Tidbits Quotations
To Accompany October 29, 2014 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

Happiness is like a butterfly: the more you chase it, the more it will elude you, but if you turn your attention to other things, it will come and sit softly on your shoulder.
Henry David Thoreau

It makes me wonder how all those people on Medicaid, food stamps, and welfare can afford iPhone and car payment monthly fees in hundreds of dollars. I suspect the main reason is avoiding marriage to what would otherwise become a higher income spouse.
Bob Jensen

According to the National Retail Federation, Americans are projected to spend $7.4 billion on Halloween this year, including $350 million on costumes for pets.
Kristin van Ogrop, Time Magazine, October 27, Page 58
Michele Obama should be rightly outraged at the unhealthy sugar intake of millions of children, and for what?

Be brave enough to start a conversation that matters.
Margaret Wheatley,

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

Don’t let anybody tell you that raising the minimum wage will kill jobs, they always say that.
Hillary Clinton
Even Paul Krugman admits that robots are replacing lower-skilled workers. McDonalds is now experimenting with automated order taking that will eventually replace many of its lowest-paid workers. In fairness to Ms. Clinton, it may not be so much the wages that are driving the robotics as the expensive worker benefits and sometimes the human training costs. Versatile robots are now being invented that are more easily trained for different types of work.

"Rise of the Robots," by Paul Krugman, The New York Times, December 8, 2012 ---

Manufacturers Adding Robots to Factory Floors in Record Numbers ---

"All Around The World, Labor Is Losing Out To Capital," The Economist, November 3, 2013 ---

Despite all these issues on the ballot in November, we're actually seeing a lull (in propositions on state ballots). According to Ballotpedia, we haven't seen such a low number of state ballot initiatives (146) on a fall election since 1988. But, as Ballotpedia also notes, new regulations have made it harder for initiative supporters to qualify their proposals for the ballot.
"Guns, Drugs, and Money: Here's What's on State and Local Ballots in the 2014 Midterms Ballot initiatives across the country offer more substance in the midterm elections than the battle for Senate control," by Scott Shackford, Reason Magazine, October 16, 2014 ---

"Everything Millennials Need To Know About Politics And Economics in 25 Quotes," by John Hawkins, Townhall, October 25, 2014 ---

Striking Photo Sums Up The Immigration Crisis On The Spain-Morocco Border ---

Economist’s View (Economic News and Writings of Famous Economists) --- http://economistsview.typepad.com/economistsview/

These maps of water use show why the Western US is in trouble ---

How to Mislead With an Article Title
"The 1% are more likely to vote than the poor or the middle class, and it matters — a lot," by Sean McElwee, Vox, October 24, 2014 ---

Jensen Comment
It turns out that this is an article that is really an appeal for more poor and middle class voters to show up at the polls. That's fine, but the title of the article is totally misleading. Firstly, the 1% really are only the 1%. Secondly, the number of nationwide 1% in most voting districts is closer to zero percent. The 1% are clustered in various parts of the USA like NYC. But with all the millions of voters in NYC, even the 1% is not likely to change the election outcomes if they do or do not show up to vote.

Sure the 1% can influence election outcomes throughout the USA with their money. But this article is about showing up at the polls and not about influencing election outcomes with money.

How to Mislead With an Article Title
"Who Really Likes the Police? Older, Richer, White, Conservative Republicans," by Emily Eakins, Reason Magazine, October 24, 2014

Jensen Comment
The title of this article is consistent with the content, but it's still misleading. The majority of inmates in prison are there because of crimes committed against the poor and middle class. In part this is because there are many more poor and middle class people. But it's mostly about the proximity of criminals to the poor and middle class. The wealthy people are tucked away behind gated neighborhoods, have the most expensive security systems money can buy, and are not out walking the streets at night or living in high crime areas. A large proportion of the felonies are drug related where the victims are far from being wealthy.

The bottom line is that the residents who are in effect getting the most 911 call policing service from police are the people  claim that they hate the police because they do not get enough protection. And they are correct!

Young black and Latino females have a higher probability of being raped than young white females. Black and Latino men have a higher probability of being assaulted and/or murdered than white men.

