Path Dependency, Part Two

What would your first reaction be (as in what would you do first) when you encounter a tap that refuses to twist in a public toilet?

Thank you for the responses =)

As most of you would have already guessed, there is no real answer. I have encountered such scenario many times before, and my first response was to turn the tap harder, and harder... and harder. It never worked.

And then I found out, almost all the time, all I had to do was to turn the tap the other way round (Chewxy!). Some taps, although rare, are made to turn the other way round (for whatever reasons, silly or otherwise, but this will not be the topic of this post). Instead of trying to turn the tap the other way round, I would always turn it to shut it further. And I realised I was not alone in doing this, because in places where taps were turned on by turning clockwise, most of the taps would be faulty through excessive force by frustrated people trying to wash their hand.

And here is where my original post comes in: history matters. We all learned from young to turn on the tap by turning anti-clockwise, and conditioned to accept the notion that leftey is loosey, rightey is tightey. It is ingrained in us all, so much so that the possibility that a tap might be made differently is so bizarre that most of us would never even think of it.

This is like racism in Malaysia.

We are taught to divide people by races from young, and conditioned to accept that Malaysians, as people, are divided. Sadly so, racism became our dominant social belief system that informs our politics, ethics and economics. We have accepted that politics in Malaysia translates to bigotry and prejudice, and economics is synonymous with discrimination and marginalisation.

Like it or not, we are all racists. And if you say "it is not US, it is THEM!", say that a few more times and reflect on it.

And we believe that racism is so deeply ingrained in everything Malaysia, that it is an immutable truth. But it is only as immutable as our perception that a tap can't be turned on by turning it clockwise and as true as that the northern hemisphere can only be drawn on the upside of a map.

Most of the time, history creates conventions that are helpful. Occasionally, some will outlive their usefulness. The important thing is for us to appreciate that the conventions are made to exist by our collective past actions in the first place and we can choose to change if we want to. History informs our present decision, but it doesn't dictate it.

Suppose one day all taps are made the other way round. We are not doomed to destroy all the taps and never wash our hands ever again just because we used to turn taps the other way round. That would be silly.

Suppose now we know that racist politics and economic policies will lead us further away from building a great and prosperous nation. We are not doomed to let our country decline further and be powerless in rejecting that racism will always be part of everything Malaysia in the future just because it used to be so in the past. That would be silly.

Elanor

Path Dependency

I am a believer that in order to understand the workings of the world, history matters, a lot. Perhaps the word history evokes an overly donnish connotation, and conjures up images of dusty tomes in a dark library. What I really mean is that events in the past have crucial bearings on present and future events.


It also means that in the man-made world, I view nothing as being random. Sometimes events might appear random, but upon closer inspection, they can always be explained by appealing to things that happened before. For example, your girlfriend suddenly throwing a tantrum might seem ridiculously random. But we ALL know it is never random. It just means that you are too insensitive or lazy to know why.


It doesn't mean, however, that I believe everything is predetermined. I am the opposite of being fatalistic. The fact that present and future events are function of past events doesn't mean that they are predetermined. It is because every single event is a function of your own actions (and inactions) as well. And by extension, all our interactions. Everything is intertwined, and we are doing the intertwining. Outcomes in the future are for us to decide. Appreciating what happened before helps us to be more informed in how best to affect the future.


This brings me to the question I want to pose to my readers:

What would your first reaction be (as in what would you do first) when you encounter a tap that refuses to twist in a public toilet?

Elanor


UPDATE: It is not a rhetorical question; I will have a post on the question once I get an okay'ish amount of answers (by Arrested Development's standard, say, 5?).

=)

I am Thinking Now

A powerful and moving talk from a speaker whom I have much respect for:

___________________________________

About this Talk

Patrick Awuah left a comfortable life in Seattle to return to Ghana and co-found, against the odds, a liberal arts college. Why? Because he believes that Ghana's failures in leadership -- and he gives several mind-boggling examples -- stem from a university system that fails to train real leaders. In a talk that brought the TEDGlobal audience enthusiastically to their feet, he explains how a true liberal arts education -- steeped in critical thinking, idealism, and public service -- can produce the quick-thinking, ethical leaders needed to move his country forward.

