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Every once in a while I mention my frequent correspondent. He recently sent me an e-mail talking about how offended he was and how he hated Palin now because of how dismissive she was towards community organizers. He also sent out a long letter written by a resident of Wasilla who has detailed knowledge of Palin and her record. I of course responded in my inimitable way.

Hush now, don't get fussy :P.

I'm sorry, I'm not trying to belittle your reactions - I'm really not. What does strike me though is that your reaction is at least part of why Republicans win. Joe Scarborough (he of Morning Joe on MSNBC) helped me understand this. Every 4 years the democrats think they're going to win. More than that, they think they're Right so they Should win. When they don't win, they raise holy hell and claim the election was stolen from them by dirty tricks. When writing about it online I compared it to an Alzheimer's patient in a whorehouse (obviously a line from 2.5 men) - Dems are constantly getting screwed, and they don't want to pay for it.

Of course the Republicans are going to be mean spirited and cut at the very heart of what Democrats hold dear. Of course they're going to demean things that Democrats think are holy. Because whenever they do that, the Left gets all puffed up and anal, go off on one and claim the Republicans have shit all over everything that's Right. Why do the Reps do this? Because they know that Dems take this stuff way too seriously - take themselves too seriously. And whenever that uptight self-righteous streak comes out in the Left, the right just doubles over laughing.

Unfortunately this is what Ann Coulter thinks she's doing, she just manages to do it incredibly badly. Palin was pitch perfect. Land enough punches to be tough and look like a fighter, but make sure that the backlash from the other side makes them look worse than you did landing the punch. And if they don't respond, you just got in a free hit.

In the end, sticks and stones can do some harm, but slander is just fun. The Republicans, if nothing else, aren't too self-righteous to win - and want to win. That said, do you imagine John McCain will be able to do anything except meet the Dems in the middle when he's faced with a Dem congress and senate?

I've said it before and I'll say it again - my bet is that he'll be the best Democratic president the country has ever known. On policy, he's right where most of the country is. He's going to be good on immigration, he's going to be clear-eyed about the labour market and helping people retrain, which is all/the best you can do when you have a globally competitive market for labour (one of the best parts of his speech, I thought), he's going to move on health care in some form or other, he's not a bigot, he'll be good for the environment, he'll finally do something about social security and medicare (private accounts are a fantastic thing, really - it's something Singapore has proved with great conviction) - what more could you ask for? He is right down the middle, and in terms of foreign policy, he has nothing to prove (unlike Barack Obama) - people talk a lot about JFK and the Cuban missile crisis, rightfully so; but before that was the fiasco of the Bay of Pigs. It's the tough guys who most are able to be peacemakers - look at Ariel Sharon, or any other right wing Israeli PM. There's a reason why they say - "Only Nixon could go to China."

As for the woman from Wasilla, whose letter you forwarded - some of her accusations I think come from a little too personal of a place, and for better or worse, I don't think they are big enough issues anyway to stick (not listening to disparate views etc.).

My sticking point with Palin is with her stance on social issues, since obsession with reproductive issues (Economist-speak) is just silly. But if she's going to talk about it but not actually do anything about it (like GWB on abortion) then more power to her. In terms of gay rights, she's just too young to be too bigoted. McCain is the same way. For all his talk, I'd be shocked if he didn't end up nominating someone like Souter to the bench - someone who looked conservative but ended up being liberal. In the end for me it matters less how it happens then what happens. Palin did turf out and call out people who were corrupt - is there anyone who's going to say "I wish my public officials were more corrupt?"

As for banning library books, that was stupid. But it sounds like really what suburban moms do yes/no? If it taught her than implementing social norms on people who don't want them is more trouble than it's worth, all the better. I'm more pissed off about her not being for sex education, especially when her daughter gets knocked up. I know most people don't want to go there, but it's not a small thing, and if you have to hand out condoms in school, so be it.

Experience to me only matters inasmuch as it gives you a record for how they're going to act vis-à-vis their own party. Obama has never never never proved he can stand up and shove it in the face of the one who brung him to the dance. McCain - again and again and again, was a thorn in Bush's side, fighting him on issue after issue even if he was the only Republican doing it. This is someone who because of his left leaning stances on immigration, his right (and Right) choice on the Surge, left on campaign finance etc. had made himself politically radioactive for so long.

