Separating superintelligence from intelligence

I’m informed this ecard is “very me”, which I suppose is probably true, considering the source.  But in my defense, I should like to point out that when people quite reliably fail to understand what one is saying in a very clear, precise, and articulate manner, assuming that one will have to explain oneself to the unwashed, overweight, and quasi-illiterate masses is the decent and civilized thing to do.  Contra common assumptions, assuming MPAI is much more fair to one’s audience and one’s interlocutors than the assumption that everyone is capable of understanding what one is saying.  While I may happen to be arrogant, that is merely a coincidence and the impression that I may occasionally appear to be talking down to people is less an indicator of that arrogance than material evidence that I am a decent and civilized individual dedicated to mutual comprehension in conversation.

However, it did remind me of this article in the New Yorker, which helps explains why so many intelligent and educated people regularly make such prodigious asses of themselves:

Perhaps our most dangerous bias is that we naturally assume that everyone else is more susceptible to thinking errors, a tendency known as the “bias blind spot.” This “meta-bias” is rooted in our ability to spot systematic mistakes in the decisions of others—we excel at noticing the flaws of friends—and inability to spot those same mistakes in ourselves. Although the bias blind spot itself isn’t a new concept, West’s latest paper demonstrates that it applies to every single bias under consideration, from anchoring to so-called “framing effects.” In each instance, we readily forgive our own minds but look harshly upon the minds of other people.

And here’s the upsetting punch line: intelligence seems to make things worse. The scientists gave the students four measures of “cognitive sophistication.” As they report in the paper, all four of the measures showed positive correlations, “indicating that more cognitively sophisticated participants showed larger bias blind spots.” This trend held for many of the specific biases, indicating that smarter people (at least as measured by S.A.T. scores) and those more likely to engage in deliberation were slightly more vulnerable to common mental mistakes. Education also isn’t a savior; as Kahneman and Shane Frederick first noted many years ago, more than fifty per cent of students at Harvard, Princeton, and M.I.T. gave the incorrect answer to the bat-and-ball question.

This doesn’t surprise me in the slightest. I’ve long observed that most smart people don’t actually want to question their core assumptions anymore than stupid people do, and they’re far more inclined to attempt to BS people into letting them skate by on a bluff. I think this may be part of what separates the superintelligent from the intelligent and it’s something that we’ve seen at work here numerous times, most recently in the discourse with the Three Pound Brain gang. It’s what I tend to think of as “the second pass”. While I’m just as susceptible to the shortcut problem as anyone else, I have a natural tendency to mentally “check my work” before answering. This doesn’t mean I’m any less biased than anyone else, or that I don’t have the usual blind spots, only that I am inclined to take the time to go and search those blind spots and see what my biases have caused me to miss on the first pass. The object is to treat one’s own mind as harshly, ideally even more harshly, than one treats the minds of others.

For example, when I looked the two problems in the article, my brain leaped immediately to the conventional wrong answer, only it noted that the answer couldn’t possibly be correct. On the second pass, I worked it out instead of attempting to justify the initial assumption, and that answer subsequently turned out to be the correct one. The trick, I think, is attuning your mind to be suspicious and look more deeply when the answer seems obvious, but something doesn’t seem quite right about it. The fact that one’s intuitive thinking is prone to these errors doesn’t meant that one’s logical thinking will be. My philosophy is that since I will probably commit errors, I might as well be the one to catch them if I can.

This, of course, is why I am so adept at setting traps for others. The reason I know where to place them is that my intuitive mind has already fallen for them.

The value of predictive models

Thomas Friedman fails to understand why not only the Europe Union and the Arab states, but the United States as well, are in the process of breaking up:

Europeans failed to build Europe, and that is now a big problem because, as its common currency comes under pressure and the E.U. goes deeper into recession, the whole world feels the effects. The Syrians failed to build Syria, the Egyptians failed to build Egypt, the Libyans failed to build Libya, the Yemenis failed to build Yemen. Those are even bigger problems because, as their states have been stressed or fractured, no one knows how they’ll be put back together again.

