Tuesday, March 26, 2013

Putting the Bull in Bull Market

I have said several times that I don't normally write about current events -- so much so that the sheer number of times I have said it seems to show how inaccurate a statement it has become --which makes this disclaimer a bit of a waste of time.  Still,  I do hope one day to go back to ignoring current events entirely and writing about more general, timeless topics, so allow me this -- perhaps misleading -- statement. As I said, current events are generally off limits in my writing, but in this case, the current economic circumstances provide such a perfect illustration of several economic theories, and so I could not resist discussing the current financial situation.

Regular readers know I typically avoid most news, even more consistently than I do writing about current events, but I was on vacation for the past few days, and as my mother watches MSM chatting heads with some regularity, I ended up hearing quite a bit of mainstream commentary on our economic situation, and thus discovered that the media has decided that we are supposedly enjoying economic improvement. Though they do admit there is quite substantial unemployment, and even that the government is spending far more than ever before (though I only saw that on Fox, which my mother passed by rather quickly), they seem to be impressed with the stock market, considering its record highs signs of economic strength.

There are several problems with this perspective, all of which I have discussed before independently, but which I shall go over once more, if only to demonstrate how present events confirm what I proposed in those past essays.

The first problem, and the one that should be most obvious -- though somehow so often overlooked -- is that we are measuring the performance of the stock market in terms of money. As I said in "The Rubber Yardstick", money would be a fine measure, if it were a stable store of value. For example, were a dollar defined as a set amount of gold or silver1, then it would be relatively easy to compare dollar values from one time period against those of another. Granted, even with gold or silver money, changes in the value of that commodity, either due to changes in supply or in consumer desire for that commodity, could cause the value of a dollar relative to other goods to change as well, but for the most part commodity currencies are relatively stable stores of value2.

Unfortunately, we are measuring the market in terms of a currency which is backed by nothing at all. Admittedly, it still continues to have some value, partly because it is accepted by governments in payment, but mostly because those governments still hold gold reserves, and the market essentially behaves as if the money might one day be redeemable once again. Otherwise, there would simply be no reason to exchange paper redeemable for nothing but more paper at anything higher than the intrinsic value of the paper and ink.

But I will leave that topic alone for now, as I know many disagree with my faith in the gold standard3, so let us say, regardless of why we accept fiat currency -- that is money which has value simply because the state declares it money -- and agree that fiat currency, whatever else it may be, is quite easily produced. And the government has recently taken to producing it with gusto. The theory appears to be that by printing enough to depress already low interest rates, the central banks will somehow end unemployment, or at least bring down the numbers. Whether or not that will work -- and obviously I do not think it will4 -- we have to agree that in so doing, the government is reducing the value of each individual dollar, and as a result, is making the monetary value of the stock market artificially inflated. Which means those supposed bull market numbers may actually represent a bear market, or at the best, a much weaker bull market.

Allow me to draw an analogy. Suppose you woke up tomorrow and found every dollar you owned had doubled. And somehow the same had happened to everyone on earth. In an instant, the amount of money magically would double5. As a consequence, it should be obvious, prices would double as well. And among those prices would be the value of stocks, which would hit all time highs as they doubled in value.

Now, suppose that the next morning your money doubled again. And the next. And the next. What would happen? Well, prices might double. But they might go up even more. Why? Well, as this doubling begins to happen with some predictability, be it the second day, or the third or fourth, people will begin to anticipate it, and they will adjust prices in anticipation of their money losing half its purchasing power every day. And so, likely prices will begin to rise even faster than monetary growth6.

Now, if in the middle of this daily doubling, or more than doubling, stocks were to continue doubling in price, it would likely be reported s a bull market, as the market tends to be judged without reference to inflation. However, in truth, a doubling of the value is far from a bull market. If prices are doubling in the rest of the economy, then a doubling market is stagnant, not a bull market. And, worse still, if the overall economy is more than doubling prices, then the supposed bull market is not a bull market at all. if prices are only doubling while the rest of the economy is more than doubling, then it is shrinking, even if it is reaching all time highs.

However, damning as that argument may be, there are still other reasons to be wary of reports that a bull market is a sign of economic health. Even if we adjust for inflation and find that the market is growing -- though probably less than the numbers suggest -- that growth may be a sign of illness, not health. As I have said before about early stages of inflation, just as a fever might give one a "healthy glow" for a time, or discontinuing chemotherapy may make one feel better at first, similarly inflation may give some superficial signs of health, but they simply mask a deeper illness7. In this case, at least two particular problems come quickly to mind when considering the record highs in the stock market.

