Tag: anarchy

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On Nassim Taleb’s Ten principles for a Black Swan-proof world

http://www.ft.com/cms/s/0…?nclick_check=1

Nassim Taleb‘s latest from the Financial Times titled Ten principles for a Black Swan-proof world provides a brief insight into what Taleb believes caused our current financial crisis and what might prevent a similar crisis going forward.

I’ve excerpted those principles below (pushing the fair-use envelope a bit, perhaps). All italics are NNT’s.

Before delving into Taleb’s ten, I’d like to suggest that NNT’s principles can be (and should be) boiled down to more simpler structural problems/observations. Taleb’s folksy expressions make for useful analogies, but they needlessly complicate some simpler realities:

  • Government-made negative externalities [1, 2, 7] — Legal constructs like corporations and limited liability companies are exploited to offload risk to the public. This subsidizes risks resulting in agents (CEOs, Managers, etc.) taking more and more chances with other people’s money. This is related to the principle-agent problem, which Taleb indicts in [4]. The Ponzi aspect of all of this is intrinsically tied to our leveraged financial system, which is inextricably tied to our centralized, fiat-“money” banking system. To me, this is the biggest point that I’ve yet to see Taleb make — centralized fiat currency is a fragile entity that is inherently leveraged (out of thin air) but can be used to build complex systems of finance. This won’t tend to break early (as we’ve seen). To kill the leverage you have to kill the source of it, which is our centralized non-robust banking system!
  • The Authority Complex [3, 4, 6, 9] — we need a great deal more skepticism in our system and we should not have such centralized power. The problem here is the authority complex — the so-called experts all pontificate to the “ignorant” masses. The masses are too busy or too confused by the magical words of the experts to deduce that the experts don’t know what they are talking about. And like any good con, the con-artistsexperts are able to trick the masses into giving them all the power. I would argue that NNT’s #9, which more or less argues that we should question authority and not trust experts, completely negates NNT’s #6, which suggest that we should be protected from ourselves. Well who is going to protect us when we can’t trust the would-be protectors? That is a problem.
  • Robust complex systems have simple base units that scale [5, 8, 10] — This is the biology angle that is exemplified by metabolic rate scaling over 27 orders of magnitude. A robust system requires simplicity at it’s base. Accounting is a good example of this. Accounting can get incredibly nuanced and complex but can always be brought back to debits and credits. The simplicity of this fundamental rule still enables incredibly complex book-keeping, but puts a governor on the system. You can’t make up assets without creating corresponding credits to the books.

    Compare this to our non-simple, non-robust banking system that holds as it’s core principle the notion of stability in prices and jobs while allowing for unlimited credit (money creation). Not simple.

    Simplicity lends itself to ease of understanding and puts a governor on shenanigans. It’s this fundamental simplicity that enables massive scalability and the emergence of complex systems that are robust.

I’m afraid I might have gotten overly complex in the above. I think what Taleb wants is an organic financial system, one that starts from real economic transactions between human beings and scales upwards from there. Thus, the solution is pretty simple. The base unit is the individual. Fictitious business entities that exist apart from owners are made illegal. No systemic credit structures, which fundamentally follows from the base unit being limited to the individual. This is because such a system would have decentralized banking that would evolve out of whatever needs such an organic economy would require.

This would be the (completely free) market solution, which incidentally most closely mimics biological systems. After all, where in biology do you see stuff created out of thin air (like Corporations or fiat currency)?

And life has been getting along fine for untold millions of years with a simple base units that are the molecules that make up DNA.

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. …

2. No socialisation of losses and privatisation of gains. …

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. …

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. …

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. …

6. Do not give children sticks of dynamite, even if they come with a warning . … Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. …

8. Do not give an addict more drugs if he has withdrawal pains. …

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. …

10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. …

Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.

