Sunday, February 21, 2021

Sunday Night Links

  • Unlike all other US energy markets, Texas does not even have a capacity market. By design they rely solely upon the energy market. This means that entities profit only from the actual energy they sell into the system. They do not see any profit from having stand by capacity ready to help out in emergencies. The energy only market works well under normal conditions to keep prices down. While generally markets are often great things, providing needed energy during extreme conditions evidently is not their forte. Unlike the traditional approach where specific entities have responsibilities to meet peak levels, in Texas the responsibility is diffuse and unassigned. There is no significant long term motivation for entities to ensure extra capacity just in case it may be needed during extreme conditions. Entities that might make that gamble theoretically can profit when markets skyrocket, but such approaches require tremendous patience and the ability to weather many years of potential negative returns. This article from GreenTech media praises energy only markets as do many green interests. Capacity markets are characterized as wasteful. Andrew Barlow, Head of the PUC in Texas is quoted as follows, “Legislators have shown strong support for the energy-only market that has fueled the diversification of the state’s electricity generation fleet and yielded significant benefits for customers while making Texas the national leader in installed wind generation.” [link]
  • The D.C. conservative scene is a veritable cornucopia of pear-shaped men. Here are the supposed intellectual elite of the American right—men who know their C.S. Lewis and are, ostensibly, fighting the abolition of men and manliness—without chests to speak of. The chest was Lewis’s metonym for thumos, Plato’s “spiritedness.” Spiritedness guards the intellect as it seeks to transform appetite into philosophic eros, the hunger that draws the great-souled upward to the truth. Thumos, chest, mediates between the head and stomach. A lot of things fell into place with the heavy lift of graduate school. I’m grateful for what my teachers taught me in the classroom, but maybe just as valuable a part of my M.A. was what I learned beforehand in the gym, the discipline of mind and body, the pursuit of excellence, the virtue of self-mastery. The other great pleasure in the flesh’s submission to the rule of steel—itself a rebellion against Weber’s iron cage—is what people call “broscience.” Or, as we would have said before the post-war technological elite that sent men to the Moon became the decadent priests of scientism, just plain old science. An educated guess, experiment, theory, more experiments, always questioning, always seeking, hungry for knowledge, hungry for gains—it’s the gym-bro way. It conquered the planet, it conquered gravity, it can conquer your fat, lazy [posterior]. [TAC]
  • In America, we are heirs to Whig history. The Whig interpretation of history is a four hundred year narrative in which Western civilization progressed from the darkness of monarchy, aristocracy, stasis, inequality, bigotry, and anti-empiricism, toward a world of freedom, democracy, progress, equality, and scientific enlightenment. All mainstream history today is Whig history. Even conservative history, as interpreted by the National Review or Heritage Foundation, is 99% Whig history, with only dissent when it comes to the most recent events and revisionism. For instance, no mainstream conservative is openly on the side of the Tories or Loyalists on the question of the American Revolution. Not only is Whig history the official narrative, we rarely even read the views of the non-Whigs. Whether we take a typical AP History class or endure the Yale Directed Studies survey course, we do not read what the losers and reactionaries had to say. One hypothesis is that the Whigs were in fact the good guys, and good has consistently prevailed over evil. A second hypothesis is that the Whigs were almost always the bad guys, and that evil routinely triumphs over good, and then writes histories to make their faction not seem so evil. A third hypothesis is that sometimes the Whigs were the good guys, sometimes they were the bad guys. Sometimes they won, sometimes they did not. But whoever won wrote the history books, and painted themselves as good guys, painted themselves as the friends of liberty and equality, painted themselves as heirs to the Whig tradition, whether it was true or not. If you genuinely love history, I encourage you to sample some readings from the other side, the losers, the non-Whigs. As you read, keep the all three hypotheses above in mind. On events ranging from the English Civil War, to the American Revolution, to World War I, to the Red Scare, it is time to hear the other side of the story, the side of the story that you never before read. You may end up eventually renewing your faith in Whig-history – but at least by reading the other side your views will now be in full color. You will have replaced the cartoon version of history’s bad guys with a three-dimensional version. [Devin Helton]
  • Social Security should be indexed to nominal national income. In fact, the way to solve the entire social security crisis is to simply state that 12.6% of national income will go to social security, and whatever that income buys, it buys. If the economy produces fewer goods because seniors retire, there is no inflation adjustment possible that can give those seniors the promised income. If the cost of living increases because the economy is shrinking, everyone must bear the pain. Conversely, if the economy grows really fast, there is no reason to exclude seniors from this windfall by reducing their income. To the extent that a changing dependency ratio is a problem, the fix should be to make part of social security income come from the tax payments of your own children. So if you had four children you get a larger payout than if you had zero children. This is fair, since social security is not actually an insurance or savings program. It is a socialization of the age-old method whereby children support their elders in retirement. But as with all socialization, it creates an incentive to freeload. The childless retirees are essentially freeloading off of the work of those who raised the next generation. Thus the childless should get less than those with children. [Devin Helton]
  • Every rat-racer fears dropping out of the race. If a rat-racer fails to put in enough effort, he will fall into the pleb class. I have seen it happen to friends. Maybe they take it easy at work and get laid off. Maybe they do not build the needed career connections. They might have had slightly lower SAT scores, and gone to a less prestigious school, and then failed to get the high powered finance job. They take a crappier job and end up laid off during a downturn in business. Desperate for a job they end up bartending or painting houses. The first few years as a rat-racer are precarious. The worker has not built up unique skills and connections, and is therefore replaceable. Because a rat-race career takes time to establish, rat-racers do not feel comfortable starting families until they near thirty. At that point, their career still requires long hours to maintain, so balancing work and children can be stressful. Thus rat-racers rarely have more than two children. Rat-racers do not want themselves or their children to fall down into the pleb class. So rat-racers must buy expensive homes so that the plebs and the underclass are priced out of the town and its schools. By sending their kids to school and college with other rat-racers, parents can prevent their kids from making friends with underclassers, and ensure their kids pick up the proper polish. However, since rat-racers are bidding against other rat-racers for slots in these towns and schools, the price of the rat-race life keeps going up. Entering the rat-race life used to only require attending college. Now it can require paying for grad school, plus supporting the child through unpaid internships. Having more than two children is quite out of the question - children are too expensive and take up too much time. Given that many rat-racers never feel the urge to have children at all, the total fertility for rat-racers is well below replacement. Rat-racers are good, smart, hard-working folk. That their work ethic is driving them to extinction is tragic and long term catastrophic. The plight of the rat-racer is one of the great problems of our age. [Devin Helton]
