Thursday, February 26, 2009

Koan of the Week

Master Li Kim Grebnesi was scanning his ID at the gym. "How are you today? " he asked the guy at the counter.
"Tip top," replied the Gym Guy.
"Tip Top? That's pretty good."
"Nowhere to go but up!"
Master Li Kim conceded, "You're the Master now."

Gym Guy's Commentary: The sky's the limit.

Master Li Kim's Haiku:

A summer blue sky
Pulls up from a rock strewn peak.
No need to look down.

Wednesday, February 25, 2009

Government on Both Sides

As always, the President gave a good speech last night. He did what good leaders do in a time of crisis – acknowledge its severity, while assuring people that together, they will prevail.

The specifics, however, were a catalog of high-priced proposals that all contradict each other.

He said that the cause of the economic crisis is too much consumer debt made possible by lax regulation, and then announced the creation of "a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small-business loans."

He praised the interstate highway system as an example of the great things that government can accomplish – and spoke of the need to "confront at last the price of our dependence on oil", the oil that fuels the vehicles driving on those highways.

He lamented "the cost of health care eats up more and more of our savings each year," and then took credit for "a law to provide and protect health insurance for 11 million American children", a measure that the Law of Demand tells us will raise the cost of health care.

He thanked Congress for its swift action in passing the American Recovery and Reinvestment Act that generated $800 billion in new deficit spending, and promised to "do what it takes to bring this deficit down".

Milton Friedman once pointed out "there is hardly an issue on which government is not on both sides. For example, in one massive building in Washington some government employees are working full-time trying to devise and implement plans to spend our money to discourage us from smoking cigarettes. In another massive building, perhaps miles away from the first, other employees, equally dedicated, equally hard-working, are working full-time spending our money to subsidize farmers to grow tobacco…The situation would be ludicrous if it were not so serious. While many of these effects cancel out, their costs do not." (Free to Choose, chapter 10).

Thirty years after Professor Friedman wrote that, government is still on both sides of every issue. The effects of tightening banking regulations while funding consumer debt will cancel each other out; the costs will not. The effects of rebuilding roads and bridges while capping carbon emissions will cancel each other out, the costs will not. The effects of "reforming" health care while expanding access will cancel each other out, the costs will not. The effects of providing billions in Keynesian stimulus to the economy while bringing the deficit down will cancel each other out, the costs…fair enough, in this case the costs will cancel each other out too.

Contradictions cannot work. The President didn't even try to make arguments that they can; he just asserted it. The Logic Critic, therefore, gives President Obama…

Coherent structure, but relies on assertion, emotion, or faith rather than genuine argument.1 Blade - Not even an argument.

Monday, February 23, 2009

Outliers

Fans of The Tipping Point and Blink can celebrate. Malcom Gladwell published a new book. In his latest opus, Outliers, Mr. Gladwell sets out to "unravel the logic behind who succeeds and who doesn't". He asks what separates Bill Gates, Robert Oppenheimer, and Wayne Gretsky from the rest of us? Like all his works, Outliers is readable and thought provoking, with a good mix of anecdotes and statistics. But at the end, the logic of who succeeds and who doesn't is still raveled.

The hypothesis of Outliers is that successful people are born to certain advantages that less successful people lack. Many of the advantages that Gladwell uncovers in his case studies are surprising. Among them: being born between January and March, being born in the 1830's, being born in the early 1930's, being born in the mid-1950's, having a job that requires lots of hours, coming from a privileged background, coming from a middle class background, growing up in a neighborhood close to universities or technology companies, knowing how to get along with people, being the victim of anti-Semitism (can this really be called an "advantage"?), having ancestors who traded garments, and having ancestors who grew rice. The book is worth reading, just to learn how these things are connected to worldly achievement.

The trouble is that millions of people share these advantages but never triumph over mediocrity. They grow up next door to Bill Gates but don't start Microsoft. They are as smart as charming as Robert Oppenheimer but don't invent the atomic bomb. Mr. Gladwell never shows why these people, who also got a leg up, never hit the big time. In other words, he confuses necessary with sufficient cause. The Logic Critic gives Malcom Gladwell…

Genuine and structured reasoning, but with fallacies or factual errors in main argument.2 Blades - Wrong.

Tuesday, February 17, 2009

Remember the War on Terror?

The Mainstream Media's cheerleading for Obama upon the signing of the Economic Stagnation Bill has overshadowed another news story – a major setback in the War on Terror. Once again, where the MSM falls down, the Blogosphere steps in.

