[W]here the accelerating pace of change should have prompted more caution, the routinization of risk management encouraged precisely the opposite. The idea that risk management had been reduced to a mere engineering problem seduced business in general, and financial businesses in particular, into believing that it was safe to use more leverage and to invest in more volatile assets.
Of course, risk officers could have pointed out that the models had been fit to data for a period of unprecedented low volatility. They could have pointed out that models designed to predict losses on securities backed by residential mortgages were estimated on data only for years when housing prices were rising and foreclosures were essentially unknown. They could have emphasized the high degree of uncertainty surrounding their estimates. But they knew on which side their bread was buttered. Senior management strongly preferred to take on additional risk, since if the dice came up seven they stood to receive megabonuses, whereas if they rolled snake eyes the worst they could expect was a golden parachute. If an investment strategy that promised high returns today threatened to jeopardize the viability of the enterprise tomorrow, then this was someone else’s problem. For a junior risk officer to warn the members of the investment committee that they were taking undue risk would have dimmed his chances of promotion. And so on up the ladder.
On not blowing the whistle, and the loneliness of being right:
But what of doctoral programs in economics (like the one in which I teach)? The top PhD-granting departments only rarely send their graduates to positions in banking or business—most go on to other universities. But their faculties do not object to the occasional high-paying consulting gig. They don’t mind serving as the entertainment at beachside and ski-slope retreats hosted by investment banks for their important clients.
Generous speaker’s fees were thus available to those prepared to drink the Kool-Aid. Not everyone indulged. But there was nonetheless a subconscious tendency to embrace the arguments of one’s more “successful” colleagues in a discipline where money, in this case earned through speaking engagements and consultancies, is the common denominator of success.
Those who predicted the housing slump eventually became famous, of course. Princeton University Press now takes out space ads in general-interest publications prominently displaying the sober visage of Yale University economics professor Robert Shiller, the maven of the housing crash. Not every academic scribbler can expect this kind of attention from his publisher. But such fame comes only after the fact. The more housing prices rose and the longer predictions of their decline looked to be wrong, the lonelier the intellectual nonconformists became. Sociologists may be more familiar than economists with the psychic costs of nonconformity. But because there is a strong external demand for economists’ services, they may experience even-stronger economic incentives than their colleagues in other disciplines to conform to the industry-held view. They can thus incur even-greater costs—economic and also psychic—from falling out of step.
Finally, this bit that reveals what happens when you have large stores of legacy data, combined with a dramatic drop in the costs of analyzing it:
The last ten years have seen a quiet revolution in the practice of economics. For years theorists held the intellectual high ground. With their mastery of sophisticated mathematics, they were the high-prestige members of the profession. The methods of empirical economists seeking to analyze real data were rudimentary by comparison. As recently as the 1970s, doing a statistical analysis meant entering data on punch cards, submitting them at the university computing center, going out for dinner and returning some hours later to see if the program had successfully run. (I speak from experience.) The typical empirical analysis in economics utilized a few dozen, or at most a few hundred, observations transcribed by hand. It is not surprising that the theoretically inclined looked down, fondly if a bit condescendingly, on their more empirically oriented colleagues or that the theorists ruled the intellectual roost.
But the IT revolution has altered the lay of the intellectual land. Now every graduate student has a laptop computer with more memory than that decades-old university computing center. And she knows what to do with it. Just like the typical twelve-year-old knows more than her parents about how to download data from the internet, for graduate students in economics, unlike their instructors, importing data from cyberspace is second nature. They can grab data on grocery-store spending generated by the club cards issued by supermarket chains and combine it with information on temperature by zip code to see how the weather affects sales of beer. Their next step, of course, is to download securities prices from Bloomberg and see how blue skies and rain affect the behavior of financial markets. Finding that stock markets are more likely to rise on sunny days is not exactly reassuring for believers in the efficient-markets hypothesis.
Really, just go read the whole thing. And I gotta track down Eichengreen.
This is why incomplete understanding, or mistaking the elegant model for messy reality, is so dangerous.
