a bunch of other names, is a large credit card processor with who we have about 7-8 accounts.  I just was set up on their online portal last month and tried to log in the first time.  I had the user name and password right (everyone should use Lastpass or something like it), but they insist on also asking me challenge questions (eg name of first pet) that I get wrong for the obvious reason that I have not set them yet.  You can set them the first time you log in, but either I did not or I have not logged in yet.  I tried every reset mechanism they have but none of these will proceed without... wait for it... answering the challenge questions.  So I tried to call.  No luck. Absolutely no phone number.  So I emailed.  Two days later I have had no response.  It is simply astounding that one of the top merchant processors in the world cannot manage to fix a 60-second log in problem on less than a 48 hour (and counting) turnaround cycle.

So I tried today to find a phone number.  I finally called the Worldpay general number and they said they could not help me.  I asked for the correct phone number, they said they could not give it to me.  I insisted.  I got grumpy.  They finally gave me an 800 number.  It turned out it was the number for office depot.  I almost have to respect the customer service agent for giving me a fake number like I was some creepy dude in a bar, but I still cannot log in.  As soon as things get better, I am switching providers.  The other merchant processors may have been just as bad in COVID, but at least their support is reachable (I have had good experience with stripe in my online accounts).

@USbank.  These guys are really headed to the hall of fame of service fail, even against the low bar of other banks.  Previously I wrote about my experience last month, where I needed their deposit slip template for the MICR data on the slip so I could get deposit slips made by a 3rd party printer.  I have accounts with 44 banks, including some really small ones, and 43 immediately produced this when asked.  For US Bank I went to every branch of theirs in town and NO ONE had ever heard of such a thing nor could they produce it.  I waited on hold for 4 hours with their customer service and they had no idea, but read up in some book and decided that I could have one for the cost of $500.  LOL.  Finally I just bought $19 of their own deposit slips that I was never going to use but I could send to the printer as a template.

So over the same period I have been trying to change our corporate name on an account to reflect our post-merger status (same FEIN, different name and structure).  I again go to the local branch folks, and to the 800 number, and they promise service, but nothing happens.  So I call back and they have never heard of the request and we start over.  In the middle of this I now need to open a second account (we have campgrounds in rural locations and in two places US Bank is the only reasonably close choice).  So I go to the branch (the world of banking makes you show up in person to open a corporate checking account, even if you have to fly across country to do it) to open the second account and all seems well, they ask me to come back.  So I come back the next day, and it is not ready.  We set an appointment, and I come back then.  Again it is not ready -- they tell me (wait for it) that my corporate name has changed with the state.  No shit, I answer.  I am pretty sure the dude I am talking to is one of the ones who I had asked for the name change to be done earlier and dropped the ball.  He says they are going to have to close all the accounts and start over.  When I seem impatient, he gets mad at me and tells me it is my fault for, get this, not telling them the corporate name has changed.  Aaarrggghh.  But bankers are one millimeter from government workers and you have to be obsequious and pretend that they are infallible and so I said yes sir thank you sir when can I come back yet again for the new accounts?

Postscript:  Please!  Will someone please come up with a way that I can convert cash and personal checks in rural locations into dollars in my Phoenix bank account?  I pay credit card processors about 3%, I would happily pay 3% to Walmart or someone else to do cash concentration for us.

Every Service Organization Has Lost 20 Organizational IQ Points During COVID (Banks Have Lost 40)

Over the past year, I have spent a staggering amount of my time trying to get service providers who are supposed to be the leaders of their business to do their damn job.  I literally keep a list at my desk with a list of reminders I need to send out to service providers to do what they promised.  This list is never less than 30 names long.

More than the COVID life disruptions, more than the fear-mongering, more even than our merger, the most exhausting thing for me over the last year has been the utter inability to reliably delegate anything to a third party without constantly having to coach them through their job.

I see many reasons this is occurring.  These include:

  • Lack of employees due to either sickness or else difficulty in competing against high unemployment payments.
  • Closure and elimination of services that companies always wanted to eliminate but they can now blame on COVID.  For example
    • Hotels stopping maid services and room service
    • Banks closing tellers and branches
    • Airlines not serving meals or drinks
  • Unwillingness to adjust to the current reality.  Banks are high on this list, demanding things they have always demanded but that are impossible to do in the last year

But these do not encompass the whole problem.  There are a lot of companies in their core functionality that seem to have simply forgotten how to do what they do.  Even after 6 phone calls, Amerigas can't take and fulfill a simple order for bulk propane delivery;  Iron Mountain, who I like and invest in, can't reliably provide any of their core services accurately and on the first try; I don't think Intuit even picks up the phone anymore.

My hypothesis is that people are getting too far ahead of themselves in saying that COVID proves that the centralized workplace is dead.   I think we are going to find that this is not true at all, that there are networks in the office that spread both knowledge and accountability that are lost with all this home work.

I have run a company for 20 years where every employee works out of their home, or more accurately, where every employee moves their home (RV) to the workplace.  My employees work in over 400 spots.  And one thing I have learned vs. years of working in Fortune 50 offices is that you have to build a special process for this situation.   In particular, my constant focus is how how to centralize complexity.  I keep trying to take complexity out of field locations and managers and centralize it in a few office people where it is easier to train and build tools and create backups, etc.

My hypothesis is that companies did OK for the first month or two with work at home as well-trained employees carried the momentum of office work styles to their house.  But as time passes, and the staff turns over, the lack of traditional knowledge-sharing, support networks, and accountability systems are causing service functionality to degrade.

 

 

Media Fear-Mongering With Zero Education Value

For most of the past year I have been hammering on the media for their destructive COVID fear-mongering.  By always cherry-picking the most alarmist opinion on every topic, and filling articles with carefully calibrated fear-provoking language, they have made us all dumber.

Let me give you one example.  For literally months, day after day, our AZ papers have been screaming that emergency rooms are filling up and telling the public they may soon be lying untreated on some hallway floor or not allowed into a hospital at all.  The articles were in my email every morning -- maybe some day I need to piece together a supercut montage of them all but my guess is most of you have experienced something similar.

I know zero about hospital management but even I can look at ICU data and see that the narrative is substantially more complex than what is in the media.  Here is the AZ state tracking report on state ICU bed utilization -- dark gray is total and red is COVID-related in some way.

The implication in the media is always that a 80% full ICU plus the equivalent of 30% of the beds with new COVID patients = zero capacity and people dying with no treatment.  But that is clearly not what happens.  AZ ICU's have run at 80+% capacity utilization since June 1, while COVID bed use in that time has drifted from 10% to 60% but we were never out of capacity.

There is clearly some complex management process the goes on with the management of ICU capacity.  In fact, it seems like someone knows what they are doing here.  Why don't we ever, ever get to hear that story?   I can't think of one hospital administrator I have seen interviewed in our local papers discussing how this management process works.  The only people they ever interview seems to be that one nurse with PTSD screaming that her hospital is a dystopian nightmare.

Perhaps this capacity management is being done with little cost, deferring non-urgent cases.  Perhaps someone is missing out on care to defer to the COVID folks.  Perhaps this is entirely normal in every winter flu season.  We don't know because apparently the media has decided it is not interesting, or at least not as interesting as the reactions they get when they have everyone as scared as possible.

