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December 1, 2006

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April 28, 2006

Humanitarian intervention by one of the great countries of democracy

French troops and warplanes tell Chadian rebels to knock it off. These Chadian rebels are the ones that the Sudanese government is accused of supporting. Note that France is not really making many friends for itself in Chad by this action; Idriss D&eacuteby is pretty unpopular. He is not a tyrant, but surrounded by the usual corruption allegations and he harasses the opposition; he’s a solid mid-table kind of Bolton Wanderers of African strongman. On the other hand, he’s almost certainly better than becoming a secondary theatre of the West Darfur civil war, and it’s not like taking a few pot-shots at the rebels is going to lead directly to Abu Ghraib, so well done France I say.

Of course, this presumably means that I am an anti-American and a hypocrite, because … well hey it’s France, and it is canonical that the EU is doing nothing about Darfur. This was all in the Economist last week by the way, so I count it frankly surprising that people are still pushing the line that the Yanks are the only ones who care, on the strength of Colin Powell having used the g-word in a speech a year ago and done nack-all since.

They are also having elections in Chad the week after next, which are obviously contributing greatly to the overall instability, but they might paint people’s fingers purple, which would be nice.

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April 26, 2006

Links, that’s what the Internet is about!

I have added a further two links to my link list. Their positioning at the top of the list reflects my perception that I would be less likely to break the whole template like I did last time rather than any endorsement, although frankly “Bitch Lab” is probably better than any of the other crap that you read these days. I have been promising to put that link up for a while, and now I have, so enjoy the ocean of nuts, trolls, ne’er-do-wells and single issue cranks that constitutes my clickthrough stream. (Btw, I have considered having adverts on this blog for a while. I do not really object to them on ethical, aesthetic (much) or general punk rock grounds, but they have not gone up because a) it looks like work and b) I really could not face google constantly reminding me “People who read this blog also purchased a blow-up doll, three kilos of sausage meat and a chainsaw” all the time)

“Aaronovitch Watch” is me, (or at least, I have currently forgotten that I am meant to be pretending it isn’t) plus a few other Big Name Bloggers, who all have more sense than me when it comes to keeping their Big Names quiet. Oh except Dave who I think is more or less out of the closet. Basically if you like astonishingly wordy and temperamental attacks on Nick Cohen or if you like sarcastic nitpicking at David Aaronovitch, we’re your men and women. Oh alright, men. There are no women involved with Aaronovitch Watch. Are you happy now?

I’m having a bit of a vague kind of day today. Are any readers having a vague kind of day? Still, it’s better than whatever I was on when I had a go at Andrew Anthony the week before last. In case anyone’s wondering, the “very nasty remark” I was holding in reserve and didn’t get a chance to use was to suggest that AA had been intellectually flat out writing the “Clothes For Chaps column and that the leap from talking about tweed collars to the epistemological status of moral statements had been a bit much for him. It was a bit unfair but certainly not as unfair as this blatant baiting of David Hirsh, who I think may be getting to that point people often reach in discussions with me where they start applying for a shotgun permit. Hirsh is (whisper it) actually one of the more reasonable Decents who is nobody’s idea of a pro-Israel bigot (he has actually been there which puts him in a clear lead over the average online Israelophile) and has written some intelligent things in the past. But the ENGAGE attempt to launch the Big Chief Eye Spy Guide To Finding AntiSemitic Implications in Everyday Phrases is hilarious and I frankly can’t see myself not finding it funny for a while.

More Levitt coming soon … (yes it is, do you think I’m lying or something).

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April 24, 2006

A puzzle, for residents of St James’ and Mayfair

Just two questions, possibly for those of my readers who work for the Economist or have other occasion to be walking up and down St James’s. Or who are art consultants or have some other way of finding out.

1. What the fucking hell is that thing of a statue outside the Economist building at the moment[1]?

2. Is there any feng shui type significance to the fact that its arsehole is, as far as I can see, pointed directly at the Carlton Club?[2]

[1] you would not imagine the combinations of search terms I went through trying to find that picture.
[2] Or possibly Brook’s, but I don’t think so. It’s not like I took a theodolite sighting or anything.

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April 23, 2006

Slouching Towards Decency

I must say, I regard the “Euston Manifesto” as an entirely positive development for the Decent Left for at least two reasons:

1. They are at least now more or less admitting that the Iraq War was a bloody disaster. Thanks guys, only took you three years. A baby step in the direction of reality.