In the wake of the 1987 stock-market crash, Morgan’s chairman, Dennis Weatherstone, started calling for a daily “4:15 Report” summarizing how much his firm would lose if tomorrow turned out to be a bad day. His counterparts at other firms then adopted the practice. Soon after, business schools jumped to supply graduates to write those reports. Value at Risk, as that number and the process for calculating it came to be known, quickly gained a place in the business-school curriculum.
The desire for up-to-date information on the risks of doing business was admirable. Less admirable was the belief that those risks could be reduced to a single number which could then be estimated on the basis of a set of mathematical equations fitted to a few data points. Much as former–GM CEO Alfred Sloan once sought to transform automobile production from a craft to an engineering problem, Weatherstone and his colleagues encouraged the belief that risk and return could be reduced to a set of equations specified by an MBA and solved by a machine.
Getting the machine to spit out a headline number for Value at Risk was straightforward. But deciding what to put into the model was another matter. The art of gauging Value at Risk required imagining the severity of the shocks to which the portfolio might be subjected. It required knowing what new variables to add in response to financial innovation and unfolding events. Doing this right required a thoughtful and creative practitioner. Value at Risk, like dynamite, can be a powerful tool when in the right hands. Placed in the wrong hands—well, you know.
These simple models should have been regarded as no more than starting points for serious thinking. Instead, those responsible for making key decisions, institutional investors and their regulators alike, took them literally. This reflected the seductive appeal of elegant theory. Reducing risk to a single number encouraged the belief that it could be mastered. It also made it easier to leave early for that weekend in the Hamptons.
As George Box said, "all models are wrong, but some models are useful." Maybe one of the signal characteristics of today's world is that the amount of time you have discover that a model isn't useful, but wrong in a really dangerous way, is shrinking dramatically.
Has anyone looked at the circumstances under which decision-makers or managers come to rely to a dangerous degree on elegant, simple models? The examples of it happening are legion; but are there interesting things we can say about why and when it happens?
This afternoon I was at the dentist, for what felt like the tenth time this year. Come to think of it, that's not far off: for some mysterious reason, I've overcome my aversion to dentistry, and have been getting a huge amount of work done these last few months, including stuff that I really should have dealt with years ago. (A great example I set, both as a futurist and a parent!)
Today the dentist removed an old filling, and started the process for putting on a crown. While I was in the chair, I caught up on a couple SMSes, then thought about just what I didn't like about going to the dentist. The obvious things are that it's painful and time-consuming.... But in point of fact, it doesn't take very long (I'm usually in and out in less than and hour), and if done right, it doesn't hurt (fortunately, my dentist treats novocaine the way a really good bartender treats the vodka in a dry martini). In fact, the worst thing about being worked on is the sound. Even if I'm not feeling anything, that high-pitched whine, and the high-frequency vibrations in my bones... well, they don't set my teeth on edge, but I find every couple minutes or so I have to relax.
So it turns out, it's not that I dislike it. In reality, I don't mind it at all, but managed to convince myself that I didn't like it. Not a bad lesson.
I go back next week for the permanent crown. Bring it on!
This is what Google's sponsored links showed with a conversation with a computer historian friend:
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They're so totally guessing.
I've gotten out of the habit of reading James Wolcott's blog-- the Vanity Fair Web site's nearly pathological need to throw pop-ups on my screen keeps me away-- but maybe I should brave the little subscription offers more often for things like this:
The truth they never teach in J-school is that too much knowledge of a subject can impede the free flow of copy. I know that my own Negative Capability is often best flexed when I know damn all nil about a phenomenon and don't find myself hemmed in by pesky concerns over its quality--you know, taste considerations over whether it's good or bad or a crime against art, that sort of thing.
If anything, having a fully formed opinion can make your job harder to do.
...rather like its subject:
And as Luis Bettencourt, David Kaiser, et al showed, ideas do spread like infections. (Or more specifically, the diffusion of Feynman diagrams in the late 1940s and 1950s can be modeled using the same mathematical models used to understand epidemics.
In the Guardian:
When her husband [Brad] turned 40, Charla Muller couldn't decide what to give him, so she offered him guaranteed sex every night for a whole year. Could they manage it? And what would be the effect on their marriage?
It looks like it should be kind of a fluffy article, but there's actually some interesting stuff in it, largely because of the apparent ordinariness of the author.
