Inexplicable knowledge

Is it possible to know something, and yet be unable to convincingly explain how you know it?  I think so.

[Just to be clear, when I say “I know something” I mean that I believe I know it. But then what else could it mean?]

David Henderson recently said:

Like Scott, I doubt that the CIA was behind the JFK assassination, but all I have is doubt. I don’t have the certainty that Scott has and I don’t know what’s behind that certainty.

Just to be clear, I’m not completely certain of anything.  But basically David is right; I claim to “know” that the CIA did not conspire to assassinate Kennedy, with 99.9% certainty.  And yet I cannot explain why I know this.  So do I?  Let’s use an analogy of a picture of Trump’s face, made out of 10,000 dots, or pixels if you prefer.  I might look at the picture and say it’s obviously Trump.  But how do I know that?  None of the individual pixels looks anything like Trump.  Rather it’s the cumulative effect of all those pixels that creates the likeness.

When we go through life we accumulate an enormous amount of information.  Each piece of information is like a dot, and together it gives us a complex worldview that tells us that some ideas are plausible and some are not.  The best I could do is use an analogy, something David would agree with.  I might say that I know that the American Girl Scouts leadership council was not behind the Kennedy assassination. If that didn’t work, pick a conspiracy that was even more far fetched—David’s grandmother.  At some point he’d accept the idea that one might know something because the alternative is too implausible, or at least most people would.  But of course that wouldn’t help at all with the CIA (which really does do nasty things.) The problem is that our life experiences give us each a different set of facts, and a different brain to process those facts.  I see a different CIA from the one David sees.

When I was much younger—like 3 months ago—I used to think it was a productive use of time to try to convince someone that Trump’s a demagogue, because . . . well, because he’s obviously a near perfect dictionary definition of a demagogue. But it’s pointless. For every fact you cite, they’ll point to other non-demagogue politicians who do something similar, at least on occasion.  Trump’s demagoguery is like the picture with 10,000 pixels, you either see it or you don’t.  No single example of the big lie, or of demonizing minorities and foreigners, or of unrealistic promises, or macho posturing, is going to convince anyone, because they’ll always be able to explain it away.  After all, politics is a very messy business.  And each argument is just one dot.

This also relates to monetary policy.  I know that monetary policy was too tight in 2008 and 2009 and that the Fed could have adopted a policy that led to faster NGDP growth.  But if asked to explain how I know this, I’d have trouble explaining my belief.  I lack an elevator pitch.  I could tell people to read my entire blog, from end to end.  But that’s 1000s of pages of argument, and it still wouldn’t even come close to explaining my belief, which also depends on decades of reading economic theory, economic history, and the history of economic thought.  That reading creates the brain architecture or grid that determines where I store all the various facts that I come across, and explains why I often just “know” that a commenter’s facts are wrong, without having actually checked. That doesn’t mean I don’t try to convince people (in the blog I do the best I can), just that it’s very difficult to do.

On the other hand I strongly recommend that people not try to explain their beliefs on the Kennedy assassination, or 9/11, or why Noam Chomsky is wrong about US foreign policy, or why Trump is a demagogue, or why free will doesn’t exist, or why Scott Alexander is brilliant, or what it means to “know something”, unless you enjoy pointless debates.  The odds of convincing anyone are so small that it’s not worth the effort.

PS.  I don’t believe that ‘inexplicable knowledge’ is the right term, but am not sure what is.  What I have in mind is not just tacit knowledge, as it can also involve reading books or articles.

PPS.  I was going to do a post on Trump’s nominees, which so far are mostly lousy. But it’s probably not worth the effort.  So I’ll just do a PS. Confirm them.  In politics, I always try to put principle over expediency.  So although I don’t like many of the nominees, I’ve always felt that Presidents have a right to pick the people who will serve them, unless something truly awful turns up.  I didn’t think it was fair to prevent those women from serving as Attorney General back in 1993, just because of various “nanny-gates”, and I’m not going to change my views just because Trump is President.

PPPS.  Vox recently published this piece by Sherri Underwood:

I remember the precise moment that I realized I regretted voting for Donald Trump.

It was during his 60 Minutes interview after the election. I was, like everyone else, shocked that he had won. It seemed so unlikely based on the polls and the confidence the media had that he would lose. It was a pleasant surprise, and I went to bed on election night thrilled that he would be our president.

But sitting on my couch, sipping coffee as I watched the interview, I saw with my own eyes who Trump really was as a person. He backtracked on one of his signature campaign promises: pursuing an investigation into the Clinton email scandal. It’s not that I want Clinton to be crucified or “locked up” — it’s the nonchalance with which he went back on his word after hammering it repeatedly during the campaign. The ease and quickness with which he reversed his position shook me to my core. I realized in that moment that I had voted for a demagogue. And it was sickening.

