The Hilarity of the Control Delusion

Laughing out loud. Commonly expressed as an acronym in the modern digital world, the three letters LOL do not give the feeling any justice, they try but they do not encapsulate the uncontrollable bursts of giggles, rolling guffaws, quiet snickers, and hooting laughter. There is something beautiful in hearing a crowd of people lose control over their vocal cords, expressing noise in appreciation of humour, doubling over with the tight contractions of the abdominal muscles as they make them shake, and tears run down their faces. Described this way it almost sounds horrific, but there is something amazing in losing yourself in laughter, a full body release that transforms you and your reality.

I attended a comedy show last night, and I’m sorry to say that most of my laughs were quiet, a non-comittal noise emitted to acknowledge that there was a joke being made. I was sitting in the front, and was worried that if I did not laugh or smile with the crowd that this well meaning Scottish comedian would likely roast me, and I had to find a way to blend in and become unseen.  This was in part fear of having the spotlight on me, but mostly for the possibility that I would retort with something dry and harsh, potentially ruining the atmosphere for my friends – it was my friends partners birthday and everyone else was enjoying themselves. So I put on my game face, quickly searching for a funny experience in my memory that I could pull the emotion from and project into this moment.

And so we come to The Black Swan, by Nassim Nicholas Taleb.

It appears I have what is called a sophisticated mordant sense of humour. I took a couple of online tests, briefly dipped my toe into the waters of a Google search on types of humour, and this is the result. I am a little surprised, I was thinking dry originally, but that appears to be more so my favoured delivery method. There are many aspects to humour, and to describe all the ways might be a blog unto itself, but suffice to say my initial readings on the topic helped to clarify to myself what I find humorous. So why The Black Swan, why would I find a book on the highly improbable funny? It wasn’t just an acknowledgement nod, it wasn’t a quiet chuckle, I found myself doubled over laughing whilst reading this, and I still use this book years after reading to bring a smile to my face.

Taleb is a statistician, a day-trader, a philosopher, and the funniest person I’ve ever had the privilege of reading. His dry and often caustic remarks on the delusion of the human race fits nicely with my own mordant humour, and it was funnier as it had the ring of truth to it. Cutting, incisive, and painful truth. I laughed at his dead-pan delivery as he flayed alive economists, statisticians, day traders, and everyone who had ever had the gullibility, the delusion of thinking that they could foresee the future from looking at the past.

Consider a turkey. Taleb discusses their life, their experiences, the knowledge of its past. It is well fed, it is comfortable, it has a place to stay outside of the rain, and as the seasons tick past the history of this process builds up. Looking at this process, can one tell what is going to come next? It is obvious that it will continue to be fed by generous humans, there is nothing in this data to suggest otherwise. So it is quite a surprise to this turkey that the day before Thanksgiving, in the prime of its life, it is killed. This is not such an odd scenario to the humans who fed the turkey, and many statisticians and economists will likely quote theories of incomplete information, and explain how additional information would have predicted this. But if you were the turkey, how were you to know? How do you find out what you do not know? Other than the history of the process, what other information feeds into the events that happen in our world?

There are numerous people who buy into the stock market with magical formulas – to them, there must be a simple yet ingenious way by which you can forecast the growth of a stock and as such get rich, but I ask how could one person possibly know everything that feeds in to the value of a stock? What do company records, previous growth, media releases, and company structure, among numerous other “key indicators” have to do with the value of its stock in the market? According to my early studies in Economics, these were, exactly as described, key indicators. Case and point, The Lehman Brothers. There was no information provided to market that could have possibly suggested that they would collapse, they themselves believed (apparently) that there was no risk in their behaviour and yet they fell. Spectacularly. The shockwave was felt by the world. The turkey was killed, and people are still scrambling to find something in the data to explain this, to protect themselves, to find the shooter behind the grassy knoll and provide more robust forecasts.

The war in Lebanon and the crash of 1987 seemed identical phenomena. It became obvious to me that nearly everyone had a mental blindspot in acknowledging the role of such events: it was if they were not able to see these mammoths, or that they rapidly forgot about them. The answer was looking straight at me: it was psychological, perhaps even biological, blindness; the problem lay not in the nature of events, but in the way we perceived them. (Page 21, The Black Swan)

Mistaking a naive observation of the past as something definitive or representative of the future is the one and only cause of our inability to understand the Black Swan. (Page 42, The Black Swan)

To the turkey, how do you know what you don’t know? Do you hurriedly scramble to gather more research, more data, more of everything – because it has always been obvious to us that more is better. Do you try numerous analysis, design brand new ones, both complex and simple, do you just think harder? Would any of this have helped the turkey? Or the Lehman Brothers? The 1930s depression? The stagflation of the 1970s, which broke crucial economic theories that supported industrialised economies?

No.

