“Expected utility theory has become so familiar to experts in economics, finance and risk-management in general that most see it as the obvious method of reasoning. Many see no alternatives. But that’s a mistake. This inspired LML efforts to rewrite the foundations of economic theory, avoiding the lure of averaging over possible outcomes, and instead averaging over outcomes in time, with one thing happening after another, as in the real world. Many people – including most economists – naively believe that these two ways of thinking should give identical results, but they don’t. And the differences have big consequences, not only for people trying to do their best when facing uncertainty, but for the basic orientation of all of economic theory, and its prescriptions for how economic life might best be organised.”
Category Archives: Uncategorized
Book Review: Secular Cycles
“If history is just “one damn thing after another”, there’s no framework for figuring out what matters, what’s worth learning, what follows what else. The secular cycle idea creates a structure that everything fits into neatly. I know that the Plantagenet Dynasty lasted from 1154 – 1485, because it had to, because that’s a 331 year secular cycle. I know that the important events to remember include the Anarchy of 1135 – 1153 and the War of the Roses from 1455 – 1487, because those are the two crisis-depression periods that frame the cycle. I know that after 1485 Henry Tudor took the throne and began a new age of English history, because that’s the beginning of the integrative phase of the next cycle. All of this is a lot easier than trying to remember these names and dates absent any context.”
A New Clue to How Life Originated
“It means that two of the essential components of life, a protocell’s membrane and its proteins, provided the conditions for each other to exist. By sticking to the fatty acids, the amino acids gave them stability. In turn, the fatty acids concentrated the amino acids, perhaps encouraging them to coalesce into proteins. From the very beginning, these partners were locked in a two-step dance that continued for 3.5 billion years, and helped create all the richness of biology from a starting place of mere chemistry. “I agree completely,” Keller tells me. “It’s completely magical. You need those two parts together.””
Peter Thiel’s Religion
“Moreover, cathedrals can only be built with scientific knowledge and communal support. They require scientists, mathematicians, engineers, craftsmen, and artists. And all of them need a long time horizon.
Long time horizons aren’t just psychological. They’re cultural. Modern society suffers from temporal exhaustion. Or as, sociologist Elise Boulding once said: “If one is mentally out of breath all the time from dealing with the present, there is no energy left for imagining the future.”
As I’ve written before, the speed of technology and the hyperconnectivity of society have placed us in a “never-ending now.” Like hamsters running on a wheel, we live in an endless cycle of ephemeral content consumption — a merry-go-round that spins faster and faster but never goes anywhere.”
Notes from a nameless conference
“The industrial elites have lost their way. In every major profession and institution, they once commanded vast, widely-admired projects that filled their lives with meaning and endowed the entire class with an unconquerable confidence. But the twentieth century couldn’t be preserved forever, like a bug in amber. The elites now face a radically transformed environment – and they are maladapted and demoralized. An inability to listen, an impulse to spew jargon in broadcast mode, a demand for social distance as the reward for professional success: such habits, which in the past placed them above and beyond the mob’s reach, now drag them down to contempt and mockery in the information sphere. Among the public, trust has curdled into loathing. The elites are horribly aware of their fall from grace – hence the conference – but being deaf to the public’s voice, they are clueless about how to respond.”
Book Review: The Electric Kool-Aid Acid Test
“Everyone had a movie. The cops had a cop movie, businessmen had a businessman movie, trauma victims had trauma victim movies. Everyone was just reading their script, doing what was expected of them. But with enough enlightenment (realistically: drugs), you could break out of other people’s movies – not just refusing to play the part they assigned you, but making them question the role they assigned themselves. You could rewrite your own movie, stop being an actor and take control of your own life. That woman in the picture, who put the flower in the barrel of the gun as the riot police stared her on: she was channeling Kesey. The riot police have their riot police movie, where you either back off or fight against them or do some other reasonable riot-police-related thing. If you can break out of that, just be yourself, your repertoire of possible actions expands to infinity.”
