Ford wins the prisoners’ dilemma

So, let’s imagine that you run a business. You and your two major competitors are looking at bankruptcy if sales trends continue, but the government offers you a deal to remain solvent.

You might think that it’s a simple question of solvency versus insolvency, but the smart player realizes that the decision to take a government bailout, or not to take one, might significantly change the sales forecast.

If all three take the bailout, then the sales figures are probably accurate. If none take the bailout, then little has changed. But if some take the bailout and some do not, the strategic situation has changed dramatically.

Ford made that bet, and won.

By refusing to take government money, they convinced US consumers that they were dedicated to success without handouts, and they became the car of choice for consumers looking to buy American.

It’s good to see a company rewarded for doing the right thing. It’s also a lesson for business students: Ford realized that the consequences of its decision were dependent on the decisions of others. So they were less concerned about their own decision, and more concerned about the decisions of their competitors. By correctly predicting that both Chrysler and GM would take government bailouts, Ford set themselves up for success by refusing. It was an ambitious decision that probably would have cost Alan Mulally his job if it didn’t work out.

These kinds of decisions fall into the statistical and economic realm of game theory, that tries to define which decisions will result in the highest payoff, considering the possible decisions of your competitors  (the “other players”). Game theory is a fascinating subject and any text on business economics can give you the essential elements.

Sexual Flirtation and the Workplace

As you’ve probably heard by now, unless you live in a cave on Mars with your fingers in your ears, David Letterman has admitted to a history of sexual relationships with women in his employment.

There seems to be a common thread that Letterman isn’t a public or moral leader, and so the world shouldn’t really care. I disagree. Letterman’s behavior is not just a poor example, but it’s probably left him and his production company hung out to dry in a legal sandstorm.

Sexual harassment rules exist to protect all of us, both those who are pressured into an inappropriate relationship, and those who must work alongside Letterman’s sexual partners. Why did Letterman do so much fishing off the company pier? Why get into relationships with his staff, rather than women in the larger community?

Because Letterman knew he could keep them quiet.

It’s all about power. They want to work in TV, and he’s a big man in the TV business. As the owner of the company, his words will have a long-reaching effect on their careers, positive or negative. The women who work for him know this, and there is no way to freely enter and leave a relationship in this environment. The employees who did not enjoy this “blessing” are now scanning the past, looking for situations when their co-workers received favors.

I have no idea whether Letterman abused his power over his employees, and ultimately it doesn’t matter if he took any specific action either for or against particular employees. Now that he has admitted to sexual relationships, every one of his decisions is going to be evaluated and second-guessed in terms of his admitted sexual proclivities. Every former sexual partner is asking themselves, “Was I really a free participant in that relationship, or did I do it because I was scared to say no?”

Worldwide Pants has produced some successful shows, and if Letterman wants that venture to continue, he needs to distance himself from day-to-day operations right now. Employees demand equity in their environment — a sense that they and their co-workers are being evaluated on their performance of the job. That equity is destroyed, and to paraphrase Benjamin Franklin, equity is like fine china: easily cracked, and never well-mended.

Steal from the Poor, Give to the Noncompetitive

It should be no surprise coming from Cato, but it’s good to see others coming to the realization that trade protectionism is nothing more than a regressive tax on the poor. It’s like a perverted Robin Hood: steal from the poor, and give to noncompetitive US businesses.

We all understand that those who have wealth should be willing to give their fair share for public health, clean streets, basic education, etc. You don’t have to be a socialist to realize that the budget for basic services has to come from somewhere, and taxes that disproportionately affect the wealthy are generally perceived as a fair solution.

But trade protectionism is aimed at cheap products and basic commodities, not luxury goods. Tires, food, clothes are all products that poor people desperately need. Raising tariffs in a recession is a disastrous policy that takes from the poor when they are least able to pay.

Ding. Tire prices going up!

Time to pay the tariff.

