Apropos of absolutely nothing (I mean, seriously, I can't think of a single 21st century example of this), here's an excerpt from the Big Con.

Not the Jonathan Chait book but the classic 1940 study of confidence games, particularly the "long con." It's the book that launched a thousand screenplays, most notably the Sting. I've been meaning to read this for years. It's not easy to find and I had looked for it in a number of libraries until finally giving up and putting it out of my mind. Recently, though, someone mentioned it in an email and I realized that if I couldn't find it in one of the four large library systems I have cards for in LA County, it probably couldn't be found anywhere.

After all this time, I half expected the book to be a letdown, but I've been very pleasantly surprised. One passage in particular jumped out at me:

From the Big Con by David W Maurer

Most marks come from the upper strata of society, which, in America, means that they have made, married, or inherited money. Because of this, they acquire status which in time they come to attribute to some inherent superiority, especially as regards matters of sound judgment in finance and investment. Friends and associates, themselves social climbers and sycophants, helped to maintain the solution of superiority. Eventually, the mark comes to regard himself as a person of vision and even of genius. Thus a Babbitt who has cleared half 1 million in a real estate development easily forgets the part which luck and chicanery have played in his financial rise; he accepts his mantle of respectability without question; he naïvely attributes his success to sound business judgment. And any confidence man will testify that a real-estate man is the fattest and juiciest of suckers.

Originally I was joking when I compared this to a hyperloop

But the more I think of it, the more serious the comparison becomes.

We are, after all, talking about another "marvelously impracticable" train, but reading through the description from this 1909 edition of Scientific American, it is difficult not to notice other similarities. Like the Hyperloop proposals, this turn-of-the-century air train (at least based on the account here) has the same odd combination of detail and vagueness, carefully spelling out parts of the system while largely passing over the obvious problem areas. There are also the same highly optimistic estimates about speed, capacity, and cost. In the case of the last, the proponents of the zeppelin train even rely on the same argument that elaborate elevated structures would more than pay for themselves through reduced land costs.

The zeppelin train does offer a few notable advantages over the Hyperloop. The passenger comfort is much greater, even including a rest room in each car. The ride would also be far more scenic than a ground level train, let alone a ride inside a metal tube. Perhaps most important of all (since we are comparing imaginary modes of transportation), the zeppelin train looks way, way cooler.

"How College Loans Got So Evil"

Warning to video viewers, thanks to the pivot to video, things are about to get really ugly really quickly. The trouble is that while the volume is going to increase sharply, the supply of people with the ability to make good videos is not going to increase significantly. that means the ratio of quality to crap is going to drop even further (and it's not like we're in double digits to start with).

To make matters worse, video viewing is more linear and less, for lack of a better word, interactive than reading. With text, you can skim, reread, jump around on the screen. All of this makes it easier to determine whether something is worth your time.

My advice (which I follow myself) is to stick with trusted referrals and proven content producers. Recommendation algorithms aren't very good now and they will only get worse as average quality drops.

Fortunately, even the most selective viewers can find enough to fill their time. I have a special fondness for what might be called the Daily Show kids, millennials who came of age wanting to be Jon Stewart or Stephen Colbert. Smart, funny, irreverent but socially conscious (sometimes lapsing into preachy). They also embrace Stewart's and Oliver's emphasis on solid research and often take it a step further (check out the corner of the screen in the video below).

This segment from Adam Conover is a good example of what happens when everything works: the topic is important; the information is clearly but entertainingly presented ; and the central conceit is skillfully executed and perfectly apt.





And if you do run out of video, trying reading something. That's what the young people are doing.

You probably never thought of a hobbyist market for x-ray machines

Couple of points.

For starters, wow! I knew people were way too nonchalant about the potential dangers of radiation in the latter part of the 19th and early 20th centuries, but wow!

Second (and, yes, I know I've been hitting this point a lot), it is almost impossible to imagine how amazing and world-changing the technological innovations of this period were. Adults who picked up this copy of Scientific American in 1896 would probably remember the first time they saw a light bulb or a telephone or a moving picture. While being born in a horse-and-buggy age is an overused cliché, it is also very difficult to avoid. For these people, the world was not only suddenly invaded by incredible machines, strange sights, and even new foods, it was also permeated by invisible rays that could actually show you the inside of your body.

1896 was also the year that a fellow named Marconi got a patent on one of his inventions, but that's a story for another time.

