Thursday, September 10, 2020

Labor Day Tweet -- 3 days too late




Hoover, of course.




I have a feeling something's about to break with Tesla, between competition across the price range and scandals propagating, but you should always be reluctant to count out the staying power of the myth of Musk.





And the Teslaish




Data "Science"




Crime and Politics


If the girl is black, it's 62 cents.


Misc

WFH


And finally...


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Wednesday, September 9, 2020

Probably a good time to dust off this discussion of self-selection and volatility


This piece was pure speculation eight years ago. We now have actual data (if you're into that sort of thing.)

Tuesday, November 6, 2012

Life on 49-49

[Following up on this post, here are some more (barely) pre-election thoughts on how polls gang aft agley. I believe Jonathan Chait made some similar points. Some of Nate Silver's critics also wandered into some neighboring territory (with the important distinction that Chait understood the underlying concepts)]

Assume that there's an alternate world called Earth 49-49. This world is identical to ours in all but one respect: for almost all of the presidential campaign, 49% of the voters support Obama and 49% support Romney. There has been virtually no shift in who plans to vote for whom.

Despite this, all of the people on 49-49 believe that they're on our world, where large segments of the voters are shifting their support from Romney to Obama then from Obama to Romney. They weren't misled to this belief through fraud -- all of the polls were administered fairly and answered honestly -- nor was it a case of stupidity or bad analysis -- the political scientists on 49-49 are highly intelligent and conscientious -- rather it had to do with the nature of polling.

Pollsters had long tracked campaigns by calling random samples of potential voters. As campaign became more drawn out and journalistic focus shifted to the horse race aspects of election, these phone polls proliferated. At the same time, though, the response rates dropped sharply, going from more than one in three to less than one in ten.

A big drop in response rates always raises questions about selection bias since the change may not affect all segments of the population proportionally (more on that -- and this report -- later). It also increases the potential magnitude of these effects.

Consider these three scenarios. What would happen if you could do the following (in the first two cases, assume no polling bias):

A. Convince one percent of undecideds to support you. Your support goes to 50 while your opponent stays at 49 -- one percent poll advantage

B. Convince one percent of opponent's supporters to support you. Your support goes to 50 while your opponent drops to 48 -- two percent poll advantage

C. Convince an additional one percent of your supporters to answer the phone when a pollster calls. You go to over 51% while your opponent drops to under 47%-- around a five percent poll advantage.

Of course, no one was secretly plotting to game the polls, but poll responses are basically just people agreeing to talk to you about politics, and lots of things can affect people's willingness to talk about their candidate, including things that would almost never affect their actual votes (at least not directly but more on that later).

In 49-49, the Romney campaign hit a stretch of embarrassing news coverage while Obama was having, in general, a very good run. With a couple of exceptions, the stories were trivial, certainly not the sort of thing that would cause someone to jump the substantial ideological divide between the two candidates so, none of Romney's supporters shifted to Obama or to undecided. Many did, however, feel less and less like talking to pollsters. So Romney's numbers started to go down which only made his supporters more depressed and reluctant to talk about their choice.

This reluctance was already just starting to fade when the first debate came along. As Josh Marshall has explained eloquently and at great length since early in the primaries, the idea of Obama, faced with a strong attack and deprived of his teleprompter, collapsing in a debate was tremendously important and resonant to the GOP base. That belief was a major driver of the support for Gingrich, despite all his baggage; no one ever accused Newt of being reluctant to go for the throat.

It's not surprising that, after weeks of bad news and declining polls, the effect on the Republican base of getting what looked very much like the debate they'd hoped for was cathartic. Romney supporters who had been avoiding pollsters suddenly couldn't wait to take the calls. By the same token. Obama supporters who got their news from Ed Schultz and Chris Matthews really didn't want to talk right now.

The polls shifted in Romney's favor even though, had the election been held the week after the debate, the result would have been the same as it would have been had the election been held two weeks before -- 49% to 49%. All of the changes in the polls had come from core voters on both sides. The voters who might have been persuaded weren't that interested in the emotional aspect of the conventions and the debates and were already familiar with the substantive issues both events raised.

