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The Overuse of Mathematics in Economics – Article by Luka Nikolic

The Overuse of Mathematics in Economics – Article by Luka Nikolic

Luka Nikolic
September 2, 2019

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If you enrolled at university today, you would find economics modules filled with mathematics and statistics to explain economic phenomena. There would also be next to no philosophy, law, or history, all of which are much more important to understanding the way our world works and how it impacts the economy.

The reason is that since the end of the 19th century, there has been a push toward turning economics into a science—like physics or chemistry. Much of this has been done by quantifying phenomena and explaining it through graphs. It has been precisely since this shift that there has been such a poor track record of public policy, from fiscal to monetary.

What many contemporary economists fail to realize is that economics is as much of a philosophical pursuit as a mathematical one, if not more so.

Modern economics was first introduced as a formal subject called “history and political economy” in 1805. Economics was a three-decade-old discipline then, as Adam Smith had published his Wealth of Nations in 1776. The earliest economists were philosophers who used deduction and logic to explain the market. Smith deployed numerical analysis only as a means of qualitatively assessing government policies such as legislated grain prices and their impact. No graphs or equations were used.

Even earlier, 17th-century philosopher John Locke contributed more to economic liberty than any mathematician has since. Likewise, philosopher David Hume successfully explained the impact of free trade with his price-specie flow mechanism theory, which employs pure logic. John Stuart Mill’s book On Liberty likewise furthered the cause for free markets without using math.

In 1798, Malthus mathematically predicted mass starvation due to population growth, but he could not quantify the rule of law and free markets.

The first substantial misuse of mathematics was by Thomas Malthus. In 1798. He predicted mass starvation due to population growth, which was exponential and outpacing agricultural production, which was arithmetic. Malthus was evidently wrong, as contemporary free-market Japan’s population density towers over collectivist sub-Saharan’s Africa. Malthus could not quantify the rule of law and free markets.

Alfred Marshall’s Principles of Economics (1890) was the first groundbreaking textbook to use equations and graphs. One of Marshall’s students, John Maynard Keynes, would further the cause of quantifying economics by mathematically linking income and expenditure and how government policy could impact this. Keynes’ General Theory (1936) would serve as a blueprint for 20th-century economic policy as more scientific methods of economics gained favor in the coming decades. Friedrich Hayek summarized this shift in his Nobel Prize acceptance speech.

It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the physical sciences—an attempt which in our field may lead to outright error. It is an approach which has come to be described as the “scientistic” attitude—an attitude which is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.

It is impossible to quantify human action. Although equations, such as utility measures, do exist to quantify human behavior, they are faulty when examined. How can an equation tell me when I am no longer satisfied with a certain good? Mathematically speaking, it is when marginal utility becomes negative. This may be true. However, the problem is how to determine how much chocolate will give me a stomach ache—mathematically speaking, what amount will produce negative marginal utility. A doctor could not figure this out, let alone an economist.

There cannot be “catch-all” formulas due to the complexity of economic phenomena. Measuring the elasticity of demand for a certain good is at best a contribution to economic history. Elasticity will hardly be constant in the same country throughout time, let alone in other countries. However, the economists pursuing this analysis do not do it to update economic history—it is done for the purpose of having government micromanage demand for these goods. In reality, government should allow the free market to produce a certain good. The market will determine the demand/supply.

Economics is more related to jurisprudence than math.

Economics, among other things, is the study of the allocation of scarce resources. If there is a limit of a certain good, it’s not the government’s job to utilize an equation to distribute it. Rather, governments must ensure that the property rights of that good are clearly defined. It is then up to the person who owns the good to allocate it. As such, economics is more related to jurisprudence than math.

The Solow-Swan growth model is a perfect example of quantifying economics. It claims to explain long-run economic growth based on productivity, capital accumulation, and other variables. It is unquestionable that these factors impact growth, however, it oversimplifies the complex interactions between various qualitative factors.

For example, English Common Law has allowed countries such as the US or Hong Kong to prosper more than African nations with no basis for the rule of law and where corruption is still widespread. Protestant nations were historically more favorable toward capitalism compared to other religions. Both of these factors undoubtedly affected the variables in the Solow-Swan model—the problem is quantifying them. Productivity and capital accumulation do not “just happen.”

Monetary policy has suffered the worst. Today, central banks manipulate interest rates to stimulate the economy due to a false belief in purely theoretical mathematical models. Such sophisticated analysis would be welcoming if it offered a better track record. By artificially lowering interest rates, central banks create malinvestment in the economy, creating a bubble.

Once the economy is deemed to be “overheating,” the rates are raised, causing the bubble to burst. This is precisely what has happened since the introduction of discretionary monetary policy in many instances. The 2008 crisis is the most recent example.

However, such policy was not possible with the gold standard because there was no need for a central bank nor monetary policy, as a tool, to even exist. Likewise, the economy was much more stable. Why did gold work? It could not be manipulated easily by the government, and furthermore, it was spontaneously chosen by people because it fulfilled the necessary criteria. Mathematical formulas cannot replicate this. One economist jokingly described it:

Instead of trading away your valuable pigs for horses, why not accept some smooth stones? Don’t worry that you don’t want them, someone else will give you horses in exchange for them! If we could just all agree on which smooth stones are valuable, we’d all be so much better off!

While serving as Hong Kong’s financial secretary from 1961 to 1971, John Cowperthwaite was skeptical about government collecting statistics outside what was necessary, claiming, “If I let them compute those statistics, they’ll want to use them for planning!” Hong Kong remains one of the richest and freest economies.

It should be recognized that mathematically-driven economics is a divergence from the foundation of traditional economics.

Sadly, Cowperthwaite’s skepticism of central planning based on models is rarely heeded today, evidenced by the Keynesianism that has reemerged in the intellectual sphere. Furthermore, considering that publishing in mathematically-driven economics journals is needed to secure tenure, it is questionable whether mainstream economics will be changed by such incentives.

Mathematics has a place at best for budgets and debt servicing—but it should be recognized that mathematically-driven economics is a divergence from the foundation of traditional economics.

What That Giant Asteroid of Gold Would Really Do to the Economy – Article by David Youngberg

What That Giant Asteroid of Gold Would Really Do to the Economy – Article by David Youngberg

David Youngberg

July 22, 2019

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In Greek mythology, Psyche was a woman of such beauty that she inspired jealousy in the love goddess Venus. The 19th-century Italian astronomer Annibale de Gasparis named a massive asteroid after her. How appropriate that it turns out that 16 Psyche, one of the biggest asteroids in the asteroid belt, is made out of a metal famous for inspiring lust: gold.

