Sunday, June 7, 2020

What shall we do about our police?

Riots in several major cities across the nation are making plain to one and all that the national tolerance for the occasional physical excesses of our police forces has come to a sudden halt.  In New York City and several other places, police vehicles have been pelted with Molotov Cocktails and many wind up turned turtle and burned beyond recovery.  Multiple police officers have been shot and killed.  Crowds of bystanders no longer stand by idly while police arrest suspects.  In Minneapolis MN and in Buffalo NY, police have been fired and charged with felonies for assaulting citizens.

Antifa and BLM have been accused of stirring protesters and turning them into rioters.  Sections of several downtowns, usually in minority neighborhoods, have been decimated by arson.  The Left generally praises and/or excuses the excesses of the rioters in contrast to the opprobrium slathered on the police and municipal leaders.  The Right tsk-tsks over the generally over-the-top police reaction but reserves their strongest condemnations for the looters and rioters.  Neither is providing much in the way of 'solutions'.

Well, is there a solution?  Without a doubt, anything that would serve to mitigate police violence would have to do so by imposing real accountability on police departments.  That means 'negative reinforcement', and that means making police misconduct painful.  Currently, when a citizen sues the police department and wins, the settlement is paid from city funds.  That is, it's paid-for by the taxpayers of the city.  The police feel no pain from that punishment.  All the pain is directed at the taxpayers.  That doesn't work.  We've seen that it doesn't work.  If it worked, police brutality would no longer be an issue.  We need a different answer.

The path suggested by several commentators is to pay such judgements from police pension funds.  This has the benefit that all cops are penalized for the misbehavior of the so-called 'bad apples'.  Essentially, it outsources enforcement of departmental ethics policies to everyone in uniform.  Would that work?  Maybe.  There may be a better answer.

It has been suggested that all government employees (at every level) with arrest power should be mandated to carry personal liability insurance.  Police unions wield tremendous political power and it's possible that the 'pension option' could be thwarted in the next contract.  It's much harder for the unions to lean on Prudential or Allstate, and those insurance companies will have a vested interest in rating police officers on their 'risk'.  A 'risky' officer will find the insurance premium rising in lockstep with the insurers perceived liability.  The best the unions will be able to do in response is to negotiate an 'insurance allowance', but such contracts apply to every member equally.  Sure, an officer might get $300/year to cover the cost of insurance, but Officer Friendly may find that the policy only costs $265, putting $35 back into the family budget, whereas Officer McSteroid has to come up with another $400 to cover the $700 premium, and if his behavior doesn't improve, before too long he'll need a second job just to maintain the required level of insurance.

Nowadays, when an officer is (finally!) fired for misconduct, it often just means a transfer to a different city or county or state and a change of uniform.  Tabula rasa, baby!  Not so if Officer McSteroid still has to maintain a current policy.  State Farm knows his name and his reputation and shares that information with Allstate and Prudential.  There's no escape from the database.

Too bad we can't do that for Congressmen.

Saturday, May 30, 2020

Corona recap

States are beginning, slowly, to re-open from the Moo Goo Gai Panic and we're seeing some lightly-reported lessons.

  • We've suspected that CV19 is wildly contagious, but we're now discovering that it's only wildly contagious in certain circumstances, viz. close contact with a symptomatic infected person over an extended time frame;  some (like the New England Journal of Medicine) are suggesting upwards of 10 minutes is required for transmission.

  • asymptomatic infected persons appear to not be carriers of CV19.

  • casual contact, even with an individual exhibiting symptoms, presents nearly no danger of infection.

  • N95 masks, touted as the gold standard for PPE, trap particles with a minimum size of 0.3 microns (E-6);  the diameter of the CV19 virus is 80 nanometers (E-9), about 1/4 the minimum size an N95 mask will collect.

  • mask use, therefore, provides close to zero protection for ordinary people going about their ordinary business.  They only protect against droplet infection when someone coughs into your face or sprays blood on you — which is why medical professionals use them on the job.  For you shopping for groceries?  Fundamentally useless, but perhaps comforting.

  • To die from CV19, you first have to catch it, then be part of a susceptible population, someone whose immune system won't successfully fight it off, and then have some co-morbidity (obesity, diabetes, heart disease, immunosuppressed, etc.).  If your immune system is working and you're in reasonable health otherwise, yes, you're going to catch it eventually, but you won't die from it.

