Author: VD

Those who have read TIA already know my position on the matter. However, I tend to doubt those who attempted to belittle the notion when they encountered it in TIA will understand how it is intimately connected to my skeptical view of rational man theory:

“The rational man theory of economics has not worked,” Roubini said last month at a session of the World Economic Forum at Davos. That’s why he and other prominent economists are paying more attention to behavioral economics, which starts from the premise that economic decisions, like other aspects of human behavior, are influenced by irrational psychological factors.

The most compelling rebuttal of the rational model, paradoxically, was delivered by the ultimate rationalist, Alan Greenspan. “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders,” the former Fed chairman told Congress last October.

That’s why Greenspan didn’t see it coming, argues Daniel Kahneman, a Princeton professor who is often described as the father of behavioral economics. His rational-actor model wouldn’t let him.

The huge chasm between the rational actors required for so many economic models and the actual behavior of acting individuals has long bothered me. But I don’t see how John Maynard Keynes can be reasonably described as the father of behavioral economics, as a few vague references to animals spirits and and liquidity preferences are not integral to his economic model in the way Ludwig von Mises’s conceptions laid out in Human Action are.

But regardless of whether one turns to praxeology or empirical evidence, it’s not difficult to determine that the rational man theory of economics is deeply flawed to the point of irrelevance.

Mises, however, will somewhat confuse journalists as he argues that it is a fallacy to describe objectively sub-optimal decisions as “irrational”, because an acting man’s decision may well be perfectly rational from his perspective and in light of his objectives. But it’s encouraging to see that the mainstream is finally beginning to cast a skeptical eye on the idea that economic actors are absolutely rational in the conventional sense of the word.

John Scalzi notes the iconic passing of an old school newspaperman, James Bellows. My thoughts on the subject he raises, namely, the ongoing decline of the newspaper.

I agree that newspapers have become increasingly boring, but the reason they’re in such dire straits is that they are facing numerous challenges. The technological angle is obvious, but another important element was the decision of too many editors and journalists in the post-Watergate era to become what was in effect the propaganda branch of the Democratic Party. How would an anti-establishment figure like Bellows fight the establishment now that former anti-establishmentarians are the new establishment?

Regardless what one thinks of its product – and I don’t watch it myself – the huge success of Fox News has derived primarily from the fact that ABCNNBCBS and PBS were all devoted to serving the same left-leaning half of the country, leaving the other half with talk radio. In Minnesota, it was always amusing to read the political endorsements of the Star Tribune and the Pioneer Press, both of which inevitably endorsed Democratic Farmer-Labor candidates except when the Independent Republican candidate was a certain winner. My family subscribed to the “Star and Sickle” for many years until my parents just couldn’t stand it anymore, switched to the Pioneer Press for a while, and finally gave up newspapers altogether.

Another element is the mass homogenization of what worked best as a local product. Did anyone seriously expect a bunch of Minnesota Lutherans or Hispanic Catholics to pay to read a New York Jew’s opinion on Likud vs Labor? Until I understood what the AP was, I couldn’t figure out why a Minneapolis paper published more editorials about the mayor of New York City than about its own mayor.

I’m certainly not saying that serving the broad spectrum of the populace would have been enough to save any newspapers from the other challenges facing them, but you know something was fundamentally wrong with the business model when many intelligent, educated, high-income individuals, the very sort of people newspapers needed as customers if they were going to survive, are openly celebrating their demise.

Once more, pornography drives the technology curve upward… but this time it’s chick porn:

Barnes & Noble abandoned ebooks once, so why are they coming back to them now? Because the format is starting to take off. Why is that? What’s popular on Fictionwise? Well, once again it seems like porn is blazing a path to a new media format. Of the top 10 bestsellers under the “Multiformat” category, nine are tagged “erotica” amd the last is “dark fantasy”. Hey, I’m not judging anyone (one of my dearest friends is an erotic romance author) and yes, I’ve used the most salacious Top 10 list on the site in my example, but this data backs up my anecdotal observations. People who read erotic romance and ‘bodice rippers’ love ebooks because of the privacy they offer, both during purchase and when reading.

The best part is the titles. The Demon’s Librarian. Submission. Sinful Treats. Seducing the Wolf. I wonder why we never hear pastors or anti-porn political activists inveighing against the family-destroying problem of textual porn? Say what you will about the male fixation on visual stimulus, but you have to admit that it seldom involves the seduction of forest creatures.

The strangest thing about the “whither Republicanism” crowd is that they’re nowhere nearly as intellectual nor as internationally sophisticated as they would have you believe. The difference between a monolingual New York journalist such as David Brooks and three-quarters of the American expatriate community is actually much greater than the difference between David Brooks and the great quantity of grassroots Republicans throughout the country that he and his tiny band of like-minded cohorts so often affect to despise. Neither the genuine intellectuals nor the genuine upper class of the Old World have much use for the upper middle class American wannabees of the media; they tend to regard them as the same sort of hicks as, ironically enough, George Bush. Most of them don’t know who Sarah Palin is and those who do couldn’t care less about care about her… and the average liberal American would probably have an absolute stroke if they heard the way that the Europeans they so admire talk about American’s new African president.

