Social implications of advancing technology

... the economic problems of the future will not be about growth but about something more nettlesome: the ineluctable increase in the number of people with no marketable skills, and technology's role not as the antidote to social conflict, but as its instigator.

The battle will be over how to get the economy's winners to pay for an increasingly costly poor. ... In a future with higher taxes, the divide between rich and poor would be the central economic challenge.

- Economist's View

We're in for a big theoretical debate with highly practical consequences. Liberty, individualism, redistribution of wealth, where the wealth comes from in the first place, what is the Good Life... There must be somewhere between Goldman Sachs and Karl Marx. I don't like the two-party State (cosy-cosy) and I don't like bipolar philosophy.

Interpreting US LTV problems

"Almost one-third of all U.S. households have no mortgage. If you adjust for that, the 70-80 percent debt-to-equity ratio suddenly becomes a major challenge because it means that the two-thirds who do have a mortgage already face a debt-to-equity ratio in excess of 100%. Even worse, once the mean reversion has run its course, two-thirds of US households will be facing a debt-to-equity ratio of 120-125% on average. U.S. CONSUMERS ARE EFFECTIVELY BROKE."

New Deal (htp: Credit Writedowns)

Has he got this right?

And how about us in Britain? Can anyone make sense of it for me?

Bubble 3

It's getting to the point where things go worryingly quiet. First we had a speculative and debt-fuelled stock market bubble; then ditto a housing bubble; and now that the US/UK governments have swallowed the grenades of debt instead of throwing them over the firing-step, a government finance bubble.

I started this blog two years ago, because I thought precious few people sniffed what was in the wind - though I've since discovered that there are quite a few, mostly in the US, who did. I don't know why the UK is so poor at this, unless it's to do with not being used to retaining much of our income. Or a hangover from aristo-landlord days, of pretending to be uninterested in money but always expecting it to be there when needed.

But where can I go from here? There's not much point in continuing to cry iceberg when the ship's side is ripped open. Both Karl Denninger and James Kunstler are saying today that the disaster is far from over, the difference between the two being that Denninger still believes in fixing it with due legal process and decisive action, whereas Kunstler has no such hope and almost looks forward to the final scene because it will usher in a postmodern bucolic age and restore human values. (Kunstler's latest echoes what I've said recently, about drawing some cash for just in case.)

I feel like the Chinese philosopher who dreamt he was a butterfly and when he woke, was not sure whether he wasn't a butterfly dreaming he was a Chinese philospher. The sun shines (beautifully today), I have my teaching to prepare for September, I am proceeding with my plan to revive my IFA business. And yet these projects seem insubstantial, a soapskin full of emptiness.

For now, I have to go on with the assumption that Denninger is right - that when it gets bad enough, tough action will be taken and we'll pull through. That's the horse I'm backing. For I don't believe the proto-Marxist fantasy that a better society will rise out of a collapse, especially not on an overcrowded island like the one where I live.

Off on my hols again next week; and when I get back, time to tackle real life.

Swirly Marmite

According to this and this, the "dark matter" (that nobody can observe directly) influences the distribution, spin and orientation of galaxies. As Haldane said, "The Universe is not only queerer than we suppose, but queerer than we can suppose."

Bias

Thought-provoking article in The Guardian today, about how even medical research can end up with an unreliable consensus skewed by influential reviews:

A small number of review papers funnelled large amounts of traffic through the network. These acted like a lens, collecting and focusing citations on the papers supporting the hypothesis.

Worse, science can be "spun":

One paper reported no beta amyloid in three of five patients with IBM, and its presence in only a "few fibres" in the remaining two patients; but three subsequent papers cited this data, saying that it "confirmed" the hypothesis.

This is an exaggeration at best, but the power of the social network theory approach is to show what happened next: over the following 10 years these three supportive citations were the root of 7,848 supportive citation paths, producing chains of false claim in the network, amplifying the distortion.

This leads one on to consider the implications of social network theory. I suppose it's a talent for this that helped Mao and Stalin rise, but also it may explain how people in other fields (e.g. finance and banking, the media) can be both successful and dangerously dumb. (Remember Mao's bright idea of 1958, culling sparrows because they ate crops? The resulting explosion in the crop-gobbling insect population forced him to ask Russia for thousands of birds to restock).

And have you watched the celeb version of "Who wants to be a millionaire?" and been struck by the ignorance of some of them? Yet they know enough (of what they need to know) to make a sight more than most of us. The technique seems to be, get the job first, then learn how to do it from those around you. Duffers try to learn first, then apply for the post, by which time it's gone. Look at chancer Blair as against plod-towards-it Brown. (Some say that Blair has never read a book; but then, he doesn't need to. As Disraeli said, "When I want to read a book, I write one.")

Connected to social network theory is Cass Sunstein's notion of "group polarisation", where like-minded people get together, not only reinforcing their views but making them more extreme. I suppose this has implications not just for political caucuses and media advisers, but for how we choose our newspapers.

And what blogs we read.

Happy or clever

"If you're so clever, why aren't you happy?" a friend's mother would say to him.

I'd turn that around. I think that for some, being unhappy is what stimulates the mind. That doesn't mean that I believe it's a good thing; it's just that your brain accelerates, looking for a way to survive. Having taught Looked After Children for a couple of years, I'd say that typically, although they were academic under-achievers, they were unusually sharp for their age in other ways. Maybe that's also why girls from broken homes become sexualised earlier.

But the one thing that all this cleverness doesn't address is the root of the cleverness itself. It may seem an impertinence to judge people one hasn't met - though that is the bread and butter of the modern media - but would you regard, say, Stephen Fry or Dawn French as happy, well-balanced people?

A clever person is more likely to out-argue you than to put right anything about themselves. I've read that psychoanalysts find highly intelligent patients the hardest to cure; and that successful entertainers avoid seeking a solution for their neuroses, because it might turn off the tap of their talent.

I hope for a world that is fit, not for heroes nor for geniuses, but for the dully contented.

Our Achilles heel?

The Contrarian Investor suggests that the next market destabilizing factor is the need for minor European nations to refinance.