📖 Read loc 1440-2080 of 12932 (16.08%) of American Amnesia by Jacob S. Hacker and Paul Pierson
Examples and discussion of how markets can manage to fail and why we need good government to fill in the (gaping) holes.
There’s also some good discussion of rent seeking behavior here too. The more I read, the more I think this should be required reading for everyone. I could see a need for taking just the first three chapters and expanding them out into their own book.
Circumstances for our poor hero Charlie become far more desperate before they begin to turn for the better.
Except that we’ve just read how horrifically poor and physically starving the family was, I’m surprised that he took two candy bars. Though I suspect his family would easily have given him the who dollar’s worth of food.
📖 Read loc 962-1440 of 12932 (11.13%) of American Amnesia by Jacob S. Hacker and Paul Pierson
This continues to be intriguing with lots of examples (and footnotes, which I’ve been skipping over presently, but will circle back upon later). It continues to make a strong argument for a mixed economy and even bolsters with evidence that the richest countries are usually the ones with the most government–something which flies in the face of traditional Republican values. There’s also some good discussion of what markets are and aren’t capable of, a point which is often missed in the bigger public, potentially because of the decades of chanting that capitalism is best while we fought a cold war with Russia.
More people should really be concerned with externalities in the markets.
In general this seems to be a sweeping meta-analysis of lots of other sources and material, most of which is footnoted. I do sometimes wish they went into greater detail on many of their points, but I suspect that no one else would be reading the book because of its length. Their arguments are fairly quick and to the point however.
I suspect at the time this was written many of these horrid children were hyperbole. It now seems like people accidentally read this as a model for how children should be and they totally missed the fact that Charlie was the hero.
Donald Trump was 18 years old when this book was released. Sadly, I strongly suspect he never read or benefited from it.
The section here on the election of Rutherford B. Hayes as president with significant help by the communication incumbent (Western Union) of the time sounds eerily like the influence which Facebook likely had on the election of Donald J. Trump. The more I read this the more I’m scared and can’t wait for yet another disruption of communication technology.
Chapter 2 is a nice piece on the El Farol Problem which is a paradox which “represented a decision problem where expectations (forecasts) that many would attend [the El Farol bar] would lead to few attending, and expectations that few would attend would lead to many attending: expectations would lead to outcomes that would negate these expectations.”
Zhang and Challet generalized this problem into the Minority Game in game theoretic form.
There are two reasons for perfect or deductive rationality to break down under complication. The obvious one is that beyond a certain level of of complexity human logical capacity ceases to cope–human rationality is bounded. The other is that in interactive situations of complication, agents cannot rely upon the other agents they are dealing with to behave under perfect rationality, and so they are forced to guess their behavior. This lands them in a world of subjective beliefs and subjective beliefs about subjective beliefs. Objective, well-defined, shared assumptions then cease to apply. In turn, rational, deductive reasoning (deriving a conclusion by perfect logical processes from well-defined premises) itself cannot apply. The problem becomes ill-defined.
This passage, though in an economics text, seems to be a perfect statement about part of the problem of governing in the United States at the moment. I have a thesis that Donald Trump is a system 1 thinker and is generally incapable of system 2 level thought, thus he has no ability to discern the overall complexity of the situations in which he finds himself (or in which the United States finds itself). As a result, he’s unable to effectively lead. From a complexity and game theoretic standpoint, he feels he’s able to perfectly play and win any game. His problem is that he feels like he’s playing tic-tac-toe, while many see at least a game as complex as checkers. In reality, he’s playing a game far more complex than either chess or go.
The overall problem laid out in this chapter is an interesting one vis-a-vis the issues many restaurant startups face, particularly in large cities. How can they best maximize their attendance not only presently, but in the long term while staying afloat in very crowded market places.
The level at which humans can apply perfect rationality is surprisingly modest. Yet it has not been clear how to deal with imperfect or bounded rationality.
Chapter 3 takes a similar problem as Chapter 2 and ups the complexity of the problem somewhat substantially. While I understand that at the time these problems may have seemed cutting edge and incomprehensible to most, I find myself wondering how they didn’t see it all from the beginning.
The structure of the book is a bit like stone fruit, with a soft wrapping of a hard core, …
Transfer entropy is hard to calculate from real data.
I love that they provide a “List of Key Ideas”, a “List of Open Research Questions”, and a “List of Key Results” in the opening along with the traditional sections of symbols used, acronyms, list of tables, etc. More texts of all stripes should be doing this!
The review of core had some resources I’m sure I knew about and have even used before, but somehow forgotten from long disuse. The quick review of the loop was useful to have again particularly as I delve into some themeing work these past few weeks.
The examples they provide are pretty solid from a pedagogic standpoint.