Peter King, the Japanese, and looting

As the Peter King hearings on Muslim radicalization continue, a fine piece of opinion journalism has appeared that critiques exactly why the whole hearings circus is deserving of opprobrium. It comes from a commentary on the widely reported lack of looting after the Japanese earthquake and the discussions that have arise regarding racial homogeneity as a possible explanation.

A distressing number of writers have noted that there are few black, Hispanic or Arab people in Japan. As one put it, “Japanese do not loot, black Americans in Louisiana do. If that is a fact, how is it racist?”

I reject racial explanations out of hand. Without any evidence of genomic differences yielding significant differences in behavior, the observation that New Orleans’ looters were largely black is indeed racist.

We might as well observe that they were mostly American, mostly Louisianan, and that very few had doctoral degrees. Those observations aren’t explanations, and to insinuate that they are is a slander.

If you replace “race” with “religion” and “black” with “Muslim” then you’ve pretty much dismantled any semblance of value to be gained by Peter King’s hearings.

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Data, Shmata

On my bad days, when I’m wavering in my faith that humans have any air of rationality, I often begin to have a creeping fear that we have become allergic to data and evidence. And I don’t just mean that we avoid science. I mean in our everyday lives. Here’s an example. As I was logging into my WordPress account today I noticed on the homepage a blog post about Jonathan Franzan’s top 10 writing tips. I read the post, smiled, and reflected for a few moments. Noticing the blog’s author had written a related article about Franzan’s The Corrections, and having thought about picking up the book for several months now, I clicked on the link.

Several paragraphs into the post was this claim:

“Second, reviews on The Corrections from non book critics (read: normal people like you and me) are mixed. Take one look at The Corrections on Amazon and you’ll see what I mean. It’s a three-star novel with more than 1,000 reviews. Why is it three stars? People either really love it or really hate it.”

I hear these sorts of declarations made quite often. “Either you’ll love his sense of humor, or you’ll hate it.”  “Either you love her beff stroganoff, or you hate it.” “Either you’ll read this book in a single night, or you’ll throw it down in disgust after the first five pages.”  I’ve never been one to buy into such extreme pronouncements so I decided to mozy on over to Amazon and take a look at this book’s customer reviews.

If we assign “really love it” a review of 5 stars and a “really hate it” a review of 1 star and do a little math we’ll learn that 55% of people either love this book or hate it, while 45% have some ambivalence toward it. Far from the claim that The Corrections is either loved or hated, only slightly more than half of readers harbor such strong convictions regarding the novel.

I don’t mean to pick on what seems like a well intentioned blog (the author is reading all 100 of Time Magazine‘s greatest English-speaking novels since 1923, a glorious and praiseworthy effort); and perhaps a few of you will write my complaint off as pedantic. But I still think it matters.

The example above is but one case of what has become (or maybe always was) an aversion to hard evidence. That we don’t calculate the percentage of people who feel a particular way toward a novel before writing a blog post is of no import. The larger point is that, far from staying neutral on topics we know little about, we transform into raconteurs—waxing lyrical, compelled to have an opinion one way or the other on every topic at hand—all the while ignoring the solid terra firma of the measurable and real as it sinks further and further away beneath our feet.

The question, “How do people on Amazon feel about The Corrections?”, like many other questions in life, has an answer (at least in part). Many of the riddles that confront our everyday lives do not. To treat that which is fact as merely a matter of opinion—or worse, to treat that which is unknowable as something that can be made real simply by will of conviction—is to infuse into the genuine a spurious nonsense. It is to give credence to intentions, hopes, and desires while discounting outcomes, history, and evidence.  It is to bake a pie made of lies—an American Lie Pie—and try to force others to eat it.

The more we make such unwarranted claims in our daily discourse, the lazier our brains become, the more susceptible we become to specious professions, and the more we view data and evidence as the banal details that should be relegated to science labs and courtrooms. I also believe it is partly at fault for our blind adherence to our own ideology.

