Monthly Archives: April 2012

Critical Thinking?

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Here is an anonymous comment in response to this essay I wrote:

You have an interesting spin on this study. The truth however is that “anterior cingulate cortex” Is why liberals are much more malleable and easier to manipulate. This is why its nearly impossible to find a self made successful liberal”statist”. Also the anterior cingulate cortex isn’t exactly “Higher intelligence” that would be the frontal lobe which the anterior cingulate cortex is only partially related. You also don’t seem to grasp from your article that the amygdala is also involved in connect both the right and left hemispheres of the brain combining emotions with logic. example: my dog is emotional not analytical. This is why liberals accept utopian arguments and seemingly disregard reality.

I find this spin not as much interesting as it is perplexing. I bring this up as an example of what I find typical and empty about internet comments in general. I come from an environment where signing your name and referencing your argument to notable sources is essential. A convincing argument must have a real author and real sources to justify its claims. A real author designates the seriousness of the claim and legitimate sources (not mired in mere apologetics) gives substance to the claims. I am not saying I always do this well but I do understand the need for it and make an attempt to do it. I always appreciate when others make me aware of my failing in this regard. In any case, here is a bit of my specific perplexities with this comment.

A statist is the idea that “a government should control either economic or social policy or both to some degree”. It is espoused by fascists in particular. This commenter appears to be conservative to me. Conservatives have mock posters of President Obama to make him look like Hitler. They are also constantly ragging him about using the government to control their lives. On the other hand, the commenter states that this, “is why its nearly impossible to find a self made successful liberal”statist””. Does the commenter want it both ways? Are we to believe that President Obama is one of those “impossible to find a self made successful liberal”statist”” AND “malleable and easier to manipulate”. This is a logical contradiction which is a hallmark of over-emotionality. Additionally, would the commenter suggest that the folks that voted for President Obama are “malleable and easier to manipulate”? If this is so, why is it that the successful conservative “statist” could not manipulate them into voting Republican? Are they not malleable to conservative devices only to liberal devices? The commenter’s statement does not account for the “statist’s” inability to manipulate liberals as they would like. This also appears logically inconsistent as the liberals ‘malleability’ appears not so malleable when it comes to the successful “statist” or the conservative pundit.

Additionally, the QUOTE “Higher intelligence” cannot be found anywhere in the essay I wrote. A quote is always meant to be verbatim. Perhaps the commenter has a private language that defines the quote differently. In any case, to the contrary, in the original comments I stated:

Oh, also, I did not think of these studies as giving any indication of intelligence. I think that was a leap on your part. I think the whole topic of intelligence is a can of worms (emotional, IQ, analytic, logical, poetic/artistic, folksy wisdom, etc.). I personally do not feel like these studies had anything to say about the intelligence of liberals or conservatives merely how they typically, in our particular present situation, handle making sense of their environment. There certainly is no claim to greater or lesser intelligence in the studies themselves…

The fact that the commenter read this article as a statement of ‘intelligence’ means the commenter really did not ‘grasp’ the article but only used it to give an occasion for some emotional issue the commenter must have with liberals.

I did state:

It [ACC] is responsible for higher cognitive learning – error correction is a big function of the anterior cingulate cortex.

It is backed up by this statement from the study:

The ACC has a variety of functions in the brain, including error detection, conflict monitoring1, and evaluating or weighing different competing choices. It’s also very important for both emotion regulation and cognitive control (often referred to as ‘executive functioning’)—controlling the level of emotional arousal or response to an emotional event (keeping it in check), as to allow your cognitive processes to work most effectively. (the source is in the article)

This Wiki link states:

Reward-based learning theory

A more comprehensive and recent theory describes the ACC as a more active component and poses that it detects and monitors errors, evaluates the degree of the error, and then suggests an appropriate form of action to be implemented by the motor system. Earlier evidence from electrical studies indicate the ACC has an evaluative component, which is indeed confirmed by fMRI studies. The dorsal and rostral areas of the ACC both seem to be affected by rewards and losses associated with errors. During one study, participants received monetary rewards and losses for correct and incorrect responses respectively.

Note: I always check WIKI sources for accuracy before I quote it.

I also made the point that the amygdale plays a vital role in long term memory with these quotes from the original sources (cited in my essay):

Although the amygdala is critical for fear conditioning, it also plays a broader, noncritical role in other types of learning and memory. The amygdala can modulate the function of other memory systems, particularly the hippocampal memory system necessary for declarative or episodic memory.

