Physicist Eugene Wigner is the author of a famous paper called “The Unreasonable Effectiveness of Mathematics in the Natural Sciences.” Brad DeLong comments:

We are all, potentially, the Friends of Wigner. It has always seemed to me that anyone with the empathy and imagination to think of him or herself as one of the Friends of Wigner is then driven inescapably to either “quantum mechanics is totally wrong wrong wrong wrong and just predicts well for incomprehensible reasons” or “many-worlds”. There really are no other alternatives, or at least what alternatives there are are even stranger.

Au contraire. I consider quantum mechanics to be evidence that we are all constructs in somebody else’s virtual reality. All of the peculiarities of quantum mechanics are easily explainable if the universe is merely a computer-generated world subject to the whims of a programmer.

The only question left is why the programmer has created such a world. Whimsy? Amusement? As a test of some sociology theorem? Bad design?

Perhaps the last one is most likely. In reality, quantum mechanics is a desperate, ugly patch glued onto a poorly working universe by a stressed freshman at 2 am. Basically, the poor kid waited until the last minute, as freshmen everywhere do, and hadn’t really understood much of the text for the required “Plenum Creation and Maintenance” class. The result was a mess that kept falling apart even for small taus of only a few billion years. One thing led to another, and eventually the whole project became a Rube Goldberg monstrosity of black holes, 11 dimensions, wavicles, arbitrary speed-of-light caps on velocity, and observer-induced wave collapse as a last-ditch way of reducing the computing power needed to run it.

In the end it received a gentlemen’s C- from a sympathetic professor. That’s the universe we live in.

With only 14 days left before Election Day, it hardly feels worth it to highlight Donald Trump’s latest public declaration of ignorance, but I have another point to make about today’s Trump Follies. Here is Donald on Obamacare:

Well, I don’t use much Obamacare, I must be honest with you, because it is so bad for the people and they can’t afford it. And like, for instance, I’m at Trump National Doral in Miami, and we don’t even use Obamacare. We don’t want it. The people don’t want it, and I spend more money on health coverage, but we don’t use it.

The obvious point to make is that Trump obviously has no idea what Obamacare is. He’s apparently under the impression that it’s some kind of option that employers can choose as group insurance for their employees. Ha ha. What an idiot.

And that’s true enough. But did you notice something else? Once again, Trump has made it clear that he has no idea how his own businesses are run. This is hardly the first time, either. As near as I can tell, Trump’s job as CEO of the Trump Organization is to (a) watch a lot of TV, (b) appear on a lot of TV, (c) make command decisions about what kind of marble to use in the bathrooms, and (d) threaten to sue people who get in his way. Beyond that, he appears to play no real role in running things.

This explains, for example, his promise last year to release his tax returns. He made that promise because he had no idea what was in them. It was only later, when someone on his finance team apparently pointed out what they contained, that he reneged on his promise. It also explains his frequent business failures. He was in love with the Plaza Hotel but had no idea what it was worth or how to run it. He loved the idea of owning an airline but had no clue about the shuttle market. He loved the casino business, but was entirely ignorant about casino operations. He loves to play golf, but doesn’t understand the business of golf. Etc. He’s spent his whole life diddling around in businesses that seemed interesting, but without knowing anything about them or understanding how to run them.

His presidential campaign is the same thing. He thought it sounded neat to run for president but had no interest in how campaigns are actually run. If he ever became president, it would be more of the same. He’d run the country the way he runs his golf courses: making windswept exits from helicopters to deliver grand statements, and then quickly losing all interest. At best, things would toddle along without catastrophe if he picked decent people to run things. At worst, he’d pick fellow con men who would embroil him in endless scandals that made Teapot Dome look like a child’s lark.

Luckily, we’ll never have to find out.

A few days ago Brad DeLong tagged a piece by David Warsh that promises to be a preface of sorts to a 14-part series about some new research into the nature of finance and the origins of the Great Recession. It actually looks pretty interesting, but I confess I’m a little unclear about one of its central points.

As we all know, one of the problems the Great Recession uncovered was the brave new world of rocket science derivatives, which were so complex that no one truly knew what they represented. Warsh suggests that this is no accident:

Stock markets existed to elicit information for the purpose of efficiently allocating risk. Money markets thrived on suppressing information in order to preserve the usefulness of bank money used in transactions and as a store of value. Price discovery was the universal rule in one realm; an attitude of “no questions asked” in the other.

….This new view of the role of opacity in banking and debt is truly something new under the sun. One of the oldest forms of derision in finance involves dismissing as clueless those who don’t know the difference between a stock and a bond. Stocks are equity, a share of ownership. Their value fluctuates and may drop to zero, while bonds or bank deposits are a form of debt, an IOU, a promise to repay a fixed amount.

