State of the Atlantic
The indispensable Jeff Masters has an exhaustive review of the current state of climatological drivers of North Atlantic Hurricanes.
In summary: June is rarely a big month and this year probably won’t be an exception.
Best of Flowing Data
Today in Difficult to Believe News
Yeah, thanks, Naomi
I read No Logo years ago and remember being swayed by its arguments.
This is an article about Foxconn, which is clearly intended as an ‘exposé’ of a sweatshop in China. Would I choose to work in such a factory? Probably not. Why? Because I’m lucky enough to have better alternatives.
If you lift the facts out of the story, it’s not so sexy:
They live in dormitories, their supervisors get angry when productivity is hampered, a poor kid killed himself a week after he quit (relevant?), his family is sad.
The amazing parts of this story are completely ignored:
1. This factory employs FOUR HUNDRED AND TWENTY THOUSAND PEOPLE. Yep, you read that right. That’s amazing.
2. People choose to work in conditions we would scoff at. Why is that? BECAUSE THEY’RE BETTER OFF.
3. A job working in such a factory would be unbelievably prestigious here. Building ipods? Tell me you wouldn’t think that’s cool.
4. These people are genuinely making our lives better. International trade, man. Win-win in the long term.
Military Metaphors in Politics/Political Economy
My view on political discourse is that serious engagement is fundamentally Quixotic and pointless. Unfortunately, it often cannot be escaped, because three things I really do care about (economics, comedy and my personal finances) often require a moderate understanding of political happenings. I’m not happy about it, but them’s the breaks.
Anyway, the thing the I most dislike about political discourse is the exaggeration of the conflict in the debate. I think people do this to shake folks like myself out of our indifference so that we validate the discourse itself. These talking heads need an audience. Take military metaphors as an example.
One of the few commentators that I can stomach who spends a fair bit of time writing about the political economy is Arnold Kling. Today he wrote about a book called “The Battle” that outlines the “sides” various groups of people are on and, perhaps, talks about who will “win”. Arnold divides the world into statists and free enterprisists and is ready to “fight”:
The battle is to dislodge the statists. I think that Brooks raises a red herring when he argues that those of us on the free enterprise side are the majority. I am, like Bryan, skeptical that we are the majority. Moreover, even if we were in the minority, I would not wish to concede the battle.
I find it tiresome, though I agree with much of Arnold’s view of the world, so I suppose I can’t be worse off for his efforts.
In the post, he refers to Scott Sumner who once made the claim that “Presidents don’t go to war, countries go to war” and then controversially said that he thinks Al Gore would have invaded Iraq. That thought really opened up my mind, actually.
I think the result of “The Battle” is meaningless. We overemphasize individuals’ and even smallish groups’ effect on society over any time scale (and, yes, ANYONE who is consistently politically engaged, no matter what “side”, is a part of a small group – most people simply do not care. Look at voter turnout!). The will of a society is a reactionary aggregate phenomenon and no individual or group of individuals is, barring the use of military force, powerful enough to seriously effect anything long enough to matter.
Looking for Reliable Data
Mandel on offshore R&D spending.
He makes the point that in fact that there is, in fact, a dearth of reliable data on things that matter and an embarrassment of data on things that don’t* (see: the Twitter firehose).
I think this thought. My pet view is that analytical capabilities are becoming more and more commoditized and that real ‘value added’ in the future will depend, to a greater and greater degree, on building data sets.
*Obviously, by “matter” I mean things of non-promotional economic value. The Twitter data could “matter” a helluva lot to advertisers.
The Loop Current Eddies
Animation of how they worked last year.
Remember that hot water pumps up hurricanes. The loop eddy drops a pile of hot water into the middle of the gulf.
And this year’s eddy just broke off
Why Insurance Exists
Brooks has a good one today (just read the bold stuff):
Over the past decades, we’ve come to depend on an ever-expanding array of intricate high-tech systems. These hardware and software systems are the guts of financial markets, energy exploration, space exploration, air travel, defense programs and modern production plants.
These systems, which allow us to live as well as we do, are too complex for any single person to understand. Yet every day, individuals are asked to monitor the health of these networks, weigh the risks of a system failure and take appropriate measures to reduce those risks.
If there is one thing we’ve learned, it is that humans are not great at measuring and responding to risk when placed in situations too complicated to understand.
I heard a story recently about a group of insurance executives meeting with BP’s risk manager in the 90s. She reiterated a common refrain: we don’t need insurance because we have a huge balance sheet.
Indeed.
And yet, insurance still has something to offer:
1. Individuals often overstate risk tolerance, especially with respect to organizations. I think that this is a combination of Robin Hanson’s Near vs Far bias and agency cost. People rely too much on silly capital models and not enough on anticipating the response of those individuals who (collectively) actually pay the costs (shareholders, stakeholders, etc) of risk when it goes pear shaped.
2. A market based appraisal of what the risk is worth. Sure, insurance underwriters may not understand it perfectly, but at least get a second opinion. You might miss something and the costs of that are, obviously, huge.
In spite of the fact that most risk is fundamentally incomprehensible, the insurance industry is actually quite stable. It continues to baffle me, to be honest, but I can’t argue with success.
Not Unreasonable 