A Good Example of the CO2 Abatement "Stupid Stuff"

In my transpartisan climate plan the other day, I wrote this:

Point 3:  Eliminate all the stupid stuff

Oddly enough, this might be the hardest part politically because every subsidy, no matter how idiotic, has a hard core of beneficiaries who will defend it to the death -- this the the concentrated benefits, dispersed cost phenomena that makes it hard to change many government programs.  But never-the-less I propose that we eliminate all the current Federal subsidies, mandates, and prohibitions that have been justified by climate change. Ethanol rules and mandates, solar subsidies, wind subsidies, EV subsidies, targeted technology investments, coal plant bans, pipeline bans, drilling bans -- it all should go.  The carbon tax does the work.

So what do I mean by "stupid stuff."  Well a good place to start is solar roads, but I have already flogged that not-dead-enough-yet horse many times. So let's find a new example -- cash for clunkers.  The original cash-for-clunkers program that paid fixed government payments for old cars that would then be destroyed was billed as both a stimulus (sells cars!) and a CO2 reduction (newer cars mostly all more efficient than older cars).

In fact, it did neither.  It turned out that the stimulus was virtually non-existent, as it just pulled forward sales that were already going to happen.  And while there might have been a teenie bit of CO2 reduction, it occurred at ridiculously high cost-per-ton (meaning the same investment in any number of other approaches would have reduced a lot more CO2).

Incredibly, given all this, Kevin Drum wrote recently:

Cash for Clunkers! My favorite stimulus program of all time. Sure, I agree with the experts who say that it’s not all that great purely as stimulus, but as a way of making stimulus popular it couldn’t be beat. More like this, please.

This is the man who, on not one but two occasions, responded to a detailed critique of mine on something he wrote by saying he had "science" on his side.  Are these guys even trying any more?

A Few Other Thoughts on Gamestop (GME)

A few thoughts in follow-up to this post on GME and short-selling

  1.  The general celebratory air around the story of Gamestop (GME) is driven, I think, in large part because no one other than a few hedge funds who had naked unhedged short positions in GME.  But recognize we are still only in the middle of this story.    This is like reporting on the Titanic after the first lifeboats were away successfully but before the first drownings.  There is no WAY that Gamestop is going to remain over $300, or even over $100.  Gamestop has almost nothing you would want to own -- bricks and mortar retail locations that sell digital product -- and yet its valuation is higher than even the hottest of retailers.  It is something like 6-8x the valuation on a price-to-revenue basis (so such thing as a PE as it loses a ton of money) of other similarly threatened retailers like Best Buy.  Its valuation is even well above players like Home Depot, which unlike Gamestop a) makes a profit b) sells a bunch of stuff that can't be sold easily online and c) is growing rather than shrinking.  Within 30 days or less GME will be back under $40 is my guess.
  2. This stock windfall is thus essentially a pyramid, no different than other attempts to corner a limited market, and will eventually fall to Earth.  Those in and out early will win -- and those are the folks winning praise and love across the media.  Those out late will lose out.  Had I been in the stock, I would never ever have stayed in the stock past the market close on Friday
  3. Every professional investor and institution that does not have a lockup or some portfolio rule that keeps them in Gamestop is out.  I would fire any professional that did not take the opportunity to unload this bankrupt dog worth $20 or less at a price over $300.  So all that is left are redditors who are keeping the stock afloat by turning over more than the entire stock float every day, thus elevating it by some investor version of Boyles law.
  4. If the folks in the stock now are like the other redditors who got in early, they are very leveraged.  This leverage allowed folks to claim huge gains with small investments, but in turn will leave small investors at the end with huge losses.

My prediction is that 30 days from now, we will look back on this story very differently.  Perhaps I am just a member of the HBS-educated elite and can't see past my traditional views on investing, but I STILL don't think that highly leveraged momentum investments on near-bankrupt stocks in collusion with other investors of whom one knows nothing is a good approach for the typical small investor.

Update:  Aaaaaand it only took 2 days.  Do we still feel like this is a heroically great story for the everyman?  We got to enjoy regular dudes making a fortune on the way up with highly-leveraged investments in a pyramid / pump-and-dump scheme.  Do we get to see stories of people holding leveraged positions at $400?

The Public REALLY Hates (and Misunderstands) Short Sellers

A group of day traders who congregate and coordinate on various online platforms made a name for themselves over the past week running up the stock price of struggling Gamestop (GME), in the process laying some epic losses on a few high-profile short sellers.  As might be expected in the current political age, the entire body of both economic thought and 90 years of stock market regulatory theory have been thrown out in the ensuing brouhaha in favor of an in-group / out-group narrative, ie underdog economic losers against entrenched billionaire elite insiders.  As Glenn Greenwald describes it:

Although it may be more complex than this once all the facts are all known, this is being treated — by those excited by it and those aghast — as a type of populist uprising, a David v. Goliath tale in which ordinary people united to brilliantly beat Wall Street at its own game, thereby transferring plutocratic wealth back to the public. Oligarchs and their media spokespeople spent all day on CNBC and other pro-Wall-Street outlets expressing outrage and demanding government intervention to protect them from what they regard as this grave injustice.

Given this narrative is already fixed firmly in place, it is almost impossible to comment thoughtfully or discuss it with anyone.  On the one hand these traders aren't doing anything that Carl Icahn did not do to Bill Ackman at Herbalife, and I can' see any reason why their communication channels or ability to trade certain stocks should be shut down.  On the other hand, this sort of crazy volatility is not good for confidence in markets.  Remember that driving GME to unrealistic levels produces everyman millionaires of the folks who were first in and driving the train, but there is no way the stock price levels are sustainable and just as surely a lot of other regular folks, just like the last ones into a pyramid scheme, are going to lose a lot of money.  I will say that this whole narrative of the stock market suddenly becoming a path for the downtrodden common man to make a fortune has a very 1928 vibe to it.

By the way, to understand what is going on, basically these guys attempted and succeeded for a time in cornering the market in GME stock, really no different from any attempt to corner a market in a commodity and drive the price up.  In this case, the wallstreetbets folks are seeking out companies with a very small "float" -- companies that may have a lot of stock outstanding but only a small amount trades actively because of insider and founder shares and shares that have been borrowed and shorted.  Combining a small float with a large short interest can lead to a sharp rise in prices that is accelerated as short-sellers are forced to cover as their losses mount.  As with any such attempt,  whether by the Hunts in silver or these guys in GME, eventually the pyramid can't be sustained and the price collapses again.  When presented this way, it is amazing to me that socialists like Greenwald are cheering on this kind of behavior.  It is a seeming contradiction but I think I know the answer:  short-selling.

I may be overreading this, but a LOT of the support for the WallSteetbets bros seems to be due to the fact that they took down a bunch of prominent short-sellers, who are considered by the public to be barely one step above child molesters on the ethics scale.  Glenn Greenwald, for example, wrote that this is a story about heterodox groups that "unite in opposition to hedge fund short sellers, who contribute nothing of value."  Had these folks united instead to hammer a popular stock like Apple or Tesla down, I am pretty sure the receptions would have been VERY different, even though the basic narrative would be identical.

So is short-selling really a plague that contributes nothing of value?  I have argued many times that it is very valuable.  But let me try again.

Markets don't have a purpose per se beyond the facilitation of individual goals.  Individuals come together in mutually beneficial trades that create value for both parties.  This is ultimately true of capital markets like any other market -- some people want a place where their savings can earn more than in a checking account, and other parties need these funds to support their business operations and growth.  Individual investors shift their money around as the perceive better risk/reward opportunities for their investment.  This is what capital markets were created for, not to serve some higher macro-economic purpose.

