Graphic Quote of the Week: Pseudo-Economics at Its Worst


Before I go any further let me first declare that I don’t believe in abstract economic research.  I never did.  Even when I was working on my PhD, I concentrated on Applied Economics, developing large-scale cost models for the industrial sector.  

Come to think of it, I don’t believe in studies for the sake of “pure knowledge” in mathematics and the entire spectrum of natural sciences either.  I think that the virtue of abstract thoughts is affordable only in Philosophy, her sister Poetry, and Fine Arts.  After all, the creation of original ideas is the entire purpose of the imaginative process; and all it needs is one genius mind. 

Yet, humans as a species are so fucking insecure and self-centered!  They constantly need reassurance that they are smarter than they really are.  So, they “study” everything there is because they simply “must know” and not because it can help our planet to survive or make a single thing better in this world.  As a result, vast resources are spent on absolutely irrelevant bullshit and poor trees are cut down to bear endless dissertations, monograms, articles in fat journals, etc.  Nobody, except the assigned reviewers, reads, and, more importantly, can possibly put to use any of that crap.   I would like to ask these people, “So, you’ve discovered, dissected, and analyzed this.  Now what?” 

And that’s assuming the actual “discovery” is made and proven, which is, as you can imagine, is not a frequent case.     

Enters the graph above.  My friend texted it to me.  I stared at my phone’s screen for two seconds and was like, “Hmm, this is fascinating!”  Seeing that the graph was posted by Economist.com, I looked it up.  It turned out to be a part of a “research” paper Forbidden Fruits: The Political Economy of Science, Religion, and Growth (no less!) collectively conceived by a Princeton “scientist” and his two Italian colleagues out of the IMT Institute for Advanced Studies.

[FYI (so you don’t have to look it up):  IMT Institute for Advanced Studies is a research establishment and a graduate school located in Lucca, Italy.  It primarily specializes in various branches of economic and computer sciences.  Note, this is where Princeton and Italy’s highest ranked institution for economic studies allocate their grants.  I mean, right now!]

The paper was published by American National Bureau of Economic Research and, according to the Economist’s note accompanying the graph, the authors explicitly claim to find “a strong negative correlation between innovation, as measured by patents, and religiosity, measured by the share of a population that self-identifies as religious.”    

Huh? What? Where? And WHY? Are you looking at your own graph, gentlemen?  Well, I am.  And if I had to focus my disbelief in just a few most problematic areas, I would have to holler:           

1.  How is this research in the subject of Economics?  By definition, Economics as a branch of social science deals with structures and forces that drive production, distribution, and consumption of goods and services.  While religiosity is definitely a factor in consumption patterns, innovations by themselves (especially the number of filed patents per capita) do not necessarily have direct or even indirect correlation with production and distribution.  In fact, in isolation this statistic doesn’t mean much at all.  More on this below. 

2.  How did these people even come up with the idea for this research?  With all social, political, and economic problems this world is facing, this was deemed crucial  – to find if religious people can produce as many, more, or less patents as atheists?  More importantly, what was the thesis?  That religion is invariably bad for innovations and economic development? The commentary to the chart in The Economist states that “the authors do not claim to prove that religion causes an innovation deficit.”  No?  Then why the said commentary is titled No Inspiration From Above?  Such, liars!  I think that’s exactly what they were trying to show – that being religious stuns one’s creativity; that every political leader who believes in God will force anti-scientific polices.  Such unscientific absolutism!  I wish I could ask them face to face: Do you know anything about the history of innovations?  The majority of the greatest innovators from 1400’s through early 20th century were believers of various degrees.  Even the Man of Proof and Reason himself, Leonardo, did not deny God’s existence.   

3.  Whatever cockamamie tangent cross-sectioned sub-sub-branch of science these  narrow specialists are trying to plow, what were the purpose and application of this exercise?   What were they trying to achieve with this research?  How did they plan to impact the world?  Let’s assume for a second that they’ve found an undeniable inverse correlation between a country’s religiosity and level of innovation.  What’s then?  Cancel religion?  Some countries already tried that, as students of history know.  Agitate people to overthrow their governments for the sake of scientific progress?  There are more important causes to start revolutions.   

4.  You realize, of course, that, in spite of the declining straight line, obnoxiously and arbitrarily drawn through the graph to force their point of view, these pseudo-scientists actually did not prove their preposterous thesis.  There is nothing wrong with that per se, of course.  The prevalent majority of well-financed research projects end in disproving the original theories and hypotheses.  That’s how science works.  By its standards, negative results are just as important as absolute proves.  The problem here is that these particular researchers lie to themselves believing that they came to a positive conclusion.  Well, not to my eye.

