Tuesday, June 30, 2020

Our take from three years ago: "a propaganda-fed base has no capacity to self correct, rather it continues follow unsustainable paths that only gain momentum"

The next time someone asks why the GOP doesn't veer away from stands that look increasingly likely to end in electoral disaster, we have a post for that.

Thursday, November 2, 2017

Russians, Straussians, soft landings, and hamburger emojis

Since February, we've been discussing the curiously stable dynamic that keeps the GOP aligned with Trump even as his poll numbers slip. We've also argued that, at this point in time, this alliance holds the danger of an extraordinarily hard landing for the party. At the risk of overextending the metaphor, the Republicans are desperately hoping for a soft landing but are, at the same time, doing everything they can to maintain altitude.
As many have observed, the GOP of the 70s was able to minimize the long-term damage of Watergate by distancing themselves from Nixon and very publicly refusing to impede the investigation. The response of the party now has been just the opposite. It is as if the Republicans had responded to Watergate by doubling down their defense of Nixon, insisting there was nothing to the accusations, and calling for hearings into the crimes of McGovern, Humphrey, and LBJ.

Obviously, the decision to go all in on Trump is partially motivated by a desire to achieve as many policy goals as possible while still firmly in control of all three branches of government, but there's another factor which might be as large and which is possibly doing even more to eliminate the possibility of a soft landing.


If some poli-sci PhD candidate out there is looking for a thesis topic, you could do worse than the breakdown of Straussian communication matrices, or as I've put it, "drinking from the wrong pipe." The conservative movement was essentially a three-legged stool built on money, prioritizing strategic offices and elections, and misinformation. This last one was arguably the most important; it is also the one that has proven the least stable.

The initial purpose of this "noble lie" approach was to use the propaganda to keep the base sending money and showing up for the polls through of a combination of rage and fear. As with all Straussian systems, it was assumed that those in power would be in on the joke while the people who believed the lies would simply serve as electoral cannon fodder.

At some point though (I suspect inevitably), a couple of things happen. First, the believers become leaders. This is become blindingly obvious with Trump, but the children of Fox News have been in control of the party since at least 2010 and the roots go back further. Remember how Dick Cheney insisted while traveling that all hotel televisions be tuned to Fox News?

The second, and possibly more dangerous problem is that a propaganda-fed base has no capacity to self correct, rather it continues follow unsustainable paths that only gain momentum, often exacerbated by ratcheting mechanisms. Soon you reach a point where, even if the leaders accurately perceive the situation and realized the best solution, they can no longer reconcile that reasonable course of action with what the vast majority of their supporters have been told to believe for decades.

One of the essential steps for achieving a soft landing is getting your core supporters to face just how dire the situation is. Fox News et al., however, has simply lost the capacity to do this.

Monday, June 29, 2020

I hate to spoil another blogger's joke...

So just click over to the Financial Times and read this cautionary list of red flags to watch out for when trying to avoid companies likely to leave a multi-billion dollar hole in the market. Make sure to read the last paragraph.

We’ll wait.

Who’s going to be the next Wirecard?

Friday, June 26, 2020

Tesla context -- Why the red flags matter

It may seem like we've been picking on Tesla quite a bit lately. Sure, Musk is annoying, but the SpaceX stuff is cool, and we can all get behind electric cars and solar cells. Aren't there things  more worth complaining about in 2020?

The trouble with that framing is that the things you hear about -- the often cool, sometimes just goofy technology, the outrageous claims, the nerd as rock star lifestyle --  are a small part of the story, while the big parts of the story are more than big enough to worry about. This is especially true when you're living in Jengaville where one of the biggest, most precarious towers is a stock market bubble in the middle of an economic collapse.

Both columns in the table below show reasons for concern (discussed further here). Tesla has grown since 2017, but its revenue is still a fraction of the others below. This is a seventeen year old company that has turned a profit only intermittently.

Think about that for a moment and remember...

... Tesla's market cap is around three times that of GM and Ford, combined.

The other column is a stark reminder of the issues with corporate governance. The board, of course, provides no oversight. Musk has flagrantly attempted to manipulate the stock price. Many of the accounting practices appear fishy. All of this may or may not be connected to a mysterious and conveniently timed spike in the stock price that earned Musk a bonus worth three quarters of a billion dollars.

In more normal times, I'd add something here about Tesla being a bad employer and bad corporate citizen, but at the moment, I'm mainly thinking about what a stock market collapse would do to a fragile economy, the pocketbooks of retail investors and the emotional well being of a country that's already under just a bit of stress.

Thursday, June 25, 2020

Some thoughts on recent reporting on Tesla

This is Joseph

One thing that I have not talked a lot about on the blog is Tesla (usually Mark's beat -- Mark is reporting on Tesla on Twitter). Tesla is becoming much bigger news now that a business insider story raises some safety concerns:
Leaked emails from 2012 reveal that Tesla knew its Model S battery had a design flaw that could lead to break downs and fires, but it sold the cars anyway. It's unclear when the design flaw was fixed.
Now, in one way this is quite normal -- cars have manufacturing issues all of the time. What makes this bad is that it is a mission critical component (the battery) and on a very high end vehicle. It's old, but it can be hard to report on a defect without a great inside source. I can think of no faster way to undermine a high end brand then to have failures on key components and the battery is heart of the electric vehicle. I think only the brakes being defective would worry me more, and even then the flammable piece is definitely not ideal.

