Ideological overconfidence is a trojan horse for entitlement

I re-watched “The Big Lebowski”. I have watched this movie many times, but like all great films, you often find yourself appreciating new things with each re-watch. Usually these are simply small, but interesting details that simply slipped by your attention previously, but in this case it was a broad theme that smacked me in the face as if I stepped on a rake. The Dude is the Buddha.

Spoilers, both narrative and spiritual, are ahead

Let me back up. For those unfamiliar with the film, there are four parties relevant to this story. Jeffrey Lebowski (old rich guy), three nameless German nihilists, Walter Sobchak, and The Dude. Jeffrey Lebowski’s trophy wife, Bunny, runs off to Vegas unannounced. Hi-jinks ensue.

The Nihilists falsely claim to have kidnapped her and demand ransom. Jeffrey wants Bunny to go away so he can better hang on to the money she is frittering away, so he fills a briefcase with deadweight and gives it to the Dude to deliver in the hopes the kidnappers will be angered and make his problem go away. Walter becomes privy to this exchange and swaps out “a ringer for a ringer”, hoping to keep the ransom money for himself. A perfect triangle of scams.

All three scamming parties are driven by selfish entitlement and all three rationalize it behind blustery, paper thin philosophies. The Nihislists believe in a chaotic universe absent responsibility, morality, or ethics. They simply want a thing so they try to take it. Jeffrey Lebowski casually gives in to his own avarice and greed to push Bunny out, rationalized by the belief that he has earned his wealth through “achievement”. Walter Sobchak wants to take the money because he has been wronged by fate and society, an unloved Veteran whose reactionary ethos assures him that he has earned anything he subsequently takes through past valor. Over the course of the film all three rationalizations are found to be more or less fabricated, their philosophical fascades disintegrating as soon as the objects of their desire prove out of reach.

Only the Dude remains whole and unblemished. His innocence isn’t shielded by superior philosophy, morality, or intelligence. He remains above the destruction and greed simply because of his lack of desire. A burned out hippie of nearly zero consequence, his lines are the only reliable words spoken throughout the story simply because he doesn’t want anything more than to go bowling and, if possible, recover a lost rug. It is the emptiness of The Dude that preserves his soul.

Too much unbending confidence in your own philosophy often betrays a far starker reality. You don’t just want something, you want a reason that you deserve it.

Anyway. Go a little easier on each other. Make yourself a White Russian tonight. Take a moment to reflect on my remedial cinema film analysis and how sure you really are. About any of this.

Maybe authoritarianism doesn’t scale

Many of us, myself included, were fretting about role that surveillance technologies would play in creating more resilient authoritarian regimes, but we’re starting to see the cracks forming in multiple regimes all at once.

I don’t want to try to share in not-as-yet-achieved victories half way around the globe as innocent civilians are still being killed and imprisoned while bearing no personal risk myself. That said, I can’t help but observe that surveillance technology seems to offer relatively little for maintaining a regime. In fact, it may be the case that all it serves to do is accelerate government overeach and eventual public resistance.

Sureveillance doesn’t seem to actually grant any additional scale to authorities, the increasing the population a smaller group in power might control. It may, however, accelerate the rate at which the public achieves a critical mass of awareness of not just transgressions by authorities, but the true beliefs of their peers regarding those transgressions. Social media and other technologies seem to be accelerating the process through which preference falsification is being unraveled.

The simpler observation, however, is that modern information technology appears to have given some authoritarian regimes the misguided belief that simply being aware of resistance earlier, and reacting ruthlessly, would be sufficient to maintain greater control and reach. Instead, this unwarranted confidence has simply greased slide to overreach. When a bunch of stormtroopers show up to force people to work, the broader public arrives at a dark calculus all the faster: resisting is no riskier than not resisting in the short run, resisting is likely less risky in the long run.

There’s no shortage of fiction reminding us that authority is brittle. Even in a world of imagined sci-fi technology, absent a dystopian robot apocalypse, controlling humans using other humans remains an analog mechanism where the returns to scale remain gratefully constant. Sometimes a small number of people can achieve control over a larger number, but their days are always numbered. The technology that we feared might tilt the balance of this equation may have, in fact, merely sped up the timeline.