Three months ago I would have mercilessly mocked her stupidity.  Now I respect her much more than I respect myself.  Writing that article took courage.  Not surprisingly, she’s a Midwesterner.

PPPPS.  Speaking of the Midwest; Minnesota, Iowa and Wisconsin were three of the most liberal states in the country back in 1988, going for Dukakis while Illinois and California went for Bush.  This fascinating factoid from the National Review suggests they are about to turn red:

In the Upper Midwest, demographic trends have lent a hand: In 2004, Iowa, Wisconsin, and Minnesota were among the few states in which the oldest white voters were the most liberal, and the generation born of the Great Depression has been dying off.

Those old hippies are the Dukakis voters.  The Wisconsin I grew up in is gone—just faded memories.  And one more dot to slightly rewire the political map in my brain, which has both spatial and temporal dimensions.

BTW, Politico has a piece on Pepin County, Wisconsin that is the single best article on the election that I have read.  I will do a post.

Update:  Regarding Trump’s alleged demagoguery:

Screen Shot 2017-01-20 at 5.10.56 PM

Why you should believe the Chinese GDP data

[There’s a much better China post just put up at Econlog.]

Here’s a typical news story about China:

Red-handed: China province admits faking economic data

A Chinese official has admitted his province falsified its economic data for years, state media said Wednesday, vindicating long-held suspicions that China has been cooking the books.

So why do I believe the Chinese GDP data?  Lots of reasons:

1.  This headline refers to provincial data.  For years, if not decades, the Chinese central government has admitted the provincial data is inflated.  For any given year, if you take an average of provincial GDP growth rates you end up with a figure that is substantially above the national growth rate.  How is that even possible? The answer is simple; the national government knows the provincial data is inflated (as provincial officials are given promotions based on success in boosting GDP) and hence the national figures are developed using a completely different data set.

2.  How plausible is it that Chinese GDP would keep growing at the same astronomical rate, year after year?  Not very, but that’s not what the data shows.  RGDP growth has slowed from over 14% in 2007, to 10.6% in 2010, to about 6.7% today.  In contrast, US GDP growth has stayed right around 2% every single year since 2010.  It’s true that quarter-to-quarter changes in China are small, but that’s partly an artifact of their smoothing technique (reporting year over year figures) and partly due to China’s size and high degree of diversification.  Also keep in mind that if the level of Chinese growth were inflated by, say, 13.7% every single year, due to reporting biases, then the growth rate would not be distorted at all.  You need increasing distortions to consistently inflate growth.

3.  Everywhere you look, you see micro level data that tells a story of extraordinary growth.  China going from a trivial part of the global economy, to a place that absorbs almost 1/2 of global output of key commodities.  A place where auto sales have exploded:

Screen Shot 2017-01-18 at 9.59.30 AMNote that these figures would be almost impossible to fake, as they are also available broken down by company.  Would Ford, GM and VW be telling their stockholders completely phony stories of massive auto sales growth in China?

Everywhere you look you see a similar story, an explosion of urbanization.  Infrastructure built at a phenomenal rate.  The China I visited in 2009 was a completely different country from the China of 2002. Here’s an example:

To appreciate the extent of China’s high-speed rail ambitions, take Mr Gu’s dreams and multiply them many times over. Less than a decade ago China had yet to connect any of its cities by bullet train. Today, it has 20,000km (12,500 miles) of high-speed rail lines, more than the rest of the world combined. It is planning to lay another 15,000km by 2025 (see map). Just as astonishing is urban growth alongside the tracks. At regular intervals—almost wherever there are stations, even if seemingly in the middle of nowhere—thickets of newly built offices and residential blocks rise from the ground.

Ditto for the world’s largest expressway system, built almost overnight.  Enormous growth in subways, airports and other types of infrastructure.

Yes, there are sectors like steel and coal that have recently struggled, but there are also sectors growing faster than average, such as services, which is now more than 1/2 of GDP.

Obviously I don’t know that RGDP growth in China is exactly 6.7%, but I also don’t know the exact growth rate in India, the US, and especially in Ireland.  All GDP data is flawed.  But when you look at the spectacular changes occurring in China, a figure of 6.7% seems very reasonable.

PS.  The Economist article on China’s high-speed rail is excellent, with the first half devoted to its successes and the second half to its wasteful excesses.  They consistently have some of the most balanced pieces on China.  If you simply read China bulls or China bears, you will have no idea what’s actually going on in the country.



