BRIEFLY NOTED: For 2023-04-02 Tu
Faux & Chafkin on FTX a grift from the get-go; Levine is on the point of abandoning belief in “fundamental values’; we are not quite completely ignorant about why MAMLMs do what they do; Joe Lieberman as VBER—Value Below Expected Replacement—champion; industrial policy successes & failures; why have Republicans suddenly decided that the economy is not but the “border” is a crisis?; millionaires claiming to be “just getting by”; & Sub-Turing BradBot: Finally Ready for Prime Time!—Well, maybe not; NOTES: ChatGPT4’s Current Ability to “Reason”, & What Follows from That…; READING: Jo Walton (1998): “The Lurkers Support Me in Email”; & BRIEFLY NOTED: For 2023-03-28 Th…
SubStack NOTES:
CrytoGrifting: Back in the foundational days of probability and statistics, Enlightenment-Era mathematicians spent much brainpower grappling with the existence in a fair game of strategies that seemed overwhelmingly likely to win. The answer, of course, is that in the small proportion of the time you lose you lose really big, and the smaller the chance of loss the bigger the magnitude of the loss when you do. But for people who cannot keep the entire ex ante distribution of outcomes in their mind, selling unhedged far-out-of-the-money puts is, as Stanford’s Robert Hall wisely once said to me, “the highest-probability way of appearing to be an immense financial genius”. This is why ijt is important to look not at actual or counterfactual gambling-for-resurrection results, but at procedures, protocols, and risk-management practices.
Bankers are paid the big bucks for being able to keep a weather eye on the probability of a run and to have guarded against it—which is why Jamie Dimon is now King of Wall Street. Exchange runners are paid the big bucks for making sure that they are never vulnerable to a run. But competently running an exchange was not the business Sam Bankman-Fried was ever in. The big questions I have about how it shook out are for those who funded Sam Bankman-Fried’s defense and those who contributed to funding that defense. He would have been much better off with a free public defender, who would at least have told him: Given Caroline Ellison’s testimony, and given John Ray’s attitude toward your management practices, you have no chance at trial—plead guilty to whatever deal you can get. Bankman-Fried’s lawyers and funders really do need to look into the mirror:
Zeke Faux & Max Chafkin: FTX’s Original Sin Is a Warning to All of Crypto: ‘Evidence from the criminal trial of Sam Bankman-Fried suggests fraud was built into FTX from the very beginning….. The total balance for an “insurance fund” listed on FTX’s website to reassure customers was actually made up using a random number generator…. Just months after the exchange opened, FTX created a backdoor for Alameda… overr[iding] FTX’s internal controls, making it possible for Alameda to borrow almost unlimited sums from FTX customers…. To deposit money at FTX, customers had to send it to Alameda. They were led to believe the funds would be passed along and held on their behalf. Instead, Alameda in many cases just spent the money. Bankman-Fried acknowledged most of this at the trial but said none of it was malicious…. FTX wasn’t a good company run by a bad guy. It was a business that was crooked almost from Day 1… <https://www.bloomberg.com/news/features/2024-03-27/sam-bankman-fried-prison-sentence-shaped-by-ftx-crypto-fraud>
TrumpGrifts: A bunch of jumped-up monkeys who can be convinced to self-immolate because dulce et decorum pro patria mori can also be convinced to make a Donald Trump into a president—or a billionaire. Perhaps the really interesting thing is that there are so many people, many young, mostly male, who find it beside the point to try to assess the odds on their gambles—for whom it is enough that someone is willing to tell a story, and swear that this story is true:
Matt Levine: Trump Media’s Business Doesn’t Matter: ‘Three years ago… people realized that… while the value of a company’s cash flows probably does set a real floor under its stock price… it does not put a ceiling on the price…. There is no law of nature requiring that a stock’s price has to equal the present value of its future cash flows, or even that it has to equal the market’s collective estimate of its future cash flows. That’s just a matter of tradition, and the tradition is only like 80 years old…. Stocks… [could] be pure tokens in a psychological gambling game…. I said… “like three years ago,” because… GameStop… meme stocks, stocks that trade purely on sentiment and attention…. But really I think the third era started a bit earlier, with cryptocurrency…. With time, I have become more comfortable with the answer to “what are we all doing here?” The answer is “not fundamental analysis.” Maybe it is “having fun online.” Maybe it is “playing a complex game of mass psychology.” Maybe it is “using our investments as a form of self-expression, buying stocks and cryptocurrencies we identify with and feeling better about ourselves if they go up.”… Maybe there are mechanisms to discover; maybe in 10 years there will be textbooks on Meme Stock Analysis…. Again, I don’t think I’m all that serious about any of this, or at least I hope I’m not… <bloomberg.com/opinion/articles/2024-04-…>