You need to out-compete vehicles like the Volt, which itself is discontinued. While the Tesla generally scores better than the Volt did, it does so at almost twice the price point the Volt was offered at. The differences in overall size, features, and ratings are not large (and the back-up fuel tank on the Volt is maybe even a plus). So the prestige brand has to bring something to the table and an obvious choice would be reliability. It is not helpful, as Mark has tweeted, that JD Power found Tesla had the lowest quality score among 32 brands.

Here is hoping that more information comes out that makes this look like an outlier and not a common issue with Tesla vehicles.But the idea of Tesla, becoming a luxury electric vehicle car brand, really does depend on getting the key pieces of the top of the market right. At the moment the cars are hard to get (scarcity = good) but at some point you need to successfully scale up unless you plan to remain a niche player. It's an awfully expensive company for a niche . . .

There are some more things to consider about the corporate structure itself (accounting and governance) which may impede Tesla's ability to adapt tho these challenges, but this is probably a separate post topic.

Wednesday, June 24, 2020

The standard journalistic definition of bias is absurdly narrow but at least it’s self-serving.

Consider the following hypothetical.

 Upon reviewing the records of a male professor, we find a consistent pattern of his giving lower grades to female students based on comparable work. When accused of bias, he replies that he obviously can’t be since most women are Democrats and he’s a Democrat.

Or let’s say he has a record of giving high grades to children of people who can advance his career, department heads, committee members, editors of prestigious journals, etc.

Or what if the professor was known to give high marks to students who sucked up to him and grade more harshly when one challenged him?

In virtually every job you’ll find, discussions of bias will center around race and ethnicity, gender, sexual orientation, religion, conflicts of interest, and playing favorites. Outside of government, the only place I can think of where party affiliation and position on the ideological spectrum makes the list, let alone dominates it, is in journalism.

If you went back 100 years or so, this made a little more sense. All major cities and most medium, even small, towns had at least two papers, one Democrat and the other Republican. Giving the opposing party a chance to air its views actually was a good indicator of how seriously editors and publishers took fairness. Obviously this is no longer the case.

The nature of the messaging coming from the two parties has also changed (and more to the point diverged) even more sharply. Conservative movement Straussianism combined with the Nixon administration's young McLuhan-spouting media advisers (including Roger Ailes and, believe it or not, the head writer from Laugh-In). Republican messaging became more disciplined and planned out, always focused on partisan objectives with two tiers, one aimed at the base and the other explicitly designed to play on the weakness of the mainstream press.

The result of holding onto this now profoundly flawed definition of fairness and objectivity is a system where journalists are actually rewarded for engaging in bad behavior. They can indulge their worst biases and bigotry, stroke sources, back away from stories requiring genuine courage, and they will be praised for balance as long as these biases were nominally nonpartisan or the slant favored Republicans over Democrats. Add to that how adept conservatives became at employing both carrot and stick and you have a situation that makes terrible journalism all but inevitable.

Arguably the worst offender and certainly the one that did the most damage due to its reach and reputation is the New York Times.

I had a chance to see this up close in the 90s when I was living in and around Arkansas. I knew that critics had been accusing the New York Times of class bigotry pretty much constantly since the 19th century, but I was totally unprepared for the openness and the nastiness of the bias. The national press, very much led by the gray lady, was horribly offended by the thought of a piece of poor white trash getting this far above his place. The 90s was also when we learned that the mere mention of Hillary Clinton tapped into a stunning pool of misogyny in the national press corps.

(To get a small but telling glimpse at the underlying misogyny of the time, go google Spy magazine covers featuring Hillary Clinton. If you want to defend the magazine and the press at large from charges of sexism, make sure you have a defense ready for the one where they added the penis.)

Whitewater also demonstrated the distaste for and disinterest in the rest of the country displayed by the NYC/DC press. Reporters routinely confused the Fulbright and Faubus camps, and treated probably the state's worst segregationist of the civil rights era as a trusted source.

When looking for bias, you should also ask yourself who is in a position to do something for the reporter or the organization. While all journalists rely on access, no publication has as much or depends on it as heavily as does the New York Times.The desire to please or at least avoid angering sources explains a great deal about the career of Judith Miller, the uncritical acceptance of Paul Ryan as series policy wonk, and the embarrassing puff pieces on figures like Hope Hicks and Jared/Ivanka.

We also need to mention the paper‘s extraordinary willingness to carry a grudge. Along with the misogyny, this was a major factor in the coverage of the 2016 campaign. Hillary is not the only example.

Gawker had a long history of humiliating the New York Times by pointing out sycophantic coverage of Silicon Valley and other lapses. When Peter Thiel, a figure so far out of mainstream thought as to criticize women’s suffrage, engineered a lawsuit expressly to kill the publication, the NYT, rather than standing up for journalism and pushing back against a dangerous precedent, actually gave Thiel a spot on the op ed page to tell his side of the story.

