Category Archives: Uncategorized

In Praise of David Hogg

I see a lot of right wing people be triggered by David Hogg in general, and particularly now that he is cashing in with a book deal. Why?

What he did was turn lemons into lemonade. He said, oh it sucks that people I know got murdered but how can I get rich and famous out of this. That’s great! Will anything he says or does ever help to prevent a school shooting? Of course not. But that is not the point. The point is for him to take money from suckers. There should always be a constant flow of resources going from suckers to non-suckers. That way the suckers shrink and die and the non-suckers proliferate. David Hogg found a way to fleece suckers and he is going for it! That’s evolution in action.

This is the kind of entrepreneurial spirit that everyone on the right should celebrate. And it doesn’t hurt that he tends to turn off a lot of people on the left, and that gun control is probably a losing issue in the midterms. That’s just a bonus though. The key thing is that David Hogg is living the American Dream. He is using tragedy to separate fools from their money, and thus making the world ever so slightly less foolish.  He should be an inspiration to us all!

Syria-ously, ISIS Won

Recently Trump said he wanted to leave Syria without having completely destroyed it. We usually like to create complete chaos in middle eastern countries, so letting Syria retain a semblance of a government is a big change in policy.  Subsequently, there was a supposed poison gas attack which may or may not have been done by Assad,  the guy who we were gonna let stay and run the place. We don’t allow poison gas even though its less lethal than conventional bombings because its icky and it was worse than conventional bombings were 100 years ago when airplanes barely worked.

Now we have done some more bombing and will probably stay there to make sure that meanie fights fair and only murders children with high explosives. No poisons allowed! People on the right are upset because they don’t like us getting involved in pointless “humanitarian” missions that don’t serve our national interest. Other people are upset, not so much because they disagree with the mission, as because they think Trump will screw it up and cause a nuclear war with Russia. Both these groups can chill. We have been more or less continuously screwing around with the middle east since the end of world war 2 when the UK gave up trying to manage the region. Its too much to expect Trump to be able to overthrow the last 75 years of institutional inertia and completely change the direction of US foreign policy. So the right should lighten up and let the Donald do what he can.  The people who are worried about world war with Russia should keep in mind that we’ve been skirmishing with them in that area for decades. We were fighting them in Afghanistan in the 80s.

So for me what we are doing in Syria is boring. Its what we have been doing in that region since well before I was born. What is interesting is who has won in this conflict. A lot of people will say that ISIS lost. They were gaining ground for awhile but heavy bombing by the major powers has beaten them back and now they have basically no territory left. I think that is a bunch of shit. As soon as the massive wave of Muslim immigrants got accepted into Germany then ISIS could have declared victory.

Now, supposedly the ISIS people consider Shiite Muslims to be apostates and hate them. They only like a pure, literal interpretation of the Koran and think any later modifications are a denial of the perfection of the original document. Maybe those particular people see the fact that they have lost their territory as a real defeat. But Muslims who are bent on long term conquest can find a pretty big silver lining. Now there are an extra million+ Muslims in Europe! And more are coming all the time.  Stability is not returning to the middle east any time soon.

There is also a backlash against the Muslim immigrants from people who consider them an invading army. This has 2 great effects. One is that it keeps the Muslims from integrating into the European society as effectively. That way, they keep their culture and have more of an incentive to fight against the foreign culture in which they find themselves. The other great effect is that the left feels an instinctive need to come to the defense of the oppressed minority. So now, in the post ISIS era we have a situation where half the political spectrum of the western world is devoted to furthering the interests of devout Muslims. They will fight any efforts to modify conservative Muslim cultures to fit better into more liberal western societies. Suggesting that women are not the property of men is sexist and racist now!

There is no end in sight to massive levels of Islamic immigration into Europe. Sure, at times the right will win and attempt to restrict immigration, but then at other times the left will win and throw the gates wide open. There is no end in sight to Muslims in Europe having a significantly higher birth rate than the native population. The projections are that in 30 years Europe will be close to 15% Muslim and at that point Muslims will start to gain a lot of political power in many European countries.

Muslims don’t have to achieve a majority in Europe to get their way politically, though I think they will do that next century. All they have to do is care more about issues related to the middle east than the rest of the population.  The right tends to be isolationist and the left is pro-Muslim, so if Muslims start telling left-wing politicians that interfering with the establishment of a caliphate is Islamophobic, they will listen. The Islamification of Europe will make the dreams of ISIS easily realizable.

