Thursday, December 23, 2010

Christmas Traditions

As you may have gathered from my post on reciprocity bias, I do not have any Christmas traditions because I have traditionally not celebrated the holiday. This year is different, but amusingly I find myself in the position of the odd man out, desiring to celebrate the holiday but with all my acquaintances celebrating with family.

I find myself, therefore, contemplating on the creation of traditions. As I have none of my own for the day, I might as well do something fun on Christmas that lends itself to continuation in perpetuity (well, not perpetuity, but for at least my lifespan). So I'll take the day and ski at a resort near DC (for future years it'll probably be a resort near a city in which I reside). Then in the evening, I'll humor the Anglophile in myself with British Christmas television specials (QI and Doctor Who, anyone?). Yes, be amused at my shenanigans for the holidays. But if I am only taking care of myself for the holidays and not attending any Christmas dinners this year, I might as well enjoy some of the things I love most about winter.

"At any rate, that is what we are going to try to do." I couldn't have said it any better.

Happy Christmas to you!

Sunday, December 12, 2010

Whose Bread I Eat, His Song I Sing

I thought I'd leave the last post as a fun one, but then I went back to reading economics articles and couldn't resist when I saw this little blurb:

Another study, released in February 2010 by Navigant Consulting, was prepared for the RES Alliance for Jobs, a group whose members primarily include renewable generation manufacturers. The study examines the economic effects of adopting a mandatory national renewable portfolio standard of 25 percent of total generation by the year 2025. The report concluded that such a standard would “lead to job growth in all states, especially those currently without state-level renewable electricity standards,” and that it would create 274,000 new jobs in the renewables industry. (Gresham's Law of Green Energy, Jonathan A Lesser, Regulation, p.16)

To fully understand the cynical nature with which I view this paragraph, you need to understand that those subsidies may make no sense from an economics viewpoint (the net benefit may be slightly positive in the best case, and quite negative in the worst case). But let's just say that it would be odd that a consultancy, hired by a group of renewable generation manufacturers, would not produce a conclusion favorable to their business. Would you think the consultancy would endanger potential future work with a negative conclusion? Or would you think they'd put the best case they could think of forward, and maybe not account for all the costs?

At any rate, this really feels like a case of "Whose Bread I Eat, His Song I Sing," another one of those behavioral biases I like to know about. It's one of the more cynical ones, and I admit it doesn't hurt to have it if it helps you approach something with more skepticism than you otherwise might have. I also thought I saw hints of it when reading an article in an OB-GYN newspaper, but there's no need for me to publish my thoughts on that here.

I'll write brief blurbs about behavioral biases that I notice ad-hoc, as I notice them. I sincerely hope that in doing so, 1) I'll recognize them more often; and 2) you'll derive some benefit from reading about them and allow your curiosity to lead you to learn more about them. If there's one thing I want this blog to result in (for the very small audience), it's intellectual stimulation. And to that end, I try to keep myself abreast of my scholarly interests to keep things moving forward.

Well wishes to those whose eyes grace this page.

NB: I agree with the economic argument of the article, incidentally. Enough that I think it the clever response to every single bloody email I've been receiving from environmental groups asking me to email my senator to support renewal of green energy subsidies. And no, I don't support those subsidies, not just because of the distortions and the likelihood that the costs exceed the benefits, but also on the general principle that government is not the solution to everything, and I highly doubt the government's ability to pick winners (which it is doing with subsidies). If green energy can't be produced on a competitive cost right now, we should not have to pay for it, because we'll be paying more for it than we would for current energy resources, and have less capital available for other pursuits.

The more we pay for necessities, the less we have for enjoyment of life, in my book at least. One of the great stories of the past two centuries is how we have needed to devote less and less a proportion of our incomes to necessities because of economic growth. Green energy, as stated at present, represents a step backward from that trend, until it becomes efficient enough to compete. And I do not believe we need subsidies to encourage that, especially since the solution may come from a field no one is thinking of and hence not subsidizing. Which is why the article's reference to Gresham's Law (originating from the field of banking on the principle that bad underwriting drives out good underwriting, which we witnessed with our recent financial crisis) was quite clever. Bad energy policy potentially driving out good energy policy.

Skiing to Holst's "Mars"

Finally! After buying skis some months back (July? August?), I finally went skiing yesterday. And I thoroughly loved it, bruises and all. Never mind that each fall was hard thanks to the snow being machine made (I'm guessing that's typical). I enjoyed zooming down the slopes, though I couldn't listen to music easily until the end of the day, when I was falling a lot less often, though still saying "bloody hell!" when going too fast for my taste.