Unlike gold discoveries of the past, there’s no rush to harvest Psyche. NASA wants to send a probe only to study it, prompting several articles to erroneously breathe a sigh of relief. According to one:

….if we carried [Psyche] back to Earth, it would destroy commodity prices and cause the world’s economy – worth $75.5 trillion – to collapse.

No one tries to explain how cheap gold would cause an economic collapse, and for good reason: it wouldn’t.

Psyche has a lot of gold—about $10,000 quadrillion worth at current prices. The eye-catching headlines that claim it’s enough gold to make “everyone on earth a billionaire” are, of course, complete fantasy. Selling that much gold would cut prices nearly to zero.

Harvesting Psyche would not cause an economic collapse.

If gold was still used for money, that much gold would create massive inflation, resulting in a lot of economic hardship. No country uses the gold standard anymore, so that’s hardly a concern. Rock-bottom gold prices would certainly be devastating for gold mining companies and people who keep their wealth in gold bars. That’s really bad for them, but they’re a tiny part of the global economy.

Perhaps the confusion rests in simple reverse causation. Recessions definitely cause lower commodity prices, but lower commodity prices cause recessions no more than umbrellas cause rain.

Harvesting Psyche would not cause an economic collapse. If that much gold could cheaply be brought to market it would be a boon, not a bust. It’s impossible to predict what a world of cheap gold would look like, but the story of aluminum gives us a hint.

Even though it’s the most abundant metal on the planet, most aluminum is trapped in bauxite and was difficult to purify for most of human history. Pure aluminum was incredibly rare, and there was once a time when the stuff of soda cans was more precious than gold. Aluminum bars were displayed next to the French crown jewels, and pure aluminum caps the Washington Monument.

Cheap gold probably won’t give us an economic boom, but that doesn’t mean it wouldn’t be an economic boon.

Techniques like the Hall–Héroult process changed all that. What was once the metal of monarchs and monuments became readily available to everyone. It’s so cheap that we now use it in fishing boats, airplanes, and beer kegs. Its foil version keeps food fresh—we throw aluminum away all the time.

Making aluminum cheap didn’t cause an economic collapse. Quite the opposite. It made society wealthier because refining improvements made everything else cheaper, thereby creating new opportunities. Wood that once went for beer kegs could be used for something else. Aluminum boats don’t corrode in water, and this application freed up steel and timber that would otherwise be used to replace degrading vessels. Modern airplanes wouldn’t even be possible without aluminum, and their existence frees up fuel, time, and materials that would have otherwise gone to passenger ships and trains.

True wealth is not found in precious metals, and Bloomberg’s Noah Smith rightly points out that harvesting Psyche won’t cause a new industrial revolution. But he goes too far when he claims that it won’t make society richer because, holding everything else constant, a cheaper resource is the definition of economic progress. It’s only a question of magnitude.

If a future entrepreneur were to harvest Psyche, it would certainly be devastating to the gold industry. For everyone else, it would be a stellar improvement.

Harvesting Psyche, if it can be harvested at the right price (a big if), would make society richer because that much gold would allow us to reallocate our efforts to other endeavors. No one knows what exact effects cheap gold would have because the price of gold has never been anywhere near zero. While gold has limited production applications now, who knows how people will adapt if gold is functionally free? There are substitutes, and there are substitutes for substitutes.

Gold, for example, is incredibly ductile and an excellent conductor of electricity; perhaps houses would be wired with gold instead of copper, freeing up copper that could be used in other ways. Or maybe there’s an industry that’s only possible with cheap gold, like aviation is for aluminum. We can’t look at how gold is used now, with its sky-high price, and assume it’ll be the same with a rock-bottom price. Cheap gold probably won’t give us an economic boom, but that doesn’t mean it wouldn’t be an economic boon.

If a future entrepreneur were to harvest Psyche, it would certainly be devastating to the gold industry. For everyone else, dirt-cheap gold would be a stellar improvement.


David Youngberg
is an associate professor of economics at Montgomery College in Rockville, MD.

This article was originally published on FEE.org. Read the original article.

Media and Politicians Ignore Oncoming Financial Crisis – Article by Ron Paul

Media and Politicians Ignore Oncoming Financial Crisis – Article by Ron Paul

The New Renaissance Hat
Ron Paul
July 7, 2019
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The mainstream media was too busy obsessing over Russiagate to notice that, according to an annual Social Security and Medicare Boards of Trustees report, the Social Security trust fund will run out of money by 2035. The trustees also reported that the Medicare Hospital Insurance trust fund will be empty by 2027.

The trustees’ report is actually optimistic. Social Security is completely funded, and Medicare is largely funded, by payroll taxes. Therefore, their revenue fluctuates depending on the employment rate. So, when unemployment inevitably increases, payroll tax revenue will decline, hastening Medicare and Social Security’s bankruptcy.

Another dark cloud on the government’s fiscal horizon involves the Pension Benefit Guaranty Corporation (PBGC), which provides federal bailouts to bankrupt pension plans. The PBGC currently has an over 50 billion dollars deficit. This deficit will almost certainly increase, as a number of large pension funds are likely to need a PBGC bailout in the next few years. Congress will likely bail out the PBGC to avoid facing the wrath of voters angry that Congress did not save their pensions.

Unfunded liabilities like Social Security and Medicare are not included in the official federal deficit. In fact, Congress raids the Social Security trust fund to increase spending and hide the deficit’s true size, while leaving the trust fund with worthless IOUs.

The media also ignored last week’s Congressional Budget Office (CBO) report predicting the federal debt will increase to an unsustainable 144 percent of the gross domestic product by 2049. The CBO’s report is optimistic as it assumes interest rates remain low, Congress refrains from creating new programs, and there are no major recessions.

Few in Congress or in the Trump administration are even talking about the coming fiscal tsunami, much less proposing the type of spending cuts necessary to pay down the debt and have the funds to unwind the entitlement programs without harming those currently reliant on them. Instead, both parties support increasing spending and debt.

Republican control of both houses of Congress and the While House led to increased federal spending of over $300 billion dollars. The House Democratic majority now wants even more spending increases. House Speaker Nancy Pelosi is threatening to not raise the debt ceiling unless President Trump and congressional Republicans agree to lift the spending caps put in place by the 2011 budget deal.

