Moontower #134

Boomer contempt is widespread.

 

’m an 80s latch-key kid. Nobody paid us a second thought. We left the house at 8am on a summer morning, came home to the sound of “dinner” being yelled in a FOB accent (have you seen my last name?), and shut it down for the night after giving up on finding your friends in manhunt (they definitely cheated by going in the house). You hit the sack, au naturel sans shower, only to do it again tomorrow. A forgotten generation. Nobody even offered us counseling after the Challenger exploded on the roll-out TV in the school cafeteria.

Fine.

Every generation thinks every other generation should take a hike. Whether we coddle them or send them to war, we seem to make every subsequent generation a villain and they are quick to return the sentiment.

But if the boomers are greedy ladder-pullers (a charge that feels hard to refute if I spend just 2 seconds on Nextdoor) we should look at how the hippies traded peace and love for trickle-down economics and stepped-up basis.

Strap on your helmet (another thing we didn’t have in the 80s).

A decade ago, I read Helter Skelter: The True Story of The Manson Murders. It was written by the chief prosecutor, Vincent Bugliosi. It stands as one of my favorite books. It’s a long book, yet the grisly murder stuff is covered early in the narrative. The bulk of the book is about the investigation and trial. It’s a fascinating look at legal proceedings, fact-finding, media concerns, and the combative relationship between the LAPD and the LA County Sheriff’s Office (LASO).

If you know the story, you’ll recall that Manson, presented as a Christ-figure amongst his hippie followers, never actually committed murders himself. They had to build the case that he was effectively controlling the minds of his so-called “family”. The case relied on the theory that Manson was preparing his followers for a race war that he foresaw in the lyrics of The Beatles’ White Album, most notably the McCartney-penned song Helter Skelter.

The backstory, the lyrics smeared in blood at 10050 Cielo Drive in the Hollywood Hills, the celebrity victims — no wonder it was one of the most captivating murder cases in history. [Did you know that Trent Reznor recorded The Downward Spiral in that house? The property has been re-addressed to 10066 Cielo Drive and coincidentally my Instagram feed which follows the Million Dollar Listing LA cast informed me the property is currently for sale.]

Well, as I was exploring the Rebel Wisdom podcasts, I found an interview with Tom O’Neill, author of Chaos: Charles Manson, the CIA, and the Secret History of the Sixties. His 20-year labor-of-love project raises a provocative question — was Manson convenient to the US government?

It’s about far more than the murders when you consider how it tied to the government’s reaction to the counterculture’s anti-war opposition. Deepthroat later revealed the sitting administration’s conspiracies but the domestic tradecraft extended beyond Watergate. Its abuse of power was abetted by useful idiots who fell for propaganda and the type of fat cat who is always for sale. Its ham-fisted approach led to a war on drugs with societal costs that are more evident every passing day.

Is the chaos we sense today amplified by its contrast to a censored culture? A culture whose highest values have been order (I don’t have to tell you about US incarceration rates) and GDP. The unwinding of this mentality, embodied in social and redistributive reform, the rallying cries of boomers’ younger years, is triggering an allergic reaction to the dope they once willingly inhaled.

If the 60’s movements gave us a glimpse of a culture attempting to widen its values, the government pulled the blinds before we could see more. Read this excerpt from Jim O’Shaugnessey’s interview with Tom Morgan:

Jim: Watch the music videos from that time. Again the artists were at the forefront. They were the tip of the spear in this and the spear scared the shit out of the left-brained dominant society and the man, so to speak. Psychedelics were broadly being misused in many cases. But all of the elements required for a phase change to happen successfully were in place in the mid-sixties to the mid-seventies. The man, in this case, Richard Nixon, but everyone in control, and I’m speaking pretty specifically about the US here. But it happened in the UK too. And it happened in Germany. It was a global phenomenon. They made drugs, almost all of which are the non-addicting drugs, illegal. Fed max prison. They made an example of Timothy Leary. He became the scapegoat for like, having a couple of joints in his pocket? They didn’t even get him with any kind of psychedelic. You got to remember this guy was a tenured professor at Harvard, who was a well-thought-of psychologist. And, so they made an example of him because, now this is getting into kind of my take on this, people are terrified of what the implications are for being free.

The conventional keepers of the social “truths” shut it the fuck down. And they did that because they could. They did that because back then there was no global communication network like we have today.

People, for example, didn’t know that Franklin Roosevelt was in a wheelchair. They did not know that. Can you imagine in our day and age? Even trying to comprehend that is wild. So they were the keepers of the “truth” and it was a narrative that everyone believed.

In other words…power did what power does.

Now you are ready to hear the interview with Tom O’Neill. Have fun!

🎤 Manson & the Secret War of the 60s (video) (podcast)

I’ve been listening to several interviews about psychedelics and the history of drug laws in general. If I had to choose one to point you to it’s Dr. Peter Attia’s interview with psychedelics expert David Nutt.

It covers the risks of recreational drugs, the legal history of drugs in the US/UK, and critically the extent, origin, and impact of the opioid and meth crises.

It pairs well with the Tom O’Neill interview.

🎤 David Nutt: Psychedelics & Recreational Drugs (podcast)


More On Psychedelics

In the coming years, the clinical use of psychedelics for therapy is going to be an even more mainstream topic. The first psychedelics ETF was listed in Canada a year ago and there are at least 2 more listed in the US today. An industry is emerging. An industry that parses that industry comes with it. It’s always fascinating times when an activity gets liberalized so if you are interested go forth and explore.

But just a thought to keep with you. Seemingly more than ever, we are floating in a sea of grift and the shore is getting further away. This post was a bit of life preserver:

✍🏽 The Psychedelic Trojan Horse (22 min read)
by Alexander Beiner

It’s not anti-psychedelics. It’s about so much more. If you read it, you’ll think “oh that’s quaint” because you know its message is going to be swallowed whole by the corporate meme-machines. Instead of your brain as an egg in a frying pan, pharma will tell you that you are a chick finally awakening and breaking free of your mind-yolk prison. 180-degree flip. Gee, what changed?

If that’s a bit cynical, it’s because you forgot about this classic:

✍🏽 Geeks, MOPs, and Sociopaths in Subculture Evolution (8 min read)
by David Chapman

Sorry, I’m just the messenger. We chose to say “Moloch”1 5 times in the mirror long ago.


Postscript

A personal thought loosely related. Take it or leave it.

Identity politics strike me as a collection of issues, many of which have important grains of truth in them, but become twisted and weaponized because that’s how you get attention. Attention equals profits and votes.

Imagine listing people’s attributes in a row of Excel. Societal narratives love to pivot every aspect of them into an identity or wealth field. It’s understandable since that’s what we can see. Correlations reinforce this. If you plot wealth or race against say “educational attainment” the story will be familiar.

But I think as a matter of policy, we need to think in terms of what area are we talking about in the distribution. I increasingly feel that the most wicked thing underlying the left tail of human outcomes has little to do with what is happening in the “average American” segment part of the distribution.

The left tail feels like it has far more to do with addiction and evil patterns of abuse. The idea that poverty is about a housing crisis doesn’t sound right unless you plot a course through addiction.

Housing crisis —> Fentanyl —> Poverty

Even then, this is a stretch if we are solving for roots and solutions. The housing and fentanyl problems are real as hell. But poverty is not a lagging indicator of these problems. It’s coincident. The difference matters because treating abuse and addiction is the direct response.

I was thinking about this as I was listening to the podcasts but also reflecting on personal knowledge of abused or addicted people. Many didn’t have a chance. It was the conditions of the inter-personal relationships, more so than their race or wealth that mattered.

Despite being the child of poor immigrants I consider myself insanely privileged — my parents loved me, they did not hurt me, they valued self-improvement and education, and they did so with their actions. I was born on third base.

Your upbringing is not your destiny but they are probably underrated. Sexual abuse and addiction are massively underreported. It’s happening right now. In your neighborhood. On your block. Whether you live in Hillsborough or somewhere the schools are 1s.

The identity stuff will overlap with what is happening in the left tails, but plain ole’ human sickness, especially the silent kind, I suspect has the higher R².

I’ve been binging the YouTube series Soft White Underbelly which interviews the invisible among us. I was talking to a friend, who let’s say went through a unique time. He felt that “hate” wasn’t the worst feeling he experienced. It was indifference. The sense that people are looking right through you like you’re not even there.

Check out the series. This particular episode will blow your mind. Tell me you cannot see how intelligent and tenacious this woman is. If I was dealt her hand, I wouldn’t have made it to this interview.

You will find a common theme in these episodes. It won’t take long to spot it.


Money Angle

Selling calls “for income” is not a thing. You can sell a call as compensation for risk but no professional options trader thinks of an option sale as “income”. They might mark-to-model and book the premium over “fair value” as theoretical edge, or simply “theo”. And even then we are talking about pennies. Just a tiny fraction of the stock price that they are long.

Nobody serious can claim the entire premium is income. I’ve discussed this before but if you’re stubborn here’s a few more angles to this.

A simple math example

You’re long a $100 stock.

  • It’s fairly priced because it’s 90% to be 0 and 10% to be $1000.
  • You overwrite by selling the 500 strike call at $45.

Did you earn income?

What if you sold the call for $55?

My problem with the “selling calls for income” crowd…they don’t know the difference.

Some people’s personal utility curves can make even a negative edge seem like an ok hurdle.

A courageous response to my question on Twitter:

There is no problem here. You take your $45 and move on with your life. If you get called away you make 5x, and if your stock goes to $0 you came out with only a 55% loss.

Umm, incinerating money when you think you are investing is actually what I would call a “problem”.

You make $445 10% of the time and lose $55 90% of the time. You are literally better off betting on roulette.1

If you overwrite a call that’s actually worth $1 at a price of $.95 because call markets are faded low for sellers, you are stuck with roulette odds. Factor in your brokerage costs (implicitly or explicitly) and effort.

I’d rather get a free hotel room.

Other framings

  • Instead of selling calls, you can buy less of the stock to have the equivalent delta and use the cash elsewhere.
  • You could buy puts and buy MORE of the stock than you originally intended.

You cannot think about selling calls without thinking of vol in some fashion.

Selling options profitably requires being able to tell the difference between these scenarios, properly accounting for what portion of the sale is “income” vs fairly probability-weighted premium.

If you can do that, go ahead and claim you sell calls for income. That’s the bar. Not “premium arrived in my brokerage account”. I’m trying to show that the decision to trade an option has nothing to do with income and everything to do with the proposition you are being offered.

The reality is that betting against mispriced options is a game of pennies or half- pennies. It’s low signal-to-noise. Realizing and validating the edge requires large sample sizes. If you are overwriting without a deep process you likely have no idea if you have edge and your sample is too small to know.

