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20140426 Intuition Pumps

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Main Idea:

Intuition pump is a thinking tool used as a short cut to understand some issue or situation. This book is kind of collection of intuition pumps provided by professional philosopher. The samples of such pumps like Descartes coordinates, probability theory, or Bayes’s theorem are abound and Dennett demonstrates application of quite a few of them.
The list includes not only general thinking tools, but also specifics tools for thinking about Meaning, Evolution, Consciousness, Free will, and big discussion about computers, their software, and intelligent use of these machines.


I Introduction
II A Dozen of General Thinking Tools

1. Mistakes
Making mistakes is one and only way of making progress. One of the main processes when mistakes are indispensible is evolution. Basically every step starts with mistake or more precisely variation in copying DNA that provides for sometimes improved chances of survival in constantly changing environment. Making mistakes seems to come naturally to everybody, but I guess it does qualify as philosophical tool.

2. Reductio
This is a standard method in any discussion – reduction to absurdum. Good example of counterattack with Chomsky: if idea you are criticizing is so absurd, why waste time to go through critic of obvious? Another method – grasping the nettle and indorse conclusion. Example: J.J.C. Smart – “Yes, my theory of ethics leads to conclusion that is is sometimes ethical to frame innocent man”

3. Rapoport Rules
Anatol Rapoport author of winning Tit-for-Tat strategy for prisoner’s dilemma come up with the rules for successful critical commentary:
a) Re- express target’s position as clearly as possible to obtain confirmation of correctness
b) List all points of agreement
c) List all lessons learned from opponent’s position
d) Only after that provide critic of points of disagreement

4. Sturgeon’s Rules
Si-Fi author Ted Sturgeon’s law: 90% of everything is crap so concentrate on main points

5. Occam’s Razor
Do not multiply entities beyond necessity

6. Occam’s Broom
Sidney Brenner’s definition: “Removing facts not consistent with theory”

7. Lay audiences as Decoys
Disputes between experts should be conducted with lay audience that would require clarification for everything they do not understand. This prevents expert from talking pass each other.

8. Jootsing
Doug Hofstadter’s definition: Jumping out of the System

9. Goulding: Rathering, Piling on, and Gould Two-step
Steven Jay Gould: Rathering – slide out of false dichotomy; Piling on – use of “nothing could be farther from bla-bla-bla; Two-steps: Step one create a straw man. Step two – refute it, but state that opponent moved away from your straw man only under your attack

10. “Surely” Operator
Use “surely” as the way to dismiss opponent’s position without argument

11. Rhetorical questions
When encountered try to come up with non-trivial response

12. Deepity
Deepity is proposition that seems to be true, important, and profound mainly due to its ambiguity

III Tools for thinking about meaning
13. Murder on Trafalgar Square
The something obvious idea that the same event (Murder) would get represented similarly in the brain of different individuals regardless of how it got there – via different languages, communication tools and such. At the same time all these individuals could have a separate property – intentionality of this event.

14. An Older Brother in Cleveland
Meaning of statement is interconnected with multiple other representations in brains. The simple statement about brother in Cleveland could represent reality or not and be just a consequence of brain dysfunction.

15. Daddy is a Doctor
This is another example of statement by child without full understanding of meaning of doctor’s profession. The notion of sorta is added here.

16. Manifest image and scientific image
The manifest image – trivial and perceptual image of the world, while scientific image is image built according to rules. However the attention here is on ontology – the things that exists. Their images are built by evolution – perception and manipulation of such images help us to survive.

17. Folk Psychology
Folk psychology presented as a set of ideas that all humans have about themselves and other people’s knowledge and behavior. Especially important in this is the human propensity to find an agent in everything that is happening. This is the logic of “No stone moves without somebody moving it”

18. The Intentional Stance
This is extension of Folk Psychology – assignment of intention to all occurrences. It could be broken into 3 stances: physical stance – an entity complies with laws of physics, design stance – the entity is consciously designed and will work in accordance with design; intentional stance – entity has volition.

19. The Personal/Sub personal
This is the idea of division of person into personality and subsystems. The sample: “your brain does not understand English, you do”

20. Homunculi
This is an idea that human personality is at least theoretically subdivided into sequentially less complex subsystems – progressively more stupid homunculi.

