Juggling Dynamite

This is an important article to read and understand.  The warnings on Trump’s behavior to date are clear.  See A warning to Trump from Friedrich Hayek:

“One of Hayek’s most important arguments in his great classic, “The Road to Serfdom,” involves the Rule of Law, which he defined to mean “that government in all its actions is bound by rules fixed and announced beforehand.” Because of the Rule of Law, “the government is prevented from stultifying individual efforts by ad hoc action.”

In “The Road to Serfdom” and (at greater length) in “The Constitution of Liberty,” Hayek distinguished between formal rules, which are indispensable, and mere “commands,” which create a world of trouble, because they are a recipe for arbitrariness. When formal rules are in place, “the coercive power of the state can be used only for cases defined in advance by law and in such a way that it can be foreseen how it will be used.

…In sharp contrast, President-elect Trump prides himself on his skills as a dealmaker, and he wants to use those skills to “make good deals” for the American people. There is a real risk that in practice, presidential deals, deliberately done on an ad-hoc basis, will turn out to be Hayekian commands.

In a world of presidential deals, companies are going to have horrible incentives — to curry presidential favor in countless ways, to act strategically, and to make promises and threats of their own, so as to avoid unfavorable treatment from government and to obtain optimal concessions from it. That’s nothing to celebrate. On the contrary, it is a road to serfdom.

One of Hayek’s enduring achievements was to clarify the importance of government neutrality and forbearance, not through anything like laissez-faire, but by avoiding commands in favor of clear, general, stable, predictable rules on which the private sector can rely. A Dealmaker-in-Chief might turn out, in practice, to be a Commander-in-Chief in precisely the sense that Hayek deplored.”

I have to admit, all the recent attention on ‘fake news’ strikes me as naive.  Never mind all the completely made up information, what about the relentless deluge of official government and corporate financial data and press releases.  Did most people really not realize, until now, how manipulated, massaged and misleading most information has become?  A lifelong devotion to critical thinking is the only hope.

On this theme, The Credit Strategist’s Michael E. Lewitt has penned two of the most honest, cathartic paragraphs I have read in some time in his January missive Faking it (subscription only here).

Such true words are rarely spoken.  We must understand and govern ourselves accordingly, especially in the financial plans and choices we make.  Eyes wide open.

After years of watching American corporations lie to investors about earnings and Wall Street analysts pimp for them and keep their jobs, it amazes me that people are just coming to discover “fake news”. Wall Street has churned out “fake news” since printing the first stock certificate. Companies lie to analysts, analysts lie to investors, the financial press parrots these lies and then everybody sits around predicting the future like a bunch of dime -store palm readers. CNBC claims to be the leading financial news channel when, to borrow the words of its Washington reporter John Harwood, it is nothing more than a cartoon version of a television network creating false excitement about markets to lure unsophisticated investors today-trade stocks at the worst possible times. They used to say that if you want a friend on Wall Street, you should get a dog. What they meant was that if you were looking for the truth on Wall Street, you are dumber than a dog.

We live in an inauthentic world yet people perceived to be telling the truth are demonized and shunned by the establishment. The fact that it took everybody so long to figure out that mainstream media promoted “fake news” to support their own political agenda is testimony to the fact that we claim to seek authenticity but settle for insincerity, falsehood and duplicity in our personal, business and civic relationships. Those of us who refuse to settle are considered “difficult”.  We term experts people whose credentials consist of being consistently and wildly wrong about the subjects of their alleged expertise while exhibiting a stunning lack of self-doubt and humility about their failures. “Often wrong but never in doubt” is the mantra of the technocrats and bureaucrats who lead us into one disaster after another while dismissing dissenting voices.  The question I keep asking (because I am decidedly “difficult”) is whether they are wrong because they are stupid or because they are lying.  I’ve come to conclude that the two alternatives are not mutually exclusive though one of the worst sins our society commits against itself is confusing educational achievement and wealth for intelligence or good intentions.

A recent study by the American Lung Association suggests that electric cars (EVs) will help to save thousands of lives per year in the US by reducing air pollution. But there is another life-saving design advantage in electric cars.  The lack of an internal combustion engine in the front helps reduce injury and fatality to passengers in frontal collisions.

Tesla CEO Elon Musk uses the analogy of a pool to describe the effect of the massive, engine free, crumple zone during an impact:  “it’s just like jumping into a pool from a high diving board — you want a deep pool and one without rocks in it.”

A high speed collision with a huge tree in Virginia this week, underlined this point yet again.

See:  Tesla owner credits safety features and lack of an engine for saving his life in a crash.

Here is a picture.  The driver walked out with only scratches.