Illegal or just stupid

Moral: Wherein we look at some modern quandaries.

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Without pointing fingers, one has to ask whether it's the idiots who ascend in our modern society? Oh, let's point a couple. There was a headline that got my attention, today. It's a firm that recently went bankrupt. And, just a few days before, the head guy (extreme over-achiever (ah, don't those types just make you sick - barf, barf, ...?), Senator, Governor, etc. probably an Eagle Scout) was telling people that things were okay.

The talk today was about the size of the missing money. Well, it was more than a billion (1 with 9 zeros following). I didn't read the whole thing (too depressing) but saw someone saying that the actions within this company may not have been illegal but that the head guy definitely was not a good manager.

Say what?

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Wait! There are those who text and drive and who, thereby, create increasing likelihoods of harming someone, perhaps even themselves. I know; these idiots almost run me over every day as I walk on a sidewalk or in a marked crossing. Business is run like this; that, folks, is what we get from the best and brighest?

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We'll forego more than only a few words about this other guy who wants to continue to stiff the savers for another couple years. Gosh. I wonder if he puts on special garb in order to kiss up (worship) that big chimera who plays with him (Sirens).

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Then,we're in an election year that is taking unprecedented steps because of bench decisions the past few years. Like someone said, we'll all hold our noses and vote when it's time.

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So, back to the title. Someone took a big company to task telling management that they could not drive things solely with rules. You need a proper mental outlook for the workers to follow. It's not like you lay down the code and a dumb machine executes these.

A company needs a spirit and some ethical sense (I'll start to use moral as soon as I work out how the secularist think that this ought to go); management is supposed to bring this out; ah, those guys/gals are after their own rewards, is that not so?

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The larger economy has the same issue. Yet, money has become the sole thing of value; all sorts of decisions the past couple of decades have resulted in our current mess almost by definition. Were we all just stupid?

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What was the article from a year ago or so? Oh, yes, we'll dumb ourselves down to make our machines look good. Evidently, this applies, as well, to management and leadership. Yes, leaders seem to have the worse case of lead feet; why is that?

Remarks:

01/20/2013 -- The bad spirit of the thing.

05/11/2012 -- Featuring Jamie.

03/23/2012 -- Ben is doing a series of four lectures on his, and the FED's, role.

03/15/2012 -- Okay, might have used incomputability in discussing quants (see post on Alan M. Turing) but stand by the context, the issues, and the need for resolutions. Wake up, quants (you, too, Ben).

02/03/2012 -- Stockman on Ben.

02/01/2012 -- Their risk officer (the first example, above) said tsk, tsk. He was shown the door. Ah, way to go, Governor!

Modified: 01/20/2013

Financial piracy

Moral: Wherein we opine about the current state of financial affairs now that Big Ben has graced (?) the Tetons with his presence, again.

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There used to the a thing called "debtors' prison" where one who got into dire straits, whether by fate or by own's one idiocy, spent time. In some of these, people were not fed; essentially, the place was a warehouse to stack those whose fortunes diminished to negative terms.

Somehow, we got to where being in debt was the "thing" to do. In fact, some exalted at how much credit they had and could use.

Sorry state of affairs. Both the physical prison and this virtual new prison. We are going to argue that this latter prison is more insidious by a long shot.

What did we do? We have the USofA now indebted to the likes of former enemies.

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Now, why "financial piracy" in the title? Some claim that morality left business. Was it ever there? One might say that the last drop of 'morality' ran out. So, we have this monster of a thing, with flashing lights and boisterous hawkers and, of course, the priestly types. And, it is daily proffered through our technical prowess, yes, television and the web and more.

Allah                                              Moolah
Worshippers

The so-called "markets" of such importance to some. In the case of the financial pirates, there is little of 'value' that is bought and sold.

To what end is this crap-shooting ca-pital-sino? To suck monies from the pockets of the hapless into that of the fat-catted ones who are in position to take advantage of the situation. Unfortunately, the politicos (those who salivate at the thought of a buck) have turned their backs on those in need in order to make things better for this upper crust.

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It may be that the larger part of the basis for a sustainable economy is the consumer. Yet, several things are implied there, the first of which would be that 'piracy' under the guise of financial imperatives would be strictly limited (sandbox'd, in other words).

Yes, those who are in control of the money (and whatever basis that we put it upon) would be of 'simple living' (the military metaphor holds - but, not the officers who become Generals and pains in the asses -- no, talking the enlisted here [E1, in fact] -- ah, but general-hood implies ability and talent to use such, does it not? --- hah! for any officer, there are scads of enlisted who are as smart and talented).

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This theme will be explored more. If Big Ben were such as to think about Main Street rather than the Wall'd warts (and all of their ilk), he would not have polluted the rare air of the Tetons area with all of those hot-air'd types who gathered last week to honor 'moolah' and its chimera. No, there are countless slums in the world (and in the US) where these types could have seen the effects of their decisions up close and personal.

Oh? Of course, they do not want to do this, as is not their dwelling in the 'heights' too much fun and causes them to disdain the 99.9999% who suffer from their coddling of the big guys?

Ah, think of those who were bailed out, cooling their heels in a debtors' prison? Nice thought!

Remarks

07/25/2015 -- We're about six weeks after the June look back at 800 years ago (Magna Carta). Too, though, poster boys have popped out of the woodwork, including Zweig.

08/27/2013 -- Golden Sacks made some error the other day (the perennial computer glitch - traced back to the best and brightest, okay?) that accumulated to $100M or so. Guess what? They got off with even a hand-slap. What? Put them all in the stocks for a week (or debtor's prison).

05/09/2013 -- Ben needs to take off the training wheels and let the markets go where they may (falling mode, most likely) and let the seniors have a little stability (Slapped silly, again, yesterday).