Which brings me to the post title. Given the dramatic moments in Holst's Mars, I quite liked how it accompanied those "bloody hell" moments.

And I don't know if it was a fluke, but I paid a very cheap price for a ski lesson yesterday. Ridiculously cheap. At the lesson desk they said it was because I was a season pass holder, but I could not find that price listed on the resort's website. So either I had a piece of good luck (double because when I went for the lesson, I was the only one for my level, so I got a private lesson for an hour and forty minutes) or that is the actual price. Either way, I was very glad for the lesson since I fell less as a result of it. And I'll probably get a few more before the end of the season, no doubt.

Anyway, I'll definitely next be skiing on the 18th (will have to end early to get back for a holiday party I'm hosting) and then Christmas Day. After that, we'll see.

Back to reading economics articles and Churchill's WWII memoirs.

Wednesday, December 8, 2010

Pearl Harbor

Yesterday was the 59th anniversary of attack on Pearl Harbor. In keeping with the recent theme of publishing quotes in this blog, here are a few in remembrance of that day:

"Praise the Lord and pass the ammunition." - Chaplain Howell Forgy of the New Orleans, encouraging the gun crews firing back at the Japanese Zeroes.

"Real planes, real bombs. This is no ***** drill." - Voice on the PA of the Oklahoma.

"Yesterday, December 7, 1941 - a date which will live in infamy - The United States of America was suddenly and deliberately attacked by naval and air forces of the Empire of Japan....No matter how long it may take us to overcome this premeditated invasion, the American people, in their righteous might, will win through to absolute victory....With confidence in our armed forces, with the unbounding determination of our people, we will gain the inevitable triumph. So help us God.... I ask that the Congress declare that since the unprovoked and dastardly attack by Japan on Sunday, December 7th, 1941, a state of war has existed between the United States and the Japanese Empire." - FDR, speech to Congress on Dec 8, 1941 requesting a declaration of war against Japan.

"Many people have been astonished that Japan should in a single day have plunged into war against the United States and the British Empire. We all wonder why, if this dark design, with all its laborious and intricate preparations, had been so long filling their secret minds, they did not choose our moment of weakness eighteen months ago. Viewed quite dispassionately, in spite of the losses we have suffered and the further punishment we shall have to take, it certainly appears to be an irrational act.... For after the outrages they have committed upon us at Pearl Harbour, in the Pacific Islands, in the Philippines, in Malaya, and in the Dutch East Indies, they must now know that the stakes for which they have decided to play are mortal." Churchill, Dec 26, 1941, Address to Joint Session of Congress, Washington, D.C.

Tuesday, December 7, 2010

Churchill on Confirmation Bias

As I'm reading The Gathering Storm, I can not help but notice occasions of psychological biases that hindered important decision-making, much to the detriment of Europe and the world. The main one (and easiest one) I've noticed is confirmation bias. Below are two examples I thought particularly illustrating.

Churchill made some comments on Hitler's violation of the Munich Pact, on the belief that the British Intelligence Service had collected good intelligence but it was somehow neglected by the government:

How was it that on the eve of the Bohemian outrage [the splitting up of Czechkoslovakia after the Munich Pact] Ministers were indulging in what was called "sunshine talk" and predicting "the dawn of a Golden Age"? How was it that last week's holiday routine was observed at a time when clearly something of a quite exceptional character, the consequences of which could not be measured, was imminent?... It seems to me that Ministers run the most tremendous risks if they allow the information collected by the Intelligence Department, and sent to them, I am sure, in good time, to be sifted and coloured and reduced in consequence and importance, and if they ever get themselves into a mood of attaching weight only to those pieces of information which accord with their earnest and honourable desire that the peace of the world should remain unbroken. [Emphasis mine] (Location 5987 to 6000, Kindle Edition)

And Mr. Duff Cooper, First Lord of the Admiralty who resigned after the Munich Pact (where Britain and France decided allow Hitler Czechoslovakia rather than honor France's guarantee of Czechoslovakia's defense against invasion), from his resignation speech given in the House of Commons (incidentally for 40 minutes and without needing to refer to any notes):

The Prime Minister [Neville Chamberlain, of the Conservative Party, which is curious, because today would you ever expect a Conservative in Britain or America to be in favour of appeasement over the mailed fist?] has confidence in the goodwill and in the word of Herr Hitler, although when Herr Hitler broke the Treaty of Versailles, he undertook to keep the Treaty of Locarno, and when he broke the Treaty of Locarno he undertook not to interfere further, or to have further territorial claims in Europe. When he entered Austria by force, he authorised his henchmen to give an authoritative assurance that he would not interfere with Czechoslovakia. That was less than six months ago. Still the Prime Minister believes he can rely upon the good faith of Hitler. (Location 5518-5544, Kindle Edition)

