Sunday, May 17, 2026

Limits to Capitalism

 (c) by Mark Dempsey

I just bought some sandwiches for a trip at Noah's Bagels.

Noah's sandwiches were previously delicious, as were their side dishes. And don't get me wrong, the bagels still are still delicious, but the filling and side dishes were second-rate.

After a little Googling, I discovered that Noah's chain first went public and was later sold to what appears to be a private equity firm. You can practically hear the bean counters crunching the numbers and eliminating the delicious side dishes (cole slaw, potato salad). But ya can't eat money! Now you can eat stale potato chips.

This is going around, too. Rubio's closed its California restaurants, blaming the higher ($20/hr) minimum wage. Actually, its private equity owners took on so much debt that it couldn't afford to pay its workers in California.

There's further evidence that homebuilders are colluding to keep land in short supply, even as rents rise faster than wages, and the US has the biggest homeless population since the Great Depression.

Almighty profit blesses such collusion, and even conspires to make sandwiches worse. This is one of the genuine limitations of capitalism.

 

The Affordable Housing Conundrum

(c) by Mark Dempsey

A local pundit recently wrote that affordable housing is nice to talk about, but difficult to build. The costs are exorbitant (he quotes a reader saying $400-$800/sq ft, excluding land!) and our resources are already stretched to their limits, never mind the bothersome question of where to get the money.

This discouraging line of talk was echoed by an HVAC technician's comment to this writer about affordable housing he worked on. The poor occupants "trashed" their homes, he said.

So let's clear up a few of the misconceptions that include "housing is too expensive," or "it's too difficult to build," and "it's unappreciated by poor people." Talk may be cheap, but it's important that it be accurate.

First of all, nationwide, there are more vacant homes than homeless. San Francisco has five times its homeless population in vacant homes. As for the expense, Google tells us that Sacramento's median home price is $339 per square foot, including land. And that's for built homes, not theoretical ones. New construction on large lots in a nice neighborhood in eastern Sacramento County sells for less than $370 per square foot, including the land. Overstating the costs or shortages is not helpful here.

Incidentally, "it seems kind of crazy that large homebuilders would be doing joint ventures with each other on land acquisition, when that could very easily lead to holding supply off the market and preventing smaller developers from competing to build cheaper homes." Yes, monopolies in land and building supplies are raising prices. The US stopped prosecuting most antitrust violations in the '80s. Markets aren't competitive if the players collude to raise prices.

And what about the money? The government makes all the dollars it needs whenever it needs them to pursue whatever priorities the governing class wants, whether it's affordable housing or warfare. Incidentally, the sentiment that "printing" money is inflationary is baloney, but let's save that conversation for a later article.

Actually, the lack of affordable housing is a public policy choice. This shortage began when Nixon stopped the feds from building (more) affordable housing, and, as he cut taxes on the wealthy roughly in half, Reagan cut HUD's affordable housing budget by 75%. The largest homeless population since the Great Depression isn't an accident; it's the product of the generations-long, bipartisan attack on the poor.

Won't the poor trash the housing, though? Yes, poor people are comfortable with squalor. They are not concerned about material things; that's why they're poor. The positive side of that attitude is that they're generous and compassionate, sentiments that would profit the wealthy if they ever chose to pay attention to them.

So building affordable housing without either mixing the poor and the rich populations to have neighbors pressure poor people to pay attention to the condition of their homes, and neighbors instruct rich people to be more compassionate and generous...or budgeting not enough maintenance if rich and poor are separate, is a subtle form of sabotage. Rich people get to say, "See! They don't appreciate the crumbs we let fall from our table!"

Incidentally, Finland gave its homeless population homes. Reportedly, 85% of the re-housed had jobs within six months of that change.

One of the key components for affordable housing is affordable land. Want to cut per-unit land costs in half? Build two units on the land. Why don't we do this?