So response bias was amplified by these factors:

1. the effect was positively correlated with the intensity of support

2. it was accompanied by matching but opposite effects on the other side

3. there were feedback loops -- supporters of candidates moving up in the polls were happier and more likely to respond while supporters of candidates moving down had the opposite reaction.

You might wonder how the pollsters and political scientists of this world missed this. The answer that they didn't. They were concerned about selection effects and falling response rates, but the problems with the data were difficult to catch definitively thanks to some serious obscuring factors:

1. Researchers have to base their conclusions off of the historical record when the effect was not nearly so big.

2. Things are correlated in a way that's difficult to untangle. The things you would expect to make supporters less enthusiastic about talking about their candidate are often the same things you'd expect to lower support for that candidate

3. As mentioned before, there are compensatory effects. Since response rates for the two parties are inversely related, the aggregate is fairly stable.

4. The effect of embarrassment and elation tend to fade over time so that most are gone by the actual election.

5. There's a tendency to converge as the election approaches. Mainly because likely voter screens become more accurate.

6. Poll predictions can be partially self-fulfilling. If the polls indicate a sufficiently low chance of winning, supporters can become discouraged, allies can desert you and money can dry up. The result is, again, convergence.

For the record, I don't think we live on 49-49. I do, however, think that at least some of the variability we've seen in the polls can be traced back to selection effects similar to those described here and I have to believe it's likely to get worse.
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Tuesday, September 8, 2020

"California would need to burn 20 million acres — an area about the size of Maine — to restabilize in terms of fire"

The sky here in LA has taken on that distinct orange tint. Just as the heat has started to let off, the air is turning bad. Another large fire has broken out in the Angeles Forest. [Emphasis added]

The rugged terrain, access and triple-digit temperatures created difficult and dangerous conditions for firefighters. During a Monday afternoon press conference, officials expressed concern that winds in the coming days would change the direction of the flames, pushing them down the mountains toward foothill communities in the San Gabriel Valley.

If that happens, authorities said the communities that would impacted first would be Monrovia and Duarte. Residents in those areas are being urged to be prepared to evacuate. Bradbury, Azusa, Arcadia and Sierra Madre could also potentially see either evacuation warnings or orders.

"Directly coming into Monrovia or Duarte, no, that area has not burned in 50 to 100 years in some places, so the fuel-loading is high and there is not a natural break from the fuels from previous fires," said incident commander Steve Goldman.
As Elizabeth Weil explains in her Pulitzer-worthy Propublica piece (which we discussed earlier here), this is not just a dangerous but an unnatural situation. [again, emphasis added]
Yes, there’s been talk across the U.S. Forest Service and California state agencies about doing more prescribed burns and managed burns. The point of that “good fire” would be to create a black-and-green checkerboard across the state. The black burned parcels would then provide a series of dampers and dead ends to keep the fire intensity lower when flames spark in hot, dry conditions, as they did this past week. But we’ve had far too little “good fire,” as the Cassandras call it. Too little purposeful, healthy fire. Too few acres intentionally burned or corralled by certified “burn bosses” (yes, that’s the official term in the California Resources Code) to keep communities safe in weeks like this.

Academics believe that between 4.4 million and 11.8 million acres burned each year in prehistoric California. Between 1982 and 1998, California’s agency land managers burned, on average, about 30,000 acres a year. Between 1999 and 2017, that number dropped to an annual 13,000 acres. The state passed a few new laws in 2018 designed to facilitate more intentional burning. But few are optimistic this, alone, will lead to significant change. We live with a deathly backlog. In February 2020, Nature Sustainability published this terrifying conclusion: California would need to burn 20 million acres — an area about the size of Maine — to restabilize in terms of fire.

...

