Lunch at the Labs

Because of super storm Sandy I did not get to post these before the Presidential election, but I think they are of general interest and perhaps even more relevant in hindsight.

• Peter Thiel: Austerity Coming, No Matter Who You Vote For (10/08/2012)
  

  Short Bloomberg video with the libertarian/contrarian Peter Thiel about the Presidential race:
      It might not matter who wins the election
      Obama & Romney are more similar than people think

• Why do "Third Parties Never Work"? Collusion and the Presidential Debates (10/08/2012)
  A nice explanation of why the presidential debates are a farce (from Falguni A. Sheth's Translation Exercises blog).

• America's duopoly of money in politics and manipulation of public opinion (10/03/2012).
  Charles Ferguson opines in The Guardian that "behind the divisiveness lies a deeper bipartisan consensus in which donors own democracy and there are no votes in reform".

  And so Obama can avoid all the hard issues and yet retain the grudging support of his base simply by proposing modest tax increases on the wealthy, and by supporting the safety net (unemployment benefits, Medicare, social security) that Romney might cut.
  Voila: an election in which there are a dozen elephants in the room, and neither candidate pays them any notice at all; an election that Obama can win because he's somewhat less bad, somewhat less utterly bankrupt, than the other guy.
  Welcome to America's new and improved two-party system.

• Why evangelical Christians like Romney? Why civil libertarians like Obama? (Tom Bissell 09/27/2012)

  Because our politics don't necessarily have anything to do with our beliefs. Politics, and presidential politics particularly, are instead dictated by nodes of sympathetic inclination.

  Mentioned at the end is, iSideWith.com where you can take a political quiz that lets you select your stance on many important issues, allowing you to specify how important they are to you and even letting you choose another position that is not specified. Once completed it tells you which political candidate you side on most issues with. You may be surprised that you didn't vote for the person you most agree with! Maybe voting on issues rather than candidates would give better results?

There seems to be a lot of disagreement on how to improve the economy. The different economic proposals remind me of the various schemes for perpetual motion machines submitted to the patent office. Just as we know from first principles that you cannot create new energy by mechanical manipulations, I don't see how you can create new wealth by financial manipulations. I think to improve the lives of people you need new discoveries and inventions. In the past things like the industrial revolution, the agricultural revolution, the automobile, airplane and computers have made people better off. Sure governments can ruin things by abusing people, but I think things like tax policy and government spending are more about how existing wealth is distributed rather than making everyone wealthier. So I was happy to see this quote from the economist and mutual fund owner John Hussman on his web site http://hussmanfunds.com/wmc/wmc120924.htm:

An increase in price alters the profile of investment returns by turning prospective future returns into past returns (and vice versa when prices fall), but economic wealth is only created by the generation of additional goods and services (and cash flows from an investment standpoint) that actually emerge in the future. Security prices are a place-holder until the expected future goods, services and cash flows actually arrive. Raising the price that investors pay today for in return for some fixed payment in the future does not create wealth in aggregate.

This is also in line with Tyler Cowen's The Great Stagnation.

I would bet that if a new cheap source of energy were found (think cheap and safe nuclear fusion) our current economic problems would mostly disappear, whether we followed Keynesian or Hayekian economic policies. And furthermore whatever policies were being followed at the time would be given credit when in fact they had nothing to do with it.

The following concerning the widespread prevalence and persistence of misinformation was published in the SAGE journal Psychological Science in the Public Interest December 2012 vol. 13 no. 3 106-131:

        Misinformation and Its Correction: Continued Influence and Successful Debiasing
        Stephan Lewandowsky,
        Ullrich K. H. Ecker,
        Colleen M. Seifert,
        Norbert Schwarz and
        John Cook

It's a bit lengthy but is worthwhile reading in its entirety and to whet your appetite these are the sub-headings:
    • The Societal Cost of Misinformation
    • Origins of Misinformation
    • From Individual Cognition to Debiasing Strategies
    • Assessing the Truth of a Statement: Recipients' Strategies
    • The Continued Influence Effect: Retractions Fail to Eliminate the Influence of Misinformation
    • Reducing the Impact of Misinformation
    • Corrections in the Face of Existing Belief Systems: Worldview and Skepticism
    • Debiasing in an Open Society
    • Future Directions
    • Concluding Remarks: Psychosocial, Ethical, and Practical Implications

After reading it I emailed the first author the following comment:

Although what your wrote makes complete sense to me, I think an important consideration is missing. Namely, how the human brain functions depends on "software" and "hardware" and it seems to me you just consider the former. To clarify what I mean, consider two extreme examples.

(1) Optical Illusions I'm sure you are aware of the numerous examples of where what you see does not match up with what is really there. Even after you make the measurement that proves you are seeing incorrectly, you can still cannot "see the truth".

(2) Mental Illness Someone who is mentally retarded may not be able to reason well enough to know what is true or false and a schizophrenic often cannot tell what is real and not real.

In both cases how the brain functions prevents the person from knowing what is true and (at least usually) no amount of reasoning will fix the perceptual problem. My hypothesis is that although these are extreme cases, there are a wide range of conditions of varying degrees of impairment that limit the brain's ability to perceive reality and know what is true. Not totally unlike a computer bug, it may be software or hardware and only sometimes can software compensate for a hardware problem.

Over the years I have thought about these issues in areas like economics, politics and religion where there are fewer facts, but the cognitive issues you describe seem to be the same as for misinformation. For example, after the prediction about the end of the world by a religious cult fails to come true, "cognitive dissonance" causes members to become even more religious and this seems similar to what you call the “backfire” effect.

I am less optimistic than you that any of these problems can be solved. Are you familiar with:
        Why Do Humans Reason? Arguments for an Argumentative Theory
        Hugo Mercier and Dan Sperber
        http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1698090 and,
        http://edge.org/conversation/the-argumentative-theory

The claim is made that human reasoning evolved to "devise and evaluate arguments intended to persuade" and not to discover the truth. If that is the case then it may be vary hard to change how evolution has "wired" us.

The only response I received was:

Owing to the volume of traffic I apologize in advance if I cannot issue a personalized response to your message.