The Wall Street Journal-20080115-The Informed Reader - Insights and Items of Interest From Other Sources
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The Informed Reader / Insights and Items of Interest From Other Sources
Economics:
As One Bubble Bursts, Another Is on the Way
The next bubble in the U.S. economy should be taking hold right about now, says entrepreneur and investor Eric Janszen.
After years in venture capital, Mr. Janszen now runs iTulip, an investment Web site premised on the idea that the financial sector has locked the U.S. into a damaging cycle of bubbles that are disconnected from the actual health of the economy. According to his theory, the finance, insurance and real-estate businesses survive by pouring capital into a sector, creating a self-fulfilling prophecy that asset prices will rise. When prices collapse back to their true value, financiers make up their losses by pouring capital into another sector and creating another bubble.
Where will the next bubble turn up? In Mr. Janszen's view, the alternative-energy industry's expansion is showing some of the same patterns that allowed values to swell far beyond their true worth during the dot-com and housing booms. For starters, green energy is popular with the media and with politicians -- "energy security" has become a catchphrase for both Democrats and Republicans. It has received favorable legislation involving loan guarantees and subsidies, just as the Internet got a sales-tax amnesty in the 1990s and deregulation allowed banks to offer more credit to potential homeowners.
Finally, the industry is flush with fresh capital. The Internet bubble was inflated by irrationally exuberant venture capitalists and IPO investors. The housing boom exploded thanks to the packaging of securitized debt. In the case of alternative energy, venture capitalists seem once again willing to supply the new capital.
Still, without another bubble, Mr. Janszen says the financial sector would probably collapse under the weight of the losses it incurred under the previous bubble. "The only thing worse than a new bubble," he says, "would be its absence."
-- Harper's Magazine -- February
Science:
Human Cognition May Rely
On Body as Much as Brains
People think with their bodies, not just with their brains, according to some recent studies.
The Boston Globe's Drake Bennett reports on the emerging field of "embodied cognition," which suggests that actions such as pacing the carpet or gesturing with one's hands might clarify the thought process as much as anything going on in the brain. Researchers vary in how much emphasis they give to the body's role in thinking. But by examining how actions shape thoughts, they aim to erase the presumed divide between mind and body that dates back at least to philosopher Rene Descartes in the 17th century.
For instance, a study led by Arizona State University psychology professor Arthur Glenberg found that arm movements can affect language comprehension. Children are more likely to solve mathematics problems if they are told to gesture with their hands as they think through the problem. Another line of research has found that unconscious eye movements help people solve certain kinds of brainteasers.
Body actions also seem to subtly shape preferences over time. Expert typists, when told to name their favorite two-letter combinations from a random selection, picked out easy-to-type couplets but couldn't give a reason why they preferred them.
At the extreme, some embodied-cognition thinkers say that the form of the human body has shaped some apparently abstract concepts. Linguist George Lakoff of the University of California, Berkeley, believes that the number system has its roots in humans' ability to walk upright, which makes it possible to measure distances in discrete steps. If humans "moved along the ground on our bellies like snakes, math might be quite different," says Mr. Lakoff.
-- The Boston Globe -- Jan. 13
Military Affairs:
Will Iraq War Produce
Peacetime Innovations?
Will the Iraq war produce peacetime technological benefits comparable with previous conflicts? So far, it doesn't seem so, says Victor Davis Hanson, a military historian.
War pressures armies to pursue radical innovations. The Civil War produced observation balloons, canned meats and elaborate telegraphic communications. The wide adoption of penicillin, prefabricated housing and airline-navigation systems also has roots in wartime.
So far, the Iraq war and terrorist-focused security measures have produced a few innovations that might prove useful to civilians, says Mr. Hanson in the magazine of the pro-business think tank American Enterprise Institute. The wider use of pilotless aircraft has promise outside the military, especially for border patrolling and shipping. Other writers have drawn attention to advances in trauma medicine emerging from Iraq. Still, says Mr. Hanson, none of these things will have quite the impact of previous wartime developments.
-- The American -- January/February
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