Wasn't Brad's initial reaction right - 365 days of scheduled sex is surely a turn off? What about spontaneity? "I felt the opposite. I felt the pressure came off. He no longer thought 'Tonight is a big deal, the only night we'll have sex this month is now, it's got to be really special.' And for me, before nightly sex, I used to guiltily wonder when I was going to have the time or desire. With sex every night it meant that I had to find the time, and that when it happened it was no longer necessarily a big deal." What about the desire? "The idea was that it would come." In fact, Muller writes in her book, 365 Nights: A Memoir of Intimacy, "Regular sex was allowing for feelings of health and wellness that sparked a desire to have more sex. Sex is a great stress-reliever too. A nice relaxing romp with Brad was a wonderful distraction from feeling like the world would crumble if I wasn't out there battling dragons 24/7. I could relax, feel those endorphins pinging around my body and forget about my bad day. And perhaps best of all, our intimate moments were making me feel younger."...
Muller concludes with some advice for married couples: "However often you are doing it, double it. And six months from now, double it again. It's proof that you're here, alive and very together".
From the New Scientist:
A cloned beagle named Ruppy – short for Ruby Puppy – is the world's first transgenic dog. She and four other beagles all produce a fluorescent protein that glows red under ultraviolet light.
A team led by Byeong-Chun Lee of Seoul National University in South Korea created the dogs by cloning fibroblast cells that express a red fluorescent gene produced by sea anemones.
This new proof-of-principle experiment should open the door for transgenic dog models of human disease, says team member CheMyong Ko of the University of Kentucky in Lexington. "The next step for us is to generate a true disease model," he says.
And I know the title's completely tasteless. Without a good garlic sauce, anyway.
Interesting to see what Michael Krasny looks like, after years of hearing him on the radio. Also onstage is Dayton Duncan, Burns' longtime collaborator.
Today I biked in the Fremont Older Open Space Preserve, one of the parks in the Midpeninsula Regional Open Space District. It was only about eight miles, but a huge amount of it was spent getting really familiar with the lowest gears on the bike.
my trusty bike on Hunters Point, via flickr
I'd never been to this park before, but that's not a surprise: the Midpeninsula District, like the Unseen University library, seems to stretch out into an alternate universe, and contain an infinite number of parks, open spaces, hiking trails, etc.. To paraphrase Samuel Johnson, when you're tired of hiking this, you're tired of life.
I parked at the Prospect Road lot, which surprisingly was not overflowing, maybe because it's beside a golf course and there are warnings about flying balls.
danger: flying golf balls, park at your own risk, via flickr
From here, I rode up to Hunters Point. The good news is that you get the hard stuff out of the way first (the Cora Older Trail in particular is a challenge); the bad news is that it's more or less straight uphill to Hunters Point, with a few brief level patches or downhills. But the view is terrific.
Cora Older trail, via flickr
After that, I followed the Woodhills Trail for a bit, then doubled back and picked up the Hayfield Trail, and headed for Maisie's Peak. It turned out that Hunters Point was just the warm-up. Both in terms of difficulty and reward, Maisie's Peak was the real prize.
Maisie's Peak, via flickr
Once I got to the top of Maisie's, I stopped for lunch, wrote a bit, and then headed down. I briefly considered doubling back, but decided to continue south to the Toyon Trail, which I knew would loop pack to the road to my car.
Coyote Ridge Trail, via flickr
One of the things that I consider most fortunate in my life is that when I travel, I manage to go to places that allow you to just wander, and reward your faith that something interesting is just around the next corner. I can't count the number of times I've been in London or Budapest or Singapore, decided to just go a little further or see what was around the next corner or down that side street, and come upon something really incredible.
Seven Springs Trail, via flickr
This kind of biking offers the same sort of experience. I know that I can bike on a path I've never been before, and no matter what, I can get back to the car-- it might end up taking hours longer than I expect, but I'll make it. Toyon Trail turned out to be really fun: a single-lane path, winding through oak and eucalyptus, and mainly downhill. It dumped me out on Hayfield, and from there it was a short ride to the Seven Springs Trail, which I'd meant to ride before.
