Ignorance, the biggest threat to society

In the midst of pandemics, environmental degradation, social unrest, and other observable catastrophes, the primary threat to humans remains to be ignorance (1). Merriam-Webster defines ignorance as a lack of knowledge, education, or awareness. More generally, it is a state of being apathetic to emerging information and a lack of a framework to evaluate such data.

It should worry every human on earth that the greatest and largest democracies have leaders who demonstrate ignorance to such levels that their mere presence is a threat to humanity. It has been assumed that in a democratic system, fair elections will guarantee that elected officials will be competent at the very least. It was also an implicit assumption that democracies will avoid those who have evil intentions to roll back the ideals of the system. It is clear that these assumptions do not hold and it may be time to ask if the democratic systems, as designed, are appropriate.

The concentration of power has always been a problem in a democratic system. The world’s largest democracy, which purports a unitary system, has accumulated power at the center and that has led to the uneven treatment of states all through its short history. As the pandemic illustrated, the center has schizophrenia, taking credit for what works and blaming the states for the rest. In the world’s greatest democracy, which is apparently getting greater every minute, the dangerous effects of concentration of power in the executive branch are becoming clearer.

Democracy has always been a fragile system. It relied on the intelligence, foresight, and compassion of elected leaders to perpetuate it. All it takes is one or a few individuals to turn it back. Large democracies are sitting at the precipice of a societal tsunami. How they manage through this period will have a profound impact on history.

(1)  https://www.amazon.com/Flexibility-Flexible-Companies-Uncertain-World/dp/1439816328

The knowledge paradox

Gaining knowledge is costly. It takes time, effort, and money. Rational decision-makers will partake in this activity only if the risk-adjusted excess returns from it are positive. Since the risk associated with investing in gaining knowledge has both a systematic and idiosyncratic component to it, if the individual is able to diversify the unsystematic risk by accumulating varied and less correlated knowledge items, the relevant risk for computing returns to knowledge is only the systematic component. Thus, it may be dominant for a young person to garner knowledge in uncorrelated domains. In this context, education systems that force an individual to specialize may be responsible for reducing overall returns to knowledge for the individual and for society more broadly. Further, the value of specialized knowledge declines in a regime of high volatility as the aggregate option value of the portfolio will be higher if it is constructed with diverse and uncorrelated knowledge components.

The value of knowledge, however, declines with age. Both the returns to knowledge as well as any diversification advantages that exist from varied knowledge decline sharply after a certain age. Thus, it is puzzling why older people will engage in the accumulation of knowledge in diverse domains. It has been observed that individuals take on foreign knowledge domains, such as new languages, music, literature, and even science after retirement. Since the computable and observable returns from these apparently irrational activities are negative, it has to be that there are benefits that are intangible. Such benefits may include an incremental extension of life by keeping the brain active and packets of happiness emanating from gameplay if knowledge-seeking is constructed as a game. These are difficult to measure and may depend on the individual.

As the expiration date of an individual is predictable within reasonable error bands, it may be possible to tease out the motivation for knowledge activities through longitudinal studies. Controlling for the individual’s mental deterioration with age, it is possible that the individual will continue to enhance the diversity of her knowledge portfolio. If the extension of life is the dominant objective, this activity should decline over time with a sudden drop closer to expiry. If gameplay drives the motivation, it should hold steady and perhaps even increase as the individual nears the irreversible outcome.

A diverse portfolio of knowledge appears dominant whatever age one is, except very close to expiry.

Information realism and economic systems

A recent blog (1) that brings attention to information realism in physics with an abstract thought that matter is "unnecessary garbage," in a universe driven only by information, is thought provoking. More tactically, such questions could be asked of economic systems, such as businesses and countries. Most identify economic systems based on financial metrics such as profits and GDP, but one could argue that these concepts are unnecessary garbage. There appears to be ample evidence for the failure of economic systems, chasing these tangible metrics, as they leak information and become devoid of it.

In the context of physics, matter is a distraction in a universe driven only by information. Same could be argued about economic systems. Profits and such metrics are pure distraction for viable economic systems. If they do not grow information, they can be predicted to fail with high confidence. The value of a system can then be determined by the information it holds and the expected growth in such information. The latter is more critical as economic systems live in a competitive pool of bounded growth in information and their success and failure largely depend on taking a share of that growth. Thus, success of an economic system does not depend on its balance sheet, income statement or even the quantity of countable resources it holds such as humans, computers and mining rights. Rather, it depends on its ability to grow information - private and public.

