Comments on: Grateful For Bad News http://www.overcomingbias.com/2008/10/grateful-for-ba.html Overcoming Bias is economist Robin Hanson’s blog, on honesty, signaling, disagreement, forecasting, and the far future. Sun, 12 Feb 2012 03:06:37 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: David J. Balan http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394659 David J. Balan Wed, 22 Oct 2008 19:15:47 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394659 I don't think we're being careful enough with the word "tyranny." We would both probably agree that being able to write what you want in a newspaper is a basic right, that it would take a very compelling public interest to justify supressing that right, and that suppressing it without such a compelling interest would in-and-of-itself constitute tyranny. You (I think) would say the same about being able to bet how you want. I would disagree (though not completely), but let's grant the point for argument's sake. Then there is the futher issue that suppression of free speech is extra bad because it is particularly dangerous, because it can bring about Hitler/ Stalin style tyranny, which is much worse than the suppression of free speech itself. My claim is that supression of betting rights is not correspondingly dangerous, and therefore does not deserve the same level of protection. I don't get the thing about the web posts. That clearly is just a contemporary version of a newspaper. I don’t think we’re being careful enough with the word “tyranny.” We would both probably agree that being able to write what you want in a newspaper is a basic right, that it would take a very compelling public interest to justify supressing that right, and that suppressing it without such a compelling interest would in-and-of-itself constitute tyranny. You (I think) would say the same about being able to bet how you want. I would disagree (though not completely), but let’s grant the point for argument’s sake. Then there is the futher issue that suppression of free speech is extra bad because it is particularly dangerous, because it can bring about Hitler/ Stalin style tyranny, which is much worse than the suppression of free speech itself. My claim is that supression of betting rights is not correspondingly dangerous, and therefore does not deserve the same level of protection.

I don’t get the thing about the web posts. That clearly is just a contemporary version of a newspaper.

]]> By: Robin Hanson http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394658 Robin Hanson Wed, 22 Oct 2008 18:34:20 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394658 David, tyrants have and continue to limit the topics on which we can bet. And the fact that Hitler and Stalin did not ban web posts seems a poor reason to be unconcerned about web post bans now. David, tyrants have and continue to limit the topics on which we can bet. And the fact that Hitler and Stalin did not ban web posts seems a poor reason to be unconcerned about web post bans now.

]]> By: David J. Balan http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394657 David J. Balan Wed, 22 Oct 2008 16:51:43 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394657 I think this is just a case where the obvious answer is the right one. There are many examples where real tyranny has advanced itself by doing things like placing restrictions on what you're allowed to write in a newspaper, so we are (rightly) particularly sensitive to that in a way that we're not to other things. I think this is just a case where the obvious answer is the right one. There are many examples where real tyranny has advanced itself by doing things like placing restrictions on what you’re allowed to write in a newspaper, so we are (rightly) particularly sensitive to that in a way that we’re not to other things.

]]> By: Robin Hanson http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394656 Robin Hanson Wed, 22 Oct 2008 16:18:49 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394656 David, you've only talked about deep reasons for "free speech". In order to explain why we should ban speculative trading but still allow newspapers, we need reasons why the first is not, but the second is, "free speech." After all, both are primarily news institutions. Why protect some forms of news but not others? David, you’ve only talked about deep reasons for “free speech”. In order to explain why we should ban speculative trading but still allow newspapers, we need reasons why the first is not, but the second is, “free speech.” After all, both are primarily news institutions. Why protect some forms of news but not others?

]]> By: David J. Balan http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394655 David J. Balan Wed, 22 Oct 2008 14:44:58 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394655 Robin, the "deep reasons" are merely the standard (but good) ones. A core principle of liberal society is that individual self-expression is both a fundamental right and a key element of limiting governmental abuse. So we've put up a high fence around that principle, making it very hard for the government to get away with saying "we need to suppress free speech for a little while, just until things settle down." And rightly so, even though it may occasionally help a bad situation, we forbid it anyway because we see how easily it could be abused and made into an excuse for plain old governmental control of information. No such core principle is at stake in the operation of financial markets. Robin, the “deep reasons” are merely the standard (but good) ones. A core principle of liberal society is that individual self-expression is both a fundamental right and a key element of limiting governmental abuse. So we’ve put up a high fence around that principle, making it very hard for the government to get away with saying “we need to suppress free speech for a little while, just until things settle down.” And rightly so, even though it may occasionally help a bad situation, we forbid it anyway because we see how easily it could be abused and made into an excuse for plain old governmental control of information. No such core principle is at stake in the operation of financial markets.

