Biden Proposes Paying More People Not to Worki

I sit on a lot of boards of trade groups and business roundtables of various sorts.  And the #1 exclusive topic -- seriously, we talk about nothing else right now -- is the inability to hire people because the government is still paying millions or people to not work.  In restaurants, campgrounds, stores, manufacturers and scores of other industries, companies are ready right now to put more people to work but cannot because the government is paying people too much money to stay home and they can't get the workers they need.  Bounties, higher salaries, and incentives are all futile when candidate after candidate says that they won't look for work until the government payments stop.

So of course, the Biden Administration is proposing to pay more people not to work:

According to a White House fact sheet, the AFP would create a national comprehensive paid family and medical leave program, funded through tax increases, and paying workers up to $4,000 a month. Under that cap, it would replace a minimum of two-thirds of average weekly wages, rising to 80 percent for the lowest-wage workers.

The proposal does not define "lowest-wage workers," however, and left out details about whether eligibility would differ from current FMLA. Those specifics will be addressed when Congress drafts an actual bill.

Biden proposed that the program be phased in over a 10-year period, guaranteeing 12 weeks of paid parental, family illness, personal illness or safety-related leave by year 10. Workers would receive three days of bereavement leave per year starting in year one.

This is one of those bait and switch programs that are sold on the most extreme forms of eligibility -- ie they talk about leave to help a dying child but in the FMLA there are so many random and poorly defined leave rules that pretty much everyone qualifies.  We had a woman in California who worked for us that liked the job but hated the busy summer season and so scheduled elective surgery every year around Memorial Day to get out of working the summer -- and that was when it was unpaid!  I can't even imagine the abuse of a leave program paying up to $48,000 a year for not working.

Why Most of the Pro-Mask Science Quoted in the Media is Absurd

I have been close to writing this post off and on for almost a full year.  Starting back in the early days of COVID when the media used graphics about droplet spray patterns with and without masks as "proof" that masks work to slow the spread of COVID.

I was going to write about how dumb this was, but I assumed that other scientific voices would soon skewer these studies and thus it would be a waste of my time.  But lo and behold, while many careful scientific minds did recognize the flaws in these studies, the large news and social media companies have been pretty diligent about preventing any heterodox opinions on masks from getting wide circulation.

And so it stood until the other day when someone once again threw these droplet studies at me as proof that masks reduce the spread of seasonal viruses like COVID.  OK, here is the problem:

It is best to think first in terms of an analogy.  You have a car and want to prove that at any time of day, you could drive 60 miles across Los Angeles in an hour.  So to "prove" that, you take the car our to a test track and show that yes indeed, your car can sustain 60 miles an hour for extended periods of time.

Hopefully the flaws with this are obvious.  Proving a car can go 60 miles an hour is not the same as proving a car can drive 60 miles in an hour in real world conditions, particularly in LA at, say, 5 in the afternoon.

In the same way, showing that a clean, new mask can stop the projection of droplets of liquid does not in any way demonstrate that they are effective in limiting the spread of a virus in real world conditions.  Others can probably add more to the logic problems here, but just a few are:

  • Are large droplets even primarily responsible for the spread of COVID  (remember, the COVID virus is WAY smaller than the holes in the weave of most masks)?
  • What happens when the mask is worn for a while and becomes saturated from the virus of an infected person.  Aren't they now just blowing out all day through a film of COVID, like a kid blowing bubbles with a bubble wand?
  • Are masks efficacious when almost none of them are sealed to the user's face?
  • Is there any evidence of transmission in certain environments, like outdoors on a sidewalk, with our without a mask?

The fact is that the sum of studies before 2020 on the efficacy of public mask wearing to limit the spread of seasonal viruses were equivocal as best.  No one thought they did much good.  People will respond, "well, you wouldn't want your doctor to do surgery on you without a mask" but in fact even the evidence on post-operative infection with and without surgeon's mask use is equivocal  (it is also an absurd analogy as I don't think anyone in Walmart will be hovering over an open incision in my body for 4 hours).   And certainly most (all?) of the quality studies since COVID on masks and virus spread have shown little or no mask effectiveness (there have been a few studies that have purported to show mask effectiveness but they had cherry-picked endpoints that compared one geography outside of its COVID season with another that was in it -- see more here).