I believe in tires at midnight

Over the weekend, the Obama administration issued a 35% tariff on Chinese-made tires. This power was a provision of a 1970s trade agreement that allowed the president to unilaterally apply a tariff against Chinese goods if the executive branch felt that China was trying to dump goods or disrupt the US market for a product.

Who pays this tariff? Since Chinese companies have to pay the tax to get their tires past US customs, you might think they are the targets. You would be wrong.

At a time when US citizens can least afford a new tax, rest assured that the money will come right out of our wallets. This restraint on trade will cause all tire suppliers — both domestic and foreign — to raise their prices. Why not? As long as their pricing stays competitive with Chinese-made products, they won’t suffer. Pirelli, Michelin, Metzler, Goodyear, Bridgestone, Continental — you can bet that every one of them will raise prices in response to this new market condition.

Vista, or the Upgrade that Wasn’t

Yeah, I’m late to this party. I decided to install Vista on my home system. We’re never going to use it where I work — smart money says that we’re going to skip straight to Windows 7 — but I wanted to see what all the fuss was about.

It’s pretty much a slapdash interface rewrite on good old Windows XP/2000. Honestly, I could be using Windows 2000 and hardly notice a difference. The new interface looks cute, but has numerous fatal flaws that make it exceedingly difficult to deal with it. For example, good luck trying to apply color preferences to your windows or anything. Many pieces of the interface will simply ignore your settings, no matter what you specify. I’ve been trying to get my taskbar away from this horrible two-tone, but apparently it can’t be done unless I revert all the way back to Windows 2000-style menus.

Anyway, when trying to copy some files from a USB drive I received this wonderful error message:

Really? I put in the wrong diskette. If only I had Volume Serial Number: in my drive Windows6.0-KB948465-X64.exe!

The fact that this operating system has been out for 2 years, been through 2 service packs and these wizards can’t manage to display the correct data fields in the error message is, I think, generally indicative of the quality control I see throughout the product. And error number 0×80070022? Although there are thousands of references on the Internet and a couple of dozen on Microsoft’s own user support bulletin boards, Microsoft has published no end-user information about this error, although it’s documented in their API guide. So how, if I am Joe Q. User, will this error message be useful if I get additional help?

The Law of Intended Consequences

The CARS (aka “Cash for Clunkers”) program doesn’t just mandate that the cars be rendered inoperable, but actually requires that the engine parts be physically destroyed. So folks who can’t afford a new car with the CARS rebate, or who are unwilling to take on additional debt to make the auto companies happy, are now faced with higher used car prices and higher prices for refurbished parts.

Bravo, US government — you’ve scored the trifecta: a cash subsidy for the rich and for auto companies, questionable environmental results, and an unintended burden on the poor! Regressive taxation at its best! While we’re at it, let’s break all the windows and stimulate the economy by paying the window glaziers.

Marketing

Some folks have read my many complaints about customer service. I think this item from www.despair.com sums things up nicely.

What is objective reality?

This is in response to a discussion over on Secular Right.

Tom Piatak :

Collins doesn’t reject the scientific method. Someone who rejects the scientific method would say, “I do not believe that man can learn anything that is true from the type of experimentation and observation in which scientists engage.” Of course, Collins doesn’t say this. What Collins doesn’t agree with is the proposition the only way to know anything that is true is from the type of experimentation and observation in which scientists engage.

First, let’s get away from the language, “the type of experimentation and observation in which scientists engage”. That’s not the standard for scientific evidence. Obviously, there are a lot of practical limits on science. We can’t observe Earth from Alpha Centauri, but such observation would satisfy the demands of scientific naturalism and serve as evidence that might support a scientific theory. Just because it’s outside the realm of things we can do now or in the immediately foreseeable future does not mean that it’s bad science per se.

So let’s tackle the problem epistemologically.

1. Certain claims and theories are supported by scientific evidence.Sane people call these theories: “true”, their evidence: “facts”, and the resulting conclusions: “knowledge”.

Evolution clearly falls in this category. Cosmology and abiogenesis do too, although the degree of evidentiary support, and the fine details of the theory, leave open many opportunities for investigation (see (3) below).

