Posts

Showing posts from December, 2009

Heidegger versus God

Found by Google Alerts on a blog called "Christians in Context":
Let me sketch one point this book defends. Heidegger argued that modern technology in its very essence is radically differentiated from pre-modern technology. He calls pre-modern technology technique, and goes on to explore what this newly-arrived word 'technology' actually signifies. To risk oversimplification, here is what technology means: it is the interpenetrating of knowing and making, the co-penetration of science and art, which for the modern world means that our science is inescapably 'folded' not just toward increasing information (i.e. describing the world, its causalities, etc) but also increasing power over the world.I never knew this was in Heidegger - but a followup search shows me that it's a phrase commonly ascribed to him (presumably in translation). Anyway, it perfectly encapsulates why I named this blog.

My first reading of the paragraph above was that it is entirely posit…

The economics zeitgeist, 27 December 2009

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.

The words moving up and down the chart are listed here.

I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.

I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.

You can also see the Java version in the Wordle gallery.

If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface to make week-to-week comparison easier, please get in touch.

Old Bridge Inn pictures

If you get the email version of this blog you might not have seen the pictures with yesterday's review of the Old Bridge Inn. Do go back and have a look at them if not.

Christmas at the Old Bridge

Image
I spent Christmas Day with family at the Old Bridge Inn in Aviemore, in the most beautiful, spectacular snowfall I've ever seen in this country.

Aviemore is a mountainside town on the River Spey (home of many of Scotland's malt whiskies) with skiing and snowboarding in the Cairngorm mountains in winter, and rafting in summer. I haven't been joining in the all-action activities (my comparative advantage is definitely in the intellectual rather than physical factor of production, which reminds us that comparative advantage can accrue purely from an inability in one attribute with no compensating capability in another).

But if I can't ski, I can at least appreciate beauty. The whole landscape is covered with a thick, pristine blanket of snow, the sky is blue and the sunlight makes the world shine like a diamond.




Best of all is the Old Bridge Inn. A warm corner in the midst of the snow, with lovely, comfortable rooms, a log fire in the bar, amazing cooking from Stevie Mats…

Odd accounting from the Telegraph

From this article (h/t Marginal Revolution):
The top 100 authors dominate sales. As The Bookseller has explained, some 100,000 titles are published every year, but these authors account for £1 in every £6 spent on books and a fifth of revenue. What does the Telegraph think is the difference between "revenue" and "£ spent on books"?

$800 billion = $800 billion. Coincidence?

Scott Sumner thinks it's just a coincidence that the increase in excess bank reserves in the US is almost exactly the same as the amount of the government's discretionary fiscal stimulus - $800 billion.

And yet, the increase in the Bank of England's balance sheet through quantitative easing so far - £180 billion or so - is also the same as the UK government's budget deficit this year. Doesn't it make you wonder?

Now it's true that there is no necessary link between the two. In "normal" times, government borrowing and central bank easing are not necessarily correlated - quite the reverse, in many cases. Public borrowing is generally inflationary; so a monetary authority with a constant inflation target is likely to counteract that by raising interest rates or otherwise reducing the money supply.

However, now is different. Inflation and growth are exactly what we need, and the fiscal and monetary authorities are acting together to try to create them.

Yo…

My BBC World/News 24 items today

I was on BBC World this morning to discuss the latest UK GDP figures and why the UK is the last major economy still in recession (hoping to get a clip to upload later). Here is a summary of my views, some of which I got across in the interview. Any of these could be an article in themselves, but there isn't much time to discuss them on an hourly business news update!

Our recession has been worse mainly because we are dependent on the financial sector. We did very well out of this before the recession, but having reached a higher peak we had further to fall.However, employment figures have been relatively very healthy, meaning that the pain of the recession has been less than it could have been. Also, fiscal and monetary action have mitigated the risk of a deeper depression.We are now gradually edging out of recession but there is a risk that tax rises and government spending cuts will put a brake on growth. To combat this, continued aggressive monetary policy is needed. Because int…

The economics zeitgeist, 20 December 2009

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.

The words moving up and down the chart are listed here. Key words this week: policy and banks up, Fed back up after a fall last week, inflation up 340 places and Bernanke up 415. Falls in sales, emissions and spending. But the most poignant entry on the list is a new name at position 272: Samuelson.

I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.

I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.

You can also see the Java version in the Wordle gallery.

If anyone wou…

What I said on the radio

They asked me about November's record budget deficit of £20.3 billion, about which George Osborne has said that "Gordon Brown is maxing out the nation's credit card".