The first is something we should recognize from a number of historical parallels. Looking back at the crash of 1929, the Carter era "stagflation" or , more recently, the bursting of the dot com bubble and the recent real estate bubble, what has preceded every noteworthy inflation-driven crash has been a period of wild speculation which has been mistaken for sound economic growth. Before each of these crashes, we have seen money drawn into one or more segments of the economy, where it has spurred increased activity, which pundits of the time have inevitably declared a sign of a robust economy. The stock market is a perennial beneficiary, as is real estate investment, and sometimes construction, but there have been other nominal winners, such as tech start ups during the dot com bubble.

What one needs to recall, and what is so often overlooked by the pundits, is that growth, in and of itself, is not beneficial. And activity is not on its own a sign of a healthy economy. For that matter, a lack of bankruptcies, or a surfeit of new firms, or the growth of existing firms, does not always signal a sound economy. All of them may be just that, it is true, but they can just as easily be quite the opposite. Sometimes bankruptcies are a positive sign, an indication the market is eliminating past mistakes. Sometimes a lack of new firms is beneficial, a sign that the present economy cannot support new entries in large numbers, and that resources are properly being diverted away from such efforts. In short, there is nothing that is inherently a good or bad sign.

I mention this because inflation, especially in the early stages, creates those thing we have been incorrectly taught to consider good signs, an excess of new firms, a lack of bankruptcies, many new projects, increased investments, rising prices for land and stocks and so on. And so, when inflation begins, we imagine we are seeing a strong economy, because of all these indicators. But, in truth, it is nothing of the kind. Instead, what we are seeing is a economy with its natural safeguards turned off.

In a functioning market, investments are made based upon a projection that the project will provide an adequate return. When firms fail to meet that projection, sooner or later they are eliminated, and go bankrupt. When new projects are put forth, if they prove to have too small a return, they fail to find investors and go under. That is what should happen. But when inflation floods the market with money, driving down interest rates to absurdly low levels8, those projects begin to appear to be more profitable than they truly are, those firms appear to be providing a viable return, and so on. And as a result, these firms continue to run, and new ones even spring up. These projects continue to find investors, and even spawn new projects. And so on and so on. In short, the market supports countless projects which, under normal circumstances would not be viable. However, because of inflation they continue to thrive. And people continue to invest in what amount to losing ventures. But, thanks to the appearance of health, pundits continue to mistake this incredible misdirection of funds and resources for a healthy economy.

That is not the only reason to see rising stock prices as a sign of ill health. There is one other.

During the early part of inflation, the glut of money keeps interest rates sufficiently depressed that, even including an inflation premium, the return on bank accounts, CDs and other fixed return investments, are lower than the rate of inflation.  This leaves those seeking to maintain the value of their holdings looking for an investment which will at least keep pace with inflation, if not provide some sort of positive return. The stock market tends to be a good place to store wealth, since the stocks generally rise as inflation does. Real estate is another good choice, since property prices also tend to rise with inflation. On the other hand, fixed return instruments, such as bonds, CDs and bank accounts, all tend to provide poor protection.

Thus, when one sees money fleeing from bonds and banks into stocks and land, it is a sign, not of a robust economy, but instead of fear about the stability of the currency.

I could probably come up with a few more reasons to be wary of this supposed bull market, but I think these few points should be more than enough. Given the events of the recent past, from the dot com boom and bust, through the real estate boom and subprime bubble bursting, it should be obvious that we are living in an ever accelerating cycle of currency driven boom and bust cycles. Ironically, the precise argument offered against gold and private banking, that they cause the supposed "boom-bust cycle" has turned out to be true instead of managed currency. And, even more ironic, the farther we get from gold and free banking -- especially since 1973 and the end of any ties between gold and the dollar -- the worse this cycle becomes, and the shorter the time between crises.

But, as I said, I know many do not agree with me on the question of gold. So, for the moment, let us put that aside and ask simply this: If we look objectively at our present circumstances, high unemployment, little growth in construction, little growth in existing firms, but with a rapidly rising stock market, all occurring at the same time the government is printing money to keep interest rates low -- if we look at all those circumstances -- what does it resemble? Is it not identical to the circumstances that immediately preceded the dot com crash? Or the real estate bubble bursting? Or even somewhat like the days immediately before the double digit inflation of the Carter administration? And if it does resemble nothing so much as those events, then how can we possibly imagine it is a sign of health?

