The Armchair Politician

So I’ve been up pretty much all night. The TV was on, so I got to see plenty of infomercials, most of them promoting some manner of real estate sales program.

I always thought the concept of these programs was silly; if endless amounts of money could be made in the real estate market, why would anyone want to advertise that fact, opening it up for thousands of other people? The more people who enter into the market, the less money is in it for everyone else. Yeah, they make money selling the program, but I doubt it offsets the amount they would stand to lose if their advice actually worked.

Clearly, they’re really not offering killer, reliable advice that will allow millions of people to profit by abusing their own personal investment strategies. But is the effort really worth the money they make by selling this crap? Thinking about it more, I realized something: they’re probably profiting quite significantly — but indirectly.

The more of the unwashed masses (or hoi polloi, if you will) that are trying to make it in your market, the more easily you can make money. When you’ve injected thousands of poorly-informed investors into an economy that’s slowing down, the easier you can take advantage of their naïvete, or even their blind obedience to your principles.

One scenario I can clearly see is in real estate. It’s long been noticed that there’s a huge bubble in the housing market, which is due to burst. It isn’t as large as the dot-com bubble, but it’s certainly there. And taking advantage of that knowledge can lead to significant profits. New and inexperienced investors act as a safety valve. If and when that bubble starts to burst, those with investments already in the market can offload them onto the amateurs who don’t have the savvy to know better. After all, when prices start to drop, someone is going to have to take the brunt. And those who built their wealth on the housing market have to have some kind of escape route for their existing investments.

Even more scary are the investment firms who tell you they’ve simplified the process of stock market or foreign exchange investing to a simple matter of reading red and green arrows. Green is good, and means buy. Red means bad, so sell.

This is just ripe for exploitation. When these folks see the green arrows and buy, they have to purchase the investments from omeone who already has it. Same for selling: some shmuck has to buy it. But that’s where these “red/green arrow” companies come into play. Their advice probably is reasonable — I assume the stocks they predict do have potential for growth, but it doesn’t have to be much. Only enough to appear enticing. So, before they broadcast to their subscribers that a stock is a sure bet, they buy enough of that stock to satisfy the demand they’ll create just by publishing that information. Now that they have a ton, they post the information. Subscribers start to snap it up; as they do so, the price rises. Since they “know” the stock will perform well, later subscribers will still be willing to pay the inflated price for it. The frenzy dies down, the stock goes back to a reasonable value, and those who got in early probably make a small, but reasonable profit. On the other hand, the investment firm sold a massive amount for increasing amounts to their customers. And, due to the price spike from their large sales, the advice looks good.

A similar scenario goes for stocks they advertise as about to do badly. They probably pick stocks that they expect to do well or better in the long run, but may drop a little now. Publish that the stock is about to go down the tubes, and everyone listening will be more inclined to get rid of it, at further and further declining prices. Prices drop a bit, and the firm buys all the stock their clients are willing to sell, at a massive discount. After the selling frenzy is over, the price normalizes and they’re holding on to a bunch of stock they bought at a discounted price.

Individually, they probably don’t make a ton of money. But by publishing dozens of bulletins every day, they stand to do very well indeed. Increasing their customer base makes a huge impact on the amount of profit they make with every recommendation. Scary, no?

I’ve been reading some of Paul Graham’s previous essays, and came across one that really resonated with me. In “Inequality and Risk”, Paul argues that trying to eliminate economic equality (within a singular country, not globally) automatically implies reducing overall economic growth.

An analogy I found particularly resonant is that economic inequality is akin to the potential energy used to power a water mill. To make a similar analogy, the dispartiy betwene rich and poor is much like electric potential: without any, the circuit does nothing. If we were to have economic equality, there would be no difference in pressure to drive economic growth at all. And, of course, it’s a proportional relation; to the degree that we limit economic inequality, we inherently limit the speed of our growth.

Interesting stuff, especially for a Libertarian like me.

Continuing with the not-so-recent trend of scapegoating video games as the epic source of all human atrocities, we now have an interview conducted by CBS News on the topic of violence in video games. The idea, to ask the same questions to both sides of the debate, is being carried out by their weekly “GameCore” column, authored by William Vitka and Chad Chamberlain. The first interview went to Jack Thompson. Never mind the fact that his site is vaguely reminiscent of those late-night lawyer commercials: “Have you been injured in an auto accident? Help ease your pain with the compensation you deserve.” Right. Because lawsuits fix all the world’s problems, especially whiplash.

