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Thursday, November 29, 2012

Assimilation Anecdote

My ancestors all came from Eastern Europe from what is now Poland, Belarus/Lithuania, and western Russia.  English was not the first language for three out of four of my grandparents.

By the time I came along, none of them had any foreign accent at all.  It was very important to them to adopt the language and culture of their new home when they immigrated here and they worked very hard at speaking English with perfect fluency and no accent.  They felt that opportunity, success and perhaps even survival were dependent on it.

I never once heard any of my grandparents speak anything but English (except for Hebrew during religious services).  In fact, it never occurred to me that they even knew another language.

Apparently, that they might know other languages never occurred to my sister either.  My sister is nine years younger than I am and when she was around four years old she was staying for a few days at our grandmother's house.  My grandmother received a call (extremely rare) from family back in Lithuania, and since the other party didn't speak any English, she began speaking Lithuanian (her native tongue).

My sister completely freaked out.  She had only ever heard grandma speak English and all of the sudden grandma was spewing forth what sounded like bizarre gibberish to my little sister.  My sister got really scared that something was seriously wrong with grandma and started crying and it took a while to get her to calm down.

That shows the extent to which my grandparents completely rejected their heritage and completely adopted as many aspects as they could of the United States.  You would never guess that they were immigrants.

The melting pot worked.

Now, the emphasis is on multiculturalism.  Immigrants and children of immigrants are encouraged to keep their language and culture.  They're not encouraged to assimilate.  Member of their group, sorted by culture, first; citizen of the United States second (or possibly third behind religious affiliation).

We'll see where that takes us, but as we seem to become ever more polarized and fractured, I wonder if that's part of the reason.

Monday, November 26, 2012

Breaking: CFTC Shuts Down Intrade in US

You've got to be kidding me.

From the Commodity Futures Trading Commission website:
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading. ...
Why aren't prediction markets a form of free speech?

Update: Harry Eagar points out that Intrade claims that it will be back shortly with a U.S. compliant platform.

HT: Marginal Revolution

Wednesday, November 21, 2012

Resilience and Collapse

In 1992, Francis Fukuyama famously claimed that we're at "The End of History" because the "struggle between ideologies is largely at an end".  While not everyone agrees with Fukuyama's assessment, the end of history implies that western civilization will also have no end and will continue forever.  Forever is a long time, but perhaps the end of history could mean that the span of our current civilization might be measured in tens of millennia instead of the tens of decades that have measured the length of every civilization that began and ended before this one.

On the other hand, many scholars, including Joseph Tainter ("The Collapse of Complex Societies") and Mancur Olson ("The Rise and Decline of Nations") identify powerful forces inherent in the formation of civilizations that sow the seeds for the decline and eventual collapse of the extended order.

Civilization is a society that surpasses a minimum level of complexity where complexity is, according to Tainter, "generally understood to refer to such things as the size of a society, the number and distinctiveness of its parts, the variety of specialized social roles that it incorporates, the number of distinct social personalities present, and the variety of mechanisms for organizing these into a coherent, functioning whole. Augmenting any of these dimensions increases the complexity of a society."

Complexity is created in order to solve problems according to Tainter.  The main problem is to support ever more people with ever more material comfort but also includes problems such as competition and warfare.

Complexity has a cost.  Layers of management, analysis, research, and other functions are required, none of which directly produce anything but each layer requires energy and resources.  At this level, these resource are the same, in theory, whether or not they are part of private or public institutions.

At first the benefits of the added complexity far outweigh the costs.  For example, the minimal complexity needed to go from hunter/gatherer tribes to an agrarian society increase human edible food per acre by a large multiple without adding all that much cost.

But eventually, the incremental level of innovation and specialization to increase prosperity and/or populations or even maintain them at current levels in the face of decreasing natural resources per capita becomes ever more difficult and costly.  According to Tainter, once this diminishing marginal return for additional complexity is surpassed by the impact of declining resources, the civilization begins to decline.

During the decline, the civilization is less able to deal with new adversity and eventually a problem that might have been trivial to overcome a few decades or centuries earlier, becomes catastrophic and the civilization collapses.  In other words, the civilization becomes increasingly less resilient after complexity increases beyond a certain point and becomes unable to respond adequately to a wider range of shocks and events.

Collapse also has a specific definition in this context.  Collapse is the rapid simplification of society.  In other words, the society loses much or all of its complexity in a relatively short period of time, where the time frame is typically less than a couple of generations.  A great simplification is sometimes associated with a greatly reduced population, but not always - if the cost of maintaining the complexity prior to the collapse far outweighed the benefits, the population can be better off and better fed after the collapse.

Tainter's models are based on resource depletion.  All of the numerous civilizations he studied were ultimately unable to maintain even the status quo as the resources available given the technology of the era diminished on a per capita basis.

