Matthew And The Distributor Cap...

I am not a mechanically inclined type of individual. As such there never has been, nor will there ever be, a time when I can lift the hood of an automobile and understand enough of what I am looking at to know why exactly we are pulled over to the side of the road. And to an extent, Muffy does not understand that I am comfortable with that situation.

Because Muffy's father was mechanically inclined, and because Muffy's brother is mechanically inclined, she is of the opinion that all men must be mechanically inclined. And the experience of being married to me has, for some reason, not cured her of this belief. Understand, though, that it's not because I've tried to bluff my way through various automotive crises. Not in the least. I don't know enough about internal combustion engines to even fake it. But no matter how many times I tell my wife I don't know diddley-squat about car mechanicals, she persists in saying things like this:

"My car started making a funny noise on the way to work today, and on the way home it was still making the funny noise. Will you look and see if there's something really wrong?"

For the first 15 or so years of marriage, the answer I would give her in these sorts of instances was straightforward and honest and designed to keep her safe:

"Dear, I don't know my ass from my elbow about cars. Why don't you schedule to take the car in for maintenance. If you want, I'll take you to work."

I just assumed, for those 15 or so years, that Muffy did this sort of thing to keep me humble. It's never a bad thing to be gently reminded, from time to time, that we all have our limitations. But in that particular belief I was wrong.

I found that out about ten years ago, when Muffy's car died about two blocks from home. We called AAA and then went back to the car. Muffy insisted I open the hood and check the engine compartment. Rather than start an argument, I complied. I then did the guy thing: I pulled on a couple of wires, touched a couple of parts, and took off and the replaced the radiator cap. I threw a couple of grunts for effect.

All the while Muffy was watching me, knowing full well that I didn't have the faintest idea of what I was doing. Well I finally finished my examination she looked at me with those big brown eyes and said:

"Well?"

It was at that moment that I finally understood what was going on with her. She was looking for reassurance. She knew perfectly well that I knew diddley-squat about cars, and she also knew perfectly well that I had no idea what was wrong with the car. That wasn't the issue. The issue was convincing herself that everything was under control.

Armed with this insight, I gazed into those eyes and did what any loving husband would do in that situation: I lied my ass off.

"Looks like the distributor cap."

"Really?"

"Yep. Think so. It'll cost some money, but it's easy to fix."

And with that everything was Just Fine.

I've taken the time to relate that fascinating vignette because I was reminded of it while reading this post by progressive Young Partisan Hack Matthew Yglesias. When he came to this line:

The case for cutting banking down to size strikes me as more compelling than the case for shrinking any particular bank.

I knew exactly what he was saying.

"Looks like the distributor cap."

He's under the hood of the engine of finance - pulling on wires and touching things - and all the while his readership, which knows even less about banking than he does (if that is indeed possible), is standing there waiting for some sort of reassurance. All they know is the engine isn't running and they can't do anything to change that situation themselves. And Matthew, being the bright boy that he is, has figured out about banking what I've figured out about cars:

Sometimes the important thing is to let others pretend you know what you're talking about.

Look at what Matthew has said.

Think about it.

What does "cutting down banking to size actually mean"? Who knows? Surely not Matthew. As Wittgenstein would say, it's a statement that approaches meaning zero.

What sort of banking is he talking about? Investment banking? Commercial banking? Retail banking? International banking? Who knows? Surely not Matthew. I doubt the thought that there could be more than one type of "banking" even crossed his mind.

And why would "cutting banking down to size" make things better? Again: Who knows? And again: Surely not Matthew.

So what we have here is a Distributor Cap Statement. It's designed to send his dimwit readership off to work reassured that everything is under control. Now if any of them actually thought things through, they'd probably come to the realization that Matthew hasn't a clue and his pronouncements are pure partisan bluff, but that sort of insight would only cloud the essential issue...

This isn't about fixing the car, it's about maintaining the illusion that we're not helpless. 

Approaching Matthew on Banking from any other angle makes no sense.

Comments

[Danny D.]

Maybe he saw it abbreviated "bank'g" somewhere.

[Coomanche Voter]

As long as we are talking distributor caps, is it possible that Yglesias has a wire loose? Or is it more probable that he is just not that bright a spark?

[Richard McEnroe]

Whenever Deb's car acts up, I just tell her it could be the worst thing that could possibly make that sound. Then when it turns out to be not so bad, I can say, "wow, we really dodged a bullet."

Commanche Voter -- Wire, no; screw, yes.

[PDS]

DTP:

You have stumbled on to some Serious Wisdom here. In poker, this is called bluffing. In Matthew's case, it is called a profession.

