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Ecology could teach economists a thing or two
EDITORIAL
LOCATIONS UK Lacon House, 84 Theobald’s Road, London WC1X 8NS Tel +44 (0) 20 7611 1200 Fax +44 (0) 20 7611 1250 Australia Tower 2, 475 Victoria Avenue, Chatswood, NSW 2067 Tel +61 2 9422 2666 Fax +61 2 9422 2633 USA 225 Wyman Street, Waltham, MA 02451 Tel +1 781 734 8770 Fax +1 720 356 9217 201 Mission Street, 26th Floor, San Francisco, CA 94105 Tel +1 415 908 3348 Fax +1 415 704 3125 to SUBSCRIbe UK and International Tel +44 (0) 8456 731 731 [email protected] The price of a New Scientist annual subscription is UK £143, Europe €228, USA $154, Canada C$182, Rest of World $293. Postmaster: Send address changes to New Scientist, PO Box 3806, Chesterfield, MO 63006-9953, USA. cONTACTS Editorial Tel +44 (0) 20 7611 1202 [email protected] [email protected] [email protected] Picture desk Tel +44 (0) 20 7611 1268 Who’s who newscientist.com/people Contact us newscientist.com/contact Enquiries Tel +44 (0) 20 7611 1202 Display Advertising Tel +44 (0) 20 7611 1291 [email protected] Recruitment Advertising UK Tel +44 (0) 20 8652 4444 [email protected] Permission for reuse [email protected] Media enquiries Tel +44 (0) 20 7611 1202 Marketing Tel +44 (0) 20 7611 1286 Back Issues & Merchandise Tel +44 (0) 1733 385170 Syndication Tribune Media Services International Tel +44 (0) 20 7588 7588 UK Newsagents Tel +44 (0) 20 3148 3333 Newstrade distributed by Marketforce UK Ltd, The Blue Fin Building, 110 Southwark St, London SE1 OSU Tel: + 44 (0) 20 8148 3333 © 2011 Reed Business Information Ltd, England New Scientist is published weekly by Reed Business Information Ltd. ISSN 0262 4079. Registered at the Post Office as a newspaper and printed in England by Polestar (Colchester)
Why banks are off balance The current financial turmoil reveals deep flaws in economic thinking ONCE upon a time, ecologists stability. They reason that big, talked of the “balance of nature”. It complex banks can make money seemed that any small fluctuation in diverse ways, so that a bust in in an ecological system was always one kind of asset will be cancelled balanced out by some other out by a boom in another. change, maintaining equilibrium But perversely, as big banks even in complex situations. diversify they become more Though a seductive idea, it was similar, and the problems finally killed off in the 1960s by the inherent in this are also mirrored American social scientist Herbert in nature – in the vulnerabilities Simon, who studied complex “We now know complex systems and concluded that it is systems can be fragile, in fact the simplest that tend to but this conclusion has survive. For example, a complex ecosystem such as the Amazonian not reached economics” rainforest can be more fragile than a simple one, such as the of a monoculture. The biggest, African savannah, because risks supposedly safest, banks then can cascade rather than cancel. become the equivalent of “superYet this conclusion seems not to spreaders”: infectious agents that can wreak havoc throughout the have reached economics. Today’s system. In a forthcoming paper, economists believe in survival of Haldane uses ecological thinking the fattest, according to Andrew to propose a range of preventive Haldane, the Bank of England’s policy measures (see page 5). executive director for financial
Haldane has been studying the global financial system with Robert May of the University of Oxford, an early proponent of chaos theory. Since May’s pioneering work in the 1970s, we have known that markets don’t behave in a predictable way. Still, that hasn’t stopped the European Central Bank and the G7 industrialised nations claiming this week they can “calm” market turmoil. May argues that there is another issue that makes prediction close to impossible. Whether by accident or design, complex mathematics often obscures flawed or simplistic assumptions in financial models. No wonder, then, that mysterious concepts endure, such as the “invisible hand” that signifies the self-regulating marketplace. It’s high time that economics caught up with ecology. n
Web search for the truth WHAT happens when you run a search through Google or Bing? You get all the search results, right? Not always. As we reveal on page 19, in the US some internet service providers (ISPs) have been hijacking traffic intended for search engines. A user searching for “canon”, for example, would be sent direct to the website of the electronics manufacturer of the
same name. It appears that the ISPs have indirectly earned commission from the sites where they delivered the hijacked traffic. Since it was exposed online by New Scientist last week, the ISPs concerned have called a halt to the practice. They were right to act. Most people expect ISPs to simply deliver content, not tamper with it: we want some degree of privacy
when we browse the web. But there’s more to it than that. By creating a reliable communication infrastructure, but leaving the data itself alone, ISPs built the foundations of the extraordinary internet successes of recent years, from Google to Facebook. So when service providers mess with search queries, they not only abuse our trust but erode the foundations that have made the internet such a remarkably innovative place. n
The race for nuclear fusion
welcome the development of smaller-scale, private fusion initiatives (see page 36). These projects are being backed by entrepreneurs such as Amazon’s Jeff Bezos and Microsoft’s Paul Allen, which suggests that fusion is becoming less speculative. Even if they fail to ignite, the competition will be good for ITER.
