Archive for February, 2010

Invulnerable zombies – the EMH

February 27th, 2010 87 comments

My book is due for publication in the US Fall, so work on my added sections on reanimation is starting to feel like one of those games where you have to kill all the zombies to get to the antidote before you fall victim yourself. Here’s another one – more on the way

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Categories: Dead Ideas book Tags:

Weekend reflections

February 27th, 2010 40 comments

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.

Categories: Regular Features Tags:

Zombie economics gets a mulligan: or, how Obamacare caused the Global Financial Crisis

February 26th, 2010 28 comments

I’m adding a little section to each of the chapters in my Zombie Economics book called “Reanimation”, about the attempts that are already under way to revive economic ideas killed (at least according to the standard rules of hypothesis refutation) by the global crisis. I wasn’t surprised to find plenty of examples for the efficient markets hypothesis (easy to render immune from any kind of refutation by an appropriate formulation) or for policy ideas that yield big benefits to the rich and powerful, such as privatisation and trickle-down economics. But I was surprised a little while ago to see the crisis described as a transitory blip in the continuing Great Moderation. Still that pales into insignificance compared to this piece by Casey Mulligan of Chicago (h/t commenter Daniel ), in which (I swear this is true!) the crisis is the result of financial markets correctly anticipating the adverse labour market impacts of possible legislation under Obama, such as a health plan that might include means tests.

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Two kinds of ignorance

February 25th, 2010 99 comments

Also, in yesterday’s Fin, Geoffrey Barker accused Abbott of going for the bogan vote (paywalled), where bogan is taken to mean ignorant. Leaving aside the class/cultural analysis implicit in the term “bogan”, which I think is wrong, the argument is the same as I made in my post on agnotology, as his characterization of Rudd as a technocrat, not really at ease with the kind of politics that includes demands for authenticity and so on. Coming back to “bogan”, the big issue in agnotology is not ignorance in the ordinary sense of the term (people who don’t know much about political issues, and don’t care to learn – that is certainly part of the stereotypical bogan image, and may perhaps be descriptive of the actual demographic groups commonly associated with the term, though I don’t know of any evidence of this).

The ignorance associated with climate change delusionism and other rightwing factoids is metacognitive and has much more to do with the Dunning-Kruger effect of overestimating one’s own competence. The classic example is the kind of person who eagerly circulates reports that there has been no statistically significant warming since 1995. The only information content in such a report is that the person doing the reporting doesn’t understand the concept of statistical significance[1], and therefore is incapable of assessing any issue involving statistical analysis, of which climate change is a prime example.

The stereotypical candidate, in relation to climate change, is that of a 50+ male[2] with a business background in engineering or some similar field where practical judgement is accorded more value than theoretical expertise, and where a willingness to push on regardless is an important element of success. Journalists and opinion columnists[3], accustomed to “mastering a brief” at short notice are also highly susceptible – lawyers who may actually have to master briefs involving technical issues seem mostly to recognise that this is the kind of problem where expert judgement is required, as does the more sensible kind of economist[4]

fn1. Note for pedants. A Bayesian statistician would say that confusion over the concept of significance reflects the logical problems of the concept and the underlying classical theory of statistics. But that only makes sloppy misuse of the concept even worse. I’ll have more to say on this soon, I hope.

fn2. A demographic group to which I belong

fn3. This one, too.

fn4. This one, too, I hope.

Categories: Life in General, Science Tags:

Greece: Haven’t we seen this movie before

February 25th, 2010 26 comments

My piece in today’s Fin compares Greece with some Australian states who also play games to conceal debt. The emerging news (also in today’s NY Times) is that the same banks who facilitate the dodgy debt deals established a CDS market for Greek sovereign debt and some have large short positions (translated from marketspeak: they are betting that the deals they set up will go bad and Greece will default). This can of course be defended as insurance, but it obviously changes your relationship with your bank or financial advisor if they can steer you into a deal and then bet on its failure. The potential for moral hazard in the CDS market has yet to be fully explored, but I think we will get to find out the hard way before too long.