Perhaps the article should have the title "Who Really Needs the Police? Poor, Liberal Democrats." Of course those that need the police the most probably have a higher probability to be abused by the police such as in racial profiling. Hence, those that need the police the most may also fear and dislike the police the most.

All this of course does not mean that everybody has equal protection by the police.
But this is partly a chicken versus the egg thing. The people having the worst protection by the police also live in parts of the USA having the highest probability of crime. To provide everybody with equal protection might mean having 50 police officers walking the beat back and forth on every block of high crime areas. This becomes insanely expensive to provide truly equal protection under the law.

One of my 70+ year-old neighbors, a very close friend, in San Antonio volunteered to ride in Mary Mont district police cars at night. He did so simply to help the police who otherwise patrolled alone in their cars. He had a license to carry a gun, but I don't think he did so when accompanying a police officer. He told me that in what was called our Mary Mont district of San Antonio, over 90% of the 911 calls came from the one subsidized housing project in Mary Mont --- what the author P.J. O'Rourke called a "whorehouse for drug dealers."

The bottom line is that the residents who were in effect getting the most 911 call policing service from the San Antonio police in Mary Mont were the people who probably also would claim that they hated the police because they did not get enough protection. And they were correct!

State Data Lab ---

Obama Era Success
"Safety Net Cut Poverty Nearly in Half Last Year, New Census Data Show," by Danilo Trisi, Off the Charts Blog, October 16, 2014 --- 

Safety net programs cut the poverty rate nearly in half in 2013, our analysis of Census data released today finds, lifting 39 million people — including more than 8 million children — out of poverty.  The data highlight the effectiveness of cash assistance such as Social Security, non-cash benefits such as rent subsidies and SNAP (formerly food stamps), and tax credits for working families like the Earned Income Tax Credit (EITC).  They also rebut claims, based on poverty statistics that omit non-cash and tax-based safety net programs, that these programs do little to reduce poverty.

Accounting for government assistance programs and taxes cuts the poverty rate for 2013 from 28.1 percent to 15.5 percent, we found (see chart).  These figures are based on Census’ Supplemental Poverty Measure (SPM), which — unlike the official poverty measure — accounts for taxes and non-cash benefits as well as cash income.  (The SPM also makes other adjustments, such as taking into account out-of-pocket medical and work expenses and differences in living costs across the country.)

Safety net programs cut the poverty rate for children from 27.5 percent to 16.4 percent, we found.

Because the SPM includes taxes and non-cash benefits, it gives a more accurate picture of the impact of anti-poverty programs than the official poverty measure, which counts only cash income.  Non-cash and tax-based benefits now constitute a much larger part of the safety net than 50 years ago, so the official poverty measure’s exclusion of them masks the nation’s progress in reducing poverty over the last five decades.

Nevertheless, some policymakers and pundits have used comparisons based on the official poverty measure to argue that federal anti-poverty programs are ineffective.  As Senator Orrin Hatch, the Finance Committee’s ranking Republican, put it last week, “For 50 years we’ve spent trillions of dollars on massive federal welfare programs that have largely failed.  The poverty rate has remained essentially unchanged since 1967.”  House Budget Committee Chairman Paul Ryan has made similar statements.

Comparing poverty rates in the 1960s and today using the official measure, which doesn’t count programs like SNAP, the EITC, and rental vouchers, implies that those programs — all of which were small or nonexistent in the 1960s — do nothing to reduce poverty, which clearly is not the case.  Columbia University researchers using an SPM-like measure (and adjusting the poverty line for inflation) found that the poverty rate fell from 26 percent in 1967 to 16 percent in 2012 if one includes this assistance.  Today’s Census figures provide further evidence of the safety net’s strong anti-poverty impact.



From the Scout Report on October 24, 2014

The Latest on Climate Change
Another global warming contrarian paper found to be unrealistic and

After record warm September, 2014 is on track to warmest year, NOAA says

Hot News: 2014 On Track to Become Warmest Year

Global Warming News

Mini multiples display decades of sea ice in a trice

What EPA is Doing: Climate Change


Don't let anybody tell you that it’s corporations and businesses that create jobs.
Hillary Clinton, Daily Mail,

. . .

