“The labor market doesn’t pay you for the useless subjects you master; it pays you for the preexisting traits you signal by mastering them.”

Bryan Kaplan:

Suppose your law firm wants a summer associate. A law student with a doctorate in philosophy from Stanford applies. What do you infer? The applicant is probably brilliant, diligent, and willing to tolerate serious boredom. If you’re looking for that kind of worker—and what employer isn’t? – you’ll make an offer, knowing full well that nothing the philosopher learned at Stanford will be relevant to this job.

The labor market doesn’t pay you for the useless subjects you master; it pays you for the preexisting traits you signal by mastering them. This is not a fringe idea. Michael Spence, Kenneth Arrow, and Joseph Stiglitz – all Nobel laureates in economics – made seminal contributions to the theory of educational signaling. Every college student who does the least work required to get good grades silently endorses the theory. But signaling plays almost no role in public discourse or policy making. As a society, we continue to push ever larger numbers of students into ever higher levels of education. The main effect is not better jobs or greater skill levels, but a credentialist arms race.

Lest I be misinterpreted, I emphatically affirm that education confers some marketable skills, namely literacy and numeracy. Nonetheless, I believe that signaling accounts for at least half of college’s financial reward, and probably more.

The World Might Be Better Off Without College for Everyone [Atlantic]


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January 15, 2020
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“Properly raised, beef is the most environmentally friendly meat.”

Sally Fallon Morell:

Arguments for lab meat capitalize on the fact that factory production of beef (and other animal foods, from pigs to fish) is an abomination; basically, modern agriculture has turned the sacred cow into a receptacle for corn – which suits the U.S. Department of Agriculture (USDA) just fine because its mandate is to sell grain, not to promote any kind of rational agricultural policy. The result is vast monocropped fields poisoned with Roundup and other noxious chemicals and requiring huge amounts of water, along with animals crowded together in feedlots, creating a festering environmental nightmare.

All of the hype about lab meat begs the question; why not just eat meat from animals humanely slaughtered rather than promote a processed product tied to so much suffering? The real answer to the crazy factory farm system is to put our animals back on pasture eating the food they were designed to eat, using portable electric fencing to move them daily to new pasture. A pasture-based grazing system maximizes soil fertility and hastens the creation of topsoil. The Earth has millions of acres available to raise livestock this way, most of which cannot support the production of grains or produce. Properly raised, beef is the most environmentally friendly meat, because – unlike poultry, fish or pigs – beef animals will grow well without any grain whatsoever. The only water they need is the water they drink – which is much less per pound of beef than what’s needed to produce a loaf of bread. But why mention such a sensible solution when you’ve got grant money to develop lab meat?

Dissecting Those New Fake Burgers [WAP]


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January 14, 2020
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“3 million U.S. homes and 13 million apartment units are owned by LLC, LLP, LP or shell companies.”

Aaron Glantz:

The Census Bureau reports that nearly 3 million U.S. homes and 13 million apartment units are owned by LLC, LLP, LP or shell companies – levels of anonymous ownership not seen in American history. The proportion of residential rental properties owned by individuals and families has fallen from 92% in 1991 to 74% in 2015.

The lack of transparency not only represents an opportunity for money laundering, but it also has more prosaic implications. First-time homebuyers are denied the opportunity to buy affordable homes with bank loans because those properties already have been scooped up by shell companies. Tenants can’t figure out to whom to complain when something goes wrong. Local officials don’t know whom to hold responsible for code violations and neighborhood blight.

Unmasking the secret landlords buying up America [Reveal]


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January 13, 2020
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Energy and Civilization: A History

Notes from Energy and Civilization: A History by Vaclav Smil:

* From a fundamental biophysical perspective, both prehistoric human evolution and the course of history can be seen as the quest for controlling greater stores and flows of more concentrated and more versatile forms of energy and converting them, in more affordable ways at lower costs and with higher efficiencies, into heat, light, and motion.

* Every form of energy can be turned into heat, or thermal energy. No energy is ever lost in any of these conversions. Conservation of energy, the first law of thermodynamics, is one of the most fundamental universal realities. But as we move along conversion chains, the potential for useful work steadily diminishes. This inexorable reality defines the second law of thermodynamics, and entropy is the measure associated with this loss of useful energy. While the energy content of the universe is constant, conversions of energies increase its entropy (decrease its utility).

