I’ve got to go and incorporate this knowledge into my decisions

Sunday, February 25th, 2018

Arnold Kling found Russ Roberts’ recent interview with Bryan Caplan to be one of his favorite EconTalk episodes, “because Russ pushes back so hard and of course Bryan debates effectively.” I also enjoyed both the Caplan quotes he cited:

I would say if there is no designable test that can show that people learn something, then they haven’t learned it. You might say the test is bad, in which case I would say, ‘Fine. Design a better test, and then show it to me.’ But, if you want to say that people have been transformed but it’s a way that no one can actually show, no matter how hard they try, then I’m going to say, ‘No. That just sounds like wishful thinking.’

[...]

I’m weird in this way, in that when I read something that seems true to me, like I just feel this incredible, this weight on the world: ‘I must repent. I can’t keep living the way I used to live anymore. I’ve got to go and incorporate this knowledge into my decisions, day after day. And, I’m a sinner if I don’t.’ But even that is such a weird response to a book. Most people read Tetlock’s Superforecasting and say, ‘Oh, yeah. So interesting. Some people are really great at this stuff. Yeah. Right.’ And then they go back and live their normal lives.

Is the education system really a waste of time and money?

Thursday, February 22nd, 2018

Is the education system really a waste of time and money, Bryan Caplan asks, as his new book claims right on the cover? This is a strange topic to debate with Eric Hanushek, he explains:

Why? Because if Hanushek had absolute power to fix the education system, education might actually be worth every penny. Hanushek is famous for focusing on what schools teach rather than what they spend — and documenting the vast disconnect between the two. If you haven’t already read his dissection of “input-based education policies,” you really ought to. Hanushek, more than any other economist, has taught us that measured literacy and numeracy are socially valuable — but just making kids spend long years in well-funded schools is not.

Tragically, however, Hanushek is not our education czar. Instead, all levels of our education system are extremely wasteful and ineffective. After spending more than a decade in class and burning up over $100,000 in taxpayer money, most Americans know shockingly little. About a third of adults are barely literate or numerate. Average adult knowledge of the other standard academic requirements — history, social studies, science, foreign languages — is near-zero. The average adult with a B.A. has the knowledge base you’d intuitively expect of the average high school graduate. The average high school graduate has the knowledge base you’d intuitively expect of the average drop-out. This is the fruit of a trillion taxpayer dollars a year.

For economists, however, there’s a powerful objection to this condemnation. If students really learn so little, why on earth is education so lucrative in the labor market? Why do high school grads outearn dropouts by 30%? Why do college grads outearn high school grads by 73%? Explain that! Employers want profit and they aren’t dumb. They wouldn’t pay exorbitant premia unless education dramatically improved worker productivity, right?

Wrong. There are TWO solid business reasons to pay extra for educated workers. One is that education teaches useful skills, transforming unskilled students into skilled workers. This is the standard “human capital” story. The other reason, though, is that education certifies useful skills, helping employers distinguish skilled workers from imposters. This is the “signaling” story. In the real world, naturally, it’s a continuum. But since Hanushek is not the education czar, signaling explains most of education’s financial reward.

How can we know this? We should start with the massive gap between learning and earning, combined with the fact that even the most irrelevant subjects and majors yield decent financial rewards. If human capital were the whole story, why on earth would employers care if about whether you’ve studied Shakespeare, Latin, or trigonometry? Think about all the classroom materials you haven’t used since the final exam.

If that doesn’t fully convince you, many other facts that every student knows cut in the same direction. Such as:

1. It’s easy to unofficially attend college classes without enrolling or paying tuition, but almost no one bothers. Why not? Because after four years of guerilla education, there’s one thing you won’t have: a diploma. The central signal of our society.

2. Students’ focus on grades over learning, best seen in their tireless search for “easy A’s.” Signaling has a simple explanation: If a professor gives you a high grade for minimal work, you get a nice seal of approval without suffering for it.

3. Students routinely cram for final exams, then calmly forget everything they learn. Signaling provides a clean explanation: Learning, then forgetting, sends a much better signal than failing.

In The Case Against Education, I also review multiple major bodies of academic research to help pin down the true human capital/signaling breakdown. In the end, my best estimate is that signaling explains 80% of the payoff. Key pieces of evidence:

1. Most of the payoff for school comes from graduation, not mere years of study. This is a doozy for human capital theory to explain; do schools withhold useful skills until senior year? But it makes perfect sense if graduation is a focal signal of conformity to social norms.

2. There has been massive credential inflation since 1940. The education you need to do a job hasn’t changed much, but the education you need to get any given job has risen about three years. Hence, the fact that waiter, bartender, security guard, and cashier are all now common jobs for college grads.

3. Though every data set yields different estimates, the effect of national education on national income is much smaller than the effect of personal education on personal income. How is this possible? Signaling! Give everyone more useful skills, and you enrich the whole nation. Give everyone more stickers on their foreheads, and you fritter away valuable time and tax money.