If that’s not clear, check out my version of trading 101:

Understanding Edge (10 min read)


Last Call

It’s only fair if I mention psychedelics to share some music.

I’ve been deeply enjoying all the projects of guitarist/vocalist Ripley Johnson:

🎸 Wooden Shjips (Spotify)

The enigmatically named quartet Wooden Shjips play a minimal, droning brand of garage-styled psychedelia with a noticeable Krautrock influence.

🎸 Rose City Band (Spotify)

Johnson’s songwriting and beautiful guitar lines take center stage, the veil of psychedelia notably drawn back. … Shimmering guitar lines are free to shine, buoyed by driving rhythms…arrangements and instruments drawn directly from classic country, resulting in songs with more than a hint of twang.

🎸Moon Duo (Spotify)

A psychedelic band with chilly electronic underpinnings and drones inspired by Spacemen 3, Silver Apples, and Suicide.


This is my favorite of his projects. It’s a duo with his wife.


I watch the music video for Sleepwalker at least once a day.


From My Actual Life

Yinh and I saw Tool last Sunday at Chase. They are amazing live. They ended their set with Invincible. I like that journey for you, so I found a decent fan vid from a Melbourne performance. Put your headphones on and enjoy.

As we left with my friend Matthew and his wife we saw who Tool apparently opened for…

 

Generational Abuse

Boomer contempt is widespread.

’m an 80s latch-key kid. Nobody paid us a second thought. We left the house at 8am on a summer morning, came home to the sound of “dinner” being yelled in a FOB accent (have you seen my last name?), and shut it down for the night after giving up on finding your friends in manhunt (they definitely cheated by going in the house). You hit the sack, au naturel sans shower, only to do it again tomorrow. A forgotten generation. Nobody even offered us counseling after the Challenger exploded on the roll-out TV in the school cafeteria.

Fine.

Every generation thinks every other generation should take a hike. Whether we coddle them or send them to war, we seem to make every subsequent generation a villain and they are quick to return the sentiment.

But if the boomers are greedy ladder-pullers (a charge that feels hard to refute if I spend just 2 seconds on Nextdoor) we should look at how the hippies traded peace and love for trickle-down economics and stepped-up basis.

Strap on your helmet (another thing we didn’t have in the 80s).

A decade ago, I read Helter Skelter: The True Story of The Manson Murders. It was written by the chief prosecutor, Vincent Bugliosi. It stands as one of my favorite books. It’s a long book, yet the grisly murder stuff is covered early in the narrative. The bulk of the book is about the investigation and trial. It’s a fascinating look at legal proceedings, fact-finding, media concerns, and the combative relationship between the LAPD and the LA County Sheriff’s Office (LASO).

If you know the story, you’ll recall that Manson, presented as a Christ-figure amongst his hippie followers, never actually committed murders himself. They had to build the case that he was effectively controlling the minds of his so-called “family”. The case relied on the theory that Manson was preparing his followers for a race war that he foresaw in the lyrics of The Beatles’ White Album, most notably the McCartney-penned song Helter Skelter.

The backstory, the lyrics smeared in blood at 10050 Cielo Drive in the Hollywood Hills, the celebrity victims — no wonder it was one of the most captivating murder cases in history. [Did you know that Trent Reznor recorded The Downward Spiral in that house? The property has been re-addressed to 10066 Cielo Drive and coincidentally my Instagram feed which follows the Million Dollar Listing LA cast informed me the property is currently for sale.]

Well, as I was exploring the Rebel Wisdom podcasts, I found an interview with Tom O’Neill, author of Chaos: Charles Manson, the CIA, and the Secret History of the Sixties. His 20-year labor-of-love project raises a provocative question — was Manson convenient to the US government?

It’s about far more than the murders when you consider how it tied to the government’s reaction to the counterculture’s anti-war opposition. Deepthroat later revealed the sitting administration’s conspiracies but the domestic tradecraft extended beyond Watergate. Its abuse of power was abetted by useful idiots who fell for propaganda and the type of fat cat who is always for sale. Its ham-fisted approach led to a war on drugs with societal costs that are more evident every passing day.

Is the chaos we sense today amplified by its contrast to a censored culture? A culture whose highest values have been order (I don’t have to tell you about US incarceration rates) and GDP. The unwinding of this mentality, embodied in social and redistributive reform, the rallying cries of boomers’ younger years, is triggering an allergic reaction to the dope they once willingly inhaled.

If the 60’s movements gave us a glimpse of a culture attempting to widen its values, the government pulled the blinds before we could see more. Read this excerpt from Jim O’Shaugnessey’s interview with Tom Morgan:

Jim: Watch the music videos from that time. Again the artists were at the forefront. They were the tip of the spear in this and the spear scared the shit out of the left-brained dominant society and the man, so to speak. Psychedelics were broadly being misused in many cases. But all of the elements required for a phase change to happen successfully were in place in the mid-sixties to the mid-seventies. The man, in this case, Richard Nixon, but everyone in control, and I’m speaking pretty specifically about the US here. But it happened in the UK too. And it happened in Germany. It was a global phenomenon. They made drugs, almost all of which are the non-addicting drugs, illegal. Fed max prison. They made an example of Timothy Leary. He became the scapegoat for like, having a couple of joints in his pocket? They didn’t even get him with any kind of psychedelic. You got to remember this guy was a tenured professor at Harvard, who was a well-thought-of psychologist. And, so they made an example of him because, now this is getting into kind of my take on this, people are terrified of what the implications are for being free.

The conventional keepers of the social “truths” shut it the fuck down. And they did that because they could. They did that because back then there was no global communication network like we have today.

People, for example, didn’t know that Franklin Roosevelt was in a wheelchair. They did not know that. Can you imagine in our day and age? Even trying to comprehend that is wild. So they were the keepers of the “truth” and it was a narrative that everyone believed.

In other words…power did what power does.

Now you are ready to hear the interview with Tom O’Neill. Have fun!

🎤 Manson & the Secret War of the 60s (video) (podcast)

I’ve been listening to several interviews about psychedelics and the history of drug laws in general. If I had to choose one to point you to it’s Dr. Peter Attia’s interview with psychedelics expert David Nutt.

It covers the risks of recreational drugs, the legal history of drugs in the US/UK, and critically the extent, origin, and impact of the opioid and meth crises.

It pairs well with the Tom O’Neill interview.

🎤 David Nutt: Psychedelics & Recreational Drugs (podcast)


More On Psychedelics

In the coming years, the clinical use of psychedelics for therapy is going to be an even more mainstream topic. The first psychedelics ETF was listed in Canada a year ago and there are at least 2 more listed in the US today. An industry is emerging. An industry that parses that industry comes with it. It’s always fascinating times when an activity gets liberalized so if you are interested go forth and explore.

But just a thought to keep with you. Seemingly more than ever, we are floating in a sea of grift and the shore is getting further away. This post was a bit of life preserver:

✍🏽 The Psychedelic Trojan Horse (22 min read)
by Alexander Beiner

It’s not anti-psychedelics. It’s about so much more. If you read it, you’ll think “oh that’s quaint” because you know its message is going to be swallowed whole by the corporate meme-machines. Instead of your brain as an egg in a frying pan, pharma will tell you that you are a chick finally awakening and breaking free of your mind-yolk prison. 180-degree flip. Gee, what changed?

If that’s a bit cynical, it’s because you forgot about this classic:

✍🏽 Geeks, MOPs, and Sociopaths in Subculture Evolution (8 min read)
by David Chapman

Sorry, I’m just the messenger. We chose to say “Moloch”1 5 times in the mirror long ago.


Postscript

A personal thought loosely related. Take it or leave it.

Identity politics strike me as a collection of issues, many of which have important grains of truth in them, but become twisted and weaponized because that’s how you get attention. Attention equals profits and votes.

Imagine listing people’s attributes in a row of Excel. Societal narratives love to pivot every aspect of them into an identity or wealth field. It’s understandable since that’s what we can see. Correlations reinforce this. If you plot wealth or race against say “educational attainment” the story will be familiar.

But I think as a matter of policy, we need to think in terms of what area are we talking about in the distribution. I increasingly feel that the most wicked thing underlying the left tail of human outcomes has little to do with what is happening in the “average American” segment part of the distribution.

The left tail feels like it has far more to do with addiction and evil patterns of abuse. The idea that poverty is about a housing crisis doesn’t sound right unless you plot a course through addiction.

Housing crisis —> Fentanyl —> Poverty

Even then, this is a stretch if we are solving for roots and solutions. The housing and fentanyl problems are real as hell. But poverty is not a lagging indicator of these problems. It’s coincident. The difference matters because treating abuse and addiction is the direct response.

I was thinking about this as I was listening to the podcasts but also reflecting on personal knowledge of abused or addicted people. Many didn’t have a chance. It was the conditions of the inter-personal relationships, more so than their race or wealth that mattered.

Despite being the child of poor immigrants I consider myself insanely privileged — my parents loved me, they did not hurt me, they valued self-improvement and education, and they did so with their actions. I was born on third base.

Your upbringing is not your destiny but they are probably underrated. Sexual abuse and addiction are massively underreported. It’s happening right now. In your neighborhood. On your block. Whether you live in Hillsborough or somewhere the schools are 1s.

The identity stuff will overlap with what is happening in the left tails, but plain ole’ human sickness, especially the silent kind, I suspect has the higher R².

I’ve been binging the YouTube series Soft White Underbelly which interviews the invisible among us. I was talking to a friend, who let’s say went through a unique time. He felt that “hate” wasn’t the worst feeling he experienced. It was indifference. The sense that people are looking right through you like you’re not even there.

Check out the series. This particular episode will blow your mind. Tell me you cannot see how intelligent and tenacious this woman is. If I was dealt her hand, I wouldn’t have made it to this interview.

You will find a common theme in these episodes. It won’t take long to spot it.

What Part Of Selling Calls Is “Income”?

Selling calls “for income” is not a thing. You can sell a call as compensation for risk but no professional options trader thinks of an option sale as “income”. They might mark-to-model and book the premium over “fair value” as theoretical edge, or simply “theo”. And even then we are talking about pennies. Just a tiny fraction of the stock price that they are long.

Nobody serious can claim the entire premium is income. I’ve discussed this before but if you’re stubborn here’s a few more angles to this.

A simple math example

You’re long a $100 stock.

  • It’s fairly priced because it’s 90% to be 0 and 10% to be $1000.
  • You overwrite by selling the 500 strike call at $45.

Did you earn income?

What if you sold the call for $55?

My problem with the “selling calls for income” crowd…they don’t know the difference.

