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Saturday 11 June 2016

Economics Struggles to Cope With Reality

Noah Smith in Bloomberg

There are basically four different activities that all go by the name of macroeconomics. But they actually have relatively little to do with each other. Understanding the differences between them is helpful for understanding why debates about the business cycle tend to be so confused.

The first is what I call “coffee-house macro,” and it’s what you hear in a lot of casual discussions. It often revolves around the ideas of dead sages -- Friedrich Hayek, Hyman Minsky and John Maynard Keynes. It doesn’t involve formal models, but it does usually contain a hefty dose of political ideology.

The second is finance macro. This consists of private-sector economists and consultants who try to read the tea leaves on interest rates, unemployment, inflation and other indicators in order to predict the future of asset prices (usually bond prices). It mostly uses simple math, though advanced forecasting models are sometimes employed. It always includes a hefty dose of personal guesswork.


The third is academic macro. This traditionally involves professors making toy models of the economy -- since the early ’80s, these have almost exclusively been DSGE models (if you must ask, DSGE stands for dynamic stochastic general equilibrium). Though academics soberly insist that the models describe the deep structure of the economy, based on the behavior of individual consumers and businesses, most people outside the discipline who take one look at these models immediately think they’re kind of a joke. They contain so many unrealistic assumptions that they probably have little chance of capturing reality. Their forecasting performance is abysmal. Some of their core elements are clearly broken. Any rigorous statistical tests tend to reject these models instantly, because they always include a hefty dose of fantasy.

The fourth type I call Fed macro. The Federal Reserve uses an eclectic approach, involving both data and models. Sometimes the models are of the DSGE type, sometimes not. Fed macro involves taking data from many different sources, instead of the few familiar numbers like unemployment and inflation, and analyzing the information in a bunch of different ways. And it inevitably contains a hefty dose of judgment, because the Fed is responsible for making policy.


How can there be four very different activities that all go by the same name, and all claim to study and understand the same phenomena? My view is that academic macro has basically failed the other three.

Because academic macro models are so out of touch with reality, people in causal coffee-house discussions can’t refer to academic research to help make their points. Instead, they have to turn back to the old masters, who if vague and wordy were at least describing a world that had some passing resemblance to the economy we observe in our daily lives.

And because academic macro is so useless for forecasting -- including predicting the results of policy changes -- the financial industry can’t use it for practical purposes. I’ve talked to dozens of people in finance about why they don’t use DSGE models, and some have indeed tried to use them -- but they always dropped the models after poor performance.

Most unfortunately, the Fed has had to go it alone when studying how the macroeconomy really works. Regional Fed banks and the Federal Reserve Board function as macroeconomic think tanks, hiring top-level researchers to do the grubby data work and broad thinking that academia has decided is beneath it. But that leaves many of the field’s brightest minds locked in the ivory tower, playing with their toys.

Fortunately, this may be changing. Justin Wolfers, a University of Michigan professor and well-known economics commentator, recently presented a set of slides at a conference celebrating the career of Massachusetts Institute of Technology economist Olivier Blanchard. The slides, although short, are indicative of the sea change underway in the macro field.

Wolfers discusses how some of the main pillars of modern academic macro theory are now being challenged. The idea of “rational expectations,” which says that people on average use the correct mental model of the economy when they make their decisions, is being challenged by top professors, and many are looking at alternatives.
But that’s just the beginning -- far deeper changes may be in the offing. Wolfers suggested abandoning DSGE models, saying that they “haven’t worked.” That he said this at a conference honoring Blanchard, who was an important DSGE modeling pioneer, is a sign that the winds have shifted.

In place of the typical DSGE fare, Wolfers suggests that the new macroeconomics will focus on empirics and falsification -- in other words, looking at reality instead of making highly imaginative assumptions about it. He also says that macro will be fertilized by other disciplines, such as psychology and sociology, and will incorporate elements of behavioral economics.

I’d go even farther. I think the new macroeconomics won’t just be new kinds of models and a more empirical focus; it will redefine what “macroeconomics” even means.

As originally conceived, macro is about explaining national-level data series like employment, output and prices. Eventually, economists realized that to explain those things, they would need to understand the smaller pieces of the economy, such as consumer behavior or competition between companies. At first, they just imagined or postulated how these elements worked -- that’s the core of DSGE.

