"The democracy arrived, and the subject was for the first time presented with a choice: "Do you (collectively) want to be ruled by Citizen A or Citizen B?" Always the subject is presented with the accomplished fact: in the first case with the fact of his subjecthood, in the second with the fact of the choice. The form of the choice is not open to discussion. The ballot paper does not say: "Do you want A or B or neither?" It certainly never says: "Do you want A or B or no one at all?" The citizen who expresses his unhappiness with the form of choice on offer by the only means open to him - not voting, or else spoiling his ballot paper - is simply not counted, that is to say, is discounted, ignored. Faced with a choice between A and B, given the kind of A and the kind of B who usually make it onto the ballot paper, most people, "ordinary" people, are in their hearts inclined to choose neither. But that is only an inclination, and the state does not deal in inclinations. Inclinations are not part of the currency of politics. What the state deals in are choices. The ordinary person would like to say: "Some days I incline to A, some days to B, most days I just feel they should both go away;" or else, "Some of A and some of B, sometimes, and at other times neither A nor B but something quite different." The state shakes its head. "You have to choose," says the state: "A or B."

J.M. Coetzee, Diary of a Bad Year. (via thelillith)

Yeah, this.

It’s a little hard to imagine a Nobel Prize in physics being shared by (1) a guy famous for advancing a particular hypothesis and (2) a guy famous for relentlessly attacking that hypothesis. This of course is what the Nobel committee has done with this year’s economics award
This is, to a certain extent, further evidence that economics isn’t a science like physics is a science (and yeah, yeah, the economics Nobel isn’t a real Nobel prize). But that’s not because economists are all frauds — it’s at least partly because economics is harder than physics. And the interaction over the decades between the differing ideas of Fama and Shiller, while maybe not exactly scientific, has certainly been enlightening, and had a huge impact on the world.

The piece I linked is a pretty good recap of the of the laureates’ work, and a lot of the passage above is close to my own view. I especially agree with the “econ is harder” part - mostly because professional, academic economics is a much younger discipline than professional, academic physics. What I disagree with in the passage, though, is the assertion that awarding scholars whose main contributions are in tension with each other is evidence against econ being a science. I simply don’t see the logic there.

My understanding is that science is supposed to progress in exactly this way, by having great discoveries tested, revised and improved upon, which eventually leads to other great discoveries. So for example, if someone makes a fundamental discovery in physics which is then extended (with further fundamental insights) by someone else within the lifetimes of both principal researchers, then I can quite readily imagine both being awarded a Nobel. Some people criticise the “shoulders of giants” conception of the scientific process for being too idealised, yet it’s a very good approximation of the development of financial economics in the past 50 years!

Physics did not cease to be a science when parts of Newton’s theory of gravity were falsified by Einstein testing relativity theory. Similarly, the fact that flaws in Fama’s early formulations were highlighted and improved upon (by Shiller, Stiglitz and others) adds nothing to the debit column on the scientific merits of economics. That’s a different (though also interesting) debate. 

Update: Since drafting this post on Tuesday morning, I read a great post by Noah Smith on the same topic. His piece fleshes out the Fama-Shiller/Newton-Einstein analogy a hundred times better than I could have (so you should read it), showing that they aren’t perfectly analogous in fact:

Shiller is really more like Michelson & Morley than Einstein. He found an anomaly - mean reversion in stock prices - that provoked a paradigm shift. In other words, Shiller really discovered behavioral finance rather than inventing it (actually, Fama, whose work is mainly empirical, isn’t really like Newton either). The theorizers who came up with the reasons why markets couldn’t be completely efficient were people like Joseph Stiglitz, Sanford Grossman, Paul Milgrom, and Nancy Stokey. I hope those people win Econ Nobels as well (Stiglitz, of course, already has one). But that paradigm shift built on the EMH, it didn’t knock it down.



