Collapse and Renewal

http://www.peopleandplace…se_and_renewal#

Found a lot of interesting things to think about in this article. Seems to get at how dynamic/complex/living systems (ecosystems, economies) evolve rapidly and then stagnate, which leads to collapse, and reboots the system (my simplification).

What I Have Learned
Change that is important is not gradual but is sudden and transformative. There is a common base cycle of change in individuals, in ecosystems, in business, in society. Increasing rigidity halts a long, slow period of growth and increasing efficiency. That begins a period of creative destruction and a fast period where uncertainty is great, where novelty emerges, and where new foundations are formed for a new cycle to begin. That is where we are now heading internationally.

In the United States, it is a time when the power of the state has achieved rigidity unseen since the triumphs of the falling of the Berlin Wall. Politicians have reacted to extreme disturbances, like the appalling terrorist attacks of 9/11, with powerful military response, a blind view of history and cultures, and a greedy desire for narrow benefit. Global economic expansion and dependence on peaking oil supplies, particularly in the Middle East, lock geopolitics into a self-destructive state from which transformation is extraordinarily difficult.

That is the time when change is most uncertain. We are living in it now. In this year we have simultaneously faced the sudden appearance of now reinforcing flips – sudden increases in the price of oil, increases in the costs of food, a financial collapse and the start of a recession, the retreat of Arctic ice sheets with climate warming, and accelerating loss of biodiversity. That is a lot to swallow and it reflects a process of human development and expansion since WWII.

But it is also the time when the individual has the greatest influence: when experiments determine the future; when the Internet opens opportunities for collaboration within and across nations; and when low cost mistakes are glorious because they trigger learning.

And these are the lessons I have learned that help in that process of dealing with turbulence:

1) Separate individual thought and work is essential but now, when integrative studies are the only way to reveal understanding, work with others is equally so. An individual’s knowledge can be combined with that of others to make the whole greater. In doing that we each recognize that we do not know everything but we do know, and know well, something. We learn with grace and humor and patience to work with others from different disciplines and backgrounds.

2) Complexity is in the mind of the beholder, in the patterns that are generated by causes that are simpler. Not as simple as once thought, but explained by a kind of “Rule of Hand”, not by a “Rule of Thumb’. Quite simply, I found in case after case of ecosystem change that four to six sets of variables operating at a number of different scales, in a non-linear way, captured nature’s flipping behavior. It turns out that ecosystems are temporary assemblages, pausing for a few hundreds of centuries in a passing state of quasi-stability as part of evolutionary change. Think of that when we think of the reality of global climate change.

3) There are about three kinds of scientists – the consolidator, the technical expert, and the artist. Consolidators accumulate and solidify advances and are deeply skeptical of ill formed and initial, hesitant steps. That can have a great value at stages in a scientific cycle when rigorous efforts to establish the strength and value of an idea is central. Technical experts assess the methods of investigation. Both assume they search for the certainty of understanding.

In contrast, I love the initial hesitant steps of the “artist scientist” and like to see clusters of them. That is the kind of thing needed at the beginning of a cycle of scientific enquiry or even just before that. Such nascent, partially stumbling ideas, are the largely hidden source for the engine that eventually generates change in science. I love the nascent ideas, the sudden explosion of a new idea, the connections of the new idea with others. I love the development and testing of the idea till it gets to the point it is convincing, or is rejected. That needs persistence to the level of stubbornness and I eagerly invest in that persistence.

All types of scientists are necessary, but I would love it if we could encourage and include the innovative type of artist. At the least, enjoy rigor, but never inhibit the innovative artists.

4) I learned that the key to make effective designs was to identify large, unattainable goals that can be approached, but not achieved, ones that relate to fundamental values of free speech, freedom, equity, tolerance and education. And then to add a tough design for the first step, in a way that highlights or creates options to design, later, a second step – and then a third and so on. We found that the results were steps that rapidly covered more ground than could ever be designed at the start. At the heart, that is adaptive design, where the unknown is great, learning is continual and actions evolve.

