Education and Intuition

The 2014 PBS TV series, How We Got to Now is a good miniseries on improvements in glass-making, sewage, water management, etc. that serve as the material/organizational basis for this modern world.

At one point in the series, the host Steven Johnson, a kind of historian of innovation, reveals his idea of how innovation occurs and he focuses on mavericks whose breakthrough is not a sudden “Eureka!” moment, but rather what Johnson calls “a slow hunch.” In other words, the innovators struggle along with a partially understood sense of possibility, very inchoate in the beginning, that comes into better focus with the passage of years and decades, via missteps and boondoggles.

The science writer Arthur Koestler shines a different “flashlight” on this problem of intuitive creativity and its bearing fruit:

Arthur Koestler, CBE (UK: 5 September 1905 – 1 March 1983) was a Hungarian British author and journalist. Koestler was born in Budapest. His masterful book, The Sleepwalkers, is a kind of defense of the way people in the past benefited from a productive sleepwalking on their journeys to scientific advance.

The Sleepwalkers: A History of Man’s Changing Vision of the Universe is a 1959 book by Arthur Koestler. It traces the history of Western cosmology from ancient Mesopotamia to Isaac Newton. He suggests that discoveries in science arise through a process akin to sleepwalking. Not that they arise by chance, but rather that scientists are neither fully aware of what guides their research, nor are they fully aware of the implications of what they discover.

A central theme of the book is the changing relationship between faith and reason. Koestler explores how these seemingly contradictory threads existed harmoniously in many of the greatest intellectuals of the West. He illustrates that while the two are estranged today, in the past the most ground-breaking thinkers were often very spiritual.

Another recurrent theme of this book is the breaking of paradigms in order to create new ones. People—scientists included—hold on to cherished old beliefs with such love and attachment that they refuse to see the wrong in their ideas and the truth in the ideas that are to replace them.

The conclusion he puts forward at the end of the book is that modern science is trying too hard to be rational. Scientists have been at their best when they allowed themselves to behave as “sleepwalkers,” instead of trying too earnestly to ratiocinate.

Add to this overview the “creativity” discussion on The Charlie Rose Show in The Brain Series (2010), where Professor Eric Kandel, the Nobel-prize physiologist, states forthrightly that brain research has no idea about creativity and the prospect of explaining creativity in terms of the brain is very distant indeed.

The arrival of a “slow hunch” (Steven Johnson) and “productive sleepwalking,” as opposed to unproductive kinds of woolgathering (Arthur Koestler), are mind, personality and spirit issues, although they do have brain-chemical “correlations” that cannot be explained mechanistically.

Mysteries all have physical/chemical “correlations” but cannot be simplistically reduced to biochem or genomics.

Education and the Pursuit of Improved Overviews

Professor Sherman Stein was a prominent mathematician and popularizer, and his book, Mathematics: The Man-Made Universe, is a modern classic. The subtitle “The Man-made Universe” already tells you that you’re looking at a clear exposition of “humans made math” in contrast to the “mathematics fundamentalism,” à la Professor Max Tegmark of MIT, whose tone seems to say mathematics allowed for reality and us.

This is of course a perfect “argument without end.” This is the kind of argument that should help a student to rethink their assumptions and not obsess about some once-and-for-all final understanding which can become an “idée fixe” (i.e., fixed idea in French, indicating being overly rigid or stuck).

In the preface to Professor Stein’s mathematics survey classic, he writes:

“We all find ourselves in a world we never made. Though we become used to the kitchen sink, we do not understand the atoms that compose it. The kitchen sink, like all the objects surrounding us, is a convenient abstraction.

Mathematics, on the other hand is completely the work of man.

Each theorem, each proof, is the product of the human mind. In mathematics all the cards can be put on the table.

In this sense, mathematics is concrete whereas the world is abstract.”

(Sherman Stein, Mathematics The Man-Made Universe, Dover Publications, “Preface” Third Edition, page XIII, 1999)

Meta-intelligence tells you if views of what is real, what is concrete, what is abstract, what is man-made, what is mathematical, are so radically different depending on the interpreter or analyst, it makes prudent sense to keep various views in one’s mind and modify them or juggle them as you go along. Our ability as a species to nail down for eternity what the nature of mathematics, humans and kitchen sinks are and how they all interrelate, is elusive and tangled up in language, as Wittgenstein keeps saying.

