Why I Believe in Santa: The Untold Story

Sometimes we take a short sighted view on what is really true. We become obsessed with illusion that we can really "know" the universe. And this leads to conclusions that certain items aren't real when the evidence of their power lurk all around us. I am of the opinion if something changes the world it is real. And Santa is one of those things.

I know there isn't any land at the North Pole, let alone a fat man in a red suit with turbo charged reindeer and pool of free elf labor. But it doesn't matter, Santa magic works anyway. He is alive and well inside everyone who plays the game. And the game teaches a powerful lesson in an unique way.

Once you had been sent gifts by Santa you are part of the tradition. In the TV show Third Watch there was a powerful episode where a homeless girl calls out the police officer Sulley for his dislike of Christmas. "You forgot what it was like. You forgot what it was like to have a person who was going to fly around the world and deliver a present just to you." In the end of course, Sulley hadn't forgot. He had only been distracted by the naysayers. He did remember and by remembering he felt the touch of Grace and its transformative nature.

Santa gifts are sent to kids, who have no means to get them any other way. They are gifts they can't be repaid to the giver. They are gifts of Grace in shining wrapping paper. And gifts of Grace transform us in ways that nothing else can.

The kids don't get it while they believe, they just feel the joy. And that joy is a seed that grows in them into a need to pay it forward and make sure everyone gets that feeling. It sprouts up in buses filled with toys for those we fear won't get that feeling because their parents, or their lack of parents, can't afford it.
Santa leads people to endless bell ringing in the cold windy dark winter. Santa leads people to do things that they don't do for 11 months a year.  Santa is empathy that lies asleep in our everyday lives. A place most of us usually give a meer trickle of a thought sprouts bright with light in the dark days of the Winter Solstice.

So you might say there is no such thing as Santa but I do remember that feeling. And so I believe.

The Arizona Purple Frog and Why We Should Take Up Ayn Rand On Her Offer

I am not sure if I am a Occupy Wall Street guy or not, mainly I can’t quite figure out what they believe.  But I understand the frustration of people who are tired of having rich guys pay their way out of trouble. As Al Lewis says in this weekend Wall Street Journal Supplement :“Either the SEC is a thuggish extortion racket, shaking down private corporations for hundreds of millions of dollars with baseless allegations, or some of America’s biggest companies have evolved into the world’s most sophisticated crime syndicate. “ I am would probably go with the later, as does Lewis when he say’s “They pay millions for the privilege of stealing billions, while the regulators take bows, arguing that civil fines represent an efficient form of justice.” Luckily one judge, Jed Rackoff, has at least stopped and given a pause to this practice, possibly from all of the noise caused by the Occupy movement.

Some of the movement seems to be total free market and parts seems to be anti-bank and anti-capitalist.  You can’t really both, banks are who make money in a capitalist economy, the rest of us are just exchanging services. Banks take money that they “buy” from the Federal Government and invest in a ratio that is governed by the assets they hold. This new money is what creates new businesses. Financial Services have done a really bad job of this lately and brought most of the free world down with their folly. Their problem was thinking that they give credit, they don’t --credit is earned. Playing loose with the rules is no different than going to Vegas and betting it all on red.  But the problem is we have gotten what is or isn’t capitalism mixed up.

Prices –you have one

Price is what drives a free market economy. Prices are information that tell us how you feel about things. Capitalism is driven by prices.  The fact that you don’t own the safest car tells us you have a basic price for the amount of safety you desire. Even if you do own the safest car on the road, you are still OK with other people paying a low price of safety. One of the problems in a capitalist society (and why a pure one won’t work-but I will get to that) is that public goods are free of price but not free of a cost. The article “The City As A Distorted Price System” blew me away when I was an undergraduate studying the economics of Baltimore at Towson State. The traffic problem is a problem of a free goods, no one stops and considers it’s cost. So you have crowded streets in city that  cost time and frustration and in turn money. People back in D.C. know that people will pay money for less traffic because in Virginia because there is a toll road that runs along side a free road and it does fairly well.  Public goods cost are a tough pickle in every society but one of the trickiest in a capitalist society. So what should we do? I think Ayn Rand had the answer, though it was not the answer she came up with!

Ayn ain’t so bad but…

Before I rip Ayn Rand, let me note that she is an easy person to dislike but she does have some good points. Ayn Rand tried to prove humans have undeniable rights and did a fairly decent job. She also pointed out that people have two basic choices in life to deal with each other, Money or Guns, and that is the conclusion the scientist Steven Pinker came up with his book The Better Angels of our Nature: Why Violence Has Declined. She also noted that the 60s movements would lead to the force answer and once again Pinker has the stats in his book to back up that the 60s were a time when violence took an odd upswing. She also noted that Big Business are a persecuted minority which is true, though not like they imagine.  But she feel short on a couple points and this leads to an error in her conclusions.

