November 29, 2009

26-year-old Venezuelan on Hugo Chavez’s video game ban

The essay addresses what are perhaps the two most destructive problems of today’s Venezuela: the rampant wave of crime that cuts a swath through the country, and Hugo Chavez’s ever-growing megalomaniac tendencies.

Being a Venezuelan myself, having grown up playing video games in Caracas, and having had close friends assaulted and killed by common criminals in the city, I couldn’t help feeling deeply identified with Guido’s point of view.

I will be spending Christmas with my family in Caracas and will blog about my own personal observations, so for now, without further ado, I invite you to read Guido’s piece.

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November 25, 2009

On becoming more compassionate — practical guidelines

During a recent TED talk delivered a couple of weeks from the Charter for Compassion launch, religious scholar Karen Armstrong reminds us of a fact that regrettably is still not entirely obvious to all of us: the centrality of compassion in all the major world faiths, and ultimately as the basis of all morality.

For getting us all back in touch with compassion, she urges us to revive the Golden Rule: Always treat others as you would like to be treated yourself.

For years I’ve been feeling frustrated because as a religious historian, I’ve become acutely aware of the centrality of compassion in all the major world faiths. Every single one of them has evolved their own version of what’s being called the Golden Rule.

Sometimes it comes in a positive version — “Always treat all others as you’d like to be treated yourself.” And equally important is the negative version — “Don’t do to others what you would not like them to do to you.”

How we got to where we are

But before we go into the practical issues of how to revive the Golden Rule in our personal lives and our global community, it’s important to understand how we got into our modern mess of moral confusion.

According to Armstrong, part of the problem is human nature:

But… you’d never know that [compassion] was so central to the religious life. Because with a few wonderful exceptions, very often when religious people come together… they’re arguing about abstruse doctrines or uttering a council of hatred or inveying against homosexuality…

Often people don’t really want to be compassionate. I sometimes see when I’m speaking to a congregation of religious people a mutinous expression crossing their faces because people often want to be right instead. And that of course defeats the object of the exercise.

As discussed in my previous post, wanting to be right all the time is simply inevitable for human beings.

We’re biologically wired for it. It’s an instinct that helped us survive back in the days when we were subject to the forces of natural selection; but in modern life, it creates more problems than it solves.

There are also deep cultural reasons that led religion to loose its focus on compassion and the Golden Rule.

In her earlier TED Prize wish talk where Armstrong argues for the creation of the Charter for Compassion, she points out that

To my astonishment, when I began seriously studying other [religious] traditions, I began to realize that … the word “belief” itself originally meant to love, to prize, to hold dear. In the 17th century, it narrowed its focus… to mean an intellectual ascent to a set of propositions: a credo.

“I believe” — it did no mean “I accept certain creedal articles of faith.” It meant: “I commit myself. I engage myself.” In the Qur’an, religious opinion — religious orthodoxy — is dismissed as “zanna”: self-indulgent guesswork about matters that nobody can be certain of… but which makes people quarrelsome and stupidly sectarian.

In this light, religion is not about believing things. It’s about behaving in a certain way:

Instead of deciding whether or not you believe in God, first you to do something. You behave in a committed way, and then you begin to understand the truths of religion… religious doctrines are meant to be summons to action; you only understand them when you put them into practice.

How to become more compassionate

Just doing it

Action is then the key that will revive our emotional connection with the Golden Rule.

Practicing diligently, compassion will slowly but surely produce its transcendental magic on our character:

People have found that when they have implemented the Golden Rule as Confucius said, “all day and every day,” not just doing your good deed for the day and then returning to a life of greed and egotism… you dethrone yourself from the center of your world, put another there, and you transcend yourself.

And it brings you into the presence of what’s being called God, Nirvana, Rama, Tao.

In a related talk recorded at the Chautauqua institution for the Charter of Compassion, Swami Dayananda Saraswati agrees with Armstrong, and urges us to act compassionately even if at first it doesn’t feel much natural:

To discover compassion, you need to be compassionate… You cannot learn swimming on a foam mattress and enter into water. You learn swimming by swimming…You learn cooking by cooking, having some sympathetic people around you to eat what you cook.

And, therefore, what I say, you have to fake it and make it. (Laughter) You have to act it out. You have to act compassionately.

Expanding our moral imagination

Relying on willpower alone for becoming truly compassionate is not enough. We need techniques that act against our subconscious resistance to compassion, which unfortunately, happens to be as much a part of human nature as judgmentalism and our obsession with being right.

Also during a TED talk, Robert Wright explores the the biological roots of compassion and the Golden Rule.

First off, compassion is built in our genes through the principle of kin selection:

…. the basic idea of kin selection is that, if an animal feels compassion for a close relative, and this compassion leads the animal to help the relative, then… compassion actually winds up helping the genes underlying the compassion itself.

So, from a biologist’s point of view, compassion is actually a gene’s way of helping itself.

So while it is good news that compassion is in our genes, the bad news is that kin selected compassion is naturally confined to the family.

Fortunately, we’re endowed with a second kind of evolutionary trait that biologists call reciprocal altruism: compassion leads you to do good things for people who then will return the favor.