Clinton's remarks sound strikingly similar to one of the biggest fumbles of President Obama's re-election campaign in 2012.

In a speech, he that governments and not individuals create jobs, telling entrepreneurs: 'If you've got a business—you didn't build that. Somebody else made that happen.'

He added: 'You didn't get there on your own. I'm always struck by people who think, well, it must be because I was just so smart.'

The inflammatory campaign speech comments underline the extent to which Obama believes that the state rather than ordinary citizens create jobs and wealth.

Don’t let anybody tell you that raising the minimum wage will kill jobs, they always say that.
Hillary Clinton
Even Paul Krugman admits that robots are replacing lower-skilled as well as higher-skilled workers. McDonalds is now experimenting with automated order taking that will eventually replace many of its lowest-paid workers. In fairness to Ms. Clinton, it may not be so much the wages that are driving the robotics as the expensive worker benefits and sometimes the human training and turnover costs. Versatile robots are now being invented that are more easily trained for different types of work.

"Rise of the Robots," by Paul Krugman, The New York Times, December 8, 2012 ---

Manufacturers Adding Robots to Factory Floors in Record Numbers ---

"All Around The World, Labor Is Losing Out To Capital," The Economist, November 3, 2013 ---

Graphic from the New York Times via Barry Ritholtz:  Change in private manufacturing jobs, by county in the USA
This graphic shows why there is such a lousy future in manufacturing jobs. There are many causes, especially the slow economic recovery and reduced government spending for such  things as military equipment, but the increasing displacements are causes by robotics and automation that increasingly replace manufacturing workers in ways that were not imagined 20 ago. Will the last person leaving an automated factory turn out the lithts ---

"Everywhere I Look I See Jobs That Will Be Replaced By Robots," by Richard White, Business Insider, September 12, 2013 ---

No More Jobs on the Farms or Most Anywhere Else
"Get Ready for Robot Farmers,"  by Jodi Helmer, CNNMoney via Yahoo Tech, October 24, 2014 ---

"Patented Book Writing System Creates, Sells Hundreds Of Thousands Of Books On Amazon," by David J. Hull, Security Hub, December 13, 2012 ---

Philip M. Parker, Professor of Marketing at INSEAD Business School, has had a side project for over 10 years. He’s created a computer system that can write books about specific subjects in about 20 minutes. The patented algorithm has so far generated hundreds of thousands of books. In fact, Amazon lists over 100,000 books attributed to Parker, and over 700,000 works listed for his company, ICON Group International, Inc. This doesn’t include the private works, such as internal reports, created for companies or licensing of the system itself through a separate entity called EdgeMaven Media.

Parker is not so much an author as a compiler, but the end result is the same: boatloads of written works.

"Raytheon's Missiles Are Now Made by Robots," by Ashlee Vance, Bloomberg Business Week, December 11, 2012 ---

A World Without Work," by Dana Rousmaniere, Harvard Business Review Blog, January 27, 2013 --- Click Here

Jensen Comment
There's hope until robots are reading, comprehending, and writing reviews of books written by robots. 

Jensen Question
How many years will it take for cost accountants to stop teaching how to allocate overhead on the basis of direct labor hours or costs?

"Minimum Wage Backfire McDonald’s moves to automate orders to reduce worker costs," The Wall Street Journal, October 21, 2014 ---

Reply from Glen Gray on October 26, 2014

Forget robots; self-service kiosks are killing jobs a a rapid rate. Thinks about what ATMs did for jobs at banks. The local Ralph's grocery stores keep adding self checkout kiosks. The United terminal at LAX is all kiosks. Everybody checks themselves in. The humans help with baggage, but that's even getting more self serve.

Jensen Comment
You have to wonder when McDonald's will simply be indoor and outdoor vending machines with tables and child playgrounds.
The vending machines might heat and then assemble meals with robots. Robots need "health care" in a sense, but their "physicians" wearing tool belts make house calls.

Actually, McDonald's earnings took a nosedive this year for various reasons more serious than labor costs. Rising food costs are part of the current problem as beef, chicken, and fish prices soar. Overseas sales, especially in China, are down. The competition, particularly in the USA, is becoming very troublesome to McDonalds. Startups have some good ideas for food quality, nutrition, and ambiance.

