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.

Geoffrey West on Scaling Laws in Biology and Other Complex Systems

http://video.google.com/v…406426776765294

[video:google:7108406426776765294]

Randomly came across this video of a lecture given at Google by Geoffrey West on how biological “laws” scale. For example, flow through capillaries and metabolic rate scale from small to large organisms. What is mind-boggling is how metabolic rate scales “over 27 orders of magnitude.” The video is almost an hour long and is pretty dense, but the first 20 minutes or so explain the metabolic scaling, which is incredible. The last ten minutes apply the idea to social organizations (starting around 47 minutes in). Apparently, human organizations actually scale at 1.05 (versus 3/4).

The big takeaways for me: simply, for complex systems to work, they must scale. On a more complicated level, evolution is a blind process of trial and error that nonetheless created fantastically scalable, complex, decentralized systems that aren’t given to catastrophic failures. Therefore, it’s reasonable to postulate that, as opposed to using central, pointed, monopolistic planning (Think: few iterations) to design systems that scale without catastrophic loss, perhaps we should default to decentralized, immensely iterative trial and error as our basis for system design. The former is unnatural, the latter organic. The former is monarchistic, the latter anarchistic. The latter provably works whereas the former has failed over and over and over again.

Geoffrey West’s takeaway: “One, that inevitably [for biological systems] the bigger you are, the slower the pace of life—your heart rate decreases, your life span is longer and so on. In social organizations the bigger you are, cities in particular, the faster life is.”

Final note, I’m reminded of Gilbert’s super-replicator idea in Stumbling on Happiness.

The abstract on the video:

Life is very likely the most complex phenomenon in the Universe manifesting an extraordinary diversity of form and function over an enormous range. Yet, many of its most fundamental and complex attributes scale with size in a surprisingly simple fashion. For example, metabolic rate (the power required to sustain the system) scales as approximately the 3/4-power of mass over 27 orders of magnitude from molecular levels up to the largest multicellular organisms. Similarly, time-scales, such as lifespans and growth-rates, increase with exponents which are typically simple powers of 1/4. It will be shown how these universal quarter-power scaling laws follow from fundamental generic principles embedded in the dynamics and geometry of underlying networks, leading to a general quantitative theory that captures essential features of many diverse biological systems. Examples will include animal and plant vascular systems, growth, cancer, aging and mortality, sleep, DNA nucleotide substitution rates. These ideas will be extended to discuss social organisations such as cities and firms: to what extent, if at all, can we think of these as very large organisms and therefore as an extension of biology? Analogues to metabolic rate and behavioral times in cities scale counter to their behaviour in biology. Driven by innovation and the creation of wealth this has dramatic implications for their growth, development, sustainability and pace of life which, left unchecked, potentially sow the seeds for their collapse.

Mr. Taleb Goes to Washington

http://tbm.thebigmoney.co…goes-washington

Marion Maneker of The Big Money (part of Slate) has a nice article on Nassim Nicholas Taleb that discusses Taleb’s recent attendance at the Wall Street Journal’s “Future of Finance” conference in Washington D.C. The article describes righteous indignation at the ongoing and deepening financial calamity and what he suggests might be a more robust financial system. It’s a good read it is entirety, though below I’m saving down the major takeaways.

Taleb recently expounded upon the charlatan theme (and their positive advice) on his personal “blog.” Also, note Taleb’s closing words and see if you aren’t reminded of Jon Stewart’s big point in his recent interview with Jim Cramer.

… Taleb’s anger at the economic establishment [3] that drove us over this cliff—and populates the Journal’s conference—makes him a representative figure of ordinary people. Like most Americans, Taleb is seething with rage about the financial establishment’s role in bringing the about credit crash. “Nobody saw the crisis coming,” he says. “Bernanke, all these guys, I want them out. They proved incompetent, they crashed the plane.”

