The deadline for the manuscript of Zombie Economics (last complete draft here) is only a few weeks away, and the zombies are popping up faster than I can knock them down. I’m adding a section on reanimated zombies to each chapter. Over the fold is the social mobility defense of trickle down economics, as animated by Thomas Sowell. There’s still time for me to benefit from your comments.
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John Q
I discussed the ‘no statistically significant warming since 1995’ talking point on my blog recently This talking point has been around the delusionist blogosphere for some time, though with a lower profile than ‘global warming stopped in 1998’, and was put as question to Phil Jones of UEA in a BBC interview. Jones answered honestly, if a bit clumsily, that the data period since 1995 is marginally too short to derive a statistically significant trend, a response which was headlined by the Daily Mail as “Climategate U-turn as scientist at centre of row admits: There has been no global warming since 1995?” and became the talking point of the day. As has been widely noted, confusing not statistically significant’ with ‘not significant; in the ordinary sense indicates either deliberate dishonesty or ignorance of a point covered in excruciating detail in every introductory stats course.
But where did this silliness come from? I’d seen Janet Albrechtsen quote Lord Monckton on the point, and it seemed about right for him, an innumerate debating point that would take a fair while to refute, during which time he could move on to the next one.
Imagine my surprise, then, when I discovered the point being made (and apparently originated) by Richard Lindzen of MIT who is (or ought to be) by far the most credible figure on the delusionist side. In a piece published on “Watts Up With That” Lindzen says ‘There has been no warming since 1997 and no statistically significant warming since 1995’. Lindzen illustrates this claim with a graph he appears to have made up for the occasion, complete with unexplained error bars (I’ve appended a NASA graph with error bars for annual estimates).
In this piece for Quadrant he gives a variation, saying “has been no statistically significant net global warming for the last fourteen years” and “the fact that warming has ceased for the past fourteen years is acknowledged” . Note the slide from “has been no statistically significant net global warming for the last fourteen years ” to “warming has ceased”, committing the basic newbie error against which all budding stats students are warned.
Lindzen has published a couple of hundred papers in climatology, so I think we can assume he knows that the statement “there has been no statistically significant warming since 1995” means nothing more than “given the variability in the data, we need at least 15 observations to reject the null hypothesis at 95 per cent confidence”, a fact so trite as not to be worth mentioning.
It is sad to see a respected scientist reduced to this kind of thing. And as far as I can tell, all this is simply to avoid admitting that he backed the wrong horse back in 1990, when he bet that he was smarter than the majority of climate scientists who thought humans were (probably) causing global warming. The data since then has supported the majority view, but instead of revising his position, Lindzen has resorted to dishonest statistical trickery.
To quote The Economist, with respect to the Daily Mail
Since I’ve advocated a more explicit use of the word “lie”, I’ll go ahead and follow my own advice: that Daily Mail headline is a lie.
But at least the Daily Mail headline writer could plead ignorance. Lindzen has no such excuse.
Update: More on this from Deep Climate
Discussion on my last post on reanimated zombie ideas in economics touched on a lot of the themes I want to talk about in this one, about the efficient markets hypothesis and why this undead monster can never be laid to rest. (Warning: favorable references to Popper ahead!).
I’m adding a little section to each of the chapters in my Zombie Economics book called “Reanimation”, about the attempts that are already under way to revive economic ideas killed (at least according to the standard rules of hypothesis refutation) by the global crisis. I wasn’t surprised to find plenty of examples for the efficient markets hypothesis (easy to render immune from any kind of refutation by an appropriate formulation) or for policy ideas that yield big benefits to the rich and powerful, such as privatisation and trickle-down economics. But I was surprised a little while ago to see the crisis described as a transitory blip in the continuing Great Moderation. Still that pales into insignificance compared to this piece by Casey Mulligan of Chicago (h/t commenter Daniel ), in which (I swear this is true!) the crisis is the result of financial markets correctly anticipating the adverse labour market impacts of possible legislation under Obama, such as a health plan that might include means tests.
There’s been a lot of discussion of the problems of Greek sovereign debt, its implications for the euro and so on. But I haven’t seen much discussion, from a standard national policy perspective, of what the Greek government should do in dealing with the simultaneous problems of an economic downturn and unsustainable debt (feel free to point me to good discussions).
The course of action being demanded by the bondholders and their advocates, as well as by the EU governments that are likely to bear the costs of a bailout is that of drastic retrenchment on the lines the IMF would normally advocate in cases of this kind. But that is obviously not a desirable policy response when considered in macroeconomic terms. I’m not well informed on the details of Greece’s budget problems, so I’m mostly going to make generic suggestions that are applicable to a case like this.
