"My Highlights" Week 1
First, on the name: "My Highlights." This is my attempt to synthesize and digest 63 notes and 127 highlights I've taken on interesting articles, books, and conversations over the past week.
A few principles for this blog (hate that label, but "anti-blog" seems too strong).
Anti-persuasive: These are not intended to be popular articles. I am not trying to persuade or convince anyone to do anything. The purpose here is to more fully develop ideas/theories/questions. I am convinced that there is something qualitatively different from jotting down bullet points to myself in my notes app and synthesizing notes for an audience. The size of the audience should be irrelevant.
Bias towards questions. In most cases, I won't be taking a clear position or side of the argument. I will intentionally explore the holes / shakiest assumptions / unsolved variables. This tendency to focus on the "bottom line" conclusion is a failure of the education system, and particularly all of my English classes.
Over-share. This is from BCG (my future employer / identity-definer). I'll get a lot out there, knowing most of it is bullshit. But hopefully, the one or two useful ideas will be fully fleshed out.
Sit with uncertainty. I will not bias towards ideas or debates I can clearly explain or solve. I've noticed recently that guys especially struggle with this. Recently, I sat with a group of 5+ girls and observed a deep conversation without contributing. I was surprised by the long pauses where people ponder unanswerable questions. This is how, ideally, these posts should be consumed. With a lot of pauses. Swim against the current! Blogging platforms do not profit from this form of digestion.
Challenge assumptions. I will ask myself "Is this a hot take?" The intent is not to be provocative or "get the people going", it's to push conventional theories, explore edge cases, etc.
Honest / no regard for political palatability. Disagreement is preferred. See: Secrets by Peter Thiel.
Always trying to get more precise/specific. No "isms" here.
Thinking in terms of graphs / distributions! I hope to follow in the tradition of Byrne Hobart, Taleb, and DFW.
In this issue:
On What Feels Like Work
Input Into America’s Anx/Dep Function
The Iceberg Effect
An Argument Against Objectivity
On Companies Deteriorating Wealth
Where Democracy Comes From
On What Feels Like Work
Recently, I searched for 3 hours for a particular vintage Bulls sweater that my girlfriend said she liked in a documentary one time. See: gift giving is inefficient. It was an intense research process that involved notes, webpage searches, "meta" (which webpage?) searches, and at the end of it all, I had a second-best solution. It noticed (1) how much more exhausting this felt than reading/studying and (2) how similar the nuts and bolts of what I was doing aligned with the "knowledge work" I'll do at BCG. The project could have easily been labeled "work" if I was doing it in an office for a supervisor.
What feels like work and why? The nuance of that question could allow us to frame our on-the-job "work" in a more optimal way.
To get more technical/measurable: The work/leisure distinction does not accurately the internal/external costs and benefits we get from different types of activities. Often, just putting the label "work" on something makes an activity less enjoyable. Are there alternative frameworks/labels we could use?
There is clearly something about "choosing" the activity that affects what feels like work. But if we think about, on some level, we "choose" everything we do. Or we made choices in the past that limited our options or "locked us in" to certain paths. Life is path-dependent, in that the switching costs go up as you climb up one branch of the tree.
The #4 best-selling book of the decade says if we are reminded of the (1) choices we made and (2) the information we had when we made the decision, we'll feel less anxiety about unpleasant bumps in the road. See: anxiety level graphs in The Elephant in The Brain. We are evolutionarily evolved to feel in control (as anything extremely out of our control could be a life-threatening tiger or lion). So, when we hit an unpleasant bump, we should remind ourselves that we chose to drive on the road, knowing that that it had a few bumps. Or more concretely, if a co-worker annoys you at work. Remind yourself you chose the job, knowing that there were going to be some annoying co-workers. You chose to show up to work today, knowing the expected benefits and expected costs of doing so. Expected value analysis can be especially useful here. See: Taleb using probability to explain anxiety/life.
The problem occurs when the choice / planning happened long ago. We forget that we chose this path in life. So it feels like work. Something SOMEONE ELSE if giving us to do. This might be key; we might dislike the task to the extent that (a) we associate it with another person, and (b) dislike that person. Or we might begin to dislike the person because they seem to be making things in life "out of our control."
