Satan or Snowflake Misleading Headline

Satan ICBMAll over my news feed today is reference to a Russian ICBM called “Satan”. Yeah, I knew about it before the headlines. It’s an extremely capable ICBM replacing an earlier generation missile called the R-36M which was actually called the Satan. The new missile is named RS-28 Sarmat by Russia and has been designated the SS-X-32 Snowflake by NATO.

I think the idea is an ICBM named Satan is a littler scarier, or has better clickbait allure, than one called Snowflake. I will not deny the missile has an operational capacity that is astounding. It can handle up to fifteen smaller (350 kiloton) nuclear weapons, ten larger MIRV payloads, or up to 24 of the new Avangard hypersonic glide vehicles that, if they work, render all missile defense systems forever obsolete.

Shame on all those headlines. The weapon system is extremely scary. Trust me to understand as much without giving it demonic names.

Tom Liberman

Immediacy of Consequence and Faith in the Improbable

faith-and-reasonWith the plethora of stories involving things along the lines of Flat Earth I’ve been thinking about why people are willing to believe certain things on faith while being much more pragmatic in other areas of their life. For example, the belief in alien visitors is, so far, a faith-based ideology. Whereas the belief in the chair you are sitting in is based on strong physical evidence.

I understand people make what they think are rational arguments for a Flat Earth, Pizzagate, Aliens, and many other theories; but the evidence for these things is universally lacking. Those same people would look at you quite askance should you tell them there was a comfortable chair ready for them to plop down into right behind them. They would look for said chair and confirm visually that it did exist. They might reach their hand or foot through the area to confirm nothing was actually there. They would then dismiss your assertion and refuse to sit.

Why are people much more likely to believe fanciful accounts of a Flat Earth but universally unwilling to believe something about a simple object in front of them? I believe the answer is the immediacy of the consequence associated with the belief. A more immediate and greater penalty for the belief inevitably leads to a sounder thought process.

Should you believe the person claiming the chair is actually there and sit down, you face a rather painful and embarrassing fall. Should you believe the Earth is flat you risk no physical harm although you might face some ridicule. Many enjoy the ridicule. They enjoy coming up with improbable or impossible arguments to prove the attacks of September 11th against the World Trade Center and other targets were actually orchestrated by some conspiracy minded organization aside from the actual perpetrators. Such improbable beliefs actually set them out and give them a sense of individuality. They actually feel smarter and better about themselves for refusing to be fooled, even though they are actually quite stupid.

Belief in such things entails no immediate risk. Belief that aliens are secretly directing our actions doesn’t really change your life in any tangible way. You still go about your daily business in pretty much the same way you would if the notion was false. There is no immediate punishment for such beliefs.

However, if someone tells you that the car you are planning on purchasing is a fantastic car, most people will not accept this advice. They will do some research to make certain the automobile meets their desired needs. The same goes for any major purchase. The more money you are planning on spending the more likely it is you will spend time in pragmatic research to ensure the product is exactly what you need.

Many people are happy to spend a few dollars on a product advertised as a miracle drug without much thought. Scam artists rely on this facet of human nature. Imagine a group of 100 people was asked to spend five dollars on a product that guaranteed fresh breath. I would guess at least half would do so. However, if the same product was offered for five hundred dollars I suspect only a few people would be willing to make the outlay.

Where do you think you fit in on this scale of faith? I would guess most people, myself included, consider themselves pragmatic thinkers requiring good evidence. I think most people would be wrong.

On the Bell Curve of Faith Based Thinking where would you put Yourself?

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Tom Liberman

Right is Right when it Comes to the Nuns and Katy Perry

Katy PerryAn ongoing story involving Katy Perry and a pair of nuns recently heated up again when one of the nuns passed away in court and the other claimed bankruptcy. I think what’s important to understand is Perry is completely in the right. Yet, there are clearly many who think she should give up her claim because the elderly nuns are a sympathetic pair. Bah humbug, says this scrooge.

I think the first step we should take is to examine the case itself. Five nuns lived at a property called Los Feliz for many years although moved away a few years back. The property is owned by the Los Angeles Archdiocese although two of the five nuns claim they were the actual owners because of their long years living there. The three other nuns are not part of the legal situation and support the Archdiocese’s right to sell.

Katy Perry expressed an interest in the property and was in negotiations to purchase it when the two nuns got wind of the sale. They watched a few of Perry’s videos and decided they didn’t approve of her. So, they contracted with a third party and quickly sold it for well under it’s value with a miniscule down payment.

The judge ruled that they had no right to sell the property and the third party was engaged in tampering and ordered Dana Hollister to pay Perry and the Archdiocese no small fee. “Clearly invalid,” was the term the judge used in regards to the sale.

It seems clear Perry is right from a legal aspect but I’m willing to go significantly further. I think she’s right from an ethical perspective. The nuns are behaving horribly and using their position to vilify Perry and break the law. They are acting in an incredibly entitled fashion. We don’t like Perry. They claim they are somehow breaking their vows by allowing the property, that they haven’t lived at for years, to be sold to someone so evil as Perry. Their behavior is despicable and filled with selfish and righteous horse manure.

The two, now one, are a playing on the sympathies of those who look at them and see a pair of elderly nuns being taken advantage of by a ruthless mogul when the opposite is closer to the truth. The nuns are acting ruthlessly and viciously exploiting their position to turn public opinion against Perry.

The surviving nun is now claiming she is bankrupt despite the fact the Archdiocese continues to pay all her living expenses and has expressed it will continue to do so until her death. She is saying terrible things about Perry.

I will not stand by. I’m calling her out! Try to be a decent human being in your last years of life you angry and bitter old woman. Yep, I’m yelling at a nun and I’m doing it because she is legally and ethically in the wrong.

