Softpanorama

May the source be with you, but remember the KISS principle ;-)
Home Switchboard Unix Administration Red Hat TCP/IP Networks Neoliberalism Toxic Managers
(slightly skeptical) Educational society promoting "Back to basics" movement against IT overcomplexity and  bastardization of classic Unix

Softpanorama Lysenkoism and PseudoScience Bulletin, 2009

Home 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 1999

For the list of top articles see Recommended Links section


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[Sep 10, 2009] Priceless: How The Federal Reserve Bought The Economics Profession by Ryan Grim

The Huffington Post
The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."

The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.

Despite all this, Bernanke has been nominated for a second term by President Obama.

In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.

Paul Krugman, in Sunday's New York Times magazine, did his own autopsy of economics, asking "How Did Economists Get It So Wrong?" Krugman concludes that "[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system."

So who seduced them?

The Fed did it.

Three Decades of Domination

The Fed has been dominating the profession for about three decades. "For the economics profession that came out of the [second world] war, the Federal Reserve was not a very important place as far as they were concerned, and their views on monetary policy were not framed by a working relationship with the Federal Reserve. So I would date it to maybe the mid-1970s," says University of Texas economics professor -- and Fed critic -- James Galbraith. "The generation that I grew up under, which included both Milton Friedman on the right and Jim Tobin on the left, were independent of the Fed. They sent students to the Fed and they influenced the Fed, but there wasn't a culture of consulting, and it wasn't the same vast network of professional economists working there."

But by 1993, when former Fed Chairman Greenspan provided the House banking committee with a breakdown of the number of economists on contract or employed by the Fed, he reported that 189 worked for the board itself and another 171 for the various regional banks. Adding in statisticians, support staff and "officers" -- who are generally also economists -- the total number came to 730. And then there were the contracts. Over a three-year period ending in October 1994, the Fed awarded 305 contracts to 209 professors worth a total of $3 million.

Just how dominant is the Fed today?

The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a "visiting scholarship." A Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That's a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list "monetary policy, central banking, and the supply of money and credit," as either their primary or secondary specialty; 310 list "money and interest rates"; and 244 list "macroeconomic policy formation [and] aspects of public finance and general policy." The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their "Financial Roundtable," the closest way they can approximate a focus on monetary policy and central banking.

Robert Auerbach, a former investigator with the House banking committee, spent years looking into the workings of the Fed and published much of what he found in the 2008 book, "Deception
and Abuse at the Fed
". A chapter in that book, excerpted here, provided the impetus for this investigation.

Auerbach found that in 1992, roughly 968 members of the AEA designated "domestic monetary and financial theory and institutions" as their primary field, and 717 designated it as their secondary field. Combining his numbers with the current ones from the AEA and NABE, it's fair to conclude that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed -- or who hope to one day soon -- and you've accounted for a very significant majority of the field.

Auerbach concludes that the "problems associated with the Fed's employing or contracting with large numbers of economists" arise "when these economists testify as witnesses at legislative hearings or as experts at judicial proceedings, and when they publish their research and views on Fed policies, including in Fed publications."

Gatekeepers On The Payroll

The Fed keeps many of the influential editors of prominent acade>The pharmaceutical industry has similarly worked to control key medical journals, but that involves several companies. In the field of economics, it's just the Fed.

Being on the Fed payroll isn't just about the money, either. A relationship with the Fed carries prestige; invitations to Fed conferences and offers of visiting scholarships with the bank signal a rising star or an economist who has arrived.

Affiliations with the Fed have become the oxygen of academic life for monetary economists. "It's very important, if you are tenure track and don't have tenure, to show that you are valued by the Federal Reserve," says Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.

Robert King, editor in chief of the Journal of Monetary Economics and a visiting scholar at the Richmond Federal Reserve Bank, dismisses the notion that his journal was influenced by its Fed connections. "I think that the suggestion is a silly one, based on my own experience at least," he wrote in an e-mail. (His full response is at the bottom.)

Galbraith, a Fed critic, has seen the Fed's influence on academia first hand. He and co-authors Olivier Giovannoni and Ann Russo found that in the year before a presidential election, there is a significantly tighter monetary policy coming from the Fed if a Democrat is in office and a significantly looser policy if a Republican is in office. The effects are both statistically significant, allowing for controls, and economically important.

They submitted a paper with their findings to the Review of Economics and Statistics in 2008, but the paper was rejected. "The editor assigned to it turned out to be a fellow at the Fed and that was after I requested that it not be assigned to someone affiliated with the Fed," Galbraith says.

Publishing in top journals is, like in any discipline, the key to getting tenure. Indeed, pursuing tenure ironically requires a kind of fealty to the dominant economic ideology that is the precise opposite of the purpose of tenure, which is to protect academics who present oppositional perspectives.

And while most academic disciplines and top-tier journals are controlled by some defining paradigm, in an academic field like poetry, that situation can do no harm other than to, perhaps, a forest of trees. Economics, unfortunately, collides with reality -- as it did with the Fed's incorrect reading of the housing bubble and failure to regulate financial institutions. Neither was a matter of incompetence, but both resulted from the Fed's unchallenged assumptions about the way the market worked.

Even the late Milton Friedman, whose monetary economic theories heavily influenced Greenspan, was concerned about the stifled nature of the debate. Friedman, in a 1993 letter to Auerbach that the author quotes in his book, argued that the Fed practice was harming objectivity: "I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results," Friedman wrote.

Greenspan told Congress in October 2008 that he was in a state of "shocked disbelief" and that the "whole intellectual edifice" had "collapsed." House Committee on Oversight and Government Reform Chairman Henry Waxman (D-Calif.) followed up: "In other words, you found that your view of the world, your ideology, was not right, it was not working."

"Absolutely, precisely," Greenspan replied. "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

But, if the intellectual edifice has collapsed, the intellectual infrastructure remains in place. The same economists who provided Greenspan his "very considerable evidence" are still running the journals and still analyzing the world using the same models that were incapable of seeing the credit boom and the coming collapse.

Rosner, the Wall Street analyst who foresaw the crash, says that the Fed's ideological dominance of the journals hampered his attempt to warn his colleagues about what was to come. Rosner wrote a strikingly prescient paper in 2001 arguing that relaxed lending standards and other factors would lead to a boom in housing prices over the next several years, but that the growth would be highly susceptible to an economic disruption because it was fundamentally unsound.

He expanded on those ideas over the next few years, connecting the dots and concluding that the coming housing collapse would wreak havoc on the collateralized debt obligation (CDO) and mortgage backed securities (MBS) markets, which would have a ripple effect on the rest of the economy. That, of course, is exactly what happened and it took the Fed and the economics field completely by surprise.

"What you're doing is, actually, in order to get published, having to whittle down or narrow what might otherwise be oppositional or expansionary views," says Rosner. "The only way you can actually get in a journal is by subscribing to the views of one of the journals."

When Rosner was casting his paper on CDOs and MBSs about, he knew he needed an academic economist to co-author the paper for a journal to consider it. Seven economists turned him down.

"You don't believe that markets are efficient?" he says they asked, telling him the paper was "outside the bounds" of what could be published. "I would say 'Markets are efficient when there's equal access to information, but that doesn't exist,'" he recalls.

The CDO and MBS markets froze because, as the housing market crashed, buyers didn't trust that they had reliable information about them -- precisely the case Rosner had been making.

He eventually found a co-author, Joseph Mason, an associate Professor of Finance at Drexel University LeBow College of Business, a senior fellow at the Wharton School, and a visiting scholar at the Federal Deposit Insurance Corporation. But the pair could only land their papers with the conservative Hudson Institute. In February 2007, they published a paper called "How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?" and in May posted another, "How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions."

Together, the two papers offer a better analysis of what led to the crash than the economic journals have managed to put together - and they were published by a non-PhD before the crisis.

Not As Simple As A Pay-Off

Economist Rob Johnson serves on the UN Commission of Experts on Finance and International Monetary Reform and was a top economist on the Senate banking committee under both a Democratic and Republican chairman. He says that the consulting gigs shouldn't be looked at "like it's a payoff, like money. I think it's more being one of, part of, a club -- being respected, invited to the conferences, have a hearing with the chairman, having all the prestige dimensions, as much as a paycheck."

The Fed's hiring of so many economists can be looked at in several ways, Johnson says, because the institution does, of course, need talented analysts. "You can look at it from a telescope, either direction. One, you can say well they're reaching out, they've got a big budget and what they're doing, I'd say, is canvassing as broad a range of talent," he says. "You might call that the 'healthy hypothesis.'"

The other hypothesis, he says, "is that they're essentially using taxpayer money to wrap their arms around everybody that's a critic and therefore muffle or silence the debate. And I would say that probably both dimensions are operative, in reality."

To get a mainstream take, HuffPost called monetary economists at random from the list as members of the AEA. "I think there is a pretty good number of professors of economics who want a very limited use of monetary policy and I don't think that that necessarily has a negative impact on their careers," said Ahmed Ehsan, reached at the economics department at James Madison University. "It's quite possible that if they have some new ideas, that might be attractive to the Federal Reserve."

Ehsan, reflecting on his own career and those of his students, allowed that there is, in fact, something to what the Fed critics are saying. "I don't think [the Fed has too much influence], but then my area is monetary economics and I know my own professors, who were really well known when I was at Michigan State, my adviser, he ended up at the St. Louis Fed," he recalls. "He did lots of work. He was a product of the time...so there is some evidence, but it's not an overwhelming thing."

There's definitely prestige in spending a few years at the Fed that can give a boost to an academic career, he added. "It's one of the better career moves for lots of undergraduate students. It's very competitive."

Press officers for the Federal Reserve's board of governors provided some background information for this article, but declined to make anyone available to comment on its substance.

The Fed's Intolerance For Dissent

When dissent has arisen, the Fed has dealt with it like any other institution that cherishes homogeneity.

Take the case of Alan Blinder. Though he's squarely within the mainstream and considered one of the great economic minds of his generation, he lasted a mere year and a half as vice chairman of the Fed, leaving in January 1996.

Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. "Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant," says Johnson.

In closed-door meetings, Blinder did what so few do: challenged assumptions. "The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he'd come out and say, 'Well, that's not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.' And it just created a stir inside--it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was
disrupted."

It didn't sit well with Greenspan or his staff. "A lot of senior staff...were pissed off about Blinder -- how should we say? -- not playing by the customs that they were accustomed to," Johnson says.

And celebrity is no shield against Fed excommunication. Paul Krugman, in fact, has gotten rough treatment. "I've been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him," Krugman said of Greenspan in a 2007 interview with Pacifica Radio's Democracy Now! "Nobody really wants to cross him."

An invitation to the annual conference, or some other blessing from the Fed, is a signal to the economic profession that you're a certified member of the club. Even Krugman seems a bit burned by the slight. "And two years ago," he said in 2007, "the conference was devoted to a field, new economic geography, that I invented, and I wasn't invited."

Three years after the conference, Krugman won a Nobel Prize in 2008 for his work in economic geography.

One Journal, In Detail

The Huffington Post reviewed the mastheads of the American Journal of Economics, the Journal of Economic Perspectives, Journal of Economic Literature, the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy, the Journal of Political Economy and the Journal of Monetary Economics.

HuffPost interns Googled around looking for resumes and otherwise searched for Fed connections for the 190 people on those mastheads. Of the 84 that were affiliated with the Federal Reserve at one point in their careers, 21 were on the Fed payroll even as they served as gatekeepers at prominent journals.

At the Journal of Monetary Economics, every single member of the editorial board is or has been affiliated with the Fed and 14 of the 26 board members are presently on the Fed payroll.

After the top editor, King, comes senior associate editor Marianne Baxter, who has written papers for the Chicago and Minneapolis banks and was a visiting scholar at the Minneapolis bank in '84, '85, at the Richmond bank in '97, and at the board itself in '87. She was an advisor to the president of the New York bank from '02-'05. Tim Geithner, now the Treasury Secretary, became president of the New York bank in '03.

The senior associate editors: Janice C Eberly was a Fed visiting-scholar at Philadelphia ('94), Minneapolis ('97) and the board ('97). Martin Eichenbaum has written several papers for the Fed and is a consultant to the Chicago and Atlanta banks. Sergio Rebelo has written for and was previously a consultant to the board. Stephen Williamson has written for the Cleveland, Minneapolis and Richmond banks, he worked in the Minneapolis bank's research department from '85-'87, he's on the editorial board of the Federal Reserve Bank of St. Louis Review, is the co-organizer of the '09 St. Louis Federal Reserve Bank annual economic policy conference and the co-organizer of the same bank's '08 conference on Money, Credit, and Policy, and has been a visiting scholar at the Richmond bank ever since '98.

And then there are the associate editors. Klaus Adam is a visiting scholar at the San Francisco bank. Yongsung Chang is a research associate at the Cleveland bank and has been working with the Fed in one position or another since '01. Mario Crucini was a visiting scholar at the Federal Reserve Bank of New York in '08 and has been a senior fellow at the Dallas bank since that year. Huberto Ennis is a senior economist at the Federal Reserve Bank of Richmond, a position he's held since '00. Jonathan Heathcote is a senior economist at the Minneapolis bank and has been a visiting scholar three times dating back to '01.

Ricardo Lagos is a visiting scholar at the New York bank, a former senior economist for the Minneapolis bank and a visiting scholar at that bank and Cleveland's. In fact, he was a visiting scholar at both the Cleveland and New York banks in '07 and '08. Edward Nelson was the assistant vice president of the St Louis bank from '03-'09.

Esteban Rossi-Hansberg was a visiting scholar at the Philadelphia bank from '05-'09 and similarly served at the Richmond, Minneapolis and New York banks.

Pierre-Daniel Sarte is a senior economist at the Richmond bank, a position he's held since '96. Frank Schorfheide has been a visiting scholar at the Philadelphia bank since '03 and at the New York bank since '07. He's done four such stints at the Atlanta bank and scholared for the board in '03. Alexander Wolman has been a senior economist at the Richmond bank since 1989.

Here is the complete response from King, the journal's editor in chief: "I think that the suggestion is a silly one, based on my own experience at least. In a 1988 article for AEI later republished in the Federal Reserve Bank of Richmond Review, Marvin Goodfriend (then at FRB Richmond and now at Carnegie Mellon) and I argued that it was very important for the Fed to separate monetary policy decisions (setting of interest rates) and banking policy decisions (loans to banks, via the discount window and otherwise). We argued further that there was little positive case for the Fed to be involved in the latter: broadbased liquidity could always be provided by the former. We also argued that moral hazard was a cost of banking intervention.

"Ben Bernanke understands this distinction well: he and other members of the FOMC have read my perspective and sometimes use exactly this distinction between monetary and banking policies. In difficult times, Bernanke and his fellow FOMC members have chosen to involve the Fed in major financial market interventions, well beyond the traditional banking area, a position that attracts plenty of criticism and support. JME and other economics major journals would certainly publish exciting articles that fell between these two distinct perspectives: no intervention and extensive intervention. An upcoming Carnegie-Rochester conference, with its proceeding published in JME, will host a debate on 'The Future of Central Banking'.

"You may use only the entire quotation above or no quotation at all."

Auerbach, shown King's e-mail, says it's just this simple: "If you're on the Fed payroll there's a conflict of interest."

Elyse Siegel, Julian Hattem, Jeff Muskus and Jenna Staul contributed to this report

Responces

Angry Bear

Huffington Post Editorial Standards II

Robert Waldmann

In response to a critical comment, I have decided to actually read the article which I stopped reading when it said the Journal of Monetary Economics was a must publish journal for young economists.

Ryan Grim asserts that economists don't criticize the Fed because the Fed has bought control of the economics profession.

I have three general impressions. First the sourcing is very odd. There are fairly few academic economists quoted and two of them firmly contest Ryan Grim's thesis.

Second it is assumed that the Federal Reserve System is a centrally controlled disciplined organization. Grim explicitly includes regional Federal Reserve Banks. Thus he assumes that the Federal Reserve Bank of Minneapolis is identical to the Federal Reserve Bank of Boston. This is a bold assumption. Finally, he is convinced that the economists who might comment on the FED are "monetary economists." I have met macroeconomists and economists who work on money banking and credit, but I don't recall ever meeting a monetary economist.