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Now that the main charges of scientific misconduct arising from the hacking of the University of East Anglia email system have been proven false, it’s possible to get a reasonably clear idea of what actually happened here. For once the widely used “X-gate” terminology is appropriate. As with Watergate, the central incident was a “third-rate burglary” conducted as part of a campaign of overt and covert harassment directed against political opponents and rewarded (at least in the short run) with political success.
The core of the campaign is a network of professional lobbyists, rightwing activists and politicians, tame journalists and a handful of scientists (including some at the University of East Anglia itself) who present themselves as independent seekers after truth, but are actually in regular contact to co-ordinate their actions and talking points. The main mechanism of harassment was the misuse of Freedom of Information requests in an effort to disrupt the work of scientists, trap them into failures of compliance, and extract information that could be misrepresented as evidence of scientific misconduct. This is a long-standing tactic in the rightwing War on Science, reflected in such Orwellian pieces of legislation as the US “Data Quality Act”.
The hacking was almost certainly done by someone within the campaign, but in a way that maintained (in Watergate terminology) “plausible deniability” for the principals. Regardless of what they knew (and when they knew it) about the actual theft, the leading figures in the campaign worked together to maximize the impact of the stolen emails, and to co-ordinate the bogus claims of scientific misconduct based on the sinister interpretations placed on such phrases as “trick” and “hide the decline”.
The final group of actors in all this were the mass audience of self-described “sceptics”. With few exceptions (in fact, none of whom I am aware), members of this group have lost their moral bearings sufficiently that they were not worried at all by the crime of dishonesty involved in the hacking attack. Equally importantly, they have lost their intellectual bearings to the point where they did not reflect that the kind of person who would mount such an attack, or seek to benefit from it, would not scruple to deceive a gullible audience as to the content of the material they had stolen. The members of this group swallowed and regurgitated the claims of fraud centred on words like “trick”. By the time the imposture was exposed, they had moved on to the next spurious talking point fed to them by the rightwing spin machine.
To keep all this short and comprehensible, I haven’t given lots of links. Most of the points above are have been on the public record for some time (there’s a timeline here), but a few have only come to light more recently. These Guardian story brings us up to date, and names quite a few of the key players (see also here). For the role of allegedly independent journalists in all this, see Tim Lambert’s Deltoid site (search for “Rosegate” and “Leakegate”).
Update I should have mentioned that much the same team had their first outing in the controversy over the Mann et al “hockey stick” graph. All the same elements were there – supposedly disinterested citizen researchers who were in fact paid rightwing operatives, misuse of accountability procedures, and exceptional gullibility on the part of the “sceptical” mass audience. Details are here (h/t John Mashey).
The American Conservative is a mixed bag, to put it mildly, but this piece by Andrew Bacevich is well worth reading. Bacevich points out how rarely the faith of the American policy elite in military force has actually been rewarded with success. The key quote:
An alternative reading of our recent military past might suggest the following: first, that the political utility of force—the range of political problems where force possesses real relevance—is actually quite narrow; second, that definitive victory of the sort that yields a formal surrender ceremony at Appomattox or on the deck of an American warship tends to be a rarity; third, that ambiguous outcomes are much more probable, with those achieved at a cost far greater than even the most conscientious war planner is likely to anticipate; and fourth, that the prudent statesman therefore turns to force only as a last resort and only when the most vital national interests are at stake. Contra Kristol, force is an “instrument” in the same sense that a slot machine or a roulette wheel qualifies as an instrument.
To consider the long bloody chronicle of modern history, big wars and small ones alike, is to affirm the validity of these conclusions.
A glutton for punishment, I’ve decided the Zombie Economics book manuscript I submitted a month ago (mostly online here) is in urgent need of more zombies. I’ve been struck, even in that short space of time by the extent to which, with undeniable “green shoots” now appearing, the zombie ideas I’ve written about are clawing their way through the softening soil and walking among us again. The most amazing example is that of the Great Moderation – surely you would think no one could believe in this anymore, but they do.
So, I’m planning to add a bit to each chapter, pointing to examples of these ideas being revived. I’d appreciate good examples for the rest: Trickle Down, Micro-based Macro the Efficient Markets Hypothesis and Privatisation (of course, the Queensland government gives an example v close to home).
I’d like to broaden John H’s discussion of the US as a center-right nation to consider the broader idea that the US is, in some sense, exceptional. As Barack Obama correctly pointed out not so long ago, every nation is exceptional in its own way, which tends to undermine the idea that any nation is specially exceptional.
Still, compared to the developed world in general, it seems obvious that the US is different in lots of ways: an outlier in terms of nationalism, military power, religiosity, working hours and inequality of outcomes and (in the opposite direction) in terms of government intervention, health outcomes and other measures typically associated with welfare states. Among these the outstanding differences arise from the fact that the US aspires, with some success, to be globally hegemonic in military terms and (with rather less success) in economic terms as well.