Some people’s personal utility curves can make even a negative edge seem like an ok hurdle.

A courageous response to my question on Twitter:

There is no problem here. You take your $45 and move on with your life. If you get called away you make 5x, and if your stock goes to $0 you came out with only a 55% loss.

Umm, incinerating money when you think you are investing is actually what I would call a “problem”.

You make $445 10% of the time and lose $55 90% of the time. You are literally better off betting on roulette.1

If you overwrite a call that’s actually worth $1 at a price of $.95 because call markets are faded low for sellers, you are stuck with roulette odds. Factor in your brokerage costs (implicitly or explicitly) and effort.

I’d rather get a free hotel room.

Other framings

  • Instead of selling calls, you can buy less of the stock to have the equivalent delta and use the cash elsewhere.
  • You could buy puts and buy MORE of the stock than you originally intended.

You cannot think about selling calls without thinking of vol in some fashion.

Selling options profitably requires being able to tell the difference between these scenarios, properly accounting for what portion of the sale is “income” vs fairly probability-weighted premium.

If you can do that, go ahead and claim you sell calls for income. That’s the bar. Not “premium arrived in my brokerage account”. I’m trying to show that the decision to trade an option has nothing to do with income and everything to do with the proposition you are being offered.

The reality is that betting against mispriced options is a game of pennies or half- pennies. It’s low signal-to-noise. Realizing and validating the edge requires large sample sizes. If you are overwriting without a deep process you likely have no idea if you have edge and your sample is too small to know.

If that’s not clear, check out my version of trading 101:

Understanding Edge (10 min read)


Snapshot of Freddie de Boer’s Education Views

The New Yorker summarized Freddie de Boer’s book Cult of Smart by saying he  “argues that the education-reform movement has been trammelled by its willful ignorance of genetic variation.”

I’m a regular reader of DeBoer’s writing and found his post You Don’t Get to Withdraw “Your Share” of Public Expenditures, Doofus to conveniently encapsulate many of his views on education. I have a lot of respect for deBoer’s thinking and research so I jotted down some of these views. All bold is mine.

Despite arguments to the contrary the US education system is quite competent

Many detractors of public spending on education claim some version of “but the schools are doing such a bad job.” Longtime readers will know how little I think of that claim. American public schools are not, in fact, uniquely or especially bad; our median student does alright, given that they consistently rank in the middle of OECD nations in international comparisons and the OECD no doubt performs far better than the international average. (Don’t get me started on Chinese educational data, or the inherent unfairness of including Hong Kong, Macau, and Singapore, city-states that are simply not good comparisons.) Plus we look better in Trends in International Mathematics and Science Study (TIMMS) than in the PISA, from where I’m sitting. (Play with the data viz tools there, they’re great.) Our top 5% or 1% are competitive with any nation on Earth, and we frequently win international STEM competitions. Please enjoy looking over the American kids absolutely whipping everybody’s ass in the International Chemistry Olympiad, for one example. Or the International Math Olympiad, where we won outright in 2015, 2016, and 2018, and tied with China for first place in 2019.

The problem is not at the top nor, I would argue, in the middle.

Where is the problem in education?

The trouble is that we’re dragged down by a relatively small number of students that perform so terribly that they drag down our averages. That is indeed a problem, but it’s not primarily (or even secondarily, really) an educational problem. Rather it’s a complex and multivariate social problem that can’t be solved at the school level. Given the amount of money, energy, and manpower this country exerts on public education, whether defined in aggregate or per pupil, we should be able to confidently say that if there were any silver bullets available we would have killed all the werewolves by now. Unfortunately wonkism rules in this domain and core to the wonkist philosophy is that every problem has a policy solution.

How about teachers?

Our teachers deserve little of the blame (and, for consistency’s sake, the praise) for our current situation, as student-side factors dominate school-side factors in determining student quantitative outcomes. I’m not going to go through the paces of that particular claim here; I’ve written on this topic extensively and immediately above is a one-stop shop for my general take on the macro educational situation in this country. But for shorthand we might consider that the vast majority of American educational inequality exists within schools, not between them, making it very odd to blame schools for inequality. (For such blame to make sense, we would have to believe that schools are deliberately withholding the better education from the low-achieving students and hoarding it for the high-achieving, when in fact most schools do everything in their power to improve performance among their worst students, given how intense the pressure from above is to do so.) We could also look at serial failures of touted prescriptions like charter schools or vouchers, a world in which districts that are still referred to as “miracles” house tons of schools with terrible performance, where programs hailed as transformative turn out to be disastrous, and where the randomization tools that are so essential for equal access and effective research operate as a black box with little or no consistency or oversight. Like I said, I’ve made the case at length before.

The students themselves matter more than the schools or teachers in determining outcomes

I’m not the only one who says that the individual student is more important than the teacher or school for determining outcomes. There is grudging but growing understanding of this reality in the policy world. For example, RAND Education, which is very much in line with the broader neoliberal education reform movement, has estimated that student-side factors are four to eight times more responsible for student outcomes than school-side factors (The Rand report that included this estimation has been “superseded” and the specific numbers have been removed from the new report, in favor of perfectly vague language about the “many factors” which influence outcomes, which is pretty common for this world – inconvenient realities get whitewashed away. Luckily for us, I got the old report.).

This should be common sense, it seems to me, and more and more people are willing to admit to it, but there’s still profound resistance to this idea, as a) there’s a large educational profiteering industry in this country and b) too many people are still addicted to Stand and Deliver-style romanticism about education, the cheery notion that all any student needs is a passionate teacher.

The determinism is not rosy, but it’s closer to reality than many want us to believe

Here’s the thing, folks: wherever your kid goes, there they’ll be. If they’re particularly talented, they’re very likely to perform well regardless of school. If they’re particularly untalented, they’re very likely to perform poorly regardless of school. Many studies that involve randomly assigning students to schools perceived to be of differing quality find no school effects, which is counterintuitive only if you assume every brain is the same. There are no magical institutions anywhere in the world where you can take a kid who is not naturally inclined to be a genius and turn them into a genius. If such a place existed, this would be a profoundly different world. 

Why a policy of diverting funding away from poorly performing schools misses the point and is basically unjustified

The case for “school choice” is not remotely strong enough to overwhelm the basic social contract that dictates public expenditure. Even many of the most ardent ed reformers will now concede, after several decades of yelling “no excuses!” and then making constant excuses for charter schools and vouchers, that neither of those programs provide fast, reliable, or scalable improvements. In many cases, students in such situations perform worse. Are the rest of us really obligated to divert precious public funds into institutions that do not operate under public control when the case for the superiority of those institutions is so thin and so contested?

Notes from Tom Morgan on Infinite Loops

Link: https://www.infiniteloopspodcast.com/tom-morgan-all-you-need-is-love-ep74/

Tom Morgan, Director of Communications & Content at The KCP Group, joins Jim O’Shaughnessy on Infinite Loops to discuss:

  • The trillion-to-one ratio of attention
  • “Love” as a compass for growth
  • Religions and Traditions
  • Enlightenment vs. Adulthood

On attention and the possibility that there is something beyond us:

Tom: I’m not going to paraphrase the whole thing [Usual Illusion], but the relevant piece that we probably are aware of 60 bits of information at any given moment, but there’s 11 million that are potentially available to us. If I say to you, “Wiggle your big toe,” you’re suddenly aware of your big toe. That information was coming to you all this time.

You are having a conversation with a cocktail party with one person, and you hear someone else across the room say your name and you swivel your attention to that. You were taking that information in some way, it just wasn’t being served to your conscious awareness. It’s a filtering process. That feels like something that’s intuitive and is easy for us to understand. The bit that took me a really long time to understand is the idea that outside of that million to one ratio, there’s a trillion to one ratio of things that we’re never aware of and never can be aware of.

When you think about an earthworm, an earthworm has never seen a sunset and it will never see a sunset because it has not evolved to see a sunset. We will never experience the way a Bloodhound does with 200 million receptors in its nose because it’s not relevant to us. So the reason why that’s important is that if you think about a trillion to one ratio of things outside of us, the things that we’re aware of, the idea that there wouldn’t be a force influencing us that was hidden goes from a possibility to, I think, a probability.

How the powerful were able to shut down threats with might and control of information in mid-sixties to mid-seventies

Jim: Watch the music videos from that time. Again the artists were at the forefront. They were the tip of the spear in this and the spear scared the shit out of the left-brained dominant society and the man, so to speak. Psychedelics were broadly being misused in many cases. But all of the elements required for a phase change to happen successfully were in place in the mid-sixties to the mid-seventies. The man in this case, Richard Nixon, but everyone in control, and I’m speaking pretty specifically about the US here. But it happened in the UK too. And it happened in Germany. It was a global phenomenon. They made drugs, almost all of which are the non-addicting drugs, illegal. Fed max prison for going. They made an example of Timothy Leary. He became the scapegoat for like, having a couple of joints in his pocket? They didn’t even get him with any kind of psychedelic. You got to remember this guy was a tenured professor at Harvard, who was a well-thought-of psychologist. And, so they made an example of him because, now this is getting into kind of my take on this, people are terrified of what the implications are for being free.

The conventional keepers of the social “truths” shut it the fuck down. And they did that because they could. They did that because back then there was no global communication network like we have today.

People, for example, didn’t know that Franklin Roosevelt was in a wheelchair. They did not know that. Can you imagine in our day and age? Even trying to comprehend that is wild. So they were the keepers of the “truth” and it was a narrative that everyone believed.

Bucky Fuller, on death and rebirth being a shocking or scary idea:

There’s nothing about a caterpillar that suggests the butterfly.

The balance of safety and vitality; bridging specific knowledge and control with the abstract

Tom: And at the moment we’ve optimized for safety at the cost of vitality. And if you want vitality, you have to give up certainty. You have to give up the certainty of what you want, and you have to give up all forms of security, but not all forms of security. I don’t want to overstate this. Everything’s a balance, right?  We’ve just gone too far in one direction. And I think that’s sort of the prescription. It doesn’t involve a huge societal meltdown. It just involves more of an awareness of our own vulnerability and our own holistic inclusiveness.

Jim: It’s not like we haven’t been thinking about this as human beings. Forever we have, and we let traditions, and I’m not anti-tradition, but I am opposed to traditions which have osified and are not serving us anymore. And it’s like our school system, it’s like every, this is the kind of the main central heart of the great reshuffle. All of those old systems are broken or breaking. And we need to make new ones. And making new ones is going to be scary, but the only way you do that is to understand vitality.

