Monday, April 25, 2022

Twitter

You’ve Got  A Friend in Me

Some other folks might be
A little bit smarter than I am
Bigger and stronger too
Maybe
But none of them will ever love you
The way I do
It's me and you, boy

And as the years go by
Our friendship will never die
You're gonna see it's our destiny
You've got a friend in me

Does Donald Trump have a friend in Elon Musk?

It is really hard to lie with Mathematics. It is a lot easier to lie in other languages  For example Twitter banned Donald Trump. Elon Musk was the enemy of Twitter ( at least he was before today when he bought Twitter ;)  So it is probably true to state  that Twitter is an enemy of Donald Trump and Elon Muck was an enemy of Twitter. However that does not necessarily mean that Elon Musk is a friend of Donald Trump. "The enemy of my enemy is my friend" is a false statement in mathematics. If you let the equal, =, sign  mean a friend and the not equal sign, <>, mean an enemy. Then Twitter <> Donald Trump and Elon Musk <> Twitter does not mean that Donald Trump= Elon Musk. Elon Musk buying Twitter does not mean that the ban of Donald Trump will immediately be lifted.

Sorry Trumpers. If you want to post lies, you will have to hope that Donald Trump gets Truth Social up and running. Even Donald Trump is not expecting that he has a new friend in Twitter.


Fact vs Fiction

 

It Ain’t Necessarily So

They tell all your children
The devil he's a villain
It ain't necessarily so

Does saying that someone is the Prince of Lies mean that they are a villain?

I have proposed that human behavior can be defined by three characteristics. However those characteristics are not binary, either/or. They are a continuum or spectrum. For example take Fact vs. Fiction.

1.     There are those who can not willingly suspend their disbelief. They prefer non-fiction to fiction books; documentaries (or at least stories based on true events) to fiction.

2.     There are those who believe in facts but can willingly suspend their disbelief, if that fiction is consistent. Continuity errors make them unwilling to suspend their disbelief.

3.     There are those who believe in facts but are willing to suspend their disbelief on many matters or try to explain away those continuity errors. ( for those who know what  MMMS stands for, they are the ones who win No-Prizes).

4.     There are those who believe in facts but are willing to suspend their disbelief and accept any and all continuity errors. All stories are imaginary stories. But the more serious the continuity error, the less willing that they are to spend their disbelief ( e.g. they get taken out of the story).

5.     There are those who are willing to adopt your beliefs, even it they believe those are fiction, if it is to their advantage. They can distinguish facts from fiction but will embrace fiction if there is something in it for them [Also known as con(fidence) men, because they pretend to adopt your beliefs to gain your confidence].

6.     There are those who would rather adopt something they know to be false, or to avoid the truth, if the truth is inconvenient.

7.     There are those who can not distinguish fact from fiction. They think only what they experience is real. E.g. the Earth is Flat;  Evolution is not real;  WWE wresting is real; Soap Operas are real stories; etc.

Any and all of these positions are real. and they are just a subset of all possible positions.  Those positions can fall on a spectrum of Fact vs Fiction, but none of them can be characterized as all Fact or all Fiction.

 

Sunday, April 24, 2022

The Federal Reserve

 

The Magnificent Seven

Knuckle merchants and your bankers too
Must get up and learn those rules
Weather man and the crazy chief
One says sun and one says sleet

Bankers have rules, even if you don’t understand their rules.