Identity is also key here! Because the extent to which things will feel "out of our control" depends on how we would spend our time if we were living as we please (independently of any institution). The degree of overlap is a crucial input. E.g. If I'm someone who routinely spends their free time reading/writing/thinking about the healthcare market (new and exciting entrants, innovations, and investment trends), and then my boss tells me to prepare a market analysis for a different sector, it won't be that jarring and it may not even feel like work (because my natural interest in that type of thinking makes in interesting?). At that point, I'm just someone who "enjoys thinking about that stuff in my free time." If Jill is someone who enjoys watching following The Bachelor / watching Netflix / sharing tweets with friends in their free time, a market analysis will seem very jarring because it's so different from how she would spend her free time normally.
This could explain increasing dissatisfaction with jobs, what we compare it with, our free time, is changing! The most well-funded entertainment project in the history of the world is displacing reading and writing? That might be romanticizing the past a bit.
This is where "discipline is freedom" comes in (???). If I follow Digital Minimalism, and restrict my free time to fulfilling conversations with friends (#GoodCompanyGoodFood), reading books, and engaging in "strenuous leisure" that physically or mentally challenge me (E.g. lifting, chess (hmu!), writing), I'll maximize overlap and job/life satisfaction (???). Work will not be jarring because, like my free time, it's full of challenging tasks that require discipline and effort.
While meditating recently (a habit I "locked myself" into long ago, whether I'm up for it or not), it occurred to me that it felt like work because I was following a strict breathing technique (100 breathes per position, nose inhale/mouth exhale). I thought "maybe what 'feels like work' is the extent to which something is planned." But this can't be the whole story. Because we just explored why planning / tying one's hands / committing towards certain activities is good? Wait, actually, what we established is that being discipline in one's leisure makes the discipline required by "work" less jarring.
This means the conclusion is we need more discipline in our leisure life. But this may "feel like work" at first? That makes sense; generally lock-in effects "feel like work" at a certain point (regardless of whether they are from your past self or your employer). But if one believes in the bigger goal / philosophy, they can power through and achieve a new baseline of discipline. If I commit to reading an intellectually-strenuous newsletter every day, some days I just won't feel like it. See: a whole separate discussion on energy levels and SR/LR optimization (I!). It's at that point that it "feels like work."
But mental and physical challenges "feel like work" relative to the strength of physical/mental muscles (???) -- bench pressing 30lb dumbbells eventually feels super light. Reading a book a day eventually seems light and you're ready to reach for book #2. See: Cal Newport; treating one's attention/focus like a muscle worth exercising.
The meta-benefit of all this! What my friend Gilbert calls "disciplining of desire" (from Buddhist/Christian/meditation traditions) (???). The Bible verse is something like "the guy who looks at the girl with lust has already committed adultery in his heart." Like one loses their taste for sugary drinks if they strictly abstain (would recommend!), one can lose taste for certain previous desires. I used to love Twitter/Instagram/YouTube. Now that I've tied my hands for over a year, I've lost my taste. There's some greater point here I'm struggling to grasp -- about learning to desire discipline/effortful/meaningful tasks instead of junk food. Then the choice to work / "the grind" feels more like the pain you feel working out (???). See: Can't Hurt Me for this philosophy taken to a scary extreme (more of a north star than a black/white, at least when behavior is socially motivated, again everyone should read The Elephant in The Brain).
Speaking of this not being a black and white philosophy, we must always think in terms of distributions! The expected costs/benefits of these concepts probably vary by the time of activity / sector of life. This is definitely not intended to a super simplified Econ 101 model or "12 Rules of Life" bullshit.
Take different companies / sectors of the economy. The degree of optimal central planning depends on a number of transient variables (E.g. corporate governance structure, board of directors? is investment SR or LR? how susceptible to external shocks or Black Swans is this good or supply chain?). Same with work, right?
The degree of optimal central planning must vary by the type of activity/task. Would love to keep exploring this if anyone has thoughts.
Input Into America’s Anx/Dep Function
There is little measurable progress in knowledge worker jobs. It's not clear whether someone is "thinking" better over time. So we increasingly pine for (randomly-distributed) outcomes/titles (see: Taleb's chapter on survivorship bias) (uncorrelated with our actual effort/skill. And because of hedonic adaption the excitement from the new prestigious promotion/job/graduate school acceptance fades quickly. Like Hamilton, we'll never be satisfied.
