Friday, October 30, 2009

Discuss 6

'I can calculate the motions of heavenly bodies but not the madness of people.'
Isaac Newton after losing £20,000 in the South Sea Bubble.

17 comments:

  1. Ah, more unheeded wisdom.

    The tragic thing is that it only becomes obvious after the disaster which particular bits of wisdom we should have heeded.

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  2. In retrospect, perhaps an ironic comment from Newton, given that the motions of the heavenly bodies are themselves chaotic, and cannot be predicted very far into the future.

    Human economic disasters, however, are generally both predictable and predicted. Only those blind to the dangers, or with a vested interest in the ideology which created the disaster, will claim that it was only obvious in retrospect.

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  3. Since then economists have got reasonably good at calculating the sanity of people. The limits of this approach are obvious.

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  4. This certainly catches the modern way of thinking does it not, with our horror of reasoning about psychology and ethics, preferring whirring spheres in vacuums.

    (This sounds like an interesting book--a deeply satirical book about the stupid things people say on blogs? Pearls before swine and all that kind of thing. 'Tis amusing in any case.)

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  5. I think Mr. McCabe must be living in some sort of parallel universe!
    Heavenly bodies may present minor discrepancies in their behaviour, but, in comparison to human time-scales, they have been incomparably more predictable thus far.
    By contrast I have yet to see any even vaguely accurate economic predictions - beyond the level of "we're all gonna die".

    Or am I missing some sort of irony?

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  6. Newton couldn't predict the madness of people because he didn't study it as much as he did heavenly bodies. His statement points to the desire to be a sure bettor, to find a way to ensure that the profits are on your side.

    The best example I know of is the state lottery. Check out the Massachusetts Lottery's MegaMillions page. Scroll down to the box that says "How to Win", and you will see that, because I have one ticket for tonight's drawing, the probability of my winning the jackpot is 175,711,536 to 1. Surely, I am not the sure bettor. But the Commonwealth of Massachusetts is. Those who run the MegaMillions lottery, which is a multi-state lottery, know they will profit from these odds. They are the house. I am the gambler.

    But, you ask, where in this did the state calculate the madness of people? It is not in the fact that they knew some fool like me would bite and spend money on a ticket. No. It is in the fact that the people running the lottery knew just how many of us fools there would be. They have down to a science, how much the next jackpot will rise to. Tonight, in bold red, it says, "CURRENT ESTIMATED JACKPOT/$40 MILLION".

    They've not only predicted the madness of people, they've got a handle on the dollar value of it.

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  7. Isaac Newton failed to observe the most basic lesson: his own madness. The South Sea Bubble was created from nothing but individuals like him making decisions to invest in mad ventures at crazy prices after the South Sea Bill had been passed in 1720. So it is with human 'greatness': sound superior and make the vacuous general point, not the one that would help you more to say and your readers more to hear.

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  8. I am starting up a new on line company - anyone care to invest?

    Seriously, its all run by computers these days - my energy company have been billing me for a meter in some other property and wanted to increase my direct debit to 977 pounds a month. I have a single gas boiler not a aluminum smelting plant...

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  9. He wasn't the only chancer who lost out on the SSB, as my uncle the bookie once said "easy come, easy go" as he eased himself behind the wheel of the Facel Vega.
    There's evolution and there again, there's erosion, not amusing when it's from the savings account.
    Always remember when investing your hard earned...a man may smile and smile again, and still be a rotten stinking bastard.

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  10. Was it only the madness of people he couldn't calculate? Or actually just the anything of people?

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  11. I think Mr. McCabe must be living in some sort of parallel universe!
    Heavenly bodies may present minor discrepancies in their behaviour, but, in comparison to human time-scales, they have been incomparably more predictable thus far.


    Actually, Mr. McCabe is not. If I remember my physics correctly, anything more than a three body system is essentially impossible to solve exactly over time.

    We suspect the solar system is stable, because it has been around for awhile. But there is no proving it will stay that way.

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  12. "Actually, Mr. McCabe is not. If I remember my physics correctly, anything more than a three body system is essentially impossible to solve exactly over time.

    We suspect the solar system is stable, because it has been around for awhile. But there is no proving it will stay that way."

    Nothing in the physical world is exact. Only in mathematics.

    The point is, it works. The prediction of planetary orbits has been usefully accurate since it was first utilised (& is consistent with evidence from previous eras), whereas economic theories seem to work for about ten minutes. If at all.

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