A few Nobel Prize facts and reflections on economics

Perhaps the most stunning of the Nobel Prize statistics is the fact that for every 1 woman that has won, 18 men would have already won the prize. The common explanation to this 'boy's club' question over the years has been that there have been far fewer women in science than have men, a field in which the Prize is heavily skewed. Assuming that the whole world provided similar opportunities for all and social expectations shifted to accommodate a world where women are treated the same as men, perhaps we shall see more women on the forefront of science, literature and peace in the years to come.

Another interesting conjecture to note is the role economics has played over the years, since 1901. One of the cornerstones of economics is a theory referred to as the rational-expectations theory, the idea that people make choices based on their rational thinking, available information and past experiences. Economists then go ahead and extend this theory to come up with the efficient-market hypothesis, the absurd idea that financial markets reflect all available information and therefore inherently tended towards efficiency and stable risk dispersion. These two theories have been central to mainstream economics for more than 40 years. Most followers of economics can see that these models blind economists to reality and certain that the universe was unfolding as 'in equilibrium', they failed both to anticipate the financial crisis of 2008 and to chart an effective path to recovery. The economic crisis has produced a crisis in the study of economics – a growing realization that if the field is going to offer meaningful solutions, greater attention must be paid to what is happening in university lecture halls and seminar rooms.

Perhaps a great starting point in this reformation exercise should be a denouncement of rational expectations and efficient-market modelling and considering what behavioural economics has to offer; which embodies the mindset that people could actually sometimes be have irrationally and contrary to predictions of economic models. Notable individuals that have won Nobel Prizes in behavioural economics are laureates Gary Becker (motives, consumer mistakes; 1992), Herbert Simon (bounded rationality; 1978), Daniel Kahneman (illusion of validity, anchoring bias; 2002) and George Akerlof (procrastination; 2001).

References: FT website, The Nobel Prize official website.

[DK 15/03/15]

Don't blame the whole 'dismal science'!

In response to this interesting article from Business Daily Africa, Why development economics is biggest challenge to growth, I'd say:

It's the massive generalisations within the 'dismal science' that are of concern and that's what should really come under fire, not the whole science. I still think there's some hope if economics is done a little differently. For instance, I'd go straight for the famed General Equilibrium as an example of one massively broken theory that's taught to new economics students so religiously. If you choose to do the unorthodox qual and quant economics (which is what Behavioral Economics mostly stands for and that I'm quite a fan of), I believe the results will be much more palatable to current affairs. For instance - as mentioned by a previous commenter adopting a different risk management methodology, or viewing public and private debt in the truer way that that debt should be looked at in stead of masking it frivolously in the way current  governments are doing (or should have learned not do having been burnt by the recent crisis).Then I believe you will still have some pretty strong cases to lobby the body politic with i.e. call them to action issues like the massive rising income inequalities of the present times, debt escalations (because as clearly experienced in the US with the largely sub-prime loan-backed crisis, when debts rise above a certain threshold, debt deflation kicks in [poor Eurozone is experiencing deflation at the moment], and then asset prices go to the floor).

The "Good" Politicians of Canberra

Canberra has taught me a few things over the years and one of them has to be the ability to spot a "good" politician. I say this after being entertained by one Julie Bishop at the Africa Day celebration event on the 27th of May. The celebration is organised by the African diplomatic core and held to commemorate the formation of the Organisation of African Unity in 1963, the organisation which now stands as the renamed African Union. 

To be precise, the statement that has left me as convinced as to think of Julie as a "good" politician boils down to her choice of words when it came to her reference of Australia's aide to Africa. The facts of the recently released budget stand as being that foreign assistance will be frozen and capped to a ceiling with the Department of Foreign Affairs expected to shed some $400m weight through efficiency gains from merging with the Australian Agency for International Development. 

