Each Sunday I compose a list of the most worthwhile content I’ve consumed during the past week. Primarily as a way to keep inventory of material that influenced me and my way of thinking.
Hayek on Complexity, Uncertainty and Pandemic Response (2020) by Mark Pennington. Kinda wonderful to read this after Friday’s NFP figure – economists were forecasting anywhere between 755k to 2100k while the actual figure was 266k – and the recent movements in commodity markets.
”Contrary to some critical readings of Hayek’s ideas (for example, Grossman and Stiglitz 1980), there is no suggestion that the relevant order in markets occurs instantaneously or that adaptations made are ‘perfect’. Rather, Hayek’s claim is a comparative one that market economies facilitate more learning and adjustment than would likely arise in a centrally managed alternative. Neither is there any suggestion that prices communicate all necessary knowledge. Hayek’s argument is the more modest one that market prices communicate in an indirect way more knowledge than would be possible without them.”
”It should be noted that none of these arguments are undermined by technological innovations such as for example the development of artificial intelligence or ‘big data’ gathering techniques which it is often suggested might allow for the replacement of market processes (for example Cottrell and Cockshott 1993; Phillips and Rozworski 2019 – for a critique see Hodgson 1998). On the one hand, these innovations increase the scope for decentralised agents – whether individuals, firms, or voluntary organisations, to increase the complexity of their own decision-making. This means that no matter how sophisticated the relevant technology becomes the complexity of the social system at the ‘meta-level’ will be higher than the cognitive capacities of any ‘directive intelligence’.”
”The rationalistic models depicted in many public health and welfare economics accounts that conceptualise policy as a process wherein policymakers list the possible options they face, evaluate the options, and then select the option that generates the highest value are entirely inappropriate to this and indeed most other forms of government decision-making. In the specific case of pandemic response, the level of complexity and uncertainty may be so great that it is not possible for such calculations to be made. The data that would be needed to calculate in this manner either do not exist – at least not in ‘concentrated or integrated form’ (Hayek 1945: 520) and, to the extent that there are institutional procedures that help to generate and communicate relevant data the relations between cause and effect and the micro-level connections that underlie such data are opaque. Much of the response will therefore be based on centralised guesswork by ‘big players’ and while there may be no alternative other than for policymakers to rely on subjective interpretations of epidemiological and economic models to guide their decisions, these are fraught with the possibility of large scale error.”
Daniel Kahneman: ”Everything I’ve done has been collaborative” by Tim Harford.
”I press him instead for a view on vaccines and the risk of blood clots, as someone who has spent a lifetime thinking about how humans respond to small risks. Do vaccine side effects loom too large in our thinking? ‘It’s a standard example, I think, of a very general feature of how people think. This is a distinction between what is normal and natural, and what is artificial and human-made. The asymmetries are enormous.’ Another example, he says, is the self-driving car, which will have to be vastly safer than human drivers. ‘This is almost without limit. They have to be so close to perfection.”
This is quite disheartening. The above reasoning is the sort of sophomoric spiel I would expect from a nincompoop like Cass Sunstein but not Kahneman. It isn’t preferable to transmute thin-tailed distributions into fat-tailed ones … it boggles the mind that this needs to be stated during a pandemic. Around 38,000 people die each year in automotive accidents in the US. Because of the (current) distributive reality of car accidents – the occurrence of one accident neither increases nor decreases the risk of another accident – a time series of fatalities due to car accidents y/y allows for fairly confident extrapolation, holding all dependent variables constant. With the manufacturing of incrementally safer cars (dependent on not messing with the non-correlative relationship between the fate of separate cars) one can assume a somewhat downward sloping trajectory in the number of automotive deaths per capita over time. The exact opposite is true for self-driving cars which allow for interdependency and outliers with tremendously dire consequences. As with a pandemic, you may have 10,000 observations with 1 single outlier (an event) above the mean. This is another example of asinine optimization, and accumulation of volatility. Turning an ergodic process into a non-ergodic one. A more thorough explanation is available here.
”All of my time and all of my attention. It’s the only way I know how to write, darn it. But I do have a trick that makes things easier for me. Since writing is very hard and rewriting is comparatively easy and rather fun, I always write my scripts all the way through as fast as I can, the first day, if possible, putting in crap jokes and pattern dialogue—“Homer, I don’t want you to do that.” “Then I won’t do it.” Then the next day, when I get up, the script’s been written. It’s lousy, but it’s a script. The hard part is done. It’s like a crappy little elf has snuck into my office and badly done all my work for me, and then left with a tip of his crappy hat. All I have to do from that point on is fix it. So I’ve taken a very hard job, writing, and turned it into an easy one, rewriting, overnight. I advise all writers to do their scripts and other writing this way. And be sure to send me a small royalty every time you do it.”
Money Talks: A Very Short History of Roman Currency by Alfred Deahl.
”Of course money is no Roman invention – but the English word itself comes from the name of the location of Rome’s first mint (a word which also derives from it): the temple of Juno Moneta. This epithet reflects local worship of a goddess called Moneta, who was gradually assimilated into the deity Juno, wife of Jupiter. What started as a remnant of religious worship gradually became synonymous for a mint and later, after the Roman period, for money itself.”
”Towards the end of the second century, aristocrats began using coinage to promote themselves and their families. Individual moneyers (often guided by the tresviri) started issuing coins with iconographic references to their own ancestors. But the full propaganda value of coinage only became apparent in Rome at the end of its Republican period. Julius Caesar (100-44 BC) famously placed his own living face on the obverse of Roman coins. It was a step he gradually built up to: first he had his own portrait featured on coins in the province of Bithynia (47 BC), where such a practice was less controversial than at home. In Rome, he carried on with modes of self-promotion that had already existed on the coinage for more than half a century until 44 BC, when he decisively he broke with tradition.”
”Caesar’s step was audacious, and not only because of the eyebrow-raising divine association. Since coins in the Greek East coins represented the heads of monarchs, Caesar was in fact aligning himself with Hellenistic kings – a damning association in a proudly Republican society. The conspirators who assassinated him had propaganda tools of their own: their ‘Ides of March’ denarius depicted the pileus (the cap of liberty given to slaves when they were manumitted) alongside two daggers, which clearly demonstrates how coins had become a vehicle for openly political messages.”
Alzheimer’s: A Stoic Take by Massimo Pigliucci.
How to Avoid Being Duped by Survivorship Bias by Richard Hughes-Jones.
Twenty-Five Things Everyone Used to Understand by Daniel A. Kaufman.
The Maginot Line Problem by Taylor Pearson.
Kubrick’s Napoleon – The Greatest Movie Never Made by Theo Zenou.
Ovid, In Our Time.
Cem Karsan on The Market Voting Machine, Flirting with Models.
The Rewind: Dare to Be Great II, The Memo by Howard Marks.
Andrew Scott, Partner and Head of Client Solutions Bach Option Ltd, Alpha Exchange. Great stuff on structured products and the proliferation of volatility relative value trades.
John McWhorter on Cursing, Anti-Racism, and Why ‘We Need to Stop Being So Afraid’, The Reason Interview with Nick Gillespie.