Wishing you the best of 2013!!!
(updated to add: I would like to thank my daughter for the image above)
Live life. Love Liberty. Love life.
People who spend their time, earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options. Even in the region they knew best, experts were not significantly better than non-specialists.Those who know more forecast very slightly better than those who know less. But those with the most knowledge are often less reliable. The reason is that the person who acquires more knowledge develops an enhanced illusion of her skill and becomes unrealistically overconfident. “We reach the point of diminishing marginal predictive returns for knowledge disconcertingly quick,” Tetlock writes. (Philip E. Tetlock, University of Pennsylvania in 2005 book Expert Political Judgment: How Good is It? How Can We Know?—Prudent Investor) “In this age of academic hyperspecialization, there is no reason for supposing that contributors to top journals—distinguished political scientists, area study specialists, economists, and so on—are better than journalists or attentive readers of the The New York Times in ‘reading’ emerging situations”. The more famous of the forecaster, Tetlock discovered, the more flamboyant the forecasts. “Experts in demand,” he writes, “were more confident than their colleagues who eked out existences far from the limelight.”
For many, thus, expertise signify more as social signaling (posturing or seeking social acceptance) and or “telling people what they want to hear” but predicated on certain technically based paradigms which produces an aura of supposed superiority rather than representative of the true domain knowledge.
In any event, after the more recent decades of my libertarian journey, I am now struck by a different aspect of this longstanding debate, which has to do with our strategy for winning people over to libertarianism. Strategy 1 is to persuade them that freedom works, that a free society will be richer and otherwise better off than an unfree society; that a free market will, as it were, cause the trains to run on time better than a government bureaucracy will do so. Strategy 2 is to persuade people that no one, not even a government functionary, has a just right to interfere with innocent people’s freedom of action; that none of us was born with a saddle on his back to accommodate someone else’s riding him.In our world, so many people have been confused or misled by faulty claims about morality and justice that most libertarians, especially in the think tanks and other organizations that carry much of the burden of education about libertarianism, concentrate their efforts on pursuing Strategy 1 as effectively as possible. Hence, they produce policy studies galore, each showing how the government has fouled up a market or another situation by its ostensibly well-intentioned laws and regulations. Of course, the 98 percent or more of society (especially in its political aspect) that in one way or another opposes perfect freedom responds with policy studies of its own, each showing why an alleged “market failure,” “social injustice,” or other problem warrants the government’s interference with people’s freedom of action and each promising to remedy the perceived evils. Anyone who pays attention to policy debates is familiar with the ensuing, never-ending war of the wonks. I myself have done a fair amount of such work, so I am not condemning it. As one continues to expose the defects of anti-freedom arguments and the failures of government efforts to “solve” a host of problems, one hopes that someone will be persuaded and become willing to give freedom a chance.Nevertheless, precisely because the war of the wonks—not to mention the professors, pundits, columnists, political hacks, and intellectual hired guns—is never-ending, one can never rest assured that once a person has been persuaded that freedom works better, at least in regard to situation X, that person has been won over to libertarianism permanently. If a person has come over only because of evidence and argument adduced yesterday by a pro-freedom wonk, he may just as easily go back to his support for government intervention tomorrow on the basis of evidence and argument adduced by an anti-freedom wonk. As John Maynard Keynes once cleverly replied to someone who asked him about his fluctuating views, “When the facts change, I change my mind. What do you do, sir?” If libertarians choose to fight for freedom solely on consequentialist grounds, they will be at war forever. Although one may accept this prospect on the grounds that “eternal vigilance is the price of liberty,” this kind of war is deeply discouraging, given that the anti-freedom forces with which libertarians must contend possess hundreds of times more troops and thousands of times more money for purchasing munitions.In contrast, once the libertarian has persuaded someone that government interference is wrong, at least in a certain realm, if not across the board, there is a much smaller probability of that convert’s backsliding into his former support for government’s coercive measures against innocent people. Libertarianism grounded on the moral rock will prove much stronger and longer-lasting than libertarianism grounded on the shifting sands of consequentialist arguments, which of necessity are only as compelling as today’s arguments and evidence make them. Hence, if we desire to enlarge the libertarian ranks, we are well advised to make moral arguments at least a part of our efforts. It will not hurt, of course, to show people that freedom really does work better than state control. But to confine our efforts to wonkism dooms them to transitory success, at best.If we are ever to attain a free society, we must persuade a great many of our fellows that it is simply wrong for any individuals or groups, by violence or the threat thereof, to impose their demands on others who have committed no crime and violated no one’s just rights, and that it is just as wrong for the persons who compose the state to do so as it is for you and me. In the past, the great victories for liberty flowed from precisely such an approach—for example, in the anti-slavery campaign, in the fight against the Corn Laws (which restricted Great Britain’s free trade in grains), and in the struggle to abolish legal restrictions on women’s rights to work, own property, and otherwise conduct themselves as freely as men. At the very least, libertarians should never concede the moral high ground to those who insist on coercively interfering with freedom: the burden of proof should always rest on those who seek to bring violence to bear against innocent people, not on those of us who want simply to be left alone to live our lives as we think best, always respecting the same right for others.
