Kenneth

The 1960s’ (earlier or later depending on the field) represented the zenith of a particular collection of ways of thinking about applied probability, about large systems, and about epistemology. Defining this paradigm is tricky. I think of Thomas Kuhn, Kalman Filters, NASA’s approach to quality, Karl Popper, and the invention of the FFT, but list is too idiosyncratic to be helpful. But the point here is that this way of thinking (which I have trouble defining) has given way to a new paradigm that is more about complexity theory (although not so much about chaos theory), network affects, heavy tail distribution, facials, and the unknowable. This book is trying to explain this new paradigm.

Taleb’s technical papers have contributed some to the development of this new paradigm, but his great contribution is the creation of an accessible philosophy built around this new science. This philosophical construction started with Fooled by Randomness, progressed in The Black Swan, and now culminates in Anti-Fragile.

To “get it” you probably have to just read the books, but I’ll try to explain. In Fooled by Randomness he examines the oft practiced money manager con, where you are sold a betting system is right 80% of the time. Sounds like a winner, but beware, the losses when the scheme is wrong are more than 4 times the winning when it’s right. Many a high wage earner has been bilked by myriad versions of this con. In The Black Swan he follows the question of how such cons are constructed, to propose that reality is partitioned into two types of probability distributions: those like the distribution of the height of people and those like the distributions of the wealth of people. The latter distribution is incomprehensibly more varied than the former. He then asserts that randomness fools use when we confusion the two kinds of randomness. In the Anti-Fragile he considers how the two types of randomness are constructed. It is well known that the low variance type arise from combining lots of independent events and the high variability type arise form feedback between lots of connected events.

And then his punch line is … large systems with lots of feedback among the connected parts can be fragile as when the connections cause cascading failures, or they can be anti-fragile as when small failures lead to compensations that strengthen the system. This insight leads to a way of about almost everything.

Oh yea, the alternate title might be, “The Quasi-Organized Ranting of a Misunderstood Genius”. He has learned that anti-fragile things benefit from verity, adversity, and controversy; and has concluded that writing popular books falls in this category. So in each book he increases the narcissus, the adolescence, and the taunting. In this book I think the new high water mark was when he said his former boss was constipated. I hope he hasn’t crossed a threshold were the anti-fragile is simply annihilated.

I've waited 4 ½ years for this book. I think of this as the third book in the trilogy: The Long Tail, Free, and now Makers. When Free came out I wrote that I thought that the next book would be about open source hardware. Now we know this was correct, but so much has happened in the intermediate 4 1/2 years that it now seems somewhat mundane. I was at the most recent Detroit Maker Fair and there were 30K people. The maker movement has serious momentum. If you’re unaware of the Makers this is an excellent introduction, but it may be kind of old news.

His argument for giving away the design but charging for hardware is unsettling. There seems to be an equally compelling argument for the reverse; that is, giving away the hardware and charging for the design. He’s in touch with what’s mostly working in 2012. However, it’s at odds with what worked in the past. I kept thinking about IBM and the PC. And no satisfying theory really justifies any choice of business model.

Finally, he argues that this is great for America and probably disastrous for China. Design will be all that’s left of manufacturing and America will own that. I agree. But the justification for this belief is far from satisfying. My reading of Christensen suggests that controlling the low end of the market allows you to move upscale market … The dynamics are complicated …

This book presents a theory of American exceptionalism. The exceptional thing about the book is that it’s the only theory of American Exceptionalism I've ever heard that is actually deep and thoughtful and has something important to say.

My summary of his theory is:

American exceptionalism is derivative from Roman exceptionalism. Over the last 2,000 years most chances at new governance have attempted to model the Roman republic. The difference is that the American founding fathers, unlike most revolutionaries, were quite educated. They spoke Latin and actually knew enough to have an approximately accurate understanding of Roman exceptionalism.

An interesting issue is that modern readers probably know far less about the Romans than John Adams. In fact, according to the author the modern pop culture story about the Romans is almost exactly the opposite of reality. He’s somewhat vague on why this is; ratings are part of the answer. He suggests that the long life of Greek propaganda about the Romans may also be a factor, or not.

In the end it doesn't matter if Joe Plumber understands that the things that make America great are linked to Rome. But it does matter that we not lose the values that made us great.

So which specific values does the author think lead to American exceptionalism. Read the book. But my observation on his list is that it’s everything and anything that is orthogonal to the left-right debate that dominates current American Politics.

I’ve read about half of Florida’s books and think this one is the best.