[Deputy fire chief of Yosemite National Park Mike] Beasley earned what he called his “red card,” or wildland firefighter qualification, in 1984. To him, California, today, resembles a rookie pyro Armageddon, its scorched battlefields studded with soldiers wielding fancy tools, executing foolhardy strategy. “Put the wet stuff on the red stuff,” Beasley summed up his assessment of the plan of attack by Cal Fire, the state’s behemoth “emergency response and resource protection” agency. Instead, Beasley believes, fire professionals should be considering ecology and picking their fights: letting fires that pose little risk burn through the stockpiles of fuels. Yet that’s not the mission. “They put fires out, full stop, end of story,” Beasley said of Cal Fire. “They like to keep it clean that way.”

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Monday, September 7, 2020

Happy Labor Day Repost

 
Look for the Union Label


The ILGWU sponsored a contest among its members in the 1970s for an advertising jingle to advocate buying ILGWU-made garments. The winner was Look for the union label.[9][10] The Union's "Look for the Union Label" song went as follows:

    Look for the union label
    When you are buying a coat, dress, or blouse,
    Remember somewhere our union's sewing,
    Our wages going to feed the kids and run the house,
    We work hard, but who's complaining?
    Thanks to the ILG, we're paying our way,
    So always look for the union label,
    It says we're able to make it in the USA!

The commercial featuring the famous song was parodied on a late-1970s episode of Saturday Night Live in a fake commercial for The Dope Growers Union and on the March 19, 1977, episode (#10.22) of The Carol Burnett Show. It was also parodied in the South Park episode "Freak Strike" (2002).















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Friday, September 4, 2020

Is age a cause?

 This is Joseph.

Inspired by this twitter thread. 

This question is amazingly complicated when you look at it closely. Age is an odd cause for discussion in public health because chronological age is not something you can directly intervene on. When you look closely, age is actually a bundle of concepts:

  • There are direct causal age effects due to social rules based on age. Criminal justice (e.g. minor versus adult sentencing), age limits on movies or alcohol purchases, eligibility for school or daycare, medicare eligibility, and other such exposures
  • Age is a proxy or marker for biological aging processes (e.g., puberty, baldness, biological entropy)
  • Age is also a convenient way to adjust for cohort effects (e.g., exposure to lead gasoline, educational changes)
So it is super clear that age is a cause of the first set of exposures, in that it changes the frequency or level of some consequent outcome (e.g., length of jail sentence, access to alcohol). 

It is also pretty clear that the second definition of age is important to de-confounding observational associations. For example, without adjusting for age (or sex), would baldness be associated with death? It would, but not in any causal way (as older males have both less hair and a higher risk of death). The idea that age is not a common cause of the exposure and outcome seems odd, even if the measure (chronological age) is imperfect. But I don't know of a generally better measure of biological entropy, and certainly not one that is so widely available. 

The last (cohort effects), it seems to me, is a case where a lot of the cohort effects would be best directly measured (if feasible). Unlike biological aging, there is a huge risk that there is effect measure modification by factors like geography. It is quite clear that exposures to leaded gasoline may vary based on car ownership of an area and the proximity to roads. 

So the most surprising thing is how age is actually a vague concept when discussing causality. 

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Thursday, September 3, 2020

The truth about Western megafires is the narrative no one wants to hear.

Every few years, some journalist will do a solid, deeply reported story on Western megafires. (This Propublica piece by Elizabeth Weil is excellent. I also recall a good series from NPR a while back.) These articles always say basically the same thing about the scientific consensus, the severity of the problem and the steps we need to take. They are always persuasive, always told with a great sense of urgency, and always ignored. This is what happens, at least these days, when a crisis and its solutions break with conventional narratives and  require great political will to address.

The doomed California genre plays both to very real environmental concerns and to a longstanding Eastern schadenfreude, the epicenter of which is located in the editorial offices of the New York Times. The Golden State is supposedly burning for its environmental sins but in reality this is not primarily a climate change story. While increased heat and more severe droughts exacerbate the situation, we would still be having megafires without them.
A seventy-word primer: We dug ourselves into a deep, dangerous fuel imbalance due to one simple fact. We live in a Mediterranean climate that’s designed to burn, and we’ve prevented it from burning anywhere close to enough for well over a hundred years. Now climate change has made it hotter and drier than ever before, and the fire we’ve been forestalling is going to happen, fast, whether we plan for it or not.