To put it another way: In Europe, the supranational project did not work, and now, to a degree, Europe is falling back into individual states. In the Arab world, the national project did not work, so some of the Arab states are falling back onto sects, tribes, regions and clans.

In Europe, the supranational project did not work because the European states were never ready to cede control over their budgets to a central authority that would ensure a common fiscal policy to back up a common currency. In the Arab world, the national project did not work — in many, but not all cases — because the tribes, sects, clans and regional groups that make up these Arab states, whose borders were drawn up by colonial powers, were unwilling or unable to meld genuine national communities….

One question historians will puzzle over is why both great geopolitical systems fractured at once? The answer, I believe, is the intensifying merger of globalization and the information technology revolution, which made the world dramatically flatter in the last five years, as we went from connected to hyperconnected. In the Arab world, this hyper-connectivity simultaneously left youths better able to see how far behind they were — with all the anxiety that induced — and enabled them to communicate and collaborate to do something about it, cracking open their ossified states. In Europe, hyperconnectedness both exposed just how uncompetitive some of their economies were, but also how interdependent they had become. It was a deadly combination.

Friedman is wrong. Historians will not puzzle, as we know the answer already, which does not originate in communications technology, but economics. Robert Prechter not only provided the answer, but repeatedly predicted these political events, beginning with his landmark Pioneering Studies in Socionomics. Peace and political unity are strongly correlated with periods of economic growth. That’s why history has always tended to skate over those boring periods where nothing happened, no one went to war, and people gradually got wealthier. The six-decade post-WWII period has been one of the longest periods of economic growth in the West since the fall of the Roman empire, so it should not be surprising that there was relative peace and partially successful attempts to build supranational organizations during that time.

However, the prosperity brought about by the post-war rebuilding of a world shattered by global war ended in 1970s and was artificially extended by the large scale substitution of credit for economic growth and wealth production. With the end of the perceived prosperity, the centrifugal force bringing people together has also ended and now the political inertia is moving in the opposite direction. Given the negative economic prospects for the next decade or two, it will be much more surprising if the various political unions do not break apart as the people brought into the various countries, drawn by the economic prosperity, will tend to become the focus of the divisive forces that will break apart the states on their various fault lines.

VP vs 538

Nate Silver releases the first of his many dynamic predictions concerning the presidential race:

The first look at the 2012 FiveThirtyEight presidential forecast has Barack Obama as a very slight favorite to win re-election. But his advantage equates to only a two-point lead in the national popular vote, and the edge could easily swing to Mitt Romney on the basis of further bad economic news. Mr. Obama remains slightly ahead of Mr. Romney in most national polls, and he has had a somewhat clearer advantage in polling conducted at the state level. Mr. Obama would be about 80 percent likely to win an election held today, according to the model.

So, five months out, Silver is predicting that Obama will be reelected. I will stick with my prediction, made more than one year ago, that Obama will withdraw from the race for one reason or another.

Former aides to President Bill Clinton are calling for a dramatic shift in their party’s economic message before the November election, warning of an “impossible headwind in November,” if they continue on their current path. The two political operations — Clinton and Obama — have never seen eye-to-eye, and now some of the top voices of the Democratic 1990s have shifted into open criticism of a political operation they cast as overly negative and reactive, and failing to offer a positive set of plans for the economy.

The “dramatic shift” that they are actually calling for is a different candidate.

Euro 2012 Day 4

England 1 France 1

While France was clearly the better team, England played hard and actually created the better chances despite being outnumbered 5-1 in shots on goal. They also arguably cheated by starting an obvious Klingon, who scored their only goal by heading in a free kick. I’d like to see some DNA testing of the so-called “Joleon Lescott”, as I would be very surprised if he was shown to be of Terran origin. Milner missed a wonderful opportunity when he was put through to goal and beat the goalie before shooting wide, while on the other end, John Terry demonstrated why his teammates are willing to put up with having such an untrustworthy wanker for a teammate. He repeatedly cleaned up potentially dangerous messes. For the French, Riberry was easily the best player and was constantly putting pressure on the English defense with his runs. There was a near goal on a French corner kick, but the English keeper, Hart, produced a nice instinct save to keep the ball out of his net. After seeing this, I expect France to win the group, while England will have a tough time of it unless they can enlist some Romulans or something.