Sometimes the press corps simply takes a dislike to someone, particularly if an influential peer like Maureen Dowd sets an example. As long as the subject is Democratic, the result can be unchecked viciousness. Given the closeness of 2000, it's reasonable to argue that the biased coverage of Gore decided the election. Add to that the work of Judith Miller and the New York Times bears a great deal of responsibility for the Iraq War.

Any definition of fairness that turns a blind eye to these things is so flawed as to be dangerous to democracy.

Tuesday, June 23, 2020

Tuesday Tweets


Monday, June 22, 2020

To misplace one billion dollars may be regarded as a misfortune; to lose two looks like carelessness.

Just to get everyone up to speed.
Wirecard shares plunged more than 60% on Thursday as the German payments giant postponed its annual results once again and said auditors could not confirm the existence of 1.9 billion euros ($2.1 billion) in cash on its balance sheet.

The Munich-headquartered company said in a statement Thursday morning that auditor EY couldn’t find the cash balances — which represent roughly a quarter of its balance sheet. There were indications that “spurious balance confirmations” had been made by a trustee to “deceive the auditor and create a wrong perception of the existence of such cash balances,” it added.

“The Wirecard management board is working intensively together with the auditor towards a clarification of the situation,” the firm said. It added that failure to provide its 2019 financial statements by Friday could result in loans of around 2 billion euros being “terminated.”


The Financial Times has published a series of reports on its investigation into Wirecard’s accounting practices. According to those reports, which began back in January 2019, Wirecard’s Singapore office tried to inflate revenue through forged and backdated contracts. Another story in October claimed that Wirecard’s staff appeared to conspire to inflate sales and profits at subsidiaries in Dubai and Dublin and mislead EY. 

Is the a SoftBank connection? Do you even have to ask? (From April of last year)

The investment by the world’s biggest private technology company is a vote of confidence in Wirecard’s business as it defends itself against allegations of fraud, and will allow the Munich-based firm to expand its operations in Asia.

Shares in Wirecard jumped 10 percent to the top of Germany’s blue-chip index by 1240 GMT.
Wirecard, founded in 1999, ousted Commerzbank from Germany’s leading share index last year as it benefited from an accelerating global trend towards digital payments driven by e-commerce.

The two companies also unveiled a strategic partnership in which Softbank will help Wirecard expand in Japan and South Korea, and provide opportunities to work with other companies in its portfolio in areas such as data analytics, AI and digital financial services.

Other Softbank investments in its Vision Fund range from ride-sharing giants including Uber, DiDi, Grab and Ola to new financial and business services such as WeWork. Analysts said the partnership could provide further growth opportunities for Wirecard.

“Wirecard has a strong track record in pioneering innovation in digital payments and has been at the forefront in reshaping modern consumer behaviors,” a spokesman for Softbank said.

“We are excited to partner with the company and see huge potential to deploy this technology at scale across new markets and sectors within SoftBank’s global technology portfolio.”

Sunday, June 21, 2020

Jengaville -- "The culture that produces $2B of fake revenue doesn’t produce ‘isolated’ frauds."

Long but exceptionally good interview with podcaster Tesla Charts. Worth the price of admission for the cash register analogy alone. What's perhaps most notable is that TC, whose whole shtick was built around pointing out Tesla red flags, spends most of his time here listing companies that are way worse than Tesla.

Saturday, June 20, 2020

Welcome to Jengaville

I've been following a lot of big stories that involve what would seem to be increasingly unstable dynamics like a market bubble in the middle of an economic collapse or a pandemic response based on trying to spin anything under a quarter million American deaths as a win. and I'm starting to imagine a city of closely packed and sometimes interconnected Jenga towers.

I read about Wirecard and I see one tower swaying. I read about Berman and I see another tower listing to one side. I look closer and I see blocks the towers have in common.

I'm not predicting when things will fall and how they'll land, but if I had to bet, my money would be on soon and hard.

Friday, June 19, 2020

Friday blogging -- lots of big posts coming next week, but for now I'm kicking back

I'm a sucker for this sort of thing.

(h/t to Adam Tooze)

This one's as remarkable for its cast as for its look at modern living circa 1933.

And when they turned on the radio, they might have heard something sophisticated, like...

Just Googled 1933 to see what else was going on and one of my favorites popped up.

Thursday, June 18, 2020

If only the government would get out of the way of these Silicon Valley visionaries.

From the Waco Tribune-Herald:
Fresh from making history by sending a manned craft to the International Space Station, SpaceX is asking Waco and McLennan County for money to grow.

The rocket company launched by billionaire Elon Musk will spend $10 million on infrastructure improvements at its rocket-testing facility in McGregor. The upgrades will include “noise suppressors,” which should prove welcome to those within earshot of SpaceX’s rumbling, window-rattling rehearsals.

Waco City Council and McLennan County Commissioners Court will vote Tuesday on sending SpaceX $2 million from the Waco-McLennan County Economic Development Corp. fund, with each entity allocating $1 million.


“It’s good that we continue to invest in this site,” said Melett Harrison, city of Waco economic development director. “We want SpaceX operations to come through McGregor and Central Texas.”

