Brute force, trial and error systems vs imagination

From the New Scientist article Daydream Believers (from last week):

“I would love to know if chimpanzees can entertain the notion of a unicorn, but we have no idea,” he says. “As far as I can tell, we don’t even know whether they can entertain two possible scenarios to solve a problem.” In Call’s view, it is impossible to say whether the animals that solve problems without trial and error are consciously imagining different solutions, or subconsciously integrating information to come up with the correct solution. “I’m not saying animals can’t imagine two different scenarios,” he says. “I just don’t see the evidence for it.”

As I have been learning this week from AI experts, the ability to learn depends mostly on trial and error processes which strengthen neural pathways that lead to positive results.

But as I am also learning, the field of artificial intelligence is split between three different types of AI learning processes.

First there are big data systems. These aren’t really intelligent because they depend on pre-programming by intelligent agents. They’re effective only because of brute force approaches to problems, processing huge amounts of data. You can imagine the problem. It’s a very energy intensive way to achieve the optimum action, and it remains dependent on instructions on what to look for. Like finding a needle in a haystack by processing every single bit of hay and checking that it isn’t by chance a needle. This is brute force trial and error.

Then there’s proper AI which achieves intelligence through self-learning algorithms that reward the AI for reaching objectives of their own accord. These are a different type of trial and error process. You don’t have to know what the task is, you’re simply learning to deal with the environment you are faced with and every time you discover something exploitable you develop a neural pathway that teaches you this is a good way to approach that sort of problem.

Problem with this system is that, if an unexpected obstacle hits the AI (unexpected item in the bagging area), it can get stuck in blind alleys applying approaches it has found effective in the past until it finds a work around. This can take a while. But sometimes it may not work at all.

The third system — arguably the smartest — incorporates what i have come to understand as mental visualization/modeling. It’s a system that aims to replicate the way the human brain works.

This is achieved by the AI integrating a model of its perceived surroundings into its actions, so if and when it comes across an unexpected obstacle it can revert to its model and take a good intuitive guess about where the solution might be. In other words it uses its imagination to figure out a solution.

The more creative it is the more likely it is to think outside the proverbial box and find the sort of solution that a process-driven AI would never be able to imagine.

A lot of human intelligence thus seems to be linked to the ability to create a working internal model of surroundings and to be able to cut corners through processes which would otherwise take ages and/or loads of energy.

But I do wonder if perhaps we have inherited a dual system as reflected by the presence of both process-type thinkers and creative-type thinkers in society.

The latter of course are pattern recognizers and extrapolators. These are people who have a tendency to jump to conclusions based on instinct and hunches, without too much care for the process of how to arrive at that solution. These are the sort of people who are super intuitive, who at school didn’t have to study too hard to pass exams, because they found they could get away with getting good marks with only half the amount of work of everyone else.

The former, however, are dedicated to the process. If you provide them with an unexpected solution to a problem they won’t necessarily trust you until they have worked out for themselves the process by which you can arrive at that point. These are, in other words, book learners. At school they would have been the type that got incredibly good results but had to study hard (and probably enjoyed that studying) so as to get to that end result.

There are, of course, strengths and weaknesses in both systems.

The amazing strength of book learners (I.e. non visualization people) is that once they understand the process they become better than anyone at doing it. They can become human calculators. And are generally hugely efficient at whatever skill they learn, and don’t get bored easily.

Their weakness, however, is that they can get stuck in the little picture and go down blind alleys. Also, they tend to be scared of unexpected encounters or anything they are not used to. In the extreme they probably fall on the autistic side of the psychological spectrum. On the really extreme side they may have trouble recognizing faces and emotions because of poor pattern recognition skills.

The amazing strength of creatives (people who can visualize from models) is that they can cut corners and find the most unexpected solution to problems and obstacles. That said they’re probably only efficient for short periods of time, with the efficiency highly linked to the out-of-box thinking process that leads them to an unexpected outcome. This may encourage an obsessive personality, I would imagine, which labours to prove that its pathway is correct. Nevertheless, they are very good at spotting patterns and are probably very good at visual representation, the arts and the subtleties of tones etc due to the power of their mind’s eye.

The downside, however, is that they do get bored easily by everything not related to their current preoccupation and can get carried away by their imaginations, never bothering to back up or update their models with actual confirmed processes from elsewhere. If they become too used to extrapolating, it can probably lead to extreme eccentricity and/or madness. Also, just because you can model internally doesn’t mean the model is necessarily correct. In the extreme scenario, you can imagine how eccentric some of these people may get and how much they may end up disregarding process, to the point of becoming non-functional or disruptive members of society. It seems quite likely to me (extrapolating madly, of course) that dyslexic types fall into this category.

