Phthursday Musings: Hedging My Bets

Let’s start this week in Klamath Falls, Oregon, with this article from the Herald and News. It’s an extraordinary story. I will not try to summarize it. I want you to read it, all the way through.

My grandmother lived alone in her house on 22nd Avenue for about 35 years. In later years she got to where she pretty much wouldn’t go anywhere besides the grocery store. I think her 1989 Plymouth Horizon still had under 60,000 miles on it as of 2013.

When you’d talk to her, the only people she’d talk about were other members of the immediate family… and maybe a neighbor… and the mailman… and the newspaper carrier.

The story linked above, I think it should not just be seen as some weird heartwarming one-off thing. The mailman and, yes, the newspaper carrier are key characters in the lives many of our loved ones live, even if they are not in our own.

My dad was a newspaper carrier - or, more properly, a paperboy. He’s written at length about some of this time, and maybe one day I’ll figure out the best way to share all that. Now, I’m not sure about this, but I think, maybe, paperboy was his favorite ever job. I get the impression he learned more about the world from delivering newspapers than he did from going to school.

Delivery may not be as in demand as it once was. But we should consider the humble newspaper carrier to hold a historically noble profession. They have literally been the human conduit between homes and news of the outside world for generations, and to this day that’s still the truth in some cases. And you just never know when your carrier might be much more than that.

What I initially wrote here was a sort of convoluted end around to discuss the stimulus check debate and in turn the free college debate. I’ve pared it down a great deal.

The idea of just cutting checks to all is a very simple approach to addressing economic difficulties. It is not targeted. But that is part of the point.

The idea of free college for all is a very simple approach to addressing, well, economic difficulties. It is not targeted. But that is part of the point.

In both cases economists can make strong arguments as to why neither approach is the “best”. I find the stimulus debate a little fuzzier, because I think urgency is a more significant part of the equation. With the free college debate, though, I’ve read about how coming up with a targeted approach inevitably leads to so much bureaucratic overhead that it is cheaper to make college free for everyone than it is to make college free for everyone except the rich.

That word - overhead - I submit that we do not think properly about it.

Usually by overhead people mean the “fixed costs” of running a business: labor, rent, utilities, etc. If you run a restaurant, you can’t just take your revenue, subtract the cost of goods, and come up with a profit. There’s overhead.

I think, though, that there are other kinds of overhead. Time is money, right? So why isn’t time part of overhead? What about emotional overhead? What about stress?

People talk about bureaucratic or administrative overhead, ostensibly as measured in tasks / steps as opposed to dollars. So why can’t we talk about overhead in other ways then?

When we evaluate things like stimulus checks, or free college, or any number of other initiatives, we shouldn’t be constraining ourselves to purely economic analysis.

The modern condition is overloaded with overhead, in many forms. Some policymakers choose to focus on particular types of overhead, those which they see as constraining business. But constraint and overhead aren’t synonyms, unless you apply too narrow a definition to overhead.

Long story short: Economists should not be allowed to frame everything. If you’re an economist you might well cringe at what all I’ve written here. But as a country, indeed as a planet, I think we’ve been bogged down by economic thought - not just capitalism, though that’s the dominant strain - and have paid insufficient heed to the idea of relieving other types of burdens, other types of overhead.

Oh boy oh boy, I finally got to this week’s big exciting news:

If you haven’t followed the GameStop story, here’s a good overview from ArsTechnica. Long story much too short: GameStop is not a super successful company, and their business model does not seem liable to stand the test of time. Investors have been betting against it for a while. But small investors on Reddit sort of banded together, sending stock prices soaring, and potentially costing hedge funds billions of dollars. The story is insane.

Of course, it’s just a twist on the much larger, much more insane world of hedge funds. Yeah, whatever, I get the idea that exotic financial instruments can expose market inefficiencies or whatever. But what I think this whole GameStop affair really points to is what a joke the stock market is.

Hey, Joe. You want to unite the country? Throw some of these finance people in jail, like your old boss should have done. That’s the purplest thing you could do.

Now, I’m not talking about the GameStop gobblers. I’d like to think they’ve done the country a service by shining a light on how pathetic our financial system is.

As the week has gone on the story has been covered in a lot of places. A little bit before my sending this out, I got an email from AOC - I mean, probably not AOC herself, just something sent out on her list - because, of course I’m on that list - basically condemning all of these brokerages for double standards.

Is this thing a blip? Is it a sign of something bigger to come? I don’t know. What I do know is, I don’t trust the stock market, I don’t trust Wall Street, I don’t consider the “health” of those things to be indicative of the “health” of the country, blah blah blah.

Oh, I tried to find a good picture of a hedge fund, and couldn’t find one. So here instead is a picture of a hedgehog, which is much, much better anyway:

I was going to say something about the Baseball Hall of Fame voting which concluded this week with nobody being elected. But what can you say about nothing? (Well, plenty, but…)

As the final voters were coming in, Joe Posnanski finished his series on the 100 people who he would put into the Hall and in what order. He got to the end, and his #1 was Minnie Miñoso. Articles from The Athletic are behind a paywall or I’d link to it here.

I didn’t need a lot of convincing, but wow, how was this man not elected when he alive? He was Roberto Clemente’s hero, and his stats are absolutely where they need to be.

I’m pretty sure the next time he comes up for consideration by a relevant committee that he’ll be voted in. But don’t wait around for that. Look him up.

If anyone wants to get me a Sox jersey, incidentally, one of those red pinstripe #15 Dick Allen jerseys would be my pick, with a #9 Minnie Miñoso just behind. Just in case you were wondering about that.

I am looking forward to spring training more than any time in the last 20+ years. It feels a little silly given we’re still in a pandemic. But it’s the truth. How about y’all?