First off she has the belief that a person who becomes an industrialist would be good at everything. I hear people spout this nonsense at graduations all the time, “You have learned that you can anything.” If you learned that you need to go back to school, what you should have learned is that you are better are certain things and get more value by doing the things you are good at doing. Rand had a romantic notion that a smart person would be good at anything and that is what she created her characters to be, people who can do anything. But Capitalism requires people to do the thing they are best at  and trade with other people who something else good.

Her second error is similar to her hero Aristotle who fell for the same mistake. This example is usually used with bears and people miss the point so I have come up with a new spin on a classic:

How valid is the following conclusion?

Frogs in Arizona are purple.

Billy found a frog in Arizona.

Billy’s frog is purple.

The conclusion of course is not valid because the first statement is undeniably wrong. Logic only works if the premises it relies on are true. As we geeks say,”Garbage in, garbage out.”

So Ayn’s second problem is that a few of her assumptions are just flat out wrong. Humans are not logical, they can make mistakes with perfect information. So you can’t conclude that when a person does something that  it is their best option. And this here is the most damning assumption because if people can be incorrect in their beliefs of what is best for them, you can’t say that them “taking a deal” is proof that they are better off with the transaction.  But oddly enough, Ayn’s hero John Galt has the answer to our problems.

John Galt has a huge tax bill

In Atlas Shrugged, the premise is the hero, John Galt, escapes away to a utopia where people pay for their exchanges. If a person wants something they should be willing to pay someone a price for the good. So let’s look at how John Galt got his money. An industrialist requires a lot of goods they didn’t pay for or expect to pay for. First, off you need an educated public. Since the majority didn’t pay for their education but you are willing to pay a price for this, let’s start off the tally with a payment to a public fund for education. Since a successful industry has lots of people, this will be pretty large. Second, you need a legal system to enforce the laws. Military, police, court and especially copyright law will be a pretty big cost.  If you don’t think you need it, then go on over to Chad or some other system without a stable military and police force and try making your product. Third, an industrialist needs an infrastructure of roads, highways, ships and cars to sell the amount of product to make a commodity profitable. You also need an infrastructure for employees to allow them to live in proximity to work for you.  You can follow this logic further as Robert Frank does in his book The Darwin Economy: Liberty, Competition and the Common Good (who shreds Rand’s arguments with her premises with sound economic logic)  but I will leave it here.  My point here is simple, if a person claims to want to pay a fair amount, they must conclude that should pay for public goods.

Tea For Two

The Tea party claims they shouldn’t have to pay taxes. They say we need to cut spending. However there are times, especially now, when not spending money raise the deficit. Sometimes paying for stuff on credit saves money in the long run. The most obvious example, which I pull from Frank’s book,  is paying for roads in Nevada. If you wait until you have more money to fix the roads, they cost 18% more than they would now. Therefore, if you borrow money now at 5%, you are saving in the long term. So if you believe that public infrastructure is something that should be a good, you have to conclude deficit spending would be good in this case. The problem is when we cut taxes, we actually end up making the waste percentage go up.

People are elected with large donations from people with large wallets that expect payback. This is a fixed cost in our system, so less money total means less money for legitimate items. If people pay for something, they expect something for their money. The only way around this scenario is to not let people pay a lot of money to people who are running for office but I don’t see that happening any time soon. It is not politically feasible but I do have an interesting political item that maybe the Occupy people could push enough to make it feasible.

Incorporate and Ditch

I was appalled on a recent 60 minutes to see the head of Cisco claim that the taxes are too high and so he has hide his cost in Switzerland taxes. Of course, he says that from his office in the United States. He, and his company, is a free loader, flat and simply. He wants to dine and they sneak off without the bill because another restaurant has a smaller check.  He claimed that the U.S. should lower its corporate tax laws. I got a better idea, how about we stick these cowards with the check. The solution is simply, any corporation that first incorporated in the U.S. and then moved out of the U.S. would face stiff barriers for entry of all of their products. If Cisco wants the educated public of the United States and bask in our prosperity but not pay for it, well, you can pay for each item that you “import” into the country. You don’t’ want to be part of this country, it is time to put your money where your mouth is. There will be plenty of people who have a new competitive advantage from your tariffs and they will pay their share. Plus, we could make a very public spectacle of this and have people on the list of “tax” dodgers. And let the boycotts fall where they may.

So if Occupy Wall Street wants to do something like this, I guess I am down with them. However, you have to remember that if you want a free economy, you need to pay for what you get. Because in the long run, somebody does.