The biggest advantage of the creative mind, however, is that it is labour-saving in terms of how many trial and error processes one has to go through to reach a conclusion. Consequently it is much more efficient, albeit not necessarily as accurate as the process-driven mind.

I imagine in society we need a good distribution of both types of brains because in the long run both are needed and both complement each other.

Give a creative mind a well formed model (I.e. One that has a wide range of data points/processes to draw on) and you get to some very special intelligence. And that presumably is the real potential of an artificial intelligence which has the capacity to model (visualize) but also has at its fingertips an expansive data set to feed those models. You go from brute force analysis of everything towards achieving action through dynamic real-time extrapolation that is more accurate than usual.

But I’ll have more on this, as well as the hierarchal architecture of the brain (which apparently features a fascinating competitive neural structure reminiscent of evolutionary game theory and competitive forces more generally) , when I actually sit down and read the papers which were given to me.


Quick update. I think all the above explains the success of the Myers Briggs system. Not sure how Introvert vs extrovert comes into it, but intuitive vs sensing does make a lot of sense. A sensing agent is the process-driven one, while the intuitive one has a good working model. Thinking vs feeling probably reflects our ability to back up that intuition with fact. As an ENFP, I just run with whacky extrapolations rather than using that intuition to figure out the process. I just “feel” it must be right. Thankfully I’m only marginally feeling, so I do have a lot of respect for confirmation and if the facts prove my intuition wrong I will change my mind (begrudgingly!). If you are intuitive and extremely feeling you can imagine a tendency towards cultism. Last there is perceiving vs judging. I guess that applies to how you respond to extrapolated options. Interestingly I have a tendency to orientate towards other ENFPs and/or INTJ/P types in life. I can see how this is complementary. INTs probably have extremely good intuitive models so can understand what crazies like ENFPs are on about, but their respect for process means they are not only great at deducing solutions they are also great at proving them. INTJs tend to be rude with an ability to alienate other personality types (other than ENFPs). Small surprise INTJs are the least common personality type. INTPs are also rare.

But do check out the sort of people who tend to be INTJs here. And the sort who tend to be INTPs. Basically they’re mainly nice geniuses or asshole geniuses.

I think it’s pretty likely that if we do create an AI it will have the personality of an INTsomething.

ENFPs (my personality type) are all extreme extrapolators. Namely creative writers, journalists, idealists and err in some cases conspiracy theorists.

Although, obviously, hard to know how true those classifications are (especially for the historic figures).

But I do think it’s interesting that logic suggests the extreme opposite of the above should be an ISFJ type. Logic further suggests these types should be dedicated to process-focused actions and/or good at following orders. Funnily enough a) there aren’t as many famous ISFJs as other types, and those who are famous tend to be military people.

Process and brute force accompanied by “thinking” rather than “feeling” meanwhile allows for very effective, convincing and powerful leaders to emerge.

Paypal hubris

Overnight I received a lot of gloaty “ain’t you an idiot for calling the death of bitcoin on the day paypal announces it’s taking bitcoin?” type emails from over zealous bitcoin fans.

(Apparently a 10% spike following a c30% decline in the month confirms I’m an idiot for ever doubting bitcoin and I should get my coat. )

So first, let me concede, the calibre and witticism of your ripostes has been truly outstanding. You’ve got me. Even now I’m not sure how to gain ground against a verbal onslaught that includes such delightfully crafted quippery as the below:


You’re all clearly gifted wordsmiths with a flare for potent and theatrical rhetoric. Also, I must say, you offer an innovative spin on the rationale of pointing out another person’s hubris.

With a swift tippety tap of the keyboard you have been able to deal me a reputational blow of such magnitude I don’t think I will ever recover. But let me try.

You see, the one thing you learn from covering financial markets is that there’s no upside to making price predictions. Ever. If you think you can read the market with such precision that you see fit to make a price prediction, you are indeed either an idiot or a glutton for punishment.

Markets can stay irrational longer than you can stay relevant.

At the same time all of this does mean that if you are prepared to stick your neck out to make a directional call due to an assessment of underlying fundamentals — which involves everything from break-even rates to dollar basket strength, toppy tech and VC burn frustration — it hopefully means something. (Especially if you don’t call peaks too often, and if and when you do you have a good track record. Gold, ahem).

But given the above risks no-one sensible would be foolhardy enough not to leave themselves a few parachutes if and when they do.

Mine were a) not giving a time frame or a price target b) specifically pointing out that deep pocketed believers will have a good stab at throwing everything they’ve got at it before giving up and c) referring to this particular incarnation of bitcoin only.

Now that we’ve got that out of the way let’s analyse the facts.
Just to be clear.

