tag:blogger.com,1999:blog-89625391514941514722023-11-16T10:03:18.385-08:00CabeçãoCKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.comBlogger54125tag:blogger.com,1999:blog-8962539151494151472.post-76223519210952767232014-10-01T12:50:00.001-07:002014-10-01T12:50:49.654-07:00England real ale journal, 1st entry<br />
<ul>
<li>Saturday (september 27): The Bear at Home, North Morton, Oxfordshire, high quality freehouse about 1.5 hour walk through fields from East Hagbourne. I drank Bear ale brewed by West Berkshire.</li>
<li>Sunday: At The Bell drank Old Tyler (great as usual, perhaps my favourite bitter anywhere) and then something called Spathdale (approximate) that was also excellent. Later passed by the Blueberry and had a very fine Butts Barbus Barbus. Worth looking for!</li>
<li>Monday: Back in London, had a very good Cornwall beer at Pillars of Hercules (featured in Ian McKewan's Sweet Tooth) in Soho.</li>
<li>Tuesday: So-so Black Sheep at Audley in Mayfair and a fine Young's beer at the Windmill (Mayfair-Soho border area)</li>
<li>Wednesday: Superb Adnan's Broadside at Seven Stars, across from the Royal Court of Justice. Strongly recommended.</li>
</ul>
CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-4849952201607102432014-07-26T10:49:00.002-07:002014-07-26T10:49:29.039-07:00Janet Yellen on why she chose economics<a href="http://www.newyorker.com/magazine/2014/07/21/the-hand-on-the-lever" target="_blank">The NewYorker recently ran a very interesting profile of Janet Yellen</a>. The author, Nicholas Lemann, notes that talks about economics "as if it were one of the helping professions." Yellen says she decided to major in economics because<br />
<blockquote class="tr_bq">
"What I really liked about economics was that it provided a rigorous, analytical way of thinking about issues that have a great impact on people's lives. Economics is a subject that really related to core aspects of human well-being, and there's a methodology for thinking about these things. This was a very appealing combination to me."</blockquote>
<br />
I can relate to that. Coming out of Swarthmore, I wanted to do good and Larry Westphal's class convinced me that there were ways of thinking about economic development and international trade that could lead to better outcomes for countries like Brazil, where I had lived. Simultaneously, Bernie Saffron's micro seminar gave me this set of intellectual keys that seemed able to open the locks of so many doors of economic phenomena. Instead of just BSing, as non-economists seemed to do, one could think analytically and truly understand what's going on. This is the lure of what the physicist Richard Feynman referred to as "the pleasure of finding things out" (in a <a href="http://www.amazon.com/Pleasure-Finding-Things-Out-Richard/dp/0465023959/ref=sr_1_7?s=books&ie=UTF8&qid=1406396532&sr=1-7&keywords=richard+feynman" target="_blank">book title</a>) but I rephrase as the deep curiosity to "figure out how the world works." In the end I don't think I've done much of anything that has a "great impact on people's lives." But I've studied trade and foreign investment and I think those phenomena do have major impacts so understanding them better is important and will ultimately benefit people.CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-80910611418976848572014-07-09T08:46:00.001-07:002014-07-09T08:46:08.766-07:00Post-mortem<div style="background-color: white; color: #141823; font-family: Helvetica, Arial, 'lucida grande', tahoma, verdana, arial, sans-serif; font-size: 14px; line-height: 12.880000114440918px; margin-bottom: 6px;">
I need to work through this the only way i know how: by analyzing it. A friend sent me about 5 commentaries from the Brazilian press but I think they missed some key points.</div>
<div style="background-color: white; color: #141823; font-family: Helvetica, Arial, 'lucida grande', tahoma, verdana, arial, sans-serif; font-size: 14px; line-height: 12.880000114440918px; margin-bottom: 6px; margin-top: 6px;">
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<ol>
<li>The first goal followed the form of other goals that have knocked brazil out of the world cup. On a set play, the Brazilian defenders just inexcusably fail to mark the leading scorer of the opposite team (Zidane twice in 98, T. Henry in 2006, G. Muller in 2014).</li>
<li>The next 4 goals requi<span class="text_exposed_show" style="display: inline;">re a completely different explanation. I think we have to see this as a collective psychological collapse. A team is suddenly unable to carry out basic operations. Germany was a hot knife and Brazil was warm butter.</span></li>
<li>One can and should blame Scolari but I don't think you can really fault his team selections--if you think he should have kept to the formation that got Brazil to the semis. Scolari substituted like for like. Bernard dribbles and drives along the left and is not much use on defence (like Neymar). Dante plays the same position as Thiago Silva for a considerably better team (Bayern Munich).</li>
<li>The German midfield of Khedira, Kroos, and Schweinsteiger is really one of the best ever and in hindsight it was a huge mistake to think that Luis Gustavo and Fernandinho would be up to the challenge of matching up with them. The problem is that we didn't have anyone on the bench who could have been predicted to do much better. Probably Fred should have been dropped and replaced by Paulinho so at least we would not have been outnumbered in that sector. But Scolari is far too set in his ways to make such a major tactical shift.</li>
</ol>
CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-21399612803055617212014-06-01T14:25:00.002-07:002014-06-11T00:44:44.505-07:00The future of education is not online<br />
<br />
An <a href="http://www.nytimes.com/2014/06/01/business/business-school-disrupted.html" target="_blank">article in the NYT yesterday with the provocative title "Business Disrupted" </a>outlined the dilemma faced by HBS where star profs like Porter and Christensen have sharply different views on the potential role of online education.<br />
<br />
Well, who cares about those guys say, what does Keith Head think? Thanks for asking.<br />
<br />
If our “business” is something like selling books or records, or DVD rentals, then the internet might reasonably be seen as an existential threat. Ask Blockbusters or Borders (or Duthie books here in Vancouver) or any number of record (CD) store chains that don’t exist anymore.<br />
<br />
