Welcome to our first regular installment of “Fixed That For You!”.

A little known fact about the 12 Angry Men is that we have an internal e-mail list wherein we discuss potential stories, troll one another, and in general have a good time. One of the frequent memes that tends to crop up is the comment “Fixed That For You!” followed by an edited version of someone’s statement. These tend towards gross misrepresentation, and hilarity, so we’ve decided to share them with you, dear readers!

This week’s topic began as a debate on whether the government or private industry was better suited to serve the needs of the public.

Herein lies the problem. Government types, especially LIBERAL government types believe they are smarter than your average American, and that they know what is best for you better than you do. It’s a sick and arrogant version of the “white man’s burden”, and they don’t even seem to realize how condescending it is. When coupled with corrupt government officials out for their own pocketbook, it creates an absurd system. Promising the moon, charging for the sun, and pocketing so much that you only deliver next to nothing.
-Angry Midwesterner

Excellent rant. But let me fix that for you! Here’s the Subprime Crisis edition:

Herein lies the problem. CEO types, especially conservative CEO types believe they are smarter than your average American, and that they know what is best for you better than you do. It’s a sick and arrogant version of the “white man’s burden”, and they don’t even seem to realize how condescending it is. When coupled with corrupt CEOs out for their own pocketbook, it creates an absurd system. Promising the moon, charging for the sun, and pocketing so much that you only deliver next to nothing.
-Angry New Mexican

Now, now, let’s give Barney Frank and Chris Dodd their due, please.

Herein lies the problem. Congressmen, especially Democratic Congressmen believe they are smarter than your average American, and that they know what is best for you better than you do. It’s a sick and arrogant version of the “white man’s burden”, and they don’t even seem to realize how condescending it is. When coupled with corrupt Congressmen out for their own pocketbook, it creates an absurd system. Promising the moon, charging for the sun, and pocketing so much that you only deliver next to nothing.

There, fixed that for you.
-Angry Overeducated Catholic

Let’s give Barney Frank and schloads of Republicans their… *ahem*, “due”, please.

Herein lies the problem. Congressmen, especially Democratic Congressmen believe they are smarter than your average American, and that they know what is best for you better than you do. It’s a sick and arrogant version of the “gay man’s burden”, and they don’t even seem to realize how condescending it is. When coupled with corrupt Congressmen out for their own pocketbook, it creates an absurd system. Promising the moon, charging for the sun, and pocketing so much that you only deliver next to nothing.

There, fixed that for you.
-Angry Midwesterner, the world’s most popular on-line retailer has unveiled a new subscription service known as “Amazon Prime”. For just $79 a year is offering free two day shipping on all of your orders (except those which Amazon deems ineligible for the service). Sounds like a pretty good idea right? Especially if you make a lot of purchases. I’m certainly behind businesses trying to find that new competitive edge it takes to stay on top. Ordinarily I would just see something like Amazon Prime as a nice piece of new business strategy. The one problem is now that Prime is out Amazon is blackmailing users into using it.

You see recently my wife and I put in an order to for a guide book we wanted for a trip to Europe. We’re leaving in three weeks, so we wanted to be sure we’d get it on time. The book was in stock and was eligible for Free Shipping, with a listed shipping time of 3-5 days. We purchased it and checked out with no problems, all very routine. Imagine our surprise that evening when we got an e-mail estimating the delivery date at three weeks. We decided to call Amazon to see what the issue was. Maybe the guide was out of stock and their system had been incorrect? No problem there we’d just select another one, so we dialed in prepared to switch our order. The explanation we got blew our minds.

Evidently in the Amazon terms of service they have the right to hold your items for later shipping, and the 3-5 days is just the time it takes from leaving the warehouse. We’d never had this kind of delay before so we were a bit surprised, was there a problem? No. Amazon is just trying to get folks to sign up for Amazon Prime (which we were offered an upgrade to, one month free trial). In fact if we upgraded today our book would ship immediately.

