BRIEFLY NOTED: For 2023-08-16 We
…& valuation-ratio explanations; & readings & notes…
MUST-READ: Þis Seems to Me Both Very Right… & Very Wrong:
Pamela Herd & al.: Administrative burden as a mechanism of inequality: ‘Ask anyone about their interactions with government, and chances are you will get an earful about a seemingly Kafka-esque experience that they or a family member has faced trying to access vitally important social rights such as health care, income support, unemployment, and food assistance, or a fundamental political right….
Administrative burdens have the odd combination of being both grindingly familiar to us as individuals, and largely unattended as a matter of policy analysis, design, and practice…. One explanation for this failing is the fragmented discourse around them, siloed both across and within academic disciplines and policy areas…. Rather than a general toolbox for reducing burdens, we are left instead with lots of little toolboxes, bereft of enough instruments to comprehensively address the problem. There is power in legibility and coherence. Naming something allows us to see it more clearly. It is difficult to accumulate knowledge when researchers use different terms and miss entire bodies of research….
The primary focus of administrative burden research thus far has been on limiting access in rights-granting venues, such as political rights or access to benefits. However, burdens also matter as a method of social control in rights-depriving venues…. Burdens… [are] a cumulative experience…. Federalism as a key source of burden. Part of the issue is the basic reality that more players means more veto points and more opportunities to add burdens…. Informational nudges can reduce learning costs. Some processes are so complex that nudges are not enough: help is needed…
My view is that administrative burdens do not very much across different types of interactions with the government—but that means that you are f***ed if you cannot afford to buy expertise to figure out how to minimize the burdens, or if you find yourself in a place in your lifewhere you have to have a lot of interactions with a lot of different arms of governments. And federalism is an absolute killer.
Thus it is not a mechanism that raises inequality so much as a burden that existing inequality makes much heavier on the poor than on the rich—that insulating themselves from government-imposed administrative burdens is another one of the things the rich can and do buy with their money.
ONE AUDIO: Eric Topel & Melanie Mitchell: Straight Talk on A.I. Large Language Models:
“If a human was able to… do these… tasks, some small change in the task probably shouldn’t matter. The human would still be able to do it…. An example… an array… indexed from zero…. What if you just said, ‘now change to starting at one’? Probably a human programmer could adapt to that very quickly, but they found that GPT-4 was not able to adapt very well…. Was… it… writ[ing] the program by… picking things…in its training data much more? Or is it… developing some kind of human-like understanding?… More the former than the latter…
ONE IMAGE: Þe Tuning-Your-Stock-Leverage Fail:
You could not have made extra money in U.S. stocks by leveraging up on stocks in the aggregate when they were low relative to valuation indicators and leveraging down when they were high. Why not? Because valuation ratios have been climbing since 1910, so the net effect of such a strategy would have been to diminish your leverage because stocks have looked expensive relative to earnings and past history almost all the time. And diminishing the weight on your stock portfolio has, in the long run, been disastrous.
Very Briefly Noted:
Chad P. Bown: How the United States solved South Korea’s problems with electric vehicle subsidies under the Inflation Reduction Act…
Barry Ritholtz: What if Dunning Kruger Explains Everything?: Our own lack of depth in a specific skillset is why we miss that complex reality. As a species, our tendency is towards combining a little bit of knowledge with some overconfidence. This combination easily leads to fundamental misunderstandings. Can this one-two punch explain why it is so easy to get so much wrong in the capital markets so often?…
Frederik Gieschen: The Pritzkers: Buffett’s Blueprint: ‘Jay recognized the growth in air and business travel and the demand for quality hotels near major airports. He pulled out a pen and scribbled his offer…. Within two years, Hyatt House hotels opened near the San Francisco and Seattle airports. The Hyatt chain became one of the cornerstones of the Pritzker portfolio…
Matthew C. Klein: China Is Now Growing Slower Than the U.S.: ‘This is an unprecedented situation. What are the implications?…
John Authers: China Sneezes, But Will the World Catch a Cold?: ‘The security blanket that Chinese expansion gave to the global economy for the past two decades is being pulled away…
Albert Einstein (1950): ‘Dear Schrödinger, You are the only contemporary physicist, besides Laue, who sees that one cannot get around the assumption of reality—if only one is honest…. Nobody really doubts that the presence or absence of the cat is something independent of the act of observation. But then the description by means of the ψ-function is certainly incomplete, and there must be a more complete description…. It seems certain to me that the fundamentally statistical character of the theory is simply a consequence of the incompleteness of the description…
Duncan Black: There Is A Natural Order To Things: ‘They don’t all own caliper sets, but belief in hiearchies unites the right and dipshit centrists. Nobody who went to Yale could be bad, nobody with an abundnace of melanin gets to tell me to clean up after myself in the office kitchen. A useful life skill is being able to intuit the pecking order of any room. Easy for those who can to spot those who can’t and slot them accordingly…
