1. Conformal projections, hat tip to this excellent new blog
2. Who really won the socialist calculation debate?
3. Assigning the blame for subprime mortgage problems
4. We are risk averse like bonobos; in contrast chimps love risk
5. Does capitalism spur cooperation?
#1 Excellent new blog? Have you read some of the other blog posts?
#6: someone I dated for over a year once said I had to read Snow Crash, and if I didn’t like it, our senses of humor were not compatible. (They were.) I don’t think I could date anyone who hated my favorites; it would indicate enough incompatibility that a relationship would be doomed. Beyond those two or three, though, nothing is a deal-breaker so long as he too considers reading a hobby…
#3 is bogus and of course blams meddling liberals. But he is misinformed.
Take his criticism of the Community Reinvestment Act. He uses Countrywide as proof that the CRE caused sub-prime lending and hence enormous foreclosure rates. The law itself and facts don’t support such a view; the CRE went effect in 1977 — the sub-prime problem is one of the past 6-7 years at most. Moreover the CRE doesn’t require lending to people who can’t pay back their loans.
Yes we’ve had high-ratio home loans for years with both — VA/FHA and with private mortgage insurance — and it worked fine with low defaults. But such loans were NOT made with no documentation for 100% of value. The Federal problem (and there has been one) was one of insufficient supervision of a business which knows only fear and greed.
on socialist calculation debate. Actually Beer was essentially against any calculations. It was his point that it is NOT possible to ‘calculate’ outcomes as he provided proof that it is impossible ( that computing power required to compute the desired outcome is much more that anything we could provide ). So the device being used in Chile was not used for any calculations. It was used to assess the situation and provide decision makers with clues where to go next step.
That is pity that Hayek is viewed as opposing to Beer. I think Beer was wrong that there is a need in one ‘assessing’ center for the government ( now with the internet we can have a lot such centers ), but his proofs on incalculability of plans deserve to be mentioned along with Hayek position as it adds another angle to view and understand the economic phenomena .
1. Hmmm.
2. I think running the world like a production factory might make sense if the world was likea production factor. But it’s more like an ecosystem…with chimpanzees and bonobos.
3. Sounds plausible to me. But hey, I’m just a dogmatic libertarian free market capitalist, apparently not because I’ve come to conclude that worldview best explains how economics and psychology best mesh, but because I like bashing meddling liberals. So, who knows. So what’s the meddling liberal’s explanation? I suppose “the answer is corporate greed, now what’s the question?”
4. “So what makes chimps gamble is a clever survival mechanism — their food resources are less certain, which means they have learnt to cope with going for big or bust” So, risk-taking or not is equally rational based on the expectations of the various primates. I wonder if there are certain chimps who don’t like risk and certain bonobos who do? Of course there are, but what’s the spread. Is the most conservative chimp moreso than the the most wild and crazy bonobo?
5. Or, does cooperation spur capitalism?
6. “I just thought Rand was a hilariously bad writer,” I guess I just don’t get the literary snobbery thing. In their world the “quality” of writing must be inversely proportional to how popular something is and how many lives have been changed by it. It’s like when me and my friend could tell a movie was going to be awful depending on which awards it had won. I guess that makes me risk-averse when it comes to waiting for some indication of movie enjoyment before buying a theater ticket.
Snow Crash was good. I think I could forgive someone who didn’t like it on the grounds that it is a bit silly – but then its been some years since I’ve read it.
Re: #3, when were most of the defaulting loans made? The Austrian in me wants to say that excessive growth isn’t needed to increase malinvestments, especially when regulators channel those investments into a specific industry (although there was a ton of growth in the money supply around ’02).
David, if the finance industry is somehow staffed by a bunch of Neanderthals who only experience the basest of emotions, then its good that many of those people are loosing money and/or jobs. However, I’d strongly doubt that professions – in any industry – are motivated strongly by fear. The externalities of our financial system harm others as well, but it wasn’t businessmen who forced that system (and its externalities) on the nation at large.
The fact that someone would consider incompatible literary tastes to be a dealbreaker would be a dealbreaker for me. It’s the hallmark of a fussy, neurotic, high-maintenance and above all unreliable person, someone who obsesses over trivialities instead of the long-term big picture. In a slightly different context, the phrase “penny wise pound foolish” would apply.
Also, I can imagine a similar article on love and video games: X-Box owner breaks up with girlfriend when he visits her apartment and sees a Wii, someone checking out significant other’s game collection and reacts with disgust upon seeing multiple games from the Shrek movies, a relationship that was never the same when she revealed that the carbine rifle was her favorite weapon in Halo 2, etc.
re #5, It also gels with anecdotal and personal experience of Hong Kongese and Taiwanese (or overseas Chinese) compared to mainland Chinese. The latter usually tending to far more individualistic behaiviour than the former. A purchase is a ruthless zero sum game, instead of a mutally beneficial transaction, and if a fovur is asked, the return favour is negotiated immedietly, not accepted as a vague promise in the future. Then of course, there’s the pointlessly spiteful jealousy (red eye disease) dispaired of by Chinese.
It is important to note that this gets socialised out quite quickly once they’re out of the PRC.
If think though that this is less the capitalisms in HK, Singapore, Taiwan and western countries breeding co-operation as Maoism, and particularly the cultural revolution destroying it alongside most of the remaining social fabric.
But in most capitalisms, co-operation substitutes from costlessly enforcible contracts, and whilst terms of the contract are determined by the market, co-operation assures those terms are met. With the absence of even the poor substitute (a decent legal system), I wonder if social evolution will return co-operation to the PRC and other post-communist countries, since the particularly brutal dog eat dog (or ren chi ren as they would have it) form of PRC capitalism seems to have far greater long term contraints than the alternative Chinese and other capitalisms.
How can anyone think humans are just risk averse? The same people
who purchase insurance also play lotteries; in the first case paying an actuarially
unfair price to avoid risk in the latter paying an unfair price to assume risk.
Harry Markowitz had it basically right (in his correction of the Friedman/Savage theory) long ago, but nevermind.
“blaming CRA (as per #3) is completely bogus. Most of the egregious subprime lending practices were perpetrated by non-depository lenders.”
So, blaming CRA in part for the overall situation is COMPLETELY bogus because MOST of the subprime lending practices were not directly under its purview? Am I understanding you right?
I apologize. I didn’t realize there were people who would call something completely bogus without offering a complete refutation
This “subprime” crisis is not just of the subprime subset. I think “Subprime” is just shorthand. I’d guess true subprimes are just the marginal ones that are going bad first. The government has or is considering increasing coverage to the “jumbo” loans.
Now, I don’t know, but I can think of two ways that such a law could marginally effect the system. First, it covers bank acquisitions and mergers. This could affect the behavior of an acquisition target. I don’t know. Second, home prices that increase due to one lender, in effect, raise the market value of all homes, or at least the perceived market value.
No, I don’t argue that government leaving people alone causes them to be cowboys. In my experience, that’s the paradigm of people who believe “that which isn’t forbidden, is mandated.”
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