21. The Sorta Operator
This is a notion of not complete understanding or action, but good enough for limited purposes. The sample: “ I Sorta understand theory of relativity”.

22. Wonder tissue
In short that there is no Wonder tissue means that out neuron despite whatever miraculous thinking produced by them seems to be are not “real miracle”, but just a specific types of materials working in full compliance with the known laws of nature.

23. Robot control room
This is a description of person in control room of giant robot that he should control without understanding of how exactly available controls work. After some trials and errors more or less competent management is quite possible. In short it is a case of competence without comprehension.

IV Interlude about computers.
24 – 27 Skipped because of triviality for me, as professional working with computers for 40 years.

V More tools about meaning
28. Redheads
This is about stereotyping. A sample stereotypical believe: For all X if X is a redhead Y is TRUE.

29. Wandering Two-Bitser
This relates to original intentionality – something about us that is not derived from our action, but intrinsic to us. To provide distinction the best way is to put examples of original versus derived intentionality such as:
Two-Bitser: Vending machine, which recognize US quarter as original intentionality and Panama coin as derived.
Twin Earth: Everything exactly the same only instead of horses there are schmorses with only difference hidden in DNA. Individual transferred to twin earth would call them horses mixing original and derived intentionality.
Robot designed to maintain comatose body in good shape for a long time would require self-programming to meet all environmental changes. In this case original intentionality of maintaining body initiate a huge tail of derived intentionality. Same situation happens with chess playing computer.
It is kind of similar to “selfish gene” logic. The original intentionality is for gene to maintain its code in perpetuity; the animals are just derived intentionality machines to do it.

30. Radical Translation
This is about Quine’s principle of indeterminacy of radical translation: given task of designing translation between completely different languages with no commonality and individuals familiar with both, result would be completely different translation manuals, but no factual confirmation which one is correct.

31. Semantic Engines and Syntactic Engines
This is about human brain. It designed to produce model of future and correspondingly direct actions of body. It is defined as semantic engine. In fact being material and working in accordance with physical and chemical laws, all parts of human brain are just syntactic engines.

32. Swampman and Cow Shark
This is a pump about instant replica of a person that somehow maintains some characteristics, but looses others, for example could not recognize friends. More precisely internal conditions remain intact, but knowledge of external world disappears. Cow shark is entity with all atoms and appearances of shark, but with cow DNA.

33. Two Black Boxes
This is a model with two connected black boxes: one with controllers (buttons) and another with presentations (lights). It provides for discussion about complexity of communication and difficulties of learning code from external presentations. The system could contain all the possible truths, but it would not be thinking system.

VI Tools for Thinking about Evolution
34. Universal Acid
This is an acid that would dissolve everything. The challenge is how to save it. Darwin’s idea of evolution is similar – works on just about everything.

35. The Library of Mendel
This is comparison of imaginary library of Babel that contains all conceivable books in all languages with all conceivable combinations of DNA.

36. Genes as Words and Subroutins
This is DNA comparison with computer program.

37. The Tree of Life
This is imaginary tree of all DNA sequences ever existed built as tree with branches and everything

38. Cranes and Skyhooks
This is discussion of complexity of life and evolutionary explanation of it. The representative image provided is construction by using cranes that was build from the bottom up versus skyhook coming down from the sky. The logic of evolution shows that skyhook is redundant. Everything could be built with cranes

39. Competence without comprehension
The infinite sequential loop of transfer with change – trial – approval / rejection, and transfer of approved design to the next generation does not require any comprehension whatsoever, but is very competent in achieving results.

40. Free-Floating Rationales
This is about human tendency to find intention where none exists. Comparison of termites and architecture coming up with similar design, but termites with no intention to do it

41. Locust and Prime numbers
This is an application of human logic of evolution to the reproductive cycle of cicadas that occurs in the years equal to prime numbers. It seems to be linked to cyclic appearance of predators.

42. Stotting
Stotting is prey’s demonstration of high level of fitness to the predator like gazelles jumping higher then necessary while running from lion. The message: “I am fit and you are not going to catch me, so let’s not waste resources on this pursuit”

43. Prime Mammal
This is chicken and egg dilemma. If every mammal had mammal parents where the first mammals came from?

44. When does Speciation occur?
This is about speciation – generation of the new species from old one. It is very rare event. Intuition pumps: geo separation of specie members one from another that leads to independent development over time.