But a theory is not like an airline or bus timetable. We are not interested simply in the accuracy of its predictions. A theory also serves as a base for thinking. It helps us to understand what is going on by enabling us to organize our thoughts. Faced with a choice between a theory which predicts well but gives us little insight into how the system works and one which gives us this insight but predicts badly, I would choose the latter, and I am inclined to think that most economists would do the same.
Economics thus becomes a convenient instrument the state uses to manage the economy, rather than a tool the public turns to for enlightenment about how the economy operates. But because it is no longer firmly grounded in systematic empirical investigation of the working of the economy, it is hardly up to the task. During most of human history, households and tribes largely lived on their own subsistence economy; their connections to one another and the outside world were tenuous and intermittent. This changed completely with the rise of the commercial society. Today, a modern market economy with its ever-finer division of labor depends on a constantly expanding network of trade. It requires an intricate web of social institutions to coordinate the working of markets and firms across various boundaries. At a time when the modern economy is becoming increasingly institutions-intensive, the reduction of economics to price theory is troubling enough. It is suicidal for the field to slide into a hard science of choice, ignoring the influences of society, history, culture, and politics on the working of the economy.
Professional investors, including fund managers, fail a basic test of skill: persistent achievement. The diagnostic for the existence of any skills is the consistency of individual differences in achievement. The logic is simple: if any individual differences in any one year are entirely due to luck, the ranking of investors and funds will vary erratically and the year-to-year correlation will be zero. Where there is skill, however, the rankings will be more stable…There is general agreement among researchers that nearly all stock pickers, whether they know it or not—and a few of them do—are playing a game of chance. The subjective experience of traders is that they are making sensible educated guesses in a situation of great uncertainty. In highly efficient markets, however, educated guesses are no more accurate than blind guesses.
The S&P 500 has now outperformed its hedge-fund rival for ten straight years, with the exception of 2008 when both fell sharply. A simple-minded investment portfolio—60% of it in shares and the rest in sovereign bonds—has delivered returns of more than 90% over the past decade, compared with a meagre 17% after fees for hedge funds...
The average hedge fund is a lousy bet, and predicting which will thrive and which will disappoint is a task that would tax even a Nobel prizewinner.
The illusion of skill is not only an individual aberration; it is deeply ingrained in the culture of the industry. Facts that challenge such basic assumptions—and thereby threaten livelihoods and self esteem—are simply not absorbed. The mind does not digest them. This is particularly true of statistical studies of performance, which provide base-rate information that people generally ignore when it clashes with their personal impressions from experience.
(3:38) we must separate diagnosis of problems from cure…
the creation of wealth is edifying. When only voluntary transactions are permitted, the creation of wealth requires cooperation, and this brings out the best in us.Piles of wealth, however, tend to be corrupting. The fixed nature of a pile is all about apportionment, not cooperation, and this zero-sum game tends to bring out the worst in us.It follows directly that no matter how noble the ends, government redistribution (which is hardly voluntary) tends to bring out the worst in us. Rising government redistribution over the past 75 years has produced ample evidence of this point.We are in this mess because we have allowed our culture to be dominated by those who are bent on spreading the false and self-serving narrative that our economy is a giant zero-sum game.As such, we might as well have the government do the dividing.Small wonder why our politics have become increasingly about who you are for rather than what you are for.
