Daniel

Following on from my stock-picking post of a couple of days ago, it appears that the people selling Obama into the convention were right in as much as they didn’t expect a post-convention bounce.

However, the Obama WTA contract was offered around 54 when I wrote the post, and remained at that level all day. CT readers who bought on my advice can now close out at 59.8 and make a quick 10% turn. So at least I haven’t cost you money.

Two points (I realise I’m getting sucked back into a debate I had sworn to give up, but there you go). First, there was no convention bounce in the polls but there was in the IEM numbers. So was there a convention bounce? I think the fact that this question doesn’t obviously have an answer rather underlines the fact that the IEM market prices aren’t giving us very much useful additional information over and above the daily tracking polls (which are themselves not incredibly useful). Second, all the action is in the WTA contract; the vote share contracts have hardly moved at all over the last few days.

Update: I’m now seeing reports of an “8-point convention bounce, which would make the IEM action seem more sensible, albeit at the cost of rather demonstrating how pointless this short-term horse race coverage is.

Why are people selling the Obama WTA contract into the convention? The “convention pop” is a pretty well-established phenomenon in the polls and is visible in IEM data from previous races too. Added to that, Obama is pretty well-known for being good at set-piece speeches. All I can find in the pundosphere is a suggestion that Hillary Clinton might steal Obama’s thunder, but this seems pretty weak beer to me. Any theories, or is there a genuine short-term trading opportunity here?

Over at the Guardian website, I have another piece up about my general scepticism of both big government IT projects, and the possibility under our current political and economic system of not being deluged with big government IT projects. I filled it full of jokes because I’m not yet really sure what I believe about the underlying causal mechanism. There’s a half-joking suggestion that the business development offices of the major IT consultancies probably ought to be considered as a material interest group in any analysis of British politics; we’ve not yet reached the levels of a “consultancy/government complex” but we’re not far off.

But on the other hand, I might be committing a version of fundamental attribution error here. The sales process is an important part of the procurement of big, failed IT projects, but the proliferation of big failed IT projects isn’t really a result of successful selling – it’s a result of the fact that nearly anything new that the government does is going to require an IT element, and that government projects tend to only come in one size, “big”, and to very often come in the variety “failed”.

And a lot of the reason why these projects screw up so badly has to do with the fact that they have to reinvent a lot of wheels, duplicate data collection exercises, and integrate incompatible systems (useful rule of thumb: whenever you hear an IT person use the word “metadata”, as in the sentence “all we need to do in order to make this work is to define suitable metadata”, you can take it to the bank; this project is fucked). In Sweden, for example, they have a working education vouchers system not unlike the one I discuss in the article, but in Sweden they have a big central database linked to the national identity card system.

In the UK, we don’t have a big central identity card database, and the main reason for that is that we don’t want one. And so I find myself entertaining the hypothesis that the constant parade of halt and lame IT projects which is British administrative politics, is actually an equilibrium outcome.

I am also rather pleased that, after two years of removing my bad language, the website editors actually introduced a swear-word into this piece that I hadn’t originally put in there.

Talk about burying the lead! All the press coverage of Shadow Education Secretary Michael Gove‘s recent speech to the Institute of Public Policy Research focused on the fact that he had a bit of a go at “Nuts” and “Zoo”[1]. But they missed the real highlight of Gove’s speech, which is that he favourably cited CT’s own Harry Brighouse (and some bloke called Adam Swift, who is less newsworthy. Yay Harry.

If you look at Gove’s speech, it’s actually surprisingly socially liberal and sensible stuff – a bit of apologia for the Tory Party’s historical treatment of gays and single mums, a bit of blah about communitarianism and a strong hint that Crooked Timber will be invited to draft future Conservative education policy once they get into power (I may be reading a bit too much between the lines here). I could almost see myself voting for the guy if it wasn’t all so transparently a pack of bollocks. I mean really, the Conservative Party, in office, is going to subsidise unprofitable post offices? I was born during a shower of rain, but I wasn’t born during the last shower of rain. Increased devolution to local government? Subsidised maternity nurses on the Dutch model? I scratch my chin, sir, and nod vaguely in the direction of the marginal rate of capital gains tax. About the only thing in this speech which you’re ever going to see is the education vouchers proposal, and I confidently predict that the administration of that one is going to be cocked up on an epic scale.