How sneaky and dishonest! All of my respect for has just been flushed down the drain. We bit the bullet and upgraded, not to prime, but two day delivery as we couldn’t chance it with the guide given our travel date, but we will be thinking long and hard before buying from again in their future. Their sneaky little game may have just cost them two customers.

-Angry Midwesterner

The White House today rebuffed pleas from California for cash. California, as anyone not living under a rock knows by now, carries an estimated $24 billion deficit and is in dire economic peril. Now they expect the rest of us to bear the penalty of their excess for them, and pay for the irresponsible behavior for which they reaped all of the rewards. Something must have hit Obama in the head this morning because for once he made the right choice.

He told those lazy, good for nothing, deadbeat, pot smoking, California Hippie Losers to bug off. Three cheers for Obama!

California has the largest GDP in the US, at over $1.8 trillion, one of the highest levels of taxation in the country, an annual tax revenue of over $114 billion, and one of the highest levels of tax revenue per capita. They have all the resources necessary to solve their own problems. The reason they cannot pay their bill is that, much like a bunch of trailer trash Wal-mart shoppers, they’ve lived beyond their means and run up a debt funding ridiculous programs, propositions, and other such folly to a point that no one in the damnable state even knows where or how the money is being spent. A full 50% of their yearly tax revenue is earmarked for propositions even before the budget is set, that’s more revenue than the total taxes brought in by 48 of the 50 states. And yet visit California and you’ll find a third world nightmare of poorly paved roads, one of the worst school systems in the nation (ranked 48th of 50), no public transportation worthy of the name, scant police coverage, and a wash of crime and poverty that stretches 800 miles from north to south.

California isn’t too big to fail. It’s too irresponsible, stupid, and mismanaged to succeed. Its practices, culture, and above all the arrogance of its people make it one of the largest threats to the American way of life in the world. So now California, we’re cutting you off and it’s time for you to reap what you have sown. Obama should strip your state of its sovereignty and readmit it as a federal territory.

-Angry Midwesterner

At noon on December 9th, Lt Dan Neubauer of Marine Corps Fighter Attack Training Squadron 101, a F/A-18D pilot, after a series of bad decisions all around, made a final bad decision to attempt to make the Miramar runway and crashed into a house killing three members of a family (Young Mi Yoon, who was in her mid-30s; her 2-month-old daughter, Rachel; and her mother, Suk Im Kim). The pilot, on a training mission off CVN-72, the aircraft carrier Abraham Lincoln, ejected after the left engine failed. He was flying on one engine after being forced to shut down the right engine due to an oil leak.

On September 10, 2003, in a session of the House Financial Services Committee, Representative Barney Frank (D. Mass.), in response to concerns about the GSEs Fannie Mae and Freddie Mac, said “I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios.” On September 25, 2003, in response to the request for additional regulation on Fannie and Freddie, Frank opined “I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.” Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez said “Secretary Martinez, if it ain’t broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?” Senator Chris Dodd (D. Connecticut), Chairman of the Senate Banking Committee which regulates mortgage lending, has been linked to preferential mortgage terms as a friend of Countrywide CEO Angelo Mozilo.

Countrywide Financial has crashed due to management and regulatory failures. The entire mortgage banking system crashed as a result of bad loans securitized by FNMA and FHLMC. See Fit to Fail.

So we have two crashes. One of an F/A-18D killing a family of four, and one of the entire US financial system and world banking market. What do we observe in the aftermath?