We're probably not terribly near the diminished resource per capita wall yet, and we probably won't be there for decades or centuries.  At least not according to Julian Simon who has been fairly accurate in his many predictions so far:
“Our supplies of natural resources are not finite in any economic sense. Nor does past experience give reason to expect natural resources to become more scarce. Rather, if history is any guide, natural resources will progressively become less costly, hence less scarce, and will constitute a smaller proportion of our expenses in future years.”
So maybe our current civilization is safe for a while, or at least won't collapse due to lack of resources.  Let's turn to the individual nations that make up our civilization.  Here we need to consider the structure of socio-economic complexity.  This is where Mancur Olson's work (and also the work of Public Choice Theorists) is important:
"The idea is that small distributional coalitions tend to form over time in countries. Groups like cotton-farmers, steel-producers, and labor unions will have the incentives to form lobby groups and influence policies in their favor. These policies will tend to be protectionist and anti-technology, and will therefore hurt economic growth; but since the benefits of these policies are selective incentives concentrated amongst the few coalitions members, while the costs are diffused throughout the whole population, the "Logic" dictates that there will be little public resistance to them. Hence as time goes on, and these distributional coalitions accumulate in greater and greater numbers, the nation burdened by them will fall into economic decline."
The burden imposed by the  lobby groups described by Olson has a similar effect to the burden of reduced resources per capita described by Tainter.  They both increase the cost and decrease the benefit derived from increasing complexity while decreasing the resilience of society.  The difference is that resource limitations may be a civilization-wide constraint (if Julian Simon is wrong) while the sclerosis Olson identified is primarily (but not completely) associated with governments within a nation state.  As a result, nation states can collapse without bringing the surrounding civilization down with them.

Perhaps even the United States could collapse without dragging the rest of western civilization down with it.  However, there's tremendous risk if the United States collapses because of a number of factors:

  • As sclerotic and fragile as the United States government and economy are getting to be, most of the other governments that comprise western civilization are even worse - a US collapse could easily be the first domino to fall taking a slew of other countries with it;
  • All bets are off regarding Simon's prediction of essentially infinite resources if the drivers of innovation in the US and other western countries suddenly find themselves without a functioning society in which they can continue to innovate putting civilization solidly into Tainter's reduced resources per capita state of decline coupled with the chaos of one or several non-functioning nations;
  • Efficiency via specialization and resilience are often opposites and therefore the efficiencies gained by specialization within the global order can become an Achilles Heel when one or more nations collapse - an example was the 2011 Japanese tsunami (not all that huge of a natural disaster) that damaged global automobile production for months.

The last point deserves more elaboration.  In the short term, resilience is increased by redundancy since if a resource becomes unavailable a redundant resource can be used instead.  Redundancy is generally the opposite of efficiency as it implies either resources that are typically not used or at least not optimized for a specific use so they can be used for multiple functions.  Specialization generally increases efficiency since each component is optimized for its task but reduces redundancy and resilience since the component isn't as easily available for alternative uses.

However, in the bigger picture, in the longer time frame, efficiency in a complex society may increase overall resilience because it enables more rapid growth of knowledge, experience, and wealth which may be called upon to mitigate the impact of adverse events.  So efficiency can increase resilience in dealing with slow decline but can decrease resilience relative to short-term shocks or rapid collapse.

Centralization of resource and/or the management and control over those resources generally reduces resilience.  In addition to Olson's insight regarding the burdens of special interests that are both inherent to a central government and more easily extracted from the concentrated target represented by a large, centralized entity, damage to the command and control of the centralized entity is more difficult to recover from than a decentralized, redundant decision making regime.  Examples* include large and centralized mainframe servers versus the Internet (for which the primary design criteria was to be fault tolerant and resilient) and cloud computing; a single large distribution center for a given commodity such as gasoline which could cause grave problems in the case of failure or attack versus multiple production and distribution centers run by different organization and spread out in terms of geography; a single monopoly producing a product where poor and wasteful decisions can lead to both inefficiency and catastrophic failure of that market versus a vibrant competitive market with many companies involved where poor decisions lead to bankruptcy of some with the recycling of the associated resources but the probability of at least some companies making good decisions is increased; and so forth.

Yet in certain cases, centralization of resource can add to resilience.  In addition to obvious cases like defense, the re-insurance market with governments being the insurer of last resort comes to mind.  This alleviates the need for small communities and even entire regions to produce adequate savings to fund their entire redevelopment should catastrophe strike (note that this doesn't imply that the central government should be involved in actually performing disaster relief and redevelopment - only that it be able to make the resources, in this case money, available for disaster relief and redevelopment).

Overall, it's clear to me that the debate about whether or not various functions being performed by a central government make a society more or less resilient is going to be split along ideological lines with Libertarians and Conservatives claiming that virtually everything done by government makes society less resilient and Statists and Collectivists claiming the exact opposite.  But the framework above allows everybody to think through the different possibilities and come up with their own conclusions.

I've been thinking about the rise and fall of civilizations because I've encountered quite a number of libertarian/conservative/republican blogs and websites panicking about Obama's reelection because they are certain that collapse is now imminent for the United States and even Western Civilization:  "The Titanic is sinking" (where the Titanic is the United States) in a post by one of Instapundit's recent co-bloggers, Sarah Hoyt; "piling up our own funeral pyre" in an article by Roger Kimball (who was predicting a Romney landslide - oops!); etc.

