I fell sick last week and had one of the worst headaches I’ve ever had in my life. It was so bad I couldn’t look at screens even if I longed for them, like cocaine addicts long for cocaine. So I couldn’t get around to writing anything.
I also realized that one of the reasons I started publishing this newsletter was to share interesting links, which I used to do in the beginning but not anymore. I started by sharing links but ended up publishing rambling essays on random things that I got fascinated with in a given week. It wasn’t planned, but something that just ended up happening, and I’m happy that it did.
So this week, I figured I’d share a bunch of amazing articles across different topics so that you can find a rabbit hole to get lost in.
The many joys of aimless reading
The Substack app has become my go-to source for discovering new writing. I don’t know if the app will remain as good as it is, but so far, I’ve found some truly insightful writing on a whole host of topics. I can confidently say that some of the best writers of our time are on Substack. By that, I don’t mean popular writers but rather people with tiny audiences that have yet to hit mainstream.
Every morning, I scroll through the app and save a few posts for reading later. So far, I haven’t been able to read all the posts I’ve saved, but I’ve been trying. This morning, I finally found time to read, and among the first posts I perused was this delightful post (archive) by Jared Henderson that had me nodding along in agreement.
The post is on why students are reading. He starts by pointing to the usual suspects of why people don’t read: the negative impact of the pandemics on students, the testing culture, horrible teaching backed by terrible theories, the ubiquity of smartphones, etc. But he also identifies another crucial reason why we don’t read—we are gatekeeping ourselves:
Gatekeeping is usually conceived of as an interpersonal violation. The gatekeeper is preventing someone else from being included in whatever is at issue. But very often, the person who is preventing you from crossing the bridge (to go back to the troll metaphor) is you. If you want to read The Economist, say,but don’t because you don’t think you fit the profile, then you are your own troll. You are the one doing the gatekeeping, and the person being kept out is you.
And this is what I believe is happening with students and reading, at least in part. They have convinced themselves that they aren’t readers. They have convinced themselves that reading old books, especially difficult old books, is just too arduous, too boring, too pointless. They have convinced themselves that even if the books are good and soul-enriching, there are better things to be doing with their time.
I picked up a reading habit thanks to my dad. He grew up in an environment where he couldn’t read, even though he desperately wanted to, so he put a premium on educating me and my brother. He was also quite smart. He made sure we weren’t just reading textbooks but other random things like magazines, newspapers, encyclopedias, and other books. I still remember trips as a young, runny-nosed kid to Sapna Book House in Gandhinagar on my dad’s rickety Bajaj Chetak.
I’ve always read random things, but after college, I stopped reading books. My reading diet was filled with online reading, but this wasn’t enough. So I made a conscious effort to start reading books again, and now I regret ever stopping.
As someone who’s remarkably average at most things, I’ve realized that life is a steady process of chipping away at one’s ignorance and stupidity. Books help you do that. Of course, you can’t learn everything from books. You’ve gotta live a little and then learn from life. But books are a part of that toolbox that helps you be a little less dumb in life.
Another aspect of the article that resonated with me was the obsession with reading metrics. It’s also something I struggle with, but I’m slowly starting to let go.
We like to measure our successes, and when we don’t measure up we consider it a failure. This carries over into adult reading culture still — people set ambitious reading goals based on books or pages, and they feel good if (and only if) they meet those goals. It’s a metrics-based way of looking at the world. This culture is everywhere, and students are sensitive to it.
Last weekend, when I was sick, I couldn’t look at screens because they made my splitting headaches worse. I also couldn’t read anything dense, so I picked up Ken Follett’s Fall of Giants. I must have devoured the first 300 out of 900 pages over the weekend. As I was reading the book, I remembered the pure joy of reading aimlessly.
In this post, Olga reflects on another post about how she has lost her habit of researching just for the sake of researching, without any specific goal. The post struck a chord with me because exploring without a goal is something I’ve tried to do all my life.
What does research as a way of life look like on a daily basis? It’s a day that’s driven by curiosity and exploration. A day full of inquiry, pondering, questioning, reading, finding, writing, revising, documenting, excavating, and editing. A day when you have the freedom to explore; be it browsing grocery store aisles, talking to urban farmers, cycling through the city, noticing things and how they change, make observations about new and old patterns, talking to people at the bus stop, foraging, or browsing the internet.
I am carving out time for leisure and research. I’m blocking off time on my calendar as leisure blocks, and using that time to download pdfs, make lists of books or cookbooks, organizing and managing my databases, reading, and re-organizing files on my computer, in Notion, and opening way too many tabs. I’m also breaking up my time to do different forms of research be it archival, qualitative research, going to the library (partially leisure), browsing online databases, taking notes, talking and asking people questions, and documenting.
To be honest, for me the whole point of life centers around discovery or a sense of adventure that comes from learning, seeing, or experiencing something new. Research is a way of life for me. I am an endlessly curious person.
An exquisite peace obtains: a drowsy, golden peace, flowing honey-sweet over my dwelling, soaking it, dripping like music from the walls, strowing the floors like trodden herbs. A peace for gods; a divine emptiness.
[…]
The easy chair spreads wide arms of welcome; the sofa stretches, guest-free; the books gleam, brown and golden, buff and blue and maroon, from their shelves; they may strew the floor, the chairs, the couch, once more, lying ready to the hand… The echo of the foolish words lingers on the air, is brushed away, dies forgotten, the air closes behind it. A heavy volume is heaved from its shelf on to the sofa. Silence drops like falling blossoms over the recovered kingdom from which pretenders have taken their leave.
What to do with all this luscious peace? It is a gift, a miracle, a golden jewel, a fragment of some gracious heavenly order, dropped to earth like some incredible strayed star. One’s life to oneself again. Dear visitors, what largesse have you given, not only in departing, but in coming, that we might learn to prize your absence, wallow the more exquisitely in the leisure of your not-being.
How does an egg become a person?
How does a single cell become a full-grown human being capable of running, climbing mountains, and generating farts of varying smells? In this fascinating post (archive), Kasra explores the work of developmental and synthetic biologist Michael Levin.
Back to the question of how a cell becomes a person: Our genes aren’t the full answer. Apparently, cells have bioelectrical networks similar to neurons in the brain that allow them to communicate and coordinate. These bioelectrical networks, from what I understand, are like cell phone networks. They talk to each other using this network to decide whether they should develop into a leg, liver, or kidney.
The worm is just one example: Levin’s lab and others have already demonstrated an astonishing level of control over development by modulating bioelectric networks. They’ve done things like getting frogs to develop extra limbs, and getting them to develop an eye in their gut, or an eye in their tail that they can actually see out of. The end goal that Levin dreams of is an “anatomical compiler” – a program which takes as input a specification for an arbitrary organ or body plan, and outputs the specific set of chemical and electrical signals needed to generate that organ. Imagine 3-d printing entire synthetic organs and organisms, except instead of having to specify all the micro-level details, you can just give a high-level description like “an extra eye at the tail.” This is Dall-E but for biology. And in the very long run, it could be the answer to virtually all of biomedicine, including traumatic injury, birth defects, degenerative disease, cancer, and aging.6
So on a practical level, the impact of Levin’s work is a shift away from genes as the only determinant of structure, shifting instead towards the bioelectric network. But there’s a broader thesis here, which is recognizing that the terms “intelligence” and “cognition” apply to much more of biology than we tend to think. The very process of development has an intelligence of its own: for example, if you take a tadpole (the precursor to a frog), and manually scramble its facial organs, those facial organs will relocate back to the correct place as the tadpole matures.
Fascinating stuff, but I’m not qualified to judge if this is all accurate.
Enough
One of the weird things about being human is that we are never content with what we have, where we are, who we are, who we are with, or what we want. We think the present state of everything sucks and strive for some ideal of perfection that lies in the future. Because of this tendency, even though we are physically in the present, we mentally live in the future. I enjoyed this beautiful and thought-provoking post (archive) by Isabel.
Much of maturity is this slow, burning realization that the Inner Ring is never quite as glamorous, sparkly, or magical as you think it will be—and noticing that what you already have is pretty damn good. You go somewhere beautiful and glamorous, but feel relieved to come back home to the people you love. You move somewhere to make new friends, but are eager to come back to those who know you deeply already. Maturing is this process of realizing that where you are, the people you’re around, the blessings you have, the city you live in—contain so much abundance that you could hardly behold it if you were to pause and feel it fully.
There will always be something shiny, glossy and new that stirs desire in you. This is the world we live in: we are mimetically inducing desires into each other constantly—a phenomenon that was happening long before we had coined the label ‘influencers’. Since the beginning of time, we have been imitating those at the top of the hierarchy, desiring the objects and symbols possessed by those inside the Inner Ring.
And hey, don’t get me wrong: desires can be fun. Striving, pursuing, attaining are all natural aspects of being human. But we don’t always need to be in pursuit, yearning for more. We can build resilience to this constant onslaught of desire. There is a way to pause and float above it all, to be where you are, to enjoy what you already have.
We’ve all forgotten how to stop and smell the roses.
But perhaps the most important reason I must return my gaze to Chelmsford is that this city, its people, and its wildlife lay a claim on me — a claim of responsibility which every inhabitant of every city, town or village has — to do good to the place you are in and one day leave it in a more convivial state than you first came to it. Where you are is where you are — and is where you must be4. As Wendell Berry wisely once said “Do you think it could be a general rule that the only place one is urgently needed is at home?” The more I have pondered these wise words, the more heartily I find myself answering “yes”.
An insightful and thoughtful post (archive) by Alex Perez on why most journalism has gone to shit. He argues that journalism was once dominated by people from ordinary and working-class backgrounds, but it’s now filled with people who can afford elite degrees and have lived relatively cosseted lives. When you no longer have people who understand cultural realities, class conflicts, and racial inequalities, you get journalism that is not just puerile but also one-dimensional.
You see the dumb opinions that result from an inability to understand the lived reality of the vast majority of people in Indian media as well. Snotty, elitist opinions, and ceaseless pontification about social matters that one couldn’t remotely fathom from the comfort of one’s privilege.
