Streetwise Professor

October 6, 2018

Net Neutrality: (More) Supercilious Twaddle From the FT

Filed under: Economics,Politics,Regulation — cpirrong @ 5:59 pm

This piece by John Thornhill on net neutrality epitomizes why I despise pretty much any opinion piece in the FT: it oozes pompous stupidity:

In a world that corresponds to economists’ assumptions of perfect competition and rational actors, we would not need net neutrality rules. But until that happy day arrives and goodwill, peace, and free chocolate ice-cream descend upon the earth, then we should defend this necessary principle.

And a bit later:

It is better to enforce equal access with some exemptions, as in India, than to allow a handful of ISPs to discriminate between users in far-from-perfect markets. [Emphasis added.]

There’s a name for this particular foolishness–“the Nirvana fallacy”–coined by the great Harold Demsetz almost 50 years ago:

The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing “imperfect” institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements.

Perhaps there was an excuse for falling for the fallacy in 1969.  But decades post-Demsetz, it is embarrassing to see someone proudly flaunting the fallacy on the pink pages of the FT.

Perfection is not an option in this fallen world.  One has to make choices between flawed alternatives–that’s what Harold meant by “a comparative institution approach.”  What is particular bizarre is that in the paragraph just preceding what I quoted, Thornhill seems to understand this:

In truth, the arguments over net neutrality involve complex trade-offs and are a matter of broader societal choice. But that public debate is often based on partial information, corrupted by corporate lobbying, and mangled by dysfunctional political systems.

But never mind that! This particular regulation–which is certainly based on “based on partial information, corrupted by corporate lobbying [e.g., by those paragons of virtue Facebook, Google, Twitter, Netflix] and mangled by dysfunctional political systems”–is preferred to alternatives, because the alternatives are imperfect.  To call this a non sequitur hardly does it justice.

It is also amusing to see India–which has a dismal history of regulatory failure–held up as some paragon.  Absent some assertion that this is the exception that proves the rule, India’s adoption of net neutrality should be taken as more of a warning than an exemplar.

This is all twaddle.  And supercilious twaddle at that.

And that, my friends, is the FT in a nutshell.


October 4, 2018

Elon Musk: Nemesis Has Been Stayed, but Hubris Remains

Filed under: Energy,Regulation — cpirrong @ 7:02 pm

As most of you probably know by now, Elon Musk settled with the SEC.  Though, perhaps it would be more accurate to say that the SEC settled with Elon Musk.  The settlement over last weekend was apparently on the very same terms that he rejected at the end of the week.  Uhm, who leaves a rejected offer on the table, especially when that offer was a gift because the case against Musk was extremely strong.

Apparently it is because Elon is deemed the Indispensable Man.  SEC Chair Jay Clayton said that the settlement was best for Tesla shareholders.  Musk supposedly threatened to quit as CEO unless the board backed him to the hilt.  So apparently both caved to the legend of Elon.

The board’s action is somewhat expected–after all, they are Elon’s co-dependents and enablers.  The SEC’s actions are rather more disappointing.  My best explanation is that the SEC filed suit against Musk only because if they hadn’t they would have been a laughingstock given the outrageousness of Musk’s actions.  Their heart wasn’t in it, however, and they were willing to capitulate rather than bear responsibility for Tesla’s fate.  The fundamentals haven’t changed, and Tesla’s future is still fraught.

And Elon hasn’t changed either.  Even a mild settlement spurred his narcissistic rage, which he expressed in a tweet scorning the SEC as the “Shortseller Enrichment Commission.”  Still obsessed with shorts, still unable to handle any criticism, still unable to count his blessings.

This is the man whom the SEC apparently deems indispensable, and believes is the best guardian of Tesla shareholders’ interests.

Perhaps the judge who must approve the settlement will find the SEC’s arguments unpersuasive.  She has asked for each side to file briefs defending the settlement.  This briefing is pro forma, but in past years–in dealing with big banks and brokers like BofA and Merrill, anyways–judges have rejected SEC settlements.   Perhaps that will happen here.  Tesla stock sank today on the news of the judge’s request, and sank more post-close after Elon’s tweeter tantrum.

