economy

Nobel For Economics: Herd Mind

Posted in economy, ideas, pop culture on December 13th, 2013 by Ira Altschiller – Comments Off on Nobel For Economics: Herd Mind

The winner of the Nobel for economics explained his approach in an interview on PBS. He feels data indicates that the markets are driven by emotion, not reason. He noted it was odd that the other winners of the same prize had contradictory philosophies.

It’s also odd that emotion drives action is a revelation. Sometimes it seems academia is an extension of the pop culture, saying the obvious, but using academic guild talk.

The realization that the markets are driven by emotion is something of which we are all aware. The idea has been sanctified now by a prize. But it has seemed to me lately that this insight into reality, that human beings are principally driven by emotion, that they find reasons afterward, has become more and more obvious.

Benjamin Franklin: “The nice thing about being a reasonable creature is that you can find a reason for anything you want to do”.

It has always been assumed the arts are driven by emotion, but the art world to a large extent affects intellect now. It’s conceptual, you know. Certainly from the political to the scientific to the pop culture, it’s all herd mind.

Tocqueville noted this tendency toward consensus in America. Maybe for the center to hold in so diverse a country it’s better if everyone keeps their own counsel and just agrees with…whatever. But if you have the right to have an opinion, why not express it? You know: a right unused is a right that can evaporate.

Aspiring to being logical, intellectual creatures, is more a pipe dream now, with the internet driving the herd more quickly and packing it more tightly, more irrationally, more extremely. What really drives the world now is psychology and the chaos system of group interaction; it’s Id all the time, everytime.

Hasn’t it always been that way though? cf. Shakespeare.

Steve Jobs

Posted in computers, economy, ideas, pop culture on October 6th, 2011 by Ira Altschiller – Comments Off on Steve Jobs

The enormous response to the death of Steve Jobs is remarkable. For a public figure, a man who ran a corporation, to have entered the emotional life of so many is an affirmation of Jobs beyond his industry. People are grateful for the tools he made. For the enjoyment and possibility those tools have brought. The tools he made, or made possible, have opened so many possibilities for me in my work.

He was more identified with his multi-billion dollar corporation than people who run small businesses who have their name on the door. He didn’t push himself forward to gain fame; he was up front making presentations because he loved the products he was so involved in creating. He never felt a salesman – always an enthusiast who shared his audience’s pleasure. He had an aesthetic response to objects and tools. He was proud of what he did.

His signature quote: He didn’t give people what they wanted, he gave them what they didn’t know they wanted. That quality of breaking the mold and believing you can accomplish your self-set task is an essential of true creativity.

It also seems likely that the outpouring of sadness over the death of Steve Jobs has to do with his personality and the times. His body frail, but his spirit vigorous, even at the end; he had an optimism and belief in the future. A vibrant, creative individual at a time where there seem no leaders, no easy answers.

Grab Bag: Do Not Pork Chops

Posted in economy, ideas, miscellaneous on December 5th, 2010 by Ira Altschiller – Comments Off on Grab Bag: Do Not Pork Chops

The football announcer just said the quarterback had great pocket presence. Something we should all have.

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To be filed under Something Else To Worry About: Municipal bonds used to be the safest of bets but this article says maybe not:

Municipal bankruptcies or defaults have been extremely rare – no state has defaulted since the Great Depression…

But the finances of some state and local governments are so distressed that some analysts say they are reminded of the run-up to the subprime mortgage meltdown or of the debt crisis hitting nations in Europe.

Analysts fear that at some point – no one knows when – investors could balk at lending to the weakest states, setting off a crisis that could spread to the stronger ones, much as the turmoil in Europe has spread from country to country.

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We saw a sign on a garden today that said “Do Not Pick Crops” which we at first misread as “Do Not Pork Chops”. There really should be and probably is a web site devoted to misread signs.