  • It may make readers uncomfortable that this essay has put so much emphasis on violence committed by black people. People who focus too much on selecting anectdotes of black crime are often accused of cherry-picking facts to further a racist narrative. I can only hope you believe me when I say that when I first started reseaching the problem of urban decay over a decade ago, the analysis in this post was not something I set out to prove. Rather, I set out to find as many first-hand, narratives accounts of urban decay and “white flight” as I could. I wanted to learn the story from the people who were actually there, or from the people who interviewed the people who were actually there. And these are the stories I found, over and over again. And these were the stories that were almost completely ommitted from my college courses – we only ever heard that white people left because the suburbs were so much better – without hearing why people thought the suburbs were better. We heard about block busters promoting fear – without learning that the fears were justified, not irrational. It should also be pointed out that it is erroneous to single out violent young black men as the villains in this story. I think a lot of American politics is basically manipulating enforcement of the law in order to steal turf from other people. A fair amount of blame goes to the liberal WASP establisment, who in their battle with the ethnic white political power, relaxed enforcement of the law in black areas, hooked them on welfare, and used black people as a tool for claiming political power. Right now we are in a vicious cycle. In academic and policy wonk circles, any criticism of “black crime” is considered victim blaming and possibly racist. The problems of the black community are instead pinned on segregation and racist policing. Yet it is not segregation that causes the crime. And every time we try to integrate, without fixing the crime problem, integration fails because white people flee the violence. And while police misbehavior is a problem, under-policing is also a big problem. When we cannot honestly describe the problem, when we cannot propose proper solutions, the problem only becomes worse. [Devin Helton]
  • I also think that we may have the problem of drug enforcement backwards – rather than the predominantly black ghettos being policed too harshly, they may be policed too lightly. In my white suburban town growing up, if a group of young men were to set up an open air drug market on our police corner, they would be reported, shut down, and sent to juvenile court within days, probably hours. It would be unthinkable that open air dealing would be tolerated. Yet in many ghettos, these markets are in fact tolerated, with minimal punishment, for long times. [Devin Helton]
  • In a dysfunctional society, people acquire wealth via corruption, rent-seeking, and theft. Perhaps they steal it at the point of a sword. Perhaps they acquire wealth through outright corruption. Perhaps they acquire wealth through holding a position in a completely dysfunctional management structure that requires internal politicking and Kabuki make work rather than actual performance. As Adam Smith wrote, "there is a great deal of ruin in a nation" Corruption has always existed in America. But in the past decades it seems as if the dominant paradigm has shifted, so now more and more income accrues via dysfunctional rent-seeking rather than via creating wealth. [Devin Helton]
  • Consider the goods and services that make up a good and comfortable life: high-tech gizmos, gas heating, indoor plumbing, a well-built home, access to a skilled doctor, good restaurants, good beer, parks, well-built infrastructure, a stroll down a street with pretty buildings, etc. If you look at the production process for those goods and services, only a small percent of the workers involved need a college degree. And most degrees granted do not improve the production process – how does granting millions of degrees in “business”, “communications” or “social science” lead to more and better of these products? It doesn’t. And in fact, by channeling so many people into the college pipeline, we have lost out on the skills that did make for the good life. We have lost the artisans that once created beautiful streetscapes and ornate architectural detailing. We have less money to spend on infrastructure. We have more debt, and more stress. Furthermore, even in the engineering fields, much of the know-how exists exclusively inside the productive organization – not inside the textbooks. Every engineer, when getting a job, has a big adjustment period as they learn how things are actually done. They learn why the schoolbook version was simplified or out-dated, and they learn the real techniques and tricks and tooling that they actually need to know to make things work. In the past few decades, America has become more educated in terms of degrees. But in reality, people like my dad were training Chinese engineers to replace them, as the boomers retired and the high-tech job moved overseas. [Devin Helton]
  • I did an inventory of every Supreme Court Justice who served between 1835 and 1870. Among them: 2 of 18 went to Law School. One graduated at age 20, the other at age 22. 11 of 18 graduated college, of those four graduated at the age of 18. 7 of the 18 had no college, they were either self-taught or had an apprenticeship. [Devin Helton]
  • Thus the life of a Philadelphia WASP might go something like this: He would start out being raised in Chestnut Hill, proceed through high school at a local elite day school like Episcopal Academy or a boarding school like St. Mark’s, then move on to college at Princeton, where he would join an exclusive dining club like the Ivy. Returning to Philadelphia, he would live in Ardmore, join a prestigious firm such as Drexel and Company or a family enterprise, assume membership in a city club like the Philadelphia or Rittenhouse Club, and be engaged in various charitable endeavors. He would play tennis at the Merion Cricket Club, attend annual Assembly dances, and spend summers in Cape May. He probably met his wife at her debutante, and would proceed to have a larger-than-average number of children with her, staying together for life. Their children would in turn marry the children of other upper-class families or the children of newly minted wealth as a means of assimilating them into the upper class. Having chronicled this shift from a local and familial to a national and associational upper class, along with describing its social and institutional life, Baltzell observed several troubling developments that by 1940 were casting a cloud over the future of the WASPs. One was the managerial revolution. The country was shifting from a bourgeois (laissez-faire family firms) to a managerial (large publicly traded corporations interlinked with an expanded state) economy, run by professional managers rather than entrepreneurs. WASP heirs increasingly became trust funders rather than business runners. [Aaron Renn]