Repost 3: The Republicans' 3 x 3 existential threat

[Given recent events and their accelerating pace, I think there’s a good chance in the next few days we’ll be discussing the implications of intraparty war in the GOP. In the meantime, I decided to bump our regularly scheduled programming (which, consisting of late 19th/early 20th century technology stories, was not particularly topical) and repost a thread we ran a while back on the dynamics of the relationship between Trump and the Republican Party. Obviously, there are things I would treat differently if writing these today, but I’m still willing to stand by the general points, and they should serve as a good starting point for the next conversation.]

From August 22, 2017.

I've argued previously that Donald Trump presents and existential threat to the Republican Party. I know this can sound overheated and perhaps even a bit crazy. There are few American institutions as long-standing and deeply entrenched as are the Democratic and Republican parties. Proposing that one of them might not be around 10 years from now beggars the imagination and if this story started and stopped with Donald Trump, it would be silly to suggest we were on the verge of  a political cataclysm.

But, just as Trump's rise did not occur in a vacuum, neither will his fall. We discussed earlier how Donald Trump has the power to drive a wedge between the Republican Party and a significant segment of its base [I wrote this before the departure of Steve Bannon. That may diminish Trump's ability to create this rift but I don't think it reduces the chances of the rift happening. – – M.P.]. This is the sort of thing that can profoundly damage a political party, possibly locking it into a minority status for a long time, but normally the wound would not be fatal. These, however, are not normal times.

The Republican Party of 2017 faces a unique combination of interrelated challenges, each of which is at a historic level and the combination of which would present an unprecedented threat to this or any US political party. The following list is not intended to be exhaustive, but it hits the main points.

The GOP currently has to deal with extraordinary political scandals, a stunningly unpopular agenda and daunting demographic trends. To keep things symmetric and easy to remember, let's break each one of these down to three components (keeping in mind that the list may change).


With the scandals:

1. Money – – Even with the most generous reading imaginable, there is no question that Trump has a decades long record of screwing people over, skirting the law, and dealing with disreputable and sometimes criminal elements. At least some of these dealings have been with the Russian mafia, oligarchs, and figures tied in with the Kremlin which leads us to…

2. The hacking of the election – – This one is also beyond dispute. It happened and it may have put Donald Trump into the White House. At this point, we have plenty of quid and plenty of quo; if Mueller can nail down pro, we will have a complete set.

3. And the cover-up – – As Josh Marshall and many others have pointed out, the phrase "it's not the crime; it's the cover-up" is almost never true. That said, coverups can provide tipping points and handholds for investigators, not to mention expanding the list of culprits.


With the agenda:

1. Health care – – By some standards the most unpopular major policy proposal in living memory that a party in power has invested so deeply in. Furthermore, the pushback against the initiative has essentially driven congressional Republicans into hiding from their own constituents for the past half year. As mentioned before, this has the potential to greatly undermine the relationship between GOP senators and representatives and the voters.

2. Tax cuts for the wealthy – – As said many times, Donald Trump has a gift for making the subtle plain, the plain obvious, and the obvious undeniable. In the past, Republicans were able to get a great deal of upward redistribution of the wealth past the voters through obfuscation and clever branding, but we have reached the point where simply calling something "tax reform" is no longer enough to sell tax proposals so regressive that even the majority of Republicans oppose them.

3. Immigration (subject to change) – – the race for third place in this list is fairly competitive (education seems to be coming up on the outside), but the administration's immigration policies (which are the direct result of decades of xenophobic propaganda from conservative media) have already done tremendous damage, caused great backlash, and are whitening the gap between the GOP and the Hispanic community, which leads us to…



Demographics:

As Lindsey Graham has observed, they simply are not making enough new old white men to keep the GOP's strategy going much longer, but the Trump era rebranding of the Republican Party only exacerbates the problems with women, young people, and pretty much anyone who isn't white.

Maybe I am missing a historical precedent here, but I can't think of another time that either the Democrats or the Republicans were this vulnerable on all three of these fronts. This does not mean that the party is doomed or even that, with the right breaks, it can't maintain a hold on some part of the government. What it does mean is that the institution is especially fragile at the moment. A mortal blow may not come, but we can no longer call it unthinkable.

Repost 2: The nuclear moose option

[Given recent events and their accelerating pace, I think there’s a good chance in the next few days we’ll be discussing the implications of intraparty war in the GOP. In the meantime, I decided to bump our regularly scheduled programming (which, consisting of late 19th/early 20th century technology stories, was not particularly topical) and repost a thread we ran a while back on the dynamics of the relationship between Trump and the Republican Party. Obviously, there are things I would treat differently if writing these today, but I’m still willing to stand by the general points, and they should serve as a good starting point for the next conversation.]

