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Wednesday, October 31, 2007

I don't need to check; I know I'm right.

In preparation for a possible op-ed on the Strategic Petroleum Reserve (SPR), which was established after the OPEC embargo to act as an added buffer, I asked an expert about whether the private industry saw it coming. I explained that I needed to know so that I could take my defense of the free market one of two ways:

* If the private sector people did anticipate the embargo, then I would explain that Nixon's price controls and high tax rates would make it pointless for speculators to build up inventories before the crisis hit. So SPR isn't necessary, we just need to unleash the market to do its job.

* If the private sector did NOT see the OPEC move coming, then I would explain that this isn't a strike against the market and FOR the government; after all, the planners were caught off guard too. So the question going forward is, okay, now that we realize OPEC could do this again, who is most likely to prepare for it better? Private speculators who are risking their own money, or bureaucrats?

=====================

Now, is anybody else slightly troubled by this? It gave me the willies when I realized that my solution was going to be the same no matter what had happened historically. Now granted, this is partly the point of Misesians who stress that economic theory is a priori. But still, I could definitely understand if a leftist thought this simply proved how dogmatic I was.

A Whole Lotta Passin'

Trinity College wins a football game with a last play that included 15 laterals. (Scroll down in the story for the video.)

Tuesday, October 30, 2007

New Intransitive Verbs

I've blogged before about my annoyance at a store clerk asking me, "Can I help?" Well the practice has spread to the US, and now I've encountered an even worse intransitive use of a transitive verb: I asked for ice in a supermarket the other day, and the cashier said, "We're out. Try the gas station up the road -- they might have." Two days later, I heard the same usage: "Oh, he might have."

We've become so busy we can't afford the time to say "it."

Dead Again

This story is pretty amusing. These rural Germans, from an area "Halloween isn't very well known," mistook a costume-zombie for a murder victim. But what puzzled me was this: "Police told the man to remove his make-up after which he was allowed to continue his journey."

Were the police afraid that the passengers in his car would again mistake him for a dead man if he left the makeup on? That they'd get another phone call: "This time he's been murdered for sure!"

There's a Moon Out Today

When I was working for MECA Software, I recall going for a walk along the Saugatuck River with a colleague who was about thirty or so. As we strolled along, he suddenly exclaimed, "Look at that! The moon is out in the daytime!"

I really didn't know what to say. What I thought was, "Yes, just as it has been for about 720 periods of several days each earlier in your life."

Sunday, October 28, 2007

Starbucks and Corporate Social Responsibility

Another Townhall column. Man, the people commenting there are a lot cruder than the geeky ones at Mises.org!

Saturday, October 27, 2007

Michael Medved is a Joke

Look at this ridiculous open letter to Ron Paul. I can't believe I used to like this crowd of "thinkers" when I was a teenager.

David Horowitz spouts more drivel...

Here:
"Anyone who links Islamic radicalism to the terrorist campaigns that are being waged against America, Europe and Israel and against non-radical Muslims in places such as Darfur, is automatically labeled an 'Islamophobe.'"

Has anyone, anywhere, ever so denounced someone else? Is there anyone who denies that these terrorist campaigns are linked to radical Islam? Sure, there are some of us who argue that it's not OK to kill millions of Moslems because a few of their fellow believers commit terrorist acts, but that's a slightly different point.

Thursday, October 25, 2007

Integer vitae

Here is a small sequence of the integers around zero listed in the usual way--in sequence in ascending order. So the only question is: What &$#@*&!*$ numeration (system of representing numbers) did I use?

…, 1010, 1011, 1000, 1001, 1110, 1111, 1100, 1101, 10, 11, 0, 1, 110, 111, 100, 101, 11010, 11011, 11000, 11001, 11110, ...

Tales of Israel's Occupation of Palestine

If these stories are true they're pretty disgusting. (Link originally on LRC.)

