Sunday, June 28, 2009

Health Care

Greg Mankiw, George Will and others of the economic right are very worried about the inefficiencies that partial socialization of health care will introduce. Paul Krugman notes that they are ignoring important theoretical evidence in their arguments.

Let me just add that the evidence of many years experience in nearly every other advanced country offers little or no support to the fears of the right.


Um, economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.

I'll take ignorant and disingenuous for George Will.

Brazil 3, US 2

The result was hardly a surprise, but it was doubly disappointing after jumping to a two goal lead in the first half. More excruciating was US play for the last 45 minutes. After playing confidently and aggressivel for the first 30 minutes, the US dropped more and more into a defensive crouch.

During the second 45, the US rarely got three successive touches on the ball. Their strategy seemed to be letting the Brazillians control the ball 100% of the time and 90 % of the pitch, while letting them get shot after shot on the goal while hoping to dodge the ball.

For twenty minutes they played like a top five team - for forty, they played like a number 200 team.

Legally Cool

The US House passed an anti-climate change bill this week. It would be a gross exaggeration to call it a good bill. It's a silly patchwork of compromises and giveaways to special interests, and it's not likely to be very effective either. On the other hand, despite the hysteria being whipped up by the fringers, it's not likely to have significant adverse economic consequences anytime real soon either.

So what value, if any, does it have? It's a semi-symbolic start, which, if it proves useful, could be turned into something useful. Nonetheless, anything with so many moving parts is likely to pose potential problems, so the future needs to monitor it carefully.

Personally, I would have much preferred a more direct "carbon added" tax. Aside from greenhouse warming, there are lots of other good reasons for decreasing our carbon use (it's running low, it makes the country vulnerable foreign suppliers whose interests run contrary to ours, and it's subject to the notoriously wild fluctuations of fossil fuel prices.)

It's hard to pass any such plan for long range purposes, though. Humans were designed to be short range thinkers, so it's pretty hard to convince anyone of the dangers who isn't personally being roasted or drowned at the moment - and even those people are robably misguided, since short time period fluctuations dominate such events.

Sex, Drugs and Rock and Roll

I suppose that I should be thinking about some of the many serious topics that are fermenting today (climate legislation, health care, or Iran) or maybe even about some of the current gossip (Farrah, Michael, or the sex lives of Carolina politicians), but I caught and got caught up in most of a NOVA program on The Music Gene last night. A lot of ground was covered, but one I noted was that music stimulated the reward center of the brain, the same center stimulated by sex and certain drugs. So, as one investigator noted, sex, drugs, and rock and roll go together neurologically as well as in popular culture.

Speaking of culture, it is obvious that different cultures have different musical styles and produce different kinds of music. How much of our appreciation of music is conditioned and guided by these cultural norms? Maybe not as much as we would suspect. One of the more interesting experiments took modern western music to some primitive peoples with a very different type of music, who had never heard western instruments or music. They were asked to listen to very short selections (a few seconds) and then describe whether the music was "happy," "scary" or "sad."

They made just the same characterizations as a westerner exposed to a long life of movie and cartoon music - plus an occasional opera. Whatever it is that makes a certain passage happy or sad or scary seems to be a universal built into our brains.

So if we devote some of our 20,000 or so genes to music, why? How fundamental is that? How does it put food on our tables or keep us off the tables of other predators?

Friday, June 26, 2009

Saves You Money!

Paul Krugman (somewhere) argues that we need the government option to use its bargaining power to save us money (and that's good). Somewhere else, Tyler Cowen (and Milton Friedman, from the beyond) argue that the government, through its monopoly power, can force savings, and that's bad (I guess because the government is thereby taking money away from deserving cardiologists and hospital corporations).


I think I will go with Krugman.

Wednesday, June 24, 2009

Let's hear it for the rainbow tour

Don't cry for me Argentina

Governor Sanford does contrition better than some of his colleagues. Either that, or he has learned from their mistakes.

The impressive thing to me is how fast these guys find remorse and repentance after they get caught.

Tuesday, June 23, 2009

Singular Sensation

Ray Kurzweil is an inventor and author whose books and inventions have made him rich. He is now devoting himself to prophesy and promotion of what he calls The Singularity. Newsweek, in its new incarnation, has a long profile of the man and his vision.

Ray Kurzweil's wildest dream is to be turned into a cyborg—a flesh-and-blood human enhanced with tiny embedded computers, a man-machine hybrid with billions of microscopic nanobots coursing through his bloodstream. And there's a moment, halfway through a conversation in his office in Wellesley, Mass., when I start to think that Kurzweil's transformation has already begun. It's the way he talks—in a flat, robotic monotone. Maybe it's just because he's been giving the same spiel, over and over, for years now. He does 70 speeches annually at $30,000 a pop, and draws crowds of adoring fans who worship him as a kind of prophet. Kurzweil is a legend in the world of computer geeks, an inventor, author and computer scientist who bills himself as a futurist. The ideas he's espousing are as radical as anything you've ever heard. But the strangest thing about Ray Kurzweil is that when you sit down for a one-on-one chat with him, he's absolutely boring.

Listen closely, though, and you may be slightly terrified. Kurzweil believes computer intelligence is advancing so rapidly that in a couple of decades, machines will be as intelligent as humans. Soon after that they will surpass humans and start creating even smarter technology. By the middle of this century, the only way for us to keep up will be to merge with the machines so that their superior intelligence can boost our weak little brains and beef up our pitiful, illness-prone bodies. Some of Kurzweil's fellow futurists believe these superhuman computers will want nothing to do with us—that we will become either their pets or, worse yet, their food. Always an optimist, Kurzweil takes a more upbeat view. He swears these superhuman computers will love us, and honor us, since we'll be their ancestors. He also thinks we'll be able to embed our consciousness into silicon, which means we can live on, inside machines, forever and ever, amen.

Kurzweil calls this moment "The Singularity," and says it represents the next great leap in human evolution, when humans will transcend biology by merging with technology. Kurzweil truly believes this is going to happen—and he can't wait to be part of it. All he has to do is stay alive until 2045, when he believes the necessary technologies will be available. So he lives on a strict diet, and every day he swallows 150 dietary supplements in order to "reprogram" his body's biochemistry. Today he is 61 years old and in very good health. In 2045 he will be 97. In other words, it's doable.