* A great deal of traditional farming required heavy work, but such spells were often followed by extended periods of less demanding activities or seasonal rest, an existential pattern quite different from the nearly constant high mobility of foraging. The shift from foraging to farming left a clear physical record in our bones. Examination of skeletal remains from nearly 2,000 individuals in Europe whose lives spanned 33,000 years, from the Upper Paleolithic to the twentieth century, revealed a decrease in the bending strength of leg bones as the population shifted to an increasingly sedentary lifestyle. This process was complete by about two millennia ago, and there has been no further decline in leg bone strength since then, even as food production has become more mechanized, an observation confirming that the shift from foraging to farming, from mobility to sedentism, was a truly epochal divide in human evolution.

* The organic fertilizer with the highest nitrogen content (around 15% for the best deposits) is guano, droppings of seabirds preserved in the dry climate of islands along the Peruvian coast.

* Until the early 1980s there were no private cars in China, and until the late 1990s most commuters rode bicycles even in the country’s large cities.

* Electricity is the most convenient, most versatile, and, at the point of its use, the cleanest form of modern energy.

* Infant mortality is an excellent proxy for conditions ranging from disposable income and quality of housing to the adequacy of nutrition, level of education, and a state’s investment in health care: very few babies die in countries where families live in good housing and where well-educated parents (themselves well nourished) feed them properly and have access to medical care. And, naturally, life expectancy quantifies the long-term effects of these critical factors.

* That fossil fuel resources are finite does not imply any fixed dates for the physical exhaustion of coals or hydrocarbons, nor does it mean the early onset of unbearably rising real costs of recovering these resources and hence the necessity of a rapid transition to a post-fossil fuel era. […] Consequently, it is not worries about an early exhaustion of fossil fuels – most prominently expressed by the advocates of imminent peak oil – but rather the impact on the habitability of the biosphere (above all through global climate change) that is the most important near-and long-term concern resulting from the world’s dependence on coals and hydrocarbons.

Energy and Civilization: A History [Amazon]


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January 10, 2020
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Iran Air Flight 655

Wikipedia:

Iran Air Flight 655 was a scheduled passenger flight from Tehran to Dubai via Bandar Abbas, that was shot down on 3 July 1988 by an SM-2MR surface-to-air missile fired from USS Vincennes, a guided missile cruiser of the United States Navy. The aircraft, an Airbus A300, was destroyed and all 290 people on board, including 66 children, were killed. The jet was hit while flying over Iran’s territorial waters in the Persian Gulf, along the flight’s usual route, shortly after departing Bandar Abbas International Airport, the flight’s stopover location. Vincennes had entered Iranian territory after one of its helicopters drew warning fire from Iranian speedboats operating within Iranian territorial limits.

Washington Post, April 1990:

The Navy has awarded special commendation medals for “meritorious service” to two of the top officers who were serving on the USS Vincennes at the time the cruiser shot down an Iranian airliner over the Persian Gulf with 290 people aboard.

The citations for the special commendations to former Vincennes skipper Capt. Will Rogers III and Lt. Cmdr. Scott E. Lustig, who was the ship’s weapons and combat systems officer, do not mention the downing of the aircraft on July 3, 1988, an error that took the lives of the plane’s passengers and crew.

Washington Post, January 2020:

On Saturday, President Trump invoked history when tweeting out a threat to destroy “52 Iranian sites … some at a very high level & important to Iran & the Iranian culture.” He said the potential targets represent the 52 Americans who were held hostage there for 444 days from 1979 to 1981.

Though the incident is nearly forgotten in the United States, it is etched deeply in memory in Iran, where the country is mourning the U.S. airstrike that killed Iranian military commander Qasem Soleimani.

So there’s that.

Iran Air Flight 655 [Wikipedia]
2 Vincennes Officers Get Medals [WaPo]
Iran Air Flight 655: Iran’s president invokes 1988 tragedy many Americans have forgotten [WaPo]


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January 7, 2020
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Titan: The Life of John D. Rockefeller, Sr.

Notes from Titan: The Life of John D. Rockefeller, Sr. by Ron Chernow:

* “It is very important to remember what other people tell you, not so much what you yourself already know.”

* “A man has no right to occupy another man’s time unnecessarily.”

