Tag Archives: news

Chickenhawks

Jingoism is a hell of a drug.

20 years ago during the end of Bush’s presidency, military intervention was anathema to most of the Democratic party. New interventions were treated with suspicion, and getting out of current wars was seen as paramount.

5 years ago, during Trump’s presidency, military intervention was again evil and bad. Trump’s assassination of an Iranian general was yet another reckless decision that would lead us to world war for little to no gain.

Yet today, the Democratic party is again making common cause with many of the foreign policy “hawks” that drove support for the wars in Iraq and Afghanistan. And somehow no one sees what’s wrong with this.

In 2023, the Houthis in Yemen began attacking ships transiting through the Red Sea on their way to the Suez Canal. The Red Sea and Suez Canal bring an enormous volume of trade to Europe, Africa and Asian. Shutting off this passage means ships have to take the long way around Africa, which greatly raises prices and increases shortages.

Then in January of 2024, Biden put the Houthis back on the Global Terrorism list (he’d removed them from the list as one of his first acts as president), and announced the USA would begin bombing Yemen to stop the Houthi attacks.

Social media lit up with stupid talking points about America’s military might, and how “the Houthis are going to learn why America doesn’t have free healthcare.” Social media is overwhelmingly populated by the young and left-leaning, so seeing the same demographic group that protested the Iraq War now beating their chests over a bombing campaign was jarring to say the least.

And what happened? After months of bombing, the Houthis are still attacking ships. Shipping companies are still avoiding the Red Sea. Transit through the Suez is still down and prices due to circumnavigating Africa are still up.

And America still doesn’t have free healthcare.

The bombing campaign has clearly failed at its goal of ensuring safe traffic through the Red Sea. So much so that Biden has now offered a ceasefire where he will again remove the Houthis from the global terror list if they will stop attacking ships. America’s military might could not silence the enemy guns or enforce America’s will, and so we are once again forced to negotiate with terrorists.

To be fair to Biden, this may be the right move. He openly stated that he was only placing them on the global terrorism list because of their attacks against ships, removing them from that list if they stop attacking ships is only natural. It is a low-cost concession to the Houthis, as removing them from the list makes it easier for them to access international markets, but doesn’t do much to harm America directly.

But it’s still obvious that this was a failed bombing campaign, and it raises the question of if we’re negotiating with terrorists now, why didn’t we *start* with negotiations *before* bombing them? The bombing does not seem to have done anything to reduce the frequency or intensity of Houthi attacks, if anything it has only given the Houthis greater credibility in Yemen as it has galvanized the populace to “rally ’round the flag.”

Hawks will complain that I’m being unfair: the bombing campaign was *not* a failure, America just wasn’t even trying to win. And it’s true, America has the capacity to conduct Dresden-level bomb campaigns and Desert Storm level ground campaigns nearly at-will. Neither of those happened, so America clearly wasn’t using its full might.

But was there any political will for carpet bombing or a ground invasion? Absolutely not, a tepid bombing campaign was all that would have been acceptable in an election year. And so if you take America as both a military and political entity, then yes this bombing campaign was about all America was capable of.

But none of the chickenhawks who beat their chest in January will ever admit that the campaign was a failure, ever admit that we are negotiating with terrorists, ever admit that there were other options or other solutions. Thousands of politicians and military aficionados went to their graves believing that the War in Vietnam could have, should have been won, and if we’d just stayed in a little longer (or nuked Hanoi), we could have won it. I have no doubt this campaign (much much smaller as it is) will also be remembered thus by many.

But the fact is that there are not always military solutions. It’s a classic slogan to say that “we don’t negotiate with terrorist,” but it’s just not true, we negotiate with terrorists all the time.

An FBI negotiator brings a suitcase full of cash to a terrorist who has hijacked a plane.

There are times when terrorists have leverage over you, and the problem with leverage is that it exists whether you want it to or not. Whether that leverage is hostages, military might, or geographic position, you can’t just wish it away and pretend it doesn’t exist. Nations also have constraints: budgetary, political, logistic, which can constrain their military response significantly.

So while it’s true that in an open field with no holding back the American military would destroy the Houthi military without a single casualty, that’s not the war that Biden fought. Trying to remove terrorists from their own country that supports them without a ground invasion or naval blockade will always be a challenge. And if a nation is politically, economically, or logistically incapable of doing that, then they need to look hard at what they are *actually trying to accomplish*.

I have seen precious few cases in my adult life of military intervention leading to a lasting improvement in the situation. The best example would be the bombing campaign in Yugoslavia from nearly 3 decades ago. The second best example would be the few years of near-normality that the American military gave to Afghanistan, prior to the Taliban returning.

