economics


“Great minds discuss ideas; Average minds discuss events; Small minds discuss people.” –Eleanor Roosevelt

Many have adopted that Eleanor Roosevelt quote as a guiding principle in their lives. Powerful ideas have enabled great advances in technology and have inspired the masses to take action, both for good as well as ill. But like any piece of wisdom, it can be misapplied and dogmatically adhered to in a way that is simply self serving.

The Haiti earthquake is seen by the religious right as an opportunity to spread the evangelical version of christianity, and to hell with the haitian people? Others on the extreme right have used the Haiti earthquake and President Obama’s response to it as their latest vehicle for their not so subtle racist views.

Naturally this disgusts those commentators seen as carrying the progressive banner:

Historical context only serves to magnify the depths to which those exploiting Haiti to push their ideology have really sunk:

And that is not even considering US and France’s involvement in the overthrow of exiled ex-president Aristide. It is very easy to anger those with more centrist views by highlighting the spokes people for religious and racist superiority.  Free market ideology is another matter, but deserves an equal amount of scrutiny and perhaps a comparable level of outrage.

There are times when we need to be thinking with what Eleanor Roosevelt calls a “small mind”. This is one such time.

For those who didn’t see last night’s The Events on C4, it is the latest project from UK’s very own mentalist, Derren Brown. In the first installment he claims to have predicted Wednesday’s lottery draw, and then revealed how he did it two days later. The program turned out to be a wonderful piece of entertainment dressed up to look like something educational — or should that be the other way around?

The bit I found most interesting was the coin flipping experiment that he reframed as a competition between two coin flippers. One challenger flipped a coin until he observed three heads in a row, whilst another flipping on Derren’s behalf was looking for a pattern tail-head-head. They each took turns flipping and the side that saw their target sequence first was declared winner of that round. Intuitively, one would think that each of the 8 patterns of 3 coin flips (HHH, HHT, HTH, etc) would be equally likely to turn up, yet Derren’s side won most of the rounds in this game. Unlike the other segments of his show, this one used almost no trickery at all. The coin tossing problem is explained quite well by Oxford mathematician, Peter Donnelly in his TED Talk.

Derren Brown chose tail-head-head (he could have chosen head-tail-tail) precisely because he knew this sequence was the most likely one to turn up in a continuous stream of tosses. If both flippers were instead allowed to flip three coins during each turn, then the original intuition would apply — all 8 outcomes are equally likely. However, the winning strategy Derren claimed to be using makes absolutely no sense. What if the challenger chose HTT, they what would you do?

Update: I’ve looked this sequence over, it is now apparent that both teams are looking for the their chosen combination in one shared sequence of tosses, and not as I had assumed previously, two independent sequences of tosses. This set up makes the game non-transitive and is called Penney’s Game.

As for the rest of the explanation of using crowd sourcing to predict a purely random outcome, perhaps it is fitting that this stunt coincides with the week in which the financial media commemorates the one year anniversary of the collapse of Lehman Brothers and the near catastrophic meltdown of the financial market. A lot of people staked their entire future in the collective wisdom, rationality, and self-correcting crowd sourcing nature of the free market and then got it so spectacularly wrong.

So, how did Derren Brown really do it? One possible method is a camera trick:

Or any other method whereby you load the numbers on the rack moments after the lottery draw. It’s the bigger budget version of the trick demonstrated in this video clip:

The really clever bit is in delaying your “prediction” without people noticing.

In summing up what Derren purports to be the explanation, I’m tempted to cite Douglas Hofstadter’s comments on the Singularity movement that has grown up around Ray Kurzweil:

It’s as if you took a lot of very good food and some dog excrement and blended it all up so that you can’t possibly figure out what’s good or bad. It’s an intimate mixture of rubbish and good ideas, and it’s very hard to disentangle the two, because these are smart people; they’re not stupid.

The difference here is that Derren Brown is an entertainer and not a futurist, and he knows very well which is good and which is utter bollocks. Though I’m not so sure that the same can be said of many futurists.

