Archive for April, 2012

Conclusion (#OWS)

This is the final part of a four-part essay that was proposed by Cathy O’Neil, a facilitator of the Occupy Wall Street Alternative Banking Working Group, and written by Morgan Sandquist, a participant in the Working Group. The first three parts are here, here, and here. Crossposted from Naked Capitalism.

Still sitting in our breakfast nook, with the banking industry squinting grumpily back at us through the glare of the morning sun on the perfectly polished granite table top, we can sit back, rest our hands on the table, and rather than shouting what it expects to hear, playing our part in the script of codependency, we can speak, without pleading or rancor, the truths that are beyond the script.

Rather than repeating once again our expectations and the banking industry’s failure to meet them, rather than pleading with it to live up to its obligations and do what’s fair, we can speak of the mundane practical details of our life and our children’s lives after its eventual demise, of the specific process by which everything around us will be sold to pay the ruinous debts for which its insurance will prove woefully inadequate.

We can make of the inevitability something tangible, rather than a vague, abstract threat. We can catalog the likely disposition of all of the banking industry’s prized possessions and family heirlooms, the eventual owners of everything it values. We won’t engage in a debate over whether the inevitable will occur, nor will we revel in the justice of it, because we’ll all suffer.

The banking industry must take responsibility for the laws it has broken and make appropriate restitution, not because we’re vengeful, but because the connection between choices and consequences so necessary to any successful relationship must be restored. And as long as the banking industry is adamant that it can’t or won’t change, and given the suffering that will follow from that refusal, we have no choice but to regretfully plan for our own and our children’s well-being to the extent we can. Should it accuse us of betrayal, our response is that the first step toward an alternative is one the banking industry must take.

I would have liked to title this section of this essay “Recovery,” but I’m not in the position to do that. I can’t speak to outcomes, only to process. I’m neither imaginative nor prescient enough to suggest what the successful results of our efforts might look like, but I have some idea of how those efforts should be undertaken.

I could use the Twelve Steps of Alcoholics Anonymous (“We admitted we were powerless over debt–that our industry had become unmanageable,” and so on) to describe what might follow from the banking industry taking that first step, but that would be a too literal extension of the metaphor.

The truth is that history offers no examples of the sort of transformation that’s now needed. Though addiction and recovery may offer greater insight into our predicament than yet another political or economic analysis, there’s no reason to believe that the situation will stick to that metaphor as it evolves, even as we proceed with what is essentially an intervention.

Gil Scott-Heron famously said, “the revolution will not be televised.” I take this to mean that any real, fundamental change to the workings of our society, won’t be an entertainment offered by revolutionaries to the rest of us. It won’t be achieved if we sit home waiting for someone on television, or now the Internet, to present us with a number we can call or text, a petition we can sign, or a ballot we can fill out. Our opinions will effect nothing, and our agreement is neither solicited nor required.

I offer this essay not to start another in the endless string of conversations about what is to be done, but to prompt you to do it, whatever it will be, even if what you will do proves that everything I’ve written here it categorically incorrect. I also offer this as an explanation of why I’m doing what I’m doing.

Among other things, I’m working with several participants in the Alternative Banking Working Group on a Web application that will allow people in New York City (and, later, the rest of the country) to find credit unions for which they’re eligible (something that turns out to be far more complicated than you might expect). This will facilitate the return of money from banks, where it functions as an addictive substance, to community ownership, where it functions as a tool in the business of that community.

I do this on your behalf as well as my own, but not in your place. What else will be done and what will come of it will be the result of what you do. The Occupy Wall Street movement is entirely open and will become no more or less than what we make of it. Tomorrow’s May Day events will provide people with the chance to find out for themselves what that movement is, how they can become involved, and what it will become.

With events in more than 115 American cities and many more around the world, you should be able to find an event near you (if you’re in New York City, you can even hear more about the prank played on MF Global by the banks).