The “leave” campaign was built on lies

The leave campaign to force Brexit was built on a set of lies, such as the claim that leaving the EU would free up 350 million pounds a week for the NHS.  This was an imaginary number pulled out of thin air, as virtually everyone now agrees.  There will be little or no benefit to the UK Treasury.

Today another lie was exposed.  Leave campaigners like Boris Johnson assured us that the UK would remain within the EU single market.  Theresa May has now admitted that it will be a hard Brexit, with Britain leaving the single market as well as the EU customs union.  Of course there is talk of setting up new trade arrangements (which I applaud), but that’s all very speculative.

It’s no surprise that the campaign was based on lies, that’s standard operating procedure for right-wing nationalist/populist campaigns.  Trump did exactly the same.  Here is a typical Trump lie:

“The EU was formed, partially, to beat the United States on trade, OK?” he asked rhetorically. “I don’t really care whether it’s separate or together.”

And here’s what really happened:

After World War II, the United States and its allies attempted to create a new world — one defined by rules and order, in which such a devastating war could never happen again.

Do you recall those dystopian novels where they postulate a history where the US lost WWII, and is a colony of Germany and Japan?  I feel sort of like we’ve entered one of those, where a Russian agent has become President of the United States:

Donald Trump just lobbed a grenade into the normally staid world of European-American diplomacy, using a joint interview with two of Europe’s biggest newspapers to call NATO “obsolete,” predict that the European Union would fall apart and announce that the US wouldn’t really care if it did, and threaten to potentially start a trade war with Germany over BMW’s plans to build a manufacturing plant in Mexico. . . .

Bashing NATO and the European Union, and alienating Germany, is a plan for tearing apart US relations with the EU — for weakening the agreements that underpin America’s status as the sole superpower and that maintain peace on the European continent.

It also means that Trump is talking about radically reshaping US foreign policy in a way that would significantly boost Putin’s influence while leaving America’s allies scrambling to figure out where they stand and how much they can trust in the future stability of an international system that has brought unprecedented economic strength and stability to the continent for decades.

“What Trump proposes is [American] geopolitical suicide,” Daniel Nexon, a professor at Georgetown who studies great power politics, writes at the Lawyers, Guns, and Money blog. “Make no mistake: you should be very worried right now.”

The article then points out how Trump is undermining the economic, political and military agreements that have led to the best period of world history since 1945.  It concludes with this warning.

There is only country that benefits from all of these moves: Vladimir Putin’s Russia.

Putin’s fundamental foreign policy goal is to restore Russia’s place as one of the world’s most powerful and influential nations. To do so, he wants to restore global politics to the way it was in the 19th century — when European countries saw each other as rivals rather than partners. This kind of “balance of power” world order would allow Russia to divide European powers by forming selective partnerships with some against the others — thus restoring Russian greatness.

Putin’s Russia is too weak, in political and military terms, to accomplish this on its own. The logical end point of Trump’s stated policies, regardless of whether that’s what he intends, is a fractured Europe that would be far less capable of standing up to Putin.

“Every [foreign policy] position Trump takes, starting from total ignorance around [a] year ago, is on Putin’s wish list,” Garry Kasparov, the Russian chess master and dissident, tweets. “Brexit, Ukraine, NATO, EU, Merkel.”

Trump’s stated policy ideas, if implemented, would have the effect of accomplishing much of what Putin has dreamed of, but that the Russian leader may have never have thought possible.

Now, with Trump taking office in a few days, it all seems very frighteningly real. Trump is proposing isolating America from its allies, and isolating these allies from each other. The only power that benefits is Russia, perhaps America’s most significant strategic rival. There is a country that Trump may soon make great again. The problem is that it’s not the US.

We now live in a bizarre alternate reality where Merkel is treated like an enemy and Putin is treated like a friend.  Is this what Americans were voting for?  On the other hand, you can’t say voters weren’t warned.

Remember those people who said Trump’s campaign was just an act, and that he’d be “Presidential” after the election?  Trump may not be a Russian secret agent, but he is sure doing a good job or impersonating one.  Some people say that maybe Trump is smarter than the rest of us.  Maybe he has a secret plan to fix what’s wrong with the world.  Yeah, that’s possible.  But it’s also possible that he’s exactly what he seems, a complete lunatic.

PS.  Here’s Tyler Cowen:

A willingness to think things through from scratch is in some ways admirable, but dangerous in matters of foreign policy and nuclear weapons, where predictability is at a premium.

Also dangerous when tinkering with the pro-trade consensus that has served the world so well since 1945.

PPS.  I’m now going on record predicting that Trump’s promise to abolish Obamacare will be exposed as a lie, within 12 months.  I also don’t expect to get the tax cut he promised me.