1) paypal’s deal is mainly a step in the direction of more OTC price clearing by the likes of coinbase and bitpay, who transact as much of their flow off exchange as possible to neutralize the impact. They internalize this flow onto their own (totally untested never publicly audited) balance sheets and are only limited by their capital with regards to the inventory they can afford to carry. It’s a step therefore towards more off blockchain transaction and more opacity, something that undermines the only point of blockchain technology.

2) it’s pretty telling that paypal has decided to cooperate with not one, not two but three bitcoin broker dealers to cover itself from the risk of accidentally ending up with a giant and unsellable bitcoin float.

3) who better to profit from a managed price run up (thanks to a paypal announcement) than Coinbase — the Goldman Sachs of bitcoin — and other deal insiders? As far as I know, there are no insider trading rules in bitcoin, and they’re free to manage their flow however they see fit. Of course there was going to be a pop.

4) this announcement leaves paypal firmly on top of the hierarchal arrangement. It’s not, after all, deploying bitcoin technology or even daring to accumulate bitcoin float. (Which is also telling because usually paypal’s business is focused very heavily on float accumulation and interest rate arbitrage).

5) if you read this more clearly therefore you realise paypal is mainly facilitating a bitcoin cashout. It’s allowing merchants who still have real costs priced in stable currencies that don’t have 10% moves in one day to tap the bitcoin cult market for sales. Yay for sales! (Think promotional campaign directed at a specific demographic segment which will make frenzied purchases without the need for expensive marketing or advertising).

6) given that the deployment is mainly for digital goods, papal is even hedging on the above front. The purchasing net it is casting in exchange for bitcoin is smartly focused on the intangible goods segment for a reason. This is much less related to the real costs of the physical economy and therefore much less likely to have an inflationary business busting effect.

7) all in all it’s a great tactical PR move for Paypal. The company now gets to be beloved by cultists who were threatening to bring it down, but at the same time change very little about its business model, while exposing itself to little of no risk.

Animal Farm V.2

Some people are perplexed by my obsession with Bitcoin and don’t understand why I keep going on about it.

I think, perhaps, this is due to the fact that nothing annoys me more than absolutist thinking, or people who evangelise about having the ultimate solution to everything and refuse to accept that the truth is never that concrete (unless it’s empirically tested).

I also happen to think the whole phenomenon provides an excellent example of cyclical repetition and generational myopia — a core interest of mine — since it perfectly reflects how and why we end up making the same mistakes over and over again (mainly due to the stubbornness of those who think they have discovered a wisdom that nobody has seen before them, without realising plenty of people have many times before).

When I was a Reuters trainee many years ago they trained us using a pretend emerging republic called Manchukistan. This was a great model because it allowed us to really understand the processes by which modern states emerge. As an ancient historian I see the same processes that influence the formation of emerging states repeated everywhere. i.e. We think that as modern individuals we are hugely sophisticated, but in reality our core human tendencies remain the same. What has happened before will happen again, and again, and we are always doomed to repeat history.

In fact, for me, bitcoin is mainly a reenactment of the story of Animal Farm. That is to say, it is the story of communism and how it all went wrong due to an overestimation of our ability to change our selfish human nature. And how it then ended up serving the interests of a small minority of “early adopters” who lived off the exploitation of others, and drove the system into bankruptcy because of the wealth they disproportionately gobbled up and never replaced.

Common to both is the idealistic belief that if everyone works together the decentralised collective can free itself from the tyranny of the incumbent system. Unfortunately, it’s a vision that fails to account for the fact that some will always do more than others and vice versa.

Either way, stage one in implementing this vision is all about creating and instigating a revolution. This involves rejecting the standing system and creating a new set of values for people to believe in.

To succeed, campaigns, evangelism and even the sacrifice of a few “true believers” is needed to gather the recruits needed to make an impact. In the modern internet age this mostly means rejecting the tax system, the standing rules/laws, and seeking refuge in an isolationist community that depends only on itself and the recruits it can persuade to join them. (Luckily, it rarely involves taking to the streets).

The second stage is about ensuring that the system can prosper in line with the directives and values outlined. That involves enforcing compliance with the extreme ideology which has been decided on, and sticking to it rigidly whether it creates wealth or not.

In animal farm those ideological protocols consisted of:

Whatever goes upon two legs is an enemy.
Whatever goes upon four legs, or has wings, is a friend.
No animal shall wear clothes.
No animal shall sleep in a bed.
No animal shall drink alcohol.
No animal shall kill any other animal.
All animals are equal.

In the world of Bitcoin those ideological “protocols” consist of:

Whatever uses inflationary fiat currency is an enemy.
Whatever rejects inflationary fiat currency is a friend.
No Bitcoiner shall endorse flexible supply.
No Bitcoiner shall view things in dollar terms.
No Bitcoiner shall replicate the old system.
No Bitcoiner shall sabotage the system with a 51% attack.
All Bitcoiners are equal.

