Many of the concerns about Big Data focus on the surveillance apparatus used to collect it, or on the naive modeling approaches, like attributing causality to mere correlations. Here Black addresses an established problem: that of deliberate abuse of models.
Read more...The financial media has attributed considerable importance to the fact that many of America’s close allies, including the UK, Australia, and Israel, have joined China’s new infrastructure bank against the clearly-stated desires of the US. While these moves seem to signal America’s declining influence, it does not necessarily follow that the infrastructure bank is destined to become a major international institution any time soon.
Michael Pettis deflates some of the hype surrounding this initiative, arguing that it is less significant from a geopolitical and practical perspective than virtually all commentators assume. China is simply not about to become the issuer of the reserve currency any time soon, and that limits how much financial clout it will have.
Read more...We’ve regularly derided the notion of “national competitiveness” as a an inevitable accompaniment to the oversold notion of “free trade”. Economists are aware of, yet choose to ignore, the Lipsey-Lancaster theorem, which says when an idealized state cannot be attained, moving closer to it may not be an improvement; it can often produce worse outcomes. You need to evaluate the “second best” options specifically and not go on faith.
But economists and policy makers treat “free trade” as an article of faith, and with that comes the idea that countries must compete to find customers overseas. There is too little consideration of the fallacy of expecting countries to be competitive and by implication, seek to be exporters. It is impossible for all countries to be net exporters. Moreover, countries are often better served to design their policies primarily for the benefit of domestic workers and markets, and to promote export-oriented programs only to the extent that they do not undermine conditions at home, or will clearly produce a net benefit.
Read more...One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools.
Read more...This post makes some very good observations about the nature of uncertainty and the value, as well as the cost, of additional information. But it uses a personal pet peeve as the point of departure for the article, that of the so-called Trolley Problem. The people who pose it argue that the two options (saving four lives by throwing a lever that results in five people being saved at the cost of another person dying, versus saving four lives by throwing a fat man off a bridge) are morally equivalent, yet the fact that most people say they will throw the lever but will reject throwing the fat person off the bridge is a cognitive bias.
Hogwash. They aren’t comparable. The throwing a fat person off a bridge (to stop a train) is presumably meant to eliminate the “what about me jumping off the bridge” option. Second, I’d wonder if I could in fact succeed in shoving someone over. And third and potentially the most important, if you do succeed in pushing the fat person in front of the train, you are unquestionably guilty of first degree murder. Tell me how you talk your way out of it if you are caught. You were knowingly planning to have the man serve as a human brake to the train and that that would be fatal. By contrast, if you flip the lever, you can say “I was trying to save five people” and profess uncertainty as to what would happen to the other person who winds up getting killed.
In fairness, the article does treat the two cases as representing more differences from an informational perspective than most who use it as an device do, but not as pointedly as I’d like. So please try to take the horrible Trolley Problem in stride and focus on the meat of the article.
Read more...A case study in Goebbelnomics, here used by austerians to justify the class and economic war against Greece.
Read more...Budget season brings out the deficit/debt burden propagandists, and Maya MacGuineas of Fix the Debt is a prominent fixture. Sadly, her type needs to be debunked often.
Read more...The fracklog is bigger than you think. That means the time to an energy price recovery isn’t as soon as many boosters hope.
Read more...Oil and gas expert Arthur Berman gave a detailed talk last month about hype versus reality as far as the outlook for US shale gas and oil production is concerned.
Read more...Wolf was early to point out the disconnect between declining rig counts, which the mainstream media has touted as proof that the oil bust was about to end, and rising production. That pattern has not abated.
Read more...The job market has allegedly disconnected in the last few months from retail spending. But is there really a divergence?
Read more...Offshore banking and tax haven expert Nicholas Shaxson has launched a new blog, Fools’ Gold, to look at issues of ‘competitiveness’ and so-called ‘competition’ between nations. We’ve often taken issue with that policy goal, since it gives precedence to crushing labor as a way of lowering product prices to stoke exports. This approach is dubious for anything other than small economies, since all countries cannot be net exporters. Undue focus on exports as a driver of growth results in increasing international friction, such as the currency wars that are underway now. Moreover, as we have discussed separately, trade liberalization has gone hand in hand with liberalization of capital flows, in no small measure due to US efforts to make the world safe for what were then US investment banks. Yet Carmen Reinhardt and Ken Rogoff pointed out in their study of financial crises, higher levels of international capital flows are associated with more frequent and severe financial crises.
In addition, lowering wage rates reduces domestic demand. In countries like the US, where the domestic economy is much larger than the export sector, lowering internal demand to stoke exports is misguided.
Here we look at a first case study, the real reasons behind the growth and meltdown of the famed Celtic tiger, Ireland.
Read more...Two stories on Slashdot say a great deal about the reality of the labor market versus the official hype. It’s noteworthy that the comments, which are typically fractious at Slashdot, line up almost uniformly on the “employers are looking for insanely specific and often unrealistic experience.” And why might that be? In the case of tech in particular, to justify bringing in more H-1B visa candidates.
Read more...Core inflation is telling a very different story than headline inflation, leading the ECB to diverge markedly from the Fed’s posture.
Read more...I am at a complete loss as to why the Federal Reserve might think that now is the moment to begin raising interest rates. I cannot see a scintilla of hard evidence in support, and potent evidence against.
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