2. As far as I can see, their document has about as many signatories as it did when it was called “Unite Against Terror”, but importantly, far fewer of them have decided to accompany their signature with a pissy little 200-word rant about their enemies on “The Left”. This has to be counted a baby step in the direction of civility; soon, perhaps, they will be able to hear the phrase “anti-imperialist” without accusing anyone of being an apologist for mass murder.

However, it is always a matter of “two steps forward, one step back”, and the attempt by the Decents to reach out to the other 99% of liberal opinion (I calculate this on the basis that they have c650 signatures, the charitable assumption that each signature represents 10 people who agree with them but haven’t signed for some reason or other, and the combined readership of the Guardian and Independent is about 650,000. Sorry guys, if you have more than 1% of the column inches of those newspapers you’re over-represented, not under[2]) has had as an unfavourable consequence the rather ludicrous assertion that they are not “the pro war left”.

Apparently, there were lots of them who were opposed to the Iraq War at the time, but who have been sooooo disgusted with the rest of us and our cheerleading for the bombers and beheaders that they have lost all hope in the Left. Yeah, right, whatever you say.

The fact is that this is a “pro war” document. It says

“If in some minimal sense a state protects the common life of its people (if it does not torture, murder and slaughter its own civilians, and meets their most basic needs of life), then its sovereignty is to be respected. But if the state itself violates this common life in appalling ways, its claim to sovereignty is forfeited and there is a duty upon the international community of intervention and rescue. Once a threshold of inhumanity has been crossed, there is a “responsibility to protect”.”

For native speakers of English, it is not difficult to work out that “intervention”, “rescue”, “protect” and such terms, mean war. It is perhaps surprising that a document drafted by so many people who claim to be admirers of George Orwell, uses so many weaselly circumlocutions to avoid writing down the simple declarative English sentence: “We are in favour of fighting wars to remove tyrannic regimes”.

So it is a pro war document. I mean this in the sense that it is substantially more in favour of war than the founding documents of the United Nations. The Nuremberg Principles and the Convention on Genocide are what I am thinking about here; the first puts a blanket prohibition on “aggression”, while the second allows an exception to this blanket prohibition when the UN as a body acts in cases of “genocide”. Genocide is defined for the purposes of the Convention in a really quite precise manner:

“In the present Convention, genocide means any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group as such:
(a) Killing members of the group;
(b) Causing serious bodily or mental harm to members of the group;
(c) Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part;
(d) Imposing measures intended to prevent births within the group;
(e) Forcibly transferring children of the group to another group.

Norman Geras (for it is he; I have been having this argument with him in slow motion for the last two years) wants to substantially lower the bar for fighting wars of aggression; in favour of the precise and restrictive test of the genocide convention, he wants to substitute a rather more subjective “threshold of inhumanity”. It is not made clear in the Euston Manifesto, but you should also be aware that there is a very odd approach to the statute of limitations on “inhumanity” in this case; Norman does actually believe that Saddam Hussein’s atrocities in 1992 formed part of the case for the war in 2003. There is a certain logic to this; after all, it is unsatisfactory to allow a regime to nickel-and-dime its population to the brink of extinction, never quite reaching the threshold which would justify a genuine “humanitarian intervention” (itself a marked weakening of the original UN charters on wars of aggression, an entirely controversial and ambiguous field of international law, but one that the EM crowd clearly want to further weaken, because nobody considered Iraq to have been a humanitarian intervention). But I bring it up to establish the point that this new doctrine of “internationalism” is not very clear at all on the subject of cost benefit analyses.

In a post defending his doctrine, Norm makes a small baby step in the direction of feasibility; he admits that the “duty to protect” should not be translated into action if the consequences would be a nuclear catastrophe. For which, I suppose, much thanks. On the other hand, it’s still a long way from the threshold of “can it reasonably be expected that this war will make things better rather than worse?” which appears to be the principle underlying the UN conventions. I personally would say that this is the only sensible threshold to have when you are setting out general rules; it is all very well to hypothesise general “duties”, but the point of politics (and the reason that there is a difference between political theory and moral philosophy) is that you actually do have to think about the effects in the real world.