45. Widowmakers
This is not that much about widow makers as about mitochondria DNA that allow to trace female line of inheritance and human individuals being a collection of various organisms to such extent that cell with non-human DNA outweigh cell with human DNA Another interesting thing – 99% of all organisms that ever lived left no offspring.

46. Cycles
This is a discussion about cycles and evolution as cyclical process with small changes accumulated during repetitions. The idea is that non-biological cycle create condition for initial start-up of bio evolution

47. Frog’s eye
This is the use of characteristics of frog’s eye to identify flying small object as food to present notion of exaptation – use of existing property for new environment. Example is provided of frog catching pellets from people in zoo instead of real flies.

48. Leaping through space in the Library of Babel
This a bit of discussion about science versus art: Newton if replaceable, while Shakespeare is not.

49. Who is the author of Spamlet?
This is about author issue: if Frankenstein created robot that wrote a play. Who is the author of the play? Other examples are from the real life – computer chess and music.

50. Noise in the Virtual Hotel
This is ac comparison between real and virtual worlds. The virtual hotel is cheap, but does not have any intrusions that are typical for real world. Then it goes through computer modeling of evolution and creativity. The key here is that virtual world is a lot simpler then real world.

51. Herbs, Alice, and Hal
This is a pump about humans. Herb and Alice make a child Hal, but not in usual way. They sequence and splice their DNA in tube. Then speculation what if humans have different sequences for different communities, they would not be compatible.

52. Memes
This is about MEMES as another conduit of evolution, only this time it is a cultural evolution.

VII Tools for Thinking about Conscience
The question here is if it is possible to comprehend conscience

53. Two Counter-images
So the images are kind of negative. Conscience is not the top and it is not media as TV. The interesting suggestion is that conscience is like a fame or “cerebral celebrity”.

54. Zombic Hunch
This is inability to accept that robots can have conscience even if it is typical to assign it to just about anything in cultural artifacts. Zombies do the same as humans and there I no behavioral differences, but they are not human.

55. Zombies and Zimbos
This is a funny discussion about ability to conceive staff. It goes to bring in Zimbo that is Zombie with ability of self-monitoring.

56. The Curse of Cauliflower
This is about notion of Qualia – term for way it seems to us, or specifics of individual’s perception unknowable for other people.

57. Vim = Money
This is discussion of Qualia with use of notion of real money to measure all other types of money. The vim is used as non-material characteristic of real money.

58. The sad case of Mr. Clapgras
This starts with idea that “Qualia are what makes life worth living” and goes through philosophical discussion of two pathologies: prosopagnosia (inability to recognize faces) and Capgras delusion (believe that close person is impostor). The derivative is produced –Mr.Clapgras whose perception is normal, but emotional attachments are screwed. For example usual emotions for blue color are attached to the yellow.

59. The Tuned Deck
This is about complex problems of conscience. Complexity illustrated by card trick – the tuned deck when magician claims to be able to hear where the each specific card is in the deck. The trick was presented as very complex, but was really very simple. The key was to make people to look for complexity.

60. The Chinese Room
This is about experiment to show that strong AI is impossible. The strong AI is computer program capable to explain human cognition. AI computer in the room uses Chinese language. Researcher outside the room does not understand and could not translate. Infer – there is no understanding of Chinese in the room.

61. The Teleclone fall from Mars to Earth
This is about question of material identity: is teleported person is the same as original?

62. The Self as Center of narrative gravity
This is thinking about difficulty of defining self. Self is not part of brain. The notion presented of self as immaterial mathematical point of gravity of a person.

63. Heterophenomenology
This is a combination of third-person and first-person view of self. More precisely it is the third-party scientific analysis of conscious representations by first-party of events and experiences that he believes to be true, regardless of third-party knowledge about correctness of this evaluation. As example the sighting of UFO could be used.

64. Color Scientist
This is mental experiment about color scientist who is able to see only in black and white. The scientist uses wavelength to recreate representations of color. Does switch to color TV for data collection change anything? Believe is that it does moves us beyond physicality.

VIII Tools for Thinking about Free Will
65. A truly nefarious Neurosurgeon
Neurosurgeon tell patient that he implanted control box in patient’s brain. The claim is that it removes responsibility.

