Fooling the Classifiers (part 2)

When media outlets get called out for misjudging a character, they tend to overcompensate with over-the-top villainization. Just look at the narrative reversals of Weinstein, Epstein, Sheryl Sandberg, Adam Neumann, Corona-chan, and yes, Elizabeth Holmes.

Nope nope nope, we never claimed the coronavirus was no deadlier than the flu, and you certainly won’t find our deleted Tweets stating such!

Maybe some of these people really are cartoon villains, but I’m sympathetic to Theranos. Right idea, wrong execution.

Build: Medical Devices

Here’s people in China taking a round of COVID serology tests before a group dinner, like some sort of aperitif.

Why can’t we have this in the United States? COVID-19 antibody tests currently have a low sensitivity rate, meaning they deliver a lot of false negatives. An inaccurate test result might lead to a false sense of security. The obvious solution is to test more, and more frequently, but public health officials think Americans are stupid. To keep us safe, government health agencies prevent anyone from getting tested at all. And that is why it took 25 years for the FDA to approve an over-the-counter HIV test.

It’s possible to fool the classifiers. Just modify the intended use. For example, absorbable sutures are considered a Class III medical device, on par with pacemakers and defibrillators. To get around clearance requirements, manufacturers call their product a “practice suture”, for training and taxidermy. Now they can sell the sutures for less than twenty bucks on Amazon. The sutures are packaged in sterile alcohol, because animal carcasses care about germs. Wink wink nudge nudge.

Another example is 23andMe, a DNA test that maps your personal genome. The original inception provided information about a person’s risk for diseases like Parkinson’s or cancer, but the FDA shut them down for a few years because any kit that diagnoses disease must first gain clearance as a medical device.

To get around FDA restrictions, 23andMe pivoted from health diagnostics to measuring intersectionality. You could be 1/1024th Cherokee and not even know it — Buy our DNA test kit and claim your minority status now! Hence the series of identity politics commercials featuring customers who discover their genetic victimhood.

So here’s how we get home COVID-19 serology tests out the door: Claim they’re for measuring disparate impact, or some similarly woke purpose. If the FDA complains, tell them to take it up with the SPLC.

(To be continued…)

Fooling the Classifiers

Bernie Madoff: Right strategy, wrong time.

Per Minsky, late-stage credit cycles tend to look like a Ponzi scheme. If asset prices go up for long enough, people stop relying on cash flows to cover liabilities and instead borrow against appreciating assets. Take out a second mortgage, then a third. It’s fine as long as the housing bubble inflates faster than you can draw down your credit.

That’s pretty much where Private Equity’s at these days. The business model consists of borrowing money through the sale of high-yield “junk” bonds, using that money to buy a company, then using the company as collateral to finance the next corporate takeover. Rinse and repeat until the PE firm is the size of BlackRock or Apollo Group, and when an exogenous shock threatens to implode the bond market, get a bailout. (See Also: Is Private Equity Having Its Minsky Moment?)

It helps if public pensions are heavily invested in your funds. It helps even more if Fed Chair Jay Powell has millions invested with you. But the thing that helps most is the ability to convince regulators to classify your Ponzi as “Private Equity”.

We can’t build anything in this country because those with wealth and power use their wealth and power to put up artificial barriers against competition. If Silicon Valley wants to build, it needs to take a page from Wall Street and learn to fool the classifiers.

One thing that Wall Street does particularly well is make illegal stuff look legal. It’s not a bucket shop if you call it “over-the-counter derivatives”! It’s not discriminatory theft if you call it “de-risking”. It’s not bribery if you “hire” presidential candidates as consultants. It’s not price-fixing if you call it LIBOR. It’s not an illegal wash trade if you call it “market making“. It’s not a denial of constitutional rights if you call it “mandatory arbitration”!

Remember that time Elon Musk tried to sell flamethrowers on the internet, but then found out that it’s illegal to own a flamethrower in California, so he renamed the product “Not-a-Flamethrower”? Yeah, we have a lot of work to do.

Build: Healthcare

Why can’t we build hospitals the way China builds hospitals? Because of all these guys:

I am constantly amazed at the level of medical care available for animals. Bring a dog to the vet and you’ll get a treatment schedule, upfront pricing, and an honest prognosis. The more disposable the animal, the less likely a government agency is involved, and the better the service. Look at the huge range of antibiotics you can get for a fish!

Here’s how Silicon Valley can build more healthcare: Open an animal clinic that promotes diversity and inclusion. Like, *real* diversity and inclusion. I mean, take wokeness to the next level: Welcome trans-species patients. We already have dudes identifying as ladies to participate in womens’ sports, it’s only a matter of time before people start identifying as goldfish to score an appointment with the aquatic vet. If the Department of Public Health complains, tell them to take it up with the ACLU.

(to be continued…)

Pave Paradise, Put up a Parking Lot

Vets are considered essential services, so the local animal clinic is practicing social distancing by seeing pets in the parking lot. You stay in the car with the animal and the vet comes out with a little doctors’ bag. Drive-ins, but for dogs.

Remember drive-ins? Drive-in theaters, drive-in diners. It was a civilized way to bring screaming children on a family outing. Back when the country was great, cars were the size of cruiseliners and the backseat was a fine place to take a date.