In Animal Farm, however, it soon became obvious that those rules were a farce, and were mainly intended for the masses, not the powerful minority. That meant over time they changed to accommodate the corruption:

No animal shall sleep in a bed with sheets.
No animal shall drink alcohol to excess.
No animal shall kill any other animal without cause.
All animals are equal, but some animals are more equal Four legs good, two legs better!

In the world of Bitcoin the rules are also changing:

Whatever uses inflationary fiat currency is an enemy.
Whatever rejects inflationary fiat currency is a friend.
No Bitcoiner shall endorse flexible supply, unless it suits them.
No Bitcoiner shall view things in dollar terms unless cashing out.
All Bitcoiners are equal, but some Bitcoiners have more hashing power than others and are thus more equal.

Bitcoin great, the old system even better!

The point being, that what starts off as an idealistic vision of empowerment always falls privy to the forces of exploitation by “early adopters” who gain leverage over the majority, and whose interests are not the same as theirs.

The same way that the pigs end up getting the animals to do more and more of the work which allows them to live in an increasingly decadent manner, so too do the early bitcoin adopters end up exploiting the naive by encouraging them to continuously pass over their real earnings into a system which benefits them above all others, and which allows them to cash out with ferraris and summer houses and so on.

In animal farm, of course, the pigs also realise that isolationism doesn’t work in the long run because the “technology” they are developing depends on the servitude of the average animal, who is so busy developing the technology (a windmill) he’s not doing his ordinary work. That leaves an ever smaller share of real wealth to go around the farm.
With the little that there is being passed directly to the pigs, the pigs soon realise that trading with their old oppressors makes sense if they’re to receive the goods and services they need.

In the world of Bitcoin this is the equivalent of getting outside businesses and shops to “adopt” bitcoin without actually subscribing to the system’s true initial rules and protocols. The shops are providing goods to the bitcoin system in exchange for the diminishing amount of valuable stuff the Bitcoin community has (i.e. dollars) not for Bitcoins themselves.

Over time, just as the pigs eventually become indistinguishable from the men that preceded them, the same will happen to Bitcoin. In fact, we already see this happening with the adoption of the exact same sort of banking practices that got us into trouble in the standing system: dark pools, derivatives, OTC, and shadow banking. Also note the greater tendency to “reform” bitcoin according to the standards of the incumbent system, for it to cooperate with existing institutions and even to be subjected to regulation.

The problem for Bitcoin, of course, is that it can’t survive in a regulated world, because being regulated is an existential threat to a system that derives value from exploiting others’ naivety. Regulation would require transparency and real price discovery, and rules and procedures about not conning people. (The very same is true of the banking sector)

The gigantic profits of the banking industry were generated by unregulated or poorly regulated businesses practices on the fringes of traditional banking. They also involved mass jurisdictional arbitrage which prevented regulators from overseeing or enforcing laws and regulations that the “honest” system subscribed to.

It should be no surprise therefore that as soon as the banking industry was forced into more regulation, a cottage industry of fresh shadow banking practices sprung up to fill the void. And that’s because the crazy banking profits of the investment banks are and always have been based on the exploitation of asymmetrical knowledge and/or those who don’t see they are misvaluing thing or overpaying for stuff. (This should not be confused with arbitrage that is focused on the identification of genuine asymmetries and imbalances, and efforts to build bridges between them for the benefit of all involved. What I’m talking about is the purposeful misdirection and skewing of balances — i.e. keeping things imbalanced on purposes — so that a few can benefit from charging tolls.)

The central bank emerged from the need to form a cartel and regulate cheating incentives

My last point on all this is simply that the modern banking system emerged from exactly the same forces which drive Bitcoin.

The banking system is and always was a private system. It is not a government system. It is government supervised only because self-supervision failed time and time again, and it was in the interests of the banks to cooperate with the government.

Furthermore, banking money itself is private and always has been. Even the government has to borrow from the private system not the other way around. The only reason money appears to be government-controlled is because private banks have tended (usually, through their own volition!) to use government assets to back their money issuance. (When there’s a lack of government assets they tend to secure against private assets from corporate businesses to houses.)

My greatest annoyance with the whole Bitcoin fad, consequently, is the cognitive dissonance associated with their central bank beliefs. On one hand they want the return of private currency, on the other hand they argue that the current system is flawed because the central bank is an evil private institution that responds to the interests of Goldman Sachs rather than those of the public. (And they fail to notice that their movement is heading in the direction of an even more powerful bank trust/monopoly.)

A small newsflash for the bitcoin cultists: the central bank system emerged from a private system not a public one.