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This article discusses “Why Modern Life Feels Rather Undead”

This is our collective fear projection: that we will be consumed. Zombies are like the Internet and the media and every conversation we don’t want to have. All of it comes at us endlessly (and thoughtlessly), and – if we surrender – we will be overtaken and absorbed. Yet this war is manageable, if not necessarily winnable. As long we keep deleting whatever’s directly in front of us, we survive. We live to eliminate the zombies of tomorrow. We are able to remain human, at least for the time being. Our enemy is relentless and colossal, but also uncreative and stupid.

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We just watched the movie Zombieland. Most excellent – Bill Murray’s appearance a great bonus in this playful movie.

Obama’s Health Care Speech

Posted in economy, politics on September 9th, 2009 by Ira Altschiller – Comments Off on Obama’s Health Care Speech

Obama’s speech on 9/9/09 was good. The credit is given to Obama, but it is the speech writer who put it together, along with the cabinet heads. Nevertheless, the quarterback gets the credit and the blame and Obama presented the speech well. (I wonder how many times the producer said, “cut to Michelle”?)

Now what? You hope it succeeds. Whatever it is. In the midst of the speech, the very crux really, after laying out the overview, Obama said, of course, “the details need to be worked out”. This met with laughter. A tome could be written…

Whether things can be changed for the better without a rise in costs? Whether cost cutting can be accomplished as promised? Whether, when the details start coming out, and the analysts look at it and reveal the actual hit individuals will take, and the public says, “ohhhhh”, Obama can still sell the plan. I watch his speeches and feel he is performing – that he has no conviction or even much of a connection to what he is saying.

Obama has always seemed dissociated to me. The public, especially the press and his closest advisors, appear enablers who are deeply complicit in the current environment of cultish narcissism. It’s possible Obama may meet “a success undreamt of in common hours”. Stranger things have happened. There is just no track record that would indicate that Obama does more than promise big and deliver small.

Boy, would I love it if he did succeed. Boy, would it be great if the health insurance industry started to fade like the festering pustule it has always been. Just dry up and blow away. Obama claims that is not his aim. But it should be, and behind the scenes statements over the years have indicated many want that outcome. We shall see.

Krugman’s Delusion

Posted in economy, ideas on August 7th, 2009 by Ira Altschiller – Comments Off on Krugman’s Delusion

Paul Krugman in a review writes, inadvertently, what would be a good descriptiion of himself,

…one’s career, reputation, even sense of self-worth can end up being defined by a particular intellectual approach, so that supporters of the approach start to resemble fervent political activists – or members of a cult.

Krugman won a Nobel Prize more for his anti-Bush fulminations than his enduring contribution to his actual field. The Nobel committee has a habit of finding such voices and rewarding them. Since that time, with the excess of rhetoric retired and the Democrats having won handily, Krugman has gone back to his field with some circumspection. His review of three books of putative financial geniuses says,

Do the lives of the sages carry useful lessons for the rest of us? Soros doesn’t really seem to have a method, except that of being smarter than anyone else. Buffett does have a method – figure out what a company is really worth, and buy it if you can get it cheap – but it’s not a method that would work for anyone without his gifts. And Volcker’s main asset is his implacable integrity, which most mortals would find hard to match…

…what I hear from my finance professor friends is that there’s a lot less soul-searching under way than you might expect. And Wall Street’s appetite for complex strategies that sound clever – and can be sold to credulous investors – survived L.T.C.M.’s debacle; why can’t it survive this crisis, too?

The rule is there are no rules and things go on pretty much as they always had before. People don’t change their fundamental selves – except in the rarest of instances. Check with Shakespeare about that.

Dancing Into The Sunset

Posted in economy on July 26th, 2009 by Ira Altschiller – Comments Off on Dancing Into The Sunset

PBS replayed a documentary following the NYC ballet as it visited Russia to honor their founder, George Balanchine. They are odd ducks, these dedicated dancers. The camera followed them as they explored the Russia Balanchine knew, walking with an unself-conscious, exquisite gait. It sounds funny, but you realize watching them walk how much walking is itself an athletic movement and how poorly most people do it.