According to the graph, the least religious country in the world (and the most populated), China, has the same number of patents per capita as the unspecified cluster of Central & Eastern European countries, whose overwhelming majority of citizens (over 95%) believe in God, and Iran (!).  India (nearly 80% religiosity) and Vietnam (less than 40%) are on the same level of “innovation”; so are Egypt and Uruguay.       

But, of course, the country that completely throws this bullshit study into garbage is the United States of America.  Our patents rate is in the third place after Japan and South Korea (even I was surprised to see that we lead Germany and UK), while, judging by the high percentage of believers, our closest peer should’ve been Guatemala.  

The truth is that if some diligent scientists actually wanted to model the major influences affecting, not innovativeness, which is too broad of a concept, but such specific parameter as the number of government-approved patents, they would have to consider an interwoven complex of factors: social and political structures, distribution of wealth, percentage of GDP re-invested into scientific research, specifics of university systems, extent of fundraising and philanthropy, the existence of entrepreneurial culture, economic mixture (particularly industrial vs. agricultural ratio), the percentage of people who can be motivated on the higher levels of Maslow hierarchy of needs, etc.  And, of course, religiosity, but only as a part of the synthesis.

And one cannot ignore the mundane fact that in some of the sampled countries the patent laws are outdated and the processing bureaucracy is unmanageable.  There might be thousands of applications in those countries that will not see the light of day for decades. 

In all objectivity, though, I cannot dismiss this illustration as completely useless.  As a compilation of data it piqued my curiosity about a few items of information. 

The position of Russia on the chart, for example, shocked me – and not because of their closeness to France and Australia in the number of patents per person, but because of their level of religiosity.  How the hell this country that spent 74 years exterminating God and his devotees with fire and blood, destroying 99% of places of worship and executing priests, rabbis, and imams like mad dogs, in just 24 years since the fall of the Soviet Union shot itself into the 75 percentile of population identifying themselves as religious?         

By the way, all those patents registered in that country (a lot considering its population) mean absolutely nothing in terms of both macro and micro-economics.  Russians are famous for inventing new stuff at their kitchen tables and building prototypes.  None of it ends up in the production because everyone over there, including the entire government, lives for a quick buck, not long-term investment of resources.     

Another thing that kept teasing my attention was the apparent strong potential for innovative achievement in the US; and that despite the pervasive nepotism and escalating irrelevance of merit.  Can you imagine what we could’ve accomplished here if we continued to uphold the fundamental principles of the original American Dream ethos? 

Mad Max vs. Fat Amy, or Sad Accounting of Regressive Tastes


Sad Accounting

Generally speaking, all benchmarking techniques can be defined as ranking of a process or a product against another process or a product with similar specific metrics of known values.  Financial benchmarking in particular focuses on the comparison of the financial results with a purpose of assessing overall competitiveness and productivity.  The beauty of this research tool is in its potential to uncover some underlying reasons behind the comparative results.

While it's difficult (yet not impossible) to apply generic correlative methodologies to such subjective, ambiguously immeasurable, and predominantly qualitative characteristics as artistic values of cinematic products, fiscal aspects of the movie-making are not only comparable (as previously outlined in Arts & Entertainment by the Numbers III), at this point they are the chief driving force behind the big-screen output.  It's that competitiveness, y'all!  "C.r.e.a.m get the money.  Dolla Dolla bill y'all."    

Let's not forget that financial results are accounting reflections of the micro-economic patterns of supply and demand.  Movies, being consumer products, specifically depend on the behavior of the consumer market; even more categorically - on the tastes of the viewing audience.

With that in mind, I would like to sketch out a simplified financial benchmarking exercise based on the most recent installments of two movie franchises (identical products competing in the same markets) that came out on the same day, 05/15/15 (another identical metric) - Mad Max: Fury Road (a terrifyingly believable upgrade of the post-apocalyptic high-octane series with Tom Hardy, Charlize Theron, and Nicholas Hoult) and Pitch Perfect 2 (a hard-to-believe Cinderella-type contemporary chick-flick-with-singing about an a capella group on the road to stardom with Anna Kendrick, Rebel Wilson, and Elizabeth Banks; the latter also produced and directed).

Mad Max opened on more screens: 3702 vs. 3473, yet Pitch Perfect 2 made $69.2 million (230% of its rumored $30 mil budget) during the opening weekend – $23.8 mil more than Mad Max whose $45.4 mil barely returned 30% of its $150 mil budget.  Here, in our blessed USA, the fiscal gap between the two movies keeps only expanding: As of yesterday, Mad Max's domestic gross ($143 mil) was already trailing Pitch Perfect 2's by $34 mil. 

Numbers don't  lie: A handful of them is all we need to clearly show that American general public prefers to see a movie full of inexplicable plot turns and dialogue pearls akin to

"Fat Amy: Listen, I don't want you guys to fight.  You're Beca and Chloe, together you're Bhloe and everyone loves a good Bhloe."

instead of taking a hard and honest look at the future that already awaits us around the proverbial corner, notwithstanding the high cinematic standards, tight script, awesome directions in all divisions of the process, and NO CGI (!!!)