The secret of the singularity is that technology is supposed to keep advancing at an ever increasing pace. Of course there are different parts of this vision. Like him, I'm pretty sure that computers will soon match or exceed human intelligence, as they already have in a number of specialized fields. Unlike him, I'm not optimistic about technology overall. Exponential growth always seems to terminate.

Our explosive technological growth over the past two centuries is almost entirel due to our increasing mastery of just two technologies: heat engines and the electromagnetic field. Electromagnetism got a big boost from the discovery of the quantum behavior of semiconductors, but the root technologies haven't changed much. There is no obvious physics ready to give a similar boost to the future, but EM hasn't quite run out its string yet. It's application to computing continues to bear fruit, but we are hitting the limit on Moore's law now too.

Biology has some potential still, of course, and at least some of it may lie in the cyborgian direction. Intellectual and similar prosthetics are likely to increase in number and versatility.

I definitely don't share RK's optimism about the potentially benevolent tendencies of our electronic successors. Look, for example, at how we treat our ancestral species. Besides, if the machines have any sense, they will realize that keeping us around as cyborgs would be a waste of space and resources. I suspect that when they are the masters, they will find application for creative destruction.

We might not have to let them take charge, but I see little sign that anybody except Bill Joy is worried about it.

It's a god article though, and I recommend it. A bit condescending, but still good.

Sunday, June 21, 2009


One of Andrew Sullivan's readers succinctly describes stands what the neocons never will comprehend:

One thing that keeps coming up in the commentaries on Iran is the observation that, in demanding that the Iranian people accept an election result that is so obviously false, Khamenei is insulting the intelligence, and thus the integrity, of his people. Or as Rami Khoury puts it in the piece you linked to, "human not like being treated like idiots by their own government, and resist the process when it takes place."

This is precisely what was so infuriating about the last 8 years, starting with the disputed election, right on to the very bitter end. Time and again, the neocons who led our country asked the American people, and the world, to accept things that were obviously false (Saddam was an imminent threat to the U.S., WMD or no WMD), obviously illegal (neither Geneva Conventions nor FISA applied to GWoT), or obviously evil (torture), thereby insulting the intelligence and the integrity of the American people.

This is not coincidence--the two are related. The top-down approach, which is at the core of both neoconservatism and tyranny, is fundamentally, or at least invariably, at odds with human dignity. In this important sense, the neocons' hearts are not in the right place at all, even if their dreams about freedom are dreams we all share. But freedom itself is not enough--justice and equality are essential, and tend to be disregarded by neocons, who routinely attack efforts to further justice and equality as threats to (their own) freedom.

Saturday, June 20, 2009

Post Apocalyptic

The Washington Post is now dead to me, and I don't think I will miss it. The firing of Dan Froomkin is merely the last straw in an era of rapid decline. The Post still has a couple of good reporters, but they aren't worth wading through the bullshit to get to. One Faux News is way more than enough.

I may or may not cancel my Newsweek subscription as well - it's not quite as hopeless but it's recent makeover sucks, and it is owned by the same disgraces to their journalistic traditions.

UPDATE: Brad Delong has a few recent examples of Dan's work. Read them and compare to the dreck churned out by Will, Krauthammer, Cohen, Broder and the rest of the WP's stable of losers. It's easy to see why Froomkin's existence was a continuing rebuke to Fred Hiatt and his whorehouse of over-the-hill hacks.


Life has a way of making us pessimistic, especially about the prospects of unarmed courage against the well-armed and brutal. Still, I can't help but be inspired by the courage of the Iranian demonstrators. I wish they could be helped, but for now, at least, they must depend on themselves and the hope that the army will not shoot it's citizens.

It's About Time

Whenever deep and difficult questions trouble the minds of the . Wise . of . Arda (or the less wise), it is sure that the IlLumonati will be there as well. I will leave you to ponder his words, as I am, but a parenthetical remark caught my eye.

Diversity of viewpoints

I must say one more thing. Sean Carroll talks about different perspectives where the concept of time is more real or less real. And he makes it very clear that he doesn't give a damn whether one has these different viewpoints.

Such comments are just stunning for me. The existence of different ways how to look at the same physics that profoundly and qualitatively differ (e.g. by the existence of some coordinates of spacetime) is one of the most critical criteria that measure a true conceptual progress in physics. That's why the AdS/CFT correspondence is so deep.

Such dualities and alternative descriptions tell us that concepts, phenomena, and mathematical descriptions that used to be thought of as completely different are actually equivalent. I can't imagine how a good theoretical physicist could not care - and I am actually convinced that there is no good theoretical physicist in the world who doesn't care.

It seems to me that this fails to make sense at more than one level. My first interpretation was that this was just Lumo in his Savronala persona, condemning anyone who fails to follow the religion according to Lumo. So what was it that Sean said?

But none of these technical arguments are really the point. What I don’t understand — and this is a sincere lack of understanding on my part, not an indirect claim that this perspective is wrong — is what’s supposed to be so great about timelessness. What are we supposed to gain from thinking in this way? What problems is it supposed to solve?

Lumo would seem to be offended not that somebody might be wrong about physics, but by the possibility that somebody else doesn't share his totalitarian view of the universe. So far, standard Lumo operating procedure, but what comes next baffles me.

In the next two paragraphs he seems to be advocating the importance of having more than one picture of the world "The existence of different ways how to look at the same physics that profoundly and qualitatively differ (e.g. by the existence of some coordinates of spacetime) is one of the most critical criteria that measure a true conceptual progress in physics. "

Bohr would certainly agree. Einstein, may not so much. In any case, I am pretty sure than Sean(AKA, the "the" in the links) agrees (as do I), so what's the problem?

Switches and Gates

The humblest elements of our technology are usually the most important, and one of the humblest "bits" is the switch. The essence of the switch is a system with two or more stable states, separated by less stable regions. We often call those states "on" and "off" since the switch is usually used as some kind of gate.