[JeffS]

Sorta kinda off thread, but I thought that you should know, Dennis, that the Dhimmicrats officially agree with you on an earlier topic.

Richard, I vote for the "screw" analogy. It applies in more than one sense to Matthew.

[Phil Smith]

Matthew knows exactly what he means. "Cutting [insert name of industry here] down to size always translates to "Increase state control over said industry". I believe they call that a "dog-whistle".

[Bilejones]

I believe that the banking industry is too large. For an industry which is 90% a zero sum game to grow to be 40% of all corporate earnings is not good. However I don't believe that that necessitates greater government control: it requires fewer government bailouts. Citi would have gone in 91 with the corp. real estate debacle.
Citi and Goldman would have been gone in 94 over the Mexican tesobono's debacle.
Both plus Chase wouldn't have survived the Asia meltdown in 97.

This shit has to stop.

[Dennis the Peasant]

B-

Distributor cap.

Just as I thought.

[LP Steve]

My wife is oblivious to the normal signs of automotive distress. If she says, "Something's wrong with the car," that means the engine is about to drop out of it. It is also the official signal that this has become MY problem. Like Dennis, I know nothing about cars. Nonetheless, it is now MY job to get the smoking heap from our driveway to the mechanic. This has made for fun times, including a famous flameout dead-center of the second busiest intersection in my fair city.

All of this is to say that I'm glad we're using Dennis' story as the analogy for Matty Y. If it were mine, the boy would actually be trying to drive the thing, and stalling it out at the worst possible moment.

[BillT]

Any time someone utters the words "strikes me as more compelling," it means "the dog ate my logic."

[catherine]

If you call an investment banker a dog, she will never purr for you.

[Jim Ryan]

I like to weigh in on banking, economics, and history, using enough sophistry to conceal my ignorance from my interlocutors. That way people who may admire me for my knowledge in other areas will think, "Woah! Jim even knows banking, economics and history. He's a polymath!" and then get a grossly inflated sense of my worth as a human being. Now, I don't care about my worth as a human being. I just want to feel the feeling I get when others evaluate me highly.

[BillT]

So, Jim, d'ya think if von Mansfeld had linked with Christian IV in 1626, he could have beaten Wallenstein at Dessau Bridge?

[PDS]

Bill:

No.

Not that you asked me.

[Jim Ryan]

Bill, it's not likely. Most accounts of the Thirty Years War are correct in noting that the key battles did not turn on shear troop numbers. You usually have to look at logistics (as I'm sure you know, the three most decisive elements in any battle: logistics, logistics and logistics.) Linking with Christian IV would have had little effect on the logistical support Mansfield needed.

[Wm T Sherman]

Not to mention the superiority of Flemish cast iron.

[David]

Holy crap Dennis you have a coven of early-modern military history enthusiasts for commenters. Not that I'm complaining.

[douglas]

"Sometimes the important thing is to let others pretend you know what you're talking about."

Sounds like he's imbibed the wisdom of Obama.

[Tim Worstall]

" For an industry which is 90% a zero sum game to grow to be 40% of all corporate earnings is not good."

Tsk. Straight Adam Smith stuff here. Allow me to assume that you're correct in your basic assumption, that there are "excess profits" in the banking system. They're making over and above the general risk adjusted rate of profit.

This is what is known in technical circles as a "good thing". We want capital to be allocated where it produces the most value, just as we want labour, copper, plastics and evertything else allocated where it produces the most value (think plastics for a moment. If here was a real shortage of plastics, what should we make with the limited amount we've got? An argument could be made for sex toys: it's likely that they produce the greatest amount of pleasure per unit of plastic used over any alternative use.).

So, those excess profits in banking are showing that more capital should flow into banking. Because that's where capital makes higher than the general risk adjusted rate of profits. That high profit rate therefore shows that we want the banking sector to *expand*, not shrink.

Of course, once that more capital flows into banking there's more competition, returns to capital inside banking start to shrink. And when the returns to capital in banking fall to the general risk adjusted rate of profit then we know we've the correct amount of capital devoted to banking.

This is true of capital allocation in any sector of the economy. Just as it's true of the allocation of anything else: copper, plastics, labour etc etc etc.

High profits in a sector mean we want the sector to grow, not shrink.

[Dennis the Peasant]

Tim-

Stop talking like a liberal (in the classical sense) economist.

You'll just confuse the boy.

[Eric Blair]

Not turning on sheer numbers of troops? Go ask Christian whether he'd have liked to have another 10,000 men at Lutter am Bamberg--Tilly beat him like a drum there--God is on the side of big battlions.

[Brett]

Well, it could be the coil.