Investigations into the neural systems of fear conditioning have mapped the pathways for learning from stimulus input to response output. One finding that has emerged from this research is that information about the identity of a stimulus can reach the amygdala by more than one pathway. Romanski and LeDoux (1992) have shown that there are separate cortical and subcortical pathways to convey perceptual information to the amygdala. If one pathway is damaged, the other is sufficient to signal the presence of a conditioned stimulus and elicit a conditioned response. It has been suggested that these dual pathways may be adaptive (LeDoux, 1996). The amygdala responds to stimuli in the environment that represent potential threat. The amygdala then sends signals to other brain regions and the autonomic nervous system, preparing the animal to respond quickly. The subcortical pathway to the amygdala can provide only a crude estimation of the perceptual details of the stimulus, but it is very fast. The cortical pathway allows the stimulus to be fully processed, but it is somewhat slower. This crude, fast subcortical pathway may prepare the animal to respond more quickly if, when the stimulus is fully processed and identified by the cortical pathway, the threat turns out to be real.

More recent research with nonhuman animals has emphasized the amygdala’s role in emotional learning and memory. Work by Davis (1992), Kapp, Pascoe, and Bixler (1984), and LeDoux (1992) has shown that while the amygdala is not critical to express an emotional reaction to stimuli that are inherently aversive, it is critical for learned fear responses.

The amygdala is part of the limbic system, the area of the brain associated with emotions. The amygdala is important for formation of emotional memories and learning, such as fear conditioning, as well as memory consolidation. Emotions significantly impact how we process events; when we encounter something and have a strong emotional reaction—either positive or negative—that memory is strengthened.

The sources further states:

Too much emotion gets in the way of logical thinking, and disrupts cognitive processing. This is why in times of crisis, we learn to set aside our emotions in order to problem-solve our way out of a dangerous situation. Those with the ability to maintain low emotional arousal and have high cognitive control are generally better at handling conflict in the moment, plus tend to be the least permanently affected by trauma in the long term2. They tend to be more adaptable to changing situations (or have a higher tolerance for complexity), and have what we call cognitive flexibility.

The amygdala has many functions, including fear processing [11]. Individuals with a large amygdala are more sensitive to fear [12], which, taken together with our findings, might suggest the testable hypothesis that individuals with larger amygdala are more inclined to integrate conservative views into their belief system. Similarly, it is striking that conservatives are more sensitive to disgust [13, 14], and the insula is involved in the feeling of disgust [15]. On the other hand, our finding of an association between anterior cingulate cortex volume and political attitudes may be linked with tolerance to uncertainty. One of the functions of the anterior cingulate cortex is to monitor uncertainty [16, 17] and conflicts [18]. Thus, it is conceivable that individuals with a larger ACC have a higher capacity to tolerate uncertainty and conflicts, allowing them to accept more liberal views.

The commenter further states:

You also don’t seem to grasp from your article that the amygdala is also involved in connect both the right and left hemispheres of the brain combining emotions with logic.

A further source for the description of the amygdale is given here (many different sources are cited at the bottom of this link). There is nothing here suggesting “the amygdala is also involved in connect both the right and left hemispheres of the brain combining emotions with logic”. Perhaps the commenter is thinking about the corpus callosum in a different more evolved part of the brain that does connect the right and left hemispheres. There is also no mention of “combining emotions with logic” with regard to the amygdale. However, this is a primary function of the corpus callosum. I think the commenter may not have “grasped” this. Additionally, since the amygdale is 500 million years old it should suggest something about the “higher intelligence” and “logic” as the commenter writes in this part of the brain. All the sources I have seen suggest it has much more to do with long term recollection and emotion, especially of fear, which are related.

From these wrong premises the commenter concludes with, “This is why liberals accept utopian arguments and seemingly disregard reality”. I would suggest that wrong premises lead to wrong conclusions but this conclusion seems to stand apart from any previous premise and thereby, gives credence to the fact that if the commenter is conservative as it appears, is using the amygdale portion of the brain more than the ACC.

I must admit that I have seen these types of anonymous, un-sourced comments by both the left and right on the internet. Apparently, folks do not seem to realize that making things up off the top of their head is not the same as making a real and serious argument by a real and serious person. This type of behavior confuses readers. I think it is really primarily emotional. I have gone into this detail to highlight what I think is ‘critical thinking’. ‘Critical thinking’ means you lay down a personal, non-anonymous stake in the game and back it up with something outside of personal emotions. Emotion of this type may have a pretense to knowledge but, in the last analysis, is really only wishful and imaginary self-delusion. Additionally, I think an argument must have logical consistency such that conclusions follow from or are reinforced by premises and contradictory statements are avoided. I will grant that reading syllogisms can be really dull so the argument cannot be too formulaic to make it more palatable. I think it is also important to avoid informal fallacies which may be easier said than done. Informal fallacies may make the argument more fun for sympathetic readers but really take away from the formal credence of the argument.