The upside of hypocrisy

Hypocrisy has gotten a bad rap. And I admit I am one who has played the hypocrisy card before to note the lack of consistency of people’s arguments. But not anymore, hypocrisy is a godsend and I fully condone the lack of inconsistency of people’s values, especially the religious ones. If people really believe the crap that they say they believe in, the world would be a pretty sad place. But luckily, people have stopped going to the logical conclusion of their confounding views. This is one of the amazing insights I learned from Steven Pinker’s latest book The Better Angels of Ourselves: Why Violence Has Declined. 

Getting better, really???

The premise of the book is that we are living in a time with an unprecedented low level of violence.  I just lost of few of you right there with mental retorts such as what about WWII? Vietnam? Insert violent tragedy here.  He knows you won’t believe him, so he goes through the history of humans from prehistory to present and dissects his points one by one. He is a good scholar and is very detail oriented. I would normally say go ahead and read about the evidence, and you can. However, let me warn you that a non rose colored view of our past is very disturbing. I will never hear the term “drawn and quartered” in the same way again.  As he noted and I agree I wouldn’t do some of the stuff that was a public spectacle for everyone to enjoy to the worst person I can imagine. As L.P. Hartley notes and Pinker reiterates “The past is a foreign country: they do things differently there. “

The sad fact is that the people of the middle ages were more consistent with their beliefs.  As Pinker notes:

Institutionalized torture in Christendom was not just an unthinking habit; it had a moral rationale. If you really believe that failing to accept Jesus as one’s savior is a ticket to fiery damnation, then torturing a person until he acknowledges this truth is doing him the biggest favor of his life: better a few hours now than an eternity later. And silencing a person before he can corrupt others, or making an example of him to deter the rest, is a responsible public health measure. Saint Augustine brought the point home with a pair of analogies: a good father prevents his son from picking up a venomous snake, and a good gardener cuts off a rotten branch to save the rest of the tree.35

Pinker, Steven (2011-10-04). The Better Angels of Our Nature: Why Violence Has Declined (Kindle Locations 656-661). Penguin Group. Kindle Edition.

Luckily, people aren’t that consistent in their actions and beliefs. Again Pinker notes:

[The] people in the West today compartmentalize their religious ideology. When they affirm their faith in houses of worship, they profess beliefs that have barely changed in two thousand years. But when it comes to their actions, they respect modern norms of nonviolence and toleration, a benevolent hypocrisy for which we should all be grateful.

Pinker, Steven (2011-10-04). The Better Angels of Our Nature: Why Violence Has Declined (Kindle Locations 666-668). Penguin Group. Kindle Edition.

So when people like Bill Maher complain that perfectly rational people somehow believe these illogical things, as he does in his movie about religion, you need to say that is ok. Let them spout their ideas but lets just make sure they don’t make these points some action items to be done by Thursday. Because if history is teacher (Ok, it really isn’t, just a figure of speech), the antics of the hypocrites are pretty mild.

The downside of utopia

But Maher goes too far and states that religion is dangerous.  It is really a idea of a perfect world that is the danger. The big 3 killers in the 20th century were not religious but secular but they peddled a very tempting caret. If you want to kill someone, you need a good idea. The idea has to be about a perfect place because that makes the economics of the idea work. If someone complains, their needs versus the perfect place makes an easy decision. Kill them for the good of all.

Note that any utopia would do. And we can see now that throwing in some extra virgins is a nice touch for utopia conscious radicals today. Of course, this shows one of the problems with the old ways. In short, guys are assholes who believe in honor and will kill you if you don’t believe it. But before I get too sarcastic, let me break down Pinker’s argument in USA Today form.

The dance to peace

Pinker’s argument is complex and full of maybes, so if you are looking for easy answers from someone who is sure of things, don’t bother. In other words, this book won’t be on FOX news any time soon. But here is basically the argument in a nutshell.

Humans were very violent in prehistory just likes our bros the Pan family.  Slowly Leviathan states emerged and started a slow reduction of violence by being the better bullies. Ideas like manners started to give us the idea that we could control ourselves. Reading comes along and allows us to actually be able to put ourselves in other people’s shoes. This leads to the ideas of the Enlightenment and rights.   Nationalism comes along to mess things up for awhile but the liberal ideas of person hood prevail. In fact, the ideas expand and bring about the removal of slavery, women suffrage, race equality, animal rights, children’s rights and gay rights.  We also pick the ability to reason more abstractly and unites some of the Leviathans and start to limit the power the Leviathans.  

Pinker is no Pollyanna and knows that there are huge problems to our current world and it is no utopia. But he sheds insight on the facts of how we have it pretty good compared to the ancestors and that we should be grateful.  But along the way he also shows us when it is not to be ok with hypocrisy.

A line in the sand with Elton John

Pinker shows that there is a line that can’t be passed by or it could lead us back to the bad old days.  The line is a very American idea that we picked up in the Enlightenment and have slowly start to realize with radical leaders like ML King.