It developed — much like Rockefeller and Opec — from the need to forge cartels or monopolies to control the chaos associated with overproduction and everyone looking our for their own interests rather than the system’s. (Read The Prize by Daniel Yergin to understand the problems that plagued the early oil drillers in Titusville and collapsed prices everywhere).

The reason Rockefeller became the wealthiest man in the world is because he in particular understood the importance of monopoly actions. He was the winner that took all, and he was able to do so because he was ruthless and didn’t play by the moral rules most others played by, and was quick to reinvest when others didn’t.

In the end Rockefeller created such barriers to entry that his product became the “STANDARD” one that everyone based everything else against.

With banks, the barriers to entry have always been mostly reputational, so an outright monopoly was never really an option. Overproduction has instead been controlled by a series of increasingly effective banking cartel systems. Some of these were publicly organised, others where privately organised. What they all had in common were rules pertaining to the conditionality of money issuance, compliance as well as an incentive to break ranks if their equity prices and reputations could withstand it. When compliance broke down too broadly and loans turned bad, financial panics resulted.

I don’t want to rehash banking and money history to those who are more than familiar with it, but the truth is that private commercial banks have always had tendencies to form cartels or trusts to protect the value of the money they print or secure, and governments have always been put under pressure to legitimise and standardise those tokens by means of a national currency.

In fact, there has been a battle between the righteousness of government money and public money for generations. Nothing changes. And this applies not just to the US, but to most major western economies.

In the case of the Federal Reserve, it was set up as a DECENTRALISED central bank system in a bid to appease both sides of the argument and to finally break the destabilising streak of banking panics which had preceded the era of the Fed. The decentralised/central structure was seen as the best compromise between interests who on one side wanted a publicly overseen and controlled system and on the other wanted an entirely private system run by the banks (albeit with assets backed by government and/or national securities). (FYI – The banking interests argued the downside of a public cartel would have been the “Continental problem” — i.e. governments overissuing money for war and other profligate reasons — whilst public supporters wanted freedom from the tyranny of corporate banking cartels.)

Today, consequently, we have inherited a dual system which benefits both from being independent (thus influenced by commercial interests) and publicly supervised (thus influenced by the interests of the people) . The system’s key mandate is ensuring stability and full employment (maximising the system’s potential). And as long as the members don’t try to regularly cheat it, it works pretty damn well.

If there have been financial crises in the US over the ages, they have not generally been caused by the profligate habits of the government element. They’ve usually been caused by the private banks not complying with their own system’s rules due to the same greedy incentives that have always caused over issuance or overproduction of anything with value.

In fact, it was the government element in the federal banking supervision system which tried to teach the banking sector a lesson by letting Lehman fail. Furthermore, in the panic that followed people withdrew to the safety of government money (debt), which was on a relative basis seen as a more prudent and restricted issuance system than that of the private banking sector, and thus a better store of value.

To suggest it was the government fiat system that let us down is thus beyond ridiculous. After all, if it was loose government money which got us into this mess, how come the private central-bank-system saw merit in recollateralising itself with government debt and/or private claims over bricks and mortar (via MBS securities).

If the Bitcoin cartel was faced with the same circumstances it too would end up debasing and recollateralising itself, breaking its own rules, because the incentive to do so (in our current system) lies not with the government but with the private banking cartel.

Not doing so would risk the private banks’ annihilation, or such extreme wealth concentration that the monopoly would breakdown of its own accord.

But here’s the clincher…what the crisis has really taught us is that as long as there is no inflationary consequence of bailing out the system in this way, it may not be a problem after all.

What’s more, it may have been overly tight cartel rules that destabilized the system rather than the profligacy of the banks themselves.

At the end of the day the bank loans given out were the means by which real wealth was distributed to those who could not otherwise afford to improve their lives. Those loans could and should have been defended with government liquidity for as long as inflation was not a problem.

Yes the banks lowered their lending standards and expanded broad money supply with it. But that’s possibly because they understood what the far too restrictive government/supervisory element didn’t understand. If the system can afford it, it’s better (for all involved) if wealth is distributed around rather than hoarded.

If Bitcoin is to prevail, it too must realise what the bank cartel realised long ago: money can be magicked out of thin air providing it is assigned to the real economy on productive terms and conditions — or at the very least against valuable collateral; having too rigid a system is not good for anyone in the long run; it’s the conditions of money supply that protect value, not the quantity of money supply per se.

Our human dynamo future

So… as I’ve been arguing for a while, all value is linked to the preservation or development of progressive organised civilisation, which indirectly means all value is lined to information and energy. Energy efficiency to be precise.

Historically, energy efficiency was physiological, based mainly on muscle power or muscle quantity. Civilisation, however, has come about because the physically weak learned how to use information to overcome their muscle disadvantage. In the process, unfortunately, they have made muscle increasingly irrelevant, which for humans is a problem because our physiology works most efficiently if it’s used productively on a regularly basis.