The marines, in court, brought charges and discharged four member of the Corps. The commander of the squadron, its maintenance officer and two others have been relieved of duty. Nine other Marines have received other disciplinary action. The disciplinary action cites deferred maintenance, faulty aircraft-ground communications, and bad decisions. The F/A-18D was flying on a left engine which had been logged with a faulty fuel-low sensor indicator, and rather than perform maintenance flew 146 additional missions. When the right engine was shut down on an oil leak, the left engine ran out of fuel. Poor maintenance decisions contributed to the crash. The pilot was also criticized in the report for failing to use his emergency checklist. While the Lincoln’s controllers advised of a North Island landing, the squadron officers requested the pilot to make for Miramar, a decision which relied on unrealistic assumptions about the aircraft’s condition. Collectively, the duty officer, the operations officer and commanding officer exhibited poor judgment. For all the criticism of the US Military, the US Marine Corp owned up to its mistakes and took decisive corrective action.

The US Congress has yet to own up to its role in the crises and in fact now wants us to believe that it, and more regulatory agencies, are in fact, the solution. When are we going to see an equivalent acceptance of responsibility? My suggestions:

  1. Rep. Barney Frank, discharged from Congress for gross incompetence and dereliction of duty.
  2. Senator Chris Dodd, discharged from the Senate, for ethics violations, conduct unbecoming, and gross dereliction of duty.
  3. Rep. Maxine Waters, discharged from Congress for incompetence and gross dereliction of duty.
  4. Speaker Nancy Pelosi, discharged from Congress and banned from ever holding a public office, for incompetence and gross dereliction of duty.
  5. Rep. Henry Waxman, discharged for cowardice in the face of the enemy, dereliction of duty, insubordination, and conduct unbecoming.

Part of an arbitrarily continuing, i.e., when I feel like it, series on education….

One of my favorite books I read as a graduate student taking an economics class was 1970 title by the economist Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. This is a very nicely written book that examines two possible responses of consumers (broadly defined) to a perceived decline in products consumed (again, broadly defined). In a nutshell, the logic of exit says “Let’s blow this popsicle stand” while the logic of voice decries the fact that the popsicle stand in question that it is “all f$%@ed up!” Both mechanisms have their virtues. Over the last few decades, market-driven exit has been much favored over the politics-driven voice in American life, but as Hirschman notes, exit at best tells an organization that there is a problem—assuming they’re looking, and all too often too late—while voice has the potential of providing information for a solution.

I already noted that the Panic of 2008 may (hopefully) lead to a rebalancing of priorities of smart people who were tempted by big dinero working on Wall Street. A cover story in The Atlantic a few months back discusses the effect on cities. (Yes, I read The Atlantic heavily, in case you hadn’t figured that out by now.)

Well this one is about the kiddies, or, more particularly, their parents. Aspiring parents have, over the last few decades, decided to exit the public schools, either by sending Junior to a private school or moving to a different town (which amounts to sending Junior to a private school, where tuition is known as “property tax”). This has left behind the parents least willing or able to say “all f$%@ed up!” and do something about it. In fact the school example is one in Hirschman’s book. Hirschman was a bright guy to have thought of all this forty years ago when exit, aka “white flight,” was at its peak and the consequences were not yet clear (as they would be ten years later in places like New York). Obviously proposals such as charter schools and vouchers are designed to make exit easier for all, not just those wealthy enough to afford to move to the district with, e.g., New Trier, where cities feeding the district have per capita incomes on par with pre-crash Manhattan(!). Like Hirschman, I muse whether more exit is really the right way to go, but I’ll leave that debate to some other rant.

Last year, before the scope of the Panic of 2008 had, the perspicacious and always a bit acerbic writer Sandra Tsing Loh, a fortysomething mom in Los Angeles, contributed this little piece to The Atlantic about how she stopped paying attention to Jonathan “Savage Inequalities” Kozol and got down to work, when she realized she couldn’t afford to live in LA and send her kids to private school. (I’m still bitter I was forced to read Kozol as an undergrad. Whatever the merits of his case, the writing is the non-fiction equivalent of a Lifetime made-for-TV movie.)