Taleb strips this delusion from you. This belief that you can foresee the future. That you have control. He offers – not a magical time telescope – but 10 principles to create a robust society, one that can minimise its risk of extreme events, and continue to grow and thrive.

Read this book and accept your weaknesses. Embrace your humanity. And laugh out loud as the facade of control comes crashing down around you.

Keep wondering readers.
– Rhiannon

Bibliography:
Taleb, N. (2010). The Black Swan. 2nd ed. Penguin Books.

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Asking Questions – The similarities between Economics and Fiction

Firstly, I’d like to take a moment to apologise for my lack of blog posts – the main reason is I’ve been inundated with ideas, and they’re big ones, and the thought of starting was terrifying. So, I’ll take a step back, and just write.

This post is inspired in part by 1Q84 by Murakami, but also helps to define why I chose Economics as my subject of study. I don’t think I ever wanted answers to questions back way when, it would frustrate me to no end if I asked an abstract question and was provided with a definite, black and white response. And I never had any desire for knowing specifics, such as years of events occurring (other than their relative position to other events). Abstract questions such as – if we have no evil, can there be any good? Often the response I’ve received is evil is bad, and needs to be controlled and outlawed. There is no discussion, or consideration of the term, or of its position in society and in human existence, just a flat answer. This is not enough for me, I want the question to inspire further questions, I want to see a flowering of thought in the other person, for them to have another look at their world.

In 1Q84, the world has changed. I shan’t say much more than that, other than what The Times wrote about it – “A work of maddening brilliance”. If you like to question, as I do, I would strongly recommend reading it.  Murakami makes some interesting notes about fiction writing in this book, particularly that authors ask questions, they link ideas, they don’t answer but they do inspire. This inspiration provides one with a new viewpoint, a new understanding of their world, and provides them with new potential tools to shape and respond to their reality. What has this to do with Economics? Why, I believe everything. Economics is, in itself, a work of fiction. Sure, it is sourced from statistics, from tested theories, and from in depth research as to the behaviours and reactions of economies and people. However, its source is an ever changing one, being people. They are never the same from day to day, person to person, or even between countries. Generalisations can be made, and the theories that are built are often strong, testable, and usable. Consider this though – throughout the ages, over many differing forms such as religion, philosophy, and scientific thought, we have considered numerous ways to describe and understand human nature, yet still day after day we are surprised by the actions and reactions of others. We cannot understand our behaviour, oftentimes we don’t even understand ourselves, yet we create a form called Economics based on human behaviour to understand the interactions between various systems of people.

Please don’t get me wrong, I don’t think this in anyway demeans or belittles the subject. Rather, I think it highlights what is is that we do with this form of thinking, this form of understanding. A by-product of sentience is a pursuit of understanding, and Economics provides a framework with which to understand the behaviour of systems of people. In its current applied form, a money currency is used as a form of exchange between economic agents and parties for goods and services, but at its very core, Economics is a science of understanding how people achieve their wants and desires with limited resources. Within an economy, for instance, Australia, we use the Australian dollar to buy and sell products and services which will – so we believe – provide us with our wants and needs. We build theories and test through statistics and econometrics what were to happen if different actions are taken, such as Government stimulus, a drop in interest rates, or a new taxation system. We ask a question, and the Economics framework provides us with a method by which to come to an answer (with provisos of course – always remembering ceteris paribus). We apply this framework to historical actions in order to identify ‘ingredients’ as such, which affected the mix and resulted in a different outcome to what we expected – take stagflation for instance. These are tried methods, backed up by swathes of data, that are used to answer questions. But how is this any different to a work of fiction?

A story has characters. An economics system has micro and macro systems. A story has an event occur. An economics system has an event occur. A story follow the unfolding of the event, its effects on characters, and gleans new understandings from the behaviours exhibited – which, I must point out, if these behaviours are too foreign to the reader, then there is no understanding. The characters must be believable, they must stem from their structure on the breadth of human behaviour and characters in place, or at least, an understandable extension of current behaviour. In economic systems, the micro and macro systems must also follow real world behaviour, our current understandings of these systems and their operations, or at the least, an understandable extension of what is currently in place. In economic theory, we follow a story just the same as a fiction. An event occurs, and through the theory we watch the unfolding of the event, the reactions of the systems in place, and we glean new understandings from these behaviours.

Stylistically, they are quite different. Structurally, I don’t think so much. I like to ask questions, so I pursued Economics, a discipline which specialises in setting a scene, and watches events unfold. The results we take with us to apply to the real world, as a tool to help us understand further, and to shape and create our reality. The framework of economics is ever changing, a different subject every decade or so, it flows with the times and the generations, and it changes as behaviour changes, providing new ideas and inspirations as to how we can satisfy our wants and desires, given our limited resources.

Keep wondering readers.

– Rhiannon.

Work hard, increase production, prevent accidents and be happy.

THX 1138
THX 1138, GEORGE LUCAS’ DIRECTORIAL DEBUT, PRESENTS A COLD, DYSTOPIAN FUTURE IN WHICH INDIVIDUAL THOUGHT AND LOVE ARE FORBIDDEN. BUT TWO CITIZENS DARE TO REBEL.
LUH 3417, a disenchanted surveillance worker, consciously stops taking her mandatory drugs — medication that suppresses emotions — and gives placebos to her roommate, THX 1138. Now free to feel, the two fall in love, but find themselves on the run for breaking laws of conformity.
Released March 11, 1971
The above was taken from the producers website, and although I selfishly watched this because of an addiction to dystopian science fiction, I found that it brought up a lot of economic questions. The populace in this movie are drugged to decrease emotion, ostensibly to increase efficiency and thus production (amusingly to produce cybernetic cops that enforce control of the society). Although the production wasn’t a particular focus of the film, it’s certainly a topic worth exploring. To begin economic studies we are presented with highly simplistic models to gain some understanding of what economics attempts to explain. Such as, demand drives supply, prices are a function of these two forces, and by extension, the entire economy operates through these interactions. Unfortunately, sometimes these simplistic models are taken as the over-arching principle of economics, and the principles of capitalism over-ride the original ideal – that economics is the study of how humans satisfy their wants with limited resources. Price is but a function of how humans negotiate this problem, it is not the end in itself. Somewhere in history, economics was mistranslated to be a study of how to maximise profits, when it has always meant much more.
THX-1138 portrays a society that has over time, drugged its people into the most efficient resource to maximise productivity. This seems ideal, if our societies end goal is to maximise productivity, as societies translation of economics is want to suggest. If so, why is this society considered dystopian? Why is there an overtone of fear, why do LUH and THX reject the medication and attempt to flee? If production, profit, is the end goal, why would anyone want to leave such a seemingly efficient society? This would suggest that the ideal of economics, of satisfying wants, does mean more than money, and resources. That emotions, personal ideals and dream can also be considered ‘resources’, worth desiring just as much as physical resources. That not all physical resources satisfy all desires, that not everyone has the same desires, and that there isn’t always a one size fits all solution.
It is a personal beef of mine when people misinterpret my love for economics as maximising profit, that being an economist means being a capitalist, and that functions such as education, welfare, and research must not matter to me because they’re not profitable. I need to say this, as it is one of the most important ideals that I hold close to my heart. I did not study economics for money, for profit, or for stock markets. I study economics because of the interactions between people, the ability to understand and watch how people reach their dreams, and to try and find ways to help society reach further, expand, grow and become more. I see this everyday in popular media, where those who chase profits find at the end of the movie that there is more to life – The Wolf of Wall Street, Wall Street, even American Psycho. (apologies if I ruined the story for anyone!). There are movements currently towards Minimalism, where one declutters, and by doing so disconnect oneself from the drive to buy happiness and to find it within. Countries across the globe are pushing for cleaner power generation technologies – though, this can partly be argued by the scarcity of the resources on which the original generators were based, as well as the push by the younger generations for environmental custodianship. Money is important insofar as it is a tool to reach our dreams, and society is pushing to realise their dreams rather than just profits. Economics, as a study, is leading the charge in understanding these movements, though I think that this is not well advertised.
Movies, novels, blogs, articles – media – are a mirror of our times, of what has been and what we expect to come. Our fears, dreams, desires, sins, and passions are laid bare for all to see. And it is here we can start to understand our desires thus what is driving our current day economics, and where we could potentially be further into the future. When I see something of interest, something that hints at a curiosity, of a desire, I’ll bring it up here for you to have a look at.
Keep wondering readers.
– Rhiannon.

 

Bibliography
Bradshaw, Mike. 2013. Global Energy Dilemmas. Cambridge, UK. Polity Press.
Folger, Edward; Ford Coppola, Francis, and Sturhahn, Lawrence. THX 1138, directed by George Lucas (United States, Warner Bros, 1971). http://en.wikipedia.org/wiki/THX_1138 / http://lucasfilm.com/thx-1138
Hanley, Chris; Pressman, Edward R. and Solomon Christian. American Psycho, directed by Mary Harron (United States, Lions Gate Films, 2000). http://en.wikipedia.org/wiki/American_Psycho_(film)
Pressman, Edward R. Wall Street, directed by Oliver Stone (United States, 20th Century Fox, 1987). http://en.wikipedia.org/wiki/Wall_Street_(1987_film)
Scorsese et al. The Wolf of Wall Street, directed by Martin Scorsese (United States, Paramount Pictures, 2013). http://en.wikipedia.org/wiki/The_Wolf_of_Wall_Street_(2013_film)
The Minimalists. Joshua Fields Millburn and Ryan Nicodemus. Accessed 30 November 2014. http://www.theminimalists.com/