About Patrick Awuah

After working at Microsoft for almost a decade, Patrick Awuah returned home to Ghana and cofounded Ashesi University, a small liberal arts college that aims to educate Africa's next generation of leaders. Its first class of students graduated in 2006. Read full bio »

___________________________________

A must-see; the talk gives great inspiration and reflection. Personally, many things he said resonated strongly with my ethics and worldview. The topics touched on are applicable to Malaysia and its people on so many levels: His idea on the urgency and importance of beneficent leadership and the need to foster a new generation of passionate, driven and ethical citizens for the future; and his personal decision to leave his comfortable life overseas to go back home and try to make a change.

But my description doesn’t do the talk justice. Go watch it.

Elanor

Wisdom from Partha

“As economics matters to us (economists), we also have views on what should be done to put things right when we feel they are wrong. And we hold our views strongly because our ethics drive our politics and our politics inform our economics. …

…(But) I realized that economics had increasingly driven my ethics and that my ethics in turn had informed my politics.”

- Sir Partha Dasgupta,

in Economics: A Very Short Introduction

He is inspirational; both intellectually and philosophically.

Elanor

Leaving on a Jet Plane

All my bags are packed, I'm ready to go

I'm standin' here outside your door

I hate to wake you up to say goodbye

But the dawn is breakin', it's early morn

The taxi's waitin', he's blowin' his horn

Already I'm so lonesome I could die

So kiss me and smile for me

Tell me that you'll wait for me

Hold me like you'll never let me go

'Cause I'm leaving on a jet plane

I don't know when I'll be back again

Oh, babe, I hate to go

Usefulness versus Truth – The Former Matters More

From John Kay’s latest piece – really can’t agree more with it; serves to partially represents how my philosophical world-view has changed in recent years. Also a pseudo-response to Rational Thinker’s excellent comment on my previous post.

“Why Rorty's search for what works has lessons for business
Financial Times 19 June 2007

When a student of business and economics wants to ponder the conceptual foundations of these subjects, Richard Rorty, who died on June 8, is the modern philosopher I recommend.

… What mattered to him was not the search for what is true, but the search for what works. The test of a model, a way of thinking or a theory is not truth but usefulness. …

… The modern economist is driven by physics-envy. Physicists have the best claim to hold a mirror to nature: their models have proved so useful that no one would think about heat, pressure or motion in any other way. Many people claim this is because these theories are true.

…The pragmatic Rorty argued that to say the theories are true adds nothing to the observation that the models are useful. This claim, applied to hard science, is a subject of continuing disagreement. But Rorty’s perspective is surely right for complex and fluid situations whose outcome depends on human interaction. The soldier’s war stories give insight into “The Way the World Is”, but in a very different way from the models of quantum physics. No individual soldier – no general – ever sees the whole picture; no one can ever, in this sense, hold a mirror to nature. The best accounts will eventually come from the military historian or the novelist who pieces together – and manufactures – a narrative from fragments of information and experience. There can be many such accounts, some better than others, none representing a unique correspondence with the truth.

And so it is with business and finance. I have often given an account of an event in business history and been confronted by a participant who offers an account of “The Way It Was”. But all he offers is an account of the way it was for him. Even an aggregation of such accounts can provide only a partial and controversial description of the whole.

… Economists often assert that economic theory says this or predicts that. But economic theory will never hold a mirror to nature. Good economic arguments are specific to their context. There are no universal economic laws, only trends and tendencies.”

The last paragraph is especially agreeable.

Elanor

PS: Also, read Greg Mankiw's nice and insightful paper: The Macroeconomist as Scientist and Engineer. To Rational Thinker again - I guess you are more of a 'scientist', and me an 'engineer' :)

Constructive Naïveté over Destructive Defeatism

My rewritten piece on confusing target for objective in theCicak.com attracted this comment from ‘Anon’:

If you’re so smart, design better targets and the appropriate incentive system. Hah, there you go.

This is one of those problems that EVERYONE recognizes but cannot solve any better.

Also, designing incentive systems is truly one of the most difficult things in the world and always always always subject to gaming tactics. Always.

I’m unimpressed with your article.

Dissatisfied, he/she went on to a more personal disapproval:

In fact, I find your article so bad, I wonder what you do for a living and what sort of working experience you’ve had. A person of even minimal insight into the workings of the world wouldn’t write something this naive.