If you’ve been wondering, “What does signaling have to do with wasteful education?,” I hope you’re starting to see the link. Sure, it’s useful to rank workers. But once they’re ranked, prolonging the ranking game is a socially destructive rat race. When education levels skyrocket, the main result isn’t good jobs for every graduate, but credential inflation: The more education the average worker has, the more education the average worker needs to be employable. And while sending fancy signals is a great way for an individual to enrich himself, it’s a terrible way to enrich society.

Given Hanushek’s work, I’m optimistic that he’ll agree with much of what I’ve said. It’s our remedies that starkly diverge. My primary solution for these ills is cutting education spending. In a word, austerity. Austerity: It’s word I love. It’s a word I believe in. If Hanushek’s bleak assessment of input-based education policies is right, austerity will save tons of time and money with little effect on worker skill.

Cutting waste is easy and transparent

Wednesday, February 21st, 2018

Bryan Caplan has some fun explaining why public education is a waste by analogy:

You think we have too much education, and I think we’re doing education wrong. In other words, you want less education, and I want better education.

My response is that doing less education is easy, and improving the education system is hard. Here’s an analogy I use in the book: Imagine that your friend comes to you and says, “You know that toenail fungus cream that you’re spending a hundred bucks a month on?” “Yeah.” “Here’s clear proof it doesn’t work, so stop using it,” and you say, “Well, I’m not going to stop using it until you give me a toenail fungus cream that does work.”

Your friend says, “Well, I don’t really know one that works, and there’s a lot of debate about it, and it’s really hard to find one. What I do know is that you should stop wasting a hundred bucks a month.”

To me, that’s a lot of what’s going on with education. We’ve got very clear evidence that we’re wasting a lot, but we don’t have a clear idea as to what would be better. All we know is that the system we have now is grossly dysfunctional, so I don’t think we should keep pouring money into it.

[...]

Cutting waste is easy and transparent. But making things better is really hard and, in order to do it, you’ve got to trust a bunch of people who have already really screwed up, and that sounds imprudent to me.

Taleb’s style can be imitated but never fully mastered

Friday, February 16th, 2018

Branko Milanovic thinks that Nassim Nicholas Taleb is one of the most important thinkers today:

Taleb went from (a) technical observations about non-Gaussian distributions of some phenomena to (b) generalization of what this means for our perception of reality and the way we comprehend things (epistemology) to (c) methodology of knowledge and the role of inductive thinking to finally (d) a statement on ethics. To convey this he created a new type of writing. I will leave this last part undiscussed, but whoever has read Taleb knows that his writing style is absolutely original and like Borges’ can be imitated but never fully mastered.

[...]

This has also led him to conservative political philosophy, similar to Edmund Burke’s (whom he does not mention): institutions should not be changed based on deductive reasoning; they should be left as they are not because they are rational and efficient in an ideal sense but because the very fact that they have survived a long time shows that they are resilient. Taleb’s approach there has a lot in common not only with Burke but also with Tocqueville, Chateaubriand and Popper (whom he quotes quite a lot). One may notice how a technical/statistical point made by Taleb such as “my field is error avoidance” leads to agreeing with Hayek’s critique of the “conceit of reason”.

This is the logic of lex talionis

Tuesday, February 13th, 2018

William Ian Miller’s Eye for an Eye did not make it onto T. Greer’s top 10 reads list for 2017, but he did find it quite thought-provoking:

Miller is an unusual creature: part law professor, part medievalist, Miller is equally comfortable discussing ancient Hittite legal decrees, the etymology of old Norse runes, the tropes of Elizabethan Drama, and modern tort law. I suppose if you were to take J.R.R. Tolkien, Thomas Schelling, a good dose of dead-pan humor, and a pinch of the morbid, and then shook them up together in a bottle, Mr. Miller is the man who would emerge.

Miller’s book looks at the politics of social life (in places like medieval Iceland):

When one man (or one women) meets another calculations begin: how should I treat this person? Are we equals, or is he my social inferior? Or perhaps he is my social superior? How do I let him know what my social status is, and how should I respond if he does not take the hint? Is this person worth an insult? A fight? What are the consequences of letting things slide? What are the consequences of refusing to do so?

Eye for an Eye looks at lex talionis — “the law of the talion, the principle of an eye for an eye, of justice through vengeance, retaliation sanctioned by culture and law”:

This understanding of justice is what propels the Icelandic sagas. But it wasn’t just a Viking tick. “Eye for an eye” was standard practice just about everywhere a few thousand years ago, from the shores of Germainia and the fields of the Greek polis to the warring tribes of Canaan and the even more distant lands of the Kurus and the Zhou. We view this understanding of justice as backward and crude. We say things like “an eye for an eye makes the whole world blind.” Miller aims to convince us otherwise.

In Bloodtaking and Peacemaking, Miller tells the story of some Norwegian merchants who had chopped off Skæring’s hand and thought the judgment too steep:

“Then I shall make you another proposal,” said Gudmund. “I will pay Skæring the thirty hundreds that you were judged to pay, but I shall choose one man from amongst you who seems to me of equivalent standing with Skæring and chop off his hand. You may then compensate that man’s hand as cheaply as you wish.”