To take the example from Norm’s post, if it happened to be the case that someone had a really bad relationship with their mother, that every time they visited their parents there was a massive and vicious fight, putting strain on their mother’s weak heart and leaving the crockery all smashed, then we wouldn’t talk about “setting aside the prima facie duty of filial piety, in cases where doing so would involve some massive disbenefit”; we’d say that the sensible thing to do was to always not visit home, except when it was clearly obviously the right thing to do. Which is, roughly, what the UN conventions actually say about wars. Since one important difference between visiting your mum and starting a war is that one of them necessarily involves killing people, I think that this is actually quite important.

And this is why neither I nor anyone else on the anti war (as in, roughly believing that the UN in the 1940s got it right about wars of aggression, as the Decents apparently believe they got it right about human rights[1]) are likely to stop “picking over the rubble” of the Iraq war any time soon. Or for that matter, the Vietnam War or any of the other wars of aggression that have ended in disaster. Wars of aggression have a really really bad track record; that’s why they were banned in Nuremberg.

This counts as me “engaging” with the Euston Manifesto, by the way. I don’t believe there was any obligation on me to do this; I have been arguing with these people for two years on all of these subjects, and the fact that they have written their views down after meeting in a pub is an event that cannot be expected to loom larger in my life than in theirs. But there you go. I have put this on my own blog, and written something with a joke in it for the Guardian website by way of trying to redress the cosmic balance.

[1] By the way, the statement in the EM that human rights are “precisely” defined by the UN Convention is bad news for our mates the gays, is it not? I don’t think that abortion rights are in there either.
[2] 690 signatures today, but lots and lots of them appear to be Americans, which means that using the column inches of the Guardian and Independent as the benchmark for Decent coverage becomes a less and less valid basis. Decentism gets huge amount of coverage in the States, and to claim that this doesn’t count is, of course, anti-American.

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April 11, 2006

Quick guessing game

OK, I’ve just written a post on this for the Guardian blog, which will probably pop up some time tomorrow so there is time for a quick guessing game.

What I’ve done is go through all 300 author profiles on the commentisfree site, noting a) whether they mentioned which university they went to and b) whether it was Oxford or Cambridge. Guess:

1) how many out of 300 mentioned a university? (clue: a hell of a lot of them are blanks or one-line bios seemingly put there by the system)

2) of those who mentioned a university, what percentage of cases was it Oxford or Cambridge?

(my own profile mentioned both Oxford and LBS before I change it; if you hurry you can probably still see it as the static pages only update with quite a lag)

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April 7, 2006

I really really hate dynamic programming

I have a bit up on Crooked Timber at the moment, attempting to make a model of when Tony Blair gets forced out of power. It’s a tricky little thing which I ended up solving in an Excel spreadsheet using my patented I Can’t Believe It’s Not Dynamic Programming technique (email me if you want the spreadsheet, though I can’t fathom why you would). Trying to do it properly reminded me why I hate dynamic programming with such a passion and think it really ought to be removed from the economics syllabus, even at the cost of rewriting a huge amount of economics which uses it.

1. It’s bloody difficult. There are loads of interesting mathematical tools which are never covered on economics courses because people have to go through all the calculus you need in order to be able to do dynamic programming. If it was dropped, you could have stochastic calculus on the main economics syllabus, you could do much more probability theory and actuarial maths, you could cover Bayesian econometrics in a sensible manner and so on. We could even, god help us, have a proper go at the sort of stuff Barkley Rosser covers in his rather expensive book.
2. It encourages you to work in “economist’s time”, which is to say, no time at all. Dynamic programming works on problems that have a well-defined beginning and a well-defined end (or a hazy “infinite horizon” that does the work of a well-defined end). Economic problems of any substance are much more likely to have started way back in the mists of time and to drag on to an unspecified future date (note that an “indefinite” future is very certainly not the same thing as an “infinite” one, and I intend to write about this subject one of these days). Flattening down proper, historical time into the sort of uninteresting timeless time of a programming model is just dealing with the dynamics of a situation by ignoring them; I think it was Steve Keen who noted that a dynamic programming model is really just a one-period model being tricked into doing some of the work of a proper dynamic model.
3. It encourages you to make assumptions about important functions because of the way they fit into dynamic programming models rather than because of any real thought about the underlying mechanism. See my CT piece for an example; I modelled the “grovelling function” as a hazard rate because I knew it would be easier to do the maths that way; as it happens I think I can make a decent case why I think that grovelling is a hazard-rate type of process but that’s not really why I did it. An even more degenerate case of this is can be seen in the countless thousands of papers in the literature where someone has found a dynamic programming solution to some problem or other under a Markov assumption. There are actually very few economic processes which aren’t history-dependent, but it is one hell of a lot easier to do the maths if you make this assumption (in fact, if you don’t, it isn’t really dynamic programming).
4. Related to 2 and 3 above, dynamic programming solutions tend to get you into the habit of treating time as a factor of production or consumption; you allocate X days to A and Y days to B and it doesn’t really matter in the model which days you allocate. This is a bad way of thinking about time and uncertainty. Every year or so, somebody says that we in economics ought to start thinking seriously about “Knightian uncertainty”, but it is more or less impossible to do that in a dynamic programming framework; any assumptions which deliver the boundedness and time-separability that you need, are going to radically limit the space of what outcomes are possible, no matter how clever your stochastic modelling is.
More to come in this vein �

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March 31, 2006

Thought for the day

If I started using the term “anti-Semitic” as a general term of undifferentiated disapprobation like “lame” or “gay” (as in “god, those trainers are pretty anti-Semitic”, “The first few series of Friends were quite sharp and funny, but it got really lazy and anti-Semitic toward the end”, “I don’t know; there’s nothing specific about Shoreditch that I don’t like – it’s just a bit anti-Semitic”), how long do you think it would take to catch on? And what sort of reaction would I get in the meantime?

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March 24, 2006

Does it make any sense to cut the HMRC budget?
(Live from the commentisfree reject bin!)

Money for schools, money for Olympic athletes, money for scientists, but a 5% budget for Her Majesty’s Revenue and Customs? Won’t somebody think of the tax inspectors, for the love of God, will nobody think of the tax inspectors?

The budget cut for HMRC is apparently meant to drive a big program of “red tape reduction” to lower the burden on business of all the Kafkaesque nightmare of VAT, National Insurance and tax forms. Which is a noble enough aim; they are bloody awful and something ought to be done. But it seems to me a really silly idea to claw back the saving to fund other parts of the budget, rather than allowing HMRC to spend the money on more enforcement personnel.

It’s one of the most solidly established facts about tax policy; the marginal revenue contribution of a fully qualified Inspector of Her Majesty’s Taxes is way, way higher than the cost. They’re some of the most productive assets that the government system has, only outperformed by a few really cleverly located speed cameras on the M11. Cutting the budget for the Revenue, means leaving money on the table for the Revenue.

It seems particularly short-sighted to be cutting the HMRC budget given that the budget also creates a big resource commitment for them from the new requirement for tax planners to disclose details of their new avoidance schemes to HMRC ahead of time, allowing them to close the more egregious loopholes more quickly. This is a sensible step; it gives the UK fiscal system most of the benefits of a “general anti-avoidance rule” without the constitutional problems associated with such a non-specific piece of legislation. But it requires that there be a sufficient supply of good tax brains hanging around at HMRC to scrutinise the schemes as they come in.

I can only think of two possible explanations. First, that Gordon is being politically savvy and knows that, like speed cameras, tax inspectors are a really efficient way of making sure that the law is obeyed, but that like speed cameras, their very efficiency makes them unpopular. Or alternatively, he thinks that HMRC will be able to make back a lot of the money from the �100 penalties they are bound to reap in from the requirement to file your tax returns at the end of September rather than the end of January. Either way, I say let the athletes jog in the park, and let’s spend some money on building an Olympic-standard inspectorate of taxes.

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March 23, 2006

Freakonomics review part 2: The Heterodox Theory of the Criminal Firm

Ah, ya thought it was never coming �

Here is the first bit of the Freakonomics review; there is more to come, along the lines of this and this semi-related bits. But for now, I’m planning to take a bit of an excursion and write a little bit more about the “crime gang = corporation” idea. I want to show that there is no meaningful analogy between a crime gang and a capitalist corporation, and to develop an alternative theory of the remuneration structures that Levitt and Venkatesh observed, drawing on more heterodox/Marxist traditions. It’s partly a digression which interested me, and partly an attempt to show that there are always a zillion and one economic theories consistent with the data, particularly when the data are as partial as the raw material of Freakonomics.

The fundamental reason why a crime gang isn’t like a capitalist firm is that it doesn’t obey the fundamental principle of a capitalist firm, which is to accumulate capital. The crime syndicate described in Freakonomics sold drugs at a mark-up, and it presumably wanted to make more profit rather than less, but so did a merchant under feudalism. The defining characteristic of a capitalist enterprise is accumulation, not profit per se.