66. A Deterministic Toy
This is pump about toy (grid of cells) to think about determinism – the idea that current status conclusively defines all future statuses of the system.

67. Rock, Paper, and Scissors
This pump is contrary to determinism- unpredictability of winner when pairs selected randomly. For this one there is a good advice: be unpredictable.

68. Two Lotteries
This pump is about two lotteries: one with winner defined before and another after ticket distribution. In the first one winner predetermined in the second winner is random.

69. Inert Historical Facts
This is pump about facts that may or may not be true like piece of gold one has used previously beloning to Caesar. From here it goes back to discussion about determinism

70. Computer Chess
Another pump about determinist thinking – is chess computer moves predetermined or not? Then it goes into funny discussion about changing the future.

71. Ultimate Responsibility
This is about responsibility: one does something because the way he is, but he did not make himself, so he has no responsibility for what he does.

72. Sphexishness
This is a term for rigid robotic mindlessness. Applied to animal with defined pattern of behavior, but could be also used as intuition pump for determinism versus free choice.

73. The boys from Brazil
This is about law being impossible without assumption of free will. The pump goes to scientist from Brazil who clones little Hitler.

IX Philosopher
74. Faustian bargain
This is a bunch of choices for philosophers between achieving intellectual objective to solve the problem, or get fame forever by incorrect but popular theory.

75. Philosophy as Naïve Auto-anthropology
This is a view at philosophy as discipline that negotiates traffic between manifest and scientific images.

76. Truths of Chmess
This is about the higher truth versus simple or practical truth. The example from chess – it is common knowledge that it is not possible to checkmate with a lone knight and king. However there is a position that is shown when it is possible. The Chmess is an invented game just like chess where king can do two steps, disabling the shown position.
Burton Dreben: “Philosophy is garbage, but history of garbage is scholarship”

77. 10 percent that’s Good
The idea that 10% of philosophy contains the truth and worth effort to develop, even if 90% is garbage.

So it comes down to use of tools trying to answer unanswerable questions: meaning in material world, how life evolved, how consciousness work, and if there is a free will.

Some intuition pumps that where left out: “Where am I”, Darwinian spaces, and many others.

My Take on It:

General Thinking Tools: A very nice set of intellectual tools. In addition to ones that I know, use all the time, and love such as Occam razor I highly appreciate addition of Occam Broom and Rapoport rules. I think it is a great systematization that allows recognizing quite a bit of malicious ways to avoid meaningful discussion. I guess if one encounters an opponent spewing lots of “Deepity” type of arguments or “Surely” operator, it is a good sign that discussion is not based on search of truth and therefore in most cases just meaningless. On other hand if conducted in a fight for hearts and minds of relatively open-minded audience the knowledge of these tools could help.

Tools for thinking about meaning: the most important for me here is a contrast between manifest and scientific way of thinking. It happens all the time especially in politically acute discussion. The clear understanding of manifest thinking is absolutely necessary in order to remove mask of scientific truth from ideas that have not a smidgen of science in them from scientific communism to global warming.

More tools about meaning: the additional piece on meaning is somewhat overcomplicated, bringing many hypotheticals like swamp man and cow shark. It goes way to deep into contrast between materiality of brain and idealism of its activity. I have difficulty in accepting it as some kind of controversy with semantic engine of brain’s predicting future and syntactic engine of brain – its material structure. As far as I am concerned it is simple and relationship of chemical molecules of the human brain and chess moves generated by this brains is no different then relationship between computer chips’ chemical molecules and chess moves generated by computer. The philosophical difference between those two is not in the process itself, but how each of these two systems came to the point of playing chess. One system – human came there as self organizing and self-directing system that was developed over long years of growing up and in process changing structure of its brain through continuing encounter with environment, while another one – computer was externally designed and programmed to use logical and mathematical processes to define the next move. The actual chemical foundation of the system is just irrelevant.

Tools for Thinking about Evolution: I really struggle to understand why evolution seems to be difficult for many people to understand and causes such a controversy. As far as I am concern it is just universal process that occurs every time when self-directing systems are involved. It is not only biological systems with genes transferring information, but also cultural evolution with memes transferring information. Moreover just about every human nontrivial activity involving learning something new could be viewed as process of evolution when every attempt that failed to achieve objective leads to change of approach (mutation of meme) until objective is achieved and new meme settled down in the head of the human who worked on it.