The Republican Congress routinely exceeded the caps’ minuscule spending limits. Therefore, Speaker Pelosi should have no problem getting President Trump and his Republic congressional allies to once again exceed the caps on welfare spending as long as Democrats agree, as they are likely to agree, to bust the caps on warfare spending.

America’s military budget already equals the combined budgets of the next seven highest-spending countries. Instead of allowing himself to be neoconned into wasting trillions on another Middle East quagmire, President Trump should bring home the nearly 170,000 troops stationed in almost 150 countries.

Unless Congress immediately begins making substantial spending cuts, America will soon face a major economic crisis. This crisis will likely involve the Federal Reserve’s debt monetization resulting in a rejection of the dollar’s world reserve currency status. Since the media and most politicians refuse to discuss this topic, it is up to those of us who understand the truth to spread the word, grow the liberty movement, and force politicians to make real cuts right now.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

Gennady Stolyarov II Speaks with Steele Archer of Debt Nation on Transhumanism and Emerging Technologies

Gennady Stolyarov II Speaks with Steele Archer of Debt Nation on Transhumanism and Emerging Technologies

Gennady Stolyarov II
Steele Archer


Watch this wide-ranging discussion between U.S. Transhumanist Party Chairman Gennady Stolyarov II and Steele Archer of the Debt Nation show, addressing a broad array of emerging technologies, the aspirations of transhumanism, and aspects of both broader and more personal economic matters – from the impact of technology on the labor market to how Mr. Stolyarov paid off his mortgage in 6.5 years. This conversation delved into Austrian economics, techno-optimism, cultural obstacles to progress, the work and ideals of the U.S. Transhumanist Party / Transhuman Party, life extension and the “Death is Wrong” children’s book, science fiction, and space colonization – among many other topics.
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Join the U.S. Transhumanist Party / Transhuman Party for free here.
Why California Cities Are Becoming Unlivable – Article by Andrew Berryhill

Why California Cities Are Becoming Unlivable – Article by Andrew Berryhill

Andrew Berryhill
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California has the highest poverty rate in the U.S. and is rated dead last in quality of life.

In July, the mayor of San Francisco frankly stated that poverty in the city is so bad, that “there is more feces on the sidewalks than I’ve ever seen.” And it’s not just her – the local NBC investigative unit found a “dangerous mix of drug needles, garbage, and feces throughout downtown San Francisco.”

While such conditions are thankfully not widespread, California still has the highest rate of poverty of any state when factoring in living costs and is rated dead last for quality of life. It’s no wonder that from 2007 to 2016, California lost a million residents on net to domestic migration.

This plight may appear counterintuitive since California’s economy is booming. If the state were an independent country, its economy would rank as the 5th largest in the world. However, a high GDP does not necessarily entail socioeconomic wellbeing.

So, what’s the main problem ailing California and creating such a high cost of living?

Housing Costs

How bad are housing costs? The median price of a home in California is over $600,000 (compared with $300,000 nationally) and a recent study found that:

“Across California, more than 4 in 10 households had unaffordable housing costs, exceeding 30 percent of household income, in 2015. More than 1 in 5 households statewide faced severe housing cost burdens, spending more than half of their income toward housing expenses.”

Housing costs are so high that in San Francisco and San Mateo counties the government considers a household of four making $105,350 as “low income”.

And it’s not just low and middle-income families that are suffering – even many “elite” technology workers can barely make ends meet. Lucrative six-figure salaries don’t go far when you live in the most expensive housing markets in America while also paying some of the highest taxes.

You can save money by living in the suburbs, but multi-hour commutes in soul-crushing traffic may await. Is such an arrangement worth it? Many have said “no” and moved to other states. While their new jobs elsewhere might pay less, other benefits more than make up for it.

But why is the housing situation in California so terrible?

It’s easy to simply say “supply and demand” – so many people have moved to cities that housing construction can’t keep up, causing real estate prices and rents to skyrocket.

However, this invites an important question: why can’t residential developers build fast enough?

Regulations

Regulations play an especially large role in the San Francisco Bay Area, which shockingly includes 15 of the 30 cities with the highest rents in the country. One article explains these struggles well:

For new housing developments in San Francisco, there’s a preliminary review, which takes six months.

Then there are also chances for your neighbors to appeal your permit on either an entitlement or environmental basis. The city also requires extensive public notice of proposed projects even if they already meet neighborhood plans, which have taken several years of deliberation to produce. Neighbors can appeal your project for something as insignificant as the shade of paint. . .

If those fail, neighborhood groups can also file a CEQA or environmental lawsuit under California state law, challenging the environment impact of the project. . .

Then if that fails, opponents can put a development directly on a citywide ballot with enough signatures. . . That’s what happened with the controversial 8 Washington luxury condo project last November even though it had already gone through eight years of deliberation.

These barriers add unpredictable costs and years of delays for every developer, which are ultimately passed onto buyers and renters. It also means that developers have problems attracting capital financing in weaker economic years because of the political uncertainty around getting a project passed.”

Why aren’t politicians working to fix this? Self-preservation. Here’s the unfortunate reality:

“The reason the San Francisco city government won’t fix things that seem obvious . . . is because it fears a backlash from the hundreds of neighborhood associations that blanket the city and can reliably turn people out to the polls.”

Community Sentiment

This cultural opposition to development is not a modern phenomenon:

“San Francisco’s orientation towards growth control has 50 years of history behind it and more than 80 percent of the city’s housing stock is either owner-occupied or rent controlled. The city’s height limits, its rent control and its formidable permitting process are all products of tenant, environmental and preservationist movements that have arisen and fallen over decades.”

Development proposals have been shot down for reasons ranging from burrowing owl protection to complaints that the size of new residential buildings will block sunshine and thereby “devalue human life”.

The power of this “Not In My Back Yard” (NIMBY) movement has been considerable, but counter-movements are growing. When one homeowner recently complained in a Berkeley city council meeting that a proposed residential building would block sunshine for her zucchini garden, one young woman angrily responded: “You’re talking about zucchinis? Really? Because I’m struggling to pay rent.” Young workers facing unaffordable rents are increasingly fed up with petty opposition to more affordable housing.

However, Californian cities still seem more preoccupied with banning strawscocktail swordsscootersdelivery robots, and workplace cafeterias.Even when politicians try to help, they frequently ignore the root causes of the issue. For example, California Representative Kamala Harris recently proposed a bill called the “Rent Relief Act” that would provide a tax credit for people spending over 30 percent of their income on rent.

Harris’ proposal only addresses symptoms of an underlying disease and would almost certainly be counterproductive. It doesn’t encourage more housing construction, which is the only real solution.