None of this is meant to deter you from wearing a mask, even a cloth mask that is nowhere near as useful as an N95 mask, if you feel that it makes people around you more comfortable.  Just understand that it isn't really providing any measurable benefit.

Second, states that started reopening early, around May 4, are not showing indications of increasing hospitalization.  There's some confusion here because the news media bleats about "increase in cases" and lets you draw the (incorrect) conclusion that CV19 is resurgent.  The (reported) increase is typically an increase in individuals reported as infected after being tested, not 'individuals complaining about symptoms and/or being admitted for treatment'.  Most people who become infected with CV19 show no symptoms (asymptomatic), and perhaps don't even know they have it until they get tested and...  surprise!  Eventually everyone will be positive for CV19, but with a death rate in the neighborhood of 0.03%, look for the real death-from-CV19 number to come out around 100,000 — which is approximately what happens in flu season.  All those deaths where a mugging victim was discovered on post-mortem to have CV19 don't count.

It appears FDR was right: the only thing we have to fear is fear itself.

Wednesday, May 13, 2020

Bailouts and IRAs

In less than a month, the government has added $5T to our national debt.  They did it by printing money.  It's backed by nothing.  There can only be one result from that: inflation.  "Big deal!" I just heard someone say.  Yes, indeed, a very big deal, especially if you've already retired.

Washington is spending enough money that its effect will be felt almost immediately.  There are already reports of retail price increases for food.  What this means is that over the next few months and years, virtually everything you want to purchase is going to cost substantially more than it does right now.

If you're a workin' stiff, you can campaign for a wage increase on the grounds that your employer is charging more for whatever your employer sells/provides, but if you're retired:

  • you're on Social Security and you're probably not going to get an increase in that,
  • you have an IRA with a certain balance, and that balance isn't going to be adjusted upward,
  • the stock market is presently in the basement.

That $3,500 cruise you had planned for next Summer?  It'll be $4,000.  For every $7 you were planning to spend, you now have to plan on spending $8.  To put it another way, if you had $400G put aside for your retirement, somebody in Washington just stole $50G.  The balance in the account doesn't change; only its purchasing power does.

Now, if you happen to be one of those fortunate people who are the beneficiaries of the bulk of that $5T bailout, you can grab your pot of gold and put it where it will generate some more wealth for you.  If you're Joe Sixpack, you're shit out of luck.  Better luck next time.

And the reason for all that extra spending?  It's to combat the ill-effects of COVID-19.  The Kennedy Center needs money to help them get past the enforced shutdown, and Planned Parenthood seems to be... well, to be honest, I don't know what they're doing to battle COVID-19, but it's important enough for them to rate $35B.  In fact, almost none of that spending will actually help the man in the street... excuse me, the man forced to quarantine at home.

The real problem here is that all those people who just got the shaft from the financial wizards in Congress will go to the polls in November and re-elect the very same people who just stole 13% of everything the voters had saved, because "Hey, I got a check for $1,200!"  They saw that; they didn't see their retirement savings shrink by 1/7th.

Thursday, April 30, 2020

Sean Hannity is a f*****g moron

Back on December 9th, 2011, I suggested that Sean Hannity was an idiot.  I was wrong.  I admit it.  Sean Hannity is a fucking moron.  There's just no polite way to say that.

I rarely watch 'Hannity' even though I regularly follow Tucker Carlson and Laura Ingraham whose programs bracket Hannity.  Tonight I let myself be lured in because of the recent revelations of FBI malfeasance regarding General Michael Flynn and the Hannity teaser that he would have additional information on that topic.  And what does Hannity lead off with?  "I wear this FBI pin to honor the 99% of honorable FBI agents who protect yada yada yada..."

Is it possible that anyone can be that stupid?  If 99% of FBI agents were as honorable as Hannity, in his blind belief in 'American exceptionalism', supposes, there would be whistleblowers galore offering documentary evidence of institutional corruption throughout the United States Department of Justice.

But there aren't.

Quod erat demonstrandum.

Hannity is a fucking moron, and he gave us the evidence voluntarily.

Tuesday, April 28, 2020

Overreacting to COVID-19

You always have to have a plan, but it doesn't always have to be the same plan.

When we first heard about Coronavirus, COVID-19, the reports were sketchy and the number of cases was small.  "Small" in statistics equates to "unreliable", so we should have heavily discounted the initial speculations of a 6% fatality rate.  "6%' is a scary number.  It's 1-out-of-16.  In this country, 6% is 20 million dead Americans.  People panicked.  The country went into quarantine in an attempt to slow the spread of the disease.