The Economist Who Would Fix the American Dream
“Hearing stories of the American dream as a boy in New Delhi, Chetty adopted the faith. When he became a scientist, he discerned the truth. What remains is contradiction: We must believe in the dream and we must accept that it is false—then, perhaps, we will be capable of building a land where it will yet be true.”
In Defense of Nationalism: Notes on Yoram Hazony and His Critics
“Hazony wants to shift our attention from questions about the conditions of legitimacy for a political order, which have dominated Western debates since Locke, to the conditions for sustaining a political order, the conditions that ensure that individuals see themselves as part of a larger unit and are willing to see its good as their good, its triumphs as their triumphs, its freedom as their freedom.”
Coffee, Magic and the ineffable joy of Hunter Pence
““I can’t really control what others think of me, I can only offer love,” Pence says. “I can only control what I offer to others, and what I offer to the game. So I have a mindset that like I always offer love, regardless of what is given to me. You don’t have to earn my love, I give it to you unconditionally. Even if you hate me, or are mad at me or whatever. My goal, it’s just a goal of mine, is to only offer love, unconditional love, regardless of conditions. I don’t need you to prove anything to me for me to love you. I just feel like that puts you in a much more peaceful state.”
He pauses, then decides to add one minor explanation. “There’s still grit and dirt and be tough, it’s still there. We’re not saying to be soft.””
What the Burnaby Mountain Gondola Teaches us about Loss
“The working theory amongst city builders whenever a group of NIMBYs pipe up about any given development in an urban environment is that people simply don’t like change.
That’s nonsense. People love change.
If you get a sought-after job, a new girlfriend/boyfriend, a first car or win a million dollars your life is going to change dramatically but you’d be hard-pressed to find someone complaining about that.
What people don’t like isn’t change, it’s loss.”
Whose advice should you take?
“Rather than seeking out the general wisdom of our elders and superiors about the way things are, we should have a view of things that is probabilistic, about the way things are right now. We should evaluate it fairly constantly, and keep updating it.
Finance advice is simple and fairly unchanging. Same for child rearing. But you are not unchanging, neither are your circumstances. You need different advice at different times. Keep updating yourself.”
Moral intuition vs. tradition
“Moral intuition is largely grounded in sub-Dunbar society. Our intuition tells us what is fair and just in a small tribe doing simple tasks. Tradition is how we were able to achieve cooperation at scale and complexity. We gradually evolved cultural norms and institutions that allow millions of people to cooperate and to participate in complex enterprises.”
Book Review: The Secret Of Our Success
“To start the ritual, the shoulder blade was heated over hot coals in a way that caused patterns of cracks and burnt spots to form. This patterning was then read as a kind of map, which was held in a pre-specified orientation. The cracking patterns were (probably) essentially random from the point of view of hunting locations, since the outcomes depended on myriad details about the bone, fire, ambient temperature, and heating process. Thus, these divination rituals may have provided a crude randomizing device that helped hunters avoid their own decision-making biases.
[…]
Rationalists always wonder: how come people aren’t more rational? How come you can prove a thousand times, using Facts and Logic, that something is stupid, and yet people will still keep doing it?
Henrich hints at an answer: for basically all of history, using reason would get you killed.
A reasonable person would have figured out there was no way for oracle-bones to accurately predict the future. They would have abandoned divination, failed at hunting, and maybe died of starvation.”
Social Status: Down the Rabbit Hole
“The beginning of wisdom about social status is learning to distinguish its two (and only two) primary forms: dominance and prestige. These are, as one research paper puts it, the “two ways to the top.”
If dominance is the kind of status we get from intimidating others, prestige is the kind of status we get from doing impressive things or having impressive traits or skills.
