Common sense over computers?
Peter Hoskin 1:51pm
Recommending what sounds like a prescient report by Edward Chancellor, Crunch Time for Credit? (2005), Charles Moore writes the following in his column today:
"Although some of Chancellor's work is technical, it benefits from a historian's understanding of what people have done in reality rather than a narrower economist's obsession with 'modelling'. It has strong elements of common sense. By that same common sense, though obviously with much less information, the man in the street also predicted the credit crunch."
It's a crucial point - and one stressed by Nigel Lawson in his evidence to the Spectator Inquiry, which will be up on Coffee House soon - that while common sense may balk at 125 percent mortgages and the like, numerous economic and financial models failed to. Unfortunately, the computers came out on top this time 'round, leading to the kind of "no more boom and bust" rhetoric that Brown, Greenspan and others espoused. I'm sure more sophisticated models will come out of the current crisis, claiming to have captured the Black Swans. But there's a lot to be said for good ol' human intuition - and the political class would do well to heed it.
P.S. Moore's column contains another great rule of thumb for politicians to bear in mind:
"But it is surely a function of leadership to question a theory more strongly the greater the consensus about it. It is proverbial that when every taxi driver advises you to buy a certain stock, you know it is oversold. The same herd stupidity infects elites. It is when the powerful all agree that they are least likely to be thinking straight."
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Mitch
March 7th, 2009 2:07pm Report this commentYou cannot computer model human behaviour and you certainly cant allow for political stupidity.
anyone who trusts computers is really trusting the human being who wrote the software.
remember GIGO? GARBAGE IN GARBAGE OUT.
Jenny
March 7th, 2009 2:12pm Report this comment"P.S. Moore's column contains another great rule of thumb for politicians to bear in mind"
Quite.
You don't draw the parallel with Islamisation but that's what I read into it when I read Mr Moore's article this morning.
It doesn't matter whether its cultural policy or economic policy, this Labour government constantly thinks in robot terms. Common sense on the economy and Islamisation simply does not compute. The machine just clunks on.
John Fuller
March 7th, 2009 2:21pm Report this commentWhilst every eye is upon the 'infallable' computer models that everyone assured us were right yet failed to anticipate the current economic disaster, can I be the only one to think that a wholly separate set of 'infallable' models should also now be questioned.
Those that predict 'global warming' and 'climate change'.
Blind faith in computer models is always misplaced.
Let's not repeat the same mistakes modelling the financial world with those that purport to foretell the future of the weather.
Garbage In.
Garbage Out.
nigel barlow
March 7th, 2009 2:37pm Report this commentPeter,
I wonder how many people in the banks actually understood the processes that the computers were telling them to do.
A question-have the basic skills of banking been lost to the financial sector generation?
Rhoda Klapp
March 7th, 2009 2:40pm Report this commentGIGO? GARBAGE IN GARBAGE OUT.
Except in the case of a climate model, when it is garbage in, gospel out.
Long the UK
March 7th, 2009 3:00pm Report this commentThis looks like to be one of the few sane politicians in this time of economic turmoil:
"We don't tell New Zealanders we can stop the global recession, because we can't," says Prime Minister John Key, leaning forward in his armchair at his office in the Beehive, the executive wing of New Zealand's parliament. "What we do tell them is we can use this time to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with."
http://online.wsj.com/article/SB123638162497057661.html
Tom
March 7th, 2009 3:26pm Report this commentWhat was it that Lyndon Johnson said about computer predictions and the Vietnam War? When you have garbage in garbage out, it is humans that put in the garbage.
John Page
March 7th, 2009 3:37pm Report this comment"It is proverbial that when every taxi driver advises you to buy a certain stock, you know it is oversold."
On the contrary, it's over-BOUGHT then and should be sold!
Puncheon
March 7th, 2009 5:22pm Report this commentI've had a rule of thumb for many years: if any two out of the TUC;CBI or the Economist agree on a policy, I know its exactly wrong and that we should be doing the exact opposite. It works every time, the establishment group is nearly always wrong. I wonder why?
David Tomlinson
March 7th, 2009 5:54pm Report this commentThe old lessons are the best: when I worked in Shell's Information and Computer Services Division in 1971-72, when evrything in sight was being computerised, we had a saying that you weren't a sophisticated computer user until you had de-computerised some system.
Chris Rose
March 7th, 2009 5:57pm Report this commentNice of you to include the link to Chancellor's book, but I just don't have £1,033.68 to spare at the moment. But when prosperity returns,...
john miller
March 7th, 2009 10:45pm Report this commentStrange that we have a vote for common sense...
When the GB Limited (thats Britain, not the OESI) was making loadsamoney, prudence prevailed. Now it has no money at all, the policy is to spend loadsamoney we haven't got, and to make up for that, we are going to print some more. Like I said, strange...
And by the way, don't forget that the Labour Party printing money is absolutely no different to you or I printing money. If the rest of the world believed millerpounds were worth a pound, they would be. If they didn't, well, guess what?
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