Tom: I think any kind of reductionist theory is always going to be incomplete. You can get to the Higgs boson, but the Higgs boson isn’t going to tell you how to live your life. Right? You need values for that. I think there are actual universal values. They may be expressed in a Ten Commandment or something like that. But there is some sort of metaphysical truth out there. But the root to that individual creativity. That way you co-create with the environment around yo is intrinsically unique. And that sounds incredibly saccharine. Because it’s like, everyone’s special. Everyone’s got creativity inside them. Again, terrible words, right. When I heard “creativity”, I think of finger painting. And when you talk about reading poetry and listening to songs that just annoys my intellect.

But you have to remember that your intellect is fiercely resistant to all of these ideas because it requires giving up the steering wheel.

[Still] you do need to be is actually practical, because spiritual regressiveness and spiritual bypassing gets us nowhere in the same direction. So you need to be looking for people that are building the bridge from science back to spirituality.

Intuition or wisdom as evidence of a good filter

Tom: I read a resonant quote, two days ago, wisdom is knowing what information is important. Well that’s simple and incredibly profound, right? And to go back to the Usual Illusion example: you can’t take in 11 million bits, you’d be burned out like a light bulb in a nuclear reactor. You can’t take in a trillion bits, you’d be jello.  So all this is about, is all we’re talking about is how do you calibrate your filter to get the full range of human experience, including the shit stuff, which is the problem. If you hide in your intellect, as a lot of people I know have, it’s typically a coping mechanism to prevent yourself from experiencing the full range of human emotion.

And if you do get blown open, a blowing open experience tends to be incapacitating and overwhelming. And that’s the point. You’re not supposed to have a direct experience of that, right? Too many crazy psychedelic experiences make you too open. You believe everything, you need a good filter.

And that’s the definition of wisdom. And I think that George Soros example is brilliant. So like, for those of you that don’t know the George Soros anecdote, it was that he used to give all these really clever, retroactive reasons why he did things and then his son gave an interview I think to the Irish Times where he was like “Oh no, it’s just his back hurts when his portfolio positioned wrong.”

I thought about that for a long time. And my interpretation of it, whether right or wrong is that, we lay down a whole bunch of information from pattern recognition and he laid down a whole bunch of information from seeing an enormous number of different trading scenarios play out. But those recognition patterns run in the background. Because if they’re running in the foreground, you’re not going to get anything done. You’re going to be using your 60-bit consciousness to act in the world. But when something trips that, because it’s not running in your intellect, it’s running in your unconscious, you’re going to feel it as a sensation first.

And that’s the point. You need to be in tune enough and embodied enough that when you feel that, you don’t just feel it and discount it, you feel it and know what it means. So you are serving the correct emotions, you’re serving the correct physical sensations to your consciousness. And then you are able to interpret them and act on them in the correct way. That is a well-calibrated filter. It’s not about feeling everything all the time, because then you’re just going to be mush.

Putting Moloch To Rest

Last week, I talked about Moloch, the evil god of child sacrifice, as a metaphor for unhealthy competition — “race to the bottoms”, prisoner’s dilemmas, and coordination problems generally.

We summon Moloch when competitive pressures require us to optimize for narrow rewards, especially ones that are easily measurable or “legible” while dispensing with the wider range of values that resist measurement.

Putting something of a face to the phenomenon is useful. It’s adaptive to recognize Moloch so we can re-direct our blame from individuals to the system. We are collectively in charge of the system. We need to recognize the high leverage nodes and rules within that system, not only to protect them from tampering, but to make sure they make sense for our communal well-being in the first place.

Our primary levers are incentives. They take many forms. They can be hard like carrots and sticks or soft like status and honor. I think of culture as the sum of these incentives. This is apparent if you tried to decompose subcultures, national identities, or the values of corporations into what makes their members tick. That which makes one rise or fall within the confines of a specific organization or tribe.

I said the comet in Don’t Look Up should have been named Moloch. But I don’t want to leave this topic making you feel I double-clicked on apocalypse.exe. I promised a lifeline, so this week I’ll give you some materials that point us in the right direction.

I’ll start with an interview with poker player Liv Boeree. While the entire conversation she has with host, Alexander Beiner, is provocative infotainment dealing with game theory and culture, she is obsessed with the Moloch metaphor. I love the race-to-the-bottom example she dwells on: Instagram beauty filters and their effect on teenagers (or really everyone) on social media. She herself finds the temptation to use them quite powerful.

Here are more excerpts that caught my attention:

Moloch’s unhealthy optimization embodied by the “Paperclip Maximizer”

A byproduct of [unhealthy competition] is that if you play it out to its logical conclusion, it means that you will turn basically everything in the universe into this one thing. The ultimate instantiation of that is the “Paperclip Maximizer”. This is a thought experiment, I think by Eliezer Yudkowsky of how a superintelligent AI could go wrong. Suppose it’s unbelievably good at getting whatever it wants done, done. But it’s stupid to the extent that it was basically programmed to do this one narrow thing, which in this instance, you wanted to make paperclips. You wanted the AI to make more paperclips better than what you can currently do. It’s a paperclip maker, but because it’s so unbelievably good, it turns everything from the factory it’s in [into paperclips]. It figures out how to pull the constituent parts of atoms, the blood, the hemoglobin in your blood, the iron. It extracts and dismantles until it can tie anything in the universe into paperclips.

How maximizing can “dismantle the universe into a low complexity state

This is analogous a little bit to the heat death of the universe. Because that is actually a very low complexity state. it’s just a homogenous grey soup. The universe started out with very low complexity, a singularity of matter and energy. If we’re talking in terms of Kolmogorov complexity, which is basically, “how many bits of code do you need to describe a thing?” The universe started out pretty simple. Then time started, things started unfolding and suddenly we started seeing hydrogen and then helium and that coalesced into stars, which could have created greater heavier elements. All this beautiful complexity started emerging. Patternicty is like a dance between order and disorder. A bit of hierarchy, but a bit of anarchy. This creates this highly complex, dynamic system that’s very hard to describe. To write the piece of code to describe the universe, you basically have to just create the universe. That’s what a highly complex system is.

But at some point, the stars will die out and so on. All this sort of free energy that is used to create all this complexity will start dissipating. And then it’ll slowly as far as we know, turn into this gray soup, which has low complexity. Entropy will do this over time.

Never thought of this as good vs evil!

This is like what a paperclip maximizer would do. It’s permanently curtailing. There’s no more complexity to rise. The universe has reached this steady state. And that seems like a tragedy of enormous potential because, at least up until now, it seems like the universe is trying to emerge into greater and greater states of complexity. So I hate to boil it down to like good and evil terms, but to me good is that which creates, allows for greater emergence and complexity to appear and thereby utility. Useful information that we can process and make wonderful things with.

And evil is that which does the opposite. It turns things into a low diversity, very basic situation, whether it’s a cloud of hydrogen or as Ginsburg describes [in the Howl poem] Moloch, who is a cloud of “sexless hydrogen”. So it’s like this force of entropy, but it’s slightly different because entropy is actually neutral. Entropy is just like time effectively. Whereas Moloch is the thing that turns everything into this like one modern focus, sacrificing everything in order to win this one thing — hence the child sacrifice.

The role of healthy competition

Competition can also be an enormous force for good. The capitalistic model has risen the world to what it is right now. We would not be living the cushy life with a lot of the luxuries that capitalism has provided.

How technology fits into this

Technology is exponential, making Moloch’s life much easier to destroy the universe. But at the same time, we’re also building technologies that enable cooperation to better coordinate with one another.

 

My takeaway

Moloch is the evil that comes from overly narrow optimization in service of a competition that has lost the script. Coordination problems devolve into sub-optimal equilibria that are difficult to escape from.

If there is a remedy, I suspect it’s a mix of the following (I included readings I really enjoyed for each prong):

  1. Surplus/redundancy/slack in a system to relieve the pressure to slide into counterproductive or sociopathic competitions✎ Studies on Slack (26 min read)by Scott Alexander

    ✎ Greedy Algorithms And The Need For Illegibility (6 min read)
    by Rohit Krishnan

    ✎ Casualties of Perfection (4 min read)

    by Morgan Housel

  2. Cooperation✎ An Ode To Cooperation (7 min read)
    by Matt Hollerbach

    (this lightly quantitative take on cooperation also underpins portfolio theory!)

  3. Appreciating the limits of legibilityMoloch sustains itself from unhealthy competition. What makes a competition unhealthy is when it becomes all-consuming by compressing our values into a narrow band like the paper clip AI. The AI must process structured and unstructured data, but its meta-intelligence needs to make choices directed by goals.I can’t see how “goals” in any holistic sense of the word can be a solved problem. How can we escape the simple trope “Not all that we measure matters, and not everything that matters can be measured”?

    We impose legibility, then recursively use the legibility to make inferences that further cement that what we originally measured was important otherwise we wouldn’t have measured it. There’s a circularity that makes us vulnerable to mutated assumptions. Sometimes, it’s a good idea to climb up into a Moontower with some friends, take a pause from the battle, and use that calm, high vantage point to wonder, “which unsaid assumptions bear more weight than they should? And how did that happen?”

    When you’re feeling open let yourself wander into this essay by Tom Morgan:

    ✎ The Most Interesting Thing I’ve Ever Read (25 min read)

    (If you find the title clickbaity, congrats — you understand Moloch!)

    I mentioned how Moloch is a force that sacrifices values that are hard to measure. Tom’s essay will bridge you into a sea of thinking that deliberates both the power of science and its limitations (at least in its current state) as a means to receive knowledge.

    [also, thanks to Tom for pointing me to a number of sources that I read after the original Moloch post]


A Final Indulgence

I’ll stretch a bit here.

Moloch feeds by forgetting that the objects of our desire are actually proxies for what we need. We feed our egos with sex, money, and status to gain control. We impose legibility to gain control. Is control freedom? Or is control safety (i.e. the freedom from fear)?

Competition feels like it turns unhealthy when it becomes about control. The illusion of control is it promises both freedom and safety. The control doesn’t mutually scale. For there to be a controller, there must be a controlled.

The trade-offs between freedom and safety, individualism and community feel very stark today. If it feels binary, it’s because the prevailing narratives have profited from framing these values in such divisive terms. The tension between these values is natural, but our sensation of the tension might be amplified artificially.

I’m not downplaying the trade-off so much as trying to restore its grey hue. I’m not well-equipped to do so, but I urge you to listen to war journalist and author Sebastian Junger’s interview with Russ Roberts. The stories within are engaging but the nuanced discussion, trading off between freedom and safety, is the payoff. I feel like the word “freedom” is a political football that has been turned into a cartoon and this interview’s depth makes it quite apparent.

Moontower #133

Last week, I talked about Moloch, the evil god of child sacrifice, as a metaphor for unhealthy competition — “race to the bottoms”, prisoner’s dilemmas, and coordination problems generally.