And while reciprocal altruism is ultimately self-serving and doesn’t bring universal compassion by itself, it has given people an intuitive appreciation of the golden rule:

… you can go to a hunter gatherer society that has had no exposure to any of the great religious traditions, to ethical philosophy, and you’ll find… that they believe that one good turn deserves another, and that bad deeds should be punished.

And evolutionary psychologists think that these intuitions have a basis in the genes… That’s close to being a kind of built in intuition.

But not even something quite close to a built in intuition makes us fully compassionate beings:

…in everyday life, the way we decide who we’re not going to extend the Golden Rule to… is through a rough and ready formula: if you’re my enemy, if you’re my rival… if you’re not my friend, if you’re not in my family, I’m much less inclined to apply the Golden Rule to you.

We all do that… For example, people from Gaza wouldn’t want to have missiles fired at them, but they say, “Well, but the Israelis, or some of them have done things that put them in a special category.”

The Israelis would not want to have an economic blockade imposed on them, but they impose one on Gaza, and they say, “Well, the Palestinians, or some of them, have brought this on themselves.”

But moral imagination is also part of human nature. And religious leaders have the power of helping people expand their moral imagination to places where it doesn’t naturally go:

… religious leaders are good at reframing issues for people, at harnessing the emotional centers of the brain to get people to alter their awareness and reframe the way they think… They are in the inspiration business.

It’s their great calling to get people all around the world better at expanding their moral imaginations, appreciating that in so many ways they’re in the same boat.

Expanding our moral imaginations is not the work of religious leaders alone.

Karen Armstrong points out that reflecting deeply upon the negative version of the Golden Rule, “Don’t do to others what you would like them to do to you,” should help us do the trick:

Look into your own heart. Discover what it is that gives you pain. And then refuse, under any circumstance whatsoever to inflict that pain on anybody else.

This sounds like material for a five-minute reflection exercise similar to the one I propose for becoming less judgmental in my previous post.

Meditation

Meditation also can help us expand our moral instincts out of the confines of family, friends and allies.

Many people swear by the power of guided meditations that focus on compassionate visualizations, but in my experience mindfulness meditation, and even more traditional approaches that seek to empty the mind of all thoughts, have a profound effect of calming the never-ending demands of the ego, of removing the self from its central place in our psyche, and therefore facilitate the emergence of compassion.

I have been practicing traditional Taoist meditation for about a year now — no wonder I all of a sudden went through a consciousness explosion of sorts that boosted my sensibility towards meaning, truthfulness, and ultimately compassion; and triggered my fascination towards these subjects.

Physical exercise

The Eastern traditions also embrace the idea that physical exercise, specially in the form of the martial arts, Yoga, etc., have an impact on our character.

These are in part considered as forms of meditation, but in my experience with practicing Tai Chi Chuan for as long as I have been meditating, there is a subtle difference between the two activities.

In the West, we also have a strong intuition that physical exercise is not only healthy, but that it makes us better persons. It boosts our moods and energizes us.

We glorify the Olympics and the Soccer World Cup as major events that celebrate our common humanity — even if the underlying sports are very competitive, they unite us in a quasi-religious, transcendent experience.

Actually, Argentines swear they have seen The Hand of God intervene in one of the best goals in the history of Soccer

This idea fits nicely with Karen Armstrong’s view that action is the most important requirement for learning how to be compassionate: we become more compassionate not only by performing acts of compassion, but also indirectly through doing meaningful work — such as invigorating, health-enhancing physical exercise.

Build an appetite for knowledge

Karen Armstrong also advocates during her TED talk for education that teaches students how to expand their moral imaginations:

[Educators] are crucial in helping to dissolve some of the stereotypical views we have of other people… I’d like youth to get a sense of the dynamism and challenge of a compassionate lifestyle. And also see that it demands acute intelligence, not just a gooey feeling.

In my opinion there is yet another sense in which education can helps us become more compassionate. There is a great need to rescue the value of philosophy, the great works of literature, and other subjects that are not immediately practical and therefore tend to be under-represented in basic education programs.

But these are the subjects that are truly inspiring, that have the power of imbuing people with a sense of awe and fascination with knowledge for the sake of knowledge that has an impact on personal development.

As Bertrand Russell put it in his short but powerful classic “The Problems of Philosphy”:

…philosophy has a value (perhaps its chief value) through the greatness of the objects which it contemplates, and the freedom from narrow and personal aims resulting from this contemplation… The mind which has become accustomed to the freedom and impartiality of philosophic contemplation will preserve something of the same freedom and impartiality in the world of action and emotion.

The impartiality which, in contemplation, is the unalloyed desire for truth, is the very same quality of mind which, in action, is justice, and in emotion is that universal love which can be given to all, and not only to those who are judged useful or admirable.

Travel

Traveling has a tremendous capacity to change us for the better, not least because it forces us to embrace the otherness of people foreign to our culture, to put ourselves in their shoes and understand their world.

And putting ourselves in other people’s shoes is the first step towards empathy, kindness and compassion.

I’ll never forget an incident that had a huge impact on me while visiting my dentist in Jordan, where I was living during the 2006 Lebanon war.