In this whole world, there is nobody more generous than the miser—the man who could deplete the world’s resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide.If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer—because you produced a dollar’s worth of goods and didn’t consume them.Who exactly gets those goods? That depends on how you save. Put a dollar in the bank and you’ll bid down the interest rate by just enough so someone somewhere can afford an extra dollar’s worth of vacation or home improvement. Put a dollar in your mattress and (by effectively reducing the money supply) you’ll drive down prices by just enough so someone somewhere can have an extra dollar’s worth of coffee with his dinner. Scrooge, no doubt a canny investor, lent his money at interest. His less conventional namesake Scrooge McDuck filled a vault with dollar bills to roll around in. No matter. Ebenezer Scrooge lowered interest rates. Scrooge McDuck lowered prices. Each Scrooge enriched his neighbors as much as any Lord Mayor who invited the town in for a Christmas meal.Saving is philanthropy, and—because this is both the Christmas season and the season of tax reform—it’s worth mentioning that the tax system should recognize as much. If there’s a tax deduction for charitable giving, there should be a tax deduction for saving. What you earn and don’t spend is your contribution to the world, and it’s equally a contribution whether you give it away or squirrel it away.
We are pattern seekers, believers in a coherent world, in which regularities appear not by accident but as a result of mechanical causality or of someone’s intention. We do not expect to see regularity produced by a random process, and when we detect what appears to be a rule, we quickly reject the idea that the process is truly random. Random processes produce many sequences that convince people that the process is not random after all. You can see why assuming causality could have evolutionary advantages. It is part of the general vigilance that we have inherited from ancestors.
But increases in the quantity of money and fiduciary media will not enrich the world or build up what destructionism has torn down. Expansion of credit does lead to a boom at first, it is true, but sooner or later this boom is bound to crash and bring about a new depression. Only apparent and temporary relief can be won by tricks of banking and currency. In the long run they must land the nation in profounder catastrophe. For the damage such methods inflict on national well-being is all the heavier, the longer people have managed to deceive themselves with the illusion of prosperity which the continuous creation of credit has conjured up
There are no possible rewards of a just distribution in a system where the distribution is not deliberately the result of people bringing it about. Justice is an attribute of individual action. I can be just or unjust toward my fellow man. But the conception of a social justice to expect from an impersonal process with nobody can control to bring about a just result, is not only a meaningless conception, it’s completely impossible. You see everybody talks about social justice, but if you press people to explain to you what they mean by social justice…what to accept as social justice, nobody knows.
IT IS not only wild-eyed prognosticators, in lonely towers with an owl for company, who predict the exact date of the end of the world. It has been marked in the diaries of popes, preachers and reformers. It has shivered the blood of a navigator nearing the edge of the globe, a delicate painter of the rites of spring, a serial killer, and the great brooding scientist who uncovered the secrets of gravity and light. It has been calculated from the alignment of planets, the track of comets, the birth of Antichrist (variously identified), the rate of global warming, nuclear build-up, intriguing palindromes or symmetries in dates, or the ever-gathering entropy of wickedness in the world. Some forecasters place it safely in the far future; others expect it imminently. Some, forgetful of the old tale about crying wolf, put out a prediction regularly. The most terrifying give no date exactly, like the hen in Leeds, in northern England, whose owner wrote “Christ is coming” on her eggs and pushed them back up again. The date to squawk about? 1806.
But the truth is that the Mayans never said the world will end in 2012.Archaeologists recently found a cache of Mayan calendars which goes thousands of years past 2012.And current Mayan elders say that the world ain’t ending this year.
Japan's central bank will inject more than 50 trillion yen in new funds over the next 12 months aimed at boosting economic growth and will review its monetary policy goals next month, fueling speculation that it will raise its target for inflation.The Bank of Japan (BOJ), which launched its asset purchase program in October 2010, said it would increase the size of the program by a further 10 trillion yen to about 101 trillion, buying 5 trillion yen of Treasury discount bills and 5 trillion worth of Japanese government bonds.The additional purchases over the next 12 months, inclusive of those already decided, will amount to about 36 trillion. In addition, the BOJ regularly buys bonds at the pace of 21.6 trillion annually.Under the Stimulating Bank Facility, which was launched in late October, the bank expects lending to reach more than 15 trillion yen. The new facility aims to provide long-term funds at a low interest rate, without any limit, to financial institutions at their request.Combining these two programs, the BOJ said the amount outstanding would exceed 120 trillion yen.
It has been said that desperate times calls for desperate measures, but such measures of desperation are likely to speed up the coming government induced train wreck for the Japanese.Talk about doing the same thing over and over again and expecting different results and not learning from the lessons of history.