My response, briefly:

Sometimes it's appropriate to run up your credit card to tide yourself over a problem - the recession definitely qualifies. Government spending is a pretty mainstream response to help mitigate an economic downturn.Spending cuts and tax rises might make a small difference, but the thing that will really cover the debt is economic growth. The UK's tax take is especially countercyclical and will rise sharply when GDP growth and profitability return.The return of VAT to 17.5% in twelve days will make some impact in itself (raising about £12 billion), but might be more valuable as a credibility device: the government showing investors and markets that they are serious about getting the deficit under control.If you're interested, the recording is here.

Radio Five this afternoon

I'm on Radio Five Live at 5.45 today talking about the public sector borrowing requirement, whether it's a necessary response to the recession, and how the country is going to pay it back.

Update later when I listen back to what I end up saying...

Red wine, blue wine

Just a link for Thursday.

From the Daily Telegraph, wine tastes better in blue- or red-lit rooms. At least in Germany. [Original paper here is quite well-written and reveals some interesting details]

According to the newspaper reports, the psychologist who ran the study (Dr Daniel Oberfeld-Twistel) thinks the explanation is that the light puts people in a better mood. But the paper cites another study showing that in fMRI tests:
Whenever colors and odors were presented together that subjectively constituted a good match in the eyes of the observer, activity in the orbitofrontal cortex and in the insular cortex was observedNow we all know to be cynical about fMRI tests, but it seems reasonable to draw the very broad conclusion that there is some cognitive basis for this effect. I am inclined to believe that - like most behavioural wine effects - it originates in a self-fulfilling calculation of the expected "value" of the wine and is a cognitive rather than a mood effect. Inde…

Taxes versus mandatory offsets

Consumerology reports a study by David Hardisty, Eric Johnson and Elke Weber at Columbia which randomly offered participants various choices between different pricing options for airline tickets. The main distinction was between a surcharge described as a "carbon tax" and an identical charge described as a "carbon offset".

The tax was unpopular - no real surprise. But when people were asked if they supported making the carbon offset mandatory - which is of course exactly equivalent - the response was highly favourable (around 2 points more positive on a scale from -3 to +3).

Not only was the "mandatory offset" more popular, but it was regarded identically by Democrats and Republicans. The tax, on the other hand, was strongly disliked by Republicans while Democrats made no distinction between taxes and mandatory offsets. Thus the entire effect appears to be due to Republicans' attitudes to tax.

This is an example of a well-known cognitive bias called &…

Sentences to ponder, Samuelson edition

From Mario Rizzo in ThinkMarkets, objecting to Samuelson's mathematical formalisation of economics:
I believe that the profession has, because of the formalistic direction in which it has traveled, more than its share of idiot savants.
Perhaps that's so. I guess Rizzo would prefer to adopt the model of some other social sciences, which are quite satisfied with ordinary idiots.

The significance of Paul Samuelson

Image
The screenshot on the left - taken within a few hours of the announcement of his death - illustrates quite simply the huge impact Paul Samuelson made on the economics profession throughout the last seventy years.

As his New York Times obituary says, he was never as well known by the public as Keynes or Friedman - and had less direct political impact - but he almost forged a whole profession with his establishment of mathematical analysis as the way to do economics [Update: my mistake, the observation was actually in this Justin Fox article]

This interview with Conor Clarke reveals that his incisiveness and charm was unimpaired right up to this summer. Read it for a flavour of his ideas and personality, but read the obit to learn the scope of his influence. [Update: Marginal Revolution links to another excellent interview, this one from John Cassidy]

(A curious side note: both of these items mention in passing, but with some admiration, that Samuelson became wealthy from his textbook. T…

The economics zeitgeist, 13 December 2009

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.

The words moving up and down the chart are listed here. Key words this week: climate, oil, debt, Copenhagen and deficit up; big falls in Fed, interest, credit and demand.

I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.

I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.

You can also see the Java version in the Wordle gallery.

If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour …

Behavioural finance working group: part 1

The lack of postings in recent days has been partly due to attending a conference: "Behavioural perspectives on the financial crisis" at Cass Business School (no relation to Cass Sunstein).

It turned out not to be quite as billed. An interesting selection of short research presentations but barely any mention of the crisis at all.

Highlights of the first day included:

Addressing the psychology of financial markets: a good qualitative insight from David Tuckett, a psychologist from UCL, into the psychological factors which affect finance. He identified a very intriguing difference between finance markets and other markets: which I'd express as saying that finance markets have no referent. Other markets involve real assets which are traded, and which provide real and direct utility. Financial markets provide no direct utility feedback from a purchase - investors hold an asset whose only utility is from its (unpredictable) future value. Thus emotional factors take the place …

Facebook Pecha Kucha

I presented a mini-Pecha Kucha at the Association for Qualitative Research last night.