McDonalds probably needs to diversify as well as automate. How far could McDonalds go to automate the entire supply chain from an organic farm to a plate of food from a vending machine? Automation of orders is only a small part of the increasing number of alternatives for automation up and down the supply chain.

But the point of the article is well taken. One of the easiest things to automate is often a task with the least amount of skill. Robots are now unloading trucks outside factories, stocking the shelves, picking the orders, and reloading the trucks all with automated billing all the way up and down the supply chain,

Just down the road from where I live is a very scenic mountain inn (close to 30 rooms) that is now bankrupt and vacant. The bank holding the mortgages held an auction in June but the the bids were little more than the value of the land. The two buildings are in pretty good shape. The hotel makes money on the golf course, although deed restrictions are such that the golf course can never be anything but a golf course or a forest.

The big problem is that managing an inn and restaurant of this size is very labor intensive. Mom and pop ownership will not work very well without added labor costs that discourage potential buyers. These buyers either want a much smaller inn or a much larger inn.

If I were younger and more adventuresome, I might consider buying this inn at a bargain basement price, advertise low room rates to guests who will bring their own bedding/towels and pay a sizeable cleaning deposits that will be refunded in most cases at the time of checkout. I would consider unique alternatives for dining. One might be to purchase on-site and cook-your-own steaks, fish, and chicken on outdoor (summer) and fireplace (winter) grills. The other alternative might be to put in automated vending for quality hamburgers, sea food, and vegetarian meals. I'm still contemplating how to make the bar a profit center --- for that automation might not work since guests often like unique cocktails and conversations with bartenders and waiters. Then again maybe huge St. Bernards wearing collar-kegs could deliver quality wine and beer to tables.

You can view some pictures of the vacant Sunset Hill House at

Did a Stanford-Dartmouth Research Project Cross Line Into Election Advocacy That Will Impact Election Outcomes?

After the Damage is Done
"Stanford U. Apologizes for Fliers That Rated Montana Candidates’ Politics," by Andy Thomason, Chronicle of Higher Education, October 24, 2014 ---

Stanford University has apologized for a research project that sent fliers to Montana residents rating the political leanings of candidates for the state’s Supreme Court, the Associated Press reports. The fliers, which bore Montana’s state seal, were condemned by its secretary of state, Linda McCulloch, who called them “deceitful.”

The university said it was investigating the methods of the project’s leaders, who are researchers at Stanford and Dartmouth College. ”We do share the concerns that the mailers have caused confusion among voters,” said a Stanford spokeswoman, Lisa Lapin. “We sincerely apologize to those voters, and we apologize to the secretary of state for the confusion we caused.”

The project was meant to determine whether voters were more likely to go to the polls if they knew more about the candidates. Fliers were also sent to California and New Hampshire as part of the project, but neither of those states has complained.


Liberal Bias in the Media and Academe ---

About as Hypocritical as You Can Get:  Cherry-Picked Exemptions for States Passing Genetic Modification Labeling Regulations

"Taking Exception to Vermont's Proposed GMO Labeling Rules," by Baylen Linnekin, Reason Magazine, October 18, 2014 ---

. . .

How's that? In the case of cheese, it comes down to a genetically modified enzyme, FPC, that's used to make ninety percent of cheeses. It's expensive to make cheese without FPC.

Vermont, of course, is known for its cheese. And beer. Not surprisingly, the regulations also exempt alcohol beverages.

Cherry-picked exceptions like these—which often appear to favor or protect local interests—are common.

"Manufacturers would have to label GMO bread, but not GMO cheese," reads a recent report on Colorado's proposed GMO-labeling law. "Soda, but not beer. Candy, but not gum."

And, as I noted earlier this year, a Hawaii county GMO ban exempts GMO papayas, which (coincidentally!) are grown in the county.

Four national associations, headed by the Grocery Manufacturers of America, sued earlier this year to prevent the Vermont law from taking effect.

They argue, among other things, that the state's GMO-labeling law is unconstitutional. They're right. That's true of every state GMO-labeling law I've seen. And Vermont's is no exception.