MAMLM: The unreasonable effectiveness of MAMLM in simulating linguistic and artistic behavior is deeply disturbing. And, given that, the failure of MAMLM in almost all reasoning tasks in which they can neither draw almost immediately on their training data nor are “Clever Hansed” to the extreme is also very disturbing. For example, ask for a Chicago Style manual citation to one of my weblog posts, and it fails to reason the way to the right answer:
Will Douglas Heaven: Large language models can do jaw-dropping things. But nobody knows exactly why: ‘And that’s a problem…. “Obviously, we’re not completely ignorant,” says Mikhail Belkin, a computer scientist at the University of California, San Diego. “But our theoretical analysis is so far off what these models can do. Like, why can they learn language? I think this is very mysterious.”… “This is something that, until recently, we thought should not work,” says Belkin. “That means that something was fundamentally missing. It identifies a gap in our understanding of the world.” Belkin… thinks there could be a hidden mathematical pattern in language that large language models somehow come to exploit: “Pure speculation but why not? The fact that these things model language is probably one of the biggest discoveries in history,” he says. “That you can learn language by just predicting the next word with a Markov chain—that’s just shocking to me”… <technologyreview.com/2024/03/04/1089403…>
Moral Responsibility: Fortunately for us all, Joe Lieberman’s role as “Founding Chair” of “No Labels” appears to have failed to raise the chances that neofascist Republicans will dominate American politics in the next few years. And Joe Lieberman was just an average senator But it remains that case that, of all American senators since 2000, Joe Lieberman had the largest VBER—Value Below Expected Replacement. Other senators as bad and worse can be seen largely as transmission belts reflecting the views of the majority of the state from which they were from. Joe Lieberman made a big difference. If not for him, ObamaCare would have had a public option, for one thing.
No Lieberman sympathizers could ever enunciate a sensible policy reason for his decision to veto the public option. The only two possibilities that seemed to make any sense for his actions were (1) attention-seeking chaos monkey, and (2) a profound psychological need to show a Black man that he was not that powerful after all:
Mara Gay: Why Lieberman Hates the Public Option: ‘Theories explaining the senator’s threat to filibuster the health care bill if it includes a public option… <theatlantic.com/politics/archive/2009/1…>
ONE VIDEO: Saule Amarova, Jonas Algers, & Isabel Estevez:
Learning from Industrial Policy Successes and Failures: Public Banks, Green Steel, and Dirty Steel
ONE IMAGE: Republicans Are Easily-Grifted Morons Department:
ANOTHER IMAGE: Just-Getting-by Little Rich Man:
Sampled from those making more than $175,000 per year:
Very Briefly Noted:
Economics: Hunter L. Clark & Matthew Higgins: Can China Catch Up with Greece?: ‘Xi Jinping… goal of reaching the per capita income of “a mid-level developed country by 2035.”… [But] mounting headwinds from population aging and from diminishing returns to China’s investment-centered growth model… increased state management… crystallization of legacy credit issues… limits on access to key foreign technologies…. [With] generous assumptions concerning future growth fundamentals, China appears likely to close only a fraction of the gap with high-income countries in the years ahead… <https://libertystreeteconomics.newyorkfed.org/2023/10/can-china-catch-up-with-greece/>
Edward White & Cheng Leng: Will Xi’s manufacturing plan be enough to rescue China’s economy?: ‘The president has won praise for ending a credit boom, but trading partners now fear a flood of cheap exports…. “New quality productive forces”… has in early 2024 become shorthand for Xi’s vision of economic growth underpinned by China’s increasingly advanced manufacturing industries. This month the phrase was used nine times in a 6,000-word essay published by state news agency Xinhua, which also elevated the importance of Xi’s economic reform programme to that of Deng Xiaoping…. “For this to work, China must expand its share of global manufacturing. That needs to be accommodated by the rest of the world. The rest of the world is unlikely to do that,” says Michael Pettis, a finance professor at Peking University and senior fellow at think-tank Carnegie China…
<https://www.ft.com/content/ae517907-0244-4344-ad0a-1d029c03555b>Economic History: Barry Eichengreen (2011): Escaping the Middle-Income Trap: ‘Growth slowdowns typically occur at per capita incomes of $16,700.4 At that point, the per capita growth rate slows from 5.6 percent to 2.1 percent, or by an average of 3.5 percentage points. For purposes of comparison, note that China’s per capita GDP, in constant 2005 international (purchasing power parity) prices, was $8,500 in 2007. Extrapolating its growth rate between then and now, China will reach the threshold value of $15,100 around 2016—that is to say, five years from now…. Growth slowdowns are almost always total factor productivity (TFP) growth slowdowns…. This said, there is no iron law of slowdowns. There is considerable dispersion in the income levels at which they occur. Mean per capita income may be $16,700, as noted earlier, but the standard deviation is $6,000…. The association between exceptionally high investment rates and the likelihood of slowdowns suggests that high investment may put off the day of reckoning by supporting aggregate demand, but it can come back to bite you if that high investment delivers an unproductive capital stock that depresses the growth of aggregate supply subsequently. The other provocative result is that slowdowns are more likely in countries with undervalued real exchange rates…. Further rebalancing of the Chinese economy away from fixed investment in favor of consumption, and normalization of the real exchange rate to encourage the shift away from low-value-added assembly operations, will greatly increase the likelihood of a smooth landing… <https://www.kansascityfed.org/documents/3097/2011-Eichengreen_final.pdf>
