I know it’s odd, but the title of this post has little to do with the actual discussion.  Instead it reflects my thought process as I try to craft together some sentences which might express the degree of my amazement about society’s disconnect between their beliefs and reality.  Hopefully too, I’ll be able to accurately express how important this issue is.

What am I referring to you ask?  A new Zogby poll, which confirms again that humans, in this case Americans, seem unable or unwilling to face reality.  Using scientific polling methodology, the poll finds, within a +/- 2.1 percentage points, that  (whole thing here) :

Nearly three-in-four Americans (72%) believe most of the country is not politically engaged and does not follow the news from Washington closely….

&

…Despite the belief that most Americans do not pay attention to the news, 85% of Americans say they personally follow the news closely….

Now basic math proves, without any hesitation, that 85% of the population simply can not be above average.   In fairness, it is possible to say that I follow the news closely, but like others, am not engaged in the political process.

However, without grouping the questions, it would seem that this is an unlikely response due to the amount of thought process that one needs to take into account versus the amount of thought process most of give to pollsters.  Meaning, that in order for me to say, most people aren’t engaged enough and intend myself to be counted among those, but also say yes to following the news closely, requires a high degree of thought.

For instance, in one possibility, I might be saying I follow the news, but am not politically engaged enough because I don’t really like politics.   Getting to this decision however would require me to have thought of the two separate questions as more of a group.

It’s far more likely to say that these people believe that everyone else isn’t paying enough attention and everyone else is uninformed…. which is honestly, just stupefying…

Don’t get me wrong, it’s not all that surprising that so many voters are wrong.  We’ve talked about it on here in reference to the public polling data which showed both a majority of Americans against more government intrusion into health care, but for a public option (here).  And this has been a topic of conversation for political scientists for ever, with Cato publishing a great  paper in 2007 which discusses in detail the The Myth of the Rational Voter (which in greater detail is presented in this book) which shows that the public holds economic views not shared by most economists.

For instance, most people believe in economic myths such as sending jobs overseas hurts us or that the change in gasoline prices was due mainly to oil companies and not the market itself.

We also know of constant polls showing Americans unable to identify national issues correctly.   In October of this year, Pew updated their polling of American’s knowledge (here):

…The Pew Research Center’s latest News IQ Quiz finds a mixed picture of public awareness on key issues, with majorities aware of some key facts on health care and the economy. But other questions stump large segments of the public, including the current size of the U.S. military commitment in Afghanistan, the approximate level of the Dow Jones Industrial Average, and the name of a key environmental proposal being debated in Congress….

With other polls of course saying the same about all kinds of issues, such as science and affirmative action.

So taking the known opinions of people with relation to their beliefs on how well they are informed and how well the public as a whole is informed – in conjunction with polling data which routinely reflects poor public knowledge – it seems we have a case of not only ignorance, but a very large blind spot.

The reason is the ability for a person to know what they don’t know, takes a higher level of knowledge and critical thinking skills, than for a person to understand only what they know.

For instance, many people these days would consider themselves computer savvy and within some degree this is true.  With the constant use of email, social networking sites, IM, presentation and documentation software and a litany of other things most people know about computers, people reasonably might consider themselves computer savvy.

However, without some additional training or self-education or schooling, it would be tough for most people to understand just the very basics of security design, even if they are well versed in virus & firewall software.

& This isn’t a negative.  Specialization of knowledge is extremely useful.  This allows people who operate a computer for mostly email the ability to be safe on the internet without needing to  understand the underlying fundamentals of security policies.  Due to specialization, we have ample experts from which to choose who will readily setup all of this for you.  Allowing you to know very little about the underlying facts, but potentially resulting in greater knowledge about firewall or administration programs.

Therefore, for the person to know that while they are well versed in many computer applications, the specificity of their knowledge base is still very limited, requires a degree of critical thinking.  Not only that, but we could go further.  If the polls are to be believed, people need to have better critical thinking abilities than the majority of the population currently has.

Honestly it really is a travesty that the most dynamic and innovative society of today to have an educational system which is failing to teach our students basic thinking skills.  I think this data among the other reams of data about public schools, shows a system in extreme need of an update if we are to succeed in really preparing people for understanding the world.  I’m not an educational expert by any means, but as a starting point I think I’d like to debate the merits of starting in elementary school teaching logic, philosophy, critical thinking, and other areas of inquiry designed specifically to help children learn to think… but I digress.

Regardless of potential solutions for education reform, we can all use this an example to help us question ourselves.  Just remember, when you’re reading that next poll which makes you wonder, “How do people believe this stuff?” – you might want to ask yourself if it’s really “the others” who are off base.

In an effort to score political points, while diminishing real atrocities, Senator Harry Reid today compared opponents to his version of health care reform to those who actively opposed the woman’s suffrage and the Civil Rights Act .  From USA Today:

Instead of joining us on the right side of history, all Republicans have come up with is this slow down, stop everything, let’s start over.