But nonetheless, the philosophical underpinnings of Cameronism, in as much as Gove sets them out here, are both interesting and sensible. Worth a look.

Update: Despite the implication given by the title of this post, the Conservative Party are not currently the government.
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Milton Friedman probably does deserve to have an institute named after him – he was one of the really big figures of 20th century economics, and even if he was much less of a principled libertarian thinker than his hagiographers like to pretend, it’s rather silly for the faculty of the University of Chicago to start acting like they’ve only just noticed that their university is famous for a particular school of economic thought that was founded by Milton Friedman. But I can’t help noticing that John Cochrane’s open letter[1] in response to the petition against founding a Milton Friedman Institute contains one of the canonical claims of Globollocks:
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While I of course do not countenance the harassment of anyone by religious nuts, I also have something of a baleful view of the kind of self-conscious atheist who regards it as a good use of his time to spend the day winding up the god squad. And so, I think it’s hard to argue that anyone involved will look back on the PZ Myers/Bill Donohoe/Webster Cook/”fricking cracker” episode and think “yes, that was my finest hour”.
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Further to John’s post (on which this should have been a comment, but it growed), I have a real bee in my bonnet about the claim made by Richard Posner that ” The managers of corporations have a fiduciary duty to maximize corporate profits”. It raises a whole load of topics relevant to plenty of my favourite economic hobby-horses as soon as you start to look remotely critically at what the seemingly simple phrase “maximise corporate profits” actually means anyway.

Pretending not to understand the meanings of common English phrases is a stock tactic for creating the impression of profundity (cf philosophers, who are always pretending not to understand the meaning of words like “is”, “would” and “must”). But sometimes you have to do it – my view is that in any view of the world more complicated than a very elementary blackboard model, the phrase “maximise profits” can’t be unpacked into a coherent decision rule which rules out any of the things which Posner talks as if it does. First, let’s look at some things that it can’t possibly mean.
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I think that over the last few years, the view has quite frequently been expressed in comments on CT and other blogs that it is rather a shame that Christopher Hitchens has suffered something of a decline in his talents as a writer even as the general direction of his politics has coarsened and moved rightwards. How we wish, a significant proportion of the readership lament, that there was somebody around writing exhilarating and scabrous left-wing polemics with a contrarian twist!

Check out “Savage Mules” by Dennis Perrin, guys, you’ll like it.
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There’s a paper to be written at some point on the economics of fad diets (I suspect that it already exists and that there’s a 90% chance it’s dreadful). I personally believe that they’re potentially a rich source for the self-organising systems literature and a good case study of how irrational and somewhat self-destructive beliefs spread through proselytisation (a subject which one might think of quite important general interest in these troubled times). My sketch model of something like the Atkins Diet or cabbage soup detox or whatever would go as follows, on the assumption that the spread of these trends through the population is based on about 10% fundamentals and 90% bubble.
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Via Ken MacLeod, the latest from Donald MacKenzie, financial sociologist to the stars, on the current kerfuffle[1] and on the social nature of market liquidity.
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Alex at The Yorkshire Ranter and I have been having an ongoing debate over the last couple of months on the general subject of capital to labour ratios in British terrorism. The motivating question’s a quite important one, with a lot of implications for what sort of public policy one might want to support; how much of a danger to us all are radical Muslim organisations and internet bulletin boards? If we take as given[1] the popularly held belief that there are organisations at work in British society which radicalise disaffected youths from the Asian community and persuade them to become supporters of jihadism and terrorism, then well, obviously that’s bad. But how much actual harm does it do – given that the only way of doing anything about these organisations is to impose some quite draconian reductions in overall civil liberties, what’s the trade-off between liberty and security that we’re looking at here?

As I say, I think this question basically comes down to capital/labour ratios.
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I’ve just noticed that the Criminal Justice and Immigration Bill which got royal asset yesterday (btw, enthusiasts of necrophiliac porn, better hide it under the mattress[1]), contains provisions to make it an offence to incite hatred on grounds of sexual orientation. I am in general in favour of this, in the same qualified way in which I was in favour of the parallel provisions of the Racial and Religious Hatred Act 2006[2]. The reason being that the specific laws in question aren’t really particularly material restrictions on free speech (as with the 2006 Act, the current law on homophobia has an explicit clause explaining that merely critical or mocking speech is not incitement to hatred), and that the UK really doesn’t need any of the antisocial behaviour that is an inevitable consequence of incitements to hatred.