But they do serve a higher purpose, and the reason is at the heart of the magic of capitalism.  Because we know that well-functioning markets with clearly understood and consistent rules populated by folks just trying to look after themselves are critical to a productive, growing economy.  At the heart of this magic is the market's role in the efficient allocation of capital to the most productive enterprises.  Again, this all occurs bottom up.   If there are two widget manufacturers making identical products, but one produces them twice as expensively as the other, we are all going to be better off long-term if the more efficient company thrives.  This tends to happen naturally in the capital markets -- more productive companies get more capital, less productive companies do not.

One of the worst things that can happen in an economy is to have scarce capital misallocated, by some market inefficiency, to unproductive or less productive purposes.   And herein lies the societal benefit of short-sellers. I will not say it is their "purpose", because their purpose is to make money (though a lot of short-sellers are driven by righteous ethical indignation about fraud and ironically often have a higher ethical component to their investment choices than do the longs).  But the larger benefit of the actions of short-sellers is to shift capital away from unproductive companies, because every dollar in capital poured into these companies is a dollar that is not invested in something that creates more wealth and benefits for the world.

Something folks may not know but investors are well aware of it -- there is a large raft of "zombie" corporations out there that shamble along unproductively but still consume huge amounts of scarce capital.   Some have government support (eg Boeing).  Others continue to survive for years eating the seed corn of their past reputation, market position, and infrastructure.  Almost all of them are being supported by the Fed's huge money-printing program that tries to keep both the DJIA and the Fortune 500 afloat.

They were once America’s corporate titans. Beloved household names. Case studies in success.

But now, they’re increasingly looking like something else -- zombies. And their numbers are swelling.

From Boeing Co.Carnival Corp. and Delta Air Lines Inc. to Exxon Mobil Corp. and Macy’s Inc., many of the nation’s most iconic companies aren’t earning enough to cover their interest expenses (a key criterion, as most market experts define it, for zombie status).

More than 200 corporations have joined the ranks of so-called zombie firms since the onset of the pandemic, according to a Bloomberg analysis of financial data from 3,000 of the country’s largest publicly-traded companies. In fact, zombies now account for nearly a quarter of those firms. Even more stark, they’ve added almost $1 trillion of debt to their balance sheets in the span, bringing total obligations to $1.98 trillion. That’s more than the roughly $1.58 trillion zombie companies owed at the peak of the financial crisis.

The consequences for America’s economic recovery are profound. The Federal Reserve’s effort to stave off a rash of bankruptcies by purchasing corporate bonds might very well have prevented another depression. But in helping hundreds of ailing companies gain virtually unfettered access to credit markets, policy makers may inadvertently be directing the flow of capital to unproductive firms, depressing employment and growth for years to come, according to economists.

Even if only half of that is misallocated, that's a trillion dollars of investment capital that could have been better deployed elsewhere.  It's a dead loss to the economy.  Short-sellers are our gladiators trying to bring down some of these zombies.

So let's consider Gamestop (GME).   GME is mainly a group of bricks and mortar stores selling digital content.  Huh?  Stores that sell freaking refrigerators have been hammered by online sales, do we really think that GME makes any sense any more?  But by driving up the price 20x, these supposedly heroic momentum investors are sending a capital market signal that this is the place, in physical stores selling digital content, that the world should put its scarce capital -- not in new bioscience investments, not in electric vehicles, not in new forms of energy technology -- but right here in physical locations next to a Safeway to allow people to buy stuff they could download less expensively in 5 minutes in their own home.  In this context, the GME shorts were freaking heroic.

Updates:

  1. To be clear, because I know how these "with us or against us" issues go, just because I am defending the action of short-selling does not mean that I support restrictions on these day traders.  I think Robinhood is making a mistake in restricting trading of its members in GME and I don't like talk of restricting certain Reddit investment forums any more than I support any other proposed restrictions on online speech.  I do think the WallStreetBets folks are being irresponsible to ordinary investors, and high-profile stories of big leveraged wins by some blue collar day traders in momentum strategies is going to result in some huge losses for other small traders getting caught holding the bag at the end of the run.
  2. Essentially, the Tesla run up has just been a slow motion duplicate of the GME runnup, with day-traders who ignore any value metric making gains due to the small float, potentially with added manipulation in the call option market.
  3. GME is currently down almost $100 per share or 28% from yesterday's close, and down $200 from today's intra-day high.  I wonder if Greenwald wants to celebrate all those underdog investors that bought in <4 hours ago at $200 higher.

Update 2: I do want to thank some group of momentum knuckleheads for driving up the price of mall owner Macerich yesterday.  I sold right at the intraday high (which was 2x the price just 2 days before) and got out whole from a crappy loss position when I thought I was going to have to wait that one out for years.

I need some alert service that says the momentum bros are playing games with such and such stock, get out now while the bagholders are buying.

Update 3:  At one point today GME was trading at 5.5x 2019 revenues -- as a bricks and mortar retailer.  Best Buy, for reference, is trading today at 0.68x 2019 revenues.  And for all its problems, if I had to choose, I would rather own Best Buy than Gamestop.

Will the First Amendment Die in the Aftermath of January 6?

I have gone about a week now without even opening Twitter, which makes me both mentally healthier as well as slower to post my thoughts on various issues.  But those who were reading me on Twitter earlier in the month know that I am far more worried about the reaction to the events at the Capitol on January 6 (J6) than I ever was about the events themselves.

We are experiencing a weird moment in history as a great number of people, IMO, are grossly over-reacting to what would have been called a "protest gone wrong", a "riot", or a "building occupation" in almost any other circumstances.  Instead, there seems to be a consensus to call the storming of the capital by a bunch of crazy painted selfie-taking, souvenir-hunting knuckleheads an "insurrection."  Even moderates and free speech defenders (I am thinking of folks like Ken White at Popehat) -- people who should know the dangers of using such inflammatory language to drive an exaggerated reaction -- are using this term.  Folks online tell me that this was "Literally the definition of insurrection."  In turn I would say that this is literally the first time the general public has used this term to describe ... anything since the Civil War.  The Native Americans that took over Alcatraz weren't described as insurrectionists.  The Bundies and the Branch Davidians weren't insurrectionists.  Nixon wasn't an insurrectionist.  The Antifa and anarchist folks declaring independent nations in the center of Seattle weren't insurrectionists.  But by God the dude in the Fred Flintstone water buffalo hat was an insurrectionist.

