I’m not sure how many people have chanced upon Post-It Notes with inspirational illustrations anywhere in Singapore and picked them up; the author/illustrator/documenter of Things We Forget is certainly doing something amazing for his/her own life and that of the others. The Post-It illustrations and notes are indeed inspirational if not a reminder of how much wisdom we lose in the course of conducting our lives. The address of the blog is apt in that sense.
And since I’m at introducing and recommending other websites, there’s an interesting free online textbook project at BookBooN. It’s not exactly free so to speak, since the textbook is interspersed advertising much like a magazine is. But well, you don’t pay a cent to download.
After leaving it on my bookshelf for a while I eventually took out Lord of Finance to resume reading books on my journeys. Written by Liaquat Ahamed, I bought it at one of Harris’ 20% storewide sales during a period when I was thinking about reading up more about Finance after the recent crisis. I thought it was good to beef up my knowledge of American finance since Age of Turbulence was the closest I got to reading about the financial sector of America.
The book turns out to be more than what I was expecting. Written in the style that feels very similar to Doris Kearns Goodwin’s Team of Rivals, Lord of Finance traces the little stories that demonstrated the personalities of the four most important central bankers prior to 1929. They had exerted huge influence on the economies of Europe and United States, and unintentionally engineered in the Great Depression with their policies and beliefs. It was interesting to get a peek at a world still obsessed with the almost divine quality of gold as a storekeeper of value and with poor understanding of monetary economics.
Even more intriguing is that monetary policies and innovations are being created by these people who has a nuanced view of monetary economics and poor understanding of the workings of the economy. The stories and opinions of civil servants, politicians and aristocrats in those years demonstrates the experimentation humans had gone through in order to figure out how this gigantic machinery works. Of course, this study and experimentation carries on today.
Liaquat Ahamed got really good reviews (here and here) from New York Times for this book, especially for the fact that the contents of the book chillingly echos the stories of Wall Street in the past couple of years, involving banking heros and monetary policies, speculative bubbles and a huge crash. The description of the mania and the built up to the eventual crash sounds rather familiar to me given that I just finished John Cassidy’s Dot.con a while back. Men’s penchant for not learning from History seems particularly pronounced in bouts of ‘Irrational Exuberance’.
For that, Liquat gives a brilliant analogy for the role of Central Bankers or the policies makers trying to stabilize the economy and also pushing for growth. He sees them much like Sisyphus in the Myth of Sisyphus, condemned the work hard to create the conditions fertile for economic growth only to have speculation and irrational exuberance extinguish the fruits of their labour – much like Sisyphus who have to push a boulder up a mountain knowing that when the deed is done, it’ll roll back to its original position for him to do it again. Perhaps Albert Camus is right, for the struggle probably do fill the central bankers’ hearts and the belief of their heroism keeps them happy.
Lord of Finance simply surprises me with the rich collection of anecdotes about the main characters of the story Liquat tries to tell and the manner it imparts knowledge on finance and the workings of money in the economy to the readers – subtly and not too overwhelmingly technical. As a result the book caters to a wide range of audience; students interested in economics, history, finance and perhaps just stories about great men’s mistakes.
Those interested in getting a preview before making a purchase of the book or going on a trip to the library to borrow it might like to check out New York Times.
Meanwhile, Dot.con have been an interesting read. It’s an old book, no doubt. I believe reading about the Internet Bubble now seem rather weird given that it has happened a while back and don’t appear to have any immediate relation with what I’ve been working on. Still, I think that events like this have lessons to offer that are often missed out and I was looking to read something a little further back given that I’ve been updating myself with The Economist all the time. John Cassidy didn’t fail me, starting his story from the time when the technology was developing for the rise of modern Internet, describing the roles that the US military and government played in its conception, research funding and even implementation. He combines the events leading up to year 2000 with interesting comparisons of speculative manias of the past and talks about retrospective telltale signs of irrationality.
Cory Johnson reveals that John Cassidy was a rare skeptical voice with regards to the Internet Boom, but failed to live up to the promise of the title of the book:
Indeed, he is unable to dismiss the most fundamental notion (a mantra among the true believers) that the Internet changes everything. Despite the stock market meltdown, almost any reading of the evolving business practice wrought by the Internet suggests that more dramatic changes are yet to come.