Yesterday the government of Pakistan announced it signed a truce with the Taliban. In exchange for a cease-fire, the government recognizes Islamic Sharia law, as interpreted by the Taliban, in the Malakand Division, an area in Northwest Pakistan near the Afghan border.

This is a huge victory for radical Islam. Islamabad is ceding rule of a portion of its territory to terrorists. While the cease-fire lasts, it provides the Taliban with a base of operations for the activities for which it was expelled from Afghanistan: forcing Sharia on the inhabitants, training terrorists for operations against the United States and its allies, destroying the cultural relics of other religions, and oppressing women, including banning the education of girls. One refugee from the region said, "They are killing people, they are beheading people, there is no accounting for what they are doing…For God's sake, in the West you must realize this: no education for women. You are going to destroy an entire generation."

As of last week, 576 American soldiers, all volunteers, had lost their lives in the Afghanistan region. They did not give this last full measure of devotion so that the Taliban, expelled from Afghanistan, could pick up where they left off in Pakistan. This action by the Government of Pakistan calls for the strongest possible response from the United States. The Federation of American Scientists estimates that the U.S. is planning some $1.2 billion in overt military and economic aid to Pakistan in fiscal 2009. We need to make it clear that continued aid depends on an aggressive effort by Islamabad to dislodge the Taliban from its Northwest haven.

Monday, February 16, 2009

Four Ideas to Blame for the Financial Crisis

Last week, Time.com published a list of "25 People to Blame for the Financial Crisis" (http://www.time.com/time/specials/packages/article/0,28804,1877351_1878509_1878508,00.html). I won't say much about the choices other than to note the absence of anyone currently in a position of power in the American Government. Certainly there are plenty of candidates (Barney Frank, Chris Dodd). So much for the press guarding our liberties by standing up to public officials.

The reason I won't say much about this list is I think it’s the wrong list to make. People act according the ideas that they believe. If you want to know the root cause of what people do, look at their ideas. You don't need 25 of them; four is enough. Ideas are not only more fundamental. They're more economical.

So here are Four Ideas to Blame for the Financial Crisis:

1. Individuals should be protected from the consequences of their actions. The implied Federal guarantee of loans owned by Fannie Mae and Freddie Mac contributed to the housing bubble by encouraging investors to place billions of dollars in risky securities backed by these enterprises. Economists call this "moral hazard".

2. This is the worst economy since the Great Depression. As you can see from two leading indicators of economic health, unemployment rate and GDP growth, this is not the worst economy since the Great Depression. In the past fifty years, there were many recessions more severe than this one:

Unemployment rate: January 2009 7.6%, June 1992 7.8%, November 1982 10.8%, May 1975 9.0%, October 1949 7.9% (source MiseryIndex.com).
Seasonally adjusted annual rate of change of GDP based on chained 2000 dollars: 2008 QIV –3.8%, 1980 QII –7.8%, 1975 QI –4.7%, 1958 QI –10.4%, 1949 QI –5.8% (source: BEA).

Nevertheless, the constant repetition of the "worst economy" falsehood by Democratic politicians spooked investors, shrinking the 401k and IRA balances of millions of Americans. If this economy does become the worst since the Great Depression, it will be in part due to this self-fulfilling prophecy.

3. Any criticism of a black person is racist. The regulators were not, as John McCain claimed, "asleep at the switch". OFHEO reported to Congress on the precarious state of Fannie Mae and Freddie Mac in 2004. When they did, Democrats refused to acknowledge there was a problem. This was in part due to their belief that OFHEO's criticisms were racially motivated because the chairman of Fannie Mae, Franklin Raines, was a black man. In particular, Rep. Lacy Clay (D-MO) said, "This hearing is about the political lynching of Franklin Raines." "Lynching" is, of course, a racially charged term. The Democrats prevented Congress from acting on OFHEO's warnings by threatening to filibuster any measures to rein in Fannie and Freddie. Had Congress intervened to stop expanding the housing bubble in 2004, it would not have burst in 2008.

4. Government should interfere in the operation of markets in order to obtain a particular outcome. Above all, the housing bubble was inflated by the efforts of the Federal Government to expand homeownership more widely than the free market allowed. These efforts included the creation of Fannie Mae and Freddie Mac, the continuation of a cheap money policy long after the recession of 2001 required it, and the Community Reinvestment Act.

