Red Herring

A red herring is an argument which is used to distract from the original issue by introducing some irrelevant issue or topic. This seems to be thought of as both a logical fallacy and a debating tactic. I guess it is a rhetorical tool when used consciously but is always a fallacy.

Supposedly, the etymology of this fallacy came from the training of dogs in the sport of fox hunting. The dog trainer would drag a cured red herring across the trail of a fox to confuse the dogs. Eventually the dogs would be able to follow the scent of the fox rather than the scent of the herring.

Its basic structure is;

1) A is the topic of discussion,
2) B is introduced as a distraction from topic A,
3) A is abandoned.

Example 1
"This new computer program is too slow for me to be able to get my work done on time and it is missing some of the necessary features the old program used to have." Steve replies "What you have failed to understand is that the new software cost half as much as the other program and is much easier to learn."

With this example Steve's argument does not in anyway address the original topic which is that the program is too slow and missing necessary features. Instead he introduces an irrelevant argument regarding costs and learning time which distracts from the original issue. This is not to say that Steve's argument is irrelevant to some other issues but it does not in anyway address the original issue.


Example 2
SENATOR YATES: Why aren’t you willing to support my antiabortion amendment? Don’t
you have any feelings at all for the unborn children whose lives are being indiscriminately
blotted out?

SENATOR WEBB: Yes, I do. That’s why I don’t understand why those of you who are so concerned about lives being blotted out by abortion don’t have the same feelings about the thousands of lives that are blotted out every year by the indiscriminate use of handguns. Isn’t the issue of the sanctity of human life involved in both issues? Why haven’t you supported us in our efforts at gun-control legislation?

Senator Webb’s concern here is no doubt a very important one, and his “conclusion” or observation about inconsistency may be very insightful, but he does not answer the question at issue, which is why he is not supporting the antiabortion amendment.(1)

(1) Attacking Faulty Reasoning

Behold

Makes me feel as if I am leaving my corporeal body. 

Over regulation

Though I tend to be somewhat libertarian minded, I do believe that a minimal degree of smart regulation is beneficial. Unfortunately the words minimal, smart and regulation don't seem to go together in the United States. Our government seems to find red tape aesthetically pleasing and wants to wrap every business in it.

An example of the ever growing nature of government regulation can be understood with this 2009 report from the Mercatus Center which tracks the budgets and staff of federal regulatory agencies. Figure 1 from the report shows budgetary cost of federal regulatory agencies in inflation adjusted dollars.




Figure 3 from the report shows the number of employees working for these regulatory agencies.



It is plain to see that in terms of cost and staffing, regulatory agencies are getting bigger. So what might be the end result of all this regulation and government control? Though history provides us with many examples, India is the first that comes to mind. After World War II, many industries were effectively nationalized while others were subject to harsh regulation and licensing requirements. Though the objectives of these measures were to pool technical and managerial manpower, prevent a concentration of wealth, and the steady expansion of gainful employment, the results were corruption among government regulators and an economy limping along for decades. Finally during the 1990's a policy shift toward deregulation allowed the country to gradually become one of the fasted growing developing nations. The following clip from the documentary Commanding Heights is an excellent summary.







Now I am not suggesting that we have the same level of government control that India had, but I do believe that government regulation has reached a level where it is negatively affecting the economy. If we don't get off this path of ever increasing government control we will become less competitive globally and our standard of living will drop dramatically.

Warren Buffett And Inflation

Inflation? Deflation? In these perplexing economic times it is hard to predict what might happen next. I certainly don't know. There are so many opposing forces pushing against each other it is hard to say which ones are strongest.

From the perspective of Warren Buffett, inflation is going to be the economic right cross to hit us next. According to this article on seeking alpha, Buffett has been banging the inflation drum for a few years. His reasoning is simple and not at all uncommon. He says that there are three ways for the government to deal with it's debt issues: 1) It can default, 2)It can raise taxes/reduce spending, 3)It can inflate its way out. Since the government's debt is in US currency, he doesn't see default as a viable option since the U.S. can simple print more money. He doesn't see the politicians raising taxes/cutting spending since these actions are unpopular and thus will damage their chances of re-election. With only one option left, he believes politicians will take the easy way out and resort to inflationary measures.

Back in February, I wrote this paper/blog entry considering the same three possible methods of dealing with the debt but came to the conclusion that it was more likely that the government would raise taxes/reduce spending rather than pursue inflationary measures. My reasoning was that the negative effects this sort of policy (rolled over outstanding debts and all future debts would have to be financed at higher rates to compensate investors for inflation)would be enough to persuade politicians to pursue the tax and cut option. Though I still feel this will be the predominant measure taken, I am a little less sure after witnessing the debt ceiling debacle we just went through. As Buffett predicted, during the debt ceiling debates neither side wanted to do what they thought would be politically harmful. Republicans did not want to increase taxes and democrats did not want to cut spending. I'm not trying to make a point here regarding the right amount of taxes vs. spending cuts, only that a great deal of political fighting resulted in very little action.