For most conventional systems, the idea that countable metrics do not matter could be shocking. More provocatively, systems that count what can be counted are bound to fail. Assets of an economic system, thus, can be defined as entities that hold information or have the power to grow information. As we move toward a regime driven by technology, it is important for the leaders to think about accounting in terms of information content and not tangible and countable units. Financial markets are quick to catch up and they become efficient lot faster than real markets and decisions, contrary to popular views. Real markets show high inertia to change and in this rapid and deep transition, traditional companies become risky as evident in their risk premia. Size does not matter but more importantly if information per capita is not growing in a system, its market value will decline rapidly.

The information tsunami is here. Most economic systems are ill-equipped to survive in it.


(1) https://blogs.scientificamerican.com/observations/physics-is-pointing-inexorably-to-mind/

Micro customization

Recent news (1) that a gastric resident delivery mechanism can deliver reliable, sustainable doses of agents for the long term is important. Innovation in chemical agents has moved ahead of mechanisms that would deliver them at the right time, in the optimum dose, by the best route and to the most receptive site. The ability to optimally deliver the agent is likely more important than the agent itself. In the absence of such delivery mechanisms, manufacturers have stuck to the original blue print - mass manufacturing of pills in a singular dose that shows the best therapeutic index in the population. Personalized medicine, thus, has remained elusive and more importantly, outside the business models of manufacturers.

It may be changing. Ironically, providers have moved ahead of other participants in the healthcare value chain, in the implementation of personalized medicine. Recent advancements in Artificial Intelligence and the availability of abundant data have better  positioned the providers to understand, treat and manage patients, individual by individual. If delivery mechanisms improve and become individually customizable, we can rapidly move into the next level of personalized medicine. Here, we can envision devices that can measure, decide and disburse micro doses to assure optimum delivery and complete compliance. Intelligent devices could be just round the corner, taking advantage of IoT. With embedded intelligence on board, such devices can not only operate as initially primed but also self learn and adjust over time. A couple of decades from now, medical professionals will likely view the current regime to be completely archaic.

More generally, any business that is driven by scale, a blind adherence to singular specifications, will have great difficulty to survive in the future. Technology is readily available, not just for mass customization but rather for individual intervention. This is a regime change that will affect every industry and every business. Getting ahead of this rapid transformation is a necessary condition for success.

(1) A gastric resident drug delivery system for prolonged gram-level dosing of tuberculosis treatment. Verma et al. http://stm.sciencemag.org/content/11/483/eaau6267

It's time for universal basic income

Finland's grand experiment, albeit in small scale, in providing a Universal Basic Income (UBI) without preconditions, ushers in a new dawn in modern societal design. The idea is already late for many countries as accelerating technology makes routine jobs irrelevant and any education less than college, nearly valueless. It is a regime change in such a short time that disallows gradual adjustments and it affects large swaths of populations across the world. Finely tuned welfare programs that create a disincentive for the poor to seek work and policies such as minimum wages that curb opportunities for the young to gain experience, has been creating stress in the social fabric for many decades. UBI will not only correct such disincentives but also remove the cost and inefficiencies associated with the bureaucracies that manage such programs.

The objective function for a modern society is clear - maximize aggregate happiness. Most research on happiness indicate an inverted U relationship with significant disutility in the absence of basic necessities or the fear of not having them in the future. UBI will remove such fear but avoid any disincentive effects. More importantly, UBI could provide optionality for each individual with private utility functions to select optimal pathways to maximize own happiness. If each individual has the flexibility to design such pathways, then society will unambiguously maximize aggregate happiness. What's missing from the status-quo of centrally administered myriad of welfare programs is flexibility for the individual to maximize own utility, unencumbered by the lack of basic necessities - food, shelter, health and information. UBI could provide that at a lower cost than current programs.

Universal Basic Income is conceptually and practically elegant. But to implement it, politicians have to acquire a desire to do something good during the course of their long and uninterrupted careers.

Missed by a whisker

As the string theorists work out the mathematics of the "theory of everything,", as the particle zoo keeper adds yet another particle to the compendium of knowledge, as the space agencies and private companies clamor to dominate space and send humans to Mars, as the environmentalists lament about the impending gloom and doom and as the activists burn and pillage to redirect policies, a large asteroid passed by the Earth peacefully, missing it by a mere 300K kilometers last night, a literal blink of an eye. And more, a lot more, is in the channel heading for the blue planet. I wonder why there was nothing in the news about it.