My BlockFi Crypto Account Is Frozen Due to Monster FTX Exchange Blowup

About a year ago, I posted some articles touting the use of BlockFi as an alternative checking account. It paid around 9% interest (this was back when interest rates were essentially zero on regular savings accounts), and allowed withdrawal or deposit of funds at any time. Nice. BlockFi is associated with respected firm Gemini, and (unlike many crypto operations) is U.S. based, with consistent formal auditing. They earned interest on my crypto by lending it out to “trusted counter-parties”, always backed by extra collateral. What could possibly go wrong?

In July I wrote about a big cryptocurrency meltdown, in which a number of medium-sized players went bust.  At that time, BlockFi assured its customers that its sound business practices put it above the fray, no problemo. They did make it through that juncture OK. But I withdrew a third of my funds, just to be on the safe side.

The huge news in crypto this past week has been the sudden, total implosion of major exchange FTX (more on that below). FTX is a major business partner with BlockFi. No worries, though, as of Tuesday of last week,  BlockFi COO Flori Marquez tweeted that “All BlockFi products are fully operational”.  Then the hammer dropped: On Thursday (11/10), BlockFi froze withdrawals, due to complications with FTX. My remaining crypto is stranded, most likely for years of legal proceedings, and I may never get it all back. I’m not going to starve, but the amount is enough to hurt.

In this case, I don’t really blame BlockFi – by all accounts, they have been trying to run an honest, responsible business. Before last week, nobody had much reason to think that FTX was totally rotten.  My bad for not connecting the FTX-BlockFi dots earlier, and pulling out more funds when I had the chance.

The Great FTX Debacle

The star of this show is Sam Bankman-Fried, the (former) head of FTX:

James Bailey posted here on EWED on the FTX crash last week. CoinDesk author David Morris summarized the downfall of Bankman-Fried’s crypto empire:

FTX and Bankman-Fried are unique in the stature they achieved before self-immolating. Over the past three years, FTX has come to be widely regarded as a reputable exchange, despite not submitting to U.S. regulation. Bankman-Fried has himself become globally influential, thanks to his thoughts on cryptocurrency regulation and his financial support for U.S. electoral candidates – not necessarily in that order.

Facts first uncovered by CoinDesk played a major role in the events of the past week. On Nov. 2, reporter Ian Allison published findings that roughly $5.8 billion out of $14.6 billion of assets on the balance sheet at Alameda Research, based on then-current valuations, were linked to FTX’s exchange token, FTT.

This finding, based on leaked internal documents, was explosive because of the very close relationship between Alameda and FTX. Both were founded by Bankman-Fried, and there has been significant anxiety about the extent and nature of their fraternal dealings. The FTT token was essentially created from thin air by FTX, inviting questions about the real-world, open-market value of FTT tokens held in reserve by affiliated entities.

Negative speculation about a financial institution can be a self-fulfilling prophecy, triggering withdrawals out of a sense of uncertainty and leading to the very liquidity problems that were feared.

Customers started a “run on the bank”, withdrawing billions of dollars of assets, leading to total insolvency of FTX:

The Financial Times reported that FTX held approximately $900 million in liquid crypto and $5.4 in illiquid venture capital investments against $9 billion in liabilities the day before it filed for bankruptcy.

If FTX had been run as an honest exchange, this withdrawal should not have been too much of a problem – – just give customers back the coins they had deposited with FTX. Apparently, though, FTX had taken customer assets and transferred them over to a sister company, Alameda, to trade with. The valuable customer crypto assets left the FTX balance sheet, and were largely replaced by the self-generated (and now nearly worthless) FTT token:

It remains worryingly unclear, though, exactly why even such a dramatic rush for the exits would have led FTX to seek its own bailout. The exchange promised users that it would not speculate with cryptocurrencies held in their accounts. But if that policy was followed, there should have been no pause to withdrawals, nor any balance sheet gap to fill. One possible explanation comes from Coinmetrics analyst Lucas Nuzzi, who has presented what he says is evidence that FTX transferred funds to Alameda in September, perhaps as a loan to backstop Alameda’s losses.