The relative absence of the adjacent figure in mainstream media—whether on the progressive or conservative side—has resulted in a sterilized environment, of two bubbles perpetually battling each other. It’s always been difficult for the adjacent figure to penetrate the elite world, but as the two bubbles have consolidated in their mutual obsession with each other, the marginal critic has been squeezed out. The difficulty lies in the ability of the adjacent figure to navigate disparate social scenes with the necessary authenticity to be allowed entry. He must understand the norms and nuances of elite culture, while simultaneously keeping a foot in the lower classes. It isn’t a matter of merely code-switching, as the differences between elite and non-elite go beyond conversational differences; it involves the far more difficult task of status switching—navigating between the rich world and the poor world. The adjacent figure, in elite spaces, may look the part and even sound the part, but something will always be slightly off. Maybe he still doesn’t know which fork to use or how to feel comfortable around old money. When the journalism world was slightly more working-class, the status switch wasn’t as difficult to navigate, but now a lower-class outsider must be attuned to the perpetually shifting language rules and norms. It probably isn’t worth the work for the outsider, and so he tends to leave, and the bubble consolidates again. Meanwhile, the status switch upon returning to the non-elite-world is just as jarring.
Look, I know it’s fashionable to rant about the “algorithms” and how they are brainwashing us by feeding us pointless nonsense. Experts peoples tell me that by giving us what we want, the “algorithms” are turning our brains into mush. It’s a ploy by the overlords that control these algorithms to make us docile enough to control us , like puppets. In our anthropomorphized descriptions of algorithms, they are akin to Darth Vader and Moriarty. But damnit, once in a while, the algorithms feed us something really good.
The good thing the algorithms fed me this week was this wonderful conversation between the amazing John Cleese and the incredible Stephen Fry. I loved it. Maybe it’s because they are British, and there’s something about British accents—they seduce you, titillate you intellectually, and make you mentally moist.
John Cleese and Stephen Fry talk about many things, from cricket, money, and work to artificial intelligence. But the part of the conversation that I loved the most was about money—it was beautiful. There was nothing in it that you and I didn’t know about, but sometimes it takes a British accent to make us think that the obvious is profound.
Like most Indians, I grew up in a family that swung between abject poverty and a luxurious lower-middle-class lifestyle. The thing about childhood experiences is that they leave a deep imprint on us. In my journey of learning about money, a revelatory moment was when I learned that our lived experiences tend to leave long-lasting scars, thanks to Ulrike Malmendier, a professor of economics and finance at the University of California, Berkeley. Our lived experiences shape everything, from how people perceive risk to their job choices, consumption patterns, and more. It sounds obvious, but sometimes the obvious things sound like profound realizations because we ignore them because they’re obvious. I wrote a little about the long lasting scars that early experiences leave on us a few months ago when Silicon Valley Bank committed hara-kiri. A couple of weeks ago, I learned about the neurobiological basis for why early experiences leave a lasting imprint on us, thanks to neuroscience professor Robert Sapolsky.
Early experiences have lifelong and even multi-generational effects. It’s essential to understand that an individual’s environment doesn’t start at birth; a significant portion of it is shaped during the prenatal period. The impact of early-life experiences can be enduring, stretching across generations, and this is especially true for early childhood adversity. While some of its effects can be mitigated through adult intervention, the longer one waits to address them, the more challenging it becomes to reverse their impact.
Your early experience is going to cause lifelong changes in your brain, which will make you more likely to reproduce the same early experience for your offspring.
Coming back to the point about money, it’s a peculiar object. In a utilitarian sense, it’s the single most uncomplicated object in life: money is a means to an end. But emotionally, boy, oh boy, is it complicated! Money can evoke a million emotions, from love, hate, and envy to shame, disgust, and misery. I can’t think of any other object or experience that can conjure up such a bhelpuri of emotions—not even the first memory of your lover’s kiss or the classical Greek sculpture of a naked rhinoceros.
Coming back to the previous point about early experiences, we are all forever tainted by the beliefs of your family and friends about money. Beliefs about money are like social pathogens. They infect our minds when we are growing up because we are blank slates. No matter what we do or how old we become, we’ll never get rid of the pathogens—there’s no vaccine. Like addicts battling addiction, we’ll have a lifelong struggle with what money means to us. Our own beliefs about money will always be anchored to those of the people around us growing up, and most of us won’t even realize it.
One reason I loved this conversation is because Stephen Fry was honest about how he thinks about money. Like most people, I have a complicated relationship with money, and listening to the conversation was a reminder to keep reminding myself about what’s important and what’s not.
The other reason I wanted to share this is because money is the single biggest cause of stress among people. Just because our beliefs about money are shaped by so many things and people doesn’t mean we accept them. We may never have the perfect relationship with money. I don’t think so, because it’s so interwoven across all facets of our lives. Money is a part of most of our life decisions; it’s everywhere, like dark matter causing a tug in our behavior.
But.
You can get to a place where you have a functional relationship with money. It’s like if you are addicted to weed, you don’t keep it at your house but at your friend’s place. You just go there and smoke once a week. You figure out ways to deal with the nauseating and dizzying range of emotions that money causes. Even Robert Sapolsky, who thinks we have no free will, says we can change:
All of this can instill a wonderfully positive belief: that change can occur, even in the face of trauma or the most challenging circumstances. It reminds us that change is possible, that things can evolve. We should not adopt a fatalistic mindset or believe that, because we are mechanistic biological beings without free will, we cannot change ourselves. Instead, we can be transformed by our circumstances.
So, while we acknowledge that change can be incredibly difficult or seemingly impossible and that circumstances can change us, striving to be better human beings remains a worthwhile pursuit. The key is recognizing that change can happen within the framework of our mechanistic neurobiology, making us more receptive to optimism and less susceptible to discouragement.
To change, you need to ask the right questions, and for that, you have to read, listen to other people’s experiences, and think.
Stephen Fry: We’re none of us entirely wide-eyed and naive about the world; we know that about the world, and it has always been the case that money talks and that everybody has a price to some extent.
John Cleese: Do you know what Napoleon said?
Stephen Fry: No, go on.
John Cleese: He said the surprising thing is not that every man has his price but how low it is. I think that’s hilarious.
Stephen Fry: I’ve always thought the greatest power a human being can have in negotiations, whether it’s as an actor in a film as minor as that or in a huge, boardroom way, is the power to walk away. Yeah, just to be able to say, Oh no, this is not for me, and go.
John Cleese: Have you ever understood why people want to be so rich? We all want to be able to have a better bottle of wine, or we all want to have a nice car, or maybe a slightly bigger house, but I think the point of being very rich is to be able to tell people that you are very rich.
Stephen Fry: Essentially, I think it is a display. It’s very fashionable these days to look into genetics and ancestry and to picture our ancestors in a cave or in a field, you know, hunting and gathering, and we know that some part of being human is acquisition, is territorial acquisition, and whether it’s land, building a castle like this, as a display as well as a defense, and money is a defense as well as a display. It protects you from everything in the world.
John Cleese: Why such huge sums of it?
Stephen Fry: You join a sort of club in which, you know, people in the suburbs might say they’ve got a better lawnmower than I have. I’m going to have to upgrade my lawnmower. I’m going to have to upgrade my strimmer. All the sort of suburban things, keeping up with the Joneses, we call it. It’s a very…we’ve talked about that all our lives. We know it as a phenomenon. But you scale it up. You simply scale it up. And we know this is true. I mean, I can still picture the moment when I was nine and I found an old Macintosh, an old raincoat people used to wear them, and it had a 10 Shilling note in it, and the joy, yeah, the absolute joy. Now what you can’t do is scale that joy up. If I then found £100,000 in a coat, I would be astonished. I would go, “Wow,” but I wouldn’t be…um…well, 10 Shillings is, you know, half a pound, so I wouldn’t be 200,000 times happier than when I found that 1 note.
John Cleese: But people think more is better, don’t they? I mean, alcoholics think more is better.
Stephen Fry: There are many aspects of humanity where we are bound, if we’re honest, to inspect ourselves and say, “I get that. I feel like that.” But also, “I don’t feel like that.” I’ve always been very lucky with alcohol, for example. I do like a drink. I like wine. But I know I could never be an alcoholic. I just don’t like it enough. I don’t like feeling sick. I don’t like having to cope with the responsibility of apologizing the next day if I’ve been drunk. I don’t like the fact I might get a bit argumentative. So I just, you know, could never be an alcoholic. But I could be lots of other things that I do recognize faults in. Andsimilarly with money. I mean, I like having enough money. I’ll be honest to turn left on an airplane. I think it’s the most…I still get excited by it. I still think, “Oh my goodness, I’m going first class,” and I love it. I mean, I just love it, and it’s a disgrace, and I know I shouldn’t. And I try and do this keyword carbon offsetting.
John Cleese: You used the keyword “enough.” So these very rich people have no sense of enough. Can you understand it? I mean, it’s an illness.
Stephen Fry: It is an illness.
Stephen Fry: I was born in the same year as Sugar Puffs, the cereal, right? So I… I should never forget. Yeah, I was of a generation for whom television advertising was first directed towards me when I was young, to eat Sugar Puffs and Rice Krispies and Frosties and sugary things. And I went to a school which had a Tuck Shop, you know, a little boarding school, and there were things like sherbet fountains with sherbet in it, white powder that you… you sucked in through a licorice straw. And they even extraordinarily had Spanish gallant rolling tobacco, which was coconut shreds, but it was done exactly like a rolling tobacco packet that you’d see grown-ups using, and you would have a pipe made of licorice, uh, and you would have cigarettes with red tips on the end, which were candy cigarettes. Do you remember all these sweets?
Well, you’re probably a generation older. You didn’t have quite… No, there was a… But they were so… You were being prepared for cocaine and tobacco, essentially. You were given white powder and tobacco, and I never could eat enough of that, and I would break out of school bans, go to the village shop, and buy all the fruit salads and Black Jacks and foamy shrimps and little rice paper flying saucers, and I stuffed myself. I couldn’t eat them. I… I got teeth missing here because of it.
So I… I had this empty hole in me, this vast empty hole that said, “Feed me. I need this sugar. I need it.” And then when it wasn’t sugar, it became tobacco, and I smoked. And then in my 20s, it became cocaine. I just… And I couldn’t sit still without going, you know, and it’s that addictive impulse that many people, many people watching will know what I mean. And many people won’t because this is the important thing to remember. I said, “Not everybody has this.” And it’s a kind of addictive gene. And I guess the money people have it for money. There’s this hole in them they have to acquire and they have to own.
