I am in earnest;
I will not equivocate;
I will not excuse;
I will not retreat a single inch;
and I will be heard.
William Lloyd Garrison
Still More on the "Evil Speculator" Debate
I have mentioned on a couple of occasions in past posts a frivolous grade appeal filed against me at a past university employer. I was the victim of a gross injustice, which I won't discuss in a blog, but it involved a handful of anonymous students. (In fact, I had a fairly good idea whom the students were despite university protection of the malcontents (i.e., academic progressives' warped sense of due process), because they had warned me there would be unspecified consequences if I didn't back off an assignment due date still a couple of weeks away.)
So in the spring, the grade appeal in question was filed literally within the last hour of the university appeal process. This was done so I could not enter a response into the record (once again, the wonderful world of academic due process). I was promised a copy of any materials; the Dean's office reneged because of the volume of materials. I was allowed monitored access (obviously so I couldn't destroy the "evidence"). To understand the significance of how ludicrous this situation was, UWM procedures specifically ruled out grade appeals based on subjective reasons like "I think the professor gave me a lower grade than I deserve because he doesn't like me"; you had to be specific and provide evidence, say, the professor applied double standards in grading procedures; my calculated grade according to course grade policy is higher than the grade I was assigned, etc.
The student never made any specific complaint against the grade he got (as I recall, he passed the course), other than his libelous, unsupported accusation that I had given him a lower grade than he deserved: a clear violation of university policy. He failed to make a single salient objective charge regarding any grade on any exam or assignment. I moved for summary judgment against the student's claim; the committee refused.
The whole hearing was adversarial in nature. One telling example: the student started complaining about the fact that it had snowed 27 inches on the last day of classes--which I had given students as a deadline to turn in their final computer assignment. (Apparently this gentleman believed that I was the devious individual responsible for the inconvenient snowstorm!) I was exasperated with my fellow faculty colleagues on the committee: first of all, I had walked to campus to answer phones and post a notice of an assignment extension, plus the student had taken advantage of the said extension! When I tried pointing out this whole discussion was little more than a student venting against me personally--on irrational grounds, no allegations against the grade on that assignment (in fact, he got a good grade on it), I was ruled out of order.
The appeal was eventually denied, although the committee started acting more like a faculty prosecution, eventually demanding any copies I had of the student's exams (despite the fact the student himself had made no allegation). But here's one of the interesting side notes: one of the members of the committee was a fellow junior MIS professor. I started talking to him one day about this circus going on; at first, he thought it was improper for us to talk about the case outside the kangaroo court hearings, but I had one simple question I wanted answered: did he bother to review the voluminous materials submitted by the student and what did he think of it? [I knew the student's grade was given fairly and consistently with all students: I assigned the grades straight off a spreadsheet (and, notably, the Inquisition never even asked to see that...)] What I knew, because I had gone through it--the malcontent's so-called "evidence" was literally nothing more than an unorganized collection of class notes, interim computer assignment outputs, etc. There was nothing there of a legitimate nature for a grade appeal, which even a casual observer would have realized. My colleague admitted that he never bothered to examine in detail the so-called evidence. I asked him why not. "Well, there's just so much of it--and where there's smoke, there's fire." (Well, it did provide evidence of something, but it had nothing to do with a legitimate grade appeal.)
This Inquisition, and all the other people involved in that fiasco, was a manifest violation of my faculty rights and professional ethics. But I suspect that the student had been coached in an old trick almost every lawyer knows: say, you have a document which helps build your opponent's case; you have to submit it under the discovery period. But you don't necessarily have to deliver the document on a silver platter; in fact, you can try to bury it among thousands of irrelevant documents.
Why did I give this long lead into discussing massive amounts of evidence or paperwork that didn't amount to anything relevant? Because I think the same type of argument is made whenever you hear progressives talking about derivatives and commodities--they start talking in terms of the face value of various contracts being bought and sold, even beyond, say, the physical volume of a commodity being produced daily... So they talk about huge numbers of contracts, and then some magic happens, and the commodity price rises artificially. These nefarious speculators make money...at the expense of the "real buyers and sellers" of said commodities.
I've written a few commentaries over the past few weeks on the speculator nonsense, pointing out that, among other things, speculators provide risk-sharing and liquidity to relevant markets. If we limit the number of speculators as proposed, we could see more exaggerated price volatility, self-directed, inefficient hedging, less inventory, and shortages.
There is a good response to the speculator bogeyman advanced by Joe Kennedy in a recent Gray Lady op-ed, by economics professor James Hamilton. (Thanks to Carpe Diem for the tip.) Hamilton notes, of course, the hypocrisy of speculator conspiracy theorists; the very same demons allegedly spiking oil prices must be crashing natural gas prices:
A single contract represents about 10 million cubic feet, so Kennedy's calculations would invite us to compare the 1,146 billion cubic feet of "paper" natural gas traded on Friday with the total of 78 billion cubic feet of natural gas that the U.S. physically produced on an average each day in 2011. Once again, the vast majority of Friday's natural gas futures trades were matched by an offsetting trade during the same day so as to have little effect on end-of-day open interest. By what mysterious process can all this within-day buying and selling of "paper" energy be the factor that is responsible for both a price of oil in excess of $100/barrel and a price of natural gas at record lows below $2 per thousand cubic feet?