There was a TV in the room switched on an Arab news channel that suddenly started transmitting the raw images of the latest Israeli bombings. My conversation with the dentist stopped abruptly, and we both fixed our attention on the monitor.

Watching for 30 minutes the gut-wrenching images that usually don’t make it to Western news channels would have probably been enough.

But what truly changed forever my interest and views on the whole Arab-Israeli conflict in a way that no amount of news, books or lectures could have, was the expression of pain, of deep anguish, on my dentist’s face.

He became a sort of transfixed automaton whose hands were still doing the dentist’s job, but whose whole being was in Lebanon with the children, the mothers and the elderly assassinated by the bombs.

I couldn’t understand his incessant mumbling in Arabic. But I definitely felt his anger and his pain.

Advocating globalization

Wright encourages us in his TED talk to see the globalization glass half full and appreciate that there are very real reasons why it can be a force towards international harmony, and ultimately towards compassion:

Any form of interdependent, non-zero sum relationship forces you to acknowledge the humanity of people. And the world is full of non-zero sum dynamics. Environmental problems, in many ways, put us all in the same boat.

I think there’s evidence that this non-zero sum connection can expand the moral compass… if you look at the American attitudes toward Japanese during World War II… at the depictions of Japanese in the American media as just about subhuman, and look at the fact that we dropped atomic bombs… without giving it much of a thought. And you compare that to the attitude now, I think part of that is due to a kind of economic interdependence.

Rabbi Jackie Tabick, the first woman in the UK to be ordained in the Jewish faith, is also optimistic about this effect of globalization:

…in the mdern world, with the environmental movement, we’re becoming even more aware of the connectivity of things, that something I do here actually does matter in Africa… And… that my needs sometimes have to be sublimated to other needs.

[Compassion] entails understanding the pain of the other. But even more than that, it means understanding one’s connection to the whole of creation… that there is a unity that underlies all that we see… hear, and feel. I call that unity God.

Affirming the charter for compassion

A very first, basic step you can take for the sake of compassion is to visit the Charter for Compassion’s website, launched by Karen Armstrong and TED, and join the thousands of people around the world who have affirmed the charter.

I just did. And it definitely felt good.

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November 21, 2009

Stefan Sagmeister: The power of time off

In this TED talk, renowned designer Stephan Sagmeister shares his rationale for closing down his New York studio for an entire year every seven years.

During his last sabbatical, he came to the conclusion that after a Year of Nothing:

• His job became a calling again.
• Over the long term, it was a financially successful exercise due to the positive impact on the quality of his work.
• Everything his studio designed in the seven years following the Year of Nothing had originated in it.

I hope my Year of Nothing has a big impact on my next seven years of life too. And then I can go for another one.

A big hat tip to @philippawhite for this one!

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November 15, 2009

How to become less judgmental in 5 minutes or less (The Year of Nothing, Part 3)

If you want the truth to stand clear before you, never be for or against.
The struggle between “for” and “against” is the mind’s worst disease.
Sent-ts’an

From the vantage point of the non-doer, during this Year of Nothing I became much better at detecting the petty little games I play with myself and others when caught up in the race towards achievement — a race we all inevitably participate in every single day of our lives.

Being right

The luxury of being able to spend long periods of time reflecting on my not-so-lovable traits allowed me to conclude that one of those petty little games I love so much, is that of being right.

If I consider a topic important enough to have a strong a opinion about it, I adore the feeling of proving to others that my opinion is supported by strong evidence and is logically coherent.

And I must confess, I get almost the same rush from proving that others who dare contradict me on these Important Subjects, are wrong. That their opinion on these Crucial Topics is biased, incoherent or otherwise flawed.

Having caught myself in the act more times than I would have liked to, I decided to do a bit more research on the subject.

Self-serving biases and natural selection

An hour of Amazon.com browsing and ten bucks less in my bank account later, I was reading The Happiness Hypothesis, an awesomely illuminating book by Jonathan Haidt. (Full disclosure: that’s an affiliate link.)

Haidt’s TED talk, to which I link below, addresses many of the book’s key arguments:

After reading for a while, I was comforted to confirm that I’m not alone in my addiction to being right. The book presents lots of research supporting the idea that humans are biologically wired to hold the belief of being right — regardless of the truth.

Actually, this tendency to think we are the Chosen Holders of the Truth is a special case of a genetically ingrained bias towards detecting the faults of others, and turning a blind eye on ours.

We’re programed from birth to see the speck in our brother’s eye, but not the log in our own. We have an instinct for hypocrisy.

The argument goes like this. Evolution favored those who played the game of life using a strategy of tit for tat: cooperate with others as long as they don’t cheat. And whenever they cheat, do not hesitate to retaliate.

React to what the other does to you, paying in kind.

But in real life we don’t react to what someone does to us. We react to what we think they did:

… and the gap between action and perception is bridged by the art of impression management. If life itself is what you deem it, then why not focus your efforts on persuading others to believe that you are a virtuous and trustworthy cooperator?

Natural selection, like politics, works by the principle of survival of the fittest, and several researchers have argued that human beings evolved to play the game of life in a Machiavellian way. The Machiavellian version of tit for tat… is to do all you can to cultivate the reputation of a trustworthy yet vigilant partner, whatever reality may be.