The truth is that most Europeans don’t regard New Yorkers as being any more sophisticated than Nebraskans, in fact, many of them aren’t really all that clear on the difference between New York City and Nebraska. (Minneapolis… is that closer to Los Angeles or San Francisco?) And, given the fact that the average fat, obnoxious, American tourist wearing shorts and white tennis shoes while making their once-in-a-lifetime pilgrimage to Florence is much more likely to hail from New York than from Nebraska, it tends to be Nebraskans who are tainted by their national association with New Yorkers.

And as Ed Anger points out, it makes no sense to pay any mind to the nonsensical burblings of the GOP’s moderate wing:

Every since their big get-together last week, everybody’s fighting about “the future of conservatives.” Namby pamby Beltway big shots tell us to dump Sarah Palin and Joe the Plumber, and get more classy and “intellectual” like them!

Heck, some of these “conservatives” even voted for Teleprompter Jesus himself!

Don’t listen to these stuck up sons of Benedict Arnold. Has Ross Douthat or David Brooks ever won a chili cook-off or fired a few rounds off a .45? David Frum probably can’t even change a tire without his Filipino nanny helping out.

Yes, yes, that last bit did indeed make me laugh.

Yeah, the US isn’t even close to rock-bottom:

Twitter cofounder and CEO Ev Williams is headed to the White House today. The administration invited him to join a “young business leaders” summit to discuss the economic crises.

Of all the people you could ask about economic advice, you’re going to go out of your way to seek advice from an entrepeneur whose company has insignificant revenue and runs at a loss? I spend more time than most in the company of technology entrepeneurs… believe me, none of them know any more about economic principles than the average Tri-Delt majoring in Art History.

In black. Let’s face it, casual fashion just doesn’t get much more incomprehensible to the masses. And it makes me wonder, in light of my ever-growing fan club, if we should think about offering VD-related gear some day. Unfortunately, most of my better aphorisms tend to be too verbose to fit easily on a short, single line, and I’m not at all keen on the generic Cafe Press kitsch.

I always find it amusing that feminist-oriented Americans inevitably get their panties in a bunch over individuals like me who point out the obvious while simultaneously supporting the very multiculturalism that sees European women beaten legally for their own good. There is no such thing as equality, and the current choice facing most of the West is which form of “Patriarchy” is to be preferred, Christian or Sharia. Secular equalitarianism isn’t on the table; it’s already proven itself to be a self-negating demographic non-starter with more internal contradictions than Communism.

It’s amazing in its near-complete detachment from observable reality, but this is the way a typical Obama supporter views the economic situation:

We are witnessing the worst debacle of unfettered capitalism in our lifetime brought on by — you got it, capitalism at its worst. It cannibalized itself. Government, sad to say, had nothing to do with it — except for criminal neglect of oversight.

Let’s see. The root problem is that government-established corporations borrowed too much government-backed fiat currency, the price of which was set too low for too long by the monopoly established by the government. What, one wonders does this actually have to do with the capitalism described by the classical, socialist and Austrian economists, much less “unfettered” capitalism? Needless to say, the clueless New York Times opinionator is, much like the administration he supports, far less interested in the ongoing collapse of the house of paper cards that is the global financial system than he is in… Rush Limbaugh. “Doomed” doesn’t even begin to describe a country cursed with such media and political “leadership”. Lest you think I exaggerate, note that even one-time Obama cheerleader Paul Krugman is getting concerned:

“Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators. Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.”

It’s interesting, is it not, to see a high-profile left-leaning economist implicitly accept the concept of subjective value… but despite these correct observations, Krugman still has the solution precisely backward. The administration may be dithering, but one cannot rationally describe its lunatic spending or frantic central planning as “inaction” in any sense of the word, however incompetent it might be. And it’s not genuine inaction that will cause the depression to last a decade or more, it’s the very sort of action in which the fiscal and monetary authorities are presently engaging, repeatedly transfusing more blood into the twitching corpses of the zombie organizations, that will do so.

The Federal Reserve refuses to name names:

The Federal Reserve Board of Governors receives daily reports on loans to banks and securities firms, the institution said in response to a Freedom of Information Act lawsuit filed by Bloomberg News. The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.

So, not only are they stealing public money and transferring to giant, zombie banks, they’re claiming that a concern for the reputation of those zombie banks is more important than basic principles of public accounting. How, one wonders, can anyone claim with a straight face that there is any form of free market still extant in the USA anymore? Information is the lifesblood of capitalist free markets; it is the absence of price information that renders socialist central planning impossible.