* Rockefeller equated silence with strength: Weak men had loose tongues and blabbed to reporters, while prudent businessmen kept their own counsel. Two of his most cherished maxims were “Success comes from keeping the ears open and the mouth closed” and “A man of words and not of deeds is like a garden full of weeds.”

* Taking for granted the growth of his empire, he hired talented people as found, not as needed.

* Far more than a technocrat, Rockefeller was an inspirational leader who exerted a magnetic power over workers and especially prized executives with social skills. “The ability to deal with people is as purchasable a commodity as sugar or coffee,” he once said, “and I pay more for that ability than for any other under the sun.” Employees were invited to send complaints or suggestions directly to him, and he always took an interest in their affairs.

* At meetings, Rockefeller had a negative capability: The quieter he was, the more forceful his presence seemed, and he played on his mystique as the resident genius immune to petty concerns. As one director recalled, “I have seen board meetings, when excited men shouted profanity and made menacing gestures, but Mr. Rockefeller, maintaining the utmost courtesy, continued to dominate the room.”

* Rockefeller prevailed at Standard Oil because he had mastered a method for solving problems that carried him far beyond his native endowment. He believed there was a time to think and then a time to act. He brooded over problems and quietly matured plans over extended periods. Once he had made up his mind, however, he was no longer troubled by doubts and pursued his vision with undeviating faith. Unfortunately, once in that state of mind, he was all but deaf to criticism. He was like a projectile that, once launched, could never be stopped, never recalled, never diverted.

* Standard Oil had taught the American public an important but paradoxical lesson: Free markets, if left completely to their own devices, can wind up terribly unfree. Competitive capitalism did not exist in a state of nature but had to be defined or restrained by law. Unfettered markets tended frequently toward monopoly or, at least, toward unhealthy levels of concentration, and government sometimes needed to intervene to ensure the full benefits of competition.

* “Great wealth is a great burden, a great responsibility. It invariably proves to be one of two things—either a great blessing or a great curse.”

* To Rockefeller, the least imaginative use of money was to give it to people outright instead of delving into the causes of human misery. “That has been our guiding principle, to benefit as many people as possible,” he affirmed. “Instead of giving alms to beggars, if anything can be done to remove the causes which lead to the existence of beggars, then something deeper and broader and more worthwhile will have been accomplished.”

* Rockefeller reviewed every bill that arrived at home and often patrolled the hallways, turning off gaslights. Such habits were not simply reflexive stinginess but were rooted in bedrock beliefs about the value of money.

* “A man’s wealth must be determined by the relation of his desires and expenditures to his income. If he feels rich on ten dollars, and has everything else he desires, he really is rich.”

Titan: The Life of John D. Rockefeller, Sr. [Amazon]


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January 5, 2020
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“There’s nothing quite like a convivial evening wrapped around a pint to give you health, happiness and a sense of well-being.”

Robin Dunbar:

Like all monkeys and apes, humans are intensely social. We have an urgent desire to schmooze and an awareness that alcohol helps our cause. Friendships protect us against outside threats and internal stresses, and this has been key to our evolutionary success. Primate social groups, unlike most other animals, rely on bondedness to maintain social coherence. And for humans, this is where a shared bottle of red wine plays a powerful role.

So, if you want to know the secret of a long and happy life, money is not the right answer. Get rid of the takeaway in front of the telly, and bin the hasty sandwich at your desk — the important thing is to take time out with people you know and talk to them over a beer or two, even that bottle of Prosecco if you really must. There’s nothing quite like a convivial evening wrapped around a pint to give you health, happiness and a sense of well-being.

Why drink is the secret to humanity’s success [FT]


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December 31, 2019
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Oil: A Beginner’s Guide

Notes from Oil: A Beginner’s Guide by Vaclav Smil:

* In 2016 motor and aviation gasoline accounted for a third of global refinery throughput. The US share of global gasoline consumption was about 41% of the total, or more than 1,200kg/capita: the country now consumes more gasoline than the combined total for the EU, Japan, China and India.

* Nearly two-thirds of the world’s refined products are now used in transportation (roughly 2.5Gt in 2005) and in the US that share is now more than 75%. Transportation’s dependence on liquid fuels is even higher: in 2015 about 93% of all energy used by road vehicles, trains, ships and planes came from crude oil.

