Saturday, November 30, 2013

Complex systems that have artificially suppressed volatility tend to become extremely fragile

Nassim Nicholas Taleb is a brilliant thinker, philosopher and writer. I have read and enjoyed Fooled by Randomness as well as Black Swan and am looking forward to his most recent, Antifragile (reviewed in The Economist here).

Taleb had an article in Foreign Affairs in 2011 which hit on some of his main arguments (as applied to international relations) - The Black Swan of Cairo. Black Swan is Taleb's term for an unpredicted (and essentially unpredictable) event that disrupts the status quo.
Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks. In fact, they tend to be too calm and exhibit minimal variability as silent risks accumulate beneath the surface. Although the stated intention of political leaders and economic policymakers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to “Black Swans”—that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.

Such environments eventually experience massive blowups, catching everyone off-guard and undoing years of stability or, in some cases, ending up far worse than they were in their initial volatile state. Indeed, the longer it takes for the blowup to occur, the worse the resulting harm in both economic and political systems.


Humans simultaneously inhabit two systems: the linear and the complex. The linear domain is characterized by its predictability and the low degree of interaction among its components, which allows the use of mathematical methods that make forecasts reliable. In complex systems, there is an absence of visible causal links between the elements, masking a high degree of interdependence and extremely low predictability. Nonlinear elements are also present, such as those commonly known, and generally misunderstood, as “tipping points.” Imagine someone who keeps adding sand to a sand pile without any visible consequence, until suddenly the entire pile crumbles. It would be foolish to blame the collapse on the last grain of sand rather than the structure of the pile, but that is what people do consistently, and that is the policy error.


Engineering, architecture, astronomy, most of physics, and much of common science are linear domains. The complex domain is the realm of the social world, epidemics, and economics. Crucially, the linear domain delivers mild variations without large shocks, whereas the complex domain delivers massive jumps and gaps. Complex systems are misunderstood, mostly because humans’ sophistication, obtained over the history of human knowledge in the linear domain, does not transfer properly to the complex domain. Humans can predict a solar eclipse and the trajectory of a space vessel, but not the stock market or Egyptian political events. All man-made complex systems have commonalities and even universalities. Sadly, deceptive calm (followed by Black Swan surprises) seems to be one of those properties.
Taleb also mentions but does not elaborate on, the important issue of "the illusion of local causal chains—that is, confusing catalysts for causes and assuming that one can know which catalyst will produce which effect." There is a tendency to see the last event as the "cause" of something when in fact it is sometimes simply the catalyst to a systemic readjustment, i.e. the straw that broke the camel's back. It wasn't the straw per se, but the cumulative weight that preceded it.

There are echoes of Stephen Jay Gould and Niles Edlredge's Punctuated Equilibrium in which they argued that evolution is not a smooth continual process but rather a process characterized by fits and starts or a system of punctuated equilibrium.

Taleb is arguing that our efforts to ensure near term tactical stability are often at odds with desirable system evolution over the long run. It is a classic trade-off decision. He has observed many times that the good tactical intentions often end up unintentionally leading to catastrophic strategic outcomes. An example would be that of forest fire management. Nobody wants forest fires and for decades the strategy was simple fire suppression, keep fires from happening and put them out as fast as possible when they do happen.

In reducing near term fires, regrettably, forests have accumulated much greater fuel loads than they would otherwise under natural conditions where lightning strike fires periodically clear dead brush. The result has been increasingly frequent, vast and intense wildfires beyond control. A strategy for achieving near term stability (reduced wildfires) has ended up worsening the situation in the long run.

When making a strategic decision, it is important to consider the historical context. Has the existing system evolved over time and therefore has some base level of stability, or has it existed in an unnatural state of artificial stability with all variance suppressed? If it is the latter, then any actions undertaken related to a new change may have unanticipated consequences not necessarily having anything to do with the intended plan of action but simply as a consequence of cumulative avoided evolution.

Friday, November 29, 2013

Specialization is for insects

Time Enough For Love by Robert A. Heinlein, page 248
A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.

Thursday, November 28, 2013

Advocates of luck as an explanation are enemies of freedom

From We Owe the Beatles to Luck by Cass R. Sunstein.
You might think that the Beatles, probably the most successful popular musicians in the last 50 years, were bound to succeed. But an astonishing new book, "Tune In," by Mark Lewisohn, suggests otherwise. Without explicitly saying so, Lewisohn’s narrative raises the possibility that without breaks, coincidences and a lot of luck, none of us would have ever heard of the Beatles.
The author recounts a long string of barriers and reverses preventing the Beatles from gaining traction. Until they did.

These kind of articles drive me crazy. There is a whole world view eager to establish that successful people are simply lucky people. That success is purely a matter of being in the right place at the right time. The paradoxical thing is that these people, and Sunstein is an example, are usually quite successful themselves. It is hard to believe that they believe their own positive outcomes are purely based on luck and that they had no material contribution to the outcome.

Malcolm Gladwell made much the same argument in Outliers.

People that believe all outcomes are essentially a matter of luck tend also to believe that that contingency therefore justifies collective action to rectify mere luck. If you did not earn your success, the argument goes, you are not entitled to it. If all outcomes are simply random luck, then all success can be justifiably appropriated to rectify the bad luck of others.

Human processes are non-linear and complex with unexpected tipping points, hidden feedback loops, extreme sensitivity to initial conditions and other characteristics which make it very difficult to precisely and accurately forecast a given outcome for specified inputs. Things like architecture, engineering, manufacturing, Newtonian physics are all nice, predictable, and incremental in nature. Do X and Y occurs. The Sunsteins of the world take this hoary way of thinking and apply it with great confidence to the human condition to great disappointment of all parties.

Looking at the experience of the Beatles, it is undeniable that there were a lot of random events and contingent circumstances preceding their eventual success. The reality is that any endeavor is prone to failure; failure is pretty much the norm. It is the taking of chances and the perseverance and adaption to new circumstances which distinguish the eventual success from the otherwise to be expected failure. Were the Beatles lucky? Sure. But only because they continued to take the risks and persevered in the face of failure, time and again, until ultimately they accomplished what they did.

Seneca, On Benefits, vii. 1
"The best wrestler," he would say, "is not he who has learned thoroughly all the tricks and twists of the art, which are seldom met with in actual wrestling, but he who has well and carefully trained himself in one or two of them, and watches keenly for an opportunity of practising them."
Often summarized as Luck is what happens when preparation meets opportunity.

Luck is not an explanation, it is a given. We all exist in an environment of fluctuating randomness and desirable outcomes are only achieved through the capacity to manage the consequences of that fluctuating randomness. Some do this well, others not.

Wednesday, November 27, 2013

Never will man penetrate deeper into error than when he is continuing on a road which has led him to great success.

The Counter-Revolution of Science: Studies on the Abuse of Reason by F.A. Hayek, page 105.
Never will man penetrate deeper into error than when he is continuing on a road which has led him to great success.
This is a dual truism arising from faulty forecasting and overconfidence. Specifically, a run of success tends to encourage a belief that we have conquered failure and setbacks and we forecast into the future the current trend line. Thus are all bubbles created whether internet stocks or real estate. Forecasted catastrophe's likewise. All my life we have been at peak oil and then some new technology comes along opening up previously inaccessible reserves. Despite all our knowledge and experience, there are structural quirks that encourage straight line forecasting to the detriment of accurate forecasting.

The second truism arises from knowledge confidence. We are successful. We explain that success based on some set of actions or circumstances; usually some set of actions we took given some particular circumstances. Typically, our narrative explanation for success emphasizes our own contribution and minimizes circumstance and luck (Nassim Nicholas Taleb cover's this ground in Fooled by Randomness). Our explanation may be more or less accurate but the longer the success continues, the more confident we are in our explanation regardless of the truth. Our search for accurate explanations slackens with out confidence.

Tuesday, November 26, 2013

Your example will educate him; your conversation with your friends; the business he sees you transact; the likings and dislikings you express; these will educate him

From On Education by Anna Barbauld, 1773. Proving that great antiquity does not preclude great insight. In fact, one could argue that Barbauld's insight, that education is the cumulative aggregation of all experiences seems to have disappeared from the minds of policy makers today. The time spent in school as Barbauld observes, is but a very small part of that education and yet all our efforts to equalize the benefits of opportunity between neo-natal citizens is largely constrained to formal education. It is the classic story of the drunk looking for his lost keys under the street lamp, not because that is where he thinks he lost them, but because that is where the light is best.

Paragraphing and emphasis added.
The other day I paid a visit to a gentleman with whom, though greatly my superior in fortune, I have long been in habits of an easy intimacy. He rose in the world by honourable industry; and married, rather late in life, a lady to whom he had been long attached, and in whom centered the wealth of several expiring families. Their earnest wish for children was not immediately gratified. At length they were made happy by a son, who, from the moment he was born, engrossed all their care and attention. -- My friend received me in his library, where I found him busied in turning over books of education, of which he had collected all that were worthy notice, from Xenophon to Locke, and from Locke to Catherine Macauley. As he knows I have been engaged in the business of instruction, he did me the honour to consult me on the subject of his researches, hoping, he said, that, out of all the systems before him, we should be able to form a plan equally complete and comprehensive; it being the determination of both himself and his lady to choose the best that could be had, and to spare neither pains nor expense in making their child all that was great and good. I gave him my thoughts with the utmost freedom, and after I returned home, threw upon paper the observations which had occurred to me.