¶s:
The source for the image above. it really does look as though required rates of return on equity have undergone a substantial secular fall since 1910. Whether you should net on the current apparent trend average valuation ratio continuing into the future, or on the trend increase in the valuation ratio continuing into the future, is a choice. Past performance is no guarantee of future results:
Ben Carlson: Do Valuations Even Matter For the Stock Market?: ‘If we lok at valuations going back to 1990, out of slightly more than 400 monthly observations, the CAPE ratio has been below the long-term average for just 22 months. That’s around 5% of the time. Mind you, this is not valuations at screaming buy levels, just below average. There was a 12-month period of below-average multiples in 1990-91. Valuations didn’t go below the long-term average again until a 10-month period in 2008-09. So if you waited to buy stocks until valuations were reasonable you had exactly two chances in the past three-plus decades. And since 2010, there hasn’t been a single monthly reading that’s below average. In fact, there hasn’t been a single monthly reading below 19.6x since the end of 2009. After 2009 you didn’t once get a chance to buy when valuations were below average…
Nobody has the ability to “buy or participate without concern” in the things that they are concerned about. That such things are things only people as rich as you can even think about buying makes them a matter of concern. How about defining “rich” as being able to buy an extra book or go out to a restaurant without concern? My guess is that one root of the problem is that the upper tale of the wealth distribution is so long that Tom Thompson knows and knows some people who could buy and sell everything he has out of petty cash, and that makes him really unhappy because his mental map of the world tells him that if he were really rich there would be very few such people:
Claire Ballentine and Charlie Wells: Are You Rich?: ‘Billionaires know they are. Low-wage workers are very well aware that they aren’t. But vast swaths of America’s “regular rich” don’t feel that way, and it’s keeping everybody down…. Despite owning a home worth almost $400,000 in Dallas and a condo in Hawaii, Tom Thompson and his wife don’t feel rich. In fact, having more money has just resulted in more bills. The 54-year-old is feeling the pressure of inflation, especially as he prepares to pay for his 18-year-old son’s college tuition. Despite an annual household income of about $450,000, Thompson worries about his job stability at an ad agency where losing a big client could mean a layoff. “We’re not living paycheck to paycheck, but I feel like we have looming expenses,” he said. “My personal definition of rich is the ability to buy or participate without concern, and I do not have that.” His bills keep adding up: $2,800 a month for his mortgage on the Dallas home, $1,400 a month for the Hawaii condo, three car payments, and soon his son’s $25,000 yearly tuition. His salary isn’t keeping up. “I know we do very well, but I didn’t get a raise and neither did my wife since before the pandemic,” he said. “That’s starting to impact that feeling of wealth.” He and his wife, who works as a consultant on employee benefit plans, have considered moving to a cheaper area like New Hampshire or even overseas to Amsterdam. But he’s hesitant to give up the 2.2% mortgage rate on his home, so for now, he’s staying in Texas…
The word on Sparta and its army, -500 to -370. The big question I remain unsure about concerning classical Sparta is how much of the Better logistics, some training, some drill, and some ability to maneuver subunits on the battlefield that us thanks held back in the days of Thermopylai and Plataia—the speeches he put in the mouth of exiled Spartan King Demoratos to his Haxamanishya Dynasty master Khshayarsha—were created after -480 in a process spurred by the desire to live up to the myth of Thermopylai, as opposed to having them present in embryo from some time in the late -500s:
Roel Konijnendijk: ‘Thermopylai was an embarrassment. All Greece looked to its leader and its leader let them down. The Spartans sent a token force and it got wiped out in a week. 4000 Greeks dead. Everyone kept calling for the real Spartan army, but it never came. Spartan damage control after this humiliation by Xerxes is the most successful propaganda campaign in history…. The following year, the Spartans finally march out in force to Plataia & beat the Persians. See, they really can do it! Spartans live on their reputation after that. People are afraid to fight them because they’ve all heard the story of Thermopylai. The propaganda. But already at Sphakteria in 425 BC, it turns out real Spartans aren’t the same as story-Spartans. They lose and surrender. Their inability to subject Athens to their will cracks the facade. Their neighbours rally immediately. At Mantineia in 418 BC they challenge Spartan power in the Peloponnese. But by now, Sparta has learned some techniques that actually do make them superior in battle. Things get more complex after this: Sparta becoming an agent of Persian power in order to maintain their status while beating other Greeks in battle until Leuktra in 371 BC. But this is not separate from their time as “leaders of the Greeks”—it’s part of it. The RT’ed thread claims there is a time when Sparta was in control, and a much later, separate time in which their power crumbled. But one flows from the other. Spartan power was always brittle, always based on exploitation, and they were hugely impopular leaders…