Rationing COVID Treatments

 

Sympathy for the Devil

Just as every cop is a criminal
And all the sinners saints
As heads is tails
Just call me Lucifer
'Cause I'm in need of some restraint

The Prince of Lies tries to confuse the Means with the Ends.

Stephen “The Lizard” Miller has crawled out from under his rock to make a claim that states are discriminating in the distribution of the COVID treatments on basis of race. (I am confused! I thought the Lizard was opposed to the vaccine and opposed to minorities.   Shouldn’t he support sending more vaccines to minorities?)

Silly Rabbit.  There is a difference in bias in the method, the means,  and bias in the result, the ends.  The result should not be discriminatory.  Just because the method is not discriminatory, that does not mean that the end result is not discriminatory.  This is known as sampling bias.

For example, if there is a poll conducted on TikTok, then only those who use TikTok can respond.   If TikTok usage is not biased, then the result of that poll is not biased.  (FYI, I am NOT among those TikTok users). But if the result is biased and that result does not reflect the general population, then it is appropriate to correct the method. 

This confusion between bias in the method, the means, and bias in the result, the ends, might be the basis for many voting fraud fears.  Asking for a Driver’s License to prove one’s identity, the means, when one is voting is not discriminatory. But if the distribution of Driver’s Licenses does not also reflect the distribution of the voters, the end, then this proof is biased.  The ends not justifying the means works both ways.  If the end is biased, then the means are biased.

The 2% Solution

Little Things Mean A Lot

Blow her a kiss from across the room
Say she looks nice when she's not
Touch her hand as she pass her chair
Little things mean a lot

And if you keep those things little, they will mean a lot more.

Sherlock Holmes was, in least one movie version, addicted to a 7% solution of cocaine.  Seven percent doesn’t seem like very much, so 2% seems even less.  For most of my career I have been involved in more and more sophisticated ways of forecasting things.  I remember one of my bosses from over forty years ago, claiming  that growth is almost always 2% per year, no matter how sophisticatedly you forecast it.  And life is change, i.e. growth.  “It is how we differ from the rocks.”  which is why the growth rate is not 0%.  So changing the growth rate from 2% to 4% doesn’t sound like a big deal, correct.  Well,… Not Exactly.

From the 1913, the beginning of the historical reporting of the Consumer Price Index, to 1944, the year of the Bretton Woods Conference, inflation, growth, was 1.87% per year.  From Bretton Woods, when the US Dollar became the international trading currency convertible into gold,  until the Nixon Shock of 1971, when the international dollar was no longer convertible into gold, inflation was 3.13% per year.  From 1971 to today, inflation has been on average 3.86% per year.  The annual rate of change does not seem so dramatic.  But just as a continual but small increase in temperature in a pot of water will boil a live lobster,  small rates of change over a long period of time can be consequential. If we concentrate on the change in inflation from say 2018 to 2019, which was only 1.76%, we miss this long term change.  From 1971 to 2022, the change in long term inflation from 2% per year to 4% per year has meant that a dollar in 1971 was worth only $.14 in 2022. Had inflation remained at 2% per year over this same period, that dollar would be worth almost twice as much. 2% per year extra may seem like a little, but it means a lot.

Resignations

 

We’re a Couple of Misfits

Why am I such a misfit?
I am not just a nit wit!
They can't fire me.
I quit!
Seems I don't fit in

Is quitting an admission of guilt?

The recent resignation by Jeff Zucker of CNN has certainly garnered a lot of comments.  However the comments may provide a better idea as to whether that commenter is playing a User Optimal strategy, which is the best strategy for the player, or a System Optimal strategy, which is the best strategy for society.  Just as a verdict of not guilty does NOT mean the plaintiff is innocent, https://dbeagan.blogspot.com/2021/10/words-you-thinkthat-i-dont-even-mean.html, quitting is NOT an admission of guilt.   Society is interested in the truth, whether the accused is innocent or guilty.  The accused may only be interested in retaining his job.

If you follow a User Optimal strategy, you should Fight every accusation, whether you are Innocent or Guilty.  Even if that accusation is true and you are Guilty; claim “whataboutism” for your competitors (they did something almost as bad!); question the motives of those making the accusation (witch hunt!); or blame the ones who provided proof of your guilt (snitches get stitches).

If you follow a System Optimal strategy, you may Quit, even if you are Innocent.  Society has to devote Resources if you Fight.  If you Quit that means that society has to devote No Resources.  If you value society, and the cost to society is greater than your value of Retaining Your Job, you may Quit even if you are Innocent.

The problem is that there is a difference between Innocent and Not Guilty.  Society can NOT find you Innocent.  Society can find you Not Guilty.