You think you’ve heard these same excuses before, you’re right. When this country belatedly recognized the wrongs of slavery, there were those who dug in their heels and said, slow down, it’s too early. Let’s wait. Things aren’t bad enough. When women spoke up for the right to speak up, they wanted to vote, some insisted slow down, there will be a better day to do that. The day isn’t quite right.When this body was on the verge of guaranteeing equal civil rights to everyone, regardless of the color of their skin, some senators resorted to the same filibuster threats that we hear today.

& herein lie’s one the most basic problems with politics today.  The willingness to diminish real accomplishments in the progression of human rights, by bringing down to the level of party politics.

I’m not saying that I’m surprised of that he went further out of line that politicians in the past, but this kind of sound bit “tit for tat” strategy works with voters.  Basically, his downside isn’t all that great.  He’s facing a tough re-election with or without stupid comments like this, but for the most part the people angry never liked him and the people defending him always will.

The odd thing is that additional inspection leads one to understand that even if you think that these comparisons are fair game in politics, the analogies themselves are flawed.  Even if we ignore the difference in degree, it should be obvious that protecting people against active discrimination is not the same thing as redistributing wealth through healthcare.

Regardless, so long as voters continue to elect Mr. Reid, they can expect him to continue down this path.  No matter how illogical the statement is or whether it diminishes true problems resolved, re-election will only strengthen his resolve through that simple act of positive reinforcement.

If people truly want real debates, on the issues, they will have to first stand up and use the main weapon at their disposal – their vote.

On this day, in 1941, Japan struck Pearl Harbor.  Watch actual news coverage of the event:

Some color footage, including interview with people who were there:

Over @Rueters Blog, Felix Salmon has a recent post titled, Why the Plutocrats will return where he makes an interesting point:

…Remember too that when you have a progressive tax system, especially when there are surcharges on people making seven-figure incomes, you also have a system where for any given level of national income, the greater the inequality, the greater the government’s tax revenues. And indeed federal revenues have been rising faster than median wages for decades now, thanks to the rich getting ever richer….

Now I don’t believe in a big conspiracy, but I do pretty much believe in the selectorate theory… I say pretty much only because I’m still digesting all the information as well as the proofs, but basically the theory utilizes game theory and historical data to model political institutions, governments, leaders, etc, etc & their behaviors.  It has also been used as a predictive tool for the CIA, DOD, and others through one of the primary author’s (Bruce Bruce Bueno de Mesquita) work with amazing accuracy (here).

As one who loves understanding critical thinking, I was at first very skeptical towards the idea that math could model international predictions well.   Which isn’t to say I think math is limited, I do not.  For instance, I firmly believe that if we could ever measure all the variables in a dice throw, we could accurately predict the outcome.  Therefore the issue isn’t one of math, but of the ability to model such complex systems.

For the die throw, it’s an issue of accuracy.  Sure, we know the air pressure to the thousandth degree, but why not the millionth?  Billionth?  For predictions through modeling behavior, the complexity is not only accuracy since people’s motives aren’t always clear, but in the interactions with additional groups of people as well.    The number of interactions which might be analyzed in a group of only 5 people is 120, with 6 – 720, with 535 people in congress…. 535!

With computers of course we can crunch very large data sets these days in smaller and smaller amounts of time, but the theory is also powerful due to its simplicity.  It states that leaders will pay back those people that helped them become leaders in order to stay leaders.  This seems fairly intuitive and agrees with most understanding of incentives, but from here they can make predictions based upon the ratio between what they call W, the Winning Coalition, and S, the selectorate or those who can affect who the leader is.

To start with, we assume the leaders real ability to incentivize those in the winning coalition is to tax and spend.  They bring in revenues and use those revenues in such a way as to stay in power.  The have only two ways to allocate those resources, either through private expenditures or public spending.

The corollary with W/S is that when W is small as compared to S, the revenues spent will be mainly private and conversely if W is large compared to S, expenditures will be mostly public.

So if we take mainly free societies of today, where the selectorate is made up of the voting population which is usually only constrained by age, the winning coalition is theoretically 50% + 1 voter of the selectorate.  Due to the shear size of W in this case, the leaders incentives line up with public spending because she would be unable to to spend enough on each member of the coalition privately to ensure re-election.

Conversely in more closed systems, where the selectorate is controlled to a great deal (Iran, China, etc) and even if you are a member of the selectorate, the winning coalition is controlled and smaller, spending private money can keep the smaller coalition in tact.

Following the model and Mr. Salmon’s post on returning to a plutocracy, it makes sense that putting people into poverty can actually align with the incentives of our government.  The more people in need of assistance means keeping power is easier as more people are in need of the public expenditures.

I’m not saying I agree with all of this it total just yet, but at first glance Mr. Salmon’s intuitive thoughts seem to be backed up by known game theory modeling to present a interesting conclusion which I think goes to further underscore the idea that limited government is required for long term societal health.