A person is a sovereign being and as long they don’t hurt anyone else, they should be left to be.  That is why I can’t ever let the Christian gay bashing stand because they have tried to remove or limit the rights of people. Ok, you don’t have to believe in Evolution. The people who matter believe in it and save your stupid self. But you can’t reverse the rights of people or try to spin your tribal crap to limit their rights. Christian nation is a bad word. Heck, American nation is a bad word. We are not a nation, people of a tribe, we are a people. A flag or a commitment to God is not our claim to fame. We thought long and hard and put our best thoughts to paper in a Constitution. Because we did that we were able to eventually see the errors of our ways and are closer to people being equal in the eyes of the law than anyone could probably imagine. IN GOD WE TRUST. I don’t think so. In reason we trust. And you know what, we have gotten pretty good results from it.

A tale of two technocrats: Steve and Bill

When I had graduated from college, I took up the task to make a list of people whom I admired due to a suggestion from a book by Dale Carnegie.  Steve Jobs was on the top of the list. I didn’t own a Macintosh but I yearned for one.  And in reality everything that Steve was selling I was buying. Steve Jobs sold dreams and it was a dream I wanted to own, to change the world.

Bill Gates never claimed he wanted to change the world. He wanted to build and sell software. Bill was an engineer. He was a nerd. I never really wanted to be Bill Gates. He was Darth Vader and Steve was Luke Skywalker.

It is so odd that now that Steve is dead and we take note of the changes that have happened due to these two visionaries, I have come to a surprising conclusion.

1984

 

The Best of Steve and the worst of Steve

Steve Jobs did change the world. Steve had a vision of the relationship between humans and technology that is unparalleled. Steve could take a complex idea and make it simple. Because of that,  the list of items that he helped to create is truly mind blowing. Apple II, the Mouse, Object Oriented Programming, Graphical Interfaces, Desktop Publishing, Macintosh, Newton, Computer Animated Cartoons (Pixar), iPod, iPhone, and iPad is list unequaled by anyone. In fact, the computer company that he created after being kicked out of Apple, NeXT, was the type of  computer that created the world wide web. This places him on every considerable important technological breakthrough of my life.

Everyone agrees that his methods pretty much made him an asshole. He was hard to work with and disrespectful of people. He had a problem with authority. However, the problem he always had was when he wasn’t the authority. When he was the authority, he was

OK with the idea. He marched to his own drumbeat but sometimes that meant he danced alone. But when we he worked his magic we all couldn’t help but watch and smile.

The worst of Bill and the best of Bill

Bill Gates was a programmer. He wrote code and had the vision to know that he should drop out of Harvard to start a company that could only be a success at that moment. He did the dirty work and created something that didn’t exist. He was a man of details. He sometimes did things that caused people to despise him.  He was known to not play fair. Many thought he was trying to take over the software industry to rule with an iron fist from his Redmond office.

Bill  Gates is now a philanthropist. He is a billionaire. He gives away large sums of money to help change real tangible problems. Bill is changing the world. However, his approach is not as sexy as Steve. He uses money to solve problems like health issues in the 3rd world. He puts his money where we never knew his mouth would be.

Change for whom?

So the conclusion is obvious that both of these men have changed the world. But the worlds they changed are quite different. Steve has changed the world for the middle class and Bill has changed the world for the voiceless. As Johnny Test says in every cartoon, “I didn’t see that coming…”

Steve changed the world for people who could pay his price. All of his products are overpriced, even today. I have an iPad and MacBook because my work gave them to me. I would never ever pay the price for this devices because they are not worth it.  We want Steve’s products because he is cool and if we have them we are cool too. But coolness has its price…

Bill changed the world for the people who could pay no price. His charities are changing the world for people that none of us know about. Bill is once again about the details and keeping the vision to himself, though is slowly letting that be known.

His own worst enemy

Steve for all of his vision is really his own worst enemy. His characteristics that make him an amazing visionary make him an amazing jerk.  Steve is the perfect mix of the hippy culture and Silicon Valley and has all the virtues and vices of both.  He is a millionaire that doesn’t care about money. He let his own opinions override the doctor’s recommendations for surgery and it more than likely cost him his life. 

He actually never did the detail work on any of his products, he was actually a rotten engineer, yet was always accusing other of stealing his ideas. He is even doing it now from his grave claiming Google stole his ideas from the iPhone. 

It’s just Steve being Steve.

Steve would speak so eloquently that he would always lift my spirit and make me remember what is so great about being alive. For example:

Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while. That's because they were able to connect experiences they've had and synthesize new things.

Design is a funny word. Some people think design means how it looks. But of course, if you dig deeper, it's really how it works.

For the past 33 years, I have looked in the mirror every morning and asked myself: 'If today were the last day of my life, would I want to do what I am about to do today?' And whenever the answer has been 'No' for too many days in a row, I know I need to change something.