The ordinary or "garden" variety of gate may be one of the oldest uses of the technology. If you have a wall, it usually has the function of keeping something out (or in), but sometimes you want to go out or in, or let someone else out or in, and this is much simpler if one has a gate or door. From an expansive enough view a lot of things can be considered to be gates (a flint and steel can be seen as a "gate" between the burning and non burning states) but I will try to confine the usage to more explicit gates. From the light switch to the transistor "bits" that are at the heart of our computers, switches and gates are ubiquitous in modern technmology, but are there other examples than gates from ancient times?

I can only think of a few - using a switch as a signal for example. One if by land, two if by sea. Do you know any others?

As usual, nature got there first. By a few billion years. Switches are everywhere in biology and central to life. The central elements of life, metabolism, reproduction, and movement all involve switches. Most metabolic processes need to be metered, and the same is true of DNA expression. Every cell needs to regulate the inflow and outflow of water, nutrients and other essential elements. Every neuron is itself a switch, and at the center of its function are molecular gates which control the inflow and outflow of sodium and potassium ions. Neurons are usuall assembled into complexes which form more complicated switches, controlling larger scale phenomena like what muscle to twitch. Muscles themselves are made up of intricate switches. Even the molecular machines that propel muscle movement, a series of little bars that connect to adjacent fibers and flip to propel muscle movement look a little like light switches. At the most fundamental level, they are switches, and are controlled by yet other larger and smaller switches.

The transistor found its most crucial use as a gate - and is itself a kind of gate, and those gates are the most essential elements of a computer. The bits that are stored in our computers are represented in several different forms, but all are switches. The information processing or "thinking" done by those computers is done by the transistors though. Assembled in various combinations they form latches for storing information and logic gates for evaluating decisons and doing arithmetic.

We could make our computers out of other kinds of gates. People have even figured out how to make fluid computers that implement all the logic in flows of streams of fluid. They are about a million times slower than the electronic kind, of course, and much bulkier.

Next time you turn on a light, use a computer, move, or think, thank a few trillion switches. They were all designed (or more commonly, evolved) to allow you to do just that.

Friday, June 19, 2009

Sicker Shock

The usual suspects think they have a way to kill care reform - we just can't afford it, they say. There is no doubt that this argument has some traction with the public and especially with the conservative Democrats deep in the pockets of the health insurance industry.

How odd that none of these dumb bastards felt any sticker shock when we flushed three trillion dollars and thousands of lives down the Iraq toilet - or when we gave another trillion or four borrowed dollars away to the very rich.

An annoying example:

I'd just like to repeat a simple question I asked at the beginning of the Obama administration: which would you rather have, the fiscal stimulus or $775 billion in public health programs?

Even better, how about $300 billion in stimulus -- the immediate stuff like aid to state governments -- and $475 billion in public health programs?

At the time no one except a few progressives thought such a question was particularly relevant.

Note that the economy has seemed to stabilize, more or less, and well under ten percent of the stimulus money has been spent to date. Moving forward, if no further major programs will be put into place, how would you like to spend the rest of that cash?

Perhaps the author thinks he has a chance to both kill the economic recovery (by disappearing the stimulus) and gut health care reform. It's amazing how much damage these characters are willing to do the country to keep the plutocracy totally in control.

Unfortunately this kind of reasoning has a fair chance of fooling the same suckers who brought us to our current sorry financial pass.

Thursday, June 18, 2009

The Search for Lost Time

Time is God's way of keeping everything from happening at once
...........sometimes attributed to Einstein or John Wheeler.

The times they are a-changing
......Bob Dylan

Sean Carroll takes up the question of timelessness in physics, quoting Fotini Markopolou:

There are two kinds of people in quantum gravity. Those who think that timelessness is the most beautiful and deepest insight in general relativity, if not modern science, and those who simply cannot comprehend what timelessness can mean and see evidence for time in everything in nature. What sets this split of opinions apart form any other disagreement in science is that almost no one ever changes their mind…

Which unchanging character is certainly plausible if one doesn't believe in time anyway. Neither Sean nor Fotini has much sympathy for the anti-time warriors (whose original ranks included Einstein), though she would like to do away with geometry, gravity, and space instead.

As Sean points out, however, those in the timeless crowd still seem to be able to meet deadlines and read plane schedules. Time might be dispensable in physics but it's surely not in everyday life. One of our most fundamental applications of time is our sense that decisions still wait to be made about the future and still affect its nature. After all, if time doesn't exist, why bother to get out of the way of a speeding car? Or why bother to plan a physics experiment, if its results are already and always determined.

Our sense of time is thus a fundamental survival skill as well as completely necessary for doing physics or any other science. My feeling is that if time fails to appear in what you consider the fundamental equations of physics, so much the worse for the equations. The first duty of a theory of physics is to explain our observations of the world. We wouldn't tolerate physics equations which decided that gravity was unnecessary (sorry Fotini!) and we shouldn't tolerate equations that don't include time, not, at least, until one has an alternate theory which explains the same observations. The fact, for example, that general relativity is essentially timeless is a flaw - proof, probably, that the theory isn't quite right.

The fundamental question is whether there is any physical significance to a statement like "nature is timeless" or "time is an illusion." How would one go about planning an experiment that tested such a statement? Which invites the question of what "plan" (or any almost any other verb) means in a timeless world.

Whether we believe in time or not, however, we will continue to plan, decide, and otherwise act as though it did. And those who fail to do so are likely to quickly come to the end of their own worldlines.

Tuesday, June 16, 2009

Origin of Life

The problem of the origin of life is perhaps the most important unsolved problem of modern science. The development of life can be traced back nearly to the time when the Earth cooled almost 4 billion years ago, but there are limited clues as to how it might have developed from non-living matter. One problem is that every living organism has essentially the same core biochemistry, cellular organization, and genetic operation, which is a potent sign that all life shares a common origin but doesn't provide many clues as to how it started.

