Pandas .melt(): A Guide For The Perplexed

pd.melt() can be confusing because of its mediocre documentation and unintuitively-named parameters. It’s nevertheless important for getting dataframes into ‘tidy’ format for plotting purposes. 

First, we’ll discuss the id_vars and value_vars parameters. Pass into id_vars a list of columns that you DO NOT WANT CHANGED. These columns will remain as they are. Pass into value_vars a list of columns you want to be combined into a single column. pd.melt() takes the columns passed into value_vars and automatically generates a new column containing the names of those old columns. By default this column is called ‘variable‘. An additional new column ‘value‘ is generated containing the values from the old columns. 

Imagine you have a dataframe with columns 'asset‘, ‘US Dollar‘, ‘Euro‘, ‘Japanese Yen‘. The values correspond to the price of a cryptoasset like Bitcoin or Ethereum in a quote currency, like USD.

If we run df.melt(id_vars='asset', value_vars=['US Dollar', 'Euro', 'Japanese Yen']), we’ll get back a dataframe with an ‘asset’ column, a ‘variable‘ column containing ‘US Dollar‘, ‘Euro‘, ‘Japanese Yen‘, and a column ‘value‘ containing the value of each cryptoasset in each of the denominations. 

pd.melt() gives you some control over how the columns are renamed. By default pd.melt() will assume that any column not passed into id_vars is to be transformed. So instead of the above code, we could run pd.melt(id_vars='airline', var_name='asset', value_name='asset_price'), which will produce the same dataframe but with more appropriately named columns. 

How Do I Find Where A Maximum Value Lives in a DataFrame?

Say we’ve created the following dataframe:

df = pd.DataFrame(np.random.randint(0,100, size=(10,4)), columns=list('ABCD'))

Now we want to accomplish two things. We want to loop through all the rows and find which column contains the largest (or smallest) integer for each row, and we want to loop through the columns to find the row containing the largest (or smallest) integer.

Looping through rows to find the column where the largest integer lives:

for idx in df.index:
    print(df.loc[idx].idxmax())

The same thing for the smallest integer:

for idx in df.index:
    print(df.loc[idx].idxmin())

Looping over all the columns to find the row where the largest integer occurs:

for col in df.columns:
    print(df.loc[:, col].idxmax())

The same thing for the smallest integer:

for col in df.columns:
    print(df.loc[:, col].idxmin())

2018: A Year in Books

You may have noticed that things have been pretty quiet around here these past few months. This is mostly because I made some pretty big changes which didn’t leave much time for blogging. As it stands, I’ve (obviously) put the World Systems project on hold for now, though I’d like to pick it back up again in 2019 if there’s time.

The added financial strain of having my first child together with dissatisfaction in my previous line of work and a general sense of wanting to pursue something new convinced me to apply to the Galvanize Data Science Immersive in Denver, CO. I got in, and proceeded to spend the next three months getting the absolute shit kicked out of me by the rigors of the program.

It was, without exception or caveat, the hardest and most humbling thing I’ve ever done. It was harder than working full time and doing the STEMpunk Project concurrently. It was harder than (figuratively) parachuting into Korea and learning Korean on my own, from scratch.

In the future I may write more about the experience, but for now just know that I definitely got my money’s worth in education and productive friendships with incredibly talented people, in addition to leads on more fruitful research trajectories than I could hope to get to in whatever span of years is left to me on Earth.

As I write this I’m sort of decompressing and getting ready to look for jobs in the new year, which struck me as a good time to write about the one that’s wrapping up; no doubt my millions of readers are curious as to what became of me 🙂

Even with all of the above I managed to read 70 books, mostly in audiobook form while driving, exercising, changing diapers, or walking the dog. This is less than last year but, well, I think you can see why.

The year started with my reading the latter few titles in Frank Herbert’s Dune series, which I first picked up half my lifetime ago and which started a fateful obsession with the best form of literature: science fiction. In my view the first books are the strongest; while the six originals are all worth reading, by the time we get to God Emperor the main character is a nigh-immortal man-worm hybrid who can see into the future and who despotically rules the universe. Frankly, I find this a little hard to relate to, and there are long stretches of dialogue which struck me as vaguely like people trying to be deep on Twitter.

Don’t misunderstand me: Dune casts a long shadow and deserves its status as a classic in the genre which any good student of the form should read and read and read again.

Naturally with the World Systems project underway I read a lot of economics. Bob Murphy’s Chaos Theory was probably the most accessible, Nami Sanandaji’s Debunking Utopia was probably the most important for modern audiences, and Mises’s Economic Calculation in the Socialist Commonwealth was easily the deepest. Dominick T. Armentano’s Antitrust: The Case for Repeal, however, deserves a mention as a punchy little refutation of the mainstream view on monopolies and the government’s vital role in preventing them.

I made it through Francis Fukuyama’s The Origins of Political Order and Political Order and Political Decay, which are excellently-researched volumes in the mold of Guns, Germs, and Steel. The basic thesis is that the rule of law, the state, and accountable government are what gave rise to the modern world, an important challenge to skeptics of any positive role for the State.

Neal Stephenson appeared twice: once along with Nicole Galland in the young-adultesque D.O.D.O. and once in Seveneves. I recommend them both; the former was whimsical and the latter more serious, but it’s pretty hard to beat Stephenson for modern SF.