… Machiavellian tit for tat requires devotion to appearances, including protestations of one’s virtue even when one chooses vice. And such protestations are most effective when the person making them really believes them (this last emphasis is mine).

As Robert Wright puts it in his masterful book The Moral Animal, “Human beings are a species splendid in their array of moral equipment, tragic in their propensity to misuse it, and pathetic in their constitutional ignorance of the misuse.”

Naive realism

Our natural tendency to think that we are right is what Emily Pronin at Princeton and Lee Ross at Standford university call “naive realism”:

Each of us thinks we see the world directly, as it really is. We further believe that the facts as we see them are there for all to see, therefore others should agree with us. If they don’t agree, it follows either that they have not been exposed to the relevant facts or else they are blinded by their interests and ideologies… It just seems plain as day to the naive realist, that everyone is influenced by ideology and self interest. Except for me, I see things as they are.

Whatever the benefits naive realism gave us when we were subject to the forces of natural selection, its usefulness in our modern societies is much less clear:

If the only effect of these biases was to make people feel good about themselves the would not be a problem… Evidence shows that people who hold pervasive positive illusions about themselves, their abilities and their future prospects are mentally healthier, happier, and better liked than people who lack such illusions. But such biases can make people feel that they deserve more than they do, thereby setting the stage for endless disputes with other people who feel equally over-entitled.

And when naive realism gets a grip on group dynamics, things get much uglier:

If I could nominate one candidate for “biggest obstacle to world peace and social harmony,” it would be naive realism because it is so easily ratcheted up from the individual to the group level: My group is right because we see things as they are. Those who disagree are obviously biased by their religion, their ideology, or their self-interest.

As it seems, naive realism is similar to overeating. An instinctual drive to eat as many calories as physically possible gave an evolutive advantage to our pre-historical ancestors, who probably ate a couple of times per week, whenever the hunting or gathering session was successful.

But in a society flooded in caloric over-abundance, the instinct doesn’t favor our survival. Quite the contrary. So it pays to learn how to control it.

The antidote: taking a 5-minute hard look at ourselves

First off, Haidt advises us to humbly accept two basic facts about our nature. First, judgmentalism is, however harmful, a natural tendency of out minds. Second, we cannot change that by willpower alone:

[As stated by Chinese Zen Master Sent-ts'an in the opening quotation of this post] Judgmentalism is indeed a disease of the mind: it leads to anger, torment, and conflict. But it is also the mind’s normal condition — the [subconscious] is always evaluating, always saying “Like it” or “Don’t like it.” So … you can’t simply resolve to to stop judging others or stop being a hypocrite. But, as Buddha taught, [you] can gradually learn to tame the subconscious…

And a simple exercise for taming the subconscious, for changing our automatic judgmental reactions starts, as Jesus advised, with ourselves and the log in our own eye:

And you will see the log only if you set out on a deliberate and effortful quest to look for it. Try this now: Think of a recent interpersonal conflict with someone you care about and then find one way in which your behavior was not exemplary. Maybe you did something insensitive (even if you had a right to do it), or hurtful (even if you meant well), or inconsistent with your principles (even though you can readily justify it).

When you first catch sight of a fault in yourself, you’ll likely hear frantic arguments from your inner lawyer excusing you and blaming others, but try not to listen. You are on a mission to find at least one thing that you did wrong…

… When you find a fault in yourself it will hurt, briefly, but if you keep going and acknowledge the fault, you are likely to be rewarded with a flash of pleasure that is mixed, oddly, with a hint of pride.

It is the pleasure of taking responsibility for your own behavior. It is the feeling of honor.

I have been doing this exercise for 5 minutes, a couple of times per week during the last few months, and I’ve found it to be incredibly rewarding and effective.

I recommend you to keep a log of the times you catch yourself at being judgmental, wanting to be right, to prove others wrong, and all those petty little games we play. I did that for the first couple of weeks, and was impressed by how visible the results of the exercise were.

I meditate regularly, and sometimes perform this exercise after a formal meditation session, which has the effect of amplifying the “pleasurable feeling of honor” that Haidt talks about. And meditation itself, of course, can help us become less judgmental:

Meditation has been shown to make people calmer, less reactive to the ups and downs and petty provocations of life. Meditation is the Eastern way of training yourself to take things philosophically.

You don’t need to perform any formal meditation before the exercise, but definitely take a few extra minutes to sit down in silence, breathe and relax.

And of course, let me know how you feel afterwards.

I’d love to hear you say my advice was right on spot. But if you think I’m wrong, I won’t try too hard to prove I’m not.

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November 3, 2009

The Year of Nothing, Part 2

Do not pull, do not push
And fortune will return of its own accord
And the Way will naturally come…
If you are still, you will get it,
If you are active, you will loose it.
Yang Zhu

Besides reminding me of the value of friendship, this Year of Nothing has provided me with a razor-sharp sense of self-knowledge.

Never before have I been clearer on what I want to do and what I want to be. Never before have I felt that I Get It as I do now.

Getting It

While it’s true that practicing formal Taoist meditation has helped me a lot in gaining this newfound clarity of values, the process has been simpler than that.

