Treading on Dangerous Ground

I just finished reading "Bonk" by Mary Roach (here), so I feel I'm up on the latest in sex research. When I ran across an article reviewing research on women's sexual desire, I thought it would be fun to see all the themes run through again.

There was a fair overlap. But there was new material. So the article was a pleasant addition to what I had recently learned.

As for style, I prefer the Roach-style romp through the literature because it educates without taking itself too seriously. But for those who are more fastidious and want their science delivered without innuendo, the article entitled "What Do Women Want?" by Daniel Bergner in the NY Times Magazine covers interesting ground in sex research.

It looks the work of a number of researchers, but most deeply at three sex researchers: Meredith Chivers at Queen's University, Lisa Diamond at the University of Utah, and Marta Meana at the University of Nevada. Here are some interesting bits from the article.

The key result of Chivers' work:

Males who identified themselves as straight swelled while gazing at heterosexual or lesbian sex and while watching the masturbating and exercising women. They were mostly unmoved when the screen displayed only men. Gay males were aroused in the opposite categorical pattern. Any expectation that the animal sex would speak to something primitive within the men seemed to be mistaken; neither straights nor gays were stirred by the bonobos. And for the male participants, the subjective ratings on the keypad matched the readings of the plethysmograph. The men’s minds and genitals were in agreement.

All was different with the women. No matter what their self-proclaimed sexual orientation, they showed, on the whole, strong and swift genital arousal when the screen offered men with men, women with women and women with men. They responded objectively much more to the exercising woman than to the strolling man, and their blood flow rose quickly — and markedly, though to a lesser degree than during all the human scenes except the footage of the ambling, strapping man — as they watched the apes. And with the women, especially the straight women, mind and genitals seemed scarcely to belong to the same person. The readings from the plethysmograph and the keypad weren’t in much accord. During shots of lesbian coupling, heterosexual women reported less excitement than their vaginas indicated; watching gay men, they reported a great deal less; and viewing heterosexual intercourse, they reported much more. Among the lesbian volunteers, the two readings converged when women appeared on the screen. But when the films featured only men, the lesbians reported less engagement than the plethysmograph recorded. Whether straight or gay, the women claimed almost no arousal whatsoever while staring at the bonobos.

The key claim of Diamond is for a sexual "fluidity" of sexual desire in women that isn't found in males:

...Diamond argues that for her participants, and quite possibly for women on the whole, desire is malleable, that it cannot be captured by asking women to categorize their attractions at any single point, that to do so is to apply a male paradigm of more fixed sexual orientation. Among the women in her group who called themselves lesbian, to take one bit of the evidence she assembles to back her ideas, just one-third reported attraction solely to women as her research unfolded. And with the other two-thirds, the explanation for their periodic attraction to men was not a cultural pressure to conform but rather a genuine desire.

The key results of Meana:

Yet while Meana minimized the role of relationships in stoking desire, she didn’t dispense with the sexual relevance, for women, of being cared for and protected. “What women want is a real dilemma,” she said. Earlier, she showed me, as a joke, a photograph of two control panels, one representing the workings of male desire, the second, female, the first with only a simple on-off switch, the second with countless knobs. “Women want to be thrown up against a wall but not truly endangered. Women want a caveman and caring. If I had to pick an actor who embodies all the qualities, all the contradictions, it would be Denzel Washington. He communicates that kind of power and that he is a good man.”

Fascinating stuff. The bottom line: men are simple while women are quite complex (separate mind/genital systems, fluidity of desire, being desired is the orgasm).

Finding "the Evil Doers"

Paul Krugman questions whether there is something that is driving policy makers away from doing the right thing. He is looking for a kind of "gold standard" fetish similar to what operated in the 1930s which fettered the minds of policy makers.

DeLong surveys the field and comes up with a tripartite categorization:

My view is that we are not now bound by golden fetters--that by and large we know what to do and how to do it to keep the world economy out of a depression. But, I would say, there are three groups of people who are trying to handcuff us with today's equivalents of the golden fetters that constrained economic policy and made the Great Depression so great. Each group is doing so for its own reasons:

1. Out of ignorance: the modern-day Chicago School of economists, which is arguing against effective use of policies to manage aggregate demand because they have never read Metzler or Friedman (or Keynes), and never thought at all seriously about the transmission mechanisms by which changes in monetary policy (and fiscal policy) affect the price level in the long run and affect output, employment and demand in the short run.

2. Out of malevolence: the Republican members of congress and all their intelletual enablers who would have fallen in line behind what are now the policies of the Obama administration had McCain won the election and had they been the policies of the McCain administration instead--but who are right now opposed because they think making Obama's presidency a failure is the road to electoral success in 2010 and 2012.

3. Out of justice: avoiding depression requires supporting asset prices--which means that for many financiers the wages of overspeculation will be not bankruptcy but fortunes. People rebel against the fact that in a financial crisis the banking sector has got the rest of us by the plums, and that there is no effective way to make sure they get their justice without creating prolonged mass unemployment for the rest of us.