This did not appeal to the Norwegians and they decided to pay the original award immediately. Gudmund took Skæring with him when they left the ship.

[...]

To the Norwegians the award should reflect the price of a middling Icelandic hand. Gudmund forces them to conceive of the award in a different way: it is not the price of buying Skæring’s hand, but the price of preserving a Norwegian hand.

This is the logic of lex talionis, T. Greer explains:

This is why “an eye for an eye” did not in fact make the whole world go blind. The principle of an eye for an eye, as Miller sees it, is “the more ancient and deeper notion that justice is a matter of restoring balance, achieving equity, determining equivalence, making reparations… getting back to zero, to even.” Trading eyes for eyes is not so much about indiscriminate, unthinking violence as it is carefully calculated attempts to match punishment to crime. Talionic justice is a system built on deterrence — not only deterring criminals from committing crimes, but deterring vengeance seekers from exacting too heavy a price in retaliation for crimes committed against them. This is empathy enforced by blood. You think carefully about the pain you inflict on others knowing, that measure for measure, the pain you give others will be given back to you.

We have a sorry habit thinking about revenge as “as going postal and blasting away,” but as Miller notes, “revenge cultures did not think of it that way.” This is obvious if you read the stories revenge cultures created. Characters in the Icelandic sagas approach murder with the meticulousness of a father inspecting his daughter’s suitor. They conducted their feuds not in the heat of rage, but through cold, calculations. Heroes from revenge plays like The Oresteia cycle or The Orphan of Zhao plan their vengeance months or even years in advance, and when the moment comes often have to be goaded into taking revenge. One gets the sense that these people believed that feuding was utterly necessary but not entirely natural.

Communist-style incentives at work

Friday, February 9th, 2018

While we were recently discussing flawed incentive systems, David Foster brought up some Communist examples:

There’s an old story about a Soviet-era factory that made bathtubs. Plant management was measured on the total tonnage of output produced–and valves & faucets don’t add much to the weight, certainly not compared with the difficulty of manufacturing them. So the factory simply made and shipped thousands of bathtubs, without valves or faucets.

He notes that the above story may be apocryphal. The version I heard involved cars and people stealing each other’s windshield wipers.

He continues with a more spectacular example from Viktor Suvorov, who was working on a communal farm in Russia, when the General Secretary of the Party announced that they needed to increase their output, and the fertilizer plant resolved to do its part:

A vast meeting, thousands strong, complete with brass bands, speeches, placards, and banners, was urgently called at the local Chemical Combine. To a man, they shouted slogans, applauded, chanted patriotic songs. After that meeting, a competitive economy drive was launched at the Chemical Combine to harvest raw materials and energy resources.

The heroic efforts of the factory workers filled the plant’s storage tanks to capacity, and the local communes had 24 hours to take possession of their liquid fertilizer:

There was a long queue of trucks of different makes, dimensions, and colours standing outside the Chemical Combine. But the queue was moving fast. I soon discovered that lorries, which had only a moment before been loaded, were already returning and taking up new places in the queue. Every one of these lorries ostensibly needed many hours to deliver its valuable load to its destination and then to return. But they rejoined the queue in a matter of minutes. Then came my turn. My tanks were rapidly filled with the foul-smelling liquid, and the man in charge marked down on his list that my native kolkhoz had just received the first one and a half tons of fertilizer. I drove my lorry out through the Combine’s gates and followed the group of lorries which had loaded up before mine. All of them, as if at a word of command, turned off the road and descended a steep slope toward the river Dneiper. I did the same. In no time at all, they had emptied their tanks. I did the same. Over the smooth surface of the great river, the cradle of Russian civilization, slowly spread a huge poisonous, yellow, stinking stain.

Foster warns us not to get too smug though. If you read the whole thing, he has an example of capitalist stupidity, too.

Early childhood development programs can only do so much

Tuesday, February 6th, 2018

Nobel prize-winning economist James Heckman’s four rules for raising successful children lean heavily on a 1980 program for growth-stunted toddlers in Jamaica:

Trained health aides visited mothers living in poverty for an hour a week and coached them in how to stimulate their children through play.

The intervention, run by British researcher Sally Grantham-McGregor, was simple but it changed those toddlers’ lives. Monitoring into adulthood shows they have gone on to do better at school, earn more money and enjoy better psychosocial skills than their origins would have predicted. They were also less prone to committing crime.

In short, training the parents while their children were still small seemed to be a magic bullet for a wide range of social problems. “Programmes like this are cheap, effective and don’t require large infrastructure,” says Prof Heckman, who, at 73, runs the Center for the Economics of Human Development at the University of Chicago in his hometown.

[...]