Take the day off and meet the people with whom you share this struggle, whether you’ve agreed to it or not. If the movement isn’t what you want it to be, it’s incumbent upon you to transform it as necessary. You can sit home waiting for a movement that checks all your boxes to somehow arise and solicit your participation, but so passive an approach is unlikely to accomplish much.

Let’s all get together on May 1st and see how much we can accomplish in this American Spring.

Categories: #OWS, finance, guest post

NYC Data Hackathon

This is a guest post by Chris Wiggins.

Last night I was a judge for the Data Viz Competition at the NYC Data Hackathon, part of the world’s first global data hackathon. Along with my fellow judges Cathy O’Neil and Jake Porway, we gave an award to the team that best found a nontrivial insight from the data provided for the competition and managed to render that insight visually.

Unlike a hackNY hackathon, where the energy is pretty high and the crowd much younger (hackNY hackathons are for full time students only; this crowd all were out of school — in fact at least one person was a professor), here everyone was really heads down. There was plenty of conversation and smiles but people were working quite hard, even 12 hours into the hackathon.

I noticed two things that were unusual about the participants, both of which I think speak well of the state of `data science’ in NYC:

* I’ve never been in a room with such a health mix of Wall Street quants and startup data scientists. Many of the teams included a mix of people from different sectors working together. The winning team was typical in this way: 1 person from Wall Street; 1 freelancer; and 1 data scientist from an established NYC startup.

* I met multiple people visiting from the Bay Area contemplating moving to NYC. In 2004-2007 many of my students from Columbia moved out to SF under the historical notion that that was `the place’ where they could work at a small company that would demand their technical mastery and give them sufficient autonomy to see their work come to light under their own direction. I was glad to meet people from the Bay Area who were sufficiently impressed with NYC’s data scene to consider moving here. Of course I told them it was exactly the right thing to do
and I looked forward to seeing them again soon once they’d become naturalized citizens of NYC.

Huge thanks to Shivon Zils and Matt Truck for hosting us in such a nice location, to Jeremy Howard for his suggestion a few weeks ago to throw the event, and to Max Shron for encouraging everyone to include a visualization prize as part of this event.

Categories: data science, guest post

An Intervention (#OWS)

This is the third part of a four-part essay that was proposed by Cathy O’Neil, a facilitator of the Occupy Wall Street Alternative Banking Working Group, and written by Morgan Sandquist, a participant in the Working Group. The first part is here and the second part is here. Crossposted from Naked Capitalism.

What are we to do with our banking industry, sitting there at the kitchen table in its underwear, drumming on the table with one hand and scratching its increasingly coarse chin with the other in an impossibly syncopated rhythm, letting fly a dizzying stream of assurances, justifications, and accusations, and generally spoiling for a fight that can only be avoided by complete and enthusiastic agreement with a narrative that can be very difficult to follow, let alone make sense of?

Because this is our kitchen too, we have our legal and moral rights. We would be well within those rights to respond to its nonsense with far more coherent and sweeping condemnations of our own. Throwing the bum out in its underwear without so much as a cup of coffee, taking the children, and keeping our share of whatever might be left could certainly be justified.

Though the sense of release offered by those responses is tempting, they’re not likely to be of any practical use. We can’t win an argument with an irrational person, and our share of an insolvent industry is likely to be very little–certainly not enough to feed the children. We have to recognize the hard truth of our implication in the banking industry and its addiction.

This doesn’t mean that we’re responsible for the addiction and its consequences, or that we can make the choice not to continue that addiction on our own, but it does mean that the problem won’t be constructively resolved without our efforts. To the extent that denial is about obscuring the connection between decisions and results, the most effective means of undermining denial is to clarify that connection, and the process of doing that is intervention.

Whether or not its participants are thinking in these terms, Occupy Wall Street, to the extent that it can coherently be referred to as an entity, is in many respects functioning as an intervention into the banking industry’s increasingly untenable addiction to money and debt.