Then there was an oil embargo and gas guzzlers fell out of favor. No one wanted to be seen in public with their Ford Pinto or GM Vega, so restaurants created drive-throughs for patrons to discreetly grab their meals and go.

But oil is cheap again! It’s time to bring back ginormous Cadillacs and 20-acre parking lots. Hair salons, restaurants, doctors’ offices should all become drive-ins. No need to sanitize surfaces between customers, and hey, my car already comes with a reclining seat for the dentist.

Remember those electric hoverboards that were cool for about a month? No one born in this century knows how to rollerskate, so carhops can ride hoverboards instead.

Automakers are trying to get another bailout, but a more sustainable solution is to lobby the CDC to recommend vehicles for social distancing.

The Myth of the Myth of the Myth of Barter

Some years ago, anthropologist and Wall St Occupant David Graeber wrote a history of Debt in which he debunks the “myth” of barter. In his telling, barter never exists in human history – Any transfer of property is the result of an exploitative power relationship, therefore ownership is theft, debt is slavery, and socialism is the answer.

In short, Graeber was questioning Adam Smith’s thesis that the division of labor leads to the voluntary exchange of surplus goods, which leads to the emergence of money. Chartalism vs Metallism.

George Selgin debunks Graeber’s “debunking” by pointing out that barter is an unstable system, and any population that engages in barter will quickly progress to monetary exchange or perish from unmatched needs. Anthropologists rarely encounter barter societies in the wild because it’s a temporary state.

Here we are in the time of coronavirus, where preppers and hoarders have emptied store shelves and I’m forced to violate social distancing to trade toilet paper for distilled water from a neighbor. Barter is back. Will TP become the new store of value, or shall we starve?

In California, anti-gouging laws prevent retailers from raising the price of goods to meet heightened demand. Six months ago, Clorox disinfecting wipes averaged $3 a can. Today, it’s illegal to charge more than $3.30 even though I would gladly pay twice that.

This isn’t barter; it’s demonetization. Dollars no longer serve as an accurate unit of account for Clorox wipes, especially since no amount of dollars can buy wipes that are out of stock. This is the point where essential items should gain intermediate commodity status and evolve into money.

Except that can’t happen. The FBI has a Hoarding and Price Gouging Task Force that prevents enterprising citizens from providing much-needed liquidity on scarce products. It’s illegal to even source them from elsewhere. My mother tried to buy a box of Chinese KN95 respirator masks for my brother’s hospital, but the masks were seized by customs at the border.

Even in the brief historical periods where barter may have existed, it was never really barter so much as bilateral monopoly. Do you think tribal chiefs allowed members to freely negotiate with hostile tribes? Of course not – some of the earliest traded goods were women and children.

So Graeber was wrong. Power isn’t the ability to assert ownership over property. Power is the ability to control how others assert ownership over property.

Blame China

China lied about their numbers.

Ohhh, I am so mad. The local stores have been out of toilet paper for four weeks. I asked why they didn’t restock in greater quantities; the stockers said their shipments had been calibrated to China’s Numbers. Health care workers don’t have protective gear – turns out our Strategic National Stockpile was downsized according to China’s Numbers. Hospitals, facing immediate bankruptcy, are forced to reduce physician pay and furlough staffers – a key component of their annual budget hinges on, what else, China’s Numbers.

Turns out China’s Numbers are a lot like LIBOR, a reference rate that serves as a keystone for the entire economy. The US Surgeon General, CDC, World Health Organization, are still advising us not to wear masks. Mask effectiveness models undoubtedly based on China’s Numbers.

The medical community made — interpreted the Chinese data as: This was serious, but smaller than anyone expected. –Dr. Deborah Birx, Deep State Department

This is stupid, but remember Russia? They spent a few rubles buying Facebook ads in 2016, and set off a butterfly effect that hacked our election, undermined democracy, and placed a Putin puppet in the Oval Office.

Initially, no one believed the DNC’s excuse that Russia had thrown the election. Even Mark Zuckerberg said the idea was crazy. But a constant drumbeat of establishment figures chanting nonstop about Russian hackers and Russian disinformation campaigns, and anyone who disagreed was accused of being a Russian shill. It turns out if you bleat nonsense for long enough, people… well, people still aren’t dumb enough to believe it, but they’ll accept it. They’ll pretend to see the Emperor’s clothes to avoid being canceled.

So even Trump had to play along, acknowledge the Russia narrative.

Billboards at the Moscow airport

Anyone could appreciate the value of having a general-purpose scapegoat. Vermont’s power grid went down – blame Russia! Yahoo suffered a major data breach – definitely Russian hackers. Experian loses everyone’s social security number – Russia again!

If China didn’t exist, we’d blame Iran for lying about their numbers. Or Russian disinformation campaigns.

The real victims in all of this are not the COVID-19 patients who will die, but the journalists hoodwinked by public health officials. Excuses are now acceptable substitutes for results. After multiple generations of rewarding failure, we’ve come to believe that everything will be fine as long as we can blame someone for our oppression.

And maybe this works in the West. Maybe if the virus had originated in Germany, we could cry foul and demand another century’s worth of reparations. But it didn’t, and we can’t. Strange, that the Marxist countries that celebrated class struggle refuse to recognize our victimhood.