From July 28, 2017.

[Just to be clear, I am not claiming that any of the following is inevitable or even likely, but I do think it falls in the category of things to consider.]

We've been arguing for quite a while now that the conservative movement's social engineering experiment has achieved its considerable success over the past few decades at the cost of exposing the party to genuinely existential threats. I had meant to precede this post with a bit more foundation, but events seem to be accelerating and I need to get this down.

Political parties have survived major rifts before. We could find numerous notable examples for both Democrats and Republicans, and, in all of those cases, the wounds were real but temporary. However, these divisions, though bitter, took place in broad-based relatively healthy political parties, I would argue that the Republican Party of 2017, though nominally controlling most of the government, is perhaps uniquely fragile and cannot survive a nasty internal conflict.

Here is a scenario of how such a conflict can arise and grow into an existential threat. I won't say that it is probable, but I think each link in the chain is definitely plausible. This is certainly true for the first link since between the time I outlined the concatenation of events and the time I sat down to write this, the first one had already happened. (That's why this is something of a rush job.)

First, a bit of background from our game theory post back in February  (Charles Schumer predicted a break between Trump and the party in three or four months. I said a year of two. Perhaps we should have split the difference):

The relationship between the Trump/Bannon White House and the GOP legislature is perhaps uniquely suited for a textbook game theory analysis. In pretty much all previous cases,  relationships between presidents and Congress have been complicated by numerous factors other than naked self-interest--ideological, partisan, personal, cultural--but this time it's different. With a few isolated exceptions, there is no deeply held common ground between the White House and Capitol Hill. The current arrangement is strictly based on people getting things they care about in exchange for things they don't.

However, while the relationship is simple in those terms, it is dauntingly complex in terms of the pros and cons of staying versus going. If the Republicans stand with Trump, he will probably sign any piece of legislation that comes across his desk (with this White House, "probably" is always a necessary qualifier). This comes at the cost of losing their ability to distance themselves from and increasingly unpopular and scandal-ridden administration.

Some of that distance might be clawed back by public criticism of the president and by high-profile hearings, but those steps bring even greater risks. Trump has no interest in the GOP's legislative agenda, no loyalty to the party, and no particular affection for its leaders. Worse still, as Josh Marshall has frequently noted, Trump has the bully's instinctive tendency to go after the vulnerable. There is a limit to the damage he can inflict on the Democrats, but he is in a position to literally destroy the Republican Party.

We often hear this framed in terms of Trump supporters making trouble in the primaries, but that's pre-2016 thinking. This goes far deeper. In addition to a seemingly total lack of interpersonal, temperamental, and rhetorical constraints, Trump is highly popular with a large segment of the base. In the event of an intra-party war, some of this support would undoubtedly peel away, but a substantial portion would stay.

Keep in mind, all of this takes place in the context of a troubling demographic tide for the Republicans. Their strategic response to this has been to maximize turnout within the party while suppressing the vote on the other side. It has been a shrewd strategy but it leaves little margin for error.  Trump has the ability to drive a wedge between a significant chunk of the base and the GOP for at least the next few cycles, possibly enough to threaten the viability of the party.

With that in mind, consider the following possible developments:

1. Trump fires Reince Priebus. Keep in mind, the choice of Priebus was (probably accurately) seen as an early indicator that, for all of his outsider talk, Trump intended to run a partisan administration with close ties to the Republican establishment. The firing has to be seen as a weakening of that relationship;

2. After ever increasing harassment, Jeff Sessions jumps or is pushed out of the administration;

3. This, along with other transgressions, prompts Graham and a few other Republican senators to start actively pushing for investigations into and greater accountability from the White House;

4. The strongest remaining link between the administration and the GOP establishment, vice president Mike Pence, is finding it increasingly difficult to keep his skirts clean from the Russia scandals. He does his best to distance himself and, as a result, further marginalizes his role;

5. Further developments in the Russia scandal exacerbate existing tensions;

6. While Trump does have his loyalists and the number of Republicans willing to publicly attack him remains fairly small, the majority of the party starts to see the president as a dangerous liability and attempts to distance itself from him, whenever possible refusing to take sides;

7. Angry at the lack of loyalty and feeling pressure from the investigations, Trump escalates his attacks on the GOP;

8. (Any of the following)
a. Trump fires Mueller
b. Mueller or some other investigator uncovers a major criminal conspiracy involving Trump, his family, or his business
c. Polls start showing serious erosion in support for Trump and the GOP in the conservative base
d. Things just keep getting ugly

9. At some major events such as a large rally or even the state of the union address, Donald Trump announces that, in the tradition of Teddy Roosevelt, he has realized that both parties are hopelessly corrupt and the only way to drain the swamp is by starting a third-party. So it is his intention to run in 2020 as the candidate for the MAGA Party and to field candidates in every major statewide contest.


