Wednesday, August 24, 2011

Egypt, Israel, and how not to solve problems

The internal problems that infest Egypt are likely to lead the country into a chaos or religious tyranny. Yet, in a typical Middle East fashion, a million people are now called into the streets to protest against the relationship with Israel – the only country in the region that free economic relationship may help Egypt break out of its cycle of illiteracy and poverty.

Israel has nothing to do with the social problems in Egypt, nor with the killings in Libya or the massacre in Syria. But after nearly a century in which the Arab world (with the moral support of many of the western countries) has blamed Israel for all their problems, it’s hard to drop old habits and start taking responsibility. But unless they do, the future they are facing will be graver than the past they fought to leave behind.

Sunday, August 21, 2011

The Boundaries of Science

This post is a continuation of The Origin of Evolution Theory

As strange as it may sound, modern science is not directly concerned with reality, but rather with models of it. Reality is the realm of philosophy. The essence of science is the scientific theory, whose purpose is to provide coherent explanations to observations; an objective aptly summed up by the physics Nobel laureate, Richard Feynman (1918–1988):

No one has ever seen the inside of a brick. Every time you break the brick, you only see the surface. That the brick has an inside is a simple theory which helps us understand things better. The theory of electrons is analogous … The electron is a theory that we use; it is so useful in understanding the way nature works that we can almost call it real.

Although theory is at the heart of science, not every theory is scientific. For a theory to be scientific it must first be internally consistent, that is, it should lead to no logical or mathematical paradoxes. If, for instance, a theory could lead to a conclusion that an object may simultaneously exist in two different places, the theory would not be consistent and cannot be deemed scientific. (This example is a paradox that contradicts the principle of space and time: a physical object exists separately in space and time in such a way that they are localizable and countable.)

Unlike mathematical models – which being the creation of the human mind require internal consistency only – scientific theories based on these models must be testable: that is, it does not matter how elegant or internally consistent a theory may be, if it does not agree with observations external to the theory, it is wrong. This requirement means that a theory can be considered scientific only after test criteria can be defined. That is, every theory is potentially refutable. Contrary to the common belief, turning an idea into a scientific theory does not necessarily improve it or make it more reliable. In many cases, it will lead, inadvertently, to the refutation of the idea.

Wednesday, August 10, 2011

Financial Astrology

A decade of one crisis succeeding another, have clearly demonstrated that at time of turmoil the market is a lagging indicator for the economy, and not as postulated by financial theory.

In science when an underlying assumption is negated, a theory has to be recreated. Therefore, if we claim that finance and economics are scientific then it's time to toss away the books and go back to the drawing board. Alternatively, we can simply admit that astrology is as predictive as economics, and we should all go outdoors to watch the stars. At least with astronomy, we have no illusion that we are in control.