Unlike us … Taleb is comfortable with the theory and practice that undergirds the whole system of options, derivatives, and risk management that has spun so recklessly out of control. That talent mixed with his righteous anger makes him a rare bird: an Everyman who can do the equations. …

In normal times, the conferencariat are an arrogant bunch. This is something [Alan Murray of the WSJ] knows well from his travels on the conference circuit, which begins each year with the World Economic Forum in Davos. “Davos is usually filled with people who have all the answers,” Murray says. “What was so striking about Davos this year was all these people, for once, didn’t have all the answers. No one could tell you with certainty what was happening or what needed to be done.”

No one but Nassim Taleb. Before Davos, Murray read The Black Swan. At the conference, the newspaperman and the trader had many conversations over the course of four days. Murray came to the conclusion that Taleb was the iconic figure of Davos in 2009. “In my mind, he had the perfect message for the moment.” …

[As for the Future of Finance conference, Taleb] left after dinner the first night. While the 130-person conference debated the government’s new regulations that George Soros described as merely “tinkering” with the system, Taleb has a clear-eyed plan.

First, he says, we have to unmask the charlatans of risk like Myron Scholes. To Taleb, Scholes is the Great Oz in this Emerald City because his work on options and derivatives allowed the whole of the financial system to adopt poorly understood products-like the ones that brought AIG down-that hide risk. To Taleb, Scholes’ academic work, which enabled the widespread use of complex derivatives, was like “giving children dynamite.”

“This guy should be in a retirement home doing Sudoku,” Taleb says. “His funds have blown up twice [6]. He shouldn’t be allowed in Washington to lecture anyone on risk.”

With complex derivatives unmasked and, in Taleb’s vision of the future, outlawed, the next step is to create a more robust version of capitalism. Taleb calls it Capitalism 2.0. Robustness begins with a dismantling of debt. Leverage was the gas that inflated the financial system until it was too big, too fragile, and too volatile.

Over the past 20 years, the financial system has grown ever more complex. Building on a greater computing capacity and communication speed—”Bank runs now take place at the speed of BlackBerry”—Taleb recognizes that the financial system now possesses an efficiency that creates volatility. That cannot and will not go away.

We cannot have both debt leverage and a hyper-efficient system—the volatility is just too great. What Taleb explains—which no one else does—is that efficiency is already a form of leverage. A highly efficient system removes slack and magnifies small changes. Think of the efficient system as a high-performance aircraft. Each minute of steering input creates a rapid and violent shift of course, speed, or altitude. The system itself is souped up even before you add the debt. Once you do, the pilot is equally jacked up and twitchy, creating an explosive combination. Now imagine that fighter jet trying to fly in a 1,000-plane formation, and you get an idea of the world financial system in the 21st century.

We can’t erase the technology that created the planes, so we’ll have to make sure we fly sober, maybe even with an onboard computer that dampens the controls. That means getting rid of the debt. It’s that simple.

A deleveraged financial system is a stable one, especially if we increase the redundancy within the system. That’s an idea Taleb has taken from biology. But in finance, redundancy means two things: not having players in the game who are “too big to fail” and not allowing anyone—from the individual to the institution—to play with too much money. Redundancy means have cash on the side, not risking it all, and not becoming dependent upon financial assets for your economic well-being.

The Power of Blogging (On why I blog)

Blogging, which I define as published informal writing, makes me happy. I blog because I enjoy it. Why do I find blogging so fulfilling? Briefly, blogging provides me with a creative outlet to focus my thinking and share my ideas and interests with others. Even as these are sufficient reasons to blog, there are certain particulars of blogging that make it absurdly powerful, and this post attempts to get at these reasons.

What is so powerful about blogging?

Blogging enables me to write about whatever I want. I can write about the particulars of property rights, ideas for workout routines, the consequences of holding a certain belief, or how best to apply an understanding of human evolution to modern life. I can blog about my personal doings or the book I just finished reading. The informality of blogging provides an enormous amount of creative freedom to speak my mind. This freedom caters to my tendency towards boredom with overspecialization. It allows me to jump from subject to subject as often as I choose.

Seth Roberts described this purpose of blogging wonderfully in a recent comment: “[blogging] allows us to talk about whatever we want without fear of boring our listeners.” With blogging there is little fear of rejection and an empowering feeling of control. Label it “narcisistic” if you want, does it really matter? Blogging provides such a fantastic creative outlet that it is a worthwhile pursuit for this reason alone.