To which I replied:

Anon,

Thank you very much for your comments, and I apologise for appearing naïve and ignorant.

You are right to say that designing any policy is difficult, and subjected to perversions and biases. Nonetheless, designing policy is needed. It is not that designing is desirable. It is regrettably inevitable for development and progress.

The important thing is, however, for policy-makers (and the public) to quickly recognise any weaknesses in the designs and change them, that is, to pick winning strategies and quickly drop losing ones. The fear is on settling in a bad equilibrium thanks to dogmatism and apathy.

And yes, given a choice of destructive defeatism or constructive naïveté, I take the latter any day.

Do have a good day,

Elanor

Hmmm…

Existential Crisis?

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to avoid being deceived by economists.

- Joan Robinson, Cambridge University

Hmmm…

PS: Sorry for the hiatus everyone. Will resume blogging soon after my many things are sorted.

A Short Trip to McDonald’s

After a long and tiring day at work, I vowed not to think about economics at all for the rest of the night. The plan was to have a quick dinner followed by a therapeutic shower and a brief casual reading on bed before dreaming of sunbeams, sea breeze and autumn leaves.

I dropped by a McDonald’s for the quick dinner.

Fine Parking

The restaurant is relatively big for a MacDonald’s with its own personal space for free parking. It is also a 24-hour drive-thru. The first thing I noticed while entering the parking area was the ubiquity of large sign boards, telling everyone that the parking spaces were strictly for restaurant patrons, and cars parked for more than two hours would be clamped and fined a hefty sum. The motivation for doing this was obvious – if the spaces were taken up by non-customers, there would be less potential customers for McDonald’s. How they intended to enforce this however, was not too obvious. There were no tickets issued or any other mechanism in place to track how long a car had been parking. That didn’t mean that it couldn’t be done – someone could possibly be walking around and jotting down car number plates and clamping cars that had been parking at the same spot two hours ago– but just that it didn’t seem that McDonald’s was being all too earnest in enforcing the clamping rule. Chances were, McDonald’s does not clamp cars most of the time.

But chances were also, I thought, not too many non-customers actually park there too. This was much akin to ‘beware of dog’ or ‘trespassers will be shot’ signs. Quite probably, the dog behind the gate was just a cute beagle or the people behind the fence actually do not carry a shotgun everywhere they go, but there was also a possibility that it’s a deadly Rottweiler or a trigger-happy guard. In these situations, the risk – the potential costs – of an action outweigh the benefits. Getting a free parking might be tempting, but the prospects of the cost and hassle of having a clamped car would probably deter most drivers.

Knowing very well that my dinner would take not more than 20 minutes, I chose a nice spot in front of the entrance and parked my car.

Bubur Ayam

As I lined up to order my dinner, I glanced at the menu. Amidst all the American-styled food, the bubur ayam appeared most out of place – it was like a perfect specimen for the Sesame Street song, “All of these things belong together, one of these things, is not the same…” poking you to pick it from the rest. At first, it might seem weird that an iconic western fast food restaurant was selling such a plain and simple Malaysian food, and only this one.

And then I thought of the spectrum of potential customers that McDonald’s has. McDonald’s serves mostly families, and the typical families range from young families that might actually enjoy Big Mac and Oreo McFlurry to hardcore traditional families that include grandma and grandpa who would never eat such manufactured western food. Then there are those in the middle – families that include young members who like sundae, Happy Meal and the play area and grandparents who love to see their grandchildren having fun but wouldn’t really enjoy the food. Bubur ayam, being plain but easily recognizable, perhaps, was added to woo these families at the margin. With it, both the children could have fun and the grandparents not starve. And for McDonald’s, its group of potential customers expanded to include those that used to be at the margin which should translate to more business.

Early Breakfast

Then I sat down to eat my spicy beef foldover and I noticed the paper placemat, informing me the restaurant was now opening from 4am to 11am to serve its breakfast menu. At first, this might appear to be silly – who would actually wake up at 3.30am in the morning so that they could go eat McDonald’s for breakfast at 4am? But an establishment like McDonald’s would not usually make silly business decisions.