For non-knowledge workers, there is less and less measurable progress. Clearly I can't speak for other's experiences. But there was virtually no "sense of improvement" in my mind-numbing Nordstrom warehouse job. My output was relatively fixed. You could probably correlate anx/dep with variation in output per warehouse/factory. As n grows, the variation decreases and you increasingly think "what's the point?"
The Iceberg Effect
Some of the most interesting people/thinkers are quite reserved. Is this because insecurity breeds high-achievers (who have the most opportunities to diversity their life experiences)? In many cases, they've been taught to second-guess their contribution to discussion (see: the most-frequent seminar contributor consistently being white).
Or maybe, even in relatively homogenous groups, the smarter people are more thoughtful? Or they've gotten smarter by having a habit of listening? The loudest voice in a room is rarely the wisest. Maybe dumber people are especially insecure? And this leads to over-participation?
In perfect efficiency, our norms would change to correct this somehow. But they don't? Probably because there's other public good seeking (reminder to self: to re-read The Elephant in the Brain).
Generally, this makes me want to diversity my friends and seek out quieter people. But there's also a huge upfront cost in getting them to open up (and unpredictable benefits).(???) I don't have enough lived experience here.
Also, my friend made a point about self-esteem levels being contagious (???). So maybe I should just stick with my confident, high-self-esteem friends? There has to be perspectives I'm missing out on then, right? Predictably lower-self-esteem = different way of seeing the world = different perspective. Humility = insights (??)
The crazy thing is that this applies to all mainstream/conventional perspectives on things. Take any given issue; there's arguably a whole subset of perspectives that never get shared because the perspective-holder lacks confidence. Like an iceberg, most of human understanding is underground and the media is dominated by a few viral perspectives/tweets (see: Winner-Take-All-Society).
It follows that many more people should be writing books (to get their perspectives out there!) A perfect "competition of ideas" implies relative equality of ability, confidence, AND incentive. This varies considerably by the type of idea being debated (see: competition for altruism). In the case of public discourse, most of the influence is captured by a few individuals with unique incentive schemes / utility functions. It's plausible that these are the exact individuals with the least amount to say about topics. Those with "skin in the game" (Taleb) have no incentive to spread their knowledge. And as a result, the world is incredibly inefficient from a knowledge-sharing perspective.
Dinner table conversations from the world's most brilliant people outcompete the entire news industry, "thought leaders," academia put together (a bold claim, but hopefully in the future everything's recorded/aggregated and we can compare relative value). Ideas are hard to value/measure, but arguably the most "valuable" ideas that advance human understanding of the world happen when individuals have an incentive to challenge conventional wisdom (aka when billions of dollars are online). When it comes to political trends in developing countries, hedge fund analysts out-predict political scientists. But they also have a bias to lean on quantifiable analysis and betting, whereas political scientists can sit with forms of uncertainty that can't be quantified.
Speaking of ideas that don't get their fair share of analysis from purely profit-seekers, The Elephant in The Brain's introduction has a whole section about why "people are greedy and selfish, mainly motivated by dominance and prestige" is a bad advertisement. There is a huge bias to reproduce / read things that reaffirm pro-human ideas. Maybe this is why investors/economists out-predict/invest journalists, but have terrible reputations (partially a function of the news). All the really do is start from the assumption that humans are selfish and self-interested. But no one wants to hear that. (See: all public discourse reaffirming "humans are righteous" intuitions).
An Argument Against Objectivity
My good friend Matt made me aware of a blog called "LessWrong" that encourages people to be more rational about everything. I was initially all for it! "More rational? Great!" I replied. "That just means maximizing benefits and minimizing costs, right?"
"No," Matt responded. "They use 'rational' to mean being objective. As in applying the scientific method rigorously to determine the truth."
Fuck. Well that's something to think about. The shakiest assumption here is access to data. In order to rigorously apply the scientific method, we need access to data (more data that most of life's problems provide). So, if we were to follow this to a T, we'll sit around being indecisive a lot more because we'd be waiting on the data to come in. Instead, we rely on shortcuts.
Unscientific, "subjective" shortcuts are efficient in this sense. The cost of gathering more information does not outweigh the benefit of a slightly better decision. Downs’ paradox applies to every decision we make; at some point, there are diminishing marginal returns to gathering more information.