Education: Linguistic and Arithmetic Elusiveness

We wish to sensitize the student to the obvious-but-hard-to-see truth that both language and arithmetic have slippery natures built into them and seeing this clearly is a part of deeper education, our mission here.

Take four simple statements and see that they’re entwined and “confusing.”

  1. You can count (i.e., numeracy).
  2. You can count (depend) on me.
  3. You don’t count (i.e., importance).
  4. Count (include) me in.

When a person says, “you can count on me” do they mean that you will be standing on me and then go, “one apple, two apples, three apples” (i.e., count in the everyday sense). No, obviously not. “On” in this context is not physical or locational, but figurative. Ask yourself: how is it that you know the difference and nuances of all these meanings given that the word count and the preposition “on” seem straightforward but are really “polyvalent.”

Wittgenstein tells us that philosophy and its conundrums are ultimately based on “language games.”

When Gadamer (Heidegger’s student) tells us that “man is a linguistic creature” he means, among other things, that man “swims” in this ambiguity ocean every moment and puns and jokes aside, handles these ambiguities automatically, somehow. How does a child acquiring language get the sense of all this? It’s difficult to understand and explain. Language is both our nature and somehow beyond our grasp.

The same slipperiness, in a different way, holds for arithmetic and numbers. You can immediately see that the square root of 16 is 4 (plus or minus) but if you are asked, “what is the square root of seventeen?” you’d be “at sea” without a calculator. If you’re now asked, what is the square root of -17 (negative seventeen), you would probably be lost.

These would seem to be very basic “operations” and yet are baffling in their way and parallel the “sudden difficulties” in language use and orientation and clarity.

Deep and “meta-intelligent” education, which we promote here, begins by seeing, among other things, that both our ability to function while “swimming” among words and numbers is puzzling if you look at them “freshly.”

It’s also not so easy to define exactly what reading and writing are in the first place or why exactly the smile in Leonardo da Vinci’s Mona Lisa painting is enigmatic.

When one glimpses the truth that we are surrounded by obvious things that are never really obvious, one pauses and thinks. This is where (self) “re-education” begins, especially if “enchantment” (genuine magical fascination) accompanies the thinking.

Words and Reality and Change: What Is a Fluctuation?

Ludwig Boltzmann who died in 1906 was a giant in the history of physics.

His name is associated with various fields like statistical mechanics, entropy and so on.

A standard physics overview book called Introducing Quantum Theory (2007, Icon/Totem Books) shows a “cartoon” of Boltzmann which says, “I also introduced the controversial notion of fluctuations.” (page 25)

In common parlance, some common synonyms of fluctuate are oscillate, sway, swing, undulate, vibrate and waver. While all these words mean “to move from one direction to its opposite,” fluctuate suggests (sort of) constant irregular changes of level, intensity or value. Pulses and some pulsations suggest themselves as related.

Expressions like “Boltzmann brains” refer to this great physicist Boltzmann and you can find this notion described here: “Boltzmann Brain.”

Notice that the word “fluctuation” occurs four times in one of the paragraphs of the article “Boltzmann Brain,” as you can see:

“In 1931, astronomer Arthur Eddington pointed out that, because a large fluctuation is exponentially less probable than a small fluctuation, observers in Boltzmann universes will be vastly outnumbered by observers in smaller fluctuations. Physicist Richard Feynman published a similar counterargument within his widely read 1964 Feynman Lectures on Physics. By 2004, physicists had pushed Eddington’s observation to its logical conclusion: the most numerous observers in an eternity of thermal fluctuations would be minimal “Boltzmann brains” popping up in an otherwise featureless universe.”

You may remember perhaps you’ve also heard the term, perhaps on a PBS Nova episode on quantum fluctuation.

In the classic history of science book, The Merely Personal by Dr. Jeremy Bernstein (Ivan Dee, Chicago, 2001), one encounters the word fluctuation all over:

“This uniform density of matter …and fluctuations from the average are what would produce the unwanted instability.”

“So Einstein chose the cosmological constant…” (page 83 of Bernstein’s book)

Suppose we allow our minds to be restless and turn to economics to “change the lens” we are using to look at the world, since lens-changing is one of the pillars of Meta Intelligence.

What do we see?

