Tuesday, May 20, 2014

Self segregation and Statistics

The difference between "physics" and "meta-physics" is that physics is based on meaningful measurements and is useful while meta-physics is belief based and sometimes entertaining but rarely useful.

In fact, all good science is distinguished by measurements.  It is not possible to quantify or predict anything without a valid measuring system.


The social "sciences" rely upon statistics.  The bane of statistics is self-segregation or self-selection.  We tend to prefer associating with people who are much like ourselves.

Attempting to collect meaningful measurements in an self-selecting environment is akin to handing a grad student a small, short handled spoon and directing him to collect a sample from a vast, bubbling cauldron of beef stew.

Even the socially inept prefer others whose deficiencies mutually mask each individual's inadequacies. Kids pretty much go through all of the same developmental stages.  Some kids quickly tag through some of the more anti-social stages but then power through them to better places.  Other kids linger.  The kids who linger long enough to self-select into one of the socially inept cliques cause their parents many sleepless nights.

The Economy

The social engineers want to "guide" our lives.  Part of their vision seems to be to homogenize society.  They put low-income housing into the toniest suburbs.  Some of the social engineering involves tipping the voter demographics.  Much of it is due to naive ideology which believes that changing the zip code of a gang-banger is sufficient to turn him into a choir boy.

As a working hypothesis, let us assume that the US economy is dropping down into a lower orbit than it historically enjoyed.  Let us assume, just for a point of reference, that we are turning into Italy, a country that is the eight largest economy in the world.

Powerful forces are about to be unleashed that will shred any chance that our society will be "homogenized".

Like Italy, the US has affluent regions and less-affluent regions.  Like Italy, our economy is buoyed by a seemingly inexhaustible supply of outside money.

Unlike the US, Italy has been through several convulsions of this type.  History has given them a game plan.

Italy has two economies.  The visible economy where rules are followed, taxes are paid and people work, sort of.  And Italy has the invisible economy where rules are bent, taxes are evaded and people really work.

There is a huge cost associated to sustaining two, parallel economies.  It is like a B movie of a randy young man with a wife and a paramour.  We laugh because we see the incredible effort it takes to sustain parallel lives with little or no gain in "benefits" for the young man.

Rational people do not joyfully embrace the additional fixed costs of running a parallel economy.  But I am hearing more rational people talk about that end-game.

The social engineers have become ever more relentlessly effective at monitoring and the homogenization of society.  The rational actors are starting to see the parallel economy as their only alternative.

The effect on the visible economy will be stunning.  The comedian in me wonders how the Equal Employment Opportunity Act will be administered when only trusted family members are "hired" by the business.  Corporate America staggers along, and tolerates, EEO and ADA requirements because all of their competitors are handicapped with the same amount of "social responsibility".   At some point Corporate America's vast economies of scale will be more than offset by the costs of 'social responsibility" and the invisible economy will explode.

One way to judge the size of the invisible economy is to estimate "job site shrinkage".   My house was built by a person who was employed in the construction trades.  He wired the 15A circuits (the wall outlets) with 12 gauge wire.  12 gauge wire is a major pain to work with as well as being significantly more expensive that 14 gauge wire (the standard for 15A circuits).  I STRONGLY suspect that he wired the house with 12 gauge wire because that was the easiest to "liberate" from the job site he was working.

Pervasive "job site shrinkage" will further tip the playing field and penalize the players who refuse to work in the invisible economy.


The only thing that has kept us off that path is inertia.  And inertia will make it a hairy biotch to return to an open and transparent society after we embrace the dual-economy model.

Let's look at a couple of "business" opportunities.


1.75 liters of 40% alcohol (vodka) costs about $22.  This product is highly taxed and regulated.

3.8 liters of 85% alcohol (e-85 at the gas pump) costs about $2.85 due to government subsidies.  A molecule of alcohol that is shipped in a glass bottle is sinful and subject to high taxes.  That same molecule of alcohol delivered via a rubber hose is deemed worthy of economic "indulgences" and is subsidized.

The amount of alcohol in a gallon of e-85, if purified and diluted to 80 proof vodka is worth $170 if sold as the cheapest grade of commodity alcohol. That is a 6200% mark-up.  And that does not count the half liter of pure gasoline that is a "waste product" of the process.

I don't mean to diminish the technical challenges of separating the impurities (the 15% gas).  But oil-separation-by-washing and fractional distillation are 1900 level technology.


Picture from HERE
Virtually every candid picture taken of the mujahideen shows them smoking cigarettes.  It is easy to dismiss tobacco as a "Luxury", but along with caffeine and alcohol it is one of the three most common ways to "self-medicate".

Tobacco is calming and reduces anxiety.  Tobacco use is very common in people who are clinically depressed.  Tobacco suppresses hunger.  Some claim that it is a potent anti-psychotic.   It is a rotten medicine due to the many side effects and links to diseases....but in the moment tobacco solves many issues for the smoker.

The "bad boys" did not necessarily smoke cigarettes as a act of rebellion.  They may have been smoking because it glued their sanity together.

Two cartons of cigarettes costs about $100 in Michigan.  There is about a pound of tobacco in those two cartons.  It costs about $2.50 to grow a pound of tobacco. That is a 4000% mark-up.

Anybody who can grow a tomato plant can grow a tobacco plant.  Expect smoking rates to go off-the-chart if a dystopian future becomes the new normal.


  1. Interesting take Joe, and things worth thinking about... sigh

  2. Now that is an idea...get into Tobacco or "weed" farming as a form of barter. It is a renewable resource and as long as you hide it from the eyes of "Big Gov". it is a viable option.

  3. Old NFO and Mr Garabaldi:

    Thank-you for reading, and especially, thank-you for taking the time to write thoughtful comments.

    The tragedy is that our current path is like a fly in the throat of a pitcher plant. They way is smooth an easy until the threat is sensed. And then, for many it is too late.

    Regarding growing smokable herbs, they have many characteristics of "money", highly divisible, durable, compact and transportable, nearly universally desirable. It is almost like printing money. Incidentally, a yield of 4000 pounds per acre is fairly achievable.

    Again, thanks for commenting.