It doesn’t help that on Friday (11/11) some $477 million was outright stolen from FTX wallets. (The Kraken exchange said it has identified the thief and are working with law enforcement).

Where does the FTX saga go from here? There seems little in the way of assets left for the bankruptcy judge to distribute to former customers and creditors. In the case of BlockFi, they are dependent on a $400 million line of credit extended to them by FTX back in June, to keep operating. And who knows how much of BlockFi assets were stored with FTX – – since FTX was to be their white knight, BlockFi would not be in a position to withdraw deposits from FTX like other customers did.

I predict that nothing really bad will happen to Bankman-Fried and his buddies who ran this thing. Although its operation was apparently dishonest, it is not clear how much is subject to U.S. federal or state legal jurisdiction. Bankman-Fried and friends ran their empire from a big apartment suite in the Bahamas. Plus, he is pretty well-connected. Beside his massive campaign contributions, his business and sometimes romantic partner Caroline Ellison (she is CEO of Alameda) is the daughter of MIT professor Glenn Ellison, the former boss (as colleagues at MIT) of the U.S. Securities and Exchange Commission chair Gary Gensler. These relations were captured in an impish tweet by Elon Musk:

The long tail of American politics

The Democratic party won more elections than was broadly anticipated last week, though results fell roughly within a standard deviation of the highest regarded forecasts. There were, however, some patterns worth noting. Election deniers seemed to have systematically underperformed expections. Conservative democrats seem to have overperformed expectations, sometimes radically so.

Putting aside forecasts based on polls, make no mistake: the Democrats should have been slaughtered in these elections. High inflation, high gas prices, a frozen housing market, a declining stock market? I’m not Ray Fair, but his inflation+income+incumbency model has been accurately forecasting elections for 50 years for a reason. If Democrats overperformed as massively as it appears they have, then the most likely explanation is that Republicans did something wrong.

First, as is tradition, let us render tribute unto the median voter theorem by whispering Anthony Downs name before taking a sip of coffee. Now, again as is tradition, let us cast mild aspersions upon those who declared the theory obsolete at best, comically reductive and coarse at worst, a relic of a less sophisticated era of social science. Yes, politics exists in more than just the single liberal-conservative dimension and we are all characterized by multi-dimensional preferences. But the liberal-conservative spectrum is the dominant political shorthand for a reason. If politics really were a played out on a single dimension with single-peaked preferences, then the candidate closest to the preferences of the median voter would always win. That has to count for something.

But that’s all just (mildly silly) social scientific gloating. What might we have learned, if anything, from the last two elections? What I think I’ve learned is that the elections– not the discourse, elections, are moving to the center relative to six years ago, and the forces behind it are the same ones that gave us Amazon and the golden age of television. The fixed costs of serving the long tail of consumer demands.

Quick refresher. Amazon succeeded as a retailer not by selling you the 90% of things that everyone else buys, but by offering the 10% of things that you want that relatively few other people want. Once you enter into the long tail of consumption, its extremely difficult for a brick-and-mortar to offer everyone what they want because the opportunity cost of stocking and shelving are to high relative to the small number they will sell. Similarly, in the age of 5 channels, the opportunity cost of niche entertainment is too high. You can’t make Mad Men for 2 million people when you have the potential to air a show that is close enough to the median viewer to grab the attention of 40 million. When the marginal cost of a product listing approaches zero, though, when a 500 channels cut audiences into thousands of slices, however, the math changes. Now the opportunity lies not in serving the lowest common denominator, but giving each person exactly what they want. That’s easier said than done, of course, just ask current Netflix shareholders.

