Archive for April 15th, 2015

Moving Towards Free-Market Money..

April 15, 2015

A good discussion at Cato Institute.

One of the discussants mentioned about making Fed chief completely irrelevant:

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If everything Is getting better, why are people so pessimistic?

April 15, 2015

Steven Pinker Professor of Psychology at Harvard University discusses this much needed question. One one hand, Economists argue in many a research how things have become better for the world. Most of these economists are based in west who do not see economic progress beyond material wealth and luxuries. On other hand, disciplines like ecology and psychology are not so sure. They see a cost people are paying for all this economic growth.

Prof Pinker says  no matter the era, people always fell it was better in the past:

Evidence from academic institutions and international organizations shows dramatic improvements in human well-being. These improvements are especially striking in the developing world. Unfortunately, there is often a wide gap between reality and perception, including that of many policymakers, scholars, and intelligent lay persons. To make matters worse, the media emphasizes bad news, while ignoring the many positive long-term trends. At a Cato Policy Forum in November, Steven Pinker, the Johnstone Family Professor of Psychology at Harvard University and author of such books as How the Mind Works and The Blank Slate, discussed the psychological, cognitive, and institutional factors behind the persistence of pessimism in an age of growing abundance.

Why are people so pessimistic about the present? My own interest in this topic began when I became aware of historical data on violence and compared them with the conventional wisdom of respondents in an internet survey. I found that people consistently estimate that the present is more lethal than the past. Modernity has brought us terrible violence, the thinking goes, while the native peoples of the past lived in a state of harmony, one we have departed from to our peril. But the actual data show that our ancestors were far more violent than we are and that violence has been in decline for long stretches of time. In some comparisons, the past was 40 times more violent than the present. Today, we are probably living in the most peaceful time in our species’ existence.

This insight led me to write The Better Angels of Our Nature: Why Violence Has Declined. But it was not the end of my encounters with pessimism. After writing a book on war, genocide, rape, torture, and sadism, I thought I would take on some truly controversial issues — namely, split infinitives, dangling participles, prepositions at the end of sentences, and other issues of style and usage in writing. There, too, I found widespread pessimism. When I told people that I was writing a book on why writing is so bad and how we might improve it, the universal reaction was that writing is getting worse and that the language is degenerating.

There are a number of popular explanations for this alleged fact: “Google is making us stoopid” (as a famous Atlantic cover story put it). Twitter is forcing us to write and think in 140 characters. The digital age has produced “the dumbest generation.” When people offer these explanations to me, I ask them to stop and think. If this is really true, it implies that it must have been better before the digital age. And of course those of you who are old enough remember the 1980s will recall that it was an age when teenagers spoke in articulate paragraphs, bureaucrats wrote in plain English, and every academic article was a masterpiece in the art of the essay. (Or was it the 1970s?)

The fact is that if you go back to the history of commentary on the state of language, you find that people were pessimistic in every era. In 1961: “Recent graduates, including those with university degrees, seem to have no mastery of the language at all.”

He gets into psychology of pessimism:

these findings point toward an interesting question for a psychologist such as myself. Why are people always convinced that the world is going downhill? What is the psychology of pessimism? I’m going to suggest that it’s a combination of several elements of human psychology interacting with the nature of news. Let’s start with the psychology.

There are a number of emotional biases toward pessimism that have been well documented by psychologists and have been summarized by the slogan “Bad is stronger than good.” This is the title of a review article by the psychologist Roy Baumeister in which he reviewed a wide variety of evidence that people are more sensitive to bad things than to good things. If you lose $10, that makes you feel a lot worse than the amount by which you feel better if you gain $10. That is, losses are felt more keenly than gains — as Jimmy Connors once put it, “I hate to lose more than I like to win.” Bad events leave longer traces in mood and memory than good ones. Criticism hurts more than praise encourages. Bad information is processed more attentively than good information. This is the tip of an iceberg of laboratory phenomena showing the bad outweighs the good.

But why is bad stronger than good? I suspect that there is a profound reason, ultimately related to the second law of thermodynamics, namely that entropy, or disorder, never decreases. By definition, there are more ways in which the state of the world can be disordered than ordered — or, in the more vernacular version, “Shit happens.”

Superb stuff.. read on..

We think there is progress. Econs using their bully pulpits tell us the same. But most people think otherwise…

Why Indian mutual fund industry neglects North East India?

April 15, 2015

Chandan Kishore Kant of BS has a story.

The story is similar to limited banking in NE:

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Should monetary policy take into account risks to financial stability?

April 15, 2015

Blogger Bernanke does not think so. He says financial regulation is the best way to manage financial stability, even if it is limited in scope.

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Regulate the Carry Trade..

April 15, 2015

Harold James advocates the regulation of carry trade.

He says large volumes carry trade are distorting world economies:

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Azim Premji varsity goes philosophical in its new economics syllabus..

April 15, 2015

Azim Premji university  is getting more philosophical and historical in its economic teaching. It has a tie up with Soros INET and is now going to teach from latter’s economics undergraduate book – The Economy.

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