Ignorance and Expertise

Kevin Williamson has a nice article on ignorance at NRO.  The alternative to ignorance is expertise.  Physical expertise often has multiple attributes as many accomplished handball players are equally accomplished softball/baseball players.

Sidebar: we were going to say that physical expertise generalizes but we consider that an overstatement.  There are lots of good athletes but few Americans could take up hurling and be expert quickly.   That is, the Karate Kid is wrong, expertise takes practice.  It is true that some skills transfer (e.g., hand-eye coordination or math skills) and that practice is not a sufficient condition.  End sidebar.

Being unaware that expertise does not generalize leads to bogus appeals to authority.  For example: Mary is a really good duplicate bridge player perhaps I should take her advice on the stock market.  Or, Einstein is a great physicist perhaps I should follow his advice on unions.  Both of these are, so far, bogus appeals to authority.  Mary might be a stock market expert.

The opposite can also be true.  How can that lout know more about X than me?  The Big Bang Theory has created a hit TV show on that premise.  Each of the scientists knows their own area better than the other but none of them understand people as well as Penny.

Understanding that expertise does not generalize lets us see the economic knowledge problem.  Understanding that any actor has limited expertise allows us to understand why markets are so vital to economic success and why economic planning has not succeeded yet.

Remember, ignorance is the normal state of affairs.  Experts are experts about some limited area.  Markets provide expertise.  Experts can still be wrong.  Einstein was not the last word in physics.  Like individuals, markets can be wrong but betting against them is not the percentage play.

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Funny Stuff

There are so many silly things that get quoted on Facebook.  Here is today’s favorite:

If All Lives Matter then why don’t we have universal health care? And why are prisons privatized? And why are there still homeless people?

Why would anyone think that monopoly health care or monopoly prisons are a good idea?  Venezuela anyone?  Why are there still homeless people.  Well, if we take them off the street then a substantial number need to be medicated and a non-trivial number are going to resist.  Where do you stand on forced medication?

All lives do matter.  Irrelevant (at best) questions don’t.

Interesting History

This is from Michael Tomasky at the Daily Beast:

Why? Three reasons. The first has to do with race and gender and history. When Clinton announced in 2007, she was going to be the first woman president. Then Obama got in, and he was going to be the first black president. He totally trumped her on the history-maker scale. I realize not everyone saw it that way, but in general terms, given the, ah, special racial history of this country, and given the role the Democratic Party played in changing that history for the better, Obama had the larger and more morally urgent historical claim to make in the minds of most Democrats and liberals. The woman would have to wait, as women so often do. [Emphasis added]

We are not sure about the bold part.  He doesn’t mean opposition to Lincoln or support of Jim Crow.  Perhaps he refers to the attempts to raise the minimum wage.  Some might think folks trying to do that mean well.  Perhaps he just means nominating Obama.  Could he mean the bipartisan acts of the sixties?

Stock Market Jitters

After falling 571 points on Friday the Dow opened down about a thousand this morning.  It has recovered most of today’s opening loss (currently down 226) but is still down for the day and is in the correction range (10% down) depending upon where it stops today.  It is serious.  The US economy is limping along.  China (any data is suspect) seems to be slowing down substantially.  So the two biggest economies on the planet are suspect.

There are lots of interesting issues to discuss.  Will the US go into recession because of the weakness in China?  Will the market rebound or continue to go south?  What should the Fed or the rest of the government do if anything?  Let’s stick with what the candidates are saying.  A CNN article includes two tweets.  The Donald says in part: “Markets are crashing- all caused by poor planning and allowing China and Asia to dictate the agenda”  The Bernie says in part: “The results are in.  Unfettered free trade has been a disaster for working Americans.”

If it is pejorative to call these guys fascists, then what can we call them and be accurate?  They are clearly tapping into nationalist and socialist (OMG, what party used that name?) sentiments.  They are also proposing terrible economic ideas by increasing tariffs and setting the agenda (a very unclear notion but clearly a nationalistic one).  Two of our major candidates don’t recognize that trade is a multi-player game.  Retaliation is likely if not certain.  MWG has a much better idea.  Let’s end all tariffs unilaterally.  We’d make up the lost revenue by increasing the gas tax although we recognize the weakness of that choice and are open to other options.

The Man From U.NC.L.E

The Man From U.N.C.L.E. has open to mildly positive reviews (enough style to overcome its lack of substance).  We agree in in summary but have a different problem with it.  The styles and vehicles (the Jag XKE) from the 1960s are lovingly displayed.  We were OK with the plot.  There were enough surprises to keep us interested.  The problem was Illya Kuryakin.  In the TV show, David McCallum (yes Ducky from NCIS) was the definition of cool for a whole generation.  In the movie Armie Hammer is fairly close to psychotic with his finger twitching need to beat people senseless.  Guy Ritchie seems to have confused Ivan Drago for Illya.    Actually, all three main characters have been changed with Gaby Teller being a substantial improvement on April Dancer (The Girl From U.N.C.L.E) and Napoleon Solo being a criminal working for the CIA to avoid jail.

Still Alicia Vikander as Gaby is fun and well dressed as the new and better Girl From U.N.C.L.E., Hugh Grant is a great choice for Alexander Waverly, and the bad guys and gals are great example of the the era.  It took time but we accepted the movie as homage to the era rather than the shows.  We are ready to go to the next installment.

The Ninety-Seventh PGA

We attended several days of the recently completed PGA.  We have three comments:

Jason Day was a deserving winner.  He has had a great year and a great four days.

Hurray for the PGA for letting them score.  Making six a drivable par four on Sunday was a great idea and one we had encouraged on Wednesday.  Unlike the USGA that obsesses on the score relative to par, the PGA let ’em play.  If the wind had of blown the winning score would have been ten strokes lower but it didn’t happen that way.  On Thursday afternoon the wind was up just a bit and there was only one score under seventy.

Dustin Johnson led another major without winning it.  On Sunday he showed his mettle.  He got a snowman (eight) on the first hole on Sunday.  He could have folded his tent but he did not.  He made six birdies and two eagles to go along with bogies to post an amazing three-under 69 and finish tied for seventh.  Well done and good for a guy that has a major in him.

Rubio’s Social Security Plan

Marco Rubio has proposed a plan for saving Social Security at NRO.

Sidebar: Many of the comments at NRO deal with individual accounts as proposed by W. and others.  It is our preference too but our opinion is that the cost of transition from the current system to investment accounts and the current debt position of the USA means that such plans are no longer viable.  End sidebar

The plan has three components:

  1. Increase the retirement age for individuals under 55.
  2. Reduce the growth of benefits for upper income seniors and provide more for lower income seniors.
  3. Eliminate taxes on interest, capital gains, and dividends.  [This appears to be for all investors.]

Rubio’s proposal does not seem to be budget neutral.  The increasing of retirement age that Ohlemacher discusses only takes care of 44% of the shortfall.  Of course, Rubio might be increasing the early retirement age to more than 64 although that seems unlikely.  Item number two seems at best a wash and item number three is expensive.

Rubio makes an excellent point that we need to consider retirement investments at the same time Social Security is reformed.  We would be more drastic on point two.  It seems to us that sending checks to Warren Buffet or Mitt Romney would be a political loser.  Phased in means testing makes sense to us starting with reducing increases immediately.

Rubio has a plan.  It is not a bad plan but we need more details.  Any proposed plan should be a permanent solution and should encourage savers because Social Security is part of retirement rather than than everyone’s sole support.   Let’s hear from the rest.