Now, I want to be careful about how we frame this. Trump forming a third party remains unlikely, but it would not that unlikely if we hit events 1 through 8 and, taken individually, none of these events seem all that improbable.

I should probably polish this post a bit more, but given the pace of things these days, you have to make your predictions as quickly as possible.

Repost 1: GOP Game Theory -- things are still different

From February 28, 2017.

 [Given recent events and their accelerating pace, I think there’s a good chance in the next few days we’ll be discussing the implications of intraparty war in the GOP. In the meantime, I decided to bump our regularly scheduled programming (which, consisting of late 19th/early 20th century technology stories, was not particularly topical) and repost a thread we ran a while back on the dynamics of the relationship between Trump and the Republican Party. Obviously, there are things I would treat differently if writing these today, but I’m still willing to stand by the general points, and they should serve as a good starting point for the next conversation.]


"It's probably better to have him inside the tent pissing out, than outside the tent pissing in."

    LBJ on FBI Director J. Edgar Hoover,


Let's start with a prediction:

Senate Minority Leader Charles Schumer (D-N.Y.) predicted on Tuesday that Republicans will split with President Trump within months unless the administration changes course.0

"My prediction is he keeps up on this path...within three, four months you're going to see a whole lot of Republicans breaking with him," Schumer said during an interview with ABC's "The View."

Schumer argued while most GOP lawmakers aren't yet willing to break publicly from the White House, they are privately having "real problems" with Trump's policies in his first month.

"A lot of the Republicans, they're mainstream people. ... They will feel they have no choice but to break with him," he said.

GOP leadership are largely dismissing any early signs of discord between Congress and the White House as they slowly try to make progress on an ambitious agenda.

Ed Kilgore, however, points out that Trump may not be as toxic as many people think:

So while it is hard to deny that Trump is amazingly unpopular for a new president, unless his approval ratings trend farther down the way even those of popular presidents typically do, his party may not suffer the kind of humiliation Democrats experienced in 2010. For all the shock Trump has consistently inspired with his behavior as president, there’s not much objective reason for Republican politicians to panic and begin abandoning him based on his current public standing. But in this as in so many other respects, we are talking about an unprecedented chief executive, so the collapse some in the media and the Democratic Party perceive as already underway could yet arrive.

The relationship between the Trump/Bannon White House and the GOP legislature is perhaps uniquely suited for a textbook game theory analysis. In pretty much all previous cases,  relationships between presidents and Congress have been complicated by numerous factors other than naked self-interest--ideological, partisan, personal, cultural--but this time it's different. With a few isolated exceptions, there is no deeply held common ground between the White House and Capitol Hill. The current arrangement is strictly based on people getting things they care about in exchange for things they don't.

However, while the relationship is simple in those terms, it is dauntingly complex in terms of the pros and cons of staying versus going. If the Republicans stand with Trump, he will probably sign any piece of legislation that comes across his desk (with this White House, "probably" is always a necessary qualifier). This comes at the cost of losing their ability to distance themselves from and increasingly unpopular and scandal-ridden administration.

Some of that distance might be clawed back by public criticism of the president and by high-profile hearings, but those steps bring even greater risks. Trump has no interest in the GOP's legislative agenda, no loyalty to the party, and no particular affection for its leaders. Worse still, as Josh Marshall has frequently noted, Trump has the bully's instinctive tendency to go after the vulnerable. There is a limit to the damage he can inflict on the Democrats, but he is in a position to literally destroy the Republican Party.

We often hear this framed in terms of Trump supporters making trouble in the primaries, but that's pre-2016 thinking. This goes far deeper. In addition to a seemingly total lack of interpersonal, temperamental, and rhetorical constraints, Trump is highly popular with a large segment of the base. In the event of an intra-party war, some of this support would undoubtedly peel away, but a substantial portion would stay.

