I am learning so much from Megan McArdle. I just discovered that if you make a mistake that damages your argument you can erase the mistake, not mention the little fact that you erased your mistake, and go on your merry way. No doubt to make as many more mistakes as you please because it's not like you are a real journalist or analyst anyway; why bother holding someone to professional ethics and standards when they are just putting on an act?
True, it's odd that Bloomberg publishes a fictional column which has every appearance of being a factual column but now it is clear that McArdle is a storyteller, not a journalist. She makes up Free Market fairy tales and relates them to her
In her recent post How Hash HealthCare.gov Hash Went So, So, Hash Wrong Hash Hash Hash, McArdle said that the faulty 2012 rollout of the website was a contributing factor to the Republican's House win in 2010. You will not know this unless you read the comments because McArdle erased her mistake without making a note that she had done so. Erasable McArdle is so much more diligent than non-eraseable McArdle!
You can see in the above quote exactly what McArdle said. That parenthetical quote is now gone. This is what her post says now:
They couldn’t, because they still lacked the votes to break a filibuster, and in 2012, Obamacare cost them the House of Representatives.
Since McArdle's material keeps appearing and disappearing like the Cheshire Cat's smile, let's reprint the end of her post. If/when an admittance of error magically appears we will be able to see the difference.
[...]architects didn’t understand how big it was. The holes in the legislation created an impossible management structure. And the federal contracting system was optimized to prevent corruption rather than deliver working systems on time and on budget.
It’s hard to see how spending more hours creating and reading reports would have fixed any of these problems. At best, it would just have provided slightly better documentation of the disaster in progress.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.To contact the author of this story:
Megan McArdle at firstname.lastname@example.org
To contact the editor responsible for this story:
Philip Gray at email@example.com
At this point I feel like I am complaining that the clown is wearing clown make-up and making pratfalls and throwing buckets of glitter. Of course she is. What else would a clown do?
One of the fractured fairy tales in her post: rules and regulations just get in the way of business deals, which are based on trusting relationships.
A client is a long-term relationship; you want to preserve that.
But the federal contracting system specifically discourages these sorts of relationships, because relationships might lead to something unfair happening. (In fact, the report specifically faults CMS for not documenting that one of the people involved in the process had previously worked for a firm that was bidding.) Instead the process tries to use rules and paperwork to substitute for reputation and trust. There’s a reason that private companies do not try to make this substitution, which is that it’s doomed.
Yes, you end up with some self-dealing; people with the authority to spend money on outside vendors dine very well, can count on a nice fruit basket or bottle of liquor at Christmas, and sometimes abuse their power in other less savory ways. But the alternative is worse, because relying entirely on rules kills trust, and trust is what helps you get the best out of your vendors.
Trust is open ended: You do your best for me, I do my best for you. That means that people will go above and beyond when necessary, because they hope you’ll be grateful and reciprocate in the future. Rules, by contrast, are both a floor and a ceiling; people do the minimum, which is also the maximum, because what do they get out of doing more?
McArdle should watch an episode of American Greed some time.
This is the same woman who said that people in the financial industry had no incentive to manipulate the system.
All of these papers suggest that the search for a villain behind the crisis will ultimately be fruitless. There are two basic narratives of what happened. The first is that bankers had bad incentives: they took massive risks because the profits were so good in the up years that it was worth the risk of the bad, or because they could pass the risks onto some other sucker, or they thought Uncle Sugar would bail them out. The other narrative is that bankers had bad information: they didn't understand the risks they were taking. I've always preferred narrative B, because Narrative A doesn't make much sense. The CEOs of big banks lost vast sums of money, and their jobs, most of their social status, and so forth. They held onto the worst tranches of their securities, which implies they didn't know how badly they were going to blow up. Etc.
I find it vastly more plausible, if not so comforting, to believe that systems can occasionally produce bad results even if the incentives basically point in the right direction. The FICO score revolution was valuable, but we took it too far. The money sloshing around US markets disguised the problems, because people who got into trouble tapped their home equity, or in a pinch, sold the house at a tidy profit. Everyone from borrowers to regulators was getting the same bad signal, that their behavior was much less risky than it actually was.
That doesn't mean that nothing can be done. Maybe we decide we want a less complex financial system. But it won't be because there's some villain manipulating everything into ruin; rather, we may decide that there are certain kinds of risks we can trust ourselves to handle.
I'm not sure that this would work, and I'm skeptical that it's a good idea. But the more time we waste trying to figure out who did us wrong, the less quickly we will arrive at an actual solution.
Another example of McArdle's storytelling habit:
I have to stop reading McArdle. There is no point in fact-checking fiction. Nobody cares that she lies. Nobody will ever hold her to account. Nobody holds anybody to account, from Obama to Trump to McArdle. (Except the poor, of course.) I am wasting my time.
Once upon a time, there was a country with a housing market that started to rise. As the market started to rise, housing defaults started to fall. They fell not because people had gotten wiser about borrowing, or better at managing their money, but because borrowers in a rising housing market virtually never need to default; they can always simply sell the house, walking away with whatever equity is left over after paying off the mortgage.
Lenders loved this. "Splendid! If default has become less likely," the lenders said, "we do not need to worry so much about things like down payments or credit histories. Who cares if they can't pay the mortgage each month; if they get into trouble, they'll just sell the house and pay us."
Go, little liar! Fly free and fly high! Enjoy screwing over the poor! It's not like I can do anything about it anyway.