Economists now realize that consumers and businesses behave in ways that are much more complicated and difficult to understand. So there has been increased interest in what’s called “macro-focused micro” -- studies of businesses, competition, markets and individual behavior that have relevance for macro even though they weren’t traditionally included in the field. Examples of this would include studies of business dynamism, price adjustment, financial bubbles and differences between workers.

Let’s hope more and more macroeconomists focus on these things, instead of trying to make big, grandiose, but ultimately vacuous models of booms and recessions. When we understand the pieces of the economy better, we’ll have a much better chance of grasping the whole. If this continues, maybe the ivory tower will have more relevance for the Fed, the financial industry and maybe even for our coffee-house discussions.

Friday 10 June 2016

Working-class Britons feel Brexity and betrayed – Labour must win them over

Owen Jones in The Guardian

If Britain crashes out of the European Union in two weeks, it will be off the back of votes cast by discontented working-class people. When Andy Burnham warns that the remain campaign has “been far too much Hampstead and not enough Hull”, he has a point. Even Labour MPs who nervously predict remain will scrape it nationally report their own constituencies will vote for exit. Polling consistently illustrates that the lower down the social ladder you are, the more likely you are to opt for leave. Of those voters YouGov deems middle-class,52% are voting for remain, and just 32% for leave. Among those classified as working-class, the figures are almost the reverse: 36% for remain, 50% for leave. The people Labour were founded to represent are the most likely to want Britain to abandon the European Union. 

When presented with a vote on the status quo, it is no surprise that those with the least stake in it vote to abandon it. The same happened in Scotland’s independence referendum. Threats of economic Armageddon resonate little with people living in communities that feel ignored, marginalised and belittled. “Economic insecurity beckons!” people who live in perpetual economic insecurity are told. A Conservative prime minister lines up with pillars of Britain’s establishment with a message of doom – and it makes millions of people even more determined to stick their fingers up at it.

The leave campaign knows all this. It is Trumpism in full pomp: powerful vested interests whose policies would only concentrate wealth and power even further in the hands of the few, masquerading as the praetorian guard of an anti-establishment insurgency dripping in anti-immigration sentiment. It is political trickery long honed by Ukip, a party led by a privately educated ex-City broker that claims to be the voice of the little guy against a self-interested powerful clique. If Donald Trump succeeds across the Atlantic, the terrible cost of leaving millions of working-class people feeling both abandoned and slighted will be nightmarishly clear. The same goes for this referendum.

What of Jeremy Corbyn, assailed for not making his voice heard more loudly? He is accused of secretly wishing leave to triumph. This is unfair. He is undeniably sceptical about the European Union in its current form, which puts him closer to the mainstream of British public opinion than a pro-Brussels ideologue. Stay in the EU to change it: that’s a message that certainly needs more emphasis. But the key fear of the Labour leadership is the Scottish scenario: if discontented Labour voters see their leaders parading with business tycoons and Tory cabinet ministers in a campaign of fear, they will abandon their party. Scottish Labour voters who opted for yes defected to the SNP en masse: this time, the fear goes, Ukip could be the beneficiaries.

It is certainly true that Labour’s coalition is fracturing. The Labour left – which has now assumed the party’s leadership – is in large part a product of London and its political battles from the 1970s onwards. London, of course, has increasingly decoupled from the rest of the country, economically and culturally. As the commentator Stephen Bush puts it, Labour does well “in areas that look like [the] UK of 30 years hence”: in particular, communities that are more diverse and more educated. In many major urban centres Labour thrives: witness the victory of Labour’s Marvin Rees in Bristol’s recent mayoral election. It is in working-class small-town Britain that Labour faces its greatest challenge. And it is these communities that may decide the referendum – as well as Labour’s future.

That’s why Labour’s remain effort needs to bring voices that resonate in northern working-class communities to the fore, such as Jon Trickett, who represents Hemsworth in West Yorkshire. These voices need to spell out the danger of workers’ rights being tossed on to a bonfire; to emphasise the real agenda of the leave leadership; and to argue that we can build a different sort of Europe. It would be foolish for either side to call this referendum. But unless a working-class Britain that feels betrayed by the political elite can be persuaded, then Britain will vote to leave the European Union in less than two weeks.

