$3.6 Trillion

Obama’s proposed budget is $3.6 trillion of spending.  That’s $11,842 for each of us or $25,714 for each individual tax return filed.   It’s also about 28% of the national economy.  Any way you cut it, it’s big and dangerous. 

To concentrate 28% of the economy in the hands of so few is dangerous.  This converts the incentives around 28% of the spending of the economy from value-based, “is-it-worth-it?” decisions made by the parties involved to third parties spending other people’s money motivated by wanting to appear helpful.  The former transaction generates much more benefit for society than the latter, despite what some economic adviser’s math model suggests.  The latter is more likely to destroy value.


Expert Fallacy

Critical thinking skills are in the tank. Rarely are the merits of an issue debated. Discussions go down several common rabbit holes. I wrote about one in a previous post, where you or your opponent will not be honest about the other’s position. 

Another common rabbit hole is an appeal to authority, or expert fallacy. In a discussion on how to fix health care, a medical doctor chimed in with an opinion that agreed with my opponent. The opponent declared, “This guy works in the profession. I trust his opinion.”  The discussion went south as we debated why being a doctor doesn’t make your opinion on the organization of the health care necessarily true.  When a medical doctor who agreed with my view chimed in, the same opponent proceeded with ad hominem attack to discredit him not bothered in the least by his blatant inconsistency.  I no longer argue with this guy.  I use him as practice for identifying fallacies.

Not only do we commit expert fallacy when the the so-called expert agrees with our position.  In Fooled by Randomness, N. N. Taleb writes about a different variation of expert fallacy. He distinguishes between fields where being an expert can help and where it doesn’t and argues that few people make that distinction. Dentists are expert enough in dental care to cure a toothache.  We incorrectly confuse the type of skill the dentist has with the type of skill economists or investment managers have.  Outcomes in these areas are more random and success is based more on luck.

Why do we fall victim to these expert fallacies?  Because critical thinking skills are in the tank.  We accept it.  Does it matter that “experts” are proven wrong all the time?  Does it occur to us that “experts” are human and are susceptible to the same biases as the rest of us?   

I’ve been told you’ve found a good doctor if she highly encourages you to seek out a second opinion because she could be wrong.  That’s a good litmus test for other “experts” as well.  Think twice if they don’t readily admit that they might be wrong.  I’m not wrong about this.

Jon Stewart Show Fallacy

Congrats Jon, you’ve smashed Jim Cramer into groveling submission.  Very Stalinesque.  What was the point?  To draw attention away from Cramer’s criticism of Obama? Rather than debate Cramer on what he said, you dusted off a good ole ad hominem, which I hereby motion to rename the Jon Stewart Show Fallacy.

Rush Limbaugh

I may be defective because I appreciate the merits of an argument more than the style in which presented.  But style is in.  Big time.

Consider Rush Limbaugh.  Over the last few years, liberals successfully marginalized Rush by changing the subject from what he says to how he says it.  Defend Rush in the slightest and you’re called  a simple-minded, dittohead moron.  Conservative friends of mine are trained well.  They reflexively bash Rush and never try to discuss the merits of a position Rush has on an issue for fear of  being shunned. The social costs are too great.  When I ask them to explain which of Rush’s points they disagree with, they either say they don’t know or that they agree on  many points, but they just don’t like his style.

When I hear a Rush-bashing caller on radio programs I hope they present an argument with some rational, logical refutation of a position Rush has put forth.  Then, shortly thereafter, I’m disappointed again.  Just another name caller.

It’s time to move the conversation back to the merits.   I’m tired of being bullied away from discussing the meat and potatoes of an issue.

Thomas Sowell read my mind.

Thomas Jefferson Says…

Thomas Jefferson speaks to us from across the centuries:

“Experience [has] shown that, even under the best forms [of government], those entrusted with power have, in time and by slow operations, perverted it into tyranny.”

My reading of history convinces me that most bad government results from too much government.”

A wise and frugal government which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”


Please read this Walter Williams column.

Few debates about what the Federal government should and should not do consider what the government is actually empowered to do by the Constitution. Why?

Open Source

In Russell Robert’s (of CafeHayek.com) January 19th EconTalk podcast with Eric Raymond, author of the The Cathedral and the Bazaar, Raymond discusses five special circumstances where open source tends to be more successful:

1. Cheap capital goods.

2. Human creativity and attention is the limiting factor.

3. The work is intrinsically rewarding.

4. There’s an objective metric for success.

5. Low communication costs.

I think this is interesting, but I’m not convinced about number 4. Open source can be successful whether the metric for success is objective or not. It can work even better than “closed source” when the metric is not so objective.

Raymond explains open source works well with software development because the metric is clear, “it either runs or it crashes.” He says it doesn’t work so well with something like Wikipedia because there’s “no metric for truth” of an entry “except the judgment of other human beings who may be as eccentric and crazed as you are.”

In his Wikipedia example, Raymond stumbled into the reason why closed source isn’t very good. In closed source it’s too easy to pick the wrong metric for success. Wikipedia’s metric for success isn’t the truth of an entry. The right metric is whether people use it. They do. Jimmy Wales, founder of Wikipedia, reported that 280 million people per month use it on the latest EconTalk podcast. That says that given all the trade-offs, Wikipedia entries provide good enough value for people to use it. Of course, the truth of entries plays a part. Few would use Wikipedia if it were very unreliable. But, it’s reliable enough for many needs.

I suggest reversing Raymond’s fourth special circumstance to say that closed systems work pretty well when the best metric for success is objective and known. I’ve been asked why I think our military, a government ran, closed source organization, is so effective. It’s because the objective is usually clear: to win. Failure is clear as well. The reason why education isn’t a very good when run by the government is that the metric for success isn’t clear.

Even with software the metric for success isn’t as clear as we might believe. In hindsight it may seem so, but it’s not as clear as we think ahead of time. A base metric for success, such as whether it crashes, may be objective. But one solution may meet not crash in 300 lines of code while another does it in 10,000. I’ll take the “300” if it does the same thing.

It was a great podcast. Highly recommended, as are all EconTalk podcasts.