Sunday, February 24, 2013

There's No Such Thing as Building a Business - Clive Crook - The Atlantic

There's No Such Thing as Building a Business - Clive Crook - The Atlantic

I think we have gone through a period when too many children and people have been given to understand "I have a problem, it is the Government's job to cope with it!" or "I have a problem, I will go and get a grant to cope with it!" "I am homeless, the Government must house me!" and so they are casting their problems on society and who is society? There is no such thing. There are individual men and women and there are families and no government can do anything except through people and people look to themselves first...

Britain was going through a v-Bi stagnation, innovations in technology led to more Iv-B where new ideas from individuals were being obstructed as deviant from the normalized society. Often the country was poor enought o become Roy, businesses became G public property as did housing. The new wealth from these Iv-B shoots wanted more GB privatization and individualism like a forest trying to grow from a near desert after new resources and seeds of innovation were added. Looking to themselves first is competitive Iv-B instead of cooperative V-Bi. This set off booms that would eventually bust like growing weeds.

There is no such thing as society. There is [a] living tapestry of men and women and people and the beauty of that tapestry and the quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate.
To any fair-minded person, the idea that Thatcher denied the existence of society is as daft as the idea that Obama thinks Steve Jobs didn't build Apple. Actually her meaning was nearly the opposite of the quoted words. What she meant, and what she ought to have said, was, "When you tell society to fix something, remember it's not some abstract third party you're making demands on but the people who make up that society." What Obama meant, and what he ought to have said, was, "If you've got a business, you didn't build it on your own."

Economist's View: Shiller: Bubbles without Markets

Economist's View: Shiller: Bubbles without Markets

Some examples of social epidemics unsupported by any speculative markets can be found in Charles MacKay’s 1841 best seller Memoirs of Extraordinary Popular Delusions and the Madness of Crowds.The book made some historical bubbles famous: the Mississippi bubble 1719-20, the South Sea Company Bubble 1711-20, and the tulip mania of the 1630’s. But the book contained other, non-market, examples as well.
MacKay gave examples, over the centuries, of social epidemics involving belief in alchemists, prophets of Judgment Day, fortune tellers, astrologers, physicians employing magnets, witch hunters, and crusaders. Some of these epidemics had profound economic consequences. The Crusades from the eleventh to the thirteenth century, for example... Between one and three million people died in the Crusades.

These are usualy Iv-B and Oy-R, people are often deluded on both sides. For example Iv and Oy quack healers might see some results and this spreads to other quacks, R and B people also see some results and it spreads as rumours of cures like Chinese Whispers or a contagion.  

There was no way, of course, for anyone either to invest in or to bet against the success of any of the activities promoted by the social epidemics – no professional opinion or outlet for analysts’ reports on these activities. So there was nothing to stop these social epidemics from attaining ridiculous proportions. ...
Without I-O policing there is a disconnect where this contagion grows in secret while the more transparent V-Bi and Y-Ro parts of society ignore or don't see them. 

The recent and ongoing world financial crisis pales in comparison with these events. And it is important to appreciate why. Modern economies have free markets, along with business analysts with their recommendations, ratings agencies with their classifications of securities, and accountants with their balance sheets and income statements. And then, too, there are auditors, lawyers and regulators.
All of these groups have their respective professional associations, which hold regular meetings and establish certification standards that keep the information up-to-date and the practitioners ethical in their work. The full development of these institutions renders really serious economic catastrophes – the kind that dwarf the 2008 crisis – virtually impossible.

Not when there is weak I-O policing, the disconnect allows them to flourish undetected like quack healers without police catching them in their frauds. For example in Delhi there are as many uncertified doctors peddling medicine as those that are licensed according to the BB series Scam City. They each work disconnected from each other.

America's demographic cliff

Collectively, we boomers were lucky. We were the most healthy, educated and privileged generation ever born. Our youth was spent virtually worry free. Our college educations were inexpensive, gas was cheap, jobs were plentiful and our futures were bright.

This is the growing of Biv society in rich resources, B baby boomers growing up together and changing the world to suit themselves. They were highly competitive and innovative at this stage like the roots of a tree.
We were the "Hippies" of the late 1960's and early 70's. Love was free and drugs were cheap (orwas it the other way around).

 At this stage they become Bi teaming up to get more resources by cooperating.

Then the 1980's rolled around and we became "Yuppies". We began to believe that success was our birthright.

After Bi confrontation with the Iv dominated police of the establishment they grew up to be protected by the same police and to keep their brithright of their original B roots. They became Iv competitive. 

We bought our BMW's and wore our V-neck sweaters. We turned conspicuous consumption into an art form. Hell, even Newsweek Magazine gave us our own year (1984). We were so busy clamoring to the top of the corporate ladder we forgot to develop any job or management skills which would lay a foundation for future generations to flourish.

The corporate ladder is like growing Iv branches.
Then as we aged, we hit our peak spending and borrowing years in the 1990's.  We went a bit middle age crazy. We splurged on second homes and McMansions.

This is the V flowering phase before retirment, people seed like trees with their children after showing off their assets like flowers to attract suitors for them.

 We thought fuel would be relatively cheap forever and bought gas guzzling SUV's. We also padded our financial statements and maxed out our credit cards trying to "keep up with the Jones's". Some of our brethren became bank CEO's and leading politicians, whose unethical and irresponsible behavior has been a reflection of our entire generation. We didn't want the party to end and they just tried to prolong it for us. We wanted it all and never learned nor cared for moderation.