In a sense, the Internet is not quite exactly an illusion so to speak. But I don’t think that was what John Cassidy was driving at. His idea is that business fundamentals have been abandoned during the period and it shouldn’t have been. The numbers he cites about businesses losing money even as stock prices climb is startling. He might have been against the arguments of the New Economy though, and he could have supported his argument with the fact that falling prices (with economic expansion) isn’t entirely an internal affair of US but a result of the external forces as well.
I’ve enjoyed the little stories told by Dot.con surrounding the whole boom and crash of the Internet, especially those about individuals trapped in those industries contributing and taking part of the boom. Besides that, Dot.con serves as a good look at human behaviours during a speculative mania.
The Economist recently featured an article on the need to package carrots as sticks to help people be more motivated. It is essentially saying that people responds more strongly to loss than gain but since companies need to make credible threats (a very game theory sort of idea) without being deemed unfair (as they would if they had threatened to dock pay) they will have to make their carrots seem like sticks.
But then, is it always about money? A couple of days back I was walking around the bookstore and I spotted a new book – Daniel Pink’sDrive: The Surprising Truth About What Motivates Us, he talks about the stuff that motivates us. We often thought of them as money but he figures out that it’s about “autonomy, mastery, and purpose”, which makes a lot of intuitive sense. The incentive systems in our world often do not drive ordinary souls to excellence. Perhaps, firms and organization must rethink their way they manage their people and this will revolutionize human resource departments and HR work.
The ideas in the book relates closely to another book I saw. It’s Richard Sennett’s documentation of the philosophy of craftsmanship, The Craftsman (reviews here and here). His definition of craftsmanship, “an enduring, basic human impulse, the desire to do a job well for its own sake” sounds like a logical consequence when an individual is well-motivated. Perhaps then, craftsmanship is the spirit to be promoted.
I read Origins of Wealth about 2 years ago and got introduced to the idea of complexity, which was elaborated for markets (specially that of financial markets) by Benoit Mandelbrot in The (Mis)Behaviour of Markets. Below is a discussion about the wider applicability of the concept of evolution I’ve learnt about from the book and some insights I’d like to share with more academic audiences. These ideas relates to the stuff Kevin Kelly was talking about on TED.com I introduced in a reading package. This long piece was penned during the time I read Origins of Wealth:
Reading Eric D Beinhocker introduced me to the concept of Evolutionary Systems, which I hope to talk about. It’s definitely a great book and I am so glad I bought it (despite the price – my price elasticity of demand for books is very very low). The reason I have decided to pen this short piece on Evolutionary Systems is that I see its application in a wide spectrum of reality and I would like to demonstrate how this idea can help weave ‘Man & Nature’ with ‘Science & Technology’, domains that our General Paper is currently delving into.
Evolutionary systems obeys certain characteristics of evolution – a process that can proceed infinitely without an equilibrium (in the traditional sense though you have no problem isolating periods of time and define them as a moment of equilibrium, albeit one that vanishes rather quickly). In Beinhocker’s words, the system is governed by the ‘evolution algorithm‘ that searches for the fit ‘interactors’ in the ‘fitness landscape’. I hope this is not too overwhelming for general interest readers. I’ll deviate briefly from my main focus on ‘Man-Nature & Science-Technology’ Argument (MNST) to explain the terms I have just introduced. ‘Interactors’ are basically agents within the system, like man within nature, technology within society and so on. ‘Evolution Algorithm’ refers to the seemingly systematic formula in which interactors constantly evolve to adapt to changing conditions within the system (whether the changes are results of endogenous or exogenous factors). Finally, the ‘fitness landscape’ refers to how fit the different characteristics the interactors can possibly assume would be given that they really manifest in the system. This is a little complex but just take it that the ‘landscape’ refers to a library of collection of strategies for interactors to survive within the system. How good the strategies are is constantly changing and what evolution does is to pick out the best of all these strategy constantly, occasionally eliminating some lousy ones and so on. This process is essentially what quantifies evolution.