The Government will achieve savings of $7.6 billion over five years by maintaining official development assistance (ODA) at its nominal 2013‑14 level of $5.0 billion in each of 2014‑15 and 2015‑16. From 2016‑17 ODA will grow in line with the Consumer Price Index. The savings include $2.0 billion in 2017‑18 by removing the provision previously set aside for ODA spending.
As part of these savings, the Government has decided to reverse previous decisions to join the African Development Bank Group and the International Fund for Agricultural Development, and has introduced a cap on departmental costs for the Department of Foreign Affairs and Trade (DFAT) to administer ODA equivalent to 5 per cent of DFAT's total ODA budget. (2014-2015 Budget - Paper No. 2 - Expense Measures - Foreign Affairs & Trade)

Julie Bishop referenced the aide that Australia provides to Africa but didn't say at which side, in the north-south map that the monies will be moving to. With some economic insight, one can clearly see the equivalence between "savings", "efficiency gains" and cuts, but with no economic insight and with some eloquently rehearsed off-the-top-of-your-head political language oratory, one can surely fail to see the stark difference as it's nicely disguised within the prose.

With that said, I still thank Canberra for opening up my eyes and driven within me the hunger for in-depth critical analysis. It becomes quite hard to take things as they come once one discovers the facts behind the talk or in this case, the rust beneath the coating. But will the average Australian have the same drive to scrutinise political speech for what it is?

But maybe the story might be different if I'd 

A Week/end to Remember

It has been a week well worth of a self-titled blog post so here it goes. Interesting enough things happened at the weekend periphery of it not to say that Monday to Friday at work presented nothing to write home about. Friday evening brought along Week 1 of Mizizi Canberra, something Kavee Masila, the current facilitator, had once mentioned to me about 2 years ago in Sydney and is currently finally hosting in Canberra. You can find more information about what Mizizi which means roots in Swahili here and here. In a nutshell,

"Mizizi is a ten weeks experience, tailor made to facilitate you to connect with God, connect with your local church, your purpose and with lifelong friends. As you know, the taller and stronger the tree, the deeper its roots have to be. The same is true about life. If we want to be the kind of people who will fearlessly influence the society and have a long term impact, then we need to know God and grow deeper in our relationship with Him."

Mizizi is a 10 week experience which promises lots to come. And maybe many more blog posts. Week 1 was introductory so I look forward to what the future weeks hold.

Saturday afternoon was moving along like any other with the nitty-grittys of the day like cleaning or the not-cleanings and it's probably the latter that led me to knock at my neighbour's for a hello. I'd met Peter coming from the bus one evening and he'd told me he's staying with his cousin and has been for the last three months. Fortunate enough Loma, the cousin, answered my knock and had some time for a chat (which slowly morphed into an afternoon at my place). Loma and Peter are both studying at the ANU. Loma's also reasonably new to Australia having having only been around 6 months. They are both from Papua New Guinea (PNG).

This wasn't a story my curious door knocking obsession but of how amazed I was to hear and share with Loma a story of his redemption and calling. A story of how the hand of God touched him and gave him a complete roundabout. Loma recounts oh how his life was ground-breakingly touched by God two years ago in PNG and how it has been a different pathway ever since. Peter says that Loma was literally dead but by what he now strongly knows and believes is the grace of God, was healed and is a living testimony of His works. I had to hijack the two into my house because I knew my housemate, Kavee, might also want to hear what these two had to testify (they also got to enjoy some our authentic Kenyan-styled tea in the process). So in my house, for about 3 hours, Loma shared his story with us which physically had me watering. That he has a prophetic message for Kenya also made the experience quite the unique one. That I have lived next door to him and not seen him until now is also unique and I think true to how God works. Loma explained his fascination with Kenya and how he can feel with strong conviction that the country has a a wider role to play in the world stage than it thinks. How there will be a strong leadership for the sake of God's kingdom and what he calls a "revival" being birthed and originated there. Having spent just a few hours with the man, I could clearly see the fear of God in him. As Loma gave an account of his experiences these last two years, I could clearly see he is true to serve and strikingly faithful in the things of God. He a man filled with the Holy Spirit and this clearly presents itself when he prays. That he sometimes goes up Mount Ainslie to pray at night in winter perhaps is one challenge many cant bring themselves to bear but Loma says he strongly believes in prayer and that cold and darkness do not bother him one bit. To me it felt like hitting a jackpot living next door to a man of such great faith. A man who has just started a church in Port Moresby. A church that is made of tent and is yet to have a name but Loma says it is a sanctuary of God. That he plans a crusade function but is not worried about where the money shall come from is true to how faithful he is in waiting for God. Lack of money may deter things but with Loma his motivation is beyond being broken by such material considerations! After all, the church he has planted is a testimony to this. It was really a blessing to share the few hours we did with Loma's family because we did invite them all later on in the afternoon. It seemed like the perfect timing because now both Loma and Peter are also newly enrolled to experience Mizizi with us.