5) I am prodigiously curious about nature, and that triggers initial ideas. I am also terribly persistent and stubborn about developing and testing an idea that grabs me; at those times I am totally and narrowly focused, driven by the potential. That is what eventually makes an idea useful. So I conclude that natures create the idea; stubbornness makes it useful! But I have had to learn how to see nature. It is curiosity, anecdotes, funny correlations, jokes and metaphors that start that. It is new emerging theory that completes it.

One has to learn to develop senses that help us listen to intriguing voices that are hidden amongst the noise. Owlish ways to hear the rustle of the mouse. Do that and the future will be fun and rewarding. We all might even help, at this time of great change and threat, to develop further a world of justice, understanding and equity.

Shoot first and ask questions later (And have kids even if you don’t want to) (Updated, sorta)

Below is a response to Patri Friedman’s recent post on his pro-parenthood bias:

I’m late to the party.

My first kid is about eight weeks from greeting the world (and piercing my ears for the first few months or years!), so I’ve been giving the whole parenthood thing a lot of thought over the past few months. Incidentally, though we intended to have kids eventually, it happened sooner than we were planning.

Such is the unpredictability of life.

Which brings me to a point that you didn’t make, one that Bryan Caplan has alluded to via some scrounged up surveys of parents. The data Caplan found indicates that almost no one regrets having kids. Most parents wish they had *more* kids than they end up having. And adults who don’t have kids also tend to wish later that they had reproduced (For sake of saving a few words or directing others, see this post on the data).

Even though this backward-looking data supports the argument to have children, I don’t think it’s necessary to conclude that you should reproduce.

We are apparently quite bad at predicting what will make us happy in the future. For a nice read on this subject, I recommend picking up Dan Gilbert’s “Stumbling on Happiness” (and if you are too busy to do that, just read my selected quotes from Stumbling on Happiness here). A theme of Gilbert, which is also a theme of books like Taleb’s “The Black Swan,” is that everything is much more complex than we make it out to be, and this complexity makes our grossly simplified forecasts fundamentally flawed — useless at best — harmful at worst. As applied to those people who choose not to have kids, as much as they think they know what will make them happy in the future, they are almost certainly going to be wrong about their predictions.

Accepting our inability to know what will make us happy but understanding that it is a biological imperative to reproduce and realizing that it will be much more expensive to reproduce past our reproductive prime, all signs point to shooting first and asking questions later.

Of course, to have kids or not is no simple binary choice. Procreating makes for an incredibly “bushy” (complex) life experience. Kids add randomness and depth to our lives in ways that we can’t possibly foresee but ways we will likely enjoy*. Sure, by having kids you’ll forgo some experiences as you engage life by yourself or with your significant other, but the experiences you’ll forgo by not having children are wholly new and unpredictable — the life of an entirely new human being: you, your significant other, and your kid(s).

In short, I liken parenthood to doing first and understanding later. This is a good rule of thumb to apply across almost all facets of life — lots of iterations make for lots of experiments through which we can learn about and enjoy life. Not having kids is a choice to have a drastically less-interesting, much more simplistic and sterile (literally and figuratively) life. I wouldn’t wish that on anyone I care about.

So I shake my head when friends make that choice.

Finally, I don’t really understand how anyone can understand humanity through the lens of evolution and not have children. Having kids means getting in touch with our core humanity — our biological nature — and living out the imperative coded in our DNA: to create life. Reject your hardwired nature at your own risk.

For my particular contribution to furthering human evolution, our kid is getting a mix of the DNA from a caucasion (me) and an Indian. Gene-swapping for the win!

* Another SoH idea is that we are better off charging into the unknown than doing nothing because our mental immune systems are better at justifying our decisions after the fact than they are at managing grief of what could have been.

** Not a brightline conclusion, I know — you can always adopt or potentially figure out other methods to have children after you pass your reproductive time.

