Will the experts save us from catastrophe?

This is from a touching story about the last two survivors from WWI:

In old age both men had an urgent message, so urgent that it almost exhausted their small supply of breath. “War’s stupid,” said Mr Allingham. “Nobody wins. You might as well talk first, you have to talk last anyway.””T’isn’t worth it,” said Mr Patch. “War isn’t worth one life.” They did the job they were asked to do”””for 18 pence a flippin’ day.” And they knew that the German enemy, too, were fighting under compulsion. From the first day, Mr Patch made a pact with his mates on the Lewis gun that they wouldn’t shoot to kill, only to wound. As far as he knew, he kept his pledge. Even the German who tried to bayonet him in no-man’s-land was only to be brought down with bullets in the leg. Similarly Mr Allingham, billeted with a German family after the Armistice, gave them the two precious oranges he received from Dorothy for Christmas. “We were all victims,” said Mr Patch.

At 110 Mr Allingham went to Germany to meet Robert Meier, aged 109. For his birthday, Mr Meier””who was to die three months after they met””had been photographed grinning broadly in the spiked helmet of a Dreckfresser, literally a mud-eater, a German infantryman. He had last worn that gear on the Western Front. Chicken soup and oatflakes, he said in his sprightly way, had kept him going since. Side by side, the two old men were wheeled to the local war memorial, where they laid a wreath and, for a long, gentle moment, shook hands.

Mr Patch, too, went abroad at 106 to meet Charles Kuentz, aged 107. He took a bottle of Somerset cider; Mr Kuentz, who was to die the next year, brought a tin of Alsatian biscuits. Mr Kuentz had fought at Passchendaele, some few hundred yards from the British lines. He had been conscripted at 19, straight from grammar school, and he too, until the age of 100, had refused to talk about the war. They went together to the German cemetery at Langemarck, where 44,000 Germans were buried, and Mr Patch laid a wreath. He had got better at doing that; on the first occasion he’d been asked to he had simply sat and cried. At Langemarck, on impulse, he picked up an acorn from the ground and gave it to his “enemy”. “Now we are friends,” said Mr Kuentz.

This got me thinking about the British, American, French, and German leaders who killed those millions of young men.  And the European intellectuals of 1914, virtually all of whom supported the war.  And how in the halls of government in 1914 anyone with my anti-war opinion would have been regarded as an idealistic fool, not worth listening to.

As I get older I am more and more inclined to think we put too much faith in the authorities.  Or perhaps I should just say that I do, as this blog has lots of commenters who are skeptics.  I must admit that while I have been advocating NGDP futures targeting since 1986, I assumed the Fed would be smart enough to prevent a decline in NGDP even with the sort of ad hoc quasi-inflation targeting regime in place since the 1980s.  In the last year my respect for authority, which was never very high, has fallen to a new low.  As I read each interview in the Big Think, it becomes more and more obvious that the experts don’t have a clue as to what went wrong, nor how to fix the problem.  Indeed they don’t even agree with each other, and none of them agree with me.  Here are two more, with nothing about the Fed letting NGDP fall at its fastest rate since 1938:



Every so often I read about the amazing progress in biotech, how the technology to do genetic engineering keeps getting cheaper and more powerful every year.  Or how we are close to the point where any scientist will be able to use low cost equipment to create a deadly virus that spreads as easily as the common cold.  Well, actually I don’t read that observation, it’s just the thought that goes through my mind when I read the other stuff.

And then there is that particle accelerator in Switzerland.  New and unheard of energy will be released as they smash particles together at ever higher speeds.  Of course only a lunatic would think that these experiments are opening a Pandora’s box; potentially creating a black hole that could swallow the Earth.  After all, the experts assure us that (according to the laws of physics circa 2000) the machine is perfectly safe.

I don’t doubt that the machine is perfectly safe according to the laws of physics circa 2000.  But that’s not what worries me.  The laws of physics circa 2000 are almost completely different from the laws of physics circa 1900.  Here is what I wonder; is there any chance that something could go wrong according to the laws of physics circa 2100?  And where do I go to get that question answered?

Does this have anything to do with monetary policy?  Well, moving from the 4% trend inflation of the 1980s to the 2% trend inflation of the 2000s does produce efficiency gains, but also slightly increases the chance that the economy will slip into a liquidity trap.  As of 2007, most experts thought that a liquidity trap was highly unlikely, even though it had already happened in Japan.  I also thought it unlikely.  So the small gains from slightly lower inflation were thought to outweigh the fact that 4% inflation would prevent liquidity traps, and the associated devastating fall in NGDP and high unemployment that is often associated with liquidity traps.  Of course we now know they were wrong.  Ex post there was 100% chance of a liquidity “trap” in this decade.

Let’s hope the experts in biotech and physics are better at doing cost/benefit analysis than the economists who run monetary policy.  In particular, let’s hope they do a better job of weighing small but certain gains against vast losses that are deemed highly unlikely.  Let’s hope they don’t suffer the cognitive bias of placing an excessively small subjective probability on “unknown unknowns.”

Oh, and don’t forget that 2012 is barely 2 years away.

PS.  Robin Hanson has a much better example here.

PPS.  I plan one more post (off topic), and then a vacation.

It’s not just the economy that’s deflating

The universe shrank by 95% this year.  At least according to a recent theory of gravity by a distinguished Berkeley physicist:

HoYava’s theory has been generating excitement since he proposed it in January, and physicists met to discuss it at a meeting in November at the Perimeter Institute for Theoretical Physics in Waterloo, Ontario. In particular, physicists have been checking if the model correctly describes the universe we see today. General relativity scored a knockout blow when Einstein predicted the motion of Mercury with greater accuracy than Newton’s theory of gravity could.

Can HoYYava gravity claim the same success? The first tentative answers coming in say “yes.” Francisco Lobo, now at the University of Lisbon, and his colleagues have found a good match with the movement of planets.

Others have made even bolder claims for HoYava gravity, especially when it comes to explaining cosmic conundrums such as the singularity of the big bang, where the laws of physics break down. If HoYava gravity is true, argues cosmologist Robert Brandenberger of McGill University in a paper published in the August Physical Review D, then the universe didn’t bang””it bounced. “A universe filled with matter will contract down to a small””but finite””size and then bounce out again, giving us the expanding cosmos we see today,” he says. Brandenberger’s calculations show that ripples produced by the bounce match those already detected by satellites measuring the cosmic microwave background, and he is now looking for signatures that could distinguish the bounce from the big bang scenario.

HoYava gravity may also create the “illusion of dark matter,” says cosmologist Shinji Mukohyama of Tokyo University. In the September Physical Review D, he explains that in certain circumstances HoYava’s graviton fluctuates as it interacts with normal matter, making gravity pull a bit more strongly than expected in general relativity. The effect could make galaxies appear to contain more matter than can be seen. If that’s not enough, cosmologist Mu-In Park of Chonbuk National University in South Korea believes that HoYava gravity may also be behind the accelerated expansion of the universe, currently attributed to a mysterious dark energy. One of the leading explanations for its origin is that empty space contains some intrinsic energy that pushes the universe outward. This intrinsic energy cannot be accounted for by general relativity but pops naturally out of the equations of HoYava gravity, according to Park.
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