Peter Watts also appeared twice, in Starfish and Maelstrom, part of the βehemoth sequence, which I haven’t finished yet. This is standard Watts-ian fare, near-future SF which induces existential terror by plausibly illustrating a scenario in which all life is destroyed. Watts is always worth a read.

Because I have an interest in privately-funded space exploration I picked up two recent books on the topic, The Rocket Billionaires by Tim Fernholz and How to Make a Spaceship by Julian Guthrie. Both do a good job of giving us an insider perspective into the kind of borderline-insane magnitude of the ambitions and intellects of the people who are endeavoring to light up the void with the sparks of human civilization. 

I re-read the first two volumes of Vernor Vinge’s Deepness series (A Fire Upon the Deep, A Deepness in the Sky) as well as the closing volume (The Children of the Sky)The first and second are excellent, the third would be quite good as a standalone but doesn’t quite manage the same pace and sense of vastness as its predecessors.

Because of my genuine love for campy old-fashioned SF I always try to rotate in some titles from the Golden Age; this year it was Jack Vance’s The Languages of Pao (a riff on Sapir-Whorf at planetary scale) plus The Naked Sun and The End of Eternity by Asimov. The latter is widely considered to be among the best of Asimov’s fiction books, and indeed it was good.

I continued my long dialogue with Objectivism, reading Philosophy: Who Needs It and Voice of Reason, both by the first lady of reason herself. I also read a volume of essays on my favorite book, Atlas Shrugged, edited by Robert Mayhew. Though I’ve been a bit skeptical of the value of literary criticism in the past, I really got a lot out of this.

For good measure I tossed in Jennifer Burns’s Goddess of the Market, the other of the two major mainstream biographies of Ayn Rand (the other is Ayn Rand and the World She Made, which I think I got to last year), and Unrugged Individualism by David Kelley, which addresses the common complaint that ethical egoism rules out being nice to people.

In the same vein I finally plunged into the Sword of Truth series by Terry Goodkind, an Objectivist philosopher who also wrote one of the most towering fantasy series in the history of the genre. Along with The Wheel of Time by Robert Jordan it basically defined the ultra-long-form fantasy epic.

I’ve given SoT a couple of tries and didn’t much care for it, but I finally made it far enough to realize that it’s less a story about magic and more a story about re-discovering lost technology. Such a plot device can be pretty tricky to get right, and I don’t think Goodkind did a good job in the first few books of getting me to care about his characters because it seemed they were always being rescued by some heretofore unknown power just in the knick of time.

But he matured as a writer as the series progressed, and there are places where in-text discussion of prophecy v.s. free will, life as the standard of value, the role of art in cognition, and other philosophical subjects which are both genuinely interesting and germane to the plot.

During this undertaking I took a break for both Carl Sagan’s Demon-Haunted World and Thomas Sowell’s Black Rednecks and White Liberals. Sagan truly is a poet in a scientist’s body, and Sowell is more incisive than almost anyone I’ve ever read in history and economics. If these two are ever widely taught in high schools, the world will be a better place.

I also finally got around to Margot Adler’s Drawing Down the Moon, an anthropological study of the rise of Neopaganism and Wicca in the United States. I’ve been meaning to give this a read since Eric Raymond brought it to my attention, and it was very good.

Happy reading!

 

WorldSys: Austrian Home Study Course, Week 31

READINGS: “Economic Calculation in the Socialist Commonwealth”, Ludwig Von Mises; Chapter 10 of “Economics for Real People”, by Gene Callahan; Chapters 2 and 3 of Thomas Taylor’s “An Introduction to Austrian Economics”.

1) For Mises, what is the defining characteristic of socialism?

Community ownership of the means of production, that is: factories, capital goods, etc. Of course some special body will have to be set up to exercise the will of the people.

2) Is it possible to have money in a socialist commonwealth?

Yes — even if consumer goods are allotted by awarding individual comrades with coupons those goods will likely be exchanged (a teetotaler could trade his alcohol allotment for tickets to the movies, and so on). To the extent that this is possible money can evolve and play the same role it does anywhere else. But where public ownership prevails this cannot be the case.

3) Does the “calculation problem” involve the difficulty of discovering technological recipes for production?

No. Mises illustrates the difference between ‘recipe for production’ calculations and economic calculations with an example of a bridge. Successfully performing all the calculations required for building a bridge won’t tell us whether, all things considered, the bridge should be built. This latter kind of calculation is the kind that becomes impossible with public ownership of the means of production.

4) Does the calculation problem involve the possibility that the central planners might be selfish and ignore the desires of their subjects?

That is always a possibility, but it’s orthogonal to the calculation problem itself. Even if central planners were every bit as wise, intelligent, and benevolent as they believe themselves to be it wouldn’t blunt the force of the calculation argument; communal ownership of the means of production would still make rational economic calculation impossible.

5) Why doesn’t the capitalist society suffer from the calculation problem?

Because the free market is able to utilize many individuals who are independently doing economic calculations with information which may not be written down anywhere. Prices on capital and consumer goods can respond to these people making value judgements, bidding for resources, taking action in the face of uncertainty, and succeeding or failing. Ultimately this means prices are able to better perform their information-theoretic function, making all calculation efforts more effective.

