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At The Seasteading Institute Conference...

...Peter Thiel asks a question--

In the year 1945, there were about 50 countries and marginal tax rates in the US were 90%.
In the year 2009, there are about 200 countries and marginal tax rates in the US are 40%.

In the year 2050, how many countries will there be? Will the number be closer to 5, 200, or 1000?

Steal the Alien's iPhone

I recently came across this clip of Neil deGrasse Tyson discussing the (lack of) evidence for UFOs.

The Seasteading Institute Conference

I just finalized my plans. Anyone else going?

Keep an eye out for a tall thin guy with blonde curls. If you see him, tell him you read his blog and say hi.

Bill Maher the Quack

Orac takes apart Bill Maher's views on science and God in light of his winning some sort of Richard Dawkins Award.

09.17.09 Market Thoughts

Almost a year ago, I posted that I was "all-in". After that, the market took a brief detour downhill, but it's well above those levels today. At this point, optimism has returned, and people believe the worst is over. As such, I've put in stop orders.

The Travails of a 30-Something High Achieving Female

HBD Girl writes a familiar story.

This blog will chronicle my journey as a traditionalist secular independent conservative-libertarianish girl living in an ultra liberal part of the United States. In a nutshell, this is the application of my personal and political philosophy to my life and my decisions.

I recently turned 30 years. Hence, the urgency (although not desperation) of finding a mate is upon me. I’m well-aware that I prolly only have 5 years of good reproductive ability left (although I am also saving up money to freeze my eggs, to be discussed later.)

Recently I put together a revised life plan to help me focus on my priorities. Creating a warm & loving family is my highest priority. I want to create an environment that will be conducive to raising curious, playful individuals that are of independent mind, yet can appreciate and cultivate communities.

To reach that goal, I need to find a partner that wants to share in that same journey and shares many of my values.

My prioritized list of traits and values that I’m looking for in a man are:

The list can be found at the link. In urban environments, this is a common situation. There's a paradox at the heart of the story.

(Everything that I'm about to describe involves statements of what is, not what should be.)

Men generally prefer youth and beauty above other factors. By her late-20s a woman's looks are deteriorating rapidly. Her value on the dating scene is dropping fast.

Women, especially high-achieving professional women, generally prefer wealth and status in men above other factors. By his late-20s a man is still gaining wealth and status.

Let's take the example of my friend we shall call Sandra. Sandra was once extremely hot; I'd give her a 9 in her prime. She's also a medical resident so any man worth her time is also either a medical resident, or someone more successful. You can imagine the pool of eligible men being extremely small. Sandra has been waiting for the perfect man for a long time.

She recently turned 31, and though she's still quite good looking, her appearance has deteriorated. Age is a harsh mistress.

The paradox is:

Any man good enough for her is going to prefer someone younger and better looking.

So she's trapped in a race between her own diminishing value and waiting for someone who meets her standards to come along. She could settle for someone less than ideal. Or she could take a chance and wait because her value diminishes every day. It's a race against time and the stakes are high.

I'm not sure the degree to which Sandra realizes these dynamics. I get the feeling she knows exactly what's up and is taking the chance of waiting. She doesn't want to settle.

On the other hand, many women like Sandra have been fooled into thinking that life is like Sex and the City, and they'll have high-value men pursuing them into their 40s and 50s.

HBD Girl does seem to realize the dynamics at play. In a later post, she writes, "If a man isn’t looking for a confident and accomplished woman and instead only values youthfulness then he’s not the one for me. Yay for the bias of self-selection!"

Nobody puts Swayze in a coffin

Well, that's not true anymore. He's like the wind.


Embrace Emotion

I've always been of the philosophy that in order to beat the market--if it's possible at all--I have to remain calm at all times. People panic at local minima, believing the market will keep going down forever and feel euphoric at local maxima, believing the good times will always last. Instead, better to remain calm, buy when everyone panics, sell when everyone is an optimist. In the words of a trader I greatly respect, "In the midst of chaos is an opportunity to profit."

There's an interesting article at The Big Picture about a study recently conducted on this topic. The author Steenbarger writes,

In a study that I conducted with Andrew Lo and Dmitry Repin of MIT, we found that emotional reactivity to financial markets was correlated with trading performance. Specifically, “…subjects whose emotional reactions to gains and losses were more intense on the positive and negative side exhibited significantly worse trading performance, implying a negative correlation between successful trading behavior and emotional reactivity” (p. 352).