Seven Springs Trail, via flickr
The trail follows the Seven Springs Canyon, through some great wildflowers, trees, and eventually down into (and out of) the canyon.
Seven Springs Trail, via flickr
It's not a trail I can take the kids on any time soon, though parts of it would be okay for hiking, so long as we took our time. And it's not for someone who likes remote hikes where you're not going to see another soul for hours: you can almost always see someone else on the trail. However, if you like a challenge it's definitely a terrific ride, and I know that there's a lot of the park that I still have yet to explore.
This was the first real off-road bike ride I've done in years. I've been sticking to paved roads and things that are kid-friendly, and not doing more technically challenging stuff. It's past time to change that. (On my way home, I stopped at a sporting goods store and bought more cycling shorts-- that padding is a life saver, or at least it saves certain parts of your life-- and a Camelbak, which basically is a two-liter bottle with shoulder straps and a zippered pocket for your keys. I have a headache now that I'm pretty sure is dehydration-caused, and this summer I'm going to be doing plenty more rides like this, so I expect the investment will pay off. I know a couple people who have them, and swear by them.)
However, I don't want to give the impression that the kids have done nothing but keep me from my natural place on the road. To the contrary: recently their example has revealed a part of me that I hadn't really thought much about.I never thought of myself as an athlete, or as someone who had athletic ability. Sure, when I was at Berkeley I biked to Tilden Park a lot, and that was a pretty strenuous ride, but somehow that didn't count. I played soccer in high school, but as anyone who grew up in Virginia can tell you, that does not count. I did intramural sports in college, but those don't really count, either. The problem is, before high school I was a pretty fat little kid, one of those doughy kids who was unlikely to be picked for teams. Further, I associated "athlete" with sports, which I don't follow, and in high school I thought of athletes as jocks-- which I very definitely was not. Stir in years of academic socialization that encouraged a mild (or not so mild) contempt for the body, and it was easy to think of myself as not interested in athletics-- and more fundamentally, just not athletic.
But my kids swim three or four days a week, and love sports. They're pretty indiscriminate about what they do, and their interests tend to jump around a bit (from swimming to soccer to basketball to baseball to fencing), but still they're pretty consistently enthusiastic about sports in general. My father was (so I'm told) a black belt in judo, and a pretty ferocious skier in his youth. He's 72 now, and still swims a couple miles a week-- and he lives in Colorado, about 7,500 feet above sea level.
When you see your parents and your kids both exhibiting the same abilities, it helps you see them in yourself. So after 25 years of repeating it to myself, the line "I'm not an athlete" is not true at all. All these years I've told myself that, I've been wrong.
Maybe it's a function of my getting older, but I find that I have more energy when I'm better shape, I work better, and of course I feel a lot better about myself. I'm still not quite where I want to be physically, but I'm moving in the right direction. And just as important, the fact that I've been able to drop 50+ pounds and am remaking my body through several hours a week at the gym (and a hundred sit-ups every morning, while the kids hold down the sofa), is a constant tangible reminder that I can change things for the better.
This spring I'm working to finish up some old projects, and start some new things (more on all this later). The pace of change is only going to accelerate. At times like these, being able to look in the mirror (especially a full-length one) and see that I can make changes, or to see a hill in front of me and know that I am able to climb it, is very valuable.
A challenging climb, but completely worth it. You can see the trail leading up to the Point behind my shoulder.
Singing Skynrd's "Sweet Home Alabama" with the Bell Brothers.
And man, do I need to replace that shirt, which is an artifact of my previous body. Maybe I should ignore the credit limit, take a weekend in San Francisco, and Just Do It. I currently have two pairs of jeans and a black jacket that actually fit; everything else ranges from oversized, to cavernous, to drapery.
Just before the Bell Brothers concert. I ordered a small chai latte, and each of the kids wanted a taste. They ended up drinking about 2/3 of it.
So I bought myself another one, and they drank a lot of that, too.
Nonetheless, I figure that even with buying them dinner there, dessert, and drinks, it was less expensive than going to the movies or Great America or any other place we normally go that doesn't have a family membership.