W. Kamau Bell, Armando Iannucci, Michelle King, Robert King, and Shonda Rhimes discuss political television shows at this year’s New Yorker Festival:

Self-recommending: an excellent discussion of political comedy, and why shows like Veep, Scandal, House of Cards, etc. seem to be having a moment right now, at least in American TV culture. And the fact that the conversation’s moderated by Emily Nussbaum makes it perfect for me, I absolutely adore her.

Update: you can watch the whole discussion here

Best Buy doesn’t want my money.


I was trying to take advantage of this hot deal on a Macbook Air at Best Buy, when I bumped into the following restrictions on international orders:

  • International orders are intended for use in the US, and it is assumed that products will be used in the US [italics mine].
  • Best Buy does not ship to known freight forwarders, and orders to such will be canceled.

This annoys me to no end, because $200 off a Haswell MBA is a pretty sweet deal. But then I remembered that I did Intro to Deductive Logic at university 6 years ago (and got an A on it). I realised that I can therefore discard my angry emotional response, as I possess the requisite mental tools to really get to the root of the problem. So here we go.

Premise 1: I have to guess whether Best Buy “knows” about the skybox company I use when I purchase US items online.

Premise 2: Best Buy wants to dictate to me where I use a product they sell to me. Kind of like a restaurant that says you can only eat their take-out food within a 7-mile radius of the restaurant. But much, much stupider than that, because we’re talking about electronics.

Premise 3: While competing in the bricks-and-mortar electronics retail business, and doing OK for now, Best Buy is also competing in the online retail space and getting predictably hammered by Amazon.

Premise 4: Despite this, it appears that Best Buy doesn’t want my money, simply because I’m a filthy evil immigrant non-American who wants to purchase electronics from America at reasonable prices.

Premise 5: Best Buy has therefore imposed sales restrictions on itself, even going so far as to cancel orders going to freight forwarders who bear the vast majority of the transport costs involved in shipping goods to non-US locations.

Premise 6: By acting in the manner described by Premise 5, Best Buy has unnecessarily foregone revenue and denied many customers some non-trivial savings, with no obvious compensating gains to the company or its domestic customers.

Conclusion: Maybe my logic is wrong, but Best Buy sucks.

Upon biting into the first wing, I couldn’t immediately tell what style of cooking was employed to produce this dish. Sometimes this is a good sign, other times it is not; regrettably, this was one of the latter cases.
a food critic I just made up, describing a piece of chicken I ate 30 seconds ago

Here’s a lay-person’s breakdown of today’s Econ kinda-Nobel awardees. I know just about enough finance to understand why two of them (Fama and Shiller) are richly deserving winners; people much smarter and more technically-adept than me are saying that Hansen’s work is essential to the empirical side of asset-price modelling.

For more detailed but still reader-friendly recaps of the awardees’ work, Tyler Cowen and Alex Tabarrok at Marginal Revolution offer their thoughts (excerpted below).

Cowen on Shiller:

Shiller’s most famous piece is from 1981, “Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?”  Here Shiller developed the very important “variance bounds test” for scrutinizing the rationality of stock prices… Let’s say you were trying to forecast the result of Miami Heat vs. San Antonio Spurs.  The results of the actual games would show higher variance than your forecast, which would reflect your single best guess of which team is better.  But in reality sometimes Miami will win, sometimes the Spurs will win, by a little, by a lot, etc. That is a basic principle of forecasting rationality, in other words that actual outcomes should show higher variance than forecasts.  But now consider stocks.  According to Shiller, the “actual results” — namely the realized returns — are the dividends.  The forecasts of the dividends are stock prices.  Yet dividends hardly vary, while stock prices move around a great deal.  It would appear that stock prices violate this variance bounds test because the forecast has a higher variance than the actual outcomes.

