FREEDOM AND COMMERCE
The commentary by Jonathan Zittrain on “Freedom and Anonymity” [Forum] misses the point. His proposed solution of caching linked pages on referring sites ensures redundancy but not security. The fbi officials who worry about Internet attacks do not care whether I can access WhiteHouse.gov or Wikipedia. Instead they worry about disruption of sites such as Amazon.com, which in 2010 averaged more than $90 million in net sales a day. The linked material on these sites is worth nothing compared with the flow of money and orders to their back-end servers and the value that is inherent in their customers’ personal and financial data.
While the Internet plays an important role in spreading ideas and encouraging political thought, it also constitutes a significant fraction of our global economy. It is commerce, not content, that drives the quest for better Internet security.
In “The Neuroscience of True Grit,” Gary Stix points out that the U.S. Army’s adaptation of Martin E. P. Seligman’s Penn Resiliency Program to assess and improve the “emotional and spiritual” well-being of soldiers is being launched to the tune of $125 million, although its efficacy has not been properly tested. What Stix fails to mention is the impact of this mandatory program on the estimated 25 percent of soldiers who report no religious preference. Soldiers who respond in the negative on such measures as “I am a spiritual person,” or “I often find comfort in my religious or spiritual beliefs,” or “in difficult times, I pray or meditate,” or “I attend religious services [how often?]” receive low spiritual-fitness ratings and are referred to a training program that extols prayer and encourages them to seek religious counseling.
This policy simply assumes that we can infer that the nonreligious lack emotional resources and are less able to cope with stress from the fact that religious people often find solace and strength in their beliefs. Of course, the more important point is that the program amounts to proselytizing by the U.S. government and thus looks like a violation of the First Amendment rights of nonreligious soldiers—to say nothing of being insulting and alienating.
In “Financial Flimflam” [Skeptic], Michael Shermer asks and answers only the least interesting of questions about economic predictions. Yes, the largest “actively managed” funds underperform passive ones, largely because of higher fees. Ho hum. Then again, dismissing the entire hedge fund industry because T. Boone Pickens was wrong about wind power is as ridiculous as concluding the opposite because Warren Buffet has routinely outperformed the market. Shermer is well aware of the logical fallacies involved because he quite literally wrote the book on them [The Mind of the Market, Holt, 2009].
Far more interesting would be to examine whether or not the claims of successful active managers stand up to scrutiny. For example, many claim that quicker access to and better use of information constitutes an edge. Law-enforcement authorities the world over seem to agree, given their reactions to the use of insider information.
Can an edge be developed legally? Some claim that small size or trading in areas underserved by risk capital can constitute an edge. Is this possible? Some claim that behavioral information is embedded in historical price charts. The list goes on, and some money managers who claim to have an edge would argue that it can persist only in an environment in which most market participants refuse to believe that there is such an advantage and so would thank Shermer for his article. The point is that some money managers consistently outperform the market over many years. Are they simply the beneficiaries of luck?