John Cleese: They don’t know how to fill it, no. And they think if I had another 500 million, I’d be happier.
Stephen Fry: One of the things that always maddened me about self-help books and books on there is the ones that start off with “Goal orientation, set yourself goals.” And I think it’s the most dangerous and despicable, inimical thing imaginable because I don’t know a human being who, when they reach a goal they’ve set themselves, isn’t dissatisfied. Absolutely always an anticlimax.
The other thing I remembered as I was writing this was the book Balance. It’s a wonderful book about personal finance that I read recently. I had written a small review of the book as well. The key message of the book is to think about your personal finances holistically; in other words, it’s just about money. Here’s an excerpt from the book:
Plenty of people seek success, but they don’t define it holistically. To many, like my students, success means money in the bank, a great career, or a big house on the hill. How often have you heard (or even said) something like, “That woman is so successful. She owns a massive house, a BMW, and her own law firm” Unfortunately, this picture defines only one element of success: monetary. As I see it, there are four quadrants to a successful life:
Having enough money
Maintaining strong relationships
Maximizing your physical and mental health
Living with a sense of purpose
Think of success as a four-legged table, with each leg representing a quadrant. Each quadrant depends on the other. If they don’t all play their part equally, the table collapses. If one leg is spindly or cracked, it’s tough to maximize your life satisfaction, no matter how solid you might be in the other three quadrants.
Unfortunately, when defining success, we often focus too much on the money leg.
Getting to a place where you can say “enough” is a superpower. I hope to get there.
Live players
Since I wrote about the death of social media platforms last week, I gots to address the deranged ketamine-laden elephant in the room: our lord and savior, Elon Musk. Our Lord made an appearance at the New York Times DealBook Summit, and this happened when Andrew Sorkin asked him about his recent trip to Israel:
Andrew Sorkin: What was that trip like? Obviously, you know that there’s a public perception that, and you’re clarifying this now. But there is a public perception that that was but part of a so-called apology tour. If you will, this had been said online, there was all of the criticism, there were advertisers leaving, and we talked to Bob Iger.
Elon Musk: I hope they stop you.
Andrew Sorkin: You don’t want them to advertise?
Elon Musk: No.
Andrew Sorkin: What do you mean?
Elon Musk: If somebody could try to blackmail me with advertising and blackmail me with money, go fuck yourself. Go fuck yourself. Is that clear? I hope it is. Hey, Bob. If you’re in the audience.
Andrew Sorkin: Well, let me ask you then about the economics of X if part of the underlying model, at least today, and maybe it needs to shift. Maybe the answer is it needs to shift away from advertising. If you believe that this is the one part of your business where you will be beholden to those who have this view. What do you do? Linda Yaccarino is right here, and she’s got to sell advertising.
Elon Musk: What this advertising boycott is is going to do is it’s going to kill the company. And the whole world will know that those advertisers killed the company, and we will document it in great detail.
And then this also happened:
Elon Musk: Jonathan, the only reason I’m here is because you are a friend. What was my speaking fee?
Andrew Sorkin: I’m Andrew.
I mean, a lot has been said about this weird conversation. The way I would describe it, is a masterclass in blowing $44 billion. I don’t want to waste my time rehashing it. Also, I’m not an Elon fanboy, and I don’t care much about what he says or does. I care to the extent that he owns Twitter. I care because it’s the platform where I keep track of amazing thinkers, the latest research, and discover most of the things I read. Despite it stinking more than the open-door toilet near the majestic busstand, as someone once said, Twitter is like having the smartest people in your pocket.
It’s not a great mystery that X is in trouble. In Elon’s defense, it was decaying before his arrival, but he may have accelerated the process. Not everybody agrees; some believe Elon will magically pull a rabbit out of the hat and make Twitter better. I’m not so sanguine about that possibility, but my crystal ball is as cloudy as the next person’s.
At some level, maybe we have to care a little about what Elon does. He’s the CEO of one of the largest electric vehicle companies in the world, a rocket company, a satellite internet company, and the public toilet of the internet—Twitter (X). He’s also on a mission to spread his seed, as if he’s delivering newspapers and wants to take us to Mars after his planting season is done. So you gotta pay some attention to him—he needs it too.
Now, given his silly antics, antisemitism, and right-wing kookiness, it’s easy to dismiss him as another nutjob billionaire. But at the same time, he heads some of the most important and civilization-defining companies in the world. If you are jobless in life to worry about the contradictions and cognitive dissonance caused by our Lord and Savior, Elon, here’s a frame of thinking that may help. I recently heard political analyst Samo Burja on a podcast. He talks about the idea of live players and dead players, which I think is an interesting way to think about smart but crazy people.
Here’s what a live player is:
The most basic observation is that nearly everyone is following conventions right? You follow conventions and pre-designed scripts in your life – be it through the educational process, be it following the standards of your industry – and for the most part these conventions are in place for good reasons. Right? You don’t necessarily want, uh, your doctor improvising your treatment. Well, that is until you do – until you do have a rare condition that’s not common and that’s not well covered by the literature.
So the vast majority of society, uh, is not, uh, improvising. Right? They’re not very good at coming up with new, uh, processes, new ways of doing things on the fly. Honestly, they’re not even that good at evaluating evidence. There’s plenty of empirical evidence for this poor quality of our ability to evaluate evidence on the fly – massive literature, uh, you know, some of it even replicates in the cognitive science field and the biases literature, and so on. Uh, but also just, you know, day-to-day experience.
So why, you know, live players – right? – people who actually are always thinking from first principles. They’re remarkably rare in society. Um, but one of the best ways to sort of spot such individuals is people who easily and successfully jump multiple domains through the course of their life.
I don’t think Elon’s even listening. I think that Elon’s perspective is so first principles-driven that while he does recognize what is popular and what is not and can work with it, his decisions as to what to do next are not tied at all to the mainstream but are following, I don’t know, like, a technology tree chart derived from basic physics or his favorite science fiction story. Let’s expand through the universe; let’s have AI not kill us; let’s actually reach a new Destiny.
Samo calls Elon a live player
Live players are basically just people who can respond to circumstances as they arise, rethinking things from first principles or just a really well-known intuition.
Dead players are people who follow a preset script. It can even be a very high-quality script, so one can easily be a dead player and still be a top performer.
Why do I frame them in terms of players? Well, because you have to think about a game. Live versus dead players is a lens that helps you think through a game. You imagine a political setting, economic setting, right? Two companies competing. Uh, who’s going to win? Well identify who’s the live player and who’s the dead player. Why? Because you know the live player can always read the dead player’s rule book and then just do something more. The dead player can’t really predict what the live player will do.
In fact, live players cannot predict what live players will do. All they can do is proactively, dynamically respond to it. So if you have a competition of dead players, you look at all of their fundamentals and you bet on the one with the best fundamentals. If it’s countries competing, the biggest army, the most natural resources, whatever. As soon as you introduce a live player, they might still lose, right? There’s nothing really, you know, they might get taken out too early in the game.
But if you have like a fairly reasonable contender and they’re a live player, the advantage is so outsized it’s it’s just not even, it’s not even funny. I think it usually, you know, either economically, politically or in any other domain, you kind of need a live player to beat a live player and a dead player will just tend to lose.
Now this is not to say that live and dead players exist only in a zero-sum context.
I gotta agree with this brilliant piece. There’ can never be a “good “social media site. Bhuvan’s law: Human nature ensures that anything that can go to shit, will eventually.
Spinning up new social media websites mimics this, except what you are trying to outrun is human nature. No design of social media can get rid of what I like to call the “semantic nadir,” which is what you’ll inevitably experience if your tweet ever goes viral, wherein eventually someone will take your tweet in literally the worst possible way (there’s some classic examples of this, as generally if you say “I love cheesecake” it won’t be long before someone reaches to “Oh, so you hate regular cake”—that’s the semantic nadir).
There’s rampant inequality. No, there isn’t. Yes, there is.
In a development that surprised everyone in the universe, from earthlings on Earth to Cyberton, Arakkis, Vogsphere, and Tatooine, economists are fighting again. Thomas Piketty, Emmanuel Saez, and Gabriel Zucman became superstars for their work showing that income inequality has exploded across much of the world.
But in 2018, economists Gerald Auten and David Splinter published a new paper using the same data as Piketty, Saez, and Zucman and came to the opposite conclusion that inequality has not exploded. Their paper was recently accepted in the Journal of Political Economy (JPE) and sparked a debate on Twitter.
So, what’s happening?
This isn’t a new debate. Piketty, Saez, and Zucman have long been accused (archive) of poor methodological choices since 2014 (archive). In their defense, they’ve engaged with the critics. But let me tell you something shocking: assessing inequality trends is hard. A lot of the arguments boil down to methodological choices and data sources because good data just isn’t available. These debates are good because they can attract other researchers to look at their issues with a fresh set of eyes and improve our understanding.
I’m not the most qualified person to assess these decisions. But there are a ton of weird decisions and adjustments regarding profits and business income that are super consequential for the conclusions drawn by AS.
You might think that analysing trends in income inequality would be straightforward. Don’t people’s tax returns tell researchers all they need to know? But although tax returns are useful, they can mislead. Americans who are partners in a company, or hold investments, often have enough trouble estimating their own income. Now imagine trying to estimate the incomes of millions of people over several decades, accounting for overhauls to the tax code. Researchers then need to account for the 30-40% of national income that is not even reported on tax returns—including some employer-provided benefits and government welfare. Researchers’ methodological choices have huge effects on the results. — Why economists are at war over inequality (archive)
I have been researching economic violence in India, where it surged during periods of social distancing and lockdowns. This not only resulted in the reduction of safe spaces for women and girls, but also trapped them in a space where they were more easily economically exploited. My research suggests that the COVID lockdowns spawned a whole new class of economic abuse of women in India.
Outside economics, Milei has also voiced support for liberalizing gun laws and greenlighting the sale of organs. Years ago, he floated a “free market” for the sale of babies, an idea he has since distanced himself from. In line with his anarcho-capitalist beliefs, Milei has pledged to cut 10 federal ministries, privatize state industries, and dismantle the public health care system in favor of private alternatives. Foreign policy wouldn’t be spared from major changes, either: Milei has suggested he would distance Argentina from Brazil and China, the country’s two biggest trading partners, and align closely with the United States and Israel.