The first thing to be considered, with respect to education, is the object of it. This appears to me to have been generally misunderstood. Education, in its largest sense, is a thing of great scope and extent. It includes the whole process by which a human being is formed to be what he is, in habits, principles, and cultivation of every kind. But of this, a very small part is in the power even of the parent himself; a smaller still can be directed by purchased tuition of any kind. You engage for your child masters and tutors at large salaries; and you do well, for they are competent to instruct him: they will give him the means, at least, of acquiring science and accomplishments; but in the business of education, properly so called, they can do little for you. Do you ask, then, what will educate your son? Your example will educate him; your conversation with your friends; the business he sees you transact; the likings and dislikings you express; these will educate him; -- the society you live in will educate him; your domestics will educate him; above all, your rank and situation in life, your house, your table, your pleasure-grounds, your hounds and your stables will educate him. It is not in your power to withdraw him from the continual influence of these things, except you were to withdraw yourself from them also.

You speak of beginning the education of your son. The moment he was able to form an idea his education was already begun; the education of circumstances -- insensible education -- which, like insensible perspiration, is of more constant and powerful effect, and of infinitely more consequence to the habit, than that which is direct and apparent. This education goes on at every instant of time; it goes on like time; you can neither stop it nor turn its course. What these have a tendency to make your child, that he will be. Maxims and documents are good precisely till they are tried, and no longer; they will teach him to talk, and nothing more. The circumstances in which your son is placed will be even more prevalent than your example; and you have no right to expect him to become what you yourself are, but by the same means. You, that have toiled during youth, to set your son upon higher ground, and to enable him to begin where you left off, do not expect that son to be what you were, -- diligent, modest, active, simple in his tastes, fertile in resources. You have put him under quite a different master. Poverty educated you; wealth will educate him. You cannot suppose the result will be the same. You must not even expect that he will be what you now are; for though relaxed perhaps from the severity of your frugal habits, you still derive advantage from having formed them; and, in your heart, you like plain dinners, and early hours, and old friends, whenever your fortune will permit you to enjoy them.

But it will not be so with your son: his tastes will be formed by your present situation, and in no degree by your former one. But I take great care, you will say, to counteract these tendencies, and to bring him up in hardy and simple manners; I know their value, and am resolved that he shall acquire no other. Yes, you make him hardy; that is to say, you take a country-house in a good air, and make him run, well clothed and carefully attended, for, it may be, an hour in a clear frosty winter's day upon your graveled terrace; or perhaps you take the puny shivering infant from his warm bed, and dip him in an icy cold bath, -- and you think you have done great matters. And so you have; you have done all you can. But you were suffered to run abroad half the day on a bleak heath, in weather fit and unfit, wading barefoot through dirty ponds, sometimes losing your way benighted, scrambling over hedges, climbing trees, in perils every hour both of life and limb. Your life was of very little consequence to any one; even your parents, encumbered with a numerous family, had little time to indulge the softnesses of affection, or the solicitude of anxiety; and to every one else it was of no consequence at all. It is not possible for you, it would not even be right for you, in your present situation, to pay no more attention to your child than was paid to you. In these mimic experiments of education, there is always something which distinguishes them from reality; some weak part left unfortified, for the arrows of misfortune to find their way into.
I think that issue highlighted by Barbauld, that the circumstances that shaped your own personal KESVB (Knowledge, Experience, Skills, Values, Behavior) and enabled your own personal achievement, cannot be replicated for your child. Your child is, paradoxically, precluded from the opportunity that fostered the success generating KESVB of the parent. With luck their own new KESVB is pertinent to the new circumstances of the child but it is the greatest challenge of every parent who has been productively successful, to create an environment where the origin KESVB can be replicated.

I suspect this is the origin to the dynamic reflected in the old adage (and universal, variants show up in many different cultures) "shirt sleeves to shirt sleeves in three generations." Old productive cultures and religions are probably the best supplements to personal experience - i.e. the child of privilege can't learn from experience, therefore there has to be some other motivating factor and passion which compensates for the indolence of privilege. Unfortunately, experience is that the novelty of ideologies too often takes the place of proven religion and culture. That explains why so many revolutionaries are from the privileged class rather than from the down trodden as logic would dictate.

Monday, November 25, 2013

But we are all Seekers

The Seekers by Daniel J. Boorstin.
Caught between two eternities - the vanished past and the unknown future - we never cease to seek our bearings and our sense of direction. We inherit our legacy of the sciences and the arts - works of the great Discoverers and Creators, the Columbuses and Leonardos and Shakespeares - recounted in my two earlier volumes. We glory in their discoveries and creations. But we are all Seekers. We all want to know why. Man is the asking animal. And while the finding, the belief that we have found the Answer, can separate us and make us forget our humanity, it is the seeking that continues to bring us together, that makes us and keeps us human.

Sunday, November 24, 2013

People are people no matter our measures and averages.

I have always been bothered by the overreliance of some on self-identity. We get hung up on terms and definitions and froth around about the meaning of trends we don't understand. As a minor example, were my niece and nephews to immigrate to the US from Europe, the census would regard the white population as having been increased. If, on the other hand, they immigrated to Argentina for a couple of years and then came to the US, they would be regarded as Hispanic (because of their paternal heritage) and the Hispanic numbers would increase. And from my perspective, I would have a niece and a couple of nephews closer to home. Our definitions and terminology sometimes get in the way of understanding the important things.

I first became alerted to the fluidity of definitions back in the seventies. After one of the OPEC embargoes, the price of oil went through the roof. In the following census, a couple of Native American tribes showed an increase in population of more than a hundred percent, an impossible fecundity. How were these issues related? Price of oil goes up. Several Native American tribes had reservation land that included oil production. The proceeds of that oil production was distributed to enrolled members. When the value of the oil went up, people who did not otherwise identify as Native American but did in fact have that heritage, enrolled as was their prerogative in order to benefit from the windfall. And thus the census numbers went up with no change in the underlying reality of people.

This is brought to mind by a recent post, Pew Study: 27% of Jewish Children Live in Orthodox Homes by David Bernstein. I have read elsewhere of this study and there apparently was an awful lot of interesting discussion regarding definitions (Orthodox, Conservative, Reformed, etc.). Notice the last sentence, though, in this post:
But with being Jewish no longer a substantial disadvantage in American life, and intermarriage unlikely in non-Orthodox circles to lead to serious family disruption, the new Pew study finds hundreds of thousands of children of intermarriage identify as Jews of no religion (and about as many as Jews by religion), hundreds of thousands of others who were raised Jewish but don’t consider themselves such but who acknowledge their Jewish ancestry, and, a bit weirdly, hundreds of thousands of additional individuals who have no Jewish ancestry and who have never converted but for whatever reason consider themselves to be Jewish.
I love that; "a bit weirdly, hundreds of thousands of additional individuals who have no Jewish ancestry and who have never converted but for whatever reason consider themselves to be Jewish." Among other things it is a very loud call to be cautious about survey data. It is not always telling us what we thinking it is saying, no matter how rigorous and effectively it might have been administered. Several hundred thousand people claiming a heritage that in no other context would people recognize, is just plain fascinating. People are people no matter our measures and averages.

A pledge by all parties not to learn anything while doing the actual work

Two articles that are interesting to read as a pair. Both Clay Shirky and Peter Berkowitz are almost always interesting and insightful The first article, by Shirky is a rumination on the failure, not as a failed information systems project per se (though it is a fairly spectacular example of that), but rather as an epistemological failure which I believe is really at the core of the issue. And the epistemological model is in part a failure of culture.

Very early in Obama's first term, there was a desire on the part of the Administration to close Guantanamo and bring the terrorists held there to the US for civil trial. There was quite a kerfuffle when it came time to consider a civilian trial for Khalid Sheikh Mohammad. In the hearings to review this plan, the Attorney General Eric Holder had the following profoundly revealing exchange with Senator Herbert Kohl, Democrat, Wisconsin.
Kohl: Mr. Holder, last week you announced that the department will bring to Guantanamo [sic in transcript] detainees accused of planning the 9/11 attacks to trial in federal court in New York, as we've talked about this morning. On Friday you said that you'd not have authorized prosecution if you were not confident that the outcome would be successful. However, many critics have offered their own predictions about how such a trial might well play out.

One concern we have heard from critics of your decision is that the defendants could get off on legal technicalities, in which case these terrorists would walk free. Does this scenario have any merit? If not, why? And in the worst case scenario that the trial does not result in a conviction, what would be your next steps?

Holder: Many of those who have criticized the decision--and not all--but many of those who have criticized the decision have done so, I think, from a position of ignorance. They have not had access to the materials that I have had access to.

They've not had a chance to look at the facts, look at the applicable laws and make the determination as to what our chances of success are. I would not have put these cases in Article III courts if I did not think our chances of success were not good--in fact, if I didn't think our chances of success were enhanced by bringing the cases there. My expectation is that these capable prosecutors from the Justice Department will be successful in the prosecution of these cases.

Kohl: But taking into account that you never know what happens when you walk into a court of law, in the event that for whatever reason they do not get convicted, what would be your next step? I'm sure you must have talked about it.