The dancers are more disciplined and athletic than any professional athlete; they come out of long tradition – the aura of art and the theater inhabits their world. Balanchine was a genius and the NYC ballet his gem. Even to a non-specialist like myself, they were distinctly better than anyone else.

In this article we learn that this institution, the NYC Ballet, that always seemed so well funded and secure, has had to layoff 11 dancers from their corps de ballet. These are the great dancers you see behind the principals, the stars. And the corps for the NYC Ballet are great. Balanchine’s pieces are so precise and demanding that much was required, and if anything went wrong, like a missed note in a Bach cascade of music, it glared.

One dancer who was let go said,

“I’ve seen so many dancers come and go…Everyone is expendable. Even principal dancers are replaceable. It’s all about the system, the end product.”

This is beginning to sound eerily familiar.

Steve Jobs and Harvard Business Review

Posted in economy, ideas on July 7th, 2009 by Ira Altschiller – Comments Off on Steve Jobs and Harvard Business Review

Harvard Business School gave us George Bush and many of the CEOs and deep thinkers that have crashed the economy. So who better to turn to when considering Steve Jobs than the Harvard Business Review.

Jobs, for all of his virtues, clings to the Great Man Theory of Leadership – a CEO-centric model of executive power that is outmoded, unsustainable, and, for most of us mere mortals, ineffective in a world of non-stop change. A Wired magazine cover story from last year made the point well. [A Wired article] begins with a memorable anecdote – the CEO, in search of a space in the company’s crowded parking lot, regularly leaves his Mercedes in a handicapped space, sometimes taking up two spaces. The pattern became so noticeable that employees, according to the article, put notes on his windshield that read, Park Different.

The winners in competitive capitalism seldom are emblems of virtue.

The HBR article is titled “Decoding Steve Jobs: Trust the Art, Not the Artist”, but Duchamp said, “I don’t believe in art. I believe in artists.” You would like to believe it was a cute flip to begin a critique of Jobs, but not. Also, Duchamp was something of a pretentious space cadet besides being an interesting outlier conceptualist, so I don’t know about quoting him for insight.

Mini-Madoff

Posted in economy on May 25th, 2009 by Ira Altschiller – Comments Off on Mini-Madoff

What’s it like inside the Madoff household? Why did he do it?

This article comes close to an insight. My own take, paraphrasing and contradicting Tolstoy: honorable people are all honorable in their own unique way, but thieves are all the same. Indifferent to all but their own impulses.

The article describes a mini-Madoff. Only 4 million stolen. Only. But the mindset of the thief, robbing from those closest to him, without compassion, is complicated by his human, if not fully available for scrutiny, complexity. The man’s stepson wrote the article. He was the only person left to appear in the court galleries for his stepfather – everyone else disappointed or filled with rage at an individual once considered a “pillar of the community”.

The article doesn’t answer why. That is unavailable to everyone most likely – including the perpetrator – only Shakespeare could express what lies inside an individual who betrays so many. But the article can, and does show the ambiguities of love and connection.

I was in a Miami courtroom, watching my 66-year-old stepfather be sentenced to 63 months in prison for doing […what Madoff did]…But for better and worse, he’s my dad. He taught me to play tennis, bought me my first dog, gave me “The Great Gatsby” (talk about irony). He was the one who read my report cards, made me study for the SAT and sent me extra money when I went broke at college. More than my somewhat eccentric biological parents, he was the one who shaped me, made me into a guy with a good job and a mortgage and two children. You know, a semi-normal grownup.

Richard Posner’s Economics

Posted in economy on April 27th, 2009 by Ira Altschiller – Comments Off on Richard Posner’s Economics

A review of a book that explains capitalism via psychology.