The core argument is that the financial troubles that culminated in the bursting of the subprime bubble is not about normal economic cycles nor about a great shock to the system, rather it represent a multi-generational shift in the structure of work and free time. His explanation for the cause of these multi-generational resets is very similar to Clayton Christenson’s explanation for the “disruptive transitions in technology”. Specifically, that each era is fueled by a core innovation that drives growth in productivity and that in time the productivity growth outstrips responsible growth in consumption. The resulting “bubble” then is not really a bubble; it’s not a collapse back to the previous norms. Rather a reset ushers in the next wave of growth, in which productivity is refocused in some new direction.

If we call the current financial event “The Great Recession” (see Reich), then according to Florida the long depression (1873 to 1896) reset from a nation of farmers to a nation of mill works and machinist, the great depression (1929 to 1939) reset from a nation of factory towns to a nation suburban company men, and the great recession (2008 to 2014) will reset from a nation of suburban company men to … well something new …

This is point where the book is a little less than clear. I think, he thinks we are resetting to a nation of creative designers, who will work in small firms and live in hip city centers (and perhaps exotic wilderness communities), but he stops short of being so bold as to say so.

Clearly if he’s right there is a fortune to be made in understanding the reset before the understanding is mainstream idea. I kept waiting for the stock tip, but it never comes. I suspect he’s “dead sure” that this is a reset (not a normal bubble) that ushers in a new period of hyper-prosperity, but he’s only vaguely sure what the new era will look like.

I try to pick a personal book of the year about once a year and a personal book of the decade about every 10 years. But I also have some in between category of books that are better than the book of the year, but not as good as the book of the decade. “Better Angles” is in this category.

In the last 5 or 6 years there seems to be a growing awareness that violence has declined significantly in parts of the U.S. since the ‘70s. This awareness may be in part due to other popular books that have pointed this out, like Freakonomics. However, this book shows that the decline in violence is global and part of a very long term trend. The details are varied, but the pattern is remarkably consistent. And the affect is not small. For example 500 years ago violence in the more civilized parts of Western Europe was 30 times higher than in the U.S. today.

The first “third” of the book contains copious detail designed to convince you that in spite of rare exceptions the trend toward less violence is significant. The middle “third” of the book reviews what science can (and can’t) tell us about the causes of violence. The last “third” tries to construct a theory that explains the reason for the actual decline in violence.

So what is his conclusion? In a word “enlightenment”. I found the argument compelling. But even more interestingly the result is an unexpected defense of education, learning, refinement, and bourgeoisie values. He clearly thinks enlightenment is at odds with modern leftist (or right wing) politics; and uses the phrase “classical liberalism”.

Three cautions: The author is a statistical researcher or a number cruncher. The math is all almost trivial, but numeracy is the core of the argument and is the bulk of the book. The book is irreverent. I found it charmingly so. But other may find it borderline belligerent. Finally, it is a long and detailed, to the point of pushing the audible format.

On the one hand this is a systematization of what you should know at 50, but probably didn’t know at 25. That said it’s an excellent book for three reasons: 1) If you look around at 50 year olds, surprisingly many of them didn’t learn all that they should have about relationships. 2) The book connects it’s insights to mainstream structures in psychology, specifically the work on attachment theory started by John Bowlby. 3) In this case the systematization seems especially valuable, creating a framework for everyday life that helps sort through much of the relationship drivel flowing from popular culture.

The book argues that attachment is at the core of adult relationships, and that different adults have distinct attachment styles. It further suggests that the analogy between adult attachment styles and the parent/child attachment style is powerful. The book summarizes these two observations by proposing three main styles: 1) avoidant (or perhaps independent), 2) secure (or perhaps altruistic), and 3) worried (or perhaps needy). Compatibility of styles leads to healthy adult attachments.

The book also suggests a hierarchy of adult compatibility: 0) passion (compatibility at this level tend to be a symptom of deeper things, mattering only in the extreme, e.g., sexual orientation), 1) logistics (compatibility at this level matters, but can typically be negotiated), 2) values (compatibility at this level is pretty core and incompatibilities here are dangerous), 3) intimacy (incompatibilities at this level probably have to be resolved for the relationship to survive).

I thought about picking this as my book of the year for 2012. I wonder if I’ll regret not doing so. Give a copy to a 25 year old; I did. It might shorten their learning process by 20 years.

When Audable.com was acquired by Amazon.com my on-line persona was bifurcated in their databases. If you follow me under my old persona, this is my new one. In the physical world I’m one person. The other review with the same tile is the other “me”.

