Cyreenik Says
The Economist came up with a lot of interesting topics this month.
22 Dec 12 The never-ending war How a terrible but little-known conflict continues to shape and blight a nation
I admit, this war was under my radar, which is saying something since during my teens and twenties I was a military history buff. But the tale told in this Economist article is interesting for a different reason: This story is in many ways a prequel to Hitler's rise and fall in Germany. It shows that charismatic leaders backed by an optimistic population can consistently lead their country over an adventurist cliff and into great damage -- Hitler was not a one-shot.
From the article, "The war, known in Paraguay as the “War of ’70” or the “Great War”, was among the worst military defeats ever inflicted on a modern nation state. According to Thomas Whigham of the University of Georgia, as much as 60% of the population and 90% of Paraguayan men died from combat or, more often, from disease and starvation. Other researchers put the figure considerably lower -- but still atrociously high. Federico Franco, Mr Lugo’s successor, recently called the war a “holocaust”. Yet it is little known outside the region. Even in Paraguay its moral ambiguities have caused generations of leaders to shroud it in myth."
The backdrop for this debacle sounds much like Germany in the 1930's. Once again from the article, "In the mid-1800s, however, Paraguay was a middling regional power. It began a breakneck industrialization during the presidency of Carlos Antonio López, who imported European experts to build a shipyard, a foundry and one of South America’s first railways. He also beefed up the army to deter Paraguay’s twitchy neighbours: Argentina considered the country a rebel province until 1852, while Pedro II, the Brazilian emperor, claimed lands that Spain and Portugal had disputed.
In 1862 López died, and was succeeded by his son Francisco Solano. The younger López demanded absolute deference -- he banned people from turning their backs to him, or sitting while he stood -- and was eager to make a name for himself as a statesman. In 1864 he saw his chance. To protect its commercial interests, Brazil threatened to intervene in a civil war in Uruguay, a small buffer state between it and Argentina. López feared this would upset the regional balance of power, and announced that Paraguay could not tolerate the presence of Brazilian troops on Uruguayan soil."
An adventurist start by a newly installed son of a charismatic leader who also had a lot of charisma. Paraguay was on a roll and Solano decided it would be profitable to meddle in the affairs of neighbors. The neighbors were big, real big, Brazil and Argentina, and reasonably competent. Solano proved clumsy in foreign affairs rather than twinkle-toed and managed to unite both against him.
The bad got worse when he refused to recognize he was beaten, and he sustained a core of supporters who were willing to follow him to the bitter end.
And bitter it was, and embarrassing for all involved. So much so that it's a war that none of these neighbors like to talk about.
The moral of this is that blind faith in a leader happens a lot, but the blinder that faith is, the more the risk that it will lead to disaster for the leader and the followers. If you are a follower, understand where your leader is taking you. Go with eyes open.
Also noteworthy is that when Napoleon was faced with a similar problem following the retreat from Moscow, he surrendered. He still had enough grounding in reality at that point to make the best of his bad situation. A few years later he developed a taste for more adventure and that lead to Waterloo, but that was later.
22 Dec 12 The king of con-men The biggest fraud in history is a warning to professional and amateur investors alike
This is another tale of blind faith leading to disaster. This time the faith is in a commercial enterprise, not a government, but the disaster was just as traumatic.
From the article, "MacGregor’s biggest swindle raised £200,000. Over his lifetime, his bond-market frauds ran to £1.3m (as a share of Britain’s economy, around £3.6 billion today). It is true that more recent scams have raised more. Bernie Madoff, a New York-based fraudster caught out in 2008 ran a scheme 20 times bigger, at $65 billion. In cash terms alone Mr Madoff trumps MacGregor.
But fraud is about creating false confidence, and making people believe in something that does not exist. For some, like Mr Madoff, it is the belief in the trickster’s shamanic stock-picking skills. For others, like Charles Ponzi, it is a fail-safe mathematical scheme. MacGregor was far more ambitious: he invented an entire country. He was, he claimed, the “Cazique” or Prince of this land -- Poyais -- located near the Black River, in modern-day Honduras.
...Through an elaborate publicity campaign, he succeeded in persuading people not only to invest their savings in the bonds of a non-existent government, but also to emigrate to a fictional country. How on earth did he manage it?"
Confidence in another person is definitely a powerful tool in the human thinking tool chest -- it liberates a lot of thinking power that would otherwise be devoted to double checking and skepticism. But it can be used for both good and ill. This is another story of it being used for spectacular ill.
The interesting part is the background that MacGregor thrived in. It was a time of optimism as the Industrial Revolution was changing how people lived. This optimism and its "magic" were felt around Western Europe and North America and showed up as hundreds of experiments with doing things in a different way. Some of these were financial and some were religious. In America this era is call the Second Great Awakening and produced things such as the Seventh Day Adventist and Mormon churches.
