Tuesday, February 8, 2011

Assault of Thoughts - Lot's o' Links Edition - 2/8/2011

"Words ought to be a little wild, for they are the assault of thoughts on the unthinking" - JMK

- Regular commenter stickman has a post up on relative prices and climate change. He introduced me to this approach several months ago with a paper by Sterner and Persson. When you approach the problem from a perspective of relative prices, you can do away with occassionally controversial assumptions about discount rates and still get the same immediacy and imperative.

- About two weeks ago NPR had physicist Brian Greene on. He has a fascinating discussion of the prospect of parallel universes. As some of you may know, this is all still quite speculative and theoretical - but it's not crazy or implausible either. And theoretical musing may soon turn to empirical results with some LHC experiments. The interviewer is great as well. Greene is good at presenting complicated ideas to a lay audience in the first place, but the interviewer does a great job laying it all out and making things clear for listeners. I wish reporters who cover economics were this good.

- Commenter nickn shares two short essays by Julian Assange, of Wikileaks fame, on authoritarianism as a conspiracy, conspiracies as networks, and strategies for destroying authoritarian networks. They are an interesting read. The analysis itself is pretty basic network analysis. People have been using this to study political structures and corporations for a very long time (in college I was a research assistant on a project that mapped out corporate boards for utility companies in the early 20th century in much the way that Assange describes here). This is a good way of thinking about these things because it illustrates where we might expect weaknesses and why they can be more robust than we might expect. I wish he spent more time delineating what an "authoritarian" conspiracy would be. Presumably you could have conspiracies that are quite anti-authoritarian too (using his definition of "conspiracy", which is essentially a closed informational network directed at some end, Wikileaks itself is a "conspiracy"). But maybe this is just an "I'll know one when I see one" or "that's for individuals to decide" issue.

- Washington Post article on Detroit. It seems to me that the Schumpeter-Kling malinvestment story might have broader applications than the Hayek-Garrison malinvestment story, although I'm confident both have some applications. As always - the empirical question at hand is "how substantial are those applications".

- Harry Reid gets props from me for defending NASA explicitly in terms of its benefits for Florida and states other than his own. Too often NASA is the pet project of Floridians, Alabamans, and Texans because of geography rather than real prioritization. Reid should be commended for his cosmopolitanism (for lack of a better word). But it's still frustrating that he is framing the benefits of NASA in terms of jobs! That's as bad as justifying it by saying it gave us Tang and velcro. If that's what NASA gives us - jobs, Tang, and velcro - we should not have NASA. We should do it for the basic research and for frontier-expansion, which means we shoudl do it for the benefits that it provides to future generations.

- The Understanding Society blog shares thoughts on the relevance of history of economic thought for economics today.

- Menzie Chinn pits Sarah Palin against Barry Eichengreen on public investments. When I saw the title of that match-up - before reading any of it, I felt sympathy for Palin for the first time that I can remember!

- Kevin Rollins discusses the evolution of order and revolution with Michael Ostrolenk here. There's a good discussion of Egypt and the way that the news media is covering the situation there.

14 comments:

  1. You ought to read Hume's "History of England." Hume is no longer viewed as a political philosopher these days, but that's what he largely was during his lifetime.

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  2. Parallel universes are like a self-proving, unfalsifiable idea. If we can not find a parallel universe, it is obviously because we do not live in that universe and can not reach it.

    It's similar to those who say that extraterrestrials on Earth can not be found because they are too advanced to allow themselves to be found. http://www.youtube.com/watch?v=wr05SESCcIg

    It's also like the LHC. One Japanese physicist at CERN said that LHC is not showing satisfactory results, because it could lead to the world being destroyed - therefore LHC from the future is coming back in time to prevent itself from being worked.

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  3. 1. The theoretical warrant for parallel universes strikes me as much more substantial than the circular logic you suggest. That is a possible ex post excuse that would be very disappointing to hear out of anyone's mouth - but the fact remains that parallel universes are entertained because many people consider them theoretically implied. Greene talks about how they're not simply theoretically implied in one instance but how we can infer parallel universes from several different theories.

    2. A single universe is trapped in these sorts of ex post excuses too, I think. When we see one animal we don't assume its the only member of its species. Why do we do that with the universe. What warrant do we have to say that about the universe. The alien analogy is useful, but it could be used differently - those who deny parallel universes are like those who think that in the vast expanse of space no life exists anywhere other than Earth, simply because we have no physical evidence for it. Is that a reasonabel position? I don't think that's reasonable at all. In the absence of evidence and in the absence of a good reason for thinking that there is only life on Earth, the reasonable assumption is that it's probably popped up elsewhere.

    3. Nevertheless, I think these circular proofs are interesting. Conspiracy theorists do this a lot too. I'm not of the opinion that we can ever prove anything conclusively. We live in a Popperian world - we can rule things out, but we can't prove them. That means that every claim is a probabilistic claim to a certain extent. You feel you have warrant to make a claim not because you've demonstrated it, but because everyone else has failed to disprove it to a point that you are satisfied. In other words, we make claims based on our expectations. If we expect a certain thing, for whatever reason, and perceptions match our expectations, we feel we have warrant to believe something. That's what I think is so fascinating about conspiracy theories and crazier alien theories. They're doing the same thing logically that the most staid scientists and thinkers do. Not seeing aliens conforms to their expectation, which gives them no reason to change their expectations! That's where Occam's Razor starts to become useful, of course. You appear to think Occam's Razor would cut out parallel universes - I'm not quite so sure.

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  4. It just seems to me that Kling's malinvestment story has no real basis in reality. I'm referring to its supposed causality, or the idea that a particular industry suddenly becomes irrelevant on the market. That is, to an extent, what happened, but it's not because the industry became irrelevant, but because there was a sudden downturn in the economy. I think there is deeper causality behind the recession than what Kling's recalculation problem tells us.