The movement’s core values of transparency, sustainability, and nonviolence reflect the clarity, patience, and compassion needed for an effective intervention.

This is not to say that all of the efforts directed at banks by the movement have been magnanimous or constructive. We have to remember the terrible suffering that has been inflicted upon so many and offer that clarity, patience, and compassion not just to the addict, but also to ourselves as intervenors and to everyone who has been affected by the banking industry.

On the whole, I have been deeply heartened by how this movement has evolved over the last seven months, and though intervention isn’t the easiest or most promising process, it’s one I recognize and know can work (in stark contrast to political revolution). From the beginning, the Occupiers have shown a fearless, poignant spontaneity that’s available only beyond the addiction-centered dynamic of denial, and the banking industry, its enablers, and others still within that dynamic of denial (which, to be fair, has included most of us at one point or another) have responded as would be expected.

The determination and wisdom granted to those who see more clearly is profoundly threatening to those seeking to maintain denial, though of course they wouldn’t be able to say quite why.

The initial objections from the press that Occupy Wall Street was making no demands could be seen as an enabler’s yearning for symptoms that can be isolated and addressed, without admitting to or addressing the addiction from which they arise. To keep calmly and patiently pointing to that underlying cause is simultaneously incomprehensible and maddening to those trapped within denial, and their responses have run the gamut from smug certainty that nothing could possibly be wrong to whistling past the graveyard to ill-conceived and unjustified violence. And the Occupiers’ patience, diligence, and good nature in the face of that decidedly ill will is as textbook an illustration of the process of intervention as we’re likely to see.

It would be all too easy to remain passive in the face of our increasingly delusional, erratic, and combative banking industry. Surely there must be a more palatable alternative to undermining the continued functioning of the complex and highly evolved process that is the core of our economy.

If we force it to rehabilitate, what will happen during that process? Will our economy collapse? When its rehabilitation is complete, will the banking industry be able to function as well as it once did? Or as the banking industry’s enablers would have it: Any attempts to regulate the banking industry will only harm it, making it less effective to all of our detriment; these banks are too important a part of our economy to be allowed to fail; and bankers must continue to receive bonuses for banks to remain competitive.

It’s true that the banking industry has seized upon the process that’s the basis of our economic survival, and that attempts to address the problems of the banking industry cannot be undertaken lightly. But it’s also true that the banking industry has perverted that process, and that attempts to address that won’t prevent our return to some fantasy of efficiency and plenty, though they might prevent the otherwise inevitable, tragic end of the current trajectory left unchecked.

Whatever happens while the banking industry is rehabilitated is unlikely to be worse than what will happen as it continues to indulge in its addiction unaddressed, and it’s unlikely to function any worse upon the completion of its rehabilitation than it is now. As Charles Eisenstein puts it, “any efforts we make today to ‘raise bottom’ for our collectively addicted civilization–any efforts we make to protect or reclaim social, natural, or spiritual capital–will both hasten and ameliorate the crisis.”

Once an addict has reached the point in his or her descent where an intervention is necessary, there’s no realistic possibility of a return to some pre-addiction Golden Age. The apparent paradox that an addict’s life must be destroyed to save it is, stated in those terms, false. The addict’s life only appears to be as yet undestroyed through the lens of denial, and a future life without substance abuse or consequences is an illusion.

But the more gently stated paradox that intervention will cause the addict suffering in the short term to help him or her in the long term is accurate. There are, however, deeper, more intractable paradoxes, and they are those of the psychology of addiction. The process of intervention is often crucial to an addict’s entering rehab and beginning recovery, yet only the addict can decide to enter rehab.

The addict must understand the damage he or she has done in order to stop using but mustn’t succumb to shame, which would simply cause a retreat to the substance. The addict must admit that he or she is powerless over the substance and that life has become unmanageable, but mustn’t surrender to hopelessness and despair, which would sap the considerable motivation needed in the process of recovery. An intervenor must do something, but there’s nothing that can be done. There is no single act, no grand gesture or magic bullet, that can accomplish anything meaningful or lasting. Intervention is a long, unpredictable process requiring superhuman compassion and patience of everyone involved. Prior training or practice in commitment to a process without regard to the outcome of that process is invaluable.