These three cases—the commodification of books, the privatization of prisons, the commercialization of governments and universities—illustrate one of the most powerful social and political tendencies of our time, namely the extension of markets and of market-oriented thinking to spheres of life once thought to lie beyond their reach.
This economistic view of virtue fuels the faith in markets and propels their reach into places they don’t belong. But the metaphor is misleading. Altruism, generosity, solidarity, and civic spirit are not like commodities that are depleted with use. They are more like muscles that grow stronger with exercise. One of the defects of a market-driven society is that it lets these virtues languish. To renew our public life we need to exercise them more strenuously.
From fluffy interviews on YouTube podcasts with millions of subscribers to subliminal attacks on Instagram Reels, the political parties in India are betting big on influencers to swing voting patterns, manage crises, and help them secure power as the world’s largest democracy gears up for state elections this month, and a national election in 2024. It’s a strategy that makes sense—622 million Indians are online, and with the cost of internet access falling, people from India’s harder-to-reach hinterlands are coming online fast. Two-thirds of the population lives in these areas, giving them enormous power to sway the results of national elections. And while the symbiotic relationship between political campaigns and influencers has allowed politicians to reach the electorate in new ways, and to influence how they vote, it’s also helped them to dodge media scrutiny during public engagement and to challenge the integrity of elections in I had written about the scourge of influencers in the content of finance.
As the Biden administration has doubled down on the surge of additional U.S. arms and forces to the Middle East, however, it is not clear that U.S. policymakers have thought through the second- and third-order effects of amplifying the United States’ security role in the region and how it will be perceived by adversaries and allies alike. Specifically, there are three risks that the Biden administration must acknowledge and address: escalation, backlash, and overstretch.
Opec’s market-share strategy last time round helped discipline America’s oil producers, pushing them to become more efficient and therefore more resistant to future squeezes. JPMorgan Chase, a bank, reckons that the cost of getting oil out of the American ground has declined by more than one-third since 2014. The country’s oilmen have found methods to fracture rocks that produce more fissures, easing the extraction of oil, and now drill deeper wells that have longer lifespans.
The UAE guys must have seen Glengarry Glen Ross.
The United Arab Emirates’ team organizing the COP28 climate talks that begin this week was planning to use its position as host of the summit to strike new oil and gas deals with foreign governments, a cache of leaked documents shows. — CNN
This article is a transcript of a discussion on the energy transition. I’ve yet to watch the video, but I read the transcript, and it’s fascinating.
A few highlights:
Oil has become less inelastic thanks to new technologies and electric vehicles.
We may not face shortages of critical commodities required for energy transition as many people assume. Also, they are less bad than the oil industry would like us to believe. Like Indian found a massive lithium deposit, “commodities have a way of showing up when somebody needs them.”
We’re in an era of “actor less threats” like the COVID pandemic and climate change.
The world economy may be entering this mid-transition, unstable phase. This is happening even as climate impacts and other impacts of the polycrisis worsen. In this context, there’s a real risk of the world economy being increasingly exposed to cross-border risks of an economic and financial nature, which would deepen fragmentation.
In my view, the focus on winners and losers is missing a very big blind spot, which is that we’re facing a huge collective action trap related to political economy. Neither the middle classes in high-income economies nor the majority of developing economies have the means in the current international institutional configuration to achieve the transition. We are seeing the simultaneous occurrence of significant costs related to climate policies and rules of the game that prevent many countries from achieving a rapid transition. The risk is that this could give rise to a significant political backlash.
That’s why I think there’s a blind spot on this discussion about winners and losers—because we will all be losers, in an absolute sense, if the current configuration persists. That is because we are likely to see these very significant binding constraints materialize both on resources and supply chains.
There’s also the issue with China—much like a lot of other countries and particularly the US—where it is a large domestic producer of a lot of fossil commodities, but also newer energy products. This, of course, has very big macro implications for anyone who trades with China in commodities.
We see the risk of a trap because of numerous cross-border feedback loops. To give you one example, the materialization of physical climate risks hit hydropower in Latin America, directly leading to a buildup of fossil infrastructure to offset that. Multiple countries face sovereign debt crises arising from different sources, which have led to an inflow of foreign direct investment into extractive sectors to address these countries’ foreign currency needs. There are also huge gas projects in Argentina. The climate crisis will continue to be fueled by all this.
China has been building up its petroleum reserves like crazy during COVID. As soon as they stopped, the market kind of fell out of bed. In a weird way, China’s been acting like a covert central bank of oil
I think about all these discussions in terms of priorities. There’s almost no country in the world where climate change is an actual political and social priority. And if you don’t have something prioritized then you’re not going to get very much done about it.
If EVs are not affordable, you can’t leave a big chunk of the US middle class without freedom to move around.
I liked what Alex said about this convergence of interests. That’s why you see the military in the US talking about climate and security. And what Amy said—of course, it’s exactly right that you asked, what will it take to take climate seriously? War is one thing. But to go back to my point, we can use things people really care about—like security, like air and water pollution, and like economic development—as prime motivators that will help the climate as well. You can get some of these happy coalitions. But if you insist on transacting everything through a climate lens, it is, in my view, not the most powerful nor the most effective way to make those transitions.
Does reducing CO2 emissions mean sacrificing economic growth? Or can we “decouple” the two, by both growing the economy and reducing emissions?
The answer is yes: many countries have managed to achieve economic growth while reducing emissions.
You can see several examples in the chart: it shows the change in annual CO2 emissions and GDP per capita since 1990. In these countries, GDP has increased over the last 30 years while emissions have fallen. You can also see the data without per capita adjustments.
But is this all due to offshoring production overseas — transferring emissions to manufacturing economies such as China and India?
In the chart, we see that consumption-based CO2 emissions — which adjust for emissions from goods that are imported or exported — have also fallen. It’s true that some emissions have been offshored overseas, but that is not the only driver of the decline.
“When we try to pick out anything by itself, we find it hitched to everything else in the universe,” the great naturalist John Muir wrote in the middle of the nineteenth century. “We forget that nature itself is one vast miracle transcending the reality of night and nothingness,” the great naturalist Loren Eiseley wrote a century later as he considered the meaning of life. “We forget that each one of us in his personal life repeats that miracle.”
As an aside, the lyrical writing of Maria Popova is a joy to read. I hope I can write 1% as well as she can one day. If you are not reading her writing, what the hell are you doing in life? Also, I just bought her book Figuringa few days ago, I can’t wait to devour it.
It may be the major theme of my book–is about the importance of chosen suffering. I have a very different opinion about unchosen suffering, we can talk about that. The importance of chosen suffering is part of a good life, which is, I think the projects that make life worth giving[?] involve suffering. We often know this ahead of time.
And, having kids is such an example. For one thing in having kids, at least for me–maybe I’m prone towards anxiety–is really an experiment in feeling mild dread for the rest of my life. Loving such fragile creatures–and they remain fragile even into their 1920s–it is like there is a hangman’s noose sitting around your neck all the time.
And then they will separate from you. If you do it right, if you are lucky and if you’ll do it right, these creatures that you love and devoted your life to, will leave you. And, actually, if you do it right they will think a lot less about you than you will think about them. Because[?] they’re into their own lives. It’s such a perverse project. And I think it’s a very human one.
This video is a succinct summary of choosing your suffering. The idea is from his book The Sweet Spot, I’ve yet to read the book but it’s on my wish list:
BTW, there seems to be a risk free arbitrage opportunity or Amazon is fooling us.
This reminds of one of my favorite Jerry Seinfeld quotes:
Someone says to you “Oh you have it so easy. You’re so naturally funny and blah blah blah.” Yes, you are naturally funny and you do have that ability to figure that stuff out. But they don’t realize the amount of work that goes into it. It’s like going into the gym every day. It’s hard, you know how you walk in every day and you go “Oh geez I gotta do this again.” Yeah it sounds like a tortured life and you say it is, it is, it is. But you know what your blessing in life is? When you find the torture you’re comfortable with – courage, it’s kids, it’s work, it’s exercise. Yes it’s not eating the food you want to eat. Right, find the torture you’re comfortable with and you’ll do well.
Kris Abdelmessih on responsibility:
b) Get to having real responsibility as fast as possible
Responsibility = risk and risk accelerates learning. A little more responsibility than you think is appropriate will stretch you — if you want to rise to that you likely will. If you don’t feel stretched, even if you’re making good money, the human capital part of your ledger is being docked. Rest-and-vest attitudes are deceptively expensive in the long run — don’t ever adopt one in your 20s and 30s (and probably not after that either).
“A good way to discover your shortcomings,” said the Master, “is to observe what irritates you in others.”
“Live your life as you see fit. That’s not selfish. Selfish is to demand that others live their lives as you see fit.”
“Seek to change yourself, not other people. It is easier to protect your feet with slippers than to carpet the whole of the earth.”
“If people want happiness so badly, why don’t they attempt to understand their false beliefs? First, because it never occurs to them to see them as false or even as beliefs. They see them as facts and reality, so deeply have they been programmed.”
seek ground truth and poke reality. don’t settle for proxies or for winning arguments.
never defer key beliefs. do everything possible to find ppl thinking from first principles rather than from what’s reasonable or what someone else believes
be suspicious if you haven’t felt awkward today
ppl good at thinking think that thinking is everything; people good at doing think that doing is everything. doers dismiss thinkers & thinkers are scared of doers.
if there’s something on your mind, write it down & get it out. maintain full attention on what you’re doing.
if you did a sequence of actions 3 times, make a checklist
if you have a thought and you don’t like it, you can tell your brain that you don’t like it and drop it.
add questions & ideas you want to get back to later to anki, snooze tabs, schedule them in asana.
if you’re not failing you’re not operating at the edge. if you’re not operating at the edge, you’re not learning as much as you can
Unpublic whispers
To reiterate what I wrote in a previous post, social media was fun, but it isn’t anymore. It’s become a performative hellscape where we’re all twerking and grinding for a “couple Elon bucks,” as Ryan Broderick put it elegantly. Opening Twitter, Instagram, and LinkedIn leaves you with a nauseating feeling—everything is just fake, plastic, airbrushed horseshit. Twerking—too much twerking—for likes and shares.