6) Would Robinson Crusoe be able to “centrally plan” his “economy”?

Crusoe would be able to plan his own behavior and undertake ever more complicated actions to satisfy ever more complicated desires. But, crucially, he wouldn’t be able to foresee all possible production choices in advance. Even when alone Crusoe is still engaged in a kind of exchange, insofar as he trades finite time for this or that good. There is no way he can imagine all that he will desire in the future, nor all the ways in which those desires can be fulfilled, nor the ways in which his preferences will evolve, nor the plenitude of ways in which higher-order goods are to be evaluated one against the other in the service of satisfying his wants.

7) Can’t central planners rely on mainstream economic theory (such as the rule that price should equal marginal cost) to guide them?

No. Quite a lot of mainstream theory relies on assumptions which render their models totally unrealistic. The concept of perfect competition, for example, imagines that all market participants possess perfect knowledge — of the relevant economic data, of each other’s motives, etc. But this sidesteps what Hayek and others considered to be the central problem of economics: resource allocation in the context of imperfect knowledge. Hayek’s great contribution to the Austrian tradition was puzzling out the implications of this fact for the market order. Stipulating perfect knowledge, therefore, begs the question and renders us unable to provide anything like a realistic treatment of actual people’s actual behaviors in actual markets. Centrally planning an economy is therefore even more difficult.

8) Perhaps Mises’s essay contained relevant points when it was first penned, but don’t modern computers offer a way to solve the calculation problem?

The calculation problem remains a problem even with the power of computers, supercomputers, and quantum computers. There is no way to outcompete the market in the absence of prices for capital goods, and no way to establish such prices without a market.

I will say that I have a hard time putting limits on what an artificial superintelligence can do; can I really be certain that the kind of minds existing on a computer the size of Jupiter couldn’t plan a simple economy, even in principle? Perhaps not, but I am comfortable saying that no human, group of humans, or group of humans aided by foreseeable technology will be able to do so.

9) What is “market socialism”?

There doesn’t seem to be much consensus on what exactly market socialism entails, but it appears to be cooperative ownership of the means of production embedded in a framework which still uses a market in capital goods. How exactly this is supposed to work varies enormously from one model to the next.

10) How might the Soviet Union have benefited from world prices established in foreign, capitalist countries?

The heart of the calculation argument is that common ownership of the means of production either distorts or destroys prices altogether, making any semblance of economic calculation in capital goods markets impossible. But a country surrounded by market economies on all sides can still undertake to perform a blunted, ham-handed version of calculation by examining prices in those countries. In the months before starvation a Soviet farmer might’ve been able to approximate the cost of a new piece of equipment by looking at what similar equipment costs in Hungary.

WorldSys: Austrian Home Study Course, Week 30

READINGS: “The Austrian Theory of the Trade Cycle and Other Essays” by Mises et al., Chapter 8 of Thomas Taylor’s “Introduction to Austrian Economics”, Chapter 13 of Gene Callahan’s “Economics For Real People”

1 Is the business cycle a natural feature of the market economy?

No, it is a result of credit expansions from financial institutions. There would be swings and retractions in a regular economy, of course, but not ones of such intensity and duration as are present in a mixed or socialist economy.

2 What is the natural rate of interest?

The rate of interest set by the market, in the absence of meddling by the central bank. Put another way (and quoting Roger Garrison) “[t]he natural rate of interest is the rate that equates saving and investment.”

3 What is the connection between central banking and the business cycle?

The Austrian Theory of the Business Cycle stipulates that it is just the central bank’s expansion of credit which drives the business cycle in the first place. Holding down interest rates and increasing the money supply encourages people to open businesses which are only profitable on paper — with easy credit and prices set to rising by an ever-inflating money supply.

4 How does the Federal Reserve lower market interest rates?

Flooding the market with new cash, which makes more money available for loans and thereby lowers the per-loan interest rate.

5 Why are low interest rates politically popular?

They’re an immensely easy sell — all you have to do is make it sound like you’re giving more businesses the power to expand and create jobs and the working-class members of your constituency will love you for it.

6 How does an artificially lowered interest rate affect the structure of production?

Investments, expansions, projects, and enterprises which are not actually feasible suddenly look more feasible because it is easy to get credit (a loan) to undertake them. Over time this means that more and more unsustainable businesses are funded, gradually bringing the structure of production into a more fragile and unworkable configuration.

7 What is the boom period?

The exuberant period in which easy credit and an expanding money supply cause people to spend more than they would opening businesses and starting new ventures. Everyone is feeling optimistic.

8 Can the boom be maintained indefinitely?

No. All that is occurring is that an expansion of credit is leading people to attempt ventures which would not look profitable or even possible under stable, sound economic conditions. Since the boom period is giving rise to a structure of production and a series of entrepreneurial bets which cannot all physically be realized it is unsustainable by definition.

9 In what sense is the “bust” good for the economy?

It liquidates bad investments and unsustainable ventures, freeing up those resources for better uses elsewhere.

During the boom period people are incentivized to open businesses they normally wouldn’t because interest rates are artificially low, and to remain in business when they aren’t profitable because an artificial rise in prices makes them look more successful than they actually are.

When it becomes clear that this isn’t going to end well the bust is the equivalent of a brush fire, clearing out the thickets, fertilizing the soil, and making space for new, healthier growth.