Megafires, like the ones that have ripped this week through 1 million acres (so far), will continue to erupt until we’ve flared off our stockpiled fuels. No way around that.
Fires are an essential part of the life cycle of these forests. Controlled burns return the forests to a more normal equilibrium. If we listened to the scientific consensus, they would be the main weapon in our arsenal. Unfortunately science is not the main consideration here.

By comparison, planning a prescribed burn is cumbersome. A wildfire is categorized as an emergency, meaning firefighters pull down hazard pay and can drive a bulldozer into a protected wilderness area where regulations typically prohibit mountain bikes. Planned burns are human-made events and as such need to follow all environmental compliance rules. That includes the Clean Air Act, which limits the emission of PM 2.5, or fine particulate matter, from human-caused events. In California, those rules are enforced by CARB, the state’s mighty air resources board, and its local affiliates. “I’ve talked to many prescribed fire managers, particularly in the Sierra Nevada over the years, who’ve told me, ‘Yeah, we’ve spent thousands and thousands of dollars to get all geared up to do a prescribed burn,’ and then they get shut down.” Maybe there’s too much smog that day from agricultural emissions in the Central Valley, or even too many locals complain that they don’t like smoke. Reforms after the epic 2017 and 2018 fire seasons led to some loosening of the CARB/prescribed fire rules, but we still have a long way to go.

“One thing to keep in mind is that air-quality impacts from prescribed burning are minuscule compared to what you’re experiencing right now,” said Matthew Hurteau, associate professor of biology at University of New Mexico and director of the Earth Systems Ecology Lab, which looks at how climate change will impact forest systems. With prescribed burns, people can plan ahead: get out of town, install a HEPA filter in their house, make a rational plan to live with smoke. Historical accounts of California summers describe months of smoky skies, but as a feature of the landscape, not a bug. Beasley and others argue we need to rethink our ideas of what a healthy California looks like. “We’re used to seeing a thick wall of even-aged trees,” he told me, “and those forests are just as much a relic of fire exclusion as our clear skies.”
 
In the Southeast which burns more than twice as many acres as California each year — fire is defined as a public good. Burn bosses in California can more easily be held liable than their peers in some other states if the wind comes up and their burn goes awry. At the same time, California burn bosses typically suffer no consequences for deciding not to light. No promotion will be missed, no red flags rise. “There’s always extra political risk to a fire going bad,” Beasley said. “So whenever anything comes up, people say, OK, that’s it. We’re gonna put all the fires out.” For over a month this spring, the U.S. Forest Service canceled all prescribed burns in California, and training for burn bosses, because of COVID-19.
In my more pessimistic moments, I think we are in a post-solution America, a country that talks a better and better game but has lost its taste for actually solving problems. Lately, those pessimistic moments have become more frequent.
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Wednesday, September 2, 2020

Bad predictions

 This is Joseph.

Early on in the pandemic, one of the worst takes is that the "stay at home" orders would result in a baby boom. This was a terrible take.  Let us consider the countervailing forces:

  1. Harder to meet partners, so this "baby boom" is mostly among people already living together
  2. Those living together are under tremendous stress, which is not good for marriage. Obviously, if you are considering a divorce that is poor timing for children
  3. There is suddenly a ton of financial uncertainty. 
  4. We got to see childcare collapse and schools turn into an unreliable form of childcare. If you are having trouble with two jobs at the same time due to unreliable (or no) childcare, that seems like a bad time to add children to the mix
  5. Who wants a ton of medical center encounters during an actual pandemic?
  6. In the United States, health care is linked to employment (the thing that the economic uncertainty also influences) and who wants to take risks with that? 
The actual baby boom occured after the period of uncertainty and suffering was over (World War 2) and in the context of an economic boom. Sure, after years of deprivation, the sudden appearance of opportunity is going to make many people consider children. But going into conditions worsening, birth rates were already at record lows. 