An interesting idea. Jack Thompson is pretty much the attack dog of the anti-videogame lobby whose rabid hatred of video games is only outclassed by the baselessness of his arguments, which are about as sound as a Play-Doh skyscraper and frankly, crazier than a bucket of horse testicles.
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This entry is going into the Politics section, even though it’s not really about politics per se. However, it is very opinionated and possibly inflammatory, so where better to put it?

I had to conduct my first interview today. To be honest, I was completely unprepared. One of my coworkers pulled me aside and asked if I could do an interview–the applicant was interested in a system administration position, and my manager, who normally would do such an interview, was out. Another coworker did the “primer” interview for a few minutes while I drafted out a few relevant questions to gauge the applicant’s interest, knowledge, and past history. I wasn’t impressed.
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Half a month ago, I received an email from a friend entitled “Things you have to believe to be a Republican today” (contents). Of course, most of the points are amusing, but have relatively little merit. Surely nobody with half a brain would consider them valid arguments against Republicans. Regardless of the actual accusations contained, being a member of a political party doesn’t even imply you accept their political dogma carte blanche. As an example, I’m an avid member of the Libertarian Party, but I obviously don’t agree with every single one of their positions.

Anyways, in the same spirit of good-natured, childish political humor, I did a Reply-All (to the dozen or so original recipients, as well as the friend who sent it to me) containing “Things you have to believe to be a Democrat today” (contents). Of course, no sooner had it left my outbox than did I receive charges of racism.
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This one is going to be short, sweet, and to the point. I’ve had to respond to dozens of people who believe that voting for a third party is somehow a waste of your vote. From my perspective, this couldn’t be any farther from the truth.

As I see it, a vote for a third party carries far more weight than a vote for one of the primary parties. When you vote, for instance, Libertarian, your vote gives them proportionally more media coverage, funding, and ballot access than either of the established parties receive. As recent example, both Greens and Libertarians received enormously disproportional amounts of coverage (the Greens in particular) after the 2000 election. Why? The percentage of their votes, in many states, was well above the margin between the two primary candidates. Most political analysts believed that the Green Party significantly swung the outcome of the 2000 presidential election, and as a result, they gained more media coverage than anyone could have predicted.
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I finally was able to take a picture (and have a video tape) of the Click It or Ticket ad. I’ve updated the entry with an incriminating picture, and a revised quotation from the advertisement.

As each day passes, I hear a greater number of people complaining about American casualties in Iraq. Others bemoan our occupation there, and decry it as another “quagmire”, in which countless numbers of American troops will be killed. According to antiwar.com, there have been 588 American combat casualties since the beginning of Operation Iraqi Freedom.

How bad is 588 casualties, exactly? The only objective way to look at the number is in relation to other American military actions. Therefore, a good set of data to compare Operation Iraqi Freedom to is the casualty figures from all other previous wars involving America. For the sake of relevance, I’m not going to include any NATO actions, as their multinational nature dilutes individual countries’ casualty rates. As a editorial note, I’m also going to compare combat casualties rather than overall casualties. There’s no reason for this other than the fact that the data has already been calcualted (for the most part), saving me time. However, after having done some calculations on total casualties, the numbers tell the same story.
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Georgia, along with many other states in the nation, has reinvigorated its Click It or Ticket campaign (visit its laughable website). While watching TV recently, one of their new advertisement spots came on. I’ve been unable to find a video (however, if I’m lucky I’ll be able to make a recording). One part of the advertisement goes something like this: I finally was able to record the spot when it came on TV. A quote follows, and a picture taken from the advertisement is on the right.

…because 43,000 Americans were killed in traffic crashes just last year. And just over half of them died with safety belts unbuckled. Safety belts save lives. Five hundred police agencies are enforcing Georgia’s safety belt law on the highways where you drive. So if you don’t click it, expect a ticket. [emphasis theirs]

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Well, I’ve decided to make this website “ad supported”. I’m putting it in quotes because I don’t expect to actually receive anything monetary out of the ads–the simple truth is that I don’t get enough traffic, and they’re so inobtrusively placed that I doubt few people will ever click on them. Either way, it doesn’t matter: I’m placing Google AdSense advertisements in the bottom-left corner of this page for idealistic reasons rather than economic ones.

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