I'm an optimist in the sense that I believe humans are noble and honorable, and some of them are really smart. I have a very optimistic view of individuals.

No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new.

Technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them.

Stay hungry, stay foolish.

But there is one quote that I find terribly disturbing that I heard him say on 60 minutes.

You are born alone and you die alone.

This is both empirically and spiritually wrong. You are never born alone, there is always at least one person helping you come into this world and has helped grow to a point of departure. And if you are lucky, as Steve was, there will people with you when you die. And as the cliché goes no one ever thinks on their death bed that I should have spent more time at work. It bothers me that Steve didn’t seem to think that. He was at Apple trying to change things for strangers until the very end. The latest iPad is not that important in the long run.

How can someone be so visionary and so blinded to his own journey?

Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something - your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

Steve always had trust in his vision and in the end, he went down with the ship.  When I connect the dots, I am a little disappointed in my hero.  His arrogance has robbed us of what he would do next and in the end I am not sure he understood the beautiful poetry that fell from his lips like manna from heaven.  But in the end the love he gave to the world is more than he took and I am thankful for his vision. So I guess I just want to thank him for inspiration and the lessons he taught me, good and bad. He gave us great times and we are the worst for his departure. R.I.P. Steve Jobs.

Haboob has nothing to do with anatomy

It is very interesting to see the terms Dust Storm and Haboob merge today on Wikipedia. If you have never looked at the history tab on Wikipedia check out this one as it interesting. The change from Haboob being localized from Sudan to Northern Africa/Middle East to everywhere is documented in the history. Also fun to note the first stub reads “boobies boobies boobies.”

http://en.wikipedia.org/w/index.php?title=Haboob&action=history

http://en.wikipedia.org/w/index.php?title=Dust_storm&action=history

A few weeks ago I was looking up the causes of a dust storm and saw this word and thought it was odd. I asked a bunch of people and no one heard it before. Today everyone and their grandmother is using it.

I think it will be interesting to follow this google ad words query in the next couple of weeks.

http://ngrams.googlelabs.com/graph?content=haboob%2Cduststorm%2C+dust+storm&year_start=1960&year_end=2008&corpus=0&smoothing=1

Plus, interesting how the word has evolved recently in the book world.

http://ngrams.googlelabs.com/graph?content=haboob%2Cduststorm%2C+dust+storm&year_start=1960&year_end=2008&corpus=0&smoothing=1

Now, when people want to talk about a dust storm they Google it and what Wikipedia says becomes gospel. They use the “unique term” to sound smart and it spreads. The AMC claims the term means  “A dust or sandstorm caused by the downdraft of a desert thunderstorm.” Does anyone know if that latest Phoenix sand storm was caused by a downdraft of a desert storm?

Could the new high battle ground be he who controls Wikipedia or the Google algorithm? He who edit last controls the truth…

The Skittles-PP Equilibrium or Why Economics is hard to predict

Steven Leavitt had a problem. His young daughter was refusing to become potty trained and his wife was at his wit’s end. Leavitt intervened with an economic solution because he is an economist. Economics is about incentives, he just needed to find the proper motivation and he found Skittles to be his daughter’s favorite. So he made the bribe, every time you go to the potty in the proper fashion, you get Skittles. Quickly, his daughter towed the line and Leavitt gloated of his brilliance. Then something went astray. His daughter who did not have the bladder control a week ago could now squirt out what was once one session into multiple sessions to get more Skittles. Leavitt, the author of the Freakonomics books and an economist at the University of Chicago, tells of this story as an example of why economics is a tricky science.

There’s Easy and There’s Easy

The truth is always hard to discern and part of it is just the mere dynamics of systems. For example, the weather cycle is a simple system but because of the relationships of the variables to each other a minor change can cause a qualitative change,.i.e. the Butterfly effect. The science of complexity was born from a model simulation of the weather when the scientist took a shortcut and left a minor digit off a fraction

.  (See http://www.amazon.com/Chaos-Making-Science-James-Gleick/dp/0140092501/ref=sr_1_2?s=books&ie=UTF8&qid=1309919214&sr=1-2 for more details on this concept.)  

So simple systems usually don’t stay simple in their results. And due this fact an odd truth emerges. The truth of simple systems is they give complex results and thus the truth is complicated. And that’s a good general rule of thumb, if the hypothesis is simple and clean, it has a high probability of being incorrect or incomplete. If it has a tons of conditions, the probability of truth is higher.