Wednesday, October 24, 2007

Hulsmann Says Murphy Is the Next Rothbard

Well, not quite. If you start listening to this mp3 at 21:40 you can hear about my peers and me. It was an honor just to be nominated. (Start at 20:00 to get the full context.)

The Problem of Plato and Aristotle

Recently, I've run across several economists whho causually term all religious belief "irrational," among them Douglas North and Bryan Caplan. I went to present two contrary cases I think should trouble them. When presented with someone like Aquinas, who surely was very rational by any yardstick, those promoting the "religion is irrational" view will often say someething like, "Sure, he was bright, but he was not immune to the prejudices of his culture." But that answer won't work for Plato and Aristotle, two of the most rational individuals in history, because the Greek traditions they inherited contained nothing at all like the concept of a transcendent God arrived at by both men. While their concepts were certainly not identical to the Judeo-Christian-Moslem concept of God, they were far closer to that concept than they were to anything from Greek mythology. And they were arrived at, against the current of their culture, by purely "rational," philosophical means.

Monday, October 22, 2007

Virgin PRI blog post--The value of saying sorry.

I will only post particularly pithy ones here from now on, but here's my first blog post as Senior Fellow in Business & Economic Studies at Pacific Research Institute.

Saturday, October 20, 2007

Financial Engineering, Behaviorial Economics and Praxeology

I had an interesting discussion last night with an old friend, about a mutual friend's job as a financial engineer. As a financial engineer, our friend creates innovative models of options and futures markets, based on variable inputs. For instance, he might attempt to create a forecast model on how certain markets react to supply shocks, or general market surprises, based on clever mathematical analysis. Sometimes the investigations of these models are prompted by a trader's hunch; sometimes, an interesting mathematical approach is tried for it's own sake, to explore new mapping possibilities. The end product is a tool used by traders to make decisions and strategies for various contingencies in the market.

My initial bias is to be skeptical of the value of such an approach. Mathematical futures/options forecasting seems similar to Max Cohen's grandiose attempt to predict the mathematical patterns in the stock market in the movie Pi (an excellent film); an illusory objective, like perpetual motion or attempts to square the circle. Mapping the current state of the economy is one thing, but making toy models of previous markets and simulating them based on the future seems a blind bet on intelligence to model what is not amenable to insightful modeling: human actions and behavior in the future.

Thinking about it, I realized my bias against such modeling came back to Mises' illustration of two approaches to economics. Murray Rothbard writes, 'One example that Mises liked to use in his class to demonstrate the difference between two fundamental ways of approaching human behavior was in looking at Grand Central Station behavior during rush hour. The " objective" or " truly scientific" behaviorist, he pointed out, would observe the empirical events: e.g., people rushing back and forth, aimlessly at certain predictable times of day. And that is all he would know. But the true student of human action would start from the fact that all human behavior is purposive, and he would see the purpose is to get from home to the train to work in the morning, the opposite at night, etc. It is obvious which one would discover and know more about human behavior, and therefore which one would be the genuine "scientist."'

Certainly this example illustrates a natural division of approaches, and to my mind makes a succinct and convincing case for praxeology, but the behaviorist may not be down for the count.

Before picking up the thread, it should be noted of course that financial engineers and quants are not (generally, anyway) trying to derive scientific truths or general principles. On the contrary, they are concerned with modeling many particular truths, especially particular generalized patterns that underlie particular phenomena. Everything is contingent and models are always susceptible to review.

It is less obvious, then, what particular, if any, contingent patterns or principles a financial engineer may uncover. The reason to hire a financial engineer, of course, is to help traders make money by exploiting inefficiencies in the market. Hayek's explanation for apparent "inefficiencies" in a given market is that since knowledge is dispersed asymmetrically, it is expected for there to be a kinked array of market prices within a short interval, there is no perfect knowledge. Behaviorial economists formulate much the same principle, but assert that modeling such inefficiencies may provide tangible insight into the patterns of knowledge distribution, or more precisely, the patterns of it's output given certain inputs.

