The early morning news today was full of cackle about how Britain will later in the day be deemed to be "technically" out of the economic recession. The economists thought that the figures, when released later in the day, would show that the economy had expanded. Not by much, mind you, just 0.2%. But to the ever optimistic economists, who actually seem to know very little, this meant that we could now see light at the end of the tunnel...
But, within hours the light at the end of the tunnel turned out to be a train coming in the opposite direction!!!
For when the figures were released a few hours later, it turned out that the UK economy had "unexpectedly" shrunk by 0.4% between July and September, making this recession the longest since records began!
It says it all.
The portentous ignorance of the economists and the financial advisers is crushing. And it goes well, as ignorance commonly does, with their optimism.
Every single move, whatever its nature, is hailed as a sign of recovery. When house prices do not fall at the rate they had been falling at previously, this is a sign - to the economists - that house prices are on the rise again! When the pound gains a cent against the dollar, this is a sign - to them - that the recession is over.
And they call themselves scientists. What a joke. What I fail to understand, is why they remain so arrogant.
The BBC carried an interesting report a few months back, about how, in India, people are consulting astrologers on where to put their money. They could actually do worse. They could consult economists!
The correspondent himself went to two astrologers. If my memory serves me right, one of them told him to put his money into something when some star was equidistant from another, while another told him exactly the reverse.
Our economic scientists do not fare much better. But I bet that they charge a good deal more than the astrologers.
Apart from making fools of themselves and giving us all the occasion to laugh at them, their optimism raises a serious neurobiological point.
Alan Greenspan predicted that there will be another economic recession, because humans have an extraordinary capacity for optimism when the going is good.
But it seems that humans, or at least economists, have an extraordinary capacity for optimism, period! Regardless of whether the going is good or bad.
Friday, October 23, 2009
Thursday, October 15, 2009
Bank of England policymaker agrees with me
It is good to record that, months after my previous post (22nd February 2009) about the importance of having more women in top economic and financial positions, I now have agreement from an economist/banker.
The Guardian reports this morning that Charles Goodhart, a previous Bank of England policymaker, no less, who is now Professor Emeritus at the London School of Economics, no less, has said that ‘the worst financial crisis since the second world war could have been prevented if more women were on the boards of major companies. "Women tend to be more cautious and have a longer term outlook. I think that men can be more aggressive and prepared to take larger risks," he said. "There would have been less likelihood of the financial crisis if we had a larger number of female chief executives in the financial sector."
He said that there were "remarkably few" female chief executives in the financial sector and that it is "a great pity". "I think that the longer term and cautious tendency that women have and less of the alpha male would be beneficial."’
This echoes my words nicely…Thank you, Charles Goodhart. There is hope yet.
The Guardian reports this morning that Charles Goodhart, a previous Bank of England policymaker, no less, who is now Professor Emeritus at the London School of Economics, no less, has said that ‘the worst financial crisis since the second world war could have been prevented if more women were on the boards of major companies. "Women tend to be more cautious and have a longer term outlook. I think that men can be more aggressive and prepared to take larger risks," he said. "There would have been less likelihood of the financial crisis if we had a larger number of female chief executives in the financial sector."
He said that there were "remarkably few" female chief executives in the financial sector and that it is "a great pity". "I think that the longer term and cautious tendency that women have and less of the alpha male would be beneficial."’
This echoes my words nicely…Thank you, Charles Goodhart. There is hope yet.
Wednesday, October 14, 2009
Ineffectual warning signs for the greedy
I was in stitches this morning, laughing my head off about a new gadget that a major company is launching to temper the greed of financiers and bankers, and others who deal with money. The gadget is some kind of instrument that measures the galvanic skin response and turns the readings into a colour scheme. Some colours (I suppose red) signal to the wearer of the gadget that he or she is getting too emotional, and should ‘cool it’. This, the makers believe, will make the financiers more risk aversive.
But this does not take into account that greed is a powerful emotion, and that such gadgets cannot control it through their warnings. Those whose greed and rapacity is above normal (which I suppose is true of many if not most financiers) can hardly be expected to be put off by some warning light, when they are prepared to risk ignominy, imprisonment and disgrace – and even the possibility of losing their entire fortune. After all, many of those currently in prison for financial mis-demeanours have had far more forceful warnings than the one delivered by a gadget strapped to the wrist.
It is like telling someone who is madly in love that they should desist because of some warning sign. It wouldn’t work, and never has. Part of the reason is that, in states of deep love, large parts of the cerebral cortex become de-activated, though the deactivation and consequent suspension of judgment is specific to the loved person. I have suggested elsewhere that with greed, too, there is a cortical de-activation and suspension of judgment, this time specifically related to the money to be made.
Under such conditions, and faced with the prospect of making millions, nay billions, one would hardly expect a banker to notice a red light telling him that he is getting too greedy.
Meanwhile, it is interesting to note that bankers are laughing all the way to their own banks, because of the huge amounts they are making owing to the imbalance between the interest they give on deposits and the interest they charge on loans. I have read that bankers in England are braced for huge bonuses, somewhere in the region of 5 billion pounds because of this artificial success.