But, when you think about it, there is nothing exceptional here.
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As Harry mentioned, I’m sceptical of the value of artificial “thought experiments” in moral philosophy, without having a fully coherent basis for this scepticism. ne thing I don’t like about the term “thought experiment” is the implication that the results of such thought experiments constitute data, and therefore that an ethical theory is more satisfactory if it fits such data than if it does not. The way I’d prefer to approach such problems involves an iterative loop, with repeated stages of (i) consider reasonable general principles (ii) compare to intuitions about specific cases (iii) where appropriate, adjust judgements on specific cases (iv) revise general principles to give a better fit to adjusted intuitions. That is, I don’t think either general principles or specific intuitions are trumps.
Over the fold, the conclusion of my book, with Release Candidate title “Zombie Economics: How Dead Ideas Still Walk Among Us”. I plan a proper post on the whole bookblogging experience, but until then, I’ll thank everyone who’s commented, or just read this exercise with interest and make one (maybe) last request for help. Can anyone recommend a book on Thatcher’s economic reforms that would be a good suggestion for further reading? I’m currently suggesting Anderew Glyn’s Capitalism Unleashed, but I’d like to add something from a centrist or Thatcherite perspective, as long as it’s readable and not too objectionable for words.
There’s a near-complete draft of the whole book here.
Since Europe-US comparisons are in the air again, it seems like a good time to report on the first year of my bet with Bryan Caplan, the terms of which are
The stake is $US100 and the agreed criterion is that, for Bryan to win, the average Eurostat harmonised unemployment rate for the EU-15 over the period 2009-18 inclusive should exceed that for the US by at least 1.5 percentage points
The relevant figures are at Eurostat and, with December still to come in, I estimate that the EU-15 rate will be 0.3 percentage points below that for the US for 2009, so that I beat the spread by 1.8 percentage points.
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I sent off the draft MS of my Zombie Economics book to the publisher last week, but there is still time for improvement. Over the fold is the second, and final part of the privatization chapter.
You can read most of the book (not always the final draft) at my wikidot site.
As always, comments and criticism much appreciated.
Hot/cold on the heels of Iceland’s quasi-default, the Roger Lowenstein in the NY Times urges underwater/negative equity homeowners to “Walk Away From Your Mortgage!”. . Lowenstein’s key point is that businesses (including those owned or controlled by the banks themselves) treat default as a straightforward business decision, to be adopted whenever it is profitable to do so. Lowenstein gives a number of examples where leading banks like (inevitably) Goldman Sachs have engaged in strategic default and urges his readers to do likewise. The piece is in a section headed “The Way We Live Now” and it’s striking that it’s taken more than 100 years for the business ethics of Augustus Melmotte to percolate through to the American middle class
To be fair, it’s only in the last thirty years or so that such ethics have become dominant in the corporate sector, to the point where a board that rejected profitable opportunities to stiff their creditors would now be regarded as having violated its fiduciary obligations to shareholders (particularly if the creditors are workers). And despite all the talk about shareholder value, a CEO who passed up opportunities for personal enrichment at the expense of shareholders would be regarded by his or her fellows as a mug.
Millions have defaulted already – (one in eight mortgages is currently in arrears). Bankruptcy is once again as common as divorce. When defaulting on debt is this common, it is hard to sustain any sort of social stigma or internalised notion that this is anything other than a financial option, like refinancing an existing loan. And, as with divorce, we must soon be reaching the point where most people who take out loans will do so in the knowledge that default is an option.
The question is – can the consumer credit system survive this? Probably it can, but the system will need some radical changes. It’s worked for several decades on the basis of creditworthiness criteria that work on the assumption that (nearly) everyone will repay their debts if they can. Until recently, the checks could also rely on the assumption that people would be more-or-less honest in the information they provided in their applications. The financial system, by promoting ‘liar loans’ colluded in the destruction of the second assumption, and by leading the way in strategic default, helped to destroy the first.
The problem for lenders now is that they will increasingly have to act on the assumption that their borrowers (including those who appear creditworthy on the old standards) are planning, at a minimum, to use default as an insurance option. The only good way to protect against this is to demand lots of secure collateral. That means less liberal credit (and, given higher default rates, higher interest rates) for everyone and no credit at all for lots of us.
I just sent a draft manuscript of my Zombie Economics book off to the publisher at Princeton UP. It’s pretty much in beta stage now.The aim is to have it come out in the Fall List.
Thanks heaps for all the praise and criticism. The praise has kept me motivated, and the criticism has been at least as valuable.
I’ve got some more sections of the privatisation chapter and the afterword to post here for comments, and I’m now going to circulate the draft in the older version of the same process. I’m also updating the draft at wikidot (lagging a little on this).