Now, the Fed is actively hiding extremely important information from investors, who quite rightly have no interest in owning shares in insolvent institutions. This isn’t a solution, it’s merely an exercise in delaying the inevitable reckoning, hoping against hope that external events will somehow intervene before their desperate efforts prove futile.

Not only has his administration begun on a thoroughly entertaining note, stabbing his most loyal supporters in the back while simultaneously showing all his moderate apologists to be morons, but in barely a month, he’s got America’s most inept pundits crying buyer’s remorse:

They may need a support group before the month is out. They could gather in New York or Washington where many victims reside. The meetings would start: “I’m Maureen [or David]. I’m a duped Barack voter. And I’m mad.”

The ranks indeed are filling with the disaffected and the disappointed — Chris Buckley, Maureen Dowd, David Brooks, David Gergen, and even that gynecological sleuth and blogger Andrew Sullivan. And then there is the very angry Marty Peretz. Their complaints are varied but expressed with equal amounts of remorse and bitterness. They all have been done wrong by Barack.

Now, if I’m correct and the promised 2010 recovery doesn’t take place, imagine how much gnashing of teeth and tearing of sackcloth there will be.

As one who actually reads books, this report appears to confirm something I have long suspected:

Two-thirds lie about reading a book
It is the dirty little literary secret of which most are guilty but few openly admit: pretending to have read highbrow books like War and Peace to make ourselves appear more intelligent and sexy than we actually are.

I will confess to not understanding how having read War and Peace or Madame Bovary is supposed to make one any more sexy, but otherwise, this common practice of deceit doesn’t surprise me at all. I’ve often noted that at parties and other social gatherings, people who don’t even appear to have a library will bring up certain haut literary classics and claim to adore them. At such times, it’s always amusing to ask them about some element of the plot, or a specific scene, and see how they attempt to murmur some generality before swiftly changing the subject. As for the mentioned Great Books:

War and Peace: Read it, loved it, and very much admired Tolstoy’s demonstration of how the great waves which affect human events cannot be explained by the Great Man school of historical thought. I tend to like the Russian classics, but must admit that I haven’t been able to make it through The Brothers Karamazov in two attempts despite it coming very highly recommended by someone I admired.

Ulysses: Read part of it before getting side-tracked in the Wandering Rocks section and never got back to it. The literary achievement is notable and had an influence on how I ended up structuring Summa Elvetica, but I found the story itself to be on the tedious side. Still haven’t read Finnegan’s Wake either.

The Bible: Of course. Regardless of your religious faith, you’re simply not an educated man of the West if you haven’t. I’ve also read the Mahabharata and other Upanashids as well as about half the Koran. I tried reading the Book of Mormon, but couldn’t abide it. You can’t fully appreciate the textual excellence of most of the Bible until you’ve read other purportedly sacred texts.

1984: Of course.

Madame Bovary: I really like Flaubert, although it’s the work of his protégé, Guy de Maupassant, that I really love. Flaubert’s short stories are particularly good and should not be missed.

A Brief History of Time: Skimmed it, was unimpressed. It’s not a classic, and like Sagan, Dawkins, and other science popularizing writers, Hawking will be quickly forgotten as science moves on. Without the circus freak aspect of his act, A Brief History of Time never would have cracked the bestseller lists in the first place.

A Remembrance of Things Past: I’ve only read part of Swann’s Way. It is, however, the source of an ongoing joke between one of my mentors in the game industry and me. We like to pitch publishers on what has to be the worst game concept in the history of electronic gaming: Swann’s Way 3D: The Hunt for the Cooler Side of the Pillow.

The Selfish Gene: I couldn’t have written TIA without doing so. It’s a very good pop science book and Dawkins is an engaging science writer. The problem is that he’s a bad logician, an even more incompetent philosopher, and a close-minded ideologue rather than a true intellectual.

Midnight’s Children: It was good, although I remember suspecting at the time that there would have been a lot less fuss if it hadn’t been written by someone named Salman Rushdie, but Sam Richards.

Jane Austen: I generally like her stuff and have read all of it except Northanger Abbey, which I’ve never been able to finish. Actually, I haven’t read Persuasion either.

Charles Dickens: I’ve read about a third of his works. I like them and quite appreciate his particular style, but the overly precious characters do get a bit tiresome after a while. A Christmas Carol and A Tale of Two Cities are my two favorites, although Uriah Heep has to be considered one of the great villains of literature. I think my complete abhorrence of obsequious individuals owes a lot to Dickens.

The Brontë sisters: I can never remember which is which. Jane Eyre and Wuthering Heights are the only two I’ve read. I seem to recall liking the former, while viewing the latter with somewhat of a jaundiced eye. It was all a bit too overwrought, in my opinion.

Ironically, I genuinely liked six of the 10 books on the Pretend list, (and rather liked a seventh, Proust, of which I’ve only read part), while Dick Francis is the only author on the 10 Most-Liked list whom I enjoy.