Humans habitually worry about the tactics and forget the big picture. There is an evolutionary basis for this as most of their history has been about tactical survival. The African Savannah was not a friendly place and as she descended from the trees, she exposed herself to danger all around her. The human psyche, thus, is programmed to worry about tomorrow and not next year for the probability of the later having any meaning for the individual was low. As the "Nobel laureates" attempt to mend the environment, they have to at least understand that the likelihood of Earth surviving a hit by a reasonable sized asteroid is small. And, there are an unimaginable number of objects in the splintered neighborhood of the solar system. The failed star, Jupiter, does her best but sweeping up all the dangerous objects that shower down from beyond her is almost an impossible task.

Those with a few billion $ to invest to create a "legacy," may be best advised to analyze the risks and rewards of their investment choices, Sure, creating a "space colony" and "curing death," are indeed great ideas but if they want humanity to survive (without whom their "legacy," will have no value), they may need to focus on something entirely different. Those who have been chasing "singularity," may need to consider that even "Artificial General Intelligence," will be dead and gone by the physics of impact. Creating robots of immense talent is good, but protecting a fragile environment built over five billion years may be more valuable.

It will be indeed ironic if the "advanced humans," are wiped out by a similar incident that lend mammals, an opening to dominate.

Clans continue

It appears clear that habits formed over hundred thousand years cannot be changed in a mere hundred years. As homo-sapiens ventured out of the African Savannah, they were still tightly organized as small clans, less than a hundred in strength, with their own unique language, culture, religion and morality. In Europe and Asia, within hundreds of years of arrival, they erased their close relatives with astounding efficiency. They also successfully navigated disease and climatic change that reduced them to a few thousand - emerging out of the bottle neck, with even tighter clan relationships.

Technology - aircrafts, computers and the internet - opened up the modern economy in the blink of an eye. Economists, excited by the possibilities, argued for the opening up of countries, continents and economies, but they did not realize the behavior patterns integrated deeply into the human psyche. Countries cling to their languages and apparent cultural nuances aided by politicians who in autocratic and socialistic regimes seem to have convinced the populace that they can implement strategic policies that will make their countries, "great again." In advanced democracies, a larger percentage of the population, seem to have self taught the same ideas and in some rare cases they have found surrogates, who will sing the same tune as the autocrats, even though he/she does not know the words to the music. A dangerous trend has emerged in clans that profess to be democratic and sophisticated. The question is whether learning from mistakes is possible - something that made humans successful in the past. Ironically, in the complex modern economy, the outcomes are not clearly observable and often has long cycles. Getting mauled by a tiger is immediate feedback but having a stagnant and deteriorating economy has little feedback for the larger population.

The modern economy, still largely driven by the clan instincts of the seven billion that occupy the Earth, cannot be shocked out of its stupor by logic. Perhaps photographs from space that show the little blue spot in the midst of chaos may appeal to the artistic side of humans. Little closer, they will find no demarcations as depicted on maps and globes. After all, humans have shown great capabilities to think abstractly, albeit, such thoughts are not often tested by logic.

Salt water bubbles

Economists, closer to salt water, appear to be prone to thoughts of inefficiency and bubbles in the financial markets, something that can be cured by a single trip to the windy city. A recent study from Columbia University (1) asserts that they could find over 13,000 bubbles in the stock market between 2000 and 2013. Using supercomputers, no less, and "big data," they appear to have "conclusively shown" that stock prices take wild and persistent excursions from their "fair values." Unfortunately, these academics, who profess to be "data scientists," are yet to encounter the phenomenon of "random walk," further evidence that "data scientists" should stay away from financial markets. After all, the “physicists” who descended into Wall Street have had a checkered history of “abnormal returns” wrapped in consistent negative alpha.

The remark from a graduate student from Harvard - "I expected to see lots of bubbles in 2009, after the crash, but there were a lot before and a lot after," is symptomatic of the problem faced by “data scientists,” seeking problems to solve in super-domains they have no clue about, where participants, who determine outcomes are equipped with pattern finding technology. They may have better luck in real markets, for prices in financial markets are determined by a large number of participants, each with her own inefficient algorithms. The most troubling aspect of the study is that the authors of the study believe that “a bubble happens when the price of an asset, be it gold, housing or stocks, is more than what a rational person would be willing to pay based on its expected future cash flows.” In a world, immersed in intellectual property, where future cash flows cannot be forecasted precisely, the value of an asset cannot be determined by such simple constructs that have been rendered invalid for decades.

