Hajaar polemics we've seen on the root (shoot?) causes of the near-meltdown and all. Some were witty and entertaining even if dead serious. Well, here's another in that genre from one sri Orlov.
The limits of incompetence
Hilariously tragic read, IMHO.
But it seems that each and every one of us is forced to plead incompetence when presented with the task of judging the value of various figments of financial imagination which comprise fully half of the increasingly fictional US economy, for the depths of incompetence on which this crumbling edifice floats are truly unfathomable. It started with incompetent public officials who blithered on about “ownership society,” which is a boneheaded idea. This, in turn, empowered individuals who were incompetent to make financial decisions to borrow vasts sums of money, with the loans backed by an implicit government guarantee. It proceeded to incompetent appraisers, who inflated the value of the collateral based on circular reasoning (value = price = value), and to incompetent bankers, who improperly documented, resold and bundled the loans into unfathomably faulty Collateralized Debt Obligations. It proceeded to incompetent government officials who treated these faulty documents as valuable and backed up their value with public money which they are yet to collect in taxes. It proceeded to incompetent judges who rush through foreclosures and throw people out of their homes based on faulty or nonexistent documentation of ownership.
Yup, ended up bolding the whole darn thing, just as I suspected....hrrrmph. Anyway, take with some salt the level of polemic/rhetoric and all. If only to cushion our own fragile sensitivities the impact of the implications of the import.
An attempt to unscramble all of the faulty financial paperwork is bound to lead to a ridiculous death by a thousand paper cuts. About half of the US economy consists of financial froth that is floating above an unfathomable abyss of incompetence, and once that froth blows away, what will remain of the US economy will turn out to look like a deflated, shriveled little thing, at a standstill because it will be unable to borrow internationally to finance fuel imports, full of defunct financial institutions right up to and including the Federal Reserve, with a worthless currency that nobody is willing to accept as payment, and full of people furiously shaking their tiny fists, hurling their impotent rage at an indifferent sky.
Oh my gosh, the guy can ear-wax eloquent or what. Take with salt only, people, in the interest of maintaining sanity and facades.
Krueger and Dunning, and other experimenters, have shown this effect to be quite pronounced. Competent people initially assumed that others were competent as well, and were able to correct their misperception once they were allowed to examine the work of others. Incompetent people, on the other hand, were only able to recognize competence in others after being taught to recognize their own incompetence. Thus, a weaker version of point 4 above suffices: incompetent people do not need to become competent, but to able to judge the superior competence of others they do have to gain some insight into their own incompetence.
But now comes an embarrassing fact: Krueger and Dunning carried out their initial research on American subjects, and their results squared well with their hypothesis, but when their experiments were repeated with Europeans and East Asians, a different picture emerged. With Europeans, the effect seemed barely measurable, while with East Asians the exact opposite picture emerges: Dr. Steven Heine of the University of British Columbia has found that East Asians tend to underestimate their abilities, focusing on self-improvement and group cohesion. I have come across examples of such a systematic error before.
Generalizations galore. Wonder what 'south asians' are like on the competence-assessment scale. The inclusion of paquis in south asian would present an outlier-heavy sample skewing and screwing results beyond comprehension.
Recommended read-it-all, janta.
Jai ho and all.