Allan Folz said...

Those are some great excerpts from Devin Helton. It's incredible how many people see so clearly through the multiple grifts modern US has running, and yet low information voters are able to be manipulated in such transparent fashion by the oligarchy.

Which is the perfect lead-in to the PUC of Texas. Those guys are absolutely useful idiots. Sharp guys that can see through the scheme are never given a voice, and clowns like Andrew Barlow are given a megaphone like they are some kind of special geniuses.

In fact, It takes a special kind of stupid to convince people they should sell unhedged volatility, and that is essentially what they did to the electricity market.

Pre-Boomers we invested in a certain amount of over-capacity as a collective insurance policy. It cost slightly more, but such is the nature of insurance. It's recognition that an ounce of prevention beats a pound of cure. Mind you, capitalists still did OK, but it was going to be at "boring" rates of return. So be it, you want to gamble go to Vegas.

Along come Boomers, using useful idiots like Barlow to justify their idiocy, and they decide we can wring out the excess and pass all the savings to consumers. It's stupid. Capitalists still do OK making a boring rate of return 92% of the time, but they also got a free call option that is all but guaranteed going to pay 10-20X once in the next 10 years. The sky falls, they make out like bandits and laugh all the way to the bank while the recriminations fly and Congress closes the barn door a day late and a dollar short. Then that one problem gets fixed after the fact, but there's a half dozen other short vol trades waiting in the wing.

It is every vol buyer's dream to have 10 positions where each one has a 10% per year chance of paying out 10X in the next 10 years. Idiots like Barlow have made it possible for these vol trades to pop-up everywhere like weeds. It is an outrage, and guys like him will never get their just desserts. They are strategic failures and are protected for it.

CP said...

Instead of "E Pluribus Unum,"

"Sharp guys that can see through the scheme are never given a voice"