Predictions

“The Perfect Storm”

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A fascinating post by Wretchard on the dynamics of public events in the Internet age, and on the ways in which such events are now subject to quantitative analysis of the type that has previously been reserved for quantum systems and securities markets:

Internet storms are emergent events which are difficult to predict. They are like rogue waves on the ocean, arising from the complex interaction between many factors, none in themselves particularly threatening. Yet combined they can suddenly throw up a devastating phenomenon, able to sweep all before it. About all people can do to gain a semblance of influence over emergent events is to shorten their reaction times to events. In the jargon of the trade they must increase the speed of their feedback loops to have any hope of evading the avalanche or deflecting it decisively. Because there is no easy way to predict what direction emergent events will take, the prudent manager must do all he can to detect them while they are building up. A number of methodologies exist to do this. But perhaps the most simple consists of an analyst trained to look at prediction markets, aggregators and sentiment analysis software in ways designed to detect the edge of the storm.

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Obama, the Election and the Economy

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Obama is currently the presidential frontrunner. Note that, on Intrade, the market odds of an economic recession in 2008 are rising in tandem with the odds that Obama will be elected President. Correlation does not prove causation but this correlation is worrisome.

UPDATE: It may not be clear what I mean, since even if Obama were elected he would not take office until 2009, and Intrade’s recession prediction refers to 2008. The point is that the prospect of a President with Obama’s stated values would raise expectations of tax increases and of other economically destructive measures, and such expectations would lead to reduced investment and hiring.

UPDATE 2 (Jan. 9): A rejoinder by Barry Ritholtz is here.

(This blog is an Intrade affiliate.)

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Related: Obama-McCain: Political Inertia Coupling?

Quote of the Day

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California and some Northeastern states have decided to force their residents to buy cars that average 43 miles-per-gallon within the next decade. Even if you applied this law to the entire world, the net effect would reduce projected warming by about 0.05 degrees Fahrenheit by 2100, an amount so minuscule as to be undetectable. Global temperatures vary more than that from day to day.
 
Suppose you are very serious about making a dent in carbon emissions and could replace about 10% of the world’s energy sources with non-CO2-emitting nuclear power by 2020 — roughly equivalent to halving U.S. emissions. Based on IPCC-like projections, the required 1,000 new nuclear power plants would slow the warming by about 0.2 ?176 degrees Fahrenheit per century. It’s a dent.
 
But what is the economic and human price, and what is it worth given the scientific uncertainty?
 
My experience as a missionary teacher in Africa opened my eyes to this simple fact: Without access to energy, life is brutal and short. The uncertain impacts of global warming far in the future must be weighed against disasters at our doorsteps today. Bjorn Lomborg’s Copenhagen Consensus 2004, a cost-benefit analysis of health issues by leading economists (including three Nobelists), calculated that spending on health issues such as micronutrients for children, HIV/AIDS and water purification has benefits 50 to 200 times those of attempting to marginally limit “global warming.”
 
Given the scientific uncertainty and our relative impotence regarding climate change, the moral imperative here seems clear to me.

 
–John R. Christy
 

One Day We Will Video Everything in Our Public Lives

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Well, maybe. Here’s a situation where a video record came in handy:
 


 
Ouch. The caption accompanying the video explains: This video was captured by a woman riding on her motorcycle. She was wearing a helmet camera (visit www.helmetcamera.com) just in case anything happened to her. Unfortunately it did. The black car locked it’s brakes and swerved due to slowing traffic. The person driving the black car later tried to blame the accident on the cyclist. Fortunetly the woman had everything on video and was able to prove she was not at fault.
 
Seems like it was a good idea for the motorcyclist to install the video camera. Why not put them in automobiles etc? That would probably be a good idea, but I don’t know if people will want to do it if it’s required, say, by insurance companies or legislation — anything that looks like a black box where only Big Brother gets to access the data will be a tough sell. But such concerns evaporate if individuals control their own tapes. As video cameras become cheaper, more people are going to think, Why not have one in my car/front porch/living room? You never know when it will be useful.
 

Iraq – How will we know if we’ve won?

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War opponents keep asking this question. One answer is that we will have won when we depose the Islamofascist governments of Syria and Iran, and perhaps some other countries, and Iraq is stable, and we no longer face a threat from Islamic radicalism and terror attacks because the Islamists are crushed and demoralized. But that’s perhaps too expansive and too vague an answer.

I was watching a TV news discussion on FOX tonight about positive recent developments in Iraq, and I realized that there’s an easy way to determine when we have won. We will know we have won when the leadership of the Democratic Party starts claiming credit for the war.