That economists themselves had, until now, missed the more fundamental difference — stocks are designed to be transparent, bonds seek to be opaque — is humbling, or at least it should be. But the awareness of that difference is also downright exciting to those who do economics for a living, especially the young. Sufficiently surprising is this reversal of the dogma of price discovery that those who have been trained by graduate schools in economics and finance sometimes experience the shift in Copernican terms: a familiar world turned upside down.

I can’t do justice to the whole idea in an excerpt, but this gives you a taste of Warsh’s thesis. But it confuses me. Certainly he’s right that mortgage-backed securities of the aughts were astonishingly opaque, but why does that lead us to believe that bonds, in general, “seek to be opaque”? For most of the 20th century and before, bonds were considerably simpler than the derivatives of the 21st century. The value of a corporate bond depended on the likelihood of bond payments being made, which in turn depended on the profitability and overall growth prospects of the firm. The value of a company’s stock also depended on the profitability and overall growth prospects of the firm. If you knew one, you knew the other. Bonds, in general, were no more opaque than stocks. And none of this had any relation to bank money, did it?

Maybe this will all be explained later. If Warsh is arguing that the transparency of the debt and equity markets have changed over the past decade or so, that’s one thing. But if he’s arguing that they’ve always been fundamentally different, then I have some questions. I hope he answers them over the next 14 weeks.

The federal government announced today that Obamacare premiums are set to rise 22 percent next year. Charles Gaba estimates that premiums will go up 25 percent. Those numbers are close enough that there’s probably no need to dive into the weeds to see if there are any gotchas. Premiums really are going up an average of about 25 percent next year. Here are five things to keep in mind:

1. Yikes. That’s a big number.
2. The biggest increase is 145 percent in Phoenix. I have no idea why. However, you can be sure that Donald Trump and others will be bleating about Obamacare premiums going up “as much as 145 percent.” (For the record, the lowest increase is -12 percent in Indianapolis. See Table 13 here for a full list.)
3. The vast majority of people on Obamacare have incomes under 400 percent of the poverty level. All of them are shielded from ever paying more than a cap set by income level. At the lowest income level, they never have to pay more than 3 percent of their income. At the highest income level (about $100,000 for a family of four) they never have to pay more than 9 percent of their income.¹ This means that in practice, the amount people pay will rise considerably less than 25 percent.²
4. The 25 percent number assumes that you keep the same policy that you have in 2016. You can do better if you shop around. For example, HHS estimates that if everyone switched to the lowest-price plan in their metal level (bronze, silver, etc.), premiums would go down an average of 20 percent. Combined with point #3, this means that nearly all individuals will be able to avoid huge increases if they’re really in dire financial straits.
5. As painful as this is, all that’s happening is that after being underpriced for years, Obamacare premiums are finally catching up to the original estimates from the Congressional Budget Office. A couple of months ago I suggested that premiums still had another 25 percent increase ahead, and this would likely be spread out over a couple of years. I was right about the size of the hike, but it’s happening in one year instead of two. The good news is that these prices hikes truly should help to stabilize the market and prevent more insurers from abandoning Obamacare. It might even prod a few new ones to enter the market.

So that’s that. Basically, this increase is painful, but was probably inevitable as insurers got more experience with the market. Subsidies and caps should shield a lot of people from the full pain of the increases, and the higher premium levels should be good for the long-term health of Obamacare. As for Republicans who plan to yell and scream about this, I have a deal for them: anyone who’s serious about reducing the suffering of folks who will be hurt by higher premiums has my full support for boosting subsidy levels.

¹The precise numbers for 2017 are 3.06 percent and 9.69 percent.

²There are other subsidies too that shield people from premium hikes. In particular, Andrew Sprung will be mad at me if I don’t mention Cost Sharing Reductions, which many people can use to buy silver plans at reasonable prices.

Supreme Court nominee Merrick Garland has been waiting patiently for months to discover his fate. Here is Rick Hasen’s prediction via Twitter:

Here’s why I think @EdWhelanEPPC is wrong and Judge Garland gets confirmed in lame duck IF Democrats take Senate. First, Obama will be loyal to Garland and not withdraw nomination and Garland won’t withdraw unless Clinton asks. Clinton won’t ask despite pressure from the left to withdraw Garland for younger and more liberal candidate.

Getting Garland out of way during lame duck clears her first 100-day agenda without a nasty Supreme Court fight that eats other things. RBG has signaled she and/or Breyer will leave the court while Dems still control Senate (before 2017). This means she can get 1 or 2 more liberal Justices on Court and/or make it a big issue in the midterms, in the hopes of turning about Dem turnout problem in the midterms. With Garland done in [lame duck], Clinton has very good chance of 1, and some chance of 2, liberal appts before 2018 elections.