Since I tend to criticize people for assuming single-dimension solutions to complex issues, I can think of multiple reasons why reactions to J6 might be exaggerated:

  • Some folks are nearly insane on any topic touching Trump.  I am going to write my retrospective on Trump later, but in short I consider him to be a bully with bad policy instincts who gathered followers by bullying folks on the Left that the Right doesn't like.  He was a disaster for the dignity of the office and public discourse -- though his opposition has some blame too for the latter -- but (consistent with my contention that our system is robust to tyrants) who did remarkably little damage from an actual policy standpoint.  But given that the anti-Trump media has been incredibly harsh on perfectly peaceful Trump gatherings, a riot and occupation of the capital is going to send some folks into orbit.
  • There is a clear asymmetry in how the media covers protests from the Left vs. form the Right.  I believe I can state this as a fact without bias, particularly since I tend to be more sympathetic to the drivers behind 2020 Leftish protests and violence  than to the motives of the J6 rioters.
  • The US Capitol building obviously has special symbolic value, though I think this targeting is more a function of how dumb this J6 group was rather than any special evil on its part.  I think many, many other groups Left and Right might have tried this themselves if they thought it was possible.  But who believed that the Capitol police, which has more officers than some large cities just to cover about 4 buildings, would show all the defensive prowess of an NBA all-star game?
  • I do think that a lot of the overwrought response to this is because it happened inside the beltway.  If this happened in Portland (and a mini version seems to happen there most evenings), it might not make the news.
  • I hate to be cynical, but I do also think there is an element who have focused-grouped the "insurrection" word and inserted it in the narrative in order to prepare the ground for the maximum amount of ex post political retribution and speech restrictions.  These are the folks who are essentially emulating that greatest of all 20th century de-platforming events, the Reichstag Fire Decree.  The lesson from those events and many others in history:  Hang the actions of one mentally ill Dutchman with a lighter on all your tens of millions of political enemies.  Pretend every person of goodwill who disagrees with you is personally responsible for the actions of extremist yahoos.

So in response to all this I was going to write about an article Will Wilkinson wrote at the Niskanen Center the other day (I would describe both Wilkinson and Niskanen as Leftish but at least within sight of the middle of the road but both have had some of the quality of their work reduced over the last 2 years with what I consider an irrational level of Trump hatred).  Given this source from a long-time member of the libertarian community, I found this article he wrote hugely depressing (since I first read it, Wilkinson's byline has been removed, probably for reasons we will get to in a moment).

I am going to leave aside the Trump impeachment stuff, which is a lot of the article.  I will just note the absolutely over-dramatic presentation and suggest there is a deep deep anger here that is simply not compatible with the policy role he wants to play.   I guess if you demanded I take a side, I would say that prosecuting your political enemies that you beat in the last election is a bad precedent.   Even the Republicans in Congress, after the unseemly "lock her up" campaign chants in 2016, managed to mostly avoid the temptation with Clinton and others.   Before I move on, I have to present this bit from the impeachment portion of his piece:

There is too much at stake to further delay mounting a trial, or to draw it out for days or weeks past Biden’s inauguration. There is no need for a lengthy Senate trial because the facts that justify impeachment and removal are not obscure.

It is interesting to see the Niskanen center parroting the words of every law-and-order Conservative demanding some dude get lynched because "we all know he's guilty."  I think it is clear to most folks that Trump was insufficiently diligent in restraining the fringes of his party.  But to convict Trump of  "[sending] his mob to the Capitol to make that threat vivid in the minds of legislators" is a stretch, and does actually need to be proved and not asserted.  I actually am not sure Trump is guilty of an act of commission for J6 -- I see him more as the sorcerer's apprentice, messing with forces he didn't really understand and having it spin out of control.  Which is a good reason to get him out of office, but not necessarily sufficient for Congress to attempt a bill of attainder against Trump under the banner of an impeachment of a dude who is already gone.

But it is the part that followed that really depressed me, leaving me to wonder if there is any intellectual support for the First Amendment any more:

Blame for the insurrectionary riots cannot be laid entirely at Donald Trump’s feet. Many Congress members actively encouraged Americans to believe that the election was tainted by fraud, that Biden may not have been legitimately elected, and that our democracy could be irreparably harmed should he be allowed to take office. They should be held responsible for the dire consequences of propagating these lies. The worst offenders may merit official censure or worse. Most deserve to be abandoned by donors, saddled with strong primary challengers, and punished by voters at the ballot box.

It appears that some Republican members did more than amplify destabilizing falsehoods. Some may have actively planned to bring a mob to the Capitol steps with the intent of influencing the electoral count. If that is the case, they should be removed from Congress and face criminal prosecution.

However, it is essential that any such sanctions imposed on Congress members be grounded in a scrupulous, comprehensive accounting of the factors that contributed to the siege. This disaster was caused by the opportunistic deployment of lies for political gain. If we are to have any hope of restoring stable, functional, constitutional government, the process by which we investigate these events and mete out justice must be a model of careful, proper procedure.

Amy Zegart and Herbert Lin of Stanford University have developed a careful proposal for a commission on January 6, based on an extensive assessment of past commissions (including the 9/11 commission). Congress should expeditiously create such a commission and commit across the aisle to follow its findings, wherever they may lead.

Wilkinson can use words like "careful", "thoughtful", and "proper" all he wants but the fact is he is advocating asymmetrical punishment (even if the punishment is just the process) for what is fairly normal political invective.  Had Republicans called for a 9/11 commission to investigate Congressional Democrats who voiced support for riots last year that turned violent, I am positive Mr Wilkinson would have blown a gasket.  Raising questions of election fraud is well within the bounds of acceptable political discourse.  As often happens in politics, the discourse can become overheated, with words slipping from "potential fraud" to "illegitimate."  But this again is fairly normal.  Why, we would have to go all the way back to the distant election of 2016 to see a similar example, where many many prominent Democrats argued Trump's election was tainted by fraud (RUSSIA!) and he was illegitimate.  In fact, there were many protesters in DC on Jan 20, 2017 protesting exactly that and a number of them turned violent.  In fact, we might even cite Wilkinson himself, who has written similar things about Trump many times, including this in Vox:

Trump’s presidency has been dogged with doubts about legitimacy from the beginning. There’s a real possibility that he would have lost but for Russian interference. At this point, however, that in itself is not the biggest stain on Trump’s legitimacy.

This is the problem with all calls for speech limitation or retribution of some sort -- they are always asymmetric.  My protest is entirely justified and important -- yours is trivial and a super-spreader event.  My invective is "passion" while my enemy's nearly identical invective is "violent and threatening."   If nothing else, 2020 has been a giant lesson in the hypocrisy of our elites, both public and private.

Which brings us to the rest of the story, where someone turned the irony dial to 11:

Will Wilkinson is a vice president at the left-leaning Niskanen Center, a contributing writer at The New York Times, and someone who has frequently quarreled with me about so-called cancel culture. (I think it's generally bad when people are fired, expelled, or dragged on social media for saying stupid or poorly phrased things they quickly come to regret; Wilkinson has suggested to me that I've made too much of this problem.)

On Wednesday, Wilkinson tweeted, "If Biden really wanted unity, he'd lynch Mike Pence."

Lynching humor is virtually never a good idea, and this joke was especially badly executed. (Wilkinson said he was making a joke not at the former vice president's expense, but in reference to the Capitol rioters who had expressed a similar sentiment. The joke being that this time it was the far right calling for violence against a Republican official rather than the left.)

Nevertheless, widespread outrage—some of it stoked by conservative news sites like The Federalist and The Daily Caller—ensued on social media. Wilkinson apologized, describing his tweet as a lapse in judgment.

"It was sharp sarcasm, but looked like a call for violence," said Wilkinson. "That's always wrong, even as a joke."

Nevertheless, the Niskanen Center fired Wilkinson and made it clear that they did so explicitly because of the tweet. "The Niskanen Center appreciates and encourages interesting and provocative online discourse," wrote Niskanen President Jerry Taylor in a statement. "However we draw the line at statements that are, or can in any way be interpreted as, condoning or promoting violence."

