Sunday, May 13, 2007

FOMIS - a good start, but big challenges ahead

In one of last year's FOMIS Lectures - "Legacies of Great Figures" - I gave the audiences three intellectual stories related to five giant figures in their respective realms of scientific research.

1. Milton Friedman, the most influential economist in the 2nd half of the 20th century, who had unfortunately passed away on Nov. 16, 2006. His ideas of individual choice and incentives, free market, limited government, permanent income consumption, monetary policy, all volunteered army, drug legalization and school voucher, have, undoubtedly, reshaped our understanding of what the world looked like and how the world was running.

2. Andrew Wiles, a Princeton mathematician, who spent seven years and eventually proved the elegant Fermat's Last Theorem, a 350 years old conjecture first put forward by one of the greatest mathematician in the 18th century, Pierre de Fermat. In the middle 1980s, Ken Ribet of UC Berkeley had proved the so called Epsilon conjecture, which set a critical linkage between Fermat's Last Theorem and the so called Taniyama-Shimura conjecture, another milestone advanced by two Japanese mathematician (one of them, Yutaka Taniyama, unfortunately commited suicide). Because of Ribet's achievement, Wiles knew that Fermat's last theorem was only a step away only if he could prove a special case of Taniyama-Shimura. When other people stopped, Wiles went on. In the first 3 years, he found a technique of so called Galois Representation to serve as a translator between two totally different worlds, say, modular forms and elliptic curves. After another two years of struggling and then another two years of re-examining, Andrew's final work was published. Fermat's legacy became a glaring history, while Andrew's legacy could lead us to future striving.

3. Fischer Black, Myron Scholes and Robert Merton, who had derived the revolutionary options pricing model, which is pervasively used in the modern financial markets today. They made this happen through the insight of dynamic hedging and continous time Ito calculus. Later in their lives, Scholes and Merton got Nobel economics prizes in 1997 (Black died before the coming fame), and also earned fame in business arena because of the above averge performance of their company, the well known Long Term Capital Management (LTCM) which was established in 1995. After 3 fat years, this hedge fund almost went bankruptcy when faced Asian Crisis in 1997 and Russian debt crisis in early 1998. It was a big controversy that the government finally bailed them out.

p.s. FOMIS is a term which I coined with a classmate to stand for Forum Of Multidisciplinary Innovation Study. We wanna make it a convenient platform to share knowledge among different social science majors with distinct backgrounds. The seminar was loosely but well organized by the members at first. But this year, it seems there are more difficulties and challenges ahead. I am not sure when it could get back on track.

(Based on the draft on Nov. 28, 2006)

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