Assessing Risk

Daniel Bonevac at Right Reason asks a question about how likely a terrorist network is to detonate or even try to detonate a nuclear device in a US city in the next five to ten years.

Overall I believe that there is some risk of a nuclear or other spectacular attack by terrorists on the United States, but to try to go much behind that and to assign say a low, moderate, or high risk so such an attack is beyond the scope of my ability to obtain and process information about the threat. In fact it is probably not possible for any member of the general public. Nonetheless I think that it is reasonable for me to take a shot at discussing some of the risk factors that I have to consider when assessing the risk. Listed below, in roughly descending order of importance are some of the factors that contribute to the threat.

My assessed risk of a nuclear or other spectacular attack on the United States:

is higher now than before 9/11, the Bali bombing, the Madrid bombing, and the London bombing due to the terrorists' demonstrated ability and will to execute these attacks.

is higher to the extent that our actions in Iraq and Afghanistan encourage more individuals to engage in terrorist activities, but is lower to the extent that terrorists focus their efforts and resources on attacking US military forces in Iraq and Afghanistan. I view the net result of these to effects as lowering the threat of an attack on the US, but that assessment is open to interpretation.

is higher due to the presence of both terrorist networks and nuclear weapons in Pakistan.

is lower to the extent that incidents like the Virginia Tech shooting illustrate the ease with which individuals could carry out this sort of small scale attack. Why do we not see more of this type of attack?

is lower due to the extent that the predominant terrorist network,Al Queda is Sunni Muslim and that Sunni versus Shitite conflict in Iraq illustrates lack of cooperation between the two groups - assuming Iran as a source for a nuclear weapon.

is higher to due to the demonstrated terrorist abilities of Shiite organizations like Hezbolla - again assuming Iran as a source for a nuclear weapon and that Hezbolla would gain the ability to target states other than Israel and Lebanon.

is higher to the extent that natural disasters such as Hurricane Katrina illustrate ineffectiveness at various levels of government.

NBC Online Video

Last week I watched the final episode of The Black Donnellys, a fairly mediocre organized crime drama that premiered on NBC in January. The noteworthy thing about this is that NBC actually canceled the show after the first few episodes, but still made the show available on their website. This is the first time that I have been able to continue watching a show via the Internet after the network canceled it from their prime time lineup, which makes me think that this could become an increasingly popular entertainment delivery mechanism.

NBC actually made a few bucks from my watching the episodes on their website. In place of the regular commercial breaks, they played a single 15 or 30 second commercial and all of the commercial breaks were for the same company. Although the commercials certainly do break up the show - it is not quite like a DVD - I found that the commercials really did not bother me because they were so short. Actually I found it a better viewing experience than skipping through the commercials on a DVR with the benefit that the advertiser actually has a chance to get a message to me.

In addition to the website that I linked to above, NBC also offers episodes of the show for download on iTunes. Each episode costs $1.99 so I assume that NBC probably charges their website advertisers something less than that.

Given that NBC decided to cancel The Black Donnellys halfway through the season I assume that the series was probably a loser financially, but the fact that NBC was able to make some of their money back through online advertising sales and through iTunes. This probably changes the equation for new episode launches to some extent because the network does not automatically have to forfeit all revenue from the later episodes when they cancel a show. My guess is that networks will probably try to launch more new series to try to find winners because they now have an additional option for monetizing a show that does not pick up a following large enough to justify keeping it in their regular lineup. Hopefully this exciting development will encourage networks to take more risks on innovative programs.

Becoming Catholic

David Howard shares some interesting commentary in the Wall Street Journal's Taste page on the recent conversion of Francis Beckwith form Evangelical Christianity to Catholicism. It is nice to see that Howard, who remains an Evangelical, has acknowledge "that we nevertheless have much in common as fellow Christians."

To me, the interesting dynamic between Catholicism and Evangelical Christianity is that Catholics view Evangelicals as wayward members of the Christian flock, while many Evangelicals view Catholics as a separate non-Christian religion. Hopefully this new development will help to heal the wounds of division in God's Church.

The Changing Politics of Ethanol

Kimberly Strassel has a great article in her Potomac Watch column about the changing politics of the corn Ethanol debate. Predictably after the federal government mandated the use of more ethanol as motor fuel the price of corn, from which U.S. ethanol is made, has more than doubled. This increase means that various groups of food producers are being hit with higher costs. This combined with environmentalists' laments about increased use of land for corn farming has put the politicians who implemented ethanol mandates in the tough spot. As usual when the government gets involved no one will be happy with the results.