Why it is so difficult to see the commonality of evolutionary process in everything that biological systems do with results somewhat hardened in what they are is beyond me.

Tools for Thinking about Conscience: I find notion of Qualia introduced here very useful in presenting uniqueness of experience and reaction of every bio system. Again, as with many other things in philosophy my simple mind makes it difficult for me to understand why a conscience is such a difficult thing to understand. In my humble opinion it is just an ability of self-directing biological system to behave at higher level of complexity by identifying itself as a separate entity from environment, and by doing so to dramatically increase effectiveness of its actions.

Tools for Thinking about Free Will: The whole discussion about determinism, free will, and responsibility seems to me being totally over-connected. In my opinion these 3 things have nothing in common if looked at not from academic point of view of how it is, but rather from practical point of view what to do. From this point of view it does not matter if somebody done something because it was predetermined or because he had free will to do it. What does matter is what to do about it. The experience shows that if properly incentivized (meaning this widely, including beyond limited material incentives), people would do things or not in accordance with incentives.

Besides, complete determinism is not possible and we know this for a while from quantum mechanics. We are now learning that even DNA code as deterministic as it seems, in reality does not work the same way in all circumstances. So with full determinism out of picture the choice between different courses of action becomes domain of free will, however it may be limited.

The final thought is about philosophy. I pretty much agree that it is 90% garbage, but I still think it is important because this garbage always accumulates in the mind of human beings and make them act in very specific and often unpleasant way like theories of race superiority which are the garbage if there is one. It would be nice to limit this accumulation to at least benign forms.

20140420 Bringing Power Back Home

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Main Idea:

The big central government is way too far away from real people to be efficient supporter of collective needs of community. At the same time low-level local governments are too low on resources to do the same. The most effective way is to create more or less standard government units optimized to be small enough to be close to human level and big enough to have necessary resources. In short the thrust here is not against government per se, but for optimization of size of the government.


Bringing Power Back Home
Interestingly enough it starts from reference to history, specifically to Machiavelli as expositor of Florentine republican ethics of “civic humanism”. It stated that to maintain immortal republic the following should apply:

1. Widespread distribution of power and thus property
2. Citizen must be participant in civic life
3. Every able-bodied male should serve in militia to protect against invasion

The discussion goes to size and level of localization of government necessary to meet these requirements. The obvious conclusion is that contemporary American society moved far away from these requirements.

The solution offered is to create shires – government bodies with sizes between 2,500 and 60,000 people in which participatory democracy is possible. These shires would be the main governing body that will transfer very limited power to superior government bodies at the state and federal level only to the extent necessary to conduct functions that are impossible at the local level such as defense, diplomacy, regulation of trade, and such.

The short expression of idea is: “Bring Government home”.

My Take on It:

Since I do not see government or any collective for that matter as thinking, feeling, and acting entity, but rather as more or less organized hierarchy of individuals, I do not believe that change in size would matter that much. There are plenty of examples that even such minimally conceivable unit of government, as homeowners association becomes a petty tyranny hell bound on stepping on individual rights and transferring other people wealth to functionaries of government.

I believe that the only real solution is not to tinker with the size of government, but drastically decrease role of government to areas of its competence which is limited to areas where use of violence is necessary and justified. All other areas where government involved in now such as wealth transfer from rich and poor, regulation, and such would be taken care of by individuals and joint or separate market exchange between them as long as all individuals have something significant enough for sale. The core of this something in my opinion should be equal, unalienable, and marketable rights for natural resources supplemented by individuals’ ability to produce marketable goods and services.

20140411 Vienneese Waltz

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Main Idea:
This book, at least partially, written to contradict the idea of Random Walk and Efficient Market. It based on the ideas of Austrian school of economics, which views market as representation of human actions and even if these are actions of multiple humans with different, often contradictory ideas, it still subject to human behavior including mob behavior and therefore is far from being completely unpredictable. Austrians and especially von Mises saw economy as the field of human actions susceptible to analysis, but way too complex for mathematical analysis. In short Skousen sees market as a dance – definitely not random movement along dance floor in accordance with some rules and esthetics. However it is quite fast dance: Viennese Waltz which is not easy to trace and difficult to predict.


Part I
1. What is the Austrian School?
This is a short 2 pages opening describing Austrian school as foremost defenders of free market economy and place of its birth – Habsburg’s Austro-Hungarian Empire. From this point follows the review of personalities and their input.