Until sweeping housing reform to enable residential development is passed at the state and local levels, Californians will keep fleeing to Texas, Nevada, and Arizona. I don’t blame them.

Andrew Berryhill is an Alcuin Fellow at Intellectual Takeout and a rising senior at Hillsdale College majoring in economics. Andrew has interned on Capitol Hill and was a research fellow for Hillsdale’s economics department. In his spare time, he enjoys practicing the violin and playing golf.

This post (“Why California Cities Are Becoming Unlivable“) was originally published on Intellectual Takeout by Andrew Berryhill.

5 of the Worst Economic Predictions in History – Article by Luis Pablo de la Horra

5 of the Worst Economic Predictions in History – Article by Luis Pablo de la Horra

Luis Pablo de la Horra
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Uncertainty makes human beings uncomfortable. Not knowing what’s going to happen in the future creates a sense of unrest in many people. That’s why we sometimes draw on predictions made by leading experts in their respective fields to make decisions in our daily lives. Unfortunately, history has shown that experts aren’t often much better than the average person when it comes to forecasting the future. And economists aren’t an exception. Here are five economic predictions that never came true.

1. Irving Fisher Predicting a Stock-Market Boom—Right Before the Crash of 1929

Irving Fisher was one of the great economists of the first half of twentieth century. His contributions to economic science are varied: the relationship between inflation and interest rates, the use of price indexes or the restatement of the quantity theory of money are some of them. Yet he is sometimes remembered by an unfortunate statement he made in the days prior to the Crash of 1929. Fisher said that “stock prices have reached what looks like a permanently high plateau (…) I expect to see the stock market a good deal higher within a few months.” A few days later, the stock market crashed with devastating consequences.  After all, even geniuses aren’t exempt from making mistakes.

2. Paul Ehrlich on the Looming ‘Population Bomb’

In 1968, biologist Paul Ehrlich published a book where he argued that hundreds of millions of people would starve to death in the following decades as a result of overpopulation. He went as far as far as to say that “the battle to feed all of humanity is over (…) nothing can prevent a substantial increase in the world death rate.” Of course, Ehrlich’s predictions never came true. Since the publication of the book, the death rate has moved from 12.44 permille in 1968 to 7.65 permille in 2016, and undernourishment has declined dramatically even though the population has doubled since 1950. Seldom in history has someone been so wrong about the future of humankind.

3. The 1990s Great Depression that Never Happened

Economist Ravi Batra reached the number one on The New York Time Best Seller List in 1987 thanks to his book The Great Depression of 1990. From the title, one can easily infer what was the main thesis of the book, namely: An economic crisis is imminent, and it will be a tough one. Fortunately, his prediction failed to come true. In fact, the 1990s was a period of relative stability and strong economic growth, with the US stock market growing at an 18 percent annualized rate. Not so bad for an economic depression, right?

4. Alan Greenspan on Interest Rates

In September 2007, former Fed Chairman Alan Greenspan released a memoir called The Age of Turbulence: Adventures in a New WorldIn the book, he claimed that the economy was heading towards two-digit interest rates due to expected inflationary pressures. According to Greenspan, the Fed would be compelled to drastically raise its target interest rate to fulfill the 2-percent inflation mandate. One year later, the Fed Funds rate was at historical lows, reaching the zero-lower bound shortly after.

5. Peter Schiff and the End of the World

Financial commentator Peter Schiff became famous in the aftermath of the 2007-2008 Financial Crisis for having foreseen the housing crash back in 2006 (even a broken clock is right twice a day). Since then, he has been predicting economic catastrophes every other day, with very limited success. There are many examples of failed predictions from which to draw upon. For instance, in a 2010 video (see below), Schiff foretold that Quantitative Easing (the unconventional monetary policy undertaken by the Fed between 2008 and 2014) would result in hyperinflation and the eventual destruction of the Dollar. Unfortunately for Schiff, the average inflation rate per year since the onset of QE has been 1.68%, slightly below the 2% target of the Fed.

 

Luis Pablo is a PhD Candidate in Economics at the University of Valladolid. He has been published by several media outlets, including The American Conservative, CapX and the Foundation for Economic Education, among others.

This article was originally published on Intellectual Takeout.

Contra Robert Shiller on Cryptocurrencies – Article by Adam Alonzi

Contra Robert Shiller on Cryptocurrencies – Article by Adam Alonzi

Adam Alonzi


While warnings of caution can be condoned without much guilt, my concern is critiques like Dr. Shiller’s (which he has since considerably softened) will cause some value-oriented investors to completely exclude cryptocurrencies and related assets from their portfolios. I will not wax poetically about the myriad of forms money has assumed across the ages, because it is already well-covered by more than one rarely read treatise. It should be said, though it may not need to be, that a community’s preferred medium of exchange is not arbitrary. The immovable wheels of Micronesia met the needs of their makers just as digital stores of value like Bitcoin will serve the sprawling financial archipelagos of tomorrow. This role will be facilitated by the ability of blockchains not just to store transactions, but to enforce the governing charter agreed upon by their participants.

Tokens are abstractions, a convenient means of allotting ownership. Bradley Rivetz, a venture capitalist, puts it like this: “everything that can be tokenized will be tokenized the Empire State Building will someday be tokenized, I’ll buy 1% of the Empire State Building, I’ll get every day credited to my wallet 1% of the rents minus expenses, I can borrow against my Empire State Building holding and if I want to sell the Empire State Building I hit a button and I instantly have the money.” Bitcoin and its unmodified copycats do not derive their value from anything tangible. However, this is not the case for all crypto projects. Supporters tout its deflationary design (which isn’t much of an advantage when there is no value to deflate), its modest transaction fees, the fact it is not treated as a currency by most tax codes (this is changing and liable to continue changing), and the relative anonymity it offers.

The fact that Bitcoin is still considered an asset in most jurisdictions is a strength. This means that since Bitcoin is de facto intermediary on most exchanges (most pairs are expressed in terms of BTC or a major fiat, many solely in BTC), one can buy and sell other tokens freely without worrying about capital gains taxes, which turn what should be wholly pleasurable into something akin to an ice cream sundae followed by a root canal. This applies to sales and corporate income taxes as well. A company like Walmart, despite its gross income, relies on a slender profit margin to appease its shareholders. While I’m not asking you to weep for the Waltons, I am asking you to think about the incentives for a company to begin experimenting with its own tax-free tokens as a means of improving customer spending power and building brand loyalty.