Update: So despite my comment being one of the last out of the 170+ comments to Patri’s post, I got a couple shout-outs in follow-up posts by Patri (here and here). And I had to throw in one more comment, which I’ll copy below, which is more or less an application of Pascal’s wager to the decision to have children. So here’s my second comment:

Another point regarding the buyer’s remorse stats — if the majority of people who don’t have kids ultimately regret it, it seems highly likely that at least one person in a committed sterile-by-choice relationship will regret their decision. Yeah, people often select mates based on whether or not they want to have kids, but these same individuals also often change their minds about their choice (thus the tendency towards regret).

And this often leads to wrecked, otherwise fantastic relationships. I’m sure that I am biased in making this observation — I know someone who clearly regrets not having children. His spouse of twenty years, on the other hand, seems perfectly content. And it has put an enormous amount of unspoken strain on their relationship, not to mention, it is a point of intense sadness for this individual.

I see a slight parallel to religion here. Having kids because you expect it to be somehow fulfilling is a bit like hoping for a reward in heaven when you die — a life lived adhering to some arbitrary religious codes requires a lot of obvious work with less than obvious rewards, not unlike the decision to have kids.

Except that is where the similarity breaks down. With the choice to procreate, not only do we see the direct benefits of our own parents’ choice (as in, I am alive and I believe my life is not only good for me but also for my parents), we see the benefits accruing to our friends and relatives.

I mention all of this because the anti-procreation argument assumes that you know without a reasonable doubt that you will be happier/more fulfilled/better off without children. Not only is there a lot of observational/anecdotal/statistical evidence suggesting you might be wrong, there’s also the reality thatwe are very bad at predicting what will make us happy in the future. The cards, it seems, are very much stacked against those who believe they’re better off without children.

So even if you don’t want to now, have kids anyway. To me, this argument is a version of Pascal’s wager that actually makes sense.

“People are complicated!”

http://xkcd.com/592/

Love the latest xkcd comic:

people are complicated!

In three frames xkcd indicts central planning with the single line that, “People are complicated!”

Why is this simple truth so hard to understand? If people are complicated, so are all systems of human interaction (i.e. markets, government, relationships, etc.). And it doesn’t stop there, of course: all dynamic systems are complicated.

It shouldn’t be a surprise that the simple-minded solutions of central planners fail to manage such unpredictable complexity. So why are they even trying?

Chance Wins

http://www.blog.sethrober…what-causes-it/

This bit by Seth Roberts reminds me all at once of Nassim Taleb’s work (Status quo, the fed turkey, works until it completely implodes), Seth Godin’s “This is Broken” idea, and the dinosaurs going extinct.

Who is flying this plane? Do they really know what they are doing? Does chance win over purpose?

Seth’s blog post is centered around the broken U.S. healthcare system — a system which suffers both from a burgeoning status quo as well as no means of introducing alternative solutions. In other words, it is entrenched.

And just like the dinos, when that entrenchment ultimately leads to social upheaval, the failure may be catastrophic.

A robust system must be dynamic.

Cross-Pollinating Ideas via the Internet

I was just leaving a comment on Richard Nikoley’s latest blog post, Vitamin K1 vs. Vitamin K2 concerning Natto, a fermented soy food from Japan that contains a huge amount Vitamin K2. I was specifically pointing out that fish gonads, which are considered to have a high K2 concentration, something I had learned over at Stephan Guyenet’s Whole Health Source: Seafood and K2, are absolutely dwarfed by the K2 concentration in natto^. I had first learned about natto and the importance of fermented foods via Seth Roberts’ blog (See his Fermented Food Category). Put differently, my comment took data from three different sources and presented it in a coordinated, collaborative manner.

Though this might not be the best term for it, I call these occurrences examples of the “cross-pollination” of ideas. It’s a collaborative, unpredictable, uncoordinated, complex effort whereby ideas and information gleaned from disparate sources are examined in relation to one another. It is knowing the trees and seeing the forest. The goal is to create more useful ideas and better information, and then spread this new knowledge far and wide. And do it over and over again. If this reminds you at all of evolutionary processes, not only are you catching my drift, you’re cross-pollinating.

Idea cross-pollination is amplified by the Internet. Historically, a powerful idea or discovery could languish in obscurity, the pet project of an experimenter who works in the silo of his own research. This was the case with Isaac Newton who had discovered/created calculus decades before it was made public.