But if our business is more like a yoga class or a music concert even selling lingerie (Victoria’s Secret has had a mail order catalog since 1978 and e-commerce since 1995 but they still found it worthwhile to take over the huge retail space Virgin had occupied on Robson) then it seems we have less to fear. In the case of yoga and live music, a core aspect of the business is the <b>shared experience</b>. Those attending get something from the instructor, sure, but they also get energy and other emotional connections from the rest of the audience. My Pilates instructor puts his classes on Youtube but I watched for about a minute before losing interest. And people have long had yoga DVDs but I have a feeling most of them are rarely used after purchase. Music concerts continue to charge hefty prices even though we can find many performances online.<br />
<br />
If this analogy is correct, then only a certain type of business education is seriously threatened by the internet: non-interactive, 100+ seat lectures. We need to be moving not in the direction of "recorded music" (lecture clips videoed and put online) but in the direction of live music, emphasizing a shared experience where you have to physically be there to get it. <br />
<br />
One corollary is that just as cellphones need to be off in yoga class or violin concertos, laptops need to be closed in the classroom (related note <a href="http://www.bostonglobe.com/ideas/2014/05/24/taking-notes-bring-pen-skip-computer/e3kGp47M7znyaNKOamUwrO/story.html" target="_blank">recent research finds taking notes longhand enhances memory</a>). As someone put it recently in a teaching panel, open laptops "suck the energy out of the classroom."<br />
<br />CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-17552130528310671412014-05-28T14:35:00.002-07:002014-05-28T14:35:54.960-07:00Excel is EVILIn the news, more reasons why no one, especially not academic economists, should use Excel formulas as a way to calculate anything even marginally important.<br />
<br />
Last year we had the <a href="http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems" target="_blank">Reinhart and Rogoff case </a>of spreadsheet errors and now we have the <a href="http://www.ft.com/intl/cms/s/2/e1f343ca-e281-11e3-89fd-00144feabdc0.html#axzz3334WxVqz" target="_blank">Piketty case</a>.<br />
<br />
Chris Giles of FT <a href="http://blogs.ft.com/money-supply/2014/05/28/follow-up-on-data-problems-in-capital-in-the-21st-century/" target="_blank">writes</a><br />
<br />
<blockquote class="tr_bq">
In the wealth inequality tables for the top 1 per cent and top 10 per cent in Capital in the 21st Century, there were 142 data points and I found problems with 114 of them. As a problem proportion, it comes in at a rather high 80 per cent.</blockquote>
<br />
At the end of the same blog posts he unfortunately has to add a mea culpa about his previous post:<br />
<br />
<blockquote class="tr_bq">
Finally, I am grateful to @kenivers1 for spotting an error in the FT’s spreadsheet I posted online. The constructed European average for the top 10% wealth share in 1810 contained a formula error. The spreadsheet has now been amended. Our mistaken result was 83.4%, while the corrected one is 81.3%.</blockquote>
<br />
Making mistakes is easy. My Stata code almost never works the first time I try to run it. But once it does run, there is code with (some) comments and hopefully it possible to figure out why I did what I did and whether it makes sense or not. On the other hand excel buries the formulas. Even when you look at them they are written in terms of A1 and D5 (wasn't that supposed to be D1?). In other words when do data work in Excel you are more or less ensuring that you will make mistakes that will be very hard to find unless someone is looking hard. And that's a bad thing.<br />
<br />
Here's <a href="http://www.bloomberg.com/news/print/2013-05-01/six-ways-to-separate-lies-from-statistics.html" target="_blank">Justin Wolfers on how to avoid/identify mistakes</a>.<br />
<br />
<br />CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-41101308664961777502012-10-14T12:00:00.003-07:002012-10-14T12:00:31.874-07:00What's wrong with Bittman's proposed food label?Mark Bittman, the NYT food columnist proposes a <a href="http://www.nytimes.com/interactive/2012/10/14/sunday-review/the-proposed-nutrition-label-a-quick-read-out-front.html?hp" target="_blank">"dream food label"</a> today. His <a href="http://www.nytimes.com/2012/10/14/opinion/sunday/bittman-my-dream-food-label.html?_r=1" target="_blank">argument for the label</a>, suggests that only the food industry would oppose his proposal. But I several problems with it. The most important has to do with his example of frozen blueberries. Bittman gives them a score of 5/5 for nutrition but only 2/5 for "Welfare". What's so bad for welfare? Answer:
<br />
<blockquote class="tr_bq">
"Although the blueberries are organic, they’re sourced from Chile, where the workers are being paid a dollar a day and little attention is paid to soil quality: 2 for Welfare." </blockquote>
Stop right there! Before you go any further... Workers paid a dollar per day in Chile? According to World Bank data in 2005 0.7% of Chileans were living on less than a 1.25 per day. And if you take the <a href="http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country" target="_blank">Chilean minimum wage</a> of 182,000 pesos per month, divided by 30 and multiply by the exchange rate, that works out to $12.74 per day.<br />
<br />
But suppose Chilean blueberry farmers do happen to paid as if they lived in Mali. Think about the conclusion Bittman wants you to draw. Because they are impoverished you should buy less from them. I think Joan Robinson once put it simply: "The only thing worse than being exploited by a capitalist is not being exploited by a capitalist." If for some strange reason, Chilean blueberry pickers have such lousy opportunities that they are willing to accept a dollar per day, why would it be a good thing to deprive them of what little they have?<br />
<br />
Other things bother me on reflection. Why do we care about "foodness" and GMOs except for impacts of these characteristics on nutrition. If a frozen blueberry is just as nutritious as a fresh one (he gives them the full 5 nutrition points), why penalize for freezing? Fresh blueberries aren't available all year so we freeze. What's wrong with that?<br />
<br />CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com1tag:blogger.com,1999:blog-8962539151494151472.post-28944661796387093982011-08-29T13:36:00.000-07:002011-08-29T14:24:30.227-07:00Crazy Social Artistic Black WidowsElizabeth Kolbert uses recent genetic studies of the Neanderthals as the frame for discussing what differentiates humans from our nearest relatives (Neanderthals and apes). <a href="http://www.newyorker.com/reporting/2011/08/15/110815fa_fact_kolbert">The article</a> is behind the New Yorker paywall. Here's my quick summary of her main points about our species' distinctive features.