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1. But not a quantity of both. Bimetalism, defining a dollar in terms of both gold and silver, leads to terrible results, as we discovered when the US experimented with it during the 18th and 19th centuries. But that is an issue beyond the scope of this essay. For now, let us just say it is defined in terms of one single commodity.

2. The opening of new mines, or the release of hoards previously kept off the market can have an effect on commodity currency somewhat analogous to the earliest stages of inflation. However, it is more of an apparent similarity than an actual identity, as such events, unlike inflation, put actual value into the economy, and are not predicted to be endlessly repeated, or accelerated, as inflation is, and so few of the ills of inflation occur when gold or silver is released on the market.

3. For those who are interested, my most recent arguments can be found in "Inflation and Uncertainty", "Bad Economics Part 7", "Bad Economics Part 8", "What Is Money? ", "What Is A Dollar?", "The Gold Question, Not "Why?" But "When?"", "Fiscal Discipline", "The Lie of "Recovery"" and "Bad Economics Part 19".

4. It is possible, in the earliest stages of inflation, to cause employment to rise through printing currency, but in a short time, the supposed benefits of early inflation will end, and unemployment will be worse than when things started. We are in an even worse situation, as we are right now feeling the "bust" following the inflation driven "boom" of the sub-prime lending years. So, we are not at the start of inflation, and printing money will simply make things worse, not better. (I suppose, just as happened following the dot com bubble burst, we might see a minor "boomlet" from sufficiently aggressive inflation, if investors are insufficiently wary, but if so, then the subsequent bust will be even worse. See "Explaining Past Crashes".)

5. This model actually misses many of the ills of inflation, as part of the harm done by inflation is that the new money does not enter the market evenly and predictably. Instead, some sectors receive new money first, and benefit from having added purchasing power before the market adjusts to the new money supply. Thus inflation tends to cause all manner of distortions and dislocations in the economy, in addition to the harm resulting from simply increasing the money supply.

6. This acceleration in price increases is one reason that using deflators in calculations  is not a valid means to adjust for inflation. First, deflators tend to use a single measure, such as CPI or money supply, which likely captures a distorted picture of the true inflationary impact, as predictions about inflation and its effects vary from sector to sector, and even individual to individual, making for a huge number of individual inflationary adjustments. In addition, even were it valid, it is an historical measurement, so it essentially shows the previous day's beliefs about inflation, failing to take in current reactions to anticipated changes.

7. See "An Analogy From Past Inflation", "Environmentalism For The Economy?", "Why"Negative" Economic Indicators Are A Good Thing", "Bad Economics Part 11", "Two Perspectives", "Production and Consumption",  "Pro Hoc, Ergo Propter Hoc", "Redundancy as a Protective Measure", "Fear of Trade"  and "Bad Economics Part 19".

8.  Normally interest rates incorporate an inflation premium as quickly as other prices do,  but for a time the excess money lowers the cost of borrowing, forcing interest so low that they fall even when the inflation premium is added in. Thus, we are not truly dealing with a lack of inflation premium, but instead with a glut of available money depressing the cost of lending to the point that the inflation premium is not an issue.

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POSTSCRIPT

I have written quite often about the topic of inflation, as well as problems with measurement, far too often to list all the essays here. However, I will try to list some here, to provide a sample of my essays on these topics, as well as links which may help interested readers find much of my relevant writing. For those who want to read more, I recommend the following:


POSTSCRIPT II

Lest anyone think this is a partisan argument, driven by a dislike of the present administration, I would point out I was just as critical of similar problems in the previous administration, as well as those of Clinton and the first Bush. And while I give Reagan credit for avoiding rampant inflationary solutions, I also fault him for failing to curtail spending, resulting in excessive borrowing and the resultant drag on the economy. In fact, I have been critical of administrations of both parties for the nation's faulty monetary and banking system and the willingness of administrations of both parties to borrow and print money whenever it might gain them political advantage. So do not take this as a partisan argument. It just happens the present administration has engaged in prodigious inflation of the money supply. I was equally critical when Bush set records for inflation as well. So, while I admit I have a definite bias toward the conservative end of the spectrum, I am fair, and in this case, it is not partisan emotion but simply an unbiased reaction to a dangerous policy. (If you want proof see  "Inflation and Uncertainty", "Missing the Point", "Hair of the Dog?", "The Inflation Engine", "Our Financial Problems", "A Thought on the Clinton Surpluses", "Not Entirely to Blame", "Explaining Past Crashes" and "WSJ Misses the Mark AGAIN". )

A Very Brief Thought on "Futurists"

I love collecting a certain type of book. They haven't been popular for a number of years, but back in the 1960's, and on through the mid-80's or so, there was a vogue for books describing what the future would hold for us. The trend ended sometime around 1984, but a small subset, the technological and computer prediction book, continued into the early 90's. And since then, we have not had many such books, but we do have countless web sites, newscasts and "experts" telling us what will be the next big thing. Ever since the "Web 2.0" nonsense began making the rounds, it seems about once a week or so, we hear the next big thing is here today.

