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Monthly Archives: October 2011

(guardian.co.uk) Why do Wall Street traders have such faith in their powers of prediction, when their success is largely down to chance? Daniel Kahneman explains how cognitive illusions skew our thinking.

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Some years ago I had an unusual opportunity to examine the illusion of financial skill up close. I had been invited to speak to a group of investment advisers in a firm that provided financial advice and other services to very wealthy clients. I asked for some data to prepare my presentation and was granted a small treasure: a spreadsheet summarising the investment outcomes of some 25 anonymous wealth advisers, for each of eight consecutive years. Each adviser’s score for each year was his (most of them were men) main determinant of his year-end bonus. It was a simple matter to rank the advisers by their performance in each year and to determine whether there were persistent differences in skill among them and whether the same advisers consistently achieved better returns for their clients year after year.

To answer the question, I computed correlation coefficients between the rankings in each pair of years: year 1 with year 2, year 1 with year 3, and so on up through year 7 with year 8. That yielded 28 correlation coefficients, one for each pair of years. I knew the theory and was prepared to find weak evidence of persistence of skill. Still, I was surprised to find that the average of the 28 correlations was 0.01. In other words, zero. The consistent correlations that would indicate differences in skill were not to be found. The results resembled what you would expect from a dice-rolling contest, not a game of skill.

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Read more: http://www.guardian.co.uk/science/2011/oct/30/daniel-kahneman-cognitive-illusion-extract?newsfeed=true

The contrast with Ireland is clear. Here the union leadership called off token resistance in the first months of the crisis and workers passively marched, shrugged their shoulders and went home. As a result the ordinary Irish worker alone, the majority of ‘the 99%’, have shouldered all the costs. Bond holders will scontinue to have their failed gambles covered. Next week alone another 700 million will be handed over to the Irish & global 1% to cover their losses in Anglo. This is our ‘thanks’ for being the poster boys for austerity across Europe.

It is true that the intention is still to impose further vicious rounds of austerity on workers in Greece. So this partial victory is only that but hopefully it will give heart to those who have fought and are continuing to fight to resist those intentions there as well as being a lesson on how resistance is fertile to those of us in Ireland.

The details of how the EU will finance the bailout are dodgy to say the least, running from a reliance on China to lend the needed funds to the construction of another round of mysterious ‘Special Purpose Investment Vehicles’ designed to turn the debts into attractive investments. Despite this the Stock Markets have still initially welcomed the new deal, presumably out of desperation and relief that the next stage of the crisis has been once more postponed.

The markets probably particularly like the further undermining of parliamentary democracy in Europe contained in what is proposed in the deal. Economist Engelbert Stockhammer pointed out in his analysis of the deal that under these proposals if deficits are not cut “some tribunal of the European commission and wealthy European governments will get powers to dictate economic policy in the deficit countries.” This continues the long pattern of the EU treaties where even the limited democracy of parliaments is displaced by neoliberal economic orthodoxy imposed by technocrats.  With these deal we are promised with a Trokia for every country in the audience.

Irish media discussion of the Greek bailout has tended to focus on whether it is ‘fair’ that 50% of the Greek debt is being cancelled when Ireland has already changed much of the (private) bank debt into (state) sovereign debt and is still expected to repay it all. Whether it is fair is neither here nor there, Greek workers forced these concessions through months of hard resistance, our reluctance to fight not very surprizingly translated into an inability to win.

Leaving aside the reality that the Greek state was unable to impose further cuts on Greek people without risking revolution this ‘fairness’ question accepts the limits of discussion that have become established and unquestioned. In Ireland as in Greece the enormous debts did not result from money being pulled out from under local mattresses to put in  the banks to lend to property speculators. Rather the banks saw a huge influx of global money, running to hundreds of billions, because the speculative bubble created by that money in Ireland & Greece offered far greater returns that those on offer in Germany or France at the time.

When that money was flowing into Ireland & Greece the wealthy 1% who were investing it insisted that it was their private property to do with as they please. There was no talk of sharing the massive profit’s generated and everything possible was done to avoid paying tax on those profits. It was only with the crash that the 1%, whether Greek, Irish or global insisted that the debts were suddenly public and national. In the boom workers in Greece or Ireland never stood to gain anything more than the crumbs that fell from the table, in the bust all the costs are somehow to be ours alone.

This underlines that the crisis is not Irish or Greek but global and is not a crisis of corruption, or poor investments but one of capitalism. Our resistance cannot be national but must be global and aimed not simply at a ‘fairer’ distribution of the costs but at a transformation of the world economy. A transformation that would take control and profits out of the hands of the ‘1%’ and into the hands of the 99%. The resistance in Greece shows that the 1% are not all powerful and is an example that can be built upon and spread across Europe & the globe.

Fri, 10/28/2011 – 10:29 — by AndrewNFlood – Written for WSM.IE

(thenextweb.com) If you ever thought of all anonymous Internet users as cowards behind a keyboard, it’s high time to think again. According to reports, Anonymous Mexico is going head-to-head with one of the most dangerous criminal organizations in the world, the Mexican cartel Los Zetas. Not only has the hacktivist group threatened to reveal names, but it has also started making good to its threats.