Holder: What I told the prosecutors and what I will tell you and what I spoke to them about is that failure is not an option. Failure is not an option. This--these are cases that have to be won. I don't expect that we will have a contrary result.
I found this profoundly shocking from two perspectives. Either what the AG said was true and that failure would not be countenanced, in which case this was simply a show trial. He wasn't arguing that failure was unlikely, he was arguing that it couldn't happen at all.

Alternatively, the most senior lawyer in the land truly believed that there was simply no way that an unbiased and fair jury trial could render anything other than a guilty verdict. A belief that could not possibly be grounded in experience or reality.

The distress was the realization that our AG was either corrupt (rigged trial) or stupid (mistaking desire for reality). It seemed that there were few alternative interpretations. But perhaps it was simply a flawed epistemological model founded on a faulty culture. Read Shirky's whole post to see the parallels with the failure.

From and the Gulf Between Planning and Reality by Clay Shirky
The idea that “failure is not an option” is a fantasy version of how non-engineers should motivate engineers. That sentiment was invented by a screenwriter, riffing on an after-the-fact observation about Apollo 13; no one said it at the time. (If you ever say it, wash your mouth out with soap. If anyone ever says it to you, run.) Even NASA’s vaunted moonshot, so often referred to as the best of government innovation, tested with dozens of unmanned missions first, several of which failed outright.

Failure is always an option. Engineers work as hard as they do because they understand the risk of failure. And for anything it might have meant in its screenplay version, here that sentiment means the opposite; the unnamed executives were saying “Addressing the possibility of failure is not an option.”

The management question, when trying anything new, is “When does reality trump planning?” For the officials overseeing, the preferred answer was “Never.” Every time there was a chance to create some sort of public experimentation, or even just some clarity about its methods and goals, the imperative was to avoid giving the opposition anything to criticize.


This is not just a hiring problem, or a procurement problem. This is a management problem, and a cultural problem. The preferred method for implementing large technology projects in Washington is to write the plans up front, break them into increasingly detailed specifications, then build what the specifications call for. It’s often called the waterfall method, because on a timeline the project cascades from planning, at the top left of the chart, down to implementation, on the bottom right.

Like all organizational models, waterfall is mainly a theory of collaboration. By putting the most serious planning at the beginning, with subsequent work derived from the plan, the waterfall method amounts to a pledge by all parties not to learn anything while doing the actual work. Instead, waterfall insists that the participants will understand best how things should work before accumulating any real-world experience, and that planners will always know more than workers.

This is a perfect fit for a culture that communicates in the deontic language of legislation. It is also a dreadful way to make new technology. If there is no room for learning by doing, early mistakes will resist correction. If the people with real technical knowledge can’t deliver bad news up the chain, potential failures get embedded rather than uprooted as the work goes on.
Now read Peter Berkowitz's Obama's Slow Learning Curve.
But perhaps the president’s most astonishing statement involved an insouciant confession of ignorance. Returning to a common but under-appreciated motif of his presidency, Obama remarked: “What we’re also discovering is that insurance is complicated to buy.”

What deficiency of Obama’s education and of the education of those who surround him accounts for administration officials not knowing what is perfectly well-known to most ordinary Americans?

This discovery that purchasing health insurance is complex is just the most recent of the rather stunning lessons that Obama professes to have learned on the job about how the world really works.
Berkowitz then goes on to list and discuss additional things that Obama ended up acknowledging not knowing what he was talking about; Peace between Palestine and Israel - “I think that we overestimated our ability to persuade them to do so when their politics ran contrary to that"; the 2008 stimulus program - “shovel-ready was not as shovel-ready as we expected"; the implementation of the Affordable Care Act - “Now, let's face it, a lot of us didn't realize that passing the law was the easy part.”
Contrary to the president’s breezy attitude suggesting that these drastic miscalculations were not knowable in advance, we know that all were foreseeable because all were perspicaciously foreseen by critics from the beginning. (The only possible exception is the staggeringly inept rollout of the website, the magnitude of which caught even the president’s toughest critics off guard.)

It’s a cliché that democracy is messy and difficult; it’s a truism that politics demands the cutting of deals and the hammering out of trade-offs; it’s common knowledge that implementing public policy and conducting diplomacy involve unforeseen obstacles and intricate maneuvering that are hard to grasp from the outside.

Yet all this keeps catching Obama and his aides by surprise. Team Obama’s surprise, however, is really not all that surprising.
Berkowitz's explanation for serial disengagement from reality?
The president and the officials around him are the product of the same progressive version of higher education that simultaneously excises politics from the study of government and public policy while politicizing education. This higher education denigrates experience; exalts rational administration; reveres abstract moral reasoning; confidently counts on the mainstream press to play for the progressive political team; accords to words fabulous abilities to remake reality; and believes itself to speak for the people while haughtily despising their way of life.

The education President Obama received at Columbia University and Harvard Law School -- and delivered to others as a lecturer at the University of Chicago Law School -- encourages the fantasy of a political world subject to almost limitless manipulation by clever and well-orchestrated images. This explains why the harsh exigencies and intractable forces of politics keep stunning the president, each new time as if it were the very first.
Is Berkowitz right? Probably in part. Our best universities do serve as an effective sorting mechanism. You know where to go to find the brightest candidates. But they are not always the most effective or the best. The best of them are able to acquire truly phenomenal educations. But many, regrettably, end up wandering into academic la la land from whence few are known to return with any desirable capabilities and many distorting beliefs.

The infusion of post modernism, critical race theory, gender studies, etc. have put large swaths of reality beyond critical discussion to the great detriment of all. More spectacularly they have created an environment in which the fervor of belief is allowed to supersede logic and evidence. It is a somewhat ironical turn of fate that segments of the academy are the ones so married to an entirely faith-based postmodernist secular creed whose foundations are patently separated from reality. Is it any wonder that the products of such education can find themselves in such deep water when their fervid belief that failure is not an option turns out to be founded on quicksand.

Reality is a cruel mistress to the post modernist faithful.

Saturday, November 23, 2013

when we moralize, we are monotheists

From Maxims and Reflections by Goethe.
When we do science, we are pantheists;
when we do poetry, we are polytheists;
when we moralize, we are monotheists

Friday, November 22, 2013

Tis the good reader that makes the good book

From Society and Solitude by Ralph Waldo Emerson.
Tis the good reader that makes the good book; in every book he finds passages which seem confidences or asides hidden from all else and unmistakenly meant for his ear; the profit of books is according to the sensibility of the reader; the profoundest thought or passion sleeps as in a mine, until it is discovered by an equal mind and heart.

Thursday, November 21, 2013

Our collective intelligence is often excellent

The Wisdom of Crowds by James Surowiecki, page xiv.
Groups do not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision. This is a good thing, since human beings are not perfectly designed decision makers. Instead, we are what the economist Herbert Simon called “boundedly rational.” We generally have less information than we’d like. We have limited foresight into the future. Most of us lack the ability – and the desire – to make sophisticated cost-benefit calculations. Instead of insisting on finding the best possible decisions, we will often accept one that seems good enough. And we often let emotion affect our judgment. Yet despite all these limitations, when our imperfect judgments are aggregated in the right ways, our collective intelligence is often excellent.

Wednesday, November 20, 2013

A memory like the breath of summers full of sunshine and of showers

In the Churchyard at Tarrytown by Henry Wadsworth Longfellow, commemorating Washington Irving.
Here lies the gentle humorist, who died
In the bright Indian Summer of his fame!
A simple stone, with but a date and name,
Marks his secluded resting-place beside

The river that he loved and glorified.
Here in the autumn of his days he came,
But the dry leaves of life were all aflame
With tints that brightened and were multiplied.

How sweet a life was his; how sweet a death!
Living, to wing with mirth the weary hours,
Or with romantic tales the heart to cheer;

Dying, to leave a memory like the breath
Of summers full of sunshine and of showers,
A grief and gladness in the atmosphere.

Trade-offs - Diversity vs. Cohesiveness, Efficiency vs. Robustness

From The Paradox of Diverse Communities by Richard Florida, reporting on the results of a computer simulation of diversity and cohesiveness. I have long argued that our policy folk are misguided in their blind pursuit of diversity and integration, treating these as outcomes to be valued in their own right rather than as dependent variables arising from more important variables.
After 20 million-plus simulations, the authors found that the same basic answer kept coming back: The more diverse or integrated a neighborhood is, the less socially cohesive it becomes, while the more homogenous or segregated it is, the more socially cohesive. As they write, “The model suggests that when people form relationships with similar and nearby others, the contexts that offer opportunities to develop a respect for diversity are different from the contexts that foster a sense of community.”

The graph below, from the study, plots quite plainly the negative relationship between community cohesion and diversity.

These findings are sobering. Because homophily and proximity are so ingrained in the way humans interact, the models demonstrated that it was impossible to simultaneously foster diversity and cohesion “in all reasonably likely worlds.” In fact, the trends are so strong that no effective social policy could combat them, according to Neal. As he put it in a statement, “In essence, when it comes to neighborhood desegregation and social cohesion, you can't have your cake and eat it too.”
Two key issues in the field in general and reflected in this study. Diversity is not a monovariable item. While we usually speak of diversity in terms of race and then gender, it is much richer than that including religion, personality orientation, language, morbidity, class, accent, region, ethnicity, culture, profession, income, age, etc. One person can wear many hats. Our idea of diversity is terribly anemic and we fail to identify what has always been true in the US, that the important thing is not diversity per se but tolerance.