<br />
<br /><ol><li>To paraphrase the tagline of the movie Black Widow, "we mate, then we kill." In the case of both the Neanderthals and Denisovans our ancestors definitely had sex. And it worked out well for us, as the <a href="http://www.bbc.co.uk/news/science-environment-14673047">BBC reports </a>it improved our immune systems. It's not clear we actually killed them after having sex, but they disappeared not long after we arrived in the regions they had previously occupied. And we have a record of causing extinctions of other species that have the misfortune to try to share the same space with us. </li><li>We painted our cave walls. Apparently the others did not.</li><li>We crossed oceans. Partly because we were smart enough to develop the technology to do so. And partly because we were crazy enough to paddle off into the open sea.</li><li>We're not especially impressive problem solvers. An adult Orangutan can solve problems that flummox human toddlers. But the human kids show greater ability to engage in social learning. Neanderthals may have been somewhat autistic.</li></ol><div>
<br /></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-62566554118864134362011-07-25T10:24:00.000-07:002011-07-25T11:02:12.876-07:00"In Fact"Don't you find it annoying when people write "in fact" as a way to assert something without providing actual evidence. One of the reasons people do this (here I can speak from experience) is because that asserted fact is not a fact at all, but merely an assertion we wish to be true.<br /><br />Example.<br /><br />In a <a href="http://krugman.blogs.nytimes.com/2011/07/24/president-pushover/">recent blog entry</a>, Krugman writes<br /><br /><blockquote>Even people who are supposedly well informed believe that there was a vast expansion of government under Obama, when <i>in fact</i> there wasn’t. (emphasis added)<br /></blockquote><br />OK, here are the actual facts obtained from the <a href="http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf">Office of Management and Budget historical tables</a>. In 2008, total government outlays were 2.98 trillion. The 2011 estimate is 3.83 trillion. As a percentage of GDP, federal government outlays rose from 20.7% to 25.1%. <div><br /></div><div>So unless we want to redefine "expansion", "government" or "under Obama", we have to accept that there was in fact an<br />"expansion of government under Obama." But was it <i>vast</i>? To me, almost a trillion dollars (28.5% increase) over 5 years is on the big side of things, especially when considering that outlays had been at 21% or below as a share of GDP since 1994.</div><div><br /></div><div>OK, that is the end of the "Republican" portion of this post. Now we have to point out that the increases in government outlays have come in large part from increases in military spending, pensions, and medicare (medical care for the elderly). Spending is not just foreign aid and "bridges to nowhere". In fact that sort thing is very small. </div><div><br /></div><div>And while government has indeed expanded, it is equally evident that tax receipts have been shrinking as a share of GDP.</div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-71536885533536690482011-07-17T11:05:00.000-07:002011-07-17T11:38:28.978-07:00Bees and BlueberriesWhile at the Kitsilano Farmer's Market, I saw a sign for honey made from the blueberries at G- farms. I asked the honeymaker if he has to pay for his bees to have access to the farm. He said actually they pay him for bringing his bees to their farm. <div><br /></div><div>Why can't the farms rely on wild bees to do the pollination? Well in the Frasier valley, the only wild bees are bumble bees which hibernate in the winter in mouseholes. With the cool spring, the bumble bees were late in getting started. I asked if he could charge extra because of the added need for his bees. Unfortunately for him, prices for pollination services fell this summer due to the arrival of a new competitor from Northern Alberta (of all places!). Where the old established price was $95 (per field? acre? I didn't catch that), this guy went to a farm show and announced his willingness to accept $65.</div><div><br /></div><div>The newcomer has 20,000 colonies in semis and decided to come to the Frasier valley to nourish his bees here before taking them to the Canola fields of the prairies for the summer. The farmer I spoke to still is able to charge over $65 to some local farms ($75 to G- farm) because of the established relationship which means the farmer can rely upon him to come each year. But the old $95 prices are unattainable.</div><div><br /></div><div>I bought 250ml of blueberry honey for $4.95. Not only am I looking forward to enjoying it on French Toast, I may use it as a prop for my next lecture on externalities...since now I have my own anecdote to add to the "fable of the bees." (Journal of Law and Economics, 1973, "The Fable of the Bees: An Economic Investigation" by Steven Cheung)</div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-45458260286118092372011-02-27T14:09:00.000-08:002011-02-27T15:17:17.324-08:00Do winners wear red? Does the truth wear off?Last week I had to go to three meetings in a row so I wore my red sweater. A non-sequitur, you say? Well, maybe, but I had a theory. Based on<a href="http://www.nature.com/nature/journal/v435/n7040/abs/435293a.html"> this article in Nature</a>, I had decided that wearing red would enhance my performance in conflicts, which I pessimistically assumed would arise in these meetings. Later in the week, I had a meeting where I didn't at all get what I wanted and I attributed it to the blue (loser) sweater I wore that day. Then I heard from my friend Sui Sui, international business professor at Ryerson, that the <a href="http://content.usatoday.com/communities/sciencefair/post/2010/02/olympics-glory-not-tied-to-color-red-or-blue/1">Nature study had been debunked</a>. In the 2008 Olympics it turned out that the blue-shirted athletes won more often. And in the 2004 Olympics (the source of the data used in the Nature paper), it now appeared that the shirt colour allocation was not really random. <div><br /></div><div>This brought to mind a very interesting article I read last month in the New Yorker, titled "<a href="http://www.newyorker.com/reporting/2010/12/13/101213fa_fact_lehrer">The Truth Wears Off</a>" by Jonah Lehrer. The author describes a variety of effects that were first estimated as being quite strong but were subsequently shown to be weak or non-existent. He attributes the tendency of "decline" to three main forces.</div><div><ol><li>Publication bias: In order to get published your paper needs to have strong, significant results.</li><li>Selective reporting: Scientists screen their own work, tossing out results that don't fit with their priors.