The lure of financial markets have been problematic for “data scientists” and “physicists.” However, a cure is readily available in academic literature emanating from the sixties.

(1) http://esciencenews.com/articles/2016/05/04/stocks.overvalued.longer.and.more.often.previously.thought.says.study

Uncertain networks

Recent research from MIT, Chicago and Harvard (1) contends that smaller shocks in the economy could be magnified significantly by network effects. If true, it may provide guidance on policy that is trying to "jump start" large economic systems by targeted investments. If the transmission of such shocks across the economy is predictable, then, it could impact macro-economic decisions favorably. However, looking back with a deterministic view of network evolution, may have some downside.

Economic growth is driven by the conscious harvesting of uncertainty and not by strategic investments by bureaucrats or even corporations. Further, networks are in a constant state of evolution. Measuring GDP impact, a backward looking measure has less meaning in an economy driven by information, innovation and intellectual property. Firms, locked into the status-quo, with a rigid view of demand and supply, indeed fall prey to shocks amplified by static networks, But those, keenly aware of unpredictable uncertainty and the value of flexibility, could certainly surpass such external noise. The question is not how the present network amplifies shocks but rather how the networks are built. If they are built by organizations with a static view of the future, then they will be brittle and consumed by minor shocks. The measurement of intellectual property by patents is symptomatic of the adherence to known metrics and a lack of awareness of where value is originating from.

Empirical analyses in the context of accepted theories have less value for the future - policy or not. The field of economics has to evolve with the modern economy. Lack of innovation will always have a negative effect on the economy - no further analysis is needed.

(1) http://esciencenews.com/articles/2016/04/06/how.network.effects.hurt.economies

Biological storage

Recent news (1) that University of Washington researchers have successfully stored and retrieved data using DNA molecules is exciting. As the world accumulates data - already many tens of millions of gigabytes, growing at an alarming rate, storage capacity and efficiency are becoming top priorities in computing. With material sciences still lagging and computer scientists clinging to the Silicon status-quo, it is important that the field takes a biological direction. After all, nature has coded and retrieved complex information for ever. Using the same mechanism is likely a few orders of magnitude more efficient than what is currently available.

DNA, the most important biological breakthrough over four billion years, has been almost incomprehensible for humans, arguably, the best product of evolution. Lately, however, they have been able to understand it a bit better. Although some argues that the human genome map is the end game, it is likely that it is just a humble beginning. The multi factorial flexibility afforded by the DNA molecule may allow newer ways to store binary data, making it akin to the other belated innovation - quantum computing. Here, thus far, research focused on mechanistic attempts to force fit the idea into the Silicon matrix. Taking a biological route, perhaps aided by the best functioning quantum computer, the human brain, may be a more profitable path.

Biology could accelerate lagging innovation in material sciences and computer science.

(1) http://esciencenews.com/articles/2016/04/07/uw.team.stores.digital.images.dna.and.retrieves.them.perfectly

Bacteria rising

Recent research from Michigan State University (1) that demonstrates the rise of multi-drug resistant bacteria due to overuse of antibiotics in animals is troubling. It has long been known that flu originates in farms with multi-species interactions. As mentioned in the article, the swine farms in China are particularly problematic as they allow easy gene transfers among bacteria. This, in conjunction with lack of antibiotics research for decades due to declining commercial economics, could result in a perfect storm. 

Bacteria have been dominant all through the history of the planet. Robust architecture with fast evolution by sheer numbers, led them to largely supersede any other biological life form on earth. For the past several decades, they have been put on the back foot, for the first time, by humans. All they need, however, are sufficient number of trials to develop resistance against any anti-bacterial agent. Data shows that they are well on their way, thanks to a variety of experiments afforded to them by inter-species breeding and the overuse of known agents. 

The economics of this indicates that commercial organizations are unlikely to focus on it till it is too late. If R&D, commercial or publicly funded, is not focused on this developing problem, we may be heading toward a regime that may make Ebola look like a household pet. In a highly connected world of intercontinental travel, it is easy for the single cell organism to hitch a ride to anywhere they would like to go. Thus, local efforts are not sufficient and a true global push is needed to compete against the abundant experience, collected over four billion years.