Like the California egg law I wrote about last week, GMO-labeling laws restrict interstate commerce. That's the primary reason why I opposed proposed laws in Washington state and California, both of which were rejected by voters.

Defending an unconstitutional law may prove as costly as it is foolhardy.

Reports indicate the state may have to revert to bake sales to fund its defense of its labeling law, which is expected to cost upwards of $8 million. In August, the state announced it had raised just over two percent of the money it expects to need to defend the law in court. Since that time, reports indicate that donations had swollen to less than four percent.

But the real costs might be borne by Vermont's farmers. The requirements in the proposed rules that sellers affirm that any products (other than products like beer and dairy products explicitly exempted) sold without a GMO label are free from GMOs via a sworn statement may prove daunting.

Continued in article

Jensen Comment
To add pain to misery, the new GMO regulations will also raise the tide of shoppers who already pour into New Hampshire to avoid Vermont's sales tax. Most days over half the cars and trucks in our nearby Wal-Mart store have Vermont license plates.

Since many out-of-state distributors will simply stop distributing many types of foods in Vermont, Amazon must be drooling over the new Vermont customers who do not want to take the time, cost, and trouble to drive to New Hampshire.

Book Review
How Adam Smith Can Change Your Life

  • ISBN-13: 9781591846840
  • Publisher: Portfolio Hardcover
  • Publication date: 10/9/2014
  • Pages: 272
  • "Adam Smith: Guide to a Happy Life --- Society doesn’t enslave us, as Rousseau suggested. According to Smith, it liberates us from the worst part of ourselves," by Daniel Akst, The Wall Street Journal, October 20, 2014 ---

    Poor Adam Smith. The great Scot was among the most important thinkers who ever lived, yet in the mind of fan and foe alike he survives as little more than a disembodied “invisible hand.” Then again, Smith would have been the first to remind us that our sympathy for the dead is wasted; he did this very thing in his first book, “The Theory of Moral Sentiments,” which established his reputation as a major thinker when it came out in 1759.

    Little wonder: Read it and you will discover a far more interesting writer—and penetrating observer—than the caricature so carelessly invoked in contemporary discourse. Smith was a moral philosopher and social psychologist as much as the political economist we know from “The Wealth of Nations” (1776). What unites his two great works is an insight neatly summarized by the historian Jerry Z. Muller in “Adam Smith in His Time and Ours” (1993): “It is the influence of society that transforms people into moral beings.”

    Smith wrote in the stately and verbose style of his day, which has helped to sequester his genius from the mass of modern readers. The economist Russ Roberts, in “How Adam Smith Can Change Your Life,” sets out to remedy this difficulty by offering a layman’s guide to Smith’s moral philosophy in plain English. A clear and focused writer, Mr. Roberts meets the challenge ably enough, and most people who read his gloss on “The Theory of Moral Sentiments” will be better off for doing so even if their lives do not change dramatically.

    Inevitably, some of the richness of Smith’s work gets lost in translation, and the lessons Mr. Roberts distills from Smith’s book, unassailable though they may be, won’t seem very different from the ones most of us have heard from our parents. Envy is pernicious. Our love for the latest and greatest consumer products, often divorced from their usefulness, leads us to needless expense. It is much better to be wise and virtuous than rich and powerful. “There is something ineffable about fame that draws us to it,” Mr. Roberts tells us at one point, rather anti-climactically. Elsewhere he says, “Smith makes it abundantly clear that money and fame don’t lead to happiness.”

    Still, Mr. Roberts offers newcomers a nice taste of the banquet Smith has to offer. Open “The Theory of Moral Sentiments” almost anywhere and you will gain insight into some aspect of the human condition: why poets but not mathematicians tend to form cabals (the former rely on public approval), for example, or what makes romantic comedies so much fun (other people’s amours are ridiculous and yet produce interesting complications). Smith saw that we rate pain more potent than the equivalent amount of pleasure and that imagination is crucial to morality—so we can see how our actions will look to others and what the future will be like depending on what we do now. In not quite as many words, Smith observes that form follows function, that crowds can have wisdom, and that what social scientists now call “hedonic adaptation” (our tendency to adjust quickly to good and bad news alike) will soon wash away the pleasure that we gain from material good fortune. His advice to mourners of all kinds—“return, as soon as possible, to the daylight of the world”—remains sound.