I have no idea how much influence the Fed has on the debate in the profession (really) and certainly agree that the economics profession is dangerously in bred and that it is much much much better for an economist to be conventionally wrong than unconventionally right (but it's gotten better in the past 20 years).

More detailed comments after the jump.

OK editorial standards. Grims list of the journals that he considers important follows

The Huffington Post reviewed the mastheads of the American Journal of Economics, the Journal of Economic Perspectives, Journal of Economic Literature, the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy, the Journal of Political Economy and the Journal of Monetary Economics.

The list does not appear to include the American Economic Review which is a bit more important than the American Journal of Economics. It also doesn't include the Quarterly Journal, Econometrica, The Review of Economic Studies, The Journal of Economic Theory or, well, any of the really top journals except for the Journal of Political Economy.

The Journal of Economic Literature is mainly an index of articles. It contains review articles and book reviews (partly I think so that it can be shipped with the special rate for journals). The journal of economic perspectives doesn't really publish research exactly -- articles are meant to be easily understood so its role is, in very large part, divulgative.

Grim attempts to explain why economists didn't warn of the financial crisis before it hit, in part, by having interns google members of the boards of the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy

I quote from the Wikipedia

American Economic Journal is a group of four peer-reviewed academic journals published by the American Economic Association. The names of the individual journals consist of the prefix American Economic Journal with a descriptor of the field attached. The four field journals which started in 2009 are Applied Economics, Economic Policy, Macroeconomics, and Microeconomics.
it is a bit harsh to blame the editors of journals which started publishing in 2009 for the failure to warn of the events of September 2008. I think normal courtesy would compel someone to wikipedia a journal title before having interns google its board of editors.

On lumping regional banks in with the board of governors, Grim argues that Bernanke controls the JME partly by noting that many editors of the JME are affiliated with the Federal Reserve Bank of Minneapolis. This is not a joke.

Now as to the universe of critics the Fed might want to buy off. Grim assumes that it consists of "monetary economists" who are distinct from macroeconomists of finance economists. I don't think there is such a group of people (name one).
Yet oddly, he considers many people who are not monetary economists valid critics of the Fed. He quotes Joshua Rosner, a Wall Street analyst, James Galbraith (who sure knows what he's talking about but probably doesn't "list 'monetary policy, central banking, and the supply of money and credit,' as either their primary or secondary specialty," (I will write "not monetary" below) Robert Auerbach, a former investigator with the House banking committee, Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts (not monetary) Robert King (who contests his thesis and is I'd guess not monetary), a letter from Milton Friedman (OK he's got one monetary economist who criticizes the Fed), Economist Rob Johnson (OK maybe two), Ahmed Ehsan a self described monetary economist who disagrees with the thesis, and Paul Krugman (not monetary).

The thesis is that the Fed (including regional banks who take orders from the chairman evidently) controls most people who have standing to criticize the Fed. Journalistic integrity requires checking if the critics of the Fed whose standing Grim considers adequate are on his list of people who have the standing to criticize the Fed. I'd guess that at most one does (Friedman is, sadly, no longer a member of the AEA).

The economics profession is a very large very slow moving target, but it is possible to miss.

David Beckworth

For a more scholarly, even-handed look at the Fed's influence see Lawrence H. White's article on this topic: http://www.aier.org/ejw/archive/investigating-the-apparatus/doc_details/3647-ejw-200508

Kievite

I think Waldmann is widely off the mark with his simplistic critique of the article. Nitpicking on shortcomings he misses the whole picture which is the fact that there are perverse "academic kingdoms" in economics which guard their interests and those kingdoms are supported by state (the Fed is just one example of such support). This phenomenon is not new and is called Lysenkoism. Moreover, the fact the neoclassical economics became dominant economic paradigms make is probably one of the most important demonstrations of the fact that Lysenkoism did nor die with the USSR.

In view of this Waldmann's complain about lack of sourcing is completely naive: IMHO few of actually working economists will discuss openly this issue. Ostracism is easy as academic journal space is a very scarce resource.

BTW the unverified argument that Waldman's own articles were supposedly never rejected make his critic even more disingenuous that otherwise. Talent always face opposition from the defenders of status quo or current scientific paradigm as Thomas Kuhn explained. IMHO the only way to have articles never rejected is to became a sycophant of one of the "tsars" of dominant economic school,

[Sep 1, 2009] An Update on C. P. Snow's "Two Cultures" By Lawrence M. Krauss

A new column that examines the intersection between science and society provides an update on the historic essay

There is another factor, one that was on display at the World Science Festival in New York City this summer, which helps to undermine the role of science in society. Amid events on the cosmos, modern biology, quantum mechanics and other areas at the forefront of science, I participated in a panel discussion on science, faith and religion.

Why would such an event be a part of a science festival? We accord a special place to religion, in part thanks to groups such as the Templeton Foundation, which has spent millions annually raising the profile of "big questions," which tend to suggest that science and religious belief are somehow related and should be treated as equals.

The problem is, they are not. Ultimately, science is at best only consistent with a God that does not directly intervene in the daily operations of the cosmos, certainly not the personal and ancient gods associated with the world's great religions. Even though, as physicist Steven Weinberg has emphasized, most people who call themselves religious tend to adhere to only those bits and pieces from scripture that appeal to them, by according undue respect for ancient religious beliefs in general, we nonetheless are suggesting that they are on par with conclusions that have been drawn from centuries of rational empirical investigation.

Snow hoped for a world that is quite different from how we live today, where indifference to science has, through religious fundamentalism, sometimes morphed into open hostility about concepts such as evolution and the big bang.

Snow did not rail against religion, but ignorance. As the moderator in my panel finally understood after an hour of discussion, the only vague notions of God that may be compatible with science ensure that God is essentially irrelevant to both our understanding of nature and our actions based on it. Until we are willing to accept the world the way it is, without miracles that all empirical evidence argues against, without myths that distort our comprehension of nature, we are unlikely to bridge the divide between science and culture and, more important, we are unlikely to be fully ready to address the urgent technical challenges facing humanity.

Note: This article was originally printed with the title, "C. P. Snow in New York."

===

Dr Huddleston:

It is true that a god who does not intervene in the natural world in any manner is compatible with science. But why stop with gods? You can postulate any entity you want with equal plausibility, so long as that entity never interacts with our reality. And nobody will fault you for that, as long as you refrain from

1) indoctrinating children in your arbitrary choice of faith

2) denigrating other people's choices because they conflict with the opinions of your imaginary friend

3) imposing your baseless beliefs on others through violence and law.

Unfortunately, these things are exactly what many people experience as "religion". If you want atheists to remain silent while you spread a system of beliefs that proclaims them sinners who are destined for eternal torment unless they recant, you need a stronger argument than the mere absence of absolute disproof.

===

"Judeo-Christian" doctrine is a cover phrase for "Evangelical Christian." It's been disproved as a legitimate term for nearly two decades in cultural anthropological circles. The two religions as modes of thought ("doctrines") are distinct and different: Among other things, Judaism employs a reverence for intellect, argument and "play" with its sacred texts, and has an historical ever-evolving notion of "G-d" while Christianity employs a reverence for stasis, predetermination, anti-intellectualism, anti-science, cultural-theological curbs on argumentation or debate, and "play" vis-a-vis its sacred texts means 'leave it alone' and 'God says...'

Historically the connections between the two loosely related religions have been construed by Christians as siblings while Jews see no similarity other than the Christian cultural theft or texts and personalities.

It goes without saying that from an atheist POV, both of those traditions are rife with problems that the intersection of science and cultural anthropology often resolves and thus should suggest alterations thereto. This is actually the fundamental problem with "beliefs"; in many religionisms beliefs dictate empirical facts. Krauss seems to be simply making the observation that if one cannot change beliefs to fit the facts, therein lies the gap between science and religion. That's religion's fault. If that feels "insulting" to good scientists like Huddleston, the rest of us simply have to throw up our hands at the impasse of the religionists' own making.

I know it may be tough for a PhD in physics at a religious (Christian) college to appreciate a humanities oriented distinction but, it's the 21st century and time to drop historically inaccurate canards like "Judeo-Christian." It would be nice to discuss science & culture consistent with at least anthropologically accurate terminology.

===

katherinebiel at 11:27 AM on 08/31/09

Science is accomplished by breaking down a problem into measurable variables. Whether or not a person believes in God is not part of this 'art' (and yes, I believe the crafting of a good study is an art). The problem with God is that the belief, or the concept, or the deity-whatever on wishes to call it, slops over the parameters of the study. Speaking from the position of a scientist, unless we know exactly the rules by how 'God' works, and take those into account, we cannot explicitly put God into a study! Right now, if one believes in God, it goes into the random error category of a study, because it must according to the rules of science.

*sigh* I guess its a sort of cultural joke. I'm sad that some people won't get it, or will take it the wrong way. I'm sad that although so many people seem to hate science, they use the discoveries of science in their lives every second of every day, and to further their belief systems.

Many of us scientists are artists of one sort or another, often later in our lives (when we aren't working 80-90 hour weeks) and we discover music and the visual arts. Snow would be pleased.

By a joke, I meant more of a mental exercise, putting an all powerful, natural world breaking deity into an experiment......It would make the results of experiments uninterpretable, if we always concluded that an experiment worked, or didn't work because God intervened.

[Aug 28, 2009] Darwin, Strauss and Popper by Robert Waldmann

Neoconservatives have expressed sympathy for "intelligent design theory," that is, creationism. This is well documented by Ronald Bailey's article in "Reason on line." Bailey discusses why neoconservatives might claim they don't believe in evolution by natural selection even though there is no scientific basis for that view.

update: link corrected thanks to VtCodger in comments.

Mainly, he suspects that it is a Strussian "noble lie," roughly that they believe that fundamentalist religion is needed for the good of society, so they pretend to agree with it. He mentions, but is not very fascinated by, the idea that this is partisan hackery -- that neoconservatives think the interests of the Republican party would be harmed if they didn't bend their knees before the fundamentalists. Of course the problem is that once one decides to lie, it is very hard to decide exactly how noble to be about it.

He doesn't mention the collosal arrogance of people who assume that biologists don't know anything relevant about biology which they don't know. I think this is always a risk in people coming from law or social sciences. They just have no clue how much evidence lies behind the claims of natural scientists and assume that they can bluff their way past biologists as they have successfully bluffed their way past say economomists.

In the second part of his article, Bailey argues that there is no scientific case against evolution by natural selection. Naturally it would come first, one normally doesn't question someone's honesty until one has exausted other options (although the NeoCons he quotes are pretty up front about how they start with the conclusion and work back to the evidence). I think the editorial decision makes sense as most Reason on Line readers don't really need to be convinced that modern biology is not all a big mistake.

I think Bailey's arguments for Darwin are weaker than his earlier analysis-not because he doesn't make a convincing case, but because he buries the lede. Basically he has a theoretical disagreement with a mathematician, then speculates about the origin of life, then asks if one can be both a Christian and a Darwinist (hint yes) and only then discusses some of the evidendence for evolution by natural selection.

But Berlinski stoutly declares in Commentary that he is no creationist. He claims merely to be engaged in critiquing the failures of Darwinism. Berlinski is particularly savage about what he regards as Darwinism's tautological character. "Time and again, biologists do explain the survival of an organism by reference to its fitness and the fitness of an organism by reference to its survival, the friction between the two concepts kindling nothing more than the observation that some creatures have been around for a very long time."

In Berlinski's view, evolutionary theory simply says that the ones that survive are the ones that survive. But that is not quite right. But that is not quite right. Darwinian natural selection sifts for useful variations among mutations, thus natural selection generates increased fitness, not just preserving the fittest. This process generates new species, species B being the descendant of earlier species A. This claim is clearly more than a tautology.

Wrong Bailey, the way to argue that something isn't a tautology is to point out a testable implication. Instead Bailey claims the stated theory is not quite right because it didn't include the word "species" even this explanation is incorrect (see below*) but the main thing is that the theory of evolution by natural selection has testable implications because organisms have detectable features which don't make any detectable difference.

The evidence for the theory became vastly vastly enormously gigantically even more immense than it was already when biologists began sequencing DNA. They found patterns explained by the idea some sequences don't matter and drift faster than others which do. Based on those sequences they can redraw the family tree of living things and lo and behold it almost exactly matches the tree drawn based on other features and based on fossils. Oh and one can check that the sequences that don't seem to matter don't matter and, so far, they don't. Before sequencing the evidence was weaker but already overwhelming based on traights which didn't seem important.

There might be another explanation for these facts, but no one has ever pretended to have one. Instead critics of biology like Berlinski and Kristol just ignore the evidence entirely. Bailey mentions it long after speculating at length about the origin of life (OK and I began indignantly typing before I read that far).

Berlinksi's claim is, I think, false as a matter of fact. Biologists do not claim that the survival of this or that species is evidence in favor of evolutionary biology. The evidence all concerns trivial things which are considered evidence of evolutionary history exactly because they have tiny or zero effect on fitness.

The quote of Berlinski (all I have read of his writings) does not disprove the hypothesis that he thinks that modern evolutionary biology is completely summed up by the phrase "the survival of the fittest." That is, indeed, a tautology. It is indeed part of the subtitle of "The Origin of Species." But I mean, to be fair to Darwin, one should at least read the full subtitle. Oh and maybe glance at the book. And to be fair to evolutionary biology, one would have to note that much evidence has been collected since then (not to mention the theory has developed).

I have Popper in the title, because Popper did the same damn thing in "The Open Society and Its Enemies." Popper at least asserted that something wasn't there -- predictions which have since been confirmed, explanations of puzzling facts, you know non tautological science -- which absolutely wasn't there. Popper, I think, assumed that he was brilliant enough to know what is written in a book after reading part (not all) of its subtitle.

* I think a biologist tried to explain this to Bailey and he didn't get it. The non tautological point is that the descendents of species A might belonge to species B and C two different species present at the same time. Now the claim that two different organisms belong to different species is *not* mere terminology -- it has an operational definition -- orgnaisms from two different species can not produce fertile offspring descended from both of them.

If evolution were always new species A replacing now extinct species B, then all we would know is that we choose to use different words for organisms of type A and B. Without a time machine, we can't test if they are two different species.

Now "survival of the fittest" does not logically imply that one species can, over time, split into two. This is a radical idea. It is also, in principle, experimentally testable, although the experiment will take a long time.

I personally think the experiment is under way and it is already clear that one species can split into 2 much more quickly than evolutionary biologists imagined. The experiment is raising fruit flies in laboratories. They are used to study genetics. Normal non mutant flies are called "wild type" but their ancestors haven't been wild for about a century now. They have been bread in labs from each other.

Interestingly when an actual wild male captured in the wild is mated with a lab bread "wild type" female, something happens called "hybrid disgenisis" which means the offspring are messed up. It is known that this is caused by a transposon (basically a very very benign virus) which keeps itself inactive in the

genome of wild fruit flies by making a repressor protein. None of that protein gets into spermatazoa so if the transposon is in one of the male's chromasomes it makes copies of itself and spreads them around inside the chromasomes of the fertilized egg.

Evidently the transposon spread through the wild population after the ancestors of the lab flies were captured.

Some of the offspring survive this process. But already there is a barrier between wild and lab fruit flies after about one century. One can imagine that another hundred years or so, wild males will not be able to produce fertile offspring with lab bread females (just a few more such latent virus like things would do it).

Now to get two whole species it has to be blocked the other way too and the lab population is very isolated (also from other insects) and divided among labs so I mean maybe experimental speciation won't occur in my grandchildren's lifetime. But it's really close.

[Aug 15, 2009] Economic fundamentalism and the minimum wage By Kathy G.

May 11, 2008 | Crooked Timber

Another thing that must be pointed out: given the anti-regulation ideological bias of the economics profession as a whole, it's not hard to imagine that studies that do find that the minimum wage has a disemployment effect are considerably more likely to be published. I'm not accusing anyone of scholarly fraud here. But the fact is, there are lots of different datasets you can use, lots of models to go with, lots of variables to include or leave out, and lots of ways to slice and dice the data. It's not unheard of for researchers to opportunistically try different models and methodologies until they hit upon one that gives them the results they want.