The table of gameplay is is

Accused	Innocence or Guilt	Evidence	Society	Societal Finding	User Outcome
Fight	Innocent	No Evidence	Use Resources	Not Guilty	Retain Job
Fight	Innocent	Evidence	Use Resources	Not Guilty	Retain Job
Fight	Guilty	No Evidence	Use Resources	Not Guilty	Retain Job
Fight	Guilty	Evidence	Use Resources	Guilty	Lose Job
Quit	Innocent	No Evidence	Use No Resources	None	Lose Job
Quit	Innocent	Evidence	Use No Resources	None	Lose Job
Quit	Guilty	No Evidence	Use No Resources	None	Lose Job
Quit	Guilty	Evidence	Use No Resources	None	Lose Job

 

There are different standards for the court of public opinion, a civil court, or a criminal court.  There can be a finding of Guilty in the court of public opinion and in a civil court, and a finding of Not Guilty in a criminal court (remember O. J. Simpson?) There are three ways to retain your job if the accused plays Fight, which is his User Optimal strategy.  There is a guarantee that Society will Use No Resources if the User plays Quit which is his System Optimal strategy.

If you place a value on the resources of society, then it is possible to Quit and Lose Your Job even if you are Innocent.  If you place no value on the resources of society (which by definition  makes you a hater of society, a sociopath) then you can Fight to Retain Your Job, even when you are Guilty. 

If you are not only a User Optimist, but are also immoral, you can act as if a finding of Not Guilty is a finding of Innocence; a finding of Guilty does not mean that you Lose Your Job; and that Quitting means a finding of Guilt.

Advertising

 

Women Be Wise

Women be wise, keep your mouth shut, don't advertise your man
Don't sit around gossiping, explaining what your good man really can do
Some women nowadays, Lord they ain't no good
They will laugh in your face, Then try to steal your man from you
Women be wise, keep your mouth shut, don't advertise your man.

But there IS a time to advertise.

Emerson said “If you build a better mousetrap, the world will beat a path to your door”.  I am loathe to disagree with the sage of Concord,  but if the world does not know that you have built a better mousetrap, then it will NOT beat a path to your door.  Building a better mousetrap, and marketing/ advertising  that mousetrap are different things. 

Leibniz developed Calculus contemporaneously with Newton. Alfred Wallace developed the Theory of Evolution contemporaneously with Charles Darwin.  Watson and Crick get the credit for developing the Double Helix for DNA, but they did not do it alone. Rosalind Franklin probably deserves a great deal of the credit.  In each case, the ones that we know just had better advertising.  Advertising something you want to keep secret, not a good idea.  Advertising something that is not a secret, probably a good idea.

Capitalism

 

The Last Time I Saw Paris

The last time I saw Paris, her heart  was warm and gay,
No matter how they change her, I'll remember her that way.
I'll think of happy hours, and people who shared them
Old women, selling flowers, in markets at dawn

Is capitalism the number of markets?

"When we toss out these big words, capitalism, socialism, they get ... sensationalized, and people translate them into meaning things that perhaps they don't mean," she told Yahoo Finance's editor-in-chief, Andy Serwer. "So to me, capitalism, at its core, what we're talking about when we talk about that is the absolute pursuit of profit at all human, environmental, and social cost.”  February 5th, 2020

This quote was attributed to Representative Alexandria Ocasio-Cortez.  I would like to suggest that the pursuit of profit is due more to the owners of capital seeking  a User Optimal solution as opposed to  seeking a System Optimal solution.  Profit is just a measurement in that User Optimal solution.   I am making a distinction between free markets and capitalism.  The two are often combined as in free market capitalism, but I would like to suggest that they are really separate and distinct.  Free market refers to many markets as opposed to a single market.  If a transaction can not take place in one market, then the buyer and seller are free to seek another market.  Capitalism, IMHO, is not how many markets there are, but who owns the profit from the production equation.

The seller’s production equation has traditionally been expressed as a function of capital and labor.  To be more precise, it is a function of capital, priced input materials, unpriced input materials, and the labor need to apply the capital to those input materials.  The amount of labor required is a function of the amount of output to be sold.  If less output is to be sold, then less input material is required and less labor is required.  Less capital is required too, but that is why there is a stock market so that a producer’s capital can be liquid.  But because there is a stock market that means that rather than lowering the amount of capital, it may be advantageous to the owners of capital to disproportionately lower the cost of inputs and labor as a way to seek their User Optimal solution. 

The problem with this is that the buyers are laborers and other producers.  Maybe not of that producer’s product but of other products.  If the wages paid for labor, or the prices paid for inputs, are reduced, then the buyer's demand equation will not be constant but will also be reduced.