Now I am not saying that it is necessarily bad to have a falling birth rate. There are a lot of complex issues that go into whether or dropping birth rates are a net positive. But this was definitely one of the predictions that seemed to look at very surface effects and make a very naive extropolation.

It is a different post, but I think there is huge confusion between "working at home under normal conditions" and "working at home in a pandemic": if nothing else, there is a lot less focus to had when everybody is trapped in the house all of the time 

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Tuesday, September 1, 2020

It's a fun show (Tom Ellis is is great) but...

I know we've been over this before (and I do feel bad about picking on the same company) but if you want to work on your skills seeing through PR, there is no better place to start than Netflix, in particular the ownership and shelf life of Netflix originals.

Keep in mind that the justification of the company's market cap rests on two pillars, sustaining dominance moving toward monopoly and building a content library that surpasses Disney/Fox, WB, and all the other majors.

It is difficult to reconcile that second goal with the ongoing practice of spending serious money producing and promoting shows that Netflix has little to no ownership of. It's a list that extends from House of Cards and Orange is the New Black to She-Ra and Avatar. A recent promoted tweet reminded me I've forgotten one.



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Monday, August 31, 2020

Musk also promised you could use it to mentally summon your Tesla

Julia Carrie Wong writing for the Guardian

Neuralink: Elon Musk unveils pig he claims has computer implant in brain


The tech entrepreneur Elon Musk on Friday showed off a pig whose brain he says has been implanted with a small computer.

“We have a healthy and happy pig, initially shy but obviously high energy and, you know, kind of loving life, and she’s had the implant for two months,” Musk said of Gertrude, the pig.

The billionaire entrepreneur, whose other companies include Tesla and SpaceX, presented during a live-stream event to recruit employees for his neuroscience startup Neuralink. He described Gertrude’s coin-sized implant as “a Fitbit in your skull with tiny wires”.

...

Musk did not present any scientific data to support his claims about the pigs or the devices.

I talked about this three years ago though I didn't realize how far this would go. Check out number 7.

Tuesday, July 25, 2017

A few points to keep in mind when reading any upcoming story about Elon Musk

First, a quick update from the good people at Gizmodo, specifically Ryan Felton:

Elon Musk awoke on Thursday with the intention of sending Twitter into a frenzy by declaring that he received “verbal govt approval” to build a Hyperloop in the densest part of the United States, between New York City, Philadelphia, Baltimore, and Washington D.C. This is dumb, it’s not how things work, and requires, uh, actual government approval.

Felton goes on to contact the government agencies that would absolutely have to sign on to such a project. Where he was able to get comments, they generally boiled down to "this is the first we're hearing of it." The closest he came to an exception was the federal Department of Transportation, which replied

We have had promising conversations to date, are committed to transformative infrastructure projects, and believe our greatest solutions have often come from the ingenuity and drive of the private sector.
This is a good time to reiterate a few basic points to keep in mind when covering Elon Musk:

1.    Other than the ability to make a large sum of money through some good investments, Elon Musk has demonstrated exceptional talent in three (and only three) areas: raising capital for enterprises; creating effective, fast-moving, true-believer corporate cultures; generating hype.

2.    Though SpaceX appears to be doing all right, Musk does not overall have a good track record running profitable businesses. Furthermore, his companies (and this will come as a big slap in the face of conventional wisdom) have never been associated with big radical technological advances. SpaceX is doing impressive work, but it is fundamentally conventional impressive work. Before the company was founded, had you spoken with people in the aerospace community and asked them "what is closest to being Mars ready, who has it, and who are the top people in the field?", the answers would have been the type of engine SpaceX currently uses, TRW (which sued SpaceX for stealing their intellectual property), and the chief rocket scientist SpaceX lured away from TRW. By the same token, Tesla is pretty much doing what all of the other major players in the auto industry are doing in terms of technology.

3.    From the beginning, Musk has always had a tendency to exaggerate and overpromise. Smart, skeptical journalist like Michael Hiltzik and the reporters at the Gawker remnants have taken any claim from Elon Musk with a grain or two (or 20) of salt.

