JERKSTORE

My former professor at the University of Chicago was awarded the Nobel prize in economics yesterday morning……

Eugene Fama is the godfather of efficient market theory…..The significant majority of his work was authored while teaching at the U. of C.  He still teaches there and was probably warmly greeted by his class when he arrived for his lecture today……

Most have never heard of him but he is truly one of the high priests in finance…Wall Street, for the most part, has diligently marketed to dismiss his findings because he essentially recommends (and his regressions strongly provide evidence) that it’s best to “be the ball, Danny” – just index and in the long-run you’ll beat professional stock-pickers…..

In addition, the consequences of markets being, if not perfectly efficient, then pretty darn close are quite incredible (market efficiency is impossible to prove or disprove because of the joint-hypothesis conundrum)….I won’t get into the consequences for not only finance but, more broadly, social policy (think Heisenberg uncertainty principle for aggregate Human interaction) but let’s just say his research has spawned spirited enemies. Besides Wall Street disliking his work, “gentlemen” like Paul Krugman actually view him as a nemesis to their ideology…..

Krugman refers to people like Fama, Coase, Hayek, and Friedman (all Nobel prize winners) as “fresh water” economists….I assume it’s a reference to them all hailing from the University of Chicago – the high temple of economics….And the only beacon of light for navigating toward the true understanding of how best society should govern herself….

Anyway, I thought it should be noted on the JERKSTORE…….

As much as the Left loves to point to Thomas Friedman as a “deep thinker” he simply is not. In fact, because of the global warming intellectual “train wreck” (a theory to which he has invested a catastrophic share of his reputation) Friedman should retreat from his positions and rethink most of what he has, shall we say, proselytized.

That being said let me respond to his opinion published in today’s NYT editorial page. Here’s the link:

http://www.nytimes.com/2013/10/02/opinion/friedman-our-democracy-is-at-stake.html?_r=0

First, Friedman, right on liberal cue, offers some irrelevant diversity argument as to why the views of congressional representatives from gerrymandered districts should be considered flawed. Well, gerrymandering cuts both ways (just ask Californians). Until we make gerrymandering unconstitutional we’ll have to live with whatever contribution to political polarization it may cause but it doesn’t neutralize the arithmetic of nominal population….The proportion of political views represented in congress are still legitimate….

Second, he accuses the Supreme Court’s “Citizen’s United” ruling for partially causing our current political atmosphere. Ridiculous. Indeed, the Right AND Left are now allowed to “scream” as a result of their ruling. But as our parents always taught us “just because you’re screaming doesn’t make what you’re screaming more persuasive.” (I ignored that life lesson as I do become more persuasive the louder my voice)

And lastly, Friedman falls into that favorite of liberal tar pits – blame FOX News and its ilk…….Good Lord, a tired trope this makes……As Charles Krauthammer joked about the predictable popularity of FOX: “Yes, FOX News is no doubt popular because it has tapped into a niche – half the country.”

What Friedman and all the other left-wing “deep thinkers” have completely missed as to the explanation for the “hostage taking” by the GOP as an attempt to mortally wound Obamacare is that two thirds of the country really dislike this law and therefore the GOP thinks they’ll win the messaging game with the public. We’ll see……..

Obamacare will not work …The greatest threat is from that oldie but goodie: adverse selection. Too many sick people will sign-up with not nearly enough healthy people signing-up. It will suffer what the insurance industry calls a death spiral……But the ideological reason (and the perfectly legitimate concern of the Tea Party) for its demise is IT’S IMPOSSIBLE TO CENTRALLY PLAN ONE FIFTH OF THE AMERICAN ECONOMY. Do you understand that “deep thinker” Tom Friedman? Being adamantly opposed to Obamacare doesn’t make one an extremist. It doesn’t make one a racist. It makes one economically informed……

Do you understand that President Obama? Do you understand that all the people who voted for President Obama? Do you understand that all of you technocrats that insist “the smartest guys in the room” really exist and they can figure it all out? (the “Angels” as Milton Friedman famously mocked)…..

You will. Eventually. Hostage taking or not……….America is intuitively a capitalistic, free-market people and Obamacare irritates that intuition – thankfully….