Well recently I noticed this about parents in Manhattan in the New York Times. Maybe, just maybe, the Panic of 2008 will lead to a regeneration of the public schools, when caring, reasonably affluent, and ever so obnoxious parents like Loh—the kind unwilling to take no for an answer when their kids have to use decrepit materials and facilities, taught by staff lorded over all too often by ossified bureaucracies—make a return, where they will rapidly realize that the problems now faced by Avery, Brock and Caleb are pretty much the same as those DeShawn, Esmerelda, and Frankie have been facing for quite some time now, and then start exercising some voice. Because, let’s face it, you don’t care so much about things in the abstract as you do when you’re being confronted by it on a day to day basis and have a personal stake in it….

What is it about Science, Technology, Engineering and Mathematics that attracts the socially inept? I’m not just talking about the lack of hygiene issues some dorks have, the tendency of geeks not to bathe, or even the very disturbing lack of respect for personal space some open source weenies display. Specifically I’m talking about the inability of many dweebs, especially in technology, to understand when and where certain types of jokes or behaviours are appropriate. It has lately come to my attention that the cadre of foul smelling basement trolls, behind the (incredibly useful) open source plotting tool gnuplot, have decided it’s perfectly professional to throw up a pornographic picture on their tool’s manual. Sure it’s “just a line drawing”, but it’s the kind of line drawing that if you used as your background at work would get you sued for sexual harassment, and rightly so.

Evidently the nerds behind gnuplot don’t get out of their filth ridden cave very often, or if they do, rarely see beyond their bristly neck beards, because otherwise you’d think they would realize that this sort of objectification of women, *especially* in a field where women are under represented, and often intimidated by the chauvinistic exclusionism which pervades the field, is not cool in a professional context. I’ve talked to many people who are angry about this particular infantile prank, and the worst part is, it seems the folks at gnuplot have been asked several times to take down the image, or move it off of the professional portion of the site. A quick Google search turns up a lot of irate messages from people who have been trying to get the gnuplot folks to have shred of adult conscience with no avail.

I’d like to ask our readers to write to the gnuplot dev team (, and ask them to move this image off of their tool’s site. It’s degrading to women, disrespectful to professionals in the field, and utterly unprofessional. I’ve sent my own message, and if I don’t see some change, will likely be reporting their behaviour to the IEEE and ACM, both of which have codes of conduct which prohibit this sort of behaviour in professional contexts.

Hopefully this is a very poor representation of the men in the field. I’d like to believe professionals in technology have grown up a bit, but displays like this one make me doubt the maturity of anyone who works with computers. Left unanswered, stunts like this reinforce the unfortunate opinion that behavior like this acceptable in a professional context. Its no secret that the field of CS is currently lacking in raw talent, there simply aren’t enough Computer Scientists at the present as evidenced by the current trend of outsourcing amongst top companies. The field needs more creativity, diversity, and skilled professionals. By behaving in a way that excludes women, the socially ept, and men with an adult sense of humor these bozos are pretty much ensuring CS won’t be recruiting the kinds of people it needs.

In a recent NY Times piece, noted imperial advisor Nicolas Kristof points out that the Emperor’s Advisers Have No Clothes:

The expert on experts is Philip Tetlock, a professor at the University of California, Berkeley. His 2005 book, “Expert Political Judgment,” is based on two decades of tracking some 82,000 predictions by 284 experts. The experts’ forecasts were tracked both on the subjects of their specialties and on subjects that they knew little about.

The result? The predictions of experts were, on average, only a tiny bit better than random guesses — the equivalent of a chimpanzee throwing darts at a board.

I salute Kristof for having the courage to declare that his profession (along with pretty much everyone else) has no clothes (or at least far fewer clothes than we think—perhaps a German speedo!) I have sometimes disagreed vehemently with Kristof over various issues, but I have to admire anyone who has the moral courage to turn the harsh light on his own profession, and even himself:

The marketplace of ideas for now doesn’t clear out bad pundits and bad ideas partly because there’s no accountability. We trumpet our successes and ignore failures — or else attempt to explain that the failure doesn’t count because the situation changed or that we were basically right but the timing was off.