A schoolyard bully is an example of pure dominance. He’s not impressive, only aggressive. Stephen Hawking and Malala Yousafzai (winner of the 2014 Nobel Peace Prize), on the other hand, are examples of pure prestige. You’re likely to treat them with deference and respect, though neither is threatening to stuff you in a locker. Both forms of status can, of course, exist simultaneously in the same person — e.g., Steve Jobs, who was brilliant, charismatic, and a notorious tyrant to his employees. The point is that dominance and prestige can be separated, and that they’re analytically distinct. They’re the two Platonic forms of social status.”
Strong Towns: Do You Want to Know What Works?
“The building of cities shifted from being a co-creation of the people who lived there to a technical undertaking by professionals. The method of change shifted from a painstaking craft to more of an assembly line. The mature city was assembled incrementally on a continuum of improvement; in contrast, the places we’ve built since about 1945 tend to be built all at once to a finished state.
A cornfield is complicated, but not complex: it requires a lot of technical expertise to maximize yields and account for such things as soil characteristics and weather conditions, but ultimately it’s a monoculture. A rainforest is complex, co-created by countless interactions among thousands of different species that couldn’t possibly be reduced to a formula.”
Why Are the Prices So Damn High?
“The price of services relative to goods has been rising because productivity in services has increased more slowly than productivity in goods. At the same time, the services sector has been growing as a share of the economy. […] Because society is moving more resources into lower-productivity sectors, the inevitable result is slowing net productivity growth.
[…]
A slowing rate of productivity growth also means a decline in the Baumol effect. The Baumol effect is driven by increasing productivity in the progressive sector. As the progressive sector becomes a smaller share of the economy, it can no longer drive price increases elsewhere in the economy.”
The Dark Forest Theory of the Internet
“Imagine a dark forest at night. It’s deathly quiet. Nothing moves. Nothing stirs. This could lead one to assume that the forest is devoid of life. But of course, it’s not. The dark forest is full of life. It’s quiet because night is when the predators come out. To survive, the animals stay silent.
This is also what the internet is becoming: a dark forest.
In response to the ads, the tracking, the trolling, the hype, and other predatory behaviors, we’re retreating to our dark forests of the internet, and away from the mainstream.
[…]
It’s possible, I suppose, that a shift away from the mainstream internet and into the dark forests could permanently limit the mainstream’s influence. It could delegitimize it. In some ways that’s the story of the internet’s effect on broadcast television. But we forget how powerful television still is. And those of us building dark forests risk underestimating how powerful the mainstream channels will continue to be, and how minor our havens are compared to their immensity.”
Clemens on minimum wage
“But let me express a doubt. Why do we discuss minimum wages so much? I think they irritate free-market economists because they are such a clear, simple, and paradigmatic stupid idea. The first insight of your Econ 101 class is that price controls destroy markets:
We see it over and over again, in centuries of experience boiled down to this simple graph. Price controls, rent controls, wage controls all have led over and over again to the same sorry story. And when supply is greater than demand, who gets the good, apartment, or job gets all screwed up. Don’t try to transfer income by screwing up prices. Along with tariffs and disincentives of 100% marginal tax rates, there isn’t much more essential to the basic canon of economics.”
Civilisational collapse has a bright past – but a dark future
Civilisational collapse has a bright past – but a dark future
“Finally, it’s significant that the world has become more networked and complex. This enhances our capabilities, but makes systemic failures more likely. A mathematical-systems study in Nature in 2010 found that interconnected networks are more prone to random failure than isolated ones. Similarly, while interconnectedness in financial systems can initially be a buffer, it appears to reach a tipping point where the system becomes more fragile, and failures spread more readily.”
Rules for wrongdoers
“On the one hand, Cicero says we can organize our interactions with words; and on the other, we can organize them through force. The Kantian thought is that this distinction from Cicero gives us the resources not only to see the difference between war and peace, but to see how both the characteristic wrong of starting a war can be characterized in terms of making a transition from a situation of peace, one in which human interactions are governed by words, to one of war in which they’re governed by force.”