Blogging focuses my curiosity and clarifies my thinking. Putting my thoughts into writing requires a “good enough” understanding of a concept for my written explanation to successfully transfer the idea to others (including me at future date). This put-it-in-writing induced constraint helps clarify my thinking and can also aid my memory. Somewhat related to clarified thought, blogging provides an end-product for my curiosity. Whereas a random interest in parkour may mean running any number of Google queries on the subject only to be done with it, the add-on of blogging creates a deliverable: I can jot down my findings for future reference and produce something tangible and useful from what would otherwise be a passing curiosity.

Blogging results in the mass production of ideas. Creating a blog is cheap, which means that anyone can do it (See below for how). Since bloggers have the power to write whatever they want, an enormous amount of writing is generated. Of course, most of these blog posts will be quickly written and forgotten. And many (if not most) of the ideas generated by bloggers will be duds. Regardless, the raw abundance of ideas presented through blogs is one of the prevailing strengths of the medium. This is because the ideas captured in blog posts are public.

Blogs, whether written anonymously or otherwise, are a means for publishing writing. Whatever I blog about is almost instantly assimilated into the vast bounty of information that is the Internet. Once published, blog posts can be searched and linked. Thanks to search, similarly interested individuals can find my writings and I can find theirs. The public nature of blogging thereby prevents both good and bad ideas from obscurity. Bad ideas are subject to correction from reader feedback. Good ideas are made better by the same. Public discourse on blogs occurs via two pathways. The more basic of the two is that readers are allowed to comment on my blog directly. The alternative, and potentially more powerful pathway is by indirect feedback on a fellow blogger’s site that is hyperlinked to my site.

The resultant combination of blogging and linking is volatile: hyperlinks are the oxygen off which the best blogs thrive. Whether it is simply another blogger sending readers to my site via a blogroll link (a sort of blanket “seal of approval”), linking to a specific post, or through submission of blog posts to the virtual watercooler, social bookmarking sites like reddit, twitter, digg, stumbleupon, del.icio.us or facebook, hyperlinks can provide an immense amount of exposure. Of course, the more linked a blog becomes, the more likely it is to be linked: hyperlinks tend to follow a power law distribution. This means that a blog post containing a good idea (or a good blog generally) has the potential to spread virally. It is through being linked that an idea can go from obscurity to widespread consideration in a very brief time.

Perhaps one of the greatest powers of blogging is how all of the above characteristics provide me with a “home” in the Blogosphere. When I write, even as I do it for my own benefits, the writing is done within a community. Random ideas no longer need to stagnate within my mind: I can publish them on my blog and share them with others who are want to hear what I have to say. I contribute to this community in my own peculiar way, blogging on whatever strikes my fancy. I keep tabs on my neighbors by visiting their sites and subscribing to their feeds. Through this community ideas are freed to germinate, mutate, evolve, or cross-fertilize with each other, producing results that can scarcely be predicted but are almost always eye-opening and sometimes even world-changing.

Indeed, that is the benefit of living in any community, in real space or online. Communities provide the potential for fortuitous opportunities — luck, in other words. That’s why we choose to live with and near other human beings. Its why civilization exists. To share, trade, create, and profit from the resulting opportunities. The main difference between communities in real space and those online is that real space communities tend to be set up based on geographical proximity to your neighbors. In a way, proximity still reigns supreme in the blogosphere; however, it’s the proximity of minds, ideas, and intellect. Blogging eliminates physical barriers to intellectual commerce; as a result, more transactions occur and better ideas and communities are created.

It is for all of these reasons that blogging is one of the most dynamic aspects of the Internet. It is changing the way we learn and the speed at which we create and record knowledge. Despite this immense power, most don’t realize the huge upside potential to maintaining little more than a public journal. The reality is that they don’t have to — like me, most bloggers start blogging because they think they’ll enjoy it, and of course, most do. That the practice results in countless other benefits? Bonus.

Do you have a blog? If not, consider setting one up.