But there are warning signs – far more potent than ones that come from wrist strapped gadgets. The latest comes from Nouriel Roubini, who was once referred to as the ‘prophet of doom’ because he was one of the very few who predicted the recent economic crisis, but who is now regarded as an economic guru, because he was one of the few who predicted it. He told the BBC a few days ago that another economic problem may well be on the way.
Is anyone listening? Probably not. With greed ruling, much of the judgmental part of the collective cerebral cortex is simply inactive, and therefore impervious to such warnings, be they from a grand guru or from a wrist gadget.
But this does not take into account that greed is a powerful emotion, and that such gadgets cannot control it through their warnings. Those whose greed and rapacity is above normal (which I suppose is true of many if not most financiers) can hardly be expected to be put off by some warning light, when they are prepared to risk ignominy, imprisonment and disgrace – and even the possibility of losing their entire fortune. After all, many of those currently in prison for financial mis-demeanours have had far more forceful warnings than the one delivered by a gadget strapped to the wrist.
It is like telling someone who is madly in love that they should desist because of some warning sign. It wouldn’t work, and never has. Part of the reason is that, in states of deep love, large parts of the cerebral cortex become de-activated, though the deactivation and consequent suspension of judgment is specific to the loved person. I have suggested elsewhere that with greed, too, there is a cortical de-activation and suspension of judgment, this time specifically related to the money to be made.
Under such conditions, and faced with the prospect of making millions, nay billions, one would hardly expect a banker to notice a red light telling him that he is getting too greedy.
Meanwhile, it is interesting to note that bankers are laughing all the way to their own banks, because of the huge amounts they are making owing to the imbalance between the interest they give on deposits and the interest they charge on loans. I have read that bankers in England are braced for huge bonuses, somewhere in the region of 5 billion pounds because of this artificial success.
But there are warning signs – far more potent than ones that come from wrist strapped gadgets. The latest comes from Nouriel Roubini, who was once referred to as the ‘prophet of doom’ because he was one of the very few who predicted the recent economic crisis, but who is now regarded as an economic guru, because he was one of the few who predicted it. He told the BBC a few days ago that another economic problem may well be on the way.
Is anyone listening? Probably not. With greed ruling, much of the judgmental part of the collective cerebral cortex is simply inactive, and therefore impervious to such warnings, be they from a grand guru or from a wrist gadget.
Thursday, October 8, 2009
Alan Greenspan doesn't get it quite right
Alan Greenspan was chairman of the Federal Reserve Board of the United States and thus effectively presided over the largest economy in the world for very nearly two decades. However controversial his monetary policies may have been, his words, on economics at least, are nevertheless worth listening to.
In an interview he gave to the BBC last month, Greenspan predicted that the economic crisis will occur again. All economic crises, according to him, have one common source, however much they may otherwise differ. The common source is "the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
I would like to suggest that there is a simpler common source that is common to economic crises - GREED. And since greed is part of human behaviour, and does not seem to have altered much through the ages, it will lead to another economic crisis, and then another.
That is why I have urged those in the field of neuroeconomics to turn their attention to the neurobiology of greed.
I do not pretend for one moment that learning about the neural basis of greed will produce a cure for economic crises, far from it. But it would provide us with an interesting picture.
And I make this prediction - that, when confronted with greed and the prospect of earning huge sums of money - large parts of the brain become de-activated.
Worth a try, isn't it?
In an interview he gave to the BBC last month, Greenspan predicted that the economic crisis will occur again. All economic crises, according to him, have one common source, however much they may otherwise differ. The common source is "the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
I would like to suggest that there is a simpler common source that is common to economic crises - GREED. And since greed is part of human behaviour, and does not seem to have altered much through the ages, it will lead to another economic crisis, and then another.
That is why I have urged those in the field of neuroeconomics to turn their attention to the neurobiology of greed.
I do not pretend for one moment that learning about the neural basis of greed will produce a cure for economic crises, far from it. But it would provide us with an interesting picture.
And I make this prediction - that, when confronted with greed and the prospect of earning huge sums of money - large parts of the brain become de-activated.
Worth a try, isn't it?
Perhaps not quite so asymmetrical after all
I commonly write and speak of the relationship between neuroesthetics and the arts and humanities as being highly asymmetric. By this I mean that we have a great deal to learn from the artists and the humanists but little or nothing at all to teach them in return. I would doubt very much whether Cézanne would have improved on his paintings if he had known what we know today about the visual brain and visual perception or that Beethoven’s music would have benefited by knowledge about the auditory cortex. In the same way, I would be surprised if our present day knowledge about brain mechanisms would do much to improve or modify the output of many currently active artists. I am also not sure that we have much to teach philosophers or historians of art, although we have a great deal to learn from them.
But perhaps the relationship is not quite as asymmetric as I think, or should not be. In preparing the lecture I am to deliver in Dublin on Francis Bacon, in connection with the celebrations of the centenary of his birth there in 1909, an acquaintance recommended that I should read one of the greatest works ever written on Bacon – a book by the French philosopher, here doubling as art historian, Gilles Deleuze. He exhorted me to read every line, digest it and then meditate on it, to gain important insights into the work of the master.