Two data-points from Springwise about small businesses using Twitter to connect with customers. The first is a Korean-Mexican mobile restaurant in LA:
Kogi Korean BBQ takes the taste of Korean barbecue and melds it with the portability of Mexican tacos and burritos for a whole new category of delectable food.... [A]t least as compelling is that the company sells its food primarily through two trucks that are always on the go to new locations in the Los Angeles area—to know where to find them, customers must follow Kogi on Twitter (and more than 7,000 already do). Prices are recession-friendly—USD 2 for each taco—which may account at least in part for the fact that it's not unusual to find hundreds of patrons lined up and socializing each evening while awaiting their turn at the Kogi truck, according to reports....
Take two taco trucks with a unique recipe, add a dose of Twitter, and you get a phenomenon the LA Times refers to as nothing short of "a burgeoning cyber-hippie movement affectionately referred to as 'Kogi kulture'."
Second is BakerTweet:
Everyone knows that baked goods tend to be best when fresh from the oven; the challenge for bakery customers is predicting when that might be. New technology from London agency Poke now removes the guesswork, however, by enabling bakeries to alert their customers via Twitter any time a new batch is done.
BakerTweet allows bakers to keep their customers informed.... Bakers begin by creating an account online with BakerTweet using their regular computer, inputting all the baked items they want to Twitter about along with the body of the Tweet that will be sent out for each. Back in the kitchens, the wall-mountable BakerTweet box captures that information, allowing bakers to simply turn a dial to select which item they want to Tweet about at that moment ("Fresh Buns," for example) and then push a button to send the full Tweet wirelessly to Twitter. Customers following the bakery then get updated immediately when it's time to go get those buns.
[T]he near-total triumph of the ‘online revolution’ (1.4 billion people online, anyone?), which now has the ‘offline world’ more often than not playing second fiddle in everything from commerce to entertainment to communications to politics.
In fact, ‘offline’ is now so intertwined with ‘online’ that a whole slew of new products and services and campaigns are just waiting to be dreamed up by … well… you? Our definition:
OFF=ON | More and more, the offline world (a.k.a. the real world, meatspace or atom-arena) is adjusting to and mirroring the increasingly dominant online world, from tone of voice to product development to business processes to customer relationships. Get ready to truly cater to an ONLINE OXYGEN generation even if you’re in ancient sectors like automotive or fast moving consumer goods.
For this briefing, we chose to focus on hands-on innovation. Which to us means coming up with new goods, services and experiences. And as this is about current OFF=ON developments, we’re excluding researched-to-death topics like straightforward ecommerce or cross-media strategies....
[C]yberspace as we know it (read: a wondrous world of control and make-believe restricted to desktops at home or in poorly-lit offices, and laptops that don’t venture too far from spotty hotspots) is about to vanish, and will be replaced by something that is everywhere, enabling consumers if not enticing* them to actually venture out into the—you guessed it—real world.
Nothing in it about penis-shaped helicopters, but this Anthony Grafton piece about going to graduate school is pretty good-- the kind of combination of encouragement about the inherent (if quirky) rewards of academic apprenticeship, combined with some (maybe too gentle) warnings about the downside. I particularly like this little "then-and-now" gem:
In the ’60s, as universities expanded around the country and the world, job offers strewed the desks of bright Ph.D. candidates like autumn leaves in Vallombrosa. [ed: This is the kind of thing that separates writers like Tony from us mere mortals. I have no idea what it means, but I feel more erudite just reading that reference.] One friend of mine opened an envelope that had been buried under detritus on his desk and discovered that he’d been offered a job two years before and never even answered.
Not very likely to happen these days, but my father (who got his Ph.D. in 1970, and his first tenure-track job three of four years before) confirms that yes, that's what it was like back then.
While Tony advises readers that they shouldn't "jump [into grad school] before you find out exactly what lies below," though I wonder if it's really possible to "find out" what it's like, or what it'll do for (or to) you with anything approaching exactitude.
Of course you should talk to lots of people, but for most prospective students that universe will only include current students and faculty. The students who will be alternately glowing about grad school and their prospects, or will try to give you the scary "real" story. The faculty will be pretty useless as advisors about the realities of grad school: life looks very different at the head of the seminar table.