Even if the judge blesses the settlement, Tesla still faces its chronic cash flow issues.  The settlement may make it somewhat easier to go to the capital market–although that would potentially–and should–trigger another investigation and perhaps suit given Elon’s adamant denials of the need to do so.  But even with a settlement, recent events have no doubt made it harder–and costlier–for the firm to sell more stocks and bonds.  Elon got off easy once.  Given that he clearly hasn’t changed–and what 47 year olds do, really?–there is a serious risk that (a) he won’t get off so easy next time, and (b) there will be a next time.  That will affect the receptiveness of the capital markets to Tesla’s voracious cash needs.

In sum, by the grace of the SEC, Nemesis has been stayed for now.  But Hubris remains.  Meaning that Nemesis may well return, more vengeful than before.

October 1, 2018

Some Things I’ve Learned

Filed under: Politics — cpirrong @ 9:10 pm

Watching the media in the past month or so, I’ve learned that the Truth Gene is on the X chromosome, and that the Lie Gene is on the Y chromosome.  I’ve also learned that the Lie Gene is dominant.  I’ve learned that his implies that XX should be believed without question, regardless of her interests or incentives; the internal consistency of her story; the consistency of her story between tellings; the lack of basic details, juxtaposed with lurid and detailed recollections; the lack of corroborating witnesses (indeed, the existence of contradictory witnesses); and the lack of physical evidence.  I’ve learned that it is beyond the pale even to raise questions about these things.

I’ve also learned that those of the XY persuasion are inherently untrustworthy, and do not deserve due process or the presumption of innocence–because they are probably guilty.  I’ve further learned that behavior of XYs as teenagers is determinative of their character as adults, but the behavior of XXs as teenagers is not only irrelevant, but cannot be questioned.

I’ve learned that I’m so old that I remember when the “politics of personal destruction” was a bad thing, rather than the highest form of patriotism.

Here are some things I’ve learned when I discarded the media filter.

I’ve learned that when people regularly use the phrase “your truth” without the slightest tinge of irony or sarcasm, that the idea of truth has been smothered in its sleep.

I’ve learned that the United States Senate is a broken institution, utterly degraded and depraved.  I’ve learned that this is so obvious that even the likes of Lindsey Graham has noticed.  I’ve learned that the rot is bipartisan, and that the body is inhabited by a full range of types, ranging from those utterly corrupted by power and a disrespect for the most rudimentary norms of personal and professional conduct, to the outrageously hypocritical, to the utterly craven (e.g., Jeff Flake, who should wear a pussy hat 24/7, and not because he’s a feminist).  Indeed, I’ve learned that many exhibit all of these traits, and some more to boot.

But the most important thing that I’ve learned is that this nation is at war to the knife, and that all that matters now is power and the will to power.  In the political sphere, norms, respect for the results of elections, institutional checks and balances, and even the most rudimentary notions of justice and fair play are quaint anachronisms.  The Al Davis ethos (just win, baby) rules.  If you stand in the way of the twisted freaks who infest the Capitol, and the political and media orcs that do their bidding, well, that’s just too bad for you.  You are expendable, as are truth and justice.

We now live by the rule of Beria: “Show me the man, and I will show you the crime.”  Or maybe that of Óscar Raymundo Benavides Larrea: “For my friends anything, for my enemies the law.” (In reality, some perverse pantomime of the law, observing some of its external forms, but violating its basic principles.)

The political atmosphere abroad in the land is only comparable to one era of American history: the 1850s.  The adversaries operate under completely different world-views, and largely view each other as evil.  There is no basis for debate, let alone compromise.

In the 1850s, the battle reached a fever pitch because of the potential shift in the balance in the Senate, which in the view of Southern Fire Eaters threatened slavery, which was precious to them.  Today, the battle has reached such a pitch because of a potential shift in the balance of the Supreme Court, which in the view of the Bi-Coastal Fire Eaters threatens the progressive project, including notably abortion (I mean–really?) but not only that.

In the 1850s, one side was willing to fight for a fundamentally depraved cause.  I think the same is true today: you may dispute that, or we may disagree on what side that is.  But the willingness of left to plumb the depths as exhibited in the oxymoronic Senate “Judiciary” Committee leaves no doubt in my mind.

Regardless of how you allocate blame, what is going on now bodes ill for the future:

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

That’s from Yeats’ “The Second Coming.”  And it is not hyperbolic today to ponder the possibility of the second coming of a Civil War.

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