Patriotism and Matricide

Dr. A.K.Biswas in Outlook India

In the high noon of euphoria over mother, motherland and Bharat mata it is apt to recall what it all means or implies in a historical perspective. In bygone colonial India people chanted 'vande mataram' for invoking blessings of the divine mother for the cause of the motherland. But since mid-1930 it excited controversies which turned more complex on Rabindranath Tagore's outright rejection of the song as one that would unite all communities in India. In his letter to Subhas Chanda Bose (1937), the great poet wrote, "The core of Vande Mataram is a hymn to goddess Durga: this is so plain that there can be no debate about it. Of course, Bankim Chandra does show Durga to be inseparably united with Bengal in the end, but no Mussulman [Muslim] can be expected patriotically to worship the ten-handed deity as "Swadesh" [the nation].......When Bengali Mussulmans show signs of stubborn fanaticism, we regard these as intolerable. When we too copy them and make unreasonable demands, it will be self-defeating."1

Does the same logic and arguments Tagore advanced for Vande Mataram apply to Bharat mata ki jai?

Fanaticism albeit fundamentalism is not wanting even now as then. Manifestation of it in various part of the country has not been wanting among people with woeful proclivity, though they can be considered responsible and well meaning. Vast sections of Indians stood aloof from garish parade of patriotism in colonial days because of social reasons and factors hurting their dignity as human beings.

Sati or widow burning vis-a-vis patriotic pretension:

Till 1829. murdering women as sati on the altar of religion was a considered a sacred act till Lord William Bentinck banned sati. In the garb of religion, in a large portion of India, widows were mercilessly burned alive with the dead body of their husband, denying them the right to life. Saints, sages and seers were exponents of morbid doctrines against women. Sons, who nonchalantly burnt their mothers alive and claimed—and received too—unique respectability and recognition from the community and the country. What moral uprightness, in the circumstance, was there for such a son to resort to sloganeering: mother and motherland superior to heaven? Does such pretension edify the noble perception of the motherland for a son who, as religious duty, remorselessly committed matricide? At the beast he can claim a homeland, not or never a motherland. There is intractable or a baffling paradox. To elaborate the point two illustrations are fielded:

"A middle-aged Brahman widow, who would have inherited a fortune of Rs 3000 to Rs 4000 left by her husband, was burnt on the pyre by her husband's brothers, and no notice was given at the police station, which lay only four miles off. The miscreants were committed to the court of circuit and found guilty of having committed a blamable act, and to be liable for punishment; but the Sudder court acquitted them on appeal on ground that the practice was not prohibited by law. In 1829 Lord Bentinck put suttee into the category of crimes."2

Solely driven by pecuniary motives, brothers of the dead man in Rungpur had put the widow to death depriving her of the right of inheritance in Dayabhaga of the law of inheritance enunciated in by Sanskrit scholar Jeemutvahan. Their matricide did not stigmatize them as heinous offenders.

The Hindu was conditioned by dinning into his mind the teachings drawn from his scriptures. Angira, credited with compiling Rig Veda and one of the saptarishis (seven sages) had lent his stamp of approval to sati:

"There are 3,50, 000,00 hairs on the human body. The woman who ascends the pile with her husband , will remain so many years in heaven.

As snake catcher draws the serpent from its hole, so, she, rescuing her husband (from hell) rejoins him."

"The woman who expires on the funeral pile with her husband purifies the family of her mother, her father and her husband."
"If the husband be a brahmanicide, an ungrateful person, or a murderer of his friend, the wife by burning with him, purges his sins."3

What a long rope of temptation for paradise offered to the families of the husband, mother and father of the poor widow. As a caged and helpless animal, she had no escape route from the jaws of death on her husband's death. Angira was not alone to offer temptations. Another citation of the scripture designed for collection of crowd reads:

"The bystanders throw on butter and wood: for thus they are taught they acquire the merit  exceeding ten million-fold merit of asvamedha (horse sacrifice). Even those who join the procession from the house of the deceased to the funeral pyre for every step are rewarded as for an asvamedha. 

Such indulgence are are promised by grave authors."4

High pitched preaching of insensitive dimension perpetuated widow burning. In 1987, the sati of teenaged Roop Kanwar in village Deorala, Rajasthan, did not bring heads of vast section of Indians down by senses of shame or mortification.

Let me cite another ignoble direction on sati from Brahma Puran:

"If the husband be out of country when he dies, let the virtuous wife take his slippers (or anything else which belongs to his dress) and binding them (or it) on her breast, after purification, enter a separate fire."