But why RT Moscow’s focus on “assault weapons”? The accused, Adam Lanza, was immediately declared guilty. According to the Associated Press, the Newtown, Connecticut medical examiner, Dr. H. Wayne Carver said that “all the victims of the Connecticut elementary school shooting were killed up close by multiple rifle shots.”Yet Fox News reports that “A CNN reporter said police recovered three weapons at the scene: a Glock and a Sig-Sauer, which are handguns, as well as a .223 Bushmaster rifle. The rifle was in the back seat of the car the gunman drove to the school, the handguns were inside the school.”The same Fox News report says: “Security measures implemented this year at Sandy Hook [the school] kept doors locked during class hours, and people have to be buzzed in before entering. There is a camera to view whoever enters the building.” If this report is correct, how did an armed Lanza gain entry to the school?I tried to point out to RT Moscow that these news reports indicate that the accused dead gunman, whom no one can interrogate, if he is indeed the culprit, killed the children with handguns, not with an “assault rifle” left in the car, but that the medical examiner said the children were killed with rifle shots.The discrepancy is obvious. Either the news reports are incorrect, the medical examiner is wrong, or someone other than Adam Lanza shot the children.
The focus on “assault weapons” is puzzling for another reason. According to news reports Lanza had a personality or mental disorder, or perhaps he was just different.Regardless, he was on medication. So does the blame lie with guns or with medication?As the agenda is to ban guns, the blame is placed on guns.In the previous mass shooting at the Colorado movie theater, eyewitness accounts differed from the official account, and according to news accounts the suspect was involved with the government in some sort of mind control experiments and was found after the shooting sitting in a car in the movie theater parking lot.Similarly, the Connecticut school shooting has puzzling aspects. In the real time report to the police, a teacher says that she saw “two shadows running past the gym.” The police radio recording also reports two men in a van at the school stopped and detained, and various news sources report that the police arrested a man in the nearby woods. The man says, “I didn’t do it,” but how would a man out in the woods know what had just happened? There are no TVs to watch in the woods; yet, the man denied doing the shooting. Very strange.What often happens is that there are a number of initial false reports, such as in the Connecticut case the report that Lanza’s mother was a teacher at the school and was killed at the school, that Lanza had also killed his father, and that Lanza’s brother might have been involved. Any discrepancies in the official story then get thrown out with the false reports. As the media simply goes along with the official story and does not investigate, it is impossible to know what really happened. People just accept the official story.
With nearly half its employees working from home now, Aetna Inc. is convinced it is saving a good deal of money with no adverse effect on productivity.A nine-month experiment at Ctrip, China’s largest travel agency, overseen by academic economists at Stanford and Beijing University, suggests Aetna’s experience may not be unique.Ctrip, was looking to save money on real estate costs and cut turnover. It asked 996 employees in its Shanghai call center if they’d be interested in working at home four days a week. Half were interested, and 252 qualified for the experiment by virtue of having at least six months on the job and broadband access from a quiet corner of their home. Those with birthdays on even days were selected to work at home, those with odd birthdays stayed in the office, making this the sort of random experiment that academics relish.
I would add that increasing specialization will hallmark the knowledge economy. And specialization will diminish the economics of urbanization.The changing nature of work can be exemplified by the telecommuting jobs, which have been rapidly growing.These jobs are based on the web, are flexible and are not location sensitive (working from home, or elsewhere).
we must recognize one important insight about technology, social evolution, and economic growth. It is common for people to attribute the western world’s stunning economic growth over the last 200 years to technology. True, technology does contribute to growth in important ways, although it’s also true that economic growth helps create new technologies by generating capital to fund research. Technology, however, does not create wealth by itself, as decades of technology transfers to the third world demonstrate. For technology to lead to wealth, the right institutions are required. I like to call this the Three I’s approach: Innovation = Invention + (good) Institutions. More specifically, the market must be free enough that technology can be turned from simply an invention into an innovation. Rising wealth requires innovation, and innovation happens when inventions meet the market.
RELIABLE data on the age and whereabouts of the religious and irreligious are hard to come by, which makes a new report on the topic from the Pew Research Centre welcome. Among its many findings is that Jews and Buddhists make the biggest religious minorities, in the sense of living in a country where another religion is dominant. Asia has by far the largest number of people who claim not to believe in any religion, something that is explained by China's official godlessness. Despite this, though, China has the world's seventh-largest Christian population, estimated at 68m. The report also contains data on people who call themselves religious but do not adhere to any of the Abrahamic religions, Hinduism or Buddhism. Here again Asia is dominant, largely thanks to the popularity of Shintoism in Japan.