I guess it would be sort of satisfying to react by saying that I was happy to see him hoist on his own petard, but really I am not.  I am not sure how we are going to do it but everyone has to just chill the hell out and accept speech as speech, and not as violence.   I am subscribed to Glen Greenwald's newsletter because he is one of the few folks on the Left who is willing to call out this ridiculous anti-speech culture that is developing.  He has a good column on Wilkinson's firing here, including:

So a completely ordinary and unassuming liberal commentator is in jeopardy of having his career destroyed because of a tweet that no person in good faith could possibly believe was actually advocating violence and which, at worst, could be said to be irresponsibly worded. And this is happening even though everyone knows it is all based on a totally fictitious understanding of what he said.

Greenwald does not say it, but it has become a habit of Trump critics to take his every statement and read it, no matter what the obvious meaning of the words, in the worst possible light.  While this is something folks have been doing in the editorial business since time immemorial, the migration of this pattern in the Trump era to the news division has been toxic.  It started way back at with the treatment of Trump's Charlottesville comments -- these actually surprised me as I for years had accepted that Trump had defended neo-Nazis as was portrayed on every news feed until I actually read his actual comments.  Trump wasn't supporting nazis and Wilkinson wasn't threatening the VP.  Any reasonable person reading either set of comments in context would agree, but we are living in a word dominated by post-modernist narrative.   Greenwald ends with this warning to both sides:

Unleash this monster and one day it will come for you. And you’ll have no principle to credibly invoke in protest when it does. You’ll be left with nothing more than lame and craven pleading that your friends do not deserve the same treatment as your enemies. Force, not principle, will be the sole factor deciding the outcome.

I will end with a few tweets from the same source, because I think he was been spot-on during the past few weeks:

 

 

 

Repost for the New Administration: Trans-partisan Plan #1: Addressing Man-Made Global Warming With A Plan That Could Be Supported By Both Democrats and Republicans

By the way, drafts of Biden's plans released so far has him doing almost the polar opposite of every step I suggest.  The cancellation of individual pipeline projects is just stupid political micro-managing to absolutely no benefit.  (First published September, 2018)

While I am not deeply worried about man-made climate change, I am appalled at all the absolutely stupid, counter-productive things the government has implemented in the name of climate change, all of which have costly distorting effects on the economy while doing extremely little to affect man-made greenhouse gas production.  For example:

Even when government programs do likely have an impact of CO2, they are seldom managed intelligently.  For example, the government subsidizes solar panel installations, presumably to reduce their cost to consumers, but then imposes duties on imported panels to raise their price (indicating that the program has become more of a crony subsidy for US solar panel makers, which is typical of these types of government interventions).  Obama's coal power plan, also known as his war on coal, will certainly reduce some CO2 from electricity generation but at a very high cost to consumers and industries.  Steps like this are taken without any idea of whether this is the lowest cost approach to reducing CO2 production -- likely it is not given the arbitrary aspects of the program.

These policy mess is also an opportunity -- it affords us the ability to substantially reduce CO2 production at almost no cost.

The Plan

Point 1: Impose a Federal carbon tax on fuel.

I am open to a range of actual tax amounts, as long as point #2 below is also part of the plan.  Something that prices CO2 between $25 and $45 a ton seems to match the mainstream estimates of the social costs of CO2.  I think methane's greenhouse effects are exaggerated, but one could make an adjustment to the natural gas tax numbers to take into account methane leakage in the production chain.   I am even open to making the tax=0 on biofuels given these fuels are recycling carbon from the atmosphere.

So what is the best way to reduce CO2 -- by substituting gas for coal?   By more conservation?  By solar, or wind?  With biofuels?  With a carbon tax, we don't have to figure it out or have politicians picking winners.  This is why a Pigovian tax on carbon in fuels is going to be the most efficient possible way to reduce CO2 production.   Different approaches will be tested in the marketplace.  Cap and trade could theoretically do the same thing, but while this worked well in some niche markets (like SO2 emissions), it has not worked at all in European markets for CO2.   There has just been too many opportunities for cronyism, too much weird accounting for things like offsets that is hard to do well, and too much temptation to pick winners and losers.

When I first crafted early drafts of this plan several years ago, I had assumed that Progressives championed a carbon tax for the reasons I listed above, ie that it is the most efficient means to allow markets to reduce emissions.  However, the referendum a couple of years ago in Washington State demonstrated that many Progressives may not understand this at all.  You can read a lot more about this debate here.  I fail the ideological Turing test on this one, because I don't know if the Progressives who were strongly for CO2 reduction but opposed the Washington State carbon tax did so because they did not understand economics or because they cared less about global warming than funding other Progressive causes.

Point 2:  Offset 100% of carbon tax proceeds against the payroll tax

Yes, there are likely many politicians, given their incentives, that would love a big new pool of money they could use to send largess, from more health care spending to more aircraft carriers, to their favored constituent groups.  But we simply are not going to get Conservatives (and libertarians) on board for a net tax increase, particularly one to address an issue folks on the Right may not agree is an issue at all.  So our plan will use carbon tax revenues to reduce other Federal taxes.

I think the best choice would be to reduce the payroll tax.  Why?  Because, the carbon tax will necessarily be regressive (as are most consumption taxes) and the most regressive other major Federal tax we have are payroll taxes.  Offsetting income taxes would likely be a non-starter on the Left, as no matter how one structures the tax reduction the rich would get most of it since they pay most of the income taxes.

There is another benefit of reducing the payroll tax -- it would mean that we are replacing a consumption tax on labor with a consumption tax on fuel. It is always dangerous to make gut-feel assessments of complex systems like the economy, but my sense is that this swap might even have net benefits for the economy -- so much so that we might want to do it even if there was no such thing as greenhouse gas warming.  In theory, labor and fuel are economically equivalent in that they are both production raw materials. But in practice, they are treated entirely differently by the public.   Few people care about the full productive employment of our underground fuel reserves, but nearly everybody cares about the full productive employment of our labor force.   After all, for most people, the primary single metric of economic health is the unemployment rate.  So replacing a disincentive to hire with a disincentive to use fuel could well be popular.

Point 3:  Eliminate all the stupid stuff

Oddly enough, this might be the hardest part politically because every subsidy, no matter how idiotic, has a hard core of beneficiaries who will defend it to the death -- this the the concentrated benefits, dispersed cost phenomena that makes it hard to change many government programs.  But never-the-less I propose that we eliminate all the current Federal subsidies, mandates, and prohibitions that have been justified by climate change. Ethanol rules and mandates, solar subsidies, wind subsidies, EV subsidies, targeted technology investments, coal plant bans, pipeline bans, drilling bans -- it all should go.  The carbon tax does the work.

States can continue to do whatever they want -- we don't need the Feds to step on states any more than they do already, and I continue to like the 50 state laboratory concept.  If California wants to continue to subsidize wind generators, let them do it.  That is between the state and its taxpayers (and for those who think the California legislature is crazy or that the Texas legislature is in thrall to oil companies, that is what U-Haul is for).

Point 4:  Revamp our nuclear regulatory regime

As much as alternative energy enthusiasts would like to deny it, the world needs reliable, 24-hour baseload power -- and wind and solar are not going to do it (without a change in storage technology of at least 2 orders of magnitude in cost).  The only carbon-free baseload power technology that is currently viable is nuclear.

