How precision-loving economists make "rigor distortis" errors

Here's the psychology that explains why many economists prefer to be narrowly right yet broadly wrong (they suffer from professional "rigor distortis").

Illustration by Julia Suits, author of The Extraordinary Catalog of Peculiar Inventions, and The New Yorker cartoonist.

Keep reading Show less

How the Blockchain revolution will decentralize power and end corruption

History shows us why we can't trust centralized power. So what can we trust?

When the world has gone corrupt, who can you trust? Blockchain is stepping up. The word might ring a bell for its connection with Bitcoin, but internet pioneer Brian Behlendorf is looking at this technology beyond its use in cryptocurrency. Blockchain is an open ledger system where transactions are irreversibly recorded and immediately shared to a distributed network of witnesses (companies, agencies, individuals). The beauty of this idea is in its decentralization—if no one person or institution holds power, then that power cannot be abused. The potential for this technology is enormous: it could significantly lower corruption and eliminate fraud in many industries like banking, freight, construction, and even trace the provenance of goods like diamonds. "Blockchain technology allows us to build these same kind of systems but in a world where we don’t want to or we can’t trust central actors," says Behlendorf. Here he describes how a blockchain system is being used to protect civilian land titles in developing nations, and demonstrates how blockchain could have prevented or severely lessened the impact of the 2008 financial crisis. Brian Behlendorf is the executive director of Hyperledger; for more info, visit hyperledger.org.

China's Economy Is Running on Borrowed Money – and Time

It takes four dollars of debt to create a single dollar of GDP growth in China. For context, at the peak of the GFC in 2008 it was taking three dollars of debt to create a dollar of GDP growth in the U.S. China has received the kiss of debt, says Ruchir Sharma.

In 2009, after the global financial crisis, China beat its 8% economic growth target while the West was economically gridlocked, caught up in debate in Washington D.C. The World Economic Forum that year marveled at the benefits that autocracies like China had over democracies in making executive decisions to protect and manage an economy. But it doesn’t look quite so marvelous from where we’re standing now, says Ruchir Sharma, the head of emerging markets and chief global strategist at Morgan Stanley Investment Management. China's post-recession strategy is the very moment the so-called miracle of its economy began to end. There is no developing country in history that has taken on so much debt in such a short span of time, which leads Sharma to think there is a rough road ahead for China, and that those hard times may form a global ripple. Ruchir Sharma's book is The Rise and Fall of Nations: Forces of Change in the Post-Crisis World.

Keep reading Show less

The Cost of Blowing up the Death Star? The Biggest Recession in the Universe

This is not the outcome you're looking for.

The Death Star. Credit:Lucasfilm

Keep reading Show less