Which is all fine and good, provided you suffer from short term memory disorder, as it appears most news agencies must. Otherwise, how can they continue to employ these "experts" who predicted things so poorly so many times?

What do I mean?

Anyone remember Ananova and the avatars that would revolutionize how we interacted with the web? Or maybe Second Life, which was going to form the framework for all future collaborative efforts? Or the ill-defined and long forgotten "Web 2.0" which basically amounted to people pushing MySpace right before it lost out to Facebook?

Now, I don't mean to sound like a curmudgeon, but if people could predict each of these supposed revolutions with a straight face, tell us with all certainty they were going to change how we lived, and basically get it all completely wrong, by what possible standard can we call them experts?

The point? Oh, you mean what is the political lesson I draw from this? As my regular readers know, I tend to write these strange little discursive essays with a political point in mind. (Though not always, sometimes I just like to ramble.)

Well, in this case, the point is pretty simple, and obvious. If the tech experts are failures, how much moreso the economic experts that drive all these government plans? How often have they predicted reducing interest rates would drive growth or whatever nonsense they are pushing at the moment, only to have it fail? And yet, again and again, we entrust them with more money and more power to dot he same thing, despite a miserable track record. They may excuse their failure by claiming we did not give them enough time, or too little authority or something, but the fact that they never said as much in the past, and only noticed the mistake in hindsight still doesn't exactly burnish their credentials as experts, does it?

I suppose I could go on, but it is hardly a new topic for me. I wrote about it at length in "Government Quackery", and a slightly more brief version in "Recipe For Disaster", as well as "The Cycle of Compassion" and "The Endless Cycle of Intervention", as well as "Grow or Die, The Inevitable Expansion of Everything" and "In The Most Favorable Light", so I doubt I have much more to say on the topic. So I will simply leave you with the question I always ask myself. If you had an expert, any expert, be it doctor or lawyer or financial planner, and his track record was anything like that of the government, would you hire him once more? If not, then how do you justify trusting the state again and again in matters just as important, if not more so?


Thursday, March 21, 2013

Insanity

Can we all agree to never again say "Insanity is doing the same thing over and over again and expecting a different result?" Please? This trite aphorism has been attributed (wrongly) to everyone from Yogi Berra to Albert Einstein in an effort to bolster its credentials, and has been used to criticize everything from the Great Society to the current Ryan budget proposals. However, I would ask that we stop using this little bit of conventional wisdom, and for one simple reason.

IT IS WRONG.

Let me ask you a few questions. If you have an infection, and take a course of antibiotics, and the infection gets better but then returns, what do you do? Most often take another course of antibiotics. That is THE SAME THING.

Or if chemotherapy causes a tumor to shrink, but does not eliminate it, what is the usual treatment? More chemotherapy! THE SAME THING.

How did Constantinople fall? By Mehmed the Conqueror staging a siege not much different from the last several attempts. That is, he won the city by DOING THE SAME THING!

Of course, in each case, the truth is that either circumstances have changed, or what seems "the same thing" to outsiders is significantly different when viewed from another perspective. However , in each of these cases, and a hundred more, it would be easy to make a case that the same thing often brings success, and thus is far from insanity.

And that is why I want to see this quote disappear. What the average ignorant blogger often thinks is "doing the same thing" is quite different, either because of some important detail the commentator fails to see, or because circumstances have changed. And thus, when some ignorant oaf trots out this old saw, more often than not, he is simply showing his own lack of understanding, and yet inevitably, the peanut gallery cheers him on, as he has the support of the Berra-Einstein Aphorism.

So, can we please put this quote to rest? Not only is it far from any meaningful definition of insanity, but it is applied incorrectly with such frequency, that it has become all but meaningless.