Don’t give up the fight, Katy. And, if you ever happen to visit St. Louis, dinner and a drink? My treat.

Tom Liberman

United Airlines and Would You Trade a Quarterly Bonus for a Chance at a Big Prize?

United AirlinesUnited Airlines recently announced they were doing away with a quarterly bonus of $300 to all eligible employees and instituting a lottery wherein those same employees have a chance to win $100,000 and other prizes. What I’d like to ask is if you would want such a plan at your place of work?

Let’s look at the metrics. United Airlines employees almost 90,000 people although we have no way of knowing how many of those get the incentive bonus of $300. It is based on things like attendance so it doesn’t sound particularly difficult to achieve. I’m going to say that about a quarter of the employees get the bonus. That’s 22,000 bonuses of $300 awarded each quarter for a total of $6.6 million in payouts.

We have to do a bit more guesswork on the value of the remaining prizes United Airlines is giving out but let’s say the total package is worth $2 million. That’s a saving of $4.6 million dollars for the company. Pretty nifty. It might be more, it might be less, but I think it’s fair to say the new policy is designed to save the company money. United Airlines executives claim it will generate employee excitement but I think it’s reasonable to infer this line is somewhat disingenuous.

Under the old plan an employee who met the standards receives $300 each quarter. That’s not a life-changing sum by any imagination. A bonus of $100,000 and trips are, obviously, of significantly greater value to an individual employee. The employee who wins the bigger prize is quite happy while all the employees who gave up the $300 for nothing are not as thrilled. From a metric point of view that’s about 21,900+ employees who are angry and 100, depending on how many prizes are offered, who are happy, each quarter.

Will this mean more employees seek the bonus? Fewer? These are interesting questions to me. They speak to psychological motivations. Would you do more for the chance at a greater prize or do less because your chance of getting something is greatly diminished? Would it not change your work behavior at all?

What do you think?

Would you be for or against a plan like United Airlines?

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Tom Liberman

Protectionism and the Steel Industry

steel-tariffPresident Trump plans to establish a large tariff on steel and aluminum. He is an avowed protectionist and that generally means making it more expensive for foreign companies to do business in the United States. I wrote a blog specifically about the trade in automobiles and our agreements with Mexico in January of 2017 but the situation is different enough this time that I thought I’d revisit the subject.

The basic idea behind almost any tariff is that foreign countries are engaged in supporting various industries in their nation and this gives those companies an unfair advantage over competing companies in the United States. I will not be getting into a discussion about the long-term impact of trade wars and how industry in the United States might be negatively impacted if countries choose to retaliate against our trade laws. Nor will I be talking about what constitutes unfair trade and our own transgressions in that regard. I’d like to keep today’s topic on the simple idea of the immediate impact of the tariffs.

Countries that import aluminum and steel into the United States will have to pay more in order to do business in this country. In the case of steel, a whopping twenty-five percent more. This means companies in the United States currently producing steel will gain a competitive advantage. Those companies might hire more workers and open more plants to start producing steel at a price higher than is currently being sold by those foreign countries but at a lower price than after the tariffs come into play.

Let’s imagine a steel manufacturer in a foreign country currently produces steel at a price of X. A competing company in the United States produces steel at a price of Y. X is less than Y and therefore foreign companies are selling us lots of steel. However, X is less than Y*1.25 and thus United States companies will be aided. They will benefit. That’s the main idea behind protectionism and at this point you might be nodding your head and thinking what a great idea it is. There is, as they say, a rub.

Everyone in the United States purchases and uses products with steel and aluminum in them. From soda and beer cans, to cars, to packaging, to windows, to doors, to siding, to many household items, street lighting, electrical lines, and more. Steel is used in buildings, roads, appliances, guns, cutlery, watches, surgical instruments, and more.

When the price of steel inevitably goes up because of these tariffs then everyone who uses these items, and that means everyone in the United States, every man, woman, and child, pays more. If people have to pay more for one thing then they inevitably have less money to pay for other things. Perhaps a family decides not to get their deck rebuilt or decides to pass on that Nashville vacation this year.

The case against Chinese steel has merit. It is possible the government is helping industry manufacturer steel at a price that cannot be met by U.S. steel companies. The question we must ask is who is hurt by this practice and who is helped?

The answer is quite straight forward. The companies and people in the United States who produce steel are hurt as are the taxpayers in China. The people who are helped is everyone in the United States including the steelworkers who get various products at a cheaper rate.

That’s economics. If you can get a comparable product at a cheaper price then you do so. You should do so. That’s a good thing. That good thing is what tariffs subvert. These tariffs will help a small percentage of the people in the United States, there is no doubt about that. That’s the appeal. We see an industry and want to help it, not thinking about the larger ramifications of such policies.

Whenever I’m talking about subjects of this nature I always remember the underrated gem, Other People’s Money. Danny DeVito plays Larry Garfield and gives an impassioned speech about the last buggy whip manufacturer. If a company can’t compete, they need to get out of the business before they are totally bankrupt.

If the government steps in and increases the price of steel then United States companies will be able to sell their product in the United States but there alone. No other country will want our high-priced steel. Eventually the tariffs will fail, as they always do. Then the steel companies and you will be back where we started. The difference will be that you’ll have less money in your pocket.

That’s the facts. That why economists don’t like tariffs and protectionist policies in general. They stave off the inevitable at an enormous cost.

Do I feel pity for the steel industry and the workers? You bet I do. It’s a sad fact of life. Everyone can’t be a winner in the game. That’s the nature of the world and of economics. President Trump would be far better off using taxpayer money on retraining steel workers for industries that can compete. I’d be all for that.

I cannot, I will not support tariffs. They just don’t work.

Tom Liberman