Monthly Archives: February 2016

Bureaucratic Rump-Covering

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Timothy Taylor points to a report by a new bureaucracy, the Office of Financial Research. Taylor writes,

The report emphasizes three main risks facing the US economy: 1) credit risks for US nonfinancial businesses and emerging markets; 2) the behaviors encouraged by the ongoing environment of low interest rates; and 3) situations in which financial markets are not resilient, as manifested in shortages of liquidity, run and fire-sale risks, and other areas.

There is a difference between actionable intelligence and bureaucratic CYA. If somebody says, “we are seeing a lot of chatter laately among these four terror cells. We had better watch these individuals closely,” that is actionable. If somebody says, “there is a risk that in the current climate terrorists will attempt a major attack,” that is not actionable, it is just CYA.

Reading Taylor’s post, I doubt that there is anything actionable in the OFR report. If the OFR had existed in 2006, we would have been told that the high level of house prices posed a potential risk. Which everyone already knew. They just did not have actionable intelligence about the state of the portfolios of key players, like Merrill Lynch, Citigroup, and Freddie and Fannie.

Kling on Matt Ridley

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My review of The Evolution of Everything is here. I end my review with a series of questions.

If ideas emerge from the “adjacent possible,” how is it that some rare individuals thousands of years ago were able to anticipate ideas that only began to penetrate our culture in the late 18th century, when Adam Smith published his most important works? And why does the idea of evolution continue to face so much resistance today? As Ridley points out, on the one hand there are many religious conservatives and others who insist that biology comes from design, not from evolution. And there are many on the left who insist that economic well-being comes from government planning, not from markets. Are those of us who see decentralized evolution as superior to central planning forever doomed to be in the minority? Or is it possible to envision evolutionary progress on that front as well?

The New Eric Weiner Book

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It is Geography of Genius. I have seen a number of reviews. I do not rate it as must-read, but it will keep you entertained on an airplane ride.

He is looking at times and places that we view as loci of genius flourishing: ancient Athens, Scotland in the Hume era, Vienna in the Mozart era and in the Freud era, etc. Some commonalities:

1. The periods tend to be short, on the order of decades. High rates of creativity and growth are difficult to sustain.

2. The locations tend to be ones that are high in trade and population mobility.

3. The societies seem to be relatively open and tolerant.

4. Golden ages tend to be multidisciplinary. You get art, philosophy, and science together.

Above all, excellence seems to flourish in fields where it is valued in the culture. The Viennese loved their music. Silicon Valley venerates computer skills and start-ups. So the message is very McCloskeyan.