Apple: Price Fixing and Collusion

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In this essay I discussed how price fixing and collusion occurs regularly in the ‘free market’. Here is another recent example of what I discussed.

Here are some lowlights from the article in the Wall Street Journal:

The U.S. accused Apple Inc. AAPL +0.41%and five of the nation’s largest publishers Wednesday of conspiring to raise e-book prices, in a case that could radically reorder the fast-growing business.

In a civil antitrust lawsuit, the Justice Department alleged that CEOs of the publishing companies met regularly in private dining rooms of upscale Manhattan restaurants to discuss how to respond to steep discounting of their e-books by Amazon.com Inc., AMZN +1.40%a practice they disliked. The executives also called and emailed each other to craft a solution to what one of them called “the wretched $9.99 price point,” the suit said.

The five publishers and Apple hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $14.99, according to the suit. The publishers then banded together to impose that model on Amazon, the government alleged.

As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles,” said Attorney General Eric Holder.

Three of the publishers settled with the Justice Department, agreeing to let Amazon and other retailers resume discounting of e-books. Settlement of a separate suit filed by 16 states and U.S. territories could lead to tens of millions of dollars in restitution to consumers who bought e-books at the higher prices.

A group of 16 states, led by Connecticut and Texas, filed their own suit Wednesday against Apple, Macmillan, Penguin and Simon & Schuster. The states said they have reached tentative settlement agreements with HarperCollins and Hachette. Those two publishers have agreed in principle to provide more than $51 million in restitution to e-book buyers, Connecticut Attorney General George Jepsen said.

My working conclusion is that this happens much more often than many folks think that it does. I base this on my own anecdotal experience of decades in business and management and on cases already mentioned in which I cited specific examples. It may sound trite and clique but I know from personal experience that these guys at the top have huge, inflated egos and they do work out these types of situations in their country clubs and on their golf courses. The Justice Department only pursues a small percentage of these types of activities.

As per Jeff’s recent comment, pure capitalism or socialism does not exist. I have pointed this out in this essay. To think of them as polar opposites in practice is a bit naïve in my opinion. We are individuals and collectivities and as such incorporate both of these components in our politics and economics.

I have no problem per se with selfishness or self-interest. If selfishness or self-interest is given carte blanche in economics the rich and powerful will always make sure that they stay that way at the expense of those that are not. If capitalism is the unregulated or nominally regulated practice of selfishness then what is the practical difference between it and oligarchy, dictatorship, fascism (statist), communism or any system that rules from the top by the powerful?

If practical capitalism is to have a form of democracy (as in the ideal of competition) then the best real hope for impartial rules on how the game is played can only be made by government. To the degree that the rules allow the process to be more competitive is the same degree that capitalism approximates its ideal. As Jeff points out, to the degree that corporatism (crony capitalism) determine the rules is, in my opinion, one factor in turning capitalism into simply another name for the powerful consolidating their hold on power. I have also pointed out that this happens with or without government involvement.

The idea that the government is solely or primarily the culprit may have emotional appeal to some but as far as I can tell is not factual. In a democracy we get the government we deserve. If we prohibit government from intervening in the market with regulation we are effectively handing the market over to the rich and powerful. As Jeff points out they will try to use the government to protect their power but as I have pointed out they will not stop there. They have many tactics for staying in power (as I previously illustrated) and are not above using them.

Those that would have the government stay out of market regulation are effectively playing into the hands of the rich and powerful and doing exactly what they claim the government is doing in crony capitalism – making it easier for the rich and powerful to maintain their hold on power. To ‘hope’ that competition will reign in unregulated or nominally regulated capitalism appears to me to be more like a religious ideal than a realistic practicality. Government should be in the active business of making competition in capitalism real and effective, offering constraints to the monopolizing tendencies of power. Our job as voters is to elect politicians that produce results toward this end and fire those that make big business the real constituents that they serve. If we put the fox in charge of the hen house we should not be surprised when all the hens get eaten.

The Free Market Ideal

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Thank you Jeff for your thoughtful comments…here are some of my observations.

First, I do think we have some agreement on many of your points. Here are some of the differences that I would highlight.

