Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago School economists and fellow travelers.
I thought this photo might strike a chord with the Chicago crowd.
This is Lake Arrowhead at 12:40 PM, May 24. I have been planning to retire there but, after seeing this, might give it more thought. I have had weekend homes there for 35 years and don’t believe I have seen snow past March. They had a lot of snow in February this year, over a foot, and it is very clean but this is getting ridiculous.
Lake Arrowhead is at about 5200 feet elevation at the lake surface. There is snow all over southern California today above 4500 feet, which is below the level of the passes to central California.
If you are holding a cabbage in one hand over a bowl of dirty water in your kitchen sink, and you are holding a knife in your other hand and using it to trim the bad parts from the cabbage, things may not end well.
Per Lex’s request, on this, the day America laid siege to Boston, MA, interrupting the otherworldly disputations of many a Brahmin:
Noted American science fiction writer Philip K. Dick once observed:
The ultimate in paranoia is not when everyone is against you but when everything is against you. Instead of “My boss is plotting against me,” it would be “My boss’s phone is plotting against me.”
My boss’s phone is rather nondescript. It’s color is a few shades darker than full oppression gray. It whimpers with the soul draining anonymity of the standard corporate VoIP phone design. It has a gray LCD, gray buttons with obscure functions, and an incomprehensible gray user manual.
It frequently finds itself on sales calls.
If it was a person, it would have no face.
My boss’s phone lacks the personality of the door from Ubik:
The door refused to open. It said, “Five cents, please.”
He searched his pockets. No more coins; nothing. “I’ll pay you tomorrow,” he told the door. Again he tried the knob. Again it remained locked tight. “What I pay you,” he informed it, “is in the nature of a gratuity; I don’t have to pay you.”
“I think otherwise,” the door said. “Look in the purchase contract you signed when you bought this conapt.”
In his desk drawer he found the contract; since signing it he had found it necessary to refer to the document many times. Sure enough; payment to his door for opening and shutting constituted a mandatory fee. Not a tip.
“You discover I’m right,” the door said. It sounded smug.
From the drawer beside the sink Joe Chip got a stainless steel knife; with it he began systematically to unscrew the bolt assembly of his apt’s money-gulping door.
“I’ll sue you,” the door said as the first screw fell out.
Joe Chip said, “I’ve never been sued by a door. But I guess I can live through it.”
Of course the motives of doors are usually open and shut. The hang ups of boss’s phones are more cryptic:
Have retroactive predictability imposed on them through the foresight of 20/20 hindsight.
Taleb frequently points to the outbreak of World War I as an example of a black swan. He scoffs at historical accounts that present the outbreak as the result of trends that built up over the preceding decades, dismissing them as manifestations of the narrative fallacy:
Narrative fallacy: our need to fit a story or pattern to a series of connected or disconnected facts.
…historians arrive on the scene. They are the scholars who specialize in the study of “fat tail” events—the low-frequency, high-impact moments that inhabit the tails of probability distributions, such as wars, revolutions, financial crashes, and imperial collapses. But historians often misunderstand complexity in decoding these events. They are trained to explain calamity in terms of long-term causes, often dating back decades. This is what Nassim Taleb rightly condemned in The Black Swan as “the narrative fallacy”: the construction of psychologically satisfying stories on the principle of post hoc, ergo propter hoc.
Drawing casual inferences about causation is an age-old habit. Take World War I. A huge war breaks out in the summer of 1914, to the great surprise of nearly everyone. Before long, historians have devised a story line commensurate with the disaster: a treaty governing the neutrality of Belgium that was signed in 1839, the waning of Ottoman power in the Balkans dating back to the 1870s, and malevolent Germans and the navy they began building in 1897. A contemporary version of this fallacy traces the 9/11 attacks back to the Egyptian government’s 1966 execution of Sayyid Qutb, the Islamist writer who inspired the Muslim Brotherhood. Most recently, the financial crisis that began in 2007 has been attributed to measures of financial deregulation taken in the United States in the 1980s.
Ferguson proclaims that the real truth is found in the opposite direction:
In reality, the proximate triggers of a crisis are often sufficient to explain the sudden shift from a good equilibrium to a bad mess. Thus, World War I was actually caused by a series of diplomatic miscalculations in the summer of 1914, the real origins of 9/11 lie in the politics of Saudi Arabia in the 1990s, and the financial crisis was principally due to errors in monetary policy by the U.S. Federal Reserve and to China’s rapid accumulation of dollar reserves after 2001. Most of the fat-tail phenomena that historians study are not the climaxes of prolonged and deterministic story lines; instead, they represent perturbations, and sometimes the complete breakdowns, of complex systems.
I’m going to quibble with the Laurence A. Tisch Professor of History here.
This morning, my spouse intercepts me coming out of the bathroom ask, “I’m going to the store, do you need anything?”
“Yes,” I replied, “I need some [blank] and some [blank] because I have [insert graphic and colorful description of a minor but disgusting personal problem].”
My spouse looked startled. Confused, I looked around.
“Oh,” I said, “You might have informed me we have company.”
Every day I grow more convinced the universe is a cosmic conspiracy to rob me of my dignity.
:
on the failure of bond investors to price the possibility of war into their trades right before the war broke out. Ferguson now returns the favor in