POSTSCRIPT

While we're at it, can we change the Santayana quote to "those who forget history are doomed to end up in summer school studying the Norman conquest and the Council of Trent", as I think that a lot more accurate than the real version as well. Not that the actual version is bad in itself, but people too often take it to mean knowing history makes one proof against error, and that simply isn't true. Too many really bad ideas have been justified with historical analogies. No, those who forget history might repeat it, but some of those who recall history do so as well. So, let us just eliminate that quote as well, as far too many use it to draw all the wrong conclusions.

Update (2013/03/26): I actually made an argument similar to the one in my postscript in my essays "Learning Too Much From History", "Learning Too Much From History II" and "Caricature as Argument".

Wednesday, March 13, 2013

Oh So Sensitive

Despite all my complaints about Wikipedia ("If It's New, Can It Be a Cliche?", "Why I Won't Be Contributing to Wikipedia", "The Tragedy of the Creative Commons", "Anecdotal Proof", "Grind Those Axes, WikiEditors!", "Something of a Paradox) it is still a source of considerable amusement at times. Sometimes because of its tendency to push a single viewpoint to the exclusion of all others ("Opinion Masquerading as Fact", "Deceiving Themselves?", "Grind Those Axes, WikiEditors!"), sometimes because of its obsession with trivial matters ("The Taxonomy of Trivia", "A Near Perfect Definition", "Something of a Paradox"), sometimes because it takes absurd beliefs far too seriously ("Why People Don't Take Academics Seriously", "Sterility of Formal Economics") and sometimes because of its insistence on certain linguistic quirks ("A Question About Language", "Stray Thoughts on Language"). However, one other source of serious amusement is the effort of wiki-editors to be "sensitive", which results in statements that, on the surface seem innocent enough, but when considered for a moment, prove to be pretty hilarious.

One good example came to my attention today when I glanced at the article on "Sanitary Sewer Overflow"*. The opening paragraph of this essay beings thus:
Sanitary sewer overflow (SSO) is a condition whereby untreated sewage is discharged into the environment prior to reaching sewage treatment facilities. When caused by rainfall it is also known as wet weather overflow. It is primarily meaningful in developed countries, which have extensive treatment facilities. 
It sounds innocent enough, doesn't it? A nice straightforward description. Or it seems to be such, until you ask yourself one simple question: Why do they claim this is a problem primarily associated with developed countries?

I suppose, if you don't give it a lot of thought, this could seem to be yet another Luddite rant, claiming this is a problem specific to developed countries, with their high-tech, centralized approaches causing horrible environmental harm. And, taken at face value, that does seem to be the implication. However, there is one problem with that assumption, and that can be embodied in one simple question: What is the alternative?

And that is where the amusement comes in. You see, this is only a problem in developed countries, because they are the only ones trying to treat the waste before disposing of it. They only have a "problem" because they try to make things cleaner. In the less developed countries, every day is a sewer overflow, as nothing is treated, or little is. They simply collect and dump, or even just dump without serious collection. And thus, this is only a problem in developed countries as only developed countries even try to treat waste**.

And that is why I find this so amusing. While the wording, in trying to be sensitive to underdeveloped (I suppose I should say "developing") nations, implies there is something wrong with the developed nations, in truth the only "problem" is that sometimes the developed nations end up with a situation which puts them slightly closer to the undeveloped nations' everyday situation.

Isn't it amazing how much can be hidden with just a few words? And how incredibly misleading technically true wording can be?

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* The county is running sewer and water into my community, and as I was writing about it elsewhere, I noticed I tended to use the word "sewerage" where most Americans use "sewage". It struck me as an interesting quirk so I decided to check if I was wrong in my usage, and discovered that technically I was correct, and in line with most non_American speakers of English, while the use of "sewage" to mean both waste and the system handling it is unique to American English. In any case, while looking this up, I investigated some other sewage related topics, and while looking into alternate, low diameter sewer models, I found a link to the topic in question.

** In a way, this mirrors the modern tendency to misuse "hypocrisy". Moderns tend to use that term, not to mean promoting something you don't believe, but instead anytime someone fails to meet their own standards. (Cf "Hypocrisy?", "Poor Grasp of the Meaning of Hypocrisy", "Second Thoughts", "Ad Hominem") As a result, those with no standards are given a pass, where those who strive and fail are held up to greater scorn. Similarly, here the modernized world is being criticized for trying and failing where the undeveloped nations are given a pass for doing nothing.

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POSTSCRIPT
While looking up links for this essay, I ran across a post which has nothing to do with this topic, and is in fact quite silly, and has nothing to do with any of my normal blog topics. But it was amusing enough I decided I wanted to try reviving it, and so I will end with a link to "One More Off Topic Post".


