Posts from — February 2010

Picture by Eric Pouchier

As we are being told that global warming looms, fossil fuels are running out, people are starving all over the world, and a global recession may not be over for a while;  encouragements to only take for oneself what is really necessary are becoming increasingly common. On the surface, this sounds nice. If we only consume what is necessary, then there will be more of everything left for those in greater need, we won’t pollute as much, and so on.

Nevertheless, whenever I hear someone urging others to restrict themselves to what is necessary, I can’t help but think: “necessary for what?” Necessity, by definition, means something you can’t do without. However, in order for such a word to make any sense at all, one needs to define what something is necessary for. For example, gasoline is necessary for most cars to drive. It is not, however, necessary for bicycling. And so on.

Now, when we are urged to only take what is necessary, then what are we really imagining as whatever we take being necessary for? The “good life”? In that case, how is “what is necessary” different from “what we want”? Perhaps it is necessary for a lot of us to have a summer house in Tuscany and drink expensive red wine for dinner every day. Or are we talking about what is merely necessary for survival? In that case, pretty much all conveniences that have been discovered during the last  hundred thousand years are not necessary. Forget about needing a cellphone, you don’t even get a house – your ancestors did just fine in a nice, warm cave. Is it necessary to live beyond age 80? Is it even necessary to be alive at all?

By all means, conserve all you want. But all this talk about restricting ourselves only to what we need is – at the very best – both quite absurd and a little intellectually annoying.

By Stephan Andreas Jensen

Picture from: http://pressthat.wordpress.com/2007/10/19/reinterpreting-islam/

Most of the links contained in this article point to Norwegian-language websites – as such I hope those of you who do not speak Norwegian and are interested in their contents make good use of Google translate. All the quotes below are translated from the original Norwegian by myself. If any Norwegians amongst you find any wrong or questionable translations, please email me and I will do my best to correct them.

During the last few weeks the homeland of Evolution-Revolution’s authors has been the stage of a fiery public debate after Dagbladet, one of the biggest newspapers in Norway, printed a picture on their front page of the Islamic Prophet Mohammed as a pig scribbling in the Koran with his trotters. However, despite its unpleasantness, the still ongoing furore following the publication has arguably been very valuable in that we have learned a whole lot about the state of immigration, integration, and Islam in Norway.

The picture in question was linked to in a post on the the Norwegian Police Security Service (PST’s) Facebook-page discussion board, amongst other posts containing highly racist remarks. After recieving a tip about it, Dagbladet wrote an article presumably meant to criticize PST for allowing a considerable amount of hateful and racist statements to be posted on their discussion board with apparent impunity. In doing so, however, they put the  - to Muslims – extremely offensive caricature in question on the front page of their print edition.

Predictably, there were heated reactions from many of Norway’s approximately 140 000 Muslims. In particular, many saw [Read more →]

The Grinch Who Stole Twelfth Grade

So argues Republican state Senator Chris Buttars in the Utah State Assembly, who recently proposed to drop the last year of high school altogether in an attempt to balance the state of Utah’s bleeding budget. Of course, an advantage of doing this from state Sen. Buttars point of view would be less time to teach students Biology – the senator has previously sponsored a (failed) bill to change the curricula of the science subject so as to add in “Divine Design” as an alternative to evolution. Last year, Senator Buttars also stated that radical homosexuals are “probably the greatest threat to America going down I know of.” We here at Evolution-Revolution think deteriorating education might be a better guess.

By Stephan Andreas Jensen

Thanks to Ulf Jakob, an avid Evolution-Revolution reader

-Jørund

I recently read Siddharta by Hermann Hesse,  a wonderful book set in ancient India about a young man’s search for understanding and inner peace. Amongst other profoundities, the book also contains some interesting insights on trading and investment. After a thorough brahmin education, followed by three years of life as an ascetic sadhu, the young Siddharta becomes an apprentice under a rich merchant. Only knowing how to, according to himself, think, wait, and fast, he quickly becomes a highly successful and very rich merchant. Importantly, he does this not by using greed or a hunger for “success” as a motivation, but rather by means of cool detachment. Hesse, of course, describes this far more eloquently than I could ever hope to:

“This Brahmin,” [the master merchant Kamaswami] said to a friend, “is not a proper merchant and will never be one; never is his heart passionately engaged in our transactions. But he has the secret of those to whom success comes of ts own accors, be it that he was born under a lucky star, be it magic, be it something he learned among the Samanas. He seems only to be playing at doing business. Never do the transactions have any real effect on him; never are they his master; never does he fear failure or worry over a loss.”

There is an interesting connection here, of course, to modern “practical investment” literature, in which the virtues of emotional control and self discipline are frequently emphasized as being of critical importance to success. The lesson to be drawn from Hesse, then, is perhaps that one possibly extremely effective way of achieving this just this is to not care very much about money – in a Siddhartian sense, “rise above” is perhaps a more appropriate choice of words.