Here is what economist Edward Glaeser had to say in a recent paper about researcher incentives and empirical methods:

Economists are quick to assume opportunistic behavior in almost every walk of life other than our own. Our empirical methods are based on assumptions of human behavior that would not pass muster in any of our models. The solution to this problem is not to expect a mass renunciation of data mining, selective data cleaning or opportunistic methodology selection, but rather to follow Leamer's lead in designing and using techniques that anticipate the behavior of optimizing researchers.
Indeed, Krueger and Card have written a paper that provides strong evidence that "specification searching and publication bias" have led to an overrepresentation of studies that find that the minimum wage has a statistically significant disemployment effect. The ideological character of much of the economics profession in the United States suggests that there are rewards for producing scholarship that confirms the idea that the minimum wage causes unemployment, and punishment for scholarship that finds otherwise.

David Card, a highly regarded economist at Berkeley (among other honors, he won the John Bates Clark Prize, a prestigious award given every two years to the most outstanding economist under 40), has produced many of the best studies taking issue with the old conventional wisdom about the minimum wage. But he stopped studying this subject, to a large degree because the reception his research got was so hostile in some quarters of the economics profession. He said:

I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.

"Traitors to the cause of economics as a whole"! Those are strong words, especially coming from someone who seems, on the basis of interviews at least, to be a fairly mild-mannered, non-drama-queen kind of guy. And if someone who's a tenured full professor and one of the leading lights in his field took so much heat that he abandoned this line of research, what do you think the chances are that aspiring Ph.D.s and ambitious young assistant professors are going to touch this issue with a ten-foot pole?

I mentioned before that I found some of the criticisms by Murphy et al. of the 1994 Krueger and Card study to be quite legitimate. But they made other criticisms that have not been so reasonable. Here is Murphy et al. on what economic theory has to say about the minimum wage:

The implications of the theory are also simple and direct. The prediction that an artificial increase in the price of something causes less of it to be purchased is the most fundamental prediction of economics; it is called the law of demand.
Well, actually, it's not so clear that an "artificial" increase in price will necessarily cause less of the good to be purchased. For one thing, it depends on the elasticity of demand for the good. If demand is perfectly inelastic, an increase in price would not lead to a decrease in demand.

More importantly, though, it's a huge mistake to view the purchase of a unit of human labor as being exactly the same as the purchase of a widget. What economics has done is to take the models of the supply and demand of consumer goods and apply them to the supply and demand of labor. This, I believe, is fundamentally wrong-headed. Human labor and consumer goods are categorically different, and it's a big mistake to treat them as if they were interchangeable. There are a slew of institutions, norms, and other features of labor markets that do not apply to product markets.

[Aug 15, 2009] "Freshwater Rage"

Obstfeld and Rogoff would have been as clueless about the logic of temporary fiscal expansion as these guys have been. Freshwater macro became totally insular.
And hence the most surprising thing in the debate over fiscal stimulus: the raw ignorance that has characterized so many of the freshwater comments. Above all, we've seen the phenomenon of well-known economists "rediscovering" Say's Law and the Treasury view (the view that government cannot affect the overall level of demand), not because they've transcended the Keynesian refutation of these views, but because they were unaware that there had ever been such a debate.
It's a sad story. And the even sadder thing is that it's very unlikely that anything will change: freshwater macro will get even more insular, and its devotees will wonder why nobody in the real world of policy and action pays any attention to what they say.

I am not quite as pessimistic about the prospects for change, but many people have their life's work wrapped up in a particular brand of model and they will defend that work aggressively, so I do agree that it's likely to come in spite of rather than because of the old guard.

Kaleberg says...

I remember when Malcom Forbes died and his son took over his magazine. At first, it didn't change much, but after perhaps a year it lost touch with reality. The articles were all dogma and mindless sloganeering. It suddenly felt horribly familiar. As far as I could tell I was reading a rehash of Pravda. Needless to say, I canceled my subscription.

Freshwater economists and communist economics have much in common than people like to admit. Neither admits reality and both scorn the facts and any critics. They like to think of themselves as opposite poles, but for anyone living on this here earth they were hard to distinguish. The communists brought down the Soviet empire and the freshwater economists are doing their bit to destroy ours.

Bruce Wilder says...

One aspect of this "debate" that has me a little curious is the way in which the antagonists have come down to the wordy, fuzzy, hand-waving, sloganeering, semi-philosophical level, where I live, to have this fight.

Cochrane was actually very angry about the fact that Krugman used "casual" or "popular" expressions of various freshwater types to illustrate his critique, rather than fairly cite the high theory on its own terms: "Paul isn't doing his job. He's supposed to read, explain, and criticize things economists write, and real professional writing, not interviews, opeds and blog posts."

In Cochrane's criticism of the Obama stimulus proposal early in the year, he exposed the conflict between his passionate ideological commitments, where he felt obligated to re-assert the usual conservative shibboleths, on the one hand, his capacity to understand the Keynesian argument on the other. Ideology won out.

But, it raises three points, that I think are important.

One is that, if economics, as a carefully and meticulously vetted way of thinking and assembly of verified facts, is to usefully inform the public discourse, then what one says in op-eds and interviews has to be consistent with the discipline's knowledge.

A second is, that in the public discourse, one ought to be able to state, or re-state, accurately the opponent's view. This is SOP in academic reviews and panels. Yet, conservatives seem to think that it is acceptable, or tactically useful, to deliberately misunderstand progressive arguments. Deafness as a tactic.

A third is that, I suspect, that things have been structured in academic circles, in the realm of high theory and professional research, so that this conflict can never play itself out. It can happen now, in the public policy discourse, because there's a vital public policy problem, that demands a realistic response.

But, in normal academic dispute, things are set up in various ways, to prevent anyone from winning the argument. The argument goes on. But, even when someone is wrong, they don't admit it, and don't have to, and even neutral observers don't have to acknowledge it. Even the existence of a fundamental, if unsettled problem is not acknowledged. An orthodoxy is confirmed in administrative control of journals and departments; a pathetically impotent methodology is adopted. And, inconvenient "facts" are simply ignored.

I've made myself read what Cochrane has written and made available to the general public this year in this dispute. I don't think he's clueless. He can follow the Keynesian argument. But, he has very strong ideological commitments that conflict with acknowledging the Keynesian argument, and, like a lot of conservatives, who follow in the tradition of Milton Friedman (and Cochrane is doing so, explictly), it is A-OK to affirm your ideological commitments in popular writing, without regard to making it fully consistent with your professional knowledge.

Economic analysis, as done in the page of the New York Times Sunday Magazine, is not going to be as sophisticated and subtle as it might be in a professional or academic forum. But, what are the rules that relate the fora? And, why is this controversy playing itself out in the plebian blogosphere?

gordon says...

Well, there is the "life's work" theory and I wouldn't discount it. But there is also ideological bias disguised as objective research, and I wouldn't discount that, either. Kathy G. in this old post

http://crookedtimber.org/2008/05/11/economic-fundamentalism-and-the-minimum-wage/

discusses it, and quotes David Card on why he stopped publishing on minimum wages and employment. She quotes him as saying:

"I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole".

It seems pretty clear to me, at least, that the role of Govt. in the US economy was an issue that was bitterly fought out in the 1930s and will have to be as bitterly fought out again. I don't see that is because of economics itself, but because of social and political developments and how they interact with the economics profession.

[Jun 4, 2009] The future of innovation

A reader sent me this article from PhysicsWorld, which considers the nature of scientific innovation. I particularly agree with Smolin's comments excerpted below. The reward structure of academic science encourages narrow specialization far too much. Tremendous lip service is paid to interdisciplinary work, but in actuality it is very risky to undertake.

Using Smolin's analogy of hill climbing, the dominant strategy today in science is:

1) self-assess own climbing ability
2) choose suitable hill (perhaps inherited from advisor!)
3) climb to local maximum (write some relevant papers with incremental results)
4) squat on hilltop and defend against all attackers (make sure everyone cites your papers; get embedded in small community of researchers defending that hill)
5) train students and postdocs on your hilltop while secretly wishing you understood what other people were doing on their hilltops -- suppressing the curiosity that originally got you into science.

From personal experience, I can tell you that as soon as you leave your little hill to cross a valley and explore somewhere else, the citations of your previous work will plummet, inhabitants of other hills will try to repel you, and funding agencies will ask why you aren't doing mainstream stuff ("he's not serious -- he keeps jumping around"). Based on this incentive system, it is easy to understand why people behave as they do.


...returns on research investment do not arrive steadily and predictably, but erratically and unpredictably, in a manner akin to intellectual earthquakes. Indeed, this idea seems to be more than merely qualitative. Data on human innovation, whether in basic science or technology or business, show that developments emerge from an erratic process with wild unpredictability. For example, as physicist Didier Sornette of the ETH in Zurich and colleagues showed a few years ago, the statistics describing the gross revenues of Hollywood movies over the past 20 years does not follow normal statistics but a power-law curve - closely resembling the famous Gutenberg- Richter law for earthquakes - with a long tail for high-revenue films. A similar pattern describes the financial returns on new drugs produced by the bio-tech industry, on royalties on patents granted to universities, or stock-market returns from hi-tech start-ups.

What we know of processes with power-law dynamics is that the largest events are hugely disproportionate in their consequences. In the metaphor of Nassim Nicholas Taleb's 2007 best seller The Black Swan, it is not the normal events, the mundane and expected "white swans" that matter the most, but the outliers, the completely unexpected "black swans". In the context of history, think 11 September 2001 or the invention of the Web. Similarly, scientific history seems to pivot on the rare seismic shifts that no-one predicts or even has a chance of predicting, and on those utterly profound discoveries that transform worlds. They do not flow out of what the philosopher of science Thomas Kuhn called "normal science" - the paradigm-supporting and largely mechanical working out of established ideas - but from "revolutionary", disruptive and risky science.

Squeezing life out of innovation

All of which, as Sornette has been arguing for several years, has important implications for how we think about and judge research investments. If the path to discovery is full of surprises, and if most of the gains come in just a handful of rare but exceptional events, then even judging whether a research programme is well conceived is deeply problematic. "Almost any attempt to assess research impact over a finite time", says Sornette, "will include only a few major discoveries and hence be highly unreliable, even if there is a true long-term positive trend."

This raises an important question: does today's scientific culture respect this reality? Are we doing our best to let the most important and most disruptive discoveries emerge? Or are we becoming too conservative and constrained by social pressure and the demands of rapid and easily measured returns? The latter possibility, it seems, is of growing concern to many scientists, who suggest that modern science is in danger of losing its creativity unless we can find a systematic way to build a more risk-embracing culture.

The voices making this argument vary widely. For example, the physicist Geoffrey West, who is currently president of the Santa Fe Institute (SFI) in New Mexico, US, points out that in the years following the Second World War, US industry created a steady stream of paradigm-changing innovations, including the transistor and the laser, and it happened because places such as Bell Labs fostered a culture of enormously free innovation. "They brought together serious scientists - physicists, engineers and mathematicians - from across disciplines", says West, "and created a culture of free thinking without which it's hard to imagine how these ideas could have come about."

Unfortunately, today's academic and corporate cultures seem to be moving in the opposite direction, with practices that stifle risk-taking mavericks who have a broad view of science. At universities and funding agencies, for example, tenure and grant committees take decisions based on narrow criteria (focusing on publication lists, citations and impact factors) or on specific plans for near-term results, all of which inherently favour those working in established fields with well-accepted paradigms. In recent years, tightening business practices and efforts to improve efficiency have also driven corporations in a similar direction. "That may be fine in the accounting department," says West, "but it's squeezing the life out of innovation."

...But physicist Lee Smolin, currently at the Perimeter Institute, suggests that science overall requires a much broader and more coherent approach to risky science. To see the kinds of policies needed, he suggests, it is useful to note that scientists, at least in some rough approximation, follow working styles of two very different kinds, which mirror Kuhn's distinction between normal and revolutionary science.

Some scientists, he suggests, are what we might call "hill climbers". They tend to be highly skilled in technical terms and their work mostly takes established lines of insight that pushes them further; they climb upward into the hills in some abstract space of scientific fitness, always taking small steps to improve the agreement of theory and observation. These scientists do "normal" science. In contrast, other scientists are more radical and adventurous in spirit, and they can be seen as "valley crossers". They may be less skilled technically, but they tend to have strong scientific intuition - the ability to spot hidden assumptions and to look at familiar topics in totally new ways.

To be most effective, Smolin argues, science needs a mix of hill climbers and valley crossers. Too many hill climbers doing normal science, and you end up sooner or later with lots of them stuck on the tops of local hills, each defending their own territory. Science then suffers from a lack of enough valley crossers able to strike out from those intellectually tidy positions to explore further away and find higher peaks.

Posted by Steve Hsu at 7:30 AM 6 comments Links to this post

[May 15, 2009] Scientific Integrity for Economists

I am wondering how CNBC clowns can hold a Ph.D without making economic PH.Ds a joke...
The federal Office of Science and Technology Policy is taking comments on its draft principles of scientific integrity. Here's what I wrote:

I am writing to offer a comment on scientific integrity. As we know, it is important that those whose work is used to provide a scientific basis for policy decisions reveal the sources of their funding so as to avoid conflicts of interest or undisclosed potential bias. This stipulation has made gradual progress in the medical sciences in particular -- something for which we should all be grateful. Unfortunately, in my own field of economics no one makes or enforces such a rule. Economic analysis often plays a central role in decision-making, and economists are often funded by interested parties, but disclosure is nonexistent. It is unlikely that the economics profession will take the lead in remedying this situation, so we have to look to our clients. If OSTP would take a clear stand on this matter it would improve the credibility of analysis entering the regulatory process and would also have a salutary effect on the profession itself.

UPDATE: The rules for biomedical researchers may be tightening. Why can't we do this for economists?

[Apr 21, 2009] Knowledge AND Ignorance: Critique of Neoclassical Economics

Following in the tradition solidified by Samuelson (1947) during the second half of the twentieth century, there have been two trends amongst neoclassical economic theorists. The first is that neoclassical economists increasingly devise compelling, mathematically elegant hypotheses with little interest in their policy implications. The second is their reluctance to engage in conversation with alternative paradigmatic schools (eg. feminists, Marxists, Institutionalists or Post-Keynesians). In doing so they have become, as Samuels recently noted in this Journal, "anti-intellectual, believing that economics is only, or primarily, a set of techniques" (Samuels 1996: 308). Their lack of concern about being unaware of what it is that they don't know, is what I identify as ignorance-squared.

In January 1996, a group of "heterodox economists" made a presentation to the publishing Committee of the American Economics Association responsible for the American Economic Review, Journal of Economic Literature, and the Journal of Economic Perspectives. Anne Mayhew, editor of the Journal of Economic Issues, speaking before the Committee, argued that not one of the publications of the Association conform to the model of scientific inquiry to which the profession pledges allegiance. She cogently argued that a small group of economists have "captured" these journals to promote mathematical complexity at the expense of issues, which incorporate "history, institutions and power". Further, the prestige of the Association and the journals is used "to narrow the discipline, to reward the excessive technical training of the prestigious graduate schools, and to stifle the advance of heterodox approaches to economics". Finally, she noted the curious state of affairs that whereas most economists do not read the American Economic Review, most want to publish an article there in order to advance their careers! (Mayhew 1996)

Clive and Cara Beed have also shown how "quality journals" (predominantly neoclassical) are being used to set standards for both recruitment and promotion (Beed and Beed 1996). It is becoming commonplace for journals to be hierarchically ranked, using a range of diverse standards for policy purposes in the academic industry. The implication is that it is no longer sufficient for academics to publish their ideas; rather it is now necessary to publish in journals that, as Mayhew asserts, they most likely don't read. Beed and Beed argue that it is not pedagogically sound to rank journals since ranking reveals little more than the mainstream's view of itself. More strongly, they, and others, suggest that, an interpretive, hermeneutic view would be that it is contradictory to imagine that the ideas of social science can be evaluated in any objective quality sense at all (Bohman 1991).