As the number of cases grew, the conclusions drawn grew more reliable.  Soon we revised the fatality rate down to 3%.  That's still 10 million dead Americans, but it was based on testing increasing numbers of people who were exhibiting symptoms.  People without symptoms were assumed (!!) to be uninfected.  They weren't being tested because test kits were scarce.

Something else was becoming obvious: almost everyone who died from COVID-19 had other underlying issues, what are called "co-morbidities".  Yes, they died from COVID-19, but they might not have died if they weren't obese, diabetic, had heart disease, or something else that turned them into a fragile patient.

As test kits became available, people without symptoms began to be tested and we discovered something startling.  Huge numbers of people were showing positive test results, and they were asymptomatic.  They had already contracted COVID-19 and shrugged it off.

The federal government, in an effort to get good data, offered states a little bonus to compensate them for the extra work they had to do collecting COVID-19 statistics.  Effectively, the feds were paying the states for reporting COVID-19 cases.  Guess what happens?  Mr. Jones dies after being mugged, and on 'post' he's discovered to be positive for COVID-19.  Presto-chango!  He's a COVID-19 death.  Suddenly, there's a huge bump in the fatality rate.  The reported fatality rate can't be relied upon because it may be artificially inflated.  It's almost certainly lower than reported.  What does this tell us?

  • COVID-19 is ferociously contagious.  You almost can't escape it.  If you don't catch it in April, you'll pick it up in May.
  • COVID-19 is not very deadly.  The latest estimates of the fatality rate are down in the 0.03% range, 3-in-10,000.  That's still 100,000 dead Americans, but that's a long way away from 20 million.
  • Your greatest chance of catching it occurs indoors.  Fresh air and sunlight are hazardous to the virus and suppress its transmission, and thus are healthy for potential hosts (us).

Some countries, notably Sweden, have taken the attitude that COVID-19 is going to have to run its course, and their numbers (cases-per-capita, deaths-per-capita) are not noticeably different than ours.  Given this, what of our reaction to the pandemic?

  • Unless you or a loved one is in an at-risk population, staying indoors too much is a bad idea.  It spreads the virus.  Efforts to keep people out of places like parks and beaches is exactly the wrong thing to do.
  • Even if you are in an at-risk population, sunlight and fresh air are probably good for you.
  • 'Social distancing' probably doesn't work.  Almost certainly, it isn't doing what we hope it's doing.
  • Shutting down the economy and disemploying so many people was stupid and irresponsible.
  • The experts think everything is working well, and we should keep doing this until we're all destitute.

You always have to have a plan, but it doesn't always have to be the same plan.

Sunday, March 29, 2020

Where's The Money Coming From? -- Part 2

At the end of the First World War, two important things happened: the Spanish Flu, and the Treaty of Versailles.  The first killed 50 million world-wide including 675,000 in the U.S. alone.  The second imposed ruinous economic conditions on Germany such that the Weimar Republic resorted to printing money so fast that inflation made all of it worthless.  You may recall stories of harried Germans trying to buy bread with a wheelbarrow full of Deutschmarks.  It's a crap-shoot at this point whether our own Chinese Coronavirus will kill anything like 50 million world-wide, but there is absolutely no doubt that printing 2 trillion (with a 'T') dollars with nothing to back it up is going to cause inflation of the U.S. currency.  How much inflation?  I have no idea, and neither does anyone else.  It is, however, a fact you can take to the bank that prices are going to rise because 2 trillion more dollars are now chasing the same amount of productivity.  Less productivity, actually, because many otherwise-productive businesses have been shuttered by executive fiat.

Amazingly, everyone seems 'OK' with that because the 2 trillion is going to be distributed more-or-less evenly across the population.  Did you catch that?  Everyone is going to get approximately the same benefit from the Mint printing all those dollars.  No one is going to be treated any better or worse than anyone else.(**)

The geniuses in Washington just did a 'stock split' on the cash in your wallet, in your savings account, in your IRA, and everywhere else you had stored your accumulated wealth.  In a stock split, you get more shares of stock, but each of those shares is less valuable than they were yesterday.  Everybody thinks "Oh, boy!  I'm getting $1200 bucks!"  Unfortunately, what you had yesterday plus the $1200 bucks now has, together, the same value as what you had yesterday.  Or less.

You've just been played.




(**):  This is not exactly true because as part of that massive 'stimulus' package, a lot of non-productive recipients are also going to get a pile of cash: various arts organizations including The Kennedy Center ($25million), and the all-time record-setting least-productive part of the economy, the U.S.Congress ($39million).