R&D prioritization at the societal level needs to take into account the downside risk and value of investments. 

(1) http://esciencenews.com/articles/2016/04/12/antibiotic.resistance.genes.increasing

Hole in the soul

The super-void, that presented itself in the background radiation, sporting a size of close to two billion light years, has baffled scientists. A few years after its discovery, no reasonable explanation is forthcoming. The standard model, that most still pin their research on, has shown so many cracks that scientists who adhere to it are beginning to look like economists, who have similar difficulty letting go of established theories. Hunting in the particle forest, either to propose new ones or to prove the hypothesized ones indeed exist, has been the favorite past-time of physicists. Recently, they even measured the reverberation of gravity waves, generated by an event over billion years ago, to the tune of the diameter of a proton. Now, it is nearly impossible to disprove anything in Physics.

Biologists and chemists are in the same spot. Technology is advancing so fast that scientists are running out of hypotheses to prove. There are so many engineers and technologists, pumped out by the elite educational institutions around the world, who stand ready to prove anything in science. We are fast approaching a regime of dearth of ideas and an oversupply of proofs. Is this what was envisioned a few decades ago by visionary scientists, who predicted a future in which there would be nothing more to prove. If so, it would be bleak, indeed.

Creating hypotheses, a skill that was left undernourished for a few decades, may need to be brought back.

Go AI??

Artificial Intelligence is in the air again. It is such a nice concept, the inventors of which have been suspected of nourishing the "God complex." Deep blue triumphed in chess and beat out mere humans in Jeopardy, Watson can understand how music is made and speak about it in a synthesized human voice, and now the famous search company has conquered Go. What's left in AI to solve?

Silicon has been alluring to engineers for four decades. They could double the speed of the "chip" in every 18 months and the mere extrapolation of this idea would have instructed even those less mathematically endowed that the belated singularity, is indeed near. Now that the game of Go, that potentially has infinite permutations of moves, has been conclusively solved by the electronic brain, we are likely nearing the inevitable. And that is bad news, especially for those in school toiling with such mundane subjects as computer science, programming and application development. Very soon, all of these will be delegated to machines, most of which would be artificially intelligent to a level, perhaps surpassing even contemporary politicians. Some had claimed decades ago that humans are nearing a state of "perfect knowledge." In Physics, the speculation has been that no mystery will remain in a few decades. Now humanity has taken an important leap to the future that artificial intelligence can quickly mop up any remaining mystery in any field - physics, medicine and even economics.

Chess, Jeopardy, self driving cars, neural nets seeking cat videos, twitter girl, Go... extrapolation certainly indicates the unstoppable triumph of artificial intelligence. The only remaining mystery is what billions of ordinary humans would do. The quantum computer they carry on their shoulders will become virtually useless in this regime of artificial intelligence dominance.

Lawless innovation

A recent study (1) that argues that "constituency statutes have significant effects on the quantity and quality of innovation" in companies, seems to fall into the same trap of pitting stakeholder value against shareholder value. For many decades, the argument has been that companies and societies (e.g. Scandinavia) that focus on the value of stakeholders - employees, communities and the environment do better than those focused on shareholder value (e.g. US). This is a result of a wrong perception that a focus on shareholder value is based on "short term profits" and stakeholder value maximization is a long term process. There is significant empirical evidence that the market and investors are not "short term focused" and are fully capable of assessing and valuing any choices (short or long term) made by the mangers of the firm. Assuming that markets are myopic, without evidence, may not be a good thing.

It is important not to assume the first correlation found in the data is the underlying cause. Note that stakeholder value choices, unless they translate into shareholder value in any horizon, are value destroying. Further, "Quantity and quality of innovation," are difficult to measure. Few innovations are responsible for most of the GDP in the economy and in winner takes all markets, marginal benefit of innovation in aggregate is simply noise. A more interesting question is the structure, systems and strategies of firms (2) that encourage innovation. It is possible that innovative firms will remain so, regardless of the bureaucracies and statutes imposed on them.

Innovation emanates from the culture of the firm - not from the laws created by those, out of touch with the present economy.