Now, our Excel model is actually super flawed and bad at estimating this DMR point. Because for most of human history our main goal has been escaping lions and tigers (see: Sapiens). We have an extreme bias towards speed. So there's a sense in which our actual expected returns are overestimated for any given (non-life-threatening) decision. Score 1 for being more objective.
HOWEVER, I still think "maximizing benefits and minimizing costs" (goal 1) is a better north star than "being objective" (goal 2). These goals are in direct contradiction with each other!!!!
The Elephant in The Brain helps us understand why.
Consider the press secretary. She is tasked with explaining to reporters questionable presidential actions. She is able to do this effectively precisely because she is NOT given privileged information about the actual reasons decisions were made.
The Elephant in The Brain argues that we are all press secretaries. We have our actual motive (or reason) for our decision and our public motive. Our main goal is being able to explain our actions to other people. Therefore we must hide our actual motive (in most cases). In order to hide our actual motive from others, it is best to also hide it from ourselves.
Therefore, our audience is the main variable that drives our (a) actions and (b) worldview / thoughts / beliefs about our actions (often explained by contrasting with our beliefs about alternative actions). This is why "the 7 people you surround yourself with the most" shape you.
If I'm stranded on a deserted island with only 7 punk rock cocaine-addicts, I will eventually cave and appeal to their senses of humor. I will also subconsciously appeal to their sense of right and wrong when explaining my actions. Eventually, this will trickle down to my decision-making. So much so that it becomes instinct. I have to, or in extreme Lord of the Flies cases, I get killed.
If I'm stranded on a deserted island with 7 math professors, I will need to defend my actions with theorems and precise logic. If I'm not logical enough, they could also Lord-of-the-Flies kill me (by coming up with a proof that "proves" objectively it makes most sense for the group to eat me).
In either scenario, the audience is the key driver in my decision-making. "What can I defend/explain?" is the key question. Not "Is the 100% objective and consistent with other beliefs?" The real world/audience is full of emotional, irrational beings, NOT math professors.
So, to get positive feedback from others (a critical input into the quality of life function), we must chill on the objectivity thing and be a little more emotional. Or surround ourselves with an audience of purely math professors.
There's a few more reasons to favor subjectivity. Briefly....
(1) The paradoxical nature of life thing. Our ability to hold contradictory ideas in our mind is a strength (for similarly, evolutionary / norm-based reasons). No one can hold a worldview devoid of contradictions. This is why philosophy exists.
(2) Our sense of whether something is a cost or a benefit (and to what extent) is subjective. Therefore, new ways of framing (EVEN IF ILLOGICAL) can make us perceive things as benefits (EVEN WHEN THEY ARE COSTS) and our utility function gives us more dopamine.
(3) A common critique of economists is that they never say "Yes" or "No," but rather "It depends...". While I generally love this, it's problematic in everyday life. If we all did this, all of the time, we'd be extremely indecisive. Seeing the world as a flow of transient variables is anxiety-producing (thanks to the lions/tigers of our past). At a certain point on the graph, it's reassuring to just take a position on something. Or an approximation of the truth / distribution. The simpler (or approximated) the worldview, the less anxiety (???) so long as you never have to wrestle with the complexities of life / edge cases. Picture the "right/wrong = black/white" Christian conservative man in a white suburb who succeeds at their job and thinks they are better than everyone. That person is pretty happy (so long as they stay away from the news). Meanwhile, the confused Brown University student wrestling with so many contradictions / trying to aggregate the truths from so many different world views? Compare the anx/dep statistics for either population and you'll see the first is more calm/happy (on average, but peaks of the distribution might vary?). Caveat: there are good, (LOGICAL) ethical arguments for not being the first person.
On Companies Deteriorating Wealth
So Taleb has this extremely popular chapter where he argues most investors deteriorate wealth over the course of their careers. The argument:
1. Due to the randomness of the market, every investor will have a -50% portfolio year at some point (where they lose half the value of their portfolio). This usually means getting fired.
2. If this happens in the investor's first year, they immediately get fired and don't even show up in the statistic (see: survivorship bias for other use cases).
3. If this happens in the investor's 30th year, this is the point where they are managing the most capital. (100M portfolio instead of 1M). So the net loss from the -50% year outweighs the gain over the investor's whole career. Awesome.
