Practical Application of the Silly Putty Theory of Society

Having built a base with my last post, it is time to look at the practical applications of the theory. In the end any model is only as good as the utility it provides.

The main conclusion that I draw is that focused regulations will always result in undesired consequences. While one can point out specific flaws in individual regulations, that it not the true cause. The real cause it that a fluid system moving towards equilibrium of the forces acting upon it will always adapt around localized obstructions. The individual mechanism may matter in the details, but in a macro sense, not so much.

This should not be taken to mean that no regulation can work. It is rather an assessment that only actions that act as a force on a significant 'volume' of the system will ever achieve their desired goals.

In the comments in my last post Tao raised the question of the FDIC. At first I would have considered this a limit, but really it is a force. It creates a vector the magnitude of peoples faith in the governments ability to meet the guarantee, placed in precise opposition to their fear that money in the bank could simply vanish if the bank collapsed. The existence of the FDIC is probably the single most important difference between this recession and the great depression.

Social security, food stamps, and various 'here's your money' programs act to prevent those who fail to succeed in society from going into unrecoverable free fall. Even from a purely economic sense, it is hard to deny the importance of this. People with nothing to loose are dangerous. The proper balance between this type of assistance and programs oriented towards providing an upward impetus is a question not yet fully answered.

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A truly blatant example if what I don't like about focused legislation is here (by way of the Coyote Blog) . The response may be to say that policy can be better designed. I would disagree. Anyone who has ever tried to get management types to do a use case scenario analysis for software design will understand why. Even people whose main job is to look at the big picture are incredibly bad at envisioning all the ways a system may be needed to act. Rarely can you get them to come up with more that half a dozen cases. And of course they complain the software has a bug when it does exactly what they asked for and yields a bad result.

(An unrealated observation. It is hard to type while on an excercise bike. But is easy to pedal a long time when typing. Go figure.)

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Society, Governmental Regulation, and Silly Putty

Like many libertarian leaning people, I have a distinct lack of regard for governmental regulation. I find that I have a difficult time expressing the reasons for some of this to people who don't share the view, but I recently developed a model that describes it. Using silly putty. I use silly putty because 1) It describes the effect in a visualizable way, and 2) I think it's funny.

For those unfamiliar with silly putty, it has some odd characteristics. Given an applied force (like gravity) it will flow to conform to a container. Strike it suddenly, and it will bounce or even break. This is important, as we shall see. (can you imagine me as a professor?) For the purposes of this post, I will use the putty as a model for society, with government represented by actions applied to the putty. I divide the actions into three types.

First up is forces. Forces act by pulling or pushing society in various directions. These are the most basic effects on society and act in a very broad fashion. The desire for stuff, need for security, and political ideology are examples of forces. The need for politicians to do what it takes to get elected would be another. Governmental examples would be criminal law enforcement and broadly designed tax incentives. Forces act in ways that have effects that are usually fairly predictable in a large sense, but less so in the details. When measured by statistics, forces tend to create a 'bell curve' shape if they are balanced by another force, or a 'hockey stick' if they are not. In the silly putty model, forces control where the putty tries to flow towards.

Next up are limits. Limits are properties of the system that keep it within artificial bounds. This would be things like Social Security, Welfare, and minimum wage. I cannot think of any that are not governmental, but that does not mean they do not exist. Limits also act in ways that tend to be pretty predictable, but not always the ones desired. When measured by statistics, limits tend to express as a 'pooling' effect at the limit. (See chart 3 on this report that Luis showed me... this is what got me started on this analogy). In the silly putty model, limits are the container that bounds some areas.

Lastly are focused forces. Focused forces are specific interactions aimed at narrowly target goals. Note that they can push or pull. These would be things like regulations against specific chemicals, incentives towards specific technologies, and demographically targeted laws. The only thing predictable about the results is their unintended consequences. When measured by statistics focused forces tend to express as a temporary 'spike' or 'divot'. In the silly putty model, this is analogous to pushing against the putty with a pencil, or pulling with a hook.

My personal notion is that forces are the best way to manipulate a system, followed by limits. Focused forces have a brief effect, but the inevitably fluid nature of any complex system will always cause it to flow around the obstruction, often with results worse than what the action was trying to fix. Limits are a middle option, to be used when necessary. Broad forces are the least attractive to many policy makers because of the lack of easily predicted point results, but in terms of making real and lasting changes are by far the most effective.

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Societal Inertia

As those of you who have been so patiently following my musings know, I have been doing a lot of research lately on statistics about the economy,government, and society over the last however many years I can get data for. And I have finally come to one important conclusion.