This is kinda sorta my take too. I agree that Obama will be loyal to Garland. That’s all part of the implicit bargain when he nominated him. And I agree that Hillary Clinton will go along with that, partly for the reason Hasen outlines, and partly because it demonstrates a deeper loyalty: not just from Obama, but from Team Obama, which Hillary is part of. I think that was part of the implicit bargain too.

But will Republicans go along and confirm him? On the one hand, they’ve said they won’t, and their base (i.e., talk radio) will go ballistic if they renege on that promise. On the other hand, in the real world (i.e., not talk radio) they know perfectly well that Garland is the best they’re going to get. If they hold out, Clinton will nominate someone more liberal, and Harry Reid has already promised that if they go into endless obstruction mode, Democrats will nuke the filibuster and confirm Clinton’s choice.

So here’s where this leaves them. If they break their promise, they’ll be tarred as feeble RINOs who pretend to be conservative but crumble at the first sign of Democratic opposition. If they keep their promise, they’ll…be tarred as feeble RINOs who pretend to be conservative but always have some lame excuse for losing. We don’t control every branch of government. What could we do? What a bunch of whiners.

In other words, talk radio is going to scorch them no matter what happens. This means that if they’re smart, they’ll go ahead and confirm Garland. It’s their least bad option.

That doesn’t mean it will happen. Fear of the base is powerful in the Republican Party. Still, the GOP leadership has some decisions to make, and how they’re going to handle the tea party faction is one of their most important ones. There’s not much question that they have to take them on sometime. The only question is whether November 9 will be the time.

NOTE: If Republicans hold onto the Senate, all bets are off. They’ll still have some leverage in the next Congress, and might reasonably think they can negotiate a better candidate with Hillary Clinton.

With 15 days left until a possible nationwide rout of the Republican Party, National Review editor Rich Lowry complains about Democratic hypocrisy:

As Jonah pointed out in a G-File a week or two ago, the Democrats started out by arguing that Donald Trump was such an outlandish figure that he couldn’t even truly be considered a Republican; now, with Election Day just two weeks away and Trump performing badly, they are seeking to use him to sink as many Republicans up and down the ballot as possible.

Maybe we tune into different liberals, but that’s sure not how I remember it. My recollection is that it was conservatives who argued that Trump wasn’t a real conservative. Lowry, for example, called Trump a “philosophically unmoored political opportunist” and a “menace to American conservatism.” Liberals, conversely, spent a vast amount of ink arguing that Trump was, in fact, the apotheosis of everything conservatives had been doing for the past 30 or 40 years. They had supported extremist talk show hosts. They had tolerated endless appeals to racist sentiment. They had impeached a Democratic president. They had adopted a strategy of pure obstruction after losing in a landslide to Barack Obama. They had promoted a bubble of cocky ignorance by convincing their followers that the mainstream media was entirely untrustworthy. They had indulged an endless series of bizarre conspiracy theories and pseudo-scandals for purely political benefits.

After all that, liberals argued, conservatives could hardly act shocked when Republican primary voters were attracted to a guy like Donald Trump. They had been poking this particular tiger for years, and now that it was biting back they had no idea how to stop it. That’s how I remember things, anyway. Anyone disagree?

And as long as we’re on political topics, I noticed this morning that Sam Wang’s Senate forecast, which has been sneaking upward for the past week, has finally reached the point where he’s now predicting Democrats will likely win control of the Senate 51-49. The overall Democratic probability of Democratic control is 83 percent. As near as anyone can tell, Donald Trump is now actively working toward this end, hoping that an epic Republican loss across the board will make his personal loss less of an insult. Or something. Nice work, conservatives!

A couple of days ago Ariana Lenarsky was on a flight from Austin to Los Angeles. As she was walking down the aisle of the airplane, a guy reached out and stroked her calf. She reported this to the flight attendants, who nodded knowingly because other women had already complained about the guy. After a bit of back and forth, the captain radioed ahead and police met the plane when it landed. No one wanted to press charges because it would have been more trouble than it was worth, which led to this:

Police said they would “give him a talking to”& “it’s not the crime of the century.” True! I’m going to tweet his picture now since it’s nbd

— Ariana Lenarsky (@aardvarsk) October 23, 2016

You can’t grab women on a plane, guy. You can’t do it. Hope you get the help you need. pic.twitter.com/5A5nGqdx87

— Ariana Lenarsky (@aardvarsk) October 23, 2016

Generally speaking, I’m not a fan of calling out ordinary schmoes on big media platforms, but wouldn’t it be nice if there was a silver lining to the odious and repugnant Trump campaign? Maybe this could be it: If someone gropes you, haul out your phone, take his picture, and post it on your social media platform of choice. We’d need a hashtag for this. Maybe if it catches on, men will finally start paying a big enough social penalty for this crap that they’ll stop doing it.

OK, OK, that won’t happen. But maybe they’ll do less of it. Baby steps.