And this appears to be exactly that is happening in the political discourse. The conversation around politics is becoming more niche and, yes, in many cases more extreme. Yes, we are increasingly living in echo chambers served by content producers more than happy to produce bespoke information bundles that will confirm your pre-existing beliefs at the highest possible pitch and volume. But elections are not the discourse. Elections are still played out in a one person, one vote construct and politics is still reducible to a single coarse dimension. Politicians have incentive to incite the id of voters, especially their base, to rile them up to turn out in greater numbers, but that is not without cost. Aligning yourself with your party’s id distances you from the true median voter, who through the forces pushing and pulling political brands will always find herself wary of the most extreme elements of clubs she isn’t particularly interested in joining.

Parties continue to exist and thrive for the same reason that Amazon does. Super-niche product sellers and echo chambers can thrive independently, but when the moment of aggregation arrives, scale matters. Where decision-making bottle necks, either with a credit card or a ballot box, there’s an enormous advantage to having a brand that lowers information costs and mitigates risk. Amazon wins because it’s boring. Amazon mitigates the risk of buying from a million niche producers, some of whom you might only buy from once in your life, but at the end of the day you know everything is almost definitely going to show up. Democrats won more last week than they should have because they’re boring. Voters knew the candidates, some of whom they may never vote for again, would show up to govern and maintain longstanding institutions. The Republican party, in their independent efforts to serve specific niches within their coaltition, let their collective brand deteriorate and, in doing so, failed to mitigate the risk facing the median voter.

Republican’s got caught up serving the discourse, fractured across a thousand channels, but elections aren’t carried out on a thousand channels. There’s still just one ballot box in every election. The median voter theoreom may be based on an unchanging analog model, but so is our democracy.

New Double Auction Paper

This weekend I am at the Economic Science Association meeting.

Most of the economists in this group use experiments as part of their empirical research. In this post I will highlight some recently published work that is in the tradition of Vernon Smith, who influenced all of us so much.

Martinelli, C., Wang, J. & Zheng, W. Competition with indivisibilities and few traders. Experimental Economics (2022). https://doi.org/10.1007/s10683-022-09772-9

Abstract: We study minimal conditions for competitive behavior with few agents. We adapt a price-quantity strategic market game to the indivisible commodity environment commonly used in double auction experiments, and show that all Nash equilibrium outcomes with active trading are competitive if and only if there are at least two buyers and two sellers willing to trade at every competitive price. Unlike previous formulations, this condition can be verified directly by checking the set of competitive equilibria. In laboratory experiments, the condition we provide turns out to be enough to induce competitive results, and the Nash equilibrium appears to be a good approximation for market outcomes. Subjects, although possessing limited information, are able to act as if complete information were available in the market.

This small excerpt from their results shows a market converging toward equilibrium over time, under different treatment conditions. With some opportunities for practice and feedback, agents create surplus value by trading.

Figure 4 plots the average efficiency in each round in the four treatments. Efficiency is defined as the percentage of the maximum social surplus realized. … learning takes longer under the clearing house institution; hence, average efficiency under the clearing house institution presents a stronger upward trend over time. Under the clearing house institution, the average efficiencies start at levels lower than under the double auction institution, and remain statistically lower in the second half of the experiment. Nevertheless, we can observe from Fig. 4 that the upward trend of the efficiencies in clearing house treatments persist over time, and at the end of the experiment, the efficiency levels from the two institutions are close.

The Price of Food: Farm to the Table

If you’re like me, then you are very fond of food. What determines the price of food? Supply and demand of course!

We can consider food as a commodity because just about anyone can buy and sell it. Almost all foods have partial substitutes. Therefore, the long-run price in the competitive market for food is largely dictated by the marginal cost. Demand has an impact on the price only in the short run.

A long-run driver of food prices are the costs that food producers face. The US Bureau of Labor Statistics divides the Producer Price Index into multiple categories that are relevant for a variety of sectors and points within the production process. Below is a table of the most fundamental, relatively unprocessed farm products and their weight among all farm products in December 2021. Cotton is a relatively large component for farm products even though it’s not a food and I include it for completeness. Fruits, veggies, and nuts makeup the overwhelming proportion of the cost of farm products. I was at first surprised that grains composed such a small proportion. But, being dirt cheap, it makes sense.