12/22/2012 -- Fair and open actually used in a WSJ article.

07/21/2012 -- Another thing uncovered, gaming of LIBOR.

05/30/2012 -- As covered by flightblogger.

09/29/2011 -- The question remains. Even with 'financial engineering' what is the science behind finance? Gaming, only? Who has the basic ontology (other than wealth for the few)?

09/27/2011 -- Recover missing image (Allah and moulah).

09/21/2011 -- On Wealth and the CEO MVP.

09/09/2011 -- Big Ben and the consumer.

08/30/2011 -- A tale from the trenches, not exaggerated. There was a techie company that has a piece of it that has been around since the 60s. The company is no longer around, except in memory. However, the group has been picked up multiple times by other companies over the years. A devoted type of employee (by the way, war vet) has endured with the group during this time. Following the history is a good read on changes over the related decades. The message? On one of the movements between overlords (financial types, of course), these employees' retirement accounts were given to a large, well-known insurance company for management. What was the first thing that they (the cruds) did? Took a large percentage (way beyond what one would think was reasonable) off the top, as their fee? What? There are tales, such as this, all over the economy. Do we pay attention? Do the regulators (ah, remember how they could not even see Made-off when he was right in front of them?) even know how? Sorry state of affairs, folks. Not only are there these tales, but they are legion (putrid to the core - what the hell has happened over the past 30-40 years, folks?). Oh, is it the lack of any sense of responsibility, or ethics, on the part of the boomers? Much to discuss.

08/30/2011 -- The status of Officer versus Enlisted is one of the last bastions of legal 'classism' in the United States. Is it necessary? Not really. All the arguments about 'leadership' run toward what we see with 'politicos' who cannot keep their salivating selves in check when they see, or think of, a buck. Sad state of affairs. Of course, the idiocy started with the onset of the new country. Yes, we're talking over 200 years of divisive methods. It is a wonder that the country has survived the shenanigans. Another bastion? Those new royalty who are the corporate elite riding herd on what the Supreme Court's members say is a 'person' and whose use of their money is equivalent (same type of ruling) to free speech (ah, twisted, indeed). Too, these royals can trample the mere citizen with impunity (no wonder, those who are the masses still yearn -- yes, the chimera has stolen the American dream).

Modified: 07/25/2015

Our basis II

Moral: Wherein we consider the economic (and other) agent as we try to understand the appeal of the chimera.

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Earlier, we looked a little at human cognitive issues; essentially, the illusion of the rational agent needs to be explained. How awry has economics been due to that bit of irrationality? Too, we might look a bit at neuroeconomics.

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Recently, neuroscientist David Eagleman has a must-read article, The Brain on Trial (be sure to see the Comments). David uses legal settings to demonstrate the genetic/environment (nature/nurture) influences on thinking and behavior. In other words, he almost argues that the 'rational' man is a myth. Yet, we all want to be capable and rational; along with that, we look to assign blame or reward.

Who wants to be considered a freak of nature? Then again, is 'free will' anywhere a factor in the modern, materialistic world (truth engineering topic that will rise to the fore)? Too, upon what can we put legal consequences, let alone matters of conscience, if we're all just neuropeptidergic messes?

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Aside: some can claim morality without teleology (this topic will be addressed more fully, at some point, in discussing truth engineering's T-issues).

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Our quandary rests in the fact that we can show how we can control ourselves and can teach this to others, to an extent. In some cases, there are metaphysical underpinnings that may need more attention in order to resolve some of the issues. In others, the framework is experiential-ly based and passed on from generation to generation (to wit: the military, corporations, families, ...).

Yet, any balancing act attained is easily disturbed (fragile, as we see with the market-theoretic viewpoints). In fact, there is a lot of science put into disabling people (black arts of defense).

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Aside: failures in mind-control (note use of meme) ought to suggest something in regard to that which coherently pulls everything together.

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The chimera, and all of its supporting casts (legions upon legions), assumes agents, with information, rationality, and more. From whence this, we might ask? That we see bubbles (sometimes, this seems to be the status quo - Alan wavered when faced with the fact -- yet, he did have a long reign) is almost inevitable.

What to do? Well, that depends upon several things which we'll get into.

Remarks

05/01/2012 -- We'll need to talk singularity in the context of Alan. The computer has as many holes as do we; however, we can cut out of the fog. 

02/27/2012 -- This post was a continuation of Our Basis, concerning just how shaky is our perceptual being (from certain views).The 01/01/2012 Remarks (below) points to work by an Eastern European. A recent Atlantic article looks at protozoan influences that may need more of our attention. It's significant that the underlying work was done by a lonely scientist in an Eastern European situation. Western culture has much thanks to offer that part of Europe who bore the brunt of waves of onslaught through the past 1000 years.

01/01/2012 -- Recently ran across the work of Kazimierz Dabrowski. We need to pay more attention to his theory on development. Yes, CEOs (and other takers) as immature (seriously, so). 

08/04/2011 -- One might add that the medical field seems to have a split personality. We have neuroscience insights galore questioning the basis, yet the M.D. holder is considered to have attained the epitome of learning (and earning). To boot, hubris seems to abound in those realms. To wit (and, we'll be documenting some cases, folks; naturally, names will be changed to protect the innocent and not so innocent): subjecting patients to intolerable side-effects in order to show their prowess with bio-chemistry, cloaking euthanasia under the guise of geriatrics, and more. Yet, some efforts at preventative medicine (and improved conceptions of how this all ought to work economically) are very encouraging (M.D.s are not responsible for the bad behavior, and choices, of their patients -- oh, given the referenced article (above), the medical establishment will provide us a made-up soup of chemicals, with which to live, in order to improve on nature's (the Creator's) work?).

