Mad Con Disease

I have this theory that at some US conservative get together a few years back, there was an unreported outbreak of a form of mental Legionnaires Disease and all their brains are now shot to hell by its after-effects. Post Viral Conservative Brain Disorder or PVCBD? 🙂 Aka Mad Con Disease?

Symptoms are a radical inconsistency of thought, delusions about reality, loss of logic, serial economy with the truth, amnesia about the US constitution and indeed about conservative principles, and a pathological desire to kiss up to narcissistic madmen. Unfortunately for the UK there were a few Brits in attendance, probably including Boris Johnson so the virus spread, hence Brexit lies, though in his case he is the narcissistical madman these days. 🙂

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Brexit Means Brexit Means Endless Austerity

What seems missing from the analysis of austerity in relation to the recent UK General Election is that Brexit means endless austerity as far as the eye can see, as it likely takes 400 billion pounds a year out of the UK economy by 2025 on my estimate, enough to fund the NHS four times over.

Brexit means Brexit means austerity, whether it is Conservative or Labour in power, and whether either of them temporarily put funding the welfare state on the national credit card. Austerity was since 2009, and is going forward, the result of not giving a fig about the appallingly low level of UK productivity, its chronic balance of payments deficit, or its complete failure to re-balance the economy so the regions away from London and the SE can be really productive.

We are going over an economic cliff and austerity is the least of our problems, a mere symptom, albeit a ghastly one that will hurt so many. Walk away from Brexit asap and focus on the real economy inside our existing trade relationships.

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The Paradox of Personal Experiment

There is this paradox at both the personal level and the political level. When there is a lot of pain is when we most need to try something new, to experiment even on a small scale with new approaches, new habits. To play even.

But this is also the time when we are least likely to do this, and most likely to cling to old ways, old routine, old policies. And as Personal Construct Theory suggests we get hostile: “Hostility is the continued effort to extort validational evidence in favor of a type of social prediction which has already been recognized as a failure.” We know the old ways don’t work but that doesn’t stop us.

And yes I am as guilty of this as anyone, wondering how I can change how I post on this blog? Given how much political pain is out there.

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Neo-Classical Economics: “Nailed to Its Perch” by Peter Radford from Real World Economics

I am reading the “End of Theory” by Richard Bookstaber (unfortunate name for an author) referenced in this insightful article, which memorably relates current Neo-Classical economics to the Monty Python sketch about the dead parrot nailed to its perch. 🙂

I always use some famous Chicago School economist as my representative fool when I am describing mainstream economics to my uninitiated friends. How does one, after all, defend such a ludicrous body of thought? By reference to Monty Python?

Here is Gary Becker explaining why mainstream theory is so ridiculous:

“The combined assumptions of maximizing behavior, market equilibrium, and stable preferences, used relentlessly and consistently, form the heart of the economic approach.”

And thus Becker’s economic approach remains firmly nailed to its perch looking for all the world like a dead bird. A very dead bird. It would be funny, indeed hilarious, were it not for the rather dismal fact that people like Becker win prizes and accolades for believing such tripe. There is, apparently, no satire sufficiently cutting, no mirth sufficiently loud, and no critique sufficiently detailed to stop the farce from continuing.

Economics, especially the Becker sort, is dead. It died at its inception. It is a joke that needs sensitive burial so we can move on and look for a real economics that engages real problems and real economies and not the fetid fantasies of the type inhabiting too many professor’s minds.

I often wonder whether economists realize how funny they sound. Or whether they even care about economies. The evidence isn’t reassuring. They press on teaching rubbish as if it were golden. They press on writing ever longer papers riddled with details and mathematics that describe absolutely nothing. They continue to paint pictures that amount to fog. They are, in short, wasting everyone’s time. 

As you can tell, I am tired of it.

The pretense must end. Economics, in its majority form, is simply dumb and wrongheaded. It is a dangerous technology based on a severely anti-social premiss. It seeks to contort the world to match itself rather than to describe the world as it is.

I am not alone in this, of course, far from it. The embarrassment of the last crisis that left the mainstream sublimely naked and bereft of anything sensible to say stirred many more voices to rise in opposition. Yet the mainstream plods on. Oblivious, apparently, to its public image it hides away in university halls pretending that nothing happened, and that its core principles simply need another tweak to make them the explanatory equipment economists dream of.

But that won’t happen.

Economics went down the wrong road many decades ago. It is too deeply embedded in erroneous thinking and is beyond saving by anyone within those university halls.

