Maggie's Farm

Many businesses fail every day, and that's the way it ought to be. Otherwise, we would still have buggy whip factories in New York City. In Capitalism, failure is not a dirty word. In fact, failures reveal the success of the way things work.

While McCain and Obama seek to grab news space by blaming someone or something for the Wall Street business failures, I do not. Businesses come and go, from bait shops to corner lunchrooms to investment banks to car manufacturers. I feel badly for folks who lose their jobs, but otherwise I feel good about the creative destruction that Capitalism provides space for. Business is all about calculated risk: in the end, what profit rewards is risk, regardless of the product.

These investment banks were gambling to stay alive in a changing world, and made bad bets. Competition is what hones businesses - and they eventually fall if they cannot keep up or adapt - or behave imprudently, or encounter bad luck.

I deal with many business people in my work, and it is my conclusion that the biggest obstacle to business creation, and thus capital creation and job creation and wealth creation, is the government. Note that the biggest screw-ups of the year, Fannie Mae and Freddie Mac, were government agencies. So much for government's role in the financial industry: it inevitably becomes politicized, mediocratized, and corrupted - as with any government involvement in any industry. Few people in government could figure out how to run a candy shop, much less a complex enterprise.

Otherwise, they'd be doing it.

Related: Tyler Cowen on how regulation made the problems worse. Also on how the hedge funds manage risk better than the investment banks.

Also related: How the Dems supported the sub-prime fiasco. Follow the money. And the banks were all too eager to play that game - as long as there were buyers for the junk. A game of musical chairs, as in all bubbles.

While the democratization of Capitalism via the huge increase in investing by the general public over the past 30 years is a wonderful thing, there is also a downside. The downside is that people complain when they lose, and expect the government to do something about it - or to prevent it. They want to privatize gain but socialize risk.

Related: How Fannie and Freddie co-opted the politicians. As Rush says re F and F, where are the investigations? The special prosecutors?

Tom Brewton directed us to a new piece by Richard Neuhaus in First Things, A New Order of Religious Freedom. It's about religion and politics.

One quote:

More than he wanted to be remembered for having been president, Mr. Jefferson wanted to be remembered as the author of the Virginia “Bill for Establishing Religious Freedom.” In the text of the bill he underlined this sentence: “The opinions of men are not the object of civil government, nor under its jurisdiction.” In a republic of free citizens, every opinion, every prejudice, every aspiration, every moral argument has access to the public square in which we deliberate the ordering of our life together.

Another:

In a democracy that is free and robust, an opinion is no more disqualified for being religious than for being atheistic, or psychoanalytic, or Marxist, or just plain dumb. There is, or at least there ought to be, no legal or constitutional question about the admission of religion to the public square; there is only a question about the free and equal participation of citizens in our public business. Religion is not a reified thing that threatens to intrude upon our common life. Religion in public is but the public opinion of those citizens who appeal to religion in public.

A quote from The Censor in the Mirror by Ha Jin in American Scholar:

In the summer of 2004, Yuan Hongbing, a Chinese writer, defected to Australia, taking with him four fiction manuscripts. After Yuan’s novels were published abroad, some top Chinese leaders were flustered. Luo Gan, director of the Politics and Law Committee of the Chinese Communist Party at the time, went so far as to give orders to punish with a death sentence whoever dared to pirate the books. Li Changchun, a member of the Standing Committee of the Political Bureau, who is in charge of ideology, issued the following directive: “The General Administration of Press and Publications, the Border Police, and Customs must work closely to prevent Yuan Hongbing’s novels from being smuggled into the mainland. We must ponder about this phenomenon: For many years our party has spent a great amount of manpower, money, and material resources in bringing up many writers, but our writers have not created any work that can trump Yuan Hongbing’s fiction artistically.” Regardless of whether Li was capable of literary judgment, he did raise a serious question for the party. The answer is clear and simple: The system of harsh censorship has crippled and “sterilized” the writers and artists who exist within its field of force.

Should libertarians fear the Dem nominee? asks Chapman at Reason. He begins:

There are no disciples of small government in the Democratic Party, and Barack Obama fits right in. His economic program is based on the assumption that the economy is to the president what a marionette is to a puppeteer, requiring his direction and responding to his every wish.

Anyone partial to free markets, restrained government, fiscal discipline and light taxation approaches a Democratic nominee's economic platform with trepidation, expecting one fright after another. Obama does not disappoint.

Read the whole thing. Of course, Repubs are only marginally better because people in government tend to become enamored of - and dependent upon - the power. To vote as a statist, you must believe in the supreme wisdom of the State and its (our) employees. Few Americans believe that.

In the end, the dividing line is between those who trust in the power and wisdom of The State vs. those who have faith in the wisdom and potential of the individual. I happen to think that The State is an ass, and foolish when it is not self-interested. No Pasaran has a bit on Statism.