Taleb Plays Mr. Fixit

Here is an article by Marion Maneker that looks at Nicholas Taleb, one of the few people who predicted the economic catastrophe. I've pulled out the key bits where Taleb prescribes the necessary fix:

Now that the catastrophe is here, Taleb's anger at the economic establishment that drove us over this cliff—and populates the Journal's conference—makes him a representative figure of ordinary people. Like most Americans, Taleb is seething with rage about the financial establishment's role in bringing the about credit crash. "Nobody saw the crisis coming," he says. "Bernanke, all these guys, I want them out. They proved incompetent, they crashed the plane."

...

First, he says, we have to unmask the charlatans of risk like Myron Scholes. To Taleb, Scholes is the Great Oz in this Emerald City because his work on options and derivatives allowed the whole of the financial system to adopt poorly understood products-like the ones that brought AIG down-that hide risk. To Taleb, Scholes' academic work, which enabled the widespread use of complex derivatives, was like "giving children dynamite."

"This guy should be in a retirement home doing Sudoku," Taleb says. "His funds have blown up twice. He shouldn't be allowed in Washington to lecture anyone on risk."

With complex derivatives unmasked and, in Taleb's vision of the future, outlawed, the next step is to create a more robust version of capitalism. Taleb calls it Capitalism 2.0. Robustness begins with a dismantling of debt. Leverage was the gas that inflated the financial system until it was too big, too fragile, and too volatile.

Over the past 20 years, the financial system has grown ever more complex. Building on a greater computing capacity and communication speed—"Bank runs now take place at the speed of BlackBerry"—Taleb recognizes that the financial system now possesses an efficiency that creates volatility. That cannot and will not go away.

We cannot have both debt leverage and a hyper-efficient system—the volatility is just too great. What Taleb explains—which no one else does—is that efficiency is already a form of leverage. A highly efficient system removes slack and magnifies small changes. Think of the efficient system as a high-performance aircraft. Each minute of steering input creates a rapid and violent shift of course, speed, or altitude. The system itself is souped up even before you add the debt. Once you do, the pilot is equally jacked up and twitchy, creating an explosive combination. Now imagine that fighter jet trying to fly in a 1,000-plane formation, and you get an idea of the world financial system in the 21st century.

We can't erase the technology that created the planes, so we'll have to make sure we fly sober, maybe even with an onboard computer that dampens the controls. That means getting rid of the debt. It's that simple.

A deleveraged financial system is a stable one, especially if we increase the redundancy within the system. That's an idea Taleb has taken from biology. But in finance, redundancy means two things: not having players in the game who are "too big to fail" and not allowing anyone—from the individual to the institution—to play with too much money. Redundancy means have cash on the side, not risking it all, and not becoming dependent upon financial assets for your economic well-being.

Krugman Passes Judgement

Paul Krugman has been nipping at the ankles of the Obama economic "team" for months. He thought a little criticism would bring them around. But over the last few weeks he has thrown in the towel. He sees no hope. In his latest NY Times op-ed, he explains that they are wedded to a financial model that they think is fixable, but which he deems broken and irredeemable:

Which brings us back to the Obama administration’s approach to the financial crisis.

Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago. 

To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.

But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.

As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.

Historical Revisionists are Busy!

Here's a bit from an article by James Surowieski in the New Yorker Magazine looking at some people are "re-interpreting" history in order to shape the emerging debate over how fix & avoid this problem:

Did Lehman Brothers’ Failure Matter?

By this point, it’s become conventional wisdom that the failure of Lehman Brothers last September was the catalyst for a massive selloff in the credit and stock markets and a general flight to safety from which the markets have yet to recover. Had the government found a way to save Lehman, the assumption has been, things today would still be pretty terrible, but we probably would not have seen the economy “fall off a cliff,” as Warren Buffett said this weekend.

In the past few days, though, a new meme has started circulating through the economics blogosphere, suggesting that Lehman’s failure actually did not wreak the havoc that everyone who lived through last September thought it did. This argument, which was floated by the well-respected macroeconomist Willem Buiter on Friday, is based on a paper from last November by the Stanford economist John Taylor, which purports to show (pdf) that the credit markets actually did not react all that badly to Lehman going under and that the crisis was really the product of market uncertainty about the effects of government action. Taylor’s conclusion is based on one piece of evidence: a graph of the 3-Month LIBOR—the interest rate that banks charge to lend to each other—which he says shows that the real terror in the credit markets didn’t emerge until well after Lehman Brothers failed.

...

More important, Taylor’s assumption in his paper is that investors would have known right away how severe the repercussions of Lehman’s bankruptcy would be. But this is simply untrue—for whatever reasons (some suggest fraud, others panic), the hole in Lehman’s balance sheet was much bigger than people initially thought it would be, which meant that the losses its lenders suffered were much bigger than anticipated. (One study suggests that the chaotic nature of Lehman’s bankruptcy alone cost creditors tens of billions of dollars.) As the magnitude of the losses became clearer, so too did banks’ risk aversion, since Lehman’s failure seemed to demonstrate starkly the risks of lending to any other big financial institution.

...