For example, I boast about having warned in 2002 and 2003 that Iraq would be a violent mess after we invaded. But I tend to make excuses for my own incorrect forecast in early 2007 that the troop “surge” would fail.

As Kristof notes, the greatest problem is with extremely self-confident experts who are morally certain that they’re right:

Mr. Tetlock called experts such as these the “hedgehogs,” after a famous distinction by the late Sir Isaiah Berlin (my favorite philosopher) between hedgehogs and foxes. Hedgehogs tend to have a focused worldview, an ideological leaning, strong convictions; foxes are more cautious, more centrist, more likely to adjust their views, more pragmatic, more prone to self-doubt, more inclined to see complexity and nuance. And it turns out that while foxes don’t give great sound-bites, they are far more likely to get things right.

Perhaps the problem is that expertise grants enormous ability to describe details about the present state of things in a field or area. There’s no absolute logical requirement for that to translate into better prediction in that area, but we’re basically hard-wired to think that there is. Combine that with our hard-wired response to confidence and we’ll follow a knowledgeable hedgehog anywhere, even to Hell itself.

Contrast that with the ability of markets,in general, to outperform experts. The best example is the stock market, whose simple average generally outperforms 2/3 of managed mutual funds each year (an example from last year: and another: Over time, the results are even more staggering, as very few mutual funds repeat winning performance from year to year. Experts simply cannot complete with the “wisdom” of the market as a whole.

An important thing to keep in mind, especially today as we’re urged to put more and more confidence in expert management of the financial sector by government regulators, expert allocation of money by government bureaucrats, and the most massive transfer of money from the private market-driven economy to government experts in recent history. It’s perhaps no coincidence that the government is relying upon the least-regulated part of the financial sector (which has been least affected by the recent woes) to bail out the most-regulated part:

Democrats like Barack Obama and Barney Frank, at least on the campaign trail or in sound bites, have portrayed the financial crisis as the product of deregulation. The solution, they say, is more regulation. In that vein Frank, one of the brainiest members of Congress, is proposing that the Federal Reserve become a regulator of systemic risk, with the power to regulate firms that because of their size or strategic position are of systemic importance.

My American Enterprise colleague Peter Wallison has argued powerfully that this is a bad idea. Neither the Federal Reserve or other regulators identified the systemic risk which caused this crisis. Neither did most financial institutions or investors. Systemic risk is hard to identify for the very reason that it is systemic.

If experts are as unreliable as Kristof argues, can expert risk assessment (which is what regulation is) be expected to outperform market-based risk assessment (which is what an unregulated market does)? Certainly not all the time, which is precisely the lesson that we should learn from the recent crisis originating in the heavily-regulated mortgage industry…and precisely the lesson our leaders seem determined not to learn.

(Hat tip to Angry New Mexican for the Kristof link and article!)

Money down the Drain

Do your pockets feel a little lighter than they used to? Perhaps about $7,000 lighter? Well don’t worry, that’s just the cost of the economic stimulus for each tax paying American! That emptiness you feel is just feeling of our economy being stimulated by Obama’s package! So now that we’re out $7,000 each the question is, will it work? Will our economy finally get the treatment it needs to get up again? Will we be driven into the cold deadly arms of Socialism? Is Obama’s $825 billion package really as big as everyone seems to think it is?

The Angry Men weigh in on the issue, and hopefully you, dear reader, will as well. We want to know, what do you think of Obama’s package?

Angry Midwesterner

Despite having voted for Obama over McCain, I have to agree with McCain on this issue, the so called “stimulus package” is mostly pork. Even the slightest bit of research shows us that only around 3% of the stimulus money will be spent in the next year, and in two years time only 16% of that money will be spent. A huge chunk of the money isn’t even marked to spent before 2011. So how exactly is this the crucial time sensitive stimulus it was sold as? How does it help America if the money isn’t even being spent? This isn’t about reviving our economy, it’s about never letting a crisis go to waste, as Rahm Emanuel has mentioned, many times.