Tuesday, March 12, 2013

Justify Yourself, Defeat Yourself

I was recently listening to some hunters discussing hunting, when I made a comment they probably took the wrong way. Several of them had been explaining that they enjoyed hunting because they felt good about being able to provide their own food, in response to which I pointed out that most people who say that do not extend it beyond the meat, and rarely make much of an effort to grow their own tomatoes or celery or lettuce. I am sure they took this as an anti-hunting statement, but in truth it is exactly the opposite. My point was not that their justification of hunting was an obvious pretense -- though it did seem that way -- but rather that they should not be providing such justifications at all.

Let me start by saying there are some hunters who really do feed themselves by hunting. And there are also a bunch of hunters who bag one buck a year and then go around feeling good that they believe they could feed themselves if they had to. (Whether that is true or not.) However, for the most part, I find that hunters tend to bring out the "feeling good that I can gather my own food" argument whenever they are worried that they are surrounded by those who dislike hunters. And it makes sense in a way. If you don't want to get in an argument, and you think there is an anti-hunting sentiment, then this is the best argument, as most people who dislike hunting are big on the eco-friendly self-sufficiency thing, and so this is the best way to excuse hunting.

But it is still a bad idea.

Allow me to offer up another example, that might demonstrate why. In the debate over abortion, many laws have been written with exemptions for rape or incest. In terms of drafting laws, it probably makes sense, as it is the sort of compromise which allows laws to get passed that might otherwise fail. However, many pro-lifers have gone beyond accepting this as a necessary compromise and actually accepted it as part of their beliefs. That is, they believe that abortion is wrong, as it kills a person, except in cases of rape and incest.

The problem here is that this belief, adopted through a combination of legislative horsetrading and a desire not to hear about how heartless it would be to make rape victims carry the rapist's child, completely undercuts the basic arguments of the pro-life movement. If a fetus is a person, then it is a person, and has the same rights as a person living outside the womb. Can you kill someone who was conceived through rape or incest? If not, then abortion should not be allowed either. And if you allow it, then you must either be saying a fetus is not a person, or else that special rules apply to abortion.

I have noticed a similar problem with those arguing for gun rights. Rather than simply set forth the argument that we have a right to own guns, regardless of the type or the use to which we intend to put them, people will offer arguments about hunting or crime prevention, and thus allow that guns are somehow special, deserving of different laws, and needing justification to own them. It is because of this we have "assault weapon" bans premised on the idea no one "needs" them for self defense or hunting, and laws limiting the number of guns one can purchase. Rather than justify guns, attempting to excuse our desire to possess them, we would have been far better off arguing that guns are just an object, a tool, not different from hammers or knives or gasoline or rope or lumber or fertilizer, all of which have also been used to kill, some in greater numbers than any gunman ever could. If we were to treat all objects identically, and not single out guns, there would never be silly arguments that somehow a pistol grip or particular sight makes a gun an "assault weapon" and hence forbidden. But by offering up justifications, we grant the high ground to the opposition and start off by putting ourselves on the defensive.

And that is how I feel about this hunting justification as well, if in a slightly less dramatic way. By offering up this excuse, that hunting is justified because it provides food, you are saying that there is otherwise something wrong with hunting, something you must explain away by showing the good side. And that was my point. I did not criticize because I think the hunters are wrong, but because I would have respected them much more had they said "I like to shoot things" than by offering up this explanation, whether it is true or not.

POSTSCRIPT

To clarify a few issues, I am not a hunter, though I have hunters in my family. However, hunter or not, I can see how the many justifications offered up by those who try to defend hunting without offending the anti-hunting crowd do more harm than good. Similarly, my position on abortion is, to be honest, a bit undecided. I know all the arguments on both sides, and have criticized many on both sides ("Legal Schizophrenia", "A Few Questions on Abortion", "An Implausible Argument"), but I am still a bit undecided about what the legal position should be. My personal feelings aside, the question of what should be done through the state and what must be done through persuasion (See "Volunteer Fireman, Barn Raisings and Government", "Government Versus Culture - A Forgotten Distinction", "Social Controls", "Shame and Behavior", "Our Rude Behavior", "Shame and Understanding", "Missionary Zeal and Human Discord", "Hard Cases Make Bad Law" and "In Loco Parentis".) is a valid question, and one which I have not yet settled in my mind. Still, that does not stop me from pointing out when either side makes a bad argument or undertakes a self-defeating strategy, and so I am happy to point out such mistakes on either side.