The greatest trick these platforms pulled was letting an entire generation delude themselves into thinking that they weren’t debasing themselves by twerking at the altar of attention. I say this because I’m no saint; I’ do my share of twerking and grinding.
I’m writing this because I came across two brilliant posts by Thomas Bevan.
The consequences of life lived online have bled through into the real world and this has happened because we have allowed them to. It’s a cliché to say that real life is now a temporary reprieve from the online, as opposed to the other way around. We pay the price for all of this via boarded up shops, closing pubs, empty playgrounds and silent streets as each individual stays at home each night, enchanted by the blue flicker of their own little screen feeding them their own walled in world of news and content and edutainment.
I believe it will end, this so-called way of life. Not through the Silicon Valley oligarchs spontaneously developing a conscience or being legislated into acting with a modicum less sociopathy. I don’t believe people will be frightened into changing how they act or suddenly shamed into putting their phones down for once in their lives. Such interventions don’t work with most addicts and more and more people are legitimately hooked on their devices than we are currently willing to countenance. No, I think this will all end, as T.S Eliot said, with a whimper. People will simply lose interest and walk away. Because the internet now is boring. People spend all day scrolling because they are trying to find what isn’t there anymore. The authenticity, the genuinely human moments, the fun..
We can do what we want here. We’ve always been able to. The first step is admitting how bad things are (it’s no accident that by far the most popular thing I have ever written is about how dull and unsustainable this Extremely Online era is. I touched on something many have felt but not articulated). Our arts and culture are not good enough. We’re not good enough, and so there is no misunderstanding I say that in a spirit of love and encouragement. We are, both collectively and individually, capable of so much more than frenetically edited youtube shorts and trend chasing and parasocial relationships with influencers and impotent moaning about the present and rose tinted nostalgic longing for some pre smartphone past. We could be so much more. We could create art that is so much more truthful and searching and humane and ambitious (and that is also fearless and angry and rabble-rousing if need be).
These two posts capture my own vibes about being online. It just isn’t fun anymore. Ok, that’s a lie. It feels good when I am shitposting, but that dopamine rush quickly wears off, and it all starts being shit again. I’m not saying we all should rise up like the Luddites and smash our modems and slash our LAN cables like they did handlooms and head toward the forests. I think you can still be online without having to feel terrible, and it starts with being a little mindful of what we consume. Otherwise, we will be consumed. Being online can’t be at the expense of a divorce from the real world. In other words, pick your rabbit holes carefully—this website is my attempt at it.
Anyway, this bit stood out in the second post:
we have ways of meeting in private groups and hanging out and talking to each other via video as a prelude to meeting face to face.
The observation is spot on; people don’t seem to enjoy posting and sharing things publicly. It shows up in the the data as well.
We find that many measures of open participation, such as sharing and commenting, have declined across countries, with a minority of active users making most of the noise. Looking back, we can detect a period of peak sharing in some markets between 2016 and 2019, primarily driven by Facebook and by divisive events such as the election of Donald Trump in the United States, the Brexit referendum in the United Kingdom, and the vote on Catalan independence in Spain. But since then, online participation has shifted to some extent into closed networks such as WhatsApp, Signal, Telegram, and Discord, where people can have private or semi-private conversations with trusted friends in a less toxic atmosphere.
The first time I noticed this trend was when I was writing a previous post on the travails of news publishers.
Public feeds of all social platforms are filled with garbage from “influencers” and “creators.” It’s just a sea of rote, anodyne, regurgitated bullshit out there. Add to this the relentless toxicity of the platforms, people seem to be spending more time in messages and private chat groups than share on public feeds. Even the head of Instagram admitted as much a few months ago:
Outside of TikTok, Mosseri is eyeing another competitor: encrypted messaging platform Telegram. Most of Instagram’s growth has been in stories and DMs, Mosseri said on the podcast. Mosseri has shifted resources to messaging, he said. “Actually, at one point a couple years ago, I think I put the entire stories team on messaging,” Mosseri added. DMs are also crucial for younger users. “If you look at how teens spend their time on Instagram, they spend more time in DMs than they do in stories, and they spend more time in stories than they do in feed,” Mosseri said. Young users below the age of 20 are also actively using Instagram’s Notes feature (think Y2K era AIM status), prompting new conversations and driving up overall engagement on the app among teens, Mosseri said. “But, the thing is, we’re not a messaging app,” Mosseri noted.
This is an interesting shift in how people are interacting on platforms. The implications for brands and marketers are obvious, but what it means at a larger level is anybody’s guess. On an interesting note, the activity on Substack Chat seems decent. It’s not as much as Twitter, but it’s much slower and saner than Twitter. I’ve no idea about the numbers, but it’ll be interesting to see Chat becomes popular.
If you are in the market for a fresh and brand new reason to feel like shit, check your phone for stats on how many hours you use it in a day. Now, do the math on how much time you spend glued to your phone screen in a year. Immediately after that, let your sub-conscious human brain do what it does best: come up with rationalizations that you do plenty of useful things other than rage tweeting or subjecting the world to your narcissism on Instagram. After that, let your conscious brain murder your rationalizations, and you have my permission to feel like shit.
Yet. These days, as I scroll, it’s accompanied with the feeling that I’ve been conned. Looking at the numbers, it’s clear: I’ve spent more than a year of my life on smartphones and the return on investment is terrible. You could excuse the sheer amount of time spent if there’d been something to show for it — a big social media presence, the ability to code, learning a language on Duolingo, a consistent output of pretty much anything creative. But I can’t make any of those claims. I know life is about much more than “productivity,” but even with that caveat my phone time is staggeringly unproductive. I post perhaps twice on Bluesky or Mastodon on a big day. Instagram is maybe once a week. Nearly all the time I spend on my phone (and, if I am being honest, my computer) is in passive consumption. Lurking. I don’t have many good memories of the half of my life I’ve spent on screens, or in fact any strong memories at all; it’s all one amorphous, algorithmic blob of memes and blogs and socials and takes.
A good timeline of how shady billionaires, and private equity funds took over soccer.
Just as the Moneyball era produced a generation of baseball fans who talked like Nate Silver, soccer’s age of decadence has turned fans into current-affairs obsessives. Sovereign wealth funds, sanctions, and debt seep into Saturday-morning chatter with the same frequency as counter-pressing or expected goals. The forces shaping modern soccer into something bigger, better, and more morally bankrupt than ever are the same ones that have blown up everything else. Following the sport is an education in oligarchs, oil, corruption, media, partisanship, politics, and the financialization of everything. You don’t even have to like soccer to learn from it—because in a lot of ways, the story of the sport’s last two decades hasn’t been about soccer at all.
Every month you work, you save a part of your paycheck to be able to retire at 60–70, kickback, and enjoy the sunsets. But increasingly, it’s becoming obvious that the traditional notions of retirement are flawed and a mirage. The biggest problem is that people are living longer than ever, which means they need a whole lot more money to get by from 60 to 90 or 100. Then there’s the issue of ageism, even as countries around the world face a demographic crisis that is leading to worker shortages. Old people can’t find work, even if they want to. Then there are the underappreciated issues of longevity: we can’t live alone because we’re social creatures. As the often-repeated cliche goes, loneliness is as bad as smoking and obesity. This is a brilliant piece looking at the many problems of the retirement system and the challenges retirees face.
HERE’S A BLEAK prospect for many retiring Canadians: they will leave or be pushed out of the workforce too soon and without enough money. They’re financially prepared for the short and medium haul of life after work, but not the long one. They will go on to live too long, in too poor health (increased life expectancy has also increased the number of years people spend being sick), with a dwindling ability to support themselves or live independently. Ultimately, they’ll become wards of the state, housed in long-term care at great cost to the government and society. Sinha said: “This is where our destitute end up, in these government-run facilities.” According to a 2019 report by the National Institute on Ageing at Toronto Metropolitan University, long-term care costs are expected to triple from $22 billion to $71 billion by 2050. “It will be the equivalent of the modern-day Victorian poor house for our old,” Sinha said.
This means finding ways for old people to keep working. Nearly half of 65- to 69-year-olds and a third of 70- to 74-year-olds have jobs. Japan’s gerontological society has called for reclassifying those aged 65-74 as “pre-old”. Ms Akiyama speaks of creating “workplaces for the second life”. But the work of the second life will differ from that of the first; its contribution may not be easily captured in growth statistics. “We have to seek well-being, not only economic productivity,” Ms Akiyama says. Experiments abound, from municipalities that train retirees to be farmers, to firms that encourage older employees to launch startups. The elderly “want dignity and respect”, says Matsuyama Daiko of the Taizo-in temple in Kyoto, which has a “second-life programme” that offers courses for retirees to retrain as priests.
This widespread insensitivity of the rich, who have protected themselves against the economic hardships suffered by the lower 90 percent, is discouraging, and does not portend well for long-term social stability. It is extremely short-sighted and incompatible with the America that much of the world has come to admire and wishes to replicate.
The answer does not lie in invoking protectionist policies of the past. Globalization, as Freeland suggests, is irreversible. Rather, it lies in adjustment policies, which means a much better educated workforce, and social protection for those too old to adjust and recycle themselves into other decent-paying job opportunities. But this is a costly project, and the abhorrence of the rich for paying taxes makes this a serious challenge, especially in the United States. Freeland touches on all these points and properly lays great emphasis on quality education.
“The ERA5 record now contains two days where global temperatures exceed the pre-industrial level by more than 2°C. That this should happen in the same month that world leaders will gather to take stock of progress towards meeting Paris Agreement commitments at COP28 sends a very clear message – the time for definitive action to tackle climate change is now,” said Copernicus Climate Change Service (C3S) Director Carlo Buontempo. “While exceeding the 2°C threshold for a number of days does not mean that we have breached the Paris Agreement targets, the more often that we exceed this threshold, the more serious the cumulative effects of these breaches will become,” he added.
As if this wasn’t cheerful enough, climate change is impacting maritime trade as well. Again, if you are a glass-half-full person, you can argue that ships are the biggest source of emissions, and less ships going around is good.
But
80% of global trade by volume is carried on the seas. So, we might just starve.
Apart from that, it’s all fine.
As the Chart of the Week shows, ports in Panama, Nicaragua, Ecuador, Peru, El Salvador and Jamaica are suffering most from these delays, with 10 percent to 25 percent of their total maritime trade flows affected. But the drought’s effects are felt as far away as Asia, Europe and North America. The drought will hamper trade for months to come, with canal passages set to halve to 18 ships per day by February, down from 36 in ordinary times. Economies reliant on the canal for trade should prepare for more disruption and delay.