We all know that inflation has been in the news. It’s been elevated since the second quarter of 2021. Consumer prices tend to lag producer prices. One indicator of where food prices will be in the near future is where the producer prices are now. Below is a graph that displays the above seasonally adjusted farm product prices since the start of 2021*.

Continue reading

On Elon, Twitter, and updating priors

I am not interested in ad hominem attacks, being a part of an internet mob, or signaling group affliation by attacking the internet’s “main character” of the day. But a significant determinant of our (hopefully always evolving) world views are how we feel about individuals who are prominent in the discourse, endowed with political power, and influential in markets. Not necessarily because we want to align or distance our selves from them as markers on a political mapping, but because at the core of our sensibilities are what we believe to be the optimal constraints and opportunities that shape the wielding of power.

<invokes best middle-aged-dude-from-a-midwestern-city-with-a-mustache accent>

Which brings me to this friggin’ guy:

My beliefs regarding Elon Musk, a man I have never met nor heard speak in person, as of twelve months ago could be summarized as such:
  1. Made prescient investment in PayPal. Could be luck, but it took some real insight to see the merits of PayPal over other transactions start-ups at the time, so he’s probably a very keen observer of nascent tech companies and talent.
  2. Tesla was run with a deep understanding that the cars would get the attention, but the money was to be made in battery innovation while circumventing the autodealers lobby and their fully-entrenched protections against market entrants. Clever.
  3. He’s excellent at getting attention, even if it isn’t always positive attention. Not sure he knows the difference. Not sure it matters.
  4. Obsessive workaholic, possibly to the point of some mild self-destructive tendencies. Decent chance he leverages prescription amphetamines when his body and mind can’t hold onto a task as long as his ego would prefer.
  5. Funnier than most people think he is. Not as funny as he thinks he is.*
  6. Highly likely (>98%) to be very, very smart. Likely (>75%) to be an excellent engineer. Highly likely (<98%) to be an excellent pitchman.

Since then I’ve listened to people call him dumb, malevolent, and childish. I mostly disregarded those as “social media ideas”, the kind of only lightly-considered opinions that are fun to have, grant you the light dopamine drip of both feeling superior to a famous billionaire while also implicitly reminding listeners that any deficiency in your own status is at least in part a product of the unfairness and stupidity of the world. It all struck me as kind of silly and deeply unconsidered. To this point – if we accept the premise that Elon Musk is a malevolent person, then we also have to accept that the market incentives combined with targeted government subsidies harnessed the powers of a smart, dedicated, malevolent person towards the creation and management of a company that measurably reduced the amount of carbon in the atmosphere. Are there a 100 people on the planet who can be credited with a greater impact mitigating global climate change? Are the fiercest critics of Elon Musk also willing to stipulate that the (neoliberal? new liberal?) melding of markets and governance can manipulate horribly selfish people to dedicate their lives to producing massive public goods?

So yeah, my estimation was pretty strong. Then he he decided to buy Twitter. That, and his subsequent public statements, have forced my periodic reconsideration.

First, while owning Twitter could certainly be considered the stewardship of a valuable public good, it seems unlikely to be a good investment relative to the price paid. Maybe more importantly, it seems outside his comparative advantage as an investor. It’s not a moonshot and there is no engineering marvel behind the customer-facing product. It is big and already expensive, so even if it plays out incredibly well over the next ten years, it yields, what, a 15% annual return?

Second, if there’s going to be a political victory, it’s not going to happy via lobbying or creative circumvention. It will always come back to free speech, which means if a conflict happens it will be settled in the courts over many, many years. Patience and constitutional nuance do not strike me as in his comparative advantage.

It might not matter that he is getting a lot bad attenion, but it does seem like he is getting, and engaging with, too much attention. How much of his bandwidth is actually left for the other companies he ostensibly runs?

He’s saying a lot of weird stuff. Or maybe the weird fraction of his public persona is just getting a greater share of the attention. I can’t tell.

If he’s not building something or re-engineering something, he must be selling something. What is he selling? The only thing I can come up with is that he’s selling himself, just not to me. Who’s he selling himself to?