* In 1900 American farmers needed an average of about three minutes’ labor to produce 1kg of wheat, but by the year 2000 the time was down to just two seconds and the best producers now do it in one second.

* The second most voluminous non-fuel use of a refined petroleum product is asphalt.

* Only about 20% of diamonds are sold to the jewellery trade; most of the rest go into drilling for hydrocarbons and metallic ores.

* Record US well depths reached with rotary rigs increased from 300m in 1895 to more than 1.5km by 1916; the 3km mark was reached in 1930, the deepest pre-WWII well was 4.5km (in 1938) and the 6km mark was surpassed in 1950.

* The average depth of new US exploratory oil wells increased from about 1,460m during the 1950s to nearly 2,300m during the first decade of the twenty-first century.

* Fracking fluid is about 90% water. Most of the rest is sand, and additives (hundreds of substances have been tried) usually make up less than 0.5% of the volume but they contain a mix of chemicals (acids, corrosion inhibitors, gelling agents, surfactants, biocides) that should never be allowed to contaminate drinking water. Usually this is not a problem as fracking takes place far below the aquifers, and steel and cement in properly finished wells should prevent any contamination closer to the surface.

* Moving Alaskan oil 3,800km by tanker from Valdez to Long Beach in California requires energy equivalent to only about 0.5% of the transported fuel. And a 300,000dwt supertanker needs an equivalent of only about 1% of the fuel it carries in order to travel more than 15,000km from Ra’s Tanūra, the world’s largest loading oil terminal on the Saudi coast of the Persian Gulf, to the US East Coast.

* By far the largest oil storage is the US Strategic Petroleum Reserve that began to fill in 1977 with imported Saudi oil. Crude oil is stored deep underground in four massive salt caverns along the Texas and Louisiana Gulf Coast. The maximum capacity is 713.5Mb and the reserves stood at 685Mb in June 2017, representing about 10% of US annual oil consumption.

* The chances of ending the fossil fuel era in a matter of two or three decades appear quite unrealistic: in 2017 the world derived about 85% of its primary commercial energy from the combustion of fossil carbon.

Oil: A Beginner’s Guide [Amazon]


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December 30, 2019
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“A fifth of Americans believe that winning the lottery is the most practical way for them to accumulate large savings.”

George Loewenstein:

A fifth of Americans believe that winning the lottery is the most practical way for them to accumulate large savings, according to a 2006 survey by the Consumer Federation of America. More recently, a 2019 survey conducted by the investment app Stash found that about 40 percent of respondents, including 59 percent of millennials, think that winning the lottery could be a good way to fund retirement.

Also:

Powerball and Mega Millions jackpots have gotten much larger in recent years because both lotteries reduced the odds of winning. In 2015, Powerball added more numbers to the drawing, dramatically decreasing the chance of winning the jackpot, from 1 in 175 million to 1 in 292 million. The odds of winning the Mega Million jackpot are even lower: approximately 1 in 302 million.

Lottery is basically a form of additional tax you get to choose not to pay.

Five myths about the lottery [WaPo]

Related:

“The lottery’s only objective is to maximize the funds you pay for educational activities.” [VAULT45]


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December 30, 2019
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“The cynics are people who haven’t accomplished much themselves and stand on the sidelines while criticizing the heroes who are on their fields of battle.”

Ray Dalio:

I believe that we are living in an era in which there are no recognized heroes, even though we aren’t lacking real heroes, because the real heroes are vilified by cynics, the media, and politicians.

The cynics are people who haven’t accomplished much themselves and stand on the sidelines while criticizing the heroes who are on their fields of battle. They arrogantly pontificate about how those on the field aren’t following the cynics’ untested and impractical approaches. Cynics also love to point to the mistakes the heroes make, ignoring the reality that all successful people make plenty of mistakes. In the process, they conjure up unrealistic images that heroes must be perfect rather than imperfect but great and much more successful than unsuccessful.

Why We Have No Heroes [LinkedIn]


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December 18, 2019
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“Germany owns no nuclear weapons.”

Germany owns no nuclear weapons. It renounced the very idea when it reunified in 1990. But if war were to break out in Europe today, German pilots could clamber into German planes, take off from Büchel Air Base in Rhineland-Palatinate and drop nuclear bombs on Russian troops.