I will observe that nuclear power suffers under some of the same problems as commercial space flight -- the government helped force the technology faster than it might have grown organically on its own, which paradoxically has slowed its long-term development.  Early nuclear power probably was not ready for prime time, and the hangover from problems and perceptions of this era have made it hard to proceed even when better technologies now exist.   We are at least 2 generations of technology past what is in most US nuclear plants.  Small air-cooled thorium reactors and other technologies exist that could provide reliable safe power for over 100 years.  I am not an expert on nuclear regulation, but it strikes me that a regime similar to aircraft safety, where a few designs are approved and used over and over makes sense.  France, which has the strongest nuclear base in the world, followed this strategy.  Using thorium could also have the advantage of making the technology more exportable, since its utility in weapons production would be limited.

Point 5: Help clean up Chinese, and Asian, coal production

One of the hard parts about fighting CO2 emissions, vs. all the other emissions we have tackled in the past (NOx, SOx, soot/particulates, unburned hydrocarbons, etc), is that we simply don't know how to combust fossil fuels without creating CO2 -- CO2 is inherent to the base chemical reaction of the combustion.  But we do know how to burn coal without tons of particulates and smog and acid rain -- and we know how to do it economically enough to support a growing, prosperous modern economy.

In my mind it is utterly pointless to ask China to limit their CO2 growth.  China has seen the miracle over the last 30 years of having almost a billion people exit poverty.  This is an event unprecedented in human history, and they have achieved it in part by burning every molecule of fossil fuels they can get their hands on, and they are unlikely to accept limitations on fossil fuel consumption that will derail this economic progress.  But I think it is reasonable to help China stop making their air unbreathable, a goal that is entirely compatible with continued economic growth.  In 20 years, when we have figured out and started to build some modern nuclear designs, I am sure the Chinese will be happy to copy these and start working on their CO2 output, but for now their Maslov hierarchy of needs should point more towards breathable air.

As a bonus, this would pay one immediate climate change benefit that likely would dwarf the near-term effect of CO2 reduction.  Right now, much of this soot from Asian coal plants lands on the ice in the Arctic and Greenland.  This black carbon changes the albedo of the ice, causing it to reflect less sunlight and absorb more heat.  The net effect is more melting ice and higher Arctic temperatures.  A lot of folks, including myself, think that the recent melting of Arctic sea ice and rising Arctic temperatures is more attributable to Asian black carbon pollution than to CO2 and greenhouse gas warming (particularly since similar warming and sea ice melting is not seen in the Antarctic, where there is not a problem with soot pollution).

Final Thoughts

At its core, this is a very low cost, even negative cost, climate insurance policy.  I am convinced this policy, taken as a whole, would still make sense even if CO2 turns out to be as harmless as nitrogen.  The carbon tax combined with a market economy does the work of identifying the most efficient ways to reduce CO2 production.   The economy benefits from the removal of a myriad of distortions and crony give-aways, while also potentially benefiting from the replacement of a consumption tax on labor with a consumption tax on fuel.  The near-term effect on CO2 is small (since the US is only a small part of the global emissions picture), but actually larger than the near-term effect of all the haphazard current programs, and almost certainly cheaper to obtain.  As an added benefit, if you can help China with its soot problem, we could see immediate improvements in probably the most visible front of man-made climate change:  in the Arctic.

Postscript

Perhaps the hardest thing to overcome in reaching a compromise here is the tribalism of modern politics.  I believe this is  a perfectly sensible plan that even those folks who believe man-made global warming is  a total myth ( a group to which I do not belong) could sign up for.  The barrier, though, is tribal.  I consider myself to be pretty free of team politics but my first reaction when thinking about this kind of plan was, "What? We can't let those guys win.  They are totally full of sh*t.  In the past they have even threatened to throw me in jail for my opinions."  Since I first published this plan I have had very prominent skeptics contact me to criticize me for "giving in to the warmists."

 

The Other Problem With A National Minimum Wage -- The National Part

So a $15 national minimum wage will almost certainly be on the table in Congress this year, and if past such legislative efforts are any guide the Republicans will probably eventually go along in exchange for reducing the $15 to a lower number and slowing the rollout.

I have talked a lot about the negative effects of higher minimum wages on low-skill workers.  Two good example background posts are here and here.  I covered how a broad range of labor regulation hurts unskilled workers in a cover story for Regulation magazine a few years back.  Unfortunately, in a country where the average American buys about $1000 in lottery tickets each year, the willingness to believe we can get something for nothing is strong.

But I want to talk specifically about a Federal minimum wage increase, where one other problem emerges.  The best way to state this is -- how can one possibly set the same minimum wage for San Francisco at the same rate as one does for rural Mississippi?  Here is one source for comparative state cost of living.  Doing this by county would make the curve even wider.

Cost of living in Hawaii is more than 2x that of Mississippi.  CA and NY are not far behind.  A minimum wage that might comfortably be accommodated in San Francisco (and note even there the rise to $15 was ending service jobs in that city long before COVID), would be an economic disaster for rural Alabama.  I don't tend to think primarily along racial lines as seems to be the case on the Left today, but basically this is a policy driven by rich white tech guys in San Francisco that is going to devastate the employment prospects of rural blacks.

Whatever one's misgivings about minimum wages, it is certainly true that allowing states to take the lead on setting minimum wages (counties would make even more sense) makes a lot more sense that trying to take action at the national level.  Even with state action there are disparities.  Look at this unemployment map of the rural counties in CA vs. the tech. enclaves in the Bay Area (the chart below is January 2020, I wanted to dial back pre-COVID).  Those rural counties are being slaughtered by the $15 minimum wage.  Just think about rural areas in states less costly than CA.

So a state by state approach is WAY better. There are three reasons, in increasing order of cynicism, why Democrats in Congress will still insist on a higher national minimum wage.

  1. Democrats in Congress believe they are carrying salvation to the powerless masses in Alabama who are held in slavery by state Republicans.  Democracy and the "will of the people as expressed at the ballot box" are only sacred when it's our team in charge.
  2. Folks in Congress did not spend a career fighting to win a seat in that body only to find that there is something that would be best done by state legislators.  They didn't work to get promoted to have LESS power (though that is exactly how the country was originally designed).  This is the enemy of all Federalist notions
  3. The fact that a $15 minimum wage will devastate many rural areas, mostly Republican bastions, may be a feature and not a bug for some.  Think of the $15 minimum wage as Democratic revenge at the heart of red states for the Trump reductions of SALT deductions in the tax code (which were a dagger at the blue state model).

I Am Still Here, Just Busy

I am completing what is for me a large and complicated acquisition/merger that we have been working on all through 2020.  I fiddle around with Twitter once in a while but have not had time for long-form blogging.  But I will be back, I just need a few more weeks away.

"Work From Home & Socialize via Zoom" Is the Height of Elite Priviledge

I have been pointing out since April that stay at home orders tend to be supported by folks who either a) are rich with lots of savings; b) have professional jobs and can work from home (eg journalists) or c) get paid even if they don't work (eg government workers and teachers).  A lot of folks on the Left that lecture the rest of us constantly on privilege have shown zero self-awareness in advocating for the most privilege-biased government order in my memory.

So it should not be shocking that the results of the COVID business lockdowns have disproportionately hit lower income and less educated workers.  From the WSJ:

A two-track recovery is emerging from the country’s pandemic-driven economic contraction. Some workers, companies and regions show signs of coming out fine or even stronger. The rest are mired in a deep decline with an uncertain path ahead.

