Economics and similar, for the sleep-deprived

A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?

Update: seemingly not

Update: Oh yeah!

Thursday, May 27, 2004

Update, September 2008. Hullo there Paul Krugman readers. Yes, I did say "Good ideas do not need lots of lies told about them in order to gain public acceptance", and as a general maxim I wholeheartedly recommend it. I don't necessarily, however, either endorse or whatever-the-opposite-of-endorse the specific use of that maxim in the context of Prof. Krugman's post about the Paulson bailout plan; I don't actually have a fully formed view about that plan. I do, however, wholeheartedly endorse "Development, Geography and Economic Theory", which I think is a terribly underrated economics book, and am at this moment rather starstruck at having one of my essays admired by the nearest modern equivalent to my hero JK Galbraith. Anyway, as you were; by way of context, the post below was written just as a lot of high-profile commentators like Thomas Friedman were abandoning their support for the Iraq War.

The D-Squared Digest One Minute MBA - Avoiding Projects Pursued By Morons 101

Literally people have been asking me: "How is it that you were so amazingly prescient about Iraq? Why is it that you were right about everything at precisely the same moment when we were wrong?" No honestly, they have. I'd love to show you the emails I've received, there were dozens of them, honest. Honest. Anyway, I note that "errors of prewar planning" is now pretty much a mainstream stylised fact, so I suspect that it might make some small contribution to the commonweal if I were to explain how it was that I was able to spot so early that this dog wasn't going to hunt. I will struggle manfully with the savage burden of boasting, self-aggrandisement and ego-stroking that this will necessarily involve. It's been done before, although admittedly by a madman in the process of dying of syphilis of the brain. Sorry, where was I?

Anyway, the secret to every analysis I've ever done of contemporary politics has been, more or less, my expensive business school education (I would write a book entitled "Everything I Know I Learned At A Very Expensive University", but I doubt it would sell). About half of what they say about business schools and their graduates is probably true, and they do often feel like the most collossal waste of time and money, but they occasionally teach you the odd thing which is very useful indeed. Here's a few of the ones I learned which I considered relevant to judging the advisability of the Second Iraq War.

Good ideas do not need lots of lies told about them in order to gain public acceptance. I was first made aware of this during an accounting class. We were discussing the subject of accounting for stock options at technology companies. There was a live debate on this subject at the time. One side (mainly technology companies and their lobbyists) held that stock option grants should not be treated as an expense on public policy grounds; treating them as an expense would discourage companies from granting them, and stock options were a vital compensation tool that incentivised performance, rewarded dynamism and innovation and created vast amounts of value for America and the world. The other side (mainly people like Warren Buffet) held that stock options looked awfully like a massive blag carried out my management at the expense of shareholders, and that the proper place to record such blags was the P&L account.

Our lecturer, in summing up the debate, made the not unreasonable point that if stock options really were a fantastic tool which unleashed the creative power in every employee, everyone would want to expense as many of them as possible, the better to boast about how innovative, empowered and fantastic they were. Since the tech companies' point of view appeared to be that if they were ever forced to account honestly for their option grants, they would quickly stop making them, this offered decent prima facie evidence that they weren't, really, all that fantastic.

Application to Iraq. The general principle that good ideas are not usually associated with lying like a rug1 about their true nature seems to have been pretty well confirmed. In particular, however, this principle sheds light on the now quite popular claim that "WMDs were only part of the story; the real priority was to liberate the Iraqis, which is something that every decent person would support".

Fibbers' forecasts are worthless. Case after miserable case after bloody case we went through, I tell you, all of which had this moral. Not only that people who want a project will tend to make innacurate projections about the possible outcomes of that project, but about the futility of attempts to "shade" downward a fundamentally dishonest set of predictions. If you have doubts about the integrity of a forecaster, you can't use their forecasts at all. Not even as a "starting point". By the way, I would just love to get hold of a few of the quantitative numbers from documents prepared to support the war and give them a quick run through Benford's Law.