In what follows, the content and causes of Mayhew's and the Beeds' articulated frustration is pursued. Recent literature on the production of knowledge and ignorance-squared is discussed and then used to investigate neoclassical economic knowledge. Subsequently, it is argued that it is fruitless to appeal to neoclassical theorists to become more methodologically pluralist or to enhance their rhetoric. It is concluded that, although a number of causes exist for the intellectual narrowing of the discipline, a fundamental answer to the query "why is this the case?" may be found in Gramsci's notion of ideological hegemony.

Ignorance-Squared

"The more I study economics the smaller appears the knowledge I have of it... and now at the end of half a century, I am conscious of more ignorance of it than I was at the beginning." (Alfred Marshall, quoted in Schumpeter, 1941: 248)

The usual methodological question in economics is, "how can one tell whether a particular bit of economics is good science?" (Hausman 1989:115). Herein is pursued a somewhat different sociological question which is not how to come to know what one doesn't know, the form of ignorance acknowledged by Marshall in the quote above; but why it is the case that neoclassical economists don't want to be aware of what it is that they don't know, which is subsequently defined as ignorance-squared.

"Ignorance", is discussed herein as the antonym of knowledge, ie. lacking knowledge or information as to a particular subject or fact. The term is not meant in a derogatory manner, but rather, is normally ascertained as the starting point in the quest for knowledge. As reflected in recent literature on ignorance-squared "(T)he greatest achievement of science… is the discovery that we are profoundly ignorant; we know very little about nature and understand even less" (Kerwin 1993: 174). Economic theories provide a formal expression of our perception of reality and all knowledge is produced through social interaction (Berger and Luckmann 1967; Bloor 1976). Ignorance does not imply merely a lack of knowledge, but also the possibility that its antonym is being produced. To supplement this assertion, it is argued that neoclassical economists, as traditional intellectuals, cultivate the social production of ignorance in the struggle for ideas. This is done through narrow pedagogy, delineation of research parameters, and by constraining the production and presentation of non-neoclassical knowledge.

Training in textbook economics and economic research systematically fosters ignorance-squared, in that students and researchers are shielded from any acquaintance with problems outside the domain of successful puzzle solving. The curriculum is always crowded with the positive heuristic of neoclassical economics; there is always too much to teach. There is never time for reflection, for perspective, for the cultivation of awareness, and most importantly, for the presentation of other contentious viewpoints, much less for the knowledge produced outside the disciplinary boundaries. When neoclassical economists restrict their own discourse, as well as their students' ability to engage with others of the same, or related specialties, then "ignorance-squared", in the manner put forward by Ravetz (1993) is enhanced.

In neoclassical economic terms, the marginal cost of the search for particular knowledge increases, and can be prohibitively high (Wible 1995: 303). But what is not clarified by neoclassical economics is that in any social formation the allocation of resources to the production of knowledge will be determined, as are other resource allocations, through struggle, and in that struggle, both knowledge and ignorance are produced dialectically. Therefore, dominant and subordinate positions are reflected by the various paradigms within the discipline, ideologically and politically.

We are all ignorant in a variety of ways, to various degrees, with respect to specific issues, problems and questions. In fact, it is the increasing awareness of our ignorance of what there remains to know that is most special about the learning process. A taxonomy of ignorance provided by Smithson (1989:9; and 1993:135) suggests a variety of forms:

  1. All the things of which people are aware they do not know (the most recognised form of ignorance);
  2. All the things people think they know but do not (ignorance based on error);
  3. All the things of which people are not aware that, in fact, they do know (intuition);
  4. All the things people are not supposed to know but could find helpful (taboo);
  5. All the things too painful to know (psychological suppression of memory); and
  6. All the things, of which people are not aware that they do not know (ignorance-squared).

Of particular interest is the latter (ignorance-squared). There is nothing necessarily negative about the fact that we proceed through life unaware of most of what there is to know. What is argued however, is that neoclassical economists promote ignorance-squared. So as not to suggest this promotion is solely limited to economists, the reader is referred to an analogous process for physical science, as discussed by Olwell (1996). There are many obvious reasons why this process exists, some of which are intuitive. Although a query as to "why this is the case is notoriously slippery in that it reflects an appeal for simplistic reductionism, an explanatory form of reductionism can offer a prioritised list of causal explanations.

To illustrate, there are numerous reasons for promoting ignorance-squared. Given the search costs combined with specialisation, there is only so much time to devote to methodological issues. Therefore, the dominant paradigm will draw the attention of most scholars. Moreover, the more a system (of thought) is entrenched, and the longer the time it has been operating, the more difficult and expensive it becomes to change that system (Collingridge 1980). Likewise, the more a person has invested in the training required to be admitted to the neoclassical coterie, the more it is in that person's interest to prevent the depreciation of knowledge threatened by alternative modes of discourse. Another reason may be the appeal of elegant mathematically constructed neoclassical axioms. For instance, Einstein's theory of relativity became the standard textbook theory of gravitation in the 1920s. Yet, it wasn't until the 1950s that radar and radio astronomy became sophisticated enough to generate and test the theory via precise predictions with experimental uncertainties less than one percent. The general acceptance of the theory in the intervening 30 years had been largely attributed to its beauty (Weinberg 1992: 98), similar to the dominance of general equilibrium theory in economics in the second half of the twentieth century. Given the conceptual apparatus of ignorance-squared, let us now examine the production of economic knowledge that incorporates simultaneously, the production of ignorance.

Economic Knowledge

"The aim of scientific discourse is profoundly argumentative and not merely expository; [that] the goal is to persuade readers, to convince them of the validity and importance of the work, and to motivate them to acknowledge the force of the contribution by explicitly accepting and building upon it" (Charney 1993:204)

Neoclassical economists normally treat economic instability as the effect of exogenous, stochastic factors even though nonlinear economics suggests that what may previously have been considered exogenous, or random, may more likely be endogenous to capitalist social formations. As such, economic fluctuations are seen as created by the processes of capitalism itself (Baumol and Benhabib 1989; Savit 1988). This is certainly not a new idea. Marx, Keynes, Hicks, Harrod, Kaldor and Hayek all considered causes for instability which were endogenous (Zarnowitz 1985). And in most of these cases the instability was created by a nonlinear feedback process such as the Keynesian "formation of expectations" (Gans 1991:42). Generally speaking, a nonlinear system must be understood in its totality, which means taking into account a variety of constraints, boundary conditions and initial conditions. These supplementary aspects of the problem must be included in the study of linear systems, too; but (in neoclassical economics) they enter in a rather trivially assumed and incidental way (Davies and Gribbin 1992: 25 and 40).

Examination of empirically defined problems, such as unemployment or inflation, also reflects irreconcilable differences in the frameworks or worldviews with which these problems are analysed. Those who believe that the free market is inherently stable and coordinated, with instability the result of exogenous shocks, largely fall into the neoclassical camp. Those who see endogenous factors, such as uncertainty or exploitation at work promoting instability, will normally be those working in a tributary rather than the mainstream (Brown 1981:457-58). With reference to instability, the crucial issue at odds between the groups is that of equilibrium or the tendency thereto.

Equilibrium theory itself has a number of integral constituents which, while not exclusive, include rationality, consumer and producer optimisation, malleable capital, decreasing returns, and constant returns to scale, all of which propound the pre-eminence of the tendency to equilibrium in capitalist goods, factor and money markets.

The 'rational' consumer of the mainstream economist is a working assumption that was meant to free economists from dependence on psychology (Simon 1976:131; Tversky and Kahneman 1987). The dilemma is that the assumption of rationality as intertemporally optimising is often confused with, and regularly presented as, real, purposive behaviour. In fact, the living consumer in historical time routinely makes decisions in undefined contexts. They muddle through, they adapt, they copy, they try what worked in the past, they gamble, they take uncalculated risks, they engage in costly altruistic activities, and regularly make unpredictable, even unexplainable, decisions (Sandven 1995).

One of the favourite diagrams of producer optimisation in the neoclassical text is the isoquant, showing a given output produced by different combinations of capital and labour. Different points on the isoquant represent different techniques of production, with differing capital-labour ratios. This continues to be presented to students even though neoclassical economics have themselves admitted that there is no possible way to measure aggregate capital independent of distribution, (Harcourt 1975:5-9; Robinson 1987), that much production takes place with fixed factor ratios, and that what are most often lumpy decisions are not reversible in practice (Robinson 1980:220).

The inscription of supply and demand into mathematical equations is generated by the assumption of "diminishing returns". It is becoming more evident that it is "increasing returns" which will better help us "to understand the messiness, the upheaval, and the spontaneous self-organisation of the world" (Waldrop 1992:18, 35; Arthur, 1990). The concept of increasing returns is not new in itself (Arrow 1962; Helpman 1984; Kaldor 1981 and Young 1969). What is new is that Arthur, following Kaldor's example, places the concept within the context of nonlinearty, instability and disequilibrium. In his work Arthur divides up the profession into two world views, the neoclassical and the 'new' economics: neoclassical economics is based on diminishing returns; 19th century deterministic dynamics approaching equilibrium; homogeneous factors; no externalities; and is structurally simplistic around the concepts of supply and demand. Alternatively, 'new' economics introduces increasing returns; is evolutionary; focuses on heterogeneity and externalities; and is structurally complex and ever changing (Waldrop 1992:38; Bak and Chen 1991). Most students graduate, only having come into pedagogical contact with the former worldview.

A few neoclassical theorists have broke part of the mould and are incorporating increasing returns into the analysis of international trade and growth theory (Helpman and Krugman 1985; Krugman 1986; and Romer 1986). However, Romer, for example, makes it evident that he is not straying beyond the boundaries, by designing his analysis as, "…a well-specified competitive equilibrium model of growth. Despite the presence of increasing returns a competitive equilibrium with externalities will exist…and is capable of explaining historical growth in the absence of government intervention" (Romer 1986: 1003-1004). Nowhere does he emphasise that increasing returns also implies a downward sloping supply function and the potential of resulting disequilibrium.

We are left with the pre-eminence of equilibrium economics when the balance of supplies and demands on all spot and futures markets takes place simultaneously, (Hicks 1939; Arrow 1971; and Debreu 1959). In this purely competitive, certain, optimising world of general equilibrium, pure profits are zero. Before students are permitted to achieve this level of sophistication, they must first go through the partial equilibrium components of marginal cost and revenue relationships.

As long ago as the 1930s, a number of economists, Means (1935), Hall and Hitch (1939), then Lester (1946) and Kaplan, Dirlam and Lanzillotti (1958) all cast serious doubt on the general applicability of the conventional equilibrium analysis of price, (Mueller 1992:151). The mainstream methodological counter-proposition was that it was not important that individuals did not consciously maximise. Rather, it was only necessary that they act as if they did (Machlup 1946; Friedman 1953; Kahn 1959).

More recently, Nitzan and Bichler point out (1995 454-455) that modern corporations are not even "acting as if" they equilibrate marginal cost-marginal revenue to maximise profits. Rather, they attempt to "beat the average". References to the "average" or "normal" pervade the business literature - from the analysis of stock performance, through the stacking of country growth rates and risk premia, to the ranking of corporate profitability. In these terms, according to Nitzan and Bichler, the primary goal becomes "differential pecuniary accumulation", through which the corporation seeks to control a "larger share of the societal surplus". Consequently, success has less to do with the intuitively convincing textbook equality between marginal cost and marginal revenue, than with the capture of external contested income, thereby redistributing the available social surplus.

As is evident from the above discussion, "whenever (conventional) economics is used or thought about, equilibrium is a central organising idea" (Hahn 1982). Two fundamental assumptions of the equilibrium model in economics are 'timelessness' and 'certainty' (Kornai 1971:19-23). Neoclassical theory deals largely in logical time, which is a period during which whatever needs to happen, will happen (Henry 1983/84:219). Historical time is assumed away, implying that neoclassical economic theory has universal applicability (Georgescu-Roegen 1971:134-140).

Conterminously, neoclassical theory reduces uncertainty to a logical construct in which rational expectations are put forward in order to conform to the demands of equilibration. In contrast, "expectational" time has been the subject of attention for tributary economic paradigms in which the future is created and is not the function of deterministic assumptions of rationality (Carvalho 1983/84:269). According to Shackle, "(E)xpectational time is an aspect of a decision-maker's effort to choose a course of action in the face of uncertainty about the outcome which would flow from this course or that" (Shackle 1968:67).

One neoclassical defence is to suggest that equilibrium is only a tendency towards which the system is moving. However, Weintraub (1991) reveals the manner whereby econometricians, such as Negishi, maintain that the equilibrium contained in a model is real and intuitively justified. They do this by appealing to the "reality out there…in which it is known that the economy is fairly shock-proof….We know from experience that prices usually do not explode to infinity or contract to zero…" (Negishi 1962:638-639).

Hutchison has insisted that even "(T)he assumption of a tendency towards equilibrium implies…the assumption of a tendency towards perfect expectations, competitive conditions and the disappearance of money" (Hutchison 1938:107). Change, not rest is the characteristic 'state' of capitalism. "The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process that is in continual disequilibrium. It may seem strange that anyone can fail to see so obvious a fact long ago emphasised by Karl Marx" (Schumpeter 1976:82).

We are left then, as noted in the assertion of Samuels, with mostly irrelevant elegance and techniques. Intricate optimisation techniques and equilibrium conditions are heaped on a small set of assumptions (Mueller 1992:159). A few methodologists, such as Hutchison, Blaug, Friedman, Caldwell and McCloskey, over the years have attempted to broaden the discussion by seeking methodological norms for both applied and theoretical economists. Hutchison and Blaug, in line with Popper's dicta, (Hutchison 1938; Blaug 1980; Popper 1959) advocated the adoption of a 'falsificationist' methodology; Friedman affirmed the benefits to be derived by economists from what has been identified by others as "methodological instrumentalism" (Friedman 1953; Caldwell 1982: 173-178); Caldwell has pushed the gentility of 'pluralism' (Caldwell 1988); and more recently, McCloskey (1986) has asked economists (in a most complicated and discursive manner) to refine their 'rhetoric' (Mäki 1995; McCloskey 1995). Why haven't neoclassical economists paid much attention?

Economic Method and Social Interests

One might presume that neoclassical economists would most recently have given a sympathetic hearing to McCloskey's overture for more fruitful exchange in the pursuit of knowledge. On the contrary, to a large degree McCloskey's plea for communicative rhetoric has been ignored, presumably because they have little need or desire to communicate with their heterogeneous disciplinary associates.

This lack of desire to engage in conversation with others is then passed on to the next generation. The motivated tendency to tailor one's opinions in accordance with perceived audience preferences has been long recognised by social psychologists as a feature of the process whereby people, in general, form their judgments (Kruglanski 1991:227). The perceived audience for most graduate students is their neoclassical mentors.

In other words, McCloskey cannot have both meaningful rhetoric and neoclassical economics. If economists are not articulate, then in terms of their own theory, either they are not optimisers and are passing up a profitable opportunity, or something in their preference, endowments or technology makes articulateness unprofitable (Kurdas and Majewski 1994:341). Presuming that economists follow their own optimising logic, then the lack of need for a more pluralist articulation has to do with their control over symbolic representation. It should be remembered that, in ideological conflict, any concession of politeness will contain political concessions as well (Bordieu 1977).

As Mayhew, and Beed and Beed suggest, the exercise of ideological power drives a portion of the full non-neoclassical transcript underground, in this instance to less reputable heterogeneous journals. In mainstream discourse, the subordinates (academic workers and students) tend to reveal only what is "safe" and "appropriate"; that which is delineated by the dominant paradigm or its ideological purveyors. Total subordinate revelation is only forthcoming in student or worker newspapers or "less reputable" heterogeneous journals, all treated with condescending contempt by the orthodoxy.