But now we are coming full circle.

The geeks are realising not only that there is value in putting redundant muscle to work but that doing so is essential for humanity’s long run survival.

The alternative is an obesity epidemic which self-destructs society like a cancer.

So, what to do with all the people who sit around looking at the internet all day?

Well, in my opinion, the real potential of the iWatch is in its ability to connect fitness with payments, and thus incentives.

What struck me as the best feature of all (especially as a woman who is always trying to lose weight) is the watch’s potential to track cardio activity and to one day perhaps even link payments to that achievement. Or better still, utilise the energy expended by the cardio exercise to power the watch in kinetic fashion.

Don’t do your exercise? No watch power.

Or for those who want a real regime incentive… How about if you don’t do your exercise in the allotted time, your phone gets locked out. The only way to unlock it or prevent it from being locked if you know you are to legitimately miss your target out is to give say, two friends, the ability to confirm the legitimacy of your excuse.

Better still, imagine an incentive system based on geographic tracking… The watch would know when you are at the gym, on a treadmill or in a restaurant stuffing your voice.

If it knows you are in a danger zone, like the chocolate aisle in the supermarket, it could give you a little confidence boost via a reassuring sound/pavlovial style pep talk.

A feature I would genuinely love (as a constant dieter) is a colour setting for that alerts people in your vicinity to the fact you are below your target or that you are on a calories restricting regime. Not quite a nil by mouth sign, but a discrete messaging system that could become well known enough to ensure waiters and friends would know not to offer you desert (without having to have an embarrassing conversation about it). Furthermore, I think if friends and waiters knew that a missed target would affect your ability to pay for stuff, this would make them act in your interests.

As for the energy expended… Let this somehow be redirected to powering the iPhone or the iWatch. No idea how. But i have noticed that cardio equipment in gyms comes with iPhone docking devices these days, so perhaps there’s a gym equipment opportunity here somewhere?

My last point about the iWatch is based on my experience owning a samsung gear watch already (for the Galaxy I use when I’m travelling). And I have to say I surprised even myself by how much I love it. The only reason I don’t use it in London is because I have an iPhone here. And it’s worth point out that the battery tends to last an average of about two days.

I think it’s particularly great for women, who tend to keep their phones in handbags. You never miss a call, and you get to free up handbag rummaging time exponentially. If Apple Pay can free up rummaging time even further by making me not have to look for my wallet, that’s even more brilliant as far as I’m concerned. My handbag can get smaller, and my back can be spared.

The other excellent thing is that the watch really does allow for discrete message checking and photo taking… (Although, the photo taking isn’t as discrete as it could be because a loud snapping sound has been purposefully added to avoid lewd or overly intrusive photos being taken).

The risk, of course, is that this leads us a little closer to a dystopia in which physical laziness alone is enough to lock us out of our digital systems. Or put another way, our human dynamo generator status ends up being exploited by a faceless digital overlord like skynet. (Or Apple.)

Hopefully, as long as all the fitness stuff is opt in rather than opt out, there won’t be too much of a danger of that happening.

Quick thoughts on human dynamos

Having just watched the big reveal from Apple I was going to give some quick thoughts about how this all fits swimmingly with my argument that everything value based is increasingly going to be about energy and information.

Then a funny thing happened on the district line.

Madly distracted by Twitter I sat down on the train and began typing away, not really aware of what was happening around me. I was carrying a medium sized but mostly empty gym bag, which was hovering over the seat next to me.

The train was medium full and there were a number of spare seats available. So I didn’t really register whether my bag (on shoulder) was monopolizing the space next to me.

Out of the blue some guy sat down next to me, and I barely noticed because somewhere back in my mind my bag I presumed my bag was squashable and in my head there were many seat options so if he chose to sit next to me it can’t have been too distracting. To be honest I didn’t even notice.

He started huffing and puffing. I looked around and noticed that my bag was indeed infringing on his seat. By which point, since he had blocked the natural swing I could do with the bag to bring it forward, I shuffled it behind me. I basically didn’t want to swirl it over his face.

In my mind, though, I was pissed off because there were clearly other options. As well as a woman sitting directly opposite me with a carrier bag right on the seat (much more obstructive and easier to move).

So I whispered under my breath (whilst moving the bag) in a moment of intolerance “you could have sat somewhere else?”.

Okay. Not nice. I admit. But it seemed to me like the guy had specifically targeted my seat despite there being other unobstructed options just to complicate my life for the hell of it. Had there been no other options I would obviously not have said a thing. And not hesitated to move my bag either. (Terribly petty first world problem I appreciate.)

He didn’t say anything and i continued to ignore him.