On a log scale the square root of 10 is half a decade.

How do you rate a book explaining that pro wrestling is fake? Are there really people out there who think that the Jews caused 911, or for that matter that Saddam Hussein had anything to do with it?

The story line of this book earnestly explains that a lack of policing was a major cause of the sub-prime bubble and subsequent collapse of world markets up to and including much of the current trouble in Europe. Seriously, are there people who don’t know this? If so let me tell you they were crooks and at least 10% of them knew they were crooks, as did an awful lot of the smart money. For decades every Ph.D. in Physics has known that Black-Scholes is based on a bogus assumption. Do you really think that men like Greenspan or Summers had never overheard such discussions?

Perhaps we don’t know how to talk about this. A failure to police Wall Street would have been referred to as a failure of regulations when I was young. The trouble is that this term has been cleverly co-opted into a euphemism for monopoly protecting legislation.

But the wonkish part of the book is excellent. Literally, a systematic list of the top 50 things government should do, prioritized and color coded. Not exactly bedtime reading, but if you’re into this sort of thing, it’s among the best of the best in this genera.

Also there is a world class centrist intellect on display in this book. If you’re old enough to remember centrist intellectuals, the book may have significant nostalgia value. It prompted my wife to ask rather the constitution prevented him from running again.

Florida wrote the “The Flight of the Creative Class”, which became an unexpected hit. This is a follow up that focus more on his data. I’d heard others try to explain his argument for a few years, before finally reading the book, and am struck by how much more convincing he is than those who argue on his behalf.

Florida’s question is what leads to sustained regional economic advantage. The short answer is creative people, by which he means those who create (at least virtually). This includes engineers, designers, technologist, and many entrepreneurs, as well as artists, but not necessarily highly educated professionals engaged primarily in non-creative work, even if they are highly paid. Apparently dollar for dollar creative work has far more positive externalities than almost anything else. Who would have guessed?

The focus of this book is the question what attracts creative people. The answer seems to be tolerance, first and foremost. In addition cool outdoor spaces seem to be a big secondary factor. And finally, creative people attract other creative people.

This much is only slightly controversial, but the details are explosively so. Of all the factors the Gay Index correlates highest with economic outcomes and the Bohemian Index is a close second. Other highly correlated factors include the Coolness Index, multi-racialism, outdoor recreation, and live music.

Are the future Steve Jobs and Bill Gates of the world, gay bohemians who spend 30 or 40 hours a week mountain climbing and playing in garage bands? Probably not! Florida presents some data to this affect. Rather he claims that they are misfits who are not widely accepted. So it is the tolerance implied by the Gay Index or Bohemian Index that attracts the creative class. A secondary story seems to be that they find the, often unrealized, but furtive possibility of, extended adolescence attractive.

At any rate once they arrive, they work 90 hours per week to create something that they care about. If they succeed others translated this into something else, and over time this something else morphs into regional economic advantage.

What doesn’t work? According to the number: tax incentives, sporting venues, convention centers, civic pride, sense of place, and everything else that your local, or regional, government is probably trying. In fact, the numbers even suggest that higher education doesn’t work (but it can help a little bit around the edges).

Sometime in the 50s American businessmen started discovering that brand was as valuable as quality or value. Eventually, the mainstream view evolved to something dangerously close to brand dominates all else in business.

These guys are number crunchers who have for decades attempted to quantify the value of brand, mostly so that businesses can figure out what’s working and what’s not.

This book claims that recently (maybe in the last 10 years) something fundamental has shifted in the numbers. The old model is breaking down. Philosophically a true “Black Swans” cannot be anticipated, but a lot of what people call black swans have “a tell”, the model starts breaking a little before the unthinkable occurs. That the model must break before an event that the model forbids can occur is tautological. That the model often starts breaking enough in advance of the “black swan” to offer some warning suggest that we need a new category for unthinkable but slightly predictable events. A “gray swan”.

This is exactly the plot to the movie “Margin Call”.

These authors are saying that for brands, now is that midnight moment in the movie. The change has occurred, the bubble will burst, it can’t be stopped, but it hasn’t happened yet. The drama is what to do before the sun comes up.

Well almost; they hedge their call a little. Specifically they suggest that the data supports the possibility of a new kind of brand that’s a little like an anti-brand. This is of no use to most large cap American companies; they are committed, but it’s instructive for entrepreneurs. The post-brand-bubble brand will be all about change, the promises of future innovation, dynamism, and energy.