Last night I went out to dinner and briefly checked in on things when I got back. While I was busy with some other stuff, I had this idle Twitter conversation:

I thought we fully litigated oversampling in the 90s

— Clara Jeffery (@ClaraJeffery) October 24, 2016

@ClaraJeffery Nothing is ever fully litigated. It’s always fucking groundhog day.

— digby (@digby56) October 24, 2016

@digby56 @ClaraJeffery They all know perfectly well what oversampling is. They’re just trolling.

— Kevin Drum (@kdrum) October 24, 2016

I had been out of touch with the news for maybe six or seven hours, nothing more. And yet I was completely out of the loop on the latest campaign idiocy. I had no idea what this was about, which explains my foolishly casual tweet. This morning I found out:

This post has currently been read by 1.3 million people, and is ricocheting through the Trumposphere at light speed. Apparently oversampling is this year’s deskewing.

In case you care, oversampling is a normal and longtime practice for folks who are running presidential campaigns—which is what John Podesta was doing. If you survey, say, a thousand people, you’re likely to get a sample of only 130 African-Americans. This means that if you happen to be particularly interested in African-American voters, you need to deliberately oversample them in order to get a statistically reliable pool of respondents. The same is true for any smallish group of people. If, for some reason, you want to target Hispanic environmentalists or white women under age 30, you have to oversample them too.

Ordinary polls don’t normally do this, though they do sometimes. For example, suppose everyone is obsessed with blue-collar white men and their alleged anger at the political system. A polling firm might want to oversample them in order to report how they really feel. That wouldn’t affect the overall poll, though. It would be released as a separate survey on a matter of current interest.

Anyway, this is all obvious and simple, which explains my tweet above. But hell, what do I know? Do the yahoos peddling this stuff know it’s nonsense but only care about ginning up an army of easily-duped malcontents on November 9? Or are they genuinely ignorant? Who knows? But naturally Donald Trump is all over it:

Major story that the Dems are making up phony polls in order to suppress the the Trump . We are going to WIN!

— Donald J. Trump (@realDonaldTrump) October 24, 2016

Jesus, this election is dispiriting. I’m beginning to think the whole thing is a spectacularly successful plot by the pharma industry to boost sales of anti-anxiety drugs and prescription blood pressure meds.

Adam Ozimek posted an item yesterday making the case that Donald Trump is wrong about something. Shocking, I know. But in the process he points to an interesting paper from a couple of years ago about the effect of sales taxes on Amazon purchases. A trio of researchers compared purchases from Amazon in five states both before and after Amazon started collecting sales taxes there:

They found that brick and mortar retailers saw a 2% increase in sales, and a decline of 9.5% for Amazon. This is hardly enough to save brick and mortar stores or stop Amazon.

True enough. The move to online retail is bigger than Amazon, and it’s unlikely that anything would have stopped it or even slowed it down substantially. Still, here’s the data from the paper:

These are…big effects. For costly items, the paper concluded that Californians reduced their Amazon purchases by a third. Even in low-tax Virginia, households reduced their Amazon habit by 11 percent. For all items, households reduced their Amazon purchases by 9.5 percent overall, but by 15 percent in California and 11 percent in Texas.

This coincided with an increase of “only” 2 percent at brick-and-mortar stores, but that’s to be expected. As big as Amazon is, it’s still a small fraction of the size of the entire retail market. A decline of 9.5 percent in Amazon sales spread among all brick-and-mortar retailers adds up to a small number.

Obviously this hasn’t put Amazon out of business. But I think that misses the point. I wonder what effect it would have had on Amazon’s growth ten or fifteen years ago? If sales tax has this much effect even now, when Amazon is practically a habit for millions of consumers, what effect would it have had back when Amazon was still relatively new in the non-book space? Bigger, I assume. And what effect would that have had on Amazon’s growth? Substantial, I think.

One study doesn’t prove anything, but this one sure suggests that an awful lot of Amazon’s initial stratrospheric growth was due to Quill v. North Dakota. Maybe Jeff Bezos should send a thank you note to the Supreme Court.

Here’s some good news on the employment front:

Retailers geared up to hire holiday-season workers in August this year, an unusually early start showing how competition has intensified for temporary help in a tight labor market….Companies and analysts say a number of trends are converging. The holiday-shopping season is starting before Halloween for many consumers, rather than the traditional day after Thanksgiving. There are fewer workers available, due to unemployment holding around 5% for the past year. And retailers are competing for the same employees as logistics firms, distribution centers and restaurants during the final months of the year.

This story is accompanied by a chart that inexplicably shows that seasonal hiring was strong in 2014, weaker in 2015, and then stronger still in 2016. Really? I don’t recall 2015 being weaker than both 2014 and 2016. So take this all with a grain of salt.

Still, it’s yet another data point that the labor market is truly starting to tighten up this year. It still has a ways to go, but we’re making progress.