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Covid-19 Cargo Cults & Why The Market Is Still Too Complacent
Covid-19 Cargo Cults & Why The Market Is Still Too Complacent
In the South Seas there is a Cargo Cult of people. During the war they saw airplanes land with lots of good materials, and they want the same thing to happen now. So they’ve arranged to make things like runways, to put fires along the sides of the runways, to make a wooden hut for a man to sit in, with two wooden pieces on his head like headphones and bars of bamboo sticking out like antennas—he’s the controller—and they wait for the airplanes to land. They’re doing everything right. The form is perfect. It looks exactly the way it looked before. But it doesn’t work. No airplanes land. So I call these things Cargo Cult Science, because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential, because the planes don’t land.
Richard Feynman, The Cargo Cult Science (Speech at Caltech in 1974)
I tease Ben sometimes for devoting his graduate studies to political science. Not because it isn’t a worthy field of study. I tease him because the idea of politics being a science is absurd on its face. And then he usually reminds me that my economics degree is nominally referred to as a science degree, too.
I am immediately chastened.
There are a lot of scientifically minded people in the investment industry. In general, this is for the good. I mean, of course it is. Investing in risky assets constantly appeals to our baser tendencies toward fear and greed. Worse, we do not respond to those appeals in isolation. We are surrounded by others who are watching us and responding to our actions for their own benefit. Process is a gift to investors.
And yet.
All Along the Watchtower
All Along the Watchtower
‘There must be some way out of here’
Said the joker to the thief
‘There’s too much confusion, I can’t get no relief
Businessmen, they drink my wine
Plowmen dig my earth
None of them along the line know what any of it is worth’
‘No reason to get excited’, the thief he kindly spoke
‘ There are many here among us who feel that life is but a joke
But you and I, we’ve been through that, and this is not our fate
So let us not talk falsely now, the hour is getting late’
All along the watchtower, princes kept the view
While all the women came and went, barefoot servants, too
Outside in the distance a wildcat did growl
Two riders were approaching, the wind began to howl
All Along the Watchtower, by Bob Dylan (1967)
Quis custodiet Ipsos custodes?
But who will watch the watchmen?
Satires, by Juvenal (2nd Century)
We haven’t published an update on our Fiat News Index for a little while, but it is for a good reason. We are working on an improved version that does more to handle gradations, nuance and context in affective language. If the concept of fiat news is new to you, Ben’s original piece here offers the best explanation. In short, it is news which broadly cheapens the credibility of media by presenting opinion as fact. It debases information in the same way that a capricious sovereign might debase a currency. It tells you how to think.
But there is a certain type of fiat news which is the most pernicious, most in need of calling out where it rears its head. It seeks, like all fiat news, to present subjective judgments and opinions as fact.
…click on the above link to read the rest of the article…