The simplest forms of life we know already possess a very sophisticated and intricately interdependent biological machinery. How could such a complicated thing have come into existence? Life as we know it requires metabolism to build and operate itself and genetic material to code for the metabolic machinery. Neither can exist without the other, so we are confronted with the chicken and egg problem at the most fundamental level.

Nobody knows how to solve these problems, but clues are starting to accumulate. Essentially these clues are discoveries that show that something like biological precursors can arise quite naturally under plausible initial conditions for our planet. Nicholas Wade, writing in this New York Times article, describes several new clues.

One is a series of discoveries about the cell-like structures that could have formed naturally from fatty chemicals likely to have been present on the primitive Earth. . .

Last month, John Sutherland, a chemist at the University of Manchester in England, reported in Nature his discovery of a quite unexpected route for synthesizing nucleotides from prebiotic chemicals. . .

Dr. Joyce reported in Science earlier this year that he had developed two RNA molecules that can promote each other’s synthesis from the four kinds of RNA nucleotides. . .

Another striking advance has come from new studies of the handedness of molecules. . .

But you need to read the article to get the interesting details, not to mention some useful background. The bottom line, though, is that strong hints about the path from prebiotic origins to life are starting to appear. It may be unlikely that we will ever understand this in detail - it's very unlikely that any fossil evidence has survived - but the story continues to become more plausible.

Monday, June 15, 2009

First They Kill all the Computers

Monday, Monday

Contemplating the many injustices in the world is one way to start off a week. Here are a few:

  1. The continued existence of the LA Lakers.
  2. Talk radio
  3. The Iranian election
  4. The plot to eleminate girls.
  5. The crappy reporting and crapper editing of The New York Times
  6. Even worse reporting by everybody else, except
  7. Television News - what it does should not be dignified by the terms "reporting" much less "editing."
  8. Bibi Netanyahu
  9. The many lies of Israel's creation myth
  10. Obama's coverup of Bush administration criminality

Saturday, June 13, 2009

Fundamentally Inconstant?

Nothing is more fundamental to physics than measurement. The result of any measurement is a number, a number that is usually referred to some system of units.

The Lumonator, following M J Duff and Jorge Majueijo has lately posted on the status of fundamental constants. One of the most important confirmations of Einstein's special relativity theory was the discovery that measurements of the speed of light yielded the same result independent of the movement of the measurer - in contrast to say, measurements of the speed of water or sound waves. The discovery of a universal relation between energy and frequency of light led to another constant of nature, Planck's constant. Some have speculated that these constants might actually be varying with time.

What caught Motl's attention was Duff's statement that:

The possible time variation of dimensionless fundamental constants of nature, such as the fine-structure constant , is a legitimate subject of physical enquiry. By contrast, the time variation of dimensional constants, such as ¯h, c, G, e, k. . . , which are merely human constructs whose number and values differ from one choice of units to the next, has no operational meaning.

Duff caught a lot of guff from the Nature reviewers and Paul Davies for this comment, and Lubos jumps to the defense - not that Duff needs much help - see his answers to his critics at the link, following the paper. I myself was more interested in Duff's quote of the following by Dirac:

The fundamental constants of physics, such as c the velocity of light, h the Planck constant, e the charge and me the mass of the electron, and so on, provide for us a set of absolute units for measurement of distance, time, mass, etc. There are, however, more of these constants than are necessary for this purpose, with the result that certain dimensionless numbers can be constructed from them.

The most famous of these is the fine structure constant but there are more. One of the annoyances of the standard model of particle physics is that it seems to require some 26 of them. It's important to notice that theory is an essential ingredient of any interesting dimensionless constant. It's theory that assigns a universal significance to a dimensionless number.

It's worth noting that any measurement is essentially the determination of a dimensionless number. When you take out your ruler to measure the length of a screw, for example, you are actually determining the ratio of the length of that screw to some standard - helped by the fact that your ruler has numerical values of those ratios conveniently printed on the side. Our first standards of time were based on astronomical phenomena, and it's plausible that some of our first astronomical ideas came from noting the dimensionless ratios between the periods of the day, month, and year.

From our present standpoint, those particular dimensionless numbers are accidental - a consequence of our peculiar history in our particular solar system. From a deeper standpoint we may hope that the same thing can eventually be said about all those dimensionless ratios in the standard model - either that, or that their values will be manifestations of some more fundamental dimensionless ratios.

Let's return briefly to Duff's point: suppose we were in communication with some isolated aliens, with whom we could exchange data, but nothing tied to the physical. Could we usefully exchange information with them about how to measure the speed of light? Not really, because our measurements depend either upon artifacts (like the meter and kilogram of some decades back) or upon other things assumed constant, like the electric charge and Planck's constant. Dimensionless numbers like the fine structure constant or the ratio of electron to muon mass are different. If they reported different values, we could be quite sure that their physics was different from ours.

If their physics was really different, of course our dimensionless ratios might not be theirs. We can imagine a universe in which the lepton spectrum is quite different, or where supersymmetry is exact.

But I started by talking about constancy of the speed of light and Planck's constant - what's up with that? Why doesn't Duff's point apply to those measurements? Because those measurements are referred to actual common artifacts in our present world - they are assumed to be dimensionless ratios between the measured phenomena and and the appropriate artifacts (clock, meter stick, the arms of Michelson's interferometer). In a larger sense, it does apply however. In making our measurement we assume that our standards can be moved about our used in different circumstances without "changing." The ultimate justification for that assumption is that it leads to a simple physics.

As Poincare emphasized a hundred years ago, most of the conventional assumptions of physics - the geometry of space, for example - are ultimately conventional choices made to simplify our physics. At the time he was trying to rationalize Euclidean geometry and relativity, but Minkowski and Einstein soon found a better way that produced a deeper simplification.

Thursday, June 11, 2009

Shep Smith

Shep Smith is a tiny point of light in the bleak night that is Fox News. TPM finds him calling out the birthers and other wackos who email him. Unfortunately, Fox is a major factor in giving credibility to most of these extremists. Some version of much of the crackpot hate speech these people feed on is regularly featured on Fox - and regularly spouted by the usual Republican demagogues.