This is painful, of course, and we shouldn’t make light of people’s failures. But this self-corrective mechanism is a necessary component of a functioning economy.

While all this is happening people start cutting back, eventually building new capital stores to be invested in enterprises that better conform to the consumer’s pattern of wants.

10 Should the government use the printing press to stimulate the economy if there is widespread unemployment?

Using the printing press to spur anything — unemployment, investment, what have you — reliably leads to mal-investments and distortions in the capital structure as business people work off faulty market signals and fund ventures which only look profitable in the light of low interest rates and rising prices.

So if the Federal Reserve curbs unemployment by inflating credit and allowing a whole bunch of new businesses to open up which shall only last as long as new money is being printed, what’s going to happen when the chickens come home to roost and the contraction begins?

11 What is capital consumption?

The use of capital without replacing it during the boom period.

12 Why do entrepreneurs make bad investments during the boom period? Doesn’t the market weed out those who make poor forecasts?

It does when it’s allowed to function properly, but this can take time. If inflationary practices have systematically distorted almost the entire economy then making sensible economic forecasts becomes extremely difficult, no matter how smart and careful an entrepreneur is.

WorldSys: Austrian Home Study, Week 29

READINGS: Selections from Henry Hazlitt’s Economics in One Lesson; Chapter 12 of Gene Callahan’s Economics for Real People

1 What is a price control?

Some kind of government-mandate change made to a market price. The State may establish a price floor below which a price may not be allowed to fall, a price ceiling above which a price may not climb, or a fixed price at which a price must remain.

2 What is a shortage?

An amount of a good less than what is demanded at a given price.

3 What is a surplus?

An amount of a good greater than what is demanded at a given price.

4 Is a shortage the same thing as scarcity?

Not quite; all economized goods are scarce more or less by definition. But there being a shortage of something means there’s an additional amount of scarcity over and above the normal amount. Automobiles are scarce because there are not an infinite number of them, but there is only a shortage if the president erects enormous tariffs on imported cars, or if a meteor hits a Detroit and America’s ability to produce cars is permanently hindered.

5 What are some of the effects of rent control?

As rent controls are just a form of price controls most of the consequences are the same. Such controls unfairly privilege those already living in apartments at the expense of those who don’t because not everyone has an equal chance to bid for space. There is no incentive to conserve space, so tenants who might be willing to suffer a roommate to split rising rents will have no reason to do so. Rent controls also strongly and increasingly dis-incentivize building new housing because construction costs are rising while potential profit (from rents) is legally frozen in place. Sometimes the State will understand this and only place rent controls on existing buildings, not ones built in the future. If this is the case, people will refuse to move because it will be so much more expensive to live anywhere else.

6 What are the effects of minimum wage laws?

Minimum wage laws price marginally-productive workers out of the market. So if the minimum wage was $10/hr and is being raised to $15/hr, anyone who was just barely worth the old wage will now incur a loss for his employer at the new one.

He will, therefore, most likely be fired. To paraphrase Hazlitt, “you cannot make a man worth a certain amount of money by making it illegal to pay him less”.

The more this happens the more economic sense it makes to begin investing in alternative like automation. There are quite a lot of jobs, like cleaning or taking orders at fast food restaurants which are increasingly falling to AI and robots because minimum wages laws make employing humans for these tasks prohibitively expensive.

So both rising unemployment and rising automation are hallmarks of a rising minimum wage.

7 What are the effects of “price supports” for agricultural products?

A typical price support scenario is artificially restricting the supply of a good like cotton or oranges to ensure that prices remain at a State-mandated level. This means that all growers of cotton and oranges produce below their capacity and prices remain above what the market “wants” them to be.

Now contrast this with an organic price decrease. If demand for agricultural goods drops, prices drop, and only the least-effective farmers go out of business: those that were working bad soil, or using old equipment, or being less efficient than they possibly could be, etc.

The resources being used by these marginal farmers are now freed up, and the most effective farmers might conceivably be able to expand their output, more effectively utilizing the newly available land and equipment.

Now, anyone who buys cotton or oranges gets their goods for less than they did before, the price having dropped and all. That extra money is then made available for saving, investing, or purchasing other goods. Those farmers that were knocked out of business by a drop in the prices of oranges and cotton might well find themselves employed in some adjacent industry, supplying the demand engendered by this surge in economic activity — in fact, it isn’t uncommon for a superior company to buy out a competitor and keep nearly the entire staff in place.

To be sure the picture isn’t always so rosy, but note that neither this scenario nor anything like it is possible with the State blindly whacking about with prices and production like a six year old at a piñata.

8 Shouldn’t the government outlaw “price gouging” after a natural disaster, at least for essential items such as canned food and bottled water?

Such laws dis-incentivize provisioning these goods. Higher prices for water, gasoline, and food reflect their scarcity. When water goes for $10/bottle people two or three states away will lead their trailers full of bottled water and drive to the disaster site. If we let our good intentions compel us to legally outlaw such behavior the far more likely result is that there will simply be no water at all.

Maybe we’d like to say “well, people should just drive to the disaster site with water anyway, out of the goodness of their hearts”, and maybe that’s true, but our sentiments do not change the reality at all.