    All this comes as part of Smith’s effort to derive a basis for virtue, the key feature of which is self-command. His premise is that our desire for the love and regard of others makes us behave in accord with their preferences and expectations, enabling us to rise above our baser selves. Society doesn’t enslave us, as Rousseau and others have suggested; rather, according to Smith, it liberates us from the worst part of ourselves and allows us to thrive in concert. All of us, Smith says, judge our behavior against the standard of an impartial spectator within who develops as we mature, a kind of embodied conscience who can hold us to the straight and narrow even if our fellow humans are reprobates or monsters. Not that this spectator can’t be fooled. Smith warns of the rationalizing to which our species is prone and, in doing so, places a modern-sounding emphasis on the problem of self-deception.

    Yet we have also learned a thing or two since the 18th century, and Mr. Roberts might have spent more time testing Smith’s arguments against recent findings in the social sciences. For example, there is evidence that rich people (and rich countries) are happier than poor people (and poor countries), suggesting that Smith underestimated the extent to which money can indeed buy happiness. Smith may have also underestimated the importance of status. Since the 1960s, the oft-cited Whitehall studies have found that British civil servants have had longer lives the higher they were on the job ladder, so maybe people have good reason to worry about rank. Likewise, the claims of evolutionary psychology and cognitive science—concerning sex, disgust, celebrity worship and other topics that Smith covers—offer explanations for our actions and moral impulses that might confirm some of the master’s ideas but undermine others.

    Continued in article

    Steve Ballmer --- http://en.wikipedia.org/wiki/Steve_Ballmer

    "Steve Ballmer Paid $2 Billion For The Clippers, But He Might Get Half That Back In Tax Breaks," by Myles Udland, Business Insider, October 27, 2014 ---

    Former Microsoft CEO is now Professor Ballmer at the Stanford Graduate School of Business
    "Steve Ballmer Goes to College: On Campus With Stanford's New Professor," by Ashley Vance, Bloomberg Businessweek, October 21, 2014 ---

    Jensen Comment
    After buying the LA Clippers for a couple of billion dollars he probably has to moonlight for the salary. I wonder if he's up to the publish or perish world of the Academy.

    Jean Tirole --- http://en.wikipedia.org/wiki/Jean_Tirole
    Resume --- http://idei.fr/vitae.php?i=3

    "Nobel for Charles Barkley of Economics," by Noah Smith, Bloomberg View, October 13, 2014 ---

    I managed to call this year’s Economics Nobel correctly. Actually, it wasn’t difficult. Jean Tirole is a name uttered so frequently in the field that the most surprising thing about his Nobel win today was that he hadn’t won the prize already. That’s how the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel works -- it’s usually a lifetime achievement award rather than an award for a specific innovation or discovery.

    That fact made the committee’s decision particularly hard this year, because Tirole is an economics polymath. Bill Walton once said of Charles Barkley: “[He doesn’t] really play a position. He plays everything. He plays basketball.” Tirole is kind of like the Charles Barkley of economics, only without the politically incorrect commentary.

    If you could summarize Tirole’s area of research in a single sentence, it would be about corporations. One might think that corporations are one of the easiest, most natural things for economists to study, but one would be wrong -- in fact, many economists wonder why corporations even exist. A lot of macroeconomic models, for instance, assume that companies work like Chinese peasants in the Great Leap Forward -- a million identical little producers, all making steel in their backyards.

    Only a few economists have both the mathematical chops and the sheer mental doggedness to try to slice through the jungle that is the modern U.S. corporation, but Tirole has both of these. The machete he wields is game theory. Game theory is very different from the typical econ theory you hear about -- Adam Smith’s “invisible hand” is nowhere to be found. Instead, game theory deals with strategic interactions, with smart people trying to bluster, wheedle, threaten and team up with each other.

    That sounds a lot like working in a corporation. And it also sounds a lot like the way corporations interact with each other, and with the government. The work the Nobel committee finally decided to cite in Tirole’s award was about the way that government should regulate firms in different kinds of competitive environments. If you have a monopoly, that requires different regulation from an oligopoly, which in turn is different from a perfectly competitive situation. Things such as mergers and acquisitions require their own sort of regulation, as do cartels. Adam Smith warned darkly about cartels but it wasn’t until the advent of game theory that we understood something about how to deal with them.

