Tuesday, September 2, 2014

Gone Native

We tried to speak between lines of oration
You could only repeat what we told you
--The Who

Mas Ayoob applauds a reporter for admitting his biases while covering a police shooting story outside of St Louis. Most reporters pretend to be reporting objective news rather than what they are actually doing--i.e., filtering data thru subjective lenses to generate distorted pictures of reality.

In fact, journalists are likely to 'go native' without realizing it. Their biases and narrow ideological networks lead them to believe that they indeed see the world objectively even though they have joined the slant walk.

Possible solutions to the problem, such as expanding personal networks to include people with significantly different views, or disclosing biases such as political affiliations at the beginning of stories proposed to be 'objective news,' seem unlikely.

Responsibility therefore rests with consumers of news to separate fact from fiction.

Monday, September 1, 2014

War: The Ultimate Diversion

Guy de Lusignan: Give me a war.
Reynald de Chatillon: That is what I do.
--Kingdom of Heaven

Politicians understand the value of diversions. The more significant the action that requires cover, the larger the necessary diversion.

Few diversions are larger than war. War diverts attention toward an external 'enemy.' Moreover, war entices a spirit of nationalism, where people come together and rally 'round the flag.

Wars have been famous political tools since civilization began. In the US, there is reason to believe that Lincoln, Wilson, and FDR (among others) facilitated wars to advance their political agendas.

Indeed, a perverse lesson that hardcore policymakers likely derive from studying the Great Depression is that war is a fine way to jump start an economy--provided the war is won, of course. Sadly, even some economists have suggested that economic growth is tied to war.

The more this administration struggles with economic malaise and other problems, chances of war go up.

Sunday, August 31, 2014

Charity and Slavery

In violent times
You shouldn't have to sell your soul
--Tears for Fears

Charity is voluntarily giving production (either self-produced or obtained thru trade) to help others. Charity is not a one-sided trade. The giver of production gains psychic or perhaps spiritual income from the transaction.

Slavery is involuntarily surrendering production to others on a routine basis. Slavery is a one-sided trade. Production is confiscated from producers who get nothing in return--although slavemasters may rationalize otherwise.

Welfare programs funded by tax dollars are not forms of charity. They are institutions of slavery. Taxpayers regularly surrender production at the point of a gun.

They are slaves of welfare program beneficiaries and their proponents.

Saturday, August 30, 2014

Movement in Motion

No more running down the wrong road
Dancing to a different drum
Can't you see what's going on
Deep inside your heart?
--Michael McDonald

Lew Rockwell argues that the libertarian movement is not a future event. It is well underway. Media can no longer ignore libertarian ideas, particularly as young people devour classics by Mises, Rothbard, Hayek, Hazlitt, et al.

Discussions are active that would have been dismissed not long ago. What is the proper role of government? Do bailouts do more harm than good? How can economic situations improve simply by printing more money? How can a people borrow their way out of debt? Why isn't the best foreign policy simply to trade freely with all?

These are not new questions. Our founding ancestors pondered them in depth. Over the past century or so, however, these issues have been pushed aside by claims that these questions are old-fashioned and out of date. People have been distracted by smokescreens of sophistry.

An attractive feature of libertarian philosophy is its simplicity. Libertarianism opposes aggression, period. This spawns another another intellectually attractive feature: consistency. Any policy or program grounded in taking property from some is undesirable and wrong. Unlike other political philosophies, offensive force is not rationalized. 

Libertarianism is a philosophy of peace and voluntary cooperation among people. It is consistent with the harmony of nature.

Libertarianism was the philosophy of our founding ancestors. And it is once again gaining traction.

Friday, August 29, 2014


And when the night is cloudy
There is still a light that shines on me
Shine until tomorrow
Let it be
--The Beatles

In French, laissez-faire means "let them do as they will" or "leave them alone." When applied to markets, this idea means that force should not intervene between people seeking to produce and trade with each other. People should be permitted to trade freely because they are acting out of their own volition.

Forceful intervention is only appropriate when property rights are violated. Otherwise, forceful intervention is a form of aggression--in conflict with natural law.

Let the people be.

Thursday, August 28, 2014

Yield Curve Flattening

A good man pays his debt
But you ain't paid yours yet

The yield curve is a plot of yields at various Treasury bond durations. When times are good, people generally like to see a 'steep' yield curve, meaning that there is a significant positive difference between short and long rates. This permits an attractive 'carry trade' where investors can borrow short duration and buy long duration.

