Tag: The Economist

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? 

Pop Culture Impediment and Career Advancement


The-economist-cover-facebookA couple of months ago I was working with a client, primarily concentrating on the improvement of accounting policies and the transition from QuickBooks to ERP. In the process, I interacted a lot with the company's staff accountant.

She is a sharp and ambitious young woman from Pacific Asia. I liked her very much and was particularly impressed by her outstanding work ethics (a rarity nowadays). She's been with the company for nearly two years and this was her first job after she got her BBA in Accounting.

Her knowledge of bookkeeping basics was pretty solid, which gave her much confidence. She was determined to leave the company and look for a job that would give her a faster career track. Never mind the fact that I've discovered a lot of errors and holes in those areas of company's records that pertained to somewhat more sophisticated concepts, such as Inventory/COGS conversion and revenue recognition.

It wasn't entirely her fault. She didn't have a benefit of working with a seasoned supervisor and wasn't savvy enough yet to understand that accountants were expected to look for standards pertaining to a specific industry. She is a capable individual, though, and most likely will get better with years. Hey, under contemporary standards, she is probably in a top 10% of quality workers. Those experience and knowledge gaps are not the reasons why I think it's unlikely for her to have a high-level career in an average American company.

Here is what happened during that consulting engagement.  Facebook filed S1, thus making public its hopes for a $5 billion IPO. The 02/02/12 issue of The Economist arrived at the client's office with a cover spoofing Mark Zuckerberg's profile on his own website, completed with Caesar's boast as a "status" and comments from various "friends," including Bill Gates, Matt Romney, etc.

Unfortunately, the "author" of the most amusing comment was obscured by the embedded subscriber's label – one could only see two letters "ge." I read, "The Death Star is fully armed and operational" and laughed, "This must be Google." The girl was standing next to me. She said, "It's 'ge,' not le' we can see." I explained, it's Larry Page of Google. She looked doubtful and also didn't understand, why I found it so funny. Something hit me and I asked, "Do you know what the Death Star is?" She shook her head, "No."

I didn't show it, but I was very surprised.  I understand that she was isolated from the rest of the world back home, but she graduated from high school and college here, in the States. I took her out for lunch and spent 40 minutes explaining: Larry Page, Sergey Brin, Google – Facebook competition, "Stars Wars," the Dark Side, Jedi, the irony of the reference – all fresh news to her.

This incident put me into an inquisitive mode and from time to time I threw well-camouflaged, unobtrusive questions at her.

"What kind of music to you like?" "Pop." "Like who?" "You wouldn't know them." "Try me. I am extremely eclectic when it comes to all arts. Who is your favorite band?" "They are all Asian."

Some time later she ventures, "What are your favorite bands?" "It's a long list, but there is a Top 10 that I can never rank – like Led Zeppelin, Radiohead, Nirvana, Pink Floyd, Queen…" She said she'd never heard those names. I am ready to give up, but still, "The Beatles is one of my Top 5." She has heard the name, but never listened to their music. My heart aches in utter pity.

Every night she watches funny videos from her home country on YouTube. How about TV? (C'mon, people all over the world watch American TV shows . In 2004, I flew from Amsterdam to Istanbul and saw a Dutch girl watching an episode of "Six Feet Under" on her laptop). Alas, not this girl, "I don't watch American television."

The question is, does this hard-working, diligent, and fairly bright person have a chance of ever becoming a partner in an accounting firm, or a corporate CFO, if the said companies are not under Asian management? Unlikely.

The higher you advance in your career, the more you have to communicate with people around you. Nobody sticks to just business, there is always the small-talk. People will be discussing the latest "Homeland" episode and she won't even know what it is? When everyone starts noticing, what will they think? In this country, pop culture is like English – a common language of the melting pot, and you must be able to speak it, or you will devalue yourself in the eyes of others.

To tell you the truth, in spite of my religious belief in the merit-based system, I don't think that this is wrong. You don't have to like pop culture and, like me, you can criticize its prevailing weaknesses all the time. Yet, not to be aware of it entirely – that's just strange. Someone who does her job well, but is so disinterested in her immediate surroundings, will be considered a reliable functionary, but unlikely to climb too high up the corporate ladder.