We are creatures of habit, running in the same circles of friends week after week, watching the same news programs, reading the same websites. The claims we make and hear from others get batted around unchallenged, slipping into conversation as easily as laughter or talk of the weather. True or not, our allegations to one another become reality. So much so that we are jarred when we are confronted with anything different. So enraptured in what we know to be “true” we respond with vitriol and indignation; only then does our scientific mind suddenly jolt to life, demanding from those who have challenged us every scrap of data and evidence on the subject hand. And even then we are likely not to believe.

We may not be able to pause for mathematical calculations or deep research with every lackadaisical comment we make. But we can stop and think, the next time we say something, “I wonder if that is true”. If there is a computer nearby maybe we can look up the answer. We can choose not to speak about the many things for which we have no knowledge, or when we do, we can state them as a matter of opinion, noting that we could easily be wrong. We can understand that on many issues there are multiple sources of data, often conflicting, and in these cases we can talk about the relative merits of each rather than discounting completely the side which contradicts our sensibilities. On matters that are settled, we can follow the evidence, even if it disagrees with what we want to believe. Or at the very least we can say, “Sorry, I understand where you’re coming from and understand your evidence, but I’m biased on the subject. Even if you’re right my heart won’t let me agree.”

Larry Summers confuses me

In this—what I can only describe as mind-bogglingly strange—statement, Larry Summers (most recently portrayed in The Social Network) is bullish about Japan’s economic prospects after the recent Japanese earthquake:

“If you look, this is clearly going to add complexity to Japan’s challenge of economic recovery,” Summers said. “It may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place.”  After the Kobe earthquake in 1995 Japan actually gained some economic strength due to the process of reconstruction, he added.”

That the rebuilding effort in Japan will lead to temporary increases in Japan’s GDP is not ironic, it is simply a matter of fact. GDP is defined such that it contains a government spending component, so spending in the aftermath of the earthquake necessitates an increase in GDP. (Well, things are slightly more complicated since there will be productivity losses in some regions of Japan that partially offset increased government expenditure induced by rebuilding).

That GDP will increase from Japan being forced to rebuild entire cities is far from the country demonstrating “economic strength”. In fact the opposite is true, it is a waste of resources that could otherwise be allocated towards productive uses. A widely cited idea from Keynes is that employment can be achieved by simply digging holes and filling them back in.  While his quote is oft taken out of context, Summers seems to echo it without irony.  Yes, GDP in Japan will increase, but this is not “economic strength”.  This is not prosperity.  If it were then the answer to America’s 8.9% unemployment rate would be to tear down New York and rebuild it.  But we all understand we wouldn’t be better off after the task were complete.

Luckily for us, Frederic Bastiat obligingly wrote this prescient essay back in good ol’ 1850 to help disabuse Larry of his misunderstandings.  (For my money, still the greatest economics essay ever written).

Zaarly Pitch at LA Startup Weekend

Just signed up for e-mail notification when Zaarly launches.  Zaarly is a hyperlocal marketplace where buyers and sellers come together for simple transactions (tickets to a game, pizza delivery, holding a place in line, etc.).

Vodpod videos no longer available.

Here is a higher quality video I couldn’t embed. It’s from a Techcrunch interview this week at SXSW.

Amazon, Sales Tax, and Unintended Consequences

There is a rule in business: if you put a bucket of money on one side, a profit maximizing enterprise* on the other, and some sort of legislation in between, eventually that enterprise will find a way to get to that bucket of money. Economists call this an unintended consequence of the legislation because the cleverness with which rules are circumvented is rarely foreseeable…at least to politicians.

 

The latest display of this stalwart economic principal is the fight between Amazon and various state legislatures throughout the country who are now demanding that Amazon pay sales taxes in those states where affiliates or subsidiaries operate. The argument behind the proposals are two fold. First, if brick and mortar facilities have to pay sales tax it is only fair that online businesses do the same.  Second, as the current debate in Wisconsin indelibly demonstrates, states are in a pinch when it comes to their budgets.

