With the possible exception of the Germanwings crash, there is like literally nothing fucking going on. 2015, like 2014 and 2013, promises to be an uneventful but prosperous year. Expect web 2.0 valuations to keep rising, but stocks seem to be sputtering possibly due to the strong dollar. We (as a nation) have almost become spoiled by our new era of geopolitical and economic quiescence, or what Pinker calls the Long Peace. On the blogs and in media, people are waiting for the Black Swan that will never happen, to break the monotony. Imagine a classroom where everyone is working on an assignment. America is like the smartest kid who finishes first, goes to the teacher and asks, ‘What’s next?’ and the teacher says, ‘Nothing. You’re done. Sit down until the bell rings’. So you just sit there, board, a victim of your own success as other people (nations) struggle to finish their assignment, mired in malaise. That’s where America is right now – in a period of unprecedented economic and political stability. Like the smart kid in class, thanks to our smart policy makers, web 2.0, HBD and high-IQ people, and the best consumer in the world, we’ve pretty much solved everything. We solved the financial crisis in 2008 with the super-effective TARP, having not looked back since. The tireless bull market than began in 2009 continues to make naysayers look stupid, so we solved the issue of falling asset prices. We’ve conquered the business cycle, turning the boom-bust cycle into a permanent ‘boom’. So this is good news for investors, but not so great for the media, who depend on crisis for clicks, page views and ad dollars.
From The panic tax
1. The cost of ameliorating panic in your system is always less than the cost of the lost productivity when panic hits. In other words, all the other steps are worth it
Agree. That’s my rationale for supporting TARP, in that the nominal cost of the bailout (about $700 billion) was dwarfed by the indirect (staved off panic, rising stocks, improved confidence) value it created. Sometimes the best policy is the polity no one likes, but creates the most indirect value, boosting the ‘common good’. As measured by indirect value, TARP may have had the highest ROI of any government program in recent history.
Tesla stock (TSLA) surged today (and in the after hours) on an announcement of a mystery product line, as tweeted by CEO Elon Musk:
Major new Tesla product line — not a car — will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30
— Elon Musk (@elonmusk) March 30, 2015
Due to hype and growth potential from the Nevada battery factory, Tesla stock could go to $250 soon*…don’t bet against high-IQ and rich people, as exemplified by Tesla and the booming web 2.0 scene. Unless you enjoy losing money, don’t bet against the fed, free markets, or the consumer. Those who have bet against high-IQ companies like Facebook, Tesla, Google, and Apple have been taken to the cleaners.
To put this theory to test, I compared the 5-year performance of what I perceive to be highest-IQ sector, the QQQ (Nasdaq 100 technology index in purple), and compared it with the lowest-IQ/most ‘blue collar’ one, the energy sector (XLE in green and red).
The two were almost tied, until the oil crash of 2014:
The energy sector is also more volatile, plunging in 2011 due to fears of a global recession stemming from Europe’s debt crisis. Technology, being that it’s not macro-sensitive, held up very well. Although the left goes on about Exxon’s record profits, profit margins for the tech sector are much higher.
So why has the energy sector fared so poorly? It comes down to IQ. Would you rather bet on the Beverly Hill Billy Oil Company or Microsoft? It’s obvious. The reason is two fold: first, low-IQ people (low IQ relative to tech CEOs and employees) gravitate to the most volatile, profit-thin, macro-sensitive industries such as energy, home building, and commodities because they aren’t smart enough to get into high-tech.
Second, because they aren’t smart they have poor common sense, are spendthrift, and incestuous/nepotistic (hiring on ‘people skills’ and family or college connections – not talent and intellect). But what about petroleum and chemical engineers? Yes, they are smart, but tech companies, especially web 2.0 and internet, tend to be staffed entirely by people as smart as engineers, and these smart people directly influence how the company is run. In the low-IQ sectors, the smartest people have little influence on executive operations.