University departments, professional journals and peers form an institutional web, which provides for the career potential of any aspirant to the profession (North 1990:95). The proficiency shown in neoclassical tools, concepts and language becomes the hallmark of identification and quality. The Krueger Commission on Graduate Education, established in the United States to report on tertiary education standards in 1990, reported that department procedures "bias the selection towards good technicians, rather than good potential economists". This implies that graduate education de-emphasises creativity and problem solving as the student requires "little or no knowledge of economic problems and institutions" (Krueger 1991:1040-42). Consequently, ignorance is promoted as a qualitative manifestation of a "good economist". The result is that the dominion of organic intellectuals, representing a class position and propounding its symbolic representation, is solidified. In order to join this coterie one must accept and disseminate the ideological and political constituents of class power that it represents.

There is much more than McCloskey would have us understand. Economics is constructed around more than subjective differences of epistemology, methodological preference or appreciation of elegant techniques; the differences at the core are also political. Neoclassical economics has represented, for two hundred years, the political self-representation of autonomous, self-subsistent, and self-interest-optimising individuals. The populist works of Friedman (1962) in Capitalism and Freedom, or the more adrenalin-pumping stuff of Ayn Rand (1952 and 1957) in The Fountainhead and Atlas Shrugged provide adroit examples of the ideological and political content in the grasp of the "Invisible Hand". It is here where the connection between promoting ignorance-squared and ideological construction is entwined.

Ideological Construction

And your education! Is not that also social, and determined by the social conditions under which you educate, by the intervention, direct or indirect, of society, by means of schools, etc? (Marx 1976: 502).

The gadfly Socrates continues to epitomise the courage of seeking knowledge (Plato 1956). The attraction of Socrates is that, through his didacticism, we come to realise that the greatest knowledge we can possess is the awareness of our boundless, fathomless ignorance.

Questioning, wondering, doubting, revising and collaborating are all practices which Socrates and now McCloskey (1985) would proffer to those interested in expanding the breadth of our knowledge through communication. Yet, students, and many of their preceptors, do not know that they do not know that capital cannot be measured; that utility is metaphysical; that optimisation is non-falsifiable; that capitalism is inherently unstable; or that, as Ricardo discovered, when we say 'supply and demand' we are explaining nothing (Dobb 1975: 52 and 119). The incentive remains not to find out; or at the very least, not to recognise the numerous serious-minded non-neoclassical economists who take all of the above for granted! Rather, mainstream protagonists spend time proving to each other that what they are doing is what they should be doing; and then convincing the disciples that what they should be doing is what their mentors are doing, ie., producing "acceptable" knowledge. The entire process is justified from within by noting that economists are all optimising their utility functions (Becker 1975).

A student may actually accept what s/he is taught as normal, even justifiable, as part of the social order. Another may reject the information as "unreal", "incomplete", "too abstract", "not relevant", or "not falsifiable" and yet have no "realistic" option to present as a critical counter-claim. In either case, to survive, to pass the course, to increase their potential material enhancement upon graduation, both types of student must internalise and become technically proficient with what is served up. At the level of ideas, this symbolic production and re-production of both knowledge and ignorance-squared is replicated, with or without conscious consent (Gramsci 1971:passim).

This process of ideological domination is portrayed through the solidification of ignorance-squared. It portrays, as well, a struggle over the appropriation of symbols, a struggle over how the past and present shall be understood and labelled, a struggle to identify causes and assess blame (Parkin 1971: 79-102). By disseminating a paradigmatic discourse and the concepts to go with it as well as defining the standards of what is legitimate, a symbolic climate is created that prevents subordinates from thinking their way free. Thinking "free", is used in the sense that acts are dialectically interactive with intentions, neither consciousness nor action being "unmoved movers" (Scott 1985: xvii and 38-39).

Conclusion

Ultimately, economic knowledge, like life, is a process and is none too solid. But then as Ivan Ilych came to see, neither are we, when, no matter how vigorously he tried to drive thoughts away, they continued to confront him (Tolstoy 1967:280-281). No matter how hard neoclassical economists try to drive away the world of complexity, it too continues to confront them. Yet, to the frustration of "heterogeneous" antagonists the neoclassical paradigm remains dominant, blatantly promoting ignorance-squared. Elegance and technique have replaced relevance. What has been shown herein is that the production of that elegance has involved the opportunity cost of simultaneously producing ignorance. Ignorance-squared is replicated amongst students given the social interests of those dominant in the paradigm. This process of producing ignorance becomes entwined with the promotion of ideology to the detriment of us all. McCloskey importunes the deaf, for dialogue with more relevant tributaries of the mainstream is not in the interests of those presently in control.

The best advice rhetorically should be exactly the opposite provided by McCloskey. Neoclassical economists should accept the advice of Frederick von Hayek's distant cousin, Wittgenstein, who, in the final sentence of the Tractatus Logico-Philosophicus, wrote: "Whereof one cannot speak, thereof one must be silent" (Monk 1991:156 and 224). However, as it has been argued, the ability to speak and to be heard is based on much more than methodological propositions. They are, as well, functions of social interests and ideological power.

[Apr 20, 2009] Major Economic Myths Commonly Found in the Social Sciences

The clearest example of contemporary trend for the abandonment of the 'scientific method' in favor of either religious or secular faith-systems has resulted in social and economic catastrophes throughout human history. Perhaps one of the best known recent examples of a 'secular faith-system' that replaced the 'scientific method' occurred in Soviet Russia, following the death of V.I. Lenin and the rise of J. Stalin – and the creation of a 'new biology' that accompanied the collectivization of agriculture, the initiation of the 'purge trials' and the implementation of the First Five Year Plan (1928-32). The chief architect of the 'new biology' was Trofim D. Lysenko [Трофим Дисвич Лысéнко] (1898-1976) and the 'new biology' came to be known as Lysnkoism. Lysenko, born to a Ukrainian peasant family, was educated at the Kiev Agricultural Institute and worked as an agricultural researcher at an agricultural experimental station in Azerbaijan during the mid- to late-1920s. In 1927 the official Soviet newspaper, Pravda (Правда or 'truth') proclaimed that T.D. Lysenko had discovered a method to fertilize fields without using fertilizers or minerals, and that he had proved that a winter crop of peas could be grown in Azerbaijan, 'turning the barren fields of the Transcaucasus green in winter, so that cattle will not perish from poor feeding crop of peas, and the peasant Turk will live through the winter without trembling for tomorrow… (www.en.wikipedia.org/wiki/Trofim_Lysenko.)

The use of the media to proclaim 'scientific truth' and establish a 'politically correct' set of scientific dogma to advance the goals of the Communist Party of the Soviet Union (CPSU), and enforced by the power of the state through it's 'apparatchiki' [аппаратчики] (including the NKVD, forbearer of the KGB or state security [secret] police) does not conform to the Baconian 'Scientific Method.' Rather, this process is more akin to what John Milton had written in his Areopagitca (1644) "…the famous Galileo grown old, a prisoner of the Inquisition, for thinking in Astronomy otherwise than the Franciscan and Dominican licensers thought." (See: Boorstin, 1983, 317.)

Lysenko was the archetypal 'scientific hero' of the Soviet system, the intellectual counterpart of Aleksandr Stakhanov (Алекср Стаханов) the 'industrial hero' for whom the Stakhanovite movement (1935) was named. (For various Soviet terms, see: 'Glossary – Soviet Union;' available at: //fas.org/irp/world/Russia/su_glos.html.) Such a pantheon of 'Saints' of 'scientific socialism' provided evidence on the ability of 'Soviet Man' to overcome the economic and technological constraints imposed by Nature on the Soviet Union, especially its 'continental' and subhumid climates. The 'science' of Lysenko was based primarily on the work of Lamarck, the 'theory' of "Inheritance of Acquired Characteristics," as the 'driver of evolution'. Hummm … I guess that this means that my children will inherit ALL of the knowledge that I have acquired during my lifetime! As an example of Lysenkoism, his 'scientific' methodology has been reported:

… primary procedure was a mixture of so-called 'vernalization' (by which Lysenko

generally meant anything he did to plant seeds and tubers) as well as hybridization.

During one period, for example, he picked a spring wheat with a short 'stage of

vernalization' but a long 'light stage,' which he crossed with another variety of wheat

with a long 'stage of vernalization' and a short 'light stage.' He did not explain what

was meant by these stages. Lysenko then concluded on the basis of his stage theory that

he knew in advance that the cross would produce offspring that would ripen sooner

and as such yield more than their parents and thus did not have to test many plants

through their generations. Though scientifically unsound on a number of levels,

Soviet journalists and agricultural officials ['apparatchiki' (аппаратчики)] were

delighted with Lysenko's claims, as they sped up laboratory work and cheapened it

considerably. Lysenko was given his own journals, Vernalization, in 1935, with which

he generally bragged about forthcoming successes. [www.en.wikipedia.org/wiki/

Trofim_Lysenko), emphasis added]

The substitution of Lysenkoism for the 'scientific method' has a number of sources, several have already been cited above, but all find their origins in the pretenses of Karl Marx (1818 - 1883) and Frederick Engels (1820 - 1895). Marxism is an economic/political system based on a mystical 'faith' in the Hegelian dialectical view of history. Friedrich Engels in his, Dialectics of Nature indicates all is explicable in terms of the 'struggle of opposites' – the 'laws of dialectics,' the most general laws, which may be reduced to three:

-- the law of the transformation of the quantity into quality and vice versa;

-- the law of the interpenetration of opposites; and

-- the law of the negation of the negation.

All of this nonsense sounds like the religious mystical speculations, such as the 'coincidentia oppositorum' of late medieval writers, including Nicholas Cusanus (St. Francis of Assisi and St. Bonaventure), or an exercise in alchemy, as described by Carl G. Jung:

The alchemist's endeavours to unite the opposites culminate in the 'chymical

marriage,' the supreme act of union in which the work reaches its consummation.

(1963, Mysterium Coniunctionis, 89)

Russell Madden has chronicled a number of recent examples of the betrayal of the 'scientific method' and "The Resurrection of Lysenko" (//home.earthlink.net~rdmadden/ webdocs/Ressurrection_of_Lysenko.html.) Quoting Robert Conquest's, The Great Terror (1990, 296), who noted, "The triumph of Lysenkoism was the most extraordinary of all indications of the intellectual degeneracy of the Party mind…, Madden observed:

While no scientist in our country has been jailed or murdered due to his beliefs, the

same insidious seeds of intellectual destruction committed in the name of political

agendas have taken root in our society – and in some instances even been nourished

by government officials and policies. Under Soviet style Lysenkoism, it became

evident that '[w]hen encouraged by the political system, quackery prevailed and 'good'

scientists deferred to politically imposed scientific truth.' In recent years, a similar

substitution of politics for reality as one's standard for truth has made itself evident in

such areas as environmentalism, economics, and medicine (in its research on gun

ownership, cigarettes, and drugs). [Emphasis added]

Madden is not alone in his criticism of the 'betrayal of the scientific method' and the substitution for it of 'junk science'. A representative, but far from exhaustive list of other examples, include:

Deveey. 1980. "Human Population," Scientific American

John Maddox. The Doomsday Syndrome.

Julian Simon. Hoodwinking the Nation.

Michael Fumento. 1993. Science Under Siege.

John Stossel. 2004. Give Me a Break: How I Exposed Hucksters, Cheats, and Scam

Artists and Became the Scourge of the Liberal Media…. Perennial Currents.

Madden continues with:

The pattern of distortions, omissions, and lies continues to expand in ripples as

faulty or fraudulent [sic] research is selected by politically motivated individuals

and used to advance their goals of political control. In press releases and in the

halls of government, these falsehoods are passed along to a public which often

lacks the knowledge or ability to recognize and refute the pronouncements handed

down by authorities they are instructed to trust. The issue is not simply reasonable

disagreements over interpretations of data and theories. As did their earlier brethren,

the proponents of modern-day Lysenkoism seek 'to change…human attitudes…by

the use of naked police power,' i.e., by appealing to government and its monopoly

on force rather than persuasion to achieve their ends.

It is well known in economics that individuals and groups have a tendency to pursue their own self-interest. Often this is accomplished by pursuing 'rent-seeking behaviors' – Zoltan J. Acs and Daniel A. Gerlowski have defined 'rent-seeking' as: "

An attempt by some interested party to alter the allocation of rents in a contractual

agreement; in general, does not create value within the organization. (1996.

Managerial Economics and Organization, 448)

In their chapter, "Distribution, Rents, and Efficiency," they have defined 'rents' as:

…benefits earned by an economic resource that exceed what the resource

could willingly earn else where. (221)

They continue by defining 'economic rents' as:

…the benefits from an activity going to a resource in excess of what is

needed to attract that resource to that activity. (222)

And, somewhat later,

… it is useful to think in terms of rents as being captured by some entity;

both economic and quasi-rents are said to 'go' to some factor of production

or, equivalently, to some party of the exchange.

In a competitive economy, there are no economic rents. The reason is clear.

In a competitive setting, positive economic profits attract entrants who

eliminate all rents in the long run. The obvious exception is, of course,

whether a factor of production is in inelastic (that is, fixed) supply, in which

case rents may exist in the long run. (226)

So, how does all of this 'economic theory' about 'rents' and 'rent-seeking behavior' relate to the betrayal of the 'scientific method'? Well, it helps us understand the 'how' and 'why' of both private and public decision-making thereby providing a system of incentives or disincentives, culminating in the abandonment of the 'scientific method'. Gwartney and Stroup – Principle # 1 Alawys and everywhere incentives matter.

... ... ...

Capitalism is inherently unstable, i.e., is beset periodically by economic crises, known variously

as – 'economic downturns', 'recessions', 'depressions', or 'crashes'. The so-called 'market-instability' is deemed to be a flaw in the free-market system and, therefore needs to be 'corrected' by the direct intervention of 'the brightest and the best' (aka* the self-appointed, intellectually superior bureaucrats employed by the government.) This idea had it origins in the pessimistic writings of Thomas Malthus [especially his: Principles of Political Economy, 2nd Ed. 1836] and was popularized by Karl Marx and Friedrich Engels [see: below]. These views were accepted as proven by John Maynard Keynes and those who adopted his theory, thereby justifying ever greater interventionist government policies. [See: J.M. Keynes. The General Theory of Employment, Interest and Money (1936/1964)]

John Micklethwait and Adrian Wooldridge, in their widely heralded book, The Company: A Short History of Revolutionary Idea (2003), in describing the rise of the 'modern company' have identified several conditions essential for their founding: "First", they note:

was the idea of shares that could be sold on the open market.… the naval

capitalism of the sixteenth and seventeenth centuries dramatically expended

the idea, bringing stock exchanges in its wake. The other idea, which had

occasionally surfaced before was limited liability. Colonization was so risky

that the only way to raise large sums of money from investor was to protect

them.

The first chartered joint-stock company was the Muscovy Company, which

was finally given its charter in 1555. [the reign of Ivan IV or Ivan Groznii]

…the Company was given a temporary monopoly over trade routes to the

Russian port [Archangelsk]…. The company was able to raise enough money

to finance the long journey to Russia by selling tradable shares. (18, emphasis

added)

An essential question that you must ask yourself is: 'Just who had the power and authority to grant "a temporary monopoly over trade routes"?' For a broader view on the issue of 'monopoly' and its source, see: Alan Greenspan. 1961. "Antitrust," in Ayn Rand. 1967. Capitalism: The Unknown Ideal. New York: Signet Book, 63-71. Greenspan in his discussion of the 'westward expansion of railroads' in the 1860s, and the initiation of governmental regulations, has written:

In the name of 'public policy' it was, therefore, decided to subsidize the

railroads in their move to the West….

As might be expected, the subsidies attracted the kind of promoters who

always exist on the fringe of the business community and who are constantly

seeking an 'easy deal.' Many of the western railroads were shabbily built:

they were not constructed to carry traffic, but to acquire land grants.

The western railroads were true monopolies in the textbook sense of the word.

They could, and did, behave with an aura of arbitrary power. But that power

was not derived from a free market. It stemmed from governmental subsidies

and government restrictions…. (64-5)

…. In the meantime, however, an ominous turning point had taken place in our

economic history: the Interstate Commerce Act of 1887.