How did it start?

Anonymous’ campaign against the cartel could be a response to the alleged kidnapping to one of the group’s members in the city of Veracruz, if a video published on YouTube several weeks ago is to be believed. In the video, a man wearing the famous Guy Fawkes mask expressly threatens the cartel: if the hostage is not released, the voice says, Anonymous will publicly name and shame policemen, officials, taxi drivers and journalists it believes to be linked to the cartel.

Taking action online

Although the authenticity of the video itself is controversial, a recent action seems to confirm that Anonymous in Mexico are indeed at war with the cartel. Indeed, one of Anonymous’s favorite tactics is website defacement, and it’s exactly what just happened to the website of a Mexican politician suspected of connections to the cartel, according to the local media. The page is still defaced as we write; here is what it looks like (“es Zeta” meaning “is Zeta”):

A bold and dangerous move

As you can imagine, going head-to-head with the cartel is both brave and risky. Veracruz, in particular, has been ridden with drug-related violence over the last months, spreading panic among the population (see our story 2 Mexican suspects await possible 30-year sentences for “Twitter Terrorism”).

More generally, Mexico is one of the most dangerous countries in the world for journalists and bloggers. As we recently mentioned in our previous post ‘How Facebook’s name policy silenced a blogger in Honduras‘, “Narcos” have increasingly targeted bloggers and Twitter users who were using the Internet to denounce crime.

Should it be confirmed that an Anonymous member has been kidnapped by Los Zetas, this could well have been a reaction from the cartel following online posts against the organization. If Anonymous decides to go ahead and reveal names, there no doubt the cartel will try and retaliate again. In other words, hacktivists should better make sure they’re as anonymous as they claim to be.

Source: http://thenextweb.com/la/2011/10/29/how-anonymous-is-threatening-a-mexican-drug-cartel/

Transcript: Anonymous from Veracruz, Mexico, and the world, we want you to know that a member has been kidnapped when he was doing Paperstorm in our city.

We demand his release. We want the army and the navy to know that we are fed up of the criminal group Zetas, who have concentrated on kidnapping, stealing and blackmailing in different ways. One of them is charging every honest and hardworking citizen of Veracruz who busts their rears working day after day to feed their families.

We are fed up of journalists and newspapers of Xalapa, Córdoba and Orizaba because they are constantly crapping on honest authorities like the army and the navy.

We are fed up with taxi drivers, commanders and “police-zetas” officers of Xalapa, Córdoba, Orizaba, Nogales, Río Blanco and Camerinos… who are chickens and have made themselves the most loyal servants of these (expletive).

For the time being, we won´t post photos or the names … of the taxi drivers, the journalists or the newspapers nor of the police officers, but if needed, we will publish them including their addresses, to see if by doing so the government will arrest them.

We can´t defend ourselves with a weapon, but if we can do this with their cars, houses, bars, brothels and everything else in their possession … It won´t be difficult. We all know who they are and where they are.

(Images with sound of explosions)

You made a huge mistake by taking one of us. Release him. And if anything happens to him, you (expletive) will always remember this upcoming November 5th .

Knowledge is free. We are Anonymous. We are a legion. We don’t forgive. We don’t forget. Expect us.”

(AlJazeera) From the Middle East to the streets of London and cities across the US there is a discontent with the status quo. Whether it is with the iron grip of entrenched governments or the widening economic divide between the rich and those struggling to get by. But where are those so hungry for change heading? How profound is their long-term vision to transform society?

Slovenian-born philosopher Slavoj Zizek, whose critical examination of both capitalism and socialism has made him an internationally recognised intellectual, speaks to Al Jazeera’s Tom Ackerman about the momentous changes taking place in the global financial and political system.

In his distinct and colourful manner, he analyses the Arab Spring, the eurozone crisis, the “Occupy Wall Street” movement and the rise of China. Concerned about the future of the existing western democratic capitalism Zizek believes that the current “system has lost its self-evidence, its automatic legitimacy, and now the field is open.”

“I think today the world is asking for a real alternative. Would you like to live in a world where the only alternative is either anglo-saxon neoliberalism or Chinese-Singaporean capitalism with Asian values?

I claim if we do nothing we will gradually approach a kind of a new type of authoritarian society. Here I see the world historical importance of what is happening today in China. Until now there was one good argument for capitalism: sooner or later it brought a demand for democracy…

What I’m afraid of is with this capitalism with Asian values, we get a capitalism much more efficient and dynamic than our western capitalism. But I don’t share the hope of my liberal friends – give them ten years, [and there will be] another Tiananmen Square demonstration – no, the marriage between capitalism and democracy is over.” Slavoj Zizek

Watch video here: http://english.aljazeera.net/programmes/talktojazeera/2011/10/2011102813360731764.html

(libertarianleft.org) Hierarchies are systematically stupid and inefficient, for the following reasons:

1. Hayekian information problems: The people in authority who make the rules interfere with the people who know how to do the job and are in direct contact with the situation. The people who make the rules know nothing about the work they’re interfering with. The people who make the rules are unaccountable to the people who do know how to do the work. Consequently, all authority-based rules create suboptimal results and irrationality when they interfere with the judgment of those in direct contact with the situation.