Having established this, I must propose that it is nature that has created this process of evolution, and this mindless but innovating process – it is no different from the laws of physics laid down by the very same nature, as well as the interactors of systems, and even systems itself. I shall not engaged in any quarrels on intelligent design right here and mindlessly assume all my readers to be intelligent followers of the idea of ‘design without designers’. In my MNST argument, I believe that nature lays down the ground rules for things to happen and whatever happens is part of nature, and the natural order. Therefore, Science & Technology is not only part of nature but relies on the laws and forces that nature has laid down in order to work. Man, has essentially leveraged on the evolution algorithm to construct ever increasingly sophisticated stuff.
Okay, now you are saying Man is emulating nature, so isn’t he trying to play God or something? Well, yes and no. Evolution, all these while, have only searched through all the possible lifeforms, object shapes, idealized forms, whatever you can conceive, using a very crude method of trial and error that closely resembles the perturbation that cutting edge physics theorist use to approximate Unified theories. Whatever characteristics that the agents may have that can help him given the existing conditions would be played out and then depending on what characteristics survive the conditions, the evolution process duplicates or eliminates the characteristics according to the fitness assessed. As such, evolution have so far been a slow and extremely painful process of extinction, disasters. The intensification of the use of deduction by man has allowed the evolution to speed up. Logical deduction has allowed quicker elimination of flawed characteristics or strategies for interactors and so they are not even played out in reality. Technologies are products of elimination both by deduction and by the market. The residual stuff that remains are basically what’s left after evolution has stripped it of its unfit cousins. Nature has essentially created man, who in turned, emulated the same innovation (ie. evolution process) that spawned the specie of homo sapiens itself in an attempt to ground its kind in the entire of a new reality – a science-tech reality.
The problem (a sort of disequilibrium occurs) when the changes in fitness landscape triggered by endogenous factors (in this case the emergence and proliferation of products of deductive evolution) has arisen a little too fast for the evolution algorithm of nature itself to catch up. Evolution is on-going because the emergence of a new strategy or at least the manifestation of it can easily alter the fitness landscape and changes the fitness of existing strategies that may have worked well for a long time (and thus harder to fade away).
The appearance of technology – a product of deductive evolution sent out ripples across the fitness landscape that radically altered the fitness of individual characteristics because products of deductive evolution are often able to extract itself from existing manifestations (all the intermediate evolving stages were transversed in the minds of the innovator). This made it hard for the other interactors, with strategies that are rendered useless, to be able to adapt quick enough. Because of that, man has taken a big bold step to dictate the paths of evolution, to alter genes, to tailor species to the new fitness landscape after the rise of technologies that caused the original patterns of existence to undergo an overhaul. I must say, this may have been one of the natural pathways evolution has decided to assume. Mankind have been selected through this mindless innovating algorithm to further its function. Nature overseen the process and will continue to oversee it. Nature cannot cease to be.
Nature, is essentially just a set of laws, forces governing everything. That carbon was chosen to be the main elemental building block of life is perhaps a result of evolutionary process itself. The rest that we classify as nature are mere manifestations of these laws. Man’s being is part of this algorithm, and so is Science & Technology, a subset of man, and thus Nature itself.
The original entry I wrote on my personal blog can be accessed here.
I guess ERPZ recommends too much readings sometimes and so I think you could try watching more videos. Charles Anderson talks about his work and especially that with globe skimmer dragonflies on TED.com. It is interesting how he made the discovery of the migratory route of the globe skimmer dragonflies just through rather informal research himself; cycling through the island of Maldives and counting dragonflies, calling friends to ask them which time of the year they observed swarms of dragonflies out there. His spirit of inquiry of nature is admirable.
Students of General Paper who are into Science & Tech questions should definitely watch a presentation by Kevin Kelly on the evolution of technology. He asks the question, ‘What does technology wants?‘ in the evolution kind of way; a little like questioning what the genes are trying to achieve and what each organism is trying to do as it lives life. He tries to identify the trends of technology, the direction everything is heading towards, comparing it with biology – where there is increasing complexity, diversity, ubiquity and such. He even defines technology as the seventh kingdom of life, integrating the man-made with nature, reconciling the arguments on man versus nature.