Compare how calculus languished to the ideas contained within Gary Taubes’ Good Calories, Bad Calories, a book written by a non-specialist (Taubes is a writer, not a scientist) that looks at an enormous amount of nutrition-related research, sees common threads across the data, and presents it all in once place, calling into question the mainstream nutrition mantra that low-fat is healthy, fat will kill you, and people are obese because they eat too much. GCBC was created by having the power to examine the research of a number of disparate specialists and see the big picture.

A book like GCBC is made possible by the Internet because it becomes much less likely that ideas remain within the dusty silos of specialists. The Internet takes curiosity, search, and a great deal of disparate computing power*, and uses them to spread ideas much, much faster. Non-specialists(like Taubes or me) then have the pleasure of making fortuitous discoveries of connections across specialties.

Of course, the means by which cross-pollination is accomplished are unpredictable: we can’t plan a course to find them. All we can do is cast a wide net, examine a lot of ideas, follow our curiosity, and let our organic pattern recognition software do it’s thing. This is very much a “learn by doing, then by thinking” concept. If we dabble in this gamble enough, every once in awhile, we will hit the idea jackpot.

Mind, the idea of idea cross-pollination isn’t really an external process across disparate people, at all. To the extent that we learn ideas, we store copies** of them in our brains, forever taking the ideas with us (A reason legal boundaries around mental concepts is fundamentally absurd). Indeed, it seems that the majority of my intellectual growth has been predicated on being able to cross-pollinate within these internalized knowledge stores. I am always trying to reconcile previously learned ideas with new ones. In this way my organic human network, a human brain, is mimicked by the inorganic mesh of networks we call the Internet.

In sum, cross-pollination of ideas has always been occurring — it is a human specialty, warts and all. Thanks to the Internet, it’s happening more, and we’re getting an explosion of ideas/concepts/knowledge as a result.

^ It seems that Natto is an obscure bastion of nutrition, which may be due to the fact that it (apparently) doesn’t taste the greatest. I’ve yet to get my hands on any as it is exceedingly hard to find. Rest assured, I will be eating some just as soon as I get a chance to check out the only Japanese grocery store in Atlanta.

* As in, human minds that work to understand and pull together the data they discover.

** Albeit imperfect, frequently mutated copies, but this, again, can make for fortuitous idea creation, and as far as I can tell, acts as a positive, dynamic force.

Nassim Taleb is no friend of academics

http://www.fooledbyrandomness.com/notebook.htm

Nassim Nicholas Taleb’s latest from Opacity, no 114 titled “Where is the evidence?” launches into Nassim’s current interest in how we know things given the lack of evidence (That is probably summed up poorly, but it is a focus on the absence of evidence/evidence of absence problem and humanity’s gross ignorance. Taleb mentions the concept in the hour long podcast at EconTalk if you’ve got the time to listen to it).

Taleb’s admonition of academia is brutal — he basically says Ben Bernanke and Larry Summers are “arrogant, formal-thinking civil servants, and Ivy-league semi-retards.” Don’t pull any punches there Nassim!

I’m still not convinced the admonition about negative advice is exactly right, but why quibble? (See prior discussion on Nassim Taleb and Expert Advice)

Finally, I’ve ordered two books by John Gray, who Taleb cites as the “greatest living thinker.” And to think I hadn’t even heard of the guy.

Note: If you are like me, and wants to be updated on Taleb’s latest posts to his non-feed-friendly blog, feel free to use this change detection RSS feed I created: Taleb’s Opacity Change Detector Feed.

I leave aside the confusion absence of evidence/evidence of absence–and the misunderstanding of the very notion of “empiricism”. It is a fact that in the real world of our daily decision-making 1) we do not have much evidence of most relevant things, yet we need to take action; 2) in most situations, “true/false” is never symmetric (one side is more harmful than the other), so the burden of evidence is one-sided. Which is why once these fakes “doing science” lose their tenures after the endowments (and charity) run out of funds, they will be barely fit to do anything in the real-life ecology. I wonder what you can do with an unemployed, say, academic orthodox economist. You could do better with non-post-academic cab drivers. Clearly those the most fit at dealing with “just evidence” will be idiot savants outside their evidence domain.