My updated beliefs, as of 11-6-2022:

  1. He’s probably a very keen observer of nascent tech companies and talent, but has become distracted from that comparative advantage by ego and age.
  2. Tesla was run with an eye towards engineering, subsidy, and sales opportunities, but that has left him overconfident in his ability to manufacture an engineering opportunity by dint of his own interest in something.
  3. He’s still excellent at getting attention, even if it is polarizing attention that will have negative effects on how large swaths of the population feel about him. He’s acting more like a politician than an executive.
  4. Obsessive, and not just about work.
  5. He’s still funnier than most people think he is, but his sense of humor is becoming meaner. Some people like cruelty and their admiration comes with consequences.
  6. Likely (>85%) to be very, very smart, but there is a growing probability (<15%) that what he is actually exceptional at is taking credit where brilliance has occurred. I’ve met a non-trivial number of people in my life who were good at “playing the part” of the genius, full of quirks and big statements and bad hair, whose real gift was standing in front of other people’s contributions. Of course, there is a certain sales and political genius in manufacturing the appearance of deep foresight.

Now that I’ve impugned (probabilistically, at leat) the capacities of a highly accomplished individual who has never done any personal harm to me or been (to my knowledge) ever accused of anything explicitly destructive, I should at least note why. I think it is important to make a regular practice of reconsidering our heroes and villains in the public sphere. It’s just good political hygiene. The sheer quantity of narratives we consume, particularly the infovores among us, is simply too much to continually process without constructing heuristic reductions of public figures: genius engineer, corrupt monster, generous savior, doddering fool, etc. And, to be clear, I think those heuristic models are probably necessary just to stay mentally afloat, but if we’re going to do that we need to update those models regularly.

I used to think Elon Musk was a tech genius whose confidence was earned and of limited consequence. Now I think he’s a tech very-smart-guy whose overconfidence has yielded an investment decision with potentiallly disasterous consequences for both his own wealth and the broader discourse in our country. Who knows what I’ll think of him next week or if I’ll even think of him at all? Maybe Elon will save an island of puppies while a genius he casually fired resurrects Tumblr into the pivotal social media of a new American golden age. We’ll have so much to reconsider!

*To be fair, neither am I.

Must-Have Practical Gifts

My wife and I have different preferences for the kind of gifts that we like to receive. She likes earrings, flowers, massages, and electronics. I like hand tools, power tools, and any other item that makes domestic life more efficient. I can really appreciate a nice new pair of dockers or a button-down.

If you have a dad, husband, or anyone else in your life who appreciates practical gifts, then this list is for you. Below are four gift ideas that are sure to make the practical person in your life very happy – even if they may not be what you would want to receive. I’ve personally vetted all of the below items, so I can attest to the satisfaction that they are sure to provide that hard-to-shop-for person.

1)  Custom Length Velcro

Is your life in disarray? Are your cords and chargers in disarray? Then look no further. Nothing compares to the knowledge that the nest of cords behind your wall unit is no more. Use Velcro to bind and truncate your computer cords and your kitchen appliance cords. Do you have a drawer or box full of tangled extras? Velcro is nice because you can cut it to your custom length and reuse it with minimal loss of life. You can also use it in electrical applications or in the cabin of your vehicle. Do you have a phone charger beside your bed that keeps falling on the ground? Just Velcro it to the nightstand lamp and it will stay exactly where you want it. AND, because it’s reusable, you can easily remove it and keep the cords in your luggage nice and compact.

2) Minute Soil

Growing stuff is hard. But flowers, greenery, or even vegetables are nice. Yes, I’m basically recommending that you give someone dirt. But it’s awesome dirt. There’s this stuff called coconut coir. It’s coconut fiber that’s been compressed into a small disc or brick that’s ideal for shipping and delivery. Just add water and you’ve got some fancy dirt just waiting for an application. Coconut coir is all plant-based material, drains well, and it’s easy to store. You may not think of dirt as something that has a shelf life, but regular potting soil can definitely grow some unsavory things if you let it sit for long enough. Coconut coir is the solution to all of your spur of the moment small-scale horticultural endeavors.