(For a detailed explanation of this concept, please see http://www.amazon.com/Wrong-us---Scientists-relationship-consultants/dp/0316023787/ref=sr_1_1?ie=UTF8&qid=1309919046&sr=8-1 or http://www.amazon.com/Being-Wrong-Adventures-Margin-Error/dp/0061176052/ref=sr_1_3?ie=UTF8&qid=1309919046&sr=8-3 )

Economics is one of these simple systems with complex end results. The problem is people want easy answers. Similar to Bart Simpson who claimed his opponent “thinks there are no easy answers. I think he isn’t looking hard enough!”, all types of politicians and pundits claim an easy fix.  The economic system is an easy to understand system:

People who create items of worth for people who have something to exchange for items of worth creates wealth.

Of course, you can see this quickly recurses upon itself and becomes a infinite loop of possibilities. Because this is a very hard to predict and more importantly control, and so this has been simplified to a couple of often used shortcuts.

John Maynard Keynes is dead

John Maynard Keynes proposed a simple solution. When inflation heats up, raise the cost of money, and when employment becomes a problem. lower the cost of money. His critics pointed out that in the long run, inflation would be a problem. His response was in the long run we are all dead. Now it is true, that JMK is dead, we aren’t and live with the consequences. As Nixon claimed “We are all Keynesians now.” And the fact that inflation has distorted the world economy and created “lumpy” money is just what his critiques predicted. Oddly enough the idea of “Stagflation (inflation and unemployment)” quickly emerged due to the OPEC crisis in the 70s yet no one seemed to notice this obvious sign that Keynes was using a simplification that was in fact false.

Ayn Rand is dead too

 Ayn Rand is famous for a simple idea “Pure Capitalism is the key to a just society.” In her defense she said that that capitalism couldn’t exist without a rational populace, but she wasn’t a real stickler for details either. When I hear people campaign that (Pick either Capitalism, Socialism, Communism, or any other word ending with ism) is the answer or the problem to (insert problem), I have one reaction. The person is a ideologue who isn’t interested in any empirical science.   The first obvious retort to any of these is that not one of these ‘isms” have ever existed in a pure form. So sentences like “when America was Capitalist we were better off” or “Since (insert Scandinavian country) is Socialist they are better off”, I can only roll my eyes. Once again the true answer is easy and complicated. Every economy on Earth is a mixed economy, the differences are only in degree. To say any different is to take a strong stand against the empirical evidence.  And saying X country is better/worse off is an aggregate that you pick your facts to prove your point. So this is crap thinking pure and true. So what is the proper thinking? Well, let’s go dancing with the stars.

Samba Economics

Brazil wasn’t touched by the financial crisis of 2008 which is an odd fact that illustrates the dynamics of an economic system. As Silva stated on 60 minutes, it took a socialist to bring capitalism to Brazil. Brazil figured out a great answer to the question that had great political and economic consequences. There were lots of poor people in the country, they gave them a stipend. This poor didn’t have basic durable goods, think washers, dryers and other capital consumer items, and Brazil had people who could create these needed items from the resources that existed. People who have something to sell meet people who have money and voila you have economic happiness. Note without the government pushing money to the poor, this doesn’t happen. And note that if they didn’t have the knowhow to build these goods, this doesn’t happen either.  The answer isn’t pushing money to people if they don’t really have a need to buy what people are selling. So though I appreciated the money earlier in the decade I wasn’t surprised it didn’t do much for the economy.

So what is the answer to our problems

In reality, I don’t have the answer. But I do have suggestions and warnings against some obvious things that won’t work. Let’s start at home.

A regressive tax (retail tax) is never an answer in a bad economy. The fact that AZ gives back retail tax at the end of the year via the long AZ140 form makes it even more stupid and more regressive. Taken more money from those with less money won’t fix anyone’s problem. The proof in the pudding of course, the schools still need money-we need to look somewhere else.

Pushing more money into the economy without making anything else just causes inflation.  Got to have a plan to push that money into an industry that capitalize some resources we aren’t using (like those who are still unemployed or those who are overeducated for their current employment). I like some of the Prez’s idea but I don’t think there is a glut of individuals with green technology skills to save us so that won’t do the trick.  Time for some crazy ideas like a census of talents of those who are unemployed and some targeted industrial incentives, not just mo’ money. But then again there are too sides to the equation, the question to answer is what do people want that we have the ability to create but aren’t and how do we get them making it.  I admit, I don’t know what that is. But let’s start to ask the right question and stop doing stuff that hasn’t worked before.

The Story Amplification Consequence or Why A Good Story Leads Us Astray

Chris Mullin sat in the ESPN studio after hearing Nick Fridell’s arguments on why Derrick Rose was not the MVP of the NBA. The fact that he didn’t have the most statistically dominate year and that his team actually had a better plus-minus ratio (net points) when he was NOT playing.  Mullin, an all time great, listened and then summed it up in a very common way.

“I don’t know about all of that but I know what my eyes see and Rose is the best.”