Yes, we can answer the banking industry’s petulant invective in kind, but that won’t fix the problem; the industry will become more defensive and reckless, and we probably wouldn’t end up feeling any better anyway. Our encyclopedic harangue would be cogent, compelling, and convince our friends in the retelling, but no matter how loud we shout it over the banking industry’s coffee cup into that sullen, bloodshot face, it will simply be brushed aside with the wave of a shaky hand and a hoarse grumble, or, worse, it will hit home, and rattled, the banking industry will glare at us and we’ll know that tonight will bring another nihilistic binge of leverage and derivatives, and maybe this time there will be no tomorrow morning. The industry will tell us that we don’t understand, that the pressure it’s under is unimaginable, that life is grim, and that even though it can’t fix that, it should be thanked for what it has accomplished, and that that’s the best it can do. What more could we want? What more could it do? And we can only sigh and shake our head, because we know the simple, honest answer would just fall on deaf ears, and even if it were understood and accepted, the broken soul sitting across the table is in no shape to do anything constructive.

The confrontations shown on television or in the movies, or that you have perhaps participated in yourself, are just part of the larger process of intervention, but they illustrate the themes that inform that larger process. Those themes can best be summarized as connection: the connection between the addict’s choices and the suffering of the addict and those who are around him or her; the connection between addiction and the addict’s choices; and the unbreakable, always available connection between the addict and the intervenors.

Where denial seeks to divide and conquer, intervention seeks to unify and transcend. Intervention doesn’t respond to denial on denial’s terms, but rather reflects reality as it is. It doesn’t engage in the petty distractions of accusations and recriminations, nor does it seek escape from the addict and his or her problems. Intervention shows the addict his or her choices as they’re made, how those choices are determined by addiction, and the consequences that follow from those choices, but it also shows the redemption that’s always available despite those choices and their consequences.

Where denial is deceptive, impulsive, and selfish, intervention is clear, patient, and compassionate. Intervention finally presents the addict with an unavoidable choice between continued deluded suffering and real, sustainable sanity. The addict may or may not respond positively to that choice, but it must continually be presented on the same terms until the addict surrenders his or her denial.

And to induce that surrender, it’s crucial that the addict be offered an alternative to his or her addiction, whether it’s formal rehab, a twelve-step program, methadone, or a recovery dog. It’s important to recognize that even before the addict became physically or emotionally dependent on the substance, that substance met an otherwise unmet need, and leaving it unmet will lead only to relapse.

Tomorrow: Conclusion

Categories: #OWS, finance, guest post

The Addiction (#OWS)

This is the second part of a four-part essay that was proposed by Cathy O’Neil, a facilitator of the Occupy Wall Street Alternative Banking Working Group, and written by Morgan Sandquist, a participant in the Working Group. The first part is here. Crossposted from Naked Capitalism.

Is it fair to say that because the quality of the denial surrounding the banking industry’s problems is so similar to that of the denial surrounding addiction, that addiction is therefore the root of those problems and our ongoing failure to adequately address them? Perhaps not, but others have come to describe money, debt, and banking as something very much like addiction for entirely different, and far better argued, reasons.

In Debt: The First Five Thousand Years, David Graeber looks deeply into the anthropological record and finds that money and debt, and, by extension, banking, are all essentially the same thing, and they’re not what most of us understand them to be. Money is certainly not simply the objective store of value and medium of exchange that economists would have us believe it is. Because money is created as debt, its use to finance productive activity means that that activity, whatever it is, must then generate interest to be returned to money’s creators in addition to the money lent.