Burning a widow with her husband's slippers? What a shoddy treatment prescribed by the scriptures for a widow! Bengal actually did boast of an instance when a widow was consigned to fire with the dress of her husband who died in far off north India.

What a son did to his mother in 1796 at village Majilpur near Jaynagar under district 24-Parganas some 15-20 miles to the south of Calcutta, was not only indelible disgrace to the Mother India but a tragedy for one who bore such a son for 10 months in her womb. The incident was as follows:

On the death of one Bancha Ram, a Brahman, his widow went to be burnt as sati with her husband's body. When all preparations for the event, as prescribed in the scriptures in this matter, were completed, she was fastened to the pyre, and fire kindled. The night was dark and rainy. According to Ward,

"When the fire began to scorch this poor woman, she contrived to disentangle herself from the dead body and creeping from under the pile, hid herself among some brush-wood. In a little time it was discovered that there was only one body on the pile. The relations immediately took the alarm, and searched the poor wretch; the son soon dragged her forth, and insisted that she should throw herself on the pile again or drown or hang herself. She pleaded for her life at the hands of her own son, and declared that she could not embrace so horrible a death—but she pleaded in vain; the son urged, that he should loose his caste, and that therefore he would die or she should. Unable to persuade her to hang or drown herself, the son and the others present then tied her hands and feet, and threw her on the funeral pile, where she quickly perished."5

Imagine a mother begging and beseeching for mercy from her son. The relentless and remorseless son simply stonewalled her fervent pleas. She implored but he brushed aside all soulful entreaties for fear and plea of losing his caste! Caste was above mother. Mother was not above caste. Still Indians believe mother is superior to heaven? Mother being below caste, heaven too is below caste.

What a delicious equation! India's time honoured psalm: mother and motherland are superior to heaven warrants rephrasing as—caste and caste-land are superior to heaven. Can such men who placed caste above mother's life have a 'motherland' when a son did not favour his mother with her life. Such sons cannot even hypothetically have a motherland which, instead, at the best be called 'homeland.'

Globally people of many nations place their country on a very high pedestal and hail them as motherland but nowhere has any of them committed matricides on one hand and pretended, on the other, that the motherland was superior to heaven.

Wednesday 8 June 2016

Coaching manual’s axe effect: When left is actually right


SURESH MENON in The Hindu


David Gower.


In Pakistan, Sadiq Mohammed turned to it to increase his chances of being picked for the side; in India, Sourav Ganguly converted so he could use his brother’s equipment; in Australia Mike Hussey was merely emulating his hero Allan Border.

These are all sound reasons for batting left-handed. But recent research has shown that there may be stronger scientific reasons than emotional or practical ones for the natural right-hander to bat left-handed.
It might seem illogical that batsmen should be classified according to the placement of their weaker hand or the use of the less dominant eye. The conventional right hander watches the approaching bowler with his left eye while the top hand, responsible for controlling and guiding the bat, is his weaker hand.

Gower’s logic

That elegant left-hander David Gower once said, “Both right-handers and left-handers have been horribly misnamed because the left-hander is really a right-hander and the right-hander is really a left-hander, if you work out which hand is doing most of the work. So from my point of view, my right arm is my strongest and therefore it’s the right hand, right eye and generally the right side which is doing all the work. Left-handers, as such, should be called right-handers.”

It is too late for that, of course!

It might be logical, though — but cricket is not a logical or natural sport like soccer is; it might even seem irrational, and that is part of its charm.

Gower’s position has recently been endorsed by science. Research in Amsterdam’s Vrije University suggests that a “reverse stance”, with the dominant hand on the top might be the most efficient way to bat, and successful international players use that technique. The paper is published in the journal Sport Medicine.

Professor Peter Allen who led the study said: “The ‘conventional’ way of holding a cricket bat has remained unchanged since the invention of the game. The first MCC coaching manual instructs batters to pick up a bat in the same manner they would pick up an axe.”

Besides Gower himself, Adam Gilchrist (who plays tennis right handed), Matthew Hayden, Kumar Sangakkara, Chris Gayle, David Warner, Ben Stokes are conventional left handers who are right-hand dominant, while the reverse is true in the case of batsmen like Michael Clarke and Inzamamul Haq. Sachin Tendulkar, uniquely, batted and bowled right-handed but signs autographs left-handed.