On the face of it, talking to students and faculty is a pretty logical decision, but the problem is this: odds are, you're not going to get a Ph.D. and then be a professor at the kind of university you aspire to attend. Further, while they're helpful about the day-to-day reality of school, graduate students are going to be useless sources about the long-term effects of going to graduate school-- either in economic or career terms, or in psychological terms. At the same time, other people who could be very informative-- people who've been ABD for 15 years; people who finished their Ph.D.s and then went to Wall Street, the World Bank, or think tanks; students who dropped out before their orals-- are much harder to track down.
So there's an inverse relationship between the availability of experts to consult, and the likelihood that their expertise is actually going to be useful in your own life.
When I was an undergrad (I was one of those nerdy kids who went straight from college to grad school-- actually, I started taking graduate classes as a sophomore), I never thought about talking to people who'd almost finished the programs I was looking at but dropped out, or people who didn't become academics. It turns out, of course, that it would have been far more useful for me to talk to Ph.D.s who'd gone into business. But those people aren't as easy to find as the ones in the faculty lounge or TA offices.
This is actually an example of a bigger problem that people and organizations face when thinking about the future: we tend to confine our research to cases that are relatively easy to find, and look only at successes (successful cases, organizations, or people), and not at failures. Getting a handle on that space-- or at least a more realistic appreciation of the likelihood of the unexpected happening-- is one of the toughest things you can do as a forecaster, or parent, or human. After all, success is what we want, and it's easy to understand; failure is what we want to avoid, and people fail for all sorts of unpredictable reasons. Success if what a strategy or good decision or first-rate school can bring you; failure is what'll happen if you don't get those things. We don't think explore the possibility that we could get those things, execute properly, and still not reach our goal; but that happens all the time. Success, we think, is comprehensible and predictable (and not largely determined by the economic state of universities and how expansive faculty hiring is allowed to be in any given season); failure is random, or something that'll happen to other people. But in reality, we're probably going to end up one of those other people. We're better off if we know that in advance.
And if we know that the definition of "failure" is sometimes as arbitrary as the forces that determine whether it happens to us or not. I can testify that it's possible to have an interesting intellectual life without being an academic (though having a library card does help). As Grafton notes,
Even if you don’t finish, or finish and don’t wind up as a professor, the skills you learn in grad school can be of value in a range of other venues. Some of my most successful former students work as scholars, teachers or writers outside the academy. But as you might expect, few follow this path without some bitterness. And no wonder. A fair number of professors treat students who leave the academy, even after experiencing terrible difficulties, as renegades and wash their hands of them. Be prepared.
Be prepared, indeed.
First I made it onto BoingBoing. Then Jess' Sad Guys on Trading Floors got nominated for a Webby. Then, I discovered that Princeton professor, Renaissance historian, fellow ex-American Scholar board member, and all-around nice guy Anthony Grafton has finally done something he can be proud of: his son Sam-- who I don't think is named after the character in Shane-- had a hilarious letter read on The Bugle, my favorite podcast of all time. (Bugle 70, near the end. It's the letter about penis-shaped helicopters. I've never heard John and Andy laugh so much at a letter.) Clearly our eventual collective dominance of all media is inevitable.
Indecision Forever points out
Remember that not-at-all ironically named "2 Million for Marriage" (2M4M) protest march being organized by the National Organization for Marriage?... Well, they never really got around to buying the rights to www.2M4M.org.
Hmmm, I wonder if anyone else might have bought it?
Edinburgh professor Geoffrey Pullum launches an attack on "50 years of stupid grammar advice:"
April 16 is the 50th anniversary of the publication of a little book that is loved and admired throughout American academe. Celebrations, readings, and toasts are being held, and a commemorative edition has been released.
I won't be celebrating.
The Elements of Style does not deserve the enormous esteem in which it is held by American college graduates. Its advice ranges from limp platitudes to inconsistent nonsense. Its enormous influence has not improved American students' grasp of English grammar; it has significantly degraded it....
[B]oth authors were grammatical incompetents. Strunk had very little analytical understanding of syntax, White even less.... [D]espite the "Style" in the title, much in the book relates to grammar, and the advice on that topic does real damage. It is atrocious.
Most notably, their treatment of the passive voice is a disaster:
It goes downhill from there. Well worth reading in its entirety.