Thursday, February 12, 2009

Koan of the Week

Katie Couric was interviewing Chesley Sullenberger, the U.S.Air pilot who successfully landed his disabled jetliner in the Hudson River, saving the lives of 155 people.

Capt. Sullenberger told her, "The physiological reaction I had to this was strong and I had to force myself to use my training and force calm on the situation."
"Was that a hard thing to do?" Ms. Couric asked.
"No, it just took some concentration.

Master Li Kim's Commentary: I don't know what kind of training pilots get, but we should all try it. If it can force calm in the cockpit of a powerless and falling airplane, it could be quite effective in everyday situations where distractions or anger keep us from our goals.

Master Li Kim's Haiku:

Gray tube, gray water.
Passengers ride to safety
On its outstretched arms.

Wednesday, February 11, 2009

Anathem

I recently read Anathem, the new novel by Neal Stephenson. Mr. Stephenson's works tend to be highly thoughtful adventure tales involving scientists. In the past he's treated us to yarns about the founders of the Royal Society (The Baroque Cycle) and the codebreakers of World War II (Cryptonomicon). The New York Times Book Review wrote that he "cares as much about telling good stories as he does about farming out cool ideas."

Mr. Stephenson's latest epic leaves Earth altogether; it takes place on the planet Arbre. Arbre's history parallels our own; there is a suggestion that it is the Platonic Ideal Earth. The people of Arbre had their Socrates and Plato (although for some reason, not their Aristotle), their Roman Empire and its decline and fall, their Age of Exploration, their industrial era (The "Praxic" Age). They even had a late Praxic Age TV show with characters resembling Captain Kirk and Mister Spock.

And they had their world wars. Three of them. The last one was followed by something called "The Terrible Events"- presumably a nuclear holocaust. Whatever these events were (records are a little sketchy), Arbreans blamed their scientists for it. Those who devoted their lives to the pursuit of reason – scientists, philosophers, mathematicians – were locked up in convents called "maths". These maths were inhabited by the most interesting people you'd ever care to be locked up with, but they were restricted in their access to experimental equipment and in their contact with the outside world. The main character, Fraa Erasmus, belonged to a Decenarian Math, which meant he was only permitted extramuros (outside the walls) once every ten years.

Fraa Erasmus's story begins about four thousand years after the Terrible Events. Not much happened in that time. Arbre continued to be a technological society with cars, video cameras, Blackberries, and orbital satellites. But there were very few advances in technology or culture after. The entire civilization was stuck in its equivalent of Earth's twenty-first century.

Then one day the secular authorities orders Fraa Erasmus's math to close its observatory. Fraa Erasmus sets out to solve the mystery of why. When he does, he uncovers a crisis facing his world, a crisis that is so severe the secular authorities must throw open the gates of the maths and enlist the help of the scientists.

Like Ayn Rand in Atlas Shrugged, Mr. Stephenson presents a case study in the role of reason in human existence. Without it, there is no technological progress and no ability to respond to changing conditions. The Logic Critic gives Neal Stephenson…

Impeccable Reason. 4 Blades - Flawless.

Check out http://www.nealstephenson.com/anathem.htm for a cool trailer.

Tuesday, February 10, 2009

Democrat Bloat

In several of his recent speeches, President Obama said that he was not going to take economic advice from those who got us into this mess in the first place by doubling the national debt in eight years. An editorial cartoon in this morning's USA Today captured this aspect of the stimulus bill debate perfectly. In it, a member of Congress says, "We got into this mess because the Republican's bloated spending." When asked for the solution, he replies, "Democrat Bloated Spending".

Monday, February 9, 2009

Another Race Hath Been: John Mortimer (1923-2009)

I've been meaning to say a few words about John Mortimer, the British author and barrister (that's lawyer to us Americans) who died last month at the age of 85. Mr. Mortimer was best known as the creator of the Rumpole of the Bailey series of mysteries that appeared on PBS.

Horace Rumpole was an aging lawyer who, when he wasn't defending minor South London villains in the Old Bailey Central Criminal Court, was swilling Chateau Thames Embankment at Pommeroy's Wine Bar and matching wits with his wife, "She Who Must Be Obeyed". The Sunday Times declared him "worthy to join the great gallery of English oddballs from Pickwick to Sherlock Holmes." Above all, Rumpole was a champion of freedom, one of the many champions of freedom, both real and fictional, who flourished in the second half of the twentieth century. When it came to liberty, Rumpole understood.