The recent murder of the security guard at the Holocaust Museum and of Dr. Tiller are natural sequellae of the lies regularly spouted by Gingrich, O'Reilly, Hannity, Malkin, the Buchanans and ilk. Those who have given them their platforms deserve to be held accountable.

Wednesday, June 10, 2009

Peter Schiff

Jon Stewart's guest last night was Peter Schiff, who was flacking his new book. Jon ate up his message that the right way to have handled the financial crisis was to have let the bad banks fail. Tempting as this seems, I doubt it. This looks like more of the same magic marketry to me.

I wouldn't trust Schiff even if he hadn't lost me a bunch of money (by investing in his fund). The guy has a product to sell, or a few of them. He's selling a book, selling a fund, and selling himself as a candidate for the Senate.

Mark me down as unpersuaded.

Bully Bully

Confrontation with a bully is a central theme of children's and adolescent fiction. It also a principal trial of youth for many. It's easy to see bullying as a natural outgrowth of the youthful competition for status that we share with our Chimpanzee relatives - working your way up the hierarchy by beating your way up. The fact that bullying is a normal part of childhood is hardly proof that we need to put up with it though. There is plenty of evidence that bullying is bad for the bullies as well as for the victims.

Peter Klass, MD, writing in the New York Times says that we know how to eliminate or greatly decrease bullying. Europeans, he says, have developed the techniques.

Next month, the American Academy of Pediatrics will publish the new version of an official policy statement on the pediatrician’s role in preventing youth violence. For the first time, it will have a section on bullying — including a recommendation that schools adopt a prevention model developed by Dan Olweus, a research professor of psychology at the University of Bergen, Norway, who first began studying the phenomenon of school bullying in Scandinavia in the 1970s. The programs, he said, “work at the school level and the classroom level and at the individual level; they combine preventive programs and directly addressing children who are involved or identified as bullies or victims or both.”

Dr. Robert Sege, chief of ambulatory pediatrics at Boston Medical Center and a lead author of the new policy statement, says the Olweus approach focuses attention on the largest group of children, the bystanders. “Olweus’s genius,” he said, “is that he manages to turn the school situation around so the other kids realize that the bully is someone who has a problem managing his or her behavior, and the victim is someone they can protect.”

The other lead author, Dr. Joseph Wright, senior vice president at Children’s National Medical Center in Washington and the chairman of the pediatrics academy’s committee on violence prevention, notes that a quarter of all children report that they have been involved in bullying, either as bullies or as victims. Protecting children from intentional injury is a central task of pediatricians, he said, and “bullying prevention is a subset of that activity.”

One problem they will have in implementing this, I suspect, is that bullying actually has a fairly substantial fan club. Bullies may have limited career opportunities in the modern world unless they are otherwise suited for the role of mafia enforcer, CEO, or drill Sergeant, but teaching high school and junior high has often been one. Even those who were on the other end of the stick may have mixed feelings - I still fondly remember besting a couple of bullies who tormented me more than half a century ago.

Spreading the message may not be trivial, but it is worth doing. Of course our fiction may be poorer for it.

Tuesday, June 09, 2009

Simple Theory

Tyler Cowen has a Simple Theory of the Financial Crisis and he seems to believe that it somehow defends Rational Expectations Theory.

Once we liberate ourselves from applying the law of large numbers to entrepreneurial error, as Black urged us, another answer suggests itself. Investors systematically overestimated how much they could trust the judgment of other investors. Investment banks overestimated how much they could trust the judgment of other investment banks. Purchasers of mortgage-backed securities overestimated how much they could trust the judgment of both the market and the rating agencies as to the securities’ values. A commonly held view was that although financial institutions had made large bets, key decision makers had their own money on the line and thus things could not be all that bad. Proceeding on some version of that assumption, most market participants (and regulators) held positions that were increasingly vulnerable to systemic financial risk. In this regard, an indirect link exists between the current crisis and the massive investment fraud perpetrated by Bernie Madoff. The point is not that all banking is a fraud but, rather, that we rely on the judgments of others when we make our investment decisions. For years, Madoff had been a well respected figure in the investment community. His fraud was possible, in large part, because he was trusted by so many people. The more people trusted Madoff, the easier it was for him to gain the trust of others. A small amount of initial trust snowballed
into a large amount of trust, yet most of that trust was based on very little firsthand information. Rather than scrutinize the primary source materials behind Madoff’s venture, investors tended to rely on the identities and reputations of those who already trusted Madoff. In the run-up to the current crisis, a similar process of informational “cascades” led a great many investors to put excessive trust in highly leveraged banks and other business plans.

In a strict rational expectations model, we might expect some people to overtrust others and other people to undertrust others. Yet, when it comes to the cumulative and reinforcing nature of
social trust, this averaging-out mechanism can fail for at least four reasons. First and most important, a small amount of information can lie behind a significant social trend, as previously explained. One of the most striking features of the current crisis is how many countries it hit at roughly the same time, which suggests some kind of international peer effect.
Second, market participation involves a selection bias in favor of the overconfident. No one aspires to become a CEO for the purpose of parking the company assets in T-bills. Third, incentives were pushing in the wrong direction. The individuals who were running
large financial institutions had an opportunity to pursue strategies that resembled, in terms of their reward structures, going short on extreme market volatility. Those strategies paid off for years but ended in disaster. Until the volatility actually
arrives, this trading position will appear to yield supernormal profits, and indeed, the financial sector was enormously profitable until the assetpricing bubbles burst.

Let me see if I get this: the crisis happened because investors systematically underestimated risk and consequently made reckless decisions. OK, but isn't that sort of like a theory that "explains" World War I by saying "Everybody started shooting at each other."

Well, I have my own theory about why that happened: Investors, economists, regulators, bankers and the general populace had been sold the the theory that markets took care of themselves and regulation was not only unnecessary but counterproductive. The twin prongs of that theory were the Rational Expectations Hypothesis and the Efficient Markets Hypothesis. Trusting those hypotheses, they failed to do the necessary spadework to make those hypothesies approximately true.