Left-handed batsmen benefit from being less common, with bowlers struggling to adapt. Left-handers play right-arm medium-pacers bowling across their bodies from round the wicket which feeds into their bread-and-butter strokes. The not-quite-glance, not-really-a-hook that left-handers play fine off their hips is unique to them. Both Gower and Lara played it exceptionally well.

Misnomer?

But did we really misname them, as Gower suggested? Coaches do tell their wards about the role of the top hand and the part played by the bottom hand in strokes such as the cut and pull. But few can explain why in that case, a batsman has to lead with his weaker side.

One possible explanation for the switch (if it is indeed that) may be that the drive being a stroke that calls for timing rather than power, the weaker top hand can handle that and leave the forcing strokes to the stronger hand. It is also easier for the bottom hand to manipulate the wrists when it needs to be rolled to keep the ball down.

In Right Hand, Left Hand, winner of the Aventis Prize for Science Books, Chris McManus says that around 10% of the population and perhaps 20% of top sportsmen are left-handed. He makes the point that left-handers have the advantage in asymmetric sports like baseball, where the right-handed batter has to run anti-clockwise towards first base after swinging and facing to his left.

Sometimes the asymmetries, he says, are subtle, as in badminton, where the feathers of the shuttlecock are arranged clockwise, making it go to the right, so smashes are not equally easy from left and right of the court. Sometimes, of course, the left-hander is at a total disadvantage, as in polo, where the mallet has to be held in the right hand on the right side of the horse, or in hockey, where the sticks are held right handed.

South Africa’s Graeme Pollock played tennis right-handed, but golf left-handed (he wrote with his right hand). Garry Sobers was left-handed in everything he did.

Indefinite conclusions

I don’t know what conclusions can be drawn from this. Perhaps the left-hander whose right hand is the stronger hand plays the top-hand shots like the drive better than most. And the one with the stronger left as bottom hand plays the shots square of the wicket better.

Coaching, cultural and visual biases may ultimately decide whether a child takes up his stance right-handed or left. From then on, familiarity and comfort dictate. As does pragmatism. The “dominant side” theory is usually a retrospective explanation.

Tuesday 7 June 2016

The British Parliament can ignore a Brexit verdict

Michael White in The Guardian


 
Brexiteers claim to revere the ancient British constitution, and ‘sovereignty’ is what it’s all about. Photograph: Carl Court/Getty Images


What if the Brexit camp wins the referendum on 23 June, as some polls are currently scaring sterling by suggesting? Could pro-remain MPs do as one anonymous minister told the BBC and use their parliamentary majority in a “reverse Maastricht” to protect UK access to the EU single market as part of the withdrawal?


They would do so, according to today’s enjoyable speculation, because they have an overwhelming cross-party majority to do so – 454 to 147 mostly rightwing Tories, on some calculations – and because they will be able to claim Brexit has not put up a coherent policy for Britain’s trade relationship with Brussels. It has put up many options, but has no mandate for many of them. 

The very thought of such defiance – here’s the BBC’s James Landale’s account – will have Brexiteers spluttering in their foreign coffee. How dare those MPs defy what will, they hope, be the sovereign will of the British people as expressed through the ballot box?

The short answer to that is simple: of course parliament can defy the referendum result, because the British constitution clearly states that “the crown in parliament” – ie a majority of elected MPs, subject to whatever the Lords tries to moderate – is sovereign.

Since Brexiteers claim to revere the ancient British constitution, and “sovereignty” is what it’s all about – not an excess of Polish plumbers or Bangladeshi restaurants – they can hardly complain about its correct and immaculate application.

There’s a second, telling point, which you will instantly remember when I point it out. Because parliament is sovereign, it can’t be bound, even by a referendum result. Legally speaking, the vote is only advisory.

So much for the legal situation by which many rigid minds think these matters are resolved. In the practical world of politics – politics is always more practical than theoretical – could it be done, if there was the political will among assorted parties to do so?

The short answer, again, is yes. Again the Brexiteers will cry outrage, but since they don’t have a coherent answer themselves it will be open to bold leaders to seize the initiative and sort things out the best way they can.

Remember, even the mud-splattered figure of Michael Gove admitted at the weekend that Britain would still be in the EU when the 2020 election takes place, and that withdrawal would be protracted and messy. Remember too that all sorts of awkward events would follow a Brexit vote.

Sterling would take a hit, so would inward investment and, probably, exports. The Bank of England is making plans. Foreign holders of UK assets – they hold a lot of cash and debt, lots of property of one kind or another – will look at the balance of payments on traded goods and levels of government debt and start moving on, as footloose foreigners do everywhere. They’re not here for the weather. Unions arerightly anxious.