But.
You can either be a glass-empty guy and die of despair even before we are slowly cooked like charcoal chicken or make some money. Climate change can be good for your portfolio.
Tradingview: KraneShares Global Carbon Strategy ETF (Black), iShares MSCI ACWI ETF, SPDR S&P 500 ETF and iShares MSCI India ETF.
A brilliant post by Adam Tooze decoding the International Energy Agency’s World Energy Outlook.
Either the oil and gas industry is silently gambling that the energy transition will not happen, that we remain in the so-called STEPS scenario, which spells disaster for the planet. Or, if one assumes that current trends continue and politics and other non-fossil business interests are now driving an inexorable energy transition, then one can hardly avoid the conclusion that the titans of the oil and gas sector are burying their heads in the sand. It is not the green energy advocates but the fossil fuel holdouts who are losing their grip on reality.
I reject the premise of this post. On a daily basis, if you are not eating a minimum of 250 grams of supplement pills, perineum sunning (sunbathing your butthole), rubbing the hide of a dead rat on your thigh, and drinking your own urine, do you even care about your health?
For immune health, some influencers seem to think the Goldilocks philosophy of “just right” is overrated. Why settle for less immunity when you can have more? Many social media posts push supplements and other life hacks that “boost your immune system” to keep you healthy and fend off illness.
Because sustaining immune balance is critical, tinkering with the immune system through the use of supplements is not a good idea unless you have a clinical deficiency in certain vital nutrients. For people with healthy levels of nutrients, taking supplements could lead to a false sense of security, particularly since the fine print on the back of supplements usually has this disclaimer about their listed benefits: “This statement has not been evaluated by the FDA. Not intended to diagnose, treat, cure, or prevent any disease.”
But don’t think that insulting an entire country is enough for Scott. Speaking to the Sunday Times’s Jonathan Dean last weekend, he also reserved some ire for historians, some of whom have suggested that Napoleon might not be the most rigorously accurate film ever made. Scott responded by addressing the entire historian community. “Excuse me, mate, were you there?” he raged. “No? Well, shut the fuck up then.”
The wine is still going down a treat and our conversation meanders wildly, from whether aliens exist (‘I think we’ve been monitored for years!’ roars Scott. ‘How did the Egyptians build the pyramids? Rolling 20-tonne stones on logs? F*** off!’) to the dangers of AI: ‘We’ve got to step on this shit now, and move forward with incredibly tight constraints. — The Standard
From my swipe file
I have a swipe file where I collect interesting links, quotes, etc. Here are a few things I added to it this week:
“We have bigger houses but smaller families; more conveniences, but less time; We have more degrees, but less sense; more knowledge, but less judgment; more experts, but more problems; more medicines, but less healthiness; We’ve been all the way to the moon and back, but have trouble crossing the street to meet the new neighbor. We’ve built more computers to hold more information to produce more copies than ever, but have less communications; We have become long on quantity, but short on quality. These times are times of fast foods; but slow digestion; Tall man but short character; Steep profits but shallow relationships. It is time when there is much in the window, but nothing in the room.” ―Dalai Lama XIV
“To feel most beautifully alive means to be reading something beautiful, ready always to apprehend in the flow of language the sudden flash of poetry.” ―Gaston Bachelard
The interweb is like a smelly public toilet with no doors near the Majestic Bus Stand. But the toilet becomes just a little bearable for you to finish unburdening yourself when a strong wind blows through the door, sweeping away the fresh and pungent Chanel N°5 odors of fellow travelers. In that split second, you can discover some wonderful things on the interweb. This blog is an ongoing journal of such things.
Here are some amazing things I discovered this week.
Hope vs. despair
Carbon credits a giant scam
Myths about electric vehicles
Summary of the IEA World Energy Outlook 2023
The world’s largest carbon emitters in 2022
In defense of rats
Patrice O’Neal on people tricking God
Victor Haghani reminisces about his days at Long Term Capital Management (LTCM).
Survivorship bias
Professor Aswath Damadoran’s interview
Big market delusions
Demographics are not destiny.
Out of the money
Age of discord
Conflicts are popping up all across the world. While a lot of people are shocked and lamenting that it’s the end of history or the end of end of history, I am not. This isn’t surprising at all to me because I am a technical analyst. Last year, I did technical analysis on the number of conflicts around the world, and there was a bullish moving average crossover. The fact that people are talking about World War III as if it’s the latest Call of Duty game release is not surprising to me. Technical analysis predicts everything.
Ok, that’s a terrible joke. The reason I made this joke is because there’s this pervasive belief that the long peace is over and we’re heading into an age of conflict. I’ve no idea what the future holds, and neither does anybody else. As I was reading about the bloodshed in the Middle East last week, I read a few wonderful articles on hope and despair in The Marginalian, and they stuck with me. The reason is because the topic of positivity vs. negativity is something I’ve long thought about, both personally and in the context of investing. Reading these perspectives was moving, and I couldn’t resist sharing them.
“Hope doesn’t mean denying these realities. It means facing them and addressing them by remembering what else the twenty-first century has brought, including the movements, heroes, and shifts in consciousness that address these things now.”
“It’s important to say what hope is not: it is not the belief that everything was, is, or will be fine. The evidence is all around of tremendous suffering and tremendous destruction. The hope I’m interested in is about broad perspectives with specific possibilities, ones that invite or demand that we act. It’s also not a sunny everything-is-getting-better narrative, though it may be a counter to the everything-is-getting-worse narrative. You could call it an account of complexities and uncertainties, with openings. “Critical thinking without hope is cynicism, but hope without critical thinking is naïveté,” the Bulgarian writer Maria Popova recently remarked. And Patrisse Cullors, one of the founders of Black Lives Matter, early on described the movement’s mission as to “Provide hope and inspiration for collective action to build collective power to achieve collective transformation, rooted in grief and rage but pointed towards vision and dreams.” It’s a statement that acknowledges that grief and hope can coexist.”
This passage by Zadie Smith landed like a punch to my brain:
Only the willfully blind can ignore that the history of human existence is simultaneously the history of pain: of brutality, murder, mass extinction, every form of venality and cyclical horror. No land is free of it; no people are without their bloodstain; no tribe entirely innocent. But there is still this redeeming matter of incremental progress. It might look small to those with apocalyptic perspectives, but to she who not so long ago could not vote, or drink from the same water fountain as her fellow citizens, or marry the person she chose, or live in a certain neighborhood, such incremental change feels enormous.
Helen Keller became blind and deaf when she was just 19 months old. Yet she overcame that adversity to become one of the most inspiring figures we’ve ever known. This particular excerpt has been playing on rewind in my brain since I read it last week:
Once I knew only darkness and stillness. Now I know hope and joy. Once I fretted and beat myself against the wall that shut me in. Now I rejoice in the consciousness that I can think, act and attain heaven. … Can anyone who escaped such captivity, who has felt the thrill and glory of freedom, be a pessimist?
My early experience was thus a leap from bad to good. If I tried, I could not check the momentum of my first leap out of the dark; to move breast forward as a habit learned suddenly at that first moment of release and rush into the light. With the first word I used intelligently, I learned to live, to think, to hope.
Optimism that does not count the cost is like a house builded on sand. A man must understand evil and be acquainted with sorrow before he can write himself an optimist and expect others to believe that he has reason for the faith that is in him.
There is no love of life without despair of life.
Albert Camus
Climate as an asset class
The tragedy of our time is that we live under the tyranny of market logic, or price signals. An entire generation of economists and bureaucrats has grown up with the idea that markets solve everything. Whenever there’s a problem, the default impulse is to look toward the markets for solutions—what if we put a price on a problem? Over the past 50-60 years, this neoliberal belief system has been driving ideology across much of the world.
“The government is not the solution to our problem, government is the problem.”
Ronald Reagan
The notion that governments suck and that markets are better at allocating resources has become gospel. There’s no place for nuance. This ideology didn’t just appear out of thin air; it was an explicit political project by a committed group of economists, businessmen, legal scholars, and politicians. It originated in Europe and the US but spread like a virus to the rest of the world.
“I react pragmatically. Where the market works, I’m for that. Where the government is necessary, I’m for that. I’m deeply suspicious of somebody who says, “I’m in favor of privatization,” or, “I’m deeply in favor of public ownership.” I’m in favor of whatever works in the particular case.”
— John Kenneth Galbraith
While there’s a tremendous backlash against these ideas, they are deeply entrenched and still shape our world. Take the example of climate change. You would think that if humanity knew that it was going to slowly burn to death, it would act to save itself.
Nope.
Humanity decided that they might as well get comfortable, switch on the AC, and enjoy the free tan. But politicians and policymakers couldn’t be seen as doing nothing. It was the end of the world, not a flat-earth protest. They had to show some minimum viable concern—a pretense that they were mildly worried that the world was ending. So they looked toward the markets for an easy solution.
In a surreal moment of brilliance, the people in power decided to put a price on climate change. If we’re going to choke and slow burn to death, we might as well make some money, went the logic. It’s personal finance 101! Lo and behold, the voluntary carbon markets were born. What if you put a price on carbon emissions? What if you paid people not to pollute? They could just buy and sell carbon credits and carbon offsets and continue polluting happily.
Did you know?
Sheryl Sturges is credited with inventing the carbon credit. In 1987, Sherly was working at the AES Corporation, which built coal-fired power plants. Global warming was becoming a part of the conversation, and Dennis Bakke, the CEO of AES, was worried and asked Sheryl to figure out ways to minimize the company's impact.
Sherly looked through a bunch of ideas and had a light bulb moment: what if you planted some fast-growing trees? She asked scientists to figure out if the idea was feasible, and soon she had a number—AES had to plant 52 million trees over 10 years, but there was no space around the plant. She then figured, What if you plant the trees elsewhere? They identified Guatemala as the spot and paid struggling farmers to plant trees, and the carbon credit was born.
Carbon credits are magical certificates that allow a company to continue polluting as long as it offsets it. Carbon credits and offsets are created from projects that reduce or remove carbon emissions, like reforestation projects, reducing deforestation, renewable energy projects, and now carbon capture. Each credit represents one ton of carbon dioxide (CO2) or equivalent gas. So polluters like fossil fuel companies, manufacturing companies, and even individuals can buy carbon credits to the extent of their pollution and sleep well knowing they are “carbon neutral.”
Brilliant idea. What could go wrong?
In short, even in countries better known as polluters than green leaders, things are shifting. By the beginning of 2023, 23% of global emissions were covered by a carbon price, up from just 5% in 2010. The spread will only accelerate over the coming years as more countries come round to the advantages of carbon pricing, and schemes expand their reach. According to the imf, 49 countries have carbon-pricing schemes, and another 23 are considering them
Heidi Blake published a damning expose of South Pole, a leading developer of carbon projects, in The New Yorker. In 2010–2011, South Pole entered into an agreement with Steve Wentzel, a Zimbabwean businessman who owned parcels of forestland near Lake Kariba in Zimbabwe. The deal would generate carbon credits by conserving the forestland and preventing deforestation. South Pole helped sell over 20 million credits to companies ranging from Volkswagen, Gucci, Nestlé and Porsche, allowing these companies to claim they were “carbon neutral.”
But in reality, South Pole overestimated the deforestation avoided and was generating more credits than the emissions that the project supposedly prevented. Not just that, despite knowing that their estimates were flawed, the company continued selling credits and making money. The company also seems to have made millions of dollars by speculating on the same credits.
Satellite data recently collected by South Pole shows that the company has severely overestimated the deforestation.This is good news for the climate but bad news for South Pole’s business: currently, the company is overestimating the deforestation it would have prevented by about a factor of 14.
The overestimation of carbon offsets is not the only bombshell under the Kariba project. South Pole publicly claims that it keeps 25 per cent of the project’s revenue as commission and that the remainder flows back to CGI, the project itself and the local people. But South Pole confirms to Follow the Money that it actually pocketed considerably more. Through a clever trick, it kept not a quarter but more than 40 per cent of the approximate 100 million revenue for itself.
To register the Kariba project with Verra, South Pole had to predict how much of the forest would be lost without any intervention, and thus determine how much carbon the scheme would conserve over a thirty-year life span. Credits would be issued every year against that total, and the prediction would be checked once a decade, by comparing Kariba with an unguarded reference area nearby. South Pole’s data analysts initially estimated that the program could save around fifty-two million tons of carbon. But Verra required them to rerun these calculations using one of its approved methodologies. The scientists used one named VM9, which generated a startlingly different projection: if the Kariba site was left undefended, deforestation would explode, resulting in the eventual loss of ninety-six per cent of the forest. On that basis, the project would be eligible for almost two hundred million credits—four times the initial estimate.
The Great Cash-for-Carbon Hustle | The New Yorker
This isn’t the first time people have exposed the uselessness of carbon credits. Earlier this year, an investigation by the Guardian, Die Zeit, and SourceMaterial found that over 90% of credits from projects certified by Verra were useless. Verra is a nonprofit that maintains several climate action standards and certifies over 70% of all voluntary carbon credits were useless:
Only a handful of Verra’s rainforest projects showed evidence of deforestation reductions, according to two studies, with further analysis indicating that 94% of the credits had no benefit to the climate.
The threat to forests had been overstated by about 400% on average for Verra projects, according to analysis of a 2022 University of Cambridge study.
Gucci, Salesforce, BHP, Shell, easyJet, Leon and the band Pearl Jam were among dozens of companies and organisations that have bought rainforest offsets approved by Verra for environmental claims.
The Guardian
Research by the University of California (UC) Berkeley Carbon Trading Project came to similar conclusions:
Ultimately, it is illusory to assume that forest conservation activities can be used to compensate for greenhouse gas emissions from the combustion of fossil fuels. They must not be lumped together into a single net value and accounting for their impacts must remain separate. This should not deter companies and governments from financing forest conservation, in particular for primary forests, but this should be done without using these investments to claim the offsetting of emissions.
Error Log: Exposing the methodological failures of REDD+ forestry projects
Carbon credits also face other challenges, one of the biggest being “leakage” or displacement of deforestation. Leakage may occur because the people who were cutting down the forest simply relocate to a different area. Alternatively, demand for food or timber that was fuelling deforestation in one place may be met by deforestation elsewhere – perhaps on the other side of the world. Another problem is ensuring that the forests are protected in perpetuity so that reduced deforestation represents permanent removal of carbon from the atmosphere.
Julia P G Jones, Professor of Conservation Science, Bangor University. Neal Hockley, Senior Lecturer in Environmental Economics & Policy, Bangor University.
It’s simply not possible to fully “offset” billions of tonnes of greenhouse gas emissions from burning of coal, oil and gas by regrowing forests, increasing the amount of carbon in soils or other measures. That’s because the carbon dioxide released by burning fossil fuels is fundamentally different to the way carbon is stored above ground in trees, wetlands and in the soil.
To compound the problem, much of the carbon stored in land-based offsets does not stay stored. Forests can easily be destroyed by fire, disease, floods and droughts, all of which are increasing with climate change.
Wesley Morgan, Research Fellow, Griffith Asia Institute, Griffith University.
There are more dimensions to the idea that we are turning climate and nature into asset classes, but more on that next week.
Climate stuff
I came across a bunch of interesting insights related to climate change and decarbonization. Simon Evans, the deputy editor of Carbon Brief, published two amazing pieces on myths about electric vehicles and an analysis of the World Energy Outlook 2023 by the International Energy Agency (IEA).
It takes less than two years for a typical EV to pay off the “carbon debt” from its battery. Over the full vehicle lifecycle, carbon dioxide (CO2) emissions from an EV are around three times lower than an average petrol car. In reality, therefore, an EV in Europe will pay off its carbon debt after around 11,000 miles (18,000km).
The IEA added that, by the end of the decade, EV sales were on track to displace 5m barrels of oil demand per day – some 5% of the current total – and to cut annual global emissions by 700MtCO2, roughly the current yearly output of Germany or Saudi Arabia.
In general, EVs cut carbon emissions significantly, even if they mainly run on coal- or gas-fired electricity, as the chart below shows. In coal-heavy Poland, an EV would cut lifecycle emissions by two-fifths, Carbon Brief analysis shows, rising to two-thirds in the UK and four-fifths in Norway.
While it is true that the production of EVs creates more CO2 than petrol equivalents – the US Argonne National Laboratory puts manufacturing-phase emissions at some 30-100% higher, depending on battery size – this carbon debt is paid off quickly. (See: FALSE: ‘An EV has to travel 50,000+ miles to break even.’) As a result, EVs still cut carbon significantly overall.
Global fossil fuel use peaking in 2025, two years earlier than expected last year.
For the first time, coal, oil and gas each peaking before 2030 under current policies.
Fossil fuel peaks being driven by the “unstoppable” growth of low-carbon technologies.
The IEA boosting its outlook for global solar capacity in 2050 by 69% since last year.
The IEA expecting 20% more electric vehicles on the road in 2030 than it did last year.
A key focus on slowing economic growth and faster low-carbon uptake in China, where fossil fuel demand is now expected to peak in 2024.
Pair this article with this Twitter thread (fuck X) by Peter Zeniewski, energy analyst for the IEA World Energy Outlook.
Highlights:
If you want to dismiss the idea of a peak in fossil fuels, you’d point to the strong historical relationship between GDP and fossil fuels. But this relationship is already changing and, in all our scenarios, it is transformed by the emergence of a clean energy economy.
But clean energy has to work hard just to bring about a peak in fossil fuel demand. Look at solar: 1 GW existed in 2000. Now? 1 000 GW. In 2012, there were around 30 thousand EVs on the road. Now there are 30 million.
And this thread by Fatih Birol, executive director of IEA.
Robbie Andrew, senior scientist at the Center for International Climate Research (CICERO), published a thread on the top ten carbon emitters. India has overtaken the European Union (EU) to become the third-largest CO2 emitter. It looks like the change in order is in part due to the reduction in emissions in the EU.
Rats are hideous and filthy vermin that spread pestilence and death, destroy our food, defile our homes, and steal our peace of mind. They are abhorrent, and they deserve to die in the most painful ways. Any creature that’s responsible for unleashing the plague that killed 30–50% of the total European population deserves to die a slow and gruesome death.
But are rats that bad?
The conventional wisdom is that rats are disgusting creatures that lay waste to everything in their paths. As it turns out, the conventional wisdom is wrong. J. B. MacKinnon published a whimsical and wonderful piece in Hakai Magazineon how rats are seriously misunderstood creatures. They didn’t cause the black plague, nor did they spread death and destruction wherever they went. If anything, rats are much like us. They are playful creatures that can learn, solve puzzles, and have distinctive personalities, and they love playing hide-and-seek. As for their filthiness, you can’t expect them to be clean when our cities are dirtier than ever with poor sanitation, a lack of waste management, and squalid living conditions.
Misconception is the order of the day with rats. Rats are aggressive, right? Bobby Corrigan, a legendary rodentologist and pest control expert in New York, has said that rats have never attacked him, “and I’ve put myself right in the thick of those animals, as thick as I can get.” But rats are filthy, right? In fact, they are such fastidious groomers, one scientist who researches laboratory animal welfare told me, that when she tried to use “permanent” ink to make identifying marks on rats’ tails, those marks were quickly cleaned away.
Even more surprising is how little we know about how often rats spread disease to humans. “We have no idea,” says Himsworth. She is, however, prepared to venture an educated guess. “Any rat you meet has the potential to have a disease,” she says. “But know that, in general, the risk—particularly for people in countries like Canada—is low.” Most people in wealthier nations live in sturdy, clean homes and have the resources to respond if faced with a serious rat infestation. On the other hand, a person who is living, say, in poor-quality housing, whose hygiene is affected by mental health struggles, and whose landlord refuses to act as rat problems worsen, is definitely at an increased risk.
In Defense of the Rat Hat tip to Longreads for the rat-i-cal pun.
Laugh a little
I was watching this comedy special by the brilliant Patrice O’Neal, and I burst out laughing when I heard the bit about tricking God.