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Categories: Economics - General Tags:

Ideology and agnotology

February 22nd, 2010 180 comments

The way in which I’ve generally thought about politics is in terms of ideology and particularly, the divide between the left (socialists, social democrats, labour and related groups) and the right (various strains of conservatives, market liberals and business advocates). But increasingly I doubt that this is the right way to look at things.
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Categories: Politics (general) Tags:

Monckton meets his match

February 18th, 2010 43 comments

After his debate with Tim Lambert, I think we will have to start calling the potty peer “Lord Monckton of McLuhan“.

Categories: Environment Tags:

What should Greece do?

February 16th, 2010 95 comments

There’s been a lot of discussion of the problems of Greek sovereign debt, its implications for the euro and so on. But I haven’t seen much discussion of what the Greek government should do in dealing with the simultaneous problems of an economic downturn and unsustainable debt (feel free to point me to good discussions).

The course of action being demanded by the bondholders and their advocates, as well as by the EU governments that are likely to bear the costs of a bailout is that of drastic retrenchment on the lines the IMF would normally advocate in cases of this kind. But that is obviously not a desirable policy response when considered in macroeconomic terms. I’m not well informed on the details of Greece’s budget problems, so I’m mostly going to make generic suggestions that are applicable to a case like this.
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Categories: Economic policy Tags:

Central banks could learn more from experience

February 15th, 2010 176 comments

My column from last week’s Fin, over the fold

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Categories: Economics - General Tags:

Monday Message Board

February 15th, 2010 65 comments

I’ve been travelling, in and out of Internet contact, as well as being overloaded with work, so updates have been scarce lately. Also, comments threads have been getting out of control. I’m making a special request for increased civility, meaning that personal criticism of other commenters (and of me) should be avoided altogether. If you can’t make your point without such criticism, leave it for another time. I’ll try for a more nuanced version of this policy when I have time to formulate it, but for the moment, I’ll be handing out red cards to anyone who violates it.

With that, it’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

Categories: Regular Features Tags:

Climategate revisited

February 11th, 2010 152 comments

Now that the main charges of scientific misconduct arising from the hacking of the University of East Anglia email system have been proven false, it’s possible to get a reasonably clear idea of what actually happened here. For once the widely used “X-gate” terminology is appropriate. As with Watergate, the central incident was a “third-rate burglary” conducted as part of a campaign of overt and covert harassment directed against political opponents and rewarded (at least in the short run) with political success.

The core of the campaign is a network of professional lobbyists, rightwing activists and politicians, tame journalists and a handful of scientists (including some at the University of East Anglia itself) who present themselves as independent seekers after truth, but are actually in regular contact to co-ordinate their actions and talking points. The main mechanism of harassment was the misuse of Freedom of Information requests in an effort to disrupt the work of scientists, trap them into failures of compliance, and extract information that could be misrepresented as evidence of scientific misconduct. This is a long-standing tactic in the rightwing War on Science, reflected in such Orwellian pieces of legislation as the US “Data Quality Act”.

The hacking was almost certainly done by someone within the campaign, but in a way that maintained (in Watergate terminology) “plausible deniability” for the principals. Regardless of what they knew (and when they knew it) about the actual theft, the leading figures in the campaign worked together to maximize the impact of the stolen emails, and to co-ordinate the bogus claims of scientific misconduct based on the sinister interpretations placed on such phrases as “trick” and “hide the decline”.

The final group of actors in all this were the mass audience of self-described “sceptics”. With few exceptions (in fact, none of whom I am aware), members of this group have lost their moral bearings sufficiently that they were not worried at all by the crime of dishonesty involved in the hacking attack. Equally importantly, they have lost their intellectual bearings to the point where they did not reflect that the kind of person who would mount such an attack, or seek to benefit from it, would not scruple to deceive a gullible audience as to the content of the material they had stolen. The members of this group swallowed and regurgitated the claims of fraud centred on words like “trick”. By the time the imposture was exposed, they had moved on to the next spurious talking point fed to them by the rightwing spin machine.