For anyone interested in thinking through new paradigms, this is well worth the 8 minutes.

The video is a talk Tyler Cowen gave at the Cato institute about his new book, Create Your Own Economy: The Path to Prosperity in a Disordered World where he makes the case that the future of all things will be so integrated with cognitive abilities, that maybe different ways of thinking will be come a more reliable measure of policy differences than say the labels for Republican or Democrat.

To do so, he discusses Autistics, who a few short decades ago were generally labeled retarded, but whom we now see as having unique cognitive abilities.  For instance Mr. Cohen makes the point that maybe ADD, some Autistics, ADHD, and other “disorders” should be seen a mere different cognitive profiles and not necessarily disorders.

I’m not sure setting up a system of Thinker Kings is necessarily better that Philosopher Kings, but I’m also not sure if Mr. Cohen goes that far.  One thing is for sure, it’s an interesting way to look at critical thinking.

Tyler Cowen also runs a great blog Marginal Revolution

Update:  Reason.tv interview as well here

Showing that only civilized intellectuals are needed to really screw things up, food pantries in New York are actively throwing away food donations:

When a small church comes to the Bowery Mission bearing fried chicken with trans fat, unwittingly breaking the law, they’re told “thank you.” Then workers quietly chuck the food, mission director Tom Bastile said….

Some in good conscience are ignoring the law, but they know it applies to them:

…The city’s law banishing trans fat took effect in July 2008 and touched everyone with Health Department food licenses — including emergency food providers….

The whole irritatingly stupid, but so not surprising thing here.

Bank of America announced today it’s plans to repay the $45 billion dollars in tarp money to get out from under the restrictions of the government (AFP):

…The bank based in North Carolina said it would repurchase the preferred shares issued to the US Treasury as part of TARP, but would not immediately buy back the warrants, or options to buy additional shares.

“This is good news that the bank can get out of the TARP and can stop having to answer to public and government criticism,” said Jon Ogg at 24/7 Wall Street….

The policies BoA is trying to escape from includes restrictions on the top 25 individuals in the company including the CEO.  I and many others wrote about what a disastrous policy from the new administration this truly was (here):

…Even without bothering with the fact that the government is not in any position to understand what kind of compensation any single employee should have, this is still a radical and arbitrary move that if continued can work to destabilize the economy.

…this decision is an anathema to a free society breaking not only the contract rights of ordinary citizens, but also violating all individuals by pushing a blatant ex  post facto punishment…

Just two days earlier, I also wrote about BoA’s issues with getting a new CEO hired under all the government restrictions (here).  Indeed, at least four potential candidates have simply stated they don’t want the job.

Now, if these policies were actually designed to do this, incentivize those companies with TARP money to pay it back as quickly as possible, bravo!

Taking the language from the administration I doubt it, but it’s always good news when a major business under intense governmental scrutiny shows the quickest to its financial health is to remove the additional scrutiny.

This also  parallels with a recent NBER Paper on the global economic recession (abstract here, full paper purchase price $5).  In the full paper they try to prove the thesis that the main problem with the global economy is that investment money from developed countries should be flowing into developing countries, but instead developing countries such as India and China have investment income flowing into developed countries like the US & Britain.

& This seems pretty intuitive.  In general, investment money will flow to inefficient markets, industries, and companies in an immature market.  The reason is easy – it’s more and faster bang for the buck.  However, in a mature economy like the US and as we move forward in time, there are less and less efficiencies to be gained through anything other than new technologies.

In an immature market it’s the opposite case.  Industries and companies are new.  Small amounts of investment money can return great efficiency gains and therefore monetary gains.

Some people try to blame us citizens, consumerism, and capitalism in general for this failure, but that’s actually the opposite of the truth as well.  The reason Chinese citizens save so much more of their disposable income than do US citizens isn’t because they are more frugal, but have less real options to invest domestically even though major efficiency gains are theoretically possible.

As the abstract states:

…The inability of emerging economies to absorb savings through domestic investment and consumption due to inadequate national financial markets and difficulties in enforcing financial contracts; the currency controls motivated by immediate national objectives; and the inability of the US economy to adjust to the perverse incentives caused by huge money inflows leading to a breakdown of checks and balances at various financial institutions. The financial crisis in the US was but the first acute symptom that had to be treated. A sustainable recovery will only occur when the natural flow of capital from developed to developing nations is restored….

This doesn’t mean the US doesn’t have fault – so long as we continue to allow the government to write blank checks of any amount without respect to the deficit and ignoring huge unfunded liabilities such as MediCare – we seem to be on a sure path to a back slide.  I’m not really into prediction making as it’s obviously fraught with so many problems, but I’ll never understand how the solution to cheap money and an over investment of housing, is to keep money cheap and incentivize home buying (here).

Either way, it’s good news for BoA, with investors showing their interest with heavy after hours trading (here).