Keep in mind, all of this takes place in the context of a troubling demographic tide for the Republicans. Their strategic response to this has been to maximize turnout within the party while suppressing the vote on the other side. It has been a shrewd strategy but it leaves little margin for error.  Trump has the ability to drive a wedge between a significant chunk of the base and the GOP for at least the next few cycles, possibly enough to threaten the viability of the party.

The closest analogy that comes to mind is the Democrats and Vietnam, but that was a rift in a big-tent loosely organized party. The 21st Century GOP is a small tent party that depends on discipline and entrenchment strategies. It's not clear that it would survive a civil war.

Given that, I suspect the next year or two will prove Schumer wrong. There is some evidence that the president's polling has stabilized, perhaps even rebounded a bit, but even if the numbers go back into free fall, Republicans in the House and the Senate will be extremely reluctant to break from Trump with anything more than isolated or cosmetic challenges.

This isn't just a question of not wanting Trump outside the tent pissing in; this is a question of not wanting Trump outside the tent tossing grenades. 

Questionable statistics alert – – Whole Foods Markets edition

From Yahoo finance:

High-end grocer Whole Foods is already poaching new customers from Walmart (WMT) and other competitors as the result of its new owner Amazon (AMZN) cutting prices, according to a report from Thasos Group, a data intelligence firm founded at MIT.

Beginning Aug. 28, Whole Foods, which had earned the nickname “Whole Paycheck,” slashed prices on some of its best-selling staple items, including avocados, bananas, organic brown eggs, Fuji and Gala apples, almond butter, and farm-raised salmon and tilapia.

Whole Foods immediately experienced a 17% increase in foot traffic year-over-year for the week beginning Aug. 28, the Thasos report found.

For the week ending Sunday, September 3, the weekly YoY change in foot traffic to Whole Foods peaked at 17%. On August 28, the daily YoY change in foot traffic peaked at 31%.

Of that foot traffic, new customers came primarily from Walmart, accounting for 24% of the new shoppers that week, while Kroger (KR) shoppers accounted for 16% and Costco customers for 15%.

Some of the Whole Foods’ other competitors also saw significant defections during that time. Nearly 10% of Trader Joe’s daily customers shopped at Whole Foods during the first week of price cuts, while 8% of Sprouts (SFM) and 3% of Target (TGT) customers did so.

Lots to unpack here, but in consideration of time constraints (both yours and mine), let's just focus on one aspect.

Possibly the most important and certainly the most underemphasized piece of context in the coverage of the acquisition is the size and distribution of Whole Foods Markets. This is a small player highly concentrated in a few areas (such as New York City, DC, San Francisco, and Los Angeles). These areas also tend to have a highly disproportionate representation of the people who write about and invest in business trends (which explains a lot about the coverage). These areas also (and this is important for this story) tend to have a disproportionately low number of Walmarts.

Because of its size and economic diversity, Los Angeles makes for an interesting case study (it also helps that I've been here for quite a while and have lived on both sides of the county). Keep in mind, when Angelenos talk about the town they are generally referring to the county and Los Angeles County has a land area of over 4000 square miles. There are a lot of good reasons for going from one side to the other, but picking up a few groceries is not among them.

If you know the town and you look at a map of LA Whole Foods Markets, it is immediately obvious that the stores are heavily concentrated in very upscale neighborhoods, particularly in the general vicinity of Santa Monica. Not only are you unlikely to find Walmarts in these neighborhoods; you are unlikely to find them anywhere in reasonable driving distance. Likewise, the parts of town are you are likely to find Walmarts have very few Whole Foods. It is also important to note that this relationship does not hold with Target stores, which have long done a remarkable job adapting their model to both sprawling suburbs and high density urban areas. Anywhere in LA will put you fairly close to a Target.

Obviously, there are exceptions (Austin comes to mind) and we would certainly expect some of the traffic from a WFM spike to come from regular Walmart shoppers, but any analysis that shows them making up the plurality must be viewed with suspicion, even more so when we consider the surprisingly low numbers for Target. These numbers are almost exactly the opposite of what we would expect.

I know what I'm about to say goes against everything you've been told, but when data and common sense diverge sharply, the first thing you should do is question the data. Yes, counterintuitive results can be the most interesting if true, but it is essential to remember that counterintuitive results are also far more likely to be untrue.

I'd heard that "hello" as a salutation was popularized by the telephone, so I looked at the Ngram viewer.

Now I'm going to be distracted every time I hear someone say 'hello' in a Western.