Dr. Collins would probably agree with all this, and this is one reason you want to call him a scientist.

2. Claims and theories inconsistent with scientific evidence.

   Sane people call these theories: “false”, and their conclusions: “fantasy”. Evidence that might support them may be invented, unreliable, anecdotal, or otherwise fail basic tests for valid observation.

People who claim they are true are often confused or intentionally deceptive. Flat earth, invisible unicorns, the flying spaghetti monster. Also the kind of stuff James Randi likes to hunt down.

Dr. Collins would almost certainly agree with us here, and I do not think all of his claims fall in this category, although it could be argued that some do (leading to diagnosis: confused).

3. Claims and theories that could be supported by scientific evidence, but we currently lack the knowledge and observational capability to confirm or deny them.

   Sane people call these “speculation” or colloquially, “theory”. Scientists might call them, “exciting”. Our friend the Higgs boson might live here.

   To be fair, I’m being a touch sloppy here. The cutting edges of science often have one foot in realm (1) and one foot in realm (3); the Higgs boson is supported by theory that has otherwise been supported by evidence. This specific part of the theory still needs to be tested. Much of science is like that.

   Again, no problems with Dr. Collins. No doubt he has worked in cutting edge research and approached many problems with the statement, “I just don’t know. What would it take to find out?”

4. Claims and theories that, due to the way they are constructed and proposed, cannot be tested by scientific methods or evidence, even hypothetically.

   And here is the problem. Dr. Collins’ claims about “the universe created and tuned to engineer humanity as a vessel for God’s moral law”, clearly falls into this category. Even if we take the suggestion seriously, it is impossible to conceive of what evidence might support such a claim, or what theory is actually being promulgated with these statements.

   Why so much trouble? Because these claims fail the natural requirement of scientific naturalism. By asserting that phenomena result from causes and events whose parameters cannot be known, the claimant is stepping right outside of the realm of science. Scientists who accept scientific naturalism would call these claims “mysticism”, and their resulting conclusions, “false”. Scientists who don’t accept the naturalism of scientific naturalism, or simply people who fail to understand it, might think these claims are in group (3), and they are not.
   But Dr. Collins insists that they are true, which leads me to two possibilities: either he doesn’t understand that genuine phenomena proceed from natural causes and events, or he does not actually believe it (that is, he believes in phenomena which he knows do not proceed from natural causes and events). Either way, it’s right to throw the issues into the light. It’s also possible, and I think this is what grates on you so much, that he holds the dual position of believing in and demanding scientific naturalism for certain claims, but withholding naturalism for others because they are part of his “faith”.

These are philosophically difficult waters, as it’s often difficult to elaborate the difference between claims about phenomena that assert intrinsic randomness as part of the claim (e.g. the Copenhagen interpretation of quantum physics), and claims that assert “forces beyond our ken” (mysticism). That’s why Einstein was so frustrated by quantum physics, because it seemed to imply reliance on something fundamentally unnatural. However, there’s a difference between theory that includes intrinsic randomness (which is tractable scientifically) and “divine forces” (which are not).

Protectionism and Bastiat

I was responding to an article on Seeking Alpha and their comments system seems to have developed an obstruction, so I figured I would post here.

I suggest the writings of Frederic Bastiat, who put comparative advantage and other economic principles in such simple terms that only the most disingenuous simpletons could deny them.

Protectionism is an economic policy to ban or tax imported goods, or correspondingly give tax breaks or subsidies to domestic production in an attempt to support domestic business.

The problem with protectionism is that it only solves a problem you can see — unemployment. The problem you do not see is that the dollars spent propping up domestic business could have been used to build a product for export, pay university tuition, or develop a drug to cure cancer, etc. Any time money is taken away from a market-selected enterprise and given to an enterprise that is unable to compete in the marketplace, it is used less efficiently.

If you have never read Bastiat, I recommend that you do so right now. That’s OK, I don’t mind if you stop reading my blog.