Mullin’s statements were in the majority and Rose was awarded the MVP. Fridell claimed that the reason Rose was considered the MVP was that he had the best story line.  The reasons for Mullin’s eyeball estimates are very common and a natural consequence of normal human thinking that we all engage in. They are highly irrational but as Dan Ariely notes they are predictably irrational.  Mullin’s thinking could summed up in this way. Chicago was mediocre last year, this year they had the best record in the NBA, Derrick Rose has improved this year and is the best player on the team. Derrick Rose is the cause of the Chicago Bulls having the best record in the NBA and thus the most valuable player this year. There a few things wrong with this argument but first let’s start an experiment to demonstrate the issue.

Let’s start an experiment

Ok, this experiment is easy. I will give you some sets of three numbers and you need to figure out the pattern. After I give you a set of numbers write down what you think the pattern is and a couple of other examples that might be in future sets and how confident you are of your hypothesis. I am warning you ahead of time, the pattern is the easiest answer.

{2,4,6}{4,6,8},{6,8,10}

Ok, write down your thoughts. Remember don’t overthink it. Pattern, future examples and confidence level.

Back to our story

One of our biggest weakness in understanding phenomenon is that we are always looking for a cause of the phenomenon. We are very blind to the products of randomness. Sports is really a beautiful illusion and we see causes where randomness would better explain things. The illusion of a “hot” shooter is one of the best. The idea of a hot shooter is an illusion and was proven experimentally to not exist (Gilovich, Vallone, and Tversky).  But anyone who has played and watched basketball knows that it really seems like a person is just hot. I can recently remember thinking that Kevin Durant just can’t miss in a recent playoff game. The reason is partly a bias in the way that we look at things, we are skewed to look for a pattern.

We always look for examples to prove our point and ignore examples that don’t support our point. Show me a baseball player that has a hit in 5 of his last 6 at bats in August and I will show you a batter who has hit in  5 of his last 7 at bats.  Show me a hitter in August that is 1 in his last 10 at bats and I will probably show you a hitter that is 2 of his last 11 at bats. You see 5 of 6 is a better story than 5 of 7 and 1 of 10 is better than 2 of 11. That natural instinct to make meaning in sets of data is a natural instinct and is ground into us from evolution’s mortal consequences.

Let’s look at some more numbers

Back to the experiment… add the following sets to your data;three,five,seven and five,seven,nine. Ok once again, write down what you see as the pattern, some future examples and your confidence in your answer. And back to the story…

It is just a lion, don’t run

Making rash judgments of casual effect has an evolutionary advantage but is not as helpful in our modern world. Seeing a lion and quickly running away because you saw a person get eaten by a lion once is not a logical conclusion.  However, it is a good bet and more than likely the best choice. The expected value is easy to calculate and it has a certain appeal. So logically if you have only seen one lion in your life and it maimed the person who didn’t run, you can’t conclude that all lions will maim you if given the chance.  However, the probability that the lion will maim you times the consequences (your health) versus the probability that the lion will not maim you and the benefits(you see a lion up close) make this an easy decision.  The expected value tells you that you should run and that is what your ancestors would have done given the hypothetical. But here is the funny part of the story, if you (person who lives in the United States) see a lion up close it is very unlikely that the lion will NOT kill you. And this odd fact is an example of how our modern world differs from the ones our ancestors lived through.

First, lions are not indigenous to North America and thus it is very unlikely that you will meet one walking down the street. Most likely you will see lions in a zoo or an animal park. In a zoo you will not need to run because the lion will be secured away such that they are not any threat. In an animal park like the wildlife park we visited last summer, the lions are actually tame and used to human contact. The lions would actually play games with their human wardens. If you were given access to go in the cage with the other trainers, the probability of your safety is actually rather high (mainly because the company would have to be awful sure because if got killed it will kill their business). So in the possible reality space of your life, if you see a lion up close you shouldn’t run. And in reality you have probably have seen a lion fairly close and didn’t run. But that first story about your distant ancestor seems reasonable.  It’s a good story for sure and easy to imagine and there lies the problem.  Our love of story and inability to imagine patterns of randomness is in fact why sports is so popular.

The beautiful illusion

I know that my position on the couch during Maryland’s national championship had nothing to do with their victory. But I also know I wouldn’t change my position once MD was in the lead. I know that most of the drama of sports that I perceive is nothing but a playing out of random processes. I also know I have nothing to do with the game as a fan watching it live or semi-live via TiVo but my human side feels that is true.  I know my mother-in-law has nothing to do with Maryland losing a 10 point lead in the last minute against Duke. However, the story is pretty good and makes have a certain odd “truth.” Here is the story: We went up to Show Low to watch my mother in law get baptized. Later that night we watched the MD and Duke game and Maryland dominates the game for the first 39 minutes. The announcer says “It will take a miracle for Duke to pull this out!” My newly baptized kin then said “Ask and ye shall receive.” Jay Williams steals the ball and leads Duke to an overtime victory. Did my mother-in-law cause MD to blow the game? Obviously the two have no relation in real life but they are hard to separate in my mind. The story is so much better if God intervened on my mother-in-laws behalf to lead the Blue Devils to victory.  And story is hard to beat.’