It might not be so easy, though. In Hesse’s work,  Siddhartas spirituality is almost completely killed off by many years of hedonism and financial success – and he becomes so emotionally and philosophically tortured that he abandons his life as a wealthy merchant and almost commits suicide.

By Stephan Andreas Jensen

I like Nassim Taleb, author of the Black Swan and Fooled by Randomness. His criticism of risk management and the notion that we fail to notice that for every success story we see, there are many failures – don’t be fooled by randomness (so-called selection bias). At the same time he is extremely harsh towards those he criticizes and always a fun, but not too serious read.

He has a new essay up on his website where he anecdotically promotes a new form of living and exercise. Instead of working out an hour everyday and getting our healthy steady 8 hours of sleep, he suggest we should live like hunter gatherers. Fast randomly a couple of days, vary our sleeping schedule and walk low intensity a couple of hours a day, but mix that with some very intense ones, introducing stochasticity, Black Swans, and leptokurtosis into our efficent, normally distributed lives.

A few quotes:

“The only thing currently missing from my life is the absence of panics, from, say, finding a gigantic snake in my library, or watching the economist Myron Scholes, armed to the teeth, walk into my bedroom in the middle of the night.”

“walks in a stimulating urban setting, but with occasional (and random) very short sprints, making myself angry imagining I were chasing the bankster Robert Rubin with a big stick trying to catch him to bring him to human justice.”

Read it here

- Jørund

Working in business might be quite challenging

via Locklin on science

-JHA

According to this article in The Economist, recent research into the psychology of power has provided som interesting insights into the anecdotal hypothesis that “power corrupts”. In a study done by Dutch and American researchers, experiment participants in an emotionally induced position of power tended to hold themselves to a lower moral standard than participants assigned to a control group not given power. That is, they would be significantly more likely to think that it would be perfectly fine for them to cheat on their taxes while at the same time frowning upon others doing the same. There are of course ample examples of this throughout human history and present.  Ted Haggard, the former leader of one of the largest American conservative evangelical mega-churches as well as the enormous National Association of Evangelicals, condemned homosexuality while frequently purchasing sex and methamphetamine from male prostitutes. The notorious Chairman Mao (pictured above gracing a crowd of cheering Chinese proletarians with his presence) caused the deaths of more than 70 million people and demanded that the entire population of China give up private property while he himself lived a life of extreme luxury.

However, the most interesting part of the recent study suggest that the picture is more complicated. In particular, the study found that when people feel like the power they have is not deserved the picture changes completely. In fact, test subjects who felt like they had undeserved power were significantly more likely than the control group to judge themselves much more harshly than others. That is, they would think it would be more okay for their neighbor to cheat on their taxes or steal a bike than for themselves to do it.

This brings up some interesting points about leadership, both in politics and business. In a sense, the moral foundation of capitalism is the idea that you always get what you deserve – and what better way of being told you are entitled to power than being given millions of dollars to thank you for having it. Democratic government is perhaps even worse. Cheering crowds and millions of supporters marching off to vote for you on election day is hardly a way to make you feel like you didn’t deserve it.

The Greeks and their successors emphasized education as a means to ensure moral ballast and humility. Anarchists believe that we could do away with power altogether (I’ll see you in the Hobbesian state of nature).  Personally, I like the Venetian approach.  The longest surviving republic in history partially solved the problem outlined above by using an exceedingly complicated election process featuring numerous lotteries to select people  for office. Of course, the question remains whether humble and responsible leaders selected by random are better than self-righteous ones we elect. Optimality, as always, is elusive.

By Stephan A. Jensen

We have moved our blog from blogger.com to a separate hosted domain. This may cause some access problems while the DNS change is still propagating the internet. Also, as we are currently still figuring out our new Wordpress CMS, our layout might be a little bit volatile during the next couple of days.

Hurray!

The Fall of Icarus by Rubens 1633

Intuitively, large foreign account reserves should be a cushion against runs on the local currency especially for countries with high foreign debt levels or lots of foreign investments that at some point need to be repatriated. If you don’t have enough foreign currency to repay, crisis will surely follow as we have seen during the many Latin-American or Asian balance of payment crises. As such, China’s enormous reserves of about 5-6 percent of global GDP should be reassuring, but as Michael Pettis explains the risks that threaten large developing countries are quite different from those smaller countries can experience.

“The risks that China faces today (and the US in the late 1920s and Japan in the late 1980s) is of excessive domestic liquidity having fueled asset and capacity bubbles, the latter requiring the uninterrupted ability of foreign countries to absorb via large and growing trade deficits. These risks include an explosion in domestic government debt directly and contingently through the banking system.”

Quite similar to what countries rich in natural resources often experience, where large inflows of foreign currency and current account surpluses cause bubbles to arise. And importantly, as foreign reserves cannot be used to solve the problems the solution lies domestically through higher interest rates, less lending, stronger currency and consequentially a less competitive export industry.

We all know what happened to the US and Japan, hopefully China will manage better.

Read the whole post over at China Financial Markets here

-Jørund