Blogging is nothing more than writing down your thoughts and publishing them. Yet doing so can change your life for the better in ways that you can’t currently predict. Anyone can set up a blog for free using services like blogger, livejournal, or wordpress dot com. If you’re feeling more industrious, you can secure your own webhosting, buy a domain name, and work through setting up a wordpress dot org or b2evolution installation. It’s really not all that hard and probably worth the effort if you want to make the most off your productive efforts. However, if you’re a bit intimidated to go this route, just pursue the free versions — you’ve got very little to lose by starting up a blog, and as I’ve illustrated above, a great deal to gain.

Nassim Nicholas Taleb: “Bankers Designed Banks to Blow Up”

http://www.bloomberg.com/…mMd4PSxEKeE.asf

Just watched a fifteen minute interview by Bloomberg of Nassim Nicholas Taleb (The Black Swan). In the interview Taleb discusses the current crisis, robust systems, nationalizing the banks and the fallacy of using narratives of history to guide present-day policy/response.

Below are some quotes from NNT, which I’ve organized into like-nuggets of wisdom:

  • Looking at biology, things that survive have redundancy . . . we have spare parts, which is the exact opposite of leverage. . . . We have diversity and nothing is too big. Things fail early. . . . Banking is organized in a completely opposite way. . . . Complex systems have properties that banks don’t have. And biological systems have survived.
  • [We have an] Illusion of stability and then blow-ups are larger. Imagine if half-country was fed by one restaurant it’d be okay except one day people would starve.
  • Bad news travels immediately . . . This environment won’t tolerate the smallest mistake . . . I don’t know the system can allow for too much leverage.
  • People can invest in real things – they don’t have to invest in paper. . . .
  • What we have is a system of deposit where people buy a company, they borrow against it, and buy another company. . . . If that disappears we have less growth but it would be a more robust economic system.
  • The government is neither nationalizing the banks nor letting them break.
  • [With regard to banking,] separate the payment system from the risk taking system.
  • It looks like we have no control. The government has no control over what the banks are doing. The banks aren’t in control of what they are doing.
  • The press reports everything except the important stuff. September 18th . . . we had the run on money market funds and the government had to step in.
  • The situation is not comparable to the Great Depression. The situation is very different.
  • This crisis is not so much a Black Swan to me. It’s like saying you’ve got a pilot who doesn’t know about storms. . . . The Black Swan for me would be to emerge out unscathed and go back to normalcy.
  • We should be very careful when we make a historical analogy like the Great Depression because the world is not like it was in the Great Depression.
  • Capitalism is you let what’s breakable break fast.

Bloomberg also ran an article on the interview with Taleb, but it is spartan as far as quotes or insights from the actual interview.

From what I can tell, it seems Taleb views bank nationalization as similar to taking out plane hijackers. It’s an interesting, more palatable way to look at nationalization in that it frames the situation as one where the public will be harmed unless someone (in this case the government) steps in and takes drastic action.

Having said that, I don’t get the impression that Taleb is a proponent of long-term nationalization. NNT would prefer banking be structured similarly to a biological system where there are redundancies and fragile things “break early.” This system wouldn’t foster as much leverage and therefore would slow growth, but it would be considerably more robust.

This is more or less what I believe, as well. A free market is an organic, naturally forming system that is decentralized and redundant. It’s robust because market actions failing apart at any micro level will not break the entire system.

How do we get there from here? Good question.

(H/T to Jesse)

Control Theory by William Glasser

Control Theory by William Glasser

William Glasser’s 1985 book Control Theory is subtitled “A New Explanation of How We Control Our Lives.” This review covers many components of the book, which makes it fairly long. In short, Control Theory is an excellent read that I heartily recommend.

Control Theory details a framework for understanding how humans choose behaviors to assert control over the world. These behaviors include depressing, angering, phobicking, etc. Glasser reframes all feelings as behaviors that you choose. As such, individuals go from being something to doing something.

This is expressed right out the gate in the Author’s Note:

Much of this book is concerned with the behaviors we choose as we attempt to control our lives. As I will explain in great detail, all behavior is made up of three* components: what we do, what we think, and what we feel. Doing and thinking are always expressed as verbs, like running or meditating, but feelings are usually expressed as adjectives, like depressed, or nouns, like depression. . . .