The wild thing is, companies behave in the same way!! They, arguably, deteriorate wealth over the course of their lifetime!! (It's useful to think of companies as banks that make investments into solving problems vs a traditional bank that make investments into other people solving problems). (The traditional company vs investor distinction is misleading; it's increasingly more of a flow/spectrum). (The bank is the manager's manager).
Byrne Hobart argues that when companies get started, they get really good at solving one set of problems. (E.g. Facebook gets really good at engineering/growth). But as they scale, they inevitably branch out into problems that they're not equipped or incentivized (#fatrichcat) to solve. (E.g. Facebook is really bad at solving for politics). By the time they're at scale, they are effectively managing their biggest sum yet! (100M vs 1M) And that's when they turn a -50% portfolio year.
Another way of thinking about this is that as the company expands into more and more problem spaces, the problems are increasingly out of their control (Taleb) and subject to extreme fluctuations in the wind. The natural solution is diversification (company --> bank) (E.g. Facebook for all intents and purposes turns into a VC), but CEOs egos' get in the way. It's also difficult from a talent acquisition perspective. (E.g. Zuck can give a rallying cry to beat Google and connect the world! But a recruiting pitch to just acquire new startups is less inspiring). The ethos of the original company eventually kills it (because it doesn't diversify enough (???).
Another way of putting this is that it wants to think it can organize its investment around its core competency (a $ here has a higher ROI than putting that same $ into the stock market). In a sense, they bet that they can beat the market (and some can!! at least at the beginning. See: venture capital). But they can't beat the market every year for their whole lifetime. At a certain point, the money is better invested in the stock market.
Where Democracy Comes From
Why do economists hate unions? Work in the NYC public school system for two weeks and you'll realize. It's impossible to fire bad/incompetent/lazy teachers or administrators. During my internship, people couldn't even talk about the possibility (they used a secret code word), they were so worried about backlash from the teachers' union.
Unions protect everyone who's currently teaching. Regardless of the value they are providing. This means that if someone outside of the union can theoretically teach better, they cannot come in and take the union teacher's job. So the quality of teaching is "suboptimal" in the sense that there is a better alternative/counterfactual.
Generally, when goods or services are suboptimal, consumers opt for a higher-quality good or the same-quality good at a lower cost. (E.g. Parents send their kid to a charter or private school system that does have the freedom to fire bad teachers and hire better ones). Without unions, there is no boost to the inferior asset. The best teacher gets hired.
Unions are a relatively new concept. For most of human history they haven't existed. People competed to deliver the "best" (quality to price ratio) good or service. Quality increases and prices decreases. But most of this competition/trade happened within one's country (e.g. Britain).
Everything changed when the gold standard laid the foundation for global trade. Suddenly, farmers in Britain weren't just competing against other farmers in Britain. They were competing against farmers in Germany, France, Italy, etc. Sometimes they were outcompeted. Consumers took their business to German farmers (for example) because they had a higher quality good or the same-quality good at a lower price.
The bottom line: wages dropped for British farmers. Some were pushed out of business. But wages went up for German farmers! Who re-invested their earnings in their businesses to create increasingly higher quality or cheaper goods. After accounting for all the gains and losses, this was a net gain for society at large (see: competition creating all the awesome goods in your room right now).
But the British farmers were unhappy. They organized (see: "forming a union" before it was cool) and protested (see: "The Labor Movement"). The government became more responsive to the people. They stopped consumers from buying from German farmers, giving the British farmers their business back. They called the first "democracy" and the second "tariffs." Global trade and the gold standard collapsed. Governments started caring about school spirit levels; they invented nationalism to keep workers in line. When protectionist policies backfired and made things worse, nationalist fervor fueled WWI (the final nail in the coffin for the gold standard).
Which is all a long-winded way of saying modern-day democracies are essentially unions. This is easy to see when the U.S. government artificially props up its agricultural sector (shielding farmers from global competition) or the City of Palo Alto limiting housing development with zoning laws (to limit supply and keep housing prices high). It's harder to see when it's the U.S. government blocking new immigrants (competitors) from entering (the status quo that we all passively accept). The teacher union restricts entry and does not allow the (new) potential teacher to compete with current (incumbent) teacher. Same exact shit with national governments. Once countries get rich enough, they shut down immigration to limit competition (to the benefit of incumbents). Psychologically, we draw borders and only think about the current teachers and the current teachers' union. We don't think of the counterfactual (the high-quality teacher who isn’t hired). In the short term, the U.S. is content with (temporary! and artificial!) job security for some and increasing unemployment (which we blame on the few immigrants we let into the country and/or cost-minimizing corporations).