Regulation is not just something that happens in government. Here are some observations from my own experience. At U.S. Robotics one of the engineering groups I managed was responsible for getting regulatory approval not just for the US but for many countries in the world. We called this homologation. In the US we had to get Underwriters Lab (UL) and FCC approvals to sell in the US. We also sold modems into hundreds of other countries and they all had their own similar approval requirements. These requirements were for consumer safety and radio interference issues.

In the 90s Microsoft decided they would implement a hardware certification process. It was practically impossible to sell modems without the Microsoft certification approval. It was also practically impossible to get all our modems every quarter through the huge bureaucracy of Microsoft. They certainly stifled our competitive efforts based on their regulatory approval.

Microsoft has also required a software vendor like myself to pay private regulatory companies a yearly fee which can be very pricey to “digitally sign” our software. They claim this is to keep hackers from infecting software products. However, there are many very good products available for software vendors like ‘obfuscators’ (which I use) that keep hackers out of code. The actual incidents that Microsoft rationalizes its ‘code signing’ process for is statistically very minimal. However, they do get kick backs from their ‘approved’ code signing companies.

Now, with the release of Windows 7, Microsoft has taken another regulatory step by reporting software that does not have a ‘reputation’. This has nothing to do with the code signing. A company may have their code digitally signed and still run into the ‘reputation virus’. Microsoft reports it as a virus. However, if you read what the ‘reputation virus’ is; it only means that Microsoft has never heard of you. Norton and other virus programs take the Microsoft virus alert and automatically delete the downloaded trial software we produce. They report it as a virus. Microsoft readily admits that 90% of the folks that see the virus alert will not install the product. This means software vendors like myself are not permitted to compete in the ‘free market’ of the software business. I have two products for download on the internet. Both are exactly the same code. The only difference is one byte in a text, configuration file that allows the product to come up as either product. One of my software downloads is allowed by Microsoft and Norton, the other is not. It is reported as a virus and automatically deleted. This affects 90% of my new and upcoming business on the Windows 7 platform. I have talked to literally hundreds of other software vendors on the web who are in total agreement with my contention of Microsoft’s market monopolizing practices.

There are many other cases of ‘private market’ regulation that I could cite but this can probably suffice. The idea is that the corrosive effect of regulation is not just a charge that can be levied against the government. It happens all the time in the ‘free market’ as well. Does this effect competition adversely? Absolutely. Is there perhaps some need for regulation by both the government and big corporations? Probably, but as Jeff suggests it is also used as an excuse to kill competition. However, not as a component of government but of the private market itself. I think most folks agree that there is some need for market regulation by an impartial regulatory agency. However, effective regulatory restrictions by large corporations with vested interests are a market distortion that happens often and distorts the ‘free market’ ideal based on competition. When the government becomes a vehicle for the capitalists that do not want competition as Jeff suggest, it is certainly corporatism which is one of the hallmarks of historical fascism.

It is not a matter of is there corporatism or crony capitalism but to what degree it happens not just by government but by big corporations as well. To the degree that this happens, it is not the ideal of the ‘free market’ but a hybrid practical reality of how it actually works. The Bush administration was a perfect example of what happens when regulatory agencies rubber stamp big business. Oil and gas regulation, toy regulations, financial market regulations and more were thrown out the window and companies were given free reign over regulators. Corporations were even discovered to be wining, dining and giving the regulators luxurious trips. This was not the government interfering with the market but giving it carte blanche to do whatever it wanted. The ideal of small footprint regulation, as Jeff espouses, was realized by the Bush administration and it ultimately resulted in the recession. The housing crisis was not caused by too much regulation but the absolute lack of regulation in the derivatives market. One email at Standard and Poor’s stated, “Rating agencies continue to create and [sic] even bigger monster–the CDO [Collateralized debt obligations ] market. Let’s hope we are all wealthy and retired by the time this house of cards falters.” Moody’s and Standard and Poor’s, both private companies, are considered to have elevated ratings on CDO’s which are mortgage backed securities to minimize the risk and, in so doing, increase the profits for investors. See The Housing Crisis – Research Revisted, this and this for more data.

Another tactic of the ‘free market’ is price collusion and price fixing. Individual multinational corporations and conglomerations of individual market segment corporations have often been accused of doing this. The diamond market is notorious for this as well as Oil and Gas (remember Standard Oil, Rockefeller) and railroad industries. While this kind of activity in normally associated with monopolies it is still a reality of the practical workings of the free market. It seems to me that thinking of this kind of activity as a rare monopoly situation allows a sort of effective monopolizing in the actual market. Jeff states that, “Thus, monopolies don’t stay monopolies for long unless they are making consumers happy” but how does this measure up? Remember AT&T, officially deemed a monopoly by the courts, -they monopolized the market for decades…is this a short time? In any case, the kind of activity that goes on daily in the market by Microsoft and others has not acquired the label of ‘monopoly’ but shows that monopolizing activity is not a rare court decided phenomenon of the market; it is an analog, practical reality of the market. Microsoft has been brought to court and found guilty at least once that I know of for market monopolizing practices. This kind of activity has to get extremely severe before a public, official pronouncement is made.