So it would be stormy. “We would accept the mandate of the people to leave the EU,” says one unnamed minister, but everything else would be negotiable. Since they regard access to the EU single market as the most important component of the deal, that is what they would insist on. A majority of MPs from Labour, Lib Dem, Tories (not backbench Tories) and assorted nationalists, notably the 56-strong SNP contingent (suspended MPs included), could then insist on embracing the Norwegian model, one of the many mooted as the ideal relationship by the Brexit campaign.

Yes, I know, there are many others, including the World Trade Organisation’s (WTO) open market scenario. But that is unlikely to stand up to much exposure to the sunlight that would pour through every British window every day after a Brexit triumph – east and west facing windows at the same time, too.

So it would be up to David Cameron and his advisers to decide how best to proceed. Yes, I realise that amateur plotters in the Tory ranks are planning to unseat Cameron if he loses, and some of them if he wins – Matthew D’Ancona is urging Dave to get tough. Does he have it in him? Not sure, but here’s hoping.

This has been a damaging period for Tory unity and many nasty things have been said on both sides. But come the day a majority of MPs will realise that their more swivel-eyed colleagues are best left to their own devices while the humdrum reality of day-to-day real life and government is resumed. If Brexit wins there would be much to do, all day and every day, and a country to run as well.

Cameron would look the best man to do the job and it would be his duty not to slope off because it was his decision alone that dropped us into this referendum shambles, done for party tactical reasons. In normal times that would be enough to finish him off, but these are not normal.

Jeremy Corbyn regularly shows how unsuited he is for any heavy lifting – he’s getting the worst of both worlds by campaigning only feebly against Brexit – and neither Boris Trump nor Govey have emerged with much dignity from the campaign. I’d watch that Theresa May if I were you, Dave, but why wouldn’t she want Cameron to clean up his own dirty kitchen before taking over and giving it a makeover?

Tory papers like the Mail and Telegraph are outraged by the attacks made over the weekend by the likes of Sir John Major. Norman Tebbit – the Tory Tony Benn, disloyal to the point of treachery but not quite crossing the fellow travellers’ Ukip line – is fuming. It would be funny if it were not serious.

Back to the Maastricht rebellion, which so disfigured and weakened decent John Major’s years in office in the 90s when, like Cameron now, he only had a wafer-thin majority. Actually Major did pretty well at the treaty negotiations, his opt-outs kept us out of the euro among other things. Were the ingrates grateful? Of course not. As Ken Clarke once witheringly put it, they are middle-aged (now elderly) men who feel their lives have not been sufficiently exciting.

The Maastricht years were a shambles, good sport for reporters like me, but grim. Yet it is diehard Maastricht disloyalists like Tebbit, John “Vulcan” Redwood and dear but daft Bill Cash who are now crying loyalty; Iain Duncan Smith, who inherited Tebbit’s Chingford seat, too. No wonder Major was so scornful.

Not since Jeremy Corbyn, serial rebel in 500 votes, appealed for loyalty from old comrades to whom he had shown little has there been such cause for dry mirth. Ah, but Iain and Jeremy were doing what they believe in and what their constituents want, will come the retort. And you think that pro-remain MPs can’t say that too?

So the “reverse Maastricht” tactic is both legal and politically feasible. All it would take – the Norway model or any that looks better on the day – is leadership and willpower. Nicola Sturgeon would be a more slippery but also more reliable ally for Cameron (pause for ironic laughter) than Corbyn-led Labour.

But what about the free movement of EU labour in and out of the UK, which Norway’s deal would require us to embrace as part of the price for access? Correct, but for all its populist talk and tabloid extravagance about immigration, Brexiters have not cracked that one either. And they’ve still got to win. Two weeks to go.

Voters believe that even if they did exercise their right to leave the EU, the politicians wouldn’t obey them.



Aditya Chakrabortty in The Guardian


 
‘Voters believe that even if they did exercise their right to leave the EU, the politicians wouldn’t obey them.’ Illustration by Matt Kenyon


Neil was speckled with paint from his trousers to his spectacle lenses, and had come straight from work to the vape shop. When I asked which side he’d be backing in the EU referendum, he projected as if addressing a rally. He wanted everyone to know he was damned if he was going to vote. “It’s an illusion that we’ve got a say in it. We don’t live in a democracy. The day of having a common working man standing for us here or in Europe – it’s over.”