The worst of it is, the pork isn’t even good pork. It’s mostly wasteful spending probably driven by lobbyists. If Obama really wanted to pork the US so badly, I at least wish he’d had the decency to not lie to us and claim it would stimulate our economy while the special interest groups he is beholden to got theirs too. This stimulus package is a violation of the trust America put in Obama, and is most definitely not the change we voted for.

Angry Diesel Engineer

I don’t see how this massive piece of legislation (almost 500 pages in the form Obama signed) is supposed to “spend us out of our recession.”  

While I completely disdain Obama’s socialist utopia (believing that I am better suited to manage my affairs than Uncle Sam), I am interested to see what happens with all this oversight that gets put in place.  If you haven’t checked it out yet, is an interesting website, with lots of ambiguous statements about how our crazy reckless spending is going to help everyone keep their job.  I am disappointed that millions of dollars are going to create government bureaucratic jobs for said oversight positions though.

I am interested to see where this takes us especially with health care.  I’m not sure how making all medical records electronic will help save jobs (unless you get a job on the H.I.T. board).  All in all, I have great distrust in the government making health care decisions for me.  If they were making decisions for you over  100 years ago, your free health care would have been mandated by the gov. to let your blood.  In a field that is constantly improving in technique and knowledge, free market is the only logical way to go.

Angry Overeducated Catholic


I think Angry Midwesterner’s boiling it down to $7000 per taxpayer is a great way to think about this. Another is how much money is being spent per job created (about $300,000 if I recall). And a third is to note the areas most impacted by the current economic woes, the areas where the most money is going, and then notice that they don’t really line up:

At first glance, Nevada, for example, should be up in arms. In fact, that map doesn’t look at all like the map of a package intended to help out those hurt by the recession. Actually, though, the per-capita map shows you that it’s not really that bad, but it’s still somewhat disconnected from the unemployment rate.

Because, after all, it’s not really about helping those hurt by economic turmoil…it’s about buliding the Great Society v2.0 (aka New Deal v3.0).

And that $7000 price tag? Only going to go up folks, or should I say, suckers! You tax-paying, hardworking chumps whose money will be systematically confiscated and transferred to the ne’er-do-wells, luckless souls, aging Boomers, shiftless bums, and criminal classes across this great land! The Democratic leadership views you as so many stupid hick sheep to be sheared for the Greater Glory of the People’s Government. It’s just the start!

Remember: Obama is going to cure cancer…with your money, all of it if that’s what it takes.

Angry Political Optimist

The size of the stimulus package is not so much of an issue. At the end of World War II, the debt as a fraction of GDP approached 100%. Even if the dire predictions of the Republicans bear out, and Obama’s administration creates a $4T running deficit, a functional United States of America can recover in less than ten years. 

What should be worrying people is the implicit surrender of what makes America great that is embedded in these packages. Since when do Americans look to the government for assistance? Remember when people listed the classical set of great lies and number two on the list was “I’m from the government and I’m here to help you?” Americans need to look inwards to themselves and to each other for support, not to Obama and his minions. If we accept what Obama and the Congress tells us we are — what is implicit in this package — then we will NEVER recover as a nation.

As a practical matter, spending money requires an efficient bureaucracy, even if they only spend on themselves. Bush’s Katrina fiasco was caused not by an unwillingness to assist black residents but by the total unwieldiness of the FEMA distribution system. Wal-Mart, and for that matter, the US Military were on site and assisting within days (only to be rebuffed and hindered by FEMA). Does anyone really think that doubling down on the bureaucracy in Washington will allow them to spend the stimulus money. Do the math. You have to distribute $2.2B a day. (I realize that this is not the way it works, but really, by 2010, I bet that most of the money is still just an allocation on the liability side of the balance sheet. One that can be wiped away with a stroke of a pen in 2010 I might add.)