SpaceX leases 4,280 acres in McGregor’s industrial district, where it employs about 500 people, McGregor City Manager Kevin Evans said Monday.

Harrison said SpaceX will spend no less than $10 million in infrastructure improvements with an eye toward making water and electric service more reliable and upgrading 1 Rocket Road, which serves the test site.

“We don’t have specifics on which buildings would be affected,” Harrison said. “We received a general request and were told SpaceX proposes spending at least $10 million on these improvements, and wondered if the Waco-McLennan County Economic Development Corp. could help.”

[Important to note that "will" and "proposes" aren't quite the same thing -- MP]

Harrison said SpaceX previously received a $3 million allocation from the city-county fund. She said improvements included a new rocket test stand.

Tuesday, May 31, 2016

At least it's under $5 billion...

As mentioned before, I'm working on a longer piece on the journalistic failure around the “proposal” for a supersonic passenger train called the Hyperloop (sorry about the scare quotes, but they really can't be avoided). It's a story of hype overwhelming the good work of some serious journalists.

The hype around the Hyperloop grows directly out of the carefully cultivated persona of Elon Musk. Here's a representative sample from the credulous Kevin Roose writing for New York Magazine:
For years, government has been a nuisance to Elon Musk. It's slowed him down. It's required him to spend his valuable time lobbying his Twitter followers for support in the New York legislature instead of building rockets. It's required him to explain his mind-bending technical innovations to grayhairs in Congress as if he were speaking to schoolchildren. Over and over, the public sector has convinced Musk that it is hopelessly lost when it comes to matters of innovation, and that anything truly revolutionary must spring from the ambitions of the private sector.

At the risk of a bit of Gawkeresque snark, Roose apparently has a rather unusually definition of “nuisance.”

Here is the far less credulous Jerry Hirsch writing for the Los Angeles Times:

Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.

And he's built those companies with the help of billions in government subsidies.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

"He definitely goes where there is government money," said Dan Dolev, an analyst at Jefferies Equity Research. "That's a great strategy, but the government will cut you off one day."

The figure compiled by The Times comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars. [It does not, however, include the more than $5 billion in government contracts that keep SpaceX in business -- MP]

A looming question is whether the companies are moving toward self-sufficiency — as Dolev believes — and whether they can slash development costs before the public largesse ends.

Tesla and SolarCity continue to report net losses after a decade in business, but the stocks of both companies have soared on their potential; Musk's stake in the firms alone is worth about $10 billion. (SpaceX, a private company, does not publicly report financial performance.)

Musk and his companies' investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.

The payoff for the public would come in the form of major pollution reductions, but only if solar panels and electric cars break through as viable mass-market products. For now, both remain niche products for mostly well-heeled customers.
Subsidies are handed out in all kinds of industries, with U.S. corporations collecting tens of billions of dollars each year, according to Good Jobs First, a nonprofit that tracks government subsidies. And the incentives for solar panels and electric cars are available to all companies that sell them.

Musk and his investors have also put large sums of private capital into the companies.

But public subsidies for Musk's companies stand out both for the amount, relative to the size of the companies, and for their dependence on them.


California legislators recently passed a law, which has not yet taken effect, calling for income limits on electric car buyers seeking the state's $2,500 subsidy. Tesla owners have an average household income of about $320,000, according to Strategic Visions, an auto industry research firm.

Competition could also eat into Tesla's public support. If major automakers build more zero-emission cars, they won't have to buy as many government-awarded environmental credits from Tesla.

In the big picture, the government supports electric cars and solar panels in the hope of promoting widespread adoption and, ultimately, slashing carbon emissions. In the early days at Tesla — when the company first produced an expensive electric sports car, which it no longer sells — Musk promised more rapid development of electric cars for the masses.

In a 2008 blog post, Musk laid out a plan: After the sports car, Tesla would produce a sedan costing "half the $89k price point of the Tesla Roadster and the third model will be even more affordable."

In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price. Timing on a less expensive model — maybe $35,000 or $40,000, after subsidies — remains uncertain.

Wednesday, June 17, 2020

Deferred Tuesday Tweets -- "Let's you and him fight."

I never miss a chance to quote the great E. C. Segar.

(For a bit more context. Ted Cruz is 49. Ron Perlman is 70.)

We'll be coming back to Quibi.





And some notes from the pandemic.

Tuesday, June 16, 2020


This is Joseph

This point rather illustrates the issues going forward:
If a bunch of the local elementary schools address social distancing by going to split days in the fall -- whether by hours of the day, days of the week, weeks of the month or whatever -- they will immediately create massive local childcare crises. The mismatch of the length of the school day (and year) with adult workplaces is bad enough already; add some sort of hybrid delivery and you’re putting extreme demands on parents and local daycare options. Given the income levels of many of our students, some of the arrangements are likely to be far worse than most of us would like to believe. And that’s assuming no second wave that abruptly closes the schools.
Basically, for the past three months we've ended the public (and private!) provision of childcare with rather extreme results for everyone with young children. I am not saying that this may not have been worthwhile in terms of lives saved, but the implications are . . . growing.

Several features of note are worth being highlighted.