This has given rise to an industry, even a class of people, that derives its livelihood not from any productive activity of its own, but merely from having money. In Sacred Economics, Charles Eisenstein takes this a step further to show that this overhead cost inherent in all monetarily denominated activities means that the value represented by money must always grow. There is no logical end to what must be monetized–natural resources, ideas, time. Nothing can remain unowned and clear of liens, and that will eventually consume any finite realm:

The dynamics of usury-money are addiction dynamics, requiring an ever-greater dose (of the commons) to maintain normality, converting more and more of the basis of well-being into money for a fix. If you have an addict friend, it won’t do any good to give her “help” of the usual kind, such as money, a car to replace the one she crashed, or a job to replace the one she lost. All of those resources will just go down the black hole of addiction. So too it is with our politicians’ efforts to prolong the age of growth.

I don’t hope to make in a couple of paragraphs the full case that those two authors have made over hundreds of pages, so I’ll just assert it to have been compellingly made: namely, that money, debt, and banking have gone from being a tool that we might use to ease social activities to being the purpose of those activities. They have become an addiction, and because they’re an addiction, all of us who are touched by them have developed a rich and pervasive denial of this fact, its history, and its consequences.

In practical terms, what do we gain by perceiving money, debt, and banking as an addiction and the discourse around them as denial? Speaking for myself, it helps me understand the otherwise inexplicable irrationality behind our ongoing financial decline. I can imagine no other explanation for so much of what we’ve seen in the last few years: the failures to properly address the mortgage and subsequent foreclosure crises; the criminal activities of banks, hedge funds, and ratings agencies, and the spiral of consumer indebtedness; the deeply emotional and often militarized response to people sleeping in an otherwise unused square of concrete in a nocturnally unpopulated commercial district; and, most of all, the general populace’s willing acquiescence to all of this.

It appears only that banking must continue as it is, undisturbed, and nothing must disrupt the use and abuse of debt and money. Though an explanation for the full range of symptoms of the banking crisis, or for the full range of symptoms of any addiction, risks being reductive, without some causal dynamic behind these symptoms, there can be no effective response to them. To prevent something from happening, a cause must be identified and addressed.

Understanding money, debt, and banking as addiction also helps me trust myself and seek a constructive approach to the daunting task of resolving this crisis. As anyone who has ever had to face the full force of shared social and familial evasion can attest, the temptation to surrender to that alternate reality despite his or her better judgment, if only for the sake of civil relations, can be overwhelming.

In the case of the banking industry, that evasion often comes in the form of expert opinion that seeks to persuade not through the substance of the discussion, but through a dependence on credentials and ad hominem dismissal. It’s invaluable to be reminded that such a surrender, regardless of expert arguments, will at best only defer the consequences that we fear. Asking ourselves if, at the addict’s eventual funeral, we’ll be comfortable that we did everything we could is a remarkable inducement to focus. It can also be a powerful inducement to anger, so the understanding that it’s really addiction and denial, not friends and family, that we’re fighting can provide a basis for the compassion we would need to constructively approach such an emotionally volatile undertaking.

Finally, this understanding helps me focus on the ultimate goal of any such effort, rather than becoming sidetracked by pointless diversions.

As I mentioned above, one strategy of denial is to hide the connection between the symptoms of addiction and their real cause. It allows the alcoholic to believe that his or her diabetes and other health issues are the result of poor diet and that his or her depression is genetic or the result of poor parenting. It’s not that an alcoholic necessarily consumes a model diet or was well reared, but addressing just those symptoms allows the alcoholic to keep drinking, and other symptoms will follow from that drinking.

Similarly, it’s not that banks don’t need to be better capitalized, but providing them with capital and liquidity alone allows banks to continue pursuing courses of action that are neither financially nor economically viable.

To effectively address addiction is to prevent further addictive use of the substance. Any effort directed at symptoms will, to the extent they’re effective, simply enable continued substance abuse. It’s only by understanding the nature and extent of denial, navigating its maze, and intervening directly in the use of the substance that one can hope to effectively address addiction, and even then, the odds aren’t in the addict’s favor. And only with a thorough understanding of this dynamic and all of its implications can we hope to intervene effectively in the banking crisis that as of now continues unabated.