If you want to read good ideas about the economy don’t ask an economist. Ask someone who has been in the economy. They might not have grand theories and lots of wizard math to blind you with, but at least they are engaged with reality and not fantasy.

Which, in rather long winded fashion, brings me to Richard Bookstaber’s excellent short book: “The End of Theory”. Let me give you a taste of it through this long quote:

“To understand crises, we must work with the limits that address these essential aspects of our human condition. And, more important, we must refute the use of mathematics because the essential problems are computationally irreducible; refute the notion that we all can be represented by a proxy, which already should be refuted based on the failures of general equilibrium theory; refute the notion of optimization and the maximization of utility, because of radical uncertainty and the need to use heuristics; refute the notion of stable preferences, because people live in a non-ergodic world where they change based on their experiences; refute models using predetermined probabilities, because past behavior cannot then prove a window into future behavior. Refute all these in periods of crisis.”

I object only to his limitation that the refutation refers to crisis. It refers to all times, those of calm as well as those of crisis.

Many of you will not appreciate Bookstaber because of his background in the deepest parts of Wall Street. But, like him or not, his thinking represents a clear and decisive denunciation of the farce that is mainstream economic thought.

Economics is riddled with longstanding idealistic and fantastic efforts to unpick the complexity of actual economies. Those efforts all end up over-simplifying to the extent that reality is tossed aside to make theorizing more tractable. And, perhaps more deadly to theory, those efforts are all entirely products of a particular time and place: they are entirely contingent on the circumstance in which they were dreamt up.

This is true of theories across the political spectrum: they ignore subsequent history and, instead, freeze within themselves the environment the theorist was observing. They become time capsules and ever more irrelevant as the real world continues to unfold. Mainstream thought, though, is a very special case: it was never relevant because it drove out reality from the very beginning. There was never an instance when mainstream thought described an actual economy or explained actual economic behavior. It was always imaginary.

And it would be demonstrably dead were in not nailed so firmly to its academic perch.


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The Art of Listening: Erich Fromm (1900-1980)

Listening is a key skill in all conflict negotiation, and I thought this quote and these six guides from Erich Fromm’s “The Art of Listening” very useful in their insights even for negotiating with an obvious opponent or even enemy. This extract is from Maria Popova’s Brain Pickings site. It is also true that our civilization is greatly damaged by the current listening drought….not only do our conflict fester as a result but our children are growing up emotionally impoverished…

Listening, Fromm argues, is “is an art like the understanding of poetry” and, like any art, has its own rules and norms. Drawing on his half-century practice as a therapist, Fromm offers six such guidelines for mastering the art of unselfish understanding:

  1. The basic rule for practicing this art is the complete concentration of the listener.
  2. Nothing of importance must be on his mind, he must be optimally free from anxiety as well as from greed.
  3. He must possess a freely-working imagination which is sufficiently concrete to be expressed in words.
  4. He must be endowed with a capacity for empathy with another person and strong enough to feel the experience of the other as if it were his own.
  5. The condition for such empathy is a crucial facet of the capacity for love. To understand another means to love him — not in the erotic sense but in the sense of reaching out to him and of overcoming the fear of losing oneself.
  6. Understanding and loving are inseparable. If they are separate, it is a cerebral process and the door to essential understanding remains closed.
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Brexit Chest Thumping Versus Skilled Negotiation: Jonathan Powell

At last a piece of Brexit analysis by someone who has done many difficult negotiations in the past and who has learned from them:

Stop the Brexit chest thumping: successful negotiators build trust. The UK must refrain from overplaying its strengths and consult widely to seal a good deal. Whether we think Brexit is an utter disaster or not, we need to hope that, if we do indeed leave the EU, we get “the best possible deal for Britain’s economy”, in the phrase Theresa May keeps repeating.

 Over the past 40 years I have, largely by accident, spent most of my time negotiating: with the IRA; on German unification; with the old Soviet Union and in Colombia, among other countries. Brexit is without doubt the most difficult negotiation I have seen in my lifetime. It is mind-bogglingly complex, structurally — how can you persuade the others that the divorce, the new deal and the transitional measures are negotiated in parallel rather than sequentially? In terms of substance, it makes the Schleswig-Holstein question look like child’s play. And the UK has an extraordinarily weak hand.