2. Carl Menger (1840-1921): Subjectivism and the Marginalist Revolution
Principle of Subjectivism – Prices defined by consumer’s subjective demand not by costs or labor value. There is no intrinsic value.
Marginal Revolution – Price defined by the utility of last (marginal) unit of profitable sale.
Time value – depending on amount of time from inception to final product and utility to consumer goods and services divided into lower (consumer) and higher (producer) order goods and services. Implies greater price volatility in lower order goods.

3. Eugene Bohm-Bawerk (1851-1914): Saving, Interest Rates, and the Theory of Capital
Importance of Savings – increase in level of roundabound method of production increases productivity and output. In other words savings directed into expansion of base of higher order (producer) goods and their quality.

4. Friedrich von Wieser (1851-1926): The “Great Man” theory
The Creative Entrepreneur – high importance of human individual who creates new sometimes break through products and services. In definitive text of “The Theory of Social Economy” he defined terms of “Marginal Utility”, Economic Planning”, and “Opportunity Cost”.

5. Ludwig von Mises (1881-1973): Human Action
Cause and Effect – Human actions are always purposeful and rational therefore if actors are known and understood, their actions and results could be predicted including future prices and market movement trends, but not details such as timing.

People are Different – Humans are too complex and understanding of their action requires completely different science – praxeology. That is science of purposeful actions different from science of purposeless processes of unanimated objects (Dualism). Overall humans are unpredictable and therefore quantitate methods could not possibly work. The economics as science is valid only at qualitative level.

Socialist Calculation Debate – Socialist planning is meaningless because without prices defined by competition efficient economy could not work. The market is process of discovery of what humans really want and what value they put on different goods and services. Without such rediscovery of constantly changing needs and values socialist economy is bound to overproduce some things and under produce others.

6. Friedrich von Hayek (1899-1992) The Austrian Theory, of the Business Cycle
Austrian Business Cycle Theory – Business cycle of boom and bust caused by government intervention into money supply via change in interest rates for credit. When government decreases cost of money below natural level it causes unhealthy expansion because cheap money encourage inefficient investment that will results in production of overpriced goods and services causing inflation. Eventually either government had to drastically decrease interest rates causing bust, or inflation will run out of control that would also lead to even more painful bust. The bust liquidates inefficient investment and businesses until money supply contracts to the level when only most efficient investment is justified causing start of next round of expansion.

7. Schumpeter (1883-1950): The Creative Destruction
The Creative Destruction – The great entrepreneur comes up with new revolutionary product or service that satisfies human needs much better then previously existing methods. The new product destroys existing businesses that use outdated methods or products.

8. Kirzner (1930- ): The Discovery Process
The Discovery Process – Entrepreneur as scientist discovering new products, services, processes, and even human needs those never existed or were latent before.

9. Murray Rothbard (1925-1995) and the Hard-Money Movement
The Cause of Stagflation: Price of consumer goods tend to rise faster then price of producer goods with prices realigned during recession caused deflation. With government pumping money into economy deflation is not occurring so prices could not be realigned causing stagnation and inflation at the same time.

The Origin of Banking and Money: Manifesto of hard money movement. Main idea is that government is inherently corrupt and therefore the only way to stable money is gold standard.

10. The 2008 Financial Crisis: Austrian Response to the Chicago School of Milton Friedman (1912-2006)
This is review of differences between Austrian school and Chicago school of economics. While both are supporting free market economy the Chicago school emphasize government monetary policy that it deems inevitable, while Austrian school insists that only gold could provide for good monetary policy.

The big work of Friedman was proving that government’s monetary policy caused the great depression.

Differences between Chicago and Austrian school in regard to crisis of 2008:
Chicago: 4 factors: 1.FDIC; 2. No gold standard; 3. Automatic stabilizers; 4.FED determination; combined prevent depression. In short – drastic monetary expansion prevents depression. This view puts Chicago monetarists on the same side as Keynesians.
Austrians: monetary expansion is inevitably leads to structural imbalances and eventually to inflation. Government manipulations with statistics such as not counting discouraged workers as unemployed or playing with inflation calculation method does not make depression disappear.
Austrian Alternative: Posit restricted money supply to M1 as only one true money supply measure – AMS (Austrian Money Supply). Also puts high importance on interest rates, but does not provides method of dealing with imbalances.