The other point Cowen makes is roughly that if some could see the calamity coming, why didn't they make a big profit by betting against the prevailing hysteria? A few did, of course, but making the appropriate bet was a strategy only a few were positioned to exploit, and timing would be critical. You can see the deluge coming, but if you can't tell when it limits your options. Two more points: you might know the horse you are trading for is dying, but the price is going up so fast that you can hope to sell it to a bigger sucker at a higher price before it does. Also, even if you bet correctly, there might be a good chance that the losing bettor won't be able to pay - think AIG.

Finally, how good are these hypotheses in the presence of fraud? The ratings agencies fraudulently rated securities highly to enhance their take on the other side, and outfits like AIG sold insurance contracts that they couldn't cover. The fact is that individuals and even huge hedge funds lack the power and tools to expose many forms of systematic fraud, and must depend on those with supoena power and the power to imprison to sort it out. When those who run the government fail to understand this, crises ensue.

In short, I blame the friggin economists and finance professors, especially those peddling the Chicago Kool Aid.

Sunday, June 07, 2009

Rational Markets

Bee takes a look at seemingly irrational behavior in the financial markets.

It was not that people who were actively involved in building up the problem were completely unconcerned. They just had no way to channel their uncanny feelings. From a transcript of a radio broadcast "This American Life" (audio, pdf transcript, via):

mortgage broker: was unbelievable... my boss was in the business for 25 years. He hated those loans. He hated them and used to rant and say, “It makes me sick to my stomach the kind of loans that we do.”

Wall St. banker: ...No income no asset loans. That's a liar's loan. We are telling you to lie to us. We're hoping you don't lie. Tell us what you make, tell us what you have in the bank, but we won't verify? We’re setting you up to lie. Something about that feels very wrong. It felt wrong way back when and I wish we had never done it. Unfortunately, what happened ... we did it because everyone else was doing it.

Italics added. My favourite part though was this

Mike Garner: Yeah, and loan officers would have an accountant they could call up and say “Can you write a statement saying a truck driver can make this much money?” Then the next one, came along, and it was no income, verified assets. So you don't have to tell the people what you do for a living. You don’t have to tell the people what you do for work. All you have to do is state you have a certain amount of money in your bank account. And then, the next one, is just no income, no asset. You don't have to state anything. Just have to have a credit score and a pulse.

Alex Blumberg: Actually that pulse thing. Also optional. Like the case in Ohio where 23 dead people were approved for mortgages.

Here we have examples of the market forcing people to do things that they quite correctly believe to be irrational. What's up with that? Partly, I think, its the "other people's money" effect - the mortgage lenders aren't dependent on the borrower's paying, because they will already have sold the mortgages to some bank to securitize, and the banks are passing them on too. The buyers think that they are safe because they are protected by credit default swaps. Everybody thinks they have offloaded the risk (or certainty) of failure on somebody else, and everybody trusts the "efficient market" and some models they don't understand. The model builders may understand the models, but either they don't understand or haven't been told the facts underlying their statistical data.

Even more important, I suspect, is the focus on short term results. This rewards the bank and the investment officer who take big risks to get good results for the next quarterly earning report, and punishes their counterparts who play it safe. The big investment banks used to be partnerships who were risking their own money - by the time of the crash they were all corporations run by guys who were playing with other peoples' money and getting a big chunk of it when they succeeded. The instinct of the predator is not focussed on next year or the next decade, but on his next meal, and when there is money in the water humans tend to revert to shark like feeding frenzy behaviors.

So what's the cure or treatment. The diehard Chicago ideologues, most of whom have never left their ivory towers, say let the idiots go bankrupt. It will be a lesson for the future. They predict this would result in a short but very sharp recession, but neither history nor systems theory is very supportive of this theory. Most of those who have actually practiced the discipline Chicago pretends to study, and most mainstream economists, think that the resulting collapse of world financial systems would be catastrophic, possibly destroying most world economic activity for a generation or more.

I say, be very suspicious of the true believer who stares lovingly into the abyss.

Saturday, June 06, 2009

Mating Games

I happened to catch just a couple of minutes of the NPR program This American Life one day and the subject seemed to be analyzing the number of potential mates for a person in a reasonably sized city. The (student?) investigators would ask various people what characteristics they considered essential for a mate and them try to figure out the likely numbers. One woman they asked said: "he just needs to be taller than I and smarter."

Given that she was tall and a Harvard physics professor, said our investigator, her odds didn't look good.

I was more interested in her choices. Why would those particular characteristics be crucial? The "taller" characteristic in particular seemed pretty superficial to me for a physics professor, and the "smarter" part was odd too. As a Harvard physics prof, I thought, she must have nearly always been smarter than all the males she knew. I was also struck by the fact that it was relative rather than absolute height and smartness that seemed crucial.

It seems though, that this sort of thing is pretty common, at least when answering questions rather than actually making a choice. Many women do indeed want a husband taller than they are. Obviously this limits the choices of a 5' 11" woman a lot more than those of one who is 5' 2".

So what about personality, character, and sense of humor? Shouldn't these things be a lot more important than a superficial quality like height? In practice, they are, I think, but the fact that many women mention it suggests some evolutionary basis.

So why should relative height be important to women? If height is such a big deal, why aren't all men 6' 11"?

At the primitive evolutionary level, height might be a badge of good health or even of high status (high status children presumably getting better nutrition). Height is definitely not an unmixed blessing of course - even if you assume that comfort in airline coach seating was not an evolutionary priority when these traits supposedly evolved. Tall people are shorter lived, need more food, and don't maneuver well in tight spaces.

I've got to say though, that being a moderately tall man (6'-3") did definitely not lead to the girls flocking around me in high school. Maybe the nerd factor was dominant here. On the other hand, Wilt Chamberlain, the 7' 1" basketball superstar claimed to have had sex with 20,000 different women, which would amount to roughly three a day for twenty years.

Efficient Markets - Not So Much

The theory of efficient markets has taken a beating in the latest economic debacle. Joe Nocera, writing in the New York Times, takes a look at some recent abuse the theory has taken.

You know what the efficient market hypothesis is, don’t you? It’s a theory that grew out of the University of Chicago’s finance department, and long held sway in academic circles, that the stock market can’t be beaten on any consistent basis because all available information is already built into stock prices. The stock market, in other words, is rational.