As soon as I stopped spending most of my waking hours doing something I didn’t find meaningful, eliminating the inherent cognitive dissonance, I started to Get It.

Not having a clear objective, nothing to achieve for a while, liberated a ton of psychic energy, and refocused it inwards.

Now I know that while I’m alive and awake, I want to do something that delivers genuine value to others — not just to myself.

I want to contribute, however humbly, to change the world for the better.

Money

An obvious question I’ve been pondering all this time is how to align my quest for meaning with the necessity of making a living out of it.

In the beginning, I was quite pessimistic about this. I was still working on the assumption that running a business was a fundamentally selfish thing.

I’ve come to the conclusion that this prejudice was in large part due to my training in Economics.

Traditional economic theory is based on the notion that people seek their narrow self interest, and that this is perfectly fine — the market’s Invisible Hand is supposed to ensure that selfish individual behavior translates into broad social gains.

But after some time I managed to break free from that prejudice.

The idea that business can be motivated by forces beyond profit is, of course, one of the hottest topics in the media today.

This Year of Nothing gave me the time to absorb the insane amounts of information available on- and offline on the subject, and to meet lots of people who have embraced the concept.

But most importantly, because I haven’t been involved with any particular business for a while, I was able to open my mind and truly ponder the validity of this idea against my previous conceptions.

###

The business guidelines

Here are a few rough guidelines I’ll be following for my upcoming income-generating initiatives. Of course, I’ll be updating you on their evolution through this blog:

Affiliate information products

Since I started sharing my insights and tips about creating a lifestyle based on meaning and personal development through this blog, I’ve had some tremendously encouraging feedback from readers about the value they receive from the project.

This feedback, and the steady increase in traffic that the blog has enjoyed since its launch, made me conclude that there is room for a little “store” section where readers will be able to buy information products that I endorse.

I will only endorse products that I have found to be extremely useful and empowering during this already 1-year old journey. Eventually, I will also offer information products created by yours truly.

A little store section for the blog is the most obvious way I can think of for creating a small business based on meaning and real value.

Art

Throughout this Year of Nothing I have re-connected with my passion for art.

I have had plenty of time to listen to music again. That was one of the things I missed the most in my life, and I got it back.

Through my travels, I have attended all kinds of concerts, shows and music festivals. I have been stopped in my tracks by dozens of awesome street musicians in subways and alleys, and been able to take the time to properly contemplate their performances.

I even ended up one night hanging out with Farruquito (one of Spain’s most acclaimed Flamenco dancers) and his friends at El Taxidermista bar in Barcelona until almost 6 am the next day.

I don’t know what got me more drunk: the alcohol, or the insanely powerful energy emanating from these people when they’re offstage, partying, singing and dancing for themselves.

Check out some of Farruquito’s incredible moves here:

I’ve been in many museums and exhibitions. I’ve attended cinema festivals and rented tons of old movies I hadn’t had the time to watch.

This Year of Nothing allowed me to truly appreciate art as the ultimate human activity aligned with higher purpose. Art can do so much good to the world at so many levels that it’s hard to think about a more valuable human activity.

So I have come to the conclusion that I want to launch a little project related to the art business. I still don’t have much of a clue about the form it will take, but I’ll keep you posted on its progress…

And to those of you who know about my frustrated musician background: yes, I have seriously started thinking about playing an instrument again. But that’s a bit of a longer term project — I will still probably do Nothing about it until mid next year

Economics

During this Year of Nothing I have also re-connected with Economics, and I have revived the excitement that I felt for the discipline back in college.

I definitely think I can use my skills as an economist for dedicating some of my time to contribute to projects aligned with a higher purpose.

Before this Year of Nothing, whenever I read or heard someone say that quietness, idleness and meditation can be a big emotional amplifier, I used to discard it as New Age BS.

Not anymore. Somehow, a Year of Nothing hugely expanded my sensitivity towards poverty, the environment, and the myriad sustainability problems we must all deal with. It’s like I’ve developed a visceral repulsion towards them that goes beyond the rational understanding of their causes and nature. And I’ve decided that I want to deal with them indeed.

Again, this is all work in progress… stay tuned for updates on this area too.

So what do you think? Does the plan make sense to you? What are your plans for 2010 (resolution time is approaching!) in terms of aligning your business or career with a sense of meaning and higher purpose?

So with a little help from my friends, I spent this Year of Nothing in New York, Buenos Aires, Caracas, London, Barcelona, Madrid, San Francisco and Los Angeles, spending close to nothing in accommodation.

But most importantly, having been able to spend so much time with friends and being in the state of calm mindfulness that comes so naturally from doing Nothing, has boosted my gratitude for friendship to levels I had never experienced. Sometimes to a crazy level of euphoria that makes me cry out of happiness.

This deeper connection with friends has pushed further down the value of consumption in my scale of values. I know now for sure that I really don’t need to buy any stuff to be happy. I need Nothing. Zero. Nada. As long as I have truly good friends, I will always have a reason for being happy.

This realization was for me the first, and biggest Something born from this year Year of Nothing.

