Tonight I will be meeting friends in a restaurant (tavernas have existed for at least 25 centuries). I will be walking there wearing shoes hardly different from those worn 5,300 years ago by the mummified man discovered in a glacier in the Austrian Alps. At the restaurant, I will be using silverware, a Mesopotamian technology, which qualifies as a “killer application” given what it allows me to do to the leg of lamb, such as tear it apart while sparing my fingers from burns. I will be drinking wine, a liquid that has been in use for at least six millennia. The wine will be poured into glasses, an innovation claimed by my Lebanese compatriots to come from their Phoenician ancestors, and if you disagree about the source, we can say that glass objects have been sold by them as trinkets for at least twenty-nine hundred years. After the main course, I will have a somewhat younger technology, artisanal cheese, paying higher prices for those that have not changed in their preparation for several centuries.
Full Story: Salon: The Future Will Not Be Cool
What Taleb fails to mention is that although perhaps he and his dinner companions will be civilized enough not to partake, many of the people in this restaurant will spend much of their evenings staring and glowing rectangles instead of talking with each other — for whatever that’s worth.
Still, he brings up at one point something interesting, which is thinking about what we will subtract in the future, rather than what we will add. From The Verge’s interview with Warren Ellis:
I’m in the middle of writing a thing for Vice right now, and I opened it by talking about how we can measure the contemporary day by the things that have become absent. Things we perhaps only notice peripherally.
For instance, here in Britain, the soundtrack of every single early morning (except Sundays) was the hum and crunch of a milk float. I don’t know if you had these in the States? Electric light vehicles stacked with crates of milk for doorstep delivery. Twenty years ago they were a permanent feature of the soundscape. Today they’re almost all gone, because home delivery got killed by cheap milk in supermarkets. So, if you’re of a certain age, there’s a gap in the ambient soundscape. That denotes futuricity (which may not be a word) just as strongly as the absence of great mountains of horseshit in our cities denoted a futuristic condition in the 1950s.
Likewise, the presence of condoms and the pill is felt by the absence of population.
More recent stuff from Taleb:
How To Build An Antifragile Career, wherein Taleb claims that artists and other creative people should have a “robust but not mentally taxing day job” instead of making a living from their creative work — do jobs like that even exist anymore?
This year’s Edge question was: “What scientific concept would improve everybody’s cognitive toolkit?” There are some good but somewhat boring answers, like Susan Blackmore’s or Kevin Kelly’s. But here are some of the more interesting ones I found:
I would especially recommend reading both Carr’s and Lehrer’s.
There are a ton of these, so I haven’t read them all, so there could be some gems out there I missed. What are your favorites?
If I’d been asked, I’d have chosen one of the following:
1. The idea of systematic ideology - that people choose what to believe based on ideology, not reason (an idea also supported by research indicating that facts can actually backfire when trying to change someone’s mind). Systematic ideology, named by George Walford, was proposed in 1947 by Harold Walsby. The idea is now being pursued by the Cultural Cognition Project at Yale Law School, though they don’t use the term and may not be aware of Walsby’s and Walford’s work.
Photo by Andrew Horne
it’s time for a fundamental reform: Any person who works for a company that, regardless of its current financial health, would require a taxpayer-financed bailout if it failed should not get a bonus, ever. In fact, all pay at systemically important financial institutions — big banks, but also some insurance companies and even huge hedge funds — should be strictly regulated.
Critics like the Occupy Wall Street demonstrators decry the bonus system for its lack of fairness and its contribution to widening inequality. But the greater problem is that it provides an incentive to take risks. The asymmetric nature of the bonus (an incentive for success without a corresponding disincentive for failure) causes hidden risks to accumulate in the financial system and become a catalyst for disaster. This violates the fundamental rules of capitalism; Adam Smith himself was wary of the effect of limiting liability, a bedrock principle of the modern corporation.
Nassim Taleb “lowers” himself to doing journalism and writes at the Huffington Post:
The story is as follows. Last year, in Davos, during a private coffee conversation that I thought aimed at saving the world from, among other things, moral hazard, I was interrupted by Alan Blinder, a former Vice Chairman of the Federal Reserve Bank of the United States, who tried to sell me a peculiar investment product. It allowed the high net-worth investor to go around the regulations limiting deposit insurance (at the time, $100,000) and benefit from coverage for near unlimited amounts. The investor would deposit funds in any amount and Prof. Blinder’s company would break it up in smaller accounts and invest in banks, thus escaping the limit; it would look like a single account but would be insured in full. In other words, it would allow the super-rich to scam taxpayers by getting free government sponsored insurance. Yes, scam taxpayers. Legally. With the help of former civil servants who have an insider edge.
I blurted out: “isn’t this unethical?” I was told in response, “We have plenty of former regulators on the staff,” implying that what was legal was ethical.
He goes on to note:
The more complex the regulation, the more bureaucratic the network, the more a regulator who knows the loops and glitches would benefit from it later, as his regulator edge would be a convex function of his differential knowledge. This is a franchise. (Note that this franchise is not limited to finance; the car company Toyota hired former U.S. regulators and used their “expertise” to handle investigations of its car defects). […]
The more complicated the regulation, the more prone to arbitrages by insiders. So 2,300 pages of regulation will be a gold mine for former regulators. The incentive of a regulator is to have complex regulation.
He doesn’t offer any remedy, but it does make more clear something I’ve been wondering about since I started following him: on the one hand, he calls himself a libertarian and skewers regulators, and on the other he says stuff like this:
Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.
I’ve always wanted to ask him about this apparent contradiction: who exactly is supposed to do this banning of derivatives and why should they be trusted? This article gives some clarity: he thinks there should be rules, but they shouldn’t be overly complex, because that breed corruption.
The idea that we should have hard and fast, clear rules as opposed to “regulation” is supported by the failure of the SEC’s revision of certain firms’ debt-ratio requirements. From Reason:
In 2004, the international Committee on Banking Supervision issued Basel II, an accord on banking regulation. In its wake, the SEC revised its regulations to allow five broker-dealer firms with more than $5 billion in capital—Lehman Brothers, Bear Stearns, Merrill Lynch, Goldman Sachs, and Morgan Stanley—to participate in a voluntary program that changed the way their debt was calculated. The existing net-capital rules required firms to keep their debt-to-net capital ratios below 12-1 and to issue warnings if they started to get close to that. Under the new rules, broker dealers increased these ratios significantly. Merrill Lynch, for instance, hit 40-1. This was possible because the rule changed the formula for risk calculations and instituted more subjective, labor-intensive SEC oversight in place of hard and fast guidelines. “They constructed a mechanism that simply didn’t work,” former SEC official Lee Pickard told The New York Sun on September 18. “The SEC modification in 2004 is the primary reason for all of the losses that have occurred.”
So I’m guessing Taleb draws a line between banning a practice and “regulating” it - and between having rules that banks must follow and “regulating” them. It’s an interesting distinction and I wonder what other self-styled libertarians would think about it.
Taleb also notes how the debate over government and regulation goes back to Ancient Greece at least - which is a discouraging reminder that almost any modern debate we have on almost any subject goes back for centuries. It’s enough to make you want to live in a bathtub and nourish yourself onions.