That Act was not necessitated by the 'evils' of the free market. Like subsequent

Legislation controlling business, the Act was an attempt to remedy the economic

distortions which prior government interventions had created, but which were

blamed on the free market. (65, emphasis added)

At this juncture it is appropriate to add some observations made by the Nobel Laureate, James M. Buchanan, that provide further evidence buttressing Greenspan's point:

From Wicksell, Buchanan concluded that governments are not

efficient, purely altruistic entities that effortlessly correct market

imperfections. Instead, governments are aggregates of individuals

pursuing private rather than the public interest through regulations

and tax laws. These private interests create wasteful lobbying

efforts known as rent seeking. (Emphasis added)

Public choice economists support strong legal rules that constrain

rent-seeking special interests from undermining an appropriate public-

goods process.

At first glance, public choice theory seems to be nothing more than

common sense: Governments are collections of individuals whose

interaction is determined by the same self-interest that motivates

people in the private sector. The simple view that government is a

collective decision-making process that altruistically solves social

problems has a long and, according to Buchanan, romantic tradition

both in political theory and in economics….his public finance models

lie outside the neoclassical mainstream belief in the collective problem-

solving model and in measurable, explicit opportunity costs… A pure

subjective-cost approach denies that the actual costs of any action can

ever be known, even by the decisionmaker(s), because the act of choice

is itself cost, subjectively perceived. A theorist adhering to this doctrine

would not carry out any benefit-cost analysis, as costs are inherently not

observable and, therefore, not measurable… (Emphasis in the original)

As many economists came to doubt the efficacy of large, state-funded

programs, they saw public choice theory as a way to examine what has

come to be known as government failure. For decades following Arthur

Cecil Pigou's famous book The Economics of Welfare, economists saw

government as a disinterested agency that could correct market failures.

Buchanan and other public choice theorists altered the debate by

proposing that government may not really correct problems in the market-

place because of the wealth trading, or rent seeking, that occurs during

the legislative process… (Emphasis added)

Influenced by what he considered the government's overreaching in the

1960s, Buchanan believes the closer a person can come to self-sufficiency,

the better off he is. (Emphasis added) [Robert L. Formaini. "James M.

Buchanan – The Creation of Public Choice Theory," Economic

Insights, 8 (2); available at: www.dallasfed.org/research/ei/ei0302,

emphasis added.]

There are three critical points in Formaini's review of Buchanan's approach to economic relationships: (i) politicians/bureaucrats are self-interested, not altruistic, decision-makers ['public servants', as they like to call themselves]; (ii) as such, they engage in 'rent-seeking' behaviors by trading favors (e.g., legislation that benefits small cohesive 'special interest groups' at the expense of the majority of the citizens); and (iii) claims that government intervention in the market place to correct so-called 'market-failures' result in 'government failure'…note the similarity to Greenspan's conclusions, cited above: "an attempt to remedy the economic distortions which prior government interventions had created, but which were blamed on the free market.

Somewhat later, Micklethwait and Wooldridge have observed that such a joint-stock, limited liability company played a major role in the founding of the United States –

The Virginia Company duly raised funds from seven-hundred-odd

Elizabethan 'adventurers,' including Sir Francis Bacon – and

produced, in return, no profits.

…. The risks of investing in voyages to the spiceries of Indonesia

would be akin to the risks of investing in space exploration today.

(19)

After several failed British attempts to send ventures to the East Indies,

It was hardly surprising that the Dutch merchants decided that state-

sponsored collusion was preferable to this. The monopoly that they

eventually secured from the state in 1602 – the Dutch East India

Company, alternatively known as the VOC (for Vereenigde Oost-

Indische Compagnie) or the Seventeen (after its seventeen-strong

board) – became the model for all chartered firms. The VOC's

charter also explicitly told investors that they had limited liability.

Dutch investors were the first to trade their shares at a regular stock

Exchange in 1611…. All the Amsterdam hub needed to prove its

capitalistic credentials was a market crash, which duly arrived with

tulip mania in 1636-1637. (20, emphasis added)

There are several points that must be pointed out explicitly in this discourse: (i) in any economic system, regardless of its organizational structure, production involves risk taking (even in a subsistence economy, as noted by game theory); and (ii) once again, there is a tendency for equating capitalism with "a market crash." A little thought on the matter reveals that 'risk' applies to all economic systems because it arises out of 'uncertainty'. This is a well-known relationship since Frank H. Knight published his seminal work, Risk, Uncertainty, and Profit (1921), but has been ignored in a most irresponsible manner. [For a brief summary of Frank Knight and his contributions, see: Robert L. Formaini. "Frank H. Knight – Origins of the Chicago School of Economics," Economic Insights, 7 (3); available at: www.dallasfed.org/research/ei/ei0203.html.] 'Uncertainty' arises from an inability 'to know' or 'predict', with any degree precision, the outcome of an event or series of interrelated events as they unfold through time. 'Risk', on the other hand, is, to some extent or in some manner, "susceptible of measurement." More specifically, Knight has made the following distinction:

Hence the problem of profit is one way of looking at the problem of the

contrast between perfect competition and actual competition….

… the problem of profit…have arisen from a confusion of ideas which

goes deep down into the foundations of our thinking. The key to the whole

tangle will be found to lie in the notion of risk or uncertainty and the

ambiguities concealed therein…. (19)

But Uncertainty must be taken in a sense radically distinct from the

familiar notion of Risk, from which it has never been precisely

separated. The term 'risk,' as loosely used in everyday speech and in

economic discussion, really covers two things which, functionally at

least, in their causal relations to the phenomena of economic organization,

are categorically different…. The essential fact is that 'risk' means in some

cases a quantity susceptible of measurement, while at other times it is some-

thing distinctly not of this character; and there are far-reaching and crucial

differences in the bearings of the phenomenon depending on which of the

two is really present and operating. There are two other ambiguities in the

term 'risk' as well, which will be pointed out; but this is the most important.

It will appear that a measurable uncertainty, or 'risk' proper, as we shall use

the term, is so far different from an unmeasurable one that it is not in effect

an uncertainty at all. We shall accordingly restrict the term 'uncertainty' to

cases of the non-quantitive (sic) type. It is this 'true' uncertainty, and not risk,

as has been argued, which forms the basis of a valid theory of profit and

accounts for the divergence between actual and theoretical competition.

(19-20)

Much later, Knight demonstrates the 'who-and-why' of the knowledge/risk/uncertainty phenomena:

…changes in conditions give rise to profit by upsetting anticipations and

producing a divergence between costs and selling price, which would

otherwise be equalized by competition If all changes were to take place

in accordance with invariable and universally known laws, they could be

foreseen for and indefinite period in advance of their occurrence, and would

not upset the perfect apportionment of product values among the contributing

agencies, and profit (or loss) would not arise. Hence it is our imperfect

knowledge of the future, a consequence of change, not change as such, which

is crucial for the understanding of our problem…. (198, emphasis added)

…it is unnecessary to perfect, profitless imputation that particular occurrences

be foreseeable, if only all the alternative possibilities are known and the

profitability of the occurrence of each can be accurately ascertained. Even

though the business man could not know in advance the results of individual

ventures, he could operate and base his competitive offers upon accurate

foreknowledge of the future if quantitative knowledge of the probability of

every possible outcome can be had….knowledge is in a sense variable in

degree and that the practical problem may relate to the degree of knowledge

rather than to its presence or absence in toto. (198-199).

[Mar 1, 2009] "The Financial Crisis and the Systemic Failure of Academic Economics"

Economic Lysenkoism ?

Via email:

The Financial Crisis and the Systemic Failure of Academic Economics, by David Colander, Hans Föllmer, Armin Haas, Michael Goldberg, Katarina Juselius, Alan Kirman, and Thomas Lux: [From the conclusion] ..."We believe that economics has been trapped in a sub-optimal equilibrium in which much of its research efforts are not directed towards the most prevalent needs of society. Paradoxically self-reinforcing feedback effects within the profession may have led to the dominance of a paradigm that has no solid methodological basis and whose empirical performance is, to say the least, modest. Defining away the most prevalent economic problems of modern economies and failing to communicate the limitations and assumptions of its popular models, the economics profession bears some responsibility for the current crisis. It has failed in its duty to society to provide as much insight as possible into the workings of the economy and in providing warnings about the tools it created. It has also been reluctant to emphasize the limitations of its analysis. We believe that the failure to even envisage the current problems of the worldwide financial system and the inability of standard macro and finance models to provide any insight into ongoing events make a strong case for a major reorientation in these areas and a reconsideration of their basic premises."

[Jan 10, 2009] "Bullshit Promises"

naked capitalism

Our new hero Elizabeth Warren (we had always liked her posts at Credit Slips, and it's to see her kicking ass and taking names) pointed to a paper "Bullshit Promises," by Curtis Bridgeman and Karen Sandrik. It looks at the concept of "bullshit" as defined by philosopher Harry Frankfurt and discusses the implications for contract law.

For those not familiar with Frankfurt's construct, (and I wasn't), bullshit is different than lying. Lying takes place when an individual says something he knows to be untrue. Bullshit is when the speaker is indifferent to the truth. Frankfurt's example is when a politician goes on about how "our great and blessed country....created a new beginning for mankind." The candidate may or may not believe it, and in this case, he isn't saying it to be believed, he is saying it to curry favor with voters.

The authors explain:

The defining characteristic of bullshit, for Frankfurt, is that it is speech that holds itself out as describing reality, but fails to live up to the accepted standards of how we go about making such descriptions. It is not its actual truth or falsity that determines whether a statement is bullshit, but rather whether it is made with or without regard for its truth or falsity.
I have a particularly keen interest in topics like this because I am distressed with the many and varied forms of dishonest that take place routinely in our culture. Not only is there resigned acceptance of much of it, but even worse, people don't even seem to notice when it happens.

I don't mean the sort of white lies that will be with us ever and always to smooth over interpersonal relations (although research has found that they are amazingly common, with study subjects telling 20 to 30 lies a day). It's the skirting the edge of truth in business and public life that sets my teeth on edge.

Maybe I am just showing myself to be old-fashioned, but when I started out for myself nearly 20 years ago, pretty much everything was on a handshake basis, even though I would always paper it up. I've seen a decline in those sorts of situations over the years, and my colleagues have had similar experiences. In recent years, I've had a few situations where people have attempted to retrade deals radically at the 11th hour, even with a paper trail and authorizations, almost for sport, just to see what they could get away with.

As an aside, maybe that's why Clint Eastwood remains so popular. He has come to play anachronistic, cranky (most recently, in Gran Torino, bigoted) old men, who are nevertheless appealing because they adhere rigidly to antique, unabashedly masculine notions of honor, in particular, living up to one's word.

I wonder how the decay started. Politicians have always been famous for exaggerating, but Lyndon Banes Johnson took discourse down a notch (he lied so unabashedly that reporters, historically loath to say anything bad about a sitting President, started openly about a "credibility gap"). But I believe that it is commercial speech that has fostered a willingness to cut corners with the truth.

I could go on at length, but I will stop with a couple of examples. One of the mainstays of commercials is to show smiling, sometimes ecstatic or giddy, people using the product. Is a better cake mix or floor cleaner really going to make you feel all that good? No, but the images say they will. And because the distortion/overpromise is non-verbal, it's harder to parse it out and look at it clinically. That is why TV is so remarkably effective.

Another is the pervasiveness of "gotcha" practices, which are particularly popular in financial services. Rebates that have such elaborate protocols that it is clear that the company went to some length to come up with ways to reject completed forms. "Free" checking accounts that are anything but (say, a minimum balance, or only a few month no-fee period). As we discussed earlier this evening, revocable "fixed interest rate for the life of the balance" credit card offers. And then we just have good old fashioned bad faith dealing. I have taken to recording the dates and details of medical claims I submit to my insurer, Cigna, because they routinely throw them out. Two years ago, every single item I sent to them wound up in the system. Now, anywhere from 20% to 35% go missing. But I can't prove that they are systematically and deliberately "losing" claims, even though that is clearly what they are up to.

Now the list above could all be called lies, made with an intent to deceive. But we have related bullshit. I once went to a focus group (I do so out of professional curiosity) which was to test consumer reactions to a proposed advertising message for a health insurance company. I cannot recall the exact wording, but all the messages said explicitly that the insurer would put the patient's interest first, be proactive, caring, etc. I took issue, saying the ad themes were rubbish, no insurer acted that way and they would have to turn their business model on its head to do so (ironically, the insurer was CIgna).

The person running the session kept trying to force me into agreement: "But if a company were to do this, how would you feel about it?" The session leader refused to hear that if I saw an advertisement so wildly at variance with the truth, it would annoy me rather than make we think better of the company. So we have bullshit market research leading to dishonest ad campaigns.

Back to the paper for some legal highlights:

Most courts require an actual intent to deceive the promisee rather than just a lack of an intention to perform. A paradigm case would be Max Bialystock from the musical The Producers, who sold 1,000% interest in a musical, planning to make sure the musical was so bad that there would be no profits to divide so that no one would discover his fraud....

In a world of standard-form contracts, however, consumers are faced with what is arguably a much more widespread problem than lying promises. Parties with great bargaining power who deal primarily in standard-form contracts need not lie in order to get the benefits of lying. Instead, what parties can do – as we will see, what they often actually do – is to avoid making a lying promise simply by making more nuanced promises that fall short of committing them to any particular course of conduct. To be sure, these parties use the words of promising, but then they elsewhere reserve the right to cancel the contract at any time or to change its terms unilaterally.

The paper then has a very informative discussion of some of the many tricks that credit card companies play (did you know that it takes PhD level reading skills to parse the interest rate language in credit card agreements?). Cell phone companies are also devious:
....every major cell phone company has been careful not to commit itself to a particular course of performance by reserving broad rights for itself in the terms and conditions.61 For example, Verizon states that the consumer's service is "subject" to its business practices, procedures and policies, which may be changed at any time without notice.62 Verizon then proceeds to state that "we can also change prices and any other conditions in this agreement."63 Likewise, AT&T's has a similar clause: "We many change any terms, conditions, rates, fees, expenses, or charges regarding your service at any time." Again, like the credit card companies, cell phone companies are not making outright lies so long as they do not have a plan in place to increase the rates at the time of advertising the plan. But they are also not subjecting themselves to the norms of promising even as they use words that would suggest otherwise. While the consumer is committed, the cellphone company can do what it likes.
While these two industries are arguably the worst offenders, similar bad practices are common elsewhere.

The authors content that the protections under current law against such practices are too weak and suggest some modest reforms that could rein them in a great deal.

Anonymous:

One of the reasons I think this recession is going to be much worse than most people imagine, is exactly this culture of bullshit we swim in. You don't notice it until you've crawled up on land and had time to dry yourself off and think about it.

So, imagine tens of millions of American consumers, cut off from their credit cards and cable TV brainwashing for several months by economic necessity, and then being coaxed back into the consumerist fold. This culture looks horrible from the outside, and once you've been detoxed for a few months, you're an outsider.

I'm stingy, not because I don't enjoy fine things, but because virtually nothing you can afford to buy in this country lives up to the promises.

Blogger donna:
Um, did you people not grow up in the 70s?

Nixon disillusioned me forever. I've never trusted a politician since. As to advertising, credit cards, banks, television, etc., they all seem to have been deceptive pretty much my whole life.

Same as it ever was, really.

Blogger Yves Smith:

Donna,

The point is it got worse before Nixon, and appears correlated with the popularity of TV. Weirdly, Johnson and Nixon kept lyin' when the footage from VIetnam made it hard to pretend things were going well there. So we've now had nearly four decades of pols getting more clever about handling the media.

And commercials are getting ever more manipulative. I spent two years in Oz, and it was refreshing how straightforward (and often wry) their commercials are. Ours have very weird video game and dream type images, often bizarre and not funny irony. It almost seems as if a very disturbed psyche is behind some of our stuff. And I suspect a lot of research has gone into it and has ascertained that it is effective.

Anonymous Anonymous:

The de-evolution of the business contract has been a sore spot of mine for many years now. In my field, construction, its a game of who sets the standards, manufacturer of building goods, people with the development monies, right through out the entire food chain.