3) Qwix Mix

Shipping items to our homes has been a game changer for shopping. But home delivery is not sensible for low priced heavy items like some liquids. My family was frequently running out of windshield wiper fluid and we’d end up stopping at a grocery store and overpaying. But no more! Qwix Mix is a windshield wiper fluid concentrate. Just an ounce in addition to a gallon of water saves us unplanned trips, high prices, and the storage cost of purchasing gallons of fluid ahead of time. I can’t vouch for the de-icing formulation, but the southern climate formula does exactly what it’s supposed to do.

4) Ufree Hair Clippers

Since the Covid recession, many of us have taken up our hand at cutting hair at home. For a while, we were borrowing a neighbor’s clippers. They were loud and had a short cord. But I’ve since purchased Ufree clippers and they are so much more convenient. They’re quiet, cordless, charge with a USB cord, and have a battery level display. But the battery lasts so long that you don’t even need to think about it. This kit comes with a beard trimmer, several guards, and a cape (throw the cape away, it’s bad). The clippers are metal and have some heft to them. Several colors are available – they come in black, silver, and gold finishes. But how can one not choose the gold ones?

That’s my list of great gifts for practical people. IDK your gift limit, but if you buy all 4 of these gifts you’ll spend about $100. That might leave room left over for stocking stuffers and chocolate.

(We’re not paid for any of these recommendations. But using our links is always helpful.)

Harness your compulsions

Every year the writers on this blog each recommend a product or gift. My recommendation for gifts to others remains the same: buy them two hours. But what about yourself?

My advice for you is this: what are the things you are compelled to do that runs against the preferences of your past and future selves? Make that list in your head or on paper. Okay, now make a second list of the things your past and future selves wish that present you would do more often? Great.

Are there activities on that list that you can bundle together into a single activity?

For example, and directly from my personal life, I am a middle-aged man who can get wrapped up in video games to the detriment of the rest of his life. I’m pretty sure that 10 hours in a given week would never make the grade of “video game addiction”, where whole lives are left to erode into dust while a soul spends every waking our gaming. But 10 hours is really costly in my current life.

Like, I don’t know, very nearly every middle-aged American, I should exercise more. We all know this, that’s why we pay for memberships in gyms we never use and buy exercise equipment that finds greater use drying our clothes.

Rather than purge my house of video games, I have instead located them strategically in a room with no chairs save an exercise bike and no TV save a one in an elevated position. I have two choices: I can either stand while I play or sit on the bike. Once on the bike, I have two choices: I can pedal or sit there stewing in my own sloth.

I bike 3-4 hours a week now.

Now, let’s be clear. I’m not telling you to buy a Playstation, TV, wallmount, and an exercise bike as the solution to your deficiency of exercise.* That’s a pretty privleged set of advice to give, especially the presumption you have the living space for all of that. What I am saying, however, is that if you already have a video game system that you know you use too much and an exercise bike you know you use too little, you may find a benefit in bundling the two together in a manner that your future self cannot easily un-bundle. [Sidenote: if you’re only short the bike, stationary bikes are (relative to my expectations), shockingly cheap. If you’re short on space, get one that folds so you can lean it against a wall while you are not using it.]

We all have our compulsions, the activities we can’t resist. Most of us also have the beneficial activities that we know will improve our lives, we can’t just through that initial inertia. Bundle them together. Draw in your sketchbook at an easel set up where you watch crappy reality TV. Keep the good whiskey and glasses wehre you write your weekly blog entries. Rack up 100 hours of Civilization 6 while doing those lying on a yoga mat doing those boring exercises your physical therapist prescribed.

Managing ourselves is often a tug of war between who we wish we wanted to be and who we actually want to be. If there is an opportunity to align the two a little better, that’s worth investing in. Now if you any of you know of a way I can harness my tragi-comic addiction to Cheetos into greater research productivity and physical strength, I’m all ears.

*I’m also not not telling you to buy those exact things.