He understood the Freedom Paradox – that freedom, to be any kind of freedom at all, can not be limited to behavior you approve of (the old "I disapprove of what you say but I will defend to the death your right to say it"). A society that sets out to ban behavior that a ruler, or a legislature, or a majority of the voters dislike will not remain free. Rumpole talked about this when he defended a man accused of selling dirty magazines entitled School Girl Capers. "Members of the jury," Rumpole said in his summation. "Freedom is not divisible. You cannot pick and choose with freedom, and if we allow liberty for the opinions we hold dear and cherish, we must allow the same privilege to the opinions we detest or even to works of such unadulterated rubbish as Schoolgirl Capers Volume I, number 1 to 6."

He understood the Presumption of Innocence – the "Golden Thread" that runs through our law - that a society where the government can lock you up without having to prove you did something illegal will not remain free. Lawyers are the guardians of our freedom because they make sure that the government has to prove it before sentence is pronounced. In one episode, Rumpole risked suspension from the bar in order to defend Charlie Wheeler, an alleged safecracker on trial on trumped up evidence. One of Rumpole's friends, another barrister, tried to talk some sense in to him. He pointed out that, trumped up evidence or not, Wheeler was probably guilty. "Guilty or innocent is not the point," Rumpole insisted. "That is not our business and you know it. That is for twelve puzzled old darlings pulled in off the street to decide. But we can make sure that they are not lied to or deceived or conned by some smiling copper doing conjuring tricks."

As Rumpole complained when he lost the School Girl Capers case, "Freedom's gone out of fashion." Those of us who still cling to it in the twenty-first century are running short of allies. Rumpole and Mortimer will be missed.

Rumpole's bedtime reading was the Oxford Book of English Verse (Quiller-Couch edition). He was particularly fond of the "Sheep of the Lake District", William Wordsworth. I presume John Mortimer was as well. By way of epitaph for both of them, I offer these lines from Wordsworth's "Intimations of Immortality":

The Clouds that gather round the setting sun
Do take a sober colouring from an eye
That hath kept watch o'er man mortality;
Another race hath been, and other palms are won.

Sunday, February 8, 2009

The Obama Fallacies Pile Up

Speaking to the House Democratic Caucus Issues Conference last night, President Obama challenged the opponents of his Economic Stagnation Bill: "don't come to the table with the same tired arguments and worn ideas that helped to create this crisis...We can't embrace the losing formula that says only tax cuts will work for every problem we face; that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or falling schools and crumbling bridges and roads and levees."

There are at least three fallacies here.

The first fallacy is the claim that the idea advocated by his opponents - free market capitalism - helped create the current economic crisis. As I've discussed before, this crisis was caused by government action that distorted markets - the creation of Fannie Mae and Freddie Mac, interest rates kept too low for too long, the Community Reinvestment Act, and the Mark-to-Market accounting rule.

The second fallacy is the accusation that his opponents believe only tax cuts will work for every problem and that they ignore critical challenges. This is a strawman argument - it attributes to an opponent an argument that he has not in fact made for the sole purpose of knocking it down. No one on the Right claims that tax cuts are the solution to every problem. Conservatives and libertarians have proposed innovative solutions to addiction to foreign oil (Drill, baby, Drill!), the soaring cost of health care (end government programs and regulations that raise costs), failing schools (vouchers), and crumbling bridges and roads and levees (privatize).

The third fallacy is his characterization of his opponents' arguments as "tired" and "worn".

A number of years ago, a reader challenged Miss Manners, "Don't you think that nowadays, in modern life, the old-fashioned custom of the condolence call is out of date?" The etiquette columnist replied, "Why is that? Is it because people don't die anymore, or is it because the bereaved no longer need the comfort of their friends?"

The Gentle Reader's argument is a variation on the Fallacy of Novelty. This fallacy consists of assuming that just because something is new, it must be better. The variation consists of assuming that, just because something is old, it must be worse. Miss Manners attacked the fallacy by questioning whether the reasons the practice was established in the first place have changed.

President Obama is guilty of the same fallacy, and deserves the same kind of response. Capitalism is based on the notion that people respond to incentives like lower prices or higher wages. Why is it "tired" and "worn"? Is it because consumers now line up to get into stores that charge higher prices for the same merchandise. Or is it because workers now quit their jobs in order to do the same work at another company for a smaller salary?

The Logic Critic gives President Obama...

Genuine and structured reasoning, but with fallacies or factual errors in main argument.2 Blades - Wrong.

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