In 1927, Keynes’s professor Arthur Cecil Pigou (died in 1959) published the famous work, Industrial Fluctuations.

In 1915, twelve years earlier, the famous Sir Dennis Holme Robertson (died in 1963) published A Study of Industrial Fluctuation.

The word fluctuation seems to be migrating to or resonating in economics.

The larger point (i.e., the Meta Intelligent one): is the use of this word a linguistic accident or fashion or is something basic being discovered about how some “things” “jump around” in the world?

Is the world seen as more “jumpy” or has it become more jumpy due to global integration or disintegration or in going to the deeper levels of physics with the replacement of a Newtonian world by an Einsteinian one?

The phenomena of change—call it “change-ology” whooshes up in front of us and a Meta Intelligent student of the world would immediately ponder fluctuations versus blips versus oscillations versus jumps and saltations (used in biology) and so on. What about pulsations? Gyrations?

This immediately places in front of you the question of the relationship of languages (words, numbers, images) to events.

The point is not to nail down some final answer. Our task here is not to delve into fields like physics or economics or whatever but to notice the very terms we are using across fields and in daily life (i.e., stock price fluctuations).

Notice, say, how the next blog post on oil price dynamics begins:

“Our oil price decomposition, reported weekly, examines what’s behind recent fluctuations in oil prices…”

The real point is to keep pondering and “sniffing” (i.e., Meta Intelligence), since MI is an awareness quest before all.

Movies as a Parallel University: Cola Wars Movie

The 1961 fast-paced comedy, One, Two, Three starring James Cagney is extremely informative in a certain way if you get beyond the farcical and “manic-jocular” tone and atmosphere.

The story takes place in West Berlin. Communism and Nazism are still “in the air,” although Germany has of course been defeated in 1945.

C.R. “Mac” MacNamara (James Cagney) is a high-ranking executive in the Coca-Cola Company, assigned to West Berlin after a business fiasco a few years earlier in the Middle East (about which he is still bitter). While based in West Germany for now, Mac is angling to become head of Western European Coca-Cola Operations, based in London. After working on an arrangement to introduce Coke into the Soviet Union, Mac receives a call from his boss, W.P. Hazeltine, at the Coca-Cola headquarters in Atlanta. Scarlett Hazeltine, the boss’s hot-blooded but slightly dim 17-year-old socialite daughter, is coming to West Berlin. Mac is assigned the unenviable task of taking care of this young whirlwind.

The undiscussed and “latent content” of this zany comedy is very serious.

There are three fundamental choices for a country:

  1. Class war (Communism, Eastern Bloc, Russia).
  2. Race war (Nazis, Germany, fascism).
  3. Cola war (Coke versus Pepsi, USA, business civilization).

The implicit message of the movie, which constitutes a kind of ultimate political science lesson, is that cola wars (i.e., corporate competition for sales and profits and markets worldwide) is the best choice, no matter that it seems manic and empty, since the alternatives on the list of three options are impractical nightmares which lead to calamities and historical catastrophes.

The basic book describing the cola wars factually is: The Cola Wars: The Story of the Global Battle between the Coca-Cola Company and PepsiCo, Inc., J.C. Louis & Harvey Z. Yazijian, Everest House, October 1, 1980.

Education and “The Three-Body Problem”

The brilliant math-watcher, Ian Stewart, says of this classic physics problem, the Three-Body Problem:

Newton’s Law of Gravity runs into problems with three bodies (earth, moon, sun, say).

In particular, the gravitational interaction of a mere three bodies, assumed to obey Newton’s inverse square law of gravity, stumped the mathematical world for centuries.

It still does, if what you want is a nice formula for the orbits of those bodies. In fact, we now know that three-body dynamics is chaotic–so irregular that is has elements of randomness.

There is no tidy geometric characterization of three-body orbits, not even a formula in coordinate geometry.

Until the late nineteenth century, very little was known about the motion of three celestial bodies, even if one of them were so tiny that its mass could be ignored.

(Visions of Infinity: The Great Mathematical Problems, Ian Stewart, Basic Books, 2014, page 136)

Henri Poincaré, the great mathematician, wrestled with this with tremendous intricacy and ingenuity all his life:

Jules Henri Poincaré was a French mathematician, theoretical physicist, engineer, and philosopher of science. He is often described as a polymath, and in mathematics as “The Last Universalist,” since he excelled in all fields of the discipline as it existed during his lifetime.