Central banks are supposed to inspire confidence in the economy by keeping inflation low and stable. America’s Federal Reserve has suffered a hair-raising loss of control. 
https://www.economist.com/leaders/2022/04/23/why-the-federal-reserve-has-made-a-historic-mistake-on-inflation

This is true ONLY if you believe that America’s Federal Reserve bank actually HAS the ability to keep inflation low. The Federal Reserve bank is responsible for maintaining a medium of exchange that allows trade in the US economy to take place. Prior to the establishment of central banks, such as the Federal Reserve, individual banks were a place to store currency. However they did not, should not, only store currency. They also lend that currency (i.e. make loans). This creates a problem with liquidity for individual banks. If a bank has loaned currency, that currency can not immediately be returned to its depositors. If depositors demand a return of their currency, it can exceed the amount of deposits, reserves, the bank has on hand. That is what a bank run is all about. And bank runs undermine the confidence in a currency as a medium of exchange. The Federal Reserve Bank serves as a central clearing house such that runs on banks will not happen. It monitors the total amount of money needed by the economy, and lends currency to those individual banks in order to maintain their liquidity and prevent bank runs.

The Federal Reserve does this by making loans to individual banks. Those loans have to repaid by those banks in the future. If there should be a discount rate that is applied to the future then this should be considered in the interest rate. That the future is worth less than the present is popular wisdom,  “A bird in the hand is worth two in the bush,” and Biblical wisdom,  Matthew 25:14-30, the Parable of the Talents. Charging an interest rate effects not only the repayment of the liquidity. If that liquidity is used to increase production (investment) or consumption (borrowing), it can have an effect on the price of goods, inflation. However that is NOT the only way that prices can increase. Consumer preferences can change (e.g. today’s demand for buggy whips is not like that of the 19th century), or the things unrelated to the interest rate can change the cost of goods (e.g. a ship can get stuck in the Suez Canal, droughts or wildfires can happen, a global pandemic can occur, Russia can invade Ukraine, etc.).

The Federal Reserve can and has maintained a stable domestic currency .  It has not created more currency (money) than is needed for trade, unlike the Weimar republic or other examples of hyperinflation. It cannot prevent ordinary inflation. This is like blaming the weatherman if it rains. Don’t shoot the messenger.

That there has been persistent inflation since the 1970s is not due to the Federal reserve’s failure to responsibly monitor the domestic US economy. It is because when a domestic currency is also used as the unit of international trade, this leads to tension between national and global monetary policy, i.e. the Triffin Dilemma. https://dbeagan.blogspot.com/2018/08/the-happening-riding-high-on-top-of.html The fact that inflation has been manageable is a testament to the Federal Reserve’s success. That it can not prevent all inflation should not be deemed its failure. You don’t have to love banks, to accept that you need banks.

Saturday, April 23, 2022

Liberal vs Conservative

 

Love Me, I'm a Liberal

Once I was young and impulsive
I wore every conceivable pin
Even went to the socialist meetings
Learned all the old union hymns
But I've grown older and wiser
And that's why I'm turning you in
So love me, love me, love me, I'm a liberal

Why is being a liberal a slur on both the left and the right?

Later, Trump Jr. responded to a tweet that exclaimed “the best part of lifting the mask mandate is that you can now tell with 100% certainty exactly how many libs are on your flight.”

“99.9% I’ll keep wearing one so I can stay under the radar,” Trump replied.

https://news.yahoo.com/donald-trump-jr-says-hell-064106917.html 

I take statements by  Donald Trump Junior, and Donald Trump, Senior for that matter, personally because they are both graduates of the University of Pennsylvania and I have a Master’s degree from the University of Pennsylvania. If they make stupid statements, then it diminishes the value of my degree. 

Donald Trump, Junior has previously said that increasing the mean wealth increases everyone’s wealth because that is how math works, (Spoiler alert, it does not). Now he seems to be adopting a one-dimensional view of the world as liberal versus conservative ( which does a disservice to conservatives. Let’s just say whatever the heck he is.)  A one-dimensional view is not very enlightened. At the Wharton  School of the University of Pennsylvania,  I learned that economists have a two-dimensional view of the work: goods are rival and exclusive. ( The Trumps must have missed those classes). Particle physicists have adopted a three-dimensional model where particles, such as quarks, come in families of three. The US Post Office ( at least the old US Post Office.  Who knows what Trump appointee Louis DeJoy will do?) measures packages in three-dimensions ( length, width, height). Virtual Reality creates a  three-dimensional world. I have proposed that human behavior is also NOT one dimensional (i.e. liberal versus conservative), but three-dimensional ( Individual vs. Team; Nature vs. Nurture; and Fact vs. Fiction) 