Application to Iraq This was how I decided that it was worth staking a bit of credibility on the strong claim that absolutely no material WMD capacity would be found, rather than "some" or "some but not enough to justify a war" or even "some derisory but not immaterial capacity, like a few mobile biological weapons labs". My reasoning was that Powell, Bush, Straw, etc, were clearly making false claims and therefore ought to be discounted completely, and that there were actually very few people who knew a bit about Iraq but were not fatally compromised in this manner who were making the WMD claim. Meanwhile, there were people like Scott Ritter and Andrew Wilkie who, whatever other faults they might or might not have had, did not appear to have told any provable lies on this subject and were therefore not compromised.

The Vital Importance of Audit. Emphasised over and over again. Brealey and Myers has a section on this, in which they remind callow students that like backing-up one's computer files, this is a lesson that everyone seems to have to learn the hard way. Basically, it's been shown time and again and again; companies which do not audit completed projects in order to see how accurate the original projections were, tend to get exactly the forecasts and projects that they deserve. Companies which have a culture where there are no consequences for making dishonest forecasts, get the projects they deserve. Companies which allocate blank cheques to management teams with a proven record of failure and mendacity, get what they deserve.

I hope I don't have to spell out the implications of this one for Iraq. Krugman has gone on and on about this, seemingly with some small effect these days. The raspberry road that led to Abu Ghraib was paved with bland assumptions that people who had repeatedly proved their untrustworthiness, could be trusted. There is much made by people who long for the days of their fourth form debating society about the fallacy of "argumentum ad hominem". There is, as I have mentioned in the past, no fancy Latin term for the fallacy of "giving known liars the benefit of the doubt", but it is in my view a much greater source of avoidable error in the world. Audit is meant to protect us from this, which is why audit is so important.

And so the lesson ends. Next week, perhaps, a few reflections on why it is that people don't support the neoconservative project to bring democracy to the Middle East (a trailer for those who can't wait; the title is going to be something like "If You Tell Lies A Lot, You Tend To Get A Reputation As A Liar"). Mind how you go.

1 We also learned in accounting class that the difference between "making a definite single false claim with provable intent to deceive" and "creating a very false impression and allowing it to remain without correcting it" is not one that you should rely upon to keep you out of jail. Even if your motives are noble.
16 comments this item posted by the management 5/27/2004 11:57:00 PM

Monday, May 10, 2004

It's all our fault, by which I mean it's all your fault

Feedback from the comments section reveals that I have been outflanked in my bile-ridden and jaundiced view of life by several commentators who form what one might call the "This War Now Is As Good As We're Going To Get" Left. This is the view that Bush is such a moron, and Blair is such a lickspittle, and the French and Russians are so venial and hypocritical, that no matter what happens, the current clown show was the only war proposal that was ever going to be made. All I can really say is good God. I thought it was bad enough being me. I'm now imaging what it would be like to be someone who regards me as a hopelessly impractical optimist, far too inclined to give politicians the benefit of the doubt, and to be honest it's quite the Joseph Conrad moment. Hell.

No come on guys. It's insufferable. While this is world is a bad old place, it's surely to hell not that bad. I offer as exhibit A, the recent experience of the UK in the debate over tuition fees (toward the end of the debate, we weighed in on Crooked Timber on the subject; Chris thought the bill was worth saving and I didn't. So now the American readers are up to speed).

The substantive issues on that bill are not the question here; in retrospect, I think that I was probably wrong to oppose the final bill that past, and that I underestimated a number of the provisions in it which could genuinely help to make it a broadly egalitarian proposition (in particular, increasing the size of the student grant, lengtheneing the term of repayment of the new loan arrangements and reducing the amount of variability in fees). But that's not the important point here. The important point is that all the good bits of the bill were the result of compromises and amendments. The original tuition fees bill submitted by the government was just terrible. But the labour backbenches rejected it, in sufficient numbers to make Blair and Clarke afeared of an embarrassing rebellion. So they came back with another draft. And another. And another. Until they finally squeaked in under the wire having shed enough ideological ballast to convince enough wavering lefties that the bill was no longer worth handing the Tories a victory over. For this fantastic piece of work, of course, the backbench MPs were treated shoddily by the press; they were portrayed as bitter unrealistic chumps, and the Blairites were able to spin hated compromise climbdown provisions as if they were part of the bill all along. But the important thing was that, through obstinacy and truculence, recalcitrant British lefties were able to force the government to come up with what was actually a quite decent piece of legislation.