Hotels vs. Airbnb is Godzilla vs Rodan. You don't know whom to root for.

From Gizmodo:

Quartz wrote that after New York passed “some of the toughest restrictions on short-term rentals in the country” last October, it is now effectively illegal in New York to rent out an entire apartment for less than 30 days unless there is a limited number of guests (one or two) and the host is present. The laws were ostensibly intended to go after Airbnb hosts who used the service to effectively run bunk-bed-filled flophouses in violation of laws governing the safety and quality of hotels.

But Quartz talked to several hosts who said sheriffs and police with the Office of Special Enforcement, which handles the city’s regulation of short-term rentals, had fined them up to $1,000 per violation for things like not having sprinklers or fire systems. The hosts also said that authorities appeared to be interpreting the law to mean that even leaving the unit while guests are present is illegal.

It’s part of an overall escalation in the struggle between Airbnb and local governments which accuse the rental giant of profiting by exploiting loopholes in zoning laws and other regulations. The hotel industry, which Airbnb is outpacing in growth, is fighting back too. As Bloomberg reported earlier this year, a hotel industry-funded group named Share Better is running sting operations to report hosts to authorities on the suspicion they are illegally running hotels, not renting out their residences.

It is genuinely difficult to decide who the good monster is supposed to be in this movie. The hotel industry is behaving horribly (and it's not like they came into this with a lot of goodwill). On the other hand, Airbnb is... you know... evil. Both sides are playing a nasty game of regulatory capture that should make good government types violently nauseous.

It does, however, provide us with an excuse to post a clip of a guy in a rubber suit being attacked by a giant puppet.

Good thing Peter Thiel wasn't around to fund the goat gland doctor.

John Romulus Brinkley was a man ahead of his time. Working from a libertarian, anti-regulation mindset, he defied the establishment with bold claims for a new technique that caught the imagination of the world. He expanded his empire first by brilliant marketing, then by embracing new technology making him one of the first international live media personalities. He was also, of course, a quack and a charlatan who made millions pitching worthless and dangerous treatments, but I don't see that making him feel all that out of place in the 21st Century.

Though we cast a fairly large net here at West Coast Stat Views, there are certain threads we revisit frequently. Brinkley was an important figure in two areas we hit a lot, broadcasting and medical pseudoscience. He was also too good an opportunity for a snarky allusion. Do you realize we've talked about topics like Robin Hanson's cryogenic retirement plan or Peter Thiel's desire for the blood of the young and never made a goat testicle joke. That simply can't go on.



From Wikipedia:

John Romulus Brinkley (later John Richard Brinkley; July 8, 1885 – May 26, 1942) was an American who fraudulently claimed to be a medical doctor (he had no legitimate medical education and bought his medical degree from a "diploma mill") who became known as the "goat-gland doctor" after he achieved national fame, international notoriety and great wealth through the xenotransplantation of goat testicles into humans. Although initially Brinkley promoted this procedure as a means of curing male impotence, eventually he claimed that the technique was a virtual panacea for a wide range of male ailments. He operated clinics and hospitals in several states, and despite the fact that almost from the beginning, detractors and critics in the medical community thoroughly discredited his methods, he was able to continue his activities for almost two decades. He was also, almost by accident, an advertising and radio pioneer who began the era of Mexican border blaster radio. Although he was stripped of his license to practice medicine in Kansas and several other states, Brinkley, a demagogue beloved by hundreds of thousands of people in Kansas and elsewhere, nevertheless launched two campaigns for Kansas governor, one of which was nearly successful. Brinkley's rise to fame and fortune was as precipitous as his eventual fall: At the height of his career he had amassed millions of dollars; yet he died sick and nearly penniless, as a result of the large number of malpractice, wrongful death and fraud suits brought against him.

On a related note, for anyone interested in the history of American broadcasting, I highly recommend Fowler and Crawford's Border Radio. You start with Brinkley and end with Wolfman Jack.

Following up on the Equifax thread.

We had an interesting exchange in the comment section for our recent Equifax post. For a quick recap: the original post argued that the stated growth goals of the company, if taken seriously, would require either considerable risk or improper use of the sensitive data the credit bureaus are allowed unique access to. Either way, this would be in violation of the implicit agreement we made with the credit bureaus allowing them their special status.

Here was the statement from the CEO:

RICHARD SMITH: Our goal financially in the next five years or so is to go from about $4 billion of revenue to $8 billion, from a valuation of $20 billion to $40 billion.