I would also like to point out, in many ways, these arguments are simply a variation on those I made in "Doing Something", "Pyrrhic Victories", "Damn the Torpedoes!", "You Lose When You Think You Win", "Grow or Die, The Inevitable Expansion of Everything", "Why We Lose", "The Glory of Eisenhower?", "Inescapable Logic", "The Cycle of Compassion", "Recipe For Disaster", "The Endless Cycle of Intervention", "Don't Blame the Politicians" and "Guns and Drugs", among many others.

Friday, March 8, 2013

The Lie of "Recovery"

I have made a habit of avoiding current events in this blog. First, because I do not keep up on current affairs well enough to write breaking stories, and so I find my posts always lag behind others. Second, having gone back over my older posts, when I did include more current events, I find such articles date rapidly, and I would prefer to spend my time and effort on something more timeless.

However, I do feel I have to address something. Seeing the stock market rise incredibly rapidly, and hearing newscasters -- ever hopeful they can boost Obama's reputation -- claiming this is a recovery, I am struck by how little we understand economics, and even more, how short our memories are. Have we forgotten the early 1970's, when Nixon cut us loose from gold and, for a short time, the numbers looked promising, before the Carter "stagflation" set in? Or the "dot com boom" when Clinton pumped money into the economy, creating an inflationary boom followed by the notorious crash? Or the most recent crash, brought about by the Bush administration's artificially low interest rates (also brought about through inflation) intended to cure a slump, which resulted in an absurdly excessive housing boom and subsequent crash?

So, what has happened recently? Has Obama been spending money like a drunken sailor, based on currency he created out of thin air through monetary inflation? Does this pattern sound familiar? And so what is the likely outcome of this boom? An eternity of government created prosperity? Or perhaps a rapid crash, following the pattern of ever shorter inflation created "booms" followed by ever worse crashes? And when will this pattern finally convince us managed currency is the problem and not the supposed "barbarous relic" of gold based money?

POSTSCRIPT

For this interested in monetary theory and inflation I suggest "Bad Economics Part 19", "Fiscal Discipline", "Bad Economics Part 7", "Bad Economics Part 8", "What Is Money? ", "What Is A Dollar?", "The Gold Question, Not "Why?" But "When?"", "Monetary Issues Made Simple Part I", "Monetary Issues Made Simple Part II", "Stupid Quote of the Day (January 7, 2012)", "Wolf or Sheep" and "Those Greedy Bankers". In this specific context, I would also recommend some of my posts on the crashes mentioned such as "Inflation and Uncertainty", "Missing the Point", "Hair of the Dog?", "The Inflation Engine", "Our Financial Problems", "A Thought on the Clinton Surpluses", "Not Entirely to Blame", "Explaining Past Crashes" and "WSJ Misses the Mark AGAIN".

Thursday, March 7, 2013

If It's New, Can It Be a Cliche?

Though I complain endlessly about Wikipedia and its many problems ("Why I Won't Be Contributing to Wikipedia", "The Tragedy of the Creative Commons", "Anecdotal Proof", "Grind Those Axes, WikiEditors!", "Something of a Paradox"), I can't seem to stay away from it for long. Today, I was passing a slow moment at work by looking up the current state of the debate over the origin of the Huns. Through a lengthy and rather bizarre series of links I went from the history of various Chinese dynasties to the civil service system to the nine rank system to mandarin squares to mandarin ducks and, at last, to Hong Kong-style milky tea. I am sure others do the same thing, starting with one topic, finding an unfamiliar or interesting link and following, then another and another, until you have roamed quite far from your original topic. Well, whether it is a common habit or not, I do it often, and usually end up finding something amusing. In this case, I thought it was the article on tea, as it struck me as the perfect example of what I described in "The Taxonomy of Trivia", containing enough text for two to three printed pages -- including several paragraphs on how to evaluate this delicacy! -- on a topic which seems, at best, to be the height of trivia. By way of comparison, the article on the Chinese civil service examinations, a major historical subject covering centuries of history was only a few lines longer, and the article on the nine rank system was only about one eighth as long. For that matter, the article I read earlier on Messapian language, an admittedly obscure topic, but one of some historical relevance, was only about two thirds as long as the article on something that is, in essence, milky tea made with Carnation. (So, basically, the tea most of England drank during wartime rationing. Or the tea that tea drinkers end up making when camping.)