[T]he bias against the passive is being retailed by a pair of authors so grammatically clueless that they don't know what is a passive construction and what isn't. Of the four pairs of examples offered to show readers what to avoid and how to correct it, a staggering three out of the four are mistaken diagnoses....
The treatment of the passive is not an isolated slip. It is typical of Elements. The book's toxic mix of purism, atavism, and personal eccentricity is not underpinned by a proper grounding in English grammar. It is often so misguided that the authors appear not to notice their own egregious flouting of its own rules.
Jess just pointed me to Passed Out Wookies. These two from the Hall of Fame are extra special. Yet more proof that, as I've been arguing, experiments in collective intelligence show that the Hive Mind is really interested in only two things: cats and dogs doing cute things, and humans doing really stupid things.
Richard Posner writes in this week's Chronicle of Higher Education (maybe accessible if you don't have a subscription, but probably not) about the current financial crisis, and why experts didn't take early warnings about it seriously.
The financial crisis, when it finally struck the nation full-blown in September 2008, caught the government, the financial community, and the economics profession unawares.
We can get help in understanding the blindness of experts to warning signs from the literature on surprise attacks. Before the Japanese attack on Pearl Harbor, there were many warnings that Japan planned to attack Western possessions in Southeast Asia, and an attack on the U.S. fleet in Hawaii, known to be within range of Japan's large carrier fleet, was a logical measure, on Japan's part, for protecting the eastern flank of its attack on the Dutch East Indies, Burma, and Malaya. The warnings were disregarded because of preconceptions (including the belief that Japan would not attack the United States because it was too weak to have a reasonable chance of prevailing), the cost and difficulty of taking effective defensive measures against an uncertain danger, and the absence of a mechanism for aggregating, sifting, and analyzing warning information flowing in from many sources and for pushing it up to the decision-making level of government.
Similar factors made it difficult to heed the warning signs of the 2008 financial crisis. Preconceptions played an especially large role. It is tempting, indeed irresistible under conditions of uncertainty, to base policy to a degree on theoretical preconceptions, on a worldview, an ideology. But shaped as they are by past experiences, preconceptions can impede reactions to novel challenges. Most economists, and the kind of officials who tend to be appointed by Republican presidents, are heavily invested in the ideology of free markets, which teaches that competitive markets are, on the whole, self-correcting. Those officials and the economists to whom they turn for advice don't like to think of the economy as a kind of epileptic, subject to unpredictable, strange seizures.
Amid the serious stuff that the Chronicle of Higher Education reports about hiring freezes, mandatory pay cuts, and other reductions affecting universities these days, is this:
Michael K. McBeath, an associate professor of psychology at Arizona State University, likes to burn some energy in the middle of the day.
So do his colleagues. For years, roughly two dozen faculty and staff members hit the gym for a game of basketball around noon, three times a week.
Now their roster has been cut in half — by anxiety.
As budget cuts have prompted the university to announce that it will shutter more than 40 academic programs, cut 200 faculty-associate positions, and force both faculty and staff members to take unpaid furloughs, far fewer people show up at the gym these days.
Mr. McBeath said many are just too worried about job security to risk an hour of lost work or a supervisor's raised eyebrow over a game of basketball.
This may not sound like a thing, but the decline of informal institutions like these-- weekly departmental get-togethers, faculty-student softball games, and the like-- are troubling.
This weekend we took the kids on a bike ride from Byxbee Park in Palo Alto, to Shoreline Park in Mountain View.
The trail from Byxbee to Shoreline is about 3 miles long, which makes it a lot shorter than the trip via highway. It's one of those rides that gives you a different sense of the geography of a familiar place.
Generally, I find marshes kind of uninteresting-- I far prefer the drama of redwoods, and so a place like Wunderlich Park or Skyline Ridge Open Space Preserve is usually more to my liking-- but if you like birds, this is the ride for you.
Since it rolls through a set of marshes and salt flats, it's a very flat ride. The real challenge comes from the wind, which on Saturday was blowing pretty hard.
Once you reach Shoreline Park, there's the marina and restaurant, so you can have a civilized break before heading back.