It has long been known that segregation arises primarily from free people making individual choices informed by preferences. Aversive racism is only a miniscule issue, swamped by issues such as religion and class and education valuation, etc.

In any major city, the diversity of neighborhoods is usually immense. There are clusterings by race and class but also by age and religion and profession and hobby, etc. With everyone wearing so many identity hats there is also an awful lot of graduation between segregated clusters.

The second key issue has long been noted in international economic development - that trust and mutual reciprocity are characteristics shared in most highly productive OECD nations. Think of the Scandinavian countries, the Netherlands, Germany, South Korea, Japan, etc. All notable for highly productive economies over long durations. All different cultures and histories but all having developed high levels of intra-cultural levels of trust and reciprocity. And all notably homogenous. The US is the only large OECD country with a high degree of heterogeneity (on all vectors of diversity) which also has a high degree of trust and mutual reciprocity - one of its many aspects of exceptionalism.

High degrees of trust and mutual reciprocity foster a high level of efficiency. Sharing the same cultural construct and language makes communication easier and more precise, makes collaborative efforts more efficient, makes risk management much easier, reduces transaction costs and insurance costs, etc.

So what Florida is reporting in this article is merely a conformation of what has been long known in different fields. We know there are trade-offs between diversity and tactical efficiency and social cohesion.

The really interesting questions are somewhat different. Increased diversity comes at the cost of reduced efficiency in the short term. But every system needs diversity in order to evolve over the long term. A purely efficient system will run at maximal productivity until circumstances change which make the system obsolete. It tends to binary - highly productive or non-productive. If you introduce some variation to the system, the system tends to evolve. New ideas are introduced, an error in the production process turns-up a better way of doing things, a botched batch of materials yields a new product.

The net result is that you need at least some diversity in the system in order to foster evolution and robustness at the expense of pure efficiency. In other words, you have to sacrifice some short term efficiency (by increasing variation) in order to achieve long term robustness (by evolving the system).

To me, the interesting question is: How much diversity is necessary to optimize short-term efficiency while ensuring long term robustness and evolution? Too little diversity and you suffer episodic painful adjustments. Too much diversity and you lose social cohesion before the long term arrives. How much is too little? I don't know. Based on anecdote and experience, my sense is that less than 5% diversity is, barring special circumstances, easily ignored and marginalized. Upper boundary? I am guessing somewhere around the 15% level is the boundary. Pure speculation though.

Florida and his ilk focus too much on ideological concerns such as diversity as a desirable trait in itself, instead of looking at the dynamic system as whole and over time. It is what leads to so many government policies that end up having negative unintended consequences and not achieving their stated goals.

Tuesday, November 19, 2013

You can't take non-cognitive skills for granted

From Job Outlook 2013 from NACE.

What are employers looking for from prospective new hires? Much of our national education debate focuses on such macro issues as STEM (whether or not we have enough of), Creativity, Critical Thinking, etc. Articles such as The Real Reason New College Grads Can’t Get Hired by Martha C. White and College Grads’ Bad Habits Driving Unemployment by Walter Russell Mead suggest that the challenge is not so much with regard to hard cognitive content as it is about the softer issues which the economist James Heckman refers to as non-cognitive skills. Non-cognitive skills are those pertaining to behavioral attributes such as propensity to show up on time, follow-through on commitments, willingness to work hard, flexibility, trustworthiness, etc. Heckman has done some interesting research on exactly how critical, and under-recognized are the non-cognitive skills.

The National Association of Colleges and Employers conducts an annual survey of businesses and their anticipated hiring needs. Among the questions they ask is one regarding the attributes that employers are seeking. For 2012, the results were:

All sorts of questions regarding the range of attributes that were allowed to be selected from, etc. But given what is in the report, it is interesting to note that of the top most sought after non-cognitive skills, 4 are personality or values related (leadership, teamwork, work ethic and initiative), 2 are communications related (written and verbal), and 2 are general critical thinking/numeracy related (problem solving and quantitative analysis).

There is a lot of energy (and money) invested in education reforms at both the K-12 and university levels but you rarely hear these basics discussed, much less brought into any kind of focus. There is a lot of happy clappy talk about critical thinking but not much of that translates into real world problem solving and quantitative analysis.

You have to take all these such surveys with a grain of salt. There is often some element of self-serving excuse making. But it does comport broadly with what I have seen over the years hiring hundreds of entry level people from the staff consultant level on up. Technical knowledge is nice to have, but if they are bright and hard working that gap can be filled later. What is critical are all those non-cognitive skills of work ethic, diligence, timeliness, etc. Without those, there isn't much of a career.

Sometimes, it seems, as if we lose sight of the fundamentals (non-cognitive skills) while focusing so much on the cognitive ones (grades and test scores).

Monday, November 18, 2013

Those days when I was young enough to know the truth

From Goin' Back by The Byrds
I think I'm goin' back
To the things I learned so well in my youth
I think I'm returning to
Those days when I was young enough to know the truth
Now there are no games
To only pass the time
No more electric trains
No more trees to climb
But thinking young and growing older is no sin
And I can play the game of life to win

I can recall a time
When I wasn't ashamed to reach out to a friend
Now I think I've got
A lot more than just my toys to lend
Now there's more to do
Than watch my sailboat glide
But every day can be
A magic carpet ride
A little bit of courage is all we lack
So catch me if you can, I'm goin' back

La la la la la, etc.
Now there's more to do
Than watch my sailboat glide
But every day can be
A magic carpet ride
A little bit of courage is all we lack
So catch me if you can, I'm goin' back

Sunday, November 17, 2013

It was about this time I conceived the bold and arduous project of arriving at moral perfection

The Autobiography of Benjamin Franklin by Benjamin Franklin. Imagine how much better off we might be were these to be taught in school.
It was about this time I conceived the bold and arduous project of arriving at moral perfection. I wish'd to live without committing any fault at any time; I would conquer all that either natural inclination, custom, or company might lead me into. As I knew, or thought I knew, what was right and wrong, I did not see why I might not always do the one and avoid the other. But I soon found I had undertaken a task of more difficulty than I had imagined.[66] While my care was employ'd in guarding against one fault, I was often surprised by another; habit took the advantage of inattention; inclination was sometimes too strong for reason. I concluded, at length, that the mere speculative conviction that it was our interest to be completely virtuous, was not sufficient to prevent our slipping; and that the contrary habits must be broken, and good ones acquired and established, before we can have any dependence on a steady, uniform rectitude of conduct. For this purpose I therefore contrived the following method.

In the various enumerations of the moral virtues I had met with in my reading, I found the catalogue more or less numerous, as different writers included more or fewer ideas under the same name. Temperance, for example, was by some confined to eating and drinking, while by others it was extended to mean the moderating every other pleasure, appetite, inclination, or passion, bodily or mental, even to our avarice and ambition. I propos'd to myself, for the sake of clearness, to use rather more names, with fewer ideas annex'd to each, than a few names with more ideas; and I included under thirteen names of virtues all that at that time occurr'd to me as necessary or desirable, and annexed to each a short precept, which fully express'd the extent I gave to its meaning.

These names of virtues, with their precepts, were:

1. Temperance

Eat not to dullness; drink not to elevation.

2. Silence.

Speak not but what may benefit others or yourself; avoid trifling conversation.

3. Order.

Let all your things have their places; let each part of your business have its time.

4. Resolution.

Resolve to perform what you ought; perform without fail what you resolve.

5. Frugality.

Make no expense but to do good to others or yourself; i. e., waste nothing.

6. Industry.

Lose no time; be always employ'd in something useful; cut off all unnecessary actions.

7. Sincerity.

Use no hurtful deceit; think innocently and justly; and, if you speak, speak accordingly.

8. Justice.

Wrong none by doing injuries, or omitting the benefits that are your duty.

9. Moderation.

Avoid extreams; forbear resenting injuries so much as you think they deserve.

10. Cleanliness.

Tolerate no uncleanliness in body, cloaths, or habitation.

11. Tranquillity.

Be not disturbed at trifles, or at accidents common or unavoidable.

12. Chastity.

Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another's peace or reputation.

13. Humility.

Imitate Jesus and Socrates.

Much of the attitude change disappeared after 1 year

A morsel of evidence regarding the degree and permanence of reading on core KESVB (Knowledge, Experience, Skills, Values, and Behaviors). From Does reading books change your mind? by Tyler Cowen. The study is here. The abstract.
Attitude change is a critical component of health behavior change, but has rarely been studied longitudinally following extensive exposures to persuasive materials such as full-length movies, books, or plays. We examined changes in attitudes related to food production and consumption in college students who had read Michael Pollan's book The Omnivore's Dilemma as part of a University-wide reading project. Composite attitudes toward organic foods, local produce, meat, and the quality of the American food supply, as well as opposition to government subsidies, distrust in corporations, and commitment to the environmental movement were significantly and substantially impacted, in comparison to students who had not read the book. Much of the attitude change disappeared after 1 year; however, over the course of 12 months self-reported opposition to government subsidies and belief that the quality of the food supply is declining remained elevated in readers of the book, compared to non-readers. Findings have implications for our understanding of the nature of changes in attitudes to food and eating in response to extensive exposure to coherent and engaging messages targeting health behaviors.
This is consistent with all the studies of Head Start which is intended to make up for accumulated disadvantages in the first four years of life by providing a learning enriched environment for the first couple of years of school. As long as they are in the program, kids show improvement. As soon as they finish the program, they revert to mean.