In essence, one might say that a financial engineer is creating a telescope that allows traders to obliquely understand what tends to happen given a relatively stable(but disparate) distribution of knowledge. This is an empirical question, but I think there may a basis in this example, for a weak (but sound) case that even behavioral economists have some contribution to the development of an applied economic science, potentially aiding praxeologists in much the same way telescopy has aided astronomy and physics and computers have aided number theorists.

Addendum: It's come to my attention that Gene has already written about this topic in depth here, thoroughly discussing the philosophical importance of financial modeling, but most interestingly (to me, anyway), providing some key insights into the practical significance of modeling. I liked this analogy:

"
Mathematical equations can be useful for modeling the result of people following through on previously made plans, for capturing "equilibrium-like" phases of markets.

"Analogously, we could say that once a player in a basketball game decides to shoot jumper, we could use an equation that, based on the initial force vector that the shooter chooses to apply to the ball, then predicts the progress of the shot. Such an equation will be of little use, however, in predicting whether the player will change his mind and pass instead."

This November Fifth (Ron Paul thingie)

They're trying to organize donations now instead of spamming polls. (Ha ha I'm a fan, people. No angry emails please.)

Thursday, October 18, 2007

Pentagon Gets "Do Overs" for Guantanamo Prisoners

You know how the military is bending over backwards to appease those defeatist liberals, and conducts reviews to make sure the "enemy combatants" being held in Cuba really are enemy combatants? Well, if the review process comes out "no," the Pentagon can simply make the prisoner go through again and again, until they get the "yes" answer. This article explains.

Wednesday, October 17, 2007

Tuesday, October 16, 2007

Bush on private military contractors

I'm so glad to have him representing the free market:

(My wife found this YouTube clip.)

Friday, October 12, 2007

He Who Would Give Up Essential Liberty For Security...

...is a good conservative. When I saw the title of this article, "Liberty or security -- a false choice," I had thought they were repeating my argument on LRC a long time ago. To wit, there is no tradeoff. If you have total liberty from gov't, you will also be as safe as possible.

Needless to say, that's not the argument in this WND article.

The Remarkable, Tool-Making Crow

The Odds of Your Being Killed in a Car Accident

It strikes me that there is something muddled about comparing something like "a person's odds of being killed in a car accident" with something along the lines of "that person's odds of being killed in a plane crash," noting that the first odds are lower than the second, and then concluding that anyone who is concerned about flying but routinely drives is "irrational." No doubt it is true that people frequently overestimate risk connected with some rare but attention-grabbing calamity that has just made the news, while remaining blase about the risks involved in more mundane activities.

But my complaint concerning the above situation is that the odds of being in a car accident are not really odds at all. That's because those "odds" are arrived at by treating the occurence of accidents as purely random events that simply "happen" to drivers, like being struck by a meteor. To the contrary, any individual driver's likelihood of having a collision is affected quite significantly by how she drives -- her skill, her knowledge of her car, her degree of focus, and how much caution she exercises. For instance, one can only collide with another car after first closely approaching it. (Automobiles have not been observed making quantum jumps that instantaneously bridge the distance separating them.) Therefore, any driver who stays as far away from other vehicles as possible is far less likely to collide with one of them than is someone who habitually tailgates or weaves through traffic. And that means that it is methodological nonsense to treat "the odds" for having an accident calculated by treating all drivers as indistinguishable and without influence over the degree of risk they face as if they applied equally to each individual driver.

On the other hand, a passenger on an airplane really does have little he can do to alter the possibility of the plane he is on crashing. (Little but not nothing, e.g., he can refrain from violently taking over control of the aircraft and then deliberately flying it into a building.) In general, this is risk beyond his control, and I see nothing irrational about one being more adverse to such risks than to those one deliberately can control.

Thursday, October 11, 2007

CNBC explains why it took down its GOP debate poll

At least the guy admits it, it's because Ron Paul was kicking keister.