    Notice that Tirole’s work on regulation defies the typical stereotype of what economists do. Many people think that economics is all about providing justifications for free markets, or assuming that businesses always do what’s best for their shareholders. Tirole, instead, takes a more practical approach, dealing with businesses as they are, not as they should be, and recommending government intervention when such intervention could improve the situation.

    Personally, I’m familiar with a different side of Tirole’s oeuvre -- his work on finance. Tirole has written a book on the theory of corporate finance (called, not surprisingly, “The Theory of Corporate Finance”). It deals with all the aspects of finance theory that don’t get a lot of attention in the press -- hostile takeovers, for example, or corporations’ bias toward financing themselves with debt. The basic idea is that to understand how corporations finance themselves, you have to understand the strategic interactions among managers, shareholders, bondholders, customers, suppliers, employees, the government and others. If the Efficient Market Hypothesis -- the idea that markets rapidly assimilate all information, making it hard for investors to profit -- makes an appearance in Tirole’s theory, it is only as a very bit player.

    But rest assured, Tirole has also taken on the topic of asset markets and efficiency. In fact, Tirole has shown not one, but at least two ways that efficiency could fail and bubbles could take over. The first way is if traders think only in the short term and ignore the long term -- not an unrealistic idea, for those of us who have met some real-world traders. The second way results from trading between older and younger generations. Tirole has also done a lot of theory about financial crises and liquidity, the things that demonstrated their importance in 2008.

    One point to note about Tirole’s work is that it’s mostly theoretical -- and by “mostly,” I mean everything I’ve ever read or seen. Another common knock against economists is that they focus too much on deduction and theory, imagining how people should interact without going out and seeing how they do interact. But that criticism doesn’t always hit the mark -- it’s perfectly natural to have a division of labor where some people make the theories and others test them. And many of Tirole’s theories are perfectly testable.

    There is a lot more to Tirole’s work than what I’ve managed to describe here, but that would be true even if I wrote three times as much as I have. When you’re dealing with the Charles Barkley of economics, sometimes all you can do is sit back and admire the whole body of work.

    "Q. and A. With Jean Tirole, Economics Nobel Winner," by Binyamin Appelbaum, The New York Times, October 14, 2014 ---

    . . .

    Q. Do you measure your success as an academic in terms of your ability to rewrite government policy? How much do you focus on shaping public policy?

    A. Not much. In a sense I’m mainly a researcher. If my recommendations are applied, I’m very happy about it, and I try to formulate them in simple ways. But you remember Keynes saying politicians and policy makers use economics that is defunct. There is something to that. You develop new ideas and they percolate or they don’t. But my choice has been to stay in the ivory tower. I try to be applied. I think the work has influenced antitrust authorities. But I think my competitive advantage is really to try to think about new paradigms.

    Continued in article

    Jensen Comment
    I think Jean Tirole is more like Tim Duncan with the Spurs than Charles Barkley. Tim lets his outstanding professionalism speak for itself. Barkley was an attention seeker with a hot temper who was prone to entering into controversies where he had no expertise. Tim, like Jean Tirole, was more of a professional.

    "Australian Premier Calls University’s Fossil-Fuel Divestment ‘Stupid’," by Andy Thomason, Chronicle of Higher Education, October 16, 2014 ---

    Jensen Comment
    Universities who divest from fossil fuel investments in their portfolios and/or shift from fossil fuel use for heating and cooling on campus generally do so as a symbolic publicity gesture rather than good economics. For example, coal companies in many instances are seeking capital to make abundant coal more environmentally friendly. Depriving them of capital may may make them play dirtier in production and politics.

    Also there are supply chain considerations. If coal is the cheapest form of energy then electric companies have more operating cash to invest in carbon removal.

    One of the most worrisome happenings in the world is the global destruction of our great oxygen sources --- the rain forests. We should make it a priority to build machines that can act like trees that feed carbon in and push oxygen out. Those machines are not yet replacing rain forests, but I long for the day when they will supply earth with abundant oxygen.