To say the man is depressed would be to infer that the depression happened to him. What I will explain in this book is that it is a behavior he is choosing in order to deal with the difficulty of losing his job. To describe accurately what this man is feeling as a behavior and also be grammatically correct, I would have to say that he is depressing or choosing to depress.

When feelings turn into things we do — Though you might be inclined to write-off talking about feelings like “anxiety” as “anxieting,” having read Glasser’s work and reflected on my own behaviors I think he is really on to something. The telltale sign of a good idea is it’s usefulness, and it has become incredibly useful to view my own behaviors and those of friends and family from the perspective of control theory.

For example, when a friend starts depressing about their job, he is actually trying to control a situation where he has lost control. Through depressing he can exact behavioral change — i.e. people react to his depressing by trying to cheer him up. Of in the case of someone who could effect change in the friend’s job, reorganize the workflow. Via depressing the friend can take back some control.

Awareness of how we work to exert control is paramount. Being aware of how I can use painful emotional behaviors (like depressing) to re-exert control makes me more aware that I could choose other, more productive behaviors. Rather than depressing to control, I can go play a sport, read a book, or do some chores. I may not want to do something more productive — sometimes its very clear to me that I just want to depress/anger/whatever — but since it is very difficult to change my feelings or think my way out of an out-of-control situation, at least by doing something productive I can improve my situation.

Control theory does not mean that all misery is chosen. In the short term, our reaction to losing control is usually some form of painful emotion. It’s the longer-term reaction whereby we either choose to emote our way back into control, which is almost always counterproductive, emotionally painful, or a waste of energy, or we do something which may change our feelings, buy us time or improve our situation, snapping us back into control of our lives.

Pictures in our heads — Glasser explains that humans convert experience into mental “pictures” that we file away in our memory for future reference. For example, a chocolate-chip cookie satisfies a baby’s hunger for something sweet. Chapter 3, The Pictures in our Heads notes:

This means that we store in our personal picture albums the pictures of anything in the world that we believe will satisfy one or more of our basic needs. For the rest of his life, when that baby gets hungry, he will start turning the food apges of his album. Many times, when he comes to the pictures of chocolate-chip cookies, he will say to himself, “That’s what I want right now,” and he’ll try to find a chocolate-chip cookie in the real world. . . . With a little thought, it will become apparent that your personal picture album is the specific motivation for all you attempt to do with your life.

And later:

It is not easy to change our own pictures, but it is even more difficult to persuade others to change theirs. To change a picture, we have to replace it with another that, if not equally satisfying to the need in question, is at least reasonably satisfying. This can be done only through negotiation and compromise; force will not work.

We behave to satisfy the pictures in our heads. It’s a simple truth that has some profound implications, particularly with regard to relationships. In particular, Glasser discusses how relationships that succeed are those where the friends, family or lovers have enough common pictures to share. In a situation like a marriage (or with parents or children), it is paramount to the ongoing success of the relationship to share common pictures.

Sometimes one person may have a picture that is irreconcilable with the picture of their significant other. Compromise and negotiation are key in these situations. What more, the couple should work towards finding ever more pictures that both can share with each other. Success in relationships is dependent on sharing mutually satisfying pictures (This doesn’t mean all the pictures have to be the same).

The process of creative reorganization — Another great concept that Glasser describes in Control Theory is that of “creative reorganization,” which is a process by which our minds attempt find usable ideas and behaviors. In Chapter 10, Creativity and Reorganization, Glasser writes:

The behavioral system is a two-part system. One part contains our familiar organized behaviors; the other part, which is the source of our creativity, contains the building blocks of all behaviors in a constant state of reorganization. By themselves these building blocks could not be recognized as discrete actions, thoughts, or feelings; but as they reorganize, they may become recognizable and usable. . . .

As active as this process is, we may have little or no awareness that it is going on. . . .