Interestingly, this issue that Kevin Kelly touched on is something I visited in the past on my personal blog. At that time, I was reading Origins of Wealth by Eric D Beinhock and was introduced to the idea of complexity. I was fascinated by it and believed that the idea of evolution as a proliferation of ‘experiments’ had great applicability beyond Biology and Economics. It’s such a pity I loaned out the book and seriously have no idea who it is with.
If TED.com is not enough for you, there’s always Academic Earth, which is way more academic in that it is practically university course lectures.
I’ve previously read Shock Doctrine and written a review on my personal blog; it was a time before ERPZ started and became active. Here’s a reproduction of the original review:
After 2 months of reading I finally finished Naomi Klein’s powerful book, Shock Doctrine. It was a long ride deep into the dark old mines of history on the different ‘economic revolutions’ all around the world: Argentina, Chile, China, Russia, Bolivia and Poland. It was a book that was written with intentions to put down Milton Friedman, clearly anti-corporatist and in some sense, anti-globalization. From this book I understand finally how the term ‘anti-globalization’ have been mis-interpreted by so many people, even myself. I once thought that it means being against the integration of cultures, economies and companies but then I realised it gets way deeper than that.
The idea of anti-globalization is usually used to mean being against the way the phenomena is taking place in our world, that inequality is rising and corporates are like taking over the world while people in poor countries work in sweatshops, suffer in silence and endure the hardship only to realise generations later that nothing changes. It is the discovery of a certain helplessness in the bottom layer of the world. Shock Doctrine is clearly about that, and more.
In a clear but otherwise way too long writing, Naomi presented a very complete picture of how pure ideology-driven economist are used by corporates and government to advance their self-interest. And of course, in a capitalistic perspective, self-interest is just profit and money. She didn’t over turn free market theories on how a perfectly free market is able to dilute power and increase freedom but she did show that the approach that allows for extreme free market is not exactly compatible with democracy and worst of all, economist have been naive about how a free market can be brought to exist. Case after case cited in the book, firms are privatize just be selling it out to the private sector without proper valuation of the assets and this hasty act would not only delay the attainment of a market equilibrium that would be at least more socially optimal but also create new forces that increases the inertia of the market. In other words, it makes the market less free.
In the area of corporate America and politics, Naomi is suggesting that the corporate people have penetrated politics too deeply with CEOs becoming civil servants in top positions of the government and politicians being lobbied by powerful companies with CEOs receiving incomes more than 400 times the average person on the street. And because of that, government becomes ran like corporations, public sector jobs being slashed and direct public spending is reduced while outsourcing (locally, giving contracts to companies) all the functions that can be done by the private sector. Worst, it is infected by a touch of cronyism; and this probably explains why contracts are rarely distributed by bidding and that the contracts concentrate in the hands of the few big firms that are always ‘aiding the government’ with ‘planning’.
It has been a good read anyways and while Naomi Klein has a rather extreme stance, my reading of Joseph Stiglitz (Globlization & its Discontents as well as Making Globalization Work) have helped me appreciate the gravity of the matters she was talking about and I could understand her thinking. As always, the writer do give us a gleamer of hope about what the future may turn out to be when the ‘Shock Wears Off’ and how we can prevent similar stuff from happening again. I would recommend this book for people who have no fear of heavy non-fiction reading, a thorough interest in learning how and why corporate America is seen in bad light.
As I was mentioning a couple of weeks back, I have been reading Thinking Strategically by Avinash Dixitt and Barry Nalebuff. This is a pretty old book, being first published in 1991 and the version I was reading is the 1993 paperback re-issue – there was no more revisits to this book by the authors since then but it’s been in print until now. I believe it’s largely used as readings for undergraduate economics students as well as students of business or management schools.
The 2 authors are great teachers of Game Theory in Princeton and Yale and have often adapted the principles this somewhat mathematical subject to the less mathematical real world. Thinking Strategically is a great attempt at discussing strategic thinking that follows from game theoretical analysis for the layman.