</li><li>Study-level random effects. Although Lehrer doesn't really nail this point, I think what he is getting at is that the significance levels in studies are calculated as if every observation in the study is independent. But what if the "apparatus" used to conduct the multiple measurements has a problem? Then over and over again it will give similar results. If the flaw is random, it doesn't bias the result up or down but it does bias the significance levels so we think that we have something when we don't. In the case of the red-shirt study, there seems to have been something about the 2004 Olympics that tilted contest victories towards red shirts but it was not an enduring effect (i.e. not truly biological or cultural, say) so it didn't show up in the 2008 replication.</li></ol><div><br /></div></div><div><a href="http://www.newyorker.com/magazine/letters/2011/01/10/110110mama_mail1">One of the letters to the editor points to a case where an estimate started out too low but was only gradually revised upwards.</a></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-62725034087324009542011-02-05T10:50:00.000-08:002011-02-05T11:02:08.991-08:00Mental virtueIn the January 17 issue of the New Yorker, David Brooks has a very nicely written summary of work in psychology and social science title <a href="http://www.newyorker.com/reporting/2011/01/17/110117fa_fact_brooks">"The Social Animal."</a> He uses the device of a composite character named Harold to convey the work and this is somewhat annoy (especially at the beginning and end where there seems to be some kind of light satire that isn't particularly amusing) but it works very nicely in the parts about human spouse-selection. <div><br /></div><div>I have removed the "biography of Harold" aspects from one part of the article I found very insightful.</div><div><br /></div><div>There is an important distinction between <b>mental strength</b>, which is the processing power of the brain and <b>mental character</b>, which are the cognitive virtues that lead to practical wisdom. The four virtues are:</div><div><ol><li>Collect conflicting information before making up your mind.</li><li>Calibrate your certainty level to the strength of the evidence.</li><li>Endure long stretches of uncertainty while waiting for an answer to become clear.</li><li>Correct for your own biases.</li></ol></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-30364135169038234792010-09-13T08:53:00.000-07:002010-09-13T09:35:48.944-07:00Economics IS a science, BUT...In the Financial Times today (free registration is required but worthwhile) there is a<a href="http://www.ft.com/cms/s/0/93d9ff2a-b9e1-11df-8804-00144feabdc0.html"> provocative column by Gideon Rachman</a> arguing that economics is a "pseudo-science" and that historians ought to get more of a hearing. There is also a more valuable discussion in an embedded video between Rachman and Martin Wolf (who makes a lot of eminently sensible points and clearly wins the "debate" in my view).<div><br /></div><div>OK, so what are the criteria we should look at to see if economics is a science? Rachman uses a clever trick and pulls a quote from a winner of the Nobel prize for economics, Joe Stiglitz, who wrote that science was "defined by its ability to forecast the future." Actually, he didn't define science that way; he said "If a science..." is defined that way then economics is in trouble because it didn't forecast the crisis. Rachman seizes on the forecasting definition. But it doesn't take long to realize that many sciences do not forecast the future at least not in the sense of accurately predicting exactly when and where certain things will happen. Astronomers can't stake their claim to forecasting the future since the astronomical future won 't be known until long after they are all dead. And biologists don't predict future evolution of most species. And climate scientists didn't predict global warming fifty years ago. And meteorologists didn't predict Hurricane Katrina in advance of its formation. Earthquake scientists can't tell me the day when Vancouver will be hit by the "big one." </div><div><br /></div><div>I don't think anyone can seriously argue that forecasting the future is the rule for membership in the science club. Rather it's something about being able to systematically understand the mechanisms at work in the field of study. With that understanding you may get predictive ability or you may not depending on the complexity of the system and how well evolved the science has become. Economics is a science since it consists of a set of mechanisms that help us understand the economy. But the subject matter is highly complex, and it keeps on changing. A crisis is a particular combination of effects that causes the current situation to fall apart. It involves individual agents and their interactions in ways that are hard enough to model and close to impossible to predict. </div><div><br /></div><div>Two more points.</div><div><br /></div><div>First, even when astronomers predicted the sun revolved around the earth, they were still doing science. Just not doing it very well. Partly because of limited knowledge--it was a young science. Partly becuase the science was infected by religion. That's my worry about economics. It's a science where certain types of secular "religion" have taken hold. We have to shake of this religion to make progress.</div><div><br /></div><div>Second, in contrast to the humble vision of historians espoused by Rachman, we know from the case of Niall Ferguson that they are not content to say: "Actually, chaps, it was a bit more complicated than that." Instead look at <a href="http://www.ft.com/cms/s/0/270e1a6c-9334-11df-96d5-00144feab49a.html">what Ferguson says in another column in the FT</a>: "there invariably came a point when money creation by the central bank triggered an upsurge in inflationary expectations." That sure sounds a lot like someone who has looked at history and elucidated a general law that holds in all situations. Or how about this one: "American stimulus can end up benefiting Chinese exporters; and at a time when there is much under-utilised capacity, so that deflation is a bigger threat than inflation." Ferguson is doing economics in this sentence; he's just not doing it very well. There is no way to see Ferguson as following what Rachman approvingly deems the true function of the historian: "to concentrate on the particular and the specific and to puncture the pretensions of social scientists, with their constant and futile effort to derive general, predictive laws from the study of the past." We can't get by without economics as a science. We have to have some analytical framework that holds across particular instances in history or we would have no basis to formulate policy. We have to do it better. Theories need to be confronted with historical evidence. But we need to do the maths too. </div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-37235902022743930652010-09-06T09:20:00.000-07:002010-09-06T10:10:02.472-07:00Churchill's 4 Greatest Hits<div><br /></div><div>1. On May 13th, 1940, Churchill gave his first speech as prime minister. He had been appointed only 3 days earlier on May 10th, the day Hitler launched a quadruple invasion of France, Belgium, Holland, and Luxembourg.