Postscript:  I am in Knoxville for a day and had two different experiences.  Last night at the Lonesome Dove restaurant was the first time I have been in a restaurant where no one, not even the servers, wore masks.   A small return to sanity.  But then the next morning I went to an indie books store near market square that had a couple of people browsing and the proprietor would not let us in because they were over their COVID capacity limit (as I said to my wife, when your business model is heading for a cliff it is probably best not to stomp on the accelerator).

Postscript#2:  I know others have observed this but it is amazing how many of the people who do where masks when they are not required are under 25 -- and essentially immune from any major consequences.  Is this virtue-signaling?  A gesture of solidarity? Fear of authority?  Scientific cluelessness?  It is a very strange time when the young are mindlessly following authority and the older folks are skeptical.   The analogies I can think of is the German youth movement pre-WWI who were big supporters of war as a romantic endeavor and the young Chinese of the cultural revolution.

Update #3:  As a by the way, in case you every get to Knoxville and are looking for a nice place to stay in the downtown or university area, the Tennessean is the place to go.  Only slightly more expensive than other hotels nearby but has really top quality service and rooms  -- Four Seasons level IMO at a third the price.

Virological Calvinism

It is always dangerous when a non-religious person tries to make a statement about religious belief, especially when we get to complicated arguments about double predestination and supralapsarianism.  But for our limited purposes in this post, in Calvinism salvation and damnation are pre-ordained by God at the beginning of time --thus faith and good works have no bearing on being saved or damned.

I have come to believe that this is largely true of COVID-19, ie that the actions of man (at least as far as non-pharmaceutical interventions are concerned) have little or nothing to do with case rates and virus spread in any particular region.  Different geographies have different seasons for the virus, and trying to attribute low case rates or high case rates to the presence or lack of government interventions / restrictions is futile.  You can see that as location after location that was praised or damned at some point for its supposed good or bad handling of the virus have since seen opposite results.

There are a few exceptions to this, but very few.   On the positive side, the accelerated vaccine development programs were a near miracle, producing multiple viable vaccines WAY faster than I ever thought possible.  On the negative side, ordering infected people into long-term care facilities was a disaster.  But beyond these few exceptions, most of everything else didn't do squat.  The great regression analysis someone does someday on virus transmission rates across geographies is going to have seasonal variables, demographics, and urbanization with most of the explanatory power.

Quote of the Day on US Media Practices

From Glen Greenwald

Twice in the last year, I have written about this bizarre practice where media outlets purport to “independently confirm” one another's false stories by doing nothing more than going to the same anonymous sources who whisper to them the same things while providing no evidence. Yet they use this phrase “independent confirmation” to purposely imply that they obtained separate evidence corroborating the truth of the original story

This awful practice, which I see all the time, let's one anonymous source create a fictional narrative that dominates news cycles.

If you are not reading Glen Greenwald, you should.  When I recommend that a Marxist should be on your reading list, take that seriously.  If you don't want to pay, his work generally appears free a couple of days later on Zero Hedge and other places.  Today's quote is from today's email blast on yet another Russian conspiracy theory, crafted apparently to stop the US's overdue exit from Afghanistan, which now appears to have been almost completely fabricated.

2020 Should Have Been The Year We Demanded Reform of the FDA and CDC, But We Didn't. Now It's Come Back to Bite Us.

Many of the early failings in COVID response can be laid right at the doorstep of the CDC and FDA.

Shortages of testing?  The FDA refused to approve an tests except those developed at the CDC, and then the CDC tests failed.  Later, the FDA was really slow and conservative in approving new test approaches (eg home testing).

Shortages of PPE?  We learned that PPE manufacturers were all heavily regulated by the FDA, and FDA rules prevented quick ramp-ups, while liability rules made folks like 3M reluctant to shift N95 masks from non-medical to medical markets.

Slow vaccine rollout?  The FDA was its usual conservative self in approving vaccines, and refused to give any credit to vaccines approved by other western nations.  THEY had to approve it too.

First doses first?  No way, the CDC and FDA would not even consider it.   The conservative approach was to insist the vaccines be used exactly as originally tested, despite testing on the Pfizer vaccine showing that 1 dose of it was over 80% effective.  Now we see the world leader in reducing cases is the UK, which is the one country that did first doses first.