Tomorrow: An Intervention

Categories: #OWS, finance, guest post

In Denial (#OWS)

This is the first part of a four-part essay that was proposed by Cathy O’Neil, a facilitator of the Occupy Wall Street Alternative Banking Working Group, and written by Morgan Sandquist, a participant in the Working Group. Crossposted from Naked Capitalism.

The largest banks in America–Citibank, Bank of America, Wells Fargo, and others–are probably insolvent. I learned of this from my companions in Occupy Wall Street’s Alternative Banking Working Group. It seems that, based on a host of legal and accounting irregularities, the banks have been able to conceal real and potential losses far larger than their capital reserves. But this has been difficult to confirm.

Isn’t that strange? Wouldn’t the possible insolvency of the core of our banking industry be a matter of nearly universal importance? Shouldn’t we be trying to figure out if this is in fact so, how it came to be, what we’re going to do about it, and how we can prevent its happening again?

Anyone investigating the true health of the banking industry, apparently including regulators, is faced with opacity, complexity, and even outright hostility that stymies all but the most savvy and persistent. Fortunately, people within OWS, including the Occupy the SEC Working Group, are that savvy and persistent. But the reaction of the industry and its partisans to such efforts has included the not-so-subtle suggestion that inquiring into the well-being of the banking industry will somehow cause problems to arise that wouldn’t otherwise exist if we would all just mind our own business.

This seems odd in an ostensibly objective and quantitative context like banking. Shouldn’t the truth be clearly visible in the accounting? Shouldn’t we all–borrowers, investors, depositors, and regulators–want to know exactly what’s going on?

As unexpected as such a visceral and irrational reaction to genuine, well-founded concern is from the supposedly rational realm of finance, that telltale blend of evasion, grandiosity, and superstition will be familiar to anyone who has ever confronted an addict about his or her addiction.

Denial is far more than an addict’s dismissal of the truth of his or her addiction; it’s collectively developed by the addict’s entire social sphere, and it takes many forms.

It might be helpful to imagine addiction and denial as intangible agents acting in a social context. Addiction’s agency is directed solely toward uninterrupted use of the addictive substance, and denial’s agency is directed solely toward ensuring that no one sees, understands, or limits addiction’s agency. Denial denies not just claims and assertions, it also denies access and insight into the reality of addiction. It denies that behavior is driven by addiction and that behavior’s consequences are the results of addiction. It denies the story of addiction and proposes an endless collection of counter-conspiracies.

It appears as those around the addict ignoring the addict’s use and the consequences of that use; as the narratives, tics, and habits through which the addict understands and acts out his or her use; and as the alternate version of reality that the addict and everyone around him or her shares in lieu of the reality of addiction. To paraphrase Baudelaire on the devil, denial’s best trick is to persuade us that addiction doesn’t exist.

No addiction could develop a more effective narrative of denial than the trade in exotic financial instruments that’s evolved over the last decade or so; no addiction could hope for more willing abettors than the financial press, regulators, and ratings agencies; and no addiction could depend on a more permissive enabler than the Federal Reserve Bank.

It’s difficult not to imagine the banking industry as jittery and unshaven, embarking on yet another unregulated derivative binge, telling us, its concerned partner, that we just wouldn’t understand what it’s like, how high the return can get, while its friends in the financial press and ratings agencies encourage it, scoffing at the very idea of risk.

And later that night, as it’s coming down, it’ll shout something at us about not really needing the $1.2 trillion in liquidity, but if the Fed’s offering, why not?, it’ll make the night that much better, only to face us the next morning, hungover and distractedly claiming none of it ever happened.