Part II – Various essays
11. Murray Rothbard As Investment Advisor
This is the review of overall ability of economists to forecast market movements with a reasonable conclusion that this ability is quite low.

12. What every Investor Should Know About Austrian Economics and the Hard-Money Movement
Philosophy of Hard-Money movement – circumvent effects of government monetary interventions by adhering to hard money (gold and silver) in their investment analysis and decisions. This essay is detailed description of hard money approach to investment.

13. The Economist as Investment Advisor
Another shot at economist as investor. The idea is that economics does not provide for valid investment advice in details, but it allows predict high level trends caused by government interference. This provide for imperfect knowledge of future that conceivably could be converted to decent returns.

14. Keynes As a Speculator
Review of Keynes performance as investor – overall very successful, but far from perfect with significant losses in some years. It is also unclear how much of his success could be attributed to insider knowledge.

15. Who Predicted the 1929 Crash?
The answer is very few and mainly sound money supporters based on their estimate of 20s as inflationary spiral. Austrian school Mises and Hayek anticipated the crash, but could not be precise on timing.

16. Financial Economics
Another essay on market predictability with the same conclusion: it is not predictable at the detailed mathematical level, but quite predictable on the high qualitative level where Austrian economics operates. Unfortunately this level highly dependable on political events those in turn are not very predictable at all.

17. A Tale of Two Dollars
The tale of inflation told via fate of two dollars in 1960: one silver and another paper. After 50 years the difference for silver was 18/1 while for paper 0.1/1. However the interesting thing is not inflation per se, but rather silver price variation. The silver dollar of 1960 went up to $5 and down back to $1 that kind of indicates that history commodity based money is far from perfect. The new technology of gold / silver extraction or production could cause crash in value any time.

Part Ill. – Information sources
18. Austrian Economics: Newsletters, Books, and Services
The final couple pages are reference to websites and newsletters that specialize in investment advice base on Austrian school of economics.

My Take on It:

I am an admirer of Austrian school and its thinkers. I believe that it is the most realistic approach to economics especially comparative to other schools such as Marxists or Keynesian. The only quarrel I have with this school is it’s over appreciation of commodity based money such as gold and silver. I think that money is construction of human action consistent of two equally important parts: government violence and human trust between individuals represented by credit. I also think that a missing part in analysis of Austrian school is analysis of property rights not just as necessary and mainly benevolent foundation of sound economy, but rather as another human construction based on government violence. Without proper attention to violent components of human society economic analysis of Austrian school while valid and useful, does not provide tools necessary to improve economic performance of society.

As to contest between Efficient Market theory with its Random walk and Market predictability to extent of predictability of human action, I am with Austrians. I believe that market could be predicted, but only to very limited extent when some human actions clearly go beyond economic rationality.

As far as Marxism and Keynesianism, I think that Marx’s theory of total government control as effective economic organization proved to be false by history and explained very well why it is false within framework of Austrian economy. The same pretty much applies to Keynesianism that was explained as mainly false by Austrians and currently is in process of final historical confirmation of its falsehood.

The only thing I would add is that typical Keynesian analysis of aggregate supply and demand misses one important thing – it is that artificial government-created demand in reality means that individuals who produce something valuable that other people are willing to pay for are bound to receive less and less in real terms for their effort and on the long run (however not that long – well before we are all dead) would respond to this by decreasing level of their effort and consequently level of production of valuable good and services. The abundance of bureaucratic goods and services of 0 value could not be a good substitute for this loss.