Ukraine 2 Sweden 1

I can’t say much about this game since I only watched the first half, which was scoreless. I wasn’t surprised to learn that Ukraine won, however, as they were clearly the more aggressive team, but I was surprised to see that Shevchenko returned to form and scored both goals. The erstwhile great was relatively ineffective in the first half, failing to even put either of his best opportunities on goal. Ibrahimovic, on the other hand, hit the post in the first half and scored in the second, but I find the half-Swedish striker to be somewhat overrated. While he’s powerful in the air and moves surprisingly well for such a big man, I see him as a complimentary striker, not a number one option, and any team relying on him to be the primary provider of their goals is likely to be disappointed. Neither team looked like it had France’s quality, as both relied very heavily on the long ball, but both looked better than England. I’d be surprised if France and Ukraine didn’t take the top two spots in the group.

Of bailouts and bullet- biting

It may be illuminating to compare what I wrote in RGD to the various ways countries mentioned in it have responded to the debt crisis. Consider the following quote from the book:

“According to Austrian theory, the effects of the housing bust on the overall economy should be much greater in countries like Estonia, Spain, and Ireland than in Austria, Germany, and Poland, and to the extent that inexpensive debt was made available to that and other sectors of the economy, we would expect to see that signs of the resulting economic contraction are similarly greater as well. Therefore we should see unemployment rising faster, prices falling further, GDP contracting more, and government deficits growing larger in the three housing boom countries than in the three non-boom ones.”

From today’s NYT on the Spanish bank bailout:

Two weeks after Prime Minister Mariano Rajoy of Spain vowed “there will be no Spanish banking rescue,” and after days of delay in which Mr. Rajoy pressed European officials for sounder rescue terms, Spain has now joined Greece, Ireland and Portugal as the latest bailout recipient. Catastrophe averted? Hardly.

Spain, check. Ireland, check. But no Estonia? What happened there? Why hasn’t Estonia required a bank bailout? The answer can be found in the rationale given by Fitch Ratings decision to affirm the little country’s credit rating.

“The rating decision reflects “the country’s near seamless transition to full membership of the euro zone starting on 1 January 2011, coupled with a more balanced economic recovery and the continued deleveraging of the private sector”…. Estonia was the only euro-area member to report budget surpluses for the last two years and had the lowest public debt among the region’s 17 members in 2011 at 6 percent of gross domestic product.”

Translation: Estonia is the only one of the three housing boom countries I noted in RGD that chose to bite the bullet and accept economic contraction and debt default rather than attempt to put off dealing with it in the interest of its banking sector. As even Paul Krugman has begrudgingly noted, they’ve hit bottom and are now in an ongoing process of recovery. But first they took a 20 percent hit to GDP, which is very much in line with what I said would have to be the case in RGD. All the multiple bailouts in Europe and the USA have accomplished is ensure that the trough will have to be bigger and deeper in the end.

Euro 2012 Day 3

Italy 1 Spain 1

Not a bad result for the Azzurri. They didn’t show the same midfield quality as Spain, and their attack was somewhat anemic, but their defense was solid and rendered the pass-heavy ground assault of the Spaniards mostly ineffectual. Balotelli was a complete disaster and I do not understand what he is even doing on the team, let alone starting. His failure to either pass to a wide-open Cassano or shoot the ball when through to goal may have cost the Italians two points; his substitute, di Natale, not only looked much more dangerous but scored within three minutes of getting in the game. The Spanish goal was nice teamwork, but was the near-inevitable result of the Italian left back failing to mark Fabregas in the box. Torres came on late, only to provide copious evidence for an argument concerning who was worse, him or Balotelli. He actually managed to have the ball stolen by Buffon, the Italian keeper, on one of his three fruitless breakaways. The draw was well-merited, as both teams looked considerably better than any of eight teams that played before them, including the Germans, and it was easily the most entertaining match of the tournament to date.