The real way to resolve the "energy independence" problem is two fold: 1. Remove the quotas on sugar and sugar ethanol so that less expensive alternatives to corn ethanol can enter the motor fuel market; and 2. increase federal taxes on gasoline so that we use less oil products.

NFL Draft Predictions

A few months back I entered a posting contest at the Blue Gray Sky with an analysis of how well the end of year college football awards do at predicting the NFL draft. The analysis is posted here.

One of the questions that this analysis brings into focus is why is there so much divergence in how well the various awards predict the top player chosen in the draft. For example the tight end, lineman, and defensive back awards to a pretty good job of predicting the top player drafted at those positions, but the running back and quarterback awards do a much worse job of predicting the top player drafted at those positions. I really don't know the answer to this questions but I would be interested to find out.

Skiing: Days 8 and 9 Killington

My family and I had two incredible days of skiing at Killington over the weekend. The mountain had snow every day and we skied our brains out. Outer Limits, Double Dipper, Downdraft, and Cascade all had great bumps so we skied them a bunch. One of my biggest issues with the people who ski Killington is that they tend to slide into the bumps which makes the troughs incredibly wide and icy. Come on people you need to learn to make turns around the bumps instead of sliding into them.

Skiing: Day 7 Watterville Valley

Lori and I skied Watterville Valley last Sunday and had a blast! I have not been to Watterville Valley in the last three years so it was nice to ski it again. We only had time to take a day trip so Watterville was the perfect place to go. We spent most of the day skiing off the Sunnyside Triple. We liked Gema, True Grit, and especially Bobby's Run. The video below has some shots of us skiing the bumps on Bobby's Run. My run looks a little rough due to the size of the moguls, but we still had lots of fun!

Lost Your Camera in a Boston Taxi?

If you lost your camera in a Boston taxi yesterday and these are your pictures then I have your camera. To get it back, please leave me a comment below with your email address. I will ask you to describe some of the other pictures that were on the camera so that I can be sure that it is yours and then send it back to you.

Sirius & XM Merger Analysis

The big business story of the week is that Sirius and XM proposed a merger of equals that will create a single satellite radio broadcaster in the US. In order for this deal to proceed the companies will need the FCC and Justice department to approve the merger. I am sure that we will see quite a bit of debate about whether the government should approve this merger. So I thought that I would take a look at some of the issues that we need to consider in this proposed merger.

Market Definition

Is the merger of Sirius and XM going to create a monopoly? Well that depends on the definition of the merged firm's market. Should we define it narrowly and deem the firm a monopoly or define it broadly and see the firm competing in a vigorous market?

Narrow Market Definition
Satellite Radio - currently only two firms

Broad Market Definition
AM & FM Radio
HD Radio
MP3 & CD

Stakeholder Perspectives

Both Sirius, XM, and a potential merged firm impact quite a few other stakeholders including customers, content providers, and competitors. Any potential merger will likely affect these stakeholders so we need to consider the impacts on each.

Customer Perspective
Prospect of monopoly rents
Mitigated by potential competition in broad market definition
Single company allows consumers to access all satellite radio content - MLB, NFL, College Football, Howard Stern...
Reduced confusion
Potentially lower commitment innovation

Content Providers
Single company allows for only one possible satellite radio partner
Each content provider has a monopoly on their content - so merged firm will gain only slightly more negotiating leverage.
Likely a push

AM/FM Broadcasters
Would prefer two weaker satellite radio competitors to a single stronger competitor

Government Role

Some people may argue that the government should not have a role in approving the merger of these two firms. However the reality is that neither one of these firms or any other radio or television broadcasters would exist with out the government regulating the broadcast spectrum to keep others from broadcasting in their spectrum. With that realization and with the realization that both of these firms understood that the government wanted two satellite radio competitors I think that it is perfectly reasonable for the FCC and the Justice department to review this merger. The reviewers should pay particular attention to how customers will be impacted by assessing the potential of the merged firms to raise the monthly costs to monopoly rents. Ultimately this gets back to the original question of how to define the market - either narrowly or broadly. If it appears that the firms would dramatically raise prices after a merger the deal should not go through, but if it appears that all the other competing technologies will force them to keep prices low then the government should approve the merger.

Warbeats

Ever wonder how music producers create the interesting beats featured in popular music? Well now nfxbeats has created a series of tutorials on YouTube illustrating how they actually do it. My favorite is this his remake of In Da Club. Enjoy

History the Minimum Wage

Minimum wage laws remain controversial in our current politics. Many people would like raise them and many others would like to abolish them. Even economists are split. In an attempt to better understand the current issues I investigated the history of the minimum wage. The following includes a couple of interesting items that I found.