I look forward to next week’s The Events in which Derren Brown claims to take control the nation of TV viewers. If the social media buzz so far is anything to go by, and especially if there is a significant increase in syndicates (most of which consisting of 24 gullible people) taking part in next week’s lottery, he can comfortably claim to have already achieved this feat.

I recently got back in touch with a classmate who graduated  a decade ago and had migrated halfway around the world to marry the women he fell in love with back then. I had promptly lost contact with him while dealing with my own personal issues, but thanks to the current global popularity of social networking websites we were able to update each other  via messages sent back and forth. Proudly he told me of his two kids and in reply I revealed that I’m still single and childfree, and that given my age and the uncertainties in the British economy, it looks likely to stay that way indefinitely. However, he was of the opinion that being a male, I still had plenty of time to start a family of my own. As if by coincidence, I happened to stumble upon this blog posting on recent research on male fertility. It seems, that men approaching midlife need to be everybit as aware of the ticking of their biological clocks as women already are today. Raising a child in today’s resource constrained and environmentally challenged world is already a significant gamble for healthy couples in their 20’s. Couples who waited until their financial situation was more secure before starting to have kids could face additional financial burdens due to increased health risks to their children. Furthermore, some of the problems their kids might face, such as autism, lower IQ,  and schizophrenia, may not be easily compensated for through financial means alone.

What time I have left to begin healthily reproducing offspring is most likely a lot shorter than most of my friends think.

But I’m not bitter. In fact, I’ve been a subscriber and advocate of the childfree philosophy for over three years now. And when I read in monetary terms how much new parents spend and have given up during the first few years of a baby’s upbringing, I find myself even more convinced that I’ve made the right choice.

Parents spend an average of £13,696 in their baby’s first year with more than £2,000 of that going towards childcare.

In the first three years of their child’s life, parents spend £1,496 on feeding them, £1,142 on clothes and £1,289 on books and toys.

However, one should not infer that I think all parents have made the wrong choice, since everyone’s situation is different and we all should be left to make up their own mind. But I cannot help but wonder how much forethought goes into such an important decision when I read about the conditions some struggling families are forced to endure due to the worsening economy. But is it really fair to demand that couples who are contemplating the step toward parenthood, should be able to predict economic conditions over the two decades it takes to raise a human from birth to adulthood, when top economists cannot even tell whether the recovery will come this year or next? And yet there are parents out there who expect way too much of themselves and end up overreaching. When circumstances do not go the way they hoped the consequences can be disasterous.

A spate of high-profile mass killings in the United States in recent months — including half a dozen rampages since March — shows the impact the economic meltdown is having on rising violence, experts say.

Direct correlations may not always immediately surface, but criminologist Jack Levin, a professor at Northeastern University in Boston, Massachusetts, says the trends are clear.

“Catastrophic losses serve as inspiration, or precipitant,” he told AFP.

In a severe recession there are simply more people suffering such a loss, he says.

In an economic downturn, the United States often sees “many more large-body-count murders — on the job, in the family — as many more Americans feel desperate in a situation they feel got completely out of control.”

Parenthood is indeed a leap into the unknown and I think anyone making that leap, especially after considering the same things that I have, are very courageous people.

When the CEOs of the major American car companies travelled to Washington to beg Congress for a bailout, the most memorable moment in the popular media was when Representative Brad Sherman grilled the CEOs about their use of individual corporate jets.

The issue was deemed sufficiently important for public relations that General Motors wants to block the public from tracking its leased planes. Japanese CEOs seem to have a completely different attitude when dealing with potentially embarrassing corporate perks:

Why the big difference in approach between US and Japanese company leadership? According to Steven Levitt, in his TED talk on Crack Economics, the Americans seem to be following a fairly new principle in economics that is common in gangland hierarchies. This principle is so new that economists don’t have a proper academic term for it, so Levitt uses a gang leader’s parlance:

Indeed, the “weak and shit” hypothesis seems to fit the car company CEOs quite well.