4.    That said, in recent years things have gotten much, much worse. Musk has gone from overselling feasible technology and possibly viable business plans to pitching proposals that are incredibly unlikely then supporting them with absurdly unrealistic estimates and sometimes mere handwaving.

5.    The downward spiral here seems to have started with the Hyperloop. This also seems to be the point where Musk started trying to do his own engineering rather than simply taking credit for the work of those under him. On a related note, it is becoming increasingly obvious that Elon Musk has no talent for engineering.

6.    Musk’s increasingly incredible claims have started to strain the credulity of most of the mainstream press, but the consequences have been too inconsistent and too slow-coming to have had much of a restraining influence on him. Even with this latest story, you can find news accounts breathlessly announcing that supersonic travel between New York and DC is just around the corner.

7.    Finally, it is essential to remember that maintaining this “real-life Tony Stark” persona is tremendously valuable to Musk. In addition to the ego gratification (and we have every reason to believe that Musk has a huge ego), this persona is worth hundreds of millions of dollars to Musk. More than any other factor, Musk’s mystique and his ability to generate hype have pumped the valuation of Tesla to its current stratospheric levels. Bloomberg put his total compensation from Tesla at just under $100 million a year. When Musk gets tons of coverage for claiming he's about to develop telepathy chips for your brain or build a giant subterranean slot car race track under Los Angeles, he keeps that mystique going. Eventually groundless proposals and questionable-to-false boasts will wear away at his reputation, but unless the vast majority of journalists become less credulous and more professional in the very near future, that damage won’t come soon enough to prevent Musk from earning another billion dollars or so from the hype.
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Friday, August 28, 2020

The perils of aggregation in complex systems

This is Joseph

I want to follow up on Mark's great cigarettes and cocaine post. I think the key to the post is the danger of aggregation of complex relationships into a simple pool and then cherry picking a component that might not be representative.

He brought up one of my favorite examples: is it environmentally friendly to switch to a plant based diet. Please note, that we are talking the environmental issues and not the ethical ones, which are a different and may lead to different conclusions . . . for entirely independent reasons. 

It is like the social security and medicare debate. If you want social security gone because it allows experienced workers to retire from your airplane factory that is an argument. But it doesn't necessarily follow that the economic sustainability argument (social security and medicare costs are out of control, we need to cut social security) is going to hold up. 

But if you look at where rice ends up relative to chicken, it is actually more environmentally costly to produce rice than chicken. Now, to be fair, if you consider post-production costs then chicken looks worse, but this is not the huge difference that beef results in. It is also the case that post-production is very modifiable -- it makes the potato look bad because of how we use it but it could be used quite differently. Similarly, cheese is very expensive to produce environmentally, but milk and yogurt are much less impactful than rice in either model.

What I am getting at is that complex models are often badly represented as aggregates. Furthermore, understanding the underlying dynamics can result in odd guidance. Beef looks terrible but milk is quite benign. But what is the counterfactual to more milk, less meat -- do we keep all of the male animals alive? Do we not consume them? What you really have is a beef ecosystem that is very hard to break apart. 

Similarly, it is easy to observe that rice is environmentally costly but the guidance can be challenging. It is also true that good farmers do crop rotation and winter wheat is a common rotation crop. It would be worse to deplete farmland completely and there is a complicated environmental cost to having more farmland to produce the same output in terms of eliminating animal habitat.  

So I guess my point is that simple solutions to complex solutions are concerning. It may be the case that it really is as a simple as cigarettes and cocaine. But in a lot cases there is important structure all of the way down and simple arguments often miss the complexity of the system. It is also the case that the counterfactual needs to be properly developed. If we get rid of beef are we getting rid of milk too? This is not to say that you can't ask questions like "should there even be pure slaughter based beef herds?" and such. 

But it takes real effort to make thoughtful improvements in complex systems. 


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Thursday, August 27, 2020

Would "North Dakota" have been funnier than "Wyoming"?