This may seem like an academic debate. But it’s not, because those who want to convince us that Lehman’s failure was not a big deal are doing so in order to shape future policy. In other words, they are arguing that when it comes to institutions like, say, Citigroup, the government can, in fact, let them implode—which means, in practical terms, allow their creditors to be wiped out—without any disastrous effects. Maybe they’re right, but it’s an awfully big gamble to take on the basis of a single dubiously interpreted graph.

Mary Roach's "Bonk: The Curious Coupling of Science and Sex"

I like Mary Roach's serious but humourous approach to unusual subjects. I loved Stiff (dead bodies). Now I've been equally captivated by Bonk (sex). Great books!

This is a soups-to-nuts approach to sex research. For those amateurs who love to collect arcane tidbits, this book is a rich resource. Of course there are the campy, over-the-top, jokey interjections by Mary Roach into her subject matter. Some find that off-putting, but for me it makes the book more endearing. I love her enthusiasm. I love her openness and honesty.

This book is a real eye-opener. You will discover things you never even thought, or thought possible. You will discover just how deeply researchers have delved into the topic of sex. And you will be amazed at how much the research "subjects" put up with in their willingness to assist the march of progress. Penis cameras, dildos, the clitoris, orgasm, vibrators, coital imaging (with a cameo appearance by Mary Roach and her husband), erectile dysfunction, testicular implants, hormones, pheromones, etc. are all covered with a light touch but serious content. It is a rich resource, and a must-read book.

The Knives are Out, Get the Economists!

Forget going after the big bonus recipients at AIG. The mobs with pitchforks and torches are about to turn on the academic economists. I'll be on the sidelines cheering them on.

Here is the opening bit of an article by Anatole Kaletsky in the Prospect Magazine of the UK:

Was Adam Smith an economist? Was Keynes, Ricardo or Schumpeter? By the standards of today’s academic economists, the answer is no. Smith, Ricardo and Keynes produced no mathematical models. Their work lacked the “analytical rigour” and precise deductive logic demanded by modern economics. And none of them ever produced an econometric forecast (although Keynes and Schumpeter were able mathematicians). If any of these giants of economics applied for a university job today, they would be rejected. As for their written work, it would not have a chance of acceptance in the Economic Journal or American Economic Review. The editors, if they felt charitable, might advise Smith and Keynes to try a journal of history or sociology.

If you think I exaggerate, ask yourself what role academic economists have played in the present crisis. Granted, a few mainstream economists with practical backgrounds—like Paul Krugman and Larry Summers in the US—have been helpful explaining the crisis to the public and shaping some of the response. But in general how many academic economists have had something useful to say about the greatest upheaval in 70 years? The truth is even worse than this rhetorical question suggests: not only have economists, as a profession, failed to guide the world out of the crisis, they were also primarily responsible for leading us into it.

By “economists” in this context I do not mean the talking heads and commentators (myself included) employed by the media and financial institutions to explain the credit crunch or the collapse of house prices or the rise of unemployment or the movements of currencies and stock markets—usually well after the event. Neither do I mean the forecasters whose computer models churn out scientific-looking numbers on future growth or inflation, numbers that have to be revised so drastically whenever something “unexpected” happens (as it always does) that they are not really forecasts at all but descriptions of recent events. An IMF study of 72 recessions in 63 countries found, for example, that in only four of these cases had economic forecasters predicted a recession three months or more before the event. Economic forecasters and pundits cannot predict the future for the same reason that weather forecasters cannot predict the weather—the world economy is too complex and too susceptible to random shocks for precise numerical forecasts to have any real meaning.

This doesn’t mean that economics is useless, any more than unreliable weather forecasts should lead us to ignore Newton’s laws of motion, on which they rely. But economics should recognise that, as a discipline, it cannot be about predicting, but is instead about explaining and describing. Smith, Ricardo and Schumpeter explained why market economies generally work surprisingly well, often in defiance of common-sense expectations. Others have explained why capitalist economies can fail very badly and what then needs to be done. This was the mission of Keynes, Milton Friedman, Walter Bagehot and, in his way, Karl Marx. And the economists who got us into this mess saw themselves as the self-proclaimed successors of these great theorists. Many of them are the academics who win Nobel prizes, or dream of winning them, and who regard themselves as intellectually superior to the journeymen who work for banks and governments, never mind the populist hoi polloi whose musings appear in newspaper columns or on television.

Academic economists have thus far escaped much blame for the crisis.

And here is the expected summary:

Economics today is a discipline that must either die or undergo a paradigm shift—to make itself both more broadminded, and more modest. It must broaden its horizons to recognise the insights of other social sciences and historical studies and it must return to its roots. Smith, Keynes, Hayek, Schumpeter and all the other truly great economists were interested in economic reality. They studied real human behaviour in markets that actually existed. Their insights came from historical knowledge, psychological intuition and political understanding. Their analytical tools were words, not mathematics. They persuaded with eloquence, not just formal logic. One can see why many of today’s academics may fear such a return of economics to its roots.

Should the economists start finding Dick Cheney "undisclosed locations" to hide alongside the AIG bonus recipient counterparts? Judging from the above... maybe!