9 What function do market prices serve?

Market prices condense and represent information about preferences, the availability of resources, production costs, supply and demand, and so forth which is otherwise spread throughout the economy in an unusable state. With the prices of final goods, the prices of the factors of production, prices for distribution, an entrepreneur is able to make sensible economic calculations. When people want more of a good or service they begin buying whatever quantity of it exists, which makes providing the good or service more profitable, which serves as a signal to entrepreneurs to enter this segment of the market. The reverse process serves as a signal to entrepreneurs to leave this segment of the market.

Thousands, or perhaps millions, of people are able to act as if they are a working together to accomplish all of this, but in fact it’s just individuals making economic decisions moment-to-moment or day-by-day.

The central mechanism making all of this possible is the price system.

10 Shouldn’t the government try to raise the prices of stock shares, in order to promote investment and growth?

No. Doing this won’t help the people who’s stock was trading below the new price, they will simply be booted out of the market. Even if this somehow weren’t the case (because people were mandated to own a certain amount of stock or whatever) the company’s boosted purchasing power would come from stock purchasers who have had their own purchasing power reduced by the same amount.

It’s unlikely that many will be buying the stocks at the new price, which means that for the most part people are just buying those stocks they would’ve bought anyway, only without the option of buying stocks that had been trading at the less-than-mandated price.

11 How do corporate “raiders” promote efficiency when they engage in leveraged buyouts?

They free up assets like labor and equipment which can be used by other firms. The “raider” essentially waits until such time as a company’s assets exceed its share price on a stock exchange, leverage their buying power to raise enough money to purchase the firm, and then auction the company off piecemeal.

This allows the mis-used resources tied up in the company to be better utilized elsewhere. Other firms might bid on the computers, office equipment, etc. of the original firm.

12 Why does Callahan write that “…there is no use crying over spilled milk?”

In the real economy failures happen. Entrepreneurs misjudge the markets, conditions change and old techniques are no longer viable, speculators and investors make bad calls, money is lost.

The free market corrects for this be liquidating the resources tied up in these unprofitable ventures, making them available for use elsewhere. This is a healthy and necessary part of a functioning economy, not a reason to cry and wring our hands and subsidize failing enterprises at the public’s expense.

There is nothing wrong with taking pity on people who have fallen on hard times, economically, but the correct approach is not bailouts, it’s to let the failures happen and new ventures to emerge.

WorldSys: Austrian Home Study Course, Week 28

READINGS: “Middle-of-the-road Policy Leads to Socialism” by Ludwig Von Mises, Chapters 11 and 12 of Gene Callahan’s “Economics for Real People”

1 What is interventionism?

A third-way system meant to stand equidistant between communism and capitalism, retaining the advantages and avoiding the pitfalls of each.

Interventionism essentially calls for having a market and a State, with the latter heavily involved in the operation of the former, issuing orders, controlling prices, wages, and interest rates, and otherwise meddling in the free economic choices made by individuals.

2 How does interventionism differ from full socialism?

Interventionism allows quite a lot of ostensively free economic activity, and lacks anything so nasty as socialism’s full public ownership of the means of production.

For a while, anyway.

3 Name some examples of typical interventions?

Price and wage controls, tariffs on imports to “support” domestic industries, taxes, establishment of governing bodies like the American Medical Association and the Food and Drug Administration, new “there oughta be a law” laws, subsidies…

4 Describe the “dynamics of intervention”.

Some enterprising bureaucrat spots an opportunity to garner public favor by offering to subsidize some industry or erect a tariff to make imports more costly. Then they pass their laws. But these laws have unintended consequences — not allowing inefficient firms in the subsidized industry to fail means higher prices, as do the tariffs. So now, to remedy this mess, more laws are passed fixing prices. Alas, this just moves the problem further afield, and now we must fix prices in more remote industries to forestall further increases in costs.

And this merry-go-round of nightmares continues to spin and spin, crushing everyone as goes.

5 Why does Mises think an initial price control will lead to more such interventions?

Because interventions generally always lead to more intervention to mitigate whatever unforeseen consequences the original intervention caused.

Mises illustrates with the example of a price control on milk. Say the government caps the price of milk at a certain level, the better to make it available to the poor so that their children can have decent nutrition.

The marginal producers of milk, those for whom the venture was just barely profitable, now take their cows, machines, and skills elsewhere and do something that makes more economic sense. This reduces the supply of milk, making it harder for anyone, including the poor who were to be the target of the State’s largesse, to get any.

To avoid this, the State now institutes further price controls on the various factors of milk production so that those marginal producers don’t face a prohibitively steep rise in their business costs.

But the result of this meddling is that the supply of the factors required to produce the factors required to produce milk drops. At this point does the State see the trend and usher in a program of sweeping free-market reforms, drastically cutting itself down to a size consilient with liberty?

Mayhap it would in a world like Narnia; not, in fact, in this one.

6 How might a government intervention lead to results that even its proponents consider worse than the initial state of affairs?

See the previous question. In this scenario, if price control schemes are allowed to metastasize eventually you end up with economy-wide shortages in all sorts of things. This is not what the original fixers of milk prices had in mind. In theory, if they had understood where their path would take them they would not embark upon it in the first place.

7 Isn’t it best to adopt a moderate position, which avoids the excesses of pure socialism and pure capitalism?

Mises contends that this cannot be done. Only the poles of socialism and capitalism are stable over the medium term, and only capitalism is stable over the long term (socialism eventually collapsing under the mis-signaling of distorted prices).