The US Department of Labor has a chart covering the history of the Federal minimum wage. The chart shows the periodic increases in the minimum wage, but the thing that I found most interesting was the notes at the bottom of the page. It turns out that the Federal minimum wage, which began in 1938 originally only covered "employees engaged in interstate commerce or in the production of goods for interstate commerce." I assume that this had something to do with the US Constitution. Of course then in 1961 the minimum wage started applying to "employees in large retail and service enterprises as well as to local transit, construction, and gasoline service station employees." Then in 1966, the minimum wage started applying to "State and local government employees of hospitals, nursing homes, and schools, and to laundries, dry cleaners, and large hotels, motels, restaurants, and farms." So eventually everyone was covered even if they only had a peripheral relationship to interstate commerce.

Also interesting was that prior to 1937, the U.S. Supreme Court had consistently struck down minimum wage laws on the grounds that the government could not interfere with private contracts. Of course this position changed when FDR proposed a court packing plan in an attempt to stop the Supreme Court from blocking his New Deal legislation. This shift on the Supreme Court ultimately enabled minimum wage legislation for the purpose of benefiting workers in a time of economic turmoil.

But where did the idea of a minimum wage originate. The idea of a minimum wage originated with Progressives at the turn of the 19th century. The interesting idea that I found in this research paper is that the Progressives did not intend for the minimum wage to benefit all workers but to keep undesirable workers out of the labor force. Specifically this included women, children, and minorities whom the advocates of a minimum wage believed took jobs from deserving workers. Their thinking was that by setting a minimum wage higher than the wage a business was willing pay for women, children, or minorities the law would lead to lower employment for these groups and higher employment for white men. Tellingly, all of the early minimum wage laws that the Supreme Court struck down were specifically women's minimum wage laws. So over the past century the politics of the minimum wage has shifted from attempts to keep people out of the labor force to attempts to benefit the labor force.

Save Boston!

Check out this hilarious game, which is an hilarious take on the recent controversy over an Aqua Teen Hunger Force promotion.

Update: I shamelessly ripped off the picture from this guy.

Update 2: I added the YouTube below, which is a pretty funny commentary on the event.

Interview with Lee Tavis

Read this great interview with Prof. Lee Tavis, who was one of my finance professors at the University of Notre Dame. The interview covers Prof. Tavis' wide ranging interests and provides a great window into his thinking on how corporations can help improve society. Prof. Tavis emphasises the transfer of values from successful corporations to indigenous populations and encourages western companies to engage with the local populations as his story about General Motors in South Africa describes.

Virtuous vs. Moral

Andrew Sullivan continues his debate with Sam Harris over the nature of religion as I noted before. Now Andrew posts a comment from a reader that points to a potentially critical distinction between Sullivan and Harris. Namely, what gives our lives meaning? I assume that Andrew would say that the meaning from his life comes from God, but I wonder where Sam attributes the meaning to his life or even if he believes that his life has meaning at all. I hope these to writers touch on the subject in future posts.

If I was going to be an Atheist, I would intimately link the meaning in my life to virtue - fully realizing myself as a great man. I am pretty sure that I would not tie the meaning in my life, as Andrew's atheist reader does, to making things just a little bit better for others. Come on how lame is that? If you are going to be an atheist you have to dream big and live large. What other meaning could you see in life other than exercising your will on the grandest scale possible? Isn't this what ancients Greeks and Romans aspired to achieve? What would Nietzsche think of an atheist who aspired to nothing more than making the world just a little bit better for those around him? I bet Nietzsche would say that that person had been cowed into abandoning his larger dreams by the prevailing Christian culture.

Though I certainly feel this call to virtue, I have to temper it with Christian morality, which comes from God and represents a universal truth. I resist the temptation to treat others as objects out of love, based on Jesus's example. What else, besides following Jesus's example, could motivate a person to give up his selfish desires and to love others instead. I think that Kant formalizes a way of thinking about this, but ultimately his philosophy crumbles unless its foundation is a universal law of love.

When atheists attack Christianity and the bible for the former's dogma and the later's internal contradictions, they miss the key point. They miss that God is love. They miss that creation, even, perhaps especially even, if it happened through the process of evolution was an expression of love. They miss that Jesus's life and especially his death was an expression of love. And they miss that every act of Christian worship ought to respond to that love. That framework gives meaning to my life. The tension that I feel between the urge to exercise my will and the call to love helps to prove to me that God exists more than any proof or even a momentary religious experience ever could.