</div><blockquote><b>I have nothing to offer but blood, toil, tears, and sweat.</b> We have before us an ordeal of the most grievous kind.<br /> We have before us many, many long months of struggle and of suffering.<br /> You ask, what is our policy? I will say it is to wage war by sea, land, and air, with all our might and with all the strength that God can give us, to wage war against a monstrous tyranny never surpassed in the dark and lamentable catalogue of human crime. That is our policy.<br /> You ask, what is our aim? I can answer in one word:<br /> Victory.<br /> Victory at all costs—Victory in spite of all terror—victory, however long and hard the road may be, for without victory there is no survival.</blockquote><div>2. On June 4th after the completion of the evacuation from Dunkirk, Churchill again addressed the House of Commons. Although the formal surrender of France did not occur until June 22nd, everyone must have seen it coming. The foremost question in English minds was whether an invasion of Britain would soon follow.</div><div><br /></div><div><blockquote>We shall not flag or fail. We shall go on to the end. We shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our Island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; <b>we shall never surrender</b>.</blockquote></div><div>3. On June 18th "in order to counter panic over the coming news of the French armistice" (Roberts, 2009, p. 85) Churchill spoke again:</div><div></div><blockquote><div>Let us therefore brace ourselves to our duties and so bear ourselves that, if the British Empire and its Commonwealth last for a thousand years, men will still say, <b>"This was their finest hour."</b></div></blockquote><div>4. The Battle of Britain that followed the invasion of France (beginning July 10th, 1940) reached its "zenith" according to Andrew Roberts' Storm of War on September 15 which is "today celebrated as Battle of Britain day." A full month before (August 15th) Churchill, referring to British fighter pilots, gave a line that I will always think of with great affection.</div><div></div><blockquote><div><b>Never in the field of human conflict was so much owed by so many to so few.</b></div></blockquote><div>And that appears to be the last of the wartime speeches that gave us the immortal lines that I knew as rock lyrics ("finest hour" in the "Finest Worksong" by REM, "never surrender" in a Corey Hart song!) before I even knew their true author and the context in which he spoke them.</div><div><br /></div><div> I believe we owe an enormous debt to Churchill for those words. They make me proud of our history and of our language. They also may have tipped the balance and kept Britain in the war when there were many who might have made "terms" with Hitler leading to occupation and a Vichy-like state instead of what Roberts refers to as "Last Hope Island." It would be almost 5 years after those speeches before the Nazis were defeated. But it was that summer of 1940 when mere words never mattered more.</div><div><br /></div><div><br /></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-63341295740998541482010-08-27T09:12:00.000-07:002010-08-27T09:36:54.122-07:00Charlatan!My two least favourite "public intellectuals" are Niall Ferguson and Nassim Taleb. I've posted several times in response to things that Ferguson has written. After an listening to an <a href="http://www.npr.org/blogs/money/2010/08/18/129276793/deep-read-nassim-taleb-the-black-swan-guy">excruciating interview with Taleb on the otherwise wonderful Planet Money</a> podcast, I wanted to post a grand critique of Taleb to try to debunk the idea that hes' some kind of "deep thinker." Since nobody cares and I actually have real work I ought to be doing, I was very pleased to find<a href="http://scottlocklin.wordpress.com/2009/07/17/nassim-taleb-clown-of-quantitative-finance/"> this blog post which nails Taleb quite effectively</a>.<div><br /><blockquote>Taleb is merely setting himself up as some sort of heretical alpha monkey of the quants for stating the obvious, the misleading, and occasionally the gratuitously wrong-headed and untrue.</blockquote></div><div><br /></div><div>I have no idea what an "alpha monkey of the quants" might mean, though I do like the sound of it. But if you listen to the Planet Money interview, you will see what Locklin (the blogger) means in the rest of the sentence.</div><div><br /></div><div>Locklin also quotes Taleb as saying " Our research shows that economic papers that rely on mathematics are not scientifically valid." This might be obvious, if "rely on mathematics" means excluding any form of evidence. For example: Edward Wilson defines science as the "systematic enterprise of gathering knowledge about the world and organizing and condensing that knowledge into testable laws and theories." So math without reference to knowledge of the world is not science. It's math. But if "rely on" means to use as a necessary part, then this quote falls into the category of "gratuitously wrong-headed and untrue." Locklin has a great response:<br /> <blockquote>I agree that many economics papers are silly. Since economic papers often involve math, his reasoning seems to be something along the lines of “we must do away with mathematics and instead base economic policy on chicken entrails and pixie dust.”</blockquote> </div><div><br /></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-28318803439772834132010-08-14T09:06:00.000-07:002010-08-14T09:31:12.595-07:00The Parallel Universe MachineIf you're not sure what you think of the $800 bn Obama stimulus, then<a href="http://www.npr.org/blogs/money/2010/08/10/129115864/the-tuesday-podcast-the-great-stimulus-experiment"> this is the podcast </a>for you to listen to. Two caveats. First, there may not be anyone who is not sure what they think. Among the people paying attention, I get the impression that everyone is pretty much 100% sure it was a big waste or money or the only thing that kept us from entering another great depression. Second, the podcast is far from conclusive. But at least you get a sense of why we should feel unsure.<div><br /></div><div>The key idea is that as scientists we would like to use the stimulus as an experiment to see if Keynes was right. But quickly we realize that it's a crummy experiment because there's no control group. We need a parallel universe in which everything else was the same but the stimulus was not enacted. But the commentators point out that economists have "parallel universe machines." We use estimated models to conduct counterfactuals. If the model is right, we can say what the parallel universe would look like. According to Mark Zandy, unemployment would be 11.5% instead of 9.5%. </div><div><br /></div><div>The Planet Money reporters rightly point out we should be skeptical about these models. But they don't get the reason right. They seem to think it's because the world keeps changing so the laws don't stay fixed long enough to figure them out. I don't accept that premise. Rather,the basic problem is that the estimates in the model were created by regressions that lacked a parallel universe. So they use observed time-series and cross-section variation instead. In some cases--my own work, for example ;-) --we can get estimates we trust this way. But for economic stimulus, the problems of holding all else equal in other periods or other places just seem insuperable. Not wanting to end on a pessimistic note, I actually got something really helpful from this podcast: a new metaphor for what I do at work. I'm a builder and operator of parallel universe machines!