It most closely reminds me of negotiating the return of Hong Kong in 1983-4 with Deng Xiaoping’s China, talks for which I was the desk officer. Britain was then, too, at a dramatic disadvantage. The New Territories reverted to China automatically at the end of the 99-year lease and the rest of the colony was not sustainable without them. Margaret Thatcher and Hong Kong’s Executive Council convinced themselves that the Chinese would never kill the golden goose — Hong Kong was an essential outlet for a liberalising Chinese economy. They were wrong. Every Chinese schoolchild had been educated for decades about the iniquity of the Opium wars and the way in which Britain had humiliated imperial China by seizing the colony. Reversing that humiliation was a far higher priority than worrying about the economic benefits of Hong Kong.

Once we had raised the issue of the lease there was no way the negotiation was going to end with Britain handing back both sovereignty and administration. Thanks to the brilliance of Britain’s chief negotiator, Percy Cradock, we were able to turn an appallingly weak hand around and secure at least some guarantees for Hong Kong’s future. These have more or less worked over the intervening years. Let’s hope we have another Percy Cradock somewhere in our system.

Learning from the Hong Kong example, the first step in the Brexit negotiation would be to stop the chest thumping. Stop telling Europe how strong we are and how it is in its interest that we should still have access to its markets. The objective of any negotiation is to build trust between the two sides, not to undermine it. At the moment we are going in the other direction — no new relationship with the EU is going to work smoothly unless we are at least civil to each other.

The second step is to stop overestimating the strength of our position. We are weak strategically and tactically. We are weak strategically because we depend on the EU market far more than it depends on us. Drivelling on about Britons buying BMWs and prosecco, as foreign secretary Boris Johnson has been heard to do, is not going to change this hard reality or the economic facts. We are weak tactically because of the two-year deadline after triggering Article 50. Extending it requires consensus among all 27 remaining EU members, so we are the ones under pressure to conclude the negotiation quickly. FT View Achieving a great repeal will not be copy-and-paste British pragmatism, not Eurosceptic ideology, should be the guide Threatening to jump off a cliff into World Trade Organization measures if we do not get what we want is comparable with someone threatening to shoot themselves unless you do what they want. It cuts no ice; so stop with the threats.

Third, and most importantly, we need to build common interests between business sectors in a potentially departing Britain and business in the remaining 27 states. Unless the voices and views of the whole of the UK are engaged in the process (business, the English regions, Scotland, Wales and Northern Ireland, the trade unions and the third sector), the final outcome of the negotiations will be worse for jobs and businesses, citizen, consumer and employment rights, environmental standards and effective regulation. And, therefore, worse for Britain.

It is only by listening to the real effects of Brexit on these sectors that Britain’s interests can be advanced. And it is only by ensuring that engagement is transnational — across all EU member states — involving enterprise, entrepreneurs, importers and exporters, employers and employees that Britain’s negotiators can obtain such a deal. This will require the support of a qualified majority of the European Council, and the consent of the European Parliament. That is why I am establishing an international dialogue to allow business to exchange views and politicians to listen. The Brexit negotiations will be extraordinarily tough and may extend beyond the two-year duration. What is clear is that unless there is real, detailed engagement and dialogue with British and European business and unions, the outcome of these negotiations will be even worse in terms of jobs, exports and enterprise than anyone has imagined.

The writer is chair of Brexit Exchange and former chief of staff to Tony Blair

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Dunning Kruger Effect and Recent Political Developments

Every day that passes seems to suggest that the Dunning-Kruger Effect is at work on an industrial scale, in both the US, with the Trump Presidency, and the UK over Brexit. But then I may be biased. I thought it worth including the useful Wikipedia summary of the underlying research that is perhaps best captured by Shakespeare’s more balanced : “The fool doth think he is wise, but the wise man knows himself to be a fool” (As You Like It Act V.i)

The Dunning–Kruger effect is a cognitive bias in which low-ability individuals suffer from illusory superiority, mistakenly assessing their ability as much higher than it really is. Psychologists David Dunning and Justin Kruger attributed this bias to a metacognitive incapacity, on the part of those with low ability, to recognize their ineptitude and evaluate their competence accurately. Their research also suggests corollaries: high-ability individuals may underestimate their relative competence and may erroneously assume that tasks which are easy for them are also easy for others.[1]

Dunning and Kruger have postulated that the effect is the result of internal illusion in those of low ability, and external mis-perception in those of high ability: “The mis-calibration of the incompetent stems from an error about the self, whereas the mis-calibration of the highly competent stems from an error about others.”[1]

Original study

The phenomenon was first observed in a series of experiments by Dunning and Kruger of the department of psychology at Cornell University in 1999.[1][2] The study was inspired by the case of McArthur Wheeler, a man who robbed two banks after covering his face with lemon juice in the mistaken belief that, because lemon juice is usable as invisible ink, it would prevent his face from being recorded on surveillance cameras.[3] The authors noted that earlier studies suggested that ignorance of standards of performance lies behind a great deal of incorrect self-assessment of competence.