Since the passing of the debt ceiling bill, nothing has really changed. We still have a massive debt problem which could explode tomorrow or 30 years from now. So what are we going to do about it?

The Wonder of it all1

Though it is easy to get bogged down by the nuts and bolts of our daily lives, I think it is important to step back and reflect upon all the beautiful and amazing things this world has to offer. I believe that doing so helps to free us from our monotonous routines and allows us to cultivate a sense of wonder. So to help facilitate that cultivation, I am going to start a series of post sharing some of the various things I have come across which leave me feeling a sense of wonder.

I saw this on TED talks and found it to be amazing:



And this beautiful cyr wheel performance

I'm afraid its a downgrade

There's no more wishes in the well
No more dreams to sell
No time in the hourglass
There's no more lies for you to tell
Your heaven is your hell
Your future dying in the past
-Evergreen by Echo & The Bunnymen


I borrowed the format from Mind & Market since I felt the lyrics were a perfect fit for our current economic situation.

Recently, the top three nationally recognized credit rating agencies have been threatening to lower the United States' credit rating if there is even a temporary delay in interest payments due to the debt ceiling not being raised on time. But there are actually ten of these credit rating agencies recognized by the securities and exchange commission. On July 16, one of these agencies, Egan-Jones, actually downgraded the U.S. from a AAA to a AA+ rating.

Here is an interview on CNBC where they announced the downgrade





It is not surprising that Egan-Jones would be the first NRSRO to make a move. Unlike most of the other nationally recognized rating agencies which are paid by issuers (the companies they are supposed to rate) they are paid by investors (those that need unbiased information). As a result, they were able to foresee problems with Enron and companies involved in the credit crisis that the other major rating agencies missed. Its important to note that Egan-Jones decided to downgrade the U.S. because of structural problems and the country's rising debt-to-GDP rather than a delay in raising the debt ceiling.

Higher interest rates here we come.

False Dichotomy

Also known as the false dilemma, either-or fallacy and black and white thinking . The argument is presented in such a way to as to suggest that there are only two possible options. The arguer then presents their evidence against the disfavored option and so it is then reasoned that the favored option must be accepted. It takes the form of: Either X or Y is true. X is false so Y must be true. This sort of reasoning is fine as long as there are truly only two possibilities, but if other alternatives exist then it is possible that both X and Y are false.

The false dichotomy may be used intentionally by an arguer to influence a debate or to force a course of action. An example would be: "Ann, I need you to donate $15 to the starving children of the world fund, unless you don't care about starving children." The two options presented are that Ann gives $15 and cares for starving children or she doesn't care for starving children. Of course a third possibility is that Ann cares for starving children but cant or doesn't want to give $15.

The false dichotomy can also arise unintentionally simply by not considering additional possible options. For instance "Silvia Brown can either talk with the dead or she is a con woman. She passed the lie detector test I gave her so she can talk with the dead." Of course another possibility is that she cannot talk with the dead but truly believes she can.

I see this kind of thinking all the time in political discussions. This is probably due to the fact that we only have two major parties, which I think tends to have a polarizing effect on our thinking (Regulation is good or regulation is bad, welfare is good or welfare is bad).

Other examples would include: "If we don't raise taxes, our government will collapse", or "you are either with us or against us" or "Which would you rather have, better schools or lower taxes".

Regulation: Its for your own good

Government regulation is a provocative topic. Many people seem to hold one of what they perceive to be only two possible opinions, either 'regulation is good' or 'regulation is bad'. Depending on which of these two opinions they may hold, the natural next step is 'more regulation would be good' or 'more regulation would be bad'.

Of course the real world is not quite as simple as our dualistic natures would like it to be. Things are messy and costs and benefits are not always easy to quantify. There is a lot of grey in between the black and white. Having said that, there is also a lot of what I would consider to be obviously silly and damaging government regulation. In particular, some of the state licensing of pretty benign professions is distressing.

For example, here is an article from USA today which reports on a law in Louisiana which requires florist to pass a test and get a license to arrange and sell flowers. Really? You need a license to arrange flowers? Or this article about the Arizona Board of Cosmetology requiring 'threaders' (people who use a piece of thread to remove eyebrow hair) to acquire an aesthetician license. To obtain the license requires schooling (which doesn't teach you how to thread) which can cost over $10,000. Or this article regarding Utah's requirement to obtain a cosmetology license in order to braid hair, a process which requires about 2000 hours of classwork at a cost of something between $9,000 to $19,000. Or this hilarious video from Reason TV regarding the licensing requirements of interior designers (at least watch the first 3 minutes for some comedy).







So is it really necessary for governments to institute licensing laws on these kind of low risk professions? Is the reason behind it really to promote public health and safety? Well I can't see the potential harm done by a florist arranging flowers. But I do see the harm to the economy this sort of regulation causes. First, it creates a barrier to entry making it more difficult to enter these professions, especially for low income workers. This suppresses competition allowing for those already in the industry to demand higher prices upon consumers. This is why trade organizations and professional associations often lobby for such regulation. Of course the obvious benefit to the states is the increased revenue they receive from licensing fees and penalties imposed upon those who are in violation of such laws.