Posts filed under “Bad Math”

Red State, Blue State: Kansas & Washington

@TBPInvictus here.

We have interesting experiments going on in the state of Kansas and the city of Seattle. Herewith a brief update on both.

Thanks to the following Tweet, I was made aware of the fact that – as you can see – the state of Kansas, under Sam Brownback’s awesome tax cuts, recorded the third-worst jobs performance in the country over the past year. Data are easily accessible just by clicking through.

It was almost three years ago – July 2012 – that Brownback touted the awesomeness of his economic plans via an op-ed:

In May, the Kansas Legislature passed and I signed the largest tax cut in state history, eliminating state income taxes on small businesses and reducing the tax burden on hardworking Kansans. [...]

Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy. It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business. It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments.

In short, it did none of the above. In fact, faced with the dire consequences of Brownback’s Laffer-inspired, misbegotten plans, Kansas schools had to implement early closures:

“It’s crazy times,” Sanders said. “The ideology in this tax experiment has gone too far. It’s almost as if they’re hell-bent on proving their point, no matter the damage it causes.”

Indeed. The beatings will continue until morale improves.

Faced with a fiscal crisis, Brownback has had no choice but to reverse course. Sadly, in doing so, he is placing much of the burden on the ordinary Kansans by raising sales taxes.

Here’s the growth of jobs in Kansas for the last 3 1/2 years, with the months of Brownback’s statement and the most recent reading highlighted.

Screen Shot 2015-06-20 at 3.29.22 PM

That’s an annual growth rate of about 1.15%, which compares poorly to the nation as a whole, which has advanced by about 1.91% annualized over the same period. Not terribly impressive.

And yet, amazingly, supply-side trickle down is somehow still a thing. Where is John Oliver when you need him?

Moving on from Kansas to the Emerald City and a different sort of experiment. Let’s see what the data have to say there about their gradually stepped-up minimum wage. Keep in mind that the increase was voted into law over one year ago, and the first bump was enacted a few months ago. (It’s important to note the timing of the legislation’s approval for the following reason: Market participants (which include restaurateurs) act on information immediately, i.e. as soon as it becomes available. In this case, information about an impending rise in wages was known over one year ago.)

So, how’s it going?

Well, I’ve been continuing the work started by Evan Soltas at his blog in March. Taking his initial six data points, and updating weekly, the Seattle restaurant scene looks like this:


seattle naics for jun172015


Seems to my eyes that the restaurant business in Seattle has continued to grow fairly briskly despite dire forecasts – and some outright lies – spread throughout the conservative media. As I was told by a contact in the most excellent King County Office of Economic and Financial Analysis, it will likely be rent before wages that slows things down in Seattle.

So, in sum, tax cuts have not led to the promised prosperity in Kansas, and a higher minimum wage has not led to the demise of the restaurant business in Seattle. I don’t expect these facts to make any difference whatsoever in conservatives’ narrative – I wasn’t born yesterday – but they do need to be documented for the record time and again.




Jobless in Seattle? Not Yet, Anyway

Jobless in Seattle? Not Yet, Anyway. Part 2

We Know What’s the Matter With Kansas

A Pizza Place Closes in Seattle

Category: Bad Math, Cognitive Foibles, Current Affairs, Data Analysis, Really, really bad calls

Buffett on Stock Prices

Its early in this potential correction, but let me remind you of Buffett’s interesting (1997) comments: “If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but…Read More

Category: Bad Math, Investing, Philosophy

The NY Post’s Financial Innumeracy

@TBPInvictus here: The New York Post ran a piece on Netflix (NFLX), written by Claire Atkinson, that was, to put it charitably, interesting. And by interesting I mean that it painfully misstated the very simple mathematics of stock splits. The piece implied that NFLX is wildly overvalued. I have no problem with that. Not that…Read More

Category: Bad Math, Cognitive Foibles, Data Analysis, Financial Press, Really, really bad calls

Fine, when you ignore history

This must be the “new normal” everyone​’s talking about​. Where a cyclical low ​in the ​unemployment rate​, to the the low 5 percent range​,​ is met with a courtly high stock market and talks of an impending rise in rates. Sure there is a feeling in some pockets ​of the economy ​that “things” are much…Read More

Category: Bad Math, Economy, Think Tank

More Fun With Useless Correlations: American Pharoah

About a year ago, we discussed what happens “When Correlations Lie.” Delving into the classic logical fallacy that correlation implies causation, we looked at equities and a variety of supposedly related factors, including gross domestic product, rising interest rates, earnings surprises, new financial products and the “death cross” involving daily moving averages. All were classic coincidences of…Read More

Category: Bad Math, Cognitive Foibles, Investing

Cullen Roche vs Andrew Smithers on Tobin’s Q

I love this debate between the idea of Tobin’s Q-Ratio as th be all for valuation analysis. It is embodied between Smithers & Co. quoted in this scary BBRG article and Pragmatic Capitalism’s Cullen Roche. Here is PragCap: “Better yet, look at the number of times this ratio has been cited during the most recent bull market…Read More

Category: Bad Math, Data Analysis, Investing, Valuation

Death Tax, Paying for What You Use, Comment Foolishness

There was some pushback on yesterday’s rather tame suggestion that the U.S. properly finance the fund that pays to maintain and repair our roads. Much of the correspondence was surprising. Then again, I am continually flabbergasted by the cognitive errors that the human brain can make. It’s a marvelously designed piece of wetware that does a…Read More

Category: Bad Math, Politics, Taxes and Policy, Weblogs

Probability, Mean Reversion and Forecasting

We’re down to the Final Four in this year’s iteration of March Madness, also known as the national collegiate basketball tournament. Our earlier discussion of “The March Madness Theory of Investing“ didn’t sit well with some readers. The lessons we sussed out from the bracket-destroying results included home-country bias, how expert forecasts are about as good as those…Read More

Category: Apprenticed Investor, Bad Math, Psychology, Sports

Dilbert: Beating the Average

Source: Dilbert

Category: Bad Math, Cognitive Foibles, Humor, Investing


As one of those folks who has spent a lot of time bashing economic and stock-market forecasters (see this, this, and this), I have no choice but to take issue with an argument made by former hedge-fund manager Jesse Felder, who asserts “that everything is a forecast.” To quote Felder: Can we please stop bashing forecasters already? There is a…Read More

Category: Asset Allocation, Bad Math, Investing, Mathematics