It's probably a good thing that Nate Silver doesn't read my blog because for all the man's considerable talents (I'm a big admirer), he has a notoriously thin skin and this is a really embarrassing comment from someone who makes a living, in part, studying the demographics and population distributions of the US.

The issue here is by no means limited to Silver. The majority of NYC based journalists have a shockingly weak understanding of the nation's most populous state (and are somehow even more ignorant of the states in between).

A great deal of the misinformation revolves around a fascination with San Francisco. The New York idea of SF as the only acceptable California city dates back at least as far as All About Eve and Addison De Witt  This SF-centric view of the state has led to a number of mistaken assumptions implicit in most coverage from the East, such as:

While LA is bigger, the population of California is almost evenly divided between Northern and Southern California;

[Greater LA is more than twice as big as the greater Bay Area. There are other ways of dividing things up but they all pretty much tell the same story.]

In Northern California, the big city is San Francisco;

[That would be San Jose, which is itself smaller than both LA and San Diego.]

Silicon Valley is right next door.

[It's about an hour's drive.]

Unless the majority of San Francisco residents move to Wyoming (with its three electoral votes), it's hard to imagine the city having a noticeable impact on the EC. Even considering the entire Bay Area, the numbers aren't all that big.


There's a more important story here about regional bias, provincialism herd mentality and the danger of conventional narratives, but it's late and I'm tired.

We'll come back to this. In the meantime, read more James Fallows, When I complain abut these things, Fallows is always the exception.
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Wednesday, August 26, 2020

Another old post that's feeling newly relevant

Tuesday, June 13, 2017

Ponzi Thresholds

Another post based on Reeves Wiedeman's Uber article in New York magazine. This one sets up a concept I've been meaning to discuss with the tentative name of a Ponzi threshold. The basic idea is that sometimes overhyped companies that start out with viable business plans see their valuation become so inflated that, in order to meet and sustain investor expectations, they have to come up with new and increasingly fantastic longshot schemes, anything that sounds like it might possibly pay off with lottery ticket odds.

Like I said, this is been bouncing around for quite a while. I may have even slipped in a previous reference that I've forgotten about. There are plenty of potential examples, but the following is the first time I've seen the phenomenon spelled out in such naked terms [emphasis added]:
Meanwhile, in an effort to show potential investors in an IPO that it has multiple revenue streams, Uber has expanded into a variety of industries tangentially related to its core business. In 2015, the company launched Uber Everything, an initiative to figure out how it could move things in addition to people, and when I visited Uber headquarters, the guest Wi-Fi password was a reference to Uber Freight, the company’s attempt to get into trucking. (A former employee said the password often seemed to be a subliminal message encouraging employees to focus on the company’s newest initiatives.) But moving things had its own complications. One former Uber Everything manager said the company had looked at transporting flowers or prescription drugs or laundry but found that the demographic of people who, for example, couldn’t afford a washer and dryer but would pay to have their laundry delivered was a small one. Uber Rush, a delivery service in New York, had become “a nice little business,” the manager said, “but at Uber, you’re looking for a billion-dollar business, not a nice little business.”

It turned out that food delivery was the only area that made much sense, though even that was difficult. In the past year, food-delivery companies SpoonRocket, TinyOwl, Take Eat Easy, and Maple have all ceased operations. Postmates said in 2015 that it could be profitable in 2016, at which point it pushed the date to 2017. Its target is now 2018. “It absolutely does not work as a one-to-one business — picking up a burrito from Chipotle and delivering it,” a former Uber Eats manager said. “It has to be ‘I’m picking up ten orders from Chipotle, and I’m picking up this person next to Chipotle, and I’m gonna drop the burritos off along the way.’ ” Uber Eats has grown significantly, but getting the business up and running had required considerable subsidies, and the manager said it was rumored that a significant portion of the company’s domestic losses were coming from Uber Everything.