In the Fall and Winter of 2014, the entire energy sector got annihilated as oil plunged $90 to $45, due to over-expansion and leverage. A lot of these energy companies were profitable provided oil was above some threshold (like $70 or so), and they borrowed heavily to expand operations on the assumption oil prices would remain high. This highlights the problem with the blue collar sectors: volatility from macro factors and incompetence/poor planning due to low-IQ management. For example, the CEO of Chesapeake Energy Corporation, Aubrey McClendon, ran his company into the ground as the stock fell from a high of $70 in 2008 to as low as $15, until his resignation on April 1, 2013:
On April 18, 2012, a Reuters report revealed that McClendon borrowed as much as $1.1 billion against his personal stake in thousands of company wells, raising the potential for conflicts of interest and raised questions on the corporate governance and business ethics of Chesapeake Energy’s senior management. On May 1, 2012, Chesapeake’s board announced that an independent, non-executive chairman would be named and that McClendon would relinquish his position as chairman of the Chesapeake Energy board. On February 20, 2013, Dow Jones reported that a Chesapeake board review of millions of pages of documents and more than 50 interviews of Chesapeake and third-party personnel found no improper conduct, no improper benefit to McClendon and no increased cost to the company.
On June 7, 2012, Reuters reported that McClendon had used Chesapeake employees to perform $3 million of personal work, including engineering and accounting support and the repair of his house, in 2010. McClendon’s employment contract expressly permitted such personal services by company employees and provided the formula for reimbursement of associated salary and other company costs. According to Chesapeake’s proxy statement filed with the SEC on May 11, 2012, McClendon reimbursed the company for all but $250,000 of the employee costs. The Reuters account also stated that McClendon had used corporate planes for non-business-related travel for the McClendons’ family and friends. “For safety, security and efficiency” reasons, McClendon’s employment agreement authorized the personal use of company aircraft by McClendon, his immediate family members and guests.
But you see this divergence of performance not just between low-IQ v.s. high-IQ sectors, but between entire countries. Compared to other nations that are struggling with slow growth, corruption and inflation, one reason why America has done well is because we do have a meritocracy that rewards the best and the brightest, and most policy makers – especially the fed and Republicans – are reasonably competent. There is room for improvement though, in that it wouldn’t hurt to have more high-IQ people in government.
* Disclaimer: I do not own Tesla, and this is not an endorsement to buy Tesla.
A major part where the ideologies of far-left and the traditional right converge is in their mutual skepticism and distrust of technology and free markets, another is foreign policy. Liberals worry that technology will destroy jobs, create wealth inequality, and harm the environment. Conservatives worry that technology will disrupt the family structure and traditions, as well emasculate society. The libertarian/pragmatic right, in contrast to the palo/traditional right, is optimistic about technology and free markets. This schism in the right between these two ideological variants seems irreconcilable, as exemplified by a recent discussion on Return of Kings about the automation of jobs, in which some traditional conservatives seem to be agreeing with the paranoid Luddites on the left.
Anyone who has read this blog for any length of time should already know my stance on this issue. Conservative technologists such as George Gilder and Matt Ridley have shown that modernity and liberalism need not be mutually inclusive. I believe HBD and optimism can coexist and that America (and possibly China) is a unique HBD success story in that America’s free market system, for all its flaws, rewards talent and high-IQ better than any other nation. Look at Facebook, Snapchat, Google, Pinterest, Air BNB, Tesla, Uber..and many other American tech success stories. How many prominent tech companies came out of Europe or the Middle East in the past decade? Spotify?
This alliance by the far-right and the far-left against technology may be motivated by a changing economic environment that seems dispiriting for anyone who isn’t in the rarefied cognitive and or financial elite.
Sometimes it’s easy to feel resentment towards nerds, because whether it’s through web 2.0, stocks or real estate, they are the ones reaping most of the gains in this strong economic recovery while everyone else sits on the sidelines and watches. It’s like a revenge of the nerds in overdrive that will continue forever. Usually it’s the ‘old left’ that attacks technology, intellectualism and STEM culture, not republicans. From Star Wars to the space race to NASA and supply side economics, it has typically been the republicans as embodied by individuals such as George Gilder that have championed technology and free markets. Just like the libs like Peter Schiff and Nicolas Nassim Taleb believe that the bank bailouts didn’t work, this lib from National Review believes that the usefulness of technology has an asymptotic limit. The left lives in a world where exceptionalism – at both the individual and national level – is not only impossible, but undesirable.
