Orwell on believing untrue things

The point is that we are all capable of believing things which we know to be untrue, and then, when we are finally proved wrong, impudently twisting the facts so as to show that we were right. Intellectually, it is possible to carry on this process for an indefinite time: the only check on it is that sooner or later a false belief bumps up against solid reality, usually on a battlefield. - George Orwell

A woman-issued warning and its implications

I'm currently about halfway through Warnings: Finding Cassandras to Stop Catastrophes - just at the end of its "Missed Warnings" section. The last chapter of of that section though seemed out of place. The stated focus of the book is on trying to find advance notice of problems in order to avoid catastrophic failures. The chapter in question focuses on a woman named Meredith Whitney. She's described as follows in various parts of the chapter:

  • "a junior associate at a relatively small investment firm"

  • "She doesn’t have an MBA and began with no formal training in financial analysis (when R.P. first met her she was a history major at Brown University). Not to mention that she is married to a six-foot-six-inch former pro wrestler whose stage persona was a financier, and whose appearance in the ring was heralded by the sound of a Wall Street trading bell."

Basically she seems to fit the following profile extremely well at first glance (though with the male and female roles swapped around from how the cartoonist intended them):

How did the market respond to her warning?

In Lewis’s view, Whitney was an oracle who came out of nowhere. “It’s never entirely clear on any given day what causes what inside the stock market,” he wrote, “but it was pretty clear that, on October 31, Meredith Whitney caused the market in financial stocks to crash. By the end of the trading day, a woman whom basically no one had ever heard of, and who could have been dismissed as a nobody, had shaved 8 percent off the shares of Citigroup and $390 billion off the value of the U.S. Stock market.”

In short it seems about as far as you could possibly be from a missed warning - particularly since the chapter also suggests that "the collapse may have been a foregone conclusion by the time she was heard." Other cases described in the book seemed to involve highly-qualified individuals making the same warning over and over (often for years) while being ignored. In this case you have a near-instantaneous, massive market reaction to a warning issued by a low-level employee at a minor firm who largely lacking the traditional qualifications expected in this area.

She seems like a classic argument for trying to take into account outside views, yet that's the sort of perspective often harshly suppressed. (The word "mansplaining" comes to mind).

What I'd have liked to have heard more about:

Neither were her calls entirely unprecedented; some analysts and even a Citigroup senior vice president had warned of trouble weeks and in some cases years before. But no one had predicted the worst-case scenario and issued such a fact-based, specific, and inflammatory warning with potentially dire and far-reaching ramifications.

Whitney seems to have been not the proverbial canary-in-the-coalmine but rather the spark that ignited the blaze. If you were looking for examples of hidden warnings that might have prevented a catastrophe it seems to me that the chapter should have dug deeper here.

Random links

Is Legal Pot Crippling Mexican Drug Trafficking Organisations? The Effect of Medical Marijuana Laws on US Crime
"We show that the introduction of medical marijuana laws (MMLs) leads to a decrease in violent crime in states that border Mexico. The reduction in crime is strongest for counties close to the border (less than 350 kilometres) and for crimes that relate to drug trafficking. In addition, we find that MMLs in inland states lead to a reduction in crime in the nearest border state. Our results are consistent with the theory that decriminalisation of the production and distribution of marijuana leads to a reduction in violent crime in markets that are traditionally controlled by Mexican drug trafficking organisations."
Corbella: In the name of tolerance, Trudeau attacks faith and those who serve others
Looks like Trudeau requiring organisations participating in a government job sponsorship program take a stand on abortion seems to be resulting in the withdrawal of funds from some of the country's largest homeless shelters.
Truth Bias and Partisan Bias in Political Deception Detection
"Based on social identity theory, in-group members should consider their politician’s message truthful while the opposing out-group would consider the message deceptive. Truth-default theory predicts that a salient in-group would be susceptible to deception from their in-group politician. ... In-groups are accurate when their politician answers, and inaccurate when he dodges. Out-groups are more accurate than in-groups when a politician dodges, but still exhibit truth bias."

Marx on history

Found this in the introduction to Oliver Tambo speaks, a book containing letters, speeches, etc. from the leader of the African National Congress during much of the Apartheid era who died from a stroke shortly before the '94 elections (whose name might now be most frequently heard internationally perhaps due to having the primary airport in Johannesburg named after him).

The quote is from Marx's Eighteenth Brumaire of Louis Bonaparte:

Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.

The quote in the book included one sentence more, but I'd like to include a different chunk of that paragraph in Marx's original:

... just as they seem to be occupied with revolutionizing themselves and things, creating something that did not exist before, precisely in such epochs of revolutionary crisis they anxiously conjure up the spirits of the past to their service, borrowing from them names, battle slogans, and costumes in order to present this new scene in world history in time-honored disguise and borrowed language. Thus Luther put on the mask of the Apostle Paul, the Revolution of 1789-1814 draped itself alternately in the guise of the Roman Republic and the Roman Empire, and the Revolution of 1848 knew nothing better to do than to parody, now 1789, now the revolutionary tradition of 1793-95.


Subscribe to Rotundus.com RSS