Domestic political and religious persecutions had ceased, and international wars began to become less frequent.
A new report in China shows that 150,000 Chinese – most of them wealthy – emigrated to other countries in 2011. While that number may not seem high for a country of more than a billion people, the flight of China's richest – and the offshoring of their fortunes – could cost the country jobs and economic growth, according to the study from the Center for China and Globalization and the Beijing Institute of Technology."The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees. So if private business owners emigrate with their capital, it would mean less investment in the domestic market, so fewer jobs would be created," Wang Huiyao, director of the Center for China and Globalization, told the state-run China Daily today.The fleeing millionaires mainly made their money in real estate, foreign currency and deposits and stocks, among other fields, according to the report. They are mainly leaving Beijing, Shanghai and coastal provinces such as Zhejiang, Guangdong and Jiangsu.
China's wealth flight, however, has been America's gain. The United States was the top destination for wealthy Chinese in 2011, according to the report. Canada and Australia came second and third.The report said that the United States had granted 87,000 permanent resident permits to Chinese nationals in 2011. Of those, 3,340 were approved through special investment visas, which allows wealthy foreigners to apply for American citizenship if they agree to invest more than $500,000 on job-creation projects. The program has become largely Chinese, with more than more than two thirds of all of the visas granted going wealthy citizens of mainland.
What is the will of the people? Whatever it is, it is certainly not without contradictions, illusions, misinformation, and wishful-thinking – just like a lot of individual thought. But as an aggregation of individual thought it is a construct used to justify all sorts of things. In some people’s minds, this construct has claim to moral authority…The will of the people is a construct that is quite malleable to the political purposes of whichever group is better at manipulation.
A former U.S. drone operator has opened up about the toll of killing scores of innocent people by pressing a button from a control room in New Mexico.Brandon Bryant, 27, from Missoula, Montana, spent six years in the Air Force operating Predator drones from inside a dark container.But, after following orders to shoot and kill a child in Afghanistan, he knew he couldn't keep doing what he was doing and quit the military.'I saw men, women and children die during that time,' he told Spiegel Online. 'I never thought I would kill that many people. In fact, I thought I couldn't kill anyone at all.'
And if we value life and are opposed to violence against innocents, why do we demand action when 27 innocent Americans die, but not when larger numbers of innocent Pakistanis, or Afghanis or Yemenis die? One drone strike in Pakistan killed 69 children, dwarfing the impact of the Newtown Massacre. With predator drones now in American skies, how long until the “collateral damage” (remember – the NDAA declared the entirety of America as a battlefield) eclipses the Newtown massacre? Or how long until a foreign power or terrorist group hacks into a predator drone (technically feasible) over America and uses it as a flying bomb? And how many more terrorist attacks against America will be fuelled by anger derived from the civilian casualties of the drone wars?Obama might cry for Americans in Newtown, but where are his tears for the Pakistani and Yemeni children he has slaughtered? And what about for the many victims who died as a result of thousands guns shipped by the US government to the Mexican drug cartels via Fast and Furious?
Napoleon Bonaparte himself was an outsider. He was not French, but Corsican. He didn’t even speak French when he arrived in Toulon as a boy. But there never is one fixed group of people who are always insiders. Instead, the insider group has a porous membrane separating it from the rest of the population. Some people enter. Some are expelled. The group swells. And shrinks. Potential rivals are brought in and bought off. Weak members are pushed out. Sometimes, a military defeat brings a whole new group of insiders into power. Elections, too, can change the make-up of the core group.The genius of modern representative government is that it allows the masses to believe that they are insiders too. They are encouraged to vote…and to believe that their vote really matters. Of course, it matters not at all. Generally, the voters have no idea what or whom they are voting for. Often, they get the opposite of what they thought they had voted for anyway.The common man likes the idea that he is running things. And he pays dearly for it. After the insiders brought him into the voting booth, his taxes soared…In short, the insiders pulled a fast one. They allowed the rube to feel that he had a solemn responsibility to set the course of government. And while the fellow was dazzled by his own power…they picked his pocket!..By the 20th century, developed countries could afford the cost of maintaining an expensive level of military preparedness, even when there was not really very much to be prepared for. But the common man was skinned again. Not only was he expected to pay for it, still under the delusion that he was in charge, he also was made to believe that he had a patriotic duty to defend the homeland insiders! That is the real reason that the modern democratic system has spread all over the world. It allows the insiders to mobilize more of the resources and energy of the country on their behalf. Nothing can compete with it.