Rabobank: Fauci And The Unscientific Method
By Michael Every of Rabobank
Welcome to a new week, and to a lengthy argument I hope is worth reading through to the end of. To start, an editorial in the journal ‘Science’ just argued that Darwin’s ‘The Descent of Man’ is “often problematic, prejudiced, and injurious”, and that the key phrase “’survival of the fittest’ does not accurately represent the dynamics of evolutionary processes.”
Yes, there have always been rivals to Darwin. Perhaps quantum epigenetics will show Lamarck was correct, and giraffes evolve longer necks directly in response to the physical stimuli of juicy leaves dangling above them. If so, that’s how scientific thought progresses. However, while some of the criticisms above may have some validity, the theory of evolution does not inexorably lead Darwinism to the worst evils of Social Darwinism. Although mankind is just another species of animal, as Darwin shook the world in saying, we don’t have to ‘behave like animals’, e.g., mother cats will eat their own kittens if they feel the biological imperative, but humans, rightly, do not. That Darwinism is “problematic” in a hyper-politicised university environment is worth noting even for non-scientists. Darwinism is as close to the oxymoron of “scientific fact” as one gets: if it is not safe from politics, then no science is. And that’s how scientific thought regresses.
Let me stress there is no such thing as a “scientific fact”. Scientific method is to extend an inductive hypothesis, which one tries to falsify, and if one cannot then the hypothesis is considered valid – until falsified. That does not mean it is a ‘fact’. A hypothesis tested vigorously enough can be called a theory – but again always until it is falsified. As opposed to being cancelled. Recall Darwin-denying Lysenkoism, which saw the USSR officially declare the entire field of genetics “a bourgeois pseudoscience” in 1948; over 3,000 Soviet biologists imprisoned, fired, or executed for pointing out everything Lysenko said about higher crop yields –while pleasing to Stalin– could be easily falsified; and tens of millions then starving in the USSR and China because of unscientific agrarian theories. One starts to see the tail risks involved when politics meets science.
Meanwhile, in the US, Dr Fauci says he is “not convinced” Covid-19 is of natural origins, with calls for a full investigation. That’s a complete reversal of the “scientific fact” media meme that such views were conspiracy theories. While it may be based on the falsification of the previous hypothesis by new evidence, there is also a perception that this is at least partly about politics. Certainly, if this new hypothesis is not falsified, then the issue is about to become far more political. If the White House holds an investigation, it will become a huge bone of contention with China; and if the White House won’t, then the Republicans will promise to. There isn’t even room here to consider what will happen if the man-made hypothesis cannot be falsified.
With all that in mind, I was just shown a piece of (not Rabo!) research. One chart takes the US Dollar index (DXY) from 1970 to 2021, with the right vertical axis scaled 70 to 170, and DXY currently around 90. The left vertical axis is the DXY lagged 8 years scaled 70 to 125. There is a strong visual correlation suggesting DXY is about to collapse back to 70 again. Another chart uses a 20-year lag with a projected timeline to 2050, again showing DXY is about to collapse 20%. This is shockingly unscientific! It’s not that the call of a big drop in DXY is bad. There are questions as to why this would happen when the Fed is being dragged closer towards tapering, the Eurodollar is top global dog, and even Elon Musk cannot tweet Bitcoin out of the red on Tesla’s balance sheet – but the hypothesis that the USD could fall is not ridiculous. However, playing with axes to generate an artificial visual correlation is snake-oil, even if it is praiseworthily oleaginous for some.
Yet far more important is the underlying intellectual arrogance – and stupidity. The chart implies a fixed teleology: history and markets do not rhyme, they repeat themselves, and every 8 –or 20– years! The fact that either number works if you tweak the axes makes the intellectual error even more glaring. This is naïve historicism without even the fig-leaf of a philosophy to lean on. There is no hat-tip to Marx and dialectical materialism. No wink at Kondratiev. No hermeneutics of hidden hands at work like clockwork. Just jerry-rigged axes and a series lagged on itself to tell us the ‘future’. Yes, economics is not a ‘science’ when Milton Friedman argued the more unrealistic the assumptions in an economic theory are, the more important it is; and not when openly falsified theories are clung to regardless. But these two charts don’t even display a “scientific-method adjacent” Fichtean thesis > counterthesis > synthesis, just a stupid thesis.
Here we come back to Darwin: does this even matter in terms of whose ideas are “fittest”? If the short DXY market call is right next week, does it matter if the concept behind the charts was off-the-charts stupid? Some would say it doesn’t – and in the short term they are right on a P&L basis. Yet don’t think that following an investment strategy that thinks snake-oil is the revealed life-blood of the universe is going to work out well in the long run. Ironically, the luckier such a strategy is in the short term, the more dangerous it gets as time goes by. Randomly guessing up/down market calls three times in three consecutive months, which is just a 1 in 8 chance using probability theory, and then levering up to go all in on this guru in month four, is a fantastic way to get wiped out completely.
So what’s the key message, for those who have made it this far?
First, if science gets politicized, beware the very fat socio-economic tail risks.
Second, be scientific and methodical in assessing just how *unscientific* much of what surrounds us in economics and markets already is.
And now to Lithuania, and to talk pure politics, given the shocking story that a Belarussian dissident has been arrested after his Ryanair plane en route to Vilnius was forced to land in Minsk due to a fake ‘bomb threat’. He apparently now faces the death penalty. European politicians are decrying this act as hijacking, piracy, or state terror – and the implications are shocking. In a world in which legal remits for some countries already run globally, those who fall foul of them are aware where they can no longer visit, and which airlines they should not fly. Now they may have to consider which *airspace* they cannot fly through. And what if the airspace is disputed, as over the South China Sea? The Belarussian action risks massive geopolitical/economic tensions unless it is immediately condemned by all countries, and the blogger freed. Meanwhile, the EU’s small Baltic states suddenly appear much more exposed.
You want to see risks of true Social Darwinism ahead? It starts with actions like this, not scientists.
Mon, 05/24/2021 – 10:05