 

Let’s take these one at a time.  The idea that online retailers paying sales tax is a matter of fairness is nonsense. At the heart of these arguments is the notion that somehow e-commerce is unfairly competitive with respect to businesses with physical retail spaces. These two types of business models are simply competitive along different dimensions.

 

While online sellers may enjoy a price and volume advantage in many cases (although this is by no means universal, think: Wal-Mart), they relinquish many other advantages.  First, customers must pay shipping expenses and even then must wait several days to receive their product. They risk having the product damaged during transit or missing the UPS driver if the item requires a signature. They don’t get to skim through the book, try on the skirt, or smell the candle. They don’t get to ask a sales person for advice or have him/her answer questions about the product. If the customer guesses wrong while shopping online, they don’t get the immediate feedback to know that the salesperson should bring them a smaller size of shoe. They don’t get to see colors and textures of fabrics in eye-poping REAL-D or in the unforgiving light of the real world. They don’t get to pick up the computer to see how light 5.1 Ibs really feels.  The customer won’t get to see the brightness of the HDTV, judge the size of the suitcase, or feel the firmness of the pillow. And trying to return something you bought online? If that online retailer doesn’t have a physical store nearby you’re off to the post office to wait in a 10-person line, destined to mail the item back and start the buying process all over again.

 

I could go on, but anyone who has been to an Apple store lately surely must know the value of a physical retail location. Daily, crowds of consumers pack between its walls to look, feel, hear and yes, purchase.

 

So how are online retailers stacking up against brick and mortar stores these days? I pulled this report from the US Census website:

E-commerce sales in 2010 accounted for 4.2 percent of total retail sales. In other words, less than $1 of every $20 a customer spends will be through an web-based vendor. Although online sellers are certainly increasing at a healthy pace, it looks like traditional retailer stores are still doing just fine.

 

Now what about those state budgets. The theory goes that forcing online retailers to pay sales tax will increase tax revenue thereby helping to close budget gaps. While that might work in a world where people’s feet are sealed in concrete, the real world is dynamic—companies and consumers constantly respond to the incentives laid out before them. So what do you do when someone slides a piece of legislation between you and a bucket of money?  You find a way to get to the bucket:

“Meanwhile, last fall, Texas officials sent Amazon a tax bill for $269 million, after determining that the retailer’s Dallas-area warehouse, owned by a subsidiary, qualified as a local address under state tax rules…In retaliation for Texas’s move, Amazon said last month that it would close the warehouse next month and cancel plans to build another.”

 

If this movement among states continues to gain steam, then Amazon will continue to respond, probably by consolidating its operations to minimize its tax exposure; all the while hurting the states that enact the legislation by reducing employment opportunities. At some unknown point in the future, I predict, some clever state will realize what is happening and invite online retailers by exempting them from sales tax—because states want to get to that bucket of money too—just as Delaware did with laws regulating incorporation of businesses. Laws which have since spread to other states, I might add. (Either that or Amazon will simply relocate to one of the four states with limited or no sales tax). And this certainly wouldn’t be the first time that companies have undergone geographic relocations in response to legislation.

 

*Note that humans are included as profit maximizing “enterprises”.

TAAZ Does Makeup Digitally

Found this site while reading the NY Times today.  It’s called TAAZ and let’s you upload a picture and digitally add hair and makeup.  Hey, that’s me!!!

The process was pretty simple.  I had to sign up for an account to upload a picture (otherwise you can choose from a photo list of models) and the site guided me through a process of tracing the various parts of my face.  There are a ton of different brands of makeup and, although I went overboard for effect, the results seem to be pretty realistic.  I was especially impressed by the look of the mascara application.  Here’s a more subtle version I did with one of the preloaded models: