Thoughts from the Beanbag
These are my unfiltered thoughts on content I’ve consumed recently. Consider this a trigger warning :)
Beware the sound of one hand clapping: Income Inequality
There's a lot of chatter around inequality in the national dialogue right now. My sense is that this isn't new and most of it is really just people talking about their feelings. I'm not qualified to comment on that kind of thing, however, among elites the lines of reasoning originate from Kate Pickett's evidence based work in "The Spirit Level". Kate's research established a set of facts that attempts to intellectualize the need for reducing income inequality, implementing universal basic income, and a whole host of semi-reasoned socialism. Fortunately, her thesis is pretty easy to articulate as it's really just the graph below (taken from one of her presentations):
You can see one of her presentations and it's exactly what you'd expect - lots of graphs showing that as inequality goes up, shit just gets terrible. And, I mean, it looks really compelling. Any semi educated person would look at this and say, "This feels like a problem".
Fundamentally, I have three main gripes about the "inequality is the root of all evil" trope. First and foremost, Kate comes from a long line of epidemiologists who have a real knack for randomly excluding data to make the point they wanted all along. She went about this so egregiously that a guy named Chris Snowden wrote a book and dedicated a blog to debunking her research. Let's take a look at her graphs if you update them with more recent data and include countries that don't fit her narrative:
Chris goes through the same exercise of updating and rightsizing the data for her claims about infant mortality, homicide, mental disorders, and obesity and it all looks the same: noise. So at the very least there's scant evidence that income inequality leads to any of these societal problems. But if you say that aloud in a room full of highly educated people, you'll get looked at like you're eating chalk. I find this pretty frustrating.
Second Gripe. "Solving" income inequality means you have to compel individuals to act against their own best interests and opposite of their own incentives and desires. There's a deep seated sin called greed that compels any group of humans towards unequal income. Literally no one wants to make less money, especially for the sake of some amorphous idea of societal equality. Think about how difficult it is to change behavior when the incentives are well aligned; for example, getting people to stop smoking or using opiods because those behaviors lead to incredible suffering and destruction. There's a pretty straightforward relationship between those behaviors and bad things happening to you and yet it's a total slog to change those behaviors. Now think about exactly how difficult it will be to make those changes when exactly no single person wants to change their behavior.
I realize it's become fashionable for billionaires to talk about the woes of income inequality but it's hard for me to believe this is anything more than quaint faux egalitarian bullshit: they've devoted their entire lives to pursuing income inequity, so why is it a societal ill now?
Last gripe and the one which I'll probably get the most hate mail for. Society owes a lot to the top 1%. They contribute more than their fair share in the US. This is by design:
If citizenship is an analogue to equity, then the real inequality is how much more the rich contribute to our society than the rest. I'm very thankful that we have high earners who create value - represented by dollars - and pass on that value to fund our government.
Personally, I feel over appreciated for my military service in two failed, expensive wars and underappreciated for my contribution to the tax base.
And before we talk about those case studies of high functioning Scandinavian socialist panaceas, let's look at how the US share of taxes paid compares to the rest of the OECD.
So the next time you hear about the great ills of income inequality just remember there's another hand clapping who contributes more than half of our tax base: the 1%.
The simple things in life
On the topic of behaviors of the productive elite, I want to highlight a case study that I haven't fully gotten my head around. Maybe you can help.
Let's start at the beginning. Some law enforcement folks in south Florida setup an investigation into human trafficking. This inevitably leads to surveillance of a rub 'n tug staffed by illegal immigrants. My guess is that those jobs probably weren't advertised transparently on the brochure when the employees agreed to pack their bags to the land of the free. So on the day of the law enforcement surveillance, a hidden camera confirms 25 men went to the parlor to receive brothel services. All pretty standard stuff so far.
Let's take a look at that random sample of 25 patrons and... holy shit:
Bob Kraft, owner of the Patriots and Heinz food guy
John Havens, former president and chief operating officer of Citigroup
John Childs, founder of private equity firm J.W. Childs Associates
That's, uh, a high concentration of billionaires.
Ok, so let's take a look at this place. This must be a pretty swanky joint.
Nope. That's very transparently a strip mall rub 'n tug.
And how did these gentlemen spend their time? Thankfully we have an affidavit which gives us the play by play.
So I have three reactions. First, the media coverage has completely lost the plot on this story. The juvenile "omg, I can't believe a NFL owner paid for a handjob" narrative is surface level clickbait. The man is widowed, single, and paid ~$200. Who cares.
Second, Bob Kraft lives his life with a kind of precision that needs a deeper dive. The day of the stakeout was the day of the AFC championship game which, as a quick reminder for all you non sports fans, was not in south Florida but in Kansas City. So Rob wakes up, apparently with some pregame jitters, and drives to his favorite rub 'n tug at 10:59 AM. He's a regular there which we know from the familiarity with which he greets his masseuse. He gets completely undressed, sorted, redressed, pays, and exits by 11:13AM. That's a 14 minute drill on the level of Tom Brady’s 2 minute drill. Then Kraft drives to the airport and takes his private jet to 0 degree Kansas City where his team comes from behind to win and advances to the Superbowl.
There's probably a lot of Americans who think the ideal Sunday is waking up late and making breakfast with your kids and watching cartoons. Not Robert Fucking Kraft.
Thirdly, there's this conventional narrative that it must be amazing to be a billionaire. That the resources and networks and access must be on another plane than the rest of us. But look, these guys are still getting handys at a rub 'n tug that any of the rest of us could go to. You can look at this one of two ways: the simple pleasures of life aren't gated by wealth, status, or access and don't need much innovation. They're great and don't need anything else to make them more great. Or, this woman is a special talent in an opaque market and her technique is just out of this world. Either way, she should be running seminars on the upper east side and not obscure strip malls on the gold coast.
Health and Fitness Vanity
I wrapped up one my fasts with three different body fat measurements techniques: a 3D scanner, a scale, and a Dexa scan. The only sane measurement came from the Dexa scan and it had some cool measurements around adipose fat and bone density which are actually useful metrics. At $45, I strongly recommend.
Horvath's clock is a measure of your biological age. This is probably one of the biggest breakthroughs in longevity research that no one is talking about. You can actually take the test at home.
The good folks at Examine did a well referenced rollup of the biggest nutrition myths. I found it to be a solid evidence based calibration.
This study is a good reminder that while we can control where we add/lose muscle, we don't have any agency over where our bodies gain or lose fat.
An Outstanding Man Remembers an Outstanding Event
Some stories you just wouldn't believe without proof. This is one of those stories. I'll warn you beforehand that for the gravitas of this tale to really resonate, you'll need to have a sense of hagiography for baseball legends.
In the mythology of baseball lore, Mickey Mantle serves as a Zeus like figure. He was and is the archetype of the All American sports star in terms of accomplishment, look, and swagger. And he's the centerpiece of this tale.
For the 50th anniversary of Yankees stadium, public relations director Bob Fishel sent out a survey to former Yankees to collect some content for promotional purposes. Because people keep paper copies of things they shouldn't, we all can now see how Mickey responded.
I'd encourage you to read the scan of his response below in full.
Let me go ahead and type out that second page in case you missed it.
What was Mickey’s outstanding experience in his legendary career?
I got a blow job under the right field bleachers by the Yankee’s bull pen
And when did this outstanding event occur:
It was about the third or fourth inning. I had a pulled groin and couldn’t fuck at the time. She was a very nice girl and asked me what to do with the cum after I come in her mouth. I said, “Don’t ask me, I’m no cock-sucker”.
There's a lot to unpack here but let's start with how Mickey signs his name: he writes “The All American Boy”. He knew Bob - PR executive guy - wanted to perpetuate the All American image for the purpose of some ballpark promotion. The sign off is clearly a sardonic jab at the role society had painted of him. He wasn’t going to play Bob’s game.
