Sunday, August 30, 2009

Unintended consequences

Extracting liberally from Nassim Nicholas Taleb's writing gives one a good idea of how smart people think about complex systems today.

1) Climate Change. I am hyper-conservative ecologically (meaning super-Green). My position on the climate is to avoid releasing pollutants in the atmosphere, on the basis of ignorance, regardless of current expert opinion (climate experts, like banking risk managers, have failed us in the past in foreseeing long term damages and I cannot accept certainty in a certain class of nonlinear models). This is an extension of my general idea that one does not need rationalization with the use of complicated models (by fallible experts) to the edict: "do not disturb a complex system" since we do not know the consequences of our actions owing to complicated causal webs. (Incidentally, this ideas also makes me anti-war). I explicitly explained the need to "leave the planet the way we got it" ...

2) Crashes. [I also] crusade against the risk of financial collapse and the need to robustify society. I find it depressing that the British public could have saved several trillion pounds and hundreds of thousands of jobs had they minded these hidden risks in the system. My position is that a robust system needs to produce frequent crashes, with citizens immune to them, rather than infrequent total collapse, for which we have no robustness. By constraining cycles and assuming "no more boom and bust" (as your current government did) you end up with a very large bust -and I am sure that I do not need more events like the most recent crisis to prove the point...

3) Social Fairness. I spent 13 years fighting bankers bonuses (when nobody else did) and am currently crusading for clawbacks of past compensation as I have shown how regular taxpayers have been financing bonuses of millionaire bankers ("socialism for the losses, capitalism for the profits"). We are financing today those who got us here, with tax hikes on those who do the right thing, and larger tax break for those who blew us up. Companies who made mistakes and fragilized the system are being subsidized by the countercyclical ones who make it more robust...unless we lower debt to "definancialize" the economy (instead of increasing deficits through stimulus) we face more risks of blowups. Read more from source

If you find any of this interests you, and particularly if you are very young, get thee a lot of books that thrill you and perhaps get to a place where people have similar interests so you can talk and learn. I learned a lot of "systems" from being at Caltech, and inspired by John C. Doyle. Sadly, in the real world, there is too little of this kind of understanding. More pertinently, even John's, Nicholas's, my understanding is very shaky and full of holes. The world is waiting for the kids with new ideas to help us understand systems. In this event, rather than not disturbing complex systems, we learn good and unsafe ways to disturb them.

If you're convinced that you're too old for very original thinking, you may still follow the thoughts on systems, complexity, robustness, and the like: If you like maths, any advanced study that makes you understand very well what solutions to ordinary differential equations look like is a great start. Without maths, try Nassim Nicholas Taleb's books The Black Swan and Fooled By Randomness, mostly on finance. I've never read them, but read reviews and discussions about. He's pretty much right.

Study Systems online:
I'm too lazy to read the following, but if you decide to study it, I'll gladly your take questions by email, since it will help me review the material that is supposedly my core area of study.
SYSTEM DYNAMICS SELF-STUDY, courtesy MIT Open Course Ware
"Course Description
Many books and thousands of papers cover the field of system dynamics. With all of these resources available, it can be difficult to know where to begin. The System Dynamics in Education Project at MIT put together these resources to help people sort through the vast library of books and papers on system dynamics. This course site includes a collection of papers and computer exercises entitled “Road Maps,” as well as a collection of assignments and solutions that were initially part of a guided study to system dynamics. Note that while the level of the course indicated in the upper right corner of the screen is "Undergraduate / Graduate," the material is suitable for people ranging from K-12 students to chief executives of corporations."
Download the readings
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