08/03/2011 -- Reading the comments to The Atlantic article brought out another meme: heart driven (ah, is busyness not the antithesis of this except for the capitalist? -- yes, unless they are exploiting 10s of thousands, and more, of people, they are not happy -- how did these guys/gals get to be such icons (idiotic, people) and have so much influence (oh, yes, money) on so many?). So, I'm happy to learn about HeartMath! The correct meme? A triad: environment, genetic, and heart (T-issues required, oh when will that be allowed?).

Modified: 05/01/2012

Von Mises and friends

Moral: Wherein having mentioned, several times, the Vienna School (also, known as the Austrian School) which is continental, how could we avoid specific reference to Ludwig (and John and Friedrich)?

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As in Ludwig Von Mises and his prolific writings. Reading 'The Elite Under Capitalism' would be a good start (we looked at his money work earlier).

I like how he calls the elite to task; yet, one has to look at several things. For instance, what would be 'elite' (as in, best-and-brightest? -- they offer the masses a preferred moral code?). What are these ideals to which the elite would lead us (greed? massive accumulations -- $1B house (as in Mumbai) looming over a vast expanse of slums -- or, gigantic yacht of immense proportions that is for anything but show?)?

Wait! do I smell big T-issues looming? Perhaps not, as we can be reasonable for a little while, can we not?

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When we brought in the Vienna School, there was one main factor. They do know what lies behind the mathematical facade. Why facade? What we see now is a large system, built upon the quaking basis of computation (we'll get to Church-Turing, in a bit).

Then, upon this shaky framework, we want to built an automated economy (virtual money, to boot, printable ad infinitum) that is wide-spread in many, and disparate, directions using colonialistic mindsets without regard to the neighbors in ones' own locale?

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As an aside, Ron Paul is featured in The Atlantic as saying that he was epiphany'd by the writings of Hayek who was a disciple of von Mises. That epiphany was a while ago. Now, the tea party, and other perturbers, have taken ahold of the guy's ideas thanks to Glenn Beck's reference to Friedrich (see 'The Road to Serfdom', for one).

No one wants a top-down power structure to be there for all aspects of life. The military life is top-down, yet those who rise come through the ranks. And, no one at the top tries to run things in a micro-managed sense, as if driving robots. That was tried in the past a few time enough for us to know its failings.

Yet, how do you keep free agency from devolving into anarchy? That is, what is there that would keep things under civil limits? The big question for libertarians.

A parallel in project/program management has been mentioned in this blog, and in related blogs, namely middle-out. Business is top-down, as we see the King CEO. Too, though, what CEO actually does any real work?

Not!! Good companies try to elicit good work from happy employees. How many succeed?

Yes, these are not easy issues, folks, but we'll continue in our own vein and time to discuss the underlying factors with the idea to eventually fruit results.

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As you see, what is the middle-out for the economy? Not Adam's 'hand' and not Stalin's 'fist' and not Big Ben's chimera and ...

Do you think that the Tea Party really has resolved the issues in their pullback in abhorrence from anything Keynesian? Of course, John Maynard came from the Neville line; nice of him to think so fondly of the little people. At least, he wasn't greed'd out as we see with the modern capitalists (in name only).

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So, we'll look at Ludwig's thinking as we go along. And, we'll look at him with a kind eye, probably kinder than he would has cast'd at the viewpoint being developed here.

• von Mises in a letter to Ayn Rand (emphasis mine): You have the courage to tell the masses what no politician told them: you are inferior and all the improvements in your conditions which you simply take for granted you owe to the efforts of men who are better than you.
• You want to know the irony? Listen up, CEOs, et al. This is how your working class, especially those of highly advanced education, think of you and your infantilish idiocies.

Gosh, was that fun or what?

Remarks:

03/23/2012 -- Renewal of the idea (and related energies) via Cooper and CiE.

04/03/2011 -- Need to look at some background. Too, tranche and trash.

11/21/2010 -- Three years ago, it was said: Computational foci raise miraculous need. Still applies.

11/03/2010 -- A big oops is emerging from the decimation of proper economic thinking through appeal to the higher-order thinking of the elites.

Modified: 03/23/2012

Out of control

Moral: Wherein we consider that the big chimera has many underlying problems. That is, the shell game gets out of control, now and then. No wonder the backbone of the economy breaks under such nonsense.

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Or, as Mean Street says, the computers get to 'making ugly, messy love' while our money hangs in the balance. You see, the computers are driving the economy due to its increasing roles, and there will be side-effects not unlike we will continue to see with cars.

That requires a new type of thinking, folks.

Given that the streeters, such as golden sacks, seem to deal with 'truth derivatives' (see cartoon) of their own liking, upon what can we build trust required for a market economy? It seems obvious that ill-begotten gains are the norm as how can large bonuses be so usual without some sort of fiddling?

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On another note, where does the money go? That is, when things roll downward. Today, many lost, yet others gained. That's called near-zero, folks.

Some argue that we can move away from near-zero, with upbeat outlooks, and such. Yet, there has to be a certain amount of accounting (and accountability) and auditing that stands up to scrutiny. That we're fiat'd in terms of money (aerated by the FED, in other words) sets the stage for all the bad stuff from the beginning.

Yet, even in the gold years, there were issues, as Big Ben can tell us.

It may be that the only way out of the muck is with computer systems and a proper playing field. Somehow, we need to get insights from improvements in engineering, such as cyber-physical notions, involved.

Smith and Samuelson would probably agree.

Remarks:

06/11/2015 -- Computers? Out of control, in more ways than one. Adam rolls over (again and again and ...).

12/22/2014 -- Nice to see the WSJ article use "sandboxed" in relation to the absence of "predict or control" within the context of computation (in a sense, we are already out of control very much in need of an economic sandbox). The issues raised in the article are central to truth engineering's core focus.