In that study, we found, no single set of personality traits was significantly correlated with favorable trading outcomes. Rather, it was emotional reactivity overall that seemed to best predict profitability.

These results would seem to support the common perception that success in financial markets requires an elimination of emotion from trading decisions. A corollary of this view is that all good trading must be rationally conceived, planned, and executed: that good traders are those, as the saying goes, that “plan their trades and trade their plans.”

But, he says, that doesn't match up with what he's observed in trading firms.

These results would seem to support the common perception that success in financial markets requires an elimination of emotion from trading decisions. A corollary of this view is that all good trading must be rationally conceived, planned, and executed: that good traders are those, as the saying goes, that “plan their trades and trade their plans.”

The problem with this perspective is that it does not fit the realities of trading floors at the firms where I work as a psychologist and coach. Traders, even the most successful, are often highly emotional and competitive. Many sustain significant profitability year after year trading actively each day, holding positions for mere minutes. Invariably these very active traders have no time to research their trades, not to mention develop formal trading plans.

This describes what I've read about George Soros. He would take large bets in one direction after telling everyone why he's absolutely certain the market will move in that direction, only to change quickly his tune completely and make large bets in the other direction.

The answer seems to be that some people just have a "gut feel" that's more often than not, correct.

Research into implicit learning suggests that people routinely apprehend complex patterns in the world without necessarily being able to verbalize those patterns. For instance, young children can form grammatically correct sentences and yet cannot explain the rules of grammar. Very active traders develop a “feel” for markets that enables them to act on short-term shifts in momentum without being able to formally lay out the rationale underlying their trades.

Antonio Damasio’s research suggests that such implicit learning is cued by “somatic markers“: a felt sense of fit or non-fit when we perceive patterns in the world. Such markers, for instance, may cue us to shift topics in a conversation when we sense that the other party is uncomfortable. We may not be able to verbalize the reasons for the shift at the time–it occurs spontaneously in the flow of interaction–but we know it feels right in the context of discourse.

Very active traders describe a similar feel for what they do. A market will be weak and suddenly the trader will perceive that “we’re having trouble going lower.” Quickly he enters bids into the order book, gets filled, and rides a reversal move higher. Asked what made him think we were putting in a bottom, the trader simply replies, “They just couldn’t break ‘em.”

Damasio’s contention is that the feel that accompanies implicit learning is indeed a kind of feeling: emotion is an integral part of decision making. What makes emotional arousal detrimental to trading is not that emotion necessarily biases decision making, but that it can cover over the more subtle, felt somatic markers that alert us to subtle market patterns. When we are frustrated with our profits and losses, we can no longer fully attend to what feels right when we process complex market relationships. That leaves us out of sync with the market’s conversations.

In Lo and Repin’s study, ten experienced traders were connected to biofeedback equipment while they viewed financial markets. Interestingly, all recorded significant physiological changes during such trading events as breakouts from price ranges. “Contrary to the common belief that emotions have no place in rational financial decision-making processes,” the authors explain, “physiological variables associated with the ANS [autonomic nervous system] exhibit significant changes during market events even for highly experienced professional traders” (p. 332).

The intriguing implication of this work is that those who have immersed themselves in financial markets probably know far more than they know they know. Their performance crucially hinges, not on brushing emotion aside, but in sustaining access to those implicit cues that literally embody expertise.

I think anyone who's a "natural" at anything probably has a talent for seeing patterns at a subconscious level. They can't explain their success because they can't rationally tap into that nether-brain.

On a related note, my gut tells me that though VT is a one touchdown underdog against Alabama tomorrow, and even though VT has traditionally performed poorly against big programs, VT will win. My mind, of course, believes my gut is crazy.

Partisan Rhetoric Hits New Low

Along the lines of "Where do they find these fucking people?", here's Melissa Lafsky:

We don't know how much Kennedy was affected by her death, or what she'd have thought about arguably being a catalyst for the most successful Senate career in history. What we don't know, as always, could fill a Metrodome.

Still, ignorance doesn't preclude a right to wonder. So it doesn't automatically make someone (aka, me) a Limbaugh-loving, aerial-wolf-hunting NRA troll for asking what Mary Jo Kopechne would have had to say about Ted's death, and what she'd have thought of the life and career that are being (rightfully) heralded.

Who knows -- maybe she'd feel it was worth it.

As a wise man once said, politics is the mind-killer.