8 If interventions fail to achieve their official goals, why do politicians continue to propose them?

They are popular with the electorate, and can gain shallow, immediate results which increase the chances of being re-elected.

9 If interventions fail to achieve their official goals, why do voters continue to support them?

Most people simply don’t understand how the economic consequences play out.

10 What are the “two roads to socialism” described by Mises?

The first is by elevating the proletariat to the status of ruling class and then encroaching by steady degrees into the operation of the market; the second is to let capitalism reach full maturity, at which point it will ineluctably evolve into socialism.

So the first sees a need for the State to take an active role in the development of socialism, but the second takes the view that the natural forces of history will take us to socialism whether we will it or no.

11 Is interventionism a viable economic system?

No, either it is abandoned in favor of capitalism or it continues to expand into socialism.

12 Does the history of the U.S. validate Mises’s views on the trends of interventionism?

Most certainly. Our once stalwart allegiance to individualism and economic freedom has given way to gradually more and more statism, collectivism, and interventionism, as Mises said it would.

Polyprofundis: June, 2018

I READ THE FOLLOWING 9 BOOKS IN JUNE

–“Matriarch: Queen Mary and the House of Windsory”, Anne Edwards. This lively examination of one of Great Britain’s famous modern queens at once humanizes the great lady while detailing the consequences, good and bad, of her astonishing devotion to the monarchy. She took her duty as a matriarch and symbol of continuity, power, and majesty very seriously, brooking no lapses from other members of the royal family. This is part of what made her such an effective and popular ruler. Another part was her exceptional intelligence — by all accounts she was smarter than almost everyone around her, memorizing lengthy passages of Shakespeare, taking great trouble to read literature in the original French and German, devouring volumes of Indian history and even learning basic Hindi phrases in preparation for an extended visit to British India.

This book also imparted a sense, foreign to an American such as myself, of just how important the monarchy was to the British people. The Queen’s stern countenance and unyielding steadfastness in the face of personal tragedy, world wars, and the rising tide of modernity were a source of great strength to her subjects. Edwards (the author) speculates that the Nazi bombing of Buckingham Palace during WWII was a profound tactical blunder because, in showing that even the monarchy was not immune to the catastrophes falling daily from the skies above onto the streets of London, it did more to bring the country together than almost anything else could have.

— “If Aristotle Ran General Motors”, Tom Morris. This slim volume examines business and ethics through Aristotle’s four cardinal values (Truth, Beauty, Goodness, and Unity), making a philosophical and empirical case for cultivating each in our working lives. Excellence in business, argues Morris, rests on honestly dealing with customers and workers, on feeling that our work connects to a larger purpose and stimulates us aesthetically, and in knowing that what we do in the office is a function of who we are as a person. Though it was written at the turn of the millennium the book’s tone and style reminded me of classic self-help books like James Allen’s “As a Man Thinketh”.

Good stuff.

— “The Origins of Political Order” ^ “Political Order and Political Decay”, Francis Fukuyama. This is Fukuyama’s famous two-volume look at what drives the development of progressively more complex human societies (answer: lots of stuff) and what makes some of them function better than others (answer: also lots of stuff). Though Fukuyama has a real blind spot around free-market economics, I still gained in both broad sociological perspective and in knowledge of specific historical periods.

-“The Languages of Pao”, Jack Vance. I have a real fondness for these old-school SF paperbacks, with their endearingly-cartoonish cover art and a panoply of goofy names for what is supposed to be high technology (“hammer-beams!”, “mind-blinders!”). The underlying premise is an interesting one: in the far future the descendants of humans have colonized various worlds, one of which is the titular Pao. Aeons of peace, plenty, and certain features of their language have made the Paonese into something like docile cattle, to be milked by more bellicose neighbors and slaughtered, as required.

Royal intrigue results in the young heir to the throne being taken to the Breakness world as a kind of hostage/squire. Over the years he conceives a burning desire to return to Pao as its rightful “Panarch” to bring it into modernity. This will require deposing the current ruler, as well as introducing a language-based caste system which will match features of three new languages with the requirements of brand new classes of warriors, industrialists, and intellectuals — the likes of which have never been seen on Pao.

Unforseen consequences of this scheme, as well as the competing interests of various powerful and crafty malefactors entangle our Panarch in plots which could cost him everything, including his world and his life.

Published in the 50’s, I couldn’t help but thinking that the book’s driving premise could use a modern reboot. Surely with modern linguistics, psychology, and economics much more could be done with it. Still worth the read.

“Seveneves”, Neal Stephenson. The book begins with the explosion of the moon in the skies over Terra; a few pages later it occurs to the relevant authorities that eventually the pieces are going to rain onto the Earth and kill 99.999% of everyone on it.

After that, the action picks up a little bit.

With the possible exception of Jean L’Flambeur being shot between the eyes by the All Defector in Rajaniemi’s “The Quantum Thief” I can’t recall another work of fiction that punches the reader in the nose as soon as they open the book. In classic Stephensonian style we are treated to lengthy discussions of topics like space suit pressurization, orbital mechanics, and the fluid dynamics of tears in space. But the author of “Anathem” and “The Cryptonomicon” has never give short shrift to non-technical subjects, and so we also explore everything from the interpersonal dynamics of humans living in tin cans their entire lives to the effects of social media on human attention to the long-term consequences of humans separating into genetically distinct races.