Nothing has changed.  Same President, same Republican House (more or less), and the Senate is still run by Democrats and the level of sclerosis due to lobbying probably won't accelerate much due to split government.  We have stable or expanding exploitable resources per capita (with the exception of helium) so we're not a lot closer the style of collapse described by Tainter.  In my analysis, while we may well be getting ever less resilient, the process is very slow and near term collapse isn't much more likely than it was before the election.  Obamacare was and continues to be a large unknown and might easily make our health care system brittle, but as a society, we can probably easily survive that even if it's horrendously bad for individuals.

My advice?  Stop worrying, relax and enjoy life!

*Thank you readers for the examples!

Monday, November 19, 2012

Searching for Resilience

I'm trying to write a post on resilience, complexity, and (perhaps) self-organizing criticality and I'm looking for an example of a complex system that is or can be objectively made more resilient by decentralization.  I've done a google search and haven't found anything I like.

Anybody have any ideas?

Friday, November 09, 2012

Media Divergence

This dialog in the comments of a recent Great Guys post ("Congrats to Romney") has been enlightening to me.  The dialog involves a discussion of an event where Romney is helping deliver water to hurricane victims and allegedly ignored questions from reporters about his views regarding eliminating FEMA.

Loyal Great Guys commenter Harry Eagar sees Romney ignoring reporters while delivering water to hurricane victims as cowardice.  That's what Harry sees and those Harry associates with and writes for apparently see it the exact same way.

I look at the same event and see Romney as reasonably and perhaps even wisely ignoring the reporters and that his actions of working to deliver water were at worst somewhat staged to help his campaign and at best an honorable thing to do (and most likely a mix of the two).

While Harry and I often or even usually disagree, I can usually at least understand why Harry sees and thinks what he does.

In this case, I cannot.  I simply cannot look at the event described by Harry and see cowardice and dishonor in Romney.  I can see from the non-liberal commenters here that they cannot see cowardice and dishonor either.

It's becoming clear to me that there will ultimately be a liberal media for liberals and a conservative media for conservatives.  As this dialog has shown, I can't reliably glean any information from the liberal media.  And I know my liberal friends try and fail to ever get useful information from conservative media (fox news, townhall, etc.).

This media divergence is leading to hundreds of millions of Americans being completely unable and unwilling to communicate with each other excepts to shout epithets at each other when forced to interact.  Conservatives will only interact with conservatives, work with conservatives, and buy and sell from conservatives.  For example, I read a story where a business owner fired everybody with an Obama sticker on their car after the election.  Liberals already play the same game (conservatives rarely are able to get tenure at universities, for example) and the trend will intensify.  This will essentially be a cold civil war between liberals and conservatives.

I doubt there's a solution.  When people can't communicate, they can't interact, and they can't solve problems.

The one hope is forums like this one.  As long as we try to understand each other, though often failing, at least there's a chance.

Thursday, November 08, 2012

Empowering, Sustaining, and Efficiency Innovations

Clayton Christensen, a Harvard business professor and author of "The Innovator's Dilemma" recently had a very interesting article in the NY Times.  He refines Schmupeter's Creative Destruction characterization of the economy into empowering, sustaining, and efficiency innovations where empowering innovations mostly generate new economic activity and employment, efficiency innovations liberate capital but reduce employment, and sustaining innovations have little effect on employment though they do increase wealth over time.  To create new jobs, one should therefore focus on empowering innovations.

He makes a second point as well: most government policy and private investment approaches were formulated when capital was extremely scarce.  Something has clearly changed in that the Fed is creating huge sums of money yet people are just sitting on the cash and not investing.  This implies that capital itself isn't nearly as scarce as it once was and that the policies and strategies of yesteryear no longer apply.  He makes some policy suggestions to push investors towards empowering innovations.

Definitely an interesting and well written read.

Wednesday, November 07, 2012

Congrats to Romney

No, you didn't misread the title and I didn't mistype it.  I mean it.

From my observations not only is Romney a pretty good guy who ran a pretty decent campaign (not flawless, but hey, nobody's perfect), he made this election a real and clear choice for the american people between ever increasing government "solutions" (spending) with reduced liberty (especially for the productive class) versus more limited government reach with more reliance on private sector and community based solutions.  For that, I believe Romney deserves a great deal of credit.

It was a clear choice and Americans clearly chose (though it was fairly close).

Now we know clearly what the game is and now we can optimize how we play the game given that we know what the rules are.  We can also guide our children (and descendants in general) to play the game as best possible.

Resilience and flexibility are the keys to surviving and thriving in any complex system and the political environment going forward is no exception.

Sorry about slow comment moderation

For some reason, blogger is identifying some of aog's and harry's comments as spam.  Unfortunately, I've been out of town a lot and have been slow to notice them in the "waiting for moderation" mailbox.

I apologize profusely for not keeping up with comments and appreciate all of your support.