In tough times, the yield curve 'flattens,' meaning that there is less difference between short and long rates. In an economy that depends on borrowing and leverage as ours does, this is an unwelcome event.

Presently, the yield curve is flattening. Much of this has been Fed induced as QE buys in long bonds, forcing their yields lower. Difference between 5 and 30 year Treasury yields is back to early 2009 levels and only 50 bips from 2008 lows.

Harbinger of coming problems? Not sure, but is seems likely that carry trades will come under increased stress.

Wednesday, August 27, 2014

Paper Wealth

An angel's smile is what you sell
You promise me heaven
Then put me through hell
--Bon Jovi

As the SPX marks new highs, many people are breathing a sigh of relief. Not only have they recovered losses associated with the credit market meltdown, but in many cases their account statements indicate that they are wealthier than ever.

However, the numbers on those statements reflect wealth only to the extent that financial securities can be converted into liquid assets that can buy real resources.

People tend to assume that such a conversion is straightforward. Simply sell stocks, bonds, et al to get liquid.

Maybe so. But if lots of people simultaneously decide to seek liquidity, then today's account statement numbers do not reflect wealth levels.

They reflect ignorance and overconfidence.

Tuesday, August 26, 2014

Affiliation, Groupthink, and Discrimination

Can you imagine no love, pride, deep fried chicken
Your best friend always sticking up for you
Even when I know you're wrong

Thomas Jefferson said that he sought kept his affiliations to a minimum in order to preserve independent thought. He understood that belonging to groups invites groupthink and clouds judgment.

Social identity theory posits that people join groups to enhance self-esteem. As they do so, individuals begin to assume characteristics thought to belong to the group.

To advance self-esteem, however, people must believe that they belong to the 'right' group. They will defend their group against perceived threats from outsiders. Group members will go also along with what the collective wants even if they personally believe it to be wrong. Failure to do so would constitute admission that their affiliation is a mistake.

A consequence of affiliation is inherent tendency to discriminate. Outsiders are apt to be seen as inferior in some way. Discrimination enhances self-esteem to be gained from joining groups.

Because he thought this was not a worthy route to self-esteem and sound judgment, Jefferson sought to be as group-free as possible.

Monday, August 25, 2014

Freedom of Choice

"A king may move a man. A father may claim a son. But remember that, even when those who move you be kings or men of great power, your soul is in your keeping alone. When you stand before God you cannot say 'but I was told by others to do thus' or that 'virtue was not convenient at the time.' This will not suffice. Remember that."
--King Baldwin IV (Kingdom of Heaven)

One characteristic that separates us from the rest of the animal kingdom is freedom of choice. Unlike Pavlov's dog, we can decide how to respond to a stimulus. We can override limbic reflex and choose differently.

This means that no matter how bad or high pressure things get, we control our response. Others cannot move us unless we let them. When we stand accountable before the Creator we will not be able to claim temporary insanity, or that social pressure was too much, or that orders were merely being followed, or that we were ignorant, or that good ends justified evil means.

But I gave you capacity for reason and choice, He will say, to choose between right and wrong, between peace and aggression. Why did you not use it?

Sunday, August 24, 2014

Little Joe

And when the night is cold and dark
You can see, you can see light
'Cause no one can take away your right
To fight and to never surrender
--Corey Hart

Thoroughly enjoyed listening to Joe Morgan the other night as he joined the Reds TV broadcast crew for a few innings. Morgan was my favorite player on the Big Red Machine. On a team loaded with superstars, Little Joe made the machine tick. He put it all together during the magical 1975 and 76 World Series years, earning back-to-back MVP awards.

Morgan was testimony to the truth that size was not a prerequisite for performance excellence. Despite his small stature, he hit for power as well as average. Watching countless BP sessions, I recall watching him stroke ball after ball against or over the right field fence at Riverfront. Long, smooth stroke, quick hands.

Morgan was also quick afoot, but not blazing fast. He learned how to channel his quickness into base stealing skill and Gold Glove defense.

Joe Morgan possessed superior attitude. He stepped on the field to play hard and to win.

In his on-air conversation the other night, Morgan demonstrated that he has not lost that attitude. When asked about what the Reds needed to do to break out of this bad losing streak, Morgan said that players have step up and do it. "You need to figure out a way. You need to will it. If what you're doing isn't working, you have to find another way. But you keep trying until you are successful."

You need to will it. That's the lesson of Joe Morgan.