</div><div><br /></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-88019735395429904382010-08-11T23:10:00.001-07:002010-08-11T23:23:43.259-07:00Why so slow to recover?The US economy doesn't look very good these days. What happened to the recovery that seemed to be moving at a pretty good clip last spring? Here are four theories I've been hearing.<div><ol><li>It's the Greeks. According to this idea, Greece's sovereign debt problems are creating uncertainty and fear. I'm skeptical. In the past far more important economies have had just as big problems without a notable drag on the US economy (Mexico in 94' , Brazil and Russia in 99', most of Asia in '97). So how did we shrug those disasters off but not this one?</li><li>It's the debt. This is the idea favoured by fiscal conservatives. The idea is that the US government has spent beyond its means and everyone now recognizes that a day of reckoning approacheth. Thus we save now so we can afford to pay our taxes down the road. Yeah, maybe.</li><li>End of stimulus. The government boosted demand but now that the stimulus is drawing to a close; we would need the private sector to replace falling government demand with rising consumption and investment. But they're not in the mood. Why not? See 1,2, or 4. </li><li>Deleveraging sucks. Debt was high relative to asset values and asset values were inflated. So debt was really, really high relative to fundamentals. Now that debt has to come down and there's no easy or fast way to do it. This is the theory that makes the most sense to me. It is complementary with theory #3.</li></ol></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-16782856556533997892010-07-25T15:52:00.000-07:002010-07-25T16:07:11.873-07:00Planet Money and the Big ShortMy July endorsements are both economics/crisis related. Thanks to a tip from Andy Bernard, I started listening to <a href="http://www.npr.org/blogs/money/">Planet Money</a>, a podcast from NPR. I download it from iTunes. The reporters are excellent. It manages to be very entertaining while not sacrificing substance. I learn something from almost every episode. In the <a href="http://www.npr.org/blogs/money/2010/07/23/128726556/the-friday-podcast-toxie-stories">episode I'm listening to now,</a> they track down homes in Sarasota, FL that were part of a "toxic asset" they bought during the crisis. Three of nine houses they found were investment homes. Another was a second home. I'd been expecting it to be poor, unsophisticated people who had lost their jobs and hadn't been able to make interest payments when their low "teaser" rates expired. I'm sure those victims are part of the larger story but it's interesting to hear about the other side.<div><br /></div><div>I've also been listening to an <a href="http://www.audible.com">audiobook</a> of The Big Short by Michael Lewis. The characters are fascinating and you learn a lot too. Though I have to admit that synthetic collateralized debt obligations still confuse me despite Lewis' lucid explanations.<br /><div><br /></div><div><br /></div></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-77745348688520830192010-07-06T09:08:00.000-07:002010-07-06T09:35:36.522-07:00The wisdom of Esther DufloI just got around to reading the Ian Parker<a href="http://www.newyorker.com/reporting/2010/05/17/100517fa_fact_parker"> profile of Esther Duflo in the May 17, 2010 New Yorker</a>. It's worth reading for anyone interested in development policy (which should be most people, I hope). But I found it particularly interesting because of the issues it raises for my profession. What are the central questions that economists are tasked with answering? And how should we answer them?<div><br /></div><div>Here are a couple passages with Duflo quotes that I liked.</div><div><br /></div><div><blockquote>Duflo had long wanted to use experimental methods to put microfinance to the test. As she saw it, there was little beyond anecdote to support claims that the technique had a special power to combat poverty, gender inequality, and ill health. This is not to say that Duflo was committed to debunking. "One of my great assets of being in this business, or maybe I've developed it over time, is I don't have many opinions to start with," she told me. "I have one opinion--one should evaluate things--which is strongly held. I'm never unhappy with the results. I haven't yet seen a result a didn't like."</blockquote></div><div><br /></div><div>I like this attitude a lot but I often feel the opposite. There's no such thing as a likable result. Our referees at journals tell us "There is nothing surprising in this paper. Your results are obvious." Or they tell us "I don't believe your results at all. They are all spurious." It would seem that Duflo has a talent for designing questions where the results will be plausible and surprising, if only in the sense that no one knew what to expect.</div><div><br /></div><div>There is an interesting debate over whether economists need to understand the mechanisms at work or whether it is enough simply to find out whether various "treatments" actually work. I think we were probably too much on the mechanism side. We had our theory telling us what to expect via mechanisms such as supply, demand, equilibrium, expected utility maximization, etc. And then as long as we had a supportive anecdote, or a strong introspective intuition, or maybe some observational data<i> consistent</i> with the mechanism we became overly confident that we really understood how the world worked enough to prescribe policies.</div><div><br /></div><div></div><blockquote><div>"It can't only be the data," Duflo said, showing a rare willingness to generalize. "Even to understand what data means, and what data I need, I need to form an intuition about things. and that process is as ad hoc and impressionistic as anybody's."</div><div><br /></div><div>It can't only be the data, but there must <i>be</i> data. "There is a lot of noise in the world," Duflo said. "And there is a lot of idiosyncrasy. But there are also regularities and phenomena. And what the data is going to be able to do--if there's enough of it--is uncover, in the mess and the noise of the world, some lines of music that actually have harmony. It's there, somewhere."