Toxic Individualism

Libertarians like to make a distinction between individualism and collectivism, in addition to the classic left vs. right political divide. Communists and Nazis are both far to the collectivist side, but Nazis are right wing and communists are left wing. far to one side of the collectivist side and libertarians are far on the individual side.

pol compass

This distinction made sense when there were many people who honestly believed that a top down managed economy could outperform a free market economy.   For instance, Nobel laureate Paul Samuelson famously predicted that the Soviet Union would imminently overtake the US economically. He didn’t remove that prediction from his textbooks until 1989! But at this point there is no excuse for not knowing that capitalism is the best method for achieving overall economic progress.

Now everyone knows that capitalism/democracy harness individual incentives for good collective ends. In the market you have the incentive to try hard and get rich for yourself, but the result is a strong growing economy that benefits the society as a whole. Each individual is somewhat expendable since they can make the wrong bets and suffer the consequences. Some individuals will be winners and some will be losers, but the collective, the country or the society or whatever, will always end up winning.

People on the left today are not collectivists because they don’t put the fate of any group, be it a community, nation or the whole human race above the interests of individuals. They put the neediest individuals at the top and think that all the larger groupings should be sacrificed to the interests of those individuals. They are not libertarians because they support an authoritarian state to impose their views, but their views are individualistic. Collectivists know that individual rights and autonomy are crucial for the overall benefit of the group, but that ultimately it is the species, the nation, the community and the family that are more valuable than the individual.

Toxic individualists don’t want America to be strong. They don’t even want the human race to be strong. They care only about raising up the worst off individuals, even if the costs vastly outweigh the benefits. They are altruists, but they are altruistic individualists who care nothing for what their “selfless” obsessions with other people’s selves will do for the whole.

I was inspired to think about this topic by something called the “demon core.” The demon core, if you don’t want to click on the link, was a 14 lb plutonium ball that was built made during the Manhattan project. It would have been the fissile core of the 3rd bomb to be dropped on Japan but they surrendered before that happened. It was subsequently used to do research at Los Alamos.  It got its nickname because it killed a few scientists who were using it for research in two separate incidents. Basically, what happens with plutonium (or uranium) is that randomly atoms will break apart into lighter elements and release energy + a neutron. If the neutron hits the nucleus of another plutonium atom then that atom will also undergo fission, breaking into smaller elements and releasing more energy and another neutron. If the piece of plutonium is small then most of the random neutrons that get released will exit without hitting another nucleus. But as the chunk of plutonium gets bigger the probability that each neutron will hit another nucleus gets higher and higher. A “critical mass” of plutonium is one in which the number of neutrons hitting other nuclei is high enough that the number of neutrons bouncing around inside the object keeps increasing exponentially. If that happens then the amount of energy and neutrons that are released will grow exponentially until the entire piece blows up and that is an atomic bomb. The demon core was 5% smaller than critical mass, so just leaving it alone it wasn’t too dangerous. But putting objects near it that reflected neutrons back could cause it to start to achieve that run away process of fission. So these 2 different scientists were both standing next to it and physically manipulating neutron reflecting materials to see what the neutron output would do. In both cases their hand slipped and they accidentally started the chain reaction. In both cases they were able to stop the process very quickly (if they hadn’t been able to its likely that a ton of people would have been killed). In both cases they died what I am assuming were horribly painful deaths due to radiation poisoning.

These scientists knew the risk of what they were doing. They knew that radiation was harmful. They knew that they were basically standing next to a nuclear bomb and taking it to the edge of exploding. No scientist in the US would do anything remotely like this today. This was less than 75 years ago and the risk tolerance of normal, intelligent people was seemingly orders of magnitude higher than ours is. Is that the biggest social change that has occurred since the industrial revolution? I think it may be. Its an unbelievably massive change. So many risky behaviors that were routine even 25-30 years ago are now considered practically criminal. When I was a kid most children rode their bikes without helmets. If they were not far from school they walked and there were crossing guards at the busy streets to help young children not be hit by cars. Now, if you let a 1st grader walk to school out of your eyesight you are likely to get in legal trouble. Leaving a 10 year old safely at the own home by themselves watching an ipad for an hour can get you in legal trouble. You can never ever leave children unattended in a car while you run into a store. My parents used to do that all the time.

What has changed? I think that it is a toxic individualism that has taken hold. No one can take the emotional hurt of any individual being harmed or neglected, so they impose enormous collective costs to minimize the chance of it happening.