It does strike me, however, that two years ago, there was an awful lot of public protest against the RRHA06. Not the least of this came from comedians like Stephen Fry and Rowan Atkinson, who were making the point that mockery and criticism of religion were an important part of comedy and that they felt their right to free expression was under threat[3].

One doesn’t have to be an aficionado of Mr Humphries or Larry Grayson to be aware that British comedians have at least as much of a professional interest in the mockery of gays as they do in the mockery of religions, but if there was a big comedians’ protest against this one I missed it. In fact, I don’t recall the free speech lobby really raising much of a stir at all; Index on Censorship didn’t so much as mention it (Update: thanks Padraig Reidy in comments, they did mention it, once, last year), though they did take an interest in the religious hatred bill, and they are aware of the current Criminal Justice Bill.

This sort of thing is unfortunate; I’m sure nobody involved intended it this way[5], but to an outsider it would certainly look as if the 2006 kerfuffle had very little to do with freedom of speech, except in as much as it could be picked up as a handy stick to beat the Muslims with. And given that, I bet it looks that way to British Muslims too. Every time we try to have a sensible discussion of the subject of hate speech, it gets much more heated than it has any reason to be, and a lot of the reason for this, in my opinion, is that the free speech issue has got tangled up with a whole load of other questions about security and immigration, to nobody’s benefit.

[1] Also bestiality porn, and as far as I can see Plaid Cymru didn’t so much as raise an objection.
[2] In comments to that thread, my view of calls from the gay lobby for parallel protection was something along the lines of “tough luck”, because I didn’t think that violent homophobia was enough of a social problem to warrant a restriction on free speech. I now think this was a mistake, partly because when you put the point as bluntly as that it’s obviously callous, and partly because the overwhelming evidence of the experience of the 2006 Act is that the restriction on free speech is trivial.
[3] Ben Elton, the noted author, former comedian and disappointment[4], apparently still believes that jokes about Islam are too near the knuckle for the politically correct world of modern British comedy. He has perhaps not noticed that they more or less form Shazia Mirza or Omid Djalili‘s entire act. I suspect that what he means is that you’re not seeing white comedians making fun of Islamic minorities, in which case I rather think he owes an apology to Jim Davidson and the late Bernard Manning for more or less everything he said in the 80s.
[4] For example, as Alexei Sayle noted when Elton collaborated with Andrew Lloyd Webber on a musical: “It’s really quite tough, you know, when you see someone whose work you’ve been familiar with for years, you don’t agree with them on politics but you recognise that they’ve got a genuine talent – and then they go and write a musical with Ben Elton”.
[5] Not true, obviously; one of the Freedom of Speech marches that year very nearly had to be called off because of the amount of involvement from the BNP and similar groups. I’m referring to Rowan Atkinson and Stephen Fry here – I am sure their concern over free speech was sincere at the time.

Synopsis: yes.

I promised this post in comments to Chris’s on Blackburn’s myths below, where I took my life in my hands and disagreed with John. I think that actually, there probably is “a general skill called management which works in any and all domains”, and, just to raise the tariff and secure gold medal position for myself in the Steven Landsburg Memorial Mindless Contrariolympiad, I’ll also defend the proposition that this skill is pretty closely related to what they teach on MBA courses. But first a couple of remarks on Blackburn’s own “Myth of Management“.

In his very definition, Blackburn pretty much gives it away; he says that “[the myth of management] claims that people can be managed like warehouses and airports”. What does this even mean? How do you manage a warehouse or an airport if it’s impossible to manage people? If he had said “like machines” or even “like factories”, then it might have been comprehensible, but a warehouse which doesn’t have any people working in it is just a shed full of stuff and doesn’t require any management because no deliveries or shipments are being made. And an airport without people is just a warehouse for planes. Warehousing and transport are two very labour-intensive industries.
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One for the junior-birdman Hayekians, Coasians and such like:

Consider a finite quantity of a consumption good G, which is to be divided into two allocations G1 and G2 for two different agents with utility functions over G described as U1(G1) and U2(G2).

What would be the minimum information that a central planner would need to have about U1 and U2 in order to be able to calculate a Pareto efficient allocation G1/G2?

Answer after the jump – I just asked three economists this question and they all got it wrong.
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