Rather than characterizing the wearing of masks on public transportation one-dimensionally as a liberal versus conservative issue, I would characterize it as a Team versus Individual issue and a Fact versus Fiction issue. If I believe that my individual rights are paramount and that your rights have no value, and if I believe that there is no risk catching  COVID (which I believe is fiction) then this is different than a liberal versus conservative issue. Conservatives who have a team perspective and believe in the facts may indeed wear masks.

I understand the risk of catching COVID on a plane if I am unmasked is small. But I also understand that the risk of being struck by lighting in an open field during a thunderstorm is also small. If seeking shelter during the latter is not odd, then  wearing  masks during the former doesn’t seem so odd, and might even be a conservative, not just a liberal, position.

 


Thursday, April 21, 2022

One Percenters?

 

Natural Gift

You don't have to be a genius to find
All the hidden potential deep in your mind
You don't have to know about nuclear physics
Know all the formulas and vital statistics

But if you don’t know statistics, then expect to be taken advantage of by those that do.

Much has been written about the 1%-ers. 3 Sigma or the Mean plus three Standard Deviations, SD, happens to be 99.7%, in other words not  the 1%-ers, but the 0.3%-ers.

If you know the Mean income, and you also know that income will not be below $0, then by reporting the Mean, and saying that the Mean minus 3 SD must be greater than zero, you are stating what the upper bound should be of the Standard Deviation, SD,  that is 0 = Mean – 3 SD,  or SD is equal to Mean /3 .  I can then state what income should be for the 0.3%-ers, it is twice the mean or  99.7% of the income,  the 0.3%-er income, which is Mean plus 3* SD, or 2 * mean.

This indicates that if you know the Mean income, or wealth, then you can compute what the  lower level for the 0.3%-ers should be. (i.e. how much income or wealth or should be needed to be in the 0.3%-ers club)

The 2019 Mean income as reported by the US Census is $98,088. That indicates that an income of $196,176 should put you in the 0.3%-ers club . The US Census reports that the 2019 Mean household wealth, including the value of the home, is  $445,900, and excluding the equity in the home, it is $321,900. That indicates that the entry into the 0.3%-ers club should be a wealth of $891,800 including the equity in your home, or $643,800 not including the equity in the home.

Also the federal is on income, not on people. If 10% of the people have 10% of the income then that 10% of the people can be expected to pay 10% of the income tax. However if 0.3% of the people have 90% of the income, then that 0.3% should be expected to pay 90% of the income tax. They should NOT be expected to pay 0.3% of the income tax.

Why do you think they are coming for our math books? Figures don’t lie, but liars do figure. Maybe the top 0.3% have more income and wealth than they would like us to know and expect.

 

Hasty

 

Zippy Dee Doh Dah

Mister Bluebird's on my shoulder
It's the truth, it's "actch'll"
Everything is "satisfactch'll"

“Bill to Revoke Disney’s Special Tax and Self-Governing Status Passes Florida’s House”

Guys be careful what you are doing.  It might feel good at the moment but…those roads on Disney property might become your state roads.  Those firefighters and police officers in Disney World, they are doing jobs that might become the responsibility of Florida public sector firefighters and police.  The inspections that Disney does on its property might become a government responsibility. The debt that  Disney incurred to build these facilities might become public debt, Etc.

It reminds me of a time when I was a government bureaucrat and my boss angrily wanted to fire one of the mangers who reported to me.  I reminded her that he would then revert to his Civil Service status from which he could not be fired, and his Civil Service status would pay more than his manager's salary. My boss changed her mind, and wanted me to tell him that as punishment she was NOT going to fire him.  I think the appropriate Disney phrase would be “Please don’t throw me in that briar patch, B’rer Fox.”  Act in haste, repent at leisure indeed!