Jeff quotes Smith here, “They often propose new laws and regulations, as Smith points out, that are to the benefit of their companies, but not to the benefit of society as a whole (i.e., to consumers).” However, Adam Smith himself, proposed over one hundred pages of financial industry regulations in the “Wealth of Nations” which have largely been neglected by the modern market place. I suppose Adam Smith himself was one the “they”s that Jeff refers to.

My contention is that it is extremely idealistic to think that the ‘free market’ is, in practice, all about competition. Yes, that is a positive aspect of the real market place but it is still an ideal and does not reflect a large part of how the market works. I also agree that government can become the problem when it effectively acts as a monopolist in the market, corporatism. However, as I have shown this is not just an essential evil of the government but occurs in the private market as well. My contention has always been that the free market works best for the public interest when government and big corporations collide. While the David and Goliath story may be cute, two Goliaths tend to do more damage to each other. The government in a democracy is ideally supposed to be the public defender and not the corporate defender although this ideal too has shown itself to be different from the reality. The answer is not to throw in the governmental towel as we did in the Bush administration but to make sure that we elect politicians that will oppose corporatism and government collusion with capitalists.

I find it interesting that Jeff thinks capitalists are capitalism’s biggest detractors. To me, this is like suggesting that churches are Christianities biggest problem. Capitalists vote Republican for the most part. If they wanted more government it seems to me like they would vote Democrat as the Republicans are fond of laying this charge on the Democrats. Republicans publicly state, almost daily, that they are on the side of business and the capitalists. Therefore, they publicly acknowledge that either they welcome the interference with the market that Jeff denounces or they want to return to the lassie faire capitalism of the Bush administration. While the Democrats may be complicitous in Jeff’s charge as well, they are not so bold proclaiming it which might account for something positive (or not). Are we to believe that the best proponents of a philosophy are intent on its destruction? This certainly may add some credence to some of Nietzsche’s discussion and post modernism but it also is a living demonstration of the inability of the system to rationalize itself based on its members. If major and important members are bent on the destruction of the market, are we suggesting that the only way to redeem the ‘free market’ is by the ideal that it proposes? If the reality has anything to do with some of the practicalities that I have suggested and seen, then ‘free market’ capitalism seems like it gets its validation based on an ‘otherworldly’ idealism not unlike Christianity. Are we supposed to believe that the ‘free market’ liberties in the Bush administration were problems of too much government still and therefore salvage the validity of the ‘free market’ ideal? I think this is a bit much to swallow. It is like continually suggesting that historical Christianity is not the ‘true’ Christianity in order to preserve an ideal Christianity that may appear dubious in practice. At some point, even the best metaphysician must live and breathe and have their existence in the world. Dreams are nice but realties are necessary. I do not advocate overthrowing capitalism but simply dealing with the reality of it without using its ideal as a pretense to justify its inadequacies. I think simple answers that make the government the scapegoat for the failures of capitalism are there to reinforce that idealism of a flawed system and enable us to overlook fundamental issues that need to be addressed. I prefer to address the issues directly and smartly while making the market more of a level playing field and less rigged against the interests of the public; a primary concern for Adam Smith and Karl Marx as well.

For me, the problem is better framed not in terms of government versus the private market but big versus small. Is the ideal of the free market demonstrated in TBTF (too big to fail)? What does competition have to do with propping up a business because it is too big? If competition always produces a better value for the consumer how is it that a ‘big’, that is too big to let the competition kill it can come from the ideal Jeff defends (remember Bush and Paulson)? If the ideal of the ‘free market’ is actually realized in practice, is this yet another glitch in the system that we have to rationalize away? How many times can we look the other way and still pronounce the ‘free market’ holy? What interest is served in ‘free market’ apologetics? My point is that ‘big’ is another name for effective monopoly in many cases. I would also apply this to the government with this caveat…the ideal of the government should be efficiency not small. If we make the government a David I would wager that Goliath will win the battle 99 out of 100 times. We need to make the big of the government our friend and defender because if we give that up we will have the mercy of the ‘free market’ and the legacy of George Bush as our BFFs.