These are the things folks need to be considering in these elections. Americans are ambivalent about government.

More from Chapman: This election season, both the left and right promise big government.

Well, so much for diversity and appreciating and embracing "the other." I think that thing only applies when "the other" is pathetic or damaged in some way, or manages to wiggle their way into some victim class.

Or perhaps some pomo reader, if we have one, could help me distinguish between the "good other" and the "bad other."

It sure doesn't apply when "the other" is a regular American woman, albeit one with unusual energy and coping skills. Nick Cohen on When Obama's berserkers lost the plot. (h/t, Lucianne). One quote:

For once, the postmodern theories so many of them were taught at university are a help to the rest of us. As a Christian, conservative anti-abortionist who proved her support for the Iraq War by sending her son to fight in it, Sarah Palin was 'the other' - the threatening alien presence they defined themselves against. They might have soberly examined her reputation as an opponent of political corruption to see if she was truly the reformer she claimed to be. They might have gently mocked her idiotic creationism, while carefully avoiding all discussion of the racist conspiracy theories of Barack Obama's church.

But instead of following a measured strategy, they went berserk. On the one hand, the media treated her as a sex object. The New York Times led the way in painting Palin as a glamour-puss in go-go boots you were more likely to find in an Anchorage lap-dancing club than the Alaska governor's office.

Some animals are more other than others.

Addendum: Apparently those folks at the Guardian also view people like me as "the other" - and as a primitive, apeish ignorant "other" for whom they hold contempt. They have clearly never met me. I'm an Ivy guy, and I wear ties and like guns. Call me a knuckle-dragging redneck if you want to. Story at Jules.

Addendum: From our commenter "People on the left are breaking the teeth of reason on the irrefutable fact of Sarah Palin--the other--as they gnash the grinders in their dismay. They have attacked her strength and accomplishments with sexism; they have belittled her origins with classism; and they have mocked her beliefs, leaving only the shell of their multiculturalism. Thus the lie of identity politics and multiculturalism lay in ruins."

Addendum: The Palin Problem. Rick Moran. One quote:

Most women work because they have to in order to make ends meet or give the family those vital little extras not to mention the fulfillment many women get from the feeling of independence and pride that having a job brings. Politicians have tried for years to address these women directly with varying degrees of success. Democrats have offered child care, family leave, job protections for pregnant women, and the child health insurance program S-CHIP among other programs. Republicans haven’t ignored these women but have not offered much government assistance, preferring tax credits to ease the financial burden on the family.

Palin is the first Republican politician with which these women can truly identify. She speaks their language. She sounds like them. Her family looks like their family. And when she speaks of the mixing of her career and family, she can look directly at the camera and give them a knowing smile of solidarity – as if they were neighbors casually talking over the backyard fence.

Photo is our refined, sophisticated, Euro-sensitive, metrosexual editor Bird Dog. Just your typical American voter...

I always thought that the American Promise was for freedom. John Judis clearly thinks otherwise. A quote:

(The speech) fed two other arguments. First, it figured in the liberal or progressive (to use Croly’s term) argument that government has a responsibility to make good on the American promise: through regulating the market, and through providing health insurance and education for all citizens. Second, it figured in Bill Clinton’s “New Democrat” argument (that has goes back to the Puritans) that in order to achieve the promise of American life, Americans have to exercise mutual and individual responsibility. People have to be willing to work; parents have to look after their children; corporations cannot behave like brigands. So through this notion of the American promise, Obama united the two historic strands of American liberalism: the older New Deal argument of the 1930s and the “New Democrat” argument of the 1990s.

One America: Finally, Obama invoked his vision of a single America--and he used it not only to put forward the promise of racial reconciliation, but as an attempt to defuse the great social divisions of the last decades over immigration, abortion, gays and guns. And that, too, dovetailed back into the idea of the American promise, which could not be achieved, Obama suggested, if America continued to be rent by incivility and social discord. It was one of the most intellectually elegant speeches I’ve heard. Besides that, I expect that it will do Obama and the Democrats a lot of good in the weeks ahead.

America is indeed divided. There is an America that wants free stuff from other people's labor, energy, and risk-taking, and there is an America that wants freedom and to be left alone by the government, to find its own way through adult life.

We are meant to build our lives, and to live with it. That's what grown-ups do in a free country.

I get 90% of my ideas for my website posts in the shower. And this is probably why.

My morning shower thought for today was this: Why were the top two Dem candidates people who have never accomplished anything substantial or difficult in their lives - other than to be in elections?

(Note to John McCain: An ad asking "Name one thing Obama has accomplished in his life.")