    "In a First, Commercial Coal Plant Buries Its CO2:  A coal plant in Saskatchewan will capture most of its carbon pollution—and use it to extract oil from the ground," by David Talbot, MIT's Technology Review, October 3, 2014 ---

    A coal plant that opened today in Saskatchewan captures and buries the carbon dioxide it emits—with two significant caveats: it still emits as much carbon dioxide as a natural gas power plant, and the carbon dioxide it buries is being used to force more oil out of the ground.

    The 110-megawatt Boundary Dam project, operated by provincial power utility SaskPower, is a refurbished coal-fired generator. It includes new post-combustion technology designed to absorb and capture 90 percent of the carbon dioxide in the plant’s exhaust, one approach to so-called carbon capture and storage, or CCS.

    Continued in article

    "Caracas 181, Kerry 0 Venezuela gets a U.N. Security Council seat with no U.S. resistance," The Wall Street Journal, October 16, 2014 ---

    Venezuela’s economy may be imploding, with a debt default looming, but the enemy of the United States on Thursday managed the diplomatic coup of being elected to the United Nations Security Council. So much for the Obama Administration’s political and moral influence with the “international community.”

    “This is a moment of great pride for all of Venezuela,” said President Nicolás Maduro from Caracas. “The world has given us support. We should feel happiness in our hearts that we are a country that is admired and loved.”

    The vote, after a long campaign by Caracas and its friends in Havana and Moscow, ought to be an embarrassment to the Obama Administration, which barely lifted a hand to stop Venezuela’s accession for a two-year term through 2016. Secretary of State John Kerry apparently felt it wasn’t worth the effort, or perhaps that the effort wouldn’t succeed.

    That’s in contrast to the George W. Bush Administration, which managed to block Venezuela when Caracas was last on the ballot. A country can be defeated with the votes of one-third plus one of the 193-member U.N. General Assembly. This time Venezuela received 181 votes, and the U.S. wouldn’t say how it voted. Ten countries abstained.

    “Unfortunately, Venezuela’s conduct at the U.N. has run counter to the spirit of the U.N. Charter and its violations of human rights at home are at odds with the Charter’s letter,” said U.S. Ambassador to the U.N., Samantha Power, in a statement. She’s right, but now she’ll have the privilege of listening to Venezuela denounce the U.S. on a regular basis.

    Venezuela will be one of the 10 rotating members of the Security Council, and with any luck it won’t matter. The Security Council has become increasingly irrelevant as Russia and China exercise their vetoes against concerted action in Syria or the world’s other despotisms.

    Still, President Obama usually insists on the world’s blessing before the U.S. acts even in its own defense, so it will be a particular irony if Cuba’s best friend in the Americas now bedevils the U.S. security agenda through the end of the Obama Presidency.










    From the CPA Newsletter on October 24, 2014

    IRS needs to take more steps to ensure health insurance exchanges are safe, report finds
    The Internal Revenue Service needs more assurance that the taxpayer information it provides to state-based insurance exchanges created under the Affordable Care Act is secure, according to a report from the Treasury Inspector General for Tax Administration. The IRS does not require state exchanges to carry out an initial security check before receiving tax information, the report notes, or take other measures such as on-site reviews or promises in writing from state exchange officials about security.
    The Hill (10/23)

    Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

    Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

    Bob Jensen's Tidbits Archives ---

    Bob Jensen's Pictures and Stories

    Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

    Bob Jensen's threads on such scandals:

    Bob Jensen's threads on audit firm litigation and negligence ---

    Current and past editions of my newsletter called Fraud Updates ---

    Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

    Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

    American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

    Bob Jensen's fraud conclusions ---

    Bob Jensen's threads on auditor professionalism and independence are at

    Bob Jensen's threads on corporate governance are at


    Shielding Against Validity Challenges in Plato's Cave ---

    ·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

    ·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

    ·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

    ·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

    Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
    By Bob Jensen

    What went wrong in accounting/accountics research?  ---

    The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


    Bob Jensen's threads on accounting theory ---

    Tom Lehrer on Mathematical Models and Statistics ---

    Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

    Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

    Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

    Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/