How many coins will be needed and, for that matter, how many niches they will be summoned to fill, remains unknown.  In his lecture on real estate Dr. Shiller mentions the Peruvian economist Hernando De Soto’s observation about the lack of accounting for most of the land in the world.  Needless to say, for these areas to advance economically, or any way for that matter, it is important to establish who owns what. Drafting deeds, transferring ownership of properties or other goods, and managing the laws of districts where local authorities are unreliable or otherwise impotent are services that are best provided by an inviolable ledger. In the absence of a central body, this responsibility will be assumed by blockchain. Projects like BitNation are bringing the idea of decentralized governance to the masses; efforts like Octaneum are beginning to integrate blockchain technology with multi-trillion dollar commodities markets.

As more than one author has contended, information is arguably the most precious resource of the twenty first century. It it is hardly scarce, but analysis is as vital to making sound decisions. Augur and Gnosis provide decentralized prediction markets. The latter, Kristin Houser describes it, is a platform used “to create a prediction market for any event, such as the Super Bowl or an art auction.” Philip Tetlock’s book on superforecasting covers the key advantages of crowdsourcing economic and geopolitical forecasting, namely accuracy and cost-effectiveness. Blockchains will not only generate data, but also assist in making sense of it.  While it is just a historical aside, it is good to remember that money, as Tymoigne and Wray (2006) note, was originally devised as a means of recording debt. Hazel sticks with notches preceded the first coins by hundreds of years. Money began as a unit of accounting, not a store of value.

MelonPort and Iconomi both allow anyone to start their own investment funds. Given that it is “just” software is the beauty of it: these programs can continue to be improved upon  indefinitely. If the old team loses its vim, the project can easily be forked. Where is crypto right now and why does it matter? There is a tendency for academics (and ordinary people) to think of things in the real world as static objects existing in some kind of Platonic heaven. This is a monumental mistake when dealing with an adaptive system, or in this case, a series of immature, interlocking, and rapidly evolving ecosystems. We have seen the first bloom – some pruning too – and as clever people find new uses for the underlying technology, particularly in the area of IoT and other emerging fields, we will see another bloom. The crypto bubble has come and gone, but the tsunami, replete with mature products with explicit functions, is just starting to take shape.

In the long run Warren Buffett, Shiller, and the rest will likely be right about Bitcoin itself, which has far fewer features than more recent arrivals. Its persisting relevance comes from brand recognition and the fact that most of the crypto infrastructure was built with it in mind. As the first comer it will remain the reserve currency of the crypto world.  It is nowhere near reaching any sort of hard cap. The total amount invested in crypto is still minuscule compared to older markets. Newcomers, unaware or wary of even well-established projects like Ethereum and Litecoin, will at first invest in what they recognize. Given that the barriers to entry (access to an Internet connection and a halfway-decent computer or phone) are set to continue diminishing, including in countries in which the fiat currency is unstable, demand should only be expected to climb.

Adam Alonzi is a writer, biotechnologist, documentary maker, futurist, inventor, programmer, and author of the novels A Plank in Reason and Praying for Death: A Zombie Apocalypse. He is an analyst for the Millennium Project, the Head Media Director for BioViva Sciences, and Editor-in-Chief of Radical Science News. Listen to his podcasts here. Read his blog here.

How Marcus Aurelius Influenced Adam Smith (No, Really) – Article by Paul Meany

How Marcus Aurelius Influenced Adam Smith (No, Really) – Article by Paul Meany

The New Renaissance Hat
Paul Meany
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Adam Smith’s appreciation for the Stoic emperor’s writings is evident in his own work.

Ancient Roman bust of Emperor Marcus Aurelius, in the Collection of Greek and Roman Antiquities in the Kunsthistorisches Museum, Vienna – Photograph by Gryffindor

Who Was Marcus Aurelius?

Marcus Aurelius Antoninus Augustus was the last of the five good emperors of Rome. He was born in 121 AD, reluctantly became emperor in 161 AD, and reigned for 19 years until his death in 180 AD. His reign was punctuated by numerous wars during which he repelled Rome’s enemies in long campaigns. When not at the frontiers of the empire, he spent his time administering the law, focusing his attention particularly on the guardianship of orphans, the manumission of slaves, and choosing city councilors.

Lord Acton memorably stated, “Power corrupts, absolute power corrupts, absolutely.” Lord Acton’s aphorism is, for the most part, true, but there was one exception to it in history: Marcus Aurelius. He famously had a keen interest in philosophy. Perpetually practicing self-control and moderation in all aspects of his life, he was the closest any person ever came to embodying Plato’s ideal of the “philosopher king.”

While on the front lines of his campaign against the German tribes, Marcus Aurelius wrote his own personal diary. This was originally titled Ta Eis Heauton, meaning To Himself in Greek. Subsequent translations of the text changed the title numerous times; we now know it as Meditations. In Meditations, Marcus Aurelius writes his personal views on the Stoic philosophy.

He focuses heavily on the themes of finding one’s place in the cosmic balance of the universe, the importance of analyzing your actions, and being a good person. Asserting that one should be judged first and foremost on their actions, he decisively urged us to “waste no more time arguing about what a good man should be. Be one.” Meditations is a masterpiece of Stoic philosophy, brimming with insightful, emotional and, most importantly, useful observations on morality and the human condition.

Who Was Adam Smith?

Adam Smith was a Scottish moral philosopher who is renowned as one of the first modern economists. He was born in 1723 in Kirkcaldy and died in 1790. He is famous for his two seminal works, The Wealth of Nations and The Theory of Moral Sentiments. His work was massively influential on classical liberal thought as he was one of the first defenders of the free market.

In The Wealth of Nations and The Theory of Moral Sentiments, Smith articulated a persuasive case for the efficacy and morality of a free-market commercial society. Ludwig Von Mises, speaking about Smith’s works, wrote that they “presented the essence of the ideology of freedom, individualism, and prosperity, with admirable clarity and in an impeccable literary form.” Classical liberal economist Milton Friedman often wore a tie bearing a portrait of Adam Smith to formal events.

Adam Smith’s Readings of Marcus Aurelius

These two figures lived in vastly different times, under vastly different circumstances, so how did Marcus Aurelius ever influence Adam Smith? The answer lies in the ancient philosophy of Stoicism.