From this bubbling, ongoing creative reorganization comes a random stream of mostly minimal but occasionally well-organized new behaviors that are available to us to try if (1) we pay attention to them and (2) we decide that those two which we pay attention may help us gain or regain control over our lives.

Glasser importantly notes that creative reorganization often produces junk ideas. It’s up to us to sort out the good ideas from the bad.

Creative reorganization hits on an idea that is so pervasive in life and success that I have to mention it here: it is that the best ideas, businesses and, well, things emerge from massively iterative processes. They survive by being most fit and useful. Look at markets, biology, ideas, blogs, products, etc. And most of the time, these things aren’t planned in advance — they emerge out of the ether — the random iterations of life. Robust, dynamic and successful systems provide for huge volumes of iterations.

Other useful clippings — While reading the book, I typed up some more insightful quotes.

From Chapter 17, Taking Control of Your Life:

In an effort to deny what they really want, people like Susan often sigh and say, “What’s the difference what I want? I’ll never get it.” But her sighs and depressing are still her way of choosing to suffer to try to get what she denies she wants. From the standpoint of the pain she chooses, it makes no difference if she is aware of what she wants or not. If we don’t have what we want, we will choose to anger or suffer just the same. Once you know control theory, you will not waste your time and energy refusing to face what you want just because it is hard to get, because you know that you will choose to suffer just the same.

Chapter 18 Control Theory and Raising Children:

Try as hard as possible to teach, show, and help your children to gain effective control of their lives.

I was remarking yesterday about extending the above quote on child-rearing to managing employees. A powerful manager empowers employees to improved responsibility and control over their job. The opposite is also true: the manager who strips control from employees will have miserable employees who essentially do very little productive work.

Conclusion — Glasser discusses control theory as it pertains to drugs and alcohol, child-rearing, health and more. This idea-packed, paradigm-shifting book weighs in at a paltry 236 pages. It is out of print, but as you can see there are some 70+ copies at Amazon. I highly recommend picking up a copy.

Glasser discusses towards the end of Control Theory a book he wrote in 1976 titled Positive Addiction. Glasser describes Positive Addiction as an activity where, while in a state of control, you achieve a period of creative reorganization. The example of positive addiction he describes is running. Running allows for a period of “in-control time” (Something we all need every day) and can take the runner into a meditative state of creativity. Because creative states have the potential to produce unpredictably good ideas via the iterative process, finding and pursuing positive addictions could be incredibly beneficial. Since I’m no runner, I’d like to discover what other activities might qualify. I might need to pick up this book, too.

Finally, hat tip to Dr. Michael Eades for alerting me to this great book.

*Glasser actually writes about a fourth component of behavior, the physiological response (i.e. the way our bodies react to a stimulus — usually a reaction we cannot control).

Below are all William Glasser books that I have read to date:

  • Control Theory — the most comprehensive and useful of Glasser’s books that I have read, this one covers the basics of control theory (also known as choice theory and reality therapy).
  • Positive Addiction — a more niche focus on acheiving meditation and creative reorganization via pursuit of positive addictions.
  • Staying Together — focuses on applying control theory, the ideas of “pictures in your head” and quality worlds, and matching up basic needs (or accounting for differences in these needs) in relationships.

Interview with Leonard Mlodinow (part 3)

http://www.blog.sethrober…lodinow-part-3/

There are 15 parts and counting to this interview with writer, scientist Leonard Mlodinow (they are all about a page long). He’s wrote The Drunkard’s Walk, which I’ve ordered from Amazon — it sounds similar to Taleb’s The Black Swan, which was fantastic and crystallized some thoughts that had been racing around in the ether of my brain. Saving this one down as I particularly liked Mlodinow’s commentary on writing here.

For the rest, here’s the current directory:

  1. part 1
  2. part 2
  3. part 3
  4. part 4
  5. part 5
  6. part 6
  7. part 7
  8. part 8
  9. part 9
  10. part 10
  11. part 11
  12. part 12
  13. part 13
  14. part 14
  15. part 15

Also mentioned in part 15 is a documentary about Cal-Tech basketball that sounds intriguing — it is called “Quantum Hoops.” Might be worth renting.