Prof Heckman estimates that another ECD programme, the high-quality Perry pre-school for poor African-American children in Michigan in the 1960s, gave society a return of $7-$12 for every dollar invested. The participants went on to rely less on welfare, commit less crime and be more productive than their peers who didn’t follow the programme. In short, pre-school proved a lot more cost-effective than university or prison.

Do any of these amazing programs replicate their initial success when repeated elsewhere?

Let’s move on to his four rules:

Lesson one is to aim programmes only at disadvantaged children. Most privileged parents already know — from their own life experiences or from parenting books — that they should read to their children and play with them. They can afford to feed their children healthy food, and they start stimulating them before birth, explains Prof Heckman.

For many poorer parents, however, “reading to the child, stimulating a child, however commonsensical that is, comes as a revelation”, says Prof Heckman.

That’s a pretty damning image he’s painted, which suggests that some kind of even earlier intervention might be in order — maybe something a few years before preschool.

His second lesson: “It’s not about genetics. It’s about having input from parents who are engaged.” You can send children to the most expensive preschools and it won’t help much without good parenting, he says. The importance of hands-on parenting “has not fully made its way into the consciousness of some advocates, but it’s so obvious”.

Let’s ignore all the science and just assert that “it’s not about genetics.” Look, we can agree that it’s not all about genetics, but genes clearly play a huge role.

The corollary is lesson three: “You don’t need lots of money or MBAs.” Just sending relatively low-skilled people to train parents can be enough, as it was in Jamaica.

In fact, we spend twice as much on public education as we used to, and it has had no (positive) effect, so more money is not the answer.

Finally, lesson four: boys and girls are different. When Prof Heckman, his research assistant Jorge Luis Garcia and others evaluated two 1970s childcare programmes in North Carolina, they found that boys benefited more than girls from good childcare (largely because their health improved and their crime levels fell). However, boys also suffered more from bad preschools. “Girls are more resilient,” he concludes.

Fortunately the difference runs in the “correct” direction.

His model country for ECD is Denmark. By focusing on under-threes, the Danes have sharply boosted cognitive skills among disadvantaged children, he says. Even so, Prof Heckman adds, full equality has not been achieved. Children of less-educated Danish mothers still enter adulthood with considerably lower qualifications than their privileged peers. Even in the best of cases, ECD can only do so much.

Early childhood development programs can only do so much.

Its rules are designed with one eye on how those rules might be exploited down the line

Thursday, February 1st, 2018

Steven Johnson looks beyond the Bitcoin bubble:

History is replete with stories of new technologies whose initial applications end up having little to do with their eventual use. All the focus on Bitcoin as a payment system may similarly prove to be a distraction, a technological red herring. Nakamoto pitched Bitcoin as a “peer-to-peer electronic-cash system” in the initial manifesto, but at its heart, the innovation he (or she or they) was proposing had a more general structure, with two key features.

First, Bitcoin offered a kind of proof that you could create a secure database — the blockchain — scattered across hundreds or thousands of computers, with no single authority controlling and verifying the authenticity of the data.

Second, Nakamoto designed Bitcoin so that the work of maintaining that distributed ledger was itself rewarded with small, increasingly scarce Bitcoin payments. If you dedicated half your computer’s processing cycles to helping the Bitcoin network get its math right — and thus fend off the hackers and scam artists — you received a small sliver of the currency. Nakamoto designed the system so that Bitcoins would grow increasingly difficult to earn over time, ensuring a certain amount of scarcity in the system. If you helped Bitcoin keep that database secure in the early days, you would earn more Bitcoin than later arrivals. This process has come to be called “mining.”

[...]

Token economies introduce a strange new set of elements that do not fit the traditional models: instead of creating value by owning something, as in the shareholder equity model, people create value by improving the underlying protocol, either by helping to maintain the ledger (as in Bitcoin mining), or by writing apps atop it, or simply by using the service. The lines between founders, investors and customers are far blurrier than in traditional corporate models; all the incentives are explicitly designed to steer away from winner-take-all outcomes. And yet at the same time, the whole system depends on an initial speculative phase in which outsiders are betting on the token to rise in value.

“You think about the ’90s internet bubble and all the great infrastructure we got out of that,” Dixon says. “You’re basically taking that effect and shrinking it down to the size of an application.”

[...]

So much of the blockchain’s architecture is shaped by predictions about how that architecture might be abused once it finds a wider audience. That is part of its charm and its power. The blockchain channels the energy of speculative bubbles by allowing tokens to be shared widely among true supporters of the platform. It safeguards against any individual or small group gaining control of the entire database. Its cryptography is designed to protect against surveillance states or identity thieves. In this, the blockchain displays a familial resemblance to political constitutions: Its rules are designed with one eye on how those rules might be exploited down the line.

Much has been made of the anarcho-libertarian streak in Bitcoin and other nonfiat currencies; the community is rife with words and phrases (“self-sovereign”) that sound as if they could be slogans for some militia compound in Montana. And yet in its potential to break up large concentrations of power and explore less-proprietary models of ownership, the blockchain idea offers a tantalizing possibility for those who would like to distribute wealth more equitably and break up the cartels of the digital age.