20140405 Triple Package

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Main Idea:
The main idea is very simple: the prosperity for groups and individuals comes from combination of three factors: superiority complex, insecurity complex, and impulse control. All these three factors are combined in the “triple package” provide for very good explanation for high level of prosperity for some of minority groups in USA. At the same time lack or weakness of any of this factors makes individuals and group fail. It is also important that the high level of achievement is identified as somewhat limited to simple things like power, money, and other forms of worldly success. Another important point is that triple package made America what it is – the most prosperous and powerful nation in history, but it tend to decay overtime making next generations to lose important components: insecurity and impulse control creating lazy and stupid people with high self-esteem living on welfare.
Description of triple package with examples of successful minority groups that possess these qualities ispades: Mormons, Cuban Americans, Indian Americans, Nigerian Americans, and, most obviously, Jews. The dynamics of achievement is presented as follows: Superiority complex and Insecurity generate drive to achieve, and Impulse Control provides for ability to maintain continuous effort necessary for high level of achievement.
More detailed review of high achievement groups: Mormons, Cubans, West Indian and African immigrant groups, Asians, especially Chinese, Jews, and Iranian / Lebanese immigrants.
Review of sources of superiority complex for each of these groups: Jews and Mormons as chosen people, Cubans as former elite of Cuban society, Chinese and Iranians (Persians) as members of greatest ancient civilization. Conversely the group consistently pressured into accepting their inferiority – American blacks developed complex of inferiority that in many cases prevents them from achieving. African black immigrants who have none of this inferiority complex like Nigerians doing just great. Also provided are some results of psychological research and experimentation that demonstrate significant dependency of level of achievement on level of expectation and self-evaluation.

The second component – insecurity reviewed not only as applied to immigrants, but also as inherent trait of American culture that was created after all by very insecure immigrants from second sons of English nobility to religious decedents. It is more then obvious that such insecurity applied too and at the much higher level to immigrant groups with minority racial and religious background.
The impulse control review starts from classical “marshmallow experiment” to demonstrate scientific prove of value of self-control for success and then goes through detailed review of superior impulse control development methods of Chinese and Jewish families.
This chapter is something unusual for a book about sources of success. It reviews cost of the success. The live within triple package culture is not easy. In exchange for constant drive, hard work, and high achievement it brings not only power and money, but also high levels of stress, psychological and emotional problems, and, sometimes substance abuse in attempts to decrease pressure. There is also an interesting discussion about Chinese Confucian culture’s based pathologies with extreme forms of compliance to authority versus Jewish individualistic god-fighting culture’s based pathologies with extreme forms of challenge of authority.
This is a review of achievement or lack thereof of various groups with detailed look at underachievement of Appalachian white Protestants. It seems to be demonstrates that lack of one component of triple package causes failure to achieve. The missing component for Appalachians is the superiority complex. The American culture controlled mainly by coastal elites treat Appalachians as retarded hillbillies and by doing so instilled in them feeling of intellectual inferiority which prevents them from achieving success.
There is also interesting take on the most successful group – Jews. They are seems to be in process of loosing their insecurity in America. One of consequences of loosing this component is drastic decrease in academic performance of American Jews. This brings us to IQ question. Ashkenazy Jews have notoriously high IQ by all accounts. So dramatic decrease in insecurity accompanied by dramatic decrease in academic performance seems to be indicate that Triple Package is more important for success then pure IQ level. The fact is that individuals with lower IQ, but higher level of drive clearly outperform individuals with higher IQ and less drive.

The final chapter is dedicated to America that, as culture, was build on the Triple Package, but after a century of incredible success is loosing these qualities. One of the most important parts – insecurity is becoming less relevant. Moreover contemporary American culture of “everybody is a winner”, and artificial self-esteem movement, combined with welfare state nearly completely eliminates insecurity from American life.

Another important part – impulse control had never been the strongest suit of typical American. A very interesting idea is expressed that Declaration of Independence was typical expression of American rebellion and inadequate impulse control, while Constitution established a framework for impulse control through checks and balances of different branches of government.

The final recommendation of this book is to work on restoring and expanding Triple Package in American culture in order to assure continuing success and prosperity of this country.
My Take on It:
I find the theory of Triple Package being a good explanation for raise of different groups within society. However one thing more or less left outside of discussion is that only in capitalist society the raise and success experienced by different groups described here is possible. More important only in capitalist society like America this success is based on doing something that other people need, buy. This way it increases quality of life for everybody, including unsuccessful individuals and groups. In all other societies known to history success of any group typically achieved at the expense of other groups leading to stagnation of society overall.

As to regard to America’s loosing its Triple Package, I would not worry about it. Americans are always in the state of insecurity whether because of the rise of some other country (China now and USSR, Germany, Japan in the past) or threat from some ideological phenomenon (Islam now and Communism, Catholicism in the past).

I think this insecurity will not go away at least until the whole world will become something like idealized America – free, democratic, and capitalistic society, where individuals have opportunity to pursue happiness any way they want.