THE LAW NOBODY OBEYS, SUPPLY-SIDE ROULETTE WHEELS, SICK JOKES IN MERRIE ENGLAND, AND OTHER MATTERS.
(FORTUNE Magazine) – THE CASE FOR AGEISM
Daring headline, eh? Hardly likely to stand up in court, you say? But then what is your riposte when told that a just-published work called Aging and Old Age contains an overpowering case for "statistical discrimination" against the aged, and that the selfsame book was written by federal appeals court judge Richard A. Posner of the Seventh Circuit (Chicago), an extremely smart guy who also lectures at the University of Chicago Law School?
The standard argument against age discrimination is the one invoked the other day by Michele Pollak of the American Association of Retired Persons (AARP), who was griping about people using Bob Dole's age (72) as a count against him. Said Michele: "Age is simply not a measure of competence in any way, shape, or form, and people need to be judged on their individual characteristics...whether they're running for President or...schoolteacher."
It's high-minded, but it doesn't fly. Posner observes that all of us, certainly including employers, have to make decisions about others based at least in part on age-based generalizations because we seldom have the kind of detailed histories and knowledge of inner lives assumed by AARP rhetoricians. And also assumed by the Age Discrimination in Employment Act (ADEA), which implicitly requires judging every worker as an individual. The requirement is a nullity. "The costs of information are too high," Posner states, "and may be particularly high in the case of elderly workers [because] variability in an age cohort tends to grow as the cohort ages."
So employers find that group judgments are inescapable. Older workers on average are more likely than younger workers to be weak on "fluid intelligence"--the kind involved in learning new skills--and it costs too much to find out which older workers are exceptions to that rule. Posner leaves you thinking the law is not only a dead letter but a source of discrimination against older workers. Knowing that they can be in for ADEA-based lawsuits when they judge older workers to be no longer up to the job, employers discriminate more than ever in the hiring process (where proof of bias is hard to come by). If employers did otherwise, their personnel costs would be much higher, meaning that pay scales would be lower, to the detriment of millions of workers who are in no sense "ageist."
Highly recommended in this corner, and guaranteed not to sell.
ASK MR. STATISTICS
Dear Crunchissimo: In a recent issue (May 13), you stated after considerable on-stage brandishing of the Lotus 1-2-3 @BINOMIAL function that there was an 18.4% probability of Roger Maris's home-run record (61 in a season) getting broken this year by one of seven named sluggers, among whom the distinct favorite was Albert Belle of the Cleveland Indians (with a 15% chance of getting the job done). My first question is whether it is really true, as aghastly rumored among your creditors, that you were so enamored of this calculation that you went and made a bet about it with the big man from Omaha, he who legendarily never goes for anything except undervalued situations and is therefore obviously telling himself that your 18.4% is an overlay needing to be pounced on. And my follow-up is: In evaluating projected returns on this sporting investment, have you and your $16.6 billion betting buddy (data based on a February 1996 filing with the Securities and Exchange Commission) given any thought to its tax consequences?
Also, I would appreciate knowing which side of the wager your adversary took, as my sole investing principle is... IT'S WARREN FOR ME
Dear Me: An event with an 18.4% probability rating translates into man-to-man odds of 4.4 to 1. But those odds refer to the likelihood that the Maris record will be broken only by one or more of seven particular sluggers. Our bet as finally structured and signed on April 30 was that the big man has to give Mr. Statistics only 4 to 1 but is prepared to pay off if anybody gets 62 or more dingers. At those odds, he is risking only 11/41,500,000 of his wealth, so one might think the guy would be relaxed about the wager.
But soon after signing up for this deal, Mr. Statistics made two interesting discoveries. One was that Warren Buffett was rejoining the board of directors of the Washington Post Co. The other was that Post editorialists, momentarily averting their gaze from the Middle East and presidential politics, had just run a highly inflammatory editorial about Albert Belle. It seems that Albert, a perennial bad boy who keeps getting suspended for this or that rule infraction, had accidentally or otherwise thrown a baseball at a photographer who offended him and nearly taken the chap's head off. The Post concluded its sermonette on Belle by calling for severe retribution, including a lengthy if not permanent suspension from the game. Sign-off line of the big man's minions: "Baseball really ought to consider giving new and broader meaning to a concept it originated many years ago: three strikes and you're out." This is what a fellow is up against.