The blockchain worldview can also sound libertarian in the sense that it proposes nonstate solutions to capitalist excesses like information monopolies. But to believe in the blockchain is not necessarily to oppose regulation, if that regulation is designed with complementary aims. Brad Burnham, for instance, suggests that regulators should insist that everyone have “a right to a private data store,” where all the various facets of their online identity would be maintained. But governments wouldn’t be required to design those identity protocols. They would be developed on the blockchain, open source. Ideologically speaking, that private data store would be a true team effort: built as an intellectual commons, funded by token speculators, supported by the regulatory state.

Like the original internet itself, the blockchain is an idea with radical — almost communitarian — possibilities that at the same time has attracted some of the most frivolous and regressive appetites of capitalism. We spent our first years online in a world defined by open protocols and intellectual commons; we spent the second phase in a world increasingly dominated by closed architectures and proprietary databases. We have learned enough from this history to support the hypothesis that open works better than closed, at least where base-layer issues are concerned. But we don’t have an easy route back to the open-protocol era. Some messianic next-generation internet protocol is not likely to emerge out of Department of Defense research, the way the first-generation internet did nearly 50 years ago.

Yes, the blockchain may seem like the very worst of speculative capitalism right now, and yes, it is demonically challenging to understand. But the beautiful thing about open protocols is that they can be steered in surprising new directions by the people who discover and champion them in their infancy. Right now, the only real hope for a revival of the open-protocol ethos lies in the blockchain. Whether it eventually lives up to its egalitarian promise will in large part depend on the people who embrace the platform, who take up the baton, as Juan Benet puts it, from those early online pioneers. If you think the internet is not working in its current incarnation, you can’t change the system through think-pieces and F.C.C. regulations alone. You need new code.

Modern universities are an exercise in insanity

Friday, January 26th, 2018

Modern universities are an exercise in insanity, T. Greer reminds us — even if we ignore all the other problems and look at just the cost:

How can you possibly justify a $200,000+ college expense? How can you justify a $100,000+ college expense?

This is not necessary.

The average tenure track professor makes $40 an hour. If you were to employ her as a private tutor at the cost of $60 an hour, and had four hours with her a week, and did that for 14 weeks (that’s the length of an average college course folks) that is about $3,400.

Were you to employ three such professor-tutors, that would be about $10,200, or a bit over $20,000 a year. In four years you would have racked up $80,000 in costs. But this is still $30,000 less than the total for the ‘cost conscious’ universities. It is a quarter of what you would pay for Trinity.

Remember: this $80,000 is for private tutoring, where individual attention would give you far and away a better and more thorough education than the 300-kids-in-a-lecture-hall style of classes that dominate undergraduate education today.

But it can get even cheaper. Let’s say you take the general principle of group classes from the university. Say you can find four other people to take all of these other classes with you. Just four. Well that equals out to $680 per class, or $16,000 a person for four years of classes.

To be fair, add in $1000 for textbooks and a subscription to JSTOR, for a total of about 17,000 to 18,000 for four years.

Modern universities are insane.

For the vast majority of human history universities as we conceive of them did not exist. The modern university system did not produce the Mahabharata, The Aeneid, or The Tale of Genji. The modern university system did not produce Ibn Khaldun, Thomas Aquinas, or Alexis de Tocqueville. The universities John Adams, Alexander Hamilton, and James Madison attended looked or functioned very little like Harvard, Columbia, and Princeton do today. Men like Abraham Lincoln are evidence that a deep reading and appreciation for the liberal arts do not require formal education at all. Make no mistake about it: the humanities existed before the modern university department was conceived; they will exist long after the modern university department has been destroyed.

I would like to see something along the lines of a “liberal education” preserved. But do the math. The important elements — the students, the books, the teachers — can be provided for at under $20,000 a year, and that is with paying the teachers $20 more an hour than they are currently earning. Any attempt to reform the current university system must take this fact as its foundation.

Fanta was created for Nazi Germany

Thursday, January 25th, 2018

In April 1955, Coca-Cola reintroduced Fanta with a new, orange-flavored recipe. The original version was rather different — and developed in Nazi Germany:

The drink was technically fruit-flavored, but limited wartime resources made that descriptor not wholly accurate. Its ingredients were less than appetizing: leftover apple fibers, mash from cider presses, and whey, a cheese by-product. “[Fanta] was made from the leftovers of the leftovers,” says Mark Pendergrast, who, as the author of For God, Country, and Coca-Cola, revealed this hidden past. “I don’t imagine it tasted very good.”

[...]

In 1895, Coca-Cola’s CEO boasted of its presence in every American state and territory. In 1920, the company’s first European bottling plant opened in France, and by 1929, Coca-Cola was being bottled and drunk in Germany.