But one success and one partial success is a terrible track record for the number of military campaigns we’ve been engaged in. And it seems the Houthi campaign will be yet another mark in the failure column, as it has done nothing to eliminate Red Sea attacks which will almost certainly be ended only by negotiations if they are even ended at all.

So the next time social media lights up with chest-thumping about how American military might should be directed at a problem, think for more than a few seconds about whether a military solution is even possible.

Sorry for no posts, I was watching the eclipse

Sorry I haven’t posted in a while, I drove halfway across the continent to see the eclipse. And then after it was finished I immediately drove the other halfway back home. After more than 24 hours of driving, I was beat, and this week was kind of a wash for me after that.

But the eclipse itself was beautiful and I encourage everyone to look for images of it online. NASA had an entire party for the eclipse, I don’t know if they did that for 2017 but maybe with how popular the 2017 eclipse was, they felt they needed to.

There was also some real science being done during this eclipse. Telescopes trained on the sun to look at its corona in great detail as the moon passed in front. A longstanding humorous story in the scientific community comes from an eclipse observed not long after Albert Einstein published his theory of general relativity. The theory predicted that light should bend when passing by massive objects. So scientists used a solar eclipse to visualize stars that were hiding near the sun. As predicted by Einstein, their light appeared to be “bent” because it had passed so close to the sun to get to us.

The newspapers published this with a somewhat hilarious line:

Stars not where they seemed or were calculated to be, but nobody need worry.

New York Times

The “but nobody need worry” always gets to me.

Regardless, eclipses are fun both for scientists and non-scientists alike. I hope if you missed this one, you’ll get to see one soon!

Surge Pricing and Dirty Deals

I’m sorry I haven’t been posting weekly like I promised to. February has not been kind to me. But I wanted to quickly fire off a post relating to two topics I’ve recently seen in the news.

The first has to do with the infamous Wendy’s “surge pricing” announcement which the company has already walked back on. As I know not all my readers are American, I’ll explain both Wendy’s and surge pricing.

Wendy’s is a fast food burger chain just like any other American chain. Surge pricing meanwhile is what Uber and Lyft do when there is a very high demand all of a sudden, prices shoot up during that time, leaving customers to balk at paying 50$ for a ride home from a baseball game, when getting into downtown may have costed just 30$. Many Wendy’s customers likewise were furious at the price of a burger going up and down during the day, possibly meaning they’d pay for their food than someone who’d walked in just a few minutes earlier.

The story got so much traction that Senator Elizabeth Warren even tweeted about it, trying to play up her corporate greed narrative. Little does Warren know that we’re now living in the era of Corporate Generosity.

Nevertheless I’m always surprised that someone with the credentials of Warren is so economically illiterate. Surge pricing has been going on for decades, perhaps centuries even. The earliest examples I can think of are matinees, theatre productions (or movies) that are shown during the daytime for a cheaper cost than the evening. It costs exactly the same to run the shown at either time, so why is the daytime show cheaper? And if you’ve ever seen a bar with a “happy hour” or a restaurant with an “early bird special,” or Halloween candy sold half-off in November, you’ve also seen surge pricing in action.

What’s going in here is simple supply and demand. The price of a good or service is *not* based on the cost to make it, the price comes from the interplay of supply and demand. The price fluctuates even if the cost does not because sellers are trying to clear the market. Lower demand? Lower price.

But a restaurant also has service and shifts. Any server serving one customer must necessarily be not serving another. Yet at the same time, servers paid for 8 hour shifts, and few people would work a job where they’re only paid minimum wage for 2 hours. The cost of transport alone would eat into your wage. What this means is that if everyone only comes to eat during dinner (let’s say a 2 hour period from 4-6pm), then the servers are sitting around for 6 hours doing nothing, then madly scrambling for 2 hours. During those 2 hours, many customers might come in only to find the line is too long, or they might be able to eat but find the service poor due to overworked servers.

Thus, for decades restaurants have lowered prices during the “slow” parts of the day to entice people to eat at those times instead of during the rush. This is exactly the same mechanism as Wendy’s “surge pricing,” only it’s framed differently. But it’s still the case that they’re charging more at dinnertime even though their costs are the same.

Surge pricing like this is actually a very good thing. It evens out demand in service industries, allowing more people to be served during a day while still letting the wait staff work full 8-hour jobs. And certain customers can take advantage of this, getting a lower price at the cost of not eating during a “normal” time. Warren (and other outraged twitterati) are simply jumping on a poorly framed policy to score very stupid political points. In fact, Burger King decided to dunk on Wendy’s poorly framed surge pricing policy by highlighting their own better-framed surge pricing policy. Every restaurant is like this, and it’s actually A Good Thing.