Stoicism was one of the three major schools of Greek philosophy in the ancient world. It was founded in Athens in the 3rd century BC by a man named Zeno of Citium. The name “Stoic” was given to the followers of Zeno, who used to congregate to hear him teach at the Athenian Agora, under the colonnade known as the Stoa Poikile. Over time, Stoicism expanded and developed sophisticated views on metaphysics, epistemology, and ethics.

While Stoicism posits numerous views on a huge variety of topics, its most interesting and relevant observations are on ethics. The Stoics were concerned with perfecting self-control which allowed for virtuous behavior. They believed that, through self-control, one could be free of negative emotions and passions which blinded objective judgment.

With a peaceful mind, the Stoics thought, people could live according to the universal reason of the world and practice a virtuous life. Marcus Aurelius described the ideal Stoic life in book three of Meditations, writing, “peace of mind in the evident conformity of your actions to the laws of reason, and peace of mind under the visitations of a destiny you cannot control.”

Adam Smith was educated at the University of Glasgow where he studied under Francis Hutcheson. Hutcheson was a Scottish intellectual and a leading representative of the Christian Stoicism movement during the Scottish Enlightenment. He hosted private noontime classes on Stoicism which Adam Smith often attended. Smith’s preference for Marcus Aurelius was encouraged by Hutcheson, who published his own translation of Meditations.

In The Theory of Moral Sentiments, Smith referred to Marcus Aurelius as “the mild, the humane, the benevolent Antoninus,” demonstrating his deep admiration for the Stoic emperor. Marcus Aurelius influenced Adam Smith in three main areas: the idea of an inner conscience; the importance of self-control; and in his famous analogy of the “Invisible Hand.”

Our Inner Conscience

Both Marcus Aurelius and Adam Smith believed that the key to understanding morality was through self-scrutiny and sympathy for others.

Marcus Aurelius wrote Meditations in the form of a self-reflective dialogue with his inner self. He thought that moral conviction lay within “the very god that is seated in you, bringing your impulses under its control, scrutinizing your thoughts.’’ He interchangeably referred to this inner god as the soul or the helmsman and believed that it is a voice within you that attempts to sway you from immoral doings; we now call this a conscience.

Similarly, Smith emphasized the role of people’s innermost thoughts. A key aspect of Smith’s moral philosophy in The Theory of Moral Sentiments is the impartial spectator. Smith theorized that morality could be understood through the medium of sympathy. He thought that before people acted they ought to look for the approval of an impartial spectator.

“But though man has… been rendered the immediate judge of mankind, he has been rendered so only in the first instance; and an appeal lies from his sentence to a much higher tribunal, to the tribunal of their own consciences, to that of the supposed impartial and well-informed spectator, to that of the man within the breast, the great judge and arbiter of their conduct.”

The Importance of Self-Control

The Stoics listed four “cardinal virtues” — wisdom, justice, courage, and temperance — for which they held great reverence. These were believed to be expressions and manifestations of a single indivisible virtue. Smith used slightly different names, but he endorsed the same set of virtues and the idea that they were all facets of one indivisible virtue.

Smith and Aurelius had a mutual appreciation for the virtue of self-control. They both believed in an impartial, self-scrutinizing conscience that guided morality: while Aurelius called it the God Within, Smith called it the Impartial Spectator.

Marcus Aurelius said, “You have power over your mind — not outside events. Realize this, and you will find strength.” The primacy of self-control is intrinsic to the Stoic philosophy. In a similar vein of thought, Smith writes that “self-command is not only itself a great virtue, but from all other virtues seem to derive their principal lustre.” This respect for self-control was encouraged and cultivated by Smith’s Impartial Spectator and Marcus Aurelius’ Inner God.

The Invisible Hand

Marcus Aurelius argues that we must work together in common cooperation in order to improve humanity as a whole. He argues that we “were born to work together.” Aurelius stressed the vital nature of human cooperation.

“Constantly think of the universe as one living creature, embracing one being and soul; how all is absorbed into the one consciousness of this living creature; how it compasses all things with a single purpose, and how all things work together to cause all that comes to pass, and their wonderful web and texture.”

In The Wealth of Nations and The Theory of Moral Sentiments, Adam Smith’s defense of the free market is expressed through the analogy of the Invisible Hand. Smith argues that in a society of free exchange and free markets, people must sympathize with one another and understand how best to benefit their fellow man in order to better their own situation.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

The transaction will not occur unless the parties involved demonstrate their sympathy for the interests of others. In the analogy of the Invisible Hand, Smith argues that we must think of others before ourselves and consider how best to serve our fellow neighbor. This famous passage bears a striking resemblance to the previous passage by Marcus Aurelius who also argues for the importance of conscious cooperation among people for the common good.

We Are All Standing on the Shoulders of Giants

A Roman emperor seems like an unlikely intellectual influence for a classical liberal thinker such as Adam Smith. Upon closer inspection, however, Smith and Aurelius are like two peas in a pod: both men believed that the root of morality lies within the self-scrutiny of one’s conscience; both believe in the primacy of the virtue of self-control; and both believe in the importance of sympathy as a tool for cooperation and the betterment of civilized society.

No thinker is entirely alone in their pursuit of truth. All people discover truth by building upon the previous discoveries of others. This explains how an emperor came to influence so strongly an Enlightenment moral philosopher and economist more than a thousand years after he had passed away. I believe that the best expression of the development of such ideas was written by a medieval philosopher and bishop, John of Salisbury, who spoke of the wisdom of Bernard of Chartres:

“He pointed out that we see more and farther than our predecessors, not because we have keener vision or greater height, but because we are lifted up and borne aloft on their gigantic stature.”

We are all dwarfs standing on the shoulders of giants in the pursuit of the system of natural liberty and prosperity that Adam Smith sought during his lifetime.

Paul Meany is a student at Trinity College Dublin studying Ancient and Medieval History and Culture.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author. Read the original article.

U.S. Transhumanist Party / Institute of Exponential Sciences Discussion Panel on Cryptocurrencies

U.S. Transhumanist Party / Institute of Exponential Sciences Discussion Panel on Cryptocurrencies

Gennady Stolyarov II
Demian Zivkovic
Chantha Lueung
Laurens Wes
Moritz Bierling


On Sunday, February 18, 2018, the U.S. Transhumanist Party and Institute of Exponential Sciences hosted an expert discussion panel on how cryptocurrencies and blockchain-based technologies will possibly affect future economies and everyday life. Panelists were asked about their views regarding what is the most significant promise of cryptocurrencies, as well as what are the most significant current obstacles to its realization.

