Via economist Dan Ariely’s blog, this is what Isaac Asimov thought about perceiving the world through data. It is an implicitly Bayesian approach and brings to mind the famous Keynes quote about changing one’s mind. Asimov wrote:
“Don’t you believe in flying saucers, they ask me? Don’t you believe in telepathy? — in ancient astronauts? — in the Bermuda triangle? — in life after death?
No, I reply. No, no, no, no, and again no.
One person recently, goaded into desperation by the litany of unrelieved negation, burst out ‘Don’t you believe in anything?’
‘Yes’, I said. ‘I believe in evidence. I believe in observation, measurement, and reasoning, confirmed by independent observers. I’ll believe anything, no matter how wild and ridiculous, if there is evidence for it. The wilder and more ridiculous something is, however, the firmer and more solid the evidence will have to be.’
Despicable though his character may have been, Keynes said some remarkable things, the title of this post among them. He also uttered the cliched investing mottos regarding animal spirits and beauty contests — true statements all, but widely abused by financial textbooks. My favorite, which remains somewhat unknown despite its enormous relevance, is:
The market can stay irrational longer than you can stay solvent.
An important second is this, in response to an accusation that he had changed his position on monetary policies during the Great Depression:
When the facts change, I change my mind. What do you do, sir?
And recently, I came across this one, which is a stunning insight into the last few years:
If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.
NPR has an interesting article titled “Obama Gives Keynes His First Real-World Test.” I’m not convinced that’s entirely accurate, it appears to be missing an appropriate disclaimer — Keynesian economics played a large role in the New Deal (though, the article suggests, not enough of one). Richard Nixon (yes, him again) famously declared in 1972 “We are all Keynesians now.”
The article begins, “John Maynard Keynes is an unlikely hero for our time.” Maybe so. His policies lost favor with the rise of conservatism in the late 1970′s. The article quotes economists remembering how Keynes was ridiculed in their classes. Personally, I remember learning about “Keynesian economics – with caveats” — it wasn’t so much that his policies didn’t work, per se, it was that no one knew for sure and no one was willing to try.
Enter the Recession of 2008, a grand laboratory for Keynesian policies. The article calculates that Keynes would have recommended roughly $650B of government spending to offset reduced economic productions (based on a $1 trillion shortfall and, I assume, some accounting for the relatively low velocity of money). Not surprisingly, Obama’s stimulus plan is coming in at $819B at last count.
One thing I was unaware of is that Keynes was a massive anti-semite, anti-women, anti-American [essentially, anti-anyone who didn't go to Cambridge] who sat on the British Eugenics Council. Another NPR article (“Some Problems with Keynes“) remarks
Keynes had this idea that Jews had brought the idea of longing for immortality to Pagan Europe. He saw that longing as positive but felt that many Jews distorted it into a longing for money. He thought that the Jews influenced the rest of Europe to love money too much and that had ruined much of European civilization. Keynes believed that by 2020, European civilization would have gotten past its Jewish-inspired love of money and would focus on other things….
One Jewish correspondent pointed out to Keynes that Jews don’t actually spend a lot of time thinking about immortality. That’s more of a Christian thing. Keynes just ignored that
And a paper entitled “The Immoral Moral Scientist. John Maynard Keynes.” [pdf link] by Nina Paulovicova at the University of Alberta is an excellent compilation of Keynes’ moral failings. Upon meeting Albert Einstein, Keynes wrote:
He is a naughty Jew boy covered with ink –that kind of Jew – the kind which has its head above water, the sweet, tender imps who have not sublimated immortality into compound interest. He was the nicest, and the only talented person I saw in all Berlin…. Yet if I lived there, I felt I might turn anti-Semite. For the poor Prussian is too slow and heavy on his legs for the other kind of Jews, the ones who are not imps but serving devils, with small horns, pitch forks, and oily tails. It is not agreeable to see civilization so under the ugly thumbs of its impure Jews who have all the money and the power and brains.
About women, he wrote:
I seem to hate every movement of their [women’s] minds. The minds of men, even when they are ugly and stupid, never appear to me so repellent.
Keynes embodies a character rarely heard these days: “fiscal liberal, social conservative.” I have to wonder, were he not such a champion of the left, would this disgraceful side of his character be more widely disseminated? Imagine the reaction if Milton Friedman, Donald Regan or James Baker had similar quotes attributed to them.