And I can expect that with the SP500 about 20% lower than here, you will see tenures unexpectedly evaporating. The silver-lining of the crisis, perhaps, with the de-academification of society.

So let me take this into more interesting territory, and express my anti-social-planner views. Even more that in Hayek’s days, the ecology of the real world is becoming too complex for Aristotelian logic: very, very little of what we do can be safely formalized, meaning asymmetries matter more than ever. Which puts the Western World today at the most dangerous point in its history: unless we get the Bernanke-Summers crowd out of there, it will eventually be destroyed by the machinery of arrogant, formal-thinking civil servants, and Ivy-league semi-retards.

Finally, beyond the current mess, I see no way out of this ecological problem, except through that tacit, unexplainable, seasoned, thoughtful, and aged thing crystalized by traditions & religions –we can’t live without charts and we need to rely on the ones we’ve used for millennia.

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.

Stumbling on Happiness by Daniel Gilbert

Stumbling on Happiness by Daniel Gilbert

Finished reading Stumbling on Happiness (SoH) by Daniel Gilbert last night, which weighs at about 240 pages and is an easy and informative discussion of the human mind, how we perceive the past and future, and our own ineptitude at understanding what makes us happy. It’s explicitly not a self-help book or a guide to finding happiness. SoH is more an expose on how our minds work to deal with reality, remember the past, and predict the future.

In short, we’re not very good at doing any of the above and Gilbert does a pretty excellent job at explaining why.

While reading SoH, I marked various pages that I found particularly insightful. I’m sharing those bits and pieces below, as transcribed from the book.

Note: This “review” is a bit long because I’m recording some of the core concepts of SoH for future reference (If I don’t do this, I’ll probably forget them!).

On the importance of control with regard to human well-being (Chapter 1, Prospection and Control):

Knowledge is power, and the most important reason why our brains insist on simulating the futrue even when we’d rather be here now, enjoying a goldfish moment, is that our brains want to control the experiences we are about to have.

[Regarding why we want control,] There are two answers to this question, one of which is surprisingly right and the other of which is surprisingly wrong.

The surprisingly right answer is that people find it gratifying to exercise control—not just for the futures it buys them, but for the exercise itself. Being effective … is one of the fundamental needs with which human brains seem to be naturally endowed …

… Research suggests that if [we] lose [our] ability to control things at any point between [our] entrance [into the world] and exit, [we] become unhappy, helpless, hopeless, and depressed. …

Our desire to control is so powerful, and the feeling of being in control so rewarding, that people often act as though they can control the uncontrollable.

We want—and we should want—to control the direction of our [lives] because some futures are better than others … This idea is so obvious that it barely seems worth mentioning, but I’m going to mention it anyway. Indeed, I am going to spend the rest of this book mentioning it because it will probably take more than a few mentions to convince you that what looks like an obvious idea is, in fact, the surprisingly wrong answer to our question. We insist on steering our [lives] because we think we have a pretty good idea of where we should go, but the truth is that much of tour steering is in vain … because the future is fundamentally different than it appears through the prospectiscope.

In other words, the futures we expect to have given we do X or Y are never the same way as we expect them to be when we imagine them now.

On our brains doing the “filling-in” trick and imagining thing we could not know (Chapter 4, Onward). This reminds me of jumping to conclusions or the logical fallacy of the “hasty generalization,” though both fail to capture what our minds are doing, which is using a great deal of spackling to fill in holes.

Your mistake was not in imagining things you could not know—that is, after all, what imagination is for. Rather, your mistake was in unthinkingly treating what you imagined as though it were an accurate representation of the facts. …

Without the filling-in trick you would have sketchy memories, an empty imagination, and a small black hole following you wherever you went … We see things that aren’t really there and we remember things that didn’t really happen, and while these may sound like symptoms of mercury poisoning, they are actually critical ingredients in the recipe for a seamlessly smooth and blessedly normal reality. … Even though we are aware … of the filling-in trick, we can’t help but expect the future to unfold with the details we imagine.