American pickers

Back before 2009 I still had a life. One feature of my earlier life was an interest in collectables.  When I was younger I was fortunate to meet a lot of eccentric people who had an obsession with collectables such as antiques (broadly defined). Even after coming to Boston, I would go to the Brimfield, MA antique show about once a year, where about 5000 sellers congregate in large fields just west of Boston. When you luck out, this activity offers the thrill of a treasure hunt.

I wonder if non-collectors have any idea just how big this subculture is.  The activities are mostly unreported, but if correctly measured would surely be a non-trivial share of GDP. It’s hard for me to tell just how large, as I probably know an above average number of obsessive collectors.  (I used to rent out my attic apartment to one.) These people basically devote all of their discretionary income to amassing a large collection of stuff.

There was a line in a French movie that always stuck with me.  A Frenchman with unusually good taste would travel around the countryside looking for undiscovered artists.  One day he bought a few paintings from an unknown artist with Cezanne-like talent.  His friend complimented him; pointing out how much money he could make selling these paintings.  He responded something to the effect “I don’t collect to sell. I sell to collect.” That reminds me of some of the obsessive collectors that I’ve known throughout my life.

There is a show on the History Channel called “American Pickers”, which follows two fanatic (but lovable) collectors as they travel America’s “Blue Highways”, looking for treasure to buy.  (One man’s junk is . . . . )  Tonight’s episode (9pm eastern time) is called “Catch-32” and features two segments.  The second segment involves these two guys visiting my brother, who lives in Wisconsin.  (You may recall that a few years ago I posted a picture of a dragon that is right in front on my brother’s house, which he and his partner created.  Mark lives in an old brick building that used to be an auto dealership in the early 1900s.  The inside of his “house” is full of interesting antiques, although not necessarily the sort of antiques you’d see in an elegant shop on 5th Avenue. Check out the episode if you have a chance, I certainly plan to.  (It will also be rerun quite often.)

There are days I wake up wishing I had his life. (I wonder if he occasionally feels the same way.)

PS.  I suspect that many academics don’t know anything about this subculture.  For instance, I read professors saying that we don’t need cash any longer; it’s only of use to criminals.  But I can’t imagine going to Brimfield without a wad of Benjamins in my pocket.  Serious collectors carry far more cash than I do, in case they find a diamond in the rough and the seller isn’t taking checks.

PPS.  I have a new post on monetary policy denialism over at Econlog.

PPPS.  Many years ago I was with my brother when he found this old barber’s chair from 1887:

Screen Shot 2017-01-16 at 11.52.37 AMLater he restored it, and gave it to me as a gift.  Here it is today:

Screen Shot 2017-01-16 at 12.04.48 PM

There are two kinds of people in the world; those who can recognize nickel plating, and those who cannot.



Here’s the Donald:

LONDON, Jan 15 (Reuters) – U.S. President-elect Donald Trump said he will offer to end sanctions against Russia in return for a nuclear arms reduction deal with Kremlin chief Vladimir Putin, The Times newspaper reported.

In an interview with The Times of London, Trump said he wanted nuclear weapons arsenals of the world’s two biggest nuclear powers — the United States and Russia — to be “reduced very substantially”.

“They have sanctions on Russia – let’s see if we can make some good deals with Russia. For one thing, I think nuclear weapons should be way down and reduced very substantially, that’s part of it,” Trump was quoted by the newspaper as saying.

Trump also criticised Russia for its intervention in the Syrian civil war, describing it as “a very bad thing” that had led to a “terrible humanitarian situation,” The Times said.

And people complain I never say anything good about Trump.

Am I changing my tune?  Or is he?  Here’s Trump a couple months ago:

Almost any list of America’s top foreign rivals would include Iran, Russia and the government of Syria.

Sunday night, Donald Trump spoke approvingly of all three.

Trump infuriated Republican insiders—and contradicted one of his own senior foreign policy advisers—when he suggested that those three governments are playing a positive role in Syria’s civil war.

I’m sure there’s an ingenious secret plan behind all this—run a campaign on the exact opposite of what you plan to do.  I eagerly await Trump’s immigration amnesty announcement.  Seriously, when he does something sensible, I’ll give him credit.

PS.  Bob Murphy has a hobby of spotting contradictions—he’ll have lots of fun with Trump.

PPS.  The nuclear arms thing also seems different from what he’s been saying, although in that case I suppose you could argue his views were always conditional on Russian moves.  I don’t recall his exact promises during the campaign. Also good to see he isn’t willing to remove sanctions without something from Putin—I had the opposite impression, maybe from his alt-right fans.