The random occurrences in time during a game become a drama that I want to see how it turns out. Every fan knows that a blowout of 20 points is not as enjoyable as a last minute victory. As TNT notes, it is the drama. I like it for the same reason I like Law and Order, it unfolds in a way that keeps me guessing.  And that guessing leads to another fun and irrational activity, prediction.

It’s the end of the world and I feel fine

Humans love to predict the future. A character in a play that I wrote noted why he liked gambling, “I am the prophet for the profit.” We love to predict things and feel great when they come true. Whether it is the rapture or the next election or which grocery line to stand in, we get an odd pleasure in predicting the future. It shouldn’t surprise anyone that someone (again) predicted the end of the world but I don’t think enough about WHY we are so in love with prediction. Take for example the Monty Hall problem.

You are on Let's Make A Deal and you have your pick of 3 curtains with a big prize behind only 1 of the curtains.
Let's say you pick Curtain A (you can pick anyone but I will use A to help with the  demonstration). Monty opens up Curtain C and the grand prize is not behind the curtain. Do you stay with your pick or change it?

This created a big controversy when Marilyn from the Parade magazine told people that the odds were better to change their pick. Curtain A still has 33% chance and therefore Curtain B must be the 66% to even it to one. If you don't believe this, try this Monte Carlo simulation that I created to prove the point right here.  There are a few odd things about this problem. One, people who were professional math people couldn’t figure it out. Two, when people get the wrong answer, 50%, they feel that they want to stay and don’t want to change. This is odd because given this 50% scenario it shouldn’t matter if you change. But we like to stay with the horse that we rode in.  I think our love of story, especially the one where we defied the odds and picked the correct answer, is part of this bias.

Now back to the experiment

So let’s get back to the experiment. I have told you that it is the easiest solution and I willing to bet you think you have the pattern figured out. So let’s end the experiment with you applying your pattern to determine if you are correct. Which of the following sets are incorrect: {six,four,two } or {one,seventy, seventy three}

I am willing to bet that most of you saw the pattern in the first set and feel that I am tricking you. And your prediction is probably right, I am tricking you. The answer is (drumroll) the pattern is three ascending numbers. Therefore the second set of numbers is the correct one.  I told you it was the easiest answer and you can’t get more simpler than three ascending numbers. The problem is our minds want to find patterns and once they have found a pattern they stop looking for things that will prove them wrong. We want to find a cause but the world is full of randomness that masquerades as a pattern. Part of it is how we ask the question, so let’s do one more experiment with facebook account.

Today’s your birthday

What do you think the chance is that one of your facebook friends has the same birthday as you? Actually not great. What are the chances that some of your facebook friends have the same birthday? Almost a sure bet. These questions look the same to the untrained eye but are very different and turn on “How” you ask the question. Check it out for yourself now in your facebook accounts, if you have more than 100 friends there is high probability that 3 of your friends have the same birthday.

As you look through your facebook friends birthdays be aware that your pattern seeking brain will try to find hidden meaning but you shouldn’t give in to this fantasy. Looking at a dataset to find patterns and then claiming to see a cause for certain items is one of the most common mistakes in the scientific community. The proper way to look at any pattern in any large dataset is what is the chance that (insert number of occurrences) would happen randomly to any characteristic of the group. Let me demonstrate this from an example in my last job.

At Sun, an email would be sent out each month to tell everyone who had a birthday that month. In September, 4 of the 6 people in our department were on the list. Someone noted in a meeting that this was interesting and wondered why it was so. Were people with a programming mindset more likely born at a certain time of year, maybe environmental factors in youth or starting school led people to a mindset towards logic. Another employee noted that this showed that there is a slight boost in birthdays in this month due to the holiday seasons. Both of these are wrong because they are not asking the right question. The correct question is what is the likely that a greater than half of a small group in about 20 groups would have the same birthday month. It is actually fairly likely. The second statement is wrong because the person said “the holidays were the cause of the increased birth rate”. The question is what is the likely hood that a certain month will have more births than all of the rest, pretty high.  It is true that September is the highest birth month on most years. However, not every culture has the same holidays so it shouldn’t hold for non-Western cultures and it doesn’t. This is the confusion caused by seeing cause when there is correlation.

So the story goes…

Be aware that your brain wants there to be a cause. Your brain wants a story to explain what is happening. A good story is memorable and we are biased to think that the things we can remember easiest are the most common. So we have a story bias and that distorts our understanding of the world around us. Remember, random happens.