Speaking of restaurants but not about Good Things, Gavin Newsom is quite nakedly corrupt. I had only heard mild criticisms of Gavin before, but there were some Democrats I know claiming he was basically the candidate-in-waiting should Biden not run. He is Governor of America’s largest and wealthiest state, and would surely win election because the only thing Republicans could ever say against him were tired tropes about “Commiefornia.” But actually it turns out here’s corrupt.

I know this because he handed a political kickback to his buddy who owns at least two dozen Panera Bread restaurants. California is set to raise the minimum wage to 20$/hr, except at restaurants that serve freshly bread baked. No, bagels and pastries do not count as “bread.” Panera is one of the very few restaurants that does this, and so they will still be allowed to pay their employees just 16$/hr.

You might think this would cause many restaurants to start opening up bakeries, but it gets even more corrupt: the restaurant must have been serving freshly baked bread in September 2023 to qualify. So only Panera is grandfathered in. Essentially, Gavin Newsom decided to directly use a government law to enrich his friend and confidant, and no one seems to really care.

Now of course he wasn’t handing his friend state money. But he was writing legislation that imposes costs on every single one of his friend’s rival businesses, while shielding his friend. That will allow his friend (whose name I just looked up is “Greg Flynn”) to profit much more than anyone else from fast food, since he can keep the same prices while paying his staff 80% less than the competition.

Some of the twitterati have tried to defend Gavin indirectly, saying that it’s obviously corrupt but that this carve-out won’t actually do anything. They say that since every other restaurant will have to abide by the 20$/hr minimum wage, it means no one will ever work for Panera for less than 20$/hr either. But that ignores that people take jobs based on more than just the wage. Maybe the Panera is closer to you than the Taco Bell, maybe you hate the smell of fried foods and are loathe to work at McDonald’s, maybe you don’t own a car and the Panera is the only restaurant in walking distance. Or maybe you have classes and Panera can offer you hours that better fit your schedule.

And Greg Flynn knows this. He knows that he will likely be able to find at least some workers willing to work for just 16$/hr, that’s why he asked Gavin to put that in the bill. But corruption and friend-dealing has never been punished too strongly in America, no matter how much partisans rage about how “the other side” is corrupt. Still, the naked corruption on display may have hurt Gavin in a national election, so Democrats are probably happier he didn’t decide to challenge Biden.

Are analysts’ opinions anti-correlated with the market?

This time 2 years ago, we were still riding high on the post-pandemic surge, and analysts were expecting the S&P could break 5,000. This time last year, we were still in what felt like the 2022 doldrums and analysts were predicting a recession. This time 3 months ago, people were declaring inflation was whipped. And then a few days ago, CPI and PPI came in hot.

I’ve written before about how the Efficient Market Hypothesis may imply that there is *no* correlation between analyst opinion and the stock market. Analysts are just as likely to be wrong as right, but people only remember the examples which agree with their biases. On the other hand, I read an article recently (I’m sorry I cannot find it to link) arguing that analyst opinion is in fact *anti*-correlated. That is, the Short Cramer ETF is correct, and analysts are so stupid you should do the opposite of what they say.

Speaking of, the Short Cramer ETF “SJIM” is down about 20% from when it began. But no matter, should you do the opposite of what analysts say or is that as irrational as following their advice?

One argument is that analysts are inherently *backward-looking*, they generally assume trends will continue forever. Some are perma-bulls or perma-bears, but on average when the market is down analysts predict a down year, and when it’s up they predict an up year. In this case, if the market is a random walk then it’s very unlikely to simply continue it’s current trend, thus an analyst is more likely to be wrong than right.

On the other hand, shouldn’t wisdom of the crowds have an affect? On the aggregate, many gamblers who bet on real world events (either sports of politics) are betting on what they *want* to happen, and many have no real knowledge whatsoever. Yet Nate Silver and others have argued that betting markets are often more accurate than not, whether it’s politics, sports or what have you. Some how, a million idiots adds up to something better than our smartest mind.

If that’s the case why don’t all the analysts of the market add up to something smart?

It just reminds me to be humble, because all too often I’ve seen people caught out badly by a trend. The late 2023 “inflation is beaten, start thanking Joe Biden” narrative won’t seem as smart if inflation stays persistently hot, any more than the “recession around the corner” narrative of 2023. Overconfidence when you really know nothing is the hallmark of an analyst, and maybe that’s why they’re so often wrong.