The first is that, even when it works ok (e.g., teenagers), doing schooling from home massively increases the privilege of having a quiet workspace (large house, separate rooms) and good technology access (everyone has a computer, internet bandwidth is adequate). Same issue with food security and safe spaces. So for long periods of time this is rough.

The second is that we completely lack the ability to compensate parents for childcare. Many historical societies saw raising children as an important public good. It is unclear when that drifted to a form of conspicuous consumption instead. Small children cannot be left alone safely for a workday and require attention in a pattern that defies schedules.

The third is that this will rapidly exacerbate gender inequality, perhaps in unexpected directions. Years of trying to both raise children and do full time jobs is going to get parents to think about whether two incomes are necessary. Regardless of which parent gives up on market income, that's a power imbalance right away in the relationship.

Most of the "take time off" ideas are daft. Minimum wage in the US is $15,000 a year or so. It can be very challenging to live on that little with children. And single parents exist too. Many jobs are difficult to get and not easily replaced at the end of an epidemic when there is a major recession going on.

As this period of restricted social gathering evolves from short-term to long-term (probably right call now that covid-19 is a leading cause of death in the US), failing to grapple with this is a huge hit to working parents. There has been speculation that covid-19 could cause a rise in births -- I see the contrary as an issue. How many parents will want more children if this could happen again?

Monday, June 15, 2020

If the next generation of Teslas turns out to be a line of hovercrafts, I’ll have to retract this post.

[I was going to open this post with a brief discussion of concerns with treating the pandemic as a natural experiment, but I have stat professors who read this and they can be picky as hell.]

Despite Elon Musk‘s suggestion I did not read the whole thing, but I did spot one interesting bit of slight of hand.

While the engineering behind diesel engines is really cool (especially the reason they don’t need spark plugs), they do have a problem with particulate pollution. There is, of course, clean diesel technology but the pros and cons there are probably better handled by experts. Besides, it’s not all that relevant to our central point.

With standard gasoline powered cars, however, the kind most of us drive, you start looking at tires and brake pads as major sources of particulate pollution. While Teslas do have a better carbon footprint than internal combustion cars, they are hardly green technology in this respect.

By the standards of Musk and Tesla, this isn't a big deal, but it is part of a pattern. Tesla frequently suggests that its success is interchangeable with the future of EVs, or that the company has plans to solve all of the problems associated with cars.

Friday, June 12, 2020

Another Friday post -- this probably fills our Ernie Bushmiller quota for a while.

Obviously no suggestion of plagiarism here, but compare this 1943 strip to the closing gag of the Monk reunion.

Warning, next time this tune gets stuck in your head (and it will), you'll have to deal with some disturbing images.

Or this

Here's a catchy alternative earworm (speaking of Monk) to give you some Windy relief.

Which reminds me of Django and that's a good note to start the weekend.

Thursday, June 11, 2020

Well, that's reassuring

Pretty much everyone with an econ background I talk to or follow has been perplexed by the speed with which the stock market has shot up despite large sectors of the economy having no perceivable plan for getting back to pre-pandemic levels. 

I'm not sure "day traders" is the answer we were hoping for.

Everywhere You Look Under Surging Stocks Is Fervid Retail Buying
By Sarah Ponczek

Companies that have been soaring are in many cases the same firms that have seen skyrocketing interest at brokerages popular with individual investors. Turnover is surging: average daily volume for these stocks has occasionally been 30 times what it was in 2019.

Their favorites list includes Norwegian Cruise Line Holdings Ltd., American Airlines Group Inc., United Airlines Holdings Inc., and Carnival Corp. The 10 Russell 3000 stocks that have seen their popularity rise the most over the last month on the Robinhood investing app, according to website Robintrack, are up an average of 93% since early May -- nine times the S&P 500’s return.

Conversely, six of the S&P 500’s 10 best performing stocks over the last month appear on a list of companies that have seen the biggest pickup in interest among users of Robinhood. On the surface of one particularly baffling phenomenon -- firms whose shares are surging despite having filed for bankruptcy -- the fingerprints of retail investors are everywhere.

American Airlines, for example, has seen an average 101 million shares change hands each day over the last month -- 23 times what was normal last year. The airline has 423 million shares outstanding, of which 417 million float -- meaning those that are available to the public. Loosely put, that means every American Airlines share publicly available is traded every four days. (Since it’s likely that many of these shares are held for longer periods by institutions, a smaller -- but still sizable -- pool of the company’s stock is trading even more frequently.)

Norwegian Cruise Lines, up more than 100% in the last month, has seen its average daily volume balloon to 73 million -- 37 times the 2019 norm. With 254 million shares in the firm’s equity float, hypothetically every share could be traded in less than four days.

“There’s a very well documented tendency for investors to buy ‘lottery tickets’,” said Jason Thomas, chief economist at AssetMark. “If you’re looking for a huge return in the near-term, a huge bump, you’re not going to go buy a consumer staples company. You’re going to buy something that is either a biotech where it’s basically an option, a binary kind of a thing, or just pick whatever has been hit the hardest.”

Wednesday, June 10, 2020

Mask-wearing and social distancing on the homefront

From the comic strip Nancy, 1943.

