Experts Ridiculed Amateur Who Died Before His Vindication

(p. 236) The Altamira cave, near Santander, near the Biscay coast, is 961 feet (263 meters) long, a cavern of chambers and passages, ending in a narrow defile known as the Horse’s Tail. A local landowner, Don Marcelino Sanz de Sautuola, noticed some black marks at the back of the cave in 1876, but thought nothing of them until his eight-year-old daughter Maria, bored with his excavations, wandered with a candle into a side chamber. “Toros! Toros!” she cried, in one classic, and seemingly authentic, tale of archaeological discovery. Father and daughter gazed in amazement at the colorful bison on the ceiling of the low chamber.

Sautuola noticed close similarities between the art and pictures of animals he had seen on antler and bone fragments from French rock shelters at an exhibition in Paris. He claimed that the Altamira bison were the work of Stone Age artists but was ridiculed by scholars for his pains. The unfortunate landowner was vindicated after his death by paintings and engravings discovered at La Mouthe and Les Combarelles caves in 1895 and 1901.

Fagan, Brian. Cro-Magnon: How the Ice Age Gave Birth to the First Modern Humans. New York: Bloomsbury Press, 2010.
(Note: italics in original.)

Myron Scholes on Sticking to His Ideas, Losing $4 Billion in Four Months, and Rejecting Taleb’s Advice


Myron Scholes. Source of photo: online version of the NYT article quoted and cited below.

(p. 22) The writer Nassim Nicholas Taleb contends that instead of giving advice on managing risk, you “should be in a retirement home doing sudoku.”
If someone says to you, “Go to an old-folks’ home,” that’s kind of ridiculous, because a lot of old people are doing terrific things for society. I never tried sudoku. Maybe he spends his time doing sudoku.

Some economists believe that mathematical models like yours lulled banks into a false sense of security, and I am wondering if you have revised your ideas as a consequence.
I haven’t changed my ideas. A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.
. . .
After leaving academia, you helped found Long-Term Capital Management, a hedge fund that lost $4 billion in four months and became a symbol of ’90s-style financial failure. .
Obviously, you prefer not to have lost money for investors.

For the full interview, see:
DEBORAH SOLOMON. “Questions for Myron Scholes; Crash Course.” The New York Times, Magazine Section (Sun., May 17, 2009): 22.
(Note: ellipsis added; bold in original versions, to indicate questions by Deborah Solomon.)
(Note: the online version of the article is dated May 14, 2009.)

FDR’s Taxes Deepened the Great Depression

Professor Ohanian is a UCLA economist well-known for his research on the Great Depression. Below I quote a few of his recent observations (with co-author Cooley):

(p. A17) In 1937, after several years of partial recovery from the Great Depression, the U.S. economy fell into a sharp recession. The episode has become a lightning rod in the ongoing debate about whether the economy needs further increases in government spending to keep employment from declining even more.
. . .
The economy did not tank in 1937 because government spending declined. Increases in tax rates, particularly capital income tax rates, and the expansion of unions, were most likely responsible. Unfortunately, these same factors pose a similar threat today.
. . .
. . . in 1936, the Roosevelt administration pushed through a tax on corporate profits that were not distributed to shareholders. The sliding scale tax began at 7% if a company retained 1% of its net income, and went to 27% if a company retained 70% of net income. This tax significantly raised the cost of investment, as most investment is financed with a corporation’s own retained earnings.
The tax rate on dividends also rose to 15.98% in 1932 from 10.14% in 1929, and then doubled again by 1936. Research conducted last year by Ellen McGratten of the Federal Reserve Bank of Minneapolis suggests that these increases in capital income taxation can account for much of the 26% decline in business fixed investment that occurred in 1937-1938.

For the full commentary, see:
THOMAS F. COOLEY AND LEE E. OHANIAN. “Gates and Buffett Take the Pledge; Wealthy businessmen often feel obligated to ‘give back.’ Who says they’ve taken anything?” The Wall Street Journal (Fri., AUGUST 20, 2010): A15.
(Note: ellipses added.)

That McGratten paper is:
McGrattan, Ellen R. “Capital Taxation During the U.S. Great Depression.” Working Paper 670, Federal Reserve Bank of Minneapolis, April 2009.

Twitter CEO Returned to Nebraska to Found First Company


Evan Williams, Twitter CEO. Source of photo: online version of the NYT article quoted and cited below.

(p. 9) I GREW up on a farm in Nebraska, where we grew mostly corn and soybeans. During the summers I was responsible for making sure the crops were irrigated.

After high school, I enrolled at the University of Nebraska at Lincoln, but I stayed only a year and a half. I felt college was a waste of time; I wanted to start working. I moved to Florida, where I did some freelance copywriting. After that I moved to Texas and stayed with my older sister while I figured out what to do next. In 1994, I returned to Nebraska and started my first company with my dad.
We didn’t know anything about the Internet, but I thought it was going to be a big deal. We produced CD-ROMs and a video on how to use the Internet, and we did some Web hosting. I recruited some friends and we tossed around some ideas, but none of us knew how to write software and we didn’t have much money. We watched what entrepreneurs in California were doing and tried to play along.
. . .
My life has been a series of well-orchestrated accidents; I’ve always suffered from hallucinogenic optimism. I was broke for more than 10 years. I remember staying up all night one night at my first company and looking in couch cushions the next morning for some change to buy coffee. I’ve been able to pay my father back, which is nice, and my mother doesn’t worry about me as much since I got married a year and a half ago.

For the full story, see:
EVAN WILLIAMS. “The Boss; For Twitter C.E.O., Well-Orchestrated Accidents.” The New York Times, SundayBusiness Section (Sun., March 8, 2009): 9.
(Note: the online version of the story is dated March 7, 2009.)

Cultures that Excel at the Practical Often Also Excel at the Sublime

According to the reasoning of the following passages, the same Cro-Magnons who created the wonderful cave paintings at Lascaux, were also the ones who created the highly effective laurel leaf projectile points.
It is often believed that the practical is in conflict with the sublime. The Solutreans may be one more example, in addition to that of entrepreneurial capitalism, that cultures that excel at the practical also excel at the sublime.
[The passages I quote are somewhat disjointed, so let me sketch how they fit together. The first sentence asserts that the Lascaux cave paintings are the prehistoric equal of the Sistine Chapel. The second passage describes the Salutreans’ highly practical laurel leaf projectile points. The final sentence asserts that the same Salutrean culture that invented the practical points, also painted the sublime cave at Lascaux.]

(p. 219) Lascaux had been sealed since the late Ice Age, so what the Abbe Henri Breuil soon called “the Sistine Chapel of Prehistory” was intact.
. . .
(p. 221) . . . The seasonal killing at Solutre resumed, but now the prey was reindeer rather than horses. This time, too, the hunters used not only bone-pointed spears hut also weapons bearing what French archaeologists rather elegantly call feuilles de laurier, “laurel leaves” . . . . These beautifully made stone projectile points do indeed look like idealized laurel leaves and stand out as exotic in otherwise unchanging tool kits of bone artifacts, burins, and scrapers. Those skilled enough to fabricate them had mastered a new (p. 222) stoneworking technology, which involved using an antler billet to squeeze off shallow flakes by applying sharp pressure along the edges of a blade. This technique–pressure flaking–produced thin, beautifully shaped yet functional spear points that were both lethal and lovely to look upon. Sometimes, the stoneworkers made what one might call rudimentary versions of the points using pressure flaking on but one side of the tool. On occasion, too, they made spearheads with a shoulder that served as the mount for the shaft. But the ultimate was the classic laurel leaf, flaked on both sides, beautifully regular and thin. Feuilles de laurier were never common, and indeed, some researchers wonder if they were, in fact, ceremonial tools and never used in the field. This seems unlikely, for they would have made tough, effective weapons for killing prey like reindeer.
. . .
If the Lascaux chronology is to be believed–and remember that the radiocarbon dates come from artifacts in the cave, not actual paintings–then Solutreans were the artists who painted there, . . .

Fagan, Brian. Cro-Magnon: How the Ice Age Gave Birth to the First Modern Humans. New York: Bloomsbury Press, 2010.
(Note: ellipses added; italics in original.)

“A Very Clear-Thinking Heretic” Doubted Big Bang Theory

BurbidgeGeoffrey2010-09-02.jpg “Geoffrey Burbidge’s work in astronomy changed the field.” Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. 26) Geoffrey Burbidge, an English physicist who became a towering figure in astronomy by helping to explain how people and everything else are made of stardust, died on Jan. 26 in San Diego. He was 84.
. . .
Dr. Burbidge’s skepticism extended to cosmology. In 1990, he and four other astronomers, including Drs. Arp and Hoyle, published a broadside in the journal Nature listing arguments against the Big Bang.
Dr. Burbidge preferred instead a version of Dr. Hoyle’s Steady State theory of an eternal universe. In the new version, small, local big bangs originating in the nuclei of galaxies every 20 billion years or so kept the universe boiling. To his annoyance, most other astronomers ignored this view.
In a memoir in 2007, Dr. Burbidge wrote that this quasi-steady state theory was probably closer to the truth than the Big Bang. But he added that “there is such a heavy bias against any minority point of view in cosmology that it may take a very long time for this to occur.”
Despite his contrarian ways, Dr. Burbidge maintained his credibility in the astronomical establishment, serving as director of Kitt Peak from 1978 to 1984 and editing the prestigious Annual Review of Astronomy and Astrophysics for more than 30 years. He was “a very clear-thinking heretic,” Dr. Strittmatter said.

For the full obituary, see:

DENNIS OVERBYE. “Geoffrey Burbidge, Who Traced Life to Stardust, Is Dead at 84 ” The New York Times, First Section (Sun., February 7, 2010 ): A7.

(Note: ellipsis added.)
(Note: the online version of the obituary is dated February 6, 2010.)

Successful Entrepreneurs Do Not Need to Give Back to Society—They Already Gave at the Office

(p. A15) Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to “give back” to society. But “giving back” implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they have earned for investing their time and talent in creating products and services that others value. They haven’t taken from society, but rather enriched us in ways that were previously unimaginable.
. . .
Let’s hope the philanthropy of those who . . . sign the Giving Pledge achieves great things. But let’s not fool ourselves into thinking that businessmen are likely to achieve more by giving their money away than they have by making it in the first place.

For the full commentary, see:
Kimberly O. Dennis. “Gates and Buffett Take the Pledge; Wealthy businessmen often feel obligated to ‘give back.’ Who says they’ve taken anything?” The Wall Street Journal (Fri., AUGUST 20, 2010): A15.
(Note: ellipses added.)