However, that rant was not to be. Curious about what could possibly be written on the "Talk" page, I took a look and was shocked to find the talk pages were actually almost twice as long as the already hypertrophied article! Most of it being a lengthy debate on whether or not this apparently ambrosial drink originated in Hong Kong, Singapore or Indonesia. Now, not one to deny anyone their national or ethnic pride, I can see why such a debate would consume so much space, so I wasn't about to mock it out of hand, at least not without reading through it and discovering the merit of the various positions. And when I did so, all thoughts of mocking the utter triviality of the whole venture vanished from my mind -- well not all thoughts, as my snide tone must convey, but most thoughts -- as I stumbled upon an example of something which has amused me for some time.

Anyone who has read this blog or its still extant but moribund predecessor -- thanks for the support Townhall.com! -- knows, in addition to my role as grammar and spelling Nazi ("The Irony of Lax Internet Standards", "Ye Olde Grammar Nazi", "In Defense of Standards", "Rules of Grammar and Pragmatism", "Spelling Nazi Short Post", "The Grammar Nazi Versus George Lucas"), I also become fascinated by strange uses of language. Be it the bizarre trend toward "gender neutral language" ("A Question About Language", "Oh No, Not Again"), the silly circumlocutions -- and logically dubious designations -- demanded by PC terminology ("Badly Chosen PC Words", "The Power of Words, or, Please Don't Take Offense", "Political Correctness and the Inversion of Precision", "Predictions Come True Yet Again", "Yet Another Misleading PC Name") , the needlesss changes to the way we represent foreign words ("Brief Note", "Grammar Nazi Comment on Greco-Latin Words") or simply the amusingly bizarre uses to which some people put language ("Woe Is Me Now for the Lord Has Added Grief to my Sorrow"). And one of the topics that I find most amusing, the horrible mangling of cliches when written by those who have only heard them, and never seen them in writing. From "it takes two to tangle" to "mix and mash", these new cliches (neo-cliches? neo-ches? cliche nouveau?) often seem oddly apropos, in their own, slightly off kilter, maladroit way. And chronicling them has become something of a hobby for me, both in my blog and in my everyday life. Why some, such as "two to tangle" have even come to replace the original among certain semi-literate segments of society, so it appears I am not alone in my fascination with them.

And so, when I found the phrase "wild spread use" I had to drop all plans of mocking the amount of attention being paid to milky tea from Hong Kong and pay tribute to this new and wonderful turn of phrase. And yes, I am aware of the irony of complaining about thousands of words being spent on milky tea, while spending just as many words, or more, to mock this single malformed cliche, but I do have a purpose. Or rather two. First, I hope to amuse a few readers who might find humor in such strange neologisms. (I know we are very few, but we do exist.) Second, I hope by pointing out the exceptionally bad abuses of spelling and grammar, I might make some of us a bit more aware of the lesser errors around us and maybe raise the standard slightly. (Again, aware of the irony of the guy who uses sentence fragments and tortured syntax griping about grammar, but as I said in "Hypocrisy?" and ""Poor Grasp of the Meaning of Hypocrisy"", failing to meet your standards is not hypocrisy, just failing.)

So, let us stop for a moment and applaud this particular new misuse of English and thank whatever minor -- and obviously negligent -- deity oversees grammar, that unlike my other neo-cliches, this one has not yet made it into wild spread use.


POSTSCRIPT

By the way, I have to admit, while I neglected this blog recently, I did post a single essay in my non-political, non-economic blog "Musings of a Ghost Squirrel". you can read it at "World of Warcraft Versus Phenomenology". I would recommend the blog in its entirety, but I don't know how much it would appeal to my readers, being mostly some outre theological musings, geeky discussion of how the "first" (read as "most recent") three Star Wars movies could have been better and a few even more irrelevant subjects. But, if you are interested, please check it out. 

I would also suggest my blog "Glowing Green", in which I intended to argue to environmentalist believers the advantages of nuclear power (hence the tongue in cheek title, intended to make light of the 1950's monster movie view of nuclear power's dangers), but I never got off the ground with that one, and it has but a single post. But it is a good post, so check it out as well if you get bored. In any case, I plan to leave those blogs alone for the moment and try to get back to posting in this one, just as soon as I find time. 

There is yet one more blog, "The Serial Bowl" where I planned to post my multi-part essays and other series -- such as "Liberalism, Its Origins and Consequences" and the "Bad Economics" series -- when finished, but which never got much attention from me or readers. Then again, I never sem to finish a series, so that may explain a great deal.