Great fun and lots of interesting people. I hadn't done a Pecha Kucha before, though it turns out my last BRX presentation was similar in style to a few of the presentations on the night.

You can download my slides here - though I'd be fascinated to hear if it makes any sense whatsoever to you without the narrative.

There should be a video of the event at some point soon for my three diehard fans to watch online.

The economics zeitgeist, 6 December 2009

Image
This week's word cloud from the economics blogs. I generate a new cloud every Sunday, so please subscribe using the RSS or email box on the right and you'll get a message every week with the new cloud.

The words moving up and down the chart are listed here. Key words this week: people, jobs, unemployment, pay and Bernanke up; energy, data and markets down.

I summarise around four hundred blogs through their RSS feeds. Thanks in particular to the Palgrave Econolog who have an excellent database of economics blogs; I have also added a number of blogs that are not on their list. Contact me if you'd like to make sure yours is included too.

I use Wordle to generate the image, the ROME RSS reader to download the RSS feeds, and Java software from Inon to process the data.

You can also see the Java version in the Wordle gallery.

If anyone would like a copy of the underlying data used to generate these clouds, or if you would like to see a version with consistent colour and typeface t…

Behavioural economics links

Notes and some videos on what sounds like a brilliant course at Edge last year on behavioural economics, with Thaler, Kahneman and Mullainathan as speakers - and just look at the attendees!

Thoughts from Felix Salmon (also click through to the more detailed Wine Economics article he references) about one of my favourite subjects: how cognitive biases influence our willingness-to-pay for wine.

Useful comments from Charles Goodhart in the FT about the money multiplier - I suggest you read this as preparation for an article I'm writing on self-fulfilling expectations and the money supply.

Mark Thoma's link to Paul de Grauwe's paper, "Top-down versus bottom-up macroeconomics" [PDF] which says some powerful things about limitations on knowledge and the consequences for rational expectations theory.

And Steve Randy Waldman's Interfluidity blog has moved - updated link in the right-hand column and here.

Bankers' bonuses: two solutions

What issue has such purchase on the public imagination that it - at least in the UK - just keeps coming back, again and again, as people's top concern about the financial crisis and the recession?

Of course, it's the bonuses paid to bank employees.

The psychology of this conversation is revealing. Nobody really notices if RBS makes £6 billion in profits. But when one RBS employee gets a $10 million bonus - that's about 1/1000th of the amount - suddenly it's a big deal. We can relate much better to (relatively) small numbers with people attached to them than we do to huge figures.

Clearly the government has a political problem: it doesn't want to be seen to be allowing high bonuses to be paid when the public has paid for the banks to be rescued.

But it also has a commercial problem: the rescue is a sunk cost, and the bonuses are part of the bank's strategy to incentivise future behaviour. If RBS doesn't pay any bonuses, perhaps their top people will leave an…

Applications of behavioural economics part 1a: anchoring

In the East End of Glasgow, as you head from the Tollbooth towards Celtic Park, you'll come across a curiosity out of the 19th century. The Barras is a huge flea market - the biggest in Europe - where everything from second-hand clothes and books to discount electronics and records of doubtful provenance are sold.

And the people selling them are some of the most effective salespeople in the country.

Let's wait by the stall of a chap called Glasgow Harry (why he's called Glasgow Harry when he works in Glasgow is another story). We're among forty or fifty people waiting expectantly for the show to start.

Harry pulls out a radio cassette player (this was quite a few years ago) and starts the pitch. "Now who wants one of these wee stoaters?" [You'll have to imagine the Glaswegian accent] "Latest Japanese technology, double cassette deck, AM/FM, lasts about forty hours on the battery." Elucidation of many more features follows.

And now the key moment...w…

The "Feck the French" strategy

Ireland has a problem. It is at risk of getting into some terrible debt.

Its fiscal deficit has soared this year to about 14% of GDP, more than almost any other country, and on current path its debt is forecast to reach 126% of GDP by 2016.

This is mainly due to a collapse of over a tenth in Irish GDP during the recession - which, under the informal definition, qualifies as a full depression in Ireland. What is to be done?

The government is willing to take fairly drastic steps to cut its deficit, even though the economic recovery is still tentative (as a very export-oriented economy, Ireland can afford countercyclical fiscal policy better than most nations). But can the government carry its citizens with it?

An Economist article last week offers a clue.

Take a look at the chart at the top of the article. Ireland's figures look bad, but it has an advantage: it starts from a reasonable public debt position. On this projection, in 2011 Irish public debt will be 96% of GDP while other …