Excerpted from: Liberal Attacks on ‘Nerd’ Culture
The reality of the situation is, whether it’s through coding, web 2.0, stocks, and real estate, the cognitive elite have a lot of pathways to quick, easy wealth though ‘self actualizing’ careers, whereas those of lesser intelligence tend to have fewer options, hugging the boundary of just ‘getting by’. True, not all high-IQ people become rich and some average IQ people do become very wealthy, but ignoring the anecdotal outliers the evidence shows wealth and IQ are positively corrected. That’s how you have all these college dropouts who become wealthy in the technology industry.
But back to the Return of Kings article, is technological advancement intrinsically good or bad? I argue it’s something to be desired, despite loss of jobs. Structural unemployment is a byproduct of technological innovation, the later of which results in rising living standards. So there is a short-term pain (job loss) for long-term gains (new technologies), as I explain the the example of the rock smashing industry. Second, there will always be new jobs, as the Luddite fallacy has a long track record of being a fallacy. They may not pay great or provide existential fulfillment, but they will be borne out by these new technologies.
Also some of this skepticism arises out of ignorance (willful and unintentional) of economics and empirical evidence, as the left imparts their own frustrations, fears and misconceptions unto the creation of these economic conspiracies and boogeymen that are responsible for their benighted state. Why does Justin Bieber make more money than a doctor? Supply and demand. There’s huge demand for his music but only one Justin Bieber; that’s econ 101, not a conspiracy. It’s easier to believe myths than to accept reality, especially if reality is holding a mirror. The left wants to believe America is in decline because they fail at life. They, the left, want to believe that the invisible hand of oppression, racism, corruption, the fed, favoritism, nepotism, crony capitalism, and feudalism is keeping them down, not factors like low-IQ and poor work ethic. But what if the aforementioned factors really exist, isn’t that a major impediment? It could be, but on the other hand, there there are all these instances of teen and 20-something college dropouts and immigrants who have become wildly successful in the past few years in the tech scene, all despite the left’s insistence that the US economy is in ruin/a scam/a bubble,…etc. So I can believe the left’s conspiracies or I can defer to the actual empirical evidence. The choice is obvious.
It appears that even posters in the right-leaning neo-reactionary community are starting to call out these doom and gloomers like Peter Schiff, Karl Denninger, and Nicholas Nassim Taleb for crying wolf too many times.
Well she’s right, of course, and Santelli is, at the deepest level, wrong. Consider Argentina under the currency board in the 90s: They tried their damnedest to keep the Argentine peso, fixed at 1 to 1 with the US dollar, as a store of value. But they couldn’t do it. The reason is that currency is simply non-interesting-paying DEBT of the government. If the government can’t service the debts, the currency can’t continue at its pre-existing level. That’s what happened in Argentina (and why the peso is now about 13 to the dollar in the streets of Buenos Aires).
As has been noted before, if you want a currency that is as good as gold, you simply have to do away with democracy and the pressures it creates on government fiscal policy, both on spending (too much) and taxation (too high).
Anyway the dollar has been rising against gold for the last 2-3 years so there’s no imminent risk of the dollar becoming confetti. Dollar holders have plenty of time to buy all the gold and silver they want! Santelli can take his paycheck to the local coin dealer every other friday and convert it all into gold with no problems. I doubt he does that though …
Santelli was right about homeowners, but wrong about the dollar, which has proven to be a pretty good store of value. Pretty much anything that isn’t denominated in dollars or yuan has lost a lot of value since 2011 when converted back into dollars. US stocks, the US dollar, and the US economy have trounced their foreign peers (with the exception, again, of China). Time and time again, and recent years no exception, those who preach doom and gloom are with very few exceptions, wrong.