Born: April 29, 1854, Nancy, France
Died: July 17, 1912, Paris, France.

We now think of applying in an evocative and not a rigorous mathematical way, the unexpected difficulties of the three-body problem to the n-body (i.e., more than three) problems of sociology or economics or history itself, and sense that social life is always multifactorial and not readily pin-downable, since “everything is causing everything else” and extracting mono-causal explanations must be elusive for all the planetary and Poincaré reasons and beyond.

This suggests to the student that novels are one attempt to say something about n-body human “orbits” based on “n-body” stances and “circumstances” with large amounts of randomness governing the untidy mess that dominates human affairs.

Words are deployed in novels and not numbers as in physics, but the “recalcitrance” of the world, social and physical, remains permanent.

Education and meta-intelligence would be more complete by seeing how the world, as someone put it, “won’t meet us halfway.” Remember Ian Stewart’s warning above:

“There is no tidy geometric characterization of three-body orbits…” and you sense that this must apply to human affairs even more deeply.

Education and Ambiguity Awareness: A Polyvalent World

Sleepwalkers and sleepwalking are both destructive and constructive and show us the ambiguity in all phenomena.

The World War I chronicle of Professor Christopher Clark, The Sleepwalkers, from 2012, is described this way:

On the morning of June 28, 1914, when Archduke Franz Ferdinand and his wife, Sophie Chotek, arrived at Sarajevo railway station, Europe was at peace. Thirty-seven days later, it was at war. The conflict that resulted would kill more than fifteen million people, destroy three empires, and permanently alter world history.

The Sleepwalkers reveals in gripping detail how the crisis leading to World War I unfolded. Drawing on fresh sources, it traces the paths to war in a minute-by-minute, action-packed narrative that cuts among the key decision centers in Vienna, Berlin, St. Petersburg, Paris, London, and Belgrade.

Distinguished historian Christopher Clark examines the decades of history that informed the events of 1914 and details the mutual misunderstandings and unintended signals that drove the crisis forward in a few short weeks.

How did the Balkans—a peripheral region far from Europe’s centers of power and wealth—come to be the center of a drama of such magnitude? How had European nations organized themselves into opposing alliances, and how did these nations manage to carry out foreign policy as a result? Clark reveals a Europe racked by chronic problems—a fractured world of instability and militancy that was, fatefully, saddled with a conspicuously ineffectual set of political leaders. These rulers, who prided themselves on their modernity and rationalism, stumbled through crisis after crisis and finally convinced themselves that war was the only answer.

On the other hand, the great science writer and intellectual Arthur Koestler (died in 1983) in his own book, The Sleepwalkers, (originally, 1959) argues that the revolution in cosmology associated with the names of Copernicus, Kepler, Galileo, et al depended on visionary thinking, a kind of “sleepwalking.”

Lastly, the classic novel, The Sleepwalkers by Hermann Broch (died in 1851) condemns sleepwalking as the basis of Europe and Germany’s descent into nightmare.

Important works by Broch are The Sleepwalkers (German: “Die Schlafwandler,” 1932) and The Guiltless (German: “Die Schuldlosen,” 1950). The Sleepwalkers is a trilogy, where Broch takes “the degeneration of values” as his theme. Various generations are depicted as sleepwalking through their times and eras without any ability to “see past” their time, place, era. They were “sleepwalking.” This made them liable to demagogic deceptions and recruitment.

On the other hand, the experience and story of Kekulé (died 1896) and his scientific discoveries prodded by dreams and reveries and sleepwalking give us a story that argues against seeing sleepwalking as always negative:
Kekulé’s dream and “good kinds of sleepwalking.”

Friedrich August Kekulé, later Friedrich August Kekule von Stradonitz (7 September 1829 – 13 July 1896), was a German organic chemist. From the 1850s until his death, Kekulé was one of the most prominent chemists in Europe, especially in theoretical chemistry. He was the principal founder of the theory of chemical structure.

The new understanding of benzene (C6H6), and hence of all aromatic compounds, proved to be so important for both pure and applied chemistry after 1865 that in 1890 the German Chemical Society organized an elaborate appreciation in Kekulé’s honor, celebrating the twenty-fifth anniversary of his first benzene paper.