In a sane world, the CDC and FDA would have gotten hammered for what could be described as following peacetime rules in during wartime.  Add to that their ever-shifting and contradictory guidance, and guidance on NPI's that went against the sum of scientific research that had been published pre-2020, and you should have expected a LOT of media scrutiny of them in 202o.   Instead there was virtually none, and if anything the media fetishized and hero-worshipped these agencies.  Why?

As usual, the answer is Trump.  By 2020 the media was in the habit of blaming everything on Trump.  If COVID tests were in short supply, it must be Trump's fault.  No further scrutiny was needed.  In fact, no further scrutiny was wanted, because no explanation excerpt for "Trump's fault" was wanted.  Granted Trump helped them to some extent by his usual habit of off-the-cuff stupid statements.  But the media went ever further -- they wanted an anti-pole to Trump, and these agencies and morons like Dr. Fauci were elevated to sainthood not because they did anything right but because they could be portrayed as not-Trump.

For the media, whatever the FDA or CDC said represented scientific consensus.  Which is a horrible bastardization of science.  The FDA and CDC are not "science" and scientific "consensus", if such a thing is even real, is based on a quasi-antagonistic process of challenge and response between differing hypotheses (a process by the way the media actually undermined by de-platforming one side of many of the COVID-related debates) and not dictats by government agencies.  The FDA and CDC are populated by politicians and government bureaucrats who happen to have scientific degrees.  They are subject to all the same influences and bad incentives as any other political organization.  For example, in the government there are very different risk profiles between action and inaction.  Essentially, bureaucrats are seldom held accountable for deaths and harm from inaction -- if people die because they are slow to approve a new drug or procedure, no one puts that on them.  But they try to avoid at all costs approving something that eventually hurts someone, even if that harm is far less than the benefits of what they approved.  But instead of making all this clear, the media granted them the secular form of Papal infallibility.

So now we arrive at April 2021, and the FDA shut down the use of the J&J vaccine because it has about a 1 in a million chance of causing blood clots and a one in 6 million chance of causing a fatality.  People seem suddenly surprised that the FDA would do such a thing that is obviously so irrational (the number of lives saved by the vaccine is  -- by everyone's estimate -- orders of magnitude larger that those who have died from this side effect that may not actually even be due to the vaccine).

What is surprising to me is that anyone is surprised.  The FDA has ALWAYS acted this way.  Libertarians have called them out of this for years (thus, for example, libertarian-sponsored right to try laws).  In particular, failure after failure of COVID response in 2020 can be laid right at the FDA's doorstep, but we were just having too much fun demonizing Trump to actually look for root causes.  Well, now our inattention has come back to bite us with this absurd FDA decision.  The only good thing that can come from it is the potential that we might finally consider some reforms.

Prediction: Feds Will Be About The Last Government Entity To Drop Their Mask Mandate

Joe Biden is kind of stuck on COVID.  He campaigned on all the things Trump did wrong in his COVID response, but the only policy step of note that I can see that Biden has done differently is to issue a mask mandate for all federal property where Trump eschewed making NPI mandates at the Federal level, preferring to leave it to state and local governments based on their local conditions.  If this is really the case, expect Biden to be about the last man standing on government mask mandates, at least in the US.  My guess is that he will use continued cases or low vaccine rates in some state as an excuse to say that he can't drop the mandate until everyone in the US is ready  (forgetting how insane this is particularly when a more logical Federalist solution exists for the problem).

Biden is trying to claim credit for vaccination rates but it is hard to think of anything he has actually done to boost these rates since most all vaccines are administered by local folks and the vaccines were developed and funded on Trump's watch.  The only major decision Biden has made, which I actually think was a setback, was to declare that the US would not take a first doses first strategy used so successfully in the UK.  Biden has declared a goal of 100 vaccines in 100 days, but this is pretty much meaningless, the equivalent of a random dude running to the front of a parade and claim to be leading it.  Someone in his shop merely took a chart and of vaccination rates and projected it forward and determined about 100 million looked like they would be done in 100 days and so adopted this as a goal, hoping to retroactively convince people they caused this rather than just predicted it.  I would love someone in the press to ask Biden to name three things his Administration did that measurably accelerated the vaccination pace.