Let me end with Hamilton's quote from a recent academic survey on speculator studies:
We find that the existing evidence [from six strands in the literature corresponding to different empirical methodologies] is not supportive of an important role of speculation in driving the spot price of oil after 2003. Instead, there is strong evidence that the co-movement between spot and futures prices reflects common economic fundamentals rather than the financialization of oil futures markets.
Let's Keep Robin Gibb In Our Thoughts and Prayers
Any faithful reader of this blog knows I have always been a huge Bee Gees' fan. (I always thought the name stood for "Brothers Gibb" but "BG" were the common initials of two early promoters.) Robin, whose fraternal twin Maurice died in early 2003 from an intestinal blockage, has been battling colon cancer which spread to his liver and was recently operated on for an intestinal problem similar to his late twin's. More recently, his health condition has taken a turn for the worse, having contracted pneumonia and lapsing in a coma (although reportedly when big brother Barry sang to him in a very recent visit, Robin seemed to respond, and Robin's wife Dwina says that he cried when she played him Orbison's Crying) Robin and his son Robin-John have been working on a classical music project called The Titanic Requiem, which had its world premiere performance in London just under 2 weeks ago. Robin's brilliant, distinctive vocals shine through this performance from the Requiem.
Major League Baseball Special Moments
This Weekend
Any familiar reader knows that I love major league baseball. I often work baseball references or experiences into my commentaries. Baseball values both individual achievement and teamwork. We baseball fans love statistics. Two are particularly special and relatively rare, given the fact that there are 30 teams playing 162 games: a triple play (one at-bat results in all three half-inning outs in an integrated play combination) and a perfect game, where the winning pitcher retires all at-bats against him, a minimum regulation 27. (A perfect game is not marred by an error which does not result in a base runner at first.) A perfect game is a subset of no-hitter, where base runners (other than by a recognized hit) from bases on ball, passed third strikes, hit batsman, error, etc. are allowed. There are 273 (to date) no-hitters since 1900, meaning in a typical year we might see 2 or 3. Triple plays are similarly rare, only a handful or so a year.
- A Perfect Game. Phil Humber, a Chicago White Sox right-hander, threw a 4-0 perfect game against the home team Seattle Mariners.
- A Triple Play. Last night the Toronto Blue Jays turned their first triple play in over 30 years, as the batter lined out to the first baseman for an unassisted double play for the runner off first and then fired to second base ahead of the base runner caught too far off second for the triple play.
/ CATO Institute,
"Understanding a Taxing Distinction": Thumbs UP!
The basic reflection is really looking at Obama's class warfare 30% millionaire's income tax, a disingenuous jab aimed squarely at GOP front runner Mitt Romney's mostly investment tax rate. Starting with Adam Smith's classic theory of income in terms of wages, profits, and rents, Mr. Aiyar basically argues Mr. Taxman has perverted the concept of income; there's a difference between an income and a property tax; if you want to have a national property tax, we can talk about that separately. He also points out that transfer payments (e.g., alimony, a monetary gift from parent to child) are not income itself but essentially a redistribution of income. He also argues: "Reshuffling assets – by selling a house – is not income either. You just turned YOUR house into YOUR money."
Aiyar discusses this point in more detail in one of his essays I've read elsewhere. (He makes a confusing point about a capital gains tax on liquidating an asset position, but I think he's trying to frame a practical solution for addressing tax evasion in India. As a general principle I would argue money is fungible, and selling the asset may be in the interest of economic efficiency.) Aiyar makes a compelling argument that taxing realized capital gains is unfair in that unrealized capital gains are not taxed, and tax policy discriminates against more economically efficient reallocation of assets.
Note that Aiyar really doesn't address the specifics of Romney's tax situation. But the salient point is that most (if not all) of Romney's personal income tax is an unfair double tax (i.e., Romney has already paid a tax by his ownership positions in the relevant companies through corporate income taxes). This is NOT saying the rich (say, living off their assets) should not be taxed; we are simply saying that it is counterproductive to do that through income tax policy: it perversely erodes the incentive to create new wealth.
Whereas as in Aiyar's second essay, there is a role for a small flat tax to minimize the desire for tax avoidance behavior and to address vertical equity considerations, Obama's reckless policy of raising investment taxes actually encourages suboptimal economic inactivity/inefficiency and static portfolio allocations. All Obama would do is reduce the tax base and discourage business investment.
Personally, I think this is a cynical attempt by Obama to firm up his political base; he knows that this economically perverse policy will never pass the Congress, but he gets to tell his political allies that he tried...
Single Father Capital of the US: Las Vegas
According to this segment, single-father households have risen 60% over the past decade; Las Vegas leads the way, given a number of unfit mothers with alcohol, drug and/or gambling addictions. Whereas I think we have to rethink our approach to the underground economy (e.g., the unsustainable enforcement costs to prohibitions), I would like to see more steps to affirming traditional institutions and virtues
After Obama and the Cameras Went Away, the Invisible Hand Stayed In Joplin, MO Musical Interlude: My Favorite Groups The Rolling Stones, "Play With Fire"