Obama and the Congress have shown their true colors. They make the Republican porkers look like pikers. Let them have their day in the sun, and then in two years bury the bastards for another 40.

    The Wall Street meltdown might have a silver lining.

    No I’m not talking about the schadenfreude that many are experiencing now that the investment bankers are falling from their lofty heights. That might be fun, but it’s not a silver lining. No, I’m talking about the large amount of highly talented people who became “quants” aka mathematical modelers in the finance sector now having to seek employment elsewhere.

    Now don’t get me wrong, there’s a place for finance, but we as a society over-invested in it. One of the really sad things was that the greed led a lot of people to put deep and abiding faith in the models. Those of us involved in mathematical models for any length of time know from bitter personal experience: The last thing you should do is believe a model, especially if it’s your model. Models are useful, not true, and should be viewed with a great deal of skepticism, always. While I suspect that the “quants” knew this, the greedy, myopic twenty five year olds doing the trading—the ones with the right hair and a nice liberal arts degree from an Ivy or Duke—didn’t (they’re certainly not trained to evaluate such things), and given the almighty dollar coming their way I suspect a good number of the quants started believing too.

    If you want a case in point, I offer up Doctors Merton and Scholes, Nobel laureates in economics, 1997, and principals of Long Term Capital Management. LTCM was a hedge fund founded by the smartest guys in the room. Unfortunately, their model was predicated on some assumptions that turned out not to be true, most importantly one about lack of correlation in various investments. This assumed other people weren’t copycats on what LTCM were doing. Whoops, funny how when the smartest cats in the room seem to have found a burrow of endless mice every other cat starts copying.

    One of the giant market distortions engendered by the rise of Wall Street has been the shortage of scientists, broadly defined: Fewer Americans going to engineering, chemistry, math, statistics, economics (besides finance, that is), etc. Instead, far too many of the best and brightest young people go into finance and investment banking. Something like 20% of the graduating class of Harvard in recent years goes directly to investment banking. That’s right, a 22 year old is managing your money, hoping to retire by 35 or 40 to a house in the Hamptons, another house in Bermuda, and a third one in Tahoe, with a nice trophy wife on his arm, and the surplus of young ladies living in finance capitals are there hoping to be said trophy wife. One of the reasons to chase the Ivy degree so hard was the hope—not unreasonable—that an in would be available for Junior into a hedge fund, Lehman, etc. So this massively distorted the college admissions market, too, making otherwise solid schools seem like poor buys and encouraging many families to run up piles of debt on undergraduate educations, mostly in the hope that Junior would get the right contacts in Duke that he wouldn’t get at, say, Illinois.

    I recall taking real analysis back in the mid ’90s. Hands down the smartest guy in the class was a Cal Tech educated engineer getting a PhD in Finance. Now this was just before the big model finance mania. He’d worked for a big aerospace company but with the defense budgets going down, he realized that his future lay elsewhere. This is, of course, why so many physicists ended up on Wall Street, too. I’m sure he did well but you know, finance doesn’t actually produce anything, whereas airplanes are something. It was getting so bad near the end of my tenure in grad school that I’d see students trying to “stealth” their way into finance by applying to programs in one area but taking finance classes. Getting into an actual PhD finance program was tricky and often costly but most schools will let you take a few courses in another department….

    So if there is a silver lining, I hope it is this: Smart kids with math skilz considering careers in finance, please come back. The rest of the world needs you to help deal with things like, oh, climate change, looming mass extinctions, energy shortages, world hunger, transit and infrastructure, finding productive things to do now that we won’t make piles of dough on houses nobody wants, to say nothing of good old “basic science.”