(1) http://esciencenews.com/articles/2016/02/18/a.stake.innovation
(2) https://www.crcpress.com/Flexibility-Flexible-Companies-for-the-Uncertain-World/Eapen/9781439816325

Innovative Life Sciences

Recent research (1) that shows Graphene could be utilized to interact with neurons open up a new avenue for research and practice to cure cognitive disabilities and possibly treat CNS diseases. More importantly, this is a profitable direction for biosciences to accelerate innovation. From the moment humans figured out they could impact the system by the ingestion of chemicals, they have been focused singularly on that. The system, however, is clearly electromagnetochemical, providing plenty of opportunities for more elegant interventions without multifactorial and unpredictable long term effects. Chemistry, has plateaued and life sciences companies with a vision of the future, have to move in a direction they are uncomfortable with.

Such an innovative departure in life sciences will take new leadership and a collaboration with emerging ideas and technologies. The impact will be far reaching - possibly replacing chemicals as the only non-invasive intervention. Medical education has to consider robotics, precision electronics and even high energy physics. Computer science and information science have to become integral to diagnosis and treatment. The meaning of intervention has to change - with impacts on the brain and the body simultaneously for optimum effect. In a regime of subdued bugs, unable to threaten the mighty human, it is going to be a battle against the body and the mind. Here, chemicals fail.

Innovation in life sciences will not come from incremental improvements to existing therapies, it will come from embracing hitherto unknown intervention modalities.

(1) http://esciencenews.com/articles/2016/01/29/graphene.shown.safely.interact.with.neurons.brain

Data science blindspot

Recent research from MIT that claims their "data science machine," does better than humans in predictive models is symptomatic of the blind spots affecting data scientists - both the human and non-human variety. Automation of data analytics is not new - some have been doing it for many decades. Feature selection and model building can certainly be optimized and that is old news. The problem remains to be how such "analytics," ultimately add value to the enterprise. This is not a "data science problem," - it is a business and economics problem.

Investments taken by companies into technologies that claim to be able to read massive amounts of data quickly in an effort to create intelligence are unlikely to have positive returns for their owners. Information technology companies, who have a tendency to formulate problems as primarily computation problems, mostly destroy value for companies. Sure, it is an easy way to sell hardware and databases, but it has very little impact on ultimate decisions that affect companies. What is needed here is a combination of domain knowledge and analytics - something the powerpoint gurus or propeller heads cannot deliver themselves. Real insights sit above such theatrics and they are not easily accessible for decision-makers in companies.

Just as the previous "information technology waves," called "Enterprise Resource Planning" and "Business Intelligence," the latest craze is likely to destroy at least as much value in the economy, if it is not rescued from academics seeking to write papers and technology companies trying to sell their wares. The acid test of utility for any "emerging technology," is tangible shareholder value. 

The Science of Economics

Many have wondered if economics is, in fact, science. Those who doubt it point to lack of testability and replicability of experiments. Natural experiments in macro systems are often unique and as they say in biological sciences, " a n of 1" is not useful. Further, predictions based on accepted theories often miss the mark. These appear to erect an insurmountable barrier to legitimizing the field of economics.

However, it is worthwhile to explore what is considered to be science. Physics, arguably the grandest of sciences, suffers from the same issues. Sure, human scale Physics is able to make eminently testable predictions based on Newtonian mechanics. Economics could also make such trivial predictions - for example on how demand will change with prices. And, quantum mechanics in the last hundred years has propelled the field further making fantastic and testable hypotheses. Whole industries have grown around it but those with knowledge and associated humility will contend that much remains unknown. In economics, there has been an analogous movement - where uncertainty and flexibility govern and not numbers in a spreadsheet. However, in economics, this has been delegated as something not many understand and thus not fully compatible with academic tenure. That is fair, we have seen that before but that does not indicate that the field is not scientific.

In biological sciences, experiments have been creating havoc. It is almost as if a hypothesis, once stated, could always be proven. In the world of empiricism, this may point to biases - confirmation and conformation - but more importantly in commerce, it showcases a lack of understanding of sunk costs (pardon the non-scientific term). Once hundreds of millions have been plunked into "R&D," the "drug" has to work, for without that, lives of many - if not the patients but the employees of large companies, could be at risk. So, testable hypotheses in themselves, albeit necessary, are not sufficient for science.

The dogma of science may be constraining development in many fields - such as economics, policy, psychology and social sciences. Those who are dogmatic may need to look back into their own fields before passing judgement.