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October 14, 2009

Krugman on math and economic crisis

“Hard Math” by misterbisson via flickr, used under a Creative Commons license .

Paul Krugman’s recently published essay in the New York Times highlights the misguided use of math by economists as the key reason for their inability to predict the current financial crisis:

As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess.

The essay is full of outrageous quotes from several economics Nobel laureates that point to their insistence on an unrealistic assumption that underpins most of the mathematical models used in their theories: people are perfectly rational agents who always act in their own best interest. For example, he quotes John Cochrane from the University of Chicago as having said that recessions are actually sometimes good because they force people to leave jobs that are somehow undesirable:

Cochrane declares that high unemployment is actually good: “We should have a recession. People who spend their lives pounding nails in Nevada need something else to do.”

The quote is intended to illustrate how stubborn economists can be when defending the implications of the perfect-rationality assumption: if people are always acting in their own best interest, unemployment is voluntary — they could have always kept their jobs if they would have been willing to work for a lower wage.

To be fair, Cochrane’s response to Krugman states that the quote was taken out of context

I didn’t write this. It’s a quote, taken out of context, from a bloomberg.com article written by a rather dense reporter who I spent about 10 hours with patiently trying to explain some basics. (It’s the last time I’ll do that!) I was trying to explain how sectoral shifts contribute to unemployment. Krugman follows it by a lie — I never asserted that “it take mass unemployment across the whole nation to get carpenters to move out of Nevada.” You can’t even dredge up a quote for that monstrosity.

But even if Krugman went too far with the quote, Cochrane himself then asks

… what is the alternative [to mathematical models in macroeconomics]? Does Krugman really think we can make progress on his – and my – agenda for economic and financial research — understanding frictions, imperfect markets, complex human behavior, institutional rigidities – by reverting to a literary style of exposition, and abandoning the attempt to compare theories quantitatively against data? Against the worldwide tide of quantification in all fields of human endeavor (read “Moneyball”) is there any real hope that this will work in economics?

No, the problem is that we don’t have enough math. Math in economics serves to keep the logic straight, to make sure that the “then” really does follow the “if,” which it so frequently does not if you just write prose. The challenge is how hard it is to write down explicit artificial economies with these ingredients, actually solve them, in order to see what makes them tick. Frictions are just bloody hard with the mathematical tools we have now.

I agree on the math’s power for assuring the logical consistency of economic theories, but that’s an entirely different thing than the naivete with which economists have used econometric models to predict the actual behavior of markets, precisely because “frictions are bloody hard” to capture by the mathematical tools available. This naivete is at the root of the Gaussian copula function fiasco, which allowed for the triple-A ratings of toxic CDO’s.

Also, Cochrane’s skepticism towards prose in economic analysis is quite puzzling. At some point during his resposne he points out that after all,

“…the central prediction of free-market economics, as crystallized by Hayek, that no academic, bureaucrat or regulator will ever be able to fully explain market price movements.”

But ironically, Hayek made this point while at the same time being a prominent advocate for playing down the role of mathematics in economic analysis, as I have pointed out in a previous post. Actually his “central prediction of free-market economics” was formulated in pure prose. Other Nobel laureates such as Ronald Coase, George Akerlof and most recently, Oliver Williamson and Elinor Ostrom, have all accomplished crucial theoretical breakthroughs without writing a single mathematical equation.

Krugman is right on spot. And if Hayek was alive, this would probably have been one of the very few issues they would agree on.

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October 6, 2009

Mind-boggling Argentine Big Mac prices

Mc Donald’s launched an aggressive promotion in Argentina a couple of days ago, cutting the price of a Big Mac for the second time during the last several weeks from 8 to 7 Pesos. This is almost a 40% discount on the sandwich’s standard price of 11.5 Pesos, which was still in place last July.

I probably haven’t walked into a Mc Donald’s restaurant during the last 10 years and Buenos Aires is perhaps the last place on earth where I would do that, so I hadn’t realized how bizarrely expensive a Big Mac here is until I saw one of the billboards advertising the promotion:

At the current exchange rate of 3.8 Pesos per US Dollar, Argentines hand 3 USD to Ronald McDonald every time they indulge in his (in)famous sandwich.

The current promotion celebrates the arrival of spring and will last about two months, so that would bring the average price of a Big Mac in Argentina to approximately 10.75 Pesos for the year, which still amounts to 2.8 USD — only 70 cents cheaper than in the US, where a Big Mac sells on average for 3.50 USD.

It boggles my mind that people are willing to pay so much for a Big Mac in a country that is famous all over the world for its incredibly high value for money when it comes to food.

A beef empanada at any pastry shop or cafe here sells for 3 Pesos, the beef in it is most probably grass fed and arguably the best quality in the world, versus whatever Mc Donald’s uses in its beef-patty look-alikes. Two empanadas provide more and much better calories than a Big Mac — for half the price.

Sadly, this has to be one of the clearest examples of McBrainwashing on earth. I’m sure that if respectable chain like Smith & Wollensky were to open a restaurant here to offer American-style steak dinners, no amount of marketing would enable them to charge anything remotely close to their prices in the US. Even after a few years of rampant inflation, a superb steak dinner with home-made fries, salad and half a bottle of wine costs 40 pesos here — 10.50 USD.