Firstly, from the cost perspective, this restaurant was already operating 24-hours for its drive-thru business. Thus, the extra fixed and labour cost from serving breakfast at 4am was marginal. Secondly, and perhaps more importantly, McDonald’s naturally has a lot of competition for its business, but competition is not a fixed thing. At different times of the day, due to the different opening times for different restaurants, the degree of competition would be different. At 4am in the morning, this McDonald’s was basically a monopoly, and a monopoly perhaps for a good 2-3 hours before nearby kopitiams open. The number of customers that early in the morning might be small, but given the small extra cost and the fact that most people who actually needed breakfast at that time would not have many alternatives to go to, serving breakfast at 4am might just be a brilliant strategy to gain more marginal customers.

And at around this time, it was clear to me that trying not to think about economics for me was an exercise in futility.

Oh well.

Elanor

Introspection

Rat in a Cage: A Convenient Journal

The reason why I started blogging was rather simple – I found it to be an ideal creative outlet and a convenient journal to track the flow of my ideas and the interesting things I found. I often find myself with many pent up ideas; ideas which are not as formal and lengthy as they are worthy of proper investigations and penned down as research reports (which would take weeks), but not as trivial as those that normally get chatted away on IM sessions - ideas that I personally feel to be tad wasteful to be forgotten.

What I didn’t expect, however, is that blogging (although I have only started blogging for a very short while) allowed much introspection on some of my beliefs and ideas. I mentioned about my Weltanschauung or worldview in my first post and how important it is for me. Looking through some of the seemingly disparate posts, coupled with some very helpful feedbacks, has somehow helped me to gain some clarity and coherence on the development of my worldview and that some of my separate interests and convictions are in fact part of a larger theme.

The World is a Vampire: Making Decisions

Personally, I am getting more and more convinced that three principles are absolutely crucial when it comes to decision-making, especially on matters pertaining to economic and public policies (although definitely not limited to these – I often find myself thinking along these principles when pondering on issues relating to management, people and relationship… and more). These principles are both interrelated and mutually reinforcing. With the reverse principles in parentheses, they are:

1. Humility (Hubris)

The first thing that is needed when considering issues such as public policy is to be humble of our knowledge. We need to appreciate firstly, that our existing knowledge, as vast as it is, is limited and many gaps exist. Secondly, we must never underestimate the complexity of the real world/situation, both in the breadth of interdependency and the dynamism of its evolving nature. Formal and established understanding, in the form of theories and existing literatures, should always be in the forefront, but local knowledge and more nuanced and specific understanding to the situation should never be ignored.

2. Flexibility (Dogmatism)

With humility, it is easier to have greater flexibility in assessing a situation and making decision. It also makes you less susceptible to dogmatism; advocating a certain school of thought, belief or conviction doggedly regardless of circumstances. When it comes to making decision on practical and specific issues, being an informed centrist is important – flexibility often dictates the success in assessing a situation, formulating a policy and implementing the decision. This is made more crucial in economics, development and public policy due to the nature of the current state of our understanding of how the real world works. Instead of a handful of simple and clear-cut laws that tell us what to do and what to expect, most of the time, we have a hundred competing tendencies and possibilities, of uncertain strength and, quite often, direction, with little guidance as to how to add them up. We can explain every fact many times over, with the result that there is very little left that we can both believe strongly and act upon (Banerjee, 2007). Thus, while it is important to identify higher-order principles involved at a sufficient level of generality, the challenge is to have the flexibility to fashion specific blueprints that are suited for the local context – that is to have decisions inspired by formal knowledge but grounded firmly on realities (Rodrik, 2006A).

3. Objectivity (Bias)

Alongside humility and flexibility, being objective is paramount in making decisions. Humans are naturally biased in their perception and particularly, most people with power are prone to overconfidence in what they believe in. Coupled with hubris and dogmatism, this often leads to the dangerous slide to self-delusion. Often, erroneous and misinformed policies are made and perpetuated by the inability to accept and appreciate their failings.

