The Real G'Town

Short and sweet this time. Just want to give props to my people for doing the damn thang, complete with photo evidence from the folks at the NYT, via Reuters:

To quote my man Darren (and the Princess Bride, via MacArthur), "NEVER get in a land war w/ China."

-Chairman

Information Asymmetry

I suppose that as you build from my last post on the nature of social media, you can probably pull a little more out of it. There's a bit of a phenomenon going on with regard to how everyday folks think about the economy and economic policy, and it has to do with the norms of social media and how we interpret information. There are a few pieces that work together, and I think that it's a reasonable explanation of the sudden influx of economic experts on social media sites.

The first thing is that we're inclined to be haters (like my man C-Lauff). And what I mean is that people tend to fixate on negative things. Conventional marketing wisdom suggests that negative word of mouth (WOM) is worth much more than positive WOM (they say that you need 6 pieces of good WOM to overcome a negative piece of WOM). So when we hear bad news, we tend to weight it more than good news.

The next piece that comes into play is that we're inclined to bitch and moan. We're crybabies. Think about the gossip around the water cooler. It's often very negative. And somehow, when we bitch and moan, we actually get more focused on the issue. We're geared toward tearing things down, whether it's sports, other people, or whatever. Think about what happens when your team wins a big game. The next day, the conversation looks like this.

"Dude, did you see that big game last night?"
"Yeah man, it was hot. We're going all the way, bro."
"I didn't even remember the 4th quarter, I was so hammered."
"Dude, me too!"
"Who Dat!"
"Who Dat!"
etc.

Not a whole lot of detail, just a lot of dim-witted euphoria. On the other hand, if your team loses, the conversation looks like:

"Man, I can't believe that we went into that quarters-prevent so early in the 4th?"
"I know, how does (head coach) not realize that teams that go into the prevent actually give up 1.4 more points per possession than teams that stay in their base 4-3?"
"I don't know, that's like the most fundamental stat that anyone running a defense should know. What I can't believe is the offensive playcalling on the last 2 possessions."
"I was just saying that! Everyone in the room knew that it was going to be off-tackle right on first and second down. And who in the world calls a 7-yard route on 3rd and 9? Hello?"
"And more importantly, shouldn't (head coach) know that you always go for it on 4th and 2? The average play from scrimmage gains 3.9 yards, and teams have converted 4th and 2 at a 74% rate this year."
"Actually, it's 76%, after (opposing team) converted on that last drive."
"Uggh. I can't believe that we got out played and out coached..."
etc.

All of a sudden, people have statistics, thoughts on strategy and execution, and are generally smarter when they're bitching and moaning about things. Now, that's not to say that they actually know anything about anything. But they're convinced that they do.

Now when we think about WOM, we also know that we believe that use information that comes from our friends more than we do from strangers. For example, when we see some crazy dud wearing 1700's clothing and a wig screaming about government policy, or when we see crazy people throwing blood on people wearing fur, we generally just roll our eyes.

I build all of my beliefs based on what dudes on stilts tell me.

Now, when the crazy people are our (Facebook) friends, all of a sudden, they have more credibility. I mean, these were people that we, at the very least, met at some point and decided to add to our online social network. And some of them are actual people that we have interacted with in real life, and found to be reasonable. So when they start putting things out on Facebook or Twitter, it carries a little more weight than, say these guys:

This is a wet dream for the pro-fur, pro-violence against women demographic.

But what happens is that on social media, the norm is that you only see other people chime in who agree. Typically, the interaction looks like this:

Original post: "It's time to go bang some slaves and have mulatto children out of wedlock." -Thomas Jefferson

Comment 1: "LOLZ!"
Comment 2: "I Know!!!"
Comment 3: "U R So right."
Comment 4: "I wish that I was smart enough to have found that out-of-context Thomas Jefferson quote myself."

You get a lot of back-patting, exclamation points, and txt shrthnd. And you may get some righteous indignation:

Comment 5: "Dude, that was one of our founding fathers. You should have more respect."
Comment 6: "LOLOLOLOLOL!!!"
Comment 7: "ROFLSDGIUBALMAO
Comment 8: "U R So right!"

What you don't get is much meaningful commentary. So, the original point, no matter how ridiculous is then, at best, accepted as gospel, or at worst, treated indifferently. And all of a sudden, you hit that tipping point (which is only 10%, according to researchers) things catch on, and people start seeing this sort of stuff all the time, and soon everyone believes that Thomas Jefferson was this genius poon hound who fathered a bunch of mixed-race children out of wedlock. And some random thoughts, promoted by internet shorthand written by morons, and otherwise left unchecked, are now a political movement based on the ideals of dudes in costume on stilts.

And now, people with no real training on economics, who are far from ideal in managing their own finances, but are really big into dogma, are flooding my Facebook news feed (another issue here, but I didn't get in depth with it - we only see what Facebook "thinks" is relevant to us). And not just that, they're also flooding my election season TV viewing. Not that this is a bad thing.

Bachmann is totally my new favorite GOP presidential candidate. LOLZ!!!

But I'm not exactly sure that my amusement is necessarily aligned with the greater good. But then again, what do I know? I don't even vote, unless there's a compelling reason.

-Chairman

Lies, Damned Lies, and Facebook Statuses

So one of my Facebook friends posted this gem of a status earlier today:

Investing advice from the internet. How could it possibly not be awesome?

Now, I've never one to let facts get in the way of an awesome Facebook post:

I don't know who this Thomas Jefferson dude was, but I quote him all the time.

However, when people post things that are just obviously wrong, inevitably, you also get the drones chiming in. And most of it is innocuous. But then the ReTweeting begins. And it starts making it around the internet, when you get all sorts of folks with moderate IQ's passing stuff around like gospel.

Facts are so overrated. Right after I post this as my status, I'm going to search for cat videos. LOLZ!

But just in case people are curious, DAL and AIG are both down roughly 40% over the last year. Certainly, not a great investment on your $1000, but ou'd still have $600 in equity. And Lehman Brothers was delisted in fall of 2008, so you couldn't really buy their stock. But you can buy penny stocks that represent parts of their bankruptcy proceedings. And those stocks are off roughly 40%, as well.

Now, beer is totally a great investment, but not from a monetary sense. A thousand bucks gets you about 4 beers a day (figure $0.70/can for 1460 cans of beer), which is totally awesome. Those 1460 cans gets you roughly 30 pounds of scrap aluminum, but only gets you about $27 (at $.90/lb). Now, if you can get the $.10 deposit back (in Michigan, a la Seinfeld), you can get all the way up to $146.

So, the cans don't really represent much of an investment.

However, this Facebook post does have upside. If we can get more people to drink heavily, then we should be able to get more drinking and driving going. As a matter of health care reform, I highly encourage the more drinking and driving, particularly when I'm not on the road. If we can get enough poor people to drink and drive, and if we can incentivize them to hit other poor people at fatal speeds, then we should take care of health care, social security, and traffic congestion issues all at once. So what's the takeaway? Post this:

We all know someone who has not been able to drink enough beer. Everyone should have the right to pound brewskis like a true bro, and then drive home really fast. So, what I want you all to do is to post this as your Facebook status for 24 hours. I know that most of you won't, but those of you that will know what's at stake.

You can thank me on Jan. 20, 2021, right after I'm inaugurated. I mean, even Thomas Jefferson thought so:

"The Chairman will go down as the greatest President in United States' history."
-Thomas Jefferson

So you know it has to be true.

-Chairman