But as soon as Ronald McDonald waves his magic wand, you have Argentines paying 3 USD for Big Macs.

As is usually the case, the company’s worse victims are kids. Argentine kids are as likely as any to fall for Ronald’s irresistible charm, and sadly, parents allow him to feed them with his concoction of sugar, saturated fat and fun, even when the company has been accused of several deaths of children infected with E. Colli during the last few years.

There’s a rather Panglossian way of seeing a silver lining to this story: as long as Big Macs are kept at 11.50 Pesos, the poor and the homeless will not be able to afford them. This will perhaps prevent Argentina of importing one of America’s worse social paradoxes: the obesity of the poor.

But still, seeing the company experiment with promotions like the one running at the moment sends a chill down my spine. I can’t help thinking of Ronald McDonald as an evil red-haired drug pusher, temporarily lowering the price of his stuff to get more kids hooked to it and being able to charge them a higher price in the future.

A common stereotype of Buenos Aires portrays its people as having a natural talent for sweet-talk and persuasion, with the mythical tango-dancing latin lovers and legendary con artists as extreme cases.

So you would expect Argentines to be particularly well trained in detecting rip offs, to be endowed with a strong immunity against gullibility. Hopefully that’s the case, and sooner rather than later they’ll realize that the only reason why they patronize McDonalds is because they have naively bought into the company’s massive capacity for Bullsh*tting.

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September 22, 2009

For discovering great wines, it’s better to not try

“An Eye for Wine” by brohman via flickr, used under a Creative Commons license .

Felix salmon recently posted an interesting piece about the potential pitfalls of tasting wine blind.

He argues that blind tastings tend to favor simple, straight forward, soft-fruity-sweet wines that offer immediate pleasure and gratification over austere, complex wines whose subtleties take longer to become aware of and appreciate properly.

According to Salmon, the very fact of not knowing what we’re tasting tends to bias us against subtle, complex wines:

…If you know exactly what it is that you’re tasting — a young first-growth wine, for example — then you can taste it in that light. Similarly, if you know that you’re looking at an Ad Reinhardt painting, you’ll be willing to spend a few minutes with it so that you can appreciate its subtleties. If you didn’t know it was a Reinhardt, then you’d probably just read it as a black monochrome and move on…

I agree with Salmon’s take on blind tasting. I have done some of it since the end of 2008 while traveling back and forth between New York and Buenos Aires (and a one-month stop in San Francisco), all cities where great wine is easy to find, which inevitably made me catch the wine bug.

I think there might other psychological elements that contribute to the problems with blind tastings. A couple of days before reading Salmon’s piece, I came across an article posted at the BPS Research Digest blog (Ht: The Situationist), about a new study by Ayumi Yamada suggesting that talking about art can alter our appreciation of it.

Half of 129 students in the study were asked to verbalize their reasons for liking (or not liking) two paintings, one abstract, and another representational. They were then asked which one of the paintings was their favorite. The remaining participants just viewed the paintings without saying anything. Afterwards, all the participants had to choose their favored painting.

Representational paintings are realistic, with content that can be easily talked about. Abstract art, by contrast, is less grounded in reality and more tricky to talk about.

… Those participants in the verbalisation condition who’d been challenged to say why they liked the paintings were subsequently biased towards choosing the representational painting as their favourite… participants in the verbalisation condition who’d been challenged to articulate their reasons for disliking the paintings were subsequently biased towards choosing the abstract painting as their favourite.

… Yamada thinks that… because participants found it easier to talk about why they liked the representational painting compared with the abstract one, this biased them in favour of the representational painting. Similarly, participants who had to talk about their dislike for the art, found this easier for the representational painting, which subsequently biased them against it.

As Salmon says, blind tastings probably diminish our capacity to judge subtle, complex wines because they’re akin to abstract paintings, and therefore difficult to evaluate from a “position of ignorance” that doesn’t provide the incentive for us to pause and let these wines grow slowly in us.

But it might as well be that the obvious, salient qualities of soft-fruity-sweet wines not only provide more immediate sensorial gratification. As it happens with representational paintings, this qualities are easier to verbalize. This would be a more fundamental advantage for these wines at any formal tasting, blind or not, which invariably consist of putting wine’s taste and aromas into the very concrete words that make up the jargon of wine connoisseurs.

Yamada study is consistent with past research showing that attempting to verbalise our feelings can distort our later choices. For example, a prior study showed that participants who attempted to explain their preferences for different jams subsequently showed less agreement with expert ratings than did control participants.

This is probably why I have discovered the wines I like the most in all kinds of situations other than wine tastings, precisely when I’m not consciously focused on tasting the wine.

Salmon is of the opinion that the best way of enjoying great wine is

“…with good food, on a special occasion, with people you love, purely for enjoyment. If you take most of that away, and drink wine blind, surrounded by serious men spitting into buckets, you’re doing something qualitatively very different indeed. And it should come as no surprise that there might not be much if any correlation between how much you like a wine in the former context and how much you like it in the latter.”