Uber’s expansion into an ever-widening gyre of business interests makes sense for a company looking to justify a huge valuation, but it has drawn criticism from some who wonder why the company is moving into so many different markets without becoming profitable in its first one. “It’s a Ponzi scheme of ambition,” Anand Sanwal, a venture-capital analyst, told me. “ ‘We’re gonna raise money on the promise of dominating an industry to come in order to pay for this thing that doesn’t make us money right now.’ ” He had recently conducted an unscientific poll of subscribers to his newsletter asking how many would invest in Uber today, even at a discounted valuation, and 77 percent said they wouldn’t. But the new initiatives have the benefit of keeping everyone excited about the future: In April, Uber held a conference in Dallas to explain why it planned to one day get into flying cars.


That phrase "looking to justify a huge valuation" is one that you need to contemplate for a few moments, let the logical implications wash over you. As I suggested before, like most New York magazine tech writers, Wiedeman does a good job capturing the telling detail, but is reluctant to draw that final Dr.-Tarr-and-Prof.-Feather conclusion, particularly when it threatens a cherished narrative.

There are at least two layers of crazy here. First, hype and next-big-thingism push Uber's value far beyond any defensible level, then, as reality sets in and investors realize that the original business model, though sound, can never possibly justify the money that's been put into the company, Uber's management responds with a series of more and more improbable proposals in order to keep the buzz going.

The phenomenon is not unique to this company but I can't think of another case this big or this blatant. (And they actually used the term "Ponzi scheme.")
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Tuesday, August 25, 2020

Tuesday Tweets

When the dust finally settles and we try to makes sense of all this, one of the key elements of the story will be the way the conservative movement cultivated rage and fear largely through disinformation then lost control of the process. 


 



Cool.





Elon Musk now has a net worth of almost $100 billion.







Impenetrable pseudonyms like ADAlthousePhD.



It's not so much that she wanted them to do it; it's that she thought it was a good idea to say it out loud.



What would some "Missy" know about... oh, never mind.




Two Economies






I would have gone with a Goodfellas reference, but it's nice to have some variety.



Excellent report on the USPS crisis.

Pretty much sums it up.










Kids, Kids and Dogs








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Monday, August 24, 2020

A cigarettes and cocaine argument

Been meaning to do a post on this for a while. The basic form goes something like this:

Our household spending is out of control.

Between your cigarettes and my cocaine habit, we're spending hundreds of dollars a week.

You definitely need to cut back on your cigarettes.

The key to the approach is to take two things, related but of wildly different magnitudes, and conveniently aggregate then disaggregate them to reach the desired conclusion.

For years (post Reagan and pre-Obamacare), pundits and politicians pushing for entitlement reform relied largely, perhaps primarily on C and C arguments. Dire projections for the combined finances of Social Security and Medicare were presented to justify severe and immediate cuts in Social Security. Of course, the horrifying shortfalls were coming from the Medicare side of the ledger, but that pea was inevitably lost among the shells.

More recently we've seen a number of articles making the case that everyone going vegan is essential for saving the planet from global warming. For the record, there are a lot of solid arguments for switching to a plant-based diet in terms of the environment, health, food security (there are a lot of arguments for quitting smoking, too), but the ones here have almost all relied on jumping from cocaine to cigarettes.

[So we're absolutely clear, the following refers only to claims about the impact of agriculture on climate change. There are enormous environmental concerns about hog farming and the poultry industry. They are outside of the scope of this post, but they are very much part of the larger discussion.]

Take this article from the Guardian, "Why you should go animal-free" by  Damian Carrington. While the framing is vegan vs. non-vegan, the specifics are almost all limited to beef or beef/lamb with virtually no mention of pork or poultry. What happens to the numbers when we start looking at other animal protein sources?



Holding protein consumption constant. the improvement caused by substituting pork for beef (a fairly small lifestyle change) is far greater than the improvement caused by going from pork to tofu, and the diminishing returns really kick in after that.

At the risk of repeating myself, there are any number of excellent reasons for going vegan, but when people argue that your chicken sandwich is causing global warming, they aren't being analytically honest.

Does anyone out there have their favorite cocaine and cigarette examples to share?
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Friday, August 21, 2020

Friday video miscellanea


























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