For people who are a bit familiar with the Marxist literature, this is quite an easy argument to make; a capitalist firm follows the cycle M-C-M’, but a criminal gang has to be in the cycle C-M-C’. For people who aren’t familiar with the Marxist literature, M stands for “money”, C stands for “commodity” and an apostrophe means “more”. In other words, the purpose of a capitalist is to produce more money, while the purpose of a crime gang is to produce more crime.

I sense I’m not convincing the unconverted. OK, look at it this way. The central feature of a capitalist economy is the good old “miracle of compounding”. When you make a profit from something, you reinvest that profit in your business so that your wealth grows at a compound rate. Even if your own firm has reached maximum scale, the rest of the capitalist economy is there to let you reinvest your surplus in order to produce more surplus. That’s the M-C-M’ cycle.

On the other hand, can a criminal gang really reinvest its profits? Not really. The physical means of production (guns, drugs inventory, etc) is not usually the constraint on a drug gang’s ability to expand. For any drug gang which isn’t basically a startup, the market will be more or less saturated in the territory it commands, so the only way to grow is to get more territory. While having some spare profits to reinvest is obviously a prerequisite for growing your territory, it’s clearly one of the least important parts of a difficult and complicated programming problem. I would say that to a first approximation, a criminal firm differs from a normal capitalist enterprise in that it cannot reinvest its profits and the entire surplus is consumed by the top management of the firm. I surmise that the actual consumption behaviour of criminals is at least weak evidence that I am right.

Obviously, the managers of a successful criminal enterprise can, if they launder them, invest their profits in the legitimate economy, but that is not the same thing. In particular, it appears to me as if there is no genuine accumulation in the criminal economy, no tendency toward monopoly and no likelihood of overproduction or underconsumption crises. Criminal gangs rise and fall due to non-economic factors.

For this reason, among others, I am not convinced that the inverted pyramid remuneration structure that Levitt and Venkatesh observed is particularly well explained as a “tournament”. As I mentioned in the first section of the Freakonomics review, the Disciples’ reward structure does not really fit very well with the objectives of a business that wanted to maximise return on sales. The soldiers were paid a flat wage, not a commission on sales, and advancement through the ranks tended to go to those individuals who demonstrated a combination of bravery, loyalty and psychopathic aggression. My sound knowledge of popular culture suggests to me that this is a common organisational feature of crime gangs; top-ranking crooks always like to claim that they are in it for the money, and that their best gangsters are the ones who can generate new profit opportunities, but a glance at the film “Goodfellas” (based on an autobiography) gives a more honest picture of what actually happens when a bunch of “guys like us” are put in charge of organising an actual capitalist enterprise.

I think that the actual stylised facts are better explained by something like the “conflict theory of the firm“, due to Bowles, Skilman, Devine and others. This puts the conflict between owners of an enterprise (who want as much profit as possible) and the workers (who want to expend as little effort, danger and inconvenience as possible for their wage) at the centre of the theory. Rather than a Coasian “nexus of contracts” between freely associating individuals, brought together to minimise transaction costs and maximise productive efficiency, a firm under the conflict theory is made up of a bunch of overlords at the top, a bunch of surly minions in the middle, and to resolve the conflict, a bunch of not-directly productive supervisors in the middle. Yes, as a matter of fact, the central college textbook for teaching this version of economics is the Dilbert Principle. JT in the gang studied was occupying the classic pointy-haired boss role; he wasn’t a businessman himself, but he was responsible for supervising a crew of soldiers.

I think that this theory actually explains a lot more of the organisational structure of the Disciples than Levitt’s tournament analogy. The soldiers were not, as a matter of fact, encouraged to believe that they could rise to the top of the gang and reap the rewards of an equity-owner. They were encouraged to stay within the confines of the gang whether or not they were actually performing in sales terms, and were incentivised to make their sales targets with beatings rather than commissions. Finally, the supervisor ranks were dominated by the loyal, the brave and the psychopathically violent. This wasn’t an entrepreneurial organisation; it was a hierarchy where the stupid were exploited by the evil, making use of the mindless. Which makes me think that perhaps a crime gang is rather more similar to a capitalist firm than I had previously thought, and that it is the neoclassical model of a capitalist firm which is the odd one out.


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