And yet Mr. Statistics has grounds for guarded optimism when he turns as requested to the tax aspects of the transaction. Ordinarily, of course, taxes on gambling income have to be viewed as a classic supply-side nightmare. Take roulette. In a perfectly fair game, the standard wheel would have 36 slots for the little ball to fall into, and the house would pay off at 35 to 1. But since casinos need an edge, they long ago added a "0" slot and then a "00" slot while continuing to pay off at only 35 to 1--thereby creating a house edge of 5.3%. Now suppose that you bet $10 on a number, collect $360, and then have to pay taxes on your $350 profit. If your marginal rate is 40%, it will turn out that your $10 investment has returned only $210. You horrifiedly note that the taxes are the equivalent of another 28 slots on the wheel, which is now offering a game nobody in his right mind would play.
Also not worth it are man-to-man bets in which the assumed true odds are 4 to 1 but you get paid off as if they were 2.1 to 1. A bookie demanding any such vigorish would be dead in the water, maybe literally. Entrepreneurs eyeing any such risk/reward ratios in the business sector would be guaranteed to display no animal spirits.
So whence one's guarded optimism? Friends, Mr. Statistics has been keeping detailed gambling records ever since he first got his hands on a computer in 1985. The ten-year record shows net gambling losses in six years. So there is a 60% probability that the $400 we expect to win will be sheltered by offsetting losses. One somehow doubts the big man will have the same advantage on the $100 he will possibly win if he succeeds in getting Belle suspended.
IT'S A MAD, MAD, MAD MAD-COW DISEASE
Your servant has been brooding over an avalanche of data about the above-referenced malady and now posits that it presents no good reasons for fearing and loathing British beef. And if you're a beefophobe looking for a reason, you would do better to look elsewhere. But first, a joke.
Two cows are hanging around in a field, and one says to the other: "Aren't you worried about this mad-cow disease?" And the answer, naturally, is, "Naah. It doesn't worry me. I'm a frog."
We read that one in the Observer, a British paper that has liberalish tendencies and therefore likes even feeble jokes about social problems occurring on the Tories' watch. Rated far more hilarious on our sick joke laffmeter was the entry about land mines--the one that ran in the letters column of the Cambodia Daily, a publication based in Phnom Penh, and was then picked up by Reuters. Here the humor was driven by the fact that the European Union had placed an embargo on British beef, which led the Brits to conclude that they had no choice but to destroy several million of the country's cows--those deemed most likely to have mad-cow disease, also known as bovine spongiform encephalopathy (BSE)--which led in turn to the discovery that nobody knew how to solve all the logistical problems attendant upon this mass slaughter. The letter laughingly suggested that an obvious solution would be to ship all 11 million of Merrie England's cows to Cambodia and use them to detonate the 11 million land mines spread around that country. Or possibly the proposal was serious.
Why posit that British beef loathers are barking up the wrong tree? Because (a) the evidence linking BSE to major medical problems for people remains tenuous, while (b) numerous and convincing studies depict serious red-meat cancer problems having nothing to do with BSE.
As to (a), the figures on human maladies remain small and the links to BSE uncertain. The problem for members of our species is Creutzfeldt-Jakob disease (CJD), which is invariably fatal and is postulated to come from eating BSE-contaminated beef. The current panic erupted when British doctors reported finding a new strain of CJD that appeared to be attacking younger people. But nobody knows for sure where this new strain came from, and in any event, only ten cases have been reported. CJD has always been an extremely rare disease, with an incidence worldwide of about one in a million and occurrences among vegetarians as well as meat eaters. Another case of the new strain has recently been reported in Austria, where there is no evidence of any BSE. All very tenuous.
The studies connecting beef to cancer seem much more solid and clearly involve diseases that kill a lot of people. If you tap into the Medline database in Lexis/Nexis and ask to look at all recent reports mentioning both red meat and cancer, you will instantly find yourself inspecting 38 serious studies. They show positive correlations between red-meat consumption and cancers attacking the breast, prostate, colon, small intestine, and kidney. Some, but not most, of the studies leave you thinking that the cancer problem resides in the animal fat that comes with red meat and not the meat itself.
The last big animal slaughter in England was in 1988, when there were 21,000 reported cases of salmonella. This led to the extermination of 3.5 million chickens, and we read about it in a recent issue of Britain's Spectator, which noted that the chicken butchery was misdirected then and argued that beef butchery is inappropriate now. Salmonella occurs naturally in chickens and eggs, and last year Britain had more salmonella (31,000 reported cases) than it had in 1988. To be sure, the Speccie is Toryish.