For so long he was talked about as the Left's favorite republican (just as Lieberman is/was every Republican's favorite Democrat), and now (as Rush Limbaugh predicted) the left has turned on him. Because the left is as entrenched by their ideology as the right ever was, and is unwilling or unable to leave fairy-idea-land and come back down to the pragmatism of reality where stuff needs to get done. McCain has actually delivered, actually gotten stuff done. By necessity that meant he was in the sticky middle, and he hasn't gotten near enough credit for it from the people who claim to want moderates but can't let go of being self-righteous.

I hope you didn't expect me to get upset - who are these ultra-right-wingers you're secretly friends with who would be offended by you hating Palin?

Why are Democrats in sequence so bumfuzzled and then so smug and soft-headed? There's just never the sense with them that they can simply make a decision, establish a conviction, and then follow it through. Always there is the handwringing and the worry, asking themselves "oh, is this a good idea". And when they get what they want, all they can do is be smug - feel good about themselves. They're like an Alzheimers patient in a whorehouse. Every 4 years the same things happen - they constantly get screwed, and they don't want to pay for it. They wake up the day after the election and wonder to their self-righteous selves, "how did this happen?" "Somehow the evil Republicans stole the electon from us with their evil evil evil-doing."

They can never imagine how they are wrong. They can never admit that the ideals they put forward are in some way fundamentally, and unequivocally, flawed. It may make them feel all warm and fuzzy to say that jobs must stay in America and not be outsourced, but that doesn't make their conviction in any way right or in any way justified. And when they get uppity about tolerance for other people, they seem to have no notion of how much people are tired of being called racist or predjudiced just for getting up in the morning. As long as Democrats think they are constantly on the brightest white side of Good, and the Republicans are somehow inherently evil, they will never have the muddy pragmatic realism to win with people who don't give themselves the luxury of being too good to come in first.

Obama can preach his gospel all he wants, but as long as his oratory is used to serve the base crassness of decieving yourself as right in order to play on the irrational fears of populist sentiment, he can take his "new politics" and shove it up his ass. You are not being "right" when you insist still on not telling the truth about how things are. And to pretend that you are telling the truth while lying and distorting is surely a larger sin than simple pandering. If you're going to pander at least have some shame in it. Hillary and McCain are held back a little each time they have to push out crap in order to get themselves elected. It doesn't mean they're not going to do it, but at least they don't seem so proud of themselves having done it.

Say what you want about McCain on the attack - he is always principled enough to sign his name at the end of everything he does. He has at least that much pride. Obama has taken to being shy and hiding his ownership of his negative attacks. McCain tags all his ads at the end, so that even after the knife is stuck in, you know who did it. Obama's been doing it up front, so that by the end, you're not sure who did what. And know who does what is the fundamental step you follow in language and in narrative in order to be honest to how things are. If you're going to attack, you can't be shy about soiling your lily white hem with your opponent's blood. Stop pretending to be self-righteous and admit you're playing the same game everyone else is, rather than pretending to stand above it all. You are not a fucking saint. Your party is not a party of saints. At least Republicans have no shame in being who they are.

Decrying the politics of personal destruction, and still playing the gotcha game (saying McCain thinks people aren't rich till their income is $5 million) is fine if you're a normal politician - but not when you think you're the second coming of Christ. No one is better than the game. If you can play, then you surrender yourself to the compromises you have to make. Acting better than how you are is the real presumptuosness.

As for the speech, I've seen this movie before. It worked the first time. But fool me once, shame on you. Fool me twice, shame on me. If you're not willing to offer realistic, substantive, concrete ideas devoid of hyperbole and outsize rhetoric, you are not being honest to the people you're talking to. Let your ideas be dramatic, rather than the way you couch it. Say you want affirmative action to be based on economic status rather than race. Admit that allowing people to invest their private savings accounts rather than paying into a failed Social Security system is not "gambling your money on the stockmarket", but rather ensuring for themselves a higher rate of return than the opportunity cost of capital.

Barack Obama is fundamentally irresponsible. These are the most fundamental things I taught my students when I taught them writing: 1) Be clear on who is doing what. Do not obfuscate the agency of a given action. 2) Do not exhalt with melodrama something that is paltry. If something is important, all the more it should be presented in the clarity of prose so that the emergency of what is happening can be appreciated for what it is, rather than exaggerated beyond any accurate of realistic sense.