Croatia 3 Ireland 1

Ireland simply doesn’t belong here. Seriously, they were so uniformly bad, both tactically and technically, that I was seriously left with the impression that the first team on my old club could have beaten them. Given wasn’t merely inept in goal, but embarrassingly so, as he failed to save a fairly easy, long-distance header on the first Croatian goal, and later knocked in a ball bouncing off the post with his own head. He looked slow and clumsy even when he was making saves. The Irish further embarrassed themselves with their crying about a nonexistent offsides on the second Croatian goal, ignoring the obvious fact that it isn’t offsides if the pass is from the other team. The Irish defender made what looked like a child’s attempt to clear the ball after a deflected shot, which sent the ball directly to the Croatian who was several yards behind the defense. The Irish were trying to claim that the Croatian had been involved in the previous play, a shot deflected from the other side of the box, which simply wasn’t true. The Irish attack was nearly nonexistent and consisted of nothing more than kicking the ball long, mostly to Doyle, who then collapsed like a hypersensitive Pippo Inzaghi as soon as a Croatian defender breathed on him. Doyle won three or four free kicks this way, one of which accounted for the sole Irish goal, before the referee wised up and forced him to actually try to do something with the ball, which promptly shut down the Irish. The Irish did run hard, but one felt that either the Spanish or the Germans could have beaten them by double digits if they wanted.

WND column

Obama and the Debt Delta

When people who are fat and flabby begin to get in shape by lifting weights, they are often surprised to discover that, although they lose inches off their waistline, they don’t actually weigh any less. This is because muscle is much denser than fat, and an amount of muscle takes up about one-third the space as the same amount of fat. The change in a person’s shape is a qualitative one rather than a quantitative one, and such changes will often have a bigger result on how he looks and feels than simply losing weight while maintaining the same fat-to-muscle ratio.

Although Paul Krugman and a few other mainstream economists are finally beginning to admit that the U.S. economy is not only in a depression, but has been in a depression for some time now, their neo-Keynesian models, which are entirely quantitative, still do not permit them to understand how or why that is the case. With their singular focus on gross domestic product, or GDP, they completely fail to even try to understand how qualitative changes in outstanding credit market debt have a significant effect on the economy.

Euro 2012 Day 2

Denmark 1 Holland 0

It was a reasonably entertaining game, but the Dutch looked simultaneously in control and inept. Rob van Persie was uncharacteristically hapless in front of goal, at one point actually managing to swing, miss, and fall down after finding himself through to goal. The Danish keeper kept them in the game, although most of Holland’s 28 shots really weren’t very dangerous. While the Dutch controlled the midfield as effectively as the Russians had against the Czechs, they weren’t able to deliver the ball to the strikers anywhere nearly as effectively. Of course, on the rare occasions they did so, the opportunity was either wasted or stuffed by the Danish keeper. The Danes, on the other hand, got a lucky bounce at just the right time, followed by a goal that was less indicative of a great finish as a poor effort by the Dutch keeper. I’ve never understood why some keepers at the top levels appear to be inordinately disposed to permitting the one sort of goals that even children can block, namely, a shot on the ground aimed directly at their feet.

Germany 1 Portugal 0

This was a better game, although the Germans didn’t look like the world beaters that they do on paper. Although Cristiano Ronaldo and Nani get all the press, the Portuguese defense was easily the most impressive aspect of the team. I didn’t like Germany’s attacking style, as it mostly consisted of sending the ball down the sidelines, then crossing it into the middle over and over again. The Germans didn’t appear to have any ability or even intent to break down the defense by attacking it on the ground, either in transition or with the defense set in the box. The German manager was just about to send in Klose for Gomez when the latter headed in a deflected cross for the game’s only goal. Portugal actually created the better opportunities, but Pepe hit the bar and Varela simply choked when presented with a near empty net. Every matchup is different, of course, but based on these two games alone, I’d be more surprised to see Holland beat Germany than to see Portugal beat Holland.

