Friday, December 21, 2012

It's the Whole Enchilada, Sister.

Since he correctly predicted the re-election of Barack Obama, American meta-pollster Nate Silver has become a bit of a cult-hero for the ill-defined left in the US and even abroad.

In part, that's understandable, considering the bullying Silver endured from the Republican commentariat.

That's why also American lefty Cathy O'Neil's smackdown on Silver catches my attention powerfully.

I haven't read Silver's book on modelling (the object of O'Neil's fury). But O'Neil makes a quite negative review of it, not on the technical aspects (which she evaluates positively, in essence), but on the general political and philosophical orientation of Silver's work.

I can't say how fair are O'Neil's criticisms of Silver's politics (or his alleged "technocrato-philia"), but I sympathize with her when she says things like these:
"We didn't have a financial crisis because of a bad model or a few bad models. We had bad models because of a corrupt and criminally fraudulent financial system.
"That's an important distinction, because we could fix a few bad models with a few good mathematicians, but we can't fix the entire system so easily. There's no math band-aid that will cure these boo-boos."
I won't pretend that I know much about the mathematical details. But what O'Neil says is evident to anyone following the news. I don't know about you, but I still remember Goldman Sachs' Fabrice Tourre's emails to his then girlfriend, made public in 2010:
"Darling you should take a look at this article... Very thoughtful... More and more leverage in the system, l'edifice entier risque de s'effondrer a tout moment... Seul survivant potentiel ['the whole building risks collapsing at any moment, the only potential survivor', my translation], the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt me, just kindness, altruism and deep love for some gorgeous and super-smart French girl in London), standing in the middle of all these complex, highly levered, exotic trades he created without necessarily understanding all the implications of those monstruosities [sic]!!! Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself !!!"

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Unfortunately, O'Neil's criticism itself falls short of the mark. It's not just the financial system that stinks: it's the whole capitalist enchilada that is rotten to the core.

Let's put this "monstruosity" out of its misery, before it drags us all even deeper into shit.

2 comments:

  1. Silver's book also got a slap on environmental grounds, too. I'll still probably give it a look, eventually.

    ReplyDelete
  2. Sorry I didn't reply earlier, A.

    I liked this bit:

    "Nate also takes some unnecessary cheap shots. In what has now become a rite of passage for those looking to establish their 'honest broker' bona fides in the climate change debate, Nate makes the requisite 'punch the hippie'"

    I guess, that's a new version of the old "punch Marx". You know, like those guys who would come out this year and the previous one saying things like Marx was right on this or that, Marx could save capitalism (!!!).

    But, to make sure they kept their credibility, those guys would make it clear at the very beginning of the text that they would not condone anything Marxist.

    Because, you know, old Marx is to be blamed for everything, from Stalin, down to Mao and even Hitler; plus the Spanish influenza, the 2004 tsunami and the Challenger and Columbia disasters.

    ReplyDelete