Democratic Spending Restraint

I am happy to read in the Washington Post that the Democratic leaders in congress are actually planing to restrain spending for the last 8 months of fiscal 2007.

To quickly resolve the current budget, the Democrats are writing a resolution to fund the government -- without earmarks -- for the remainder of the year. Obey and Byrd expect the resolution to total $463 billion [sic], the amount left over from Bush's 2007 budget after the homeland security and defense budgets are removed.

I really never thought that I would cheer on Senator Byrd for fiscal responsibility, but that is just what I am doing. By eliminating earmarks in this budget the Democrats caused some heartburn at universities and other recipients of federal largess. So here is half a cheer for the Democrats. Why only half a cheer? Well with Post continues:

Obey and Byrd said earmarks will resume with the 2008 budget, but under new rules passed by the Democrats. Legislators will have to disclose any earmark they insert and will have to certify they have no personal financial interest in the earmark, among other changes.

Skiing: Day 6

Yesterday some friends and I skied at Bretton Woods in New Hampshire. Lori and I won free lift tickets from WFNX, a local radio station, as part of their Snow Riders program. This was my first trip to Bretton Woods, but unfortunately unless I win free lift tickets again, it will probably be my last.

Although the mountain's snow quality was actually OK for an East Coast resort - a little icy in spots, but overall pretty firm and flaky due to the very cold temperature, the bigger problem that I have with the mountain is just lack of terrain. Bretton Woods just does not have the enough vertical drop. All of the runs are very short and the steep sections are even shorter. For example, in the "bump" runs I considered myself lucky to find more than four moguls in a row - just too short to really start having fun. I will give the resort props for all of the gladed terrain available (unfortunately much of it was closed due to lack of snow), although I am pretty sure that even this is not enough to get me to return at $64 per lift ticket.

So thanks again to WFNX for the free lift ticket and the chance to explore this new mountain. Hopefully we can do it again sometime.

Let's Get Serious

Charles Krathammer unloads on the President's ridiculous energy proposals in today's Washington Post. Krathammer makes compelling arguments for taxing gas, drilling for oil in the Arctic and outer continental shelf, and increasing use of nuclear power to reduce our reliance on foreign sources of energy. The problem is that all of these solutions have costs, which means that our politicians do not want to talk about them.

Guaranteeing access to energy is a compelling national interest. We need to start acting like we believe that by taking the tough steps necessary to decrease our reliance on foreign energy sources.

Skiing: Days 1 - 5

This pas week, I had the opportunity to travel to Vancouver, B.C. for some meetings at my company's headquarters. While there I spent five days skiing at Whistler. Both Whistler and Blackcomb mountains had fantastic conditions. I usually gripe about Whistler's wet snow, which tends to become very unless they constantly have new snow, but last week, even though they did not have a ton of new snow, the colder than usual temperature kept the snow soft and flaky.

My favorite runs on the Whistler side were the Whistler Bowl going into Shale Slope, and certain sections off the Harmony Lift. On the Blackcomb side, I liked the Sunburn run off the 7th Heaven lift, and especially Outer Limits, which is a steep gladed run that holds snow incredibly well.

State of the Union

After watching the President's State of the Union address last night, I think that the speech was pretty much at least a year too late.

The most positive aspect of the speech was the President's proposal to level the playing field on health insurance by making health insurance premiums tax deductible and making employer provided health insurance a taxable benefit. Where was this proposal last year? The Wall Street Journal editorial page has been talking about this reform for the better part of the last decade. Of course now that the democrats control congress this proposal has just about zero chance of passing. This smacks of building up an electoral issue instead of trying to improve our nation's laws.

Perhaps the most depressing domestic policy proposal was the President's approach on reducing gasoline consumption by 20%. I do not necessary disagree with the goal, but setting increased fuel efficient standards and requiring the use of more ethanol is nothing more than a heavy handed way for government to regulate the markets. The sight of all the farm state congressmen whopping it up when the President mentioned increasing ethanol use disgusted me because we could easily increase ethanol use by just reducing the tariffs on sugar or ethanol produced by sugar as I have mentioned before. But these guys don't want that. They want the government to require consumers to buy more expensive corn produced ethanol from their constituents. Talk about mafia government...

And while were are on the subject: earmarks. The president's goal is to cut them in half this year. Please. Why not cut them to zero. How hard is that? Oh but then all the lobbyists would have to schlep off to 50 state capitals to make their money. We couldn't have that now could we.