And on how the brain leaves things out (Chapter 5, Absence in the Present), Gilbert cites Francis Bacon:

Nearly four centuries ago, the philosopher and scientist Sir Francis Bacon wrote about the ways in which the mind errs, and he considered the failure to consider absences among the most serious:

By far the greatest impediment and aberration of the human understanding arises from [the fact that] . . . those things which strike the sense outweigh things which, although they may be more important, do not strike it directly. Hence, contemplation usually ceases with seeing, so much so that little or no attention is paid to things invisible.

I’ll circle back to this later, but this is strikingly similar to our abilities to justify action over inaction, which Gilbert addresses later in the book.

Gilbert further illustrates how our brains leave out important details in discussing siamese twins and blind people who are unquestionably happy. Those of us without such disabilities have a hard time appreciating how individuals stricken with a dehabilitating problem could be just as, if not more happy than us. That is because our brains leave out important details. Regarding blind people, Gilbert writes (Chapter 5, Absence in the Future):

[W]hen sighted people imagine being blind, they seem to forget that blindness is not a full-time job. Blind people can’t see, but they do most of the things that sighted people do—they go on picnics, pay their taxes, listen to music, get stuck in traffic—and thus they are just as happy as ighted people are. They can’t do everything sighted people can do, sighted people can’t do everything that they can do, and thus blind and sighted lives are not identical. But whatever a blind person’s life is like, it is about much more than blindness. And yet, when sighted people imagine being blind, they fail to imagine all other things that such a life might be about, hence they mispredict how satisfying such a life can be.

Later in Chapter 5 Gilbert makes the astute analogy between how when we see off in the distance of space, our brains understand that we are unable to make out many details of the far-off objects, like the hairs on buffalo far off in the horizon; however, when we see off in the distance of time (either remembering the past or imagining the future), we fail to appreciate the many details our temporal perception may leave out (On the Event Horizon):

But when we remember or imagine a temporally distant event, our brains seem to overlook the fact that the details vanish with temporal distance, and they conclude instead that the distant events actually are as smooth and vague as we are imagining and remembering them.

One interesting part of the book describes how we use our brain hardware to imagine. This means that when we imagine a song or a picture in our heads, we trigger the parts of the brain that deal with visual or audio stimuli. This works reasonably well, but it is difficult for our brains to multi-task the hardware, which means that when we are feeling a certain way, that feeling impacts our imagining of something else – like the past or future. Gilbert writes (Chapter 6, Onward):

Each of us is trapped in a place, a time, and a circumstance, and our attempts to use our minds to transcend those boundaries are, more often than not, ineffective. … We think we are thinking outside the box only because we can’t see how big the box really is. Imagination cannot easily transencd the boundaries of the present, and one reason for this is that it must borrow machinery that is owned by perception. The fact that these two processes must run on the same platform means that we are sometimes confused about which one is running. We assume that what we feel as we imagine the future is what we’ll feel when we get there, but in fact, what we feel as we imagine the future is often a response to what’s happening in the present. The time-share arrangement between perception and imagination is one of the causes of presentism …

Gilbert goes on to discuss the balance our minds strike between the real and the illusory, and that this balance is achieved by the competing forces of what motivates us (the illusory) and what keeps us grounded (the real). He writes in Chapter 8, Cooking with Facts:

We cannot do without reality and we cannot do without illusion. each serves a purpose, each imposes a limit on the influence of the other, and our experience of the world is the artful compromise that these tough competitors negotiate.

Rather than thinking people as hopelessly Panglossian, then, we might think of them as having a psychological immune system that defends the mind against unhappiness in much the same way that the physical immune system defends the body against illness.

The idea of our minds as having an immune system over otherwise cold-hard depressing truths is particularly apt. How often are we able to find the silver-lining on the darkest, most depressing of clouds? Indeed, this is almost certainly an evolved trait that forces us to press onward despite real, painful realities.