Protectionist policies provide good PR in the short term but prolong the inevitable. Global trade is back! And it's not going away. The price of labor (wages) is also going down because the global supply of labor is going up (people are increasingly able to work in factories because they're living in cities instead of scattered villages). U.S. corporations will go to the cheapest labor source.
The silver lining (for the most vulnerable people in the world) is that rich countries are doubling down on their protectionist policies and accelerate the push to build factories (aka steady jobs) in developing countries. From a global redistribution standpoint, we might be tempted to cheer on this phenomenon (???), but the net gains would be greater if we just opened up borders (see: the greater slice of El Salvador's GDP being remittances from jobs in America) (also see: global GDP would triple if JUST ONE rich country opened up its borders). If anyone can figure out the most cost-effective way to donate to increase the global flow of labor, let me know.
I'm not sure how to think about this silver lining take. There are some instances where external shocks or really bad government policies forced economies to modernize (see: Stalin forcing the development of factories by starving farmers). Arguably, the economic growth thing is way too slow because people are sticky and do not move to cities (see: Good Economics For Hard Times). There could be a decent argument for governments accelerating modernization (by taxing (not starving) declining industries ???) It won't happen because those declining industries tend to be important political blocks (E.g. farmers, coal miners), but it's interesting to think about what an optimal global government would do as a benchmark.
E.g. Amazon fueling the $15 minimum wage movement (a subsidy to larger companies at the expense of small businesses). This could be just accelerating the shift to everyone working at Amazon-esque warehouses instead of dying small town businesses (???). Should we embrace this shift? Maybe. The small town businesses are going to die eventually if they are not innovating (increasing quality or reducing costs). It's better to kill them now while the owners are younger / re-trainable (???).
The original designers of the minimum wage were eugenicists who wanted the "weaker" races/genes to die out (through unemployment). Obviously, that argument is horrible. But it might make sense to let dying businesses (not people) die out if they are going to die out eventually. Or maybe not, if they are just going to be replaced by technology startups? (see: every $ of GDP does not create the same amount of jobs).
The Elephant in The Brain makes a convincing case that, despite our rhetoric, we want to make sense of the world and, to do so, we compare things. A more controversial way of saying this is that we look for hierarchy. Norms, in this view, are low-cost ways to signal unobservable information. With enough information, we can establish a pecking order for any given room. Pecking orders make it clear what we should and should not say or do to who. Legibility is the goal (see: Seeing Like A State).
To be the alpha within a group we must signal dominance and/or prestige. The effort we put into asserting positive qualities (e.g. intelligence) depends on the people around us. We must only be better (smarter) than those around us. Relative strength is what matters. And this depends on size of the group / competition (which must have all sorts of self-selection effects — e.g. choosing to to live in a city or a small-town). This also helps explain why anxiety is correlated with city-living.
If a human just lived with dogs, lions, and chimps, its extremely high level of intelligence would not make sense (pictured below). It would seem out of place, uncanny, and unnecessary.
A 300ft redwood in an open meadow would seem similarly absurd. There would be no need to grow that high to compete for sunlight. It’d be better off investing energy in other activities. The density of the forest is what shapes the redwood into the tallest tree in the world.
The interesting point here is that all redwoods in the forest would be better off if there was a height cap (e.g. 100ft). But it’s a coordination problem, trees cannot talk to each other and come to this truce. And perhaps they differentiate themselves by investing in similarly wasteful pursuits (???).
There’s a sense in which norms are just coordination solutions that stop us from wasting all of our energy fighting. We use norms to figure out the relative hierarchy and we move on to solving other problems.
The approximate nature of the hierarchy is key. There is no perfect information, so we must be willing to imagine (and accept) alternative realities. Throughout Sapiens, Harari goes so far as to call these alternative realities “myths” and attributes our uniqueness as a species to our ability to stomach them.