Daily Archives: December 9, 2016

A Better Theory to Explain Financial Bubbles

By Noah Smith – What causes asset bubbles?

This question is the great white whale of finance theory. We know that asset prices are given to spectacular rises and falls over short periods of time. Answering this question is hugely important, not just for people’s pensions and retirement, but for the whole economy, since crashes in asset prices can leave growth in the doldrums for years.

But despite decades of research, finance academics have been unable to agree on a cause for this phenomenon. Do investors suddenly become optimistic about asset fundamentals, only to realize a couple of years later that it was all a mirage?

Do they buy at prices they know are inflated, hoping to find a greater fool to sell to before the crash? Or do they simply follow the herd? more> https://goo.gl/17mP8n

What would a rational criminal justice system look like?

BOOK REVIEW

Creating Freedom, Author: Raoul Martinez.

By Raoul Martinez – The effectiveness of punishment as a deterrent is often misunderstood. Those who fill our prisons are clearly undeterred by society’s punishments. The fact that rates of recidivism in the UK and US hover between 60 and 65 per cent only underscores the point that incarceration routinely fails to deter repeat offending. It might seem that more severe punishments would be more effective deterrents, but often the opposite is true.

And it’s telling that Europe’s lowest reoffending rate is in Norway’s humane prison island of Bastoy. Contrary to popular intuitions, what matters most in deterring criminal behaviour is not so much the severity of punishment but the likelihood of getting caught.

If people aren’t ultimately responsible for their actions, then there is no justification for retribution.

Broadly speaking, on finding someone guilty of a crime, we have three ways of responding: punishment to deter; rehabilitation to heal; or incarceration to protect. These responses are not mutually exclusive and often overlap.

For each, there are two questions to answer: will it be effective and can it be ethically justified? The answers depend on whom we’re talking about – each brain is unique. A ‘one size fits all’ approach is inefficient and unethical. more> https://goo.gl/4Kwy3G

Updates from GE

Could You Soon Fly An Airplane With Your Mind?
By Geoffrey Ling – Imagine we are at the very early stages of the original cellphone. In the 1980s, they were large bricks and all they could do is make phone calls. That’s sort of where we are with brain science.

We can measure reliably certain signals associated with individual functions. We can see how to move an arm, or what is happening during a specific emotional state. We can measure those things fairly well.

The technology is still bulky and expensive. It’s still not amenable for everyday use: normal people doing real things in real time.

Much like the cellphone though, the progress is going to be staggering. We will learn to measure the signals better, and find more functionality associated with those signals. The innovation is going to explode.

This technology could take human relationships to a whole new level. We could cross boundaries of language, understanding. Misunderstandings could be a thing of the past. more> https://goo.gl/R6yvXh

Addressing Our Aging Roads

By Randy Shumway – Fully half of America’s current highway systems have their origins in Eisenhower’s Federal-Aid Highway Act of 1956.

Eisenhower’s investment is still delivering solid returns: America’s roads boost significant economic growth and social mobility.

By dramatically expediting and substantially reducing costs for the transportation of goods, the freeway system changed the way we do business—enabling national supply chains to efficiently make and deliver products. Good, efficient roads make commuting feasible, thereby widening the pool of potential employees and employers.

By connecting small towns with larger cities, freeways improve Americans’ access to education, healthcare and employment. Moreover, infrastructure development is itself a hotspot for jobs, with more than 14 million people working in related fields.

In spite of these benefits, infrastructure spending slowed in the late ’60s, and declined to a 30-year low in 2014. more> https://goo.gl/WiCxGy