To keep all this short and comprehensible, I haven’t given lots of links. Most of the points above are have been on the public record for some time (there’s a timeline here), but a few have only come to light more recently. These Guardian story brings us up to date, and names quite a few of the key players (see also here). For the role of allegedly independent journalists in all this, see Tim Lambert’s Deltoid site (search for “Rosegate” and “Leakegate”).

Update I should have mentioned that much the same team had their first outing in the controversy over the Mann et al “hockey stick” graph. All the same elements were there – supposedly disinterested citizen researchers who were in fact paid rightwing operatives, misuse of accountability procedures, and exceptional gullibility on the part of the “sceptical” mass audience. Details are here (h/t John Mashey). Note in particular the role of Edward Wegman, who had the great appeal of being an apparent cleanskin without the kind of paper trail associated with the majority of delusionist “experts”. Here are my comments on Wegman’s silly and dishonest critique of Mann.. It was obvious at the time that Wegman had agreed in advance to do a hatchet job, a fact confirmed by his later appearance on delusionist petitions. But until now we didn’t have the details of the connection.

Categories: Environment Tags:

Bacevich on the American faith in force (crosspost from Crooked Timber)

February 10th, 2010 51 comments

The American Conservative is a mixed bag, to put it mildly, but this piece by Andrew Bacevich (h/t Jack Strocchi) is well worth reading. Bacevich points out how rarely the faith of the American policy elite in military force has actually been rewarded with success. The key quote:

An alternative reading of our recent military past might suggest the following: first, that the political utility of force—the range of political problems where force possesses real relevance—is actually quite narrow; second, that definitive victory of the sort that yields a formal surrender ceremony at Appomattox or on the deck of an American warship tends to be a rarity; third, that ambiguous outcomes are much more probable, with those achieved at a cost far greater than even the most conscientious war planner is likely to anticipate; and fourth, that the prudent statesman therefore turns to force only as a last resort and only when the most vital national interests are at stake. Contra Kristol, force is an “instrument” in the same sense that a slot machine or a roulette wheel qualifies as an instrument.

To consider the long bloody chronicle of modern history, big wars and small ones alike, is to affirm the validity of these conclusions.

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Categories: World Events Tags:

Monday Message Board

February 8th, 2010 105 comments

It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

Categories: Regular Features Tags:

Send in the clowns

February 8th, 2010 76 comments

It’s hard to believe that, three months ago, Australian national politics was (primarily) a contest between two broadly normal political parties. The government was running well ahead, but open to criticism for having talked a lot and done relatively little. The opposition was excessively keen on the maxim ‘the first duty of an opposition is to oppose’, and the alternative policies it proposed were neither as detailed as they might be, nor entirely consistent, but that has always been true of oppositions. Although a change of government in 2010 looked unlikely, there was nothing to suggest that such an event would be a disaster if it happened.

That could not be said today. The government is much the same as before, but the opposition has become a clown show, happy to do or say whatever comes to mind, either to chase votes, secure the support of its base or simply to muddy the waters enough that they have a chance to win in the resulting confusion.
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Categories: Oz Politics Tags:

Weekend reflections

February 5th, 2010 115 comments

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.

Categories: Regular Features Tags:

Zombie ideas rise again

February 4th, 2010 39 comments

A glutton for punishment, I’ve decided the Zombie Economics book manuscript I submitted a month ago (mostly online here) is in urgent need of more zombies. I’ve been struck, even in that short space of time by the extent to which, with undeniable “green shoots” now appearing, the zombie ideas I’ve written about are clawing their way through the softening soil and walking among us again. The most amazing example is that of the Great Moderation – surely you would think no one could believe in this anymore, but they do.

So, I’m planning to add a bit to each chapter, pointing to examples of these ideas being revived. I’d appreciate good examples for the rest: Trickle Down, Micro-based Macro the Efficient Markets Hypothesis and Privatisation (of course, the Queensland government gives an example v close to home).