What happens in a depression, and makes it a psychological event as well as an economic and political one, is that the economic environment becomes so uncertain that people freeze.

The review is worth reading because the reviewer is the brilliant Richard Posner. He simplifies the dismal science as he confronts the arguments of the book. It is a lesson in the dismal science that is not itself dismal reading.

The idea that monetary policy–raising interest rates (and therefore reducing the amount of money in circulation, because interest is the price of putting money into circulation rather than hoarding it) to check inflation, and lowering interest rates to check economic downturns–holds the key to moderating the business cycle, and therefore to preventing depressions as well as inflations, has been falsified.

The above is Keynesian economics. A product of a liberal approach to the economy.

Posner says,

Many influential economists came to oppose deficit spending on public projects, which injects the government deep into the economy and creates a risk of inflation and high taxes in the future. Increasingly economists favored the monetarist approach, championed most famously by Milton Friedman, which teaches that the proper management of the money supply is all that is needed to avert depressions, and that it can do so painlessly.

The book under review seeks to,

…marry Keynes to “behavioral economics” and offer the resulting union as a replacement for conventional monetarist economics…

The crucial point about the book is that it, “… rejects the “rational man” model of conventional economic theory in favor of what its proponents consider a more realistic picture of human motivations and capacities. Akerlof and Shiller believe that if people were rational, there would be no depressions; but there are depressions, and so the rational model must be inadequate.”

The takeaway:

As one reads this book, one has the sense that deep down Akerlof and Shiller believe that being rational is the same as being right. That is a mistake. It prevents them from entertaining the possibility that what has now plunged the world into depression is a cascade of mistakes by rational businessmen, government officials, academic economists, consumers, and homebuyers, operating in an unexpectedly fragile economic environment…

Reason doesn’t know everything there is to know – it just thinks it does.

The complexity of a modern economy has defeated efforts to create mathematical models that would enable depressions to be predicted and would provide guidance on how to prevent them or, failing that, to recover from them. The insights of behavioral economics have not done the trick, either.

Desperately seeking answers.

Amazon. Not Good.

Posted in economy, miscellaneous on April 23rd, 2009 by Ira Altschiller – Comments Off on Amazon. Not Good.

I’m kind of a fan of Amazon. For a big company they have been pretty smart. Much of their implementation, for example, the ease of returning items, is well thought out. I have a Kindle book that was a little more difficult to make available than necessary, but it was still, for a new deal, pretty good. I buy a lot of stuff from them.

But this article, saying Amazon.Bad, is definitely you-guessed-it, not good. As one commenter said, you tend to give credence to the reviews. But according to the article,

After buying an anti-snoring mouthpiece from a third-party seller on Amazon, reader Bob received an email from the company offering him a free mouthpiece in exchange for a five-star review. He noted this attempted bribe in his Amazon review, and Amazon deleted it. Twice.

If companies only understood how much their good name matters. Like the mother-ship itself, the economy, businesses run on consumer confidence.

What Happens After The Recession?

Posted in economy on April 15th, 2009 by Ira Altschiller – Comments Off on What Happens After The Recession?

This Harvard study (opens pdf) takes a look at what is going to happen after – after a deep recession combines with a collapse of the financial sector.

This is what passes for a positive assertion: “Even recessions sparked by financial crises do eventually end, albeit almost invariably accompanied by massive increases in government debt. ”

Unfortunately, they say that underneath…

An examination of the aftermath of severe financial crises shows deep and lasting effects on asset prices, output and employment. Unemployment rises and housing price declines extend out for five and six years, respectively.

And the looming 8000 pound gorilla – international collapse, as nations default,

Indeed, these historical comparisons were based on episodes that, with the notable exception of the Great Depression in the United States, were individual or regional in nature. The global nature of the crisis will make it far more difficult for many countries to grow their way out through higher exports, or to smooth the consumption effects through foreign borrowing. In such circumstances, the recent lull in sovereign defaults is likely to come to an end.