Objectivity is crucial for two broad reasons. Firstly, I am convinced that there is no single grand narrative that is able to provide an elegant and complete explanation to any particular issue, event or phenomenon, especially complex ones. Almost all the time, it is the collection of small tales that explains the whole story. Thus, any attempt to view any complex issue through the lenses of any single convention based on dogmatic conviction will prevent us from appreciating its subtleties and ultimately reduce our ability to comprehend the issue in its entirety as well as. The danger arises when this narrow comprehension is used as a basis to come up with remedies or policies. Secondly, objectivity allows us to effectively and dispassionately assess the efficacy and success of our implemented decisions without bias. Especially given the uncertainties and the limitation of our knowledge, it is absolutely crucial that a policy that does not work is recognised, accepted, discarded and replaced quickly (Rodrik, 2006A). Perpetuating an ineffective policy is not just redundant; it is also wasteful and could potentially exacerbate the very issue it is trying to address. Cliché as it may sound, learning from our mistakes is one of the best way to improve ourselves.

No doubt, my thoughts on this will definitely evolve further as I learn more and gain further experience in the future. That said, I am fairly convinced on the broad principles outlined above as desiderata in any decision-making process, especially pertaining to broad-ranging issues such as economics and public policy.

Elanor

References

Banerjee, A. V. (2007), Inside the Machine – Towards a New Development Economics, Boston Review.

Rodrik, D. (2006B), Goodbye Washington Consensus, Hello Washington Confusion?, Harvard University.

Rodrik, D. (2006A), What’s So Special About China’s Exports?, Harvard University.

Political Infeasibility

Lifted from Greg Mankiw’s blog – a quotation from the late Milton Friedman in his new biography (emphasis added):

“The role of the economist in discussions of public policy seems to me to be to prescribe what should be done in light of what can be done, politics aside, and not to predict what is ‘politically feasible’ and then to recommend it.”

I am convinced that public policy debates in Malaysia would be much more fruitful and encompassing for the development of the nation if they are done so. And perhaps, through the resulting public awareness, it will also extend the realm of our political feasibilities.

Elanor

Listening to Kahneman

Regular readers of the shared articles on my coffee table (that would be one of you, including myself) would notice that I often find myself fascinated by articles on cognitive biases, particularly from this collaborative site, Overcoming Bias. I did not read behavioural economics back in university, preferring instead to focus on game theory and econometrics (perhaps I should have taken an extra paper… in fact, I have a strong feeling that I should have…), so I am relatively new to the subject.

Basically, cognitive bias is a broad term for all distortions in the human mind that are hard to avoid and that lead to a perception, judgement, or reliability that deviates systematically, involuntarily, and rather distinct from the “reality”. Decisions made influenced by cognitive biases are not easily reconcilable with rationality, and thus could potentially lead to sub-optimal outcomes. Some familiar examples include overconfidence, gambler’s fallacy and self-deception.

In this post, I will try to introduce, informally, three relevant biases.

1. Paternalism

Not sure if it has been formally articulated, but paternalism is a form of bias. It relates to policy that is intended to benefit some people by limiting their choices, that is, the interference of a state or an individual with another person, against their will, and justified by a claim that the person interfered with will be better off or protected from harm, like a parent who stops a kid from playing in the street.

Basically, a paternalistic individual believes that he/she has superior rationality and reasoning, and that others are helpless in doing for what is good for them, and thus decisions are best left not to these helpless people.

For example, when one decides that a movie should be banned without really watching the show at all, because he knows better. Or when one decides that the populace is too stupid to understand matter pertaining to planning of transportation infrastructure.

2. Hyperbolic Discounting

The second interesting bias refers to the empirical finding that people generally prefer smaller, sooner payoffs to larger, later payoffs when the smaller payoffs would be imminent; when the same payoffs are distant in time, people tend to prefer the larger, even though the time lag from the smaller to the larger would be the same as before.

For example, when given a choice of getting RM 100 on say, September 1^st, 2009 or RM200 3 years later (September 1^st, 2012), you choose the latter option - that is, equivalent interest rate of about 26% per year (!). But when given a choice of RM 100 right now, and RM 200 three years from now - essentially the same scenario but with different time-frame - you choose to get RM 100 now.

Or similarly, when you decide to formulate a long term policy which is intended to ultimately enrich a portion of the population and lead to more equality amongst all in the long run, and that the potential long term gain from this policy should outweigh all the competing short term gains. But when the policy goes from formulation to implementation, most affected rather choose quick gains rather than potentially larger long term benefits.