This pattern of over-estimating competence was seen in studies of skills as diverse as reading comprehension, practicing medicine, operating a motor vehicle, and playing games such as chess or tennis. Dunning and Kruger proposed that, for a given skill, incompetent people will:[4]

  • fail to recognize their own lack of skill
  • fail to recognize the extent of their inadequacy
  • fail to accurately gauge skill in others
  • recognize and acknowledge their own lack of skill only after they are exposed to training for that skill

Dunning has since drawn an analogy – “the anosognosia of everyday life”[5][6] – with a condition in which a person who experiences a physical disability because of brain injury seems unaware of, or denies the existence of, the disability, even for dramatic impairments such as blindness or paralysis: “If you’re incompetent, you can’t know you’re incompetent.… [T]he skills you need to produce a right answer are exactly the skills you need to recognize what a right answer is.”[5]

Supporting studies

Dunning and Kruger set out to test these hypotheses on Cornell undergraduates in psychology courses. In a series of studies, they examined student self-assessment of logical reasoning skills, grammatical skills, and humor. After being shown their test scores, the students were asked to estimate their own rank in the class. The competent group estimated their rank accurately, while the incompetent group overestimated theirs. In other words, students who were about to get Ds and Fs thought they had turned in B-or-better work. As Dunning and Kruger noted:

“ Across four studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although test scores put them in the 12th percentile, they estimated themselves to be in the 62nd.[1] ”

Meanwhile, students of high ability tended to underestimate their relative competence. Roughly, participants who found tasks to be easy erroneously presumed that the tasks also must be easy for others; in other words, they assumed others were as competent as, if not more competent than, themselves.[1]

A follow-up study, reported in the same paper, suggests that grossly incompetent students improved their ability to estimate their rank after minimal tutoring in the skills they had previously lacked, regardless of the improvement gained in skills.[1]

In 2003, Dunning and Joyce Ehrlinger, also of Cornell University, published a study that detailed a shift in people’s views of themselves when influenced by external cues. Participants in the study, Cornell University undergraduates, were given tests of their knowledge of geography. Some of the tests were intended to affect their self-views positively, some negatively. They were then asked to rate their performance. Those given the positive tests reported significantly better performance than those given the negative.[7]

Daniel Ames and Lara Kammrath extended this work to sensitivity to others and subject perception of how sensitive they were.[8]

Research conducted by Burson et al. (2006) set out to test one of the core hypotheses put forth by Kruger and Muller in their paper “Unskilled, unaware, or both? The better-than-average heuristic and statistical regression predict errors in estimates of own performance”. Their hypothesis was “that people at all performance levels are equally poor at estimating their relative performance”.[9] To test this hypothesis, the authors investigated three different studies, which all manipulated the “perceived difficulty of the tasks and hence participants’ beliefs about their relative standing”.[9] The authors found that when researchers presented subjects with moderately difficult tasks, the best and the worst performers varied little in their ability to accurately predict their performance. Additionally, they found that with more difficult tasks, the best performers were less accurate in predicting their performance than the worst performers. The authors concluded that these findings suggest that “judges at all skill levels are subject to similar degrees of error”.[9]

Ehrlinger et al. (2008) made an attempt to test alternative explanations, but came to conclusions that were qualitatively similar to the original work. The paper concludes that the root cause is that, in contrast to high performers, “poor performers do not learn from feedback suggesting a need to improve”.[10]

Studies focusing on other cultures

Studies on the Dunning–Kruger effect tend to focus on American test subjects. A number of studies on East Asian subjects suggest that different social forces are at play in different cultures. For example, East Asians tend to underestimate their abilities and see underachievement as a chance to improve themselves and to get along with others.[11]

Historical antecedents

Although the Dunning–Kruger effect was formulated in 1999, Dunning and Kruger have noted earlier observations along similar lines by philosophers and scientists, including Confucius (“Real knowledge is to know the extent of one’s ignorance”),[2] Bertrand Russell (“One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision”),[10] and Charles Darwin, whom they quoted in their original paper (“Ignorance more frequently begets confidence than does knowledge”).[1]

Geraint Fuller, commenting on the paper, noted that Shakespeare expressed a similar observation in As You Like It (“The fool doth think he is wise, but the wise man knows himself to be a fool” (V.i)).[12]

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