Posts filed under “UnGuru”

Piketty vs John Stuart Mill’s Marketplace of Ideas


Source: Amazon

Any reader of this site has likely heard about the book currently setting the world of economics aflame. “Capital in the Twenty-First Century” was written by a French economist named Thomas Piketty. It is on the New York Times best-seller list and is currently sold out, with its publisher scrambling to print more copies.

If you haven’t heard of Piketty, he is director of studies at the École des hautes études en sciences sociales and associate chairman at the Paris School of Economics, where he specializes in the study of economic inequality. If you had heard of him before the book’s publication, it probably was for his now infamous chart of income inequality in the U.S. It was widely adopted by many, especially the Occupy Wall Street crowd.

The book has dominated the media like no other work of economics since the writings of Milton Friedman or even John Maynard Keynes. I won’t spend too much space recounting the reviews, but suffice it to say they have been spectacular. The book has so dominated the economic debate, that it is hard to compare it to anything in recent memory.

The data-driven demolition of trickle-down economics has the Ayn Rand crowd panicked. But what I find so fascinating about this debate (having not yet read the book, though I plan to) is the inability of the economic right wing to respond. Thus far they have been rendered impotent, unable to construct an intelligent counterargument. The strongest response so far — and I am not making this up — has been to give the book a single-star rating on Amazon.com’s website.

Alexander Kaufman at the Huffington Post collected some of the more amusing one-star reviews. There wasn’t a single verified purchaser of the book on the entire, absurd list.

Which raises a question about John Stuart Mill’s notion of the marketplace of ideas: Is the debate driven by the quality of ideas, or by the marketing, branding and PR behind it?

Ralph Waldo Emerson wrote “Build a better mouse trap and the world will beat a path to your door.” All tech entrepreneurs quickly learn that this isn’t true. The better mouse trap is merely the first step, which might get you some venture-capital funding if you have a good pitch book and a winning personality.

Regardless of your views on Piketty’s thesis, it raises an interesting epistemological question: Was Mill wrong? How could the “worse” idea win in the market place? If you believe trickle-down economics is a fraud, how did it dominate the world of economics for so many decades? If you think Piketty’s work is just so much nonsensical Marxism, why has it received so much acclaim from the economics profession and public alike?

Perhaps Mill’s marketplace of ideas suffers the same flaw as the efficient-market theory, or the idea that prices reflect all information and investors can’t beat the market over time. A decade ago, I called it “The kinda-eventually-sorta-mostly-almost Efficient Market Theory.” Markets are filled with all sorts of inefficiencies and friction. They eventually get it more or less correct, but along the way, they can deviate from the true path of efficiency. We just need to wait a decade or three for that efficiency to sort itself out.

Originally published here

 

 

Category: Books, Philosophy, Really, really bad calls, UnGuru

The Biases of Your Favorite Market Pundits . . .

Ever wonder what motivates various pundits, strategists and fund managers to spout off about whatever it is they are yammering on about? Step back and examine all of the various words spilled on markets. Scratch a little beneath the surface, and you quickly realize that not all participants are in a relentless search for the…Read More

Category: Financial Press, Hedge Funds, Investing, UnGuru

More War Lies Sold By the Same Lying Liars

Painting by Anthony Freda: www.AnthonyFreda.com Peddler of Iraq War Lies Now Pushes Lies On Ukraine to Drum Up Confrontation with Russia Intelligence regarding Syria is arguably being manipulated even more blatantly than intelligence on Saddam and Iraq. Media coverage of Syria and Ukraine is as bad as it was of the Iraq war … or…Read More

Category: Think Tank, UnGuru, War/Defense

Christie vs. Tesla?

How New Jersey Governor Chris Christie clamped down on one of America’s most innovative companies.

Category: Really, really bad calls, Regulation, UnGuru, Video

Get Lucky: 5 Years Ago Today

Five years ago today, I made the luckiest market call of my career. A few details and some context first, than an explanation as to why this was so lucky. In 2005, I knew something was amiss in the global markets. The various metrics we track showed that credit had become a full on bubble,…Read More

Category: Bad Math, Investing, Markets, UnGuru

Fed is Too Focused on Wealth Effect, Equity Markets

  “When will these guys ever learn that maybe, just maybe, these Fed policies aimed at targeting asset prices at levels above their intrinsic values is probably not in the best interests of the nation?” -Dave Rosenberg, chief economist and strategist at Gluskin, Sheff   Not long ago, I was listening to former Federal Reserve…Read More

Category: Federal Reserve, Philosophy, Really, really bad calls, UnGuru

Professional Forecasters and the June 2013 FOMC Meeting

Preparing for Takeoff? Professional Forecasters and the June 2013 FOMC Meeting Richard Crump, Stefano Eusepi, and Emanuel Moench     Following the June 18-19 Federal Open Market Committee (FOMC) meeting different measures of short-term interest rates increased notably. In the chart below, we plot two such measures: the two-year Treasury yield and the one-year overnight…Read More

Category: Markets, UnGuru

Paul Farrell: Beware of Predictions, Optimism Bias

The following assortment of quotes comes from Paul Farrell   2007-2008 bank credit meltdown — the top nine happy-talking gurus False predictions made before the 2008 subprime credit meltdown: ‘Mad Money’ Jim Cramer: “Bye-bye bear market, say hello to the bull.” Ken Fisher: “This year will end in the plus column … so keep buying.”…Read More

Category: Cognitive Foibles, Really, really bad calls, UnGuru

Muppet Portfolios

One of the funny things about running an asset management shop is that you get to see how other firms assemble portfolios. They range from good to bad to terrible. If they were all that good, we probably are not seeing much of them, for those clients are happy to stay where they are. Hence,…Read More

Category: Investing, UnGuru

Why did God invent economists?

10 reasons why economics is an art, not a science Barry Ritholtz Washington Post, August 9, 2013       “Why did God invent economists?” “To make weathermen feel good about themselves.”   That’s a quip from David Rosenberg, former chief economist at Merrill Lynch who is now working at Gluskin Sheff, the wealth management…Read More

Category: Apprenticed Investor, UnGuru