Daily Archives: October 14, 2013

Economists Clash on Theory, but Will Still Share the Nobel

The New York Times has the story Economists Clash on Theory, but Will Still Share the Nobel.

The two men, leading proponents of opposing views about the rationality of financial markets — a dispute with important implications for investment strategy, financial regulation and economic policy — were joined in unlikely union Monday as winners of the Nobel Memorial Prize in Economic Science.

Now you know the reason that when I publish the views of an economist, I rarely mention that they have won the Nobel Prize in Economics.   Of course, if I want to sully the reputation of the Nobel Prize, I will list all the wing-nuts who have won the prize.

In this case, I do not have to go any farther than what The New York Times has just said. (but of course, I just did.)

To put it another way, always remember that a person is great for the greatness of what the person did or what the person said.  The person is not to be judged great by the awards that have been given to that person.  The great actions or words did not become great because awards were given.  If we are lucky, some of the awards came because the action or words proved to be great in the judgment of history.  In many cases the Nobel Committee makes the awards long before we know the judgment of history.  Yes, I know, the same can  be said truthfully about recent awards of the Nobel Peace prize.

What both economists may be missing in their theories is that some actors in the market are acting with criminal intent. One way a con artist succeeds is by hiding information from the pigeon.

We know these people exist and can and do exert tremendous influence on the market. That seems to fly in the face of the efficient market theory as a general rule that holds under all circumstances. It also may temper the idea of irrational behavior in the market. The people pulling the con are acting rationally in their own interests. The people being duped by the con may be acting rationally based on all the information they have. Of course, just as in the case of the efficient market theory applying some of the time, the theory of irrational behavior is also true for some of the people, some of the time.

The trick with any model of human behavior is to know when the model does apply and when it does not apply.

The other way I have put it is that there are many opposing forces acting in the market at all times. The trick is to figure out what are the dominant forces at any particular time.

Sometimes there are two very large forces that oppose each other and almost balance each other out. The slightest miscalculation on the size of one or both of them can lead to huge errors in predicting what will happen. (Think of predicting the outcome in a a game of tug-of-war with a pair of well matched teams.)

As for a statistical method of moments to make up for missing information, one can immediately see the limitations when we are talking about large opposing forces that are nearly balanced.

Bill Moyers Essay: On the Sabotage of Democracy

Bill Moyers Essay: On the Sabotage of Democracy describes secession by another name.

If you doubt what Moyers is talking about, look at the flags that are being carried by the disloyal opposition.

Confederate Rally at the White House

I know these people are so frustrated, that they are trying to anger us. If I can stand to see the American flag burned in protest, I suppose I can stand to see the confederate flag.

When someone burns the flag they are trying to tell you what they do not want. Is it fair to say that when they display the flag of the confederacy, they are telling you what they want? If this is any indication of how a grudge can be handed down for over 140 years, you can imagine how long they will be willing to carry on the grudge against the Affordable Care Act. Will we have to defeat these people more resoundingly than they were defeated in the Civil War (they call it The War Of Northern Aggression), before we can get the point across? Or has the American experiment finally reached the end of the road?

You might take the lesson from this that we have to defeat the latest move in Congress by the Republicans the way we treated the surrender of the Japanese after World War II. Then we insisted on abject surrender with no face saving possibility. The Republicans are giving every indication that this is the only way they will get the point, if indeed they will ever get it.

Does The US Deserve a Debt Default?

I have been thinking about the ramifications of a US debt default.  People worry that it will harm the US credibility in the rest of the world, and may threaten our dominant position.

Given the current dysfunction in our political system, maybe it is time for the US to be knocked out of our dominant position.

Other countries like China and India seem to be able to adopt policies that improve their countries rather than policies that only adhere to long held ideological positions.  The same is true of many countries in South America.

It is the USA and European Union that seem to want to hold onto their ideological positions despite the evidence that their policies do more harm than good. They also want to drive these positions into the policies of countries in the rest of the world.

So what do we have to teach the rest of the world, when we are so dysfunctional ourselves?  Perhaps we need to be knocked from our pedestal, and then have to earn our right to be put back there if we can.

The message to the world will be especially vivid if we manage to knock ourselves out without any help from external forces.

Maybe we progressives ought to work with the Tea Party to help with the self-inflicted blow that will finally straighten out the world order.

I introduce this blog post on Facebook and Google+ with the comment:

The progressives might want to try the political equivalent of jujitsu.

I think of jujitsu in the way described in Wikipedia.  Jujitsu represents manipulating the opponent’s force against himself rather than confronting it with one’s own force.

If progressives said to the Tea Party that they were right about having the US default on its debt, would this be the political equivalent of throwing them and pinning them to the mat?  If it  did not work out in that way, perhaps what I said above about deserving default would justify it anyway.

Despite Anti-Obamacare Crusade, Ted Cruz Admits He Supports Government-Run Health Care

Think Progress has the article Despite Anti-Obamacare Crusade, Ted Cruz Admits He Supports Government-Run Health Care.

Since undergoing major reforms during the Clinton administration, the fully integrated structure of government doctors and hospitals in the Veterans Health Administration provides veterans with benefits that are the envy of the rest of the health care system. A study by the RAND Corporation found that “VA patients were more likely to receive recommended care” and “received consistently better care across the board, including screening, diagnosis, treatment and follow up.”

Cruz isn’t the only conservative to praise the program; Mitt Romney, Newt Gingrich, Rick Perry, Rick Santorum, and Michele Bachmann have all endorsed the government-run system.

Now I see the Tea Party Logic, they think that the military deserves the benefit of government supported health care, but the civilian population will lose their freedom if they get it. What does this say about their feelings for our military veterans, or what does it say about their feelings for civilians like themselves?

Trita Parsi: Treacherous Alliance – the Secret Dealings of Israel, Iran and the U.S.

Here is a point of view that you don’t often hear anywhere else.

It is easy to be a skeptic about this presentation. Just read the comments on YouTube. However, if we act like Republicans to the rest of the world we are never going to get anywhere. As soon as Iran shows the slightest hint that they are willing to negotiate, we ask them for more.

I hope the right wingers in this country and Israel do not get to defeat the attempt for Iran and the US to start talking to each other. Unlike with dealing with the Republicans in this country who show every evidence of having no common ground with the Democrats, I’d like to see if straightforward discussions with Iran can lead to something positive.