Anti-vaxxers are another example. Most of them know that the risk of vaccines are small. And yet, if they can prevent the small chance of harm to their child by imposing a larger expected harm on the collective they will do so.

People who care about the collective don’t bemoan the fact that best and brightest are getting more resources to do more good. They celebrate it. Its what is supposed to happen. It is what will make our nation strongest in the long run. People who want to prop up the weak at the expense of the strong and the whole are the true individualists.

Failure is Life. Stasis is Death

The human ability to learn from others is the source of our enormous advantage in the animal kingdom. We can pass on knowledge across time and space to a much greater degree than other species and build on that knowledge over time in ways that no life before us could. And yet we suck horribly at learning from others.

In my business, I have seen many occasions where someone has been exposed to a profitable strategy at one firm and then utterly failed to replicate it. Very smart people who understand exactly how a trading algorithm works can have enormous difficulty reproducing it.

Blockbuster video could see Netflix and Red Box coming a mile away. It tried to compete with both of them, and was much bigger and had more resources than either at one time, but it just couldn’t get the details right.

Amazon’s business strategy was no secret (at least its retail strategy). Wal-Mart had an enormous and very efficient distribution system and has spent many $billions trying to compete, and yet Amazon continues to grow and take market share year after year.

In “Thinking Fast And Slow” Kahneman describes 2 different systems for thinking. Type 1 thinking is fast, easy and intuitive. Type 2 thinking is slow, deliberative, effortful and more logical.

I think the notion of Type 1 vs Type 2 thinking can be easily generalized to organizations. The tasks that the organization has been streamlined to accomplish with little bureaucracy or internal effort are Type 1. New or different tasks that the org is not optimized for are Type 2. Amazon was built to be a Type 1 e-commerce business. Wal-Mart, even with so many more resources and expertise, couldn’t make that effortful change to develop new efficiencies and become Type 1 at e-commerce as well.

On Jon Stewart’s episode of “Comedians in Cars Getting Coffee” he says that the hardest thing he ever did was shifting the focus of the Daily Show from celebrity news and a light tone to political news and a harder satirical tone. It seems like such a small change. The format stayed the same. It was still a half hour TV show where he sat a desk and read jokes about news stories. But apparently just making an adjustment in the content of the jokes was a multi-year battle behind the scenes. Its amazing just how difficult it is to make any deliberate changes to the core functioning of an organization that is successful. The inertia and habits are ingrained at every level.

This is my experience in the trading industry. Every successful strategy seems to be embedded within the very particular organizational capital and capabilities of a specific firm. Trying to do something similar elsewhere seems like it would be so easy, but in practice it is next to impossible. The whole organization has to shift to accommodate the strategy and most of the time it simply can’t be done. Earlier in my career, my thought was always that if I could just learn what the successful firms were doing, their secrets, then I could be much more successful. Mostly, there aren’t secrets and what there are can’t really be transferred.

We dig ruts of habit and efficiency in our organizations, and getting out of them to make a change is an enormous task. Therefore, its a very good thing that corporations tend to not live too long. Its inevitable that successful corporations will develop habits that make it difficult to adapt to major changes. So once new firms bring that change about we see old firms shrink and die. All the innovation and success of our economy is based on this ability to destroy organizations as soon as they are not useful and free up the resources within them.

Other organizations like governments and Universities have the same issues. They get good at doing certain things in certain ways, and it is very difficult to get them to make substantial changes. For core government services it seems like stability and predictability are more valuable than innovation, so having a very long-lived and hard to change organization may be an advantage. However, everyone expects universities to be crucibles of innovation, and many people expect government to change in fundamental ways, and those hopes are probably in vain. Other people fear potential change in these very old and nearly static organizations, and those fears are almost always overblown.

Someone overestimating the risk of change.

Fuck Academic Research

My mom is a very accomplished scientist. She has authored something like 400 published peer reviewed papers, tons of book chapters, edited a book series and been a senior editor at one of the top journals in her field for decades. She was an independent investigator in academia for 16 years, then went into industry and was a vice president at a major pharmaceutical company. Now she has a senior role at the National Cancer Institute. Her view on academic research is interesting. Her feeling is that  while academic scientists “try their best” for the most part they don’t have the skills or tools to do real cutting-edge science.  Real rigorous science is done in industry, but not much in academia.