3. Confirmation Bias

Sometimes known as myside bias, confirmation bias is a tendency to search for or interpret information in a way that confirms one's preconceptions and to avoid "counter-attitudinal" new information. It refers to the tendency for people to extend critical scrutiny to information which contradicts their prior beliefs and uncritically accept information that is congruent with their prior beliefs. An important consequence of the bias is that many incorrect beliefs are slow to change and often become stronger even when evidence is presented which should weaken the belief. Generally, such irrational belief persistence results from according too much weight to evidence that accords with one's belief, and too little weight to evidence that does not.

For example, after making the decision of buying a Toyota Vios, one tends to be especially receptive towards advertisements, positive reviews and comments for Toyota Vios, and choose not to heed reliable information that the Honda City is actually a better car overall.

Or when one choose not to believe that a policy has done little to achieve its objectives after many years, and decides – against evidence and well-accepted scholarly and empirical understanding that it would not work, to extend the policy forever. Or the conviction that one has for the future of an automotive company he helped create, despite blatant signs that it is a failure.

It is crucial to acknowledge that cognitive biases exist and to appreciate that they could lead to sub-optimal decisions and outcomes in the daily happenings of our lives, from simple trivial matters to over-arching policy decisions that have repercussions lasting multiple decades and affecting welfare of the entire nation.

Have you noticed your cognitive bias today?

Elanor

Cellar Door

‘‘Mighty is the charm

Of these abstractions to a mind beset

With images, and haunted by herself

And specially delightful unto me

Was that clear synthesis built up aloft

So gracefully.’’

