Archive for the ‘Economics’ Category

Just Say No To Groups!

Thursday, August 13th, 2009

Liberal, conservative, communist or libertarian.  Democrat or Republican.  Catholic, Jewish, Born again Christian, Muslim or Hindu.  Millions of Facebook members unabashedly advertise their affiliations.  What are you?

This question is inherently offensive because of its implicit assumption that I would mindlessly associate myself with a group whose members share common opinions on a smorgasbord of topics.  Such wholesale acceptance of a canon without critical evaluation is intellectual atrophy.  Each group has plenty of dogma that is downright silly, so I refuse to join.

Take conservatives who are against giving girls human papilloma virus (HPV) vaccinations, which prevent cervical cancer.  The reason: HPV is transmitted through sexual intercourse, and virtuous young woman should abstain from sex.  Is getting cancer a just punishment for promiscuity?

Liberals are no better.  Anti-smoking zealots used reports of the dangers of second hand smoke to push for legislation that bans smoking from public places.  When those studies were shown to be flawed, the liberals resorted to ad hominem attacks on the scientists who pointed out the errors in the methodology.  Though I am not a liberal (nor anything else), I support a ban on smoking in public places based on my own selfish reason that smoke literally makes me sick.  I don’t need a flawed study to validate my cause.  We should all be honest about our motives, and judge issues solely on their merits.

Rather than seek the truth, groups fervently bend and remold the facts to further the cause.  Rather than consider each issue logically and unbiasedly, group members are energized by their unquestioned faith in the broader agenda.  It’s comforting to associate with a group whose members share the same viewpoint.  Our minds conveniently filter out conflicting data and uncritically accept group dogma – a sure recipe for belief in the absurd.

Imagine all of the resources that would be set free to combat killer diseases if we didn’t waste money on homeopathic cures and alternative medications that are known to be ineffective.  Imagine all the time wasted debating ideology when we could be solving real problems.  Reason and honesty, applied to one issue at a time, would lead to sensible ideas and efficient solutions.  Real progress requires that we divest ourselves of our present group membership, and start fresh.

You’ve probably heard, “I am a pro-choice Catholic who really doesn’t believe in transubstantiation.”  “I go to Synagogue for cultural reasons.” “I’m liberal but understand the benefits of capitalism.”  You might as well be a vegetarian who eats meat.  Just say no to groups!


Free markets take advantage of the wisdom of crowds

Tuesday, January 13th, 2009

The recent near-collapse of the financial markets has lead to a call for tighter regulation; and, a higher proportion of news pieces mock of free markets.  There is comfort in the thought of a kind and wise government that protects its citizens from harm.   As a result, support is growing for the belief that free markets have soured and that government should take a more active role in controlling the economy.  Paradoxically, the root cause of our problems may be that our markets are not free enough.

The free market operates on the principle that complex information can be better processed by large numbers of people, each person being a tiny social neuron, that when combined into a crowd, can out think even the brightest individual or think tank.    The wisdom of crowds is not just an abstract idea.

Michael Shermer’s essay in Scientific American ( gives compelling evidence for the wisdom of crowds.  The gist of the thesis is that when a large group of diverse and independent individuals are given a problem, their solution will on average be optimal and superior to a consensus view of experts.  The free market, be it a market of ideas or a system of trade, works most efficiently when individuals make decisions by applying their unique expertise to the available information.