June 29, 2010 Leave a comment
Right after you finish reading this entire blog of course.
- Robin Hanson’s open letter to angsty teens.
- Seth Roberts is not impressed with the results of genetics research. You mean it was supposed to produce results, and not merely $100k+ jobs and nice suburbs houses for PhDs? Guess I was misinformed.
- This plea from Rick Grant to real estate agents to stop waiting for the government’s next trick & get back into actual real estate selling seems symptomatic of a larger issue I was screaming about over a year ago: when the government is this large and bulky and throws around this much money/regulation this haphaardly, the government becomes the economy, the government is the economy. If real estate agents are (as is implied) somehow on the sidelines keeping an eye on when/whether the government will extend this or that tax credit, or whatever other giant macro government goody/subsidy, well – who can blame them? What single other factor is going to have a larger effect on housing than this or that monstrous, ill-conceived, corrupt, rent-seeking, ill-informed government act by this or that government blowhard egomanic? What chance do old-fashioned rational market forces stand when the government can decide to “stimulus” ten billion phony dollars this way or that on the whim of some stupid-ass Senator? Grant wants real-estate agents to ‘get back to work’, but in light of the government’s whimsy, they’d be pretty stupid to. Actually, everyone would.
- Arnold Kling notes the irony in having the EU warn about a collapse of democracy.
- Norman Geras rebuts anti-sport sentiment via the parable of Erica.
- Dafydd ab Hugh has figured out the most loathsome thing about lefties.
- Please also read Dafydd on the one-size-fits-
allnone approach to salt among health nazis. Why is it that the most strongly, passionately-held lefty beliefs seem to be so ill-informed?
- Steve Sailer points out the whiteness of soccer. Predominantly white, and yet you get Diversity Bonus Points for liking (i.e. pretending to like) it – no wonder lefties like (the concept of) soccer so much!
- Per Kurowski letter to the FT on risk-weights.
But when the regulators allow, as they do, the bank to hold only 1.6 percent in capital when lending to AAA rated clients, which implies a leverage of 62.5 to one (100/1.6), then the expected net result on capital for the banks when lending to AAAs, before credit losses, becomes a whopping 31.25% (.5×62.5).
And of course, a bank, and bankers, being able to make 31.25% before credit losses when lending to no risk-AAAs, would be crazy going after the much more difficult 50% margin before credit losses available when lending to the riskier small businesses and entrepreneurs.
Seems to me that between this, and salt regulation, and genetics research, and climate-change regulation, etc etc, I keep encountering a larger pattern, which has these properties:
- a system or theory (risk weightings are good financial regulation, salt-is-bad research, carbon controls to stop climate change) set up by Smart People that has the surface trappings of rationality/science, i.e. the lingo, the jargon, the Peer-Reviewed Papers, etc.;
- it is argued (not in the open marketplace but generally through the political/bureaucratic system) by Smart People that the system/theory should be put in place i.e. that it be given the force of law and whatever enabling executive power necessary;
- only Smart People (i.e. the people who study/work with the system) really understand it in either its evidential support or its implications, because the rest of us, even if we could understand it (which many many could), are basically busy with our lives and don’t have the time;
- in reality, the system/theory is not all that well thought-out and is really rather poor/flimsy;
- but thousands of Smart Peoples’ jobs, livelihoods, lifes’ work, upper middle class lifestyles depend on it staying in place.
And so it does.
Seth Roberts calls this phenomenon, in the context he writes about, ‘cargo-cult science’.
I think from a larger point of view it should be thought of as part of a larger pattern of Parasitic Meritocracy. Meritocrats create and populate self-perpetuating parasitic institutions that feed off the rest of society so as to make life nice and easy for…meritocrats. In fact it should not be surprising that they do this. By definition they are the ones who are good at talking, arguing, and convincing others to follow their ideas because their ideas are good and people who don’t agree with those ideas are stupid and low-class.
Just try to argue against the salt regulation push at a cocktail party with highly educated upper class types for example. See how quickly and totally you are shunned….
- Arnold Kling agrees with me that soccer needs more scoring, echoing my commenter Arthur Doohan that the low scoring encourages lucky/random outcomes (Kling’s point being, that this is bad not good).
- zbicyclist makes an important point I totally agree with about the limits of government/regulatory power (in the context of the oil spill). He doesn’t go as far in extending this logic to consideration of whether various attempts at financial ‘reform’ make sense, but he should.
That would go against the Parasitic Meritocracy however. And that could cause embarrassment.