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Your belly fat could be making you hungrier

http://www.eurekalert.org…o-ybf041608.php

A fascinating study on how our belly fat can almost turn into a sort-of self-regulating cancer that grows and grows regardless of the intended regulation of the rest of the body. This is sort of like cellular anarchy and rule of fat:

The extra fat we carry around our middle could be making us hungrier, so we eat more, which in turn leads to even more belly fat. Dr. Kaiping Yang and his colleagues at the Lawson Health Research Institute affiliated with The University of Western Ontario found abdominal fat tissue can produce a hormone that stimulates fat cell production. The researchers hope this discovery will change in the way we think about and treat abdominal obesity.

Yang identified that the hormone Neuropeptide Y (NPY) is produced by abdominal fat tissue. Previously, it was believed to only be produced by the brain. Yang believes this novel finding may lead to new therapeutic targets for combating obesity. Their findings were reported in a recent issue of The FASEB Journal.

The traditional view is that one of the main reasons why overweight people eat more food is because their brains produce the hormone NPY in excessive amounts. NPY is the most potent appetite stimulating hormone known, sending signals to the individual that they are constantly hungry. However, Yang, a Professor in the Departments of Obstetrics & Gynaecology and Physiology & Pharmacology at the Schulich School of Medicine & Dentistry at The University of Western Ontario, has provided evidence that in obese rat models NPY is also produced locally by abdominal fat.

A fat cell cannot replicate itself. But the researchers found NPY increases fat cell number by stimulating the replication of fat cell precursor cells, which then change into fat cells.

Yang says “this may lead to a vicious cycle where NPY produced in the brain causes you to eat more and therefore gain more fat around your middle, and then that fat produces more NYP hormone which leads to even more fat cells.”

Being overweight, regardless of where the fat is located, is unhealthy. However, because of its anatomical location and its byproducts, abdominal fat or the apple-shape is known to be the most dangerous. People predisposed to the apple shape are at an elevated risk for heart disease, Type 2 diabetes, hypertension and some cancers.

Next, the researchers will be investigating whether NPY produced by fat is released into the body’s circulatory system. “We want to know if NPY could potentially be transported in the blood to the brain where it in turn has an impact on the brain to stimulate feelings of hunger,” says Yang. If the researchers find that NPY is in fact transported in the blood circulation then it may be possible to develop a simple blood test to detect increased levels of NPY. “If you can detect NPY early and identify those at risk for abdominal obesity we can then target therapy to turn off NPY. It would be much easier to use drugs to prevent obesity than to treat the diseases caused by obesity.”

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That Belly Fat Colony

http://www.arthurdevany.com/?p=1054

Art had this to say back when the post was still live:

Aside from NPY, belly fat secretes tumor necrosis factor and a host of other hormones and messengers that make other tissues resistant to the action of insulin. This, in effect, redirects nutrients to them away from other tissues such as muscle, organ and brain. They also elevate serum triglycerides that can directly poison insulin beta cells and receptors.

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India Take Two

I first traveled to India in December of 2004. It was a two-week trip where I got to see New Delhi, Agra (Taj Mahal), Baroda and Bombay. Had a great time and participated in a lot of wedding shopping.

Fast forward to last Sunday when we (Father-in-law or “FIL”, sister-in-law/”SIL”, wife and me) flew out of Atlanta. Our flight left around 5pm Sunday and arrived in Amsterdamn around 7am Monday (6 hour time change). We then had a flight out of Amsterdam at 10am (Note: security at Amsterdam was a pain) and arrived in Bombay at around 11pm (3.5 hour time change). Both of those flights were roughly nine hour dinkers. In Bombay, we had a huge layover with our flight to Baroda (Vadodara) which departed around 6am and brought us to our final destination at 7am Tuesday. Yeah, quite a travelling experience! I managed it all by reading the first couple
Hitchhiker’s Guide to the Galaxy books, watching airplane movies (quite a selection these days!), fasting, entertaining other travelers and Bombay airport employees by wearing my Vibram Five Fingers (With new Injinji socks!), and attempting to sleep.