MLODINOW I think that in a way . . . I guess there’s two components to being able to write. One is your natural proclivity, I try not to say talent, but it’s your voice or the way you express yourself. And the other is the craft part of it that you learn by doing. I think I always had a good sense of humor and maybe a way to say things colorfully or think in terms of dramatic or powerful situations and I guess that’s the first part and served well. The other part is the things you learn as you go, such as what puts people to sleep or how to abandon what you think are good ideas but really aren’t. That’s a hard lesson to learn because it’s difficult to let go of things you might like and to realize that it just doesn’t belong or goes on too far or the idea that sometimes it’s hard to recognize things that may be good but just don’t belong there–that are tangents and they take away the dramatic thrust of where you’re going and they really have to be cut even though they’re good and you like them. You know, lessons like that, lessons about pacing–you learn by doing, by failing. You learn more about pacing, all sorts of technical aspects of writing, whether its fiction or nonfiction or TV or books; there are certain principles that you just learn by repeatedly doing and doing wrong and realizing, absorbing what went wrong and fixing it and you grow that way. In book writing you’re able to do that a lot with rough drafts so a lot of your mistakes don’t end up getting published–you know? TV writing can be so fast that often you don’t see the problems with the script until you actually watch it on the air and then you go, ‘Next time I think I won’t have that guy climbing the stairs for four minutes in the middle of the scene; I think five seconds is enough to get the idea across.’

ROBERTS Yes, that kind of brings us back to the very beginning. I feel like somehow the times have changed and people are smarter. Now you can make a living from what you’re doing. You’re writing this very entertaining intellectual history; finally there’s a market for it. Finally people are smart enough to be at your level so that you can write a book that you respect but you can get a wide enough audience.

MLODINOW Are you saying that in the 50s that couldn’t have been done? I don’t know.

ROBERTS Well, nobody did it; let’s put it that way.

MLODINOW No, nobody did it. I don’t know why.

ROBERTS As I said before we started recording, you’re the first person to ever do this. Will you be the last? I don’t know but you’re the first. You’re the first person to write intellectual histories that actually are popular and that people want to read, that they’re not forced to read by their teachers. It’s not just a tiny group of people reading them. Professors of course write them but they’re not well written and it’s just their job to write them; they get a salary from the government to write those books. You’re not getting any salary. You’re an entrepreneur and it’s just so different. Your books have to be popular or your job goes away. It’s just a different level of competence; your books are just infinitely more accessible, infinitely better than a professor would normally write. A professor is subsidized and that’s what is basically comes down to. Practically everybody who writes about science is subsidized but you’re not.

The No-Stats All-Star

http://www.nytimes.com/20…&pagewanted=all

Interesting article on Shane Battier, Houston Rockets b-ball player whose conventional stats are totally unimpressive but unconventionally, he makes all his teams much better. Interesting read from many angles.

The 3-point shot from the corner is the single most efficient shot in the N.B.A. One way the Rockets can tell if their opponents have taken to analyzing basketball in similar ways as they do is their attitude to the corner 3: the smart teams take a lot of them and seek to prevent their opponents from taking them. In basketball there is only so much you can plan, however, especially at a street-ball moment like this. As it happened, Houston’s Rafer Alston was among the most legendary street-ball players of all time — known as Skip 2 My Lou, a nickname he received after a single spectacular move at Rucker Park, in Harlem. “Shane wouldn’t last in street ball because in street ball no one wants to see” his game, Alston told me earlier. “You better give us something to ooh and ahh about. No one cares about someone who took a charge.” The Rockets’ offense had broken down, and there was no usual place for Alston, still back near the half-court line, to go with the ball. The Lakers’ defense had also broken down; no player was where he was meant to be. The only person exactly where he should have been — wide open, standing at the most efficient spot on the floor from which to shoot — was Shane Battier. When Daryl Morey spoke of basketball intelligence, a phrase slipped out: “the I.Q. of where to be.” Fitting in on a basketball court, in the way Battier fits in, requires the I.Q. of where to be. Bang: Alston hit Battier with a long pass. Bang: Battier shot the 3, guiltlessly. Nothing but net.