Thought this was pretty good, Arthur.
Essentially, Greenspan, Bernanke, and Summers, can’t count! He didn’t spend a lot of space in his tales of bubbling on the fact that while some people lose, other people win, though the point is made that the dot.com crash may have been positive with the success of Amazon, Google, Yahoo, E-Bay, and suchlike. But, it’s like a poker game played upstairs. The same amount of money comes down as went up – but now is in different hands. The people who came downstairs with the money in the real estate crash were the landholders. After the crash, the home-owners lost out. The banks held mortgages with land as collateral and land values dropped so they lost out. The landholders spent the summer in the Bahamas. The big landholders bought begin to buy back land at lower prices making a good profit, but that’s what always happens at the bottom of the so-called “business cycle” and leads to the land ownership concentration that is evident everywhere. Harry From: [email protected] [mailto:[email protected]] On Behalf Of Arthur Cordell Sent: Thursday, August 05, 2010 12:19 PM To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION' Cc: [email protected] Subject: [Ottawadissenters] FW: paper on technology manias and gullibility This paper might be of interest to some. Arthur ========================= http://www.dtc.umn.edu/~odlyzko/doc/mania03.pdf Bubbles, gullibility, and other challenges for economics, psychology, sociology, and information sciences Andrew Odlyzko School of Mathematics and Digital Technology Center University of Minnesota [email protected] <mailto:odlyzko%40umn.edu> http://www.dtc.umn.edu/~odlyzko Preliminary version, August 5, 2010 ABSTRACT Gullibility is the principal cause of bubbles. Investors and the general public get snared by a "beautiful illusion" and throw caution to the wind. Attempts to identify and control bubbles are complicated by the fact that the authorities who might naturally be expected to take action have often (especially in recent years) been among the most gullible, and were cheerleaders for the exuberant behavior. Hence what is needed is an objective measure of gullibility. This paper argues that it should be possible to develop such a measure. Examples demonstrate, contrary to the efficient market dogma, that in some manias, even top-level business and technology leaders do fall prey to collective hallucinations and become irrational in objective terms. During the Internet bubble, for example, large classes of them first became unable to comprehend compound interest, and then lost even the ability to do simple arithmetic, to the point of not being able to distinguish 2 from 10. This phenomenon, together with advances in analysis of social networks and related areas, points to possible ways to develop objective and quantitative tools for measuring gullibility and other aspects of human behavior implicated in bubbles. It cannot be expected to infallibly detect all destructive bubbles, and may trigger false alarms, but it ought to alert observers to periods where collective investment behavior is becoming irrational. The proposed gullibility index might help in developing realistic economic models. It should also assist in illuminating and guiding decision making. ---------------------------------------------------------- ----- The previous three papers in this series are available at: 1. Collective hallucinations and inefficient markets: The British Railway Mania of the 1840s http://www.dtc.umn.edu/~odlyzko/doc/hallucinations.pdf 2. This time is different: An example of a giant, wildly speculative, and successful investment mania, B.E. Journal of Economic Analysis & Policy, vol. 10, issue 1, 2010, article 60 (registration required) http://www.bepress.com/bejeap/vol10/iss1/art60 preprint available at: http://www.dtc.umn.edu/~odlyzko/doc/mania01.pdf 3. The collapse of the Railway Mania, the development of capital markets, and Robert Lucas Nash, a forgotten pioneer of accounting and financial analysis http://www.dtc.umn.edu/~odlyzko/doc/mania02.pdf ---------------------------------------------------------- ----- Source materials for the Railway Mania and the Internet bubble are available at the web pages http://www.dtc.umn.edu/~odlyzko/rrsources/ and http://www.dtc.umn.edu/~odlyzko/isources/ __._,_.___ Reply to <mailto:[email protected]?subject=fw:%20paper%20on%20technology%20manias%20and%20gullibility> sender | Reply to <mailto:[email protected]?subject=fw:%20paper%20on%20technology%20manias%20and%20gullibility> group | Reply <http://groups.yahoo.com/group/Ottawadissenters/post;_ylc=X3oDMTJyZjZsdGM1BF9TAzk3MzU5NzE0BGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRtc2dJZAMxMjYzMARzZWMDZnRyBHNsawNycGx5BHN0aW1lAzEyODEwMzU5Mzg-?act=reply&messageNum=12630> via web post | <http://groups.yahoo.com/group/Ottawadissenters/post;_ylc=X3oDMTJmcmdkZjZrBF9TAzk3MzU5NzE0BGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRzZWMDZnRyBHNsawNudHBjBHN0aW1lAzEyODEwMzU5Mzg-> Start a New Topic Messages in this topic <http://groups.yahoo.com/group/Ottawadissenters/message/12630;_ylc=X3oDMTM3YW1oOGswBF9TAzk3MzU5NzE0BGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRtc2dJZAMxMjYzMARzZWMDZnRyBHNsawN2dHBjBHN0aW1lAzEyODEwMzU5MzgEdHBjSWQDMTI2MzA-> (1) Recent Activity: <http://groups.yahoo.com/group/Ottawadissenters;_ylc=X3oDMTJmamkyMmtkBF9TAzk3MzU5NzE0BGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRzZWMDdnRsBHNsawN2Z2hwBHN0aW1lAzEyODEwMzU5Mzg-> Visit Your Group <http://groups.yahoo.com/;_ylc=X3oDMTJldHA2YjUwBF9TAzk3MzU5NzE0BGdycElkAzE1MjA5MDU5BGdycHNwSWQDMTcwNTA4MzUxMgRzZWMDZnRyBHNsawNnZnAEc3RpbWUDMTI4MTAzNTkzOA--> Yahoo! Groups Switch to: <mailto:[email protected]?subject=change%20delivery%20format:%20Traditional> Text-Only, <mailto:[email protected]?subject=email%20delivery:%20Digest> Daily Digest • <mailto:[email protected]?subject=unsubscribe> Unsubscribe • <http://docs.yahoo.com/info/terms/> Terms of Use . <http://geo.yahoo.com/serv?s=97359714/grpId=15209059/grpspId=1705083512/msgId=12630/stime=1281035938/nc1=1/nc2=2/nc3=3> __,_._,___
_______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
