Comments on: Sam Bowman’s talk last Friday: Thinking about what had been too big to think about

By: On February 22nd Michael Jennings will be talking about globalisation « Samizdata

Thu, 14 Feb 2013 21:27:27 +0000

[...] the highly successful (nobody has said otherwise to me) relaunch of Brian’s Fridays with a talk by Sam Bowman on January 25th, the last Friday of February is now approaching fast, in fact it is about as early in the month as [...]

By: Johnathan Pearce

Johnathan Pearce — Wed, 30 Jan 2013 17:50:16 +0000

One angle that could have been mentioned on Friday – but I forgot – is that some of this ignorance of risk in the financial system, say, has been deliberately encouraged. As evidence let me give the case of these “off-balance sheet” structures, in which the credit risks of lenders, in the form of loans and bonds outstanding, were taken off the balance sheets of banks and put into what are called Special Purpose Vehicles. The result was, that when mayhem broke out, some firms had no idea whatsoever on what they were on the hook for in terms of potential bad loans and the like. The ignorance of the situation was in part brought about by the toleration of such things, a feature of the developments in financial engineering in the past decades as well as the activities of rating agencies, mistaken changes in accounting standards; the unwarranted faith in some risk models, and such perverse incentives such as state-backing of banks, “too big to fail”, and of course, bringing up the rear, central banks.

It makes a big difference if you have a system where the incentives are structured to encourage people with specialist knowledge to discover new information and act on it, rather than put it out of their minds almost as an instrument of policy.

By: Dale Amon

Dale Amon — Wed, 30 Jan 2013 03:48:23 +0000

When I use the phrase ‘known unknowns’ it is to signify a question to which the information is unavailable. Is there bacterial life on Mars? Will the last set of changes fix the pressure transient we saw in the data? Are there terrorist groups with enough fissile material to build a bomb? Will a solar storm wreak havoc with Earth this year?

They are all questions for which we may be able to get an answer eventually. We know we do not know the answer. We may not even know how to get the answer. But we know it could bite us. Unknown unknowns are exactly the same except we don’t know the question either…

By: nemesis

nemesis — Tue, 29 Jan 2013 21:33:44 +0000

‘try to understand where other people are coming from and how they see the world…’
I think that is a good starting point – asking someone why they choose to believe what they believe – since we rarely question our motives on a such personal level and self interest is not something people are willing to admit to.

By: JohnB

JohnB — Tue, 29 Jan 2013 15:37:14 +0000

People believe what they want to believe, if they can.

By: Simon Gibbs

Simon Gibbs — Tue, 29 Jan 2013 10:44:30 +0000

I think your recollections are approximately correct. The evening was indeed inspiring, in terms of argumentation and I think at least two blog posts will be coming out of it stuffed with arguments. It remains to be seen if they are better arguments or merely different ones.

Round one, entitled “The Micklethwait Alpha” is already drafted and looks good so far Round two was drafted during the Q&A and rehearsed towards the end and needs more work evidently.

Don’t record the evenings, the setting is informal and so the format should match. There are other venues for slightly-more-well-developed ideas that benefit from being videoed, such as the Libertarian Home meetup, if you don’t mind my saying so.

By the way. Something that came up during the Q&A was that some of the relevant reports* about assessing risk in the banks were implemented in PERL. I wonder if that isn’t more important than was recognised. Not many people know PERL anymore; and even fewer like to think about it. That represents a shortage of brains on part of the problem (or part of the solution), lots of reports suffering from bitrot and not being run; and big disincentives to going and looking at these things.

* reports => repeatable computer queries and their outputs.

By: Perry de Havilland (London)

Perry de Havilland (London) — Tue, 29 Jan 2013 01:04:18 +0000

Damn, I wish we had been able to attend

By: Wolfie

Wolfie — Mon, 28 Jan 2013 22:46:13 +0000

Sam Bowman is a talented and eloquent chap and, I believe, may do a lot of good in influencing those who rule us in a less destructive direction. There is a window of opportunity as politicians start to realise that expanding the money supply and extending government spending will not deliver economic growth, for some new ideas to seep through. Sam is the sort of person who might just get some seeds of sanity through the prevailing Keynsian miasma of self-delusion.