Gennady Stolyarov II, Chairman of the U.S. Transhumanist Party, and Demian Zivkovic, President of the Institute of Exponential Sciences, are the moderators for this panel.

Panelists

Moritz Bierling

Moritz Bierling, in his work for Exosphere Academy – a learning and problem-solving community – has organized a Space Elevator bootcamp, an Artificial Intelligence conference, and an Ethereum training course while also authoring a Primer on the emerging discipline of Alternate Reality Design. As Blockchain Reporter for the Berlin blockchain startup Neufund, he has educated the city’s Venture Capital and startup scene, as well as the broader public on the applications of this groundbreaking technology. His work has appeared in a number of blockchain-related and libertarian media outlets such as CoinTelegraph, The Freeman’s Perspective, Bitcoin.com, and the School Sucks Project. See his website at MoritzBierling.com.

Chantha Lueung

Chantha Lueung is the creator of Crypto-city.com, which is a social-media website focused on building the future world of cryptocurrencies by connecting crypto-enthusiasts and the general public about cryptocurrencies. He is a full-time trader and also participates in the HyperStake coin project, which is a Bitcoin alternative that uses the very energy-efficient Proof of Stake protocol, also known as POS.

Laurens Wes

Laurens Wes is a Dutch engineer and chief engineering officer at the Institute of Exponential Sciences. Furthermore he is the owner of Intrifix, a company focused on custom 3D-printed products and software solutions. He has also studied Artificial Intelligence and is very interested in transhumanism, longevity, entrepreneurship, cryptocurrencies/blockchain technology, and art (and a lot more). He is a regular speaker for the IES and is very committed to educating the public on accelerated technological developments and exponential sciences.

The YouTube question/comment chat for this Q&A session has been archived here and is also provided below.

Visit the U.S. Transhumanist Party Facebook page here.

See the U.S. Transhumanist Party FAQ here.

Become a member of the U.S. Transhumanist Party for free, no matter where you reside.

Become a Foreign Ambassador for the U.S. Transhumanist Party.

References

Chat Log from the Panel Discussion on Cryptocurrencies of February 18, 2018

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Review of Philip Tetlock’s “Superforecasting” – Article by Adam Alonzi

Review of Philip Tetlock’s “Superforecasting” – Article by Adam Alonzi

The New Renaissance Hat
Adam Alonzi
******************************
Alexander Consulting the Oracle of Apollo, Louis Jean Francois Lagrenée. 1789, Oil on Canvas.

“All who drink of this treatment recover in a short time, except those whom it does not help, who all die. It is obvious, therefore, that it fails only in incurable cases.”

-Galen

Before the advent of evidence-based medicine, most physicians took an attitude like Galen’s toward their prescriptions. If their remedies did not work, surely the fault was with their patient. For centuries scores of revered doctors did not consider putting bloodletting or trepanation to the test. Randomized trials to evaluate the efficacy of a treatment were not common practice. Doctors like Archie Cochrane, who fought to make them part of standard protocol, were met with fierce resistance. Philip Tetlock, author of Superforecasting: The Art and Science of Prediction (2015), contends that the state of forecasting in the 21st century is strikingly similar to medicine in the 19th. Initiatives like the Good Judgement Project (GJP), a website that allows anyone to make predictions about world events, have shown that even a discipline that is largely at the mercy of chance can be put on a scientific footing.

More than once the author reminds us that the key to success in this endeavor is not what you think or what you know, but how you think. For Tetlock pundits like Thomas Friedman are the “exasperatingly evasive” Galens of the modern era. In the footnotes he lets the reader know he chose Friedman as target strictly because of his prominence. There are many like him. Tetlock’s academic work comparing random selections with those of professionals led media outlets to publish, and a portion of their readers to conclude, that expert opinion is no more accurate than a dart-throwing chimpanzee. What the undiscerning did not consider, however, is not all of the experts who participated failed to do better than chance.

Daniel Kahneman hypothesized that “attentive readers of the New York Times…may be only slightly worse” than these experts corporations and governments so handsomely recompense. This turned out to be a conservative guess. The participants in the Good Judgement Project outperformed all control groups, including one composed of professional intelligence analysts with access to classified information. This hodgepodge of retired bird watchers, unemployed programmers, and news junkies did 30% better than the “pros.” More importantly, at least to readers who want to gain a useful skillset as well as general knowledge, the managers of the GJP have identified qualities and ways of thinking that separate “superforecasters” from the rest of us. Fortunately they are qualities we can all cultivate.

While the merits of his macroeconomic theories can be debated, John Maynard Keynes was an extremely successful investor during one of the bleakest periods in international finance. This was no doubt due in part to his willingness to make allowance for new information and his grasp of probability. Participants in the GJP display open-mindedness, an ability and willingness to repeatedly update their forecasts, a talent to neither under- nor over-react to new information by putting it into a broader context,  and a predilection for mathematical thinking (though those interviewed admitted they rarely used an explicit equation to calculate their answer). The figures they give also tend to be more precise than their less successful peers. This “granularity” may seem ridiculous at first. I must confess that when I first saw estimates on the GJP of 34% or 59%, I would chuckle a bit. How, I asked myself, is a single percentage point meaningful? Aren’t we just dealing with rough approximations? Apparently not.

Tetlock reminds us that the GJP does not deal with nebulous questions like “Who will be president in 2027?” or “Will a level 9 earthquake hit California two years from now?” However, there are questions that are not, in the absence of unforeseeable Black Swan events, completely inscrutable. Who will win the Mongolian presidency? Will Uruguay sign a trade agreement with Laos in the next six months? These are parts of highly complex systems, but they can be broken down into tractable subproblems.

Using numbers instead of words like “possibly”, “probably”, “unlikely”, etc., seems unnatural. It gives us wiggle room and plausible deniability. They also cannot be put on any sort of record to keep score of how well we’re doing. Still, to some it may seem silly, pedantic, or presumptuous. If Joint Chiefs of Staff had given the exact figure they had in mind (3 to 1) instead of the “fair chance” given to Kennedy, the Bay of Pigs debacle may have never transpired. Because they represent ranges of values instead of single numbers, words can be retroactively stretched or shrunk to make blunders seem a little less avoidable. This is good for advisors looking to cover their hides by hedging their bets, but not so great for everyone else.