Political Hero Worship

Once again a politician dies, and once again I'm shocked at the reactions by mourners who consider him a hero. To me, Ted Kennedy represented everything that's wrong with politics. He wasn't very bright, rode to the limelight on his family's name, and at the very least let some drown, possibly outright murdered her. Depsite that, he had a job for life, and no ordinary job at that, but a job that affects everyone. He was a product of a political machine, thrust into power despite his obvious shortcomings. And today, there are thousands (millions?) who look back on him as a hero.

Someone on a message board I visit once remarked--with pride I might add-- how he cried for days after Reagan's death. Despite murdering millions, Stalin's death was received with widespread grief. People literally wept in the streets.

It's non-sensical enough to adore celebrities who, though popular, don't affect our day-to-day lives. It's entirely another to worship those who control the almighty arm of the modern state. What is it about the human condition that causes adulation of the powerful? Do we all have a form of Stockholm Syndrome somewhere in the recesses of our minds? Is there some evolutionarily evolved trait that makes some of us naturally subservient to alpha males?

Days like today bring out the cynic in me.

Pinker on the decline of violence

I finally got around to watching Steven Pinker's TED talk on the decline of violence.

He describes some theories as to why violence has declined which I summarize as follows.

Hobbes: peace-keeping governments
Other: life is more valuable
Wright: positive-sum interactions
Singer: empathy

It was a nice touch having a large black-and-white picture of Pinker behind him on the stage. If human-against-human death is considered "violence", so should death by government which would add another 100 million for the 20th century. That would probably only double that little blue blip on the graph shown.

My own thoughts lie mainly along Wright's, though all of the above reasons are probably true in part. We live in a much more interdependent networked world in which violence doesn't pay.

Here I'm brainstorming, but I believe polycentrism is a key also. Alpha males have always sought to climb to the top of social hierarchies. The more such hierarchies there are, the more alpha males can co-exist without violence. I had a boss a few years ago who was absolutely ruthless when it came to socio-political maneuvering within the hierarchy at a certain teaching hospital in Boston. He became the department chair and kept that position for many years. He was both competent and fair, but he wasn't going to let anyone challenge him, and he had no mercy for weakness. I could imagine that if he still lived in his native South America, he might have instead pursued politics, and rather than merely keeping his challengers from getting a promotion, he'd be jailing them and silencing the press. In the US, his fierceness was channeled into something productive, something constrained by the decidedly non-violent machinations of an academic medical center.

In an open society, there are all sorts of institutions and networks alpha males can climb. One can be CEO or Oracle, another can be Senator of Massachusetts, and yet another can be quarterback for the New England Patriots. Even institutions with a decidedly egalitarian bent--such as a commune--are ladders to climb. (And I bet the most popular guy at the commune still gets the hottest chicks whereas the omega male gets none.) In less developed societies, there is only one Big Man, and all the wannabe Big Men fight for the coveted position. Modern society forces Larry Ellison to run a multi-billion dollar company that makes useful software rather than wage war in order to achieve alpha status.

More brainstorming: what about sports, video games, and movies? All channel violent urges into non-violent activities. The usual criticism is the other way around, i.e., that they foster violence, but I wonder if they actually allow people to get their kicks and then go about the business of non-violent living.

I just bought some overpriced food at Whole Foods

In response Whole Foods CEO John Mackey's sensible WSJ editorial, some leftists have organized a boycott. While I can understand how someone might disagree with parts of what Mackey wrote, a boycott? Really? For Whole Foods?

To me, enterprise is a function of property rights; that's justification enough in my book. But there are some who think businesses should seek a social good. There is suffering in the world from poverty, disease, and war, and free enterprise is a great (best?) way to alleviate it. As I said, I don't particularly subscribe to that view. I think a desire to make money is good enough; I'm old school like that. But if there's any corporation in America that embraces the business-as-positive-social-force viewpoint, it's Whole Foods.

I've long held theories about political movements as psychological phenomena on a massive social scale. One belief is that self-destructive personality traits on a grand scale get channeled into leftism.

To the boycotters: Is this really the corporation that you want to boycott? Based on that opinion piece?

In response, like Radley Balko, I just bought some overpriced food from the store, and will continue to do so until the boycott lasts.

Charter Cities and Freedom

A debate has broken out in parts of the libertarian blogosphere about Charter Cities and the nature of freedom. Will Wilkinson got the ball rolling by calling Charter Cities "illiberal". A series of responses followed:

What is Real Freedom? by Arnold Kling

Freedom Is Exit, Not Voice by Patri Friedman

Arnold Kling on Freedom as Exit by Will Wilkinson

More Democraphilia from Will Wilkinson by Will Chamberlain

Liberal Democracy: D- or B+? by Patri Friedman

Unsurprisingly, I stand on the side of Exit. Arnold Kling's argument is so elegant and powerful that I'm going to quote the whole thing.