Real finance

Recent observations by a previous Fed chairman that it is puzzling why one would advocate a reinstatement of Glass-Steagall act because he could not see how the crisis in 2008 would have been avoided had it been in effect, is symptomatic of regulators who are good tacticians but not strategists. From Princeton to Wall street, financial institutions and their regulators still believe intermediation is “God’s work.” Academics, slaves to economics text books from last century, still believe financial intermediation is integral to markets and the economy. If the former chairman is intellectually honest, he may want to revisit the transcripts from Jackson Hole in 2005, before spewing wisdom. The one who came before him, who spewed infinite wisdom for many decades seem to have finally realized, “something was wrong.” He is still selling wisdom at $75K per pop. Meanwhile financial malls, that do everything but intermediation, with a skewed incentive to take risks for their bonuses that depend on the upside potential emanating from their actions and they are generally not accountable for the downside risk, invest into fooling both the academics and the regulators.

Although the chairman may be an expert of the depression era, what he may be missing is that the modern economy needs very little finance as we know it. Any financial activity, that does not have a direct connection to real assets and real investments, adds no value to the economy. Real assets today comprise of only two things – real estate and intellectual property. Financial intermediation in the former can now be done by the internet and it does not require “God’s men,” behind oak desks in the penthouses. And financing needed to develop and nourish IP is not something the mega banks have any clue about. They are dinosaurs with a ridiculous combination of disparate businesses with conflicting incentives that still pose a systemic risk to the entire population.

Glass-Steagall is a necessary condition to eliminate the greed of the ignorant and I am sure “God” will approve.

Elite efficiency

A recent paper (1) studies the “distributional preferences of the elite” and makes a somewhat obvious (startling to them) conclusion - “the elite” prefers not to distribute compared to the general population. There are many problems with the study including the premise and the definition of the “elite,”  comprising of the graduates of the Yale Law School (YLS). The assertion is that these graduates are destined to power and influence (and presumably wealth) and hence the “branding” of “elite.” Institutions and researchers looking backwards and frozen in time, may be in for a shock when they look outside their theoretical and historically adorned windows and see the future.

How do we test a hypothesis that YLS students prefer not to redistribute compared to a random graduate? Could we use the same study and data? Suppose we prove that YLS students are not “elite” at all because the probability of a YLS graduate to have any influence on society is roughly equal to a random graduate, what would it imply for the study? Economists tend to use fancy words and create complexity so that they can live within their secluded ivory towers, contributing nothing to society. In this context, what exactly does equality-efficiency trade-offs mean? Does it mean that the “elite” like to keep the money for themselves and phenomena that cannot be understood in this framework is assumed to maximize efficiency?

Practical educators and researchers should stop wasting time assigning labels and useless observations in a label prone, segregated and tiring society.

(1) The distributional preferences of an elite
Raymond Fisman1,*, Pamela Jakiela2, Shachar Kariv3, Daniel Markovits4
1Department of Economics, Boston University, Boston, MA, USA.
2Department of Agricultural and Resource Economics, University of Maryland, College Park, MD, USA.
3Department of Economics, University of California, Berkeley, Berkely, CA, USA.
4Yale Law School, Yale University, New Haven, CT, USA.

Fusion, it is here (almost)

Ever since a brilliant member of the Homo Erectus produced fire for the first time nearly 2 Million years ago, their descendents have been trying to tame and use energy optimally. More recently, humans have been getting smarter with alternatives to wood burning, including fossil fuels, biofuels, nuclear energy, hydro, solar, wind and tidal. For many decades now, it has been obvious to many that most of these are inelegant solutions to the energy problem.

Burning hydrocarbons, albeit easy to do, has possible long term negative effects on the environment and biofuels take more energy than they produce. Nuclear fission, often fails to account for the costs associated with the storage of waste materials, with half lives exceeding 50,000 years. Solar, the darling of environmentalists, is not economical – in all varieties, photoelectric and concentrating-solar and it is an industry propped-up by subsidies, devised by politicians looking for brownie points. Hydro power has displaced massive populations across the world, with long term deleterious effects on the ecosystem. Finally, tidal and wind, better understood by public, show low efficiency and they are pushed by “green companies,” who make turbines for profits.

The energy problem is far from being solved. Lately, however, there are glimpses of hope – Lockheed, Alpha Energy and National Ignition Facility – to mention a few, seem to be making great strides to taming fusion. Ever since humans understood how stars worked, it should have been obvious that there is only one avenue to pursue to solve energy. Better late than never.

Fusion could lead to zero cost energy and that will make most tactical problems that consume humanity currently, utterly irrelevant.