    As for the Ivy league liberal arts major turned investment banker who ran my admittedly modest portfolio into the ground with $200K in student loans breathing down his neck… thanks but I don’t want aioli, arugula, sprouts, grape tomatoes or olive tapenade, I’ll enjoy my schadenfreude plain and unadulterated.

    For further reading:

    • Niall Ferguson, The Ascent of Money. Excellent and very lucid writing. I read this on a plane to Vegas (for business!), which seemed appropriate.
    • Nassim Nicholas Taleb, The Black Swan. Rather more personal pique than is really necessary and some excessively broad statements, but generally he’s right on, particularly about the excessive faith in the Gaussian error distribution when modeling extreme events, the so-called “tail risk” being too low. We’ve seen this in other areas as well.
    • Any others?

[Editor's Note: We hereby welcome our latest writer, Angry Diesel Engineer. I hope you enjoy his perspective on flex-fuel vehicles - ANM]

The Big Three have announced that by 2012, half of their production will be flex-fuel vehicles.  I’ll leave it to the other Angry Men to debate whether it makes sense to run your car on food at all (I’m sure Angry Biologist would have something to say about it), but ramping up on our current production FFVs is not the way to go about it.

If you’ve ever seen a FlexFuel sticker on a car in America, it means that that car contains an engine and fuel system which was designed and optimized to run on gasoline, but made to tolerate E85, a blend of 85% ethanol and 15% gasoline.  Ethanol is not a bad fuel, per say.  Compared to gasoline, it has 61% the energy content (Lower Heating Value),  and, conveniently enough, 61% of the Air/Fuel ratio for Stoichiometric combustion.  For this reason, it blends well with gasoline as a fuel – a higher volumetric consumption releases the same energy.  Relative to gasoline, it actually has a much higher knock resistance (Octane rating), comparable almost to racing fuel. Coupled with the it can be made from a variety of sources, most of them renewable, and it becomes downright attractive.  

But gasoline it ain’t. Gasoline has about a 90 year head start on ethanol in engine optimization, infrastructure deployment, and the like. It bears the aforementioned higher energy content, so for the same weight and/or volume (both large considerations for vehicle designers), it can be converted to produce more work.  And, as Americans, this is the measure our car’s efficiency – units of work done per volume of fuel consumed, or miles per gallon.

Which brings me to the topic of this rant: chemical  energy to rotational force conversion systems, or as they are commonly called, engines.  The modern internal combustion engine is a marvelous piece of engineering.  It has been highly refined over more than a century resulting in ridiculous increases in specific output and efficiency.  Despite its advances, a modern example is rarely found operating at even 33% efficiency. That’s right, over 2/3 of the energy (gasoline) you are putting into your car is wasted.

Long ago it was discovered that raising the compression ratio (the maximum cylinder volume : minimum cylinder volume) increased the efficiency of the engine, but also uncovered the tendency of liquid fuel/air mixtures to explode spontaneously, as opposed to the desired flame-front propagation.  Spark ignition engines are by design “knock limited,” meaning were it not for this spontaneous combustion, the engine output or efficiency (or both) could be improved.  Historical solutions to this knock limit have been found, but in the end were deemed environmentally irresponsible.

“But wait,” you ask, “didn’t you just say that E85 has a higher octane rating, which means it should tolerate a higher compression ratio and thereby actually run more efficiently?”  And you’d be right to ask that.  Yes, an engine designed to run on E85 could theoretically achieve higher thermal efficiencies, achieving miles-per-gallon similar to (but probably still lacking compared to) its gasoline counterpart.  

Which brings us to Detroit’s folly.  In an age when fuel economy is the ultimate quest, and green house gasses are on the brink of being regulated, Detroit is saying “up yours” to mother earth.  FlexFuel engines are designed to tolerate E85, not actually achieve anything from it.  Actually burning the stuff results in about 2/3 the fuel economy compared to straight gasoline.  All that potential for any increase in mileage is scoffed at.  Detroit does with it what it does best: throws it out the tailpipe.

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