Tuesday, June 9, 2020

I don't like giving too much weight to historical analogies.

But the precedent is worth noting.
You should listen to this (but you should definitely turn the volume down first)

And while we've got the Archive open...

For the few moderate Republicans still out there.

Monday, June 8, 2020

Four years ago we said that the New York Times was about to be in a lonely place. Now they are trying weasel out of it with scapegoating and revisionism

Fallout comes at you fast in 2020.




The New York Times would love to cast their sins upon Bennett's back and send him out in the desert (despite the fact that false balance has been more of a problem for the news side compared to the opinion section). In case that fails, they've already sent out their big guns to try to convince us that "even-handedness, both-sidism, the 'view from nowhere'" is everyone's problem, rather than being an approach strongly associated with the New York Times.

Before you accept the spin, take a minute to remember what people were saying in 2016.

Wednesday, September 21, 2016

"Why do you hate us for caring too much?" – – Dispatches from a besieged institution

Public Editor
From Wikipedia

The job of the public editor is to supervise the implementation of proper journalism ethics at a newspaper, and to identify and examine critical errors or omissions, and to act as a liaison to the public. They do this primarily through a regular feature on a newspaper's editorial page. Because public editors are generally employees of the very newspaper they're criticizing, it may appear as though there is a possibility for bias. However, a newspaper with a high standard of ethics would not fire a public editor for a criticism of the paper; the act would contradict the purpose of the position and would itself be a very likely cause for public concern.

I don't want to impose a template, but generally one expects public editors to serve as the internal representative of external critical voices, or at least to see to it that these voices get a fair hearing. A typical column might start with acknowledging complaints about something like the paper's lack of coverage of poor neighborhoods. The public editor would then discuss some possible lapses on the paper's part, get some comments from the editor in charge, and then, as a rule, either encourage the paper to improve its coverage in this area or, at the very least, take a neutral position acknowledging that both the critics and the paper have a point.

Here are some examples from two previous public editors of the New York Times.

Clark Hoyt
The short answer is that a television critic with a history of errors wrote hastily and failed to double-check her work, and editors who should have been vigilant were not. But a more nuanced answer is that even a newspaper like The Times, with layers of editing to ensure accuracy, can go off the rails when communication is poor, individuals do not bear down hard enough, and they make assumptions about what others have done. Five editors read the article at different times, but none subjected it to rigorous fact-checking, even after catching two other errors in it. And three editors combined to cause one of the errors themselves.

Margaret Sullivan

Mistakes are bound to happen in the news business, but some are worse than others.

What I’ll lay out here was a bad one. It involved a failure of sufficient skepticism at every level of the reporting and editing process — especially since the story in question relied on anonymous government sources, as too many Times articles do.

The Times needs to fix its overuse of unnamed government sources. And it needs to slow down the reporting and editing process, especially in the fever-pitch atmosphere surrounding a major news event. Those are procedural changes, and they are needed. But most of all, and more fundamental, the paper needs to show far more skepticism – a kind of prosecutorial scrutiny — at every level of the process.

Two front-page, anonymously sourced stories in a few months have required editors’ notes that corrected key elements – elements that were integral enough to form the basis of the headlines in both cases. That’s not acceptable for Times readers or for the paper’s credibility, which is its most precious asset.

If this isn’t a red alert, I don’t know what will be.

But these are strange days at the New York Times and the new public editor is writing columns that are not only a sharp break with those of her predecessors, but seem to violate the very spirit of the office.

In particular, Liz Spayd is catching a great deal of flak for a piece that almost manages to invert the typical public editor column. It starts by grossly misrepresenting widespread criticisms of the paper, goes on to openly attack the critics making the charges, then pleads with the paper's staff to toe the editorial line and ignore the very voices that a public editor would normally speak for .

[Emphasis added]

The Truth About ‘False Balance’
False balance, sometimes called “false equivalency,” refers disparagingly to the practice of journalists who, in their zeal to be fair, present each side of a debate as equally credible, even when the factual evidence is stacked heavily on one side.

There has been a great deal of speculation as to what drives false equivalency, with the leading contenders being a desire to maintain access to high-placed sources, long-standing personal biases against certain politicians, a fear of reprisal, a desire to avoid charges of liberal bias, and simple laziness (a cursory both-sides-do-it story is generally much easier to write than a well investigated piece). Caring too much about fairness hardly ever makes the list and it certainly has no place in the definition.

Spayd then accuses the people making these charges of being irrational, shortsighted, and partisan.

I can’t help wondering about the ideological motives of those crying false balance, given that they are using the argument mostly in support of liberal causes and candidates. CNN’s Brian Stelter focused his show, “Reliable Sources,” on this subject last weekend. He asked a guest, Jacob Weisberg of Slate magazine, to frame the idea of false balance. Weisberg used an analogy, saying journalists are accustomed to covering candidates who may be apples and oranges, but at least are still both fruits. In Trump, he said, we have not fruit but rancid meat. That sounds like a partisan’s explanation passed off as a factual judgment.

But, as Jonathan Chait points out, Weisberg has no record of being a Hillary Clinton booster. The charge here is completely circular. He is partisan because he made a highly critical comment about Donald Trump and he made a highly critical comment about Donald Trump because he is partisan.