The always amazing Scott Alexander recently posted a literature review on adult human neurogenesis. After showing how the newest research shows that the whole field has been built on a spurious base he writes:

“the reason I feel compelled to dabble in this subject anyway is that I don’t feel like anyone else is conveying the level of absolute terror we should be feeling right now. As far as I can tell, this is the most troubling outbreak of the replication crisis so far. And it didn’t happen in a field like social psychology which everyone already knows is kind of iffy. It happened in neuroscience, with dramatic knock-on effects on medicine, psychology, and psychiatry.

I feel like every couple of months we get a result that could best be summed up as “no matter how bad you thought things were, they’re actually worse”. And then things turn out to be even worse than that. “

My response to my mom’s judgement on the quality of academic science is that the government should stop giving these people so much money to waste. My mother’s response has always been that that would be disastrous because so many scientists would be out of work. The point of scientific grants are not to produce knowledge that will benefit the people who pay for it. Its has become just a jobs program for people who like playing scientist. It also allows them to train the next generation of “scientists” to spend their lives writing grant proposals to do invalid research and write papers that no one will read.

Grants to academic scientists are somewhere around $40 Billion/year, and have been substantial since the 1960s. All together the federal government has spent $Trillions on academic research with no accounting on the value allegedly produced.

In Tyler Cowen’s seminal book “The Great Stagnation” he points to some time around 1973 as when economic growth really slowed down.  A lot of things happened in the early 70s. The Bretton Woods system fell apart. China hit its nadir and started to rebound. OPEC imposed their embargo that created a massive gasoline shortage.  I think all these things contributed to why the early 70s was a turning point (in the wrong direction) for the US. But another thing that happened was that Nixon declared his War on Cancer.  That was what drove my mom to pick cancer as her field. There was suddenly a lot more money to do academic science. The 60s and 70s was when the government really started to put big money into academic research. Is it just a coincidence that the rate of innovation started to crater at the same time?

Since the 1960s we have created this path that smart people can take to do “research that interests them” rather than research that produces enough results to be worth paying for by the private market. Before then, non-economic research was limited to people who had a day job or independent means. There is a myth that technology comes from theory but very often theory comes from observing technology that has been derived from incremental tinkering. As Taleb wrote in Antifragile:

“Scranton showed that we have been building and using jet engines in a completely trial-and-error experimental manner, without anyone truly understanding the theory. Builders needed the original engineers who knew how to twist things to make the engines work. Theory came later, in a lame way, to satisfy the intellectual bean counter.” 

By taking a lot of the smartest people out of the role of tinkering technological development, and putting them into the role of developing “fundamental knowledge” without good incentives to get stuff right, maybe we have slowed the whole process way down. Everyone, pretty much across the whole political spectrum, thinks more money for research creates more progress and faster growth. The budget that Trump signed a few weeks ago included a 10% increase in funding for NIH and republicans and democrats both counted that as a win. What if they are all just wrong? What if the sclerotic, bureaucratic and masturbatory (the endless circle jerk of “peer review”) system of academic research is just sucking brain power out of the dynamic and innovative parts of our society? What if we could just shut the whole thing down and get an immediate boost in the rate of scientific advancement? Isn’t that a chance worth taking?


P.S. The one area situation where government money can speed up research is if the capital necessary for tinkering is just beyond the capabilities of the private sector. I think fusion is an example where $10s of billions must be spent just to start trying stuff out. I think that is an appropriate place for publicly funded scientific research as I have written about here.

Pig Skin In The Game

I Just finished reading “Skin In The Game” by Nassim Taleb. It is about the importance and consequences of people being exposed to the downside of the risks they take. Like all his books it’s a fun read that is also profound. It’s a little on the light side and not quite as good as Antifragile, in my opinion, but still highly recommended.

In SITG Taleb describes a “Bob Rubin trade” as a class of bets in which you keep the upside but somehow transfer the downside to others. The classic example is the banker who gets bonuses for years doing some activity that will eventually blow up,  and then loses more money than he ever made when the blow up happens but gets to walk away with the bonuses.

Another example Taleb brings up a lot is the pundit, adviser or politician who advocates in lofty terms for foreign interventions but doesn’t have to live with the consequences. No one who talked up spreading democracy to the middle east in the 2000s ended up moving to Mosul.

On a smaller level I think a good example of the Bob Rubin trade is the cowardly cop. Police officers aren’t paid to take crazy risks, but they are paid to take reasonable risks in order to decrease the risks that the public face. Cowardly cops are those that transfer the risks that they are supposed to be taking back to the public.