08/23/2013 -- Another example. Jon has it right: high-frequency to blame. Of course, there are several reasons for the market being out of control.

06/11/2013 -- CDOs and tranching, once again.

05/30/2013 -- We're being driven by systems and developers into a type of hell.

03/15/2012 -- Okay, might have used incomputability in discussing quants (see post on Alan M. Turing) but stand by the context, the issues, and the need for resolutions. Wake up, quants (you, too, Ben).

02/11/2012 -- Example of the senselessness of the ca-pital-sino give to us by the best-and-brightest. 

01/13/2012 -- We'll be coherent and thorough as we discuss issues (out of control) related to this theme. 

05/17/2011 -- Golden sacks (leftmost mug of the rogue table), by Rolling Stone and Daily Ticker.

03/22/2011 -- It's spring, and the garble uses gambling metaphors.

11/21/2010 -- Three years ago, it was said: Computational foci raise miraculous need. Still applies.

11/02/2010 -- Over a year later, the message is the same, except some changes have occurred. But Big Ben continues in his ways. Of real note is that the jobless rate is high; out-housing really set up for that. Also, we need to re-look at that learned from the 'vons' guys, Ludwig and Friedrich. See Near Zero.

10/07/2010 -- Several principles need to be explored, such as the ergodic one.

05/25/2010 -- Who will (or can) lead out of the morass?

05/14/2010 -- Oh yes, smartest guys in the economy.

05/14/2010 -- NYT's opinion points toward algorithms which nowadays seem to have a panache that seems to need some scrutiny.

05/13/2010 -- Some of the 'out of control' is intentionally inserted, as that helps some make money. See Time article from 12 years ago in which it is suggested that a lot of 'high' finance is motivated by attempts to circumvent accounting rules. As a reminder, folks, the issue of 'moral hazard' consists of this: playing with other peoples' money (many of which are moms and pops just trying to survive their later years), not handling risk properly (hubris of mathematical prowess), taking off the top (privatization of the profits), expecting bailouts from the general populace (socialization of gain) when things go awry, gloating about being right (again, hubris, but this time it's probably male egotism). It's been said here before: we need people running finance who do not salivate when a buck is passed beneath their nose. Now, that set would not be exclusively female.

05/10/2010 -- Commentary, and cartoon, via USA Today is right on.

05/07/2010 -- Another opinion on the influence of computers in the market.

05/07/2010 -- As said before, politocos seem to be those who salivate at the sight of a buck. I should add that the thought of the buck might cause the glands to activate, too. Especially, it seems, according to this report, that it's worse than I could have imagined. Why expect more from these people? That ethics might come into politics approaches zero in likelihood?

05/07/2010 -- Basically, the whole model stinks and is very unstable. How did we get to where our lives are dependent upon this type of thinking? And, this is how 'capital' ought to be handled? On no. Have to consider that Grasso was right. Like they say, right message, wrong messenger.

Modified: 06/11/2015

Our basis

Moral: Wherein, we see that humans can differ quite a bit as we can observe by looking at the wide variety of human opinions. There are many explanations possible.

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Yet, at the basis for human endeavors, such as that which economics claims as its domain, there is consciousness that has defied any definition via scientific means. Oh yes, there are plenty of theories and wishes. The fact is, folks, that the issue is open and will remain so (t-issue). We can gather the facts as we see them, within our neuropeptidergic limitations and attempt understanding. Too, the operationalistic methods can say 'who cares?' and proceed almost nonchalantly. From this, we get workable methods, many times, of which none ever achieves the silver bullet status (not for very long, that is, and why this need?).

So, we can't have some nice theory about rational agents when the underlying basis is unknown (essentially underdetermined, let's say). That is, any constructionist's model ought to have some sound basis, unless incompleteness is accepted as the reality.

That is one reason why the law comes into play so strongly as mathematics has no hold on the overall perspective. Oh yes, again, we see phenomenal advances, yet do not many of these produce more negative side-effects than benefits? That is the reality behind near-zero, in a sense. We have never had a true accounting.

The clever, and we ought to give them some credit for this (tongue-in-cheek, folks - ah, is this risk management or tranching?), have excelled at keeping themselves from having to endure the consequences related to bad side-effects. Think about it. For example, all sorts of modern methods (lean, etc.) can push problems out to sub-contractors (be it by globalization, in some cases, or otherwise).

What are we to do? Well, it does turn out that the computational can be a tool for intelligence and coherency, if we use it correctly. In terms of the context of this blog, 'correctly' would entail all sorts of things, some of which the financiers, and the best-and-brightest, may find antithetical to their interests.

These themes will continue.

Aside 1: As a reminder, there are three blogs using a different viewpoint. Some issues, such as this one, seem to relate across these viewpoints. Hence, look for more material on truth engineering and 7oops7, as the discussion continues.

Aside 2: One thing that will come to fore is that the advance of abstraction in the recent centuries has had both a good and a bad side. We can use the world/earth dual for a brief explanation. Expect that this topic will be more thoroughly covered as we go along here. So, we know that the earth is round (the sphere is a close approximation, yet precise measurement will detail lopsidedness) in this day and age when the Space Station runs around the earth on a fairly short cycle, comparatively. But, too, we know that the world is flat, essentially is it so when one overlays reality with insights from Hilbert (yes, analog of the Hilbert space). Though, since Da Vinci, we've known about perspective and vanishing lines, within the measure on any person, or personal interactions, we have a very large, and orthogonal space. Even relativity didn't get rid of xyz and time. Wait, what gives here? There are many abstractions that we can superposition over ourselves and our lives. Yet, these are all limiting constructs to what 'being' actually is.

