Posts Tagged ‘economy’

IQ and Rationality

I’m reading about the distinction between intelligence and rationality these days:

What Intelligence Tests Miss: The Psychology of Rational Thought
by Keith E. Stanovich

There’s one aspect of the book that I’d like to comment on so far:

Intelligence has to do with the processing power of the brain. Rationality has to do with how we form our beliefs.

In other (my) words: You don’t have to be unintelligent to believe that you’re safer with a gun in your house, or that lower taxes are always better. You just have to be irrational.

What do I mean with irrational? It’s a lot of things, but an important element is our common tendency to be more impressed by evidence that supports our worldview, than by evidence that contradicts it.

Let’s start with the pistols and revolvers. Of course, it’s easy to create in our minds a scenario where you’re safer with a gun in your house than without it. “You hear an intruder. You have time to find your gun and load it before the intruder finds it. You know how to use it effectively and responsibly, even when your adrenaline is sky high. The intruder is either unarmed or unprepared.” And at the end of the story, you are the hero, unhurt, and the intruder is either dead, wounded or (hopefully just) in chains. Read more…


Bob Herbert’s vision of the class war … and mine

The NYTIMES columnist Bob Herbert had an article in this morning’s online edition entitled 

Winning the Class War

Reading this against the background of just having finished Tolstoy’s “War and Peace” was fascinating. Herbert describes an American system anno 2010 that is remarkably similar to Russian system anno 1810, in the sense that wealth and power are to a higher and higher degree inherited. Americans anno 2010 don’t call themselved “Count” and “Prince”, and they no longer feel obliged to take care of and provide for their serfs. Those are the main differences.

Of course I’m exaggerating. Read more…

Bubbles and Busts: An Airplane Analogy

This morning’s reading of Rob Alderman’s blog made me think of another analogy of the economy.

Your airplane analogy is good, but I think it can be taken further. The primary problem isn’t turbulence, but that the plane has developed an undersized engine (agricultural and industrial sector) and an oversized passenger compartment (private consumption). A plane like that is only capable of flying slowly, and even slower if it needs to climb.Every time the stall speed warning has gone off (the economy has slowed down), the Fed has done what every good pilot would have done. It has put the plane into a dive, by adding more money to the system. This makes the plane (economy) go faster, at the expense of altitude. As long as we were sure we were high up, higher than anybody else, this didn’t seem to matter. We stayed focused at airspeed (GNP), not altimeter (national debt).

Today, we’re painfully aware that China’s engines are getting stronger and stronger, while ours are due for a major overhaul. That has caused a lot of simple-minded people to go bananas over the way the altimeter is spinning backwards … to the point where they’re willing to pull the stick backwards and jerk the whole thing into a tailspin. If they do, it will be the end of America as we know it. Read more…

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Paul Krugman’s Structure of Excuses

September 28, 2010 Leave a comment

Structure of Excuses


Thanks a lot to Paul Krugman for drawing his flawless logic just one notch too far in this article in the NYTIMES online. There’s nothing that engages me more as a pupil, than when I see my teacher making a mistake.

How can I use words like “flawless logic” and “mistake” about the same article? Read more…

The Long-Overdue Death of an Economic Theory

Four Deformations of the Apocalypse

By DAVID STOCKMAN, Published: July 31, 2010

This article hit the top of the “most popular” list in the New York Times Online this morning, and it’s easy to see why: Finally a compact and easy-to-understand overview of what’s gone wrong with the American economy.

Stockman points out four ideas that have worked together, in a kind of synergy, to undermine our position. Together, they have created a false impression of prosperity that has enticed us to go further and further down the garden path into economic la-la land.

Sixty years ago, the people who lived in our house had to start laundry day by harnessing the horse and hitching it up to the wagon. Then they’d have to drive their laundry down to the river, stoke up the wood-fired boiler on the beach, do their laundry by hand, rinse it in the river, drive home, unhitch the horse and feed it, and then hang up the laundry to dry. That’s the kind of effort it took to create modern, civilized society.

One of our problems today is that other people are still willing to work just as hard, for similar rewards. For a while, they’ve been content to be our servants, supplying us with almost everything we’ve wanted while we ran through our capital. It’s going to be really interesting to see what happens in a generation or two, when they’ve saved some of what we’ve squandered, and invested enough of it in improved local infrastructure and education.


