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Comment by megaduck | Hacker News Reader

I wouldn't dismiss this piece out of hand. As co-captain of Berkshire Hathaway, Charlie Munger's got a pretty good window into the global financial system. Both he and Buffett have a pretty folksy manner, but behind the goofiness is usually some razor-sharp analysis.

To make it more palatable, substitute 'United States' for 'Basicland', and 'investment banks' for 'casinos'. Then it becomes a pretty accurate picture of our current situation.

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The problem with this piece is that it doesn't touch on the controversial issues. The purpose of casinos is to entertain. That is a good purpose and they fulfill it well. So the parable breaks down rather quickly because he doesn't even touch on the question of what the purpose of the financial system is and what role derivatives play as part of that.

That's important, because the theory wasn't just that "the market is always right" and therefore we must let derivatives trading run amok. The theory is that derivatives help the financial system to fulfill its role better by making it more flexible, more robust in the face of volatility and risk.

I don't want to go into whether this is true or not, but without discussing the purpose of financial markets, their role in providing finance and the inevitability of speculation, etc, any critique is pointless.

The purpose of casinos is to entertain.

No, although many people go there for entertainment. The purpose of casinos is to separate suckers from their money.

That's what I thought he was getting at, but near the beginning of the piece, he describes Basicland as "rich in all nature's bounty except coal, oil, and natural gas". But the U.S. has enormous coal deposits, and in the 19th and early 20th centuries was the world's largest oil producer. Its natural gas deposits aren't too shabby either.

I got the analogy, and the story may or may not be accurate. I have heard the name Charlie Munger before, but I don't know what he stands for. I just don't like the general approach of convincing readers with fiction. It appeals to the subconscious rather than logic. I prefer logic in such matters.

"Artists use lies to tell the truth"

Artists also use lies to tell lies, especially political ones.

" I just don't like the general approach of convincing readers with fiction. It appeals to the subconscious rather than logic. I prefer logic in such matters."

The idea behind a parable is to encourage you to think for yourself, not to explicitly convince you of an argument.

Maybe, but it is a deception, because the setup is given by the storyteller. So if you think for yourself, you do so with the assumptions given by the story.

I still think it is simply a device to sway people's opinions. Otherwise, why not just give some condensed facts about the real world?

You're opposed on principle to rhetoric?

That's a prejudice that goes back to Plato.

Am I supposed to like rhetoric?

Like? No. Understand and be able to use, because it makes a lot more sense to a lot of the people on this Earth? Yes.

So you basically agree that it is designed to sway the opinions of people who don't like to think hard about what they hear?

Another place I know parables from is the bible. Does that mean I have to be religious?

No, I don't agree with that proposition at all. Rhetoric is something you don't have to like, but to dismiss it entirely as you have done in this subthread is to do a disservice to yourself. I happen to find rhetoric fascinating, as it has to do with human communication and interaction.

If you've ever given a presentation, you've performed rhetoric (the art of using language to persuade). If you've presented based on measurable facts, you've still used rhetoric. (Indeed, without using other language to help organize and interpret the facts at hand, it's very easy for facts to be used to confuse an issue.)

Parables are rhetorical devices usually used to illustrate a moral or religious lesson. Yet, they can also be used to illustrate other lessons, too. A quick search for "secular parables" resulted in the "Parable of the broken window" as a lesson to be learned about economics.

  http://en.wikipedia.org/wiki/Parable_of_the_broken_window

You can't handle the truth.

A listing of facts contains editorial opinion.

Yeah I know true objectivity is impossible, but that doesn't mean we can not at least try to be as objective as possible.

Transparent bias is better than imperfect objectivity.

I still wonder: did this story make you think "hm, I wonder if trading derivatives is just like gambling in the casino", or did it make you think "yeah, those roothless traders were just gambling, I knew it"?

Fiction can be used as propaganda, but contrast fictional evidence with fictional insight:

http://lesswrong.com/lw/1lw/fictional_evidence_vs_fictional_...

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