We summon Moloch when competitive pressures require us to optimize for narrow rewards, especially ones that are easily measurable or “legible” while dispensing with the wider range of values that resist measurement.

Putting something of a face to the phenomenon is useful. It’s adaptive to recognize Moloch so we can re-direct our blame from individuals to the system. We are collectively in charge of the system. We need to recognize the high leverage nodes and rules within that system, not only to protect them from tampering, but to make sure they make sense for our communal well-being in the first place.

Our primary levers are incentives. They take many forms. They can be hard like carrots and sticks or soft like status and honor. I think of culture as the sum of these incentives. This is apparent if you tried to decompose subcultures, national identities, or the values of corporations into what makes their members tick. That which makes one rise or fall within the confines of a specific organization or tribe.

I said the comet in Don’t Look Up should have been named Moloch. But I don’t want to leave this topic making you feel I double-clicked on apocalypse.exe. I promised a lifeline, so this week I’ll give you some materials that point us in the right direction.

I’ll start with an interview with poker player Liv Boeree. While the entire conversation she has with host, Alexander Beiner, is provocative infotainment dealing with game theory and culture, she is obsessed with the Moloch metaphor. I love the race-to-the-bottom example she dwells on: Instagram beauty filters and their effect on teenagers (or really everyone) on social media. She herself finds the temptation to use them quite powerful.

Here are more excerpts that caught my attention:

Moloch’s unhealthy optimization embodied by the “Paperclip Maximizer”

A byproduct of [unhealthy competition] is that if you play it out to its logical conclusion, it means that you will turn basically everything in the universe into this one thing. The ultimate instantiation of that is the “Paperclip Maximizer”. This is a thought experiment, I think by Eliezer Yudkowsky of how a superintelligent AI could go wrong. Suppose it’s unbelievably good at getting whatever it wants done, done. But it’s stupid to the extent that it was basically programmed to do this one narrow thing, which in this instance, you wanted to make paperclips. You wanted the AI to make more paperclips better than what you can currently do. It’s a paperclip maker, but because it’s so unbelievably good, it turns everything from the factory it’s in [into paperclips]. It figures out how to pull the constituent parts of atoms, the blood, the hemoglobin in your blood, the iron. It extracts and dismantles until it can tie anything in the universe into paperclips.

How maximizing can “dismantle the universe into a low complexity state

This is analogous a little bit to the heat death of the universe. Because that is actually a very low complexity state. it’s just a homogenous grey soup. The universe started out with very low complexity, a singularity of matter and energy. If we’re talking in terms of Kolmogorov complexity, which is basically, “how many bits of code do you need to describe a thing?” The universe started out pretty simple. Then time started, things started unfolding and suddenly we started seeing hydrogen and then helium and that coalesced into stars, which could have created greater heavier elements. All this beautiful complexity started emerging. Patternicty is like a dance between order and disorder. A bit of hierarchy, but a bit of anarchy. This creates this highly complex, dynamic system that’s very hard to describe. To write the piece of code to describe the universe, you basically have to just create the universe. That’s what a highly complex system is.

But at some point, the stars will die out and so on. All this sort of free energy that is used to create all this complexity will start dissipating. And then it’ll slowly as far as we know, turn into this gray soup, which has low complexity. Entropy will do this over time.

Never thought of this as good vs evil!

This is like what a paperclip maximizer would do. It’s permanently curtailing. There’s no more complexity to rise. The universe has reached this steady state. And that seems like a tragedy of enormous potential because, at least up until now, it seems like the universe is trying to emerge into greater and greater states of complexity. So I hate to boil it down to like good and evil terms, but to me good is that which creates, allows for greater emergence and complexity to appear and thereby utility. Useful information that we can process and make wonderful things with.

And evil is that which does the opposite. It turns things into a low diversity, very basic situation, whether it’s a cloud of hydrogen or as Ginsburg describes [in the Howl poem] Moloch, who is a cloud of “sexless hydrogen”. So it’s like this force of entropy, but it’s slightly different because entropy is actually neutral. Entropy is just like time effectively. Whereas Moloch is the thing that turns everything into this like one modern focus, sacrificing everything in order to win this one thing — hence the child sacrifice.

The role of healthy competition

Competition can also be an enormous force for good. The capitalistic model has risen the world to what it is right now. We would not be living the cushy life with a lot of the luxuries that capitalism has provided.

How technology fits into this

Technology is exponential, making Moloch’s life much easier to destroy the universe. But at the same time, we’re also building technologies that enable cooperation to better coordinate with one another.

My takeaway

Moloch is the evil that comes from overly narrow optimization in service of a competition that has lost the script. Coordination problems devolve into sub-optimal equilibria that are difficult to escape from.

If there is a remedy, I suspect it’s a mix of the following (I included readings I really enjoyed for each prong):

  1. Surplus/redundancy/slack in a system to relieve the pressure to slide into counterproductive or sociopathic competitions

    ✎ Studies on Slack (26 min read)

    by Scott Alexander

    ✎ Greedy Algorithms And The Need For Illegibility (6 min read)
    by Rohit Krishnan

    ✎ Casualties of Perfection (4 min read)

    by Morgan Housel

  2. Cooperation

    ✎ An Ode To Cooperation (7 min read)
    by Matt Hollerbach

    (this lightly quantitative take on cooperation also underpins portfolio theory!)

  3. Appreciating the limits of legibility

    Moloch sustains itself from unhealthy competition. What makes a competition unhealthy is when it becomes all-consuming by compressing our values into a narrow band like the paper clip AI. The AI must process structured and unstructured data, but its meta-intelligence needs to make choices directed by goals.

    I can’t see how “goals” in any holistic sense of the word can be a solved problem. How can we escape the simple trope “Not all that we measure matters, and not everything that matters can be measured”?

    We impose legibility, then recursively use the legibility to make inferences that further cement that what we originally measured was important otherwise we wouldn’t have measured it. There’s a circularity that makes us vulnerable to mutated assumptions. Sometimes, it’s a good idea to climb up into a Moontower with some friends, take a pause from the battle, and use that calm, high vantage point to wonder, “which unsaid assumptions bear more weight than they should? And how did that happen?”

    When you’re feeling open let yourself wander into this essay by Tom Morgan:

    ✎ The Most Interesting Thing I’ve Ever Read (25 min read)

    (If you find the title clickbaity, congrats — you understand Moloch!)

    I mentioned how Moloch is a force that sacrifices values that are hard to measure. Tom’s essay will bridge you into a sea of thinking that deliberates both the power of science and its limitations (at least in its current state) as a means to receive knowledge.

    [also, thanks to Tom for pointing me to a number of sources that I read after the original Moloch post]


A Final Indulgence

I’ll stretch a bit here.

Moloch feeds by forgetting that the objects of our desire are actually proxies for what we need. We feed our egos with sex, money, and status to gain control. We impose legibility to gain control. Is control freedom? Or is control safety (i.e. the freedom from fear)?

Competition feels like it turns unhealthy when it becomes about control. The illusion of control is it promises both freedom and safety. The control doesn’t mutually scale. For there to be a controller, there must be a controlled.

The trade-offs between freedom and safety, individualism and community feel very stark today. If it feels binary, it’s because the prevailing narratives have profited from framing these values in such divisive terms. The tension between these values is natural, but our sensation of the tension might be amplified artificially.

I’m not downplaying the trade-off so much as trying to restore its grey hue. I’m not well-equipped to do so, but I urge you to listen to war journalist and author Sebastian Junger’s interview with Russ Roberts. The stories within are engaging but the nuanced discussion, trading off between freedom and safety, is the payoff. I feel like the word “freedom” is a political football that has been turned into a cartoon and this interview’s depth makes it quite apparent.


Money Angle

Moontower reader Jeff sent me a treasure trove of free technical course materials to add to the volatility wiki.

Here’s a thread explaining what you’ll find and where to find it:


Last Call

Last month Disney+ in partnership with National Geographic released the documentary about the Thai boys that were trapped in a cave in June of 2018.

The bravery and ingenuity on display will push your conception of what humans can do when they cooperate.

We watched it with the kids. The gripping footage and editing (same team as Free Solo) honored the miracle that was:

The Rescue

Moontower #132

This is an actual story of an elementary school class election:

One of the kids running for class president gave an impassioned speech about what they would change (Maybe no hall monitors anymore, I have no idea, the detail isn’t important). Then the challenging candidate strides up to the podium and declares that if you elect him, he’ll secure the school a…rollercoaster! In the informal “exit poll”, one of the students was asked why they wanted to vote for the rollercoaster candidate and the student said, “I know it probably won’t happen, but what if it did?! That would be soooo cool”.

Surely the challenger is on their way to a lucrative career in politics.

And we are all worse off for it.

Why does it have to be this way?

For the same reason that the realtor who shouts the highest number gets the listing. The reason is…Moloch. A mythical demon that demands child sacrifice has become a metaphor for how things become terrible.

I’ll turn to Scott Alexander for an explanation:

The implicit question is – if everyone hates the current system, who perpetuates it? And Ginsberg answers: “Moloch”. It’s powerful not because it’s correct – nobody literally thinks an ancient Carthaginian demon causes everything – but because thinking of the system as an agent throws into relief the degree to which the system isn’t an agent.

Moloch is the odorless, selective pressures of evolution responding to incentives. It has no moral attribute. It just is. If you are an armchair game-theorist you see Prisoner’s Dilemmas everywhere you look. If you don’t already see them everywhere, bless your heart.

Personally, I constantly fight the resigned feeling that we cannot save ourselves from taking second-helpings of misery pie. “Moloch” is a catchy term that binds to situations known as “coordination problems”. These problems are too devilish to pin on any single individual (although this doesn’t stop anyone from trying to point fingers).

The sub-optimal equilibrium in a Prisoner’s Dilemma is not a mystery in itself. A Nash equilibrium is actually the result of choosing an action that you would have chosen even if you knew how your counterpart would act. The omnipresent Prisoner’s Dilemma is a narrow instance of what Alexander calls, a multi-polar trap — a situation where the best course of action for an individual makes the group worse off.

I dare you to resist nodding as you read this passage:

All these scenarios [described earlier] are in fact a race to the bottom. Once one agent learns how to become more competitive by sacrificing a common value, all its competitors must also sacrifice that value or be outcompeted and replaced by the less scrupulous. Therefore, the system is likely to end up with everyone once again equally competitive, but the sacrificed value is gone forever. From a god’s-eye-view, the competitors know they will all be worse off if they defect, but from within the system, given insufficient coordination it’s impossible to avoid…in some competition optimizing for X, the opportunity arises to throw some other value under the bus for improved X. Those who take it prosper. Those who don’t take it die out. Eventually, everyone’s relative status is about the same as before, but everyone’s absolute status is worse than before. The process continues until all other values that can be traded off have been – in other words, until human ingenuity cannot possibly figure out a way to make things any worse.