I think I will write an article about this. I am too speechless at the moment to do it justice.

Victor Aguilar's Open Letter to Bryan Caplan

Rothbardian Austrians might regard this as Nazi Germany invading the USSR.

Wednesday, October 10, 2007

Tuesday, October 09, 2007

Bad Epistemology

There are two popular trends in epsitemology today that, taken as avenues that may add epistemological insight are fine, but taken as the way to do epistemology are nonsense:

1) Evolutionary epistemology. Yes, our history and our genes will be relevant to how we know things and what sort of things we know. But some people want to go further and say, "Any confidence we can have in our knowledge can only be grounded in the fact that evolution has steered things so that our minds can successfully cope with reality, because, of course, only organisms that successfully cope with reality will survive."

The problem with that is you're grounding all your other knowledge on your theory of evolution -- but how do you know that's right? For instance, I reject your idea with my theory of evolution: Nature is perverse, and has assured that only the least fit creatures with the worst cognitive maps of reality have survived, by wiping out all of the most fit ones with earthquakes, floods, droughts, etc.

Of course I think the latter theory is dumb, but it certainly can't be rejected by pointing to the former theory, because that's precisely what's being disputed! So it turns out that we do, after all, have epistemological resources independent of counting on evolution to have weeded out bad ideas.

2) Formal epsitemology: Again, formalism can be useful, sure, but it can't take the place of "old style" epistemology. I can't find the fellow's web site now, but I ran across a guy who said, "There are two types of philosophy: formalized philosophy, and vague philosophy that never resolves anything."

And, once again, the difficulty with mistaking a useful tool for the subject ought to be obvious: A formal analysis may clarify one's thinking on a problem. But the formal analysis can't tell you itself if it does so! For example, let's say I tell you: "You want to know what beauty is in art? That's easy -- just look at the Pythagorean Theorem!" This is obviously silly, but the formalism itself can't tell us that! To see what formalisms are relevant to what philosophical problems, and in what way, requires a non-formal judgment.

Montanas and Molehills

My friend Meghan has a very interesting blog on her adventures in Ecuador.

Monday, October 08, 2007

A Mixed Review of Murphy

This review of my book starts out as a love fest, but then the guy hits me out of nowhere about Amtrak. A full response in a few days...

Sunday, October 07, 2007

Just Checking

The phone rang and I picked up.

"Hello?"

"Hi is Alicia there?"

"Sorry, you have the wrong number."

"Is this [my home phone number]?"

"Yes."

"Hmm, that's the number she gave me. [pause] Are you her brother by chance?"

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I realize it is unfair to actually analyze this, but I must: Did she expect me to say, "Oh, you wanted my sister Alicia?! I had thought you were asking for a stranger with the same name, and that's why I thought you had the wrong number. Hang on, I'll go get her..." ?

Tuesday, October 02, 2007

The Worst Recession in 25 Years?

Maybe so. Incidentally, for those who wonder why I apparently changed my tune--I did a forecast for a bank client over the summer, and that's when I came across all this data that made me very pessimistic about the future. So I still disagree with people like Paul Craig Roberts who say that "Bush's free trade policies" are wrecking our economy, but I do agree that the economy is in trouble.

You Didn't Match the Letters on the Page

I understand the problem of spam on blogs or robots buying from tickets sites. (Imagine the reaction of someone in 1980 if you told them, "In 2007, we will have a big problem with robots snatching up the tickets for major public events.) But this method of putting up all squiggly letters and making the purported user match them sucks. Programs can't read the letters, but you know what...I can't either! The letters are all deliberately distorted -- so how are we supposed to tell an 'l' from an 'I'? An 'S' from an 's'? A 'W' from a 'w'? I find I miss something about 1/3 the time.

Much better idea: I was at a site the other day that instructed me: "Put the answer to 3 + 4 in the box to the left." No letter guessing involved! Rotate the questions automagically, i.e., "What is the name of the animal that says 'meow'?" and you're good to go.