In 1933, right when Hitler and the Nazi Party were assuming power, German-born Max Keith (pronounced “Kite”) took over the company’s German subsidiary, Coca-Cola GmbH. Keith was an imposing figure: tall, intimidating, possessing a “little whisk-broom mustache” (not unlike Hitler’s), charming but quick-tempered, and utterly devoted to Coca-Cola. “[Keith] valued his allegiance to the drink and to the company more than his allegiance to his own country,” says Pendergrast. For that reason, he saw no quarrel with boosting sales by tying Coca-Cola to every aspect of German life and, increasingly, Nazi rule.

[...]

The U.S.’s entrance into World War II meant that American companies had to immediately stop all business activities with the enemy. In addition, the German government was threatening to seize “enemy-owned” businesses. General Motors pulled out of Germany (though, Opal, a fully owned subsidiary of GM, still operated there). IBM’s operations were seized by the Third Reich, though controversy exists on how much they contributed to the German war effort. Coca-Cola HQ in Atlanta also cut off communications with Keith in Germany and halted the export of Coca-Cola’s 7X flavoring (the long-mythicized, top secret formula for Coca-Cola syrup).

[...]

Working with his chemists, Keith patched together a recipe within the limitations imposed by wartime rationing. It was basically made from the leftovers of other food industries: fruit shavings, apple fibers and pulp, beet sugar, and whey, the liquid remaining after milk has been curdled and strained during cheese production. To name this concoction, Keith told his team to use their imagination. Joe Knipp, a salesman, pitched “Fanta,” shorthand for the German word for “fantasy.” It stuck.

Fanta saved Coca-Cola GmbH. Sales rose gradually during the war, particularly as other choices became harder and harder to find. It wasn’t simply drunk either. Fanta was popular as a sweetener for soups due to severe sugar rationing, since the drink’s renown earned it an exemption from the rationing after 1941 (though Keith had to use beet sugar). It was likely used for a variety of other cooking and baking needs as well.

“It was Fanta or nothing,” says Tristan Donovan, author of the book Fizz: How Soda Shook Up the World. “It had pretty much market dominance during war time.” By 1943, sales had reached nearly three million cases.

You are quite likely to grind up the humans in the process

Wednesday, January 24th, 2018

Megan McArdle shares some stories of metrics and their unintended consequences:

In December, doctors at a VA hospital in Oregon decided to admit an 81-year-old patient. He was dehydrated, malnourished, plagued by skin ulcers and broken ribs — in the medical professionals’ opinion, he was unable to care for himself at home. Administrators, however, overruled them.

Was there no bed for this poor man? No, the facility had plenty of beds; in fact, on an average day, more than half of the beds are empty, awaiting patients. Was there no money or medicine to care for him? No, and no. Reporting by the New York Times suggests that Walter Savage was, perversely, turned away because he was too sick. Very sick patients tend to worsen the performance measures by which VA hospitals are judged.

If this had happened in isolation, we could simply gape at the monstrosity that bureaucracies are occasionally capable of.

But such examples abound in health care. For example, in the 1990s, New York and Pennsylvania started publishing mortality data on hospitals and surgeons who did coronary bypasses. The idea was that more informed consumers would steer themselves toward the teams with the better statistics — theoretically good for patients, bad for slacking providers. The reality was less ideal: In those states, surgeons seem to have started doing more operations on healthier patients, while turning away the sickest ones who might otherwise have benefited.

From this we can take a few lessons. The first is one that has been well-known to other sorts of businesses: What you measure is what you get, not necessarily what you want. In fact, if your measurement is badly designed, you may get a great deal of something you don’t want.

To illustrate that, look at Wells Fargo, which recently paid a whopping fine because a badly designed compensation system encouraged low-level employees to muck around with customer bank accounts. These machinations generated effectively no revenue for the bank, and annoyed customers, but they did generate income for the employees — and eventually, a stinging, expensive rebuke from the Consumer Financial Protection Bureau.

[...]

I could reel off examples endlessly: purchasing managers who have cozy arrangements to buy a certain amount of product from their vendors in December, and ship it back in January, in order to help some sales director make quarterly targets … universities that compete to turn away as many students as possible, because doing so makes them rise in the U.S. News rankings … law schools that hired their own graduates for temporary make-work jobs in order to boost the schools’ employment statistics. All metrics will be gamed, and the games always have costs. And when the metrics involve our health, those costs can be very high indeed.

Health care and education are particularly ill-suited to management-by-measurement:

Most companies are dealing with reasonably standardized inputs, which can be turned into measurable outputs. But the less you deal with things, and the more you deal with human beings, the less useful productivity metrics are. Human bodies and human minds are both highly variable and immensely complicated. When you are working on them, it is hard to know how much of the final result is a result of your labor, and how much can be credited to the qualities of your initial starting material.

So when we measure outputs, we are getting at best a very distorted picture of the value of the services provided. Modern industrial management is simply not designed for this sort of situation. If you feed human inputs into a machine system, you are quite likely to grind up the humans in the process.