During the Parkland shooting, the cop that hid outside, rather going to seek out source of gunfire was clearly a cowardly cop. It was his responsibility to try to find and confront the shooter, but given the terrible luck to actually be the cop on the scene when someone started shooting, he chose to let the unarmed students and teachers deal with it and save his own skin.  Now he is retired and collecting his pension in classic Bob Rubin style.

A police officer who fails to confront a threat deserves the approbation that they get, but they aren’t the worst variety of cowardly cop.  All they are doing is failing to do the job they were paid for. They aren’t actively putting the public at risk.

The worst cowardly cops are those that decide that when confronted with any perception of a threat they will prefer a “false positive” to a “false negative” response. In other words, they prefer to kill an innocent than take the risk of dying themselves, and so they can create a deadly situation where none existed. That is the situation we have recently seen with Stephon Clark  and seen many times with people like Philando Castile and many, many others.

We are not paying police like that to risk their lives for us. We are paying them to risk our lives for themselves. Any police officer that would prefer to shoot an innocent than to get shot is not doing the job. They are creating more risk than they are taking and making society worse off. They are also creating a horrendous negative externality by discrediting the majority of police who are brave and do their honest best to shoulder the responsibilities that they have voluntarily accepted.

The standard right now is that the cop may shoot whenever they can reasonably determine that they are at risk. They don’t have to 100% be at risk, just make the reasonable judgement that they are at risk. This legal standard invites false positives and risk transfer.  As long as the cop can honestly say that they thought the cell phone might have been a gun (and perhaps 1 out of 100 times it actually would be) then they face no liability. That policy transfers all the risk to the (probably) innocent person. Instead, the standard should be that no reasonable person should think that they are safe. The burden to determine that they are actually in danger should be on the cops since they are the ones who volunteered to take that burden!

We should laud cops as heroes and encourage them to be heroes. We shouldn’t be providing them with every legal incentive to become Bob Rubins.

“The Wall” Will Make America Great Again

I’ve been reading articles recently about how Trump is not getting much of what he wants for border wall funding in the latest spending bill. Its sparking a lot of anger on right and in response Trump has threatened to veto the bill.  Its a great sign that by introducing the idea of the wall Trump has given a truly enormous gift to the American right.

Everyone knows that most people who get here illegally overstay visas or go through some other legal maneuver rather than just crossing the desert. Everyone knows that even though a lot of drugs are smuggled in from Mexico, there would be plenty of ways for drugs to get here or be made here with a Wall. The Wall is mostly symbolic. To the right it is a symbol that America is a great place and that coming and sharing in that greatness is a privilege that has to be earned by contributing. To the altruist left, the wall is a symbol that America is a fundamentally heartless and “racist” place that denies its bounty to poor suffering people just because they weren’t born here.

Because of the symbolism, the left has a hatred of the wall that vastly exceeds its practical importance or cost. If they just let it be built then for most part the problems it seeks to address would still be around and it would be easy to just forget about it. But as long as it is not built, it is a convenient stand in for the larger philosophical issue and Republicans win that issue. Most Americans are not altruists and can understand at a visceral level that helping poor foreigners doesn’t help them.

It reminds me a lot about universal healthcare. Universal healthcare was a democratic goal for decades. Republicans had the abstract, philosophical objection that it constituted “socialized medicine” and that socialism is bad. The abstract threat of socialism didn’t resonate as much with people as the observable fact that US healthcare is very expensive and being uninsured or in danger of being uninsured is scary. Finally it got to a point after the 2008 election where democrats had complete control of the federal government and a strong mandate to do something about healthcare.  They managed to pass Obamacare which was a pretty small and mild reform designed to ameliorate some of the worst aspects of the old healthcare system from a consumer point of view. It didn’t address any of the thornier provider side issues. But even though it was a smallish thing, Democrats still put up the “mission accomplished” banner and haven’t stopped getting their ass kicked since. Without that issue to drive the lower middle class to polls for dems, the wind really went out of their sails. People won’t vote for the people who had a good idea and implemented it. They’ll vote for the people who have a good idea and want to implement it.

The wall is not a particularly good idea, but it represents a good idea. It represents an American government that looks out for American interests. It represents a government that is of, by and for the American people and not some other group of people. By wrapping the good idea in a bad idea that guarantees that it never gets done, Republicans have a gift that keeps on giving.  It can help drive Republicans to wins for decades, and then once elected they can spend their time lowering taxes and repealing regulations and doing actual immigration reform. They can do all the stuff that helps America in the long run but has limited appeal for ordinary people.