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Low hanging fruit for genetic engineering

Ashkenazi jews have both an unusally high average IQ, and a high incidence of genetic diseases like Tay-Sachs. A new paper [PDF] suggest that these may be related. The author argues that due to the particular economic niche of this group, intelligence was selected for even more strongly than usual. The result is that genes which confer increased IQ when heterozygic, but cause genetic diseases when homozgygic are more common. Read more »

C\'mon, the science isn\'t *that* dismal!

Alex Tabarrok gives us some humorous insight into public perception of economists:

The masseuse was working on my chakra's (or something like that) when she said:

"Has anyone told you that you are great today? I can tell that you have a lot of loving energy. You're a very giving person."

"Wow," I replied, "no one has ever said that. I'm an economist."

"Oh," she replied, pausing slightly, "I guess I was wrong."

The real argument on free speech for bloggers

The excellent Coyote Blog cuts through the crap on the issue of whether bloggers should have the same speech protection as MSM with this great point: Read more »

Demand is a curve, not a constant!

I'll have more to post on the offshore aquaculture summit I'm at later. But for now, I'll just comment on an economic fallacy that really annoyed me in the (generally good) report "Farming The Deep Blue", and a presentation here. They project seafood supply and seafood demand as single numbers, and have a gap between them, and say that "supply is not going to meet demand". Read more »

Even unlicensed raters can be competent

Via Mahalonobis comes the results of a study on bond licensers. The SEC requires all public bonds to be rated by one of the four certified rating agencies: Standard & Poor's, Moody's, Fitch Ratings, and Dominion Bond Rating Service.

These companies are charged with acting as "information intermediaries" and improving the efficiency of securities markets by increasing the transparency of the securities themselves.

Bogle on the Cost Matters Hypothesis

John Bogle gave a speech in February entitled "The Relentless Rules of Humble Arithmetic", about how costs in the financial industry are severely impacting investor returns. He suggesting that we don't need EMH to explain why the financial industry sucks, but merely the CMH:

Efficient Markets Hypothesis Cost Matters Hypothesis
  • Strong Evidence
  • Sound Explanation
  • Mostly True
  • Overwhelming Evidence
  • Obvious Explanation
  • Tautologically True

The CMH is quite simple: it states that investor returns are equal to the average market return minus fees and costs. The title of the speech is from a statement by Louis Brandeis (later a Supreme Court justice), made during the roaring pre-Depression era, explaining why the speculation of the period was not sustainable. Bogle, whose detractors say that all he has is "an uncanny ability to recognize the obvious", states the obvious:

Since the returns investors receive come only after the deduction of the costs of our system of financial intermediation—even as a gambler's winnings come only from what remains after the croupier's rake descends—the relentless rules of that humble arithmetic devastate the long-term returns of investors. Using Brandeis's formulation, we seem obsessed with the delusion that a seven percent market return, minus three percent for costs, still equals a seven percent investor return; i.e., that costs are too trivial to be considered.

The difference between a 7% and a 4% long-term return are gigantic, a fact that becomes especially pressing if equity returns are going to be lower this century. When fees and taxes are combined, those who want decent returns can no longer afford to play Wall Street's shell game:

index fund vs. managed fund returns
Read more »


Just ran into And Then There Were None, an anarchist short story by Eric Frank Russell. Apparently this was published in 1951, in Astounding Science Fiction, which explains why its quite a bit better than most of the random fiction you find around the net. Read more »

Wall Street\'s Shell Game

Wall St SignKeeping with the theme of survivorship bias, I stirred up some debate on a mailing list recently by claiming that managed mutual funds are a scam. Specifically, they are a variant of a particularly clever scam that goes like this: Read more »

Selection Bias and Risky Strategies

Back when I was new to poker, I had a lot of ideas about metaphors from poker to strategy, economics, and life. But now that I mostly play on the internet, beating the games I know how to beat, I'm a lot less creative, it's more of a grind than an adventure. Still, this article from Mahalonobis on selection bias reminds me of the poker tournament world. The key is these two graphs: Read more »

Raising a Libertarian Army

baby in camoWe libertarians have some problems. We're in the minority, and competing constantly for ideological market share. We try to educate, sway, and convince, but it's tough going - some people's minds just aren't very receptive. If only there was some way to guarantee that some of the world's population increase consisted of a die-hard contingent... Read more »

A cinematic view of Stalin\'s kindness

cover of east-west (1999) from IMDBTalking with a Russian coworker about the issues we discussed here in our May Day Memorial, she says that even some people in Russia still refuse to believe what Stalin did. She also suggests that to get a more visceral taste of the horrors of his regime, see the movie East-West. Read more »

Hypocrisy of George Lucas

Over at the National Review Online comes a nice example of the hypocrisy of rich Luddites:

It’s a free country, and Lucas can make whatever films he likes, and put in whatever subtle or not-so-subtle political messages he likes. But I can’t be the only one who finds a stunning disconnect between the messages of Lucas’ films and the decisions he’s actually made in his life and work.

Solutions To Bad Taxes - And Bad Government

The Idea Shop has an excellent post on Bad Tax Policy:

There’s a lot of evidence that people aren’t always rational, and suffer from a range of cognitive biases. But thanks to arbitrage, rational people stand to profit when irrational people let prices and wages stray from efficient levels. That’s what justifies the economist’s assumption of rationality—a small number of rational profit-seekers keep markets rational as a whole even when many participants aren’t.

Power + Dehumanization = Tragedy

[T]here is more that binds us to Bolshevism than separates us from it. There is, above all, genuine, revolutionary feeling, which is alive everywhere in Russia except where there are Jewish Marxists. I have always made allowance for this circumstance, and given orders that former Communists are to be admitted to the party at once. The petit bourgeois Social-Democrat and the trade-union boss will never make a National Socialist, but the Communists always will.

-- Hitler, quoted in Hermann Rauschning, Hitler Speaks Read more »

Time Management for Anarchists

A funny (but serious!) flash animation. While us market anarchists don't need quite the sales pitch ("Smash The State - By Breaking Down Tasks"), its still amusing. Useful too. Amazing how the internet lets art find its tiny niche market...