You are not allowed to be a selfish individual

Thursday, January 18th, 2018

Three weeks after college, Karin McQuillan flew to Senegal, West Africa, to run a community center in a rural town — which was, in the words of the Peace Corps doctor, “a fecalized environment“:

In plain English: s— is everywhere. People defecate on the open ground, and the feces is blown with the dust – onto you, your clothes, your food, the water. He warned us the first day of training: do not even touch water. Human feces carries parasites that bore through your skin and cause organ failure.

We may have a shorter, pithier term for that in English. I don’t know if the French have a term with the same je ne sais quoi:

Last time I was in Paris, I saw a beautiful African woman in a grand boubou have her child defecate on the sidewalk next to Notre Dame Cathedral. The French police officer, ten steps from her, turned his head not to see.

Senegal was not a hellhole, though:

Very poor people can lead happy, meaningful lives in their own cultures’ terms. But they are not our terms. The excrement is the least of it. Our basic ideas of human relations, right and wrong, are incompatible.

As a twenty-one-year-old starting out in the Peace Corps, I loved Senegal. In fact, I was euphoric. I quickly made friends and had an adopted family. I relished the feeling of the brotherhood of man. People were open, willing to share their lives and, after they knew you, their innermost thoughts.

The longer I lived there, the more I understood: it became blindingly obvious that the Senegalese are not the same as us. The truths we hold to be self-evident are not evident to the Senegalese. How could they be? Their reality is totally different. You can’t understand anything in Senegal using American terms.

Take something as basic as family. Family was a few hundred people, extending out to second and third cousins. All the men in one generation were called “father.” Senegalese are Muslim, with up to four wives. Girls had their clitorises cut off at puberty. (I witnessed this, at what I thought was going to be a nice coming-of-age ceremony, like a bat mitzvah or confirmation.) Sex, I was told, did not include kissing. Love and friendship in marriage were Western ideas. Fidelity was not a thing. Married women would have sex for a few cents to have cash for the market.

What I did witness every day was that women were worked half to death. Wives raised the food and fed their own children, did the heavy labor of walking miles to gather wood for the fire, drew water from the well or public faucet, pounded grain with heavy hand-held pestles, lived in their own huts, and had conjugal visits from their husbands on a rotating basis with their co-wives. Their husbands lazed in the shade of the trees.

Yet family was crucial to people there in a way Americans cannot comprehend.

The Ten Commandments were not disobeyed – they were unknown. The value system was the exact opposite. You were supposed to steal everything you can to give to your own relatives. There are some Westernized Africans who try to rebel against the system. They fail.

We hear a lot about the kleptocratic elites of Africa. The kleptocracy extends through the whole society. My town had a medical clinic donated by international agencies. The medicine was stolen by the medical workers and sold to the local store. If you were sick and didn’t have money, drop dead. That was normal.

So here in the States, when we discovered that my 98-year-old father’s Muslim health aide from Nigeria had stolen his clothes and wasn’t bathing him, I wasn’t surprised. It was familiar.

In Senegal, corruption ruled, from top to bottom. Go to the post office, and the clerk would name an outrageous price for a stamp. After paying the bribe, you still didn’t know it if it would be mailed or thrown out. That was normal.

One of my most vivid memories was from the clinic. One day, as the wait grew hotter in the 110-degree heat, an old woman two feet from the medical aides – who were chatting in the shade of a mango tree instead of working – collapsed to the ground. They turned their heads so as not to see her and kept talking. She lay there in the dirt. Callousness to the sick was normal.

Americans think it is a universal human instinct to do unto others as you would have them do unto you. It’s not. It seems natural to us because we live in a Bible-based Judeo-Christian culture.

We think the Protestant work ethic is universal. It’s not. My town was full of young men doing nothing. They were waiting for a government job. There was no private enterprise. Private business was not illegal, just impossible, given the nightmare of a third-world bureaucratic kleptocracy. It is also incompatible with Senegalese insistence on taking care of relatives.

All the little stores in Senegal were owned by Mauritanians. If a Senegalese wanted to run a little store, he’d go to another country. The reason? Your friends and relatives would ask you for stuff for free, and you would have to say yes. End of your business. You are not allowed to be a selfish individual and say no to relatives. The result: Everyone has nothing.

The more I worked there and visited government officials doing absolutely nothing, the more I realized that no one in Senegal had the idea that a job means work. A job is something given to you by a relative. It provides the place where you steal everything to give back to your family.

I couldn’t wait to get home. So why would I want to bring Africa here?

(Hat tip à mon père.)

Free advertising for mass killers

Tuesday, January 16th, 2018

Tyler Cowen cites a study estimating the value of the media attention given to mass killers:

This study compared perpetrators of seven mass killings during 2013–2017 with more than 600 celebrities over the same time period. Findings indicate that the mass killers received approximately $75 million in media coverage value, and that for extended periods following their attacks they received more coverage than professional athletes and only slightly less than television and film stars. In addition, during their attack months, some mass killers received more highly valued coverage than some of the most famous American celebrities, including Kim Kardashian, Brad Pitt, Tom Cruise, Johnny Depp, and Jennifer Aniston. Finally, most mass killers received more coverage from newspapers and broadcast/cable news than the public interest they generated through online searches and Twitter seems to warrant. Unfortunately, this media attention constitutes free advertising for mass killers that may increase the likelihood of copycats.