This was enticing and my enthusiasm was fortified by the exciting title of the book, The Logic of Sensation. I have been studying visual perception and sensation all my life, and here is a book, written by a philosopher, addressing the issue through the art of Francis Bacon. I lost no time in obtaining it.
The great American writer, HL Mencken, once wrote of an actress – probably Sarah Bernhard – who could instill fear and even terror in a recitation of the multiplication table. This same talent, magnified to the nth degree, is present in Deleuz’s writing. The effect of the windy and bombastic phrases is to produce a numbness of the senses, a general cognitive paralysis; its portentous ignorance adds a further intellectual shock.
He tells us on page 34 that “The Figure…acts immediately upon the nervous system, which is of the flesh, whereas abstract form is addressed to the head and acts through the intermediary of the brain, which is closer to the bone”! What could this mean, since the brain is part of the nervous system? My friends assure me that it is a metaphor. But a metaphor for what? Aren’t metaphors meant to help one understand better, to clarify? It makes no sense. Perhaps it would be worth learning a little neurobiology here. He might have clarified his thoughts and told us what he meant.
Fast forward to page 81, where we are told that “In Bacon, primacy is given to the descent” But this fall is “not necessarily a descent in space…It is the descent as the passage of sensation, as the difference in level contained in the sensation”. And “Why is the difference in level not experienced in the other direction, as a rise? Because the fall must not be interpreted in a thermodynamic manner, as if it produced an entropy…Kant laid down the principle of intensity…and concluded that the plurality apprehended in this magnitude could only be represented by its approximation to negation = 0…Consequently even when sensation tends toward a superior or higher level, it can make us experience it only by the approximation of this superior level to zero, that is, by a fall”.
The ellipises are all mine, but they do not alter the meaning significantly, because there is no meaning.
And so it goes on.
I have indeed tried to re-order the words in two paragraphs. This did not improve the passages, I admit at once. But even more interestingly, it did not make the passages any worse.
I am urged to have patience, to read and then re-read. Ultimately, I am told, I will gain the impenetrable insights. This implies that my inability to understand is really due to my somewhat limited capacities. This, alas, may well be true.
But if the price to pay for gaining these insights is to spend interminable hours trying to gain them, I will forgo the pleasure. After all, there are other art historians who have written far more eloquently on Bacon and other artists, or at least have written in language that I and others like me can understand.
But perhaps the relationship is not quite as asymmetric as I think, or should not be. In preparing the lecture I am to deliver in Dublin on Francis Bacon, in connection with the celebrations of the centenary of his birth there in 1909, an acquaintance recommended that I should read one of the greatest works ever written on Bacon – a book by the French philosopher, here doubling as art historian, Gilles Deleuze. He exhorted me to read every line, digest it and then meditate on it, to gain important insights into the work of the master.
This was enticing and my enthusiasm was fortified by the exciting title of the book, The Logic of Sensation. I have been studying visual perception and sensation all my life, and here is a book, written by a philosopher, addressing the issue through the art of Francis Bacon. I lost no time in obtaining it.
The great American writer, HL Mencken, once wrote of an actress – probably Sarah Bernhard – who could instill fear and even terror in a recitation of the multiplication table. This same talent, magnified to the nth degree, is present in Deleuz’s writing. The effect of the windy and bombastic phrases is to produce a numbness of the senses, a general cognitive paralysis; its portentous ignorance adds a further intellectual shock.
He tells us on page 34 that “The Figure…acts immediately upon the nervous system, which is of the flesh, whereas abstract form is addressed to the head and acts through the intermediary of the brain, which is closer to the bone”! What could this mean, since the brain is part of the nervous system? My friends assure me that it is a metaphor. But a metaphor for what? Aren’t metaphors meant to help one understand better, to clarify? It makes no sense. Perhaps it would be worth learning a little neurobiology here. He might have clarified his thoughts and told us what he meant.
Fast forward to page 81, where we are told that “In Bacon, primacy is given to the descent” But this fall is “not necessarily a descent in space…It is the descent as the passage of sensation, as the difference in level contained in the sensation”. And “Why is the difference in level not experienced in the other direction, as a rise? Because the fall must not be interpreted in a thermodynamic manner, as if it produced an entropy…Kant laid down the principle of intensity…and concluded that the plurality apprehended in this magnitude could only be represented by its approximation to negation = 0…Consequently even when sensation tends toward a superior or higher level, it can make us experience it only by the approximation of this superior level to zero, that is, by a fall”.
The ellipises are all mine, but they do not alter the meaning significantly, because there is no meaning.
And so it goes on.
I have indeed tried to re-order the words in two paragraphs. This did not improve the passages, I admit at once. But even more interestingly, it did not make the passages any worse.
I am urged to have patience, to read and then re-read. Ultimately, I am told, I will gain the impenetrable insights. This implies that my inability to understand is really due to my somewhat limited capacities. This, alas, may well be true.
But if the price to pay for gaining these insights is to spend interminable hours trying to gain them, I will forgo the pleasure. After all, there are other art historians who have written far more eloquently on Bacon and other artists, or at least have written in language that I and others like me can understand.
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