cam, 251 words, 0 comments, Black Swan, Nassim Nicholas Taleb, Risk Assumption, Risk Management

Nassam Nicholas Taleb describes a Black Swan as having three properties:

First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurence after the face, making it explainable and predictable.

Taleb neatly divides the world up into mediocristan and extremistan in terms of probability. For instance your chances of being a rock star, a millionare author, etc are very small, infintisimally so where luck plays more in your ascent than talent; this is his description of extremistan. Whereas mediocristan falls within knowable, even gaussian, probabilistic maths; such as human height, etc. Consequently events that inhabit 'extremistan' cannot be predicted even though their are whole industries and professions devoted to providing confidence in this area; such as economists, bankers, etc.

Taleb's thesis can be summed up that 'no-one is a good predictor of anything'. However he differentiates between negative and positive Black Swans. Lasers for instance were a positive Black Swan as they are used in all manner of technology other than what they were intended or originally designed for. However a negative Black Swan for a certain casino - outside of their normal assumptions of risk management - was one of their stars getting mauled by a white tiger. This apparently cost them 100 million, far more than cheating, or any other assumption of risk. (reply)

cam, 176 words, 1 comment, Don Arthur, Clive Hamilton

Don Arthur pens an amusing ode to the potato and Clive Hamilton's philosophy. I suspect Hamilton gets up the nose of most people as the basis of his views is that individuals are unable to perceive through the 'spectacle', the advertising or marketing and are literally slaves to the commodity process and social climbing mores.

This fails incredibly. I do not know anyone who enjoys the half time shows at the grand final or superbowl as an example of how that isn't true. Another good example, I don't own a television. If I was truly a slave to the marketing process as an individual then I would have one. So his philosophy has limitations.

Hamilton's view is also arrogant in that a 'philosopher king' is required to perceive what is going on and save the masses from the spell of commodification. Fortunately there is no shortage of self-appointed moralizers to undertake these tasks and lobby government to ban all manner of behavior and activity in order to save people from themselves.

I feel free-er already. (reply)

cam, 199 words, 0 comments, The Situationists, Plagariasm, Postmodernism, The Postmodern Turn

Early postmodernists grappled with the capability of individuals to see through the conformity that massification (economies of scale) that occur in science based capitalism. For instance, the factory, the media, nation-state based politics, etc.

For a Marxist class reading he believed the factory and capitalism's inherent instabilities meant the working class could see through it and force political revolution. Others such as Kirkegaard and Nietzche believed massification meant the individual was oblivious to the cultural shaping and conformity of ultra-modernist social organization.

The Situationists were with Marx, they believed the individual could see through the 'spectacle' - or consumerist endazzlement - and saw revolution as the end result of piercing that veil. Their solution was ingenious and wonderfully subversive. Best and Kellnor write:

The fundamental goal of Situationist praxis was to reconstruct everyday society and everyday life to overcome the apathy, deception, passivity, and fragmentation induced by the spectacle. The recovery of active existence was possible only by destroying spectacular relations and by overcoming passivity through the active creation of 'situations'.

In other words deconstruction of spectacles through adoption and mockery. This element of plagiarism led the way for modern art, cultural and music forms such as hip hop. (reply)

cam, 223 words, 0 comments, Rome, Violence in Republican Rome, Andrew Lintott

Lintott argues that the solution to violence in 52 BC left control of the city in one group under Pompeius and consequently, any dispute between Pompeius, Caesar and the optimates (Senate) without constitutional compromise would elevate the violence immediately into civil war. The solution of 52 BC where constitutional mos had been stretched to achieve a political solution to demagoguery and urban violence. Lintott writes:

Though urban violence had been suppressed, the feelings associated with it lived on. The optimates, finding that they could not use legal means to control a man they considered the enemy of the republic, decided automatically for force. They could not see clearly enough the dangers of a new civil war, which, though it was not founded on the personally bitterness that characterized the previous one, was to spell the end of republican government.

For Caesar the concept of the republic involved his right to maintain his dignitas, especially his position of patronage over his troops, by any constitutional means possible. When these were of no avail, violence had always been the way for a Roman to right undeserved wrongs.

As Lintott notes, if Caesar had returned as a private citizen he most likely would have faced a political prosecution which Caesar feared would take the form of a biased court and his being surrounded by armed men. (reply)

cam, 43 words, 0 comments, Stephanie Syjuco, Personal Protest

I think this is very cool, Stephanie Syjuco's personal protest against her own bad habits. It reminds me a bit of xkcd's protesting methodology or Father Ted's placards which read "Down with this sort of thing" and "Careful Now". (reply)

cam, 306 words, 0 comments, FInancial Crisis, Market Rationality, Market Irrationality

Chris Dillow writes on Nassim Nicholas Taleb of Black Swan fame:

But this isn't because Taleb had any great insights into the nature of risk. It's because he thought banks' risk managers were idiots, whilst economists didn't think so - not even me. In doing this, however, we were just following economists' standard procedure - of assuming that agents were if not rational then at least not wholly stupid.

For me, all this is very troubling. It suggests that what we economists have to learn from Taleb has nothing to do with the nature of risk - we've all known that - but about others' rationality. We should ditch the assumption - which in a sense is mere courtesy - not only that others are rational but even the weaker assumption that they are nearly so. Perhaps we should indeed regard them merely as "empty suits."

Vs the rationality of irrationality:

Basically, there is some amount of irrationality in the system, but over time, as more and more people seem to be making money against the irrationality, more and more explanations are made for why that irrationality is actually rational. And since the irrational activity goes on for so long, it becomes nearly impossible for most people to really believe that things are so irrational. So, it's not that there's anyone who did anything wrong that needs to be blamed, so much as we need to blame ourselves, for not taking enough time to recognize that what seems irrational in the beginning actually is irrational.

And we are left with the only good thing coming out of a bubble is an excess of capacity in some kind of infrastructure; which in this case seems to be car making capacity and banks. Which we are now propping up with taxpayer money.

Color me unimpressed. (reply)