Two of the best ideas that Gilbert illustrates in SoH demonstrate the implications of having a psychological immune system. For one, the present of this mental immune system incites us to prefer action over inaction (Chapter 9, Looking Forward to Looking Backward):

But studies also show that nine out of ten people are wrong. Indeed, in the long run, people of every age and in every walk of life seem to regret not having done things much more than they regret things they did

But why do people regret inactions more than actions? One reason is that the psychological immune system has a more difficult time manufacturing positive and credible views of inactions than of actions. … The irony is all too clear: Because we do not realize that our psychological immune systems can rationalize an excess of courage more easily than an excess of cowardice,we hedge our bets when we should blunder forward.

The second point is that despite how we seem to believe we want as much choice and freedom as possible, our psychological immune system is so effective at its job that we are often better off without choice because the restrictions imposed by unchangeable decisions elicit compensatory justification by our minds, which enables us to make peace and appreciate our somewhat restricted positions (The Inescapability Trigger):

The costs and benefits of freedom are clear—but alas, they are not equally clear: We have no trouble anticipating the advantages that freedom may provide, but we seem blind to the joys it can undermine.

Somewhat related to Bacon’s observation that we tend to ignore the absences is the reality that unusual experiences stand out in our minds, tricking us into thinking they are the norm, when we are forgetting that the norm is the usual. Said better by Gilbert in Chapter 10, The Least Likely of Times:

The fact that the least likely experience is often the most likely memory can wreak havoc with our ability to predict future experiences.

In SoH Gilbert explains the idea of super-replicators, an idea explaining why certain genes are transmitted successfully, and applies this idea to belief systems. The super-replicator idea is simply that “any ( gene | idea ) that promotes its own “means of transmission” will be represented in increasing proportions in the population over time.” The idea of the super-replicator immediately elicits thoughts of the spreading of religion (and hark remembrances of Neal Stephenson’s Snow Crash):

If a particular belief has some property that facilitates its own transmission, then that belief tends to be held by an increasing number of minds. … [T]here are several such properties that increase a beleif’s transmissional success, the most obvious of which is accuracy.

I’d substitute usefulness or efficacy for accuracy, but the point is well made. There are ideas, both good and bad, that propagate and self-replicate. Gilbert goes into details on some of these ideas, perhaps the most prominent being the belief that money == happiness. The entire notion of self-replicating ideas is a great meta idea that, though related to how we perceive the world, could probably be expanded and written on in its own book.

At the end of SoH, Daniel Gilbert suggests a solution to help deal with our innately handicapped ability to perceive the future (and know what will make us happy). It’s pretty simple: observe others who are experiencing what you either will experience or want to experience. Watch how they feel because more often than not, the way they feel given a set of circumstances is likely to be how you would feel under the same. Gilbert calls this using surrogates, and it makes a lot of sense in theory though I can imagine it being incredibly difficult to put into practice. This is because we overestimate our own uniqueness in relation to other human beings when. As noted earlier, we are blind to how a blind man could be as happy as we are because we only see their blindness as a unique difference rather than seeing the gross majority of similarities.

All in all, some great insights are elicited in Gilbert’s Stumbling on Happiness. I have to recommend it!

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.

Nassim Taleb on Experts and Negative Advice

Nassim Taleb’s latest from Opacity #113 titled Negative Advice; Why We Need Religion makes the brief case that human beings are “suckers for charlatans who provide positive advice (what to do), instead of negative advice (what not to do).” Below is the entirety of his post, take a read (Emphasis mine):

At the core of the expert problem is that people are suckers for charlatans who provide positive advice (what to do), instead of negative advice (what not to do), (tell them how to get rich, become thin in 42 days, be transformed into a better lover in ten steps, reach happiness, make new influential friends), particularly when the charlatan is invested with some institutional authority & the typical garb of the expert (say, tenured professorship). This is why my advice against measuring small probabilities fell on deaf ears: I was telling them to avoid Value-at-Risk and the incomputable rare event and they wanted ANOTHER measure, the idiots, as if there was one. Yet I keep seeing from the history of religions that survival and stability of belief systems correlates with the amount of negative advice and interdicts — the ten commandments are almost all negative; the same with Islam. Do we need religions for the stickiness of the interdicts?