But the most extraordinary part of the piece and one which reminds us just how strange the final days of 2016 are becoming is the conclusion.

I hope Times journalists won’t be intimidated by this argument. I hope they aren’t mindlessly tallying up their stories in a back room to ensure balance, but I also hope they won’t worry about critics who claim they are. What’s needed most is forceful, honest reporting — as The Times has produced about conflicts circling the foundation; and as The Washington Post did this past week in surfacing Trump’s violation of tax laws when he made a $25,000 political contribution to a campaign group connected to Florida’s attorney general as her office was investigating Trump University.

Fear of false balance is a creeping threat to the role of the media because it encourages journalists to pull back from their responsibility to hold power accountable. All power, not just certain individuals, however vile they might seem.

Putting aside the curious characterization of the Florida AG investigation as a tax evasion story (which is a lot like describing the Watergate scandal as a burglary story or Al Capone as a tax evader), equating her paper's pursuit of the Clinton foundation with the Washington Post's coverage of Trump is simply surreal on a number of levels.

For starters, none of the Clinton foundation stories have revealed significant wrongdoing. Even Spayd, who is almost comically desperate to portray her employer in the best possible light, had to concede that “some foundation stories revealed relatively little bad behavior, yet were written as if they did.” By comparison, the Washington Post investigation continues to uncover self-dealing, misrepresentation, tax evasion, misuse of funds, failure to honor obligations, ethical violations, general sleaziness and blatant quid prop quo bribery.

More importantly, the Washington Post has explicitly attacked and implicitly abandoned Spayd's position. Here's how the Post summed it up in an editorial that appeared two days before the NYT column.
Imagine how history would judge today’s Americans if, looking back at this election, the record showed that voters empowered a dangerous man because of . . . a minor email scandal. There is no equivalence between Ms. Clinton’s wrongs and Mr. Trump’s manifest unfitness for office.

Charles Pierce's characteristically pithy response to this editorial was "The Washington Post Just Declared War on The New York Times -- And with good reason, too."

If is almost as if Spayd thinks it's 2000, when the NYT could set the conventional wisdom, could decide which narratives would followed and which public figures would be lauded or savaged. Spayd does understand that there is a battle going on for the soul of journalism, but she does not seem to understand that the alliances have changed, and the New York Times is about to find itself in a very lonely position.

Friday, June 5, 2020

In which a film critic reviews his own early work and realizes he'd been a huge asshole.

As previously mentioned, I'm an admirer of film critic Bob Chipman, in part because of his willingness to re-examine his own work and, when appropriate, apologize.

I was going to troll Andrew Gelman with this human Spirograph clip, but we've had to reschedule this post so often I doubt anyone remembers the original comment.

And finally a bit of Wes Montgomery to kick off the weekend.

Thursday, June 4, 2020

And the view from a year ago.

Tuesday, February 5, 2019

Rational actors, stag hunts and the GOP

We have hit this idea in passing a few times in the past (particularly when discussing the Ponzi threshold), but I don't believe we've ever done a post on it. While there's nothing especially radical about the idea (it shows up in discussions of risk fairly frequently), it is different enough to require a conscious shift in thinking and, under certain circumstances, it can have radically different implications.

Most of the time, we tend to think of rational behavior in terms of optimizing expected values, but it is sometimes useful to think in terms of maximizing the probability of being above or below a certain threshold. Consider the somewhat overly dramatic example of a man told that he will be killed by a loan shark if he doesn't have $5000 by the end of the day. In this case, putting all of his money on a long shot at the track might well be his most rational option.

You can almost certainly think of less extreme cases where you have used the same approach, trying to figure out the best way to ensure you had at least a certain amount of money in your checking account or had set aside enough for a mortgage payment.

Often, these two ways of thinking about rational behavior are interchangeable, but not always. Our degenerate gambler is one example, and I've previously argued that overvalued companies like Uber or Netflix are another, the one I've been thinking about a lot recently is the Republican Party and its relationship with Trump.

Without going into too much detail (these are subjects for future posts), one of the three or four major components of the conservative movement's strategy was a social engineering experiment designed to create a loyal and highly motivated base. The initiative worked fairly well for a while, but with the rise of the tea party and then the Trump wing, the leaders of the movement lost control of the faction they had created. (Have we done a post positing the innate instability of the Straussian model and other systems based on disinformation? I've lost track.)

In 2016, the Republican Party had put itself in the strange position of having what should have been their most reliable core voters fanatically loyal to someone completely indifferent to the interests of the party, someone who was capable of and temperamentally inclined to bringing the whole damn building down it forced out. Since then, I would argue that the best way of understanding the choices of those Republicans not deep in the cult of personality is to think of them optimizing against a shifting threshold.

Trump's 2016 victory was only possible because a number of things lined up exactly right, many of which were dependent on the complacency of Democratic voters, the press, and the political establishment. Repeating this victory in 2020 without the advantage of surprise would require Trump to have exceeded expectations and started to win over non-supporters. Even early in 2017, this seemed unlikely, so most establishment Republicans started optimizing for a soft landing, hoping to hold the house in 2018 while minimizing the damage from 2020. They did everything they could to delay investigations into Trump scandals, attempted to surround him with "grown-ups," and presented a unified front while taking advantage of what was likely to be there last time at the trough for a while.