This also seems to be confirmation bias, because Chamberlain felt he could trust Hitler (eerily similar to Bush's words about trusting Putin by looking into his eyes) and hence ignored the abundance of evidence to the contrary. That's a key point of confirmation bias, only using evidence that supports your thesis. Though I have to wonder what evidence Chamberlain had for his viewpoint in the first place, given that a good number of Hitler's transgressions occurred during the prior Prime Minister's (Baldwin) tenure.

A further comment: confirmation bias is the bane of any thinking person. Regardless of the field where intelligence needs to be applied, be it medicine, science, economics, banking, scholarly research, etc, one of the worst dangers is to only read articles, opinions, and research that accords with your worldview. To not know the Opposition's viewpoint is to avoid subjecting your thoughts to arguments that may illustrate weaknesses in your thoughts which may need to be rethought and may have some wrong points only discovered by looking at the other side's arguments. Or you may have avoided addressing certain subjects that need to be addressed, even though your argument may overall be correct. Regardless, I would argue that confirmation bias is a terrible risk, one worth addressing.

Sometimes the consequences of not addressing potential bias are minimal. But other times, like 1938, the consequences were terrible.

Sunday, December 5, 2010

An ounce of prevention is worth a pound of cure

For some inscrutable reason, I've been reading "The Gathering Storm" recently. Not the 11th volume of the Wheel of Time. Rather, I've been reading the first volume of six by Winston Churchill on the second World War.

While I have not completed reading it yet (nor have I made any progress on This Time is Different, which if I recall correctly has some interesting statistics for that period of time), one very common theme in that volume is that the war was preventable. That was Churchill's view. Geopolitically, Germany rising again was not preventable. However, the war could have been prevented.

Another way to put it would be that Germany rebuilding itself as a powerhouse was geopolitically inevitable. Whether it would be a military powerhouse desiring war or an economic powerhouse was what could have been influenced by the UK and France, but unfortunately was not.

Keeping in mind the bias that "to understand is to believe," I think I could subscribe to Churchill's view.

I'll let some of his words speak for themselves on the preventability of that war, or if not preventability, at least being able to avoid the disastrous need to be evacuated from Dunkirk for inadequate training of the BEF and statistical inferiority of the RAF to the Luftwaffe:

While remaining sufficiently armed themselves, they must enforce with tireless vigilance and authority the clauses of the treaty which forbid the revival of their late antagonist's military power. Secondly, they should do all that is possible to reconcile the defeated nation to its lot by acts of benevolence designed to procure the greatest amount of prosperity in the beaten country, and labour by every means to create a basis of true friendship and of common interests, so that the incentive to appeal again to arms will be continually diminished. In these years I coined the maxim, "The redress of the grievances of the vanquished should precede the disarmament of the victors." As will be seen, the reverse process was, to a large extent, followed by Britain, the United States, and France. And thereby hangs the tale. [Location 798-801 in Kindle edition]

On March, 16, 1933, the MacDonald Plan was introduced, suggesting that the French army be reduced from 500,000 to 200,000 men and the German army allowed to reach parity with the French one. Churchill commented:

The Germans demand equality in weapons and equality in the organisation of armies and fleets, and we have been told, "You cannot keep so great a nation in an inferior position. What others have, they must have." I have never agreed. It is a most dangerous demand to make. Nothing in life is eternal, but as surely as Germany acquires full military equality with her neighbours while her own grievances are still unredressed and while she is in the temper which we have unhappily seen, so surely shall we see ourselves within a measurable distance of the renewal of general European war.

... One of the things which we were told after the Great War would be a security to us was that Germany would be a democracy with Parliamentary institutions. All that has been swept away. You have the most grim dictatorship. You have militarism and appeals to every form of fighting spirit, from the reintroduction of duelling in the colleges to the Minister of Education advising the plentiful use of the cane in elementary schools. You have these martial or pugnacious manifestations, and also the persecution of the Jews of which so many members have spoken.... [Location 1,313-24 Kindle edition]

[Hitler] did not even trouble to accept the quixotic offers pressed upon him. With a gesture of disdain he directed the German Government to withdraw both from the Conference and from the League of Nations. Such was the fate of the MacDonald plan. [Location 1,388 Kindle edition]