If American intelligence agencies had presented the formidable but vincible figure of 70% instead of a “slam dunk” to Congress, a disastrous invasion and costly occupation would have been prevented. At this point it is hard not to see the invasion as anything as a mistake, but even amidst these emotions we must be wary of hindsight. Still, a 70% chance of being right means there is a 30% chance of being wrong. It is hardly a “slam dunk.” No one would feel completely if an oncologist told them they are 70% sure the growth is not malignant. There are enormous consequences to sloppy communications. However, those with vested interests are more than content with this approach if it agrees with them, even if it ends up harming them.

When Nate Silver put the odds of the 2008 election in Obama’s favor, he was panned by Republicans as a pawn of the liberal media. He was quickly reviled by Democrats when he foresaw a Republican takeover of the Senate. It is hard to be a wizard when the king, his court, and all the merry peasants sweeping the stables would not know a confirmation bias from their right foot. To make matters worse, confidence is widely equated with capability. This seems to be doubly true of groups of people, particularly when they are choosing a leader. A mutual-fund manager who tells his clients they will see great returns on a company is viewed as stronger than a Poindexter prattling on about Bayesian inference and risk management.

The GJP’s approach has not spread far — yet. At this time most pundits, consultants, and self-proclaimed sages do not explicitly quantify their success rates, but this does not stop corporations, NGOs, and institutions at all levels of government from paying handsomely for the wisdom of untested soothsayers. Perhaps they have a few diplomas, but most cannot provide compelling evidence for expertise in haruspicy (sans the sheep’s liver). Given the criticality of accurate analyses to saving time and money, it would seem as though a demand for methods to improve and assess the quality of foresight would arise. Yet for the most part individuals and institutions continue to happily grope in the dark, unaware of the necessity for feedback when they misstep — afraid of having their predictions scrutinized or having to take the pains to scrutinize their predictions.

David Ferrucci is wary of the “guru model” to settling disputes. No doubt you’ve witnessed or participated in this kind of whimpering fracas: one person presents a Krugman op-ed to debunk a Niall Ferguson polemic, which is then countered with a Tommy Friedman book, which was recently excoriated  by the newest leader of the latest intellectual cult to come out of the Ivy League. In the end both sides leave frustrated. Krugman’s blunders regarding the economic prospects of the Internet, deflation, the “imminent” collapse of the euro (said repeatedly between 2010 and 2012) are legendary. Similarly, Ferguson, who strongly petitioned the Federal Reserve to reconsider quantitative easing, lest the United States suffer Weimar-like inflation, has not yet been vindicated. He and his colleagues responded in the same way as other embarrassed prophets: be patient, it has not happened, but it will! In his defense, more than one clever person has criticized the way governments calculate their inflation rates…

Paul Ehrlich, a darling of environmentalist movement, has screeched about the detonation of a “population bomb” for decades. Civilization was set to collapse between 15 and 30 years from 1970. During the interim 100 to 200 million would annually starve to death, by the year 2000 no crude oil would be left, the prices of raw materials would skyrocket, and the planet would be in the midst of a perpetual famine. Tetlock does not mention Ehrlich, but he is, particularly given his persisting influence on Greens, as or more deserving of a place in this hall of fame as anyone else. Larry Kudlow continued to assure the American people that the Bush tax breaks were producing massive economic growth. This continued well into 2008, when he repeatedly told journalists that America was not in a recession and the Bush boom was “alive and well.” For his stupendous commitment to his contention in the face of overwhelming evidence to the contrary, he was nearly awarded a seat in the Trump cabinet.

This is not to say a mistake should become the journalistic equivalent of a scarlet letter. Kudlow’s slavish adherence to his axioms is not unique. Ehrlich’s blindness to technological advances is not uncommon, even in an era dominated by technology. By failing to set a timeline or give detailed causal accounts, many believe they have predicted every crash since they learned how to say the word. This is likely because they begin each day with the same mantra: “the market will crash.”  Yet through an automatically executed routine of psychological somersaults, they do not see they were right only once and wrong dozens, hundreds, or thousands of times. This kind of person is much more deserving of scorn than a poker player who boasts about his victories, because he is (likely) also aware of how often he loses. At least he’s not fooling himself. The severity of Ehrlich’s misfires is a reminder of what happens when someone looks too far ahead while assuming all things will remain the same. Ceteris paribus exists only in laboratories and textbooks.

Axioms are fates accepted by different people as truth, but the belief in Fate (in the form of retroactive narrative construction) is a nearly ubiquitous stumbling block to clear thinking. We may be far removed from Sophocles, but the unconscious human drive to create sensible narratives is not peculiar to fifth-century B.C. Athens. A questionnaire given to students at Northwestern showed that most believed things had turned out for the best even if they had gotten into their first pick. From an outsider’s perspective this is probably not true. In our cocoons we like to think we are in the right place either through the hand of fate or through our own choices. Atheists are not immune to this Panglossian habit. Our brains are wired for stories, but the stories we tell ourselves about ourselves seldom come out without distortions. We can gain a better outside view, which allows us to see situations from perspectives other than our own, but only through regular practice with feedback. This is one of the reasons groups are valuable.

Francis Galton asked 787 villagers to guess the weight of an ox hanging in the market square. The average of their guesses (1,197 lbs) turned out to be remarkably close to its actual weight (1,198 lbs). Scott Page has said “diversity trumps ability.” This is a tad bold, since legions of very different imbeciles will never produce anything of value, but there is undoubtedly a benefit to having a group with more than one point of view. This was tested by the GJP. Teams performed better than lone wolves by a significant margin (23% to be exact). Partially as a result of encouraging one another and building a culture of excellence, and partially from the power of collective intelligence.

“No battle plan survives contact with the enemy.”

-Helmuth von Moltke

“Everyone has a plan ’till they get punched in the mouth.”

-Mike Tyson

When Archie Cochrane was told he had cancer by his surgeon, he prepared for death. Type 1 thinking grabbed hold of him and did not doubt the diagnosis. A pathologist later told him the surgeon was wrong. The best of us, under pressure, fall back on habitual modes of thinking. This is another reason why groups are useful (assuming all their members do not also panic). Organizations like the GJP and the Millennium Project are showing how well collective intelligence systems can perform. Helmuth von Moltke and Mike Tyson aside, a better motto, substantiated by a growing body of evidence, comes from Dwight  Eisenhower: “plans are useless, but planning is indispensable.”

Adam Alonzi is a writer, biotechnologist, documentary maker, futurist, inventor, programmer, and author of the novels A Plank in Reason and Praying for Death: A Zombie Apocalypse. He is an analyst for the Millennium Project, the Head Media Director for BioViva Sciences, and Editor-in-Chief of Radical Science News. Listen to his podcasts here. Read his blog here.