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Paul KRUGMAN, Peddling Prosperity, 1994.
On August 31st 1996, The Economist published an essay by Paul Krugman, written "by invitation", taking up some of the themes discussed in his book.

In this essay he warns in general against the danger of following slogans (for which he here uses the term "shibboleths",) expressing simplistic ideas which "often become badges of identity for groups of like-minded people, who repeat certain phrases to each other, and eventually mistake repetition for truth." The particular slogans he argues against – with his customary gusto and rigour – in the two main sections of this essay are:

Krugman advises us to "just say no" to "both fatuous promises of easy growth and mystical faith in the virtues of stable prices." But he also tells us what we should say "yes" to:
Suppose you reject both the miracle cures of the growth sect and the old-time religion of the stable-price sect. What policies would you advocate?

A shibboleth-free policy might look like this. First, adopt as a long-run target fairly low but not zero inflation, say 3-4%. This is high enough to accommodate most of the real wage cuts that markets impose, while the costs of the inflation itself will still be very small. Monetary policy, however, affects inflation only with a long lag, so you also need some intermediate target. A reasonable strategy is to try to stabilise unemployment around your best estimate of the level consistent with stable inflation at the desired rate, even while recognising that such estimates are imperfect. So you should be prepared to adjust the unemployment target if inflation is worse or better than expected. And of course if past misjudgments have caused inflation to move above – or below – the target, policy must seek to bring it back into line.

This proposal will presumably bring angry objections from both sides. The growth sect will denounce it as an acceptance of defeat, insisting that the West needs higher growth to raise living standards and solve its budget problems. Unfortunately, economics is not only about what you want, it is also about what you can get. Growth may be good, but achieving it requires more than simply declaring inflation to be dead.

Meanwhile, the stable-price sect will denounce this strategy as irresponsible, a return to the bad old inflationary ways of the 1970s. But the strategy is not outlandish – on the contrary, it is intended to be a description of the actual policies followed by several of the world's big central banks. In particular, what I have described is close to the behaviour predicted by the "Taylor rule". This rule, which suggests setting interest rates automatically based on a comparison of the actual and potential output of an economy, successfully tracks the policies of the Federal Reserve. (It is ironic that the Fed, whose policies are in fact more growth- and employment-oriented than any other western central bank, is the target of most of the growth sect's attacks.) But the strategy described is also arguably a pretty good description of the behaviour of other central banks, including the Bank of England and even – dare one say it? – the Bundesbank, which talks a monetarist game but rarely meets its own announced targets.

Central banks may have to avoid intelligibility and to spout slogans, such as "zero inflation", lest the sensible policies most of them follow are pounced upon. But among the dangers of spouting slogans is that one may start to believe in them oneself – as Krugman warns is happening in some countries. He concludes:
Shibboleths make you feel good. They are an alternative to the pain of hard thinking and, because so many people repeat them, they offer a reassuring sense of community. But you must go beyond shibboleths, however comfortable they make you feel: monetary policy is too serious to be conducted on the basis of slogans.

Under the heading "Better off, but not much," The Economist reported on October 4th 1997 as follows:

According to the Census Bureau's annual report on poverty and income, the typical American household's income rose by 1.2% in real terms in 1996 ... By many measures, the country's wealthiest families did better than the poorest ones. Average income for the poorest fifth of American families fell by 1.8%, while average income for the top fifth rose by 2.2%. This explains why America's poverty rate did not fall despite an increase in median household income.
Figures from the Bureau of the Census also show that the median household income has stayed almost constant during the 20 years to 1996, but that the share of aggregate household income of the top fifth of households has risen from about 43% to about 49% during that same period, while that of households in the other quintiles has fallen.

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Peter D. KRAMER, Listening to Prozac, 1993.
From The Economist, September 27th 1997:
Without marketing, even the fruits of excellent research can be frittered away. Eli Lilly's Prozac was the first anti-depressant of its kind, and won good publicity for that reason. Now, it is losing market share rapidly to competitors such as Pfizer's Zoloft and SmithKline Beecham's Paxil. Pfizer has bombarded doctors with pamphlets claiming that Zoloft works as well as Prozac for a broader range of symptoms, with fewer side-effects. Pfizer's sales force stresses the 'anxiety' that Prozac users can suffer (a coded references to an unsuccessful string of lawsuits claiming that the drug causes suicide or even violence).
A diagram to illustrate the decrease in the time between the launch of a drug and its first competitor, based on study by A.T. Kearney, shows that its first competitor came onto the market 4 years after Prozac became available in 1988.

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Benford's Law
From the International Herald Tribune, August 5, 1998:
The income tax agencies of several nations and several states, including California, are using detection software based on Benford's Law, as are a score of large companies and accounting businesses.

Benford's Law is named for the late Frank Benford, a physicist at the General Electric Co. In 1938 he noticed that pages of logarithms [in mathematical tables] corresponding to numbers starting with the numeral 1 were much dirtier and more worn than other pages. ...

One of the experts putting this discovery to practical use is Mark Nigrini, an accounting consultant ... . Mr. Nigrini gained recognition a few years ago by applying a system he devised based on Benford's Law to some fraud cases in Brooklyn, New York. The idea underlying his system is that if the numbers in a set of data like a tax return more or less match the frequencies and ratios predicted by Benford's Law, the data are probably honest.

But if a graph of such numbers is markedly different from the one predicted by Benford's Law, he said, 'I think I'd call someone in for a detailed audit.'

Some of the tests based on Benford's Law are so complex that they require a computer to carry out. Others are surprisingly simple; just finding too few ones and too many sixes in a sequence of data to be consistent with Benford's Law is sometimes enough to arouse suspicion of fraud.

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Sherry TURKLE, Life on the Screen, 1995.
In the "Technology Quarterly", March 16th 2002, The Economist wrote about the field of 'Artificial Intelligence' (AI):
That field was launched, and the term "artificial intelligence" coined, at a conference in 1956 ... . Most researchers agree that the high-water mark for AI occurred around 1985. ... [But] It proved to be a false dawn. Thinking computers and household robots failed to materialise, and a backlash ensued. ... By the late 1980s, the term AI was being eschewed by many researchers, ... .

Ironically, in some ways, AI was a victim of its own success. Whenever an apparently mundane problem was solved, such as building a system that could land an aircraft unattended, or read handwritten postcodes to speed mail sorting, the problem was deemed not to have been AI in the first place. "If it works, it can't be AI," as Dr Leake characterises it. The effect of rapidly moving goal-posts in this way was that AI came to refer to blue-sky research that was still years away from commercialisation. Researchers joked that AI stood for "almost implemented". Meanwhile, the technoloies that worked well enough to make it to the market, such as speech recognition, language translation and decision-support software, were no longer regarded as AI. Yet all three once fell within the umbrella of AI research.

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