Yes, dolphins are smart

Friday, January 12th, 2018

The more we study dolphins, the brighter they turn out to be:

At the Institute for Marine Mammal Studies in Mississippi, Kelly the dolphin has built up quite a reputation. All the dolphins at the institute are trained to hold onto any litter that falls into their pools until they see a trainer, when they can trade the litter for fish. In this way, the dolphins help to keep their pools clean.

Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on. This behaviour is interesting because it shows that Kelly has a sense of the future and delays gratification. She has realised that a big piece of paper gets the same reward as a small piece and so delivers only small pieces to keep the extra food coming. She has, in effect, trained the humans.

Her cunning has not stopped there. One day, when a gull flew into her pool, she grabbed it, waited for the trainers and then gave it to them. It was a large bird and so the trainers gave her lots of fish. This seemed to give Kelly a new idea. The next time she was fed, instead of eating the last fish, she took it to the bottom of the pool and hid it under the rock where she had been hiding the paper. When no trainers were present, she brought the fish to the surface and used it to lure the gulls, which she would catch to get even more fish. After mastering this lucrative strategy, she taught her calf, who taught other calves, and so gull-baiting has become a hot game among the dolphins.

Dolphins are clever in the wild, too:

In an estuary off the coast of Brazil, tucuxi dolphins are regularly seen capturing fish by “tail whacking”. They flick a fish up to 9 metres with their tail flukes and then pick the stunned prey from the water surface. Peale’s dolphins in the Straits of Magellan off Patagonia forage in kelp beds, use the seaweed to disguise their approach and cut off the fishes’ escape route. In Galveston Bay, Texas, certain female bottlenose dolphins and their young follow shrimp boats. The dolphins swim into the shrimp nets to take live fish and then wriggle out again – a skill requiring expertise to avoid entanglement in the fishing nets.

Dolphins can also use tools to solve problems. Scientists have observed a dolphin coaxing a reluctant moray eel out of its crevice by killing a scorpion fish and using its spiny body to poke at the eel. Off the western coast of Australia, bottlenose dolphins place sponges over their snouts, which protects them from the spines of stonefish and stingrays as they forage over shallow seabeds.

This earns a “wow”:

At a dolphinarium, a person standing by the pool’s window noticed that a dolphin calf was watching him. When he released a puff of smoke from his cigarette, the dolphin immediately swam off to her mother, returned and released a mouthful of milk, causing a similar effect to the cigarette smoke.

Their ability to learn a language is impressive:

By human definition, there is currently no evidence that dolphins have a language. But we’ve barely begun to record all their sounds and body signals let alone try to decipher them. At Kewalo Basin Marine Laboratory in Hawaii, Lou Herman and his team set about testing a dolphin’s ability to comprehend our language. They developed a sign language to communicate with the dolphins, and the results were remarkable. Not only do the dolphins understand the meaning of individual words, they also understand the significance of word order in a sentence. (One of their star dolphins, Akeakamai, has learned a vocabulary of more than 60 words and can understand more than 2,000 sentences.) Particularly impressive is the dolphins’ relaxed attitude when new sentences are introduced. For example, the dolphins generally responded correctly to “touch the frisbee with your tail and then jump over it”. This has the characteristics of true understanding, not rigid training.

I’m reminded of that damn bird, Alex the African Grey parrot, who was no birdbrain, and of Rico the Border Collie.

Iran is dirt poor

Saturday, January 6th, 2018

Iran is dirt poor, Edward Luttwak reminds us:

I recently saw Iran’s general poverty at first-hand driving through one of Iran’s supposedly more prosperous rural districts. In an improvised small market next to a truck stop, several grown men were selling livestock side by side, namely ducks. Each had a stock of three or four ducks, which looked like their total inventory for the day.

That is what happens in an economy whose gross domestic product computes at under $6,000 per capita: very low productivity, very low incomes. The 500,000 or so Iranians employed in the country’s supposedly modern automobile industry are not productive enough to make exportable cars: Pistachio nuts are the country’s leading export, after oil and petroleum products.

[...]

Much of the economy is owned by bonyads, Islamic foundations that pay modest pensions to war widows and such, and very large amounts to those who run them, mostly clerics and their kin. The largest, the Mostazafan Bonyad, with more than 200,000 employees in some 350 separate companies in everything from farming to tourism, is a very generous employer for its crowds of clerical managers.

That is why the crowds have been shouting insults at the clerics—not all are corrupt, but high-living clerics are common enough to take a big bite out of that theoretical $6,000 per capita.

But the largest cause of popular anger is undoubtedly the pasdaran, a.k.a the Islamic Revolutionary Guards (IRGC), an altogether more costly lot than the several hundred aghazadeh or tens of thousands of high-living clerics.