</div></blockquote><div></div><div><br /></div><div>That's a gorgeous expression of an inspiring thought. But don't worry I'm not going to abandon my office and take to the field, running randomized experiments. I am very glad economics has made room for and even celebrates (Clark medal) this sort of work. But I have been brought up to believe that the data is given and it is our job to find the data,, assemble it, clean it, massage it, scrutinize it, and finally interpret it (via econometrics). Nothing in my education, experience or natural aptitudes has prepared me to go out and<i> create the data</i>.</div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-32229815056192970982010-06-07T09:33:00.000-07:002010-06-07T09:50:39.604-07:00This Month's EndorsementsMostly getting old is just a long (or not-so-long) bumpy road downwards. But on thing I like about getting old is my increased enjoyment of finding really good things. I feel like I have the experience to make a sound judgment of quality. So here goes a new monthly feature of my blog.<div><ul><li><a href="http://www.maddingcrowd.co.uk/">Far From the Madding Crowd</a>, Oxford pub on Friar's Entry, very near Borders, quite close to the central bus station. Everchanging but always excellent beer selection. Good prices (2.5 for a pint of the daily special). Well-lit. Free wireless. Quiet enough for work or conversation. Welcoming. My favourite pub in the world!</li><li>India Pale Ales: Jaipur from Thornbridge, <a href="http://green-jack.com/our-real-ales">Mahseer from Green Jack</a>, and Carronade from TRYST.</li><li><a href="http://www.partridge-inn.com/">The Partridge</a>, great French food in Wallingford. The best restaurant food I've had in England. Please, please go there. It needs more support!</li><li><a href="http://www.bbc.co.uk/programmes/b00fq31t">Outnumbered</a>. Funny. Painful. Painfully funny. My favourite comedy since Thirty Rock.</li><li>New College, Oxford. Medieval walls just do it for me.</li><li>Bath, my favourite English city, in Somerset, my favourite county.</li><li>The Cotswold Way, especially Wotton-under-edge and Painswick.</li><li>Robert Schumann</li><li>Music at St Peters, Wallingford</li><li><a href="http://en.wikipedia.org/wiki/Nicola_Benedetti">Nicola Benedetti</a>, Scottish violinist</li></ul><div><br /></div><div><br /></div></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-83841738079322134412010-05-31T14:24:00.000-07:002010-05-31T14:39:59.256-07:00World Cup Country Rankings and Betting OddsThe ranking information:<div><br /></div><div><ol><li><a href="http://www.fifa.com/worldfootball/ranking/lastranking/gender=m/fullranking.html">FIFA ranking</a></li><li><a href="http://www.eloratings.net/">ELO ranking</a></li><li><a href="http://www.ubs.com/1/e/bank_for_banks/news/topical_stories/edition_10.html">UBS predictions</a>, model based on past cup performances, home advantage, and the ELO rating (which is based on recent game outcomes taking into account strength of the opposition)</li></ol><div><br /></div><div>The betting odds:</div><div><br /></div><div><ol><li><a href="http://world-cup.betting-directory.com/odds.php">World Cup Betting Directory</a></li><li><a href="http://sports.williamhill.com/bet/EN/betting/e/839/World-Cup-2010---Outright.html">William Hill</a></li><li><a href="https://sportsbook.gamingsystem.net/sportsbook4/www.superbook.com/getodds.xgi?categoryId=553">Sportsbook</a></li></ol><div><br /></div></div></div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com1tag:blogger.com,1999:blog-8962539151494151472.post-61810844440953969962010-05-30T09:19:00.001-07:002010-05-30T10:27:58.340-07:00Sign of the Times<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMyrev-ziXMYwLzoLpKb1PF22dqOy8Zj5IFD7NUlJE16DRSN7uDEcozl9uCcf0qB14PEJurLqkQqOf551UsEoeNcb0fYnhfVWvBoOKJlVkd1L6CgtWK7RNSk0xS0WgevKrMCLfID-4YkV4/s1600/P5270071.jpg"><img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 320px; height: 240px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMyrev-ziXMYwLzoLpKb1PF22dqOy8Zj5IFD7NUlJE16DRSN7uDEcozl9uCcf0qB14PEJurLqkQqOf551UsEoeNcb0fYnhfVWvBoOKJlVkd1L6CgtWK7RNSk0xS0WgevKrMCLfID-4YkV4/s320/P5270071.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5477098965871047410" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLfc0kbbdI5CHWBJT-5EYrudVY7723-NHifIlbDpSWKxrl3YUgE54wLLY44FkNVYqwxKwvMmYt8XOcf8RM72EmbwCjDDGu2xh4tbKy3sK8YXFqu08xt4kIOpnRyin_PinxX4HeQmTSyzpV/s1600/CIMG2601.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 320px; height: 240px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLfc0kbbdI5CHWBJT-5EYrudVY7723-NHifIlbDpSWKxrl3YUgE54wLLY44FkNVYqwxKwvMmYt8XOcf8RM72EmbwCjDDGu2xh4tbKy3sK8YXFqu08xt4kIOpnRyin_PinxX4HeQmTSyzpV/s320/CIMG2601.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5477098677407493810" /></a><br /><br /><div><br /></div><div>According to <a href="http://www.beerandpub.com/newsList_detail.aspx?newsId=332">a study done for the British Beer and Pub Association</a>, 39 pubs close each week in the UK. More specifically, there were 1566 closures between June and December 2009. The good news is there are 52,000 total pubs and there were 553 pubs that opened. I personally suffered from the phenomena of pub closures on the third and fifth days of my walk along the Cotswold Way. On Day 3 (Painswick to Dursley) we arrived in Ryeford, expecting refreshment at a pub indicated on our map. As you can see in the picture on the left we arrived too late. The Ryeford Arms was boarded up. We asked a man walking through the parking lot where we could find a pub nearby. We suggested King's Stanley (which was on the way, more or less) but he said their pub had closed too. Responding to our disappointment, he put it simply as, "Sign of the times." Fortunately he told us about a pub at 3/4 miles in the wrong direction (The Woolpack in Stonehouse) that was indeed open and making good lunches. Two days later we came up the pub shown in the picture on the right just north of the town of Cold Ashton. This pub may not close I suppose if a new publican is found but I think the To-Let sign is indeed an accurate reflection of the difficult economics of pubs in England today.</div><div><br /></div><div>So what is the problem? I suppose one simple thing is that drinking is down. Since more people have cars, they are less obliged to frequent the local pub. Land values are up, making the opportunity costs of pubs rise. One thing that would seem to go against the land story is the highest rates of pub closure (-3% per week according to the study!) are in the regions called Tyne Tees and Granada (northern England) which are probably not the areas of high housing price increases. In Central and Southern England entry is higher relative to exit (but still net exit). </div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-89913262024597734862010-05-30T02:14:00.000-07:002010-05-30T02:23:47.420-07:00Secret of Human Success? Trade<blockquote><span class="Apple-style-span" style="color:#3333FF;">At some point after millions of years of indulging in reciprocal back-scratching of gradually increasing intensity, one species, and one alone, stumbled upon an entirely different trick. Adam gave Oz an object in exchange for a different object...The extraordinary promise of this event was that Adam potentially now had access to objects he did not know how to make or find; and so did Oz.