]]> By: frelkins http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394654 frelkins Wed, 22 Oct 2008 12:40:10 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394654 @David "All that self-fulfilling prophecy stuff could, in principle, be a good reason for shutting down financial markets for a short time." No. Historically, shutting the market seems to have only made things worse when it re-opened. For an example we all remember, take the market shutdown after 9-11. There the market closed for a shocking week, supposedly to prevent panic. Yet when the market re-opened, the panic happened anyway: the market dove 7.13% on Sept. 17, 2001. Further in this case since the situation is/was global, wouldn't all major markets have had to shut down at the same time to prevent "panic shift?" Such a co-ordinated shut-down perhaps would make sense only in the context of, say, a united G8 announcement on a unified restructuring or unified regulations. Extraordinary measures like closing the market only makes people think things must be much worse than they know, because the market carries so much information. When people suddenly are cut off from information, that's what's paralyzing and frightening. Without information people can't plan, and when they can't plan, they feel like they don't have control - that's what causes fear. @David

“All that self-fulfilling prophecy stuff could, in principle, be a good reason for shutting down financial markets for a short time.”

No. Historically, shutting the market seems to have only made things worse when it re-opened. For an example we all remember, take the market shutdown after 9-11. There the market closed for a shocking week, supposedly to prevent panic. Yet when the market re-opened, the panic happened anyway: the market dove 7.13% on Sept. 17, 2001.

Further in this case since the situation is/was global, wouldn’t all major markets have had to shut down at the same time to prevent “panic shift?” Such a co-ordinated shut-down perhaps would make sense only in the context of, say, a united G8 announcement on a unified restructuring or unified regulations.

Extraordinary measures like closing the market only makes people think things must be much worse than they know, because the market carries so much information. When people suddenly are cut off from information, that’s what’s paralyzing and frightening. Without information people can’t plan, and when they can’t plan, they feel like they don’t have control – that’s what causes fear.

]]> By: Robin Hanson http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394653 Robin Hanson Wed, 22 Oct 2008 11:39:27 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394653 David, that would have been an opportune time to mention the "lot of deep reasons." David, that would have been an opportune time to mention the “lot of deep reasons.”

]]> By: David J. Balan http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394652 David J. Balan Wed, 22 Oct 2008 04:04:11 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394652 All that self-fulfilling prophecy stuff could, in principle, be a good reason for shutting down financial markets for a short time (I"m not saying that is the case here). Robin seems to suggest that believing this requires one also to believe that it would be good to shut down newspapers. This does not follow: we have a lot of deep reasons why the government shouldn't be allowed to shut down newspapers, even during an emergency, that don't apply to shutting down the financial markets. All that self-fulfilling prophecy stuff could, in principle, be a good reason for shutting down financial markets for a short time (I”m not saying that is the case here). Robin seems to suggest that believing this requires one also to believe that it would be good to shut down newspapers. This does not follow: we have a lot of deep reasons why the government shouldn’t be allowed to shut down newspapers, even during an emergency, that don’t apply to shutting down the financial markets.

]]> By: michael e sullivan http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394651 michael e sullivan Fri, 17 Oct 2008 19:10:10 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394651 <i> I'm no banker, but... it seems to me that any asset, the primary value of which is expected buy-in by third parties (and not any intrinsic earning potential), is a pyramid scheme. You can pretty it up and tangle it in fancy talk, but in the end the first guys get rich and the last guys get screwed, and then the whole thing blows up. So why is selling them legal? </i> Because it's turtles all the way down. Just try to come up with an asset, *any* asset, that at it's core isn't based on what people will pay/trade you for it (or something it is based on). That's the fundamental definition of value. "fundamentals" of securities are still generally fiat money numbers which could become worthless in the event of hyperinflation. Earnings which can evaporate under bad business conditions. And what are bad business conditions? Merely conditions where what people will pay for your service has fallen. It's all ultimately about whether the asset is worth something, there is no ontological market value.
I’m no banker, but… it seems to me that any asset, the primary value of which is expected buy-in by third parties (and not any intrinsic earning potential), is a pyramid scheme. You can pretty it up and tangle it in fancy talk, but in the end the first guys get rich and the last guys get screwed, and then the whole thing blows up.

So why is selling them legal?

Because it’s turtles all the way down.

Just try to come up with an asset, *any* asset, that at it’s core isn’t based on what people will pay/trade you for it (or something it is based on).

That’s the fundamental definition of value.

“fundamentals” of securities are still generally fiat money numbers which could become worthless in the event of hyperinflation. Earnings which can evaporate under bad business conditions. And what are bad business conditions? Merely conditions where what people will pay for your service has fallen. It’s all ultimately about whether the asset is worth something, there is no ontological market value.

]]> By: Richard Hollerith http://www.overcomingbias.com/2008/10/grateful-for-ba.html#comment-394650 Richard Hollerith Tue, 14 Oct 2008 04:32:14 +0000 http://prod.ob.trike.com.au/2008/10/grateful-for-bad-news.html#comment-394650 Banking and finance should be boring and effective. If they become the subject of electrifying news stories and all-night emergency meetings high officials, something is wrong. Banking and finance should be boring and effective. If they become the subject of electrifying news stories and all-night emergency meetings high officials, something is wrong.

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