Like many, I find Trump irritating and distasteful and I have trouble saying nice things about him but he got a range of vaccines funded and got the US first in line for doses by pre-paying.  Its hard to think of anyone else who did more to help the crisis.  This helps me forget things like the botched testing development, which was really the FDA's and the CDC's fault but a different leader might have kicked those agencies out of their obstinate blocking role and into a more productive mode.

UPDATE:  I will add that the recent CDC / FDA decision to stop the J&J vaccine due to a 1 in a million non-fatal side effect seems like a terrible decision.  Again, possibly not Biden's decision, but like my criticism of Trump and testing, Biden could exercise some leadership here.  This is the price for fetishizing the CDC and FDA as all-knowing consensus voices of "science" that are not to be doubted, even to the point of having heterodox youtube videos taken down.  Because 1) These guys like Fauci are not scientists per se, but government bureaucrats with science degrees.  And as I have written many many times, government employees have incentives that lead to high risk aversion for acts of commission and low risk aversion for acts of omission.  Which means they put much higher weight on a death from a very easy to count and identify side effect that they could have stopped by stopping the vaccine than they do on deaths that are impossible to count or to see that were caused by the vaccine delay.  And 2) the idea of "scientific consensus" is a chimera and a term only used by non-scientists and a small group of government scientists that want to wield their position as a club to exercise power.  Seriously, how does such a consensus even exist if one side never was allowed to debate?  This is consensus as defined by Stalin or Mao.

We Knew About the Disproportionate Danger of COVID to the Elderly From The Very Beginning

In some recent debates over the Great Barrington Declaration, critics of that proposal argued that we didn't know that COVID was only a relatively small threat to healthy people under 65.  But we did know, as early as April or at worst May.  I know I was writing about it.  Just think of all the articles you have read with the theme of "everyone, not just old people, need to be terrified of COVID" and then look at this:

People over 65 make up only 18% of the UK population but clearly accounted for 90+% of the deaths.

Here is the calculus as I see it:  I was 58 when this all started.  Let's assume I have 20 good years.  Hiding in my home and not doing the things I enjoy for a whole year, as preached by Fauci and company, would have wasted 5% of my remaining life.  Instead, by ignoring them and going about my business, I was taking perhaps a 1/2000 chance of dying to the disease or 0.05% (I actually think given my health and weight that this is exaggerated).  These two numbers are not even close.  They are not one but two full orders of magnitude apart.  When presented with these numbers, and given my preferences, it would have been wildly irrational (or demonstrated extreme risk aversion) for me to follow the advice and dictats of the coronabros.

Well, That Was Fast. UK COVID Strain Likely NOT More Deadly

In my post about the Sunday NY Times article on the B.1.1.7 COVID variant, I expressed skepticism that it really was substantially more deadly than other variants.  While this is possible, on average we expect viruses to mutate in a way that they are more communicable but less deadly (there are no rewards in the parasite world for killing the host).

Specifically I said:

My personal bet is that we will see a story buried on page 34 in August saying that original relative death studies for this [B.1.1.7] 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.

Well, I was wrong.  Rather than in August, the predicted story was buried in the Wall Street Journal one day later

Clear evidence has emerged that B.1.1.7 transmits more easily than earlier variants, which helped enable its rapid spread. Whether the variant is associated with more severe disease and death has been less certain, however...

In the new study, the researchers took samples collected in early November from 341 Covid-19 patients admitted to University College London Hospitals or North Middlesex University Hospital. The researchers sequenced genetic material from the samples to determine the viral variant that caused the infection, used the test results to estimate how much virus the patients harbored and then compared the two groups.

Nearly 60% of the Covid-19 patients had an infection caused by the B.1.1.7 variant, and patients hospitalized with B.1.1.7 were younger, had fewer health conditions and more often received an oxygen mask than those admitted with other variants, the study found.

Yet the researchers didn’t find that those with a B.1.1.7 infection had more severe disease outcomes such as needing ventilation or dying, after accounting for other factors such as age, ethnicity and underlying conditions.

I will be more careful than the NY Times, who cherry-picked one study result on the far end of the scale of results to date, and acknowledge that the study results -- all based on small samples and uncontrolled population groups -- are mixed.  But evidence both of prior meta-studies as well as this new one give us little reason to believe that this variant is substantially more deadly.

Variant Terrorism and the New York Times

Update:  Just one day after this story, the Lancet published a study showing that B.1.1.7 not likely more deadly than other variants.  As predicted below.

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.