Then about five mins later, totally out of the blue, he decided to quite loudly tell me off for not moving my bag more enthusiastically.

He claimed a) that I was rude (not impossible but debatable since in my mind he had been needlessly inconveniencing) and b) that he gives up seats for pregnant women on the train all the time.

It’s point b) that struck me as utterly bizarre.

What has his seat sacrificing track record got to do with a situation where there wasn’t a quantitative scarcity issue to begin with but a qualitative judgment on his part?

Furthermore it’s not like his seat sacrifice record is publicly disclosed for me to be able to assess and base my responses on.

I mention all this because yesterday, whilst forming ideas about what this post was actually supposed to be about, I did wonder if some sort of goodwill tracking device which rations goodwill tokens that people distribute to others, might one day forge the basis for a new type of currency system based on brownie points/credits for good deeds.

An economy, say, in which seat sacrificing has value because individuals can be recognized for past actions which were appreciated by others and authenticated as being appreciated by the fact that no one can double spend “likes” for any particular activity. (Perhaps there’s a time limit. You only have five likes to distribute per day.)

Then, if you had clocked up a big stash of seat sacrificing tokens, during a crowded journey in which u really felt particularly uncomfortable for unique reasons you could send out a seat redemption distress signal. Those feeling a bit more able bodied at the time could then make an evaluated judgment as to whether to help you out or not.

I concluded it wouldn’t necessarily work, however, because of the perpetual altruist problem — the sort who would sacrifice himself all the time and thus create too much token supply.

That said, I do think things like biometrically authenticated wearable devices could open the door to the ability to scan “goodness” in a room with sensors, without any need to pinpoint identity itself. As long as the appreciation token mechanism could be policed so that you can’t double-appreciate someone for the same deed, it could create an interesting parallel economy.

The question is could negative deeds be tracked at the same time, and should they be tracked at all? That’s much harder to assess because it’s based on a judgment call/bias. What qualifies as a value boosting deed for one may not for another and vice versa. Furthermore, a simple lack of brownie points doesn’t imply negative or socially destructive behavior either.

For example, false brownie points could easily be delivered to drug dealers by their addicts due to their appreciation for the service they are providing them. But a totally honest introvert might have zero points accumulated as well. The right for past “sins” to be forgotten would also be essential to ensure constructive growth and evolution — i.e. The opportunity to learn from past mistakes.

Also, i’d be distressed if my train altercation was judged by some as worthy of a minus mark, given my view that at worst it should count only as a double offsetting minus mark for both of us, that cancels itself out.

So there you go.

I will come back to the issue of human dynamos shortly.

Aluminum queue antitrust case dismissed

A fair judgment overall which accounts for the fact this wasn’t a malicious conspiracy but rather an arbitrage resulting from the curve structure, itself the product of the interest rate environment.

Some highlights:

That the combined actions of traders and warehouses to
maximize their profits negatively impacted downstream purchasers through a rise in the Midwest Premium is clear—but as cast in the complaints, this was an unintended consequence of rational profit maximizing behavior rather than the product of conspiratorial design.

“Plaintiffs allege as a plus-factor that defendants’ alleged conduct was against their self-interest. Economically, this is incorrect. In fact, it was entirely consistent with their self-interest. Plaintiffs’ allegations regarding the recession, the contango, and the resulting arbitrage opportunity support sensible parallelism—whether conscious or not —by the trader defendants. The way that defendants acquired, held, and cancelled warrants simply furthered this arbitrage opportunity, on which it was in each’s individual economic self-interest to capitalize.”

“Similarly, to the extent the warehouse defendants could have sped up load-
outs and did not, or even delayed them, plaintiffs again allege that this led to higher storage revenues. But the warehouse plaintiffs were, after all, in the business of collecting rent for storage; and the longer the storage, the higher the rent. In this sense it would be in the warehouse defendants’ economic self-interest to turn a minimum load-out rule into a maximum, so long as they were not losing business due to their slow load-out times. Indeed, this point is further supported by plaintiffs’ allegations that warehouse inventories began increasing in 2009, before the trader defendants even acquired the warehouse defendants, as these allegations suggest that the warehouse defendants were motivated to act in this manner of their own accord. “


Tribute series – Part 3 (Muscle economics)

In this tribute series, I’ve been trying to get people to stop thinking about money in the abstract or intrinsic value sense.

My proposition instead is that money is about muscle. Always has been and always will be. Riches are the product of the authority or gravitas that affords you well being, a.k.a wealth. A muscle, of course, being a biological machine which optimizes energy efficiently so as to create power with.