People in authority make stupid decisions because the people who know more than they do are their subordinates, and the only people who can hold them accountable know even less than they do.

The only way the people doing the work can get anything done is to treat irrational authority as an obstacle to be routed around, the same way the Internet treats censorship as damage and routes around it.

2. Groupthink: Hierarchies systematically suppress negative feedback on the results of their policies. As R.A. Wilson said, nobody tells the truth to a man with a gun. Hierarchies are very good at telling naked emperors how good their clothes look.

Hierarchies also systematically suppress critical thinking ability in their members. Psychological studies have found that people in positions of authority become less likely to evaluate communications based on their internal logic, and instead evaluate them based on the authority of the source.

3. Opacity from above: A major theme of “Seeing Like a State,” by James Scott, is that states try to make populations “legible” from above, and hence more amenable to control. We might add a “seeing like a boss” corrollary about the analogous phenomenon inside hierarchies. The problem is that such legibility is very costly, if not impossible, to achieve.

Hospitals are a good example. Most of the paperwork that nurses are required to fill out results from the fact that management doesn’t trust them to do what it wants them to do without some independent means of verification. But the paperwork is worthless, unless management operates on the assumption that those same nurses can be trusted to fill out the paperwork honestly. It all boils down to the fact that management knows their interests are diametrically opposed to those of the nurses, but there’s no way to actually get inside the nurses’ heads and look out through their eyes and thereby overcome this fundamental agency problem. So bosses constantly look for new, ineffectual gimmicks to get around the problem, resulting in endless layers of new paperwork that are as useless as the old paperwork.

Conclusion: To the extent that hierarchical organizations leave subordinates with freedom of exit, they are not coercive in the same way that the state is. But given that hierarchies are artificially prevalent because of state policies, and those who work within them do so as a necessary evil resulting from artificial constraints on the range of competing opportunities, the hierarchy resembles a microcosm of statist society, in which the agency and knowledge problems of authority internally mirror the irrationalities created by state authority in society at large.

So long as the predominant production methods required large aggregations of capital beyond the means of individuals and small groups, and corporate hierarchies were propped up by state ones, the cultural pathologies of hierarchy were surmountable. But technological change is rapidly eroding the requirement for capital outlays, nullifying the advantages of capital ownership, and increasing the vulnerability of hierarchy to external and internal attacks by self-organized networks.

So hierarchies, increasingly, lack the resources to compensate for their handicaps — even with help from the state. The state will only bankrupt itself, along with corporate hierarchies, in trying to prop up the old order.

Kevin Carson, “Why Self-Organized Networks Will Destroy Hierarchies — A Credo,” under a Creative Commons license

C4SS Research Associate Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online.

By ⋅ Oct. 13, 2011

Source: http://dallas.libertarianleft.org/blog/2011/why-self-organized-networks-will-destroy-hierarchies

(Salon.com) BUDAPEST, Hungary (AP) — Tens of thousands of protesters have attended a rally expressing their opposition to the policies of Prime Minister Viktor Orban.

Speakers from several civic groups, united by the “I don’t like the regime” motto, condemned a wide range of government measures, from restrictive media polices to changes in the tax system hurting the poor.

Balazs Denes, head of the Hungarian Civil Liberties Union, said the weak opposition parties in parliament, up against Orban’s two-thirds majority, were also responsible for the problems affecting Hungarian democracy.

A spokesman said Hungary’s “alternative president” will be elected at the next rally on March 15.

Sunday’s demonstration was held on the 55th anniversary of Hungary’s 1956 revolution against Soviet rule.

Source: http://news.salon.com/2011/10/23/tens_of_thousands_in_hungary_protest_govt_policy/


Demonstrators hold a poster depicting Hungarian Prime Minister Viktor Orban looking like Matyas Rakosi, communist era dictator of the 50s during an anti-government demonstration in Budapest, Hungary, Sunday, Oct. 23, 2011. Tens of thousands of Hungarians gathered to protest against Orban’s government at the 55th anniversary of the 1956 Hungarian revolution. (AP Photo/Bela Szandelszky) (Credit: AP)

(economist) They don’t like the system

OCTOBER 23rd is a resonant date for Hungarians. Fifty-five years ago the failed anti-Soviet uprising began when teenage street fighters starting lobbing Molotov cocktails at Russian tanks. The revolution was crushed by the Soviets, but remains seared into the country’s collective consciousness.

The young, middle-aged and elderly protestors at yesterday’s demonstration in Budapest hoped to capture the spirit of 1956. Tens of thousands of them marched under the banner of Nem tetszik a rendszer? (“You don’t like the system?”). See video footage here.

Organised by a Facebook group, the protest was peaceful, good-humoured and crackling with energy, despite the rain and winds. The crowds stretched from the Elizabeth Bridge into the heart of the city, and probably exceeded the numbers at the first such mass protest in March this year.

Read more: http://www.economist.com/blogs/eastern-approaches/2011/10/remembering-1956