The comment thread mainly revolved around the question of whether or not a company in general and Equifax in particular could seriously pursue that growth target without taking unfair advantage of our data or experiencing a level of risk unacceptable for what is in effect a public utility. Here, slightly rewritten, is the gist of my reply.

We've come to accept, as a society, the notion that growth is something that is simply willed into existence. Rather than being the result of market conditions, technological developments, business logic, and trade-offs between growth/risk/opportunity cost, doubling the size of a company is something a visionary CEO simply decides to do.

We've written before about the growth fetish, an attitude common among investors and business writers that overstates the potential returns of growth while understating the risks. The tetish, as a consequence, demonizes stability. There are few pieces of bullshit conventional wisdom about business more common or pernicious than "grow or die." Lots of businesses have done very well making a steady, stable profit while many others have gone under due to badly conceived plans for expansion.

Almost by definition, accelerating growth entails risk. That said, the dangers associated with growth and the reasonableness of highly aggressive targets vary greatly from one situation to another. It is only when you consider the conditions, that the full absurdity of Richard Smith's proposal becomes evident.

The larger the company, the more difficult high growth rate becomes. The most famous exception to this (GE) was largely the result of risky behavior and accounting fraud. Because of the denominator, it is extraordinarily difficult for a few new products or services (such as evaluating online advertisers) to move the needle. This is a case where $100 million cash cow is literally too small to make a difference. Explosive growth for large corporations is especially difficult when you have mature companies or stable industries or saturated markets. (Or in this case, all three.)

Acquisitions are never risk-free, but some are safer than others. Buying up smaller competitors might be the safest. The riskiest acquisitions are outside of the industry (like a bank buying a cell phone company). Equifax acquiring any large company in the financial services industry would be an antitrust/conflict of interest/regulatory nightmare. Expanding into an overseas market would be extraordinarily problematic (most countries wouldn't even allow a homegrown Equifax to exist). Pretty much the only acquisitions the company could make are in areas where it doesn't know what it's doing.

Equifax actually had a respectable growth rate going into this, having doubled its revenue over the past decade (though that doesn't factor in inflation). As mentioned elsewhere, a great deal of this growth came from questionable newer practices such as employers looking up credit histories for prospective candidates (not sure how much more they can grow with that one). Still, even if that growth rate leveled off, the company would still be in an excellent position, bringing in high profits in an expanding and extremely safe market niche protected from new competitors by what is very close to a government monopoly. The fact that the CEO felt the need to promise to double that growth rate and the fact that people tended to believe him tells us a great deal about investor mentality in 2017.

Inevitably, the wacky billionaire and snake oil threads collide

As many others have observed many times before, Michael Hiltzik does exceptional work.

That was a problem, because homeopathy is a discredited and thoroughly debunked “alternative medicine.” Even Howard Federoff, UCI’s vice chancellor for health affairs, agreed that the scientific basis for homeopathy was “lacking.” The issue is important because the donors of a $200-million gift to UCI’s medical schools, the billionaire couple Susan and Henry Samueli, are sworn believers in homeopathy and supporters of a raft of other “integrative” health treatments. As I reported, some medical authorities have raised questions about whether the Samuelis’ beliefs and their rare generosity will undermine UCI’s explicit commitment to science-based medicine.

So it’s interesting that after I raised questions about the treatment’s listing on the website, it mysteriously disappeared. As of this writing, a UCI spokesman hasn’t gotten back to me with word on when it was removed, or whether its removal means that homeopathy no longer will be offered to patients, or merely that UCI is keeping it quiet. The listing was present as recently as last Wednesday, when I asked Federoff about it in connection with my column about the Samueli gift, which appeared online Friday; its presence can be seen on an archived version of the website dated Sept. 19.

What happened to "homeopathy"? As recently as last week, the debunked treatment was listed as a therapeutic offering on UCI Health's website, seen at left. After we asked about it, the reference disappeared, at right. (UCI Health)

As it happens, UCI didn’t succeed in scrubbing all mentions of this quack remedy from its website. At the moment, it appears on the web page of Dayna Kowata, a naturopath and acupuncturist associated with UCI’s Susan Samueli Center for Integrative Medicine. Kowata’s page says homeopathy is Kowata’s “preferred mode of treatment.” (Thanks to naturopathy debunker Britt Marie Hermes for the catch.)