Ask a question to a person with authority about a clarification in a spec, may educe a response, but try and get them to sign off on it. I've seen contracts ripped up with the statement of go a head and do some thing about it we have better solicitors. In the building boom over here, I have watched as the old and knowledgeable members of the industry have be replaced with increasingly younger and more malleable individuals with little ethical behaver evident in their still maturing brains.

Ex sample to my point, Young man walks on to construction site, new khaki slacks, fashionable new black shoes, Ralph L Oxford shirt and eyes wide with pride. I greet him with a G'Day and what can I do for you, his response was Hi I'm the new site supervisor (his type would run 5 to 20 jobs depending on size). I jokingly say you guys just keep getting younger every day and his response was "well we are bringing a new youthful energy into the market". Well after I picked my jaw off he floor, I wished him luck in his new position and got back to my work. My head was filled with pictures of him in a room full of dopplegangers, just down loading what ever some construction/sales Mgr puts in front of them and send them out the door to make life hell for everyone else and all for a company cell phone/car and a title they can bullshit about at the pub to get girls and impress mates lool.

Society is sick and its the criminals, wolfs in lambs skins, sales, advertising, profit at all costs, politicians for personal gain that are the root of it.

Yes Yves, I agree with you 110% fix this component in the equation and then things will start to function with more rational behaver for everyones benefit.

Skippy

Richard Smith:
'Bullshit' has been around for a long long time. It's acknowledged in your Constitution - that's why the right you have is to 'the pursuit of happiness', not 'happiness'. The hucksters facilitate that pursuit.

For other literary examples see "Huckleberry Finn" (the Duke and the King); or Nabokov "Nicolai Gogol" (1944).

The term "poshlost" that Nabokov uses is a nuanced version of 'bullshit'. Fake ad promises are pretty much at the core of it. You can see Nabokov pursuing that from magazines & film (40s) through to TV (50s and 60s).

Ideal exchange for fake happiness? Fake money.

Easy to see why bullshit peaks might coincide with debt bubbles.

[Jan 10, 2009] "Bullshit Promises"

naked capitalism

Our new hero Elizabeth Warren (we had always liked her posts at Credit Slips, and it's to see her kicking ass and taking names) pointed to a paper "Bullshit Promises," by Curtis Bridgeman and Karen Sandrik. It looks at the concept of "bullshit" as defined by philosopher Harry Frankfurt and discusses the implications for contract law.

For those not familiar with Frankfurt's construct, (and I wasn't), bullshit is different than lying. Lying takes place when an individual says something he knows to be untrue. Bullshit is when the speaker is indifferent to the truth. Frankfurt's example is when a politician goes on about how "our great and blessed country....created a new beginning for mankind." The candidate may or may not believe it, and in this case, he isn't saying it to be believed, he is saying it to curry favor with voters.

The authors explain:

The defining characteristic of bullshit, for Frankfurt, is that it is speech that holds itself out as describing reality, but fails to live up to the accepted standards of how we go about making such descriptions. It is not its actual truth or falsity that determines whether a statement is bullshit, but rather whether it is made with or without regard for its truth or falsity.
I have a particularly keen interest in topics like this because I am distressed with the many and varied forms of dishonest that take place routinely in our culture. Not only is there resigned acceptance of much of it, but even worse, people don't even seem to notice when it happens.

I don't mean the sort of white lies that will be with us ever and always to smooth over interpersonal relations (although research has found that they are amazingly common, with study subjects telling 20 to 30 lies a day). It's the skirting the edge of truth in business and public life that sets my teeth on edge.

Maybe I am just showing myself to be old-fashioned, but when I started out for myself nearly 20 years ago, pretty much everything was on a handshake basis, even though I would always paper it up. I've seen a decline in those sorts of situations over the years, and my colleagues have had similar experiences. In recent years, I've had a few situations where people have attempted to retrade deals radically at the 11th hour, even with a paper trail and authorizations, almost for sport, just to see what they could get away with.

As an aside, maybe that's why Clint Eastwood remains so popular. He has come to play anachronistic, cranky (most recently, in Gran Torino, bigoted) old men, who are nevertheless appealing because they adhere rigidly to antique, unabashedly masculine notions of honor, in particular, living up to one's word.

I wonder how the decay started. Politicians have always been famous for exaggerating, but Lyndon Banes Johnson took discourse down a notch (he lied so unabashedly that reporters, historically loath to say anything bad about a sitting President, started openly about a "credibility gap"). But I believe that it is commercial speech that has fostered a willingness to cut corners with the truth.

I could go on at length, but I will stop with a couple of examples. One of the mainstays of commercials is to show smiling, sometimes ecstatic or giddy, people using the product. Is a better cake mix or floor cleaner really going to make you feel all that good? No, but the images say they will. And because the distortion/overpromise is non-verbal, it's harder to parse it out and look at it clinically. That is why TV is so remarkably effective.

Another is the pervasiveness of "gotcha" practices, which are particularly popular in financial services. Rebates that have such elaborate protocols that it is clear that the company went to some length to come up with ways to reject completed forms. "Free" checking accounts that are anything but (say, a minimum balance, or only a few month no-fee period). As we discussed earlier this evening, revocable "fixed interest rate for the life of the balance" credit card offers. And then we just have good old fashioned bad faith dealing. I have taken to recording the dates and details of medical claims I submit to my insurer, Cigna, because they routinely throw them out. Two years ago, every single item I sent to them wound up in the system. Now, anywhere from 20% to 35% go missing. But I can't prove that they are systematically and deliberately "losing" claims, even though that is clearly what they are up to.

Now the list above could all be called lies, made with an intent to deceive. But we have related bullshit. I once went to a focus group (I do so out of professional curiosity) which was to test consumer reactions to a proposed advertising message for a health insurance company. I cannot recall the exact wording, but all the messages said explicitly that the insurer would put the patient's interest first, be proactive, caring, etc. I took issue, saying the ad themes were rubbish, no insurer acted that way and they would have to turn their business model on its head to do so (ironically, the insurer was CIgna).

The person running the session kept trying to force me into agreement: "But if a company were to do this, how would you feel about it?" The session leader refused to hear that if I saw an advertisement so wildly at variance with the truth, it would annoy me rather than make we think better of the company. So we have bullshit market research leading to dishonest ad campaigns.

Back to the paper for some legal highlights:

Most courts require an actual intent to deceive the promisee rather than just a lack of an intention to perform. A paradigm case would be Max Bialystock from the musical The Producers, who sold 1,000% interest in a musical, planning to make sure the musical was so bad that there would be no profits to divide so that no one would discover his fraud....

In a world of standard-form contracts, however, consumers are faced with what is arguably a much more widespread problem than lying promises. Parties with great bargaining power who deal primarily in standard-form contracts need not lie in order to get the benefits of lying. Instead, what parties can do – as we will see, what they often actually do – is to avoid making a lying promise simply by making more nuanced promises that fall short of committing them to any particular course of conduct. To be sure, these parties use the words of promising, but then they elsewhere reserve the right to cancel the contract at any time or to change its terms unilaterally.

The paper then has a very informative discussion of some of the many tricks that credit card companies play (did you know that it takes PhD level reading skills to parse the interest rate language in credit card agreements?). Cell phone companies are also devious:
....every major cell phone company has been careful not to commit itself to a particular course of performance by reserving broad rights for itself in the terms and conditions.61 For example, Verizon states that the consumer's service is "subject" to its business practices, procedures and policies, which may be changed at any time without notice.62 Verizon then proceeds to state that "we can also change prices and any other conditions in this agreement."63 Likewise, AT&T's has a similar clause: "We many change any terms, conditions, rates, fees, expenses, or charges regarding your service at any time." Again, like the credit card companies, cell phone companies are not making outright lies so long as they do not have a plan in place to increase the rates at the time of advertising the plan. But they are also not subjecting themselves to the norms of promising even as they use words that would suggest otherwise. While the consumer is committed, the cellphone company can do what it likes.
While these two industries are arguably the worst offenders, similar bad practices are common elsewhere.

The authors content that the protections under current law against such practices are too weak and suggest some modest reforms that could rein them in a great deal.

Anonymous:

One of the reasons I think this recession is going to be much worse than most people imagine, is exactly this culture of bullshit we swim in. You don't notice it until you've crawled up on land and had time to dry yourself off and think about it.

So, imagine tens of millions of American consumers, cut off from their credit cards and cable TV brainwashing for several months by economic necessity, and then being coaxed back into the consumerist fold. This culture looks horrible from the outside, and once you've been detoxed for a few months, you're an outsider.

I'm stingy, not because I don't enjoy fine things, but because virtually nothing you can afford to buy in this country lives up to the promises.

Blogger donna:
Um, did you people not grow up in the 70s?

Nixon disillusioned me forever. I've never trusted a politician since. As to advertising, credit cards, banks, television, etc., they all seem to have been deceptive pretty much my whole life.

Same as it ever was, really.

Blogger Yves Smith:

Donna,

The point is it got worse before Nixon, and appears correlated with the popularity of TV. Weirdly, Johnson and Nixon kept lyin' when the footage from VIetnam made it hard to pretend things were going well there. So we've now had nearly four decades of pols getting more clever about handling the media.

And commercials are getting ever more manipulative. I spent two years in Oz, and it was refreshing how straightforward (and often wry) their commercials are. Ours have very weird video game and dream type images, often bizarre and not funny irony. It almost seems as if a very disturbed psyche is behind some of our stuff. And I suspect a lot of research has gone into it and has ascertained that it is effective.

Anonymous Anonymous:

The de-evolution of the business contract has been a sore spot of mine for many years now. In my field, construction, its a game of who sets the standards, manufacturer of building goods, people with the development monies, right through out the entire food chain.

Ask a question to a person with authority about a clarification in a spec, may educe a response, but try and get them to sign off on it. I've seen contracts ripped up with the statement of go a head and do some thing about it we have better solicitors. In the building boom over here, I have watched as the old and knowledgeable members of the industry have be replaced with increasingly younger and more malleable individuals with little ethical behaver evident in their still maturing brains.

Ex sample to my point, Young man walks on to construction site, new khaki slacks, fashionable new black shoes, Ralph L Oxford shirt and eyes wide with pride. I greet him with a G'Day and what can I do for you, his response was Hi I'm the new site supervisor (his type would run 5 to 20 jobs depending on size). I jokingly say you guys just keep getting younger every day and his response was "well we are bringing a new youthful energy into the market". Well after I picked my jaw off he floor, I wished him luck in his new position and got back to my work. My head was filled with pictures of him in a room full of dopplegangers, just down loading what ever some construction/sales Mgr puts in front of them and send them out the door to make life hell for everyone else and all for a company cell phone/car and a title they can bullshit about at the pub to get girls and impress mates lool.

Society is sick and its the criminals, wolfs in lambs skins, sales, advertising, profit at all costs, politicians for personal gain that are the root of it.

Yes Yves, I agree with you 110% fix this component in the equation and then things will start to function with more rational behaver for everyones benefit.

Skippy

Richard Smith:
'Bullshit' has been around for a long long time. It's acknowledged in your Constitution - that's why the right you have is to 'the pursuit of happiness', not 'happiness'. The hucksters facilitate that pursuit.

For other literary examples see "Huckleberry Finn" (the Duke and the King); or Nabokov "Nicolai Gogol" (1944).

The term "poshlost" that Nabokov uses is a nuanced version of 'bullshit'. Fake ad promises are pretty much at the core of it. You can see Nabokov pursuing that from magazines & film (40s) through to TV (50s and 60s).

Ideal exchange for fake happiness? Fake money.

Easy to see why bullshit peaks might coincide with debt bubbles.

[Jan 6, 2009] "Laffer-able"

Since the recession is caused by rich people deciding not to work, the solution, of course, is to cut capital gains taxes to they'll stop lounging around and do something productive:

Laffer-able, Marion Maneker, BP Cafe: ...Art Laffer ... was on Fast Money... The segment was on the proposed Obama tax cuts. Laffer didn't think much of them. Instead, he wondered aloud, what if the government proposed a 6-month income tax moratorium: how great a stimulus would that be? After all, Laffer reasoned, freeing citizens from the undue burden of taxes would get them all out working harder and spending money.

Really? Did anyone on the panel believe that Americans of all income levels are sitting on the couch–or lounging out by the pool–instead of working because they're unhappy with their income tax? They're knocking off early because the marginal rates are too high and they'd prefer the leisure time to the minimal extra money? Fascinating. Unemployment moving toward double digits and the greatest white-collar restructuring in 15 years all because of onerous income taxes?

Sure, he's a guest on the show–they're being polite, right?–but not one of the traders said a word about this preposterous idea. They just nodded their heads in agreement and kept the bobbing up as Laffer launched into his idea that capital gains should not be taxed at all.

The slam against the Obama cuts was that the money would go into the mattress, not stimulate the economy. ... But why would the wealthy be any different? Cut their income tax or capital gains and they'll put the money in the mattress right now too.

Not that cutting the capital gains tax would do anything to move money off the sidelines. Where would it go? What productive use would it be put to?

I'd share the segment with you but there's no clip of his appearance on the CNBC site and the short post on the segment on Fast Money's page is covered by an intrusive pop up. Maybe they've finally gotten a sense of shame for promoting this voodoo.

This tries to use a stabilization argument to implement a growth policy, which is a bad idea. We can debate whether cutting capital gains taxes is a good way to promote economic growth in the long-run, but it's clear that cutting the capital gains tax is a lousy short-run stimulus program. Even if it does promote new investment, and again that is a point that can be debated even in good times, in bad times it's hard to imagine a cut in capital gains motivating new investment when the economic outlook is so poor and so uncertain. In addition, you run into the same "are the projects shovel ready" problem you run into with public spending. For the most part, they aren't shovel ready and planning and constructing new investments, e.g. building a new production line, is not something that happens overnight. But no matter, the real goal here isn't stabilization anyway, and the long-run growth arguments are mostly a vehicle for obtaining the real goal: tax cuts for the wealthy. I hope Democrats don't give into this nonsense as they continue to compromise to get something passed.

Update: In comments to another post, where I agree that some type of tax cut may be needed as part of the stimulus package, and also say that "I am not thinking of the trickle down variety,"pgl says:

Tax cuts for the well to do - who are not borrowing constrained - will likely have NO aggregate demand stimulus effect as I have often argued (aka either Life Cycle or Ricardian Equivalence) models so if this is what the Republican Party have in mind - it is based on hogwash economics. Tax cuts for the working poor, however, may be a good idea as these households will consume much of the tax cut. I think this is what Obama has in mind. If your argument is that we should go with the kind of tax cuts Obama campaigned on - I agree. But tax cuts for Bill Gates is just stupid from a Keynesian point of view.

Update: And speaking of tax cuts of questionable value as a stimulus measure, Dean Baker:

More Money for Robert Rubin, Beat the Press: It looks like President-elect Obama is picking up President Clinton's promise to end welfare as we know it. Back in those pre-welfare reform days, welfare checks went to poor families. Welfare as we know it now seems to involve giving taxpayer dollars to Citigroup and other banks.

The media seem to have largely overlooked the Citigroup tax credit in their discussion of the latest items in President Obama's stimulus proposal. According to the Washington Post, the proposal will allow companies to write off current losses against taxes paid over the last 4-5 years, not just 2 years, as in current law.

There are relatively few companies that could benefit from this tax break since most companies will not have losses so large that they would need more than two years of tax payments to balance them against. But, really big losers, like Robert Rubin's Citigroup, and other badly failing financial institutions, are losing much more money in 2008 and 2009 than they earned in 2006 and 2007.

Did the political connections of Robert Rubin and others in the financial industry have anything to do with the decision of Obama's economic team to be so generous to them? I don't have an answer to that question, but the media should be asking it.

At best, I suppose you could argue this is a backdoor method of recapitalizing struggling financial institutions, but even then there are better ways to provide for recapitalization.

[Jan 6, 2009] "Laffer-able"

Since the recession is caused by rich people deciding not to work, the solution, of course, is to cut capital gains taxes to they'll stop lounging around and do something productive:

Laffer-able, Marion Maneker, BP Cafe: ...Art Laffer ... was on Fast Money... The segment was on the proposed Obama tax cuts. Laffer didn't think much of them. Instead, he wondered aloud, what if the government proposed a 6-month income tax moratorium: how great a stimulus would that be? After all, Laffer reasoned, freeing citizens from the undue burden of taxes would get them all out working harder and spending money.