And one more thing… avanti Azzurrri!

Paying $5.21 for a dollar

Karl Denninger notes the latest Z1 report:

We’re where we were in Q3 2007 on a ratio basis, which is hardly “healthy” by any stretch. And if you look closely you’ll see that the debt number is going up — and faster than the GDP one is. Where’s it going up? In Federal Government, that’s where. We’re simply shifting where the debt resides. Are we making any material progress? No. In fact, last quarter we added more debt than we did GDP. Therefore, we’re still going backward.

That’s not quite true when viewed from a larger perspective. By my calculations, the debt/GDP ratio has fallen from 3.75 to 3.48 since Q2-2008. The problem, however, is that the debt-shifting that Karl describes is even more significant than most people who know about it grasp. The federal government has not only increased its outstanding debt by 105.76 percent, but as I will show in my column tomorrow, it has provided 168 percent of the $3.3 trillion in post-crisis credit growth. This means that when people talk about the economy needing $3 in new debt to purchase $1 in GDP growth, they are failing to account for the decline in private credit. In other words, the federal government has needed to take on $5.21 in new debt in order to purchase $1 in new nominal GDP.

But that’s not what I found most interesting about the latest report. First, the amount of possible statistical shenanigans appears to be increasing. I keep track of the numbers according to the initial reports, and whereas the federal government number is always static from quarter to quarter, the other numbers tend to change dramatically. The biggest change I’ve seen was in State and Local Governments, which showed a mysterious $500 billion increase (+23.77 percent) in Q3-2011, but the one that caught my attention is the sudden growth in corporate debt during 2011. Corporate debt had been basically flat from 2008 through the first quarter of 2011, but for last three quarters it has suddenly averaged 3.62 percent quarterly debt growth. It was 4.46 percent in Q1-2012, which is between 2x and 3x normal. The last time we saw this sort of corporate debt growth, it ran 3.16 percent for a year, ending in the second quarter of 2007.

I don’t know if this could be some sort of indication that federal government is feeding loans to corporations or if it suggests that corporations go on debt binges prior to economic crises. I tend to doubt the former since the financial sector is still contracting and I’d have to do a lot more research before I could possibly conclude the latter. Either way, it doesn’t strike me as being an entirely innocuous development.

A blog of very particular interest

Being reliably informed that I may happen to possess a few idiosyncracies of my own, I’m always pleased to see when others unabashedly let their freak flag fly. Jamsco has launched a new blog that will no doubt be of massive interest to the State Park-visiting community as he is providing what he describes as A Guided Tour Of The Best State Parks In The World. And he’s not afraid to court a little controversy either, as exhibited by this daring call-out of the Minneapolis Star Tribune.

Last week the Star Tribune published its “Best Of Minnesota” magazine and in it they claim that the best state park in Minnesota is Whitewater State Park. They cite “miles of cool rivers, steep bluffs and deep valleys, drumming grouse and gobbling turkeys”

Now I will say that (A) Whitewater is a very pleasant place to visit, as I said in my review, and (B) it would be very difficult to choose the best state park, but no – Whitewater is not the best one. I will go on record and say that any one choosing a best state park that is not on the “East Coast” (i.e. Lake Superior or the Mississippi or St. Croix Rivers) will be wrong. Okay, probably wrong.

That’s right, it’s on record, bitch! While I am not among what I can only imagine to be the vast State Park-visiting demographic, I am very excited about the Guided Tour, as I cannot wait for the first serious East Coast-West Coast State Park blog war to kick off. Best of luck to Jamsco aka Biggie. (flashes sign) East Coast!