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Categories: Dead Ideas book Tags:

Ignoring the elephant

February 3rd, 2010 77 comments

My piece in Thursday’s Fin noted the prevalence of delusional conspiracy theories about climate change on the political right, pointing in particular to Lord Monckton, Nick Minchin and the Lavoisier Institute as sources for the claim that the whole thing was a plot to destroy the economy and bring in a communist world government. Among other points on the silliness of this claim, I observed that all credible economists agreed that the cost of measures to stabilise global climate (less than 5 per cent of GDP) on all estimates, did not appear sufficient for the catastrophic destruction required by the conspiracy theorists.

The piece attracted a couple of responses, one from the Lavoisier Institute and one from Sinclair Davidson (who has given Monckton plenty of favorable treatment on his blog, and his pushed conspiracy-theoretic views of the IPCC). Curiously, neither of them mentioned the conspiracy theories that were the main subject of the piece, and which Lavoisier has pushed for years.

Rather they cavilled at the point that the economic costs of an ETS or carbon tax would be marginal. Lavoisier’s Ray Evans did not offer a counterargument, but simply claimed that economists had been wrong when they said the effects of Thatcher’s 1981 Budget would be disastrous. Davidson accepted the standard estimates, but said that, if you converted them into present values at a low discount rate, they looked really big. He also made a spurious personal attack on me (reply over the fold).

This is just silly. Although Australia got off relatively lightly from the GFC, our national income is several percentage points below where it would have been in the absence of the crisis and is likely to remain below trend for some years to come. Has anyone noticed the collapse of civilisation as we know it? Even in countries like the UK, where the impact of the GFC has been many times the size of the maximum estimates put forward by economists for the cost of climate stabilization, many observers believe that the threat of imminent communist dictatorship and a return to the Dark Ages may yet be staved off.

As I said in my original piece, it is tempting to dismiss all this as mere hyperbole. But, for delusionists, the only alternative to crazy conspiracy theories is the claim that thousands of professional scientists have fallen prey to errors that can easily be discerned by the average (scientifically untrained, innumerate, information derived from blogs) rightwing pundit. Now that’s really crazy.

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Categories: Boneheaded stupidity, Environment Tags:

Well, we did do the nose … and the hat

February 3rd, 2010 70 comments

In discussing the loony antics of Lord Monckton with climate delusionists/rightwingers (the two categories are now pretty much coextensive), I’m struck by the frequency with which I get the line (pushed a little while ago by Janet Albrechtsen) “Well he did say that Rudd and Obama were planning a communist world government, and that Jackie Kennedy killed millions of people and that the child of holocaust survivors was a Nazi and that he was a member of House of Lords, but why focus on that stuff … you should be debating him on the science”

I’m not sure whether the appropriate Monty Python reference is the witch sketch in Holy Grail or “What have the Romans ever done for us” in Life of Brian. Certainly, the idea of supposedly hard-headed politicos going to this guy for scientific advice is one that would stretch credulity even for a Python gag.

Categories: Boneheaded stupidity Tags:

Anonymous comment safe again

February 3rd, 2010 5 comments

I did a couple of interviews earlier this week on South Australian legislation banning anonymous blog comment on the forthcoming election. The same idea came up at the Commonwealth level after the last election and I testified against it at the Parliamentary inquiry – they decided not to go ahead. This time around, the result has been the same. Facing a storm of protest, the SA government has backed down.

Categories: Metablogging, Oz Politics Tags:

European exceptionalism (crosspost from CT)

February 3rd, 2010 24 comments

I’d like to broaden John Holbo’s CT discussion of the US as a center-right nation to consider the broader idea that the US is, in some sense, exceptional. As Barack Obama correctly pointed out not so long ago, every nation is exceptional in its own way, which tends to undermine the idea that any nation is specially exceptional.

Still, compared to the developed world in general, it seems obvious that the US is different in lots of ways: an outlier in terms of nationalism, military power, religiosity, working hours and inequality of outcomes and (in the opposite direction) in terms of government intervention, health outcomes and other measures typically associated with welfare states. Among these the outstanding differences arise from the fact that the US aspires, with some success, to be globally hegemonic in military terms and (with rather less success) in economic terms as well.

But, when you think about it, there is nothing exceptional here.
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Categories: World Events Tags:

Monday Message Board

February 1st, 2010 114 comments

It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

Categories: Regular Features Tags: