The Emergent Fool » Politics

The Currency Crisis Is In Your Head

Alex — Wed, 16 Jun 2010 00:25:24 +0000

What in the world do I mean by that? Of course I think the dollar and euro are broken, but what’s the alternative? Gold? Maybe, but it won’t last. Tyler Cowen partially touches on information classification in his book, but does he make the link to currencies in their traditional sense? Before I get to why the crisis is in your head, make sure you get what a “currency” really is:

“We are in the lazy habit of thinking that the flow of the currency in a transaction is the one that matters instead of the actual flow of goods, services, resources, knowledge or participation which flows COUNTER to an exchange currency.

Those real-world currents shaped and enabled by currencies are what make them so valuable and powerful.

The currency itself is actually just a flow of information. But there are two reasons we myopically focus our attention on the currency flow as if it is the one that matters:

1) We are big-brained, symbol-using creatures, and it’s much simpler to us to deal with those nice clean symbols than the actual sloppy flows — dollars are easier to account for than time, random quantities of random things and other stuff which is difficult to count (such as the state of relationships), and

2) The REAL flow is an event which happens in a moment and is gone. If you were NOT there to witness the service being performed, the good being exchanged, or the participation of that person, then once that moment has passed, the only consistent way we have of knowing what occurred is the record we keep of the event. We use currencies to keep records of currents.

I believe this is the single MOST CRITICAL CONCEPT for currency practitioners to grasp. It allows us to break out of bad habits of thinking about currencies in very outdated ways (such as believing they have or should have intrinsic value because precious metals were once used as coins). This allows us to see currencies for what they truly are: formal systems which shape, enable and measure currents which allow communities to interact with those currents.

Let me paint a more concrete picture. Imagine being out for a walk in the snow, and you see a set of small animal tracks where it bounded out from under a hedge and crossed a field toward another shrub. Then you see them end in a sudden deep indentation, with some wingtip marks on extending out from either side. These tracks tell a story — a flow of resources and relationships that took place in that field.

Of course, the story itself has passed. All we have left are the tracks. But the tracks can tell quite a lot to the right set of eyes: what types of animals were involved, how long ago it happened, which direction the bird flew off, etc. This is the role that currencies play in our economy. Actual currents of resources and relationships occurred and currencies are the tracks they left behind. The tracks are very informative to the right eyes, so we use them to make business and policy decisions.”

Source: http://newcurrencyfrontiers.com/wagn/Introduction_to_Currencies

The centralized currency of our governments is undergoing a crisis. But that’s simply evidence that the short-sighted hierarchical system of power in our politics and positively reinforcing system of capitalism have become obsolete in light of our electronic technologies. Recommendation and trust network systems unbiased by the speed of light and low cost of competition are exposing the idiocy of godlike decision makers. Do you really think the emperor cannot be naked in this Day and Age?

The point is NOT that these new systems of aggregative expertise and opinion are and will continue to be “better”. Rather we are on the frontier of extracting patterns from behaviors we haven’t been able to capture before, due to the inferior biological, mechanical, and electronic technologies of the past. The new systems will also become obsolete, and definitely at a faster rate. But do you think we have a say? Unless you think we can slow down or stop the pace of quantification of behavior when everything is becoming electronic?

What do you think about the last slide – Wealth a Living Systems Model? OR do you want to wait a few months or years until “60 Minutes” tells you what to think? That IS the question. Find sources of expertise YOU TRUST and trust yourself to move on when YOU judge them to be obsolete.

That’s precisely what MLK meant by this:
“Power properly understood is nothing but the ability to achieve purpose. It is the strength required to bring about social, political and economic change. … What is needed is a realization that power without love is reckless and abusive, and love without power is sentimental and anemic. Power at its best is love implementing the demands of justice, and justice at its best is power correcting everything that stands against love.”

Now don’t make me quote Eminem or Buddha. :) Once you really understand that this means that the power is within you, you will be able to kill goats with a stare.

Balance the past with Zeitgeist

Alex — Sun, 10 Jan 2010 03:44:46 +0000

Please watch the Zeitgeist Addendum, and RIP: Remix Manifesto

Kafka gave us The Metamorphosis. We have the power to realize our own humility. Being wrong is irrelevant if you learn from your mistakes and prevent systemic risk from such errors. How can we be so content with our wisdom if we continually ignore this vital lesson. As Wikipedia suggests, some people mistakenly dismiss The Zeitgeist Movement of being similar to Socialism, which could not be more wrong. Emergent systems are the building block of The Zeitgest Movement, while socialism tends to ignore incentives between the group and the individual. Most “losers” of history tend to argue that their system of beliefs wasn’t implemented correctly. But they are right! Thomas Sowell suggests that WHO is making the decision is the most important aspect of any system. I urge you to skim this excellent summary of the book.

Zeitgest Movement is a school of thought that grounds itself in its humility and focuses on learning and technology to achieve a kind of Truthocracy I’ve been posting about. The Zeitgesters are working to create a system for continual improvement where the incentives of the individual are aligned with those of the group. Where the decision maker is in a continual iterative effort to harvest every drop of wisdom from the group prior to making the decision. Let’s not be naive though – we have to be honest and humble in this pursuit and continually strive to improve the knowledge gathering algorithms. We must also beware of students bluffing their way to teaching.

“The Internet was not the first technology to disrupt a few business models. From the printing press to the player piano, one generation is always calling the next a pirate”. The aim of copyright law was to aid in learning by BALANCING the rights of the authors and readers (teachers and students). Balance between the copyright and copyleft is the key. Removing the obstacles for a balanced use of the rational and creative sides of the brain is the trick to achieving flow:
“Alice Flaherty argues that creativity is due to a balance of frontal and temporal lobe activity. In other words the trick is not, in fact, to get out of your “left brain” and into your right, but to increase activity in the right hemisphere (or reduce activity in the left) so it matches the activity on the other side.” Source

Awareness vs “Bewareness” is the eternal and internal battle of the present imagination and past “experience”. Our goal then must be to reduce obstacles to balance to create flow in all systems.

Rafe was here more than 2 years ago:
“- Cooperators and defectors co-exist
- “Cooperators survive in clusters”
- “Cooperators can invade defectors when starting from a small cluster”
- One interesting dynamic occurs when two self-sustaining “walker” sub-populations collide into a “big bang” of cooperation which largely takes over the population.”"

So it is very reasonable that I would have never learned this or learned it years from now if i didn’t start Googling my hypotheses. Ultimately the resource focus of Zeitgest will revolve around the speed of learning, which resides within you – your own willingness to learn, teach, and stay humble.

Please watch the Zeitgeist Addendum, and RIP: Remix Manifesto

Then facebook and twitter it (buy a copyleft t-shirt to spread the word and create more balance). You can’t have big bang without them.

Must Read Paper On Overconfidence

kevindick — Fri, 25 Sep 2009 03:27:55 +0000

Via the indispensable Tyler Cowen, a new paper from Johnson and Fowler explores whether overconfidence is, in fact, adaptive. They show that it it is under some very reasonable assumptions. They model competition for resources as a two-player game and then analyze the evolutionary dynamics of populations playing this game.

The basic result is that overconfidence is beneficial in proportion to two factors: (1) the size of the payoff relative to the cost to play and (2) uncertainty about competitor capabilities. There are two optimal strategies for a population, overconfidence (which minimizes unclaimed resources) and underconfidence (which minimizes conflict costs). Unbiased self-perception is always dominated by these strategies. However, an overconfident person can successfully invade an underconfident population while the reverse is not true. So overconfidence is the stable solution.

The direct implication is that resources get destroyed. It is optimal for an individual to be overconfident, but then he ends up fighting with other overconfident individuals, which imposes costs. If you think about it for a minute, this is a pretty important fundamental problem. All of the big societal decisions we face have potentially big payoffs (or avoidance of costs), but it’s really unclear who has the best expertise to make a recommendation. So we get a bunch of “experts” telling us they are absolutely right.

Note that if it is public knowledge how “good” someone is, the “overconfidence premium” goes to zero. This is why forcing experts to make public predictions is so important. Then you can figure out how good they really are.

The Link Between Food & Healthcare Reform

Rafe Furst — Sun, 13 Sep 2009 20:26:04 +0000

Also must-read this Sunday is Michael Pollan’s NY Times Op-Ed piece from Wednesday. Nice cap to my week of ranting on the dismantling of rationality when it comes to lifestyle choices that directly impact one’s health, here and here.

What Obama Needs to Do

Rafe Furst — Fri, 21 Aug 2009 19:49:18 +0000

The old philosophical theory says that reason is conscious, can fit the world directly, is universal (we all think the same way), is dispassionate (emotions get in the way of reason), is literal (no metaphor or framing in reason), works by logic, is abstract (not physical) and functions to serve our interests. Language on this view is neutral and can directly fit, or not fit, reality.

The scientific research in neuroscience and cognitive science has shown that most reason is unconscious. Since we think with our brains, reason cannot directly fit the world. Emotion is necessary for rational thought; if you cannot feel emotion, you will not know what to want or how anyone else would react to your actions. Rational decisions depend on emotion. Empathy with others has a physical basis, and as much as self-interest, empathy lies behind reason.

This is part of a brilliant article by cognitive science and linguistics pioneer, George Lakoff (emphasis mine). His argument about what needs to be done to right the health care reform ship — and more generally in his administration — is to stop denying the above reality and craft a communications strategy that will achieve the (undeniably logical) goals:

As for language, the term “public option” is boring. Yes, it is public, and yes, it is an option, but it does not get to the moral and inspiring idea. Call it the American Plan, because that’s what it really is.

The American Plan. Health care is a patriotic issue. It is what your countrymen are engaged in because Americans care about each other. The right wing understands this well. It’s got conservative veterans at Town Hall meeting shouting things like, “I fought for this country in Vietnam, and I’m fight for it here.” Progressives should be stressing the patriotic nature of having our nation guaranteeing care for our people.

A Health Care Emergency. Americans are suffering and dying because of the failure of insurance company health care. 50 million have no insurance at all, and millions of those who do are denied necessary care or lose their insurance. We can’t wait any longer. It’s an emergency. We have to act now to end the suffering and death.

Doctor-Patient care. This is what the public plan is really about. Call it that. You have said it, buried in PolicySpeak. Use the slogan. Repeat it. Have every spokesperson repeat it.

Coverage is not care. You think you’re insured. You very well may not be, because insurance companies make money by denying you care.

Deny you care… Use the words. That’s what all the paperwork and administrative costs of insurance companies are about – denying you care if they can.

I was a fan of Obama’s unification approach when he was campaigning and was hopeful that his opponents would come around and see this as sincere (which I believe it is). At this point though, that sincerity is being abused by a small, selfish and powerful elite who are not interested in seeing the right to adequate health care universally applied. And these opponents are masters of the communications strategy Lakoff is suggesting, which is what has been fueling the town hall screamers, tea-baggers and FOX News “pundits”.

It’s impossible to unify with people who are not interested in unification. And I agree with Lakoff that if the administration adopts the necessary communication strategy to complement its logic and sensibility, it will have a much better chance of getting back support of the conservative public for the goals we should all be unified on.

Something Fishy About Mercury

Rafe Furst — Mon, 10 Aug 2009 22:23:20 +0000

Here is a fascinating discussion on NPR’s Forum from earlier this year on the subject of mercury and fish:

If you’ve listened to this the whole way through (which you should), I’m curious as to how it will affect your habits, if at all. And why?

Nature Minus Humans?

plektix — Tue, 05 May 2009 22:16:05 +0000

From the “nothing is quite so simple” department, a Boston Globe article this week points out a hidden legacy of the conservation movement: The expulsion of native peoples from their land.

Starting with Yosemite in the late 19th and early 20th centuries, the pattern of forcing indigineous civilizations from their ancestral land in order to create wildlife reserves and national parks has been repeated across the country and the world.

The conflict is… compelling the conservation movement to grapple with the effects of its own century-long blunder, and with its origins as an American movement driven largely by nature romantics and aristocratic men determined to protect their hunting grounds. Not only has it dispossessed millions of people who might very well have been excellent stewards of the land, but it has engendered a worldwide hostility toward the whole idea of wildland conservation – damaging the cause in many countries whose crucial wildland is most in need of protection.

The article describes how indigineous peoples threatened with displacement across the globe have begun to band together to force a change in the conservationist mindset that humanity and nature are antithetical.

Reporting like this is why the Boston Globe needs to stay in business.

Powerful Images

Alfred Hubler on Stabilizing CAS

Rafe Furst — Thu, 23 Apr 2009 15:33:43 +0000

With his permission, I am posting an email thread between myself and Alfred Hubler. I had contacted him on the recommendation of John Miller when Kevin and I were posting on the possibility of dampening boom-bust cycles in the financial markets through policy or other mechanisms. Here’s what Hubler had to say:

I would compare large scale boom-bust cycles to catastrophic forest fires.

Two thoughts:

Policy impacts only small forest fires: When small forest fires are suppressed, large forest become possible and, more importantly, the untorched forest changes the local climate and therefore the forest may grow faster and faster. At some point forest fires are potentially so devastating that policy makers have no choice but to suppress them. Eventually the amount combustible reaches a threshold where the forest fire can not be prevented, the catastrophic forest fire takes place, and the cycle starts over.

Self-adjusting systems suppress catastrophic boom-bust cycles – therefore catastrophic wildfires are rare in un-managed forests: self-adjusting Systems avoid chaos [1,2]. However such adaptation to the edge of chaos occurs only if the system parameters change slowly, compared to the dynamical variables, i.e. if we change policy faster than the period of the boom-bust cycle, then self-adjustment will not suppress them. The good news is, that almost any type of self-adjustment suppresses chaos[3].

[1] P. Melby, J. Kaidel, N. Weber, A. Hübler, Adaptation to the Edge of Chaos in the Self-Adjusting Logistic Map, Phys.Rev.Lett 84, 5991-5993 (2000): http://server10.how-why.com/publications/2000/Melby00.pdf

[2] P. Melby, N. Weber, A. Hübler, Robustness of Adaptation in Controlled Self-Adjusting Chaotic Systems, Phys. Fluctuation and Noise Lett. 2, L285-L292 (2002): http://server10.how-why.com/publications/2002/Melby02.pdf

[3] T. Wotherspoon and A. Hubler,”Adaption to the Edge of Chaos with Random-Wavelet Feedback” is accepted by the Journal of Physical Chemistry: http://server10.how-why.com/blog/chemical.pdf

I then asked him if he had any specific thoughts on either Sumner’s proposal or synchronized chaos. Here was Hubler’s response:

In desert oasis, larger, more specialized ants often dominate. Smaller non-specialised ants have smaller populations and competition pushes them to boundary of the oasis. However the small, non-specialised ants species are around for very long periods of time whereas the larger, specialised ant species are often wiped out by a change in climate and catastrophic events. The smaller ants may initially suffer from a catastrophe too, but have a higher likelihood of survival, and even thrive temporarily after the catastrophe, since the competition from the larger ants is gone. The group around Jim Brown, at UNM, did work on ants and we just started work on bacteria colonies in changing environments.

By analogy, I conclude that boom-and-bust cycles are more harmful for larger and more specialised organizations which flourish in a certain environment, and disappear if this environment changes suddenly. A forest fire helps smaller plants and increases diversity.

Yes, chaotic synchronization sounds attractive and I have published many papers on this topic over the past 20 years. It work wells with simple nonlinear oscillators but it does not seem to work with living organisms, such as yeast cells. We do not understand that. Maybe there are adaptive processes or evolutionary advantages suppressing synchronization. For years we tried to entrain the life cycle of cancer cells and yeast cells with heat pulses, microwave pulses and other stimulus, but the cells always escape synchronization.

By analogy, I conclude that it might be difficult to synchronize economic systems.

I’d like to hear your opinions on what this means for policy, regulation, incentive plans, etc.

Crowdsourcing Election Verification, part 3

Rafe Furst — Wed, 22 Apr 2009 13:29:01 +0000

In part 1 I advocated photographing your completed ballot before submitting it and posting your photograph online. Turns out that if you followed this piece of advice in Missouri, you might be in jail right now. Oops! Sorry :-)

I’m not even clear whether doing what I did in revealing the contents of my ballot textually would be illegal in Missouri or not. Or in Nevada where I voted for that matter. Of course it would be a silly and slippery slope if it were illegal to reveal the contents without using a photo. For one, I could have lied and not really voted according to what I posted — as far as I know blogging falsehoods is still legal. Also, what if I posted my choices before the actual vote, like op ed columnists do? And what if I did so prospectively but scheduled the post to be published after the vote happened? Or if I tried to post before the vote but the system was slow and it didn’t actually get posted until after the vote?

Anyone who can clear up the legalities, both federally and also on a per state basis, please comment below.

hat tip: Ace Bailey

Is the Party Over?

Rafe Furst — Mon, 13 Apr 2009 18:31:13 +0000

I don’t like the Republican or Libertarian parties. But I’m also no fan of the Democratic party. In fact, I dislike all political parties and think they should be done away with. And while I’m not naive enough to think that this will happen, it makes me glad to see that the “post partisan” utopia is closer today than it was a year ago.

The reason I think parties will never go away is that they are borne of cooperative activities to address asymmetric power relations. In other words, they create value, and thus they emerge all too easily. The problem is that the value created gets conferred entirely to the party constituents, and additional value is leached from non-constituents. Note that I am not suggesting this is a zero-sum game where no new value gets created, but rather there is collateral damage, especially when it comes to future cooperative opportunities that are precluded. To see what I’m referring to, simply consider a Democrat and a Republican in Congress who agree that abortion should be totally illegal, and consider the chances of them actually teaming up to work on it.

Parties are self-reinforcing once they are established and take on a life and raison d’etre all their own. At some point their own constituents may feel resentful and beholden, but what can they do? It’s become too tough to go it alone. The few independents who have been elected to Congress were either elected as a party member and later became independent, or ran as independent in a later term, or they leverage a party affiliation in the caucuses.

But I am hopeful that the political ecology will look vastly more diverse in the future, with many viable parties, each one holding less power than the current ones, and with a vibrant collection of independents holding seats of power. And I’m confident that this will happen much quicker than most people think. To see why I am hopeful, look at what is happening to the news media ecology and how quickly the power structure is shifting due to information technology and social media.

This seems like a situation where I should put my money where my mouth is, so here’s a prediction. I believe that there will be an independent elected to either the U.S. House or Senate by 2012 who has never run as a candidate for an existing party.

Click here to make your own prediction.