22 Dec 12 Learning new lessons Online courses are transforming higher education, creating new opportunities for the best and huge problems for the rest
Thanks to communications revolutions revolving around the Internet and smart phones, education is changing as well. How and how much it will change we will get to see. Movies, radio and TV all promised to change education, but the familiar classroom format survived with little change. We will see if the Internet can bring about a deeper change.
22 Dec 12 Cleverer still Geniuses are getting brighter. And at genius levels of IQ, girls are not as far behind boys as they used to be
This is an example showing that human thinking is changing in absolute terms. How much of that change is nature (genes) and how much is nurture (environment) has long been disputed. The right answer continues to be: a mix of both. The gene pool is getting pushed hard, but how we are raised also makes a big difference.
22 Dec 12 Keep it in the family Home schooling is growing ever faster
This is another fallout of the Internet revolution in education. Thanks to the rich supply of information available on the Internet, home schooling can work better than it has in the past.
8 Dec 12 The great mismatch Skills shortages are getting worse even as youth unemployment reaches record highs
Recessions are times of dream changing. The boom industries of the previous boom have transformed from positive feedback into diminishing returns, and "the next big thing" must now be researched and discovered. This is always an uncertain and dislocating process. It can be a little or a lot, an example of "a lot" being the discovery process of the 1930's that is now called The Great Depression.
The next boom is always different than the last boom. This means that valued jobs will be different. This is part of the uncertainty. What business, education and government need to do is recognize that what is in demand is changing, and adapt to that as quickly and steadily as possible.
And simply creating jobs is not a solution, it's a distraction. This 5 Dec 12 Fortune article, Why Job Growth is Overrated by Ken Fisher, talks about the difference between "just a job" and a productive job -- one that is producing positive feedback to the economy. Just-a-jobs buy social peace, but they are expensive. Greece has found that out to its dramatic dismay over the last couple years.
Productive jobs are harder to discover, they take lots of research. But this is the kind of research that businesses in competitive free markets can do efficiently and routinely... if they are given a competitive free market to operate in. This is why lightening the hand of government in taxes, regulations and uncertainty is so important to regaining our strong growth.
22 Dec 12 Going backwards The world is less connected than it was in 2007
It seems that, just as happened in the 1930's, the world has taken a step backwards in globalization and integration. This is always expensive when it happens.
15 Dec 12 Gold-hunting in a frugal age Austerity-battered Western companies are looking everywhere for growth -- A lesson here: Keeping interest rates low may not stimulate growth if private investment goes looking elsewhere for better returns.
It's taken me a while to figure out: (and clearly it's taking our government leaders even longer to figure out) Why low interest rates aren't stimulating growth like they are supposed to?
The answer is: These low interest rates are sucking wealth away from investor choices and into government choices.
The difference is that investors look carefully at returns, and the higher the interest rates the more carefully they look. High returns are the same as positive feedback -- you invest in what will return a lot, and when you have gotten back a lot, you have a lot more to invest in the next round.
What the government looks for from its spending is different. Instead of high returns its looking for social peace and good intentions. These are nice, but they aren't positive feedback. They don't grow the economy. Worse, the low interest rates make project proposers sloppy -- they don't research to find, and then structure, high return projects because they don't have to.
It's a cycle that leads to little growth and lots of distracting spending.
24 Nov 12 The new maker rules Big forces are reshaping the world of manufacturing
The next industrial revolution is coming! This is part of the next big thing. This is partly why we are having a recession now. This is dream changing. And this is why it's more important than ever that business, education and government be spending a lot of attention on being flexible in training offerings and be constantly asking, "What jobs are valued now? What jobs will be valued in ten years?"
This is a lot of heady stuff to end the year with. 2013 promises to be an exciting one.
My heart goes out to the people of Newtown, Connecticut and all others affected by the tragedy that took place there. It is a sad affair. But it also reveals some interesting human thinking patterns, and understanding these better may help in taking some pain out of future tragedies.
One interesting pattern revealed here is the consistent evolution of two roles in early post-tragedy analysis: The role of saying, "I told you so, and here's why." and the role of being deeply angry at the "I told you so." person.
These roles go back a long, long way. The prophets of the Old Testament were all playing the "I told you so." role, and the mobs that got angry with them were playing the angry person role.
In this Sandy Hook incident Mike Huckabee and Brian Fischer both made news by saying that this incident was caused by taking prayer out of school. Half the news was that they said this, the other half was the outrage expressed by some people that they did. Huckabee and Fischer are acting like prophets and they are being faced by an angry media and social networking mob.