If you liked his other work you’ll like this one; if you didn’t, then we are very different people.

“The Voice of Reason”, Ayn Rand et al. Mostly I read this because I was experimenting with ways of turning PDFs into audiobooks and I had this PDF lying around. If you’ve read other collections of Objectivist essays there won’t be any surprises here, but her meditation on the absurdity of American antitrust legislation was especially solid, Peter Schwartz’s critique of early libertarianism merits consideration, and Leonard Peikoff’s poignant, illuminating reflections on his thirty-year friendship with one of the most polarizing thinkers of the twentieth century was well worth reading.

“Debunking Utopia”, Nami Sanandaji. If you read just one book on economics this year, it should probably be this one. Sanandaji — a trained Norwegian economist sympathetic to government-sponsored programs like universal healthcare — challenges the standard Leftist talking point that the Scandinavian countries are prosperous because of their enormous public sectors.

His case can mostly be boiled down thusly: make a list of all the things you like about Norway/Denmark/Finland/Sweden. With virtually no exceptions it can be shown that those positive social features either 1) predate the establishment of socialist-democratic governments by decades or centuries; 2) also mark Scandinavian immigrants to other countries, like the U.S., which completely lack such public-sector initiatives; 3) are actively eroding the cultural basis for Scandinavian success.

“The New Jim Crow”, Michelle Alexander. A sobering look at how truly terrifying the American judicial system has become and how far outside the mandates of the Constitution we’ve wandered, with the predictable, tragic destruction of countless lives. I have not yet decided how I feel about the book’s central thesis; Alexander’s view that implicit and explicit racial prejudice was the primary motive for the war on drugs and stacks the deck against poor non-whites in ways clearly meant to be discriminatory has been challenged by the left no less than the right, and for my own part I think there are noteworthy evidentiary omissions and places where she overstates her case.

Nevertheless, I found myself unable to read about ‘Operation Pipeline’ or civil asset forfeiture without a rising sense of incandescent fury on behalf of all those crushed under the bulk of a monster whose evil and stupidity will someday be described as nothing short of breathtaking.

“Antitrust: The Case For Repeal”, Dominick T. Armentano. A leading antitrust scholar draws on more than a century of data to demonstrate that, contrary to popular opinion,a combination of legal ambiguity and arbitrary enforcement makes this law little more than a means by which firms can punish successful rivals and the government can plan the economy.

 

WorldSys: Austrian Home Study Course, Week 27

READINGS: Various articles on patent law from Gene Callahan

1 Describe Amazon.com’s patent.

Amazon patented the idea of buying items on the internet with a single mouse click.

2 What did British Telecom announce as its patented innovation?

Hyperlinks (!)

3 Why does Callahan challenge Gleick’s statement that “[patent law] fueled industrial progress in the early United States”?

Because Gleick can’t possibly know that. He can’t go back in time, remove the legal apparatus of the patent office, and observe the effect of this maneuver on industrial progress. Admittedly this is a problem for historical, economic, and sociological hypotheses more generally, so I don’t know if Callahan has a particular reason for rejecting this line of thought in this case.

4 Why does Callahan say that patent law is not grounded in the common law?

He claims that they are a state intervention which came later and ultimately strip the rights of subsequent inventors.

If someone patents an invention a week before me and I independently invent it later, without use of the earlier inventor’s designs, I am open to legal punishments.

5 What is Gleick’s analysis of the specific case of the incentives facing Jeff Bezos?

Without a patent on 1-click ordering Bezos would’ve still invented it, seen it copied by other online distributors to the benefit of consumers, and would’ve prospered to the degree that he could continue to innovate.

6 Describe the typical attitude of Walter Mossberg concerning PC software.

That the software is far too buggy and computers should simply work at all times without issue.

7 Why does Callahan think the partnership for which he worked couldn’t possibly be accused of sacrificing the end user’s needs when it came to software quality?

Because the people who paid for and used the software were the same people — they therefore could not be mis-understanding their own interests.

8 Why was 61 percent accuracy the point at which debugging of Callahan’s program should stop?

Because, on the basis of some fairly simple accounting, that is the point at which the stock-trading program Callahan was working on would be profitable. At 61% good trades the program would be making money on average and any additional advance testing beyond that point would simply be costing the firm money.

9 Is it really true that home appliances besides computers never crash?

No, if they didn’t there wouldn’t be plumbers, dishwasher repairman, or warranties on refrigerators. And even if this were the case it would hardly be decisive — home appliances are much, much simpler than computers.

10 What alternatives do customers have to “buggy” Windows?

They have a choice between two Windows varieties, Windows 98 and Windows NT, as well as all manner of Unix distributions and the OSx family of operating systems.

11 Describe some of the proposed reforms of the software industry, and Callahan’s reaction.

A government mandate regulating how buggy software could be and implementing a licensing scheme for software engineers. The former would make developing new software too expensive for anyone except the likes of Microsoft, and the latter would drive up the costs of entering the software development field while ossifying the high salaries of anyone able to afford licensing.

WorldSys: Austrian Home Study Course, Week 26

READINGS: “Private Security” in Bob Murphy’s Chaos Theory.