This is not coincidence. Many politicians are not very good at regular life, but these two stand out as having only been good at being, not at life accomplishment. Being female, being black, and being medium-smart and above-average crafty and calculating. They have never run anything, made anything, or done anything: It's all about being them. As Dino notes:

Think about this: most people have someone whom they know or with whom they work, a relative perhaps, who has a thicker résumé and a longer list of achievements than the Democratic presidential candidate. Consider this: if history were different and Senator Obama had decided this year to run to become governor of Illinois, would he have been given rock-star status? Could his Republican opponent have run against him as “too inexperienced” to govern the Prairie State?

These folks are all about Jive Talkin':

Admittedly, I will always tend to vote for the more conservative candidate in any election, even if he or she is brain-damaged. That's because individual freedom and protection of our freedom is my main political agenda. That's my bias. I'm sure the Lefties approach things similarly.

However, my resume (and life experience) is deeper than Obama's or Hillary's, for sure. But that's not saying much.

Just as professional journals and newspapers are more interested in printing pieces that support hypotheses rather than papers with negative findings, so we all tend to spend more time discussing the risks of action rather than the risks of inaction.

That seems to be human nature, but it ain't rational and, fortunately, people vary across a spectrum of activity/passivity.

Passive people worry about the risks of action. Active people worry about the risks of inaction. I am more-or-less in the middle.

To discuss that half-intelligently, though, I first need to review the notion of Type 1 and Type 2 errors, now that we have taken a look at the null hypothesis a couple of days ago. 

A Type 1 error, also known as False Positive, is the error of erroneously rejecting the null hypothesis. In other words, it supports a connection which does not really exist.

A Type 2 error, or False Negative, is the error of wrongly accepting the null hypothesis. In other words, it says nothing is there, when it is, in fact, there.

For example, a blood test which has a 10% False Positive rate will wrongly tell you that there is an abnormality 10% of the time. A blood test with a 10% False Negative rate will miss an abnormality 10% of the time.

For another example, convicting an innocent person is a Type 1 error; letting a guilty person go free is a Type 2.

Depending on the matter at hand, either sort of error could have worse consequences. A Type 1 error in a death penalty case is a grievous error. But sometimes you need Type 1 errors.

My favorite example of a good Type 1 error is in the emergency treatment of appendicitis. Since medical diagnosis contains both art and luck as well as science, some error rate is inevitable unless you have the diseased organ in hand. But since a False Negative diagnosis would have dire consequences (ruptured appendix), it is necessary to do some unnecessary appendectomies on patients who might have appendicitis, but do not turn out to. In the case of emergency appendectomies: one study indicates that the Type 1 error rate is around 10%, with 18% False negatives. I would have guessed that the False Positives would be higher, and you could argue that there is room for them to go higher. The point is that, with appendicitis, you want to minimize your False Negatives by having more False Positive diagnoses - by being deliberately biased against the Null Hypothesis that there is nothing there, but without cutting open everyone with a bad stomach ache.

Thus that is the opposite of what you want in a justice system, where the null hypothesis of innocence is presumed in order to minimize False Positives.

What is college for? I've been writing about that subject recently. Stanley Fish's essay of the above title begins thus:

Pick up the mission statement of almost any college or university, and you will find claims and ambitions that will lead you to think that it is the job of an institution of higher learning to cure every ill the world has ever known: not only illiteracy and cultural ignorance, which are at least in the ball-park, but poverty, war, racism, gender bias, bad character, discrimination, intolerance, environmental pollution, rampant capitalism, American imperialism, and the hegemony of Wal-Mart; and of course the list could be much longer.

So much for the humility of scholars. Read the whole thing.

Two friends of Maggie's Farm, Dennis Keegan and David West, have written this book which has come out today.

An Amazon reviewer says:

This book provides an unbiased review of the major issues of the past 10 years. Heavily researched and footnoted, it provides a much different picture of the United States than what the media paints. If you would like data rather than opinion on the state of the U.S., this is the book to read.

The book description reads:

Streaming headlines, round-the-clock broadcasts--we live in a world of twenty-four hour news. But lately, most of what we read and hear is either negative, biased, or both. Cutting through the gloomy reports and liberal slant are Dennis Keegan and David West with their brand new book, Reality Check: The Unreported Good News About America. Contrary to what the cynical reporters and politicians say, Keegan and West prove that America is still a shining city on a hill, with a low unemployment rate, high GDP, and enviable democracy. These are not opinions, but facts--based on statistics that the media isn't reporting because of political agendas, industry competition, and limited resources. In Reality Check, Keegan and West cut through the bias and spin to reveal:

How our twenty-four hour news culture gives us more inaccurate information, not less
Why the U.S. economy is doing better than we realize
* Why the recent rhetoric and politics of change may do more harm than good

In this age of information saturation, the need to question and critically think about what we're reading and hearing is more important than ever. In Reality Check, Keegan and West show us how to be discerning consumers and why the news about America is much better than the media would have you believe.

A timely book. Check it out.