We know that correlation does not necessarily mean causation. But sometimes you gotta wonder, especially as Mr. Trump’s administration is busily dismantling the CIA. First, GW Bush ignore the PDB of August 8, 2001, on “Bin Laden determined to strike in US”. Then Trump 1.0 eliminates the NSC directorate on pandemic preparedness before the Covid-19 pandemic (and apparently with the exception of Peter Navarro(!) ignores warnings about Covid).
The PDF of the entire memo (redacted of course), delivered 36 days before 9/11, is here.
Now, Mr. Trump’s administration is going full throttle to eliminate (once again) early warning systems against threats to the United States. What’s coming next?
Populism elevates personal intuition above fact. Experts (the real ones) traffic in facts, and populists are mostly anti-expertise. Maybe you want your surgeon to be an expert, and your plumber, but scientists, teachers, policy makers, bureaucrats – what do they know?
Bush didn’t “debate with myself”, which was his dismissive way of saying he didn’t need to think before deciding. War and tax cuts, deregulation and bullying were all that mattered. That said, even Bush was more sensitive to unintended consequences than Trump, though punishing differences of opinion was a big part of the Bush administration, just like it is for the felon-in-chief.
Off topic – Risks to the AI-ification of finance:
Inevitably, advances in information technology are adopted as a way to speed up – excuse me, “to improve efficiency in” – financial transactions; AI is here and is going to cause financial turbulence. Jon Danielsson, Director, of the LSE Systemic Risk Centre, is on the case:
https://cepr.org/voxeu/columns/artificial-intelligence-and-stability
Here’s his introductory paragraph:
“Private-sector financial institutions are rapidly adopting artificial intelligence (AI), motivated by promises of significant efficiency improvements. While these developments are broadly positive, AI also poses threats – which are poorly understood – to the stability of the financial system.”
I’d love to know how Danielsson arrived at “these developments are broadly positive”, but let’s put that “what’s good for finance is always good” shibboleth aside. Danielsson sees the speed and black-box nature of AI-driven financial activity as a source of risk. He’s in charge of studying systemic financial risk at the LSE, so maybe he’s on to something. After all, it’s pretty much axiomatic that financial innovation leads to crisis.
Danielsson recommends that governments set up AI-driven emergency liquidity facilities to deal with AI-generated bad things. Y’all remember the whole “what about moral hazard” objection to financial bailouts? Seems like we’ve given up on that.
Danielsson has essentially recommended that human judgement be set aside, so that any time an AI-based money-making scheme runs amok, government will lend money to the scheme and so to its backers and counter-parties. Never question, just lend. Go ahead and AI the bejesus out of this thing – we’ll back you up.
The problem Danielsson has identified is that split-second financial transactions with no human oversight and no human insight into the transaction creates systemic financial risk. His solution is split-second bailouts with no human oversight and no human insight into the transaction.
I’m willing to believe that AI is a problem. I’m not so sure Danielsson has the solution.