Patrice O’Neal: “Remember the good old days when you were a kid and you saw somebody with a funny-shaped head, and you pointed right at their head like it was nothing? You couldn’t stop yourself from pointing at that funny head that made you say, ‘Oh, Jesus, look at that funny-shaped head right there.’ It wasn’t that bullshit in you to stop. Now that we’re adults, we still want to point at a funny-shaped head, but we say to ourselves, ‘I can’t point at someone’s funny head.’ But your first feeling is your real feeling. That other shit is you trying to trick God into thinking you’re a wonderful person.”
A few wonderful thoughts
“I believe that reading and writing are the most nourishing forms of meditation anyone has so far found. By reading the writings of the most interesting minds in history, we meditate with our own minds and theirs as well. This to me is a miracle.”
“See the collateral damage—the suffering—that results when you cling to your desires and opinions or take things personally. Over the long haul, most of what we argue about with others really doesn’t matter that much.”
In an interview with Abraham Okusanya and Robin Powell, Victor Haghani, founding partner at Long Term Capital Management (LTCM), said something interesting. It wasn’t the bit about index funds are great, but rather his comment about self-inspection. I work for a brokerage firm, and I see firsthand that most investors are oblivious to things like taxes, costs, and even basic performance measurement. The vast majority of retail money flows based on hope and ignorance and stays because of inertia. If most investors commit the damning sin of checking if what they are doing is working, markets will break.
Robin Powell: But the story doesn’t end there. The LTCM saga prompted Victor Haghani to look afresh at investing and, over the next few years, his investment philosophy changed completely.
Victor Haghani: So I got to this point and I was like, wow! I really need to focus on investing the remaining capital and savings of my family post-LTCM, and I kind of realised that, “wow, I’ve never really thought about personal investing at all.” you know, here I was almost 40 years old and I had never really thought about it. I was working in at the forefront of finance, but I never really thought about personal investing. When I was at Solomon Brothers, I was young, I was getting paid. They were putting half of my compensation into Solomon stock, and the rest of it, I would pay tax on and sort of just keep mostly in cash and not do much investing. Then at LTCM, it just seemed like the only thing to do with your money was mostly put it into the LTCM fund. That seemed like the thing to do.
So I wasn’t really thinking about investing. Yet all of a sudden here I was. So the first thing that I did is I looked around at people that I respected, people that I liked, and I looked at what they were doing. All of them were actively trying to beat the market through different kinds of alternative and private investments, and angel investing, and doing trading in their own accounts – almost to a man, to a woman. And so I decided that’s what I should do too. You know, I knew all these hedge fund managers. It was my world. I thought I could assess managers. I thought I could find good investments, and that it would be fun. And so that’s what I started to do.
So I did that for four or five years. And then one day – maybe around 2005-06, I just started to really take stock of what I was doing and what my life was like. I was spending so much time on it. I was paying so much in fees. And also as a taxable investor, I saw that what I was doing was highly tax inefficient as well: a lot of short-term capital gains, a lot of ordinary income, a lot of non-deductible business expenses for the US listeners. And so I sort of decided I really wanted to go back to basics and to start to move away from all these active, concentrated forms of risk and get to what I was taught when I went to the London School of Economics: invest in the market portfolio, get full diversification, be a long-term investor. And that started my different journey after working in an investment bank, in a hedge fund. Started, I guess, the third chapter of my relationship with finance.
This year marked the 25th anniversary of the collapse of LTCM. The collapse of LTCM is perhaps one of the most popular stories in finance—I’m surprised there isn’t a Netflix documentary on it. The interesting thing for me is that the episode has become a shorthand for smartness, not equating to results in investing. Here’s Warren Buffett himself:
If you take John Meriwether, Eric Rosenfeld, Larry Hilibrand, Gregory, Hawkins, Victory Haghani, the two Nobel Prize winners Myron Scholes and Robert C Merton, and the other twelve of them, they probably have as high an average IQ as any sixteen people working together in one business in the country, including at Microsoft or wherever you want to name. So, that incredible amount of intellect in that room.
Now, you combine that with the fact that those sixteen had had extensive experience in the field they were operating in. I mean, this is the one. It was not a bunch of guys who had made their money, you know, selling men’s clothing and then all of a sudden went into the securities business or anything. They had—they’d had in aggregate, the sixteen of them, probably 350 or 400 years of experience doing exactly what they were doing.
And then, you’re throwing in the third factor that most of them had virtually all of their very substantial networks in the business, so they had their own money up—hundreds and hundreds of millions of dollars of their own money up—super high intellect, working in a field they knew, and essentially, they went broke. And that, to me, is absolutely fascinating.
I mean, if I ever write a book, it’s going to be called “Why Smart People Do Dumb Things.” Yeah, my partner says it should be autobiographical, but I—I—but it: This might be an interesting illustration. And these are perfectly decent guys. I—you know—I respect them, and they helped me out when I was at problems with Solomon. And so, they’re—they’re not bad people at all. But to make the money they didn’t have and didn’t need, they risked what they did have and did need. And that’s foolish. That is just plain foolish.
I’d doesn’t matter what their IQ is if you—if you risk something that is important to you for something that is unimportant to you, it just does not make any sense. I don’t care whether the odds are a hundred to one that you succeed or a thousand to one that you succeed.
There are few other investing stories that have been co-opted by people to sell financial products as much as the LTCM story. It’s a story that launched a million investment product PPTs. This episode reminds me of another popular story involving survivor ship bias. No doubt you’ve seen this image floating around on Twitter threads. The story goes thus: during World War II, the Statistical Research Group (SRG) at Columbia University was trying to figure out better ways to protect bomber planes. So they looked at all the bullet holes in the planes that had returned, and they figured reinforcing the areas with holes would make them safer. However, Abraham Wald, a Hungarian statistician who was part of the group, noted that the group was looking only at the planes that had returned—the most damaged planes were the planes that had not returned. So he recommended adding armor to the least damaged parts of the planes. The inference was that if the planes had returned with bullet holes, that meant they could survive getting hit in those areas.
It seems to me that the whole trope that genius doesn’t equal success in investing based on the failure of LTCM is a little overdone. What about the actual geniuses who are successful?
A couple of other good reads on survivorship bias:
Most of us are regularly fooled by the survivor bias. Consider the plethora of business books readily available in airport bookstalls that feature the most successful companies. Smith analyzes two of the best sellers in the genre. In his 2001 book Good to Great (more than three million copies sold), Jim Collins culled 11 companies out of 1,435 whose stock beat the market average over a 40-year time span and then searched for shared characteristics among them that he believed accounted for their success. Instead, Smith says, Collins should have started with a list of companies at the beginning of the test period and then used “plausible criteria to select eleven companies predicted to do better than the rest. These criteria must be applied in an objective way, without peeking at how the companies did over the next forty years. It is not fair or meaningful to predict which companies will do well after looking at which companies did well! Those are not predictions, just history.” In fact, Smith notes, from 2001 through 2012 the stock of six of Collins’s 11 “great” companies did worse than the overall stock market, meaning that this system of post hoc analysis is fundamentally flawed.
“How do you respond to the argument that Steve Jobs, Bill Gates, Michael Dell, and Mark Zuckerberg—all billionaires—dropped out of college?” I asked.
“And what about ‘John Henry’ and the 420,000 other people who tried ventures and failed?” Smith responded. “It’s a classic case of survivor bias. We make judgments about what we should do based on the people who survived, totally ignoring all the guidance from the people who failed.
I really admire Professor Damodaran because he’s one of the most intellectually honest and self-aware people in finance. In an industry that revolves around big egos and personality cults, that’s a rarity. I started listening to a conversation featuring Professor Damodaran, and the start of the conversation stood out to me because I had read a tweet related to the topic:
Professor Damodaran: Let me pause you right there. I am not objective, but I’m open about my bias. So anybody who ever claims to be objective is right off the top line. None of us as human beings is ever capable of being objective. All we can do is be open about our biases. I am open about my biases.
Larissa Fernand: Okay then, let’s start with your biases. Can you tell me a bias that you have successfully overcome and one that you are combating with right now?
Professor Damodaran: I don’t think you ever fully overcome a bias because it’s built into you. It’s in your DNA. All you can do is be aware of it. So I’ll give you an example. I love Apple as a company. I’ve loved it since 1981 when I bought my first Apple. And I struggle with that love of the company every time I evaluate the company. I can’t make it go away. It is there. But one of the things I can do is when I make a choice, I can always step back and say, “Did I make the choice because I like Apple as a company?” But I make a choice based on something that’s more soft, something based on the numbers. So I think it’s an ongoing process. You never get rid of it because it constantly recreates itself.
The tweet was from Steve Stewart-Williams about a new paper on bias blind spots. I couldn’t find an open version of the paper, but I found a different study on the same topic:
“When physicians receive gifts from pharmaceutical companies, they may claim that the gifts do not affect their decisions about what medicine to prescribe because they have no memory of the gifts biasing their prescriptions. However, if you ask them whether a gift might unconsciously bias the decisions of other physicians, most will agree that other physicians are unconsciously biased by the gifts, while continuing to believe that their own decisions are not. This disparity is the bias blind spot, and occurs for everyone, for many different types of judgments and decisions,” said Erin McCormick, an author and Ph.D. student in behavioral decision research in CMU’s Dietrich College of Humanities and Social Sciences.
We’re perfect; it’s the other people that suck!
The road to ruin is paved with good stories. This piece on market delusions was really good. Investors will be far more successful if they just diversify broadly with low-cost index funds and do something useful in their lives, like watching Fabulous Lives of Bollywood Wives on Netflix.
The key point is that when an investor bets on a new technology or industry becoming huge based on the size of its potential market, even ‘diversifying’ by investing in multiple companies within that industry won’t necessarily protect them from losses, because when the entire industry becomes overvalued, the resulting correction is likely to affect everyone. The simple way to avoid getting caught up in big market delusions is by remaining broadly diversified across markets – and for advisors, the lessons learned from previous examples of big market delusions can help guide clients on avoiding the next one!
While their findings document that a demographic drag could be the new normal in the upcoming decades for most OECD countries, economic growth depends not only on how cohorts change but also on how labor productivity changes with improvements in functional capacity as longevity rises. Improvements in functional capacity can cushion much of this slowdown. Thus, perhaps the consequences of population aging will be less severe than demographic predictions suggest, as immigration and technological progress can reduce the demographic drag by cushioning labor shortages, automating physically demanding tasks, and creating age-friendly jobs.
That’s it for this week. Go make someone laugh but try not to punch little kids.
I was 
