Thoughts on tails and Hayekian (neo) liberal economics. The standard story is that markets “learn”—absorbing trades and propagating the implicit information by setting prices. It’s sufficiently intelligent to bring me tea from Japan. But tails *can’t* be learned... Image
They don’t occur often enough to train the reenforcement algorithm that the price system runs. When they do, their surface logic is unrepeatable (GameStop, really?)
Tails can, however, be reasoned about. We can think about what would be out of scope, even if we can’t anticipate its details. We can ask if this or that profit is on some sense “unreasonable”, emphasis on reason, not inference.
This is part of Taleb’s style—his books, beginning with Black Swan, incorporate narrative, philosophy, surprising turns in a story. Stories have logics, but not ones that a machine can learn.
Systemic risks are the obvious places the price mechanism fails—but it fails in more quiet ways, on the individual level; it fails people. Health insurance is an obvious example but (IMO) so is the student loan bubble, which harms both students and Universities.
Our societies are increasingly run by an efficient moron—a kind of magician’s apprentice. Whether you describe it as an absence of reason, judgement, or wisdom, the system’s inhumanity is of a particular sort, the self-driving car.
It’s more than a misspecified model—the tails can not be learned. Too rare and idiosyncratic—there’s no well-specified model waiting. (BTW, is Mandelbrot taught in Econ departments?)
I’d add another part of the market’s u reason is the magnification of heuristics that the system has trained in to its most successful performers—see, e.g., the hedge funds and their returns.
Tails can be expected but IMO the market teaches the wrong lessons about what to do next.
“Easier to imagine the end of the world”. An obvious counter power to the price mechanism are the online publics, able to organize and act on previously unimaginable scales (for better or worse, e.g., and IMO, the 2016 election)...
You can never predict the nature of a tail, but it is not implausible that (for example) online publics could lead large scale rent and loan repayment strikes. Probably with a lot of memes.
Not to declare for either side in that matter—although I do have strong opinions about the (surprising) harm the student loan system has done to universities, their missions, and their teaching and scholarship.
I agree. A functional jubilee needs to do more than forgive debt—it needs to do so by introducing new logics into the market. (We already do forgive debt occasionally—e.g., bankrupcy, eventually—but a jubliee is a social and political matter.)
The "IYI"—the thinker-who-is-not-a-thinker—is the classic victim of the tail. Simultaneously in awe of a fragment of the truth, and of his own intuition—which is really, in the end, a product of institutions briefly isolated from instability.

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More from @SimonDeDeo

7 Apr
.@ycombinator as the apex predator of gifted programs, middle-class testing culture, and "the Stanford Marshmallow Prison Experiment". Pretty killer lede in @ben_r_hoffman's response to Paul Graham's "lessons to unlearn". benjaminrosshoffman.com/approval-extra…
Related: @dellsystem's Abolish Silicon Valley, which is in part a bildungsroman about escaping this "final boss" of the meritocracy.
Ben puts together a lot of pieces of the Y Combinator story, which appears to narcissism and splitting on a billion-dollar scale. Gatekeepers like Altman and Graham impose arbitrary, rapid fire demands on applicants—and interpret obedience to their whims as excellence.
Read 8 tweets
6 Apr
Related to something I learned from a @gwern essay. When you find a chemical that improves performance, you have to ask—why doesn't my body make it already? Evolution is not a moron. Caffeine, nicotine, modafinal, LSD. You can't live your life on them, "or we already would."
Always possible that the only way to synthesize the chemical is through some intermediate and highly toxic process. But evolution is pretty handy with proteins: "it can fold a crane".
Right—"hey, we built a society that involves poisoning yourself". That reminds me of the @PaulSkallas / Neal Stephenson / Kim Stanley Robinson point: we'll never live in space, space sucks and wants you to die.
Read 43 tweets
5 Apr
Today in cascading discoveries. I cleaned out the MacBook Pro and, because I live on the edge, replaced the thermal paste on the CPU/GPU. All of a sudden, the battery started draining while the system was plugged in. @trishankkarthik was right! I ruined something. BUT...
I thought through the problem a bit. Why would improving heat management lead the battery to drain faster? One thing I noticed is that I was now running my CPU at 3.5 GHz rather than 3 GHz...
Which is presumably because the thermal management is better and the system doesn't have to throttle for heat as much. But this also means that more power is draining. I open the panel where the power strip is, and notice the fault light is on...
Read 7 tweets
25 Mar
So many cognitive science teachable moments in this utterly fascinating and self-aware account of online sex work by @Aella_Girl. e.g., below—“Theory-theory” vs “simulation-theory”. AG will be on @breakth3rules this evening with @giantgio. knowingless.com/2018/11/19/max…
How many layers of recursive thinking are going on when a sex worker who talks about feminism, IQ, and manipulating people online agrees to this debate format? Poll below...
@Aella_Girl arguing the anti-feminist position should be taken at level...
Read 19 tweets
25 Mar
Two ways of thinking about mathematics: as a computational process (Hilbert, Turing) unfolding in time, and as a static object (e.g., our epistemic networks in “explosive proofs” paper)...
The latter style has (in my memory) greater prestige. Consider the definitions of open, closed, and compact sets in point set topology—often in a “static” form that asserts the existence or non-existence of objects with properties, rather than methods for constructing them.
The idea that mathematical claims are process claims, rather than property claims, still feels alien to me. Even the unfolding of a proof feels “at one remove” from the truth being established.
Read 16 tweets
24 Mar
Stunning chart via @PaulSkallas. Current student loan debt to USG *alone* is $1.4 trillion. Total size of US mortgage market is only $10 trillion.

What is the *true* value of the college degree? What happens if employers stop valuing it? What happens if students stop paying?
This, to me, is crazy. IMO college education is extraordinarily misunderstood and mispriced. Much of it is “bubble” value—informally, “the hardest thing about Harvard is getting in”—that could decline precipitously.
e.g., not hard to imagine curriculum and staffing changes that meant CS departments just stopped teaching students how to code. (Something similar has already happened in many classics programs: you don’t need to learn a classical language to get a degree in classics.)
Read 30 tweets

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