Multi-family housing has problems that public policy makers are eager to ignore. Smaller or non-existent yards--that occupants would otherwise have to mow--mean people need bigger public parks. Parks, culture, and education are the kinds of public amenities the governing class has downplayed in the US for generations now. Public policy makers have done everything they can to say "We can't afford that cultural/educational stuff!" while assiduously casting the isolation and cultural deprivation of suburban life in concrete.

Just about all the complaining about overregulation and intrusive state requirements is overblown. Locally, land speculators seldom find zoning or regulations they can't change to make their bets pay off.

Building codes do increase costs, but not nearly enough to make homes as expensive as they are now. In fact, increased insulation and solar panels requirements make utility costs lower, and earthquake readiness makes insurance less expensive. Nevertheless, there is no shortage of complaining about the "cost" of such regulation.

So to deal with the homeless (40% of whom are employed) and the homes for the poor and even the not-so-poor:
  • We don't necessarily need more homes; we need to distribute them more evenly. Vancouver, Canada, began taxing homes left vacant to restrict supply and boost rents, and rents receded after Vancouver implemented the tax. California's governing class would like you to ignore this, but it's true.
  • We need to be realistic about how much affordable homes cost to build, and understand that money is always available for society's priorities, without necessarily inflating other costs. USDA used to make ("Farm Home") loans subsidized so even farm workers could afford to own their own house. Needless to say, the Farm Home loans are seldom funded.
  • We need to expect poor people will be less attentive to material conditions, and account for that in any affordable housing plan, whether mixing the poor with the rich (multiple units among the mansions) or stand-alone affordable housing (with a larger maintenance budget).
  • To reduce land costs, and not incidentally make such things as economically viable neighborhood commerce and public transportation possible, we need denser housing than sprawl. If there aren't enough riders within a comfortable walk of transit stops, then we'll just roll around a bunch of empty buses or trains. The lower threshold is about 11 units per acre, says Berkeley planner Robert Cervero. That's slightly more than duplexes, and amounts to an occasional 4- or 8-plex among the single-family homes.
  • Amenities like parks, culture, and education are not optional for more concentrated housing to work. We've tried defunding the "public realm"-- what's available even to the poor--for decades now. That defunding began with "white flight" (i.e., racism)--but it's a dead end.
So...that's what is not just possible, it's necessary. Will it happen? Intelligent pundits discourage it, and try to persuade other it's not even possible, ignoring accuracy in the process. Facing up to the obvious is not automatic.

Scoring a goal for the opposing team is called an "own goal." When people vote against their own interests, it's a version of the "own goal." A large part of political commentary tries to deceive people into "own goal" behavior so the plutocrats can continue to direct resources, even resources they don't use in a tragic pursuit of conspicuous consumption. That's the current state of play.

Sunday, May 10, 2026

Cowboys & Conquistadors vs. Indians

 Here's Charles Mann's short version of his book 1491 delivered as a lecture. Highly recommended.

 


 

Saturday, May 9, 2026

How to Master Life

From X/Twitter

A Hungarian psychologist raised three daughters to prove that any child could become a chess grandmaster through early specialization. He succeeded. Two of them became grandmasters. One became the greatest female chess player who ever lived. 

Then a sports scientist looked at the data and found something nobody wanted to hear. 

His name is David Epstein. The book is called "Range." 

The Polgar experiment is one of the most famous case studies in the history of deliberate practice. Laszlo Polgar wrote a book before his daughters were even born arguing that geniuses are made, not born. He homeschooled all three girls in chess from age four. By their teens, Susan, Sofia, and Judit were dominating tournaments against grown men. Judit became the youngest grandmaster in history at the time, breaking Bobby Fischer's record. The story became the gospel of early specialization. Pick a domain young, drill it hard, and you can manufacture excellence. 

Epstein opens his book by telling that story honestly and then quietly demolishing the conclusion most people drew from it. 

Chess works that way. Most things do not. 

Here is the distinction that took him four years of research to articulate, and that almost nobody who  quotes the 10,000 hour rule has ever read. 