The on-again-off-again appearance of homeopathy on UCI’s website and among its clinical offerings underscores the difficulties the university may face in navigating the inconsistencies between the world view of its biggest donors and its explicit commitment to rigorous scientific standards in its medical teaching, research, and clinical treatment. The Samuelis, after all, will have their names on UCI’s main on-campus medical building, and their gift will endow up to 15 faculty members, all of whom will have to demonstrate some “expertise in integrative health.”

Homeopaths occupy and interesting position in the world of snake oil and medical pseudoscience. From a scientific standpoint, they aren't any worse than practitioners of things like energy manipulation and since the active ingredients are generally diluted to the point of nonexistence, there's a limit to the harm their concoctions can do directly.

But perhaps alone among alternative medicine treatments, homeopathy has lost its plausible deniability.  Everyone who is halfway serious about medical science, knows that this is not medical science. You might be able to convince a knowledgeable audience that the jury was still out on acupuncture or that some treatment with an eastern name that sounded kind of ancient and mysterious needed more research. By now, though, very few people are willing to give homeopathic remedies the benefit of the doubt.

In a very real sense, we got lucky here. In that they featured easy to spot pseudoscience so prominently. If they had gone with something like reiki, Hiltzik's criticisms probably wouldn't have gotten much traction, and the real scandals here would not have gotten nearly as much attention.

What are the real scandals? One is the unholy amalgam of mysticism and credulous hype. The second is unprecedented in modern times concentration of wealth and economic power, amplified by a culture that assumes that the super rich are gifted with extraordinary, even supernatural competence and character.

Both of these scandals have permeated our society. I suppose it was only a matter of time before they overlapped.

Everyone's missing the second scariest thing about the Equifax story.

[Make sure to check out the comment thread. You also might want to take a look at the magical heuristics posts since we are definitely getting into magic of will here.]

As we mentioned before, the data gathering of Google and Facebook is almost entirely a bad thing from the user's perspective, something we tolerate because it comes with lots of features we do like and (often more importantly) it is generally done in such a way that we don't notice what's going on.

The data-gathering of the credit bureaus is just the opposite. It provides a service that is useful and even necessary to alleviate the asymmetry of information when seeking a line of credit. Since almost all of us fall into this group at some point in our lives, simply having the bureaus go away without creating something new to take their place is simply not an option.

The solution we collectively decided upon (or stumbled into) was something close to the public utilities model. Private companies that would be allowed to operate as government sanctioned semi monopolies granted special accommodations. We could go back-and-forth as to whether or not this was a better solution than setting up a government agency to warehouse our financial data, but once the utility model has been settled upon, we should all be able to agree that certain conditions hold.

The companies are exempted from antitrust rules and are allowed to do things that other companies aren't. In exchange, the companies must be heavily regulated and are locked into an extremely conservative business model. Since they provide an essential service, they cannot be allowed to take big or even moderate risks. Since they are given special government accommodations, they cannot be allowed to take unfair advantage of these. Thus, the companies should provide a remarkably safe and stable investment, but with limited returns. Any attempt to deviate from that can only be trouble.

Which brings us to this from the CEO of Equifax.

RICHARD SMITH: Our goal financially in the next five years or so is to go from about $4 billion of revenue to $8 billion, from a valuation of $20 billion to $40 billion. And to do that, we're focused on a couple of things important to us.

Of course, it is possible that the CEO was simply bullshitting the investors. That would be bad enough, but the other possibility is far worse. For a large, mature company like Equifax to double its revenue and valuation in a five-year period almost certainly requires risky behavior or making all possible use of any competitive advantage or probably both. The moment this statement went public it became obvious that the management of Equifax was either willfully misleading its shareholders and/or planning to abuse its position.

How did we get to the point where something this egregious goes unnoticed? For starters, there's the growth fetish – – the tendency to greatly overvalue growth over stable returns. Then there's the widespread modern belief that profit is proportional to social good. And, of course, there's hostility toward regulation. All bad individually, but potentially catastrophic when combined.

An exceedingly good point

This is Joseph

Mike the Mad Biologist: 

Supply-side concerns, even as corporations are sitting on $2 trillion cash? Of course.

Now it is perfectly possible that there are distributional issues here that would make for a targeted plan.  But, in general, if there were great investment opportunities for any firm or skill-set then you'd expect that cash hoarding would be less.

If there are specific areas that need to be boosted, this suggests a redistribution instead of a pure cut.  Sure, there could be other reasons for cutting rates but they sure aren't due to a lack of capital overall, if the corporate cash holdings are remotely accurate (that's more than $5000 per person in the United States -- this is a lot of idle capital).