The Luftwaffe can do that thanks to Nato’s nuclear-sharing scheme, under which America quietly stations nuclear bombs across five countries in Europe.

Turkey’s Syria move highlights America’s tactical nukes in Europe [Economist]


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December 9, 2019
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“The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s.”

Deutsche Bank Research:

* The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s. If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar.

* Until now, cryptocurrencies have been additions, rather than substitutes, to the global inventory of money. Over the next decade, this may change. Overcoming regulatory hurdles will broaden their appeal and raise the potential to eventually replace cash.

* Eventually, it is possible that inflation will become more and more embedded in our system and doubts will rise about the sustainability of fiat money. The demand for alternative currencies will therefore likely be significantly higher by the time 2030 rolls around. Will fiat currencies survive the policy dilemma that authorities will experience as they try to balance higher yields with record levels of debt? That’s the multi-trillion dollar (or bitcoin) question for the decade ahead.

Konzept: Imagine 2030 [DB, PDF]


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December 6, 2019
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“A stroll through a modern art gallery shows artistic works whose production requires no more effort or talent than can be mustered by a bored 6-year-old.”

Saifedean Ammous:

A stroll through a modern art gallery shows artistic works whose production requires no more effort or talent than can be mustered by a bored 6-year-old. Modern artists have replaced craft and long hours of practice with pretentiousness, shock value, indignation, and existential angst as ways to cow audiences into appreciating their art, and often added some pretense to political ideals, usually of the puerile Marxist variety, to pretend-play profundity. To the extent that anything good can be said about modern “art,” it is that it is clever, in the manner of a prank or practical joke. There is nothing beautiful or admirable about the output or the process of most modern art, because it was produced in a matter of hours by lazy talentless hacks who never bothered to practice their craft. Only cheap pretentiousness, obscenity, and shock value attract attention to the naked emperor of modern art, and only long pretentious diatribes shaming others for not understanding the work give it value.

As the Medicis have been replaced with the artistic equivalents of DMV workers, the result is an art world teeming with visually repulsive garbage produced in a matter of minutes by lazy talentless hacks looking for a quick paycheck by scamming the world’s aspirants to artistic class with concocted nonsensical stories about it symbolizing anything more than the utter depravity of the scoundrel pretending to be an artist who made it. Mark Rothko’s “art” took mere hours to produce, but was sold to gullible collectors holding millions of today’s unsound money, clearly solidifying modern art as the most lucrative get‐rich‐quick scam of our age. No talent, hard work, or effort is required on the part of a modern artist, just a straight face and a snobby attitude when recounting to the nouveau riche why the splatter of paint on a canvas is anything more than a hideous thoughtless splatter of paint, and how their inability to understand the work of art unexplained can be easily remedied with a fat check.

The Bitcoin Standard: The Decentralized Alternative to Central Banking [Amazon]


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April 26, 2018
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“Like Trump, Meciar first rose to power by sidelining rivals in his own party and staging a flurry of media stunts that left his opponents paralyzed and divided.”

Dalibor Rohac:

To any fair-minded observer, President Trump’s authoritarian instincts, Twitter outbursts and divisive rhetoric should be greatly concerning. Americans might take comfort in the fact that the United States is not the first country to elect and live under such a leader. I would know.

Two and a half years after the fall of communism in 1989, the ruthless and charismatic Vladimir Meciar was elected as prime minister in my home country of Slovakia after a brief previous stint in the office. His larger-than-life personality and bombastic rhetoric filled much of the media space, often with lies and conspiracies. His opponents, many of them former dissidents from the old era, lacked the rhetorical skills, charisma and political acumen to compete.

Meciar’s demise was precipitated by the emergence of an effective opposition that coalesced around the questions that mattered the most: rule of law and Slovakia’s place among European democracies. Like Trump, Meciar first rose to power by sidelining rivals in his own party and staging a flurry of media stunts that left his opponents paralyzed and divided. At the time, Slovakia had a vast array of small, mostly center-right, parties, which differed in the emphasis they placed on economic reforms, family values and environmental protection. Meciar’s power was the greatest when the opposition was divided and mired in debates over irrelevant minutiae.

My country had its own Trump. Here’s how we beat him. [WaPo]


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February 24, 2017
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