The good news is that Disney is going to lower its ticket prices.  The bad news is that I am going to have to increase your taxes, even if you don't ever go to a Disney Park.  Gee, thanks Florida State House, NOT!

Tuesday, April 19, 2022

Distribution of Wealth

 

New York, New York

And find that I'm number one
Top of the list
Head of the heap
King of the hill

We’re Number One!

Actually the United States is Number 3 on  a ranking of the most skewed wealth among the counties in the World. However the first-place county, Brunei, and the second-place country, Bahamas, have only slightly more than 0.01% of the wealth of the United States. It is number one among countries that have at least 0.1% of the wealth of the United States.

The mean wealth is only the first moment of the wealth distribution of the population. The second moment of any distribution, including wealth, is the variance. (During the COVID pandemic the phrase “flatten the curve” became popular. A statistician would state this same concept as “increase the variance”). The third moment of a distribution is the skew. If the skew is zero, then the distribution is characterized as normal. It is only in this case that Donald Trump Junior was correct, increasing the mean will also increase the median. If the distribution is skewed, then this need not be true because THAT is how math works.

In order to know the skew it is necessary to know the Standard Deviation, the square root of the variance. Income or wealth can not be less than zero. (While you can be in debt, someone else owns that debt as an asset therefore you can’t report income or wealth below zero unless you similarly reduce that debt, or the income from that debt,  as an asset of someone else.). Even when the mean and median wealth, or income, is reported, the Standard Deviation is often not reported. Statistics states that 99.97% of a distribution will be within three Standard Deviations of the Mean. This is known as the scientific standard of 3 Sigma. If you know the Mean, and you know that three times the Standard Deviation from the Mean can not be less than zero, you can bound the Standard Deviation. Knowing the bound on the Standard Deviation it is possible to estimate the skew of the distribution.

Top 20 Counties Ranked by Skew of Wealth Distribution

 Country

 Mean (USD)

 Median (USD)

 Wealth (USD)

 Pearson's Second Coefficient of Skew

  Brunei  

$39,098

$5,122

$12,081,282,000

7.82

  Bahamas  

$56,737

$7,507

$15,772,886,000

7.81

  United States  

$505,421

$79,274

$126,339,581,949,000

7.59

  Bahrain  

$87,559

$14,520

$115,402,762,000

7.51

  United Arab Emirates  

$115,476

$21,613

$929,928,228,000

7.31

  Brazil  

$18,272

$3,469

$2,801,225,504,000

7.29

  Ukraine  

$13,104

$2,529

$453,909,456,000

7.27

  Russia  

$27,162

$5,431

$3,037,933,890,000

7.20

  Philippines  

$15,290

$3,155

$1,023,818,400,000

7.16

  Lesotho  

$1,226

$264

$1,523,918,000

7.14

  Switzerland  

$673,962

$146,733

$4,689,427,596,000

7.04

  Laos  

$7,379

$1,610

$31,641,152,000

7.04

  Yemen  

$5,581

$1,223

$85,283,261,000

7.03

  Kuwait  

$129,890

$28,698

$408,633,940,000

7.01

  South Africa  

$20,308

$4,523

$763,377,720,000

7.00

  India  

$14,252

$3,194

$12,833,113,636,000

6.98

  Zambia  

$3,068

$692

$25,559,508,000

6.97

  Saudi Arabia  

$68,697

$15,495

$1,661,505,642,000

6.97

  Nigeria  

$6,451

$1,474

$618,850,881,000

6.94

  Botswana               $15,598               $3,680                  $21,182,084,000                   6.88

 Source: Credit Suisse Wealth Databook.

Not only is the United States the wealthiest county on Earth, but it also has one of the, if not the, most skewed distributions of that wealth.

If anyone is interested, the listed country with the least skewed distribution of wealth is Iceland, where virtually everyone is related.  It would make for some very awkward family reunions if you became wealthier at the expense of a family member.