Barack Obama is fundamentally irresponsible.

Much has been said, not least in the popular media and even in intelligent literate writing, that decries the goal of profit maximisation as the stated goal of industry. Just off the top of my head, I think of Michael Moore's Roger and Me, where he rails against the fact that profitable industries are still closing plants and moving manufacturing to countries other than the US in the 80s and 90s (a process that, as far as I'm aware is largely complete nowadays). But even more recently The Wire - or more specifically the introduction the the 5th season - talks about how with journalism and the funding of newsrooms, it wasn't that they weren't making profits, it's just that they weren't making enough profits.

I've come to realise this to be true: that profit maximisation indeed is not a sufficient means of defining what companies should strive for. But of course my objection has little to do with agreeing with the discourse I've cited, and more to do with explaining exactly why "profitable" companies still desire to make sometimes large and drastic changes.

Much of this has to do with my having been contacted by The Christman Group, an investment bank that has an internship opening that I'm hoping to fill. But the less said about that the better, I'm sure - I don't have unrealistic expectations. Suffice to say between recieving an e-mail that expressed interest in me and arranging a phone interview, I decided to do what any responsible job-seeker would - find out as much as possible about my potential employer. Aside from reading their President Richard Jackim's very accessible book "The $10 Trillion Opportunity," (I bought the e-book online) about their company's focus on Exit Planning for mostly privately held middle market companies, I was also looking at what seems to be the beginners bible of MBA finance, Brealey-Myers' Principles of Corporate Finance. 

Brealey-Myers makes an intriguing and really rather stunning assertion about the brief managers should recieve from shareholders - exactly that profit maximisation is not the most appropriate objective of professional managers. This is in part because profit maximisation as a principle is needlessly vague - it is not time specific, it does not say for what period profit is being maximised - whether this year, next year or 5 years hence, each perhaps at the expense of the other, or of other longer term periods of profit. It makes no sense to have one year have the largest profits imaginable at the expense of profits for the next ten years. Similarly owners do not want to sacrifice profits for the next ten years in the hope that at the end of that period there will be one year of huge profits.

The answer is Net Present Value. I find it a little difficult to explain in totality the concept of Net Present Value except mathematically, and I don't wish to go into too much detail - you can read the wikipedia article on it, and download a copy of Brealey-Meyers (isn't piracy grand?). But suffice it to say it is the beginners holy grail of corporate finance. The maximisation of Net Present Value argues that given the same level of risk, the return on investment of a given amount of capital must exceed what that same capital would earn through the capital markets (buying govenment securities or shares of similar risk as the investment), or else the investment cannot be justified since it does not create more value than the opportunity cost of capital.

I'll try and make that a little more concrete. When you have a given amount of money, and you don't do anything with it other than stuff it under your mattress, you are losing money. Not just because of inflation, that makes your money less valuable, but because you are not investing it in order to create more wealth. This investment is not "funny money" - on the contrary it is very real. Whenever you put money into capital markets, that is the money that business users borrow to fund their businesses - to make more and better widgets. It's the money that people borrow to buy a house or car. These are things those people couldn't otherwise do, and you are allowing them to get those things done, for which they are paying you back your investment plus interest. That return on investment is the base level at which someone who doesn't stuff their money under the mattress operates. If you have $100 and you do nothing with it, at the end of one year you have $100 (before inflation). If you put that $100 towards buying government securities that give a 7% return at the end of one year, at the end of one year, you have $107.

What maximising NPV argues is that if you are investing in something at the same level of risk as a govenment security, it needs to provide a return of more than 7% in order to be a rational decision. Otherwise you are not making as much money as you can given the level of risk. Put another way, you are taking on too much risk for too little reward - when the going rate of that risk is lower than that of your investment.

This brings me back to the beginning of this post, about why "profitable" companies may still move factories or streamline newsrooms. Because if you are only making the amount of profit equal or less than the amount of profit you could be making by investing in capital markets, you are not making a rational decision. For the level of risk of your endeavour, you need to be making more profit than you would otherwise be making, or you're putting in all that effort and still losing money compared to investing it.

Of course in the real world this becomes more and more complicated as more variables come in, but in general this is a useful guide in terms of how to make rational decisions regarding the allocation of capital. And the efficient allocation of capital is a good thing. Me saying why that is will have to wait for another post, but suffice to say anything less is just irrational.