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  5. Well Kling talks a lot about technological change. Clerical work to him is the same as agricultural work in the Great Depression.

    I don't think that is a full explanation, but I'm certainly sympathetic to the idea that technological change and economic restructuring plays a big role in the economy.

    Detroit is not a wasteland because of artificially low interest rates that caused a multi-decade boom in the American auto industry - an industry which stayed strong through many subsequent recessions. Detroit is a wasteland not because of Hayekian malinvestment or elongation. It was a good investment. It's just going through a period of "creative destruction" right now.

    That does not explain the downturn on its own - you know I wouldn't concede that! But I think it is potentially more applicable in more places than Hayekian ABCT.

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  6. Oh, and my point is that you better believe technological change has a basis in reality. I don't know where you're coming from with that.

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  7. That was...that was...convincing, Daniel.

    Yeah, you can't rule it out but you can't fully prove it. It reminds me of GMAT Critical Reasoning, where a correct answer choice may "strengthen" or "weaken" an argument, but never disprove or prove it. That's the most frustrating thing!

    Brian Greene's argument is interesting, because he says there is a finite number of complexions of matter, so infinite universe can only repeat it itself in parallel universes. But what if there is also an infinite number of complexions of matter?

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  8. Prateek - is the first line sarcastic? I can't tell over the internet :) I don't care either way, just curious!

    As for Greene - ya, you don't know what to think when you start multiplying infinities... you could have infinite complexions of matter, but if you have infinite universes with infinite complexions of matter does that solve everything? Ad infinitum.

    Sometimes I regret not being a physicist, sometimes I really don't :) If I were a physicist I'd be a more traditional astronomer, rather than a cosmologist or a theoretical physicist.


    I need to consult Keynes's Treatise on Probability and some of the other early probability work too... if I recall, a lot of the early fights over the frequentist, classical, and Bayesian understanding of probability revolved around this idea of multiple potential realities and what probability would really mean if we had one single deterministic universe. It seems like parallel universes would have applications here, but since most of those discussions happened in the 19th century and since the parallel universe issue came up in the 20th I'm not sure if anybody has talked about the two together.

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  9. Not sarcastic.

    Physics is, however, incredibly incomprehensible to the layman.

    When I asked some senior physics majors to clarify some of the things I learnt in school, I realized that I never knew physics in my life. Everything they taught in school was analogy. Atoms are not made of tiny round balls circling around one compact tiny round ball. That's just an illustration. What atoms are actually like, it is difficult to describe or fathom.

    In the end, they had to satisfy my curiosity by saying that if you saw a long convoluted physics paper, that is the exact and only way of describing the phenomenon. It can not be summarized without giving crude imperfect analogies, and that's the only way of understanding it. I remember Steve Weinberg saying that physicists try to give a single fundamental series of explanations, but every one of those fundamentals is defied in nature. Exact science is not an exact science.

    What are scientists like in their heads? What do they think when they see us primitive, unadvanced creatures? What do they know that we will never know?

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  10. What are scientists like in their heads? What do they think when they see us primitive, unadvanced creatures? What do they know that we will never know?

    Fight defeatism, Prateek!!!!!

    I know what you mean, though. Well if we take Feynman at his word on quantam mechanics, nobody should feel too confident.

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  11. Technological change doesn't cause SUDDEN economic catastrophes. The problem faced by Detroit's auto companies has much, much more to do with expensive labor costs than it does with technological change - i.e. union labor costs. They simply could not produce the same quality cars as foreigners could, facing higher wage prices. These same auto companies, though, are doing much better now that the majority of the labor contracted is Mexican.

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  12. Well, technological change can make prior investments not as renumerative. Just like changes in the time structure of production.

    How "sudden" the catastrophe is depends more on the psychology of how these issues get revealed, or exogenous shocks.

    Labor costs have something to do with it, but even if you paid auto workers poverty wages the American auto industry still isn't going to support an entire city the way it used to support Detroit. Between automation and trade there is absolutely no way. That's a good thing. That's why we call it CREATIVE destruction.

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  13. Labor costs had a lot to do with it. It was an institutional problem which ruined a very large industry over a period of two or three decades. Of course the consequences are going to be relatively large. Changes in technology had nothing to do with Detroit's problems - all the problems were institutional. It was a lack of competitiveness, augmented by institutional problems, and slightly abetted (negatively) by American trade regulations (tariffs, ex cetera). The Detroit auto industry is the perfect example of how an industry can be both inflated and destroyed by the American government.

    Technological change just doesn't have anything to do with it, and neither does "creative destruction". Those businesses were just too handicapped by institutions to adapt to competition.

    "
    Labor costs have something to do with it, but even if you paid auto workers poverty wages the American auto industry still isn't going to support an entire city the way it used to support Detroit."

    I'm sorry, but this doesn't say anything of value.

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  14. Right - labor costs did have a lot to do with it. I hope you didn't take my "something to do with it" to be minimizing labor costs.

    "Those businesses were just too handicapped by institutions to adapt to competition."

    OK, call me crazy but that SOUNDS like creative destruction to me - obsolescence - not ABCT. A productional form - domestic labor intensive, geographically concentrated, unionized - used to work. Patterns changed. In the eighties much of the work was automated. International competitors started to emerge. In the wake of both of those trends the union and pension arrangments became unsustainable. There was nothing wrong with the initial arrangement - it worked VERY well. And then over time it became obsolete, and aside from some adaptation on the part of Ford at the eleventh hour the American auto industry was not able to fix itself in time. This is a creative destruction story, not an ABCT story and not an aggregate demand story.

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