Here Kekulé spoke of the creation of the theory.

He said that he had discovered the ring shape of the benzene molecule after having a reverie or day-dream of a snake seizing its own tail (this is an ancient symbol known as the ouroboros).

Kekulé’s story of “dreaming up” the structure of benzene (C6H6) gives us another historical example of Arthur Koestler-type “good sleepwalking” ie visionary dreams and reveries that really enhance “objective” concrete scientific analysis and not only art works.

It is educational to see the inner ambiguity of words and phenomena (such as sleepwalking) because this duality and “polyvalence” applies to many cases.

Germany-Watching: Economics (U.S. Money Market Fund Reform)

from Deutsche Bundesbank Eurosystem’s Bundesbank Research Centre:

You Can’t Always Get What You Want (Where You Want It): Cross-Border Effects of the U.S. Money Market Fund Reform [PDF]

Authors: Daniel Fricke, Stefan Greppmair, Karol Paludkiewicz

Non-technical summary
Research Question

Money market funds (MMFs) are an important part of the growing segment of non-bank financial intermediaries. This paper contributes to this literature by analyzing the cross-border effects of the 2014 U.S. MMF reform, which was implemented several years prior to the EU Regulation. We study whether euro area MMFs received inflows as a consequence of the reform and investigate the (unintended) economic effects on the basis of the non-synchronized implementation dates of the regulatory changes in the U.S. and the EU.

Contribution

To the best of our knowledge, we are the first to examine the cross-border effects of the 2014 U.S. MMF reform. Prior work has shown that the reform led to a substantial decline of the institutional prime segment in the U.S. (MMFs that invest primarily in non-sovereign debt instruments). Moreover, these funds increased their risk-taking due to the increased competition and newly imposed liquidity restrictions left these funds more prone to large outflows (run risks).

Results

We document both positive and negative effects of the U.S. reform on institutional MMFs in the euro area. These funds, particularly those from the prime segment, experienced substantial inflows from foreign investors around the implementation of the U.S. reform and we show that these cross-border flows were largely motivated by the search for money-like instruments. While euro area MMFs reduced their risk-taking, the industry as a whole has become more concentrated and possibly more exposed to run risks. This risk materialized in the COVID-19 induced stress period during which these funds faced large outflows by foreign investors.

Read the full discussion paper [archived PDF].

World-Watching: This Week in Petroleum

(from the U.S. Energy Information Administration, This Week in Petroleum)

Release Date: February 24, 2022

Low Inventories and High Demand Boost Global Distillate Crack Spreads

Rising crude oil prices, low refinery production, and high consumption of distillate fuel, which includes diesel fuel and heating oil, have contributed to the highest nominal (not adjusted for inflation) middle distillate prices since 2014 (Figure 1). The front-month futures price for ultra-low sulfur diesel (ULSD) for delivery in New York Harbor (NYH ULSD) reached as high as $2.96 per gallon (gal) on February 14, 2022. On that same day, ULSD priced in the Amsterdam, Rotterdam, and Antwerp (ARA) hubs of Northwest Europe reached $2.74/gal, and distillate fuel oil priced in Singapore (Singapore 500 ppm) reached $2.54/gal. Prior to October 2021, distillate prices had not exceeded $2.50/gal in any of these three major pricing hubs since 2014.

Read the EIA analysis [archived PDF]

Data (Excel .xls files)

Join Us for Conversations on Central Banking: Inflation and Monetary Policy

The Center for Inflation Research and the Federal Reserve Bank of Cleveland invite you to attend Cleveland Fed Conversations on Central Banking, on Tuesday, March 1, 2022, from 2:00 – 2:40 pm EST. The session topic will be Inflation and Monetary Policy.

Distinguished panelists include:

Jason Furman, Aetna Professor of the Practice of Economic Policy, Harvard Kennedy School.

Catherine Mann, Monetary Policy Committee Member, Bank of England

Ricardo Reis, A.W. Phillips Professor of Economics, London School of Economics and Political Science.

The session will be moderated by Colby Smith, U.S. Economics Editor, Financial Times.

View the entire agenda [archived PDF].

You must register in advance to attend. Upon registering, you will receive a confirmation email containing additional instructions to join the virtual meeting and a way to add it to your calendar.

If you have any questions, please contact Diane.Roberts@clev.frb.org.