In the last decade, the efficient market hypothesis, which had been near dogma since the early 1970s, has taken some serious body blows. First came the rise of the behavioral economists, like Richard H. Thaler at the University of Chicago and Robert J. Shiller at Yale, who convincingly showed that mass psychology, herd behavior and the like can have an enormous effect on stock prices — meaning that perhaps the market isn’t quite so efficient after all. Then came a bit more tangible proof: the dot-com bubble, quickly followed by the housing bubble. Quod erat demonstrandum.

The efficient market theory (EMT) has its origins in Adam Smith's "invisible hand" but it got its modern juice from the discovery that it allows lots of neat mathematical models to be built. It's not just supposed to apply to stock prices, of course, but to prices of housing, oil, financial securities and anything else traded on a large scale. The grand generalizations of science are what give it its immense power, and when a science gets one, it can consider itself to have arrived. The principle of conservation of energy is such a principle for physics, and natural selection serves the same role in biology. Geology has its own version in sea floor spreading and continental drift. With the EMT, economists, or at least the Chicago school, thought they had their own.

The universe is stingy with its secrets, though, and grand generalizations need a lot of testing before they can be considered validated. The efficient market must now go the way phlogiston, N-Rays and Maxwell's ether. The EMT managed to do a lot of damage in its heyday, and the way it did its damage was due to the fact that people in positions of power believed it. Most especially, Alan Greenspan, the Republican party, and Bush's last bozo to head the SEC believed it, and believing it they decided that regulation and intervention were unnecessary and counterproductive, and consequently neglected their responsibilities. Nocera quotes Jeremy Grantham, a prominent critic of the EFT.

The incredibly inaccurate efficient market theory was believed in totality by many of our financial leaders, and believed in part by almost all. It left our economic and government establishment sitting by confidently, even as a lethally dangerous combination of asset bubbles, lax controls, pernicious incentives and wickedly complicated instruments led to our current plight. ‘Surely, none of this could be happening in a rational, efficient world,’ they seemed to be thinking. And the absolutely worst part of this belief set was that it led to a chronic underestimation of the dangers of asset bubbles breaking.”

Part of the problem is built into one of the cardinal assumptions of the EMT: that the market has all the available information. The construction of hyper-complex financial products that essentially nobody understood invalidated this. Ratings agency guys looked at Maximum Entropy models of securities performance and saw, as one put it, lots of Greek letters. Some people did understand that mortgages were being given to people very unlike historical borrowers and who were very unlikely to be able to pay if the housing market halted its unprecedented boom. A few of them were wise investors who steered clear and the rest were salesmen hoping to sell to some other sucker before the world noticed that the emperor was unclothed. The fact that the SEC chaiman and the legendary Alan Greenspan sat idly by did a lot to convice the suckers that the game was on the up and up, but it wasn't. I doubt that fraud will be proven against those who sold the garbage - too many of them bought their own swindle, but fraud it was.

Lack of information played its role, but human nature had its own part as well. Humans are not the long term profit maximizing machines imagined by EMT kool-aid vendors, but creatures designed to compete and survive as a predator in a world of predators, the most dangerous of which were our fellow humans. The predator - think Bernie Madoff - is not thinking about long term profit maximization, he's thinking about his next meal.

The thing is, markets usually really are sort of efficient - more efficient than central planners for most things, but confusing this useful rule of thumb with an inviolable principle led to the greatest financial debacle in modern history.

So let's not bury the notion of the efficient market, let's just put it to bed for a bit. Just in case it might take on airs again, we might consider putting a stake through its heart, however.

Friday, June 05, 2009

Rule of Drum

Kevin Drum brings us a little math problem:

Via Alex Tabarrok, a pair of researchers asked people how big the economy would be if it grew 5% a year for 25 years:

Only around 10–15% of the participants gave estimations between 50% less and 100% more than the true value...furthermore, the majority of the false estimations were systematically below the true value ...which was underestimated by 88.9–92.1% of the participants.

As Kevin points out, this is not exactly one of those "look how many people think the Earth is flat" examples. It's not very easy to do the arithmetic to get the correct answer. 5% interest, compounded yearly, yields 1.05^25 (1.05 to the 25th power). This is not a calculation that I can do in my head. If one resorts to the binomial theorem (the first resort of the physics student!), we have (1+0.05)^25 which expands into the series 1+25/20+25*24/(2*20^2)+ ... This series converges slowly - the first three terms yield 3 compared to the actual value of 3.38. Adding the fourth term gets us to 3.28 and the fifth to 3.36 - pretty good, but a heck of a lot of arithmetic too hard to do in my head - thanks Google.

The revelation for Kevin was that he learned the rule of thumb called the rule of 70.

But Alex made this worth my time by teaching me a new rule of thumb I hadn't heard of before:

A good way of approximating is to use the rule of 70. If x is the growth rate then the doubling time is approximately 70/x. Thus, with a growth rate of 5% we expect a doubling (100% increase) in 14 years and a quadrupling in 28 years so a bit more than a tripling in 25 years (200% increase) is a good guess.

I love good rules of thumb, and this one makes me slightly more knowledgable than I was five minutes ago. Thanks, blogosphere!

When I hear a rule of thumb, I want to know how, why, and when it works. Given a fractional interest rate I, how many years y does it take to double the principal?

That equation is (1+I)^y = 2. To solve for y, we take the (natural) logarithm of both sides, getting:
y*ln(1+I)=ln(2) or y = ln(2)/ln(1+I). The rule of 70 amounts to saying y = 70/100*I or 0.7/I. Now ln(2) = 0.693 and, for small values of I, ln(1+y) is approximately y, so the rule of 70 amounts to approximating the ln(2) by 0.7 and ln(1+y) by y. For I = .05 = 5% the rule of 70 gives y=70/5 = 14, whereas the more precise value is ln(2)/ln(1.05) = 14.21 - which is not too bad. For higher interest rates the error get larger. For 35% interest (think credit card) the rule of 70 give y =70/35 = 2, but the more precise value ln(2)/ln(1.35) is 2.31.