As if that Saturday was not awesome enough, Sunday brought along its own goodness. Our C3 Watson Sunday morning service was graced by Pastors Steve and Deb White from C3 Monash and Steve had a prophetic message for me as he began to speak, "You are redeemed. You cant do anything for it. You need to accept it. You do not need to earn it any more. The price has been paid. You are redeemed." It's hard to write anything following that so I think all I shall say is Amen!

In many many ways God has been faithful through and through and Loma and Peter's story just serve to confirm that. I can not think of anything better than finishing off with Psalm 8:

Lord, our Lord,
    how majestic is your name in all the earth!

You have set your glory
    in the heavens.
Through the praise of children and infants
    you have established a stronghold against your enemies,
    to silence the foe and the avenger.
When I consider your heavens,
    the work of your fingers,
the moon and the stars,
    which you have set in place,
what is mankind that you are mindful of them,
    human beings that you care for them?

You have made them a little lower than the angels
    and crowned them with glory and honor.
You made them rulers over the works of your hands;
    you put everything under their feet:
all flocks and herds,
    and the animals of the wild,
the birds in the sky,
    and the fish in the sea,
    all that swim the paths of the seas.

Lord, our Lord,
    how majestic is your name in all the earth!

Issues Obama Must Not Avoid, Again

A cross-post from Truthout Live Blog summarises my thoughts exactly.

History will remember the 2012 presidential election campaign as being among the wackiest, most expensive, least informative, whiplash-inducing events ever seen in real life on this planet. Remember the GOP primaries? The hilarious "anyone-but-Mitt" frenzy that gave the likes of Herman Cain, Donald Trump, Newt Gingrich and Michele Bachmann their own star turn? Magic. That wonderful carnival of nonsense has delivered Mitt Romney and Barack Obama to this, the finish line, at last. No more campaign commercials carpet-bombing the airwaves; after this, you get to be bombarded by Christmas advertising for the next two months. It's almost like a punishment, really. 

-William Rivers Pitt, 06 November 2012

Obama has once again won the votes of the American people but will he lead a congress that tackles real issues that are undeniably of grave importance. To begin with two, an environmental disaster and a nuclear war might be a good start. The UN has recently produced reports on global warming claiming that summer ice may be gone by 2020 and not 2050. I do not see how drilling more oil helps this issue at all. The Obama administration has to rethink its policies on climate change and do more than just promise limiting emissions in   cooperation with other nations of the world.

On the possibility of a nuclear war, the debate is around the US, Israel and Iran. Israel has always refused to sign the non-proliferation treaty which Iran is a signatory to yet it still continues to enjoy US unremitting support. Even though the NPT guarantees nations the right to enrich uranium, we all know that Israel doesn't want this and whatever Israel does not like is almost tantamount to what the US does not like. Would the US go on to bomb Iran if it insists on enriching uranium? Israel insists the only way it can even start talking about a  nuclear free Middle East is if the region is peaceful yet we know full well the misery it inflicts on Palestine.

As Noam Chomsky put it and as I shall plainly relay here, "We could be moving toward a devastating war, possibly even nuclear. Straightforward ways exist to overcome this threat, but they will not be taken unless there is large-scale public activism demanding that the opportunity be pursued. This in turn is highly unlikely as long as these matters remain off the agenda, not just in the electoral circus, but in the media and larger national debate.

Elections are run by the public relations industry. Its primary task is commercial advertising, which is designed to undermine markets by creating uninformed consumers who will make irrational choices – the exact opposite of how markets are supposed to work, but certainly familiar to anyone who has watched television.

It’s only natural that when enlisted to run elections, the industry would adopt the same procedures in the interests of the paymasters, who certainly don’t want to see informed citizens making rational choices.

The victims, however, do not have to obey, in either case. Passivity may be the easy course, but it is hardly the honorable one"

Attributed directly to Noam Chomsky on Issues That Obama and Romney Avoid.