The government has a lot less control than most folks think. There are underlying currents in society that have a vastly larger affect than any set of policies or any political party.

Something changed in the behaviour of society in the mid to late 1970's. People started to save less and spend more. Credit went from being a necessary evil to be used only when absolutely needed, to a way to buy conveniences and luxuries.

I would guess this to be a generational change. This was the point at which people who had not lived through the Great Depression began to economically 'outnumber' those who had not.

Government changed also. Government spending, which had been increasing steadily, levelled off. We went from a steady budget surplus to consistent deficits, following just a few years after personal expenditures did the same.

What strikes me about this is that Government followed the public, not the other way around. It is popular to talk about Reagan as the start of this change, but I think that he was a symptom, not a cause.

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Loosing By Winning

For most of my life, one defining characteristic of the Republican party has been their political effectiveness. Not necessarily at accomplishing anything, but at winning. They developed the concept of party unity and discipline to an extent that the Democrats never did. It kept them winning elections, and to a large extent controlling congress even when they did not win elections.

And it is what is killing them now. The current crop has learned a pattern of behaviour that has been successful their entire careers, but that is all it is. A pattern of behaviour. The ideas and ideals have long since been replaced with talking points and dogma. It's not enough anymore, but the party structure has no room for new ideas.

But because it has always worked, they cannot adapt. They lash out in frustration, doing the same things they have always done, and they cannot understand why it doesn't work anymore. Look at their 'budget' proposal. That has to be the most pathetic thing I have ever seen. Lower taxes but then expect the deficit to fall because people will voluntarily pay more than required? Seriously? Freeze spending? Oh, yeah, and then I'll make my car run better by cutting off 20% of the fuel. They attack Obama for everything but breathing, and hell they will probably start in on that next. This is particularly bad because there are some things he is doing that do deserve some serious scrutiny, but no one is listening to chicken little anymore.

The Republican party needs to grow the f$%! up and start looking at what they can learn from Obama. It is not about strategy. It is not about tactics. It is about having a real plan about policy and a real goal for the future.

And the Democrats should probably be looking closely at the failure of the Republicans. This is the long term risk success brings.

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Measuring Sucess

So a little bit ago, I posted a question about how we would measure the success or failure of our society and government. The silence was deafening. The only direct response was regarding health care, and I while it is a worthwhile area of study, it is certainly not enough by itself. Later I have received comments rejecting the concept of quantitative measurement as a means of assessment altogether. This does not work for me either.

I think the problem with settling on a set of quantitative measurements is that one will quickly discover that the most tightly held beliefs are often not supported by the evidence. Two obvious examples would be 'tax and spend democrat' and 'rising cost of living'. A review of the deficit will quickly sink the first, the consumer price index the latter.

It is simply the nature of how the brain works that we easily accept information that matches our world view, and we challenge or outright reject information that contradicts it. Humans are incredibly poor at weighing the costs and benefits of actions in a rigorous fashion; it is an ability that must be consciously and rigorously developed. Witness the popularity of video poker. A few seconds thought will make it obvious that as the lottery turns a consistent profit, the players must turn a consistent loss. And yet ask those who play and 99 out of 100 will tell you they are 'even or maybe a little ahead'. The emotional impact of winning and loosing is not a linear affect, so many small losses will be outweighed by the rare large win, even though the net over time is always a loss.

Likewise, the benefits of policies we agree with are easier to see and have more emotional impact than the costs. The opposite is true of policies we disagree with. Attached to this is the tendency to apply a binary 'good'/'bad' label to the policy. The reality is messy and unattractive; all policies have costs and benefits. There are vanishing few pure gain or pure loss actions.

So I conclude that an objective quantitative means of measuring society is necessary to make any kind of informed decision. As a matter of practicality, some of the means will slant one way, some will slant another. As long as they balance out reasonably well, the imperfections of any one indicator are not a huge problem.

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Tea Parties Revisited

The Rasmussen Report released this report about the public perception of the 'tea parties'.
On a sub page they have less processed numbers. Note that they show only 1000 respondents, which is pretty typical of polls like this; that seems a strong argument against taking polls like this too seriously.

Living on the internet as I do, it is strange how much my sense of things like this gets distorted. The week before the 'parties' commentary about them just dominated the left blogs. Right blogs that were promoting the 'parties' didn't spend half the words as blogs questioning, criticizing, and of course mocking them.

Myself, I can't say I had a lot of interest in the 'parties' themselves. They need to have a message more clearly defined than 'I don't like this' before I am going to pay much attention.