Selections from the comments.
Pete November 10, 2013 at 3:58 am Wouldn’t you expect that over time the readers become exposed to more and different ideas and thus their opinion changes continuously? It’s not that “The Omnivore’s Dilemma” should be taken as a bible representing absolute truths. The more extreme the book the stronger I would expect the regression effect to be.

john personna November 10, 2013 at 1:12 pm I think so. I have never read OD but I think my food (and exercise) beliefs are a time averaged synthesis of things I believed. I mean for instance that there must be some kernel of truth in the idea of natural human diet, without going paleo-nuts.
People tend to view books as binary in effect - it causes something or not (such as a change of mind or a change in behaviors). In reality, I suspect it is much as john personna indicates - one element in an accumulation and synthesis of KESVB with effect often highly dependent on sequence and context. People that read a lot likely end up with better life outcomes not necessarily because of what they read but because of the simple act of reading. More input means more contradictions and surprises that need resolving, leads to more thinking leads to clearer thought processes. Perhaps.

I am suggesting that habits of mind have been absorbed, often without knowing it

Dorothy Lessing, Nobel prize winner in literature passed away today. From an essay in 1992, filled with keen observation still pertinent today. Questions You Should Never Ask a Writer by Doris Lessing.
The first point: language. It is not a new thought that Communism debased language and, with language, thought. There is a Communist jargon recognizable after a single sentence. Few people in Europe have not joked in their time about “concrete steps,” “contradictions,” “the interpenetration of opposites,” and the rest.

The first time I saw that mind-deadening slogans had the power to take wing and fly far from their origins was in the 1950s when I read an article in The Times of London and saw them in use. “The demo last Saturday was irrefutable proof that the concrete situation...” Words confined to the left as corralled animals had passed into general use and, with them, ideas. One might read whole articles in the conservative and liberal press that were Marxist, but the writers did not know it. But there is an aspect of this heritage that is much harder to see.


The second point is linked with the first. Powerful ideas affecting our behavior can be visible only in brief sentences, even a phrase — a catch phrase. All writers are asked this question by interviewers: “Do you think a writer should...?” “Ought writers to...?” The question always has to do with a political stance, and note that the assumption behind the words is that all writers should do the same thing, whatever it is. The phrases “Should a writer...?” “Ought writers to...?” have a long history that seems unknown to the people who so casually use them. Another is “commitment,” so much in vogue not long ago. Is so and so a committed writer?

A successor to “commitment” is “raising consciousness.” This is double-edged. The people whose consciousness is being raised may be given information they most desperately lack and need, may be given moral support they need. But the process nearly always means that the pupil gets only the propaganda the instructor approves of. “Raising consciousness,” like “commitment,” like “political correctness,” is a continuation of that old bully, the party line.


A very common way of thinking in literary criticism is not seen as a consequence of Communism, but it is. Every writer has the experience of being told that a novel, a story, is “about” something or other. I wrote a story, “The Fifth Child,” which was at once pigeonholed as being about the Palestinian problem, genetic research, feminism, anti-Semitism and so on.

A journalist from France walked into my living room and before she had even sat down said, “Of course ‘The Fifth Child’ is about AIDS.”

An effective conversation stopper, I assure you. But what is interesting is the habit of mind that has to analyze a literary work like this. If you say, “Had I wanted to write about AIDS or the Palestinian problem I would have written a pamphlet,” you tend to get baffled stares. That a work of the imagination has to be “really” about some problem is, again, an heir of Socialist Realism. To write a story for the sake of storytelling is frivolous, not to say reactionary.

The demand that stories must be “about” something is from Communist thinking and, further back, from religious thinking, with its desire for self-improvement books as simple-minded as the messages on samplers.

The phrase “political correctness” was born as Communism was collapsing. I do not think this was chance. I am not suggesting that the torch of Communism has been handed on to the political correctors. I am suggesting that habits of mind have been absorbed, often without knowing it.

Saturday, November 16, 2013

It filled me with very serious thoughts of the misery that was coming upon the city, and the unhappy condition of those that would be left in it

Daniel Defoe's A Journal of the Plague Year. Nearly three hundred years later, it is fascinating to me to be gripped by the chill of impending catastrophe. What was it like to live so close to an apocalypse? Especially when they occurred with some regularity. And the precariousness of daily life. Forget zombie movies, this is the real deal.
I lived without Aldgate, about midway between Aldgate Church and Whitechappel Bars, on the left hand or north side of the street; and as the distemper had not reached to that side of the city, our neighbourhood continued very easy. But at the other end of the town their consternation was very great: and the richer sort of people, especially the nobility and gentry from the west part of the city, thronged out of town with their families and servants in an unusual manner; and this was more particularly seen in Whitechappel; that is to say, the Broad Street where I lived; indeed, nothing was to be seen but waggons and carts, with goods, women, servants, children, &c.; coaches filled with people of the better sort and horsemen attending them, and all hurrying away; then empty waggons and carts appeared, and spare horses with servants, who, it was apparent, were returning or sent from the countries to fetch more people; besides innumerable numbers of men on horseback, some alone, others with servants, and, generally speaking, all loaded with baggage and fitted out for travelling, as anyone might perceive by their appearance.

This was a very terrible and melancholy thing to see, and as it was a sight which I could not but look on from morning to night (for indeed there was nothing else of moment to be seen), it filled me with very serious thoughts of the misery that was coming upon the city, and the unhappy condition of those that would be left in it.

This hurry of the people was such for some weeks that there was no getting at the Lord Mayor's door without exceeding difficulty; there were such pressing and crowding there to get passes and certificates of health for such as travelled abroad, for without these there was no being admitted to pass through the towns upon the road, or to lodge in any inn. Now, as there had none died in the city for all this time, my Lord Mayor gave certificates of health without any difficulty to all those who lived in the ninety-seven parishes, and to those within the liberties too for a while.

This hurry, I say, continued some weeks, that is to say, all the month of May and June, and the more because it was rumoured that an order of the Government was to be issued out to place turnpikes and barriers on the road to prevent people travelling, and that the towns on the road would not suffer people from London to pass for fear of bringing the infection along with them, though neither of these rumours had any foundation but in the imagination, especially at-first.

I now began to consider seriously with myself concerning my own case, and how I should dispose of myself; that is to say, whether I should resolve to stay in London or shut up my house and flee, as many of my neighbours did. I have set this particular down so fully, because I know not but it may be of moment to those who come after me, if they come to be brought to the same distress, and to the same manner of making their choice; and therefore I desire this account may pass with them rather for a direction to themselves to act by than a history of my actings, seeing it may not be of one farthing value to them to note what became of me.

I had two important things before me: the one was the carrying on my business and shop, which was considerable, and in which was embarked all my effects in the world; and the other was the preservation of my life in so dismal a calamity as I saw apparently was coming upon the whole city, and which, however great it was, my fears perhaps, as well as other people's, represented to be much greater than it could be.

The first consideration was of great moment to me; my trade was a saddler, and as my dealings were chiefly not by a shop or chance trade, but among the merchants trading to the English colonies in America, so my effects lay very much in the hands of such. I was a single man, 'tis true, but I had a family of servants whom I kept at my business; had a house, shop, and warehouses filled with goods; and, in short, to leave them all as things in such a case must be left (that is to say, without any overseer or person fit to be trusted with them), had been to hazard the loss not only of my trade, but of my goods, and indeed of all I had in the world.

Friday, November 15, 2013

We had no such thing as printed newspapers in those days to spread rumours and reports of things, and to improve them by the invention of men

I have begun reading Daniel Defoe's A Journal of the Plague Year. The very beginning:
It was about the beginning of September, 1664, that I, among the rest of my neighbours, heard in ordinary discourse that the plague was returned again in Holland; for it had been very violent there, and particularly at Amsterdam and Rotterdam, in the year 1663, whither, they say, it was brought, some said from Italy, others from the Levant, among some goods which were brought home by their Turkey fleet; others said it was brought from Candia; others from Cyprus. It mattered not from whence it came; but all agreed it was come into Holland again.

We had no such thing as printed newspapers in those days to spread rumours and reports of things, and to improve them by the invention of men, as I have lived to see practised since. But such things as these were gathered from the letters of merchants and others who corresponded abroad, and from them was handed about by word of mouth only; so that things did not spread instantly over the whole nation, as they do now. But it seems that the Government had a true account of it, and several councils were held about ways to prevent its coming over; but all was kept very private.
In a world of always connected, always on, it is hard to recapture the pure uncertainty of news and rumor. I love the description of newspapers; plus ca change.

Thursday, November 14, 2013

Frictions arise because perception and reality can diverge ex post, especially when helping remotely

From A Theory of Good Intentions by Paul Niehaus. From the abstract.
Why is other-regarding behavior so often misguided? I study a new explanation grounded in the idea that altruists want to think they are helping. Frictions arise because perception and reality can diverge ex post, especially when helping remotely (as for example in international development projects). Among other things the model helps explain why donors have a limited interest in learning about effectiveness, why charities market based on need rather than effectiveness, and why beneficiaries may not be able to do better than accept this situation. For policy-makers, the model implies a generic tradeoff between the quantity and quality of generosity.
An interesting effort to answer in theory what is observable in practice. It would explain such puzzles as why programs with good intentions are continued long after they are proven not to achieve the outcomes sought (such as Head Start) or even injure those whom it intended to benefit (rent control, affirmative action, hate speech legislation, etc.)