We were in Pontypool, south Wales. As a valleys boy (“I smell of sheep”), Neil had been brought up Labour. But now, “It’s all lies, isn’t it?” Then came the sins: Blair “a big liar”; the political class in the pockets of the bankers.

It was the refrain I kept getting last week across south Wales – and have heard in many other regions too. That dissolution in old loyalties, that breakdown in trust, runs wide and deep – and it already marks the referendum on 23 June. Opinion polls show that voters believe that even if they did exercise their right to leave the EU, the politicians wouldn’t obey them. This is what a democratic crisis looks like.

Although journalists often remind us that this is the first vote the British have had on Europe in 40 years, they rarely dwell on what happened last time round. Yet the torchlight of history shows just how much has changed. While today’s polls show leave and remain neck and neck, the 1975 referendum on whether Britain should stay in the European Economic Community was as good as won before it was even announced. The then prime minister, Harold Wilson, led a coalition of the establishment – all three parties, the unions, the business lobbies, the press – and emerged with a 2:1 majority to stay in.

Europhoria” is how the Guardian reported the results. Its leader began: “Full-hearted, wholehearted and cheerful hearted: there is no doubt about the ‘yes’.” Imagine anything even close to that being said in two weeks’ time – after months of sullen and sour campaigning, of close colleagues branding one another “liars”, “luxury-lifestyle” politicians and “Pinocchio”.

“Wilson would never have asked a question of which he couldn’t be confident of the answer,” says historian Adrian Williamson. Contrast that with David Cameron, who once claimed he wanted to be prime minister because he’d be “rather good at it”, but now resembles a short-tempered supply teacher struggling to control his own class.

Panicked by a fear of Nigel Farage and the ultras in his own party, the Tory leader has staged a referendum for which there was little public appetite and which he may now, incredibly, lose.

Months were spent trailing a deal that the prime minister was going to strike with Germany’s Angela Merkel and the rest – a rewriting of the rules that was going to form the basis of this referendum. You’ve barely heard about that deal since.
Posed a question few of them were actually asking, voters have wound up raising their own. Why haven’t my wages gone up? How will the kids get on the housing ladder? When will my mum get her knee replacement? All good questions, none of which are actually on the ballot paper. The likely result is that on 23 June, many of those who do vote will try to squeeze a multitude of other answers into one crude binary.

In 1975 Roy Jenkins, another son of Welsh coal and steel, explained the result as: “The people took the advice of people they were used to following.” Classic Jenkins, but also an expression of the classic role of mass political parties. When they had millions of members, both Labour and the Conservatives served as the brokers between the people they represented and the “experts”, the authoritative midpoint between ideology and empirics.

Neither party can claim to be mass any more, least of all the Tories – low on members, bankrolled by hedge funds and the City. This creates what Chris Bickerton, politics lecturer at Cambridge, calls “the crisis of political mediation”.

No longer claiming the same democratic legitimacy as their predecessors, Cameron and George Osborne have had to borrow their authority from other sources: Mark Carney and the Bank of England, the International Monetary Fund, the Treasury. These technocrats, much cited by broadcasters and jittery remainers, are one of the two main sources of authority in our democracy. The other is the post-truth brigade, as channelled by Boris Johnson and Michael Gove, who advise voters to ignore the nuance, trust their gut – and blame migrants or the Brussels fatcats.

British democracy in 2016 comes down to this: a prime minister can no longer come out and say something and expect to be believed. He or she must wheel out a common room-full of experts. He or she can expect to be called a liar in the press and by their colleagues. He or she can only hope that some of what they say resonates with an electorate that has tuned them out.

And mainstream politicians have only themselves to blame. Over the past three decades, Britons have been made a series of false promises. They have been told they must go to war with a country that can bomb them in 45 minutes – only to learn later that that was false. They have been assured the economy was booming, only to find out it was fuelled by house prices and tax credits.

New Labour pledged an end to Margaret Thatcher’s unfairness, except that – as the Centre for Research into Socio-Cultural Change has shown – the richest 20% of households scooped as much of the income growth under Brown and Blair as they had under the Iron Lady.

Britons were told austerity would last five years, tops – although we will now endure at least a decade.