Aside 3: And, folks, what has more being than money? Ah, not so, many will argue. Just conjecture a realm in which money does have more substance than we've thought about (yes, economists limit us), and this realm is only partly computationally supported. Mostly, it's that thing that Ben, and buddies, are trying to inflate. Keynes' notion of animal 'spirits' does not go far enough. So, that realm will be described further.

Remarks:

03/23/2012 -- Renewal of the idea (and related energies) via Cooper and CiE.

02/27/2012 -- This post was a continuation of Our Basis, concerning just how shaky is our perceptual being (from certain views).The 01/01/2012 Remarks (below) points to work by an Eastern European. A recent Atlantic article looks at protozoan influences that may need more of our attention. It's significant that the underlying work was done by a lonely scientist in an Eastern European situation. Western culture has much thanks to offer that part of Europe who bore the brunt of waves of onslaught through the past 1000 years.

01/01/2012 -- Recently ran across the work of Kazimierz Dabrowski. We need to pay more attention to his theory on development. Yes, CEOs (and other takers) as immature (seriously, so). 

08/03/2011 -- The relationship to economics is important.

04/03/2011 -- Need to look at some background.

10/28/2010 -- Warning, train wreck ahead. What train, I had asked? Yes, there is already a wreck, despite the inflated market (those who lost big are still behind).

01/22/2010 -- We need to balance an awareness of the soup that controls synaptic activity with the fact of the wiring aspect. The use of 'neuropeptidergic' mostly reminds those who may have perfect wiring (or think that they do) that their cognitive function is more than can be be modeled by electrical circuitry.

01/06/2010 -- Poor Ben, getting grief and criticism.

12/29/2009 -- Time calls Ben an uber-Nerd.

12/28/2009 -- Ben was named the Time Person of the Year. Nice. We can't call him 'King' as we saw with Alan's 'cult of personality' reign.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

12/08/2009 -- Consider current CEOs in relation to Paul. Not fair? Well, these guys/gals have set themselves upon some supposed plane that is above the rest of us.

12/01/2009 -- The consumer as focus.

Modified: 03/23/2012

Risk and rationality

Moral: Wherein these two concepts play heavily in economics, and finance, in several ways. So, they are worthy of some attention.

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First, let's look at a couple of recent media offerings. On the print side, today, McClatchy Newspapers provided some words about how gambling laws might help dampen the effects of the games related to derivatives. Earlier, on the tele, I glimpsed an ad for an investing class where the theme was a clever take on the differences in risk taking, that was observed, between male and female students. Now, this latter has been discussed in several forums, but Laura's take is worth a read.

So, we are reminded that 'casino capitalism' has been allowed to become the basis for the economy, for reasons that we'll be looking at in depth. Too, those who may see that near-zero is the reality are pushed aside for several reasons, of which gender is only one.

Both of these topics are extremely important to our future, risk and rationality. About 'risk' we can say a lot, especially that it is inherent in life, to wit, the monies paid by the big boys to manage it. That the idea has been pushed to the limits of rationality needs some discussion.

Somehow, we hear this inane spiel about the rewards going to those who take the risk. Ah, yes (gains go to the pocket; failures are bailed out and mitigated). That nonsense goes back to the argument that getting out of bed is risky. Well, staying in bed is risky, too. Risk, in this sense, ought not be the focus as risk always is there. Okay, perhaps, some notion about managing risk's effects is appropriate, yet, a real accounting of the types of pain is what needs our attention. It has never been done right.

Oh, things are great? Millions are out of work and without any meaningful life? The fat cats bask in their bonuses, even thinking that these are appropriate? And, those working buy junk from China, assuming that they have money? Extremest luxury for the smallest few is accountable as progress in what sense? (a small sampling of thousands of possible questions, by the way)

Economics, in the classical sense, stressed 'rationality' from its beginning. Well, we can, and will, go into the etiology of that notion. For now, just be aware that economics getting biological (to wit, neuroeconomics) portends that some fundamental changes are coming. Too, we are only at the start of the computational influence. There is a whole lot we'll learn, even to the point of getting an appreciation for innumeracy (is not idiocy!).

When one considers ourselves, what is a rational view founded upon? That is, do we really know which neurotransmitter mix is optimal? Is that why we stress the mental IQ and associated performance (hey, isn't that what's behind the best-and-brightest labeling?) measures?

Or, is rationality tied to mathematical prowess (some economists seem to think so)? Well, can that be done on other than a quasi-empirical basis (think borgs)? Oh, are mathematics and its ilk (er, practitioners) any less subject to influences of the neuropeptidergic nature of ourselves than the rest of humanity (think mole hills)?

Well, to be fair, the argument is usually couched in terms of rational self-interest. However, underdetermined-ness is an important concept to consider in this context that is not easily tossed aside.

So much to discuss.

Remarks:

12/06/2013 -- If only Ben would put a shot across the bow. He's helped the chimera unfold in unhealthy ways. He could, at least, say a mea culpa.

03/11/2012 -- We need to update this, especially with a nod to Alan M. Turing.

11/21/2010 -- Three years ago, it was said: Computational foci raise miraculous need. Still applies.

02/10/2010 -- We could probably use the auto (and recent events) as a way to characterize the concepts of the blog. Of course, we have the value versus quality mis-think as part of the problem. Business Week reports that Toyota was asking suppliers for a 10% cut. Well, such scrimping would have an effect, even if it was only in looks. However, cutting into the life of a system may appear smart but, actually, relies on the same unstable basis as does a lot of economic thinking.

12/01/2009 -- The consumer as focus.

11/30/2009 -- Neuropeptidergic limitations are only one consideration for our basis.

Modified: 12/06/2013

On the behalf of

Moral: Wherein we consider that one may need to act on the behalf of another is an age-old situation in human affairs. Parents perform this role for their children. As we can see in many cases, a grown child may accept fiduciary duties for an aging parent.