Tabarrok on Fama:

Fama’s dissertation and famous 1970 review article, Efficient Capital Markets: A Review of Theory and Empirical Work made efficient markets a touchstone for modern economists and finance theorists but practitioners hated and still hate the idea. Nevertheless, test after test showed that very few mutual fund managers beat the market and those that beat the market this year are not more likely to beat the market the next year. Chance and perhaps a few, very rare, geniuses explain the data. Eventually, hundreds of billions of dollars began to flow into index funds. So Fama’s ideas have made an enormous contribution to how people invest, saving them billions in fees which generated beautiful homes for fortunate mutual fund managers but less than nothing for their customers.

Bottom line: as far as practical financial advice goes, “you can’t beat the market” is as simple and useful as they come.

Guan Yang has a summary of Hansen’s contributions, specifically the Generalised Method of Moments (GMM), for the more technically-minded. As I said earlier, I’m not going to pretend I understand this stuff, but Guan is super-smart and is good at explaining things, so read that.

What’s great about this Nobel is that the winners’ (combined) work has improved the world both in practical terms and by massively advancing the state of knowledge in economics. It also shows - by including both Fama and Shiller (or Shiller and Fama, if you prefer) - that economics is robust to important findings (Shiller) which conflict with important earlier work (Fama), yet still acknowledge and reward both.

Overall, it makes a very strong case for this type of joint prize, i.e. multiple awardees in the same field but who haven’t published together. Personally, it’s got me more excited to learn more about finance, which I’ve only started with recently.

Overseas sales of Uniqlo products sky-rocketed 64 percent from the previous year to ¥251.1 billion as the Yamaguchi-based company continued to expand in foreign markets. The number of Uniqlo outlets abroad stood at 446 as of the end of August, an increase of 154 stores in the past year. Seven of Uniqlo’s 10 best-performing outlets in terms of sales are now overseas, Yanai noted.

Uniqlo is taking over the entire world, y’all. And that’s a great thing, because they make superb, affordable clothes.

…in the absence of an adequate legal system they outsource their justice in situations as trivial as parents disciplining their children. These (mostly) men are as educated as anyone else (61.9 percent finished high school, as opposed to 64.2 percent of non-gang members), get some of their income from legitimate sources, and help enforce community rules; thus, they are not common street gangs, but rather organized criminal institutions with important social functions. [7] The gangs of Trinidad and Tobago have infiltrated the official government and created an alternative administration—at least in urban centers—of violence and strict order, lacking any semblance of ethics or ability to address welfare.

It’s worth reading the entire piece, to get an idea of the scale and significance of gang culture/violence in T&T’s social and political systems. This isn’t a problem that’s going away soon, and, as the article makes very clear, the political constraints on doing anything about it seem to be almost insurmountable. It makes for very unpleasant reading, to be sure.

"Even though I’m sick, I’m a happy boy"


I probably have the one on the left, but because of some drugs that I got from a doctor who has plaques in his office from big evil pharmaceutical companies, I’m probably not going to die this weekend.

I’ve been on sick leave from work for the last four days. That’s given me a bit of time to think about certain things, and in the last thirty minutes I’ve been thinking about the relative levels of discomfort that office workers would feel over time, as a result of minor illness. Obviously I can only speak for the past based on what I’ve read or heard about from older folks. But it’s occurred to me that this is an unusually not-bad era in which to be afflicted with the common cold.

To be sure, this isn’t a “pull a sickie, hehehe”-type post. I’m definitely sick, and the physiological state of having an upper respiratory tract infection is as annoying as it has always been (and always will be, until scientists conquer the common cold). But thanks to the miracles of late-capitalist civilisation - namely, the pharmaceutical industry, telecommunications, consumer technology and my mother’s cooking - being home sick from work* is both more productive (read some long reports, edited a presentation my colleagues delivered this week) and less uncomfortable (Twitter! Tumblr! Seasons 4-7 of Seinfeld!) than it probably has ever been. 

Modern life has been getting a bad rap these days, but it is pretty nice sometimes!

* - At least in a mid-level office job in a relatively wealthy country.