As further evidence of this backlash, blogger Libertarian Realist takes aim at Peter Schiff and his wrong predictions.
Unlike a religion or a cult, rather than being beholden to a specific party or person, an important part of the neoreaction/HBD/alt-right movement is seeking truth and reality in a world of political correctness, and when you have human equivalent of a blow horn habitually blaring the same doom and gloom crap that doesn’t agree with the empirical data and evidence, it is perfectly justified to criticize and finally ignore him – even if he’s technically a member of the same ‘party’. Peter Schiff’s unhinged rants don’t agree with the empirical evidence; he is so blinded by this leftist desire to see America and the fed fail, he’s not only wrong all the time, but he’s losing credibility among the very people he’s targeting.
Today’s good news: Your life is going to stink
The left is wrongly interpreting this is mean Charlie Munger is pessimistic about America or as a criticism against the economy, as left wants America to be in decline and no longer exceptional. Actually, what he means is that while America is doing great in terms of technological and intellectual innovation, rising currency, booming stock market, quarter after quarter blowout profits and earnings, huge consumer spending, and political and economic influence – for the vast majority of Americans (those who are not in the financial and cognitive elite), your life will feel like it sucks, even as the economy booms.
Through a relatively new economic phenomena I call bifurcated inflation, wages will lag inflation for many essential goods, despite the bond market alluding to non-existent inflation. That means record high costs for healthcare, education, cable TV, internet, phone plan, daycare, and especially insurance. In America’s increasingly litigious society where everyone is scrounging for a buck and getting sick or in an accident can leave you financially ruined, insurance is a necessity and insurance providers know this, keeping fees high accordingly. Like in Japan, Germany, and Great Britain, interest rates in America are never rising again. Forever low interest rates – even in good times – is another example of how the rules of macroeconomics are being rewritten in the post-2008 era.
Back to the comments by Munger, it’s good news not because it’s good for Americans, but because it’s good that he is acknowledging economic reality that in our era of biological determinism and in our winner-take-all economy, maybe not everyone is cognitively ‘fit’ reap the fruits of America’s strong economy. Some people will be left out, and that’s neither bad nor good, it’s just the way it is. Understandably, these recent socioeconomic developments may make people anxious.
Related: Redefining the American Dream
From Scott’s Blog: IS EVERYTHING A RELIGION?
Awhile ago I realized that I could still be a conservative and not believe in a benevolent God, or a God at all. I saw that this actually strengthened my views.
If religion is loosely defined to means a set of beliefs and rituals, then even brushing your teeth can be viewed a some sort of religion unto itself. The distinction though is that a religion, unlike an ideology or a cult, typically has a some sort of creation myth and eschatology, neither of which can typically be falsified, nor does it offer a framework within the rules of science and math to do so. It’s up to its members to take these suppositions on face value, to believe unconditionally. String theory cannot be verified yet, but it does have an underlying scientific and mathematical basis that has some logical consistency, whereas religious creation myths don’t. Also, religions have a group or collective aspects to them, possibly as a form of de-individualization, in that your value as a person is not in your own intrinsic abilities, wealth, talent, and genes, but in how you serve ‘god’ and the collective. Consequently, for most organized religions the barrier to entry for redemption or salvation is not very high, a topic I discuss further here. Organized religions want members, and people will probably be turned off by a religion that condemns it members to ‘hell’ unless they are either super smart and or talented, versus merely being a ‘decent human being’ that believes in the required deity.
In summary, a religion has the following characteristics:
1. subservience, de-individualization (individuals serve not themselves, but either a higher power and or the collective/community)
2. unfalsifiable, offers no logically consistent basis within the rules of math and science to verify its beliefs
3. ritualistic, repetitive
4. low barrier to entry for salvation/redemption (especially in contemporary religions)
5. blank slate view of humanity, no one is intrinsically better than anyone else
An ideology, on the other hand:
1. aims for intellectual rigour and falsification
2. no creation myth or eschatology
Political parties are a mixture of the two in that there is an ideology, but it also requires some sort of group participation and loyalty to the candidate and the cause.