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All civilized people point to the 'golden rule' as a primary in this regard. This is true, as well, in economics in so far as ethics may apply. Trouble is that some want to use a metaphor more from what we think of nature and its dwarinistic ways.

So, there is the issue of caveat emptor. In financial affairs, one might think that some counselor is looking out for one's interest, however, in many cases, this is not the case. The financial guy is more into selling something that will line his or her pocket, not in really considering the client's interest.

Then, we have the Madoff type (thanks, WSJ). As said earlier, we need to update the label for this type of thing as Ponzi was so long ago (we now have Made-off).

On 10/2/2009, the USA Today reports that there are many schemes being uncovered all the time. That somewhat points to having something like Fisher's view about smelling a rat to be taught on a regular basis. That is, the nose is a talent to hone.

Other notions that apply here are accountability and being aware. On the former, whatever role one has ought to have some type of review from time to time. Just being prepared to give an accounting can be a good discipline in any endeavor. Trouble is, under what circumstance can such a report be warranted? Some business methods have gravitated toward yearly reviews for employee evaluation. Also, in terms of work, the efforts to determine earned value have some appeal. Yet, these are not easy problems; even doing assessment of fair value is not without problems.

In term of the latter (being aware), we have to consider how the counseling role evolves. The fact of the matter is that there are more things that we do not know than that we know, the hubris of the know-it-all aside. That is, no one is expert at everything. Using the medical experience as an example, all one has to do is try to talk to some doctor about anything that is outside of his or her specialty interest or training.

So, given the existence of things like innumeracy, one can see why the financial adviser community as grown to be so large. Let's forget, for the moment, the whole thing of whether financial engineering (despite MIT's involvement) is even a valid field and consider the need with a few questions that we'll consider in more details.

Does the need for the financial expert really exist? How do we know that the flim-flam of casino capitalism isn't the main culprit? If that is the case, ought not the brains (yeah, best-and-brightest) be looking at more robust ways and means?

Can all this be put in framework that allows the normal person to make reasonable decisions about financial affairs? Is it by necessity that the underlying instability is exploited by those who have been allowed to game the system?

Note: Just because we have the difficulties involved with determining value is no reason for those who can (like anyone close enough to the market's workings to extract regular pocket fillings -- hey, work under a vow of poverty people, that is, anyone dealing with other people's money) to exploit the situational issues arising from complexity and undecidability.

Remarks:

05/11/2012 -- Rick getting grief from quoting Marx.

05/17/2011 -- Golden sacks (leftmost mug of the rogue table), by Rolling Stone and Daily Ticker.

03/16/2011 -- On the rise of the professional politician (will there ever be the citizen polico? that is, those who do not salivate when a buck is passed beneath the nose) toward robber barony. The M & Ms are apropos. As well, need to bring in Schervish's viewpoint.

05/25/2010 -- Who will (or can) lead out of the morass?

01/06/2010 -- Poor Ben, getting grief and criticism.

01/03/2010 -- More news on Goldman Sachs as the uber example of 'not on the behalf' comes to fore regularly. It'll need to be a separate subject at some point. Thanks to McClatchy: Nov 1, 2009 & Jan 3, 2010 (update). Goldman has to respond, of course.

12/29/2009 -- Time calls Ben an uber-Nerd.

12/28/2009 -- Ben was named the Time Person of the Year. Nice. We can't call him 'King' as we saw with Alan's 'cult of personality' reign.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

12/09/2009 -- The Street loves Ben who loves 'em back: The Street utterly loves the Fed's largess, earning massive profits from trading unstable currencies, the carry trade (borrow short-term dollars near zero, buy longer-term assets abroad), and the high-margin process of transferring America's capital abroad.

11/08/2009 -- The gigantic chimera needs proper attention.

11/06/2009 -- There ain't no train, just like there ain't no free lunch (TANSTAAFL).

10/16/2009 -- 201K <-- 401K --> 25601K, this denotes the current financial gaming.

10/06/2009 -- Ah, yes, on the behalf of. It is clear that Alan and Ben act on our behalf, though one has to wonder what 'our' means as it sure is not the little guy. Finance, people, can be (probably ought to be) run as a non-profit affair. AND, the CEO (or whatever the titles at the top) would not make $1M and more! That is absurd. We have people who put their lives on the line for this country and its ideals for pittance. As said before, we really need a national service (Remarks 09/03/09) experience for the young'uns, especially for those of the privileged classes.

Modified: 05/11/2012

Economic sandbox

Moral: Wherein we consider a sandbox. In several posts (see below list), 'sandbox' has been used to either characterize gaming that is risky (sandboxy) for more than just the players or to denote a better process, using as an analog the role that labs play for the test engineer. That is, filter out the toxic from the secure instruments.

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Think of it this way. A new plane is seriously tested before people fly the thing. Even the test pilots don't just jump in and take off. Where is there some correspondence to this notion in economics?

What we've seen is creative spawning of instruments as if by necessity. Then, in the past year, we've seen 'shooting from the hip' by some cowboys (right and left, there have been processes changed and adopted, seemingly without caution); too, those in the position to rake in the dough are doing just that; the taxpayers, and savers, are being sacked.

One motivation: describe and establish a mechanism to put the game players where their impact is limited. We do not need this supposed 'creativity' of the best-and-brightest that seems to persist in creating dire consequences for the majority.

So, for starters, let's look at the posts that used 'sandbox' and start this necessary discussion. The following are three groups of links to post with some comment about how it relates to the sandbox imperative. The post are listed from latest to earliest in time.

• Educational Institutions (Sep 09) -- As with engineering and science, these institutions ought to be where sandboxes evolve, not in the for-profit side of business.
• Computation, finance and engineering (Sep 09) -- Even Nobel winners were amiss, big time.
• Spitting in the wind (Sep 09) -- The sandbox would isolate effects until something is proven.