A further elaboration from the paper, which is worth reading.
Other-regarding behavior poses a challenge for social scientists. On the one hand, some people are remarkably generous. Americans give about 2% of GDP to charity each year, for example. This suggests that they care deeply about helping others. Yet in many cases generous people are also quite poorly informed about how to help effectively. For example, only 3% of charitable givers even claim to have done any research comparing the effectiveness of alternatives. This pattern is in fact so common that it is embodied in colloquial language, where “well-intentioned” is a euphemism for “poorly informed.” Yet if people really are well-intentioned, why don’t they become well-informed?

The predominant interpretation in the literature has been that funders want to be effective, but struggle to learn how because of market failures. Information about effectiveness is a public good (Duflo and Kremer, 2003; Levine, 2006; Ravallion, 2008; Krasteva and Yildirim, 2011), and communication from practitioners to funders is often distorted by strategic considerations (Pritchett, 2002; Duflo and Kremer, 2003; Levine, 2006). Addressing such market failures was
one stated purpose for creating many of the institutions that today produce and disseminate effectiveness research – the Center for Global Development, the Jameel Poverty Action Lab, Innovations for Poverty Action, and the Center for Effective Global Action, among others.

This paper examines an alternative (and complementary) interpretation: funders do not want to be more effective. Instead, they want to think that they are effective. To underscore how distinct these concepts can be, consider donating to a charity that feeds malnourished African children. This induces agreeable thoughts of children eating nutritious meals. Now
suppose you learn that the charity is ineffective – perhaps an expos´e reveals that management committed serious fraud. Presumably this reduces your satisfaction. What is more interesting is that, if you had not learned of the fraud, you would have continued to experience “warm glow” (Andreoni, 1989) thinking about your impact even though in reality no such impact existed. Put bluntly, your altruistic preferences cannot literally be over childrens’ outcomes; these occur on another continent, outside of your experience.

I formalize this idea in a model of a single benefactor whose actions affect a beneficiary. The state of the world is uncertain, so that the benefactor does not know ex ante how his decision will affect the beneficiary ex post. The unusual feature of the model is that this uncertainty persists ex post with positive probability. For example, a donor may never learn whether the charity he gave to is honest. As a result the benefactor faces ex post ambiguity: he may observe information that is insufficient to reveal the state and have to interpret it. This is an interesting problem precisely because he has no way of learning the correct interpretation over time, even if the game repeats, since the true state remains unobserved. I therefore examine the case in which the benefactor interprets ambiguity in the way that maximizes his expected utility. I find that he optimally holds empirically correct beliefs about observable quantities, but interprets ambiguity optimistically. For example, a donor correctly forecasts the probability that he will learn about a scandal involving his chosen charity. On learning of no scandals, however, the same donor assumes that “no news is good news” and views the charity as definitely honest.

Wednesday, November 13, 2013

Immodest words admit of no defense, For want of modesty is want of sense.

From The Autobiography of Benjamin Franklin by Benjamin Franklin, page 21 in my edition.

The self-education is striking but so is the counsel so desperately needed today when pundits hold forth with great certainty upon things about which their track record of prognostication indicates they are in severe want of knowledge.
And now it was that, being on some occasion made ashamed of my ignorance in figures, which I had twice failed in learning when at school, I took Cocker's book of arithmetic, and went through the whole by myself with great ease. I also read Seller's and Shermy's books of navigation, and became acquainted with the little geometry they contain; but never proceeded far in that science. And I read about this time Locke "On Human Understanding," and the "Art of Thinking," by messrs. du Port Royal.

While I was intent on improving my language, I met with an English grammar (I think it was Greenwood's), at the end of which there were two little sketches of the arts of rhetoric and logic, the latter finishing with a specimen of a dispute in the Socratic method; and soon after I procured Xenophon's "Memorable Things of Socrates," wherein there are many instances of the same method. I was charmed with it, adopted it, dropt my abrupt contradiction and positive argumentation, and put on the humble inquirer and doubter. And being then, from reading Shaftesbury and Collins, become a real doubter in many points of our religious doctrine, I found this method safest for myself and very embarrassing to those against whom I used it. Therefore I took a delight in it, practising it continually, and grew very artful and expert in drawing people, even of superior knowledge, into concessions, the consequences of which they did not foresee, entangling them in difficulties out of which they could not extricate themselves, and so obtaining victories that neither myself nor my cause always deserved. I continued this method some few years, but gradually left it, retaining only the habit of expressing myself in terms of modest diffidence; never using, when I advanced anything that may possibly be disputed, the words certainly, undoubtedly, or any others that give the air of positiveness to an opinion; but rather say, I conceive or apprehend a thing to be so and so; it appears to me, or I should think it so or so, for such and such reasons; or I imagine it to be so; or it is so, if I am not mistaken. This habit, I believe, has been of great advantage to me when I have had occasion to inculcate my opinions and persuade men into measures that I have been from time to time engaged in promoting; and, as the chief ends of conversion are to inform or to be informed, to please or to persuade, I wish well-meaning, sensible men would not lessen their power of doing good by a positive, assuming manner, that seldom fails to disgust, tends to create opposition, and to defeat every one of those purpose for which speech was given to us, to wit, giving or receiving information or pleasure. For, if you would inform, a positive and dogmatical manner in advancing your sentiments may provoke contradiction and prevent a candid attention. If you wish information and improvement from the knowledge of others, and yet, at the same time, express yourself as firmly fixed in your present opinions, modest, sensible men, who do not love disputation, will probably leave you undisturbed in the possession of your error. And by such a manner you can seldom hope to recommend yourself in pleasing your hearers, or to persuade those whose concurrence you desire. Pope says, judiciously:
Men should be taught as if you taught them not,
And things unknown propos'd as things forgot;
farther recommending to us
To speak, tho' sure, with seeming diffidence.
And he might have coupled with this line that which he coupled with another, I think less properly,
For want of modesty is want of sense.
If you ask, Why less properly? I must repeat the lines,
Immodest words admit of no defense,
For want of modesty is want of sense.

Not the hundred best novels? by Michael Caines

From Not the hundred best novels? by Michael Caines. A list from 1898 in the Illustrated London News of the perceived 100 best novels (not including then living authors). Lists are always fun. As the commenters to the original article point out, one interesting observation is that 31% of the authors listed are female. Looking down the list I see authors I know but whose selected book is not what I would regard as their best. I also see many authors I don't know at all. But there are also many mainstays that have flowed down through the years, Gulliver's Travels, Robinson Crusoe, Don Quixote, still today as revered as they were then.

For general literary knowledge, I looked at whether I recognized the title of the book (one point) and whether I knew of the author (one point). Outcome? 67 points out of 200 possible for a literary awareness rating of 33.5.

Of the 28 books I recognize, I have read 13. But then again, this is a list of fiction which is not my preferred genre.

Some of the selections are striking. I love R.L. Stevenson and have read much of his oeuvre but not The Master of Ballantrae. Likewise, I have read and enjoyed various works by Washington Irving, but, as far as I know, have never even registered the existence of Bracebridge Hall.

The full list of 100.