MAMLM: Anton Korinek: Large Language Models and Cognitive Automation: ‘Lots of interesting new questions: What will the new era of cognitive automation imply for: • labor markets • education • technological progress • … • social welfare? As of right now, human brains enhanced by LLMs are (still!) the best technology around to answer these!… <https://www.brookings.edu/wp-content/uploads/2023/03/2023-03-Language-Models-Brookings-Korinek.pdf>
Cognition: Barry Ritholtz: Danny Kahneman: What if Everything is Narrative Fallacy?: ‘Kahneman in Thinking Fast and Slow: “Flawed stories of the past shape our views of the world and our expectations for the future. Narrative fallacies arise inevitably from our continuous attempt to make sense of the world. The explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to talent, stupidity, and intentions than to luck; and focus on a few striking events that happened rather than on the countless events that failed to happen. Any recent salient event is a candidate to become the kernel of a causal narrative… <https://ritholtz.com/2024/03/danny-kahneman-what-if-everything-is-narrative-fallacy/>
Public Reason: Noah Smith (2021): Noah Smith’s writing advice: ‘Responses… someone writes something and you respond to it…. Takes… something is happening… and you want to give your thoughts on it…. Theses… an idea about the world that you want to advance…. Lessons… when you have some piece of expertise…. Roundups are when you gather a whole bunch of arguments, evidence, or other relevant info… Narratives… where you want to explain how you think… but it’s a gestalt impression…. Write less than you know…. A solid argument is constructed not just of the things you write down, but also of plenty of things you didn’t write down…. That background knowledge can’t all be written down in the post. It’s in your head, not on the page… <https://www.noahpinion.blog/p/noah-smiths-writing-advice>
Journamalism: John Macintire: ‘My trust in the Economist starts from a very low base, is then an increasing function of the subject’s distance from the City with some downward adjustment for US subjects, where poorly repressed longing for the GW Bush administration is always a subtext… <https://braddelong.substack.com/p/briefly-noted-for-2023-03-28-th/comment/52661146?r=d0v>
Neofascism: Will Lloyd: Even Tories seem ashamed of their record: ‘There is no good parking… school… pub… [or] post office [in] Kirby Sigston… [whose] residents are served by a 12th-century, grade I listed church and by the man who bought the local manor in 2015… Rishi Sunak… If a weekend “mega-poll” is to be believed, Richmond is desperate to see the back of Rishi Sunak…. The most notable thing about current and former Conservatives is how eager they are to blame everyone else for their conservatism…. George Osborne… [on] the “lie” of Brexit…. Former Treasury hatchet man David Gauke… [on] austerity going “too far”. Dominic Cummings… accus[ing] Boris Johnson of “cake-ism”…. “Absolute shit. Abominable,” was the verdict of one bravely anonymous cabinet minister under Theresa May… [who is now] “woke and proud”…. You have to wonder what Suella Braverman will have to do…. What will the Conservatives leave behind them in 2024? Books, podcasts, essays, briefings and interviews all saying the same thing. Never trust us with anything again. It’s a message clear enough to shake Rishi Sunak out of Kirby Sigston…<https://www.thetimes.co.uk/article/even-tories-seem-ashamed-of-their-record-r87fmxt8q>
Rick Perlstein: ‘It doesn’t matter whether you and I think revolution is being pursued, it’s what the REACTIONARIES think; an ethnographic approach here is imperative. The same problem carries over to Corey’s argument that reaction cannot have tipped over into something worse called “fascism”, because fascism must definitionally be a reaction to socialism…. Is it [Corey Robin’s] argument that this would NOT be fascism (or possibly even reaction?), because the ACA is not ACTUALLY “revolutionary” nor, whatever the right-wing militants say, “socialism”?… Is there a useful heuristic word (I’m pragmatist about this, that these ideologies aren’t “real” things that can be objectively pinned down, they are ultimately JUST heuristics) that [Corey Robin] find[s] more useful?… <https://twitter.com/rickperlstein/status/1774522151577567368>
Robert Farley: On Global Authoritarianism: ‘My own view is that the idea that the current authoritarian moment on the right bears no resemblance to “fascism” is a pleasant fantasy that enables the self-identified Left to reject any notion of a crisis that requires solidarity with mainstream liberalism; if it walks like a Nazi and talks like a Nazi then it might as well be treated like a Nazi… <https://www.lawyersgunsmoneyblog.com/2024/04/on-global-authoritarianism>
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