• Roles for schools (Sep 09) -- As mentioned earlier, labs are an accepted fact in institutes of higher learning.
• Modern finance (Oct 08) -- Where did the notion arise that people could play games with other people's money using what are essentially untested processes? Does fiduciary duty mean anything?
• Easy steps (Oct 08) -- Definitely derivatives (other usage) ought to be wrapped with some type of testing constraint. Minsky's notion of speculation leading to ponzi applies here.
• Swarm proof (Sep 08) -- This type of proof, applying the wisdom of the crowd concept, would be interesting in several contexts.
• The times (Sep 08) -- We need to accept our quasi-empirical limits as we apply some notion of testing. How do we agree on these is something to discuss.
• Loops and truth (Feb 08) -- Getting an agreement on limits would help us to try to resolve issues related to the thrill of gaming where consequences go far beyond the player's own health and wealth.

• Cult of me (Jul 09) -- We may already have some sandboxes that are being misused by the 300 lb bullies.
• New type of colonialism (Sep 08) -- Sandboxes could help reduce the large influxes to some pockets, albeit that some of these come about from making bets that pay off (note, near zero allows us to know that the pay off was from pockets that diminish correspondingly).
• Oops as poop (Sep 08) -- Not handling moral hazards leads to an increase in sandboxy ways (where the whole economy is seen as someone's sandbox).
• Oops and more oops (Sep 08) -- We could show that hedging and speculation are natural control mechanisms to some point beyond which the game then is sandboxy and ought to be handled as such.
• Miscellany (Jul 08) -- The sandbox notion applies to control of risky behavior, except that there has not appeared to be an easy way to resolve the issues. However, has any tried the sandbox? Oh yes! Engineering!
• People matters (Mar 08) -- This was the first mention of the sandbox needed to control use of methods that have more potential than their current role of moving monies into a few pockets. After all, how people use their monies can be a type of voting. Allowing such a thing to evolve can be thwarted by the massive flows from the giants (un-level field).

Note: these posts paralleled the unfolding of the madness with several reactions, including from incredulity.

Note: 'sandbox' has found usage in computer security and software development. This usage is apropos to the discussion of an economic sandbox.

Remarks:

01/15/2015 -- This week, this post is getting read. Great! Nice little piece of work (kidding, in part) so many years ago. ... At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

12/22/2014 -- Nice to see the WSJ article use "sandboxed" in relation to the absence of "predict or control" within the context of computation (in a sense, we are already out of control). The issues raised in the article are central to truth engineering's core focus.

10/30/2014 -- Where are we?

10/16/2014 -- Need to get back to this, as the days of the downturn loom. No matter how much the Fed feeds the panhandlers, they will succumb to health issues at some point (when?, how long?, actually, for me, it does not matter, as I am an observer, only, who is one of those interested in building a better pie). The tragedy to all of this? Oodles of hapless folk will be drawn down with the players as their ca-pital-sino sinks. ... Does not have to be. There are better ways.

01/20/2013 -- Perhaps, the sandbox ought to be for play, dirty and otherwise. Which means, of course, outside of the mainstreams that handles things for the folks who care about their economic well-being.

09/14/2012 -- Ben just gave them, the runner amok'ers, the store. 

05/28/2011 -- Lemons problem, dark pools, ... Oh, so much to look at! Avatars, too.

04/03/2011 -- Need to look at some background issues. Sandbox, again.

03/22/2011 -- It's spring, and the garble uses gambling metaphors.

01/27/2011 -- The chimera shines.

05/25/2010 -- Who will (or can) lead out of the morass?

12/24/2009 -- What would Samuelson think of the concept?

11/29/2009 -- Rick is now with the SEC. Who will engineer (verb)?

10/05/2009 -- Ah, yes, on the behalf of.

09/13/2009 -- Need to pause for a bit, to look at Bookstaber's work.

Modified: 01/15/2015

Why not?

Moral: Wherein we ask 'why not? which question can go a couple of ways. We're going to look at one of these. Actually, there is a third that is the mantra of the toddler learning about its will, that of others, and boundaries (say, good behavior), but we'll not go there either.

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The query could indicate an awareness that something ought to be done or to happen, say like realizing one suggestion from the President's speech. Stay in school and be a good student (as good as you can be). Or, why not build a new plane with entirely new processes and material, that is, re-position the decision framework on an unknown center plus relax constraints along about all decision axes? In other words, the little engine that could. Or, why not pursue globalization? That's not the focus, for now.

The query could relate to reasons for something not happening, such as causal analysis tries to effect. Oh yes, risk analysis tries to do this before the fact. That use is what we're going after in order to pull together some 'un' words with a coherent message. For instance, 'undecidability' has be thrown about here, thanks to its use by the Vienna School. And, 'underdetermined' has been used, mainly due to its usefulness in resolving how we think about several dilemmas. We need to add 'unpredictable' as the risk people don't seem to know the concept.

Let's try this sequence of using these concepts (U U U N, unfortunately, not as meaningful as TANSTAAFL) in order to explain why these have appeared as well as to start discussion about what their applicability means to our difficult situations. There are other orders; this one seems to have some power for explication.