Just months ago, economists were predicting a V-shaped recovery—a rapid rebound from a steep fall—or a U-shaped path—a prolonged downturn before healing began.

What has developed is more like a K. On the upper arm of the K are well-educated and well-off people, businesses tied to the digital economy or supplying domestic necessities, and regions such as tech-forward Western cities. By and large, they are prospering.

On the bottom arm are lower-wage workers with fewer credentials, old-line businesses and regions tied to tourism and public gatherings. They can expect to bear years-long scars from the crisis.

The divergence helps explain the striking disconnect of a stock market and household wealth near record highs, while lines stretch at food banks and applications for jobless benefits continue to grow.

These charts are telling:

     

One other observation -- I think the second part of the statement in the title to this post is important as well.  I am not an expert on ethnic and cultural variations and practices.  However, I have been lectured by the woke that cultural differences are important, including a memorable twitter argument about whether expecting workers to show up on time is racist.  It has been my observation that different cultures satisfy the human need for socialization differently.  In my world, you often see white families in parks gathered in small nuclear families, while other cultures might have 25-30 person extended multi-generational families with them.

I wish I had more background on this topic, but it is my hypothesis that the government's lockdown orders may well disproportionately harm ethnic minorities.  In general, we Westerners are more used to getting by individually or in small nuclear family groups (though remember that even for whites, solitary confinement is generally the ultimate societal punishment short of the death penalty).  I think there is a good chance other cultures more used to relying on larger networks and multi-generational extended families are having a particularly hard time with the order to limit social contact to zoom.

Coyoteblog Finally Has SSL/HTTPS

After a few false starts, and prodding from several readers, I finally got this creaky 16-year-old blog (yes, started in October of 2004) onto SSL and HTTPS.  Hopefully you will not get security and safety warnings any more and will see that comforting little lock symbol by the URL.

There was one advantage to waiting so long -- the process is now ridiculously easy.  Cpanel will provide free auto-SSL certificates for all the domains on my server, but I went ahead a splurged for a paid key and that can be done entirely automatically now too.  Then, I installed a little WordPress plugin called "really simple ssl" which was in fact just that -- installed the plugin, pressed a button, and all the work was done.   It detected my certificate and did all the setup and without doing another thing, we were good to go.  It doesn't seem to have blown anything up like comments, but email me or DM me on Twitter if you see a problem.

A Brief Primer on Corporate Accounting and Taxes

From reading various comments on Trump's taxes, it is clear to me that many people do not understand even the basics of corporate accounting and taxes.  I sometimes forget, as the owner of a medium-size business, that everyone does not live and breath this stuff.  The following is meant to illustrate a few concepts I see the most confusion about.  This article is not written to be exculpatory of Trump's tax or business practices -- in fact I did not even read the NY Times article because at this time of year the last thing I need to do is spend time burying myself in someone else's taxes.

We are going to take a very simple example from my world.  Let's imagine my startup company has a piece of land we acquired years and years ago.  Suddenly in the pandemic we have an idea -- we are going to buy 50 Airstream trailers (as if we could actually obtain them in this market, but ignore that) and put them on our land and rent them out.  Let's say in the first year we bought them all on January 1 for $5 million using $5 million of bank debt (banks actually are happy to finance this sort of asset) and they ended up generating a net income (after expenses and interest) of $1 million.

So how do we account for the year?  We know we have a million dollars of operating income, but what do we do about the $5 million in capital spending on the trailers?  By GAAP accounting, capital investments of this sort that have a long service life are not expensed immediately.  They are depreciated over the life of the asset. So if we say these trailers have a 20 year life, we would expense 1/20th or 5% of their cost each year.  For our $5 million investment, that is $250,000 a year in depreciation.  In this case our final income statement for  the year would show $1 million in operating income less $250,000 in depreciation expense for a net income of $750,000.  One might expect that is what we report to the IRS and pay taxes on.

But we live in a more complicated world.  Our Congress loves to express its preferences for how business should operate in the form of changes to the tax code.  For example, Congress prefers we buy electric vehicles and solar panels, so it gives special tax credits for these.  Relevant to our example, Congress strongly prefers that companies reinvest their profits in new capital spending.  It provides incentives for this by allowing accelerated depreciation for capital investment in certain types of assets and equipment.  We can argue about the tax code -- I have not checked this particular example with my CPA -- but it is very likely that current law would allow us to depreciate our $5 million investment in trailers not in 20 years but in one.

So how does this change our example?  Well suddenly, in year one, we still have a million dollars in operating income but $5 million (100%) depreciation expense for taxes.  This means we have a $4 million loss we will report to the IRS.  This loss is carried over and used as a credit in later years.  If we continue to make a million dollars in operating profit a year, this means we will go five years without paying taxes.  The owners, for example if it is an S-corp or LLC with no double taxation of distributions, might be pulling hundreds of thousands of dollars out of the company every year, living the dream, while neither they nor the corporation pay any taxes.

This is what everyone is calling a "loophole" but I think that is a misnomer.  "Loophole" implies people are taking advantage of some drafting error or unanticipated use of an IRS rule.  That happens all the time, but our example is not an unanticipated use.  In our example we are using IRS rules exactly as Congress intended -- the company is being rewarded by Congress for the investment it made in new equipment with a multi-year tax deferral.

Note that this is only a deferral.  Once the five years is up, the company will pay its full taxes on the million dollars (unless it makes more investments with the profits which would allow it to defer more taxes).  Even if the company keeps investing and keeps getting accelerated depreciation, eventually when it sells the business it will have a large tax bill in the form either of depreciation recapture or goodwill in the business.

There are of course many other tax dodges that range from legal but ugly to outright fraudulent.  I don't know what Trump was doing.  But I wanted to show an example of how it is perfectly possible to legally (and I suppose socially responsibly) pay no taxes while generating a lot of income.  The key in this case is to reinvest profits, a behavior Congress has chosen to reward.

Why The Incentives Are Stacked to Overreact to COVID

Long-time readers will know that I am interested, to the point of obsession, in incentives.   One should always be suspicious of bad outcomes described as irrational or the nefarious actions of bad people.  In both cases, if one looks carefully, the outcomes usually turn out to be the perfectly rational outcomes of perfectly normal people responding to bad incentives, assumptions, and/or information.

I personally believe the COVID response in this country (and others) is exaggerated and counter-productive.  But for this post I am not going to ask you to agree or disagree with my skepticism.  Instead, I am going to focus on incentives, and show how media, academia, and government all have incentives, assumptions, and information asymmetries that push them towards exaggerated COVID responses.

The following list is not necessarily complete and the items here are not independent of each other.  Having completed this post, they now look a little random but this is sometimes the way I clarify my thinking on things -- to write and publish and get feedback and maybe be more structured the next time.