We’ll confront it with seemingly undeniable evidence of MERS, TARP, executive bonuses, and a ruined housing sector, and it’ll look betrayed, ask us how we could even say such a thing, and tell us that it’s none of our concern and that we just have to trust it, because the bills are paid, right? It’s not like it’s as bad as AIG or MF Global, it’ll say, which will lead to an impossible-to-follow tale of the prank it played on MF Global last night, and how that was like something that happened to Bear Stearns and Lehman Brothers once, and ending with the declaration that the Fed and the SEC would never let anything bad happen to the Banking Industry.

And what choice do we have? Maybe it’s not that bad. After all, if the banks really were insolvent, there would’ve been something on the evening news.

Tomorrow: The Addiction

Categories: #OWS, finance, guest post

Innovation, elevation, and space travel

Science Fiction writer Neal Stephenson recently wrote this essay entitled “Innovation Starvation” on how it’s too bad we don’t have an innovative culture any more. I kind of like and agree with some parts his essay, especially this:

Most people who work in corporations or academia have witnessed something like the following: A number of engineers are sitting together in a room, bouncing ideas off each other. Out of the discussion emerges a new concept that seems promising. Then some laptop-wielding person in the corner, having performed a quick Google search, announces that this “new” idea is, in fact, an old one—or at least vaguely similar—and has already been tried. Either it failed, or it succeeded. If it failed, then no manager who wants to keep his or her job will approve spending money trying to revive it. If it succeeded, then it’s patented and entry to the market is presumed to be unattainable, since the first people who thought of it will have “first-mover advantage” and will have created “barriers to entry.” The number of seemingly promising ideas that have been crushed in this way must number in the millions.

It’s similar to my reasoning for not googling something under discussion for at least 30 minutes, especially when it seems possible to reckon whether it’s true or not.

I would add this: it’s tempting to immediately gauge the competition when you have a new idea, especially a business idea. But if you develop it within yourself or a small group of people it will inevitably morph into something that is probably unrecognizable from the original idea, so with that in mind, googling the original idea is actually irrelevant anyway. Stephenson makes a point similar to this in his essay.

Stephenson goes on:

The illusion of eliminating uncertainty from corporate decision-making is not merely a question of management style or personal preference. In the legal environment that has developed around publicly traded corporations, managers are strongly discouraged from shouldering any risks that they know about—or, in the opinion of some future jury, should have known about—even if they have a hunch that the gamble might pay off in the long run. There is no such thing as “long run” in industries driven by the next quarterly report. The possibility of some innovation making money is just that—a mere possibility that will not have time to materialize before the subpoenas from minority shareholder lawsuits begin to roll in.

Today’s belief in ineluctable certainty is the true innovation-killer of our age. In this environment, the best an audacious manager can do is to develop small improvements to existing systems—climbing the hill, as it were, toward a local maximum, trimming fat, eking out the occasional tiny innovation—like city planners painting bicycle lanes on the streets as a gesture toward solving our energy problems. Any strategy that involves crossing a valley—accepting short-term losses to reach a higher hill in the distance—will soon be brought to a halt by the demands of a system that celebrates short-term gains and tolerates stagnation, but condemns anything else as failure. In short, a world where big stuff can never get done.

While I agree that people, especially within the context of large companies or government, are too short-sighted, I think this view is overly negative. On smaller scale, and in smaller companies, people do definitely take real risks (and pay for them sometimes).

But this essay is really about “doing the big stuff” and that’s where I’ll just have to argue against it altogether. Stephenson, like many sci-fi writers, is totally into the idea of space travel and is deploring the fact that we as a nation have turned away from it because of its expense and because we don’t want to take huge risks with money and people. Unlike in the good-old days of the Sputnik Era.

But I’d argue that the Sputnik Era was really about the Cold War and competition with the Russians, not space travel. This nostalgia is misplaced, similar to how people talk about family values and how great it was in the 1950′s, while ignoring the outrageous racism, sexism, and homophobia that existed then. It’s a revisionist view.