On the Iraq war, I am certainly not happy with the situation, but it is just too important to lose. Any kind of significant US withdraw this year, next year, or probably for the next five years will likely cause even more chaos in the region. We have to stabilize that country. So I am willing to give the President the benefit of the doubt and give his plan a chance to succeed. Nonetheless, why didn't we "plus up" last year or the year before that?

On net I thought the speech was OK, but would have been better if the president had delivered it last year when he actually had congressional support.

Sullivan vs. Harris

Andrew Sullivan and Sam Harris debate if anyone can rationally hold religious beliefs. Harris says no, while Sullivan says yes. Readers of this blog know that I am certainly partial to Sullivan's position and I think that Andrew makes a strong case for belief in both religion and logic.

Without trying to jump too much into the middle of this debate, it seems that Harris' downfall here is trying to make the perfect the enemy of the good. In his latest post Harris states:

The bottom line is that this pope, and all his predecessors (and you, apparently) believe that the Bible is a magic book: that it was not authored by human beings, however brilliant, but by some supernatural force.

This just is not the case as the following quotes from the Catechism of the Catholic Church makes clear. Paragraphs 80 - 82 of the Catechism illustrates the relationship between sacred scripture and apostolic tradition:

One common source. . .
"Sacred Tradition and Sacred Scripture, then, are bound closely together, and communicate one with the other. For both of them, flowing out from the same divine well-spring, come together in some fashion to form one thing, and move towards the same goal." Each of them makes present and fruitful in the Church the mystery of Christ, who promised to remain with his own "always, to the close of the age".
. . . two distinct modes of transmission
"Sacred Scripture is the speech of God as it is put down in writing under the breath of the Holy Spirit."
"And [Holy] Tradition transmits in its entirety the Word of God which has been entrusted to the apostles by Christ the Lord and the Holy Spirit. It transmits it to the successors of the apostles so that, enlightened by the Spirit of truth, they may faithfully preserve, expound and spread it abroad by their preaching."
As a result the Church, to whom the transmission and interpretation of Revelation is entrusted, "does not derive her certainty about all revealed truths from the holy Scriptures alone. Both Scripture and Tradition must be accepted and honored with equal sentiments of devotion and reverence."

So this "magic book" not the sole basis for the Church's beliefs. For this reason the faithful must constantly struggle to interpret scriptures in a search for truth. We must constantly try to rectify scripture with tradition and our own experience. Paragraphs 107 - 110 describe the nature of sacred scripture and how Christians should use sacred scripture to augment their beliefs:

The inspired books teach the truth. "Since therefore all that the inspired authors or sacred writers affirm should be regarded as affirmed by the Holy Spirit, we must acknowledge that the books of Scripture firmly, faithfully, and without error teach that truth which God, for the sake of our salvation, wished to see confided to the Sacred Scriptures."
Still, the Christian faith is not a "religion of the book." Christianity is the religion of the "Word" of God, a word which is "not a written and mute word, but the Word is incarnate and living". If the Scriptures are not to remain a dead letter, Christ, the
eternal Word of the living God, must, through the Holy Spirit, "open [our] minds to understand the Scriptures."
In Sacred Scripture, God speaks to man in a human way. To interpret Scripture correctly, the reader must be attentive to what the human authors truly wanted to affirm, and to what God wanted to reveal to us by their words.
In order to discover the sacred authors' intention, the reader must take into account the conditions of their time and culture, the literary genres in use at that time, and the modes of feeling, speaking and narrating then current. "For the fact is that truth is differently presented and expressed in the various types of historical writing, in
prophetical and poetical texts, and in other forms of literary expression."

The Catechism goes on to describe the various methods that the faithful should use to interpret scripture. This of course goes to the heart of Harris' misunderstanding of faith, especially the type of faith, which I profess. We must base our faith not only on scripture but on the entire tradition of the church. This tradition, if completely captured in writing, would encompass an entire library and run into the millions of pages. Our current cannon, was an attempt by men, guided by the holy spirit, some 1700 years ago to distill that tradition into a manageable volume that contained the truth as they saw it. This human effort, while perhaps not foreseeing moral breakthroughs like the end of slavery, gave us a book which continues to inform us about the truth and made those breakthroughs possible.

I doubt that Andrew will ever convince Sam of the merits of Christianity through this debate, but he can certainly help to fortify the beliefs of his fellow Christians in an age where vivid fabric of moderate belief seems torn between one dimensional atheism and fundamentalism.

Good Luck Andrew!