Read the essay. It’s one of Alexander’s best (it’s almost 6 years old now).

I’ll warn you. It’s quicksand (don’t worry, I have a plan to pull you out next Sunday). It articulates what you already sense but struggle to put your finger on.

You can find the essay as well as my commentary on it here:

Notes From Moloch


Under the oppression of Baader-Meinhoff, I could not help but think the comet in Don’t Look Up should have been named Moloch.

[Beware spoilers]

Alexander even wrote a review of the movie pointing out its contradictions and never even mentions Moloch.

He instead focuses on whether the writers were advocating for “trust the science”, “trust the experts”, or “don’t trust experts”, or “don’t trust the government”. The movie is a Rorschach. Choose one of those angles if you want. But if you do that, you need to confront the glaring contradictions of those interpretations. Alexander competently explains them in his review.

Still.

It’s not the angle I would have chosen.

I found that approach to the movie too quibbling. Too object level. Sure, this movie can be politically weaponized by either side to confirm their positions (deep state, climate complacency, Covid response). The other side could wave a contradiction in their face and we’ll just talk past each other, just like we do in real life and in the movie.

The real message of this movie is…Moloch.

The comet prompts system-wide institutional failure. A massive failure to coordinate. This is a movie that showed the end-state of gamesmanship and competition that is so exhausting we accept death as mercy. An overdue rest-in-peace. That final scene at the dinner table is disturbing and poignantly stirring at the same time.

Don’t Look Up skewers a culture that has thoroughly and without self-doubt internalized the strategy “it doesn’t matter what you say, but how you say it”. Marketing, storytelling, branding, signaling, persuasion. There is so much emphasis on our ability to hack each other because attention is what is scarce.

Moloch is not moral one way or the other. There is no redemption. In the film, Jennifer Lawrence remains pure. For that, she gets to live out her days bagging groceries. Leo eats from the serpent’s sweet apple nourishing his ego with the foreign but empty calories of in-crowd flattery.

Guess what?

Their fate did not discriminate.


A personal take on Don’t Look Up:

The movie is a comedy. It’s a satire. While I watched it, it felt like a slightly above average movie, but it has lingered so much in my head, that I’m not giving enough credit to how provocative it was as a piece of art. My favorite performance was Mark Rylance playing the rich tech founder meme. (Coincidentally, the best live performance I may have seen of anything ever was Rylance on Broadway in La Bete. He has a 45-minute soliloquy in iambic pentameter that is physically hilarious and verbally brilliant. He would make a rapper proud.)

If you watch Don’t Look Up, do not turn it off before the credits start rolling. You’ll miss the most satisfying part of the film.


Money Angle

In economics, there is a trade-off between efficiency and equality. Efficiency is concerned with maximizing output, and equity is about how that output is distributed. If I give a resource, for example, an education, to 9-year-old Elon Musk that’s more optimal than handing it to Snooki if I care about efficiency. If I want to be fair, I’d split my education budget between the two of them. This trade-off is fairly self-evident when you point it out.

(I’m imagining an Orange County strip-mall landlord droning on about Reagan’s “trickle-down” economics to a YouTube influencer wearing a Che Guevara tank top at a Hollywood Hills cocktail party.)

If we look at the extreme poles of the equality-efficiency spectrum, we would find archetypes for how our activities should be coordinated. Equality, as the primary goal, leads to top-down communism and authoritarianism. Sorry, there is no benevolent dictator.

Efficiency at-all-costs would be coordinated by free markets. “Free” of course is corruptible (i.e. crony capitalism) and anti-trust is a broadly accepted guardrail to protect us from winner-take-all endgames.

As capitalists, it’s more relevant to think about the Moloch essay in the context of markets. To that end, I just wanted to share some Moloch-meets-markets musings.

On Thoughtful Rules

The logic of markets is they are a coordination mechanism to get to truth or what finance-types call “price discovery”. Price discovery provides signals to guide how we allocate our physical and human capital. It does this through the “profit incentive” pathway. Oil prices rise when people demand to fly and drive. So you should drill for more oil because the price offers you a profit.

The problem is that the system can work too well.

The profit incentive is powerful because money is fungible with everything that’s promised to satisfy any human desire. Money, of course, is incapable of that, but very few people believe they have “enough”. We expect businesses and individuals to claw for profits and, obediently, they do.

This is fine and good. But it still requires some top-down design. Why?

Because when our horns are locked in competition for that oh so sweet profit, Moloch demands we push ourselves right up to the line. The person who wins that last dollar must dispense with every other value so long as it doesn’t violate the law. Norms are not even effective restraints at the pinnacle of competition where you are likely to find sociopaths.

To keep Moloch from running wild we need the lines we draw to accommodate the fact that once we yell “go” everyone will look for every possible edge. Our lines must account for externalities. That’s what anti-pollution laws are. Our accounting laws serve similar functions. A carbon credit is an accounting term that “internalizes” an externality. It forces the emitter to own what they’ve done. They need to put it into their profit calculus.

On Flexibility

Of course, even well-considered laws will be gamed. But I couldn’t help notice that the marketplace seems to be telling us that the laws are behind the times.

Consider examples coming from different directions:

  1. Matt Levine’s “everything is securities fraud” thesis suggests that any practice that damages shareholder value, even if it’s legal can be used retroactively as the basis for a lawsuit. This forces management to consider their externalities even if stodgy laws and accounting rules cannot keep up with a rapidly changing world.
  2. From the other side, ESG, at least in its idealized form, is pushing to internalize the externalities by pushing our wider discarded values back onto balance sheets as more explicit liabilities. Instead of using judges, they want to use accounting laws and influence investing norms.
  3. Then you have crypto’s techno-libertarianism. If you love the idea of smart contracts’ black-and-whiteness, you should prefer the ESG reform to the whim of human judgments after-the-fact. If smart contract purists are more comfortable choosing the letter over the spirit of the law, they must be dead-set on demanding bright lines for every issue. (Sounds great if you hate nuance. Like religious fundamentalists. Or toddlers.)

    Smart contracts are a brilliant idea. Just not for every decision context.

On Liquidity

Price discovery increases with liquidity. This is mostly uncontroversial (if there were no VCs reading this I would have ditched the word “mostly” but I do love Moontower readers, so an olive branch is in order). And if price discovery and liquidity are good, is more always better?

The amount of brainpower and resources devoted to capturing that last penny of arbitrage in markets is formidable. What is the true cost of that price being “discovered”? I don’t even know where to start with that one (Jessica, in her characteristic snark, wonders a similar question on Twitter).

Let’s consider a more tractable question from Byrne Hobart. As he thought about the proposed repeal of 1031 exchanges, he wrote (bold is mine):

The defense of 1031 exchanges is that they encourage growth, because they keep people spending money on new property developments instead of cashing out and enjoying their gains. Which embeds two assumptions:

  1. It’s generally better to tax consumption than investment, and
  2. Real estate investment is a particularly worthy kind of investment to avoid taxing.

Assumption #1 sounds true, but is circumstantial. Assumption #2, though, is hard to defend. Real estate speculation does produce jobs, but it also produces macroeconomic volatility and sometimes threatens the financial system. From a macroprudential perspective, where the goal is to reduce the odds of financial crises, it might make more sense to have 1031 exchanges for everything but real estate: sell your company, and you can roll the money into starting a new one; sell a mall or skyscraper, and you get taxed. But it’s always fiendishly hard to predict the long-term incentives created by a change in the tax code. Any tax on realizing gains, for example, is implicitly a subsidy on borrowing against appreciated assets instead of realizing those gains. If that’s true, the net effect of eliminating 1031 exchanges would be that real estate portfolios would turn over less often. If we assume that people vary in their ability to make good real estate investments, this would mean that the best such investors wouldn’t make as many discrete investing decisions, which would make prices a bit less efficient. Which might be a reasonable tradeoff: making real estate investing a less tax-optimal choice could be a fair trade in exchange for making real estate prices less reflective of their value. But it’s still a tradeoff, not a straightforward benefit. Quirks in the tax code become load-bearing over time; even if they didn’t make economic sense when they were made, the structure of the economy only makes sense in light of the tax incentives that economic actors have already responded to. If you assume that people are reasonably good at reacting to incentives—or, more plausibly, that over time the people who are good at doing this end up controlling more assets—then any change in those incentives has complicated and unpredictable results.

The trade-off is one of price discovery vs the goals of tax-policy. Would we sacrifice liquidity and price discovery for another shared value even if it’s less legible?

This is right back to the heart of the matter. Efficiency we can measure vs equality we can measure. Are we even able to measure these values in a broad context where the multitude of considerations does not give way to the grinding demands of narrow optimization?

Conclusion

I can’t answer these musings. They are just the Money Angle exhaust of reading that damn essay.

The only things I’m reasonably sure of is:

  1. Communism is hell. Look I had to throw Satan a bone with all this attention I’m showering on another demon.
  2. Capitalism’s efficiency-equality tensions remind us that it is a compromise that must be tended with care because the invisible hand is connected to Moloch’s arm.

Last Call

Any longtime reader knows how big a fan I am of Khe Hy. He’s transparent, kind, and very smart.

While you still have that New Year’s bolt of energy and inspiration check out his totally free upcoming summit.

Your Roadmap for an Epic 2022 (Link)

Ready to hit your goals and accelerate your career? Start strong into 2022 with this free 3-day training for the RadReads community.

Khe’s material and delivery is a cut above. And I’m pretty skeptical of productivity porn. If you have energy swirling around inside you but struggling to convert it from potential to kinetic energy, take a look. It’s riskless.

Separately, if you’re thinking about entrepreneurship, read his recent story:

Why I’m Giving Up On Solopreneurship (Link)

Don’t Look Up, It’s Moloch

This is an actual story of an elementary school class election:

One of the kids running for class president gave an impassioned speech about what they would change (Maybe no hall monitors anymore, I have no idea, the detail isn’t important). Then the challenging candidate strides up to the podium and declares that if you elect him, he’ll secure the school a…rollercoaster! In the informal “exit poll”, one of the students was asked why they wanted to vote for the rollercoaster candidate and the student said, “I know it probably won’t happen, but what if it did?! That would be soooo cool”.

Surely the challenger is on their way to a lucrative career in politics.

And we are all worse off for it.

Why does it have to be this way?

For the same reason that the realtor who shouts the highest number gets the listing. The reason is…Moloch. A mythical demon that demands child sacrifice has become a metaphor for how things become terrible.