Of course, making back multiples of the budget and fattening the pockets of producers and distributers pretty much guaranteed Pitch Perfect 3, which is already set to be released in 2017.  On the other hand, if people behind Mad Max: Fury Road had to rely only on the US distribution, the $7 mil deficit would pretty much kill all the chances for the filming of the next installment - Mad Max: The WastelandThankfully, there are international distribution channels.

And overseas results are quite opposite to what we observe here at home.  The universal appeal of Mad Max's sci-fi realism yielded the film $202.5 mil of foreign revenues, making the total box office as of yesterday $346.10 mil. 

On the other hand, I can't even imagine how translators deal with that Bhloe crap in the subtitles.  So, it is not surprising that Pitch Perfect 2 made only $94.5 mil outside of US, with 51% of that coming from English-speaking countries of UK, Australia, New Zealand, and the Netherlands.  In many countries the movie stayed in the theaters only for the opening weekend.    As the result, its worldwide box office now totals $272 mil, or $74.1 mil less than its competitor in this example. 

That's gross, of course.  Nowadays, it's hard to overcome a $120 mil budgetary differential.  Thus, the singing chicks are still $46K more profitable than the depiction of our damaged Planet and her marred inhabitants.

One can argue that today $150 mil worth of resources is too high of a price for any movie, good or bad.  And I agree, but spending any resources at all over and over again on crap that furthers the process of human degeneration is simply criminal.

Quote of the Week: Amidst Silly Shenanigans “The Blacklist” Sometimes Hits the Truth on the Head


Reddington and Tuzik"They are… part of a global conspiracy; a shadow organization that spans across every continent and has for the last three decades; consisting of leaders in world governments and the private sector.  Some call this group the Cabal.  The world you live in is the world they want you to think you live in.  They start wars; create chaos; and, when it suits them, they resolve it.  Cabal members will move more money in the next quarter than the World Bank will in the next year.  Their alliance affects a sea of change in every aspects of human life.  The value and distribution of commodities, money, weapons, water, fuel, the food we eat to live, the information we rely on to tell us who we are."

                                                            The Blacklist, episode 2.22

                                           Written by  John Eisendrath and Jon Bokenkamp

The Frustrated CFO's Note (to explain the post's title): It's impossible for an intelligent person to take the action-packed storytelling about spies and secret agents at face value, even if the writers manage to sneak in ideas and opinions that resonate with one's own political, social, and world views, which frequently happens on The Blacklist.  The very basis of a good thriller about things that are "known only to a few" is that shit is mostly made up.  Luc Besson once said that La Femme Nikita and Leon: The Professional were as much sci-fi creations as The Fifth Element.  What pushed The Blacklist into the shenanigans territory for me was the recycling of the "unknowing daughter of the KGB agent-mother" plot turn.  I guess it's difficult for J.R. Orci to shake off the Alias baggage.        

The Frustrated CFO Recommends: Black Mirror


Black_Mirror_1If you can stomach the naked truth about the world we live in, about your surroundings and yourself; if you are ready to actually see a clear depiction of the pile of unbearable scum that the human species has become, watch Black Mirror.  Pay attention and look hard  - it reflects Homo Technologiae  and its self-made surroundings at its realest.

And for those who don't look at the world through the pink glasses of delusional denial, what a joy to know that there is Charlie Brooker and his cohorts at Zeppotron!  What a gratifying experience to realize that there are like-minded people out there!  

Thank you, to everyone who has been working on this reality-fiction anthology and to those at Channel 4 responsible for its distribution.  And special thanks to the executives at Netflix who are continuously bringing narrow-niche products like this to their 60 million global subscribers.  

It has been reported that the show is  a big success in the US.  Well, I don't know if everyone understands that they are looking at their own reflections.  Nevertheless, this gives us a shred of hope, doesn't it?    

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Joke of the Day: Are You Fracking Kidding Me?


FrackingOne of the walls in the lobby of the building where my office is located is entirely covered by multiple monitors.  Together they work as one giant HD screen.  This is what techies call a video wall.  To the best of my knowledge its primary feed is CNBC.

Most days when I leave the office I see in passing Jim Cramer still going Mad about Money. But today I had to leave a little earlier and the only money manager ever to tell the general public not to use their retirement and college funds for stock-market speculations wasn't on yet.  

I have no idea what was on, but from the corner of my eye I saw flashing on the screen

EARTHQUAKES ARE LINKED TO FRACKING?

Eh, dah!  Are you fucking kidding me?  Is that even a question?  Who the fuck told these people that they could rape the Earth every each way and not to hear her scream?

I am glad, though, that it was there, hanging on the wall for a minute – at least someone in the prime media is talking about this abhorrent crime.