The other interesting element to this is that we honor the Old Testament prophets. Many of us today consider them to be men of vision. Hey, they got the world's most widely published book written about them! But the modern day angry people consider their modern day contemporaries to be crackpots who come up with the same whine at each disaster.
It's impressive what difference in attitude a few centuries brings.
Update: In something of a surprise to me, this 16 Dec 12 Mail Online article, Outrage as Westboro Baptist plans praise gathering outside Sandy Hook Elementary school, says the Westboro Baptist Church has decided to put this incident on their radar. My guess is that this choice is a sign that internally the group is loosing cohesion and it's going to soon slide into irrelevant obscurity.
Update: <sigh> This 11 May 13 LA Times article, Task force: Sandy Hook Elementary should be torn down, rebuilt by Devin Kelly, indicates we have some serious giving in to ghosts and evil spirits thinking going on here. The school is going to be torn down and rebuilt in the same place, just so some instinctively fearful people can sleep easier. The article further states that Sandy Hook elementary students have been attending school in a building in a neighboring town since the event. These kinds of choices are an example of instinctive thinking getting expensive on many levels. Sincerely believing in ghosts and evil spirits (sincerely as in: willing to spend a lot of money, time and attention) is not doing Newtown students or families any favors.
December should pick up yet another meaningless celebration. It should be declared National... wait... International Good Intentions Month because it's certainly the time of year when good intentions get acted upon on massive quantities and as a result massive waste is generated.
In keeping with that spirit, here are some more examples of good intentions gone awry.
First on the "good intentions hits... hard" parade is food. It's real easy to think about food instinctively, which means it's real easy to support enormous waste in many ways. This 5 Dec 12 REASON article, Food Bunk by John Stossel, asks, then answers, the question "Which protects food consumers more: government inspections or competition and reputation in the marketplace?" This 24 Nov 12 Economist article, Milking the Budget in Charlemagne, talks about farm subsidies in Europe. But good intentioned farm subsidizing goes on world-wide and has for decades. Koreans and Japanese subsidize rice farmers, and Americans subsidize sugar growers and corn ethanol suppliers. In all these cases there were supremely good intentions behind starting these programs, but the results over the years have been waste of resources in the form of pork spending, and even more waste in the form of market distortions.
This list could go on, but that will be for another time and place. Once again, the moral surrounding good intentions is, "If you're going to listen to your heart in money matters, be sure you learn to listen to your head as well. If you don't, you're being a fool with money." and another proverb will shortly describe your condition.
This 4 Dec 12 USA Today follow up article, Barefoot man given boots by NYPD officer not homeless by Natalie DiBlasio, demonstrates how good intentions can go sour. The video of a police officer giving this bare-foot and homeless man boots has warmed the hearts of millions on the Internet. It's sure generated a heaping helping of warm-fuzzy there. But what about the man himself and those boots?
According to the above article the bare-foot man, Jeffery Hillman, is strange, not homeless. He has mental problems, and is getting state support, but he is now living in an apartment a few blocks from where the video was taken. And the boots? He doesn't wear them. He hid them. From the article, "A few days after the viral photo was posted, The New York Times found Hillman barefoot again and asked about the $100 all-weather boots. Hillman said he'd hidden them because 'they are worth a lot of money.'"
The moral of this story is that while good intended acts feel warm and fuzzy to the person doing them, and to many on-lookers when there are some, they will not produce the intended result unless they are thought through carefully and their consequences considered. If they are not producing the intended result they are wasting money and resource.
And the waste can be huge. It wasn't in the Hillman case, but it is in US housing policy as just one example. The federal government got involved in promoting home ownership for the best of intentions -- it was as World War Two (WWII) ended and it was felt that home owners would be better citizens, and many would be returning soldiers. But this good intention was not well thought through. And it has turned out that combination of getting the government involved in promoting home ownership starting after WWII in the 1940's, plus the added good intention of doing so without discrimination starting in the 1960's, plus even more good intentions in helping more low-income people in the 1990's, laid the foundation for the 2000's Fannie Mae and Freddie Mac influence peddling and the housing asset bubble and crash. That fiasco combination has cost Americans billions in foreclosure pains, market distortions, and even more influence peddling.
Actions taken based mostly on warm and fuzzy good intentions can hurt... a lot. And as prosperity lets people get more and more insulated from the harsh reality of limited resources, we spend more and more on good intentions that don't have good consequences. Hillman and the fate of his boots is just one poignant example. We need to be teaching ourselves and our children that acting on good intentions alone is not enough. The actions should always be preceded by carefully analyzing how good consequences can flow from those good intentions. Only after the consequences have been considered should action take place.
-- The End --