Reflections on the War in Afghanistan

View Is Bleaker Than Official Portrayal of War in Afghanistan

This article in the NYTIMES online by C. J. Chivers, Carlotta Gall, Andrew W. Lehren, Mark Mazzetti, Jane Perlez, and Eric Schmitt, with contributions from Jacob Harris and Alan McLean takes as its starting point the recent publication, through Wikileaks, of thousands of classified documents about the ongoing military operations in Afghanistan.

The article is unpleasant reading. It details, in example after example, how difficult it is to stabilize a country that doesn’t seem to have any interest in stabilizing itself.

My reflections:

1) This is not about Afghanistan, but about every single nation in the world that is falling apart because it can’t feed its population at a living standard they’re willing to accept. While Islam is certainly adding flavour to the problem, the underlying problem is that people are fighting for control over resources. Afghanistan is too hot and too dry, and its population is too hungry. We either have to feed them or fight them.

Read more…

A Summary of This Morning’s Reading

Grandmothers and Global Growth

On how artificial intelligence is poised to reach “escape velocity” and have the same kind of transformational effect on the world economy as has had the emergence of China and India.

My reflection: The best part of this is that it might make top-level university education more affordable for everybody. The worst is a question the author doesn’t even ask: Such a leap in productivity will involve losses as well as gains. Who will lose, and who will gain? What if this reinforces the present trend, where low-skilled workers lose more and more of their opportunities? What’s going to happen to the cohesion of our societies? Aren’t they already fragmented to the point where large blocks of the inner-city populations are feeling worse than useless?


Old Age, From Youth’s Narrow Prism
On how old age isn’t what young people think.

My reflection: All the more reason to keep going for those walks together.

Want a Better Listener? Protect Those Ears

On preventing hearing loss in children – and how important it is to start when they’re young.

My reflection: The article isn’t that important, but it illustrates something: There’s a big change going on here. In my parents’ generation, and the one before, safety margins were thin. Knowing how dangerous life was, people they gave their children less freedom. Today we actually have a much better starting-point for steering our children in the right directions, but our culture has changed, and children are given much wider latitude for self-destructive behaviour.

Human Culture, an Evolutionary Force
On how human culture affects evolutionary changes in human beings. The article focuses on how closeness to dairy animals cause the emergence of genes for handling lactose.

My reflection: This slots nicely in with Nicholas Kristof’s article from a few days ago, so I sent the author this letter:

Thank you for “Human Culture, an Evolutionary Force”. Since you’re interested in the subject, I’d like to point to one more important example: The general rise in the toxic load around us.

Nicholas Kristof pointed out a few days ago, in an excellent article, how this rise may be the driving force behind the current autism epidemic. (The incidence of autism has gone up by a factor of 20 in the last 25 years). Mr. Kristof is absolutely correct in this. An example he didn’t mention is the Somalis: Somali immigrants have one of the highest autism rates in the USA, while autism is virtually unknown in Somalia. It’s the change in the environment that does it.

The implication for your subject is: Autistic individuals don’t reproduce. They may live just as long as other people, but they are not desirable mates, and they wouldn’t be good at caring for their offspring.

So, what’s going on right now is that we’re chopping off an entire branch of the human genetic tree: We’re in the process of eliminating the genetic material that can’t handle the modern toxic load.

Yours sincerely
Jørgen Klaveness
Autism Dad / Attorney / Fitness Entrepreneur

The Hard and the Soft

David Brooks draws a line from Norway’s recent success in the Winter Olympics, back to a wartime survival story. His conclusion is that “There is also an interesting form of social capital on display. It’s a mixture of softness and hardness. Baalsrud was kept alive thanks to a serial outpouring of love and nurturing. At the same time, he and his rescuers displayed an unbelievable level of hardheaded toughness and resilience. That’s a cultural cocktail bound to produce achievement in many spheres“.

My reflection: David Brooks is probably jumping to conclusions, but I was still deeply touched by his story, deeply grateful that I was born here, and worried that today’s affluence is going to destroy the spirit that he describes. Every improvement in the human condition will also produce a hidden loss.