And the people of south Wales were told new industries would replace the coal and steelworks. Looking out of the shop window, Neil remembered how Pontypool on market days like today would be “rammed”. Now it was half-empty. “It’s dead now, because they took what they wanted,” he said. “Thatcher smashed the unions. There used to be coalmines all around here. Boosh – we’re out of here. They’ve moved on.”

Cameron and the rest of the political class are learning a lesson the hard way. You can only break your promises to the public so many times before they refuse to put any more trust in you. After that, you have to rely on Threadneedle Street and the Treasury to corrode their own finite reputation for impartiality.

Whichever way the ballots go on 23 June, the public will continue returning a vote of no-confidence in Westminster for a long time to come.

Monday 6 June 2016

When left alone in a room, people preferred to give themselves electric shocks than quietly sit and think. Why do smart people do stupid things?

Andre Spicer in The Guardian

Thinking is hard work and asking tough questions can make you unpopular. So it’s no wonder that even clever people don’t always use their brains

Scene from The Big Bang Theory: ‘Having a high IQ score does not mean that someone is intelligent.’ Photograph: CBS/Everett/Rex


We all know smart people who do stupid things. At work we see people with brilliant minds make the most simple mistakes. At home we might live with someone who is intellectually gifted but also has no idea. We all have friends who have impressive IQs but lack basic common sense.

For more than a decade, Mats Alvesson and I have been studying smart organisations employing smarter people. We were constantly surprised by the ways that these intelligent people ended up doing the most unintelligent things. We found mature adults enthusiastically participating in leadership development workshops that wouldn’t be out of place in a pre-school class; executives who paid more attention to overhead slides than to careful analysis; senior officers in the armed forces who preferred to run rebranding exercises than military exercises; headteachers who were more interested in creating strategies than educating students; engineers who focused more on telling good news stories than solving problems; and healthcare workers who spent more time ticking boxes than caring for patients. No wonder so many of these intelligent people described their jobs as being dumb.

While doing this research I realised that my own life was also blighted with stupidities. At work I would spend years writing a scientific paper that only a dozen people would read. I would set exams to test students on knowledge I knew they would forget as soon as they walked out of the examination room. I spent large chunks of my days sitting in meetings which everyone present knew were entirely pointless. My personal life was worse. I’m the kind of person who frequently ends up paying the “idiot taxes” levied on us by companies and governments for not thinking ahead.

Clearly I had a personal interest in trying to work out why I, and millions of others like me, could be so stupid so much of the time. After looking back at my own experiences and reading the rapidly growing body of work on why humans fail to think, my co-author and I started to come to some conclusions.

Having a high IQ score does not mean that someone is intelligent. IQ tests only capture analytical intelligence; this is the ability to notice patterns and solve analytical problems. Most standard IQ tests miss out two other aspects of human intelligence: creative and practical intelligence. Creative intelligence is our ability to deal with novel situations. Practical intelligence is our ability to get things done. For the first 20 years of life, people are rewarded for their analytical intelligence. Then we wonder why the “best and brightest” are uncreative and practically useless.

Most intelligent people make mental short cuts all the time. One of the most powerful is self-serving bias: we tend to think we are better than others. Most people think they are above average drivers. If you ask a class of students whether they are above the class average in intelligence, the vast majority of hands shoot up. Even when you ask people who are objectively among the worst in a certain skill, they tend to say they are above average. Not everyone can be above average – but we can all have the illusion that we are. We desperately cling to this illusion even when there is devastating evidence to the contrary. We collect all the information we can find to prove ourselves right and ignore any information that proves us wrong. We feel good, but we overlook crucial facts. As a result the smartest people ignore the intelligence of others so they make themselves feel smarter.

Being smart can come at a cost. Asking tricky questions, doing the research and carefully thinking things through takes time. It’s also unpleasant. Most of us would rather do anything than think. A recent study found that when left alone in a room, people preferred to give themselves electric shocks than quietly sit and think. Being smart can also upset people. Asking tough questions can quickly make you unpopular.

Intelligent people quickly learn these lessons. Instead of using their intelligence, they just stay quiet and follow the crowd – even if it is off the side of a cliff. In the short term this pays off. Things get done, everyone’s lives are easier and people are happy. But in the long term it can create poor decisions and lay the foundations for disaster.

Next time I find myself banging my own head and asking myself “Why are you so stupid?”, I will try to remind myself that I’m trapped in the same situation as many millions of others: my own idiocy probably came with a payoff.