I’ll turn to Scott Alexander for an explanation:

The implicit question is – if everyone hates the current system, who perpetuates it? And Ginsberg answers: “Moloch”. It’s powerful not because it’s correct – nobody literally thinks an ancient Carthaginian demon causes everything – but because thinking of the system as an agent throws into relief the degree to which the system isn’t an agent.

Moloch is the odorless, selective pressures of evolution responding to incentives. It has no moral attribute. It just is. If you are an armchair game-theorist you see Prisoner’s Dilemmas everywhere you look. If you don’t already see them everywhere, bless your heart.

Personally, I constantly fight the resigned feeling that we cannot save ourselves from taking second-helpings of misery pie. “Moloch” is a catchy term that binds to situations known as “coordination problems”. These problems are too devilish to pin on any single individual (although this doesn’t stop anyone from trying to point fingers).

The sub-optimal equilibrium in a Prisoner’s Dilemma is not a mystery in itself. A Nash equilibrium is actually the result of choosing an action that you would have chosen even if you knew how your counterpart would act. The omnipresent Prisoner’s Dilemma is a narrow instance of what Alexander calls, a multi-polar trap — a situation where the best course of action for an individual makes the group worse off.

I dare you to resist nodding as you read this passage:

All these scenarios [described earlier] are in fact a race to the bottom. Once one agent learns how to become more competitive by sacrificing a common value, all its competitors must also sacrifice that value or be outcompeted and replaced by the less scrupulous. Therefore, the system is likely to end up with everyone once again equally competitive, but the sacrificed value is gone forever. From a god’s-eye-view, the competitors know they will all be worse off if they defect, but from within the system, given insufficient coordination it’s impossible to avoid…in some competition optimizing for X, the opportunity arises to throw some other value under the bus for improved X. Those who take it prosper. Those who don’t take it die out. Eventually, everyone’s relative status is about the same as before, but everyone’s absolute status is worse than before. The process continues until all other values that can be traded off have been – in other words, until human ingenuity cannot possibly figure out a way to make things any worse.

Read the essay. It’s one of Alexander’s best (it’s almost 6 years old now).

I’ll warn you. It’s quicksand (don’t worry, I have a plan to pull you out next Sunday). It articulates what you already sense but struggle to put your finger on.

You can find the essay as well as my commentary on it here:

Notes From Moloch


Under the oppression of Baader-Meinhoff, I could not help but think the comet in Don’t Look Up should have been named Moloch.

[Beware spoilers]

Alexander even wrote a review of the movie pointing out its contradictions and never even mentions Moloch.

He instead focuses on whether the writers were advocating for “trust the science”, “trust the experts”, or “don’t trust experts”, or “don’t trust the government”. The movie is a Rorschach. Choose one of those angles if you want. But if you do that, you need to confront the glaring contradictions of those interpretations. Alexander competently explains them in his review.

Still.

It’s not the angle I would have chosen.

I found that approach to the movie too quibbling. Too object level. Sure, this movie can be politically weaponized by either side to confirm their positions (deep state, climate complacency, Covid response). The other side could wave a contradiction in their face and we’ll just talk past each other, just like we do in real life and in the movie.

The real message of this movie is…Moloch.

The comet prompts system-wide institutional failure. A massive failure to coordinate. This is a movie that showed the end-state of gamesmanship and competition that is so exhausting we accept death as mercy. An overdue rest-in-peace. That final scene at the dinner table is disturbing and poignantly stirring at the same time.

Don’t Look Up skewers a culture that has thoroughly and without self-doubt internalized the strategy “it doesn’t matter what you say, but how you say it”. Marketing, storytelling, branding, signaling, persuasion. There is so much emphasis on our ability to hack each other because attention is what is scarce.

Moloch is not moral one way or the other. There is no redemption. In the film, Jennifer Lawrence remains pure. For that, she gets to live out her days bagging groceries. Leo eats from the serpent’s sweet apple nourishing his ego with the foreign but empty calories of in-crowd flattery.

Guess what?

Their fate did not discriminate.


A personal take on Don’t Look Up:

The movie is a comedy. It’s a satire. While I watched it, it felt like a slightly above average movie, but it has lingered so much in my head, that I’m not giving enough credit to how provocative it was as a piece of art. My favorite performance was Mark Rylance playing the rich tech founder meme. (Coincidentally, the best live performance I may have seen of anything ever was Rylance on Broadway in La Bete. He has a 45-minute soliloquy in iambic pentameter that is physically hilarious and verbally brilliant. He would make a rapper proud.)

If you watch Don’t Look Up, do not turn it off before the credits start rolling. You’ll miss the most satisfying part of the film.


Money Angle

In economics, there is a trade-off between efficiency and equality. Efficiency is concerned with maximizing output, and equity is about how that output is distributed. If I give a resource, for example, an education, to 9-year-old Elon Musk that’s more optimal than handing it to Snooki if I care about efficiency. If I want to be fair, I’d split my education budget between the two of them. This trade-off is fairly self-evident when you point it out.

(I’m imagining an Orange County strip-mall landlord droning on about Reagan’s “trickle-down” economics to a YouTube influencer wearing a Che Guevara tank top at a Hollywood Hills cocktail party.)

If we look at the extreme poles of the equality-efficiency spectrum, we would find archetypes for how our activities should be coordinated. Equality, as the primary goal, leads to top-down communism and authoritarianism. Sorry, there is no benevolent dictator.

Efficiency at-all-costs would be coordinated by free markets. “Free” of course is corruptible (i.e. crony capitalism) and anti-trust is a broadly accepted guardrail to protect us from winner-take-all endgames.

As capitalists, it’s more relevant to think about the Moloch essay in the context of markets. To that end, I just wanted to share some Moloch-meets-markets musings.

On Thoughtful Rules

The logic of markets is they are a coordination mechanism to get to truth or what finance-types call “price discovery”. Price discovery provides signals to guide how we allocate our physical and human capital. It does this through the “profit incentive” pathway. Oil prices rise when people demand to fly and drive. So you should drill for more oil because the price offers you a profit.

The problem is that the system can work too well.

The profit incentive is powerful because money is fungible with everything that’s promised to satisfy any human desire. Money, of course, is incapable of that, but very few people believe they have “enough”. We expect businesses and individuals to claw for profits and, obediently, they do.

This is fine and good. But it still requires some top-down design. Why?

Because when our horns are locked in competition for that oh so sweet profit, Moloch demands we push ourselves right up to the line. The person who wins that last dollar must dispense with every other value so long as it doesn’t violate the law. Norms are not even effective restraints at the pinnacle of competition where you are likely to find sociopaths.

To keep Moloch from running wild we need the lines we draw to accommodate the fact that once we yell “go” everyone will look for every possible edge. Our lines must account for externalities. That’s what anti-pollution laws are. Our accounting laws serve similar functions. A carbon credit is an accounting term that “internalizes” an externality. It forces the emitter to own what they’ve done. They need to put it into their profit calculus.

On Flexibility

Of course, even well-considered laws will be gamed. But I couldn’t help notice that the marketplace seems to be telling us that the laws are behind the times.

Consider examples coming from different directions:

  1. Matt Levine’s “everything is securities fraud” thesis suggests that any practice that damages shareholder value, even if it’s legal can be used retroactively as the basis for a lawsuit. This forces management to consider their externalities even if stodgy laws and accounting rules cannot keep up with a rapidly changing world.
  2. From the other side, ESG, at least in its idealized form, is pushing to internalize the externalities by pushing our wider discarded values back onto balance sheets as more explicit liabilities. Instead of using judges, they want to use accounting laws and influence investing norms.
  3. Then you have crypto’s techno-libertarianism. If you love the idea of smart contracts’ black-and-whiteness, you should prefer the ESG reform to the whim of human judgments after-the-fact. If smart contract purists are more comfortable choosing the letter over the spirit of the law, they must be dead-set on demanding bright lines for every issue. (Sounds great if you hate nuance. Like religious fundamentalists. Or toddlers.)

    Smart contracts are a brilliant idea. Just not for every decision context.

On Liquidity

Price discovery increases with liquidity. This is mostly uncontroversial (if there were no VCs reading this I would have ditched the word “mostly” but I do love Moontower readers, so an olive branch is in order). And if price discovery and liquidity are good, is more always better?

The amount of brainpower and resources devoted to capturing that last penny of arbitrage in markets is formidable. What is the true cost of that price being “discovered”? I don’t even know where to start with that one (Jessica, in her characteristic snark, wonders a similar question on Twitter).

Let’s consider a more tractable question from Byrne Hobart. As he thought about the proposed repeal of 1031 exchanges, he wrote (bold is mine):

The defense of 1031 exchanges is that they encourage growth, because they keep people spending money on new property developments instead of cashing out and enjoying their gains. Which embeds two assumptions:

  1. It’s generally better to tax consumption than investment, and
  2. Real estate investment is a particularly worthy kind of investment to avoid taxing.

Assumption #1 sounds true, but is circumstantial. Assumption #2, though, is hard to defend. Real estate speculation does produce jobs, but it also produces macroeconomic volatility and sometimes threatens the financial system. From a macroprudential perspective, where the goal is to reduce the odds of financial crises, it might make more sense to have 1031 exchanges for everything but real estate: sell your company, and you can roll the money into starting a new one; sell a mall or skyscraper, and you get taxed. But it’s always fiendishly hard to predict the long-term incentives created by a change in the tax code. Any tax on realizing gains, for example, is implicitly a subsidy on borrowing against appreciated assets instead of realizing those gains. If that’s true, the net effect of eliminating 1031 exchanges would be that real estate portfolios would turn over less often. If we assume that people vary in their ability to make good real estate investments, this would mean that the best such investors wouldn’t make as many discrete investing decisions, which would make prices a bit less efficient. Which might be a reasonable tradeoff: making real estate investing a less tax-optimal choice could be a fair trade in exchange for making real estate prices less reflective of their value. But it’s still a tradeoff, not a straightforward benefit. Quirks in the tax code become load-bearing over time; even if they didn’t make economic sense when they were made, the structure of the economy only makes sense in light of the tax incentives that economic actors have already responded to. If you assume that people are reasonably good at reacting to incentives—or, more plausibly, that over time the people who are good at doing this end up controlling more assets—then any change in those incentives has complicated and unpredictable results.

The trade-off is one of price discovery vs the goals of tax-policy. Would we sacrifice liquidity and price discovery for another shared value even if it’s less legible?

This is right back to the heart of the matter. Efficiency we can measure vs equality we can measure. Are we even able to measure these values in a broad context where the multitude of considerations does not give way to the grinding demands of narrow optimization?

