The Lesson Is Unmistakable
Colin Barr, who has a bee in his bonnett about high-frequency stock trading, writes, of the turmoil in the market last week: "The exact causes of Thursday’s stock market short-circuit remain unclear, but the lesson is unmistakable."
This is a very weird thing to say. It strikes me as akin to a case where, say, someone's wife wants him to stop drinking. Then, when some mysterious medical ailment strikes him, well before the doctors know the cause, she says, "The lesson is unmistakeable: you need to stop drinking."
What would you think if you went to the doctor with a mysterious ailment, and she told you, "I have no idea what is causing your problem, but the lesson is clear: We need to amputate your leg."
The point being that, without knowing the cause, how can any lesson at all be drawn from any incident?
And the point here is not whether Barr is right or wrong about high frequency trading. The point is, rather, that until he knows the cause of yesterday's incident, it is invalid to use it is an example of any problem at all!
When I noted this to the Barr, he responded: "I am with the drunk guy's wife on this one." (Reproduced with his permission.) He also concluded that I must be a fan of high-frequency training.
Man, do people have a tough time sorting out good and bad argument from good and bad conclusions. Noting that something is a bad argument does not mean that one thinks the conclusion the argument is supposed to lead to is false.
"We can tell the moon is not made of cheese because otherwise it would be covered with mice" is a bad argument.
But if I point that out, it's also bad logic to respond, "Ah, so you think the moon is made of cheese!"
This is a very weird thing to say. It strikes me as akin to a case where, say, someone's wife wants him to stop drinking. Then, when some mysterious medical ailment strikes him, well before the doctors know the cause, she says, "The lesson is unmistakeable: you need to stop drinking."
What would you think if you went to the doctor with a mysterious ailment, and she told you, "I have no idea what is causing your problem, but the lesson is clear: We need to amputate your leg."
The point being that, without knowing the cause, how can any lesson at all be drawn from any incident?
And the point here is not whether Barr is right or wrong about high frequency trading. The point is, rather, that until he knows the cause of yesterday's incident, it is invalid to use it is an example of any problem at all!
When I noted this to the Barr, he responded: "I am with the drunk guy's wife on this one." (Reproduced with his permission.) He also concluded that I must be a fan of high-frequency training.
Man, do people have a tough time sorting out good and bad argument from good and bad conclusions. Noting that something is a bad argument does not mean that one thinks the conclusion the argument is supposed to lead to is false.
"We can tell the moon is not made of cheese because otherwise it would be covered with mice" is a bad argument.
But if I point that out, it's also bad logic to respond, "Ah, so you think the moon is made of cheese!"
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