1. Don Quixote - 1604 - Miguel de Cervantes
2. The Holy War - 1682 - John Bunyan
3. Gil Blas - 1715 - Alain René le Sage
4. Robinson Crusoe - 1719 - Daniel Defoe
5. Gulliver's Travels - 1726 - Jonathan Swift
6. Roderick Random - 1748 - Tobias Smollett
7. Clarissa - 1749 - Samuel Richardson
8. Tom Jones - 1749 - Henry Fielding
9. Candide - 1756 - Françoise de Voltaire
10. Rasselas - 1759 - Samuel Johnson
11. The Castle of Otranto - 1764 - Horace Walpole
12. The Vicar of Wakefield - 1766 - Oliver Goldsmith
13. The Old English Baron - 1777 - Clara Reeve
14. Evelina - 1778 - Fanny Burney
15. Vathek - 1787 - William Beckford\
16. The Mysteries of Udolpho - 1794 - Ann Radcliffe
17. Caleb Williams - 1794 - William Godwin
18. The Wild Irish Girl - 1806 - Lady Morgan
19. Corinne - 1810 - Madame de Stael
20. The Scottish Chiefs - 1810 - Jane Porter
21. The Absentee - 1812 - Maria Edgeworth
22. Pride and Prejudice - 1813 - Jane Austen
23. Headlong Hall - 1816 - Thomas Love Peacock
24. Frankenstein - 1818 - Mary Shelley
25. Marriage - 1818 - Susan Ferrier
26. The Ayrshire Legatees - 1820 - John Galt
27. Valerius - 1821 - John Gibson Lockhart
28. Wilhelm Meister - 1821 - Johann Wolfgang von Goethe
29. Kenilworth - 1821 - Sir Walter Scott
30. Bracebridge Hall - 1822 - Washington Irving
31. The Epicurean - 1822 - Thomas Moore
32. The Adventures of Hajji Baba - 1824 - James Morier ("usually reckoned his best")
33. The Betrothed - 1825 - Alessandro Manzoni
34. Lichtenstein - 1826 - Wilhelm Hauff
35. The Last of the Mohicans - 1826 - Fenimore Cooper
36. The Collegians - 1828 - Gerald Griffin
37. The Autobiography of Mansie Wauch - 1828 - David M. Moir
38. Richelieu - 1829 - G. P. R. James (the "first and best" novel by the "doyen of historical novelists")
39. Tom Cringle's Log - 1833 - Michael Scott
40. Mr. Midshipman Easy - 1834 - Frederick Marryat
41. Le Père Goriot - 1835 - Honoré de Balzac
42. Rory O'More - 1836 - Samuel Lover (another first novel, inspired by one of the author's own ballads)
43. Jack Brag - 1837 - Theodore Hook
44. Fardorougha the Miser - 1839 - William Carleton ("a grim study of avarice and Catholic family life. Critics consider it the author's finest achievement")
45. Valentine Vox - 1840 - Henry Cockton (yet another first novel)
46. Old St. Paul's - 1841 - Harrison Ainsworth
47. Ten Thousand a Year - 1841 - Samuel Warren ("immensely successful")
48. Susan Hopley - 1841 - Catherine Crowe ("the story of a resourceful servant who solves a mysterious crime")
49. Charles O'Malley - 1841 - Charles Lever
50. The Last of the Barons - 1843 - Bulwer Lytton
51. Consuelo - 1844 - George Sand
52. Amy Herbert - 1844 - Elizabeth Sewell
53. Adventures of Mr. Ledbury - 1844 - Elizabeth Sewell
54. Sybil - 1845 - Lord Beaconsfield (a. k. a. Benjamin Disraeli)
55. The Three Musketeers - 1845 - Alexandre Dumas
56. The Wandering Jew - 1845 - Eugène Sue
57. Emilia Wyndham - 1846 - Anne Marsh
58. The Romance of War - 1846 - James Grant ("the narrative of the 92nd Highlanders' contribution from the Peninsular campaign to Waterloo"
59. Vanity Fair - 1847 - W. M. Thackeray
60. Jane Eyre - 1847 - Charlotte Brontë
61. Wuthering Heights - 1847 - Emily Brontë
62. The Vale of Cedars - 1848 - Grace Aguilar
63. David Copperfield - 1849 - Charles Dickens
64. The Maiden and Married Life of Mary Powell - 1850 - Anne Manning ("written in a pastiche seventeenth-century style and printed with the old-fashioned typography and page layout for which there was a vogue at the period . . .")
65. The Scarlet Letter - 1850 - Nathaniel Hawthorne
66. Frank Fairleigh - 1850 - Francis Smedley ("Smedley specialised in fiction that is hearty and active, with a strong line in boisterous college escapades and adventuros esquestrian exploits")
67. Uncle Tom's Cabin - 1851 - H. B. Stowe
68. The Wide Wide World - 1851 - Susan Warner (Elizabeth Wetherell)
69. Nathalie - 1851 - Julia Kavanagh
70. Ruth - 1853 - Elizabeth Gaskell
71. The Lamplighter - 1854 - Maria Susanna Cummins
72. Dr. Antonio - 1855 - Giovanni Ruffini
73. Westward Ho! - 1855 - Charles Kingsley
74. Debit and Credit (Soll und Haben) - 1855 - Gustav Freytag
75. Tom Brown's School-Days - 1856 - Thomas Hughes
76. Barchester Towers - 1857 - Anthony Trollope
77. John Halifax, Gentleman - 1857 - Dinah Mulock (a. k. a. Dinah Craik; "the best-known Victorian fable of Smilesian self-improvement")
78. Ekkehard - 1857 - Viktor von Scheffel
79. Elsie Venner - 1859 - O. W. Holmes
80. The Woman in White - 1860 - Wilkie Collins
81. The Cloister and the Hearth - 1861 - Charles Reade
82. Ravenshoe - 1861 - Henry Kingsley ("There is much confusion in the plot to do with changelings and frustrated inheritance" in this successful novel by Charles Kingsley's younger brother, the "black sheep" of a "highly respectable" family)
83. Fathers and Sons - 1861 - Ivan Turgenieff
84. Silas Marner - 1861 - George Eliot
85. Les Misérables - 1862 - Victor Hugo
86. Salammbô - 1862 - Gustave Flaubert
87. Salem Chapel - 1862 - Margaret Oliphant
88. The Channings - 1862 - Ellen Wood (a. k. a. Mrs Henry Wood)
89. Lost and Saved - 1863 - The Hon. Mrs. Norton
90. The Schönberg-Cotta Family - 1863 - Elizabeth Charles
91. Uncle Silas - 1864 - Joseph Sheridan Le Fanu
92. Barbara's History - 1864 - Amelia B. Edwards ("Confusingly for bibliographers, she was related to Matilda Betham-Edwards and possibly to Annie Edward(e)s . . .")
93. Sweet Anne Page - 1868 - Mortimer Collins
94. Crime and Punishment - 1868 - Feodor Dostoieffsky
95. Fromont Junior - 1874 - Alphonse Daudet
96. Marmorne - 1877 - P. G. Hamerton ("written under the pseudonym Adolphus Segrave")
97. Black but Comely - 1879 - G. J. Whyte-Melville
98. The Master of Ballantrae - 1889 - R. L. Stevenson
99. Reuben Sachs - 1889 - Amy Levy
100. News from Nowhere - 1891 - William Morris

Tuesday, November 12, 2013

Focusing on economic growth and talent development solve the problems of disadvantage and inequality faster than focusing directly on disadvantage and inequality

A couple of weeks ago, I posted about Ricardo Hausmann, a Venezuelan developmental economist and Harvard professor, and a provocative post, The Tacit-Knowledge Economy.

Hausmann's conclusion.
The bottom line is that urbanization, schooling, and Internet access are woefully insufficient to transmit effectively the tacit knowledge required to be productive. That is why today’s emerging markets are so much less productive than rich countries were in 1960, even though the latter were less urban, had higher birth rates and less formal schooling, and used much older technologies.
Hausmann is a member of the Harvard Center for International Development and they have the South Africa Growth Initiative along with a number of associated research papers. I browsed through a few of them and came across, Is Black Economic Empowerment a South African Growth Catalyst? (Or Could it Be…)
Racial segregation has been South Africa’s primary and defining characteristic. Non-whites were seriously disadvantaged because of structures that limited their economic and social opportunities, leaving few from this vast group in the formal economy. Black Economic Empowerment (BEE and its more recent Broad Based version) is a policy intervention driven from the economic and industrial complex in government. Aimed directly at addressing the economy’s skewed racial profile, BEE calls the private sector to restructure itself and create opportunities for previously disadvantaged individuals (PDIs). The policy requires change to intra and inter-firm relational patterns of capital and control, personnel selection, promotion and development, supplier selection, enterprise development and social engagement.

Organizational theory argues that these kinds of intra and inter-firm relational structures and the networks they establish influence who participates in economies and how these people benefit. This argument supports the contention that BEE’s focal changes are necessary to open the economy and adjust its racial composition. If the structures that have entrenched patterns of access to economic opportunities remain static they will not allow inclusion of previously excluded groups. The argument could also be used to view BEE as a potential South African growth catalyst.

Research suggests that the same structural variables that influence who participate in and benefit from an economy also impact what new ideas enter, what products are produced and what growth opportunities exist. Organizational arrangements
prompt and constrain economic actors all the time, shaping what and how they produce. When favoring large firms and vertical relationships, for example, organizing structures offer opportunities for large scale undertakings that emphasize heavy capital investment. Such structures are less conducive to nimble adjustment in the face of changing global economics, however.

Many observers have noted links between the South African economy’s organizing structures and its economic weaknesses. Limited new entry into markets is often explained, for example, as a result of high levels of capital concentration and vertical integration in key industries. Critics contend that these and other structural factors restrict the entry of new ideas, inclusion of outsiders (including budding entrepreneurs and low skilled workers) and development of a
Interesting research. I thought this observation particularly telling.
One is reminded of Fafchamps’ comment that business networks are about much more than ethnicity: If the ethnic barrier to entry in the inner circle falls but the other barriers are left up, does the network really expand? Racial barriers are falling, as are gender and political barriers (with new political voices entering this circle) but in other respects most companies in the sample cannot claim to have enhanced the cosmopolitanism of their boards.40 This suggests that the highest rungs of big business will remain closed to most, as defined by pre-existing network configurations. One has to wonder if these big business decision-making rungs will also be closed to new ideas and thus limit economic growth as well. Chabane, Goldstein and Roberts (2006, 567) certainly suggest it might in commenting, “There is no discernible evidence that changing the composition of South African boards influences corporate strategies.”
A second type of proposition arises from observing Malaysia’s affirmative action policies. These policies took two different shapes in different time periods—the New Economic Policy (NEP) between 1970 and 1985 and the National Development Policy (NDP) after 1985 (Athukorala and Menon 1999; Haque 2003). The NEP actually looked a lot like BEE, but with an explicit growth policy tagged to it focused on promoting heavy industry. The BEE-type components include “long-term targets” for “Malay ownership of share capital in limited companies, and the proportion of Malays employed in manufacturing and occupying managerial positions” (Athukorala and Menon 1999, 1122-23). The program had many problems and contributed to budget and current account deficits. A faltering economy—unassisted by the deficits—frustrated NEP progress. The NDP replaced it in 1986, “with a view to putting creating wealth ahead of redistributing it” (Athukorala and Menon 1999, 1123). Some of the ethnic requirements of the NEP were relaxed, work permit requirements for foreigners were eased, and authorities adopted a more overt approach to address racial imbalance, consisting of “various initiatives geared to entrepreneurship, managerial expertise and skills development in the Malay community” (Ibid). The NDP was more successful than the NEP, facilitating growth and structural change: Inequality dropped, Malay engagement in the economy increased, the manufacturing sector grew, and the economy flourished.
Interesting throughout. The final conclusions are that the existing policies intended to broaden and integrate the economy are certainly benefitting substantially only a small privileged elite, and likely, but not conclusively, hindering the transmission of knowledge and talent, constraining the openness of firms to new ideas, and handicapping the companies when they face competition.