I think that a big part of this qualitative difference is that drinking wine “with good food, on a special occasion, with people you love, purely for enjoyment” is not only intrinsically more enjoyable than being “surrounded by serious men spitting into buckets”, but more crucially, it doesn’t let us concentrate too narrowly, rationally and deliberately on tasting the wine. We are going with the delicious flow of the situation, and wine is but one of the multiple delights that register in our subconscious.

The wines I like the most have always managed to surprise me in these situations, when I’m almost not paying attention to them. They pull me out of conversation for a few seconds that I use to revel more intently in the sensory pleasure they provide. But this pleasure is always enigmatic to the point that even if I could, I wouldn’t want to define it or attach any words to it. It almost feels as if I would somehow spoil the experience by analyzing it. And that’s how, so far, my best technique for discovering great wines is to not even try to.

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September 22, 2009

For discovering great wines, it’s better to not try

“An Eye for Wine” by brohman via flickr, used under a Creative Commons license .

Felix salmon recently posted an interesting piece about the potential pitfalls of tasting wine blind.

He argues that blind tastings tend to favor simple, straight forward, soft-fruity-sweet wines that offer immediate pleasure and gratification over austere, complex wines whose subtleties take longer to become aware of and appreciate properly.

According to Salmon, the very fact of not knowing what we’re tasting tends to bias us against subtle, complex wines:

…If you know exactly what it is that you’re tasting — a young first-growth wine, for example — then you can taste it in that light. Similarly, if you know that you’re looking at an Ad Reinhardt painting, you’ll be willing to spend a few minutes with it so that you can appreciate its subtleties. If you didn’t know it was a Reinhardt, then you’d probably just read it as a black monochrome and move on…

I agree with Salmon’s take on blind tasting. I have done some of it since the end of 2008 while traveling back and forth between New York and Buenos Aires (and a one-month stop in San Francisco), all cities where great wine is easy to find, which inevitably made me catch the wine bug.

I think there might other psychological elements that contribute to the problems with blind tastings. A couple of days before reading Salmon’s piece, I came across an article posted at the BPS Research Digest blog (Ht: The Situationist), about a new study by Ayumi Yamada suggesting that talking about art can alter our appreciation of it.

Half of 129 students in the study were asked to verbalize their reasons for liking (or not liking) two paintings, one abstract, and another representational. They were then asked which one of the paintings was their favorite. The remaining participants just viewed the paintings without saying anything. Afterwards, all the participants had to choose their favored painting.

Representational paintings are realistic, with content that can be easily talked about. Abstract art, by contrast, is less grounded in reality and more tricky to talk about.

… Those participants in the verbalisation condition who’d been challenged to say why they liked the paintings were subsequently biased towards choosing the representational painting as their favourite… participants in the verbalisation condition who’d been challenged to articulate their reasons for disliking the paintings were subsequently biased towards choosing the abstract painting as their favourite.

… Yamada thinks that… because participants found it easier to talk about why they liked the representational painting compared with the abstract one, this biased them in favour of the representational painting. Similarly, participants who had to talk about their dislike for the art, found this easier for the representational painting, which subsequently biased them against it.

As Salmon says, blind tastings probably diminish our capacity to judge subtle, complex wines because they’re akin to abstract paintings, and therefore difficult to evaluate from a “position of ignorance” that doesn’t provide the incentive for us to pause and let these wines grow slowly in us.

But it might as well be that the obvious, salient qualities of soft-fruity-sweet wines not only provide more immediate sensorial gratification. As it happens with representational paintings, this qualities are easier to verbalize. This would be a more fundamental advantage for these wines at any formal tasting, blind or not, which invariably consist of putting wine’s taste and aromas into the very concrete words that make up the jargon of wine connoisseurs.

Yamada study is consistent with past research showing that attempting to verbalise our feelings can distort our later choices. For example, a prior study showed that participants who attempted to explain their preferences for different jams subsequently showed less agreement with expert ratings than did control participants.

This is probably why I have discovered the wines I like the most in all kinds of situations other than wine tastings, precisely when I’m not consciously focused on tasting the wine.

Salmon is of the opinion that the best way of enjoying great wine is

“…with good food, on a special occasion, with people you love, purely for enjoyment. If you take most of that away, and drink wine blind, surrounded by serious men spitting into buckets, you’re doing something qualitatively very different indeed. And it should come as no surprise that there might not be much if any correlation between how much you like a wine in the former context and how much you like it in the latter.”

I think that a big part of this qualitative difference is that drinking wine “with good food, on a special occasion, with people you love, purely for enjoyment” is not only intrinsically more enjoyable than being “surrounded by serious men spitting into buckets”, but more crucially, it doesn’t let us concentrate too narrowly, rationally and deliberately on tasting the wine. We are going with the delicious flow of the situation, and wine is but one of the multiple delights that register in our subconscious.

The wines I like the most have always managed to surprise me in these situations, when I’m almost not paying attention to them. They pull me out of conversation for a few seconds that I use to revel more intently in the sensory pleasure they provide. But this pleasure is always enigmatic to the point that even if I could, I wouldn’t want to define it or attach any words to it. It almost feels as if I would somehow spoil the experience by analyzing it. And that’s how, so far, my best technique for discovering great wines is to not even try to.

Post a comment