If bankers and economists did things right, of course, they would compound interest continually so that the proportional increase would be e^(I*y), where e is the base of the natural logarithms, or about 2.7183. For I = 5% and y = 25 years, I*y = 1.25 so that the accumulated value would be e^1.25 = 3.49. Not that that is so easy to calculate in your head either.

If you have Google or a calculator handy, of course, the arithmetic is not a problem.

Eliot Spitzer: Annoying Scold

The Eliot Spitzer Rehab album is out, but it seems that the Rev Dimsdale has been reborn as an even more boring version of the same tiresome scold. In the cited link he rather hysterically recycles some well-
known economic statistics and proposes some unimaginative and improbable remedies.

While we have addressed the credit collapse, we have not begun to tackle the far more daunting, and more significant, structural problems in the economy. Instead of focusing on the green shoots, let's examine the macro data that will determine our national prosperity in the next generation. These data are terrifying. . .

...why not take an amount equal to the AIG bailout (more than $180 billion) and invest in a product that would be truly worthwhile: high-speed rail along our major economic corridors? If we transform the L.A.-San Francisco corridor with high-speed rail, and D.C.-Boston similarly, the savings and technological advances would be enormous.

I love high speed rail, but to pretend that his short collection of make work projects is an adequate substitute for a functioning financial system is absurd. Yes, our economy needs some serious fix-up, but Eliot Spitzer is not the guy to tell us how. I liked him better as Dimsdale.

Wednesday, June 03, 2009

That Toddlin Town

Milton Friedman infamously wrote:

“Truly important and significant hypotheses will be found to have “assumptions” that are wildly inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions (in this sense). The reason is simple. A hypothesis is important if it “explains” much by little, that is, if it abstracts the common and critical elements from the mass of complex and detailed circumstances surrounding the phenomena to be explained and permits valid predictions on the basis of them alone. To be important, therefore, a hypothesis must be descriptively false in its assumptions; it takes account of, and accounts for, none of the many other attendant circumstances, since its very success shows them to be irrelevant for the phenomena to be explained.”

What he had in mind here, I suspect was defending the idea that a theory based on immortal nad farseeing rational agents could work in the real world of irrational actors who know very little and live lives nasty, brutish, and short. His way is a very odd way to put it, however. I think that it would be far more rational just to say that a theory based on drastically simplified assumption can sometimes make good predictions anyway. My formulation has the advantage of not ignoring the fundamental principle of logic that deductions from a false premise imply everything and nothing. If such a deduction happens to work in a particular case, either the assumptions *did* hold, or else the math was faulty.

The recent economic collapse was a dagger in the heart of the Chicago school, since neither did any of them predict it nor does its actual evolution fit any of their models. The problem, says Brad DeLong, is that Chicago can't bring itself to admit that the Earth goes around the Sun rather than vice-versa. Ideologues always have a last redoubt, however, and Chicago's is the big bad boogeyman government. This theory can never be wholly wrong, since the government is always the biggest and most important player in the economy. The real problem though, is the fact that what broke down here were the key assumptions of their religion, and the way it occurred follows exactly the pattern predicted by a failure of their sacred principles.

My principle in such cases is to never trust an ideologue, especially when he is trying to explain why the facts don't fit his theory.

See also, this commentary by Arun. I also like the comments to Brad's post.

Tuesday, June 02, 2009

No Tears for Jonathan Pollard

Jonathan Pollard stole United States intelligence information, reputedly including some of our most secret intelligence gathering methods, to Israel, in return for jewelry, cash, and a large monthly stipend. Details of what he stole are still secret, but it was important enough that seven former Secretaries of Defense have signed petitions to keep him locked up.

Students of the case have alleged that Israel was not his only customer, that he may have stolen and transferred as many as a million documents, and that Israel subsequently traded some of this information to the Soviet Union, resulting in the exposure and deaths of American agents. Whether these claims are true or not, we do know that Israel has lied, denied, concealed, and refused to cooperate at every step of our attempted investigation - see, e.g., the Wikipedia article that I linked to above.

All those petitions from Defense Secretaries were needed because Israel and the Israel lobby have waged a long and vigorous campaign to free Pollard. Which brings me back to the subject of my last post. The rabbi in question invoked Hillel's principle and Deuteronomy to construct a remarkably disingenuous argument for freeing Pollard, the linchpin of which was that some other American who had spied for Israel had gotten a much lighter sentence - I muttered "shoot them both."

The justification was that Pollard had only given an ally (Israel) information that it needed for its own defense, and that no harm had come of it. I don't for a minute believe either of these statements, but even if they were true, remember that this was the identical argument Rosenberg's supporters used to justify his giving the Russians (our ally during WW II) the nuclear weapon secrets.

The American Jewish community of the late nineteenth century was deeply suspicious of the Zionist movement, mainly because they feared that it would result in American Jews becoming, or seeming to have become, a fifth column at odds with the rest of America. This fear has particular urgency now with Israel ruled by an extremist regime deeply at odds with American policy. It may seem that the fears of these far seeing individuals were hardly exaggerated. American Jews might have to decide sometime where their chief loyalty lies. It should be mentioned that many other Americans have faced similar tests: German Americans in WWI and WWII, Japanese Americans in WW II, and others, and nearly all chose the US.

Torah! Torah! Torah!

The highlight of a recent religious service that I attended occurred when the Rabbi switched to English for about 5 minutes of the five hour total. This was a highlight mainly because I understand English. A couple of things he said caught my attention, but the first was a story about Hillel be asked to explain the Torah while standing on one leg. He is reported to have said that the message of the Torah was "Do unto your neighbor as you would have him do unto you. The rest is commentary."

This is a wonderful ethical principle, but a lousy summary of the Torah. My (admittedly weak) biblical scholarship suggests that there is at least as much "do unto your neighbor before he does unto you," not to mention assorted genocides, other forms of mass murder, the odd human sacrifice and a very long list of mostly absurd rules for living. I do think that Hillel picked out the part worth saving - but I'm less impressed with the commentary.