Telling people NOT to smoke seems to be the greatest medical contribution of the last 60 years. Druin Burch, in the recently published Taking the Medicine

The harmful effect of smoking are roughly equivalent to the combined good ones of EVERY medical intervention developed since the war. (…) Getting rid of smoking provides more benefit than being able to cure people of every possible type of cancer”

It is easy to read Taleb’s argument as meaning that negative advice is both more routinely followed and better than positive advice. However, this is clearly not the case as there are countless examples of bad negative advice. For example, look at the “Don’t eat fat” mantra that developed over the past few decades. This is negative advice that I believe Taleb has personally acknowledged as poor (Taleb is a friend of Art De Vany’s and an adherent on some level to the low-carb evolutionary nutrition/fitness theory). The low-fat or lipid hypothesis that has been the driving force behind public health policy over the past few decades may ultimately be proven to have caused the premature deaths of millions of human beings (via cancer, cardiovascular disease, Alzheimer’s, obesity, diabetes, etc.). Clearly, not all negative advice is good to follow.

However, negative advice or bright-line rules seem to take hold more strongly than positive advice. Christianity and Islam are the two most dominant religions of the world. Both contain prescriptive, bright-line rules. In the case of Christianity the prominence of rules is particularly ironic: Jesus openly argued for the destruction or irrelevance of the law (The bright-line rules of Judaism at the time). Regardless, the dominating sects of both Islam and Christianity appear to have more negative advice (What not to eat, drink, do) than positive advice (Love your neighbor), and the negative advice tends to be much more concrete: “Do not commit adultery” is much more cut-and-dry than “Love everyone.” It’s the time-tested success of hard-line, negative-advice-based religions that lends the most support for Nassim Taleb’s argument.

Agreeing somewhat with Taleb’s theory, I think it is too limited in scope, and should be expanded and clarified. Simply put: human beings are sucker’s for bright-line rules be they positive or negative; adherence to and success of these bright-line rules is dependent upon their prescriptive strength. Based on conclusions drawn from observing health and religion idealogies, it seems that negative advice promotes the greatest adherence and zealotry, both of which lead to idealogical success**.

That it is human nature to want others to tell us what to do seems hard to deny. Why are we this way?

I just finished reading Daniel Gilbert’s Stumbling on Happiness (SoH), which discusses how we perceive things and how that affects our happiness. One argument Gilbert makes is that it is human nature to prefer action over inaction. This is because it is easier to justify our action-based decisions after the fact because they have clearcut consequences whereas inaction does not, making inaction difficult to imagine and thereby difficult to justify. I would add to this that I believe it is human nature to put greater faith in our ability to control outcomes; therefore, we act out of the misguided belief that our action can elicit the responses we want.

Regardless of the source of our preference for action, I believe it’s from this bias that springs the need for bright-line positive advice. For proof of concept, look no further than the pervasive mentality that, “We must do something to mitigate the economic crisis!” Charlatans and politicians fully exploit the bias of action over inaction to propagate their own prerogatives.

On the other hand, there is a second contention in SoH that seems an extension of the preference for action over inaction, which is that the elimination of choice can trigger our psychological immune systems. Once triggered, these systems work to make us happy or content with a more restricted existence. Imagine this: having bought the farm, you’re quick to articulate the benefits of the purchase and figure out a way to love the cows. In keeping with this understanding, we can readily explain the human preference for ideologies that drastically reduce choice via negative, bright-line rules.

Thus, here we have two psychological explanations for why humans crave bright-line rules, both positive and negative.

I’d imagine Taleb would agree: life is incredibly more complex and uncertain than our bright-line rules, either positive or negative, allow. We should be aware of our tendency towards dogmatic over-simplifications and be wary of overly prescriptive, bright-line advice.

* It’s always interesting how Jesus is written to have claimed he came to free man from the law. Yet Christianity, via any number of particular denominations like Catholicism or Protestantism all adhere to stringent rules and edicts.

** I can’t help but wonder if its just easier to prescribe negative advice than positive advice even though both are likely to instill dogmatic behaviors.

Further reading