I do find the accusations of astroturfing amusing. First off, I was a regular at one of the blogs that helped launch the whole thing at the time it caught on. I watched it develop in real time. Secondly, look at these people. They are just not organized well enough to be a planned campaign. Where are the catchy, universal slogans? Note the lack of buses. Note the blatant inexperience with things like permits. The interest groups are not driving this, they are trying to cash in on it.

Also interesting is how much this is portrayed as a Republican thing. At least one of the liberal bloggers I follow was active. Supposedly, Steele himself was turned down when he asked to speak, although he denies asking. Most everyone I have read who went for any purpose but heckling mentioned the effort spent on keeping it non-partisan. Elected officials of any stripe were largely excluded.

Really, this was a libertarian protest; most libertarians are just Republicans. Many don't know it.

In the end I think I will neither support nor deride their efforts. Their message is too poorly developed to deserve my support; their protest too heartfelt to deserve my scorn.

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Not Democratic?

The whole gay marriage issue has resurrected a perennial complaint on the right about judicial activism, now focused on how it is 'not democratic'.

Many people, most of them better writers than me, have addressed this, but I have seen none that mentions what is to me the key response.

Yes, it is undemocratic. It's supposed to be.

Some things are simply not to be decided by a vote. Democracy is the best government system humanity has found. That does not mean it is perfect. That is why we have a constitution, and more specifically a bill of rights. These are the things that are not negotiable.

Or to put it most simply, when the courts strike down a democratically enacted law to protect the rights of a minority, they are doing their job. No more, no less.

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By Request

This is a comparison of debt versus savings, as requested. Unfortunately I do not have data going back as far as I would like.
The debt data is from here.
The savings data is from here.
I am not at all certain I converted the monthly data for debt to quarterly correctly, so all the data may be offset a few months, but I don't think that really matters for our purposes.

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Fiddling

OK, I'm fiddling with the colors again on this, since some people though the old setup was ugly, and my next try was hard to read. Since I have just as much design sense as you would expect from a redneck, this may take a few attempts.

Bear with me, and feel free to chime in with any problems (some of the ones that were hard for some people to read looked fimr to me)

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Telling

If I had to pick one economic indicator that defines recent economic history, I think this would have to be it.

(PS - Posting direct from this picture editor thing - pretty cool. I love technology.)

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Intriguing

This is not what I expected. I had always assumed that the top earners were pretty well insulated from recessions, but they are affected much more than others. Not that they are hurting by any measure!

I would guess that this represents how much of their wealth is tied into the stock market.

This is more data pulled from the congressional budget office. Fun stuff!

EDIT - Notice also the explosive growth in the late 90's. This was happening at the exact same time as our brief flirtation with actually paying the nation debt. I have no idea what that means.

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What is 'Fair'?

There has been much use of the word 'fair' floating around recently. I personally do not generally use the word; 'Fair' seems like a childhood concept to me. Since I do not use it myself, and given my awe inspiringly poor grasp of implicit arguments, I am curious what people mean by 'fair'.

Since it is being used in the context of taxes lately, I will discuss it in those terms. All these stats are pulled from here.

As of 2006, the top 20% of people make 55.7% of all the money, and pay 69.3% of all Federal taxes. The rest of us make 44.3% of all the money, and pay 30.7% of the taxes.

For a more stark comparison, the top 10% make 41.6% of all the money, and pay 55.4% of all Federal taxes. The rest of us make 58.4% of the money, and pay 44.6% of the taxes.

The average tax paid (per household?) is $18,800. The average tax paid by the bottom quintile is $700. The average tax paid by the second quintile is $4,000. The average tax paid by the middle quintile is $8,600. The average tax paid by the fourth quintile is $15,700. The average tax paid by the top quintile is $64,000. (all numbers federal taxes for 2006).

The extent to which the majority of people in America are subsidized by the wealthy is difficult to overstate, at least in tax terms. Is this 'fair'? It is certainly hard to argue that the wealthy are not paying their 'fair' share. On the other hand, they can afford it. And the simple fact that their portion of the overall income is increasing proves rather handily that this is not a crippling burden.

I do wonder about the inevitable effects of this on policy however. The 'payocracy' effect (he who pays makes the rules) is nearly unavoidable. If they are paying for the Federal government, is it not 'fair' that they have more say in how it works? And 'fair' or not, is it in the best ineterests of the country if they do effectively control the government? Come to that, whether or not it is in the best interests of the country, can it be avoided?

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Obama Disappoints

Those who have spoken to me here and there in my blog travels know that I am not generally big on criticizing Obama. I dont often agree with him, but I generally accept that he is doing what he was hired to do, the way he was hired to do it.