Which leads me to wonder: what is this "real freedom" of which you speak?

Consider the following definition of freedom: the absence of monopoly.

The absence of monopoly means that you can exercise exit, even if you cannot exercise voice. The presence of monopoly means that, at most, you can exercise voice.

Neither my local supermarket nor any of its suppliers has a way for me to exercise voice. They don't hold elections. They don't have town-hall meetings where they explain their plans for what will be in the store. By democratic standards, I am powerless in the supermarket.

And yet, I feel much freer in the supermarket than I do with respect to my county, state, or federal government. For each item in the supermarket, I can choose whether to put it into my cart and pay for it or leave it on the shelf. I can walk out of the supermarket at any time and go to a competing grocery.

The exercise of voice, including the right to vote, is not the ultimate expression of freedom. Rather, it is the last refuge of those who suffer under a monopoly. If we take it as given that the political jurisdiction where I reside is a monopoly, then perhaps I will have more influence over that monopoly if I have a right to vote and a right to organize opposition than if I do not. However, as my forthcoming Unchecked and Unbalanced argues, the reality is that the amount of influence I have is shrinking while the scope of the monopolist is growing.

The idea of charter cities (or seasteading) will be a success to the extent that it creates a viable exit option vis-a-vis government. Suppose that the Chinese government loses its monopoly power, because it becomes easy for people residing in China to choose to live under alternative governments. In that hypothetical case, I would argue that those residents are free, even if those who choose the Chinese government are not allowed to vote in contested elections or to freely criticize their government. If you lived in North Korea, which would you rather have--the right to vote or the right to leave?

In fact, if we had real competitive government, then we would be no more interested in elections and speaking out to government officials than we are in holding elections and town-hall meetings at the supermarket. I repeat: real freedom is the absence of monopoly.

Loss of health care freedoms

As I said below, Americans are finding out that actual health care reform won't be easy, and there will be the same kind of backlash that I vividly remember from 1993. Shawn Tully writes the kind of article we are going to see more and more of:

The Senate bill requires that Americans buying through the exchanges -- and as we've seen, that will soon be most Americans -- must get their care through something called "medical home." Medical home is similar to an HMO. You're assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.

Under the proposals, the gatekeepers would theoretically guide patients to tests and treatments that have proved most cost-effective. The danger is that doctors will be financially rewarded for denying care, as were HMO physicians more than a decade ago.

That's right-- to control costs, you actually have to spend less money. And if the government is the rationer, by definition Americans will have fewer choices.

Free advice to anyone looking to quash health care reform: Recite the above two paragraphs in as many settings and media as possible over and over again. Nothing else could be more powerful.

Are expensive big-name colleges worth it?

A recent salary survey has been making the rounds. It lists median starting and mid-career salaries by college attended. The usual suspects appear at the very top of the list with Dartmouth having the highest mid-career salary of $129,000. However, my own alma mater Virginia Tech appears surprisingly high (to me anyway) on the list for a large, land-grant, public university, having a mid-career salary of $97,400. I suspect large engineering colleges receive a nice bump in the rankings.

These data allow certain calculations to be made. Suppose you are a high school senior in Virginia having the choice of attending Dartmouth and Virginia Tech. Is it worth it to pay a lot more to attend Dartmouth instead of VT? Let's do some back-of-the-envelope calculations.

Total cost of attending VT (instate) for four years: $60,000
Total cost of attending Dartmouth for four years: $210,000

Ceteris paribus, the relevant question becomes, "Is the $150,000 upfront marginal cost of attending Dartmouth worth earning $30,000 more per year during your peak earning years?"

(Yes, I know there's a discounted rate of return of the forgone cash to consider, along with potential attendance of graduate and professional schools, and choice of major, etc. That's why I called it a back-of-the-envelope calculation.)

I suspect that for most people, if they have the means to pay, the answer is Yes. That $150,000 can be made up in five years, say from age 40 to 45, a blip in time if you ask me. This leads me to wonder not why private elite colleges are so costly, but rather why they aren't even more expensive.

Having said that, attending a state school as an engineering major seems like a steal.

Requisite woof: Looks like VT beats UVA in more than just football.