Conclusion

I can’t answer these musings. They are just the Money Angle exhaust of reading that damn essay.

The only things I’m reasonably sure of is:

  1. Communism is hell. Look I had to throw Satan a bone with all this attention I’m showering on another demon.
  2. Capitalism’s efficiency-equality tensions remind us that it is a compromise that must be tended with care because the invisible hand is connected to Moloch’s arm.

Notes From Moloch

Select excerpts from Slatestarcodex’s:

Meditations on Moloch (Link)

The premise:

The implicit question is – if everyone hates the current system, who perpetuates it? And Ginsberg answers: “Moloch”. It’s powerful not because it’s correct – nobody literally thinks an ancient Carthaginian demon causes everything – but because thinking of the system as an agent throws into relief the degree to which the system isn’t an agent.


Categories and examples of “multi-polar traps”

Situations where the best course of action for an individual makes the group worse off.

I sorted them as follows:

  1. Prisoner’s Dilemma
    • Dollar auctions (think of “pay to bid” auctions)
    • Tragedy of the commons problems (ie overfishing)

  2. Race to the bottom
    • Malthusian Traps (intense competitive pressures that penalize attempts at “slack”)
    • Capitalism (an instance of the evolutionary mechanism underlying Malthusian traps)
    • Two-income traps (From within the system, absent a government literally willing to ban second jobs, everyone who doesn’t get one will be left behind.)
    • Agriculture (Maybe hunting-gathering was more enjoyable, higher life expectancy, and more conducive to human flourishing – but in a state of sufficiently intense competition ag wins)
    • Arms races
    • Education signaling
    • Science and pseudo-science research
    • Gov’t corruption
    • Politics (Congressmen tactics to get elected)

All these scenarios are in fact a race to the bottom. Once one agent learns how to become more competitive by sacrificing a common value, all its competitors must also sacrifice that value or be outcompeted and replaced by the less scrupulous. Therefore, the system is likely to end up with everyone once again equally competitive, but the sacrificed value is gone forever. From a god’s-eye-view, the competitors know they will all be worse off if they defect, but from within the system, given insufficient coordination it’s impossible to avoid.

…in some competition optimizing for X, the opportunity arises to throw some other value under the bus for improved X. Those who take it prosper. Those who don’t take it die out. Eventually, everyone’s relative status is about the same as before, but everyone’s absolute status is worse than before. The process continues until all other values that can be traded off have been – in other words, until human ingenuity cannot possibly figure out a way to make things any worse.

My own local example:

The public school system shifted the start date of the scholastic year up from late August to early August to gain an artifical advantage in year-end standardized test scores by giving the students more time to prepare. Eventually, all schools will adopt this to maintain competitiveness and we’ll sacrifice the value of summer vacations in August when people commonly take off work and camps are not in session.

Select Excerpts

On incentives and initial conditons…

Any human with above room temperature IQ can design a utopia. The reason our current system isn’t a utopia is that it wasn’t designed by humans. Just as you can look at an arid terrain and determine what shape a river will one day take by assuming water will obey gravity, so you can look at a civilization and determine what shape its institutions will one day take by assuming people will obey incentives. But that means that just as the shapes of rivers are not designed for beauty or navigation, but rather an artifact of randomly determined terrain, so institutions will not be designed for prosperity or justice, but rather an artifact of randomly determined initial conditions.

We just analogized the flow of incentives to the flow of a river. The downhill trajectory is appropriate: the traps happen when you find an opportunity to trade off a useful value for greater competitiveness. Once everyone has it, the greater competitiveness brings you no joy – but the value is lost forever. Therefore, each step of the Poor Coordination Polka makes your life worse.

Capitalism

Capitalism is a lossy accounting system in that it can elevate priorities without precision. Not unlike napalm. Its a victim of its own success in the sense that any critique of it galvanizes its defense with soothing rationalizations both by the rich and by those to whom it has unknowingly imprisoned. Look, capitalism is good. It doesn’t need religious arguments in its favor to affirm that. Those arguments discredit its supporters which is a collective self-own. It’s possible to discuss its merits and flaws in the same room.

With that said, here’s a nuanced point from the essay…

I know that “capitalists sometimes do bad things” isn’t exactly an original talking point. But I do want to stress how it’s not equivalent to “capitalists are greedy”. I mean, sometimes they are greedy. But other times they’re just in a sufficiently intense competition where anyone who doesn’t do it will be outcompeted and replaced by people who do. Business practices are set by Moloch, no one else has any choice in the matter. (from my very little knowledge of Marx, he understands this very very well and people who summarize him as “capitalists are greedy” are doing him a disservice)

Politics

Politics is similarly skewed…

As well understood as the capitalist example is, I think it is less well appreciated that democracy has the same problems. Yes, in theory it’s optimizing for voter happiness which correlates with good policymaking. But as soon as there’s the slightest disconnect between good policymaking and electability, good policymaking has to get thrown under the bus. For example, ever-increasing prison terms are unfair to inmates and unfair to the society that has to pay for them. Politicans are unwilling to do anything about them because they don’t want to look “soft on crime”, and if a single inmate whom they helped release ever does anything bad (and statistically one of them will have to) it will be all over the airwaves as “Convict released by Congressman’s policies kills family of five, how can the Congressman even sleep at night let alone claim he deserves reelection?”. So even if decreasing prison populations would be good policy – and it is – it will be very difficult to implement.

The libertarian-authoritarian axis on the Political Compass is a tradeoff between discoordination and tyranny. You can have everything perfectly coordinated by someone with a god’s-eye-view – but then you risk Stalin. And you can be totally free of all central authority – but then you’re stuck in every stupid multipolar trap Moloch can devise. The libertarians make a convincing argument for the one side, and the monarchists for the other, but I expect that like most tradeoffs we just have to hold our noses and admit it’s a really hard problem.

This reminds me of a story I heard from my wife about an elementary school class election. One kid gave an impassioned speech about what they would change (no hall monitors anymore? I have no idea what kids see as the real issues in that otherwise simulcrum of no reality I know of called “school”). Anyway, the challenging candidate rolls up to the podium and declares that if you elect him, he’ll secure the school a…rollercoaster! In the exit poll one of the students was asked why they voted for the rollercoaster candidate and the student said, “I know it probably won’t happen, but what if it did?! That would be soooo cool”.

I suspect the challenger is on their way to a lucrative career in politics.

And we are all worse off for it.

How conservative and liberal views of societal evolution dictate thir imperatives

Societies, like animals, evolve. The ones that survive spawn memetic descendants – for example, the success of Britan allowed it to spin off Canada, Australia, the US, et cetera. Thus, we expect societies that exist to be somewhat optimized for stability and prosperity. I think this is one of the strongest conservative arguments. Just as a random change to a letter in the human genome will probably be deleterious rather than beneficial since humans are a complicated fine-tuned system whose genome has been pre-optimized for survival – so most changes to our cultural DNA will disrupt some institution that evolved to help Anglo-American (or whatever) society outcompete its real and hypothetical rivals.

The liberal counterargument to that is that evolution is a blind idiot alien god that optimizes for stupid things and has no concern with human value. Thus, the fact that some species of wasps paralyze caterpillars, lay their eggs inside of it, and have its young devour the still-living paralyzed caterpillar from the inside doesn’t set off evolution’s moral sensor, because evolution doesn’t have a moral sensor because evolution doesn’t care. Suppose that in fact patriarchy is adaptive to societies because it allows women to spend all their time bearing children who can then engage in productive economic activity and fight wars. The social evolutionary processes that cause societies to adopt patriarchy still have exactly as little concern for its moral effects on women as the biological evolutionary processes that cause wasps to lay their eggs in caterpillars. Evolution doesn’t care. But we do care. There’s a tradeoff between Gnon-compliance – saying “Okay, the strongest possible society is a patriarchal one, we should implement patriarchy” and our human values – like women who want to do something other than bear children.

Too far to one side of the tradeoff, and we have unstable impoverished societies that die out for going against natural law. Too far to the other side, and we have lean mean fighting machines that are murderous and miserable. Think your local anarchist commune versus Sparta.

An optimistic angle. Or maybe not.

Franklin continues: “The project of civilization [is] for man to graduate from the metaphorical savage, subject to the law of the jungle, to the civilized gardener who, while theoretically still subject to the law of the jungle, is so dominant as to limit the usefulness of that model. This need not be done globally; we may only be able to carve out a small walled garden for ourselves, but make no mistake, even if only locally, the project of civilization is to capture Gnon. “

I maybe agree with Warg here more than I have ever agreed with anyone else about anything. He says something really important and he says it beautifully and there are so many words of praise I want to say for this post and for the thought processes behind it. But what I am actually going to say is…

Gotcha! You die anyway!

My Concluding Thoughts

  • First a general thought:

    This essay is infotainment. It’s a work of art, it’s provocative, and one I expect to return to because it is stirring. Its sense-making Slatestar at his best. It’s dreary by default. But I see a glimmer of liberation peeking from behind its nimbus:

    If you accept its hopelessness and kneel to Moloch, you might fare better. But it’s delaying the inevitable. Instead, you can rebel. It might be quiet. And maybe nobody will care. But a large part of your reality is your own internal narration of it. There are truths that inhabit the physical world. Beyond that, things veer pretty quickly towards “it’s all made up”. This is liberation. How you feel about how you play matters. You might as well play your way since it doesn’t matter anyway.

    But this is not even the useful part.

    The real gift is once you witness how others deal with this non-mattering, you have found a magic compass. It points you to the family you choose. It gives you back control of your attention. And while we’re here, that’s probably the most useful choice we have.

  • A (pollyannish?) thought:

    This essay highlights how capitalism and competition narrow our values. ESG seeks to broaden our values. There is some irony in that one of the arguments in favor of ESG is that if we internalized our externalities, through what amounts to a broader system of accounting, that it would also maximize a Chicago-school capitalists brand of utility.

    Perhaps this is true. Companies that are more virtuous might be better for “shareholder value” in the long run. But part of me finds that reasoning patronizing. Like hiding the dog’s pill in peanut butter. 

    The ESGer is conceding a point they shouldn’t have to. Instead of trying to fit a wider set of values into an existing legible accounting system we could realize that the system is a needless sacrifice to legibility.

    (I don’t need a lecture on the grifty aspects of ESG. Every movement that gains traction brings its share of mops and sociopaths.)

  • Finally:

    You should read the essay. It’s a classic from a good writer. If you need another breadcrumb, one of the questions Slatestar poses:

    Why do things not degenerate more and more until we are back at subsistence level?

    I can think of three bad reasons – excess resources, physical limitations, and utility maximization – plus one good reason – coordination.

    You’ll need to read it to explore the answers.