But this is seriously disappointing. He is actually acting worse (at least by some measures) than Bush with the whole domestic surveilance thing? And closing Guantanamo is looking less and less like a good thing. Are we just moving prisoners to somewhere less visible?

My faith that he was at least trying to do the right thing as he knows it has taken a serious hit here.

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Why Government Expands

Much is said about the expansion of government from all sides. Some favor large government, some do not.

Largely, it really doesn't matter whether people believe in large government or not, because it will always expand regardless.

Many people are aware that this happens, but are unaware of why. Charges are thrown around of 'power grabs' and 'socialism' etc., but this is not why.

The answer is much simpler and harder to address.

People are elected to 'do something'. For the purposes of this discussion, what they are elected to do is irrellevant. It is the 'do something' itself that matters.

To accomplish any goal, you need to be able to make changes. To make changes, you need power. It is really that simple. Even the ones whose goal is to reduce government need to gain power to make it happen.

No evil motives, no master plan, not even bad judgement.

Just the obvious and unavaoidable end result of the generating circumstances.

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So, Gun Control

I have avoided gun control on my blog, mostly because it is an area where I have some very strongly held opinions, but an honest discussion is needed somewhere, so here goes nothing...

The whole 'Obama is/isn't going to take away your guns' is a meaningless distraction. Period.

Those of us who pay attention to gun control / gun rights are well aware that an all-at-once gun seizure is not going to happen. That was a one-time trick, New Orleans used up the free pass.

What we are watching for is the slow erosion.

Before I go to far into this, a question for the non gun owners who read this:

What do you think Obama's policies on gun control are?

(EDIT 4/10/09: I am going to abandon gun control for bit here. Not because I don't want to continue the discussion, I just have an idea on how to do it without hijacking this blog. Will update when I get somewhere, probably this weekend)

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Glenn Beck

So, Glenn Beck.

Some kind of 'conservative' commentator on Fox news, right?

Who watches this guy?

One of the blogs I follow ( I really forget which one) had a clip of him an LaPierre up, and I watched it.

OK, that man is seriously annoying. Seriously.

He could be saying the most brilliant piece of analysys ever seen on TV... I wouldn't know because I just cannot sit through him talking. It's like torture.

But I did manage to make it through four minutes or so. Nothing he said was particularly interesting, standard preaching to the choir stuff.

I see him quoted so much on left leaning blogs, never on any of the right leaning blogs. It makes me think; There is a theory on the 2A blogs that the vast majority of visits on the gun control sights are actually us looking to see what they are up to. I wonder if a sizeable portion of Beck's audience is liberals looking for something to make fun of?

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Health Care, an Alternate Proposal

OK, we have been going around about health care, so I thought I'd throw my two cents in here in my little playground.

I support a health savings account(HSA)/ high deductible insurance plan.

Here's why:

Insurance is a form of gambling. When you play the lottery, you balance the near certainty that you will lose a small amount of money against the possibility of winning a great deal of money. Insurance is exactly the same. As a group, you always pay more than you get. Therefore the goal should be to use insurance as little as possible.

Some major catastrophes are simply too expensive to save against, so we pool the risk with insurance, and accept the inevitable loss. This would be a high deductible/ high benefits plan that covers only major problems, but covers them more-or-less completely. This should be pretty inexpensive, as it would be rarely used.

To cover regular, predictable costs, you save money against need. This is the only system that removes the administrative costs and overhead associated with insurance. No one but you needs to decide if it is a reasonable expense.

The benefits would be reduction in overhead, first. Also, people would pay attention to how much their treatment costs. Going to the doctor is the only service I can think of where people do not expect to know what it costs ahead of time. Often, if you ask, they cannot even tell you. I think that it is not coincidence that this is also the only service I know of with uncontrolled cost increases.

Right now, we treat medical care as a cost no object service, and place a premium on speed of service, options, and quite frankly a 'magic cure' mentality. So that is what we get. If we apply a cost/benefits analysis every time we see a doctor, some of them will respond and gain a competitive advantage. Prices will go down for everyone.

If I am right and prices do go down, that will solve a lot of the coverage problem by itself. Also, the oft touted 'x million without coverage' is a bit of an exageration. It is not a measure of how many lack coverage at any one point in time, but rather how many lack coverage for some span within a time frame, usually a couple of years. This is caused by relying on employers to provide insurance. A HSA is not reliant on employment, so a substantial portion of those without coverage now would be eliminated.