V people now form a team to get more assets, the top of a tree tends to grab more resources from the rest of it. 
And now in the Autumn of our lives it looks like we are going to get it all (of course in devalued dollars). We will leave those coming up behind us with nothing but debt, austerity and a lower standard of living.

The trees collapse allowing their seeds or children to use the humus to grow in.

We will be reigning in our spending and hoping to save so we can offset future inflation. The malls, our cathedrals of consumption, will be ghosts towns compared to what they were, with "30%-70% off" signs decorating their stores windows.

Like dead and dying trees of wood which takes a long time to decay into humus, or it can be propped up as a zombie economy.

We will be net sellers of equities and mutual funds soon, not net buyers. Therefore, trade accordingly. It was fun while it lasted but now the piper must be paid. You know the old saying; the longer the party the bigger the hangover. Well, this hangover may last 25-30 years until the last of my generation are dead, either through natural causes or intergenerational warfare.

Inequality: Complex machines, simple cogs | The Economist

Inequality: Complex machines, simple cogs | The Economist

Mr Lindsey approaches the question of rising inequality through the prism of complexity. Modern economic growth, he notes, has been the story of positive feedback loops between specialisation and knowledge accumulation, which have given rise to ever more complex social and economic systems. Economic outcomes in this world come down to differential abilities in managing complexity.

In Aperiomics this complexity is largely hidden in society until the chaos causes collapses, for example in the GFC. Until then we see glimpses of orderly exponential growth. This specialization is often not knoweldge accumulation but an accumlation of rumors and deceptions, for example like beliefs and hype in a real estate boom. The assumption is that someone else somewhere understands it which feeds back into false confidence then disillusionment in a crash. 

  The story of economic growth as one of ever increasing complexity is attractive. I'm not sure I'm sold on the idea that a steady increase in societal and economic complexity must necessarily lead to more inequality, however. That is certainly the story of the past 30 years, but I don't know if it's the story of the era of modern economic growth as a whole.

This inequality comes more in an Iv-B and V-Bi disconnect, Iv-B is like a poker game of bluff where some do far better creating inequality and happens around innovation.

 The honing of assembly line techniques allowed for further deskilling, but workers were able to capture a large share of the gains from the resulting surge in productivity. Production was becoming more complex, but jobs were getting simpler, and the upshot was an explosion in opportunities for high-wage, middle- to low-skill employment.

Assembly lines grow like Iv-B root and branch structures, parts are put together into a whole like roots coming together onto a trunk. Jobs can become more spcialized and chaotic, they can lead to an exponential growth or explosion of employment or collapses if industries fail. The system can be highly unstable as the explosion of growth in the 1920s led to the Great Depression.

Moral Imagination and the Fate of the World

Now here's the thing about policy makers: they have in recent decades become less and less autonomous. Thanks largely to new information technologies, they're more constrained by public opinion, by immediate and powerful popular feedback. And I contend that whether they are "allowed" by their constituencies to pursue wise policies will depend on their constituencies' moral character in a certain specific sense.

This can become highly chaotic where leaders not follwing this feedback might suddenly collapse, their popularity might also boom and bust between floors and ceilings compelling them along this path. By conteast a V-Bi government might try to follow a normalized equilibrium of policy ignoring this pressure to become deviant. The sense of crisis forces them to become more Iv-B, and in some poorer Roy countries Oy-R. it can also be caused by revolutionary and counter revolutionary innovations and inventions, these cause weed like growth to use these new resources. The politicians then create more chaotic laws leading to a stronger disconnect and weakening of I-O policing which tries to moderate and ends up chafing all parties. For example Bill Black says under Clinton prosecuting fraud dropped because it would hurt innovation, for example a bank might collapse or lose the competition against other corrupt banks elsewhere, then get overshadowed.

Networked zealotry | Critical Thinking Applied

Networked zealotry | Critical Thinking Applied

The dramatic drop in communication costs, and explosion in ability to connect, that the information technology revolution represents means that the like-minded can associate together far more easily. This can be liberating and reassuring. It can also lead to intensification of beliefs as people reinforce each other and divergent information is excluded or discredited. An ironic effect of massively increased access to information is to make the crippled epistemology (pdf) which is so much a part of zealotry and fanaticism easier to maintain.
Established groupthinkThe established information institutions have (more than) done their bit to create the basis for these patterns. While critical thinking is allegedly an ideal of post-Enlightenment education (particularly universities), what educations systems have generally actually been teaching and practising (particularly universities) has been groupthink. (Scott Sumner, for example, regularly bewails the current groupthink among macroeconomists–all the more remarkable since it fails to conform to previous accepted analysis.)

This is V-Bi and Y-Ro thinking where teams develop normalized ideas and deviant information is discredited as potential deception or wrong Iv-B and Oy-R. 

Saturday, February 23, 2013



We normally carry our sense of identity around with us and are thus well aware of how we are relating to other people. There are ways, however of losing ourselves, including:
  • Becoming a part of a large group, such as a mob or army.
  • Becoming engrossed in an interesting task, such as a hobby.
  • Meditation and other contemplative activities.
Deindividuation into a group results in a loss of individual identity and a gaining of the social identity of the group. When two groups argue (and crowd problems are often between groups), it is like two people arguing. The three most important factors for deindividuation in a group of people are:
  • Anonymity, so I can not be found out.
  • Diffused responsibility, so I am not responsible for my actions.
  • Group size, as a larger group increases the above two factors. 

In many cases it is advantageous to join V-Bi and Y-Ro teams, however they lose the ability to deceive as individuals as well as to compete with others.