1 What is anarcho-capitalism?

The most thorough possible endorsement of private property rights and free markets. Anarcho-capitalists believe that infrastructure, healthcare, police, armies, and everything else should be provided by the private sector.

2 Are all Austrians anarcho-capitalists?

Today, it definitely seems that way, but historically many prominent Austrians, including the likes of Mises and Hayek, were minarchists.

3 How could law be privately provided?

Murphy believes that insurance companies would be incentivized to finance armies in order to protect the lives and property they’re insuring because, in the event of an invasion or similarly destructive event the insurance companies would be obliged to pay out enormous sums.

4 Do anarchists believe that all humans are basically decent and law-abiding?

No. Anarchists generally seem to believe that people are decent enough to have a society without tearing it apart, but they are not committed to any silliness about the angelic qualities of human nature. This is why they spend time thinking about how the private sector could provision courts, police, and armies — because these things will still be required.

5 How are insurance companies involved in [Bob] Murphy’s proposals?

Centrally: it is insurance companies that Murphy believes will pay for armies. Just as insurance companies would be willing to pay to build earthquake shelters and earthquake-proof buildings in a seismically-active region so too would they be willing to fund defensive forces which, in the long run, will result in their having to pay out less.

6 Wouldn’t Murphy’s system basically be a State run by insurance companies?

No, as alluded to in a previous question set insurance companies simply do not face the same incentives as a state. They do not have a territorial monopoly on violence, they personally own the resources being deployed in various capacities, and they are liable for damages.

7 Give an example of experts or “authorities” from other disciplines where force is definitely not involved.

Murphy cites baseball clubs and French restaurants as examples — one needn’t be a professional athlete or have an encyclopedic knowledge of foreign cuisine to manage establishments devoted to these pursuits, provided one is willing to hire other people to identify the requisite talent.

So if I, as a private-sector general, were allowed to compete with the Pentagon for wartime strategy, the first thing I’d do is start trying to identify and hire experts in logistics, intelligence gathering, and battlefield tactics. I would also look around for a historian who could draw from a reservoir of knowledge to make comparisons between ongoing conflicts and historical ones.

8 How might social/economic pressure persuade disputants to submit to arbitration?

Conflict tends to be expensive and obnoxious. In the majority of cases we can reasonably expect people to be willing to submit to arbitration when conflicts arise because ‘going to war’ with a person — either on a national or individual level — is often simply not worth whatever is to be gained.

9 How does the Misesian calculation argument relate to military defense?

In the same way that it does anywhere else. The calculation argument essentially claims that public ownership of the means of production — factories, lumber, labor — doesn’t allow prices to work, which means that performing rational economic calculations becomes impossible.

How is a given unit of wood or steel to be put to the best use? Without price signals there simply isn’t any way to tell.

Well, this fact doesn’t change when the subject of discussion changes to defense. Every rivet in every tank, every piece of glass in every rifle scope, every hour spent training troops or sending them out on patrol is scarce, and subject to the same economic laws as all scarce goods are.

If you accept this, then you’ll see that Misesian worries over the calculation problem apply to military defense as much as to constructing roads, harvesting wheat, and performing root canals.

10 Why would insurance companies ever pay for military defense?

As discussed in several earlier questions, to reduce long-term payouts. If I’m insuring skyscrapers, bridges, tunnels, roads, and other massive infrastructure projects it damn sure makes sense for me to use some of my profits to pay for a small military able to protect these investments from foreign invaders whose bombs and guns might destroy them.

11 Why does Murphy think that private militaries should have their budgets multiplied by a certain factor before comparing them to government budgets?

Because governments pretty much never underpay for anything, and private sector investors would almost certainly get military equipment for a fraction of the cost. No one is shocked by the $38 million price tag of an F-14 Tomcat because the government’s monopoly on defense has made it impossible to determine how much such a weapon should cost.

12 If the U.S. military is second to none, doesn’t this prove that government is the best way to provide defense?

No, because said military is competing against other state-provisioned armies, not privately-provisioned ones, so at best we can say that it demonstrates that one government (ours) is better than other governments at building enormous war machines.

But the deeper question is whether or not the U.S. military could do a better job of innovating new fighter jet designs and manufacturing existing fighter jet designs than a private firm. On the evidence, I think this is unlikely.

13 Perhaps a draft is detestable for moral reasons, but doesn’t it give a society the best means to defend itself from attack?

The best means of defending from attacks is a volunteer army of willing soldiers who know for what and for whom they are fighting, backed by a robust industrial economy and the high military technology provided thereby.

14 Wouldn’t a private army take over a society?

This would be less likely if there were many competing defense agencies, and it would be a fairly rare situation for conquest to be more profitable than trade.

But I do admit to having less sympathy for the anarchist case on this point. History is replete with examples of precisely this scenario unfolding, and I’m less sanguine about that not happening in a modern anarchy.

15 Would an anarchist society need to develop nuclear weapons in order to deter invasion?

Not necessarily. Plenty of societies exist today without nuclear weapons deterring invasion, and an anarchist society might well be bleeding-edge in the private provision of nuclear defense systems.

It’s also worth remembering that anarchist countries, being poorly suited for conquest, would be harmless neighbors unlikely to provoke a preemptive invasion.