There are echoes of the experience of Philadelphia, Detroit, Jersey City, Baltimore and Atlanta throughout.

The final conclusions, though not stated plainly, seem to be that focusing on economic competitive growth and talent development solve the problems of disadvantage and inequality faster than focusing directly on disadvantage and inequality.

The challenge is that from a policy perspective, ensuring economic competition, fostering economic growth and developing talent offer far less scope for rent seeking and regulatory capture to the established elites than do coercive goals and redistributionist policies. It is like asking the turkeys to vote for Thanksgiving. That is likely why we see so much more "guided" economic development despite its extensively documented failures rather than competitive market development where the successes are so much better documented.

Monday, November 11, 2013

For brevity is very good

From Hudibras by Samuel Butler, Line 669.
For brevity is very good,
When we are, or are not, understood.

Sunday, November 10, 2013

Humans come then go, that is the way fate decreed on the Tablets of Destiny

From the dawn of literary time, The Epic of Gilgamesh. Siduri to Gilgamesh, Tablet 10
O Mighty King, remember now that only gods stay in eternal watch.
Humans come then go, that is the way fate decreed on the Tablets of Destiny.
So someday you will depart, but till that distant day Sing, and dance.
Eat your fill of warm cooked food and cool jugs of beer.
Cherish the children your love gave life.
Bathe away life's dirt in warm drawn waters.
Pass the time in joy with your chosen wife.
On the Tablets of Destiny it is decreed For you to enjoy short pleasures for your short days.

Saturday, November 9, 2013

Sociology? I thought it was an economic experiment.

From Learning to Compete and Cooperate by Alex Tabarrok.

Tabarrok discusses an experiment.
What drives individualism and competitiveness as opposed to collectivism and cooperation? Leibbrandt, Gneezy and List have a great paper studying this question with an ingenious experiment. LGL study two types of fishermen in Northeastern Brazil. The two types live within ~50km of one another but one type are lake fishermen and the other sea fishermen. Lake fishing favors individual fisherman in small boats while sea fishing favors team production on larger boats.


Perhaps you won’t be too surprised to learn that 45.6% of the lake fishermen chose to compete compared with just 27.6% of the sea fishermen. What makes the paper great is all the secondary tests the authors do to understand this result at a deep level. The result, for example, is not due to differences in throwing ability or risk preferences.
Tabarrok goes on in some detail, but you get the gist. New study, interesting results confirming of an existing theory, clever experimental work, etc. This is from the blog site Marginal Revolution which has some pretty bright readers and commenters. It is always worth reading the comments about research such as this, to get some pretty pointed identification of weak points in the argument - small sample size, no controls, issue of definitions, etc.. And they do not disappoint in this case.

Human activities are inherently causally dense - there is always a lot going on, most of it not apparent. In this case, the commenters are pointing out that it is conceivable that what is actually being measured is developed risk aversion rather than learned competitiveness.

But there is one step further in this instance. The article is illustrated with a photograph of the experiment (which involved tossing tennis balls into a bucket) in process.

One of the commenters points out one of the innumerable incidental variables that so often are not addressed or even considered in experiments such as these. The commenter points out that the observer taking notes of the experiment is a pretty young woman. The participants are middle aged men.

So the experimenters think they are conducting a study of economic behaviors in terms of cooperation and competition among lake and sea fishermen. But what if they are inadvertently conducting a sociological study of male behavior in the presence of attractive women? What if the patterns of gender behavior among the lake fishermen differs in a material way from those of the sea fishermen and for reasons having nothing to do with their respective fishing techniques?

I don't know that having an attractive young woman as the recorder of the experiment would actually make any difference in the outcomes but it is an example of one of those exogenous variables that don't ostensibly have anything to do with the experiment but which, unless controlled for, might actually skew the results.

Friday, November 8, 2013

Commenting vs. Analyzing, Opining vs. Writing

From The Implications of Behavioral Economics Are Not Obvious by Alex Tabarrok. Tabarrok is responding to commenters regarding an earlier post about the economics and decision-making related to layaway purchases.
Yesterday’s post, Stayaway from Layaway, elicited lots of comments but less analysis.
Not far from the criticism I came across in Miles Gone By, the autobiography of William F. Buckley, Jr. He is commenting on one of the changes that occurred at Yale during the 1960's.
The other change during that period was that students who wrote for the OCD (we called it that, Oldest College Daily) no longer had to know how to write, merely to opine.

Thursday, November 7, 2013

Progress, far from consisting in change, depends on retentiveness.

From Reason in Common Sense by George Santayana, Volume I.

In this passage, the line everyone knows is "Those who cannot remember the past are condemned to repeat it" but I think that the opening line might be the more insightful - you have to have an acknowledged position from which to start in order for progress to be made. Tradition and continuity is a prerequisite to progress.
Continuity necessary to progress.

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it. In the first stage of life the mind is frivolous and easily distracted; it misses progress by failing in consecutiveness and persistence. This is the condition of children and barbarians, in whom instinct has learned nothing from experience. In a second stage men are docile to events, plastic to new habits and suggestions, yet able to graft them on original instincts, which they thus bring to fuller satisfaction. This is the plane of manhood and true progress. Last comes a stage when retentiveness is exhausted and all that happens is at once forgotten; a vain, because unpractical, repetition of the past takes the place of plasticity and fertile readaptation. In a moving world readaptation is the price of longevity. The hard shell, far from protecting the vital principle, condemns it to die down slowly and be gradually chilled; immortality in such a case must have been secured earlier, by giving birth to a generation plastic to the contemporary world and able to retain its lessons. Thus old age is as forgetful as youth, and more incorrigible; it displays the same inattentiveness to conditions; its memory becomes self-repeating and degenerates into an instinctive reaction, like a bird's chirp.

Wednesday, November 6, 2013

Tuesday, November 5, 2013

All but a few of those theories are found wanting, but some survive and flourish over time, and those comprise our knowledge

A muscular defense of freedom of speech, variance in behaviors and a call for tolerance - The Case for Hate Speech: How Anita Bryant, Jerry Falwell, and Orson Scott Card have advanced the cause of gay rights by Jonathan Rauch.
A generation ago, the main obstacle to gay equality was not hatred, though of course there was a good deal of that. Most people who supported the repressive status quo meant well. The bigger problem, rather, was that people had wrong ideas about homosexuality: factual misapprehensions and moral misjudgments born of ignorance, superstition, taboo, disgust. If people think you are a threat to their children or their family, they are going to fear and hate you. Gays’ most urgent need was epistemological, not political. We had to replace bad ideas with good ones.

Our great blessing was to live in a society that understands where knowledge comes from: not from political authority or personal revelation, but from a public process of open-ended debate and discussion, in which every day millions of people venture and test billions of hypotheses. All but a few of those theories are found wanting, but some survive and flourish over time, and those comprise our knowledge.
The regrettable reality is that truth is not an instantaneous converter. Truth is insufficient on its own to change minds and behaviors. Sustained truth over time is more like it but that means that there is always a frustration to be endured between the time a truth becomes known and the acceptance of that truth. Hence the ubiquitous desire to accelerate things a bit by using some power of coercion. But I think Rauch is right, tempting as it might be to legislate away or boycott opinions you dislike, better to let truth take its own course. Every suppression lends credence to the idea that that being suppressed must be valuable in some way.
The restless process of trial and error does not allow human knowledge to be complete or perfect, but it does allow for steady improvement. If a society is open to robust critical debate, you can look at a tape of its moral and intellectual development over time and know which way it is running: usually toward less social violence, more social participation, and a wider circle of dignity and toleration. And if you see a society that is stuck and not making that kind of progress, you can guess that its intellectual system is not very liberal.

The critical factor in the elimination of error is not individuals’ commitment to the truth as they see it (if anything, most people are too confident they’re right); it is society’s commitment to the protection of criticism, however misguided, upsetting, or ungodly. America’s transformation on gay rights over the past few years is a triumph of the open society. Not long ago, gays were pariahs. We had no real political power, only the force of our arguments. But in a society where free exchange is the rule, that was enough. We had the coercive power of truth.

History shows that the more open the intellectual environment, the better minorities will do. We learn empirically that women are as intelligent and capable as men; this knowledge strengthens the moral claims of gender equality. We learn from social experience that laws permitting religious pluralism make societies more governable; this knowledge strengthens the moral claims of religious liberty. We learn from critical argument that the notion that some races are fit to be enslaved by others is impossible to defend without recourse to hypocrisy and mendacity; this knowledge strengthens the moral claims of inherent human dignity. To make social learning possible, we need to criticize our adversaries, of course. But no less do we need them to criticize us.