<br /></span></blockquote><br />The claim that Ridley makes in a new book reviewed <a href="http://www.nytimes.com/2010/05/18/science/18tier.html?scp=1&sq=Matt%20Ridley&st=cse">here</a>, is that Neanderthals had comparable brains to Homo Sapiens but evidence suggests they relied on local resources whereas some 80,000 year old seashells have been found far from the nearest coast, which anthropologists infer to have been used in barter.<br /><div><br /></div><div>I like this because it shines the spotlight on my academic specialty: international trade. But now that I think on it, I'm no longer sure humans were the first species to trade one item for another. There was a BBC article a year ago about <a href="http://news.bbc.co.uk/1/hi/sci/tech/7988169.stm">male chimps trading meat for sex</a>!</div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-58835699173945630252010-05-30T01:59:00.000-07:002010-05-30T02:10:12.342-07:00Parasitism of the -isms<div><br /></div><div><span class="Apple-style-span" style="line-height: 24px; "><blockquote>Empires bought stability at the price of creating a parasitic court; monotheistic religions bought social cohesion at the expense of a parasitic priestly class; nationalism bought power at the expense of a parasitic military; socialism bought equality at the price of a parasitic bureaucracy; capitalism bought efficiency at the price of parasitic financiers.</blockquote></span></div><div><span class="Apple-style-span" style="line-height: 24px; "><br /></span></div><div>quoted in <a href="http://www.nytimes.com/2010/05/18/science/18tier.html?scp=1&sq=Matt%20Ridley&st=cse"> John Tierney's NYT review</a> of Matt Ridley's new book,<a href="http://www.amazon.com/Rational-Optimist-How-Prosperity-Evolves/dp/006145205X/ref=sr_1_1?ie=UTF8&s=books&qid=1275210120&sr=8-1"> the Rational Optimist</a>. I like this way of thinking. It helps to explain why society has not ever discovered a perfect social organization. Inherent in each approach is a tendency that undermines its performance in the long run. I would add that pro-labour policies also run the risk of parasitism by militant or obstructionist unions.</div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-61948481537176834482010-03-21T15:18:00.000-07:002010-03-21T15:27:17.854-07:00Where can we go?<span class="Apple-style-span" style="font-family: georgia, 'times new roman', times, serif; font-size: 10px; color: rgb(51, 51, 51); line-height: 15px; "><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; "></p><blockquote><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; ">A lot of Republicans today have argued that this health-care bill smacks of European socialism, or a European “nanny-state” government.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; ">Representative Jeff Fortenberry, Republican of Nebraska, discloses that a little boy the other day asked him, “if the government gets so bad, which country should we move to?”</p></blockquote><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; "></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; ">Umm yes, Johnny, where can we find another highly developed country which declines to provide health insurance to over ten percent of the citizens?</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; ">Oh wait...THERE AREN'T ANY!</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; ">Ok, but there must be lots of miserable citizens of "nanny states" like France. Can't we bring them over to America to testify to the horrors of life under French medical care? Errrr, no. Because the French<a href="http://prescriptions.blogs.nytimes.com/2009/09/11/health-care-abroad-france/"> like their system</a>.</p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; "><br /></p><p style="margin-top: 0px; margin-right: 0px; margin-bottom: 1em; margin-left: 0px; font-size: 1.4em; line-height: 1.5em; "><br /></p></span>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0tag:blogger.com,1999:blog-8962539151494151472.post-4054778432061954482010-03-18T07:59:00.000-07:002010-03-18T08:20:39.131-07:00Ferguson's pseudo-science of EmpiresMy good friend from Arpoador, who knows how to push my buttons, sent me a link to <a href="http://articles.latimes.com/2010/feb/28/opinion/la-oe-ferguson28-2010feb28">this recent LA Times article</a> by Niall Ferguson (who i have railed about in a past <a href="http://ckhead.blogspot.com/2008/11/niall-fergusons-chimerica.html">post</a>). Like many social scientists before him (including Paul Krugman), he has become seduced by the science of complex systems, with their self-organized criticality, tipping points, phase transitions, etc. I find this stuff really cool too. But how much does it really help understand social science (either explaining past social events or predicting future ones)? <div><br /></div><div>The sudden collapse of the Soviet Union does look like the kind event described in the complexity models. But i don't think we can overlook the personal role of Gorbachev who could have elected to resist the breakdown but opted to facilitate it.<br /><br />Now think back to the Great Depression, another collapse, it would seem, of a complex system.<br />But Hoover and the Federal Reserve didn't resist either, they took actions that probably accelerated the collapse.<br /><br />Now think of the most recent crisis: Paulson, Bernanke, Geithner, Summers, and Obama all resisted the collapse--pushing back with aggressive monetary and fiscal policy--and succeeded in preventing another great depression. Billions of people whose livelihoods were saved should breath a sigh of relief that Bernanke et al didn't consult with Ferguson, who apparently thinks easy money and stimulus will cause America's collapse, whereas the near obvious truth is that they prevented it.<br /><br />Last point: in the traditional use of the word, Empires need colonies or at least a large swath of conquered territory. What is America's empire? Puerto Rico, Guam? He can't be referring to a couple small islands. Ferguson must be talking about Afghanistan and Iraq but these are not America's colonies; they are policing actions. US losses in Afghanistan are very sad, as are the associated civilian deaths but the numbers are very small relative to past conflicts that ended empires. And recently the US and Afghan army took over the Taliban's last city in Afghanistan (Marja). So how do we see echoes of the past (Soviets, English, and Greek disasters in the region) in the Afghanistan of 2010? </div><div><br /></div><div>Ok, really last point. The suspicion that he's become a total charlatan hardens further when he starts quoting that other great charlatan about "fat tails" and "black swans".</div>CKHhttp://www.blogger.com/profile/06784881086103689057noreply@blogger.com0