Even shortly before the midterms, it became apparent that a soft landing was unlikely and the threshold shifted to hard landing. The idea of expanding on the Trump base was largely abandoned as were any attempts to restrain the president. The objective now was to maintain enough of a foundation to rebuild up on after things collapsed.

With recent events, particularly the shutdown, the threshold shifted again to party viability. Arguably the primary stated objective of the conservative movement has always been finding a way to maintain control in a democracy while promoting unpopular positions. This inevitably results in running on thinner and thinner margins. The current configuration of the movement has to make every vote count. This gives any significant faction of the base the power to cost the party any or all elections for the foreseeable future.

It is not at all clear how the GOP would fill the hole left by a defection of the anti-immigrant wing or of those voters who are personally committed to Trump regardless of policy. Having these two groups suddenly and unexpectedly at odds with each other (they had long appeared inseparable) is tremendously worrisome for Republicans, but even a unified base can't compensate for sufficiently unpopular policies. Another shutdown or the declaration of a state of emergency both appear to have the potential to damage the party's prospects not just in 2020 but in the following midterms and perhaps even 2024.

So far, the changes in optimal strategy associated with the shifting thresholds have been fairly subtle, but if the threshold drops below party viability, things get very different very quickly. We could and probably should frame this in terms of stag hunts and Nash equilibria but you don't need to know anything about game theory to understand that when a substantial number of people in and around the Republican Party establishment stop acting under the assumption that there will continue to be a Republican Party, then almost every other assumption we make about the way the party functions goes out the window.

Just to be clear, I'm not making predictions about what the chaos will look like; I'm saying you can't make predictions about it. A year from now we are likely to be in completely uncharted water and any pundit or analyst who makes confident data-based pronouncements about what will or won't happen is likely to lose a great deal of credibility.

Reviewing our take on the state of the GOP seven years ago.

Not especially prescient but not much I wouldn't still stand by (though I wish I would have considered the possibility -- and implications -- of a wealthy, well-known candidate appealing directly to the base).

Tuesday, August 6, 2013

Metablogging -- stag hunts, misalignment, principal agents and all that jazz

Shortly after Josh Marshall posted this analysis of recent events in the GOP, Joseph called me up to compare reactions. We've been having this conversation for so many years that much of it has devolved into a self-referential shorthand. As an illustration, at one point, after a fairly long-winded comment by me, Joseph simply said "Stag hunt." and tossed the ball back to me and we moved on to the next topic.

We agreed (with, I assume, fingers crossed on both ends of the line) that we'd write some posts on the subject, but I'm starting to think that it might be more useful to step back for a minute and talk about how we've been framing the question of what's going on in the Republican Party (politically, not socially or in terms of policy. Those are entirely different metaposts).

For years now, the two of us have been talking about the post-Tea Party GOP in terms of a multi-player stag hunt. Over the past few years the stakes (particularly the costs of failure) have increased. At the same time, participation rates required to take down the stag have also increased. As a result, progressively smaller groups have gained the power to kill the enterprise. (In a different conversation Joseph pointed out that, in a military context, shooting deserters is also a predictable result of this situation.) We could dig deeper into examples and implications (particularly with respect to the trade off between the power of an alliance vs. its stability) but for now I want to limit the discussion to framing.

(there might also be a place here to talk about symmetry breaking, but I'd need to give that some thought first.)

Another way of looking at the story we've found useful is to look at misalignment of interests, especially what looks to us two non-economists as a particularly nasty two-level principal agent problem where a small group of big donors determine the pool of viable candidates and a relatively small but coherent subgroup of the primary voters make the purchasing decisions for the entire party. You'll notice that, like the stag hunt frame, under this scenario small groups can acquire disproportionate power.

And of course there's the mandatory Influence reference, framing the story in terms of social psychology. If you check out the chapters on commitment and consistency, social proof, and scarcity you'll find all sorts of applicable discussions of the ways groups united by a common belief system deal with ideological challenges and the loss of dominance.

Nothing particularly fresh or profound here, but these idea have proven a pretty good framework recently. I'm not saying they should be the basis of the standard narrative -- I'm not sure there should be a standard narrative -- but they do come in handy. More importantly, I think you can make the case that too little of the public discourse is spent examining underlying assumptions and asking about the different ways to frame our questions.

Wednesday, June 3, 2020

Deferred Tuesday Tweets

Lifestyles of the Rich(?) and Famous.

 I'm not going to weigh in on the scientific debate, but the politics of hydroxychloroquine is worthy of study.

Flack-to-Hack ratio at work.

Mandatory hyperloop reference.

Common sense from Krugman.

At least the Onion's on a roll.

Zuckerberg is a horrible person...

... and yet still better than....

One of the stories we're following closely.


Amazing how a company this well run could have lost over eight billion dollars in 2019.


Brought to you by the good people of MOD.

Time to revisit our dysfunction thread. Excellent by Fallows.

 The revolution will be tweeted