Really? Did anyone on the panel believe that Americans of all income levels are sitting on the couch–or lounging out by the pool–instead of working because they're unhappy with their income tax? They're knocking off early because the marginal rates are too high and they'd prefer the leisure time to the minimal extra money? Fascinating. Unemployment moving toward double digits and the greatest white-collar restructuring in 15 years all because of onerous income taxes?

Sure, he's a guest on the show–they're being polite, right?–but not one of the traders said a word about this preposterous idea. They just nodded their heads in agreement and kept the bobbing up as Laffer launched into his idea that capital gains should not be taxed at all.

The slam against the Obama cuts was that the money would go into the mattress, not stimulate the economy. ... But why would the wealthy be any different? Cut their income tax or capital gains and they'll put the money in the mattress right now too.

Not that cutting the capital gains tax would do anything to move money off the sidelines. Where would it go? What productive use would it be put to?

I'd share the segment with you but there's no clip of his appearance on the CNBC site and the short post on the segment on Fast Money's page is covered by an intrusive pop up. Maybe they've finally gotten a sense of shame for promoting this voodoo.

This tries to use a stabilization argument to implement a growth policy, which is a bad idea. We can debate whether cutting capital gains taxes is a good way to promote economic growth in the long-run, but it's clear that cutting the capital gains tax is a lousy short-run stimulus program. Even if it does promote new investment, and again that is a point that can be debated even in good times, in bad times it's hard to imagine a cut in capital gains motivating new investment when the economic outlook is so poor and so uncertain. In addition, you run into the same "are the projects shovel ready" problem you run into with public spending. For the most part, they aren't shovel ready and planning and constructing new investments, e.g. building a new production line, is not something that happens overnight. But no matter, the real goal here isn't stabilization anyway, and the long-run growth arguments are mostly a vehicle for obtaining the real goal: tax cuts for the wealthy. I hope Democrats don't give into this nonsense as they continue to compromise to get something passed.

Update: In comments to another post, where I agree that some type of tax cut may be needed as part of the stimulus package, and also say that "I am not thinking of the trickle down variety,"pgl says:

Tax cuts for the well to do - who are not borrowing constrained - will likely have NO aggregate demand stimulus effect as I have often argued (aka either Life Cycle or Ricardian Equivalence) models so if this is what the Republican Party have in mind - it is based on hogwash economics. Tax cuts for the working poor, however, may be a good idea as these households will consume much of the tax cut. I think this is what Obama has in mind. If your argument is that we should go with the kind of tax cuts Obama campaigned on - I agree. But tax cuts for Bill Gates is just stupid from a Keynesian point of view.

Update: And speaking of tax cuts of questionable value as a stimulus measure, Dean Baker:

More Money for Robert Rubin, Beat the Press: It looks like President-elect Obama is picking up President Clinton's promise to end welfare as we know it. Back in those pre-welfare reform days, welfare checks went to poor families. Welfare as we know it now seems to involve giving taxpayer dollars to Citigroup and other banks.

The media seem to have largely overlooked the Citigroup tax credit in their discussion of the latest items in President Obama's stimulus proposal. According to the Washington Post, the proposal will allow companies to write off current losses against taxes paid over the last 4-5 years, not just 2 years, as in current law.

There are relatively few companies that could benefit from this tax break since most companies will not have losses so large that they would need more than two years of tax payments to balance them against. But, really big losers, like Robert Rubin's Citigroup, and other badly failing financial institutions, are losing much more money in 2008 and 2009 than they earned in 2006 and 2007.

Did the political connections of Robert Rubin and others in the financial industry have anything to do with the decision of Obama's economic team to be so generous to them? I don't have an answer to that question, but the media should be asking it.

At best, I suppose you could argue this is a backdoor method of recapitalizing struggling financial institutions, but even then there are better ways to provide for recapitalization.

>[Jan 24, 2008] As U.S. emerges from dark age, Canada's scientific edge fades by CAROLYN ABRAHAM AND ELIZABETH CHURCH
globeandmail.com

Scientists across America are celebrating the passing of the Bush administration as the end of a dark age, a bleak stretch in which research budgets shrank and everything - stem cells, sex education, climate change, and the very origins of the Grand Canyon - became a point of conflict.

... ... ...

The last time Canada let its research spending slide in the mid-1990s, the country lost so many scientists it wiped out entire departments.

Heather Munroe-Blum, principal of McGill University in Montreal, was head of research at U of T during those dark days and saw top academics in field after field pack their bags and head south.

"It was heartbreaking," she said.

The losses spurred the university community to lobby the Liberal government to give them the money to stem the tide. Those efforts paid off. Between 1997 and 2005, annual federal funding for university research more than tripled to more than $2.5-billion from $793,000.

The crisis also prompted the government to create programs to bolster the country's research expertise, such as the Canada Foundation for Innovation, which funds research infrastructure, and the Canada Research Chairs, which now support 2,000 scholars across the country.

(These programs have since become models of interest to other governments, including the Obama administration.)

The investments also triggered a building boom as state-of-the-art facilities sprang up in major cities. Before long, foreign talent followed.

Leah Cowen, an infectious diseases specialist, came to U of T from the Massachusetts Institute of Technology. Neuroscientist Evelyn Lambe left Yale University. Noted stem cell scientist Gordon Keller, a returning Canadian, left New York to take the helm at the McEwen Centre for Regenerative Medicine in Toronto. Dan Goldowitz left an endowed position at the University of Tennessee to become a Canada Research Chair in developmental neuro-genetics at UBC.

"The biggest reason for me leaving was the Bush administration … they were anti-intellectual, intolerant and the NIH pay line was plummeting," said Dr. Goldowitz, who arrived in Vancouver in 2007.

"There just seemed to be a bigger commitment at UBC and Canada-wide for research generally."

Dr. Giaever landed a Canada Research Chair in chemical genetics that came with a generous five-year package to launch her own lab at U of T's sparkling new Terrence Donnelly Centre for Cellular and Biomolecular Research - a light and airy glass tower that won the 2008 Governor General's Medal in Architecture.

She calls it a "world-class facility" but said the biggest draw north "were the world-class collaborators."

Her husband received a tenured position through U of T's Banting and Best Department of Medical Research and both became assistant professors. They had every reason to believe they had picked the greener pastures. At the CIHR, approvals for grant applications were running in the 20 per cent range, said Dr. Nislow, just as it once had at the NIH.

But only two years into their arrival here, they have sensed winds of change in Canada's research climate - and the breezes aren't warm.

"We're seeing top scientists here having trouble getting funding," Dr. Giaever said. "Not funding renewals tends to have a much greater impact" since it could mean the closing of a lab, people losing jobs and research stopping in midstream.

"If Obama pumps up science, maybe Canada will follow suit. If not, maybe all these people Canada attracted might move."

[Jan 24, 2008] As U.S. emerges from dark age, Canada's scientific edge fades by CAROLYN ABRAHAM AND ELIZABETH CHURCH

globeandmail.com

Scientists across America are celebrating the passing of the Bush administration as the end of a dark age, a bleak stretch in which research budgets shrank and everything - stem cells, sex education, climate change, and the very origins of the Grand Canyon - became a point of conflict.

... ... ...

The last time Canada let its research spending slide in the mid-1990s, the country lost so many scientists it wiped out entire departments.

Heather Munroe-Blum, principal of McGill University in Montreal, was head of research at U of T during those dark days and saw top academics in field after field pack their bags and head south.

"It was heartbreaking," she said.

The losses spurred the university community to lobby the Liberal government to give them the money to stem the tide. Those efforts paid off. Between 1997 and 2005, annual federal funding for university research more than tripled to more than $2.5-billion from $793,000.

The crisis also prompted the government to create programs to bolster the country's research expertise, such as the Canada Foundation for Innovation, which funds research infrastructure, and the Canada Research Chairs, which now support 2,000 scholars across the country.

(These programs have since become models of interest to other governments, including the Obama administration.)

The investments also triggered a building boom as state-of-the-art facilities sprang up in major cities. Before long, foreign talent followed.

Leah Cowen, an infectious diseases specialist, came to U of T from the Massachusetts Institute of Technology. Neuroscientist Evelyn Lambe left Yale University. Noted stem cell scientist Gordon Keller, a returning Canadian, left New York to take the helm at the McEwen Centre for Regenerative Medicine in Toronto. Dan Goldowitz left an endowed position at the University of Tennessee to become a Canada Research Chair in developmental neuro-genetics at UBC.

"The biggest reason for me leaving was the Bush administration … they were anti-intellectual, intolerant and the NIH pay line was plummeting," said Dr. Goldowitz, who arrived in Vancouver in 2007.

"There just seemed to be a bigger commitment at UBC and Canada-wide for research generally."

Dr. Giaever landed a Canada Research Chair in chemical genetics that came with a generous five-year package to launch her own lab at U of T's sparkling new Terrence Donnelly Centre for Cellular and Biomolecular Research - a light and airy glass tower that won the 2008 Governor General's Medal in Architecture.

She calls it a "world-class facility" but said the biggest draw north "were the world-class collaborators."

Her husband received a tenured position through U of T's Banting and Best Department of Medical Research and both became assistant professors. They had every reason to believe they had picked the greener pastures. At the CIHR, approvals for grant applications were running in the 20 per cent range, said Dr. Nislow, just as it once had at the NIH.

But only two years into their arrival here, they have sensed winds of change in Canada's research climate - and the breezes aren't warm.

"We're seeing top scientists here having trouble getting funding," Dr. Giaever said. "Not funding renewals tends to have a much greater impact" since it could mean the closing of a lab, people losing jobs and research stopping in midstream.

"If Obama pumps up science, maybe Canada will follow suit. If not, maybe all these people Canada attracted might move."

Continued

Recommended Links

Google matched content

Softpanorama Recommended

Top articles

Oldies But Goodies

[Dec 19, 2017] Do not Underestimate the Power of Microfoundations

[Nov 29, 2017] Economics is a Belief System - and We are Ruled by Fundamentalists

[Nov 29, 2017] Michael Hudson: The Wall Street Economy is Draining the Real Economy

[Nov 04, 2017] Who's Afraid of Corporate COINTELPRO by C. J. Hopkins

[Oct 10, 2017] The US Economy: Explaining Stagnation and Why It Will Persist by Thomas I. Palley

[Oct 06, 2017] Prof. Philip Mirowski keynote for Life and Debt conference

[Oct 06, 2017] How Economists Turned Corporations into Predators

[Oct 01, 2017] Bulletproof Neoliberalism by Paul Heideman

[Sep 25, 2017] Free market as a neoliberal myth, the cornerstone of neoliberalism as a secular religion

[Sep 19, 2017] Neoliberalism: the deep story that lies beneath Donald Trumps triumph: How a ruthless network of super-rich ideologues killed choice and destroyed people s faith in politics by George Monbiot

[Sep 19, 2017] Neoliberalism: the idea that swallowed the world by Stephen Metcalf

[Sep 18, 2017] Critical Realism: Mathematics versus Mythematics in Economics

[Sep 11, 2017] Neo-classical economics as a new flat earth cult

[Jul 04, 2017] Summers as a defender of Flat Earth theory

[Sep 29, 2018] Steve Keen How Economics Became a Cult

[Sep 07, 2018] Neomodernism - Wikipedia

[May 31, 2018] Meet the Economist Behind the One Percent's Stealth Takeover of America by Lynn Parramore

[May 30, 2018] How Media Amnesia Has Trapped Us in a Neoliberal Groundhog Day

[Mar 12, 2018] There is no democracy without economic democracy by Jason Hirthler

[Mar 12, 2018] Colonizing the Western Mind using think tanks

[Feb 10, 2018] The generals are not Borgists. They are something worse ...

[Dec 31, 2017] Brainwashing as a key component of the US social system by Paul Craig Roberts

[Dec 01, 2019] Academic Conformism is the road to 1984. - Sic Semper Tyrannis

[Dec 01, 2019] Neoliberalism Tells Us We're Selfish Souls How Can We Promote Other Identities by Christine Berry,

[Nov 21, 2019] How Neoliberal Thinkers Spawned Monsters They Never Imagined

[Nov 04, 2019] Postmodernism The Ideological Embellishment of Neoliberalism by Vaska

[Oct 23, 2019] The treason of the intellectuals The Undoing of Thought by Roger Kimball

[Oct 05, 2019] Everything is fake in the current neoliberal discourse, be it political or economic, and it is not that easy to understand how they are deceiving us. Lies that are so sophisticated that often it is impossible to tell they are actually lies, not facts

[Sep 22, 2019] Neoliberalism Political Success, Economic Failure Portside by Robert Kuttner

[Sep 19, 2019] Form vs. substance in the neoliberal university

[Sep 10, 2019] Neoliberal Capitalism at a Dead End by Utsa Patnaik and Prabhat Patnaik

[Sep 02, 2019] Where is Margaret Thatcher now?

[Aug 04, 2019] to the liberal economists, free markets were markets free from rent seeking, while to the neoliberals free markets are free from government regulation.

[Jul 25, 2019] The destiny of the USA is now tied to the destiny of neoliberalism (much like the USSR and Bolshevism)

[Jun 22, 2019] Use of science by the US politicians: they uses science the way the drunk uses a lamppost, for support rather than illumination.

[Jun 19, 2019] Bias bias the inclination to accuse people of bias by James Thompson

[Mar 11, 2019] The university professors, who teach but do not learn: neoliberal shill DeJong tries to prolong the life of neoliberalism in the USA

[Jan 02, 2019] That madness of the US neocons comes from having no behavioural limits, no references outside of groupthink, and manipulating the language. Simply put, you don't know anymore what's what outside of the narrative your group pushes. The manipulators ends up caught in their lies.

[May 24, 2020] Unable to communicate in Arabic and with no relevant experience or appropriate educational training

[May 13, 2020] A Pandemic of Know-Nothings

[Mar 26, 2020] Reflections on a Century of Junk Science

[Jan 25, 2020] Rabobank What If... The Protectionists Are Right And The Free Traders Are Wrong by Michael Every

Sites



Etc

Society

Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers :   Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism  : The Iron Law of Oligarchy : Libertarian Philosophy

Quotes

War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda  : SE quotes : Language Design and Programming Quotes : Random IT-related quotesSomerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose BierceBernard Shaw : Mark Twain Quotes

Bulletin:

Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 :  Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method  : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law

History:

Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds  : Larry Wall  : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOSProgramming Languages History : PL/1 : Simula 67 : C : History of GCC developmentScripting Languages : Perl history   : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history

Classic books:

The Peter Principle : Parkinson Law : 1984 : The Mythical Man-MonthHow to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite

Most popular humor pages:

Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor

The Last but not Least Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt. Ph.D


Copyright © 1996-2021 by Softpanorama Society. www.softpanorama.org was initially created as a service to the (now defunct) UN Sustainable Development Networking Programme (SDNP) without any remuneration. This document is an industrial compilation designed and created exclusively for educational use and is distributed under the Softpanorama Content License. Original materials copyright belong to respective owners. Quotes are made for educational purposes only in compliance with the fair use doctrine.

FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to advance understanding of computer science, IT technology, economic, scientific, and social issues. We believe this constitutes a 'fair use' of any such copyrighted material as provided by section 107 of the US Copyright Law according to which such material can be distributed without profit exclusively for research and educational purposes.

This is a Spartan WHYFF (We Help You For Free) site written by people for whom English is not a native language. Grammar and spelling errors should be expected. The site contain some broken links as it develops like a living tree...

You can use PayPal to to buy a cup of coffee for authors of this site

Disclaimer:

The statements, views and opinions presented on this web page are those of the author (or referenced source) and are not endorsed by, nor do they necessarily reflect, the opinions of the Softpanorama society. We do not warrant the correctness of the information provided or its fitness for any purpose. The site uses AdSense so you need to be aware of Google privacy policy. You you do not want to be tracked by Google please disable Javascript for this site. This site is perfectly usable without Javascript.

Last modified: August, 01, 2020