• Unpredictable - Actually, this ought to be used for the fact that we have no a priori knowledge of how events will unfold, for the most part. Of course, some stable events recur without our involvement or worry. For instance, days succeed one another. Yet, how many lost their wealth, and income, of late due to some idiocy (not necessarily their own) that can be explained? Do we know of any problematic programs? Say, has weather forecasting in your area been 100% on (whatever that would mean) this past summer? That the quants have run off after their stochastic taming attempts we'll be looking at further. That CAE folks have broken the rules of map/territory differentiation is another variation of mis-handling of that which this sequence denotes.
• Underdetermined - Well, what does this mean? We can use the wiki definition. Since predictability, and its complement (ah, is that so?), are figured using mathematics, albeit a subset dealing with things called statistics, let's use that type of story here. Basically, if we have a series of equations and unknowns to be determined, we like them to match in cardinality. That is, if there are too few equations, then we'll have to sort out the extra unknowns by various schemes (assumptions, swags, etc.). If there are too many equations (too few unknowns), then we're on the other side of the bad boat. The case, with computational modeling, is just this. Too much fudging (sorry, techie folks, but the truth has to be told). Also, note that we talked about unknowns. The equations would contain variables, to boot, whose definition and handling can be problematic.
• Undecidable - Now, we have to mention Turing's, and related, work, briefly. Then, we can just discuss the issues involved with the complicated concept, in general. It is more than just a computation problem, as we see from Hilbert's query. To shorten a potential long story, we can say that some issues are not related to time, sequence, or any type of order. Yet, we can always re-frame things to be decidable, within limits (meaning choice, allowable error, etc.), of course.
• NP (Nondeterministic polynomial) -- We're using this to introduce complexity. You see, even re-framing does not guarantee some solution unless we're exceptionally good (which some people are) or lucky (again, we see this). Yet, it's the computational aspect that is troublesome, such as using approximation, heuristics, and more. Why? We have had many of years to learn about human dynamics; yet, there continues to be intractable problems. Adding in the computer just exacerbates things incredibly. But, for thinking of complexity in terms of using the computer for solutions take the chess game. Well, that little game, on a small board, is highly complex. Something as seemingly simple as checking if two circuits are equivalent is, to boot.

Having gone through this, can you see other orders? It's the chicken/egg thing. For instance, 'undecidable' might be made the basis, with incompleteness being a key thing. The order, shown in the list, comes about since we're dealing with things that have gone awry due to our immaturity with using computational resources.

One could suggest a decision framework based upon this order that is operationally effective (with a bow of acknowledgment to quasi-empiricism). By the way, with NP at the core, how can we proceed? Ah, that is the essence of truth engineering's contribution.

But, this question of 'why not?' and UUUN ought to be part of the program management vernacular, and jargon. So, we'll continue this next time.

Note: An important concept will be separability. On predictability, some say, well, the sun will rise. Sure. But, weather was added in for this reason: will it be clear enough to see the rise? You see, NASA faces this problem all the time with shuttle launches. So, various windows of opportunity can be identified, with some ranking of certainty. Yet, the operational scheme is to be ready to take advantage; and, how many times does weather cause a mission delay? Now, if the parts of engineering that relate to business would just go back to their true framework, perhaps some of the hubris would diminish. The issues of underdetermination, undecidability and NP are important just because predictability, as a highly mathematicized approach, can be easily mis-used. Too, people play power games in these complex situations where someone who fails to solve an essentially intractable problem has his head removed. Sheesh. How the hell can we expect to learn without failure? Those who try and fail ought to be honored. Except in this situation that is very much apropos for mention and current: playing silly games with other peoples' monies in a risky fashion is verboten, by definition. Because of near-zero, we ought not even honor those who win. Stupid game, folks.

Remarks:

01/15/2015 -- This week, this post is getting read. Great! Nice little piece of work (kidding, in part) so many years ago. ... At last, a series that will establish the basis and extensions, as required. We are going to go back to some simple and come forward to the modern, complicated economy. Why? My long chain of ancestors (inherited via Prof. Lucio Arteaga) is one motivation.

03/11/2012 -- We need to update this, especially with a nod to Alan M. Turing.

10/07/2010 -- Several principles need to be explored, such as the ergodic one.

12/08/2009 -- Consider current CEOs in relation to Paul. Not fair? Well, these guys/gals have set themselves upon some supposed plane that is above the rest of us.

11/29/2009 -- Rationality and risk. Need a new look.

11/08/2009 -- The gigantic chimera needs proper attention.

10/16/2009 -- 201K <-- 401K --> 25601K, this denotes the current financial gaming.

Modified: 01/15/2015

New School

Moral: Wherein having mentioned, several times, the Vienna School (also, known as the Austrian School) which is continental, it stands to reason that we need a link to something on this side of the pond.

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So, we'll use the New School's site, though it is mainly a development of an extensive view of "The History of Economic Thought" with links to a whole wealth of material, including commentary. "New School" refers to the university, not another economic school. This site allows a look at the breadth of economic thought.

We see categories, such as the Classical and its Neo follow-on. Plus, there are the alternative views.

One area that we will look at will be the heterodox approaches which were mentioned in a post related to money. The reference, then, alluded to other views, such as thermodynamics as a motivation, and model, rather than just having a gab standard with its star player, the saver sacker. As well, this approach might be better if it were extended with bio-dynamics, too. However, there are other equally valid view to consider.

A lot of the categories are top-down and heavily theoretic. Notice the use of "themes." These we'll look at too, as it's where we can see a focus on game theory or finance, perhaps allowing a bottom-up construction.

Probably, the first reaction to looking at all this thought is that there is not an answer, hence we know economics as dismal. Yet, perhaps, some physically-based model would have more appeal and application than we've seen so far. After all, nature and life have been there a lot longer than have been our analyses and other little intellectual schemes.

Note: We'll also have to address how we see stability in nature, and life, all the while knowing that there is uncertainty, undecidability, unpredictability, and such. The main problem? The computer exacerbates the issues, more so for finance than for engineering. Yet, they both face problems.

Remarks:

03/23/2012 -- Renewal of the idea (and related energies) via Cooper and CiE.

12/15/2009 -- Requiem for the dollar (WSJ) and responses.

Modified: 03/23/2012