- Wordsworth

And thus in utter randomness she descends…

~~~

(http://www.jtran.net/, http://www.duskyward.com/)

Little-Death

Read this interesting (and short) entry in Johan Norberg’s blog which made me think a bit.

Fear Itself
from Johan Norberg

It's an old truth that the greatest harm rarely comes from terrorist acts and diseases, but from our fear of them and our reactions to them. The greatest cost in human lives from SARS and bird flue in the affected countries so far has come from less visitors and less trade, because this deepens poverty and reduces living standards.

I just learned an interesting example of this from John Mueller: After the terrorist act on 9/11 2001, many Americans avoided flying and preferred the (much more dangerous) car. Until the end of 2001 around 1 000 more Americans died because they drove rather than flew.

I wonder to what extent our public policies are allowed to perpetuate, driven by our fear of inequality and social unrest, and ironically result in greater inequality, social division and global economic marginalisation.

Perhaps it is time for us to face our fear and embrace the future.

Elanor

Collection of Small Tales

I took this very short test here.

And I found out that I am a Centrist:

CENTRISTS espouse a "middle ground" regarding government control of the economy and personal behavior. Depending on the issue, they sometimes favor government intervention and sometimes support individual freedom of choice. Centrists pride themselves on keeping an open mind, tend to oppose "political extremes," and emphasize what they describe as "practical" solutions to problems.

I have always thought of myself being a libertarian, so I was tad surprised to get this result. At first it seems to me that being a centrist either means that well, your are schizophrenic or just plain not having any opinion.

But I have always had strong opinions on issues. And then it dawned upon me – I AM a centrist – without really realizing it. I wrote this not too long ago:

The Danger of Seeking a Grand Narrative

I have often been accused of being a believer of a particular school of thought, or an advocate of a certain strand economic ideology. They usually take the following forms:

“Aha, you are just so Keynesian, Elanor”

“Yes, Elanor, you so believe the Market will solve all problems of human civilization”

“Gosh, you are such a nerd!”

While I still can’t find a suitable defense against the third sort of claim, I am often dumbfounded by accusations such as the first two. I normally respond by giving a blank look (or, occasionally and only when it is entirely appropriate, I say “bless your lil’ cotton socks”). Firstly, I have no idea what I have to believe in if I am a Keynesian, or how Market should be defined, or if I have to join a political party if I am supposed to be a Liberal. All I know is that if I am all these at the same time, it means that I am most probably schizophrenic.

Secondly, and more important, I don’t believe in any form of grand narrative that is supposed to provide elegant and complete explanation to any particular issue, event or phenomenon, especially complex ones. Just as how capital liberalisation alone doesn’t explain the miracle of the Asian economies in the 1990s, neither does it, by itself, explain the end of the miracle. Almost all the time, it is the collection of small tales that explains the whole story. The same, of course, applies to our personal lives, but that is for another post.

Any attempt to view any complex issue through the lenses of any single convention based on dogmatic conviction will ultimately reduce our ability to comprehend the issue in its entirety. The danger arises when this is used as a basis to come up with remedies or policies. It is due to this reason why we should always have in mind that short-term interest rate is very blunt policy tool for diverse macro-economic issues, why a free-floating yuan is not a panacea of the global imbalances, why war does not solve terrorism, why hasty privatisation cannot be the sole solution to the efficiency problem of the transition economies in the Europe, or why affirmative action is not the only way we could address economic inequalities.

Are you a centrist too?

Elanor

Milton Friedman, Václav Havel and Bloggers

From American.com, on blogging, economics, market of ideas, journalism, self-regulation, Milton Friedman and more:

Milton Friedman, Technology Maven

By Jens F. Laurson and George A. Pieler*

… [T]he beauty of blogging: Self regulation at its very best. While 99.9% of blogs will be read only by their authors and three buddies, possibly coerced, quality asserts itself quickly and rises to the top. With no editorial straitjacket on the information or the quality of offerings, the consumer chooses by his action (reading—or not; spreading the word—or not, linking—or not) what makes a quality product. The “blogosphere” is like a little experimental universe validating consumer choice vs. regulation—and consumer choice has won a colossal victory. Trial and error may not help find the right surgeon, but it seems to be a great way to find your right media diet. By and large, blog consumers have shown an incredible sense for quality and reliability.

Blogging’s greatest “weakness” is thus its greatest strength: Web authors and their sites come with no expectations, claims, or certifications of quality or reliability. Precisely because there is no authority filtering our blogged content, because of this healthy lack of “if it is printed, it must be true”, the reader can and must judge for himself. Instead of floundering helplessly in a sea of (mis-) information (the self-serving admonition from media traditionalists), the internet news-and-entertainment hungry reader develops a knack for picking the cherries out of the innumerable offerings. The blogosphere has something for everyone. Viewpoints are chosen, not dictated, and niches of interest explored, not marginalized.

…

Left to the free market of ideas and instant reader feedback, good writing, quality and reliability in blogging secures a readership and reputation solely on merit. The analogy to “democracy” may be clichéd but the blogosphere is a prime example of Milton Friedman’s credo (“Capitalism and Freedom”) that minimal (or no) regulation and state licensing are best; they are too often a pretext to shut down competition not protect the populace.

All the more reason, then, why Friedman should be the patron saint of the Age of Blogging: people with brains, networks, and powers of self-expression don't wait for journalism degrees anymore to have an impact. Indeed the response of 'mainstream' journalism to blogging (if you can't beat 'em, join 'em) vindicates Friedman's skepticism of credentialing like few other phenomena of the past 50 years. This may be a sub-part of what Friedman saw as the power of the Internet: "The Internet is the most effective instrument we have for globalization," he said in 2005, referring to the power of instant electronic connections for commercial purposes. The same applies, of course, to the world of ideas, flourishing free of the state.

Makes you reflect on the current situation in Malaysia doesn’t it? Clash of Web 2.0 and strictly state-regulated media; flourishing world of ideas and the power of the powerless.

Speaking of Václav Havel**, this is from the introduction of his essay “The Power of the Powerless” from worldandi.com:

…[H]avel urges his fellow citizens to down-play strictly political activity in favor of a strategy he feels will be more successful: cultivating the sphere of truth within individuals in the hope that as this hidden sphere grows, it will becomes an irresistible force that will change society.

Perhaps Malaysian bloggers could down-play politically charged tendency and instead be catalysts to cultivate objective pursuance of truth and knowledge. It is bound to be more productive if the aim is to sow the seed towards a more mature society.

Elanor

(All emphases added.)

*Jens F. Laurson is Editor-in-Chief of the International Affairs Forum and classical music critic for the Culture-blog Ionarts. George A. Pieler is Senior Fellow with the Institute for Policy Innovation.

**Václav Havel is a Czech writer and dramatist, the last President of Czechoslovakia and the first President of Czech Republic, hero of the Velvet Revolution and the moral core of the movement to establish a true democracy in Czechoslovakia.