After all, the human genome would not have been mapped so swiftly if the publicly funded Human Genome Project had not had Craig Venter’s Celera Corporation snapping at its heels. Given the pressing need for new energy sources, we will all benefit if a similar momentum can be transferred to the fusion race. n
THE massive ITER reactor currently being built in southern France is nuclear fusion’s great hope – but it won’t harness the power of the stars until 2026 at the earliest. So we should
13 August 2011 | NewScientist | 3
LOCATIONS UK Lacon House, 84 Theobald’s Road, London WC1X 8NS Tel +44 (0) 20 7611 1200 Fax +44 (0) 20 7611 1250 Australia Tower 2, 475 Victoria Avenue, Chatswood, NSW 2067 Tel +61 2 9422 2666 Fax +61 2 9422 2633 USA 225 Wyman Street, Waltham, MA 02451 Tel +1 781 734 8770 Fax +1 720 356 9217 201 Mission Street, 26th Floor, San Francisco, CA 94105 Tel +1 415 908 3348 Fax +1 415 704 3125 to SUBSCRIbe UK and International Tel +44 (0) 8456 731 731 [email protected] The price of a New Scientist annual subscription is UK £143, Europe €228, USA $154, Canada C$182, Rest of World $293. Postmaster: Send address changes to New Scientist, PO Box 3806, Chesterfield, MO 63006-9953, USA. cONTACTS Editorial Tel +44 (0) 20 7611 1202 [email protected] [email protected] [email protected] Picture desk Tel +44 (0) 20 7611 1268 Who’s who newscientist.com/people Contact us newscientist.com/contact Enquiries Tel +44 (0) 20 7611 1202 Display Advertising Tel +44 (0) 20 7611 1291 [email protected] Recruitment Advertising UK Tel +44 (0) 20 8652 4444 [email protected] Permission for reuse [email protected] Media enquiries Tel +44 (0) 20 7611 1202 Marketing Tel +44 (0) 20 7611 1286 Back Issues & Merchandise Tel +44 (0) 1733 385170 Syndication Tribune Media Services International Tel +44 (0) 20 7588 7588 UK Newsagents Tel +44 (0) 20 3148 3333 Newstrade distributed by Marketforce UK Ltd, The Blue Fin Building, 110 Southwark St, London SE1 OSU Tel: + 44 (0) 20 8148 3333 © 2011 Reed Business Information Ltd, England New Scientist is published weekly by Reed Business Information Ltd. ISSN 0262 4079. Registered at the Post Office as a newspaper and printed in England by Polestar (Colchester)
Why banks are off balance The current financial turmoil reveals deep flaws in economic thinking ONCE upon a time, ecologists stability. They reason that big, talked of the “balance of nature”. It complex banks can make money seemed that any small fluctuation in diverse ways, so that a bust in in an ecological system was always one kind of asset will be cancelled balanced out by some other out by a boom in another. change, maintaining equilibrium But perversely, as big banks even in complex situations. diversify they become more Though a seductive idea, it was similar, and the problems finally killed off in the 1960s by the inherent in this are also mirrored American social scientist Herbert in nature – in the vulnerabilities Simon, who studied complex “We now know complex systems and concluded that it is systems can be fragile, in fact the simplest that tend to but this conclusion has survive. For example, a complex ecosystem such as the Amazonian not reached economics” rainforest can be more fragile than a simple one, such as the of a monoculture. The biggest, African savannah, because risks supposedly safest, banks then can cascade rather than cancel. become the equivalent of “superYet this conclusion seems not to spreaders”: infectious agents that can wreak havoc throughout the have reached economics. Today’s system. In a forthcoming paper, economists believe in survival of Haldane uses ecological thinking the fattest, according to Andrew to propose a range of preventive Haldane, the Bank of England’s policy measures (see page 5). executive director for financial
Haldane has been studying the global financial system with Robert May of the University of Oxford, an early proponent of chaos theory. Since May’s pioneering work in the 1970s, we have known that markets don’t behave in a predictable way. Still, that hasn’t stopped the European Central Bank and the G7 industrialised nations claiming this week they can “calm” market turmoil. May argues that there is another issue that makes prediction close to impossible. Whether by accident or design, complex mathematics often obscures flawed or simplistic assumptions in financial models. No wonder, then, that mysterious concepts endure, such as the “invisible hand” that signifies the self-regulating marketplace. It’s high time that economics caught up with ecology. n
Web search for the truth WHAT happens when you run a search through Google or Bing? You get all the search results, right? Not always. As we reveal on page 19, in the US some internet service providers (ISPs) have been hijacking traffic intended for search engines. A user searching for “canon”, for example, would be sent direct to the website of the electronics manufacturer of the
same name. It appears that the ISPs have indirectly earned commission from the sites where they delivered the hijacked traffic. Since it was exposed online by New Scientist last week, the ISPs concerned have called a halt to the practice. They were right to act. Most people expect ISPs to simply deliver content, not tamper with it: we want some degree of privacy
when we browse the web. But there’s more to it than that. By creating a reliable communication infrastructure, but leaving the data itself alone, ISPs built the foundations of the extraordinary internet successes of recent years, from Google to Facebook. So when service providers mess with search queries, they not only abuse our trust but erode the foundations that have made the internet such a remarkably innovative place. n
The race for nuclear fusion
welcome the development of smaller-scale, private fusion initiatives (see page 36). These projects are being backed by entrepreneurs such as Amazon’s Jeff Bezos and Microsoft’s Paul Allen, which suggests that fusion is becoming less speculative. Even if they fail to ignite, the competition will be good for ITER.
After all, the human genome would not have been mapped so swiftly if the publicly funded Human Genome Project had not had Craig Venter’s Celera Corporation snapping at its heels. Given the pressing need for new energy sources, we will all benefit if a similar momentum can be transferred to the fusion race. n
THE massive ITER reactor currently being built in southern France is nuclear fusion’s great hope – but it won’t harness the power of the stars until 2026 at the earliest. So we should
13 August 2011 | NewScientist | 3