Today we took the kids to the Jikoji Zen Center, in the hills above Silicon Valley. They were holding a celebration of the Buddha's birthday (today was just a red letter day for religion, I guess), and I thought it would be interesting for the kids to see it.
I was interested in going for a couple reasons. I've recently been reading about Buddhism (I find it alternately appealing and alien-- a combination of ideas that seem intuitively correct, but very far from my own experience and instinct), and wanted to see the ceremony myself.
The Center is also on the site of the old Pacific High School, which in the late 1960s became famous for its student-built geodesic domes. I've read a lot about PHS, but had never seen the site itself; so when a friend from Peninsula sent around a note about today's event, I thought I had to go.
It's still a beautiful site.
After the ceremony we hiked up to the ridge over the school. On a clear day you can see the Pacific Ocean from the summit, but today the fog was coming in.
I love local news.
A hungry groundhog couldn't see its shadow -- or much of anything else -- after it got its head stuck in a peanut butter jar in Allentown yesterday afternoon.
Unable to see through the label-covered jar, the creature struggled to remove it from its head. Observers trapped the animal under a 55-gallon drum outside a Dunkin' Donuts at Airport Road and Lloyd Street and called emergency crews.
But a volunteer wearing protective gloves was able to move the squirming groundhog to a nearby garden and then remove the jar from its head around 1 p.m.
Futurists always measure their batting average by counting how many things they have predicted that have come true. They never count how many important things come true that they did not predict. Everything a forecaster predicts may come to pass. Yet, he may not have seen the most meaningful of the emergent realities or, worse still, may not have paid attention to them. There is no way to avoid this irrelevancy in forecasting, for the important and distinctive are always the results of changes in values, perception, and goals, that is, in things that one can divine but not forecast. (Peter Drucker)
[h/t to Jess]
The sort of thing that reminds you that while we may all be alike deep down, we're really different on the surface:
I will never forget how I found out that “Blonde Charity Mafia” would be the title of the upcoming reality show about the Georgetown social scene. It was at my annual polo fundraiser, The Courage Cup’s Meadow Matches on June 21, 2008.
And yet, could there be a more perfect name for a reality TV show?
This is great: a protest sign made of worthless currency.
And we think the economy here is bad because it's hard to get financing for the spare 56" plasma screen TV. Zimbabwe has been dealing with inflation so bad, even its $100 trillion dollar note is worthless (and at one point it ran out of money to pay for the license to... print more money. It also then ran out of paper. Comedy gold!).
That's some serious inflation. Suck on it, Weimar Germany! You bunch of wimps. (Interestingly, the same firm that supplied currency-quality paper stock to Zimbabwe until mid-2008 also supplied the Weimar government.)
[via Britannica Blog]
I write about people, technology, and the worlds they make.
I'm a senior consultant at Strategic Business Insights, a Menlo Park, CA consulting and research firm. I also have two academic appointments: I'm a visitor at the Peace Innovation Lab at Stanford University, and an Associate Fellow at Oxford University's Saïd Business School. (I also have profiles on Linked In, Google Scholar and Academia.edu.)
I began thinking seriously about contemplative computing in the winter of 2011 while a Visiting Researcher in the Socio-Digital Systems Group at Microsoft Research, Cambridge. I wanted to figure out how to design information technologies and user experiences that promote concentration and deep focused thinking, rather than distract you, fracture your attention, and make you feel dumb. You can read about it on my Contemplative Computing Blog.
My book on contemplative computing, The Distraction Addiction, will be published by Little, Brown and Company in 2013. (It will also appear in Dutch and Russian.)
The Distraction Addiction
My latest book, and the first book from the contemplative computing project. The Distraction Addiction is published by Little, Brown and Co.. It's been widely reviewed and garnered lots of good press. You can find your own copy at your local bookstore, or order it through Barnes & Noble, Amazon (check B&N first, as it's usually cheaper there), or IndieBound.
The Spanish edition
The Dutch edition
Empire and the Sun
My first book, Empire and the Sun: Victorian Solar Eclipse Expeditions, was published with Stanford University Press in 2002 (order via Amazon).
PUBLISHED IN 2012
PUBLISHED IN 2011
PUBLISHED IN 2010
PUBLISHED IN 2009