But don’t forget that transhumanism is also Christianity!. It’s got weird beliefs, a promise of eternal life through anti-aging drugs (or resurrection through cryonics), and an eschatology in the Singularity. Objectivism is a religion.
Perhaps transhumanism could be considered a type of religion, but its mores differ from most conventional denominations in that transuhmanism and rationalism tends to be individualistic. I would argue tranhumanism falls under an ideology, with some elements of religion.
In the post 2008 era, intellectualism in and of itself has become a culture, with people in high-IQ endeavors such as professors, STEM workers, stock traders, quants, wonks, tech CEOs, nerds, real estate investors/speculators, mathematicians and theoretical physicists becoming ‘celebrities‘ to large portions of the population. You see evidence of this on Reddit; for example, a thread asking professors about the most annoying things students do got a mind-blowing 10,000 replies – quite possibly a site record. The replies are suggestive of a backlash by professors and students to the leftist self-esteem movement and helicopter parenting. Liberals want to be coddled, to be sheltered from reality. Parents, particularly liberal ones, insist their kids are special, possessing unlimited unlocked potential; professors, who see thousands of students a year, just see another dull slow learner, cringing at the thought have having to read another paper with butchered syntax composed by one of these ‘special snowflakes’.
Most Millennials, and to a lesser degree Generation X, associate IQ, intellect and social awkwardness with positive traits such as authenticity, introspectiveness and competence. Breaking social norms has become cool – as a way of rebuking leftist, dumbing-down PC conformity and delusion. Smart people, particularity in STEM fields, deal with reality and empirical data, not wishful thinking. Smart people, the millennials in particular, seek the counsel of these objective, empirically-minded experts like Pinker and Murray, preferring the unvarnished truth over the polished lies spread by the liberal media and pseudo-intellectuals like Malcom Gladwell. That’s why the SJWs are failing and why themes of HBD could be bubbling to the surface of mainstream public discourse. Decades ago, few people cared about the these professions except other members of those professions. Multiple factors – the internet, the smartist era, and millenials endowed by the Flyn-Effect – have foisted these once obscure, nerdy, stodgy professions to the spotlight, eclipsing even athletes, actors, and other ‘traditional’ archetypes of fame and stardom.
In an article for Qz, Jonathan Wai challenges Ivy League bashing liberal Frank Bruni. If you have a high enough IQ to get into the Ivy league, you can succeed at life without a degree by virtue of your intelligence. That’s why you see so many instances of people who were admitted to top schools still becoming successful despite either not finishing or not choosing careers directly related their degree. The connections help a lot, too.
For STEM, the choice of college is less important, but I suspect this has to to do with STEM majors having a higher IQ, which is positively correlated with income. Since most colleges have the same STEM curriculum, including Ivy Leagues, roughly the same IQ should be required to complete it regardless of the school.
From marginal revolution: An Anxious Age: The Post-Protestant Ethic and the Spirit of America.
The grand confluence of Protestantism has dwindled to a trickle over the past thirty years, and the Great Church of America has come to an end.
…The death of Mainline Protestantism is, as we’ve noted, the central historical fact of our time: the event that distinguishes the past several decades from every other period in American history. Almost every one of our current political and cultural oddities, our contradictions and obscurities, derives from this fact: Mainline Protestantism has lost the capacity to set, or even significantly influence, the national vocabulary or the national self-understanding.
Church attendence has been delining for decades:
And millenials are the least religious of any generation:
The default response is that millennials are more liberal than other generations and hence less religious. But another possibility is not that millennials reject religion on political grounds; instead, they don’t view religion as being aligned with empirical reality, deeming it a waste of time to engage with something that is obviously wrong. Perhaps that’s why atheist conservatism is becoming so popular. In the hyper-competitive post-2008 era where IQ is more important than ever and the specter of biological determinism hovers in our everyday lives, the Church seems antiquated and irrelevant. All that feel-good ‘you can be saved/we are all children of God’ doesn’t agree with the evidence that shows that some people by virtue of wealth, intellect, fame and accomplishments seem intrinsically better than others.