I hope that the parallel with the war is clear. It didn't have to be the dog and pony show we have before us. They did have it in them to plan and execute a proper war. If Blair had been genuinely made to think that the fiasco he was allowing Bush to set in motion was going to cost him the election, he'd have put up some resistance to it. If meaningful resistance from allies had been encountered, I am more or less certain that, under pressure, the Bush team would have come up with a better plan. They're all intelligent blokes.

So in other words, the conclusion is pretty bleakly pessimistic for the British Left. It's all our fault. If we had tried a bit harder with the Stop the War movement, then there would have been a better war. Sure, a better war would have meant that we'd have to put up with some fairly insufferable arseholes saying "despite your silly predictions of a fiasco and quagmire everything has turned out alright thanks to the sensible and realistic plan put together by Rumsfeld and Wolfowitz", but we're the left; we've got broad shoulders when it comes to that sort of thing. We should have done better.

Of course, it would have helped somewhat if the efforts of those of us on the Anti This War Now Left had not been constantly and maliciously undercut by people who thought that
  • their breathless enthusiasm for an idealised vision of humanitarian intervention, or
  • (far less forgivably) their own desire to settle scores with obscure far-left grouplets that they were embarrassed with their own previous associations with or
  • (far more forgivably) their distaste at the nasty element of British Islam that attached itself to the movement
were sufficient reasons to ignore the coming farrago of fond hopes and underplanned plans which anyone with eyes in his head could have seen was being put together. But, to be honest, I'm not anticipating many mea culpas from that direction. Much easier to claim that everyone who disagrees with you is a supporter of fascists and ignore the practical consequences of your program. Which formulation has the effect of clearing my head on the question of why there are so many ex-Trots on the pro war left.

Update: I wrote this a couple of weeks ago then went on holiday. Since then, for obvious reasons, the "This War Now Is As Good As We're Going To Get Left" has rather thinned out in its ranks, and we have even had a few mea culpas. So my final paragraph is probably too harsh.
1 comments this item posted by the management 5/10/2004 10:25:00 AM

This page is powered by Blogger. Isn't yours?


Bitch : Lab
Aaronovitch Watch
Brad Delong
The Robert Vienneau blog

Political and philosophical heroes

Subcomandante Marcos
Will Rogers
Boris Vian
The English Svejk

RSS Feed:
This seems to matter to a lot of people

If you liked this "Daniel Davies" website, you might be interested in

"Danux", the web developer
The martial artist (and fan of extremely annoying Flash intros) from Blackburn
The Welsh political journalist
A Scouse computer programmer who collects Soviet cameras
"Danimal", the heavy metal drummer
Canada's finest recorder of radio jingles
More of the same, at the Guardian
A tailor's in Lampeter where Jimmy Carter once bought a hat
An advertising man who has written a novel about dogging (I think we sometimes get each other's email)
An award-winning facilities manager in Dubai
The son of the guitarist from the Kinks Update: he is apparently "balls-out motherfucking shit-dicked exxxstatic" to be included on a Kerrang magazine giveaway CD of Iron Maiden covers, which is nice.
"Fritz Gretel" from the Ramones film "Rock 'n' Roll High School"
The former presenter of the leading politics talk radio show on the Isle of Man, now a business change manager in the Manx government secretary's office
An aquarium curator in Sussex who keeps on scoring home runs like this (this is the first stable link I've found, but he is constantly kicking ass in acquarial terms)

If you didn't like this "Daniel Davies" website, then don't give up on the Daniel Davies industry completely!

An American "Christian Political Analyst" who has the same name as me
A student at Patrick Henry College
these two might be the same guy ...
"Scatter", the deceased Liberian gangster
A naked man stuck in a chimney in Wigan
A thug in Barrow

This blog has been going downhill since ...

August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
November 2003
December 2003
March 2004
April 2004
May 2004
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
May 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
June 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
March 2012
April 2012
May 2012
June 2012
July 2012
August 2012
September 2012
October 2012
December 2012
February 2013
April 2013
June 2013
July 2013
August 2013
March 2014
April 2014
August 2014
October 2015
March 2023