The amount of priced inputs can be unfairly reduced if the producer is approaching a buyer’s monopoly, a monopsony. 

Unpriced inputs,  common goods provided by society, such as like fresh air, clean water, etc. can be consumed at a price without regard to their value with the false assumption that they are not only unpriced but unlimited.

If the return on investment of capital is low, a producer can decide to increase market share, at the expense of competitors, to maximize his share of the “profits” for that product.

Capitalism, socialism, etc., is who is the owner of the components of production as well as the as the outputs of production.  Free markets for buyers and sellers are NOT capitalism.  You can have free markets and ownership of some capital and/or products by society, i.e. socialism, and still have a free market as anyone in Scandinavia would be happy to attest. 

Free markets require truth in the transactions between buyers and sellers.  In the US we have regulated free markets because too often one party is NOT truthful.  A single market requires that the market is perfect. If that market is operated by humans, the temptation is that they will operate it for their own advantage, and not perfection. “All animals are equal, but some are more equal”.  “Power corrupts and absolute power corrupts absolutely.” 

Inflation III

 

War

War, huh, good God
What is it good for
Absolutely nothing, listen to me!

Inflation, huh, good God, What is it good for?

Persistent long-term inflation has been accepted as a fact of life.  But persistent long-term inflation is NOT a fact of life and accepting it does have consequences

Long-term inflation is NOT the inflation from the previous year.  In 1979, when I took out a 30-year mortgage to buy a house, the year-to-year inflation was 11.3% and the fixed interest rate of the mortgage reflected this.  By 1986 the annual inflation had dropped to 1.9% and I paid the costs to refinance my mortgage at the lower, fixed rate which was then being offered.  I could have refinanced to an Adjustable-Rate Mortgage, but then my monthly payments would not be fixed, but could increase if the Prime Rate offered by the Federal Reserve Bank also increased.  If the Prime Rate was high enough, then my monthly mortgage payment could exceed my monthly budget and I could lose my home.  My condolences to everyone who lost their home to subprime mortgages in the late 2000s and early 2010s.

Lenders have tried to offer financial products, such as Balloon or Adjustable-Rate Mortgages, such that they are repaid in the dollars when the loan originated.  The problem is that what is the maximum payment that the borrower can afford when interest rates are low, or before the balloon payment is due, may not be affordable in the future.

There is a similar problem when monetary amounts are written into  the law.  A $7.25 per hour Minimum Wage might have been reasonable in 2009, but it is not so reasonable in 2022.  That is why so many statutory values now have Cost Of Living Adjustments (e.g. Social Security, Tax Brackets, etc.)  But there are still remain many statutory values that are only still appropriate if long term inflation is closer to 0%.

High long-term inflation rates, that are mistakenly considered to be the annual inflation rate,  benefit lenders, not intentionally but it does.  It benefits those who pay fines or amounts specified in law.  It does not benefit borrowers or the society that has agreed to the payments specified by law.  Reducing long term inflation and paying less attention to annual inflation would benefit everyone.

Inflation II

 

One for My Baby (and One More for the Road)

I got the routine, put another nickel in the machine
Feelin' so bad, can't you make the music easy and sad
I could tell you a lot, but you've got to be true to your code
Make it one for my baby and one more for the road

A nickel?  Really? Really?

The Seventh Amendment to the US Constitution, one of the Bill of Rights, reads:

“In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.”

Good luck trying to find a lawyer that is interested in a $20 court case. The filing fees are probably greater than $20!  But if those $20 are considered to be in US Dollars, USD, in the year the Constitution was enacted, that $20 in 1789 is worth $633.64 today.  The value of the dollar varies from year to year. That is what inflation and deflation is all about.  However in the long term before 1944, the value of money did not change very much.  Thus a law setting a penalty, a benefit, or mentioning any monetary value, assumed it would not appreciably change over time.  However beginning in 1944 with the Bretton Woods agreement, the long term change in money was inflationary but modest.  Beginning in 1971 with the Nixon Shock, the change in the long term value of money became inflationary and dramatic.

Any monetary value entered in law should note the amount is in the current year dollars.  Then if the value of money is changed, that value will also change.  If this had been the case in 2009, when the minimum wage was last enacted, the specified wage of $7.50/hr. in 2009 USD, it would be $9.75/hr. in 2020 USD. 

When Johnny Mercer wrote One for My Baby (and One More For The Road) in 1943, his nickel is now worth $0.81. If you could find a jukebox today, it wouldn’t cost a 2022 nickel in the machine to play a song.