There are two kinds of environments in which humans develop expertise. Psychologists call them kind and wicked. A kind environment has clear rules, immediate feedback, and patterns that repeat reliably. Chess is the cleanest example. Every game ends with a winner and a loser. Every move is recorded. The board never changes shape. The pieces never invent new ways to move. A child who plays ten thousand games will see most of the patterns that exist in the game, and pattern recognition is exactly what chess mastery is built on. 

A wicked environment is the opposite. Feedback is delayed or misleading. Rules shift. The patterns that worked yesterday may be exactly the wrong patterns to apply tomorrow. Most of the real world looks like this. Medicine is wicked. Investing is wicked. Building a company is wicked. Scientific research is wicked. Almost every job that involves a complex changing system with humans in it is wicked. 

The Polgar sisters trained in the kindest environment any human can train in. Their success was real and the method was correct. The mistake was generalizing the method to fields where the underlying structure of the environment is completely different. 

Epstein's research is what made the implication impossible to ignore. 

He looked at the careers of elite athletes outside of chess and golf and found that the pattern was almost the inverse of what people assumed. The athletes who reached the very top of their sports were overwhelmingly people who had played multiple sports as children, specialized late, and often switched disciplines well into their teens. Roger Federer played squash, badminton, basketball, handball, tennis, table tennis, and soccer before tennis became his focus. The kids who specialized in tennis at age six and trained year-round for a decade mostly burned out, got injured, or topped out at lower levels of the sport. 

The same pattern showed up everywhere he looked outside of kind environments. Inventors with the most patents had worked in multiple unrelated fields before their breakthrough work. Comic book creators with the longest careers had drawn for the most different genres before settling. Scientists who won Nobel Prizes were dramatically more likely than their peers to be serious amateur musicians, painters, sculptors, or writers. 

The skill that mattered in wicked environments was not depth in one pattern. It was the ability to recognize when a pattern from one domain applied unexpectedly in another. That kind of thinking cannot be built by drilling a single subject. It can only be built by accumulating mental models from many subjects and learning to move between them. 

The deeper finding is the one that should change how you think about your own career. 

Specialists in wicked environments often get worse with experience, not better. Epstein cites studies of doctors, financial analysts, intelligence officers, and forecasters showing that years of experience in a narrow domain frequently produce more confident judgments without producing more accurate ones. The expert builds elaborate mental models that feel comprehensive and turn out to be increasingly disconnected from the actual structure of the problem. They stop noticing what does not fit their framework. They mistake fluency for understanding. 

Generalists do better in wicked domains for a reason that sounds almost mystical until you understand the mechanism. They have less invested in any single mental model, so they abandon broken models faster. They are used to being a beginner, so they are not threatened by the discomfort of not knowing. They have seen enough different domains that they can usually find an analogy from one field that unlocks a problem in another. The technical name for this is analogical thinking, and the research on it is one of the most underrated bodies of work in cognitive science. 

The single most useful sentence in the entire book is the one Epstein puts almost as a throwaway. 

Match quality matters more than head start. 

A person who tries six different fields in their twenties and finds the one that genuinely fits them will outperform a person who picked one field at fourteen and stuck to it on willpower alone. The lost years were not lost. They were the search process that produced the match. Every field they walked away from taught them something they later imported into the field they finally chose. 

The reason this is so hard to accept is cultural, not empirical. We tell children to pick a path early. We reward the prodigy who knew at six. We treat the late bloomer as someone who failed to launch on time, when the data suggests they were running an entirely different and often more effective optimization process underneath. 

The Polgar sisters were not wrong. The conclusion the world drew from them was. 

If your environment is genuinely kind, specialize early and drill hard. If it is wicked, and almost every interesting human problem is, then the people who win are the ones who refused to specialize until they had seen enough to know what was actually worth specializing in. 

You are not behind. You were running the right experiment all along.

Monday, April 27, 2026

The Healthcare Update

 

Sunday, April 26, 2026

"Gambling is a tax on ignorance." - Warren Buffett

 

Limits to Capitalism

 (c) by Mark Dempsey I just bought some sandwiches for a trip at Noah's Bagels. Noah's sandwiches were previously delicious, as were...