If we eliminate the temporary coverage gaps, and reduce or at least contain costs, then medicaid can be expanded to cover the poor at a sustainable cost.

With this system, the concern about who decides what treatment is rendered moot - there is no longer a gap between who pays and the patient, they are one and the same.

Note that hybrid systems would also be possible. Making catastrophic coverage a universal system with a mild progressive tax support would fix the 'dying from lack of coverage' issue, without eliminating the cost benefits of value shopping.

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Government Control

With the liberals so strongly in ascendance right now, the push to implement many long cherished plans to improve the welfare of the public. It's what liberals do, and that is as it should be, at least in my eyes.

Attendant to this is the resistance of conservatives, who are concerned with what the consequences of these programs will be, both in what they intend to accomplish, and in the unintended side effects. It's what conservatives do, and that is as it should be, at least in my eyes.

The usual game of straw arguments is being played out right before all of our eyes, with liberals pointing out the great successes of some programs while ignoring the failures, and conservatives pointing out the failures, while ignoring the successes. Preach to the choir, pat each other on the back and go flame the other side. We all think the other side is stupid, greedy, lazy.

Enough.

I will attempt here to take an honest view of the great concern of the conservatives when we talk about government programs, and that of course is government control.

I wanted to keep this abstract, not touching on any actual current issue to avoid entrenched positions, but I find that it will not coalesce without a real world example. So (deep breath) I will go with a single-point example from health care.

One common criticism of our current system of health care is the relatively low life expectancy, especially compared to how much we spend. Nobody really has a good explanation for this, I suspect because the obvious is too uncomfortable to talk about. Obesity. Obesity in the US has reached levels unprecedented in history. And it has health implications, serious ones. If we go to a government controlled health care system, the pressure will be immense to show gains in health and life expectancy. That cannot be done without reducing obesity.

But how? Forcing excercise? Banning high-fat foods? Taxing the overweight? Or doing a sneaky tax - this is a 'credit' for being a healthy weight, which has the exact same effect as taxing being overweight, while calling it a tax cut (the last is not an abstract example, the UK is considering it last I checked).

Are we willing to accept this sort of control over our lives? Let someone tell us that we have to excercise. What we can and cannot eat? Obesity is over represented among the poor. Are we going to tax them for it?

And can it work? Solutions applied to literally millions of people are either going to be one-size-fits-all or else riddled with rules and loopholes. Will that be outweighed by the benefits?

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Infinite?

So a recent post I did that was really just a temper tantrum put down in words turned into a full on debate, with me supporting the side I was pissed at to start off with. By a wide margin, the most comments any post I have done has ever had, even if better than a third were mine.

I'm not really a fan of debate, I much prefer discussion. But it is easy to fall into when people have different views, especially when the difference is about the basic state of current reality. I am no more immune than others, and such things quickly develop a momentum of their own.

I am currently spending an excessive amount of time doing research on all sorts of economic data, trying to get a feel for trends, testing what I thought I knew against cold hard numbers. When I figure out a good format, I will try and make what I find accessible online.

A couple of requests for anyone who reads this:

1 - How do we measure success on a societal scale? Please try to step back from policy focus and think large scale. For example, equality is good, but everyone starving would be equality. It is not enough by itself. How do we evaluate the health of a system overall?

2 - Anyone know a good flexible way of generating graphs to present data in an easily readable format. I would like to be able to post both graphs and raw tables. The FRED graphs come with shaded bands that show recessions. I would like to be able to mark administrations, congressional majorities, perhaps add lines to show when particular legislation occurred.

And a final thought that created the title for this post. Every major political group, every big name analyst, every budget proposal has one thing in common. They all assume that the goal is infinite growth.

Nothing grows infinitely.

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Natural Consequences

A natural consequence can be defined as the way a given situation will change over time in the absence of interfering action. Natural consequences can rarely be fully predicted in a real world setting, but their general shape is usually easily foreseen.

A simple example : If you roll a ball down a hill, you cannot easily predict the exact course it will take, but you know it is going to the bottom of the hill.

A more complex example : If you build a house on a foundation of sand, the house will collapse. Where it will break is not easily predictable... the walls may separate from the floor, or each other, the floor may collapse, ectetera. It may take a week, it may take a year. But it will collapse.

A real life example : If, as an ongoing policy, you buy things without bothering to ask what they cost, the price of those things will increase constantly.

Now that I think about it, natural consequences are really an expression of a deeper priciple : balance. A situation that is out of balance will do one of two things. It will either 1) Move back towards balance, because of effects on a related system countering, or 2) Spin out of control until it breaks, and the wreckage will fall into balance.

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