Ever the gentleman Mickey describes his exhibitionist co-conspirator as "a very nice girl". Many men today could take this as a lesson in adopting a mindset of empowerment over objectification. Ironically, by thrashing against the 1960’s idea of an All American he sorta becomes even more All American by today's standards in my mind. On another level, he's just owning up to what a fucking degenerate he was. And yes, he absolutely was. And look, it's easy to say ‘haha, boys will be boys” or "oh look at this hetero-normative toxic masculinity". The man was a true cocksmith and a cocksmith is going to cocksmith - as they say - and if the time and place happens to be in the middle of the third or fourth inning at a professional sporting contest, well then, so be it. These are all consenting adults.
Of course Bob Fishel changed Mickey's answer to some bullshit about clinching the NLCS championship with a home run. Some people just can't handle the truth.
The Most Important Graph to Understand Systemic Risk
A lot has been made of the 10 year minus 2 year yield or 10 year minus 3 month yield curve inverting. This has historically been one of the few robust recession indicators that doesn't predict 20 of the past 5 recessions. However, I believe this a bit overstated because of the effect of the discontinuation of Quantitative Tightening on the 10 Year. Just to play that out in non central banker jargon, the Federal Reserve owns a bunch of 10 Year Treasury bonds because reasons (recession stimulation policy) and has been selling them for the past year or so because other reasons (they want a smaller balance sheet and the appearance of not monetizing government debt). They're going to stop selling the 10 Year Treasury in September which will abate the downward price pressure on the 10Y. Therefore, the 10Y yield will be lower (remember as bond prices rise, yields decrease and visa versa) so the difference between the 10 year yield will be artificially lower than it otherwise would be if the Fed wasn't unloading 50B worth of 10Y per month on the market. Most importantly, this indicator is essentially a quantitative market sentiment metric and doesn't point to where the embedded credit bubbles lay within the economy.
However, I believe shadow debt is the much bigger story illustrated by the infographic below:
Despite all the gratuitous circlejerking about how much safer the banking sector is because the Fed implemented some "stress tests" and compliance officers, they continue to ignore the first principle of cheap credit finding the path of least resistance. Most of that risky credit flow lives outside of institutions that the Fed monitors closely.
Anyway, as a substitute for the 10Y - 2Y indicator, I'd use the Fed's recession metic as a recession lead signal. I still don't have an articulate view on the catalyst beyond "something something shadow debt".
Potpourri
YC did their demo day. Here's a summary of the companies.
"A WeChat poll of Chinese users finds 60% of the 2,000+ respondents see the New Zealand mosque massacre as a revenge and "extremely sympathize" with the killer after reading his manifesto of terror." Link Note: I haven't been able to dig into this since everything is in Mandarin.
PornHub's data science team did a good bit on woman's search preferences by region. Michigan, Pennsylvania, Wisconsin, Maryland, and Hawaii's top search strings were "detroit", "milwaukee", "philly", "baltimore", and "hawaii" respectively. Who knew women had such granular geographical loyalty in their sexual tastes. There's also something going on with conflict regions and thetop search category of being "anal".
I've often said that LSD is the drug you thought drugs would be like when you sat through D.A.R.E. class as a kid. But ironically while acid lives up to the hype as an experience, it's extremely rare for users to get killed or addicted. That begs the question: how dangerous are recreational drugs? Like, quantitatively. I found a good study to answer the question. Here's the graph that matters:
I found a great resource for discovering the email addresses of major corporation CEOs. Sending them emails has been a surprisingly effective way to get my support issues resolved.
Do Minorities Pay More for Mortgages? No (according to research from the Federal Reserve).
In the spirit of graduation season and forgettable graduation speeches, I want to close with the best commencement speech of all time. The honor belongs to David Foster Wallace when he spoke at Kenyon College. I probably listen to this once a quarter.