The Protestant work ethic doesn’t seem to work anymore unless you are really smart and or have some connections, as IQ has become our new caste system in post-2008 America. And there is some truth to this. If you have a high-IQ, you can lean how to code apps and possibly become a millionaire should the app become a success. Or you can code for a web 2.0 company and get filthy rich overnight should the company be acquired. Or you can become a professional trader at home, at a proprietary firm or on Wall St., making thousands of dollars (or even millions) a day speculating on the direction of stocks, options, futures, and other financial instruments. For people of more modest intellectual means, unemployment is higher and wages are obviously not as good, in addition to more job insecurity for fear of being fired for the slightest mishap (as you’re easily replaceable). For this intellectually average cohort, work, which is already hard to come by given that the supply of labor vastly exceeds demand for most jobs, is less about ‘self-actualizing’ and more about providing immediate, direct units of economic value to a boss. Some of these jobs can actually pay well (Mike Rowe’s dirty jobs, for example), but the majority are low paying service sector work.
Perhaps through fed & fiscal policy of bailouts, QE, and forever low rates, combined with a winner-take-all economic environment, this is the ‘real world’ version of ‘god’ (policy makers) choosing those who should be saved (rich, smart, successful people). I suppose that’s the closest thing to religion in America today, but it’s reality. So there’s no need to look to deities, holy men and ancient books for the answers.
I remember in 2012, following the botched Facebook IPO and the stock’s subsequent decline, the liberal media was certain that web 2.0 had burst, their elation breaking through their veneer of journalistic impartiality as Facebook stock fell from its IPO price of $38 to as low as $20. At last for the left, after years of reading zerohedge, voting for Obama twice, Ron Paul, and the failed OWS protests, the chickens had come home to roost. Web 2.0 and their technocratic elite would finally be pulled to earth by the weight of their hubris to face the ‘trying times’ that normal people face. But by the turn of the new year, 2013, it was all over – the left’s hopes and dreams of another 2000 & 2008 tech and stock market crisis up in smoke as Facebook zipped past its IPO price following a blowout earnings report that left the lib’s ‘Facebook can’t monetize mobile’ narrative in ruin. The S&P 500 surged 30% that year. Silicon Valley home prices went into the stratosphere, Tesla gave the NYT the finger as its stock catapulted from $40 to $150 in the span of just three months, and Snapchat was slapped with a $4 billion dollar valuation (on its way to $50 billion soon).
So much for Facebook being an ‘obvious’ bubble at $38; it’s now at $83 on its way to $150 and beyond. Facebook may be worth $2 trillion by the end of the decade. These bubbleheads are worse than broken clocks in that the are never right. One shouldn’t waste their time entertaining this bubble mysticism, although I’m guilty because refuting bubbleheads is one my favorite types of posts. The tape matters. Reality matters. People, funds, institutions want ‘in’ on Facebook, Snapchat, Tinder and Uber – not only because of hype, but strong underlying fundamentals of the US economy and the these web 2.0 businesses. The 90′s tech bubble was mostly hype, compared to today where the PE ratio of the Nasdaq is less than 20, versus over 400 in 2000!
The reality is that there is absolutely no bubble in technology, but the left is so wrapped up in their belief and desire to see the economy and smart people fail and web 2.0 to collapse, that they are blind to facts. In 2008 the left wanted the financial system to fail to get Obama elected, now they want Silicon Valley (a high-IQ capitalist success story) to become a low-IQ dump like Detroit or Ferguson, and for Facebook and Snapchat (two examples of high-IQ web 2.0 free market capitalism success stories) to become Myspace (a failure). From raising taxes, to raising interest rates, to more regulation, the left supports anything that causes smart, talented, rich people to become poorer and less powerful. Normal, sane people celebrate success. The left, being the party of jealousy and envy, not only seeks failure – but actively instigates it – to bring society down to their level.