Friday, 2 December 2011

It's just so OBVIOUS

It's just so obvious, I'm amazed everyone else is just so bloody thick they can't see it. It must be because they haven't read as much as me.


The Coalition government are hell bent on finishing off what Thatcher started by rolling back the public sector to fund ideologically driven tax cuts. This is taking money out of the economy just when higher government spending is exactly what's needed. This means we're heading into another recession, which means we'll end up borrowing even more than we were before. The government have no idea about basic macroeconomics, Nobel Laureates Paul Krugman and Joseph Stiglitz have been warning for years that the austerity experiment will not only fail, but ruin Britain's economy for the next decade.

But the Tories don't care. All they care about is protecting the wealth of their core voters, the rich. The injustice is all the more infuriating seeing as it was the bankers that caused the financial crisis in the first place, yet they still seem to be doing just fine. The rich protect the rich, they couldn't care less about everyone else. So public sector workers do the only thing they can to protect themselves, they strike... and so they should. They're the ones who look after the poor, the sick, the needy and they've done nothing to cause any of this. It is the clearest case of Right vs Wrong since, well, since ever.

But then on the other hand...


Striking public sector workers are taking the piss. They've got more generous pensions than their equivalents in the private sector and its the tax revenues from the private sector that actually pay for them. It used to be the case that you got less money for working in the public sector because you had extra job security. Now, despite the approaching redundancies, the public sector have greater job security AND a pay premium. In the private sector, workers have been getting their pay cut if they're lucky enough to just not lose their job. So, public sector people, you want more money? Yeah, no shit, don't we all.

The government just HAS to cut spending. The bond markets wanted a signal that spending was going to be brought under control. Clegg flipped from his pre election position because he believed he simply had no choice. Anyone who doesn't understand that doesn't grasp basic game theory. Veteran investors like Jim Rogers and Bill Gross warned that investors were close to losing faith in the British government. You only have to look at what's going on in Greece, Italy and the rest of Europe to see what happens if you don't placate the bond markets.

Taxing the bankers is one solution, but if they all move to Hong Kong, the government will be getting 60% of nothing instead of whatever they collect now. Besides, the top 1% of income tax earners are already paying over 25% of all income tax revenues. Given the choice of funding generous public sector pensions or cutting income tax for the low paid, I'd go for the latter.


Either, they are both plausible. Believing one over the other doesn't make you intelligent or ignorant. There is plenty of evidence out there to support either argument and I don't think the morality of one position is obviously superior to the other.

Now, I love Twitter and Facebook as sources of information. Twitter knows everything before I do and Facebook is a great way to keep in touch with all my friends in London now that I live in Bristol. But this week, the only thing I've learnt is how much my teacher friends hate bankers/Tories, and how much my banker/entrepreneur friends hate the unions.

Perversely, now that we all communicate via Twitter and Facebook and can talk to almost anyone, we increasingly only hear from the people we agree with. Sure, some of us follow the odd journo from the other side, just to stay informed. But, I'm betting most of us mainly click on links from the people we already agree with. Your Facebook homepage now runs off an algorithm that gives increased prominence to friends whose links you click on more regularly. So the more someone posts something you want to read, the more you hear from them.

This is a problem. The more we hear an opinion, the more we believe it. Psychological research shows that we confuse repeated information with new information (among others... Hawkins & Hoch, 1992; Kahneman & Tversky, 1973). Someone tells you something twice, you believe it more the second time, even though its the same information. More to the point, if person A tells you something and person B tells you the same, you tend to treat person B's information as 'new'. You will do this even if you know person B found this information out from person A in the first place. Anyone who has ever spread or heard gossip (i.e. everyone) should be familiar with this phenomenon.

As much as I love Twitter and Facebook, they are more or less a never ending stream of opinions, skewed towards the viewpoint you already have. The same goes for any news source. We tend to think that just because we're spending lots of time collecting information, we're actually learning something 'new'. Actually, most of the time, we're just hearing repetitions. These repetitions make us more certain we're right, when we're often no more informed than we were at the start. Its like the example I gave above of persons A and B, but its happening thousands of times a day in a network so complex we can't even begin to compute its underlying structure and therefore the true value of the 'new' information we are receiving.

If we acknowledge that we vastly overstate our certainty, then we can shrug our shoulders and admit that in truth, we're not really too sure about exactly what is 'right' and 'wrong'. We might then be able to talk to each other with a bit more humility and without making any wild conclusive statements.

But then I suppose, where would be the fun in that?

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