I’m not saying nothing cool happened in order to get a man on the moon, because clearly lots of cool stuff did happen. I’m just saying it happened in the context of a very serious us-versus-them mentality, where we were actively afraid of being blown up in a nuclear war, and I for one am not signing up for that again just so we can work together better.

More generally, Doing Something Big almost by definition means making sacrifices on other projects, so it makes sense that people who benefit from the chosen project think it’s awesome but other people not so much.

Going back to space travel: it’s a funny subject for conversation. When people talk about it they often experience elevation, which is my favorite recently understood emotion, and it means they transcend their normal existence. This seems to happen to young people and science fiction fans especially when talking about space travel, can happen to people listening to music, and used to happen to a lot of people when listening to Obama’s speeches.

Having been born and raised around science fiction and space lovers, I get this, and I can even summon up the accompanying elevated trance at will. But I also get that the idea of putting a huge amount of our resources into space travel, when we still haven’t figured out how to consistently feed people here on earth, is not completely reasonable.

I’m not arguing for no space travel, because there’s definitely a place for the basic scientific research that gets accomplished in the wake of cool, ambitious plans. But to Neil Stephenson I’d say, buddy there’s a pretty good reason this isn’t happening, and it’s not just because people aren’t innovative.

Categories: musing

Hey, Doocy apologized for fabricating part of Obama’s speech!

A few days ago my friend Michael Thaddeus wrote a guest post after noticing that Fox News reporter Steve Doocy had added three words, “Unlike some people,” to Obama’s line “I wasn’t born with a silver spoon in my mouth.”

This fabrication had the effect of making Obama appear to be making a snide reference to Romney. Indeed Doocy was talking to Romney on Fox News when he added the words. But the truth was that Obama had been saying the silver spoon line since 2009, as Thaddeus pointed out.

Moreover, the Washington Post and New York Post had picked up the line verbatim from Doocy, rather than checking the original source, and when Thaddeus had contacted them they had ignored his complaints. So that’s when he asked me to put up his guest post, which I did.

And what’s super cool is that it was picked up by a bunch of people who linked to my blog (ISPN Media, Deep Brain Media, Brobrubel’s blog, The Fifth Column, and FAIR), and quite a bit of twitter buzz for what I’m used to.

A bunch of other media outlets also picked this up who didn’t link to my blog (which is kind of ironic considering the post is about doing your job as a journalist) including USA Today, Media Matters, and the Daily Kos, after which the Washington Post corrected its Obama quote.

After that, the story got onto Talking Points Memo, and didn’t link to my blog but was attributed to Michael Thaddeus which later got shortened to MT for some reason. It was even the top story on Talking Points Memo for some time Sunday afternoon.

The ultimate (in terms of my kids thinking I’m cool) happened Monday evening though when the story was featured on the Colbert Report. Cool!

Oh yeah, and Doocy finally apologized on Fox News.

Blogging isn’t dead, people!!

Categories: news

Declaration of Linear Independence: the nerdiest thing you’ve ever seen

My friend Michael Thaddeus recently informed me of the existence of the Declaration of Linear Independence, written by mathematician David Grabiner. I will describe the document as a “re-imagining” of the original Declaration of Independence from the point of view of a set of vectors in some vector space which feel, for whatever reason, that their independence has been under attack (I’m considering inviting them to join Occupy).

I’m not really sure I can ethically ask you to read the entire document, due to the intense nerdiness of it which may cause the weaker among you to lose consciousness, but let me give you the flavor. Here’s the most famous sentence translated into vector-angst:

We hold these truths to be self-evident: that all nonzero vectors are created equal; that they are endowed by their definer with certain unalienable rights; that among these are the laws of logic and the pursuit of valid proofs; that to secure these rights, logical arguments are created, deriving their just powers from axioms; that whenever any argument becomes destructive of these ends, it is the right of the vectors to alter or to abolish it, and to institute a new argument, laying its foundation on such principles, and organizing its powers in such form, as to them shall seem most likely to reach the correct conclusion.

Whereas the original document listed grievances against King