Okay, here is a map of India to help you follow along:


View Larger Map

Note: You can switch to the “map” view and you’ll see more cities, but the Terrain view is somewhat helpful for discussion and lack of map clutter. Baroda is a bit south of Ahmadabad (a two hour drive) and though the politically accepted name for Bombay is now Mumbai, I’ve found that most people here still refer to it as Bombay.

Here in Baroda we’ve spent the week shopping as well as taking care of some familial obligations. My FIL and I have shopped less than my wife and SIL. One of the first things I set out to do upon arrive was attempt to get wireless for my Asus eee 900 as well as set up my Blackberry 8320 with a local sim card for data/EDGE. This required my FIL and our friend Malay as a resident to go to a local mobile provider, Airtel. Unfortunately, what we failed to realize at the time (And the Airtel employees didn’t know) was that the prepaid cards won’t get data working on your blackberry. D’oh! And getting set up on a plan requird committing to a year long contract.

We figured all of that out about 24 hours later upon our second trip to Airtel. This set in motion trips to Reliance (they can’t provide) and finally Vodafone. Vodafone was a near bust until we convinced them that we didn’t care about losing the 500 rupee (Rs) deposit if we cancelled after three months (or was it six?). 500 rupees is only about $10, which I’ve decided is way too low a deposit to affect any Americans behavior. But that is not an insignificant sum to locals, it seems.

Anyway, even after getting a Vodafone card, the instructions we were provided on how to activate the blackberry data on it were out of date. Calling customer service was fruitless. Another day passes.

Finally, on Thursday afternoon (day 3 of trying to get my blackberry up and running), we went back to Vodafone, explained that the instructions were wrong, and then were provided the new instructions that worked within five minutes. Yay! Emails started piling in (Boo!) and I could get onto google maps (triangulation works here!), Jivetalk/beejive, opera, gmail, everything — same as BIS in the states.

Fortunately, throughout all of this I had been hooked up with a TATA wireless modem that an uncle-in-law had set up on a previous trip and left here. That thing, in combination with my eee, has been a godsend, bridging the gap on not having my blackberry working for a few days, enabling me to still keep up with work (Implode business). My only gripe on it is that it is huge in relation to the eee (which is tiny). See here for what I mean. Otherwise, even at max speeds of like 10kbs, it is getting the job done like a champ. And god bless the linux community for ease of setup of a random wireless usb modem on a random wireless provider in India on ubuntu. Works like a charm.

So having completed a good deal of shopping, which meant getting some pimp Indian dress shoes plus some dhoti (“Indian hammer pants”) and a couple new kurta tops, dodging cow patties on Baroda sidewalks (SIL was hilariously unsuccessful in this regard), being stared at, observing the amazing anarchy that is driving/biking/rickshawings/carting/ox’ing/cow-dodging/walking on the streets of India (no traffic lights and lanes are entirely ignored) and eating Papa Johns and Subway (and ate some great Indian food, of course), we are moving on to the South for a week.

We fly out of Ahmadabad down to Bangalore and then drive to Mysore. This is a mountainous region that is apparently beautiful. And our stay will involve being in some sort of rain forest for a couple of days. Should be awesome.

There are a lot of thoughts I have on this trip. They range from observations about people, business, food, overpopulation, anarchy to the bizarre mix of modern times (mobile phones and computers) and age-old tech (you should see how they build stuff here — women carrying bricks on their heads, latticing at construction sites made out of rope-tied sticks) to abundant religious iconography to the omnipresence of cows. India is an amazing place on this planet.

In the meantime, I have to get ready to leave Baroda. If you want, please follow along on my mobog. This is where I’ve been posting pictures from my blackberry live of sites I’m seeing here. Hopefully, I’ll be able to keep that up, but a quick review of my mobog will give you a good sense of some of the things I’ve alluded to above.

Anyway, hope to write more when I get a chance. After out trip down south, we’ll be coming back to Baroda in time for Diwali!