Yes, indeed, you've been played.

Saturday, March 28, 2020

Where's The Money Coming From? -- Part 1

On last night's (Friday Mar 27th) show, Tucker Carlson asked a very important question regarding the $2.2 Trillion Corona Virus bailout package.  He may not have realized how important the question was when he asked it.  He asked "Where's the money coming from?" and then offered that it might be money borrowed from China.  It may be worth a moment or two to ask (again) the question people shy away from asking — perhaps from some inbred instinct that they're not going to like the answer: Where does the government get its money in the first place?

All the money the government spends comes from three sources:

  • taxing
  • borrowing
  • printing

All of these things hurt the economy and the people for whom the economy exists.  In fact, government spending, because it is funded by these methods, hurts the economy and the people for whom the economy exists.  I addressed this issue about 10 years ago right here on this blog where I suggested we were on the verge of a financial catastrophe the likes of which we had never before seen.  And we're intent on doing it again.  Why are taxing, borrowing, and printing money bad for the economy?

Taxing:  When two people make a free exchange of goods, whatever form those goods may take, profit ensues.  Each participant in the exchange wants something the other has and values it more highly than what they already have.  I have $5, you have a cake.  You think the cake is worth less than $5 and I think the cake is worth more than $5.  When you make the sale, you now have $5 — which is better than just a cake — and I have a cake worth more than that five-spot I just gave you.  We both profited.

Then the government steps in.  It snags a few percent off the top as sales tax, and some of that profit has just evaporated because the actual price I paid has been artificially inflated.  You don't get off scot-free, either.  All the material you put into making that cake you had to buy from people who charged you sales tax for the flour, the eggs, the sugar, and everything else that went into it, plus you're going to pay income tax on the $5 you got from me.

The act of taxing is like tapping the brakes on your car: it slows the process down, perhaps imperceptibly, but the slowing happens even if you can't detect it.  Multiply this drag by millions, billions, or trillions, because it happens each time a taxable transaction occurs.  The actual slowing is the removal of profit.  What profit each of us made has been transferred — some of it, all of it, or more than that — to the government so that it can be spent on things that have nothing to do with that cake.

Borrowing:  Whenever you borrow something, the intent of the lender is that whatever was borrowed will come back eventually, and often with interest.  There are certainly cases where borrowing, even at interest, is a good thing.  That's why there are mortgages on homes.  When borrowing happens in order to increase one's productivity, the increase in productivity is expected to be greater than the interest and thus enable the loan to be paid off over time.  The greater the increase in productivity, the easier it is to pay off the loan, but it still involves transferring profit to the lender.  The borrower trades future profit for current advantage.

That, alas, is not how government borrowing usually works.  Government borrowing is a way of 'kicking the can down the road'.  The loan will be paid off in the future when the politicians who borrowed it have retired, and 'paying the loan back' is somebody else's problem.  The 'somebody else', in case you haven't figured that out, is you.  The government doesn't want to tax you in the current cycle for current budget needs, so it taxes you in the future at higher rates.  As I said: somebody else's problem, but the effect is the same: a drag is imposed on the economy.

Printing money:  Most people think money is wealth.  How wealthy am I?  Let me see what's in my wallet.  But that's not wealth.  The true measure of wealth is "what can I do with this money?"  If a haircut or an oil change costs $300, how far will your $100,000 retirement fund take you?  That's what 'printing money' does.  It shaves a little bit off every dollar in circulation and transfers it to whoever owns the printing press.  In lots of cases, the effect is so slight that it's virtually unnoticeable, but over time the effect is cumulative.  In the past hundred years or so, approximately 95 cents has been shaved off the dollar.  That's why 1920 prices seem so bizarre to us.  Cars being sold for $600; gasoline at 7 cents per gallon; houses for $4,000!

In days of yore when 'money' was based on something solid like gold, evil rulers would 'tax' by shaving a tiny sliver of gold from the edge of a coin.  In modern times, governments just inflate the currency.

So, Tucker Carlson asked the right question: "Where's the money coming from?".  The answer is that the government is going to inflate the currency, make each of your dollars worth a tiny bit less, make each of the things you buy a tiny bit more expensive.  Whether they do it by taxing you (unlikely, since they're writing $1200 checks to every taxpayer) or by borrowing, or by simply printing enough extra dollars, the effect is the same: starting tomorrow, life is going to get more expensive.