Elite private schools and the rents of early talent filters

An email from a (no doubt loyal) reader about my post last week:

“I’m a big believer that – for all the problems with our educational system – it’s a strength of the US that it’s possible to be a late bloomer and still succeed. But your piece also resonated with me because I’ve been revisiting  my thoughts about [Thomas Jefferson High School for Science and Technology of Northern Virginia, a public magnet school] through all of the recent controversies over promoting diversity. (Not my topic here. I’m for it, but that’s a whole other discussion.)

I will state up front that my opinion is not a popular one among the TJ crowd (as evidenced by the bemused reactions it got at my 25 year reunion), but here goes: 

I believe people are using the wrong baseline when they point to the success of TJ – most wonder “what would my life have been like if I hadn’t gotten into TJ?”   but I think the proper question is “what would my life have been like if TJ didn’t exist?” 

I think that is well observed, but lets unpack it a bit more. The broader framing of “Would admitted students lives be different if schools like TJ didn’t exist?” is an extremely useful one, especially if you compare them to the elite private schools whose entire sales pitch boils down to “For $60K a year we’ll give your child a real shot at getting into the Ivy League or the Supreme Court“. When that is your pitch and your price tag, schools have no choice but to invest significant resources ensuring that their graduates have not just an advantage, but pre-designated slots in the incoming classes of the elite undergradute institutions. They aren’t passively part of a filter system, they are actively working to ensure that their admissions process for those 13 or younger serve as a talent filters for the Ivy League.

Full Disclosure: I attended the Thomas Jefferson High School for Science and Technology in the mid-90s. It was no doubt less competitive to get in then, so don’t feel obligated to update your prior beliefs regarding my intelligence or insight. My time there was a lovely experience that I am grateful for, though, so I am no doubt biased.

For all of it’s incredible local reputation, TJHSST isn’t nearly as big a deal in the broader world, in part because it remains very much a public school, albeit one with an admissions process beyond pure geography. There is no board of trustees working actively to promote it as a filter, no club structure committed to the long-term prestige of the institution to be passed down through legacy admission​s. Part of the reason I find the TJ model more tolerable is that it promotes itself as an educational opportunity and adjuvant for its students, rather than a probabilistic ticket to the next stage of the social ladder.

The cost of TJ not existing is roughly equivalent to that borne by students who applied but were not admitted: a set of kids each year who receive an arguably inferior education, nothing more, nothing less. The external cost imposed by TJ admissions on the rest of the school system is largely neglible. Yes, the peer networks within each of the schools they pull from will be slightly weaker academically, but they are pulling from a lot of schools, so that cost is spread pretty thin.

What about the filter effect, you might ask? Are the students not admitted to TJ suffering at a disadvantage later applying to college? There may be some small signal disadvantage at the margin, but my suspicion is that it is pretty small. There are no resources dedicated to creating dedicated pipelines into elite schools, and absolutely no legacy systems incentivizing the creation of those generational pipelines. For an institution to become a talent filter it has to on some level, I believe , dedicate resources towards becoming a filter. It has to not just want that status, it has to have club members willing to invest in it acquiring that status.

Conversely, the effect of Georgetown Prep, the Phillips Academy, and others of their ilk not existing is, similarly, a probable decline in the quality of education of some subset of students. It would also mean, however, that the pool of consideration for Harvard and Yale would get wider and the relevant talent filters would be applied 4 years later in student development. As it stands, students not being admitted, not being unable to afford, or not even being aware of the existence of these educational institutions and opportunities is that they’ve been removed from the track to the professional elite. The composition of the Supreme Court and Congress are being indirectly determined by the admission boards (and legacy donors) sorting children before they’ve learned algebra or finished growing.

You want my opinion? Well here it is: we need more TJHSST’s, not less. We need more public magnet schools, more elite public colleges and universities. Schools where, yes, students are competing for admission, but for whom the prize of admission is the education itself and not entry into a club whose principal endeavor is procuring rents for their matriculants and the offspring of their alumni by offering signal value through their admission. If a filter occurs, it should occur through the quality of their educational outputs, not the narrowness of their admission criteria inputs.

In the end, private schools as early talent filters are an institution prime for capture by highly capitalized rent-seekers. Truly great public schools are not part of that problem. They may even be a solution to it.