All this time [up until 1934] the Allies possessed the strength, and the right, to prevent any visible or tangible German rearmament, and Germany must have obeyed a strong united demand from Britain, France, and Italy to bring her actions into conformity with what the Peace Treaties had prescribed. In reviewing again the history of the eight years from 1930 to 1938 we can see how much time we had. Up till 1934 at least German rearmament could have been prevented without the loss of a single life. It was not time that was lacking. [Location 933 Kindle edition]

On March 14, 1933, a statement of Churchill's:

I regretted to hear the Under-Secretary say that we were only the fifth Air Power, and that the ten-year programme was suspended for another year. I was sorry to hear him boast that the Air Ministry had not laid down a single new unit this year. All these ideas are being increasingly stultified by the march of events, and we should be well advised to concentrate upon our air defences with greater vigour. [Location 1266 in Kindle edition]

Mr. Baldwin, on Nov 28, 1934, refuting a statement by Churchill on German air force rearmament:

It is not the case that Germany is rapidly approaching equality with us. I pointed out that the German figures are total figures, not first-line strength figures [...] Germany is actively engaged in the production of service aircraft, but her real strength is not 50 per cent of our strength in Europe to-day. As for the position this time next year, if she continues to execute her air programme without acceleration, and if we continue to carry out at the present approved rate the expansion announced to Parliament in July, so far from the German military Air Force being at least as strong as, and probably stronger than, our own, we estimate that we shall still have a margin in Europe alone of nearly 50 per cent. [Locations 2,032-42 in Kindle edition]

And yet, either the Air Ministry had poor forecasters or intelligence about Germany (people in general are poor forecasters though), for:

[A]t the end of March the Foreign Secretary and Mr. Eden paid a visit to Herr Hitler in Germany, and in the course of an important conversation, the text of which is on record, they were told personally by him that the German Air Force had already reached parity with Great Britain. [...] We had indeed fallen into an ambush. [Locations 2064-68 in Kindle edition]

Henceforward all the unknown, immeasurable threats which overhung London from air attack would be a definite and compelling factor in all our decisions. Moreover, we could never catch up; or at any rate the Government never did catch up. Credit is due to them and the Air Ministry for the high efficiency of the Royal Air Force. But the pledge that air parity would be maintained was irretrievably broken. [...] Very considerable efforts were made by the British Government in the next four years, and there is no doubt that we excelled in air quality; but quantity was henceforth beyond us. The outbreak of the war found us with barely half the German numbers. [Locations 2,200-6 in Kindle edition]

During the Battle of Britain, the RAF took down three to four enemy planes for one British loss, which is a quantitative statement on quality, but no one in their right mind would want to enter a war against a foe with as good technology as oneself with statistically inferior numbers. And yet the British were forced to do so, in large part because of a policy of disarmament in the MacDonald-Baldwin Government which could not be rectified after 1934. If the RAF had that hit rate, but as good numbers or better than the Germans, it would be a good probability that the shortcomings of the BEF in 1940 could have been overcome.

Or maybe not. For in deployment in Europe in 1939, its commanders had frittered away the months that passed between the declaration of war (over Hitler's invasion of Poland) and the arrival of blitzkrieg close to the Channel and Britain itself. [...] The 3rd Division's commander, Major General Bernard Montgomery, had not been idle, though. His formation had been honed during five major exercises that had emphasized all of the operations it was about to carry out.[...] As events unfolded, Montgomery's staff were struck by his prescience, one reflecting 'Although Monty made no predictions about the course of the battle, it followed almost exactly the way he had anticipated in his exercises.' Unfortunately for the army, the 3rd Division was the only part of the BEF that had rehearsed to this degree. [Mark Urban, Generals, p. 269]

Even if the RAF had statistical parity or superiority to the Luftwaffe, the BEF's apparent lack of professionalism and practice would probably have resulted in a land rout, and hence an overall rout. It just may not have been as hideous and dire as it was during Operation Dynamo, the evacuation of Dunkirk.

What would the world be like if Churchill, instead of being an ignored MP, was listened to and such prevention was effected? Would we never have had a second World War? Would Britain and France have been able to hold their own against Germany, effecting a repeat of the first World War with German advances being halted in France but not pushed back? Would Dunkirk still have happened, but with fewer casualties and little to none of the war materiel abandoned on the beaches because of enough RAF fighters to repel the Luftwaffe's bombing runs and allow the evacuation to occur in a less haphazard manner? Who knows? But we can guess, and at the minimum, "The Gathering Storm" to me is a persuasive account of the tragedy of lack of prevention.