The good thing about ideas on strategic thinking is that their principles hold even when the examples they are attached to often become obsolete or arcane – that is not to say that Thinking Strategically features arcane examples. Most of the examples used to bring ideas across in the book are simple, often bordering trivia but they illustrate the essence of the concepts and can be used to explain the principles for similar but more complex issues. One of the case studies brought up that I particularly love is the one about a three-way duel where we have 3 shooters of varying abilities.
Each shooter fires at someone (or something) each round; there’s is fixed order as to who gets to shoot first. The one who’s allowed to shoot first is a poor shooter with an accuracy of only 30%, the second has an accuracy of 80% and the last is a sharp shooter who shoots with an accuracy of 100%. The question is that if you’re the first shooter and allowed to go first, who would you choose to shoot?
An analysis of this “game” gives us a surprising but convincing result. If you choose to shoot the average shooter, and succeed, you will definitely lose because the next in line would be the sharp shooter and he would shoot you. If you choose to shoot the sharp shooter and hit, the average shooter will shoot you, leaving you with a 20% chance of survival. And even if you survive, you only have 30% chance of hitting him later. You might say, this mediocre shooter is so lousy, he’ll probably have to lose anyways. But you can actually raise your chances of winning by choosing a more intelligent strategy: To fire into the air.
This way, the average shooter will get his turn and attempt to shoot the sharp shooter since shooting you and succeeding mean he’ll have to die when the sharp shooter’s turn comes. If he succeeds, the mediocre shooter gets to try his hands at killing the average shooter. If he fails, the sharp shooter will immediately kill him and that once again, leaves the mediocre shooter with a chance of 30% to kill the sharp shooter. The somewhat counter-intuitive strategy of shooting at no one raise the chances of the mediocre shooter winning substantially.
The principle alluded by this example is that if you’re a weak player; it is wise to allow the stronger players to make their moves and get rid of all each other before making a move and fire your best shot at the one left standing. Now that we surface the principle, the logic of such a choice becomes more intuitive.
Thinking Strategically is a great read for students who likes to think and don’t mind re-reading some of the statements in the book a couple of times to understand the explanation behind some strategic moves. It teaches an important skill of looking forward and reasoning backwards and shows you the power of its application in all sorts of “games”. The book might make you feel like you’ll become smarter but trust me, it’s not that easy to apply strategic thinking that quickly in real life and often, we need a degree of foresight that we would almost definitely lack.
The Duck is about arguments and rhetoric, which are aspects of writing and presentation that is usually missing in our General Paper classes. We have extremely few lessons where we truly tear apart arguments and examine rhetoric used by writers, politicians, activist. Getting to know how to avoid bad arguments and thereby make good ones would not only help lawyers in court but an ordinary student when it comes to presenting his/her ideas during lesson, trying to engage peers in a project/idea as well as General Paper writing.
The Pig, on the other hand, examines arguments made by others – basically a GP lesson for each of the text or passage examined in the book. It claims to hold thought experiments but basically Baggini is merely making readers think twice about arguments or scenarios presented and the ideas behind them. I didn’t quite read the books but simply browse through them. Even if they don’t present the topics well, they are good starting point for how you should actually be studying GP.
This boxer day came with reads as well, ERPZ decided not to rest on the day after Christmas so here’s your reads for this holiday weekend, almost all from The Economist’s latest double issue’s Christmas Specials.
We first have Arguing till Death, a lesson for America from history’s greatest Western Philosopher, Socrates’ life. I got introduced to Aristophanes’The Clouds through the article and is pleasantly surprised by the sort of humour ancient Greeks were capable of.
Hi There discusses politeness and courtesy in the English Language and the effect of this spread of English Language on the world today. The other talks about the virtues and motivations of being a foreigner in the world today and on the same issue is an article, A Ponzi scheme that works that looks into the migrant society of America today and the allure of it.
For viewing pleasure, How to make a splash in social media by Alex Ohanian. It’ll only require about 4 plus minutes of your attention; a short time before you dash off to the next party. Ohanian really gives a strong message about how the Internet works and how you might be able to ride on it to help you with a cause, but like what he says in the end, ‘you are not going to be in control’.