But by muscle, I don’t necessarily only mean brute force. I mean all systems that are better organised than other systems and thus stronger and more capable of enforcing their will or alternatively of creating value. Whether that means they are better at collecting favours due, cultivating the land, confiscating assets directly or manipulating you into doing what they want, doesn’t really matter. What matters is that they are just better at doing it.

Not to say that reciprocity doesn’t encourage value creation but simply that when it happens it’s mostly incentivized by a need to join forces so as to organise against a stronger enemy, whether that enemy is a stronger person, a nation or nature itself.

For example, I will remember to reciprocate the favour you did for me when you shared your bison meat with me because it’s in my interests to have access to your food if and when I go without it again. The two of us sharing stuff have a better chance of defeating mother nature’s brute randomness than if each of us tries to beat her on our own.

Going back to hunter gatherer times, the most powerful man was generally the strongest man. i.e. someone who was leaner, faster and more adept at whacking the competition than anyone else.

Power flowed to him because he had the best power-generating muscles. His authority was tied to the fact that he could fight anyone for what he wanted and would probably win.

This left anyone without muscular physicality on their side at a distinct disadvantage.

Thus, from hereon forward the pressure for brains to outsmart brawn would become a driving and equalizing force in society. It became the eternal story of David outsmarting the brute force of Goliath with wisdom, skill and craft.

It is because the strong oppressed the weak, in other words, that the weak became motivated to unleash their mental faculties against the strong and use them to process information more efficiently than the strong could ever hope to or to organise themselves more diligently (trade unions, cartels, etc).

Women have always been more inclined to form alliances for example or to get what they want from information advantage and sharing (gossip).

Skills, crafts, and weaponry, meanwhile, all result from the fact that the weak, the hungry or the oppressed were motivated to innovate their way out of bad situations.

I go back to Rome once again, because I seriously can’t think of a better example of the phenomenon than the foundation of the Roman Republic — a system which was designed not only to protect the people from oppression by a pathological tyrant, but to allow for the emergence of a city-state that understood that information workers (politicians, scholars, traders, bureaucrats and lawyers) were as important to organised progressive society as the farmers who supplied them with food.

Today’s modern cities are the by-product of these trends. They are huge hubs dedicated to information gathering and stand-alone consumption.

But they also happen to be society’s most vulnerable pressure points, due to their dependence on supply chains and the actions of the body whole. Cities can for example be easily starved out, cut off or sacked. And when that happens, civilisation itself is threatened.

Whilst economic crises touch every part of a country, their effects on the city state are what makes of breaks countries. For government, the urban poor are a much bigger problem than the rural type.

An inflation crisis generally signifies a lack of energy or supply flowing to the main city hub. Somewhere the distribution channels (the nervous system) have become clogged whether that’s due to natural disaster, famine, war, disease or corruption (over consumption by the few).

In these circumstances the body has to work hard to revive supply and the distribution channels. Not doing so risks losing its proverbial head. More often than not this involves the strong once again overcoming the weak due to their superior ability to get the supply they need to keep going. Sometimes, however, societies can come together and collectively organise themselves out of trouble thanks to carefully regimented strategies to share toil or suffrage among them in the name of longer term prosperity. War-time rationing and dedicated compliance with that rationing, so as to more capably defeat the true oppressor, is a good example of that.

A deflation crisis, however, is more of an obesity attack. It represents a system that is too efficient at getting supply to the brain. In these circumstances the physically weak have become so efficient at serving themselves or so organised that the muscle in society has been left with nothing to live for at all.

Redundant muscle wastes and transforms into fat, which is an energy system that very specifically focuses on making people less efficient at exerting power, but not necessarily any less of a burden.

Fat is a strange phenomenon in that sense. It detracts from muscle power. Yet it also does little to encourage brain power. Also, even as the body grows bigger other essential mechanisms get wasted, corrupted or destroyed.

What does that mean for money?

I’m not sure at this point.

But if money is muscle, and the weak are now the muscle because they have outsmarted the strong to such a degree that muscle is no longer needed… there may be grave implications for anyone who uses or is used to depending on physicality to achieve well being. There’s also the problem that brains are getting overly fat.

While riches will increasingly be tied to those who understand the organizational needs of the system as well as the protocols that govern them, it’s probably not a good idea to lose all of society’s muscle. We don’t want to end up like the humans in Wall-E

But perhaps that’s why we have become so body conscious and why the world’s most powerful nerds — now that they have achieved power –are also gymming it up.

The question we should, consequently, be asking in this new age of passive/benevolent/redundant muscle is: what should we really be doing with all the energy being expended by those trying to stay physically fit and relevant? If there’s no paid labour for them to do, and even criminality, piracy or gangsterism can’t buy you power through muscle because it too has been outwitted by the nerds, and even nerds need muscle… how best to deploy all this human energy intelligently?

(Not sure human gym dynamos are the answer.)