Incentives

  • Political incentives to "do something" about the issue of the moment.  We see this after every high-profile "bad thing" that happens.  There is immense pressure on politicians to do something -- pass some law (often with a person's name in it) or, if the legislative process is perceived as to slow, fire off some executive order.  In the heat of battle these actions are often taken without regard to efficacy, cost, or unintended consequences.  In the heat of these frenzies, a multi-dimensional decision is magically redefined as having only one dimension that matters.  Anyone who focuses on costs or unintended consequences or even efficacy problems of the proposed solution are cast as heartless and uncaring, potentially even evil and nefarious.
  • Politicians always legislate to first-order metrics, never second-order metrics.  Politicians know that the public and the media is looking at their country or state every day and publishing the number of COVID cases and deaths.  No one is publishing the number of additional suicides, or cancer deaths from people too scared to go to the hospital, or increased starvation and disease deaths in poorer countries as food prices rise and aid from rich countries dries up. These second order effects are real but hard to prove or measure.  They are what we call "unintended consequences" but should instead call "ignored but entirely predictable consequences."
  • Political incentives to expand power.  Every politician in every branch of government is always working to expand their own power (this is not unique to government, you can say the same thing of executives and functional departments in many large corporations).  When the public is scared and panicky, politicians are able to break through past limits and norms and establish new precedents.  The best example of this is that governments in Western democracies all expanded their power during the 20th century wars, expansions that largely stuck and were not reversed in peace time (except for a few fortunate examples like locking up whole ethnic groups in internment camps).  When the public is scared, power is to be had and it is the unusual politician that will say in such a situation that the right solution is to do nothing.
  • Political incentives not to admit error.  Politicians simply cannot admit error.  To some extent this is due to the personality and ego traits that the political process sorts for, and to some extent this is based on day to day political incentives.  But think about any President in your lifetime and try to think of even the smallest issue on which they said something like "I tried X, over time X has not worked and now I realize we should do something other than X."  We would actually hope this is the kind of person we have leading the country, but simultaneously our own behaviors don't allow it.  Presidents frequently admit past errors of others (eg, a current President saying the war in Afghanistan was a mistake) but they can never turn against any policy of their own.  So if, say, lockdowns were the response to wave 1 of the virus, lockdowns are damn well going to be the response in successive waves.  Because not doing so is essentially an admission that it was a mistake the first time.
  • If it bleeds, it leads.  This one takes little explanation, because I think most of us understand the strong incentives of news organizations to create and amplify emergencies to increase the attention and viewership they get.  Cable news had a huge spike in viewership after 9/11 and again in the early days of the Gulf War, and they are constantly jonesing for the same sort of hit.  Remember that the media has accurately called 11 of the last 2 pandemics, earlier predicting disaster from swine flu (dating myself here), bird flu, ebola, zika, mad cow, and probably several I can't remember.
  • Reference to personal circumstances when making national trade-offs.  I would say that the number 1 thing that drives me crazy about statists on the Left and Right and which makes me a libertarian is the tendency to impose solutions to tradeoffs on everyone in the country based on how you would personally make decisions for yourself.   If one-size-fits-all public policy decisions are going to be made, I want them to be made in a way that suits me.  For example, a politician in Chicago might say they would never feel comfortable letting thier kids walk to school on their own, so no parent should be allowed to let their kids walk to school alone.  Applying this to COVID, we know there is a large contingent in media, academia, and politics who will say that is is wrong to consider economic damage when evaluating COVID lockdowns.  What do all these folks have in common who tend to be advocating strongest for lockdowns?  They still have their jobs, are still getting paid, can still be productive over the Internet, and are comfortable getting their social interaction over zoom.  Note that these are the same folks that constantly tell us to check our privilege, but then tell us to ignore the economic hardships of lockdowns that they are too privileged to experience.  Only by the most extreme action do the voices of the less privileged who are suffering the most under lock-downs get heard (and even then, like the hair dresser in TX and later in SF, they get mocked by the elite).

Assumptions

  • Trump is so bad that no price is too high to get rid of him.  I have told folks for years that every generation thinks their current era is uniquely politically toxic.  I don't think we have yet risen even to 1968 levels of discord, but one exception is the hatred for Trump that exists in some quarters.  I personally have never seen anything like it.  The nadir was when Trump mentioned that HCQ looked like a promising COVID treatment and the governors of MI and NV immediately banned HCQ without evidence to make Trump look bad (a desire I assume stems from a perception that Tump is so dangerous and represents such an existential threat that any action to undermine him or make his re-election less likely should be pursued).  A prominent study was essentially made up out of whole cloth to prove HCQ was dangerous and thus Trump bad, a conclusion that should have made zero sense to everyone as HCQ is used by millions every day as a malaria prophylactic.   I find Trump distasteful but trust the American system to limit the damage of tyrants, but many are working from a very different assumption.
  • Humans have conquered nature.  I will confess to having an almost Victorian confidence in progress, but even I accept that sometimes nature throws things at us that are a) not our fault and b) we can't yet stop.  But throughout our COVID responses there seems to be, particularly in Western nations, an assumption that we should be able to prevent death from this thing -- ie that any death should be judged as a failure of our response.  But diseases still kill people.  Last year communicable diseases killed at least 15 million people in the world.  And many of our Western deaths have been among the very old in care facilities where the average life expectancy pre-COVID was numbered in months.

Information

  • Good cause skewing of data, or "fake but accurate."  Decades ago, there was a stat that there were a million homeless people in the US.  Everyone repeated it as gospel.  Someone tracked it down, and eventually discovered that it was just made up by a homeless advocate who just picked a round large number.  When this was presented to a well-respected reporter on NPR, that the "fact" she was quoting was no such thing, she just shrugged.  She said homelessness was clearly a problem and if the number she was quoting (as a reporter!) was exaggerated, then it was in the good cause of increasing attention to homelessness.  This was the first example I can remember of something that was considered fake but accurate, but there have been many more since.   During COVID, this has caused outlets like Goggle and Facebook to actually censor opinions the tend to be skeptical of the severity of the disease or efficacy of mitigation steps like lockdowns.  They claim to be doing so for a good cause, believing it is better to err on the side of having the public too cautious rather than insufficiently cautious.
  • Asymmetric public exposure to experts.  Throughout COVID we have been told that the experts all say X, that there is a consensus for X.  And sure enough, we mostly only hear X on the news.  But anyone in academia can tell you that this sort of homogeneity of opinion can't possibly be true.  As in other science, on issues such as mask or lockdown effectiveness or herd immunity thresholds, academics hold a wide range of opinions and there are a wide range of findings in the literature.  But this heterodoxy in opinions never really gets full public view due to media incentives, political incentives, and good cause skewing.  The most extreme voices on the end of the academic scale that support the media's and politicians' desire to create fear are selected for public exposure.  Then, these selected academics are retroactively crafted into leading experts.  Any of you folks every heard of Anthony Fauci before this started?  How about whatever expert your governor is using?  No, you had not -- these are prominent people in their field but just one of ten or twenty equally qualified persons who could have been selected and presented as experts.  They are then retroactively reinvented not as one of ten folks with a wide variety of opinions but as the one leading true unassailable expert.
  • Social media amplification of tail-of-the-distribution events.  One of the features of social media independent of these incentives is that it tends to spread and amplify tail of the distribution events/risks.  The problem is that there seems to be two personality types in people -- one, and I would include myself in this -- who are knee-jerk skeptical of such stories.  Did it really happen?  Did A really cause B?  Is this really anything more than one bizarre outlier?  But there is a second type of person, and I would say that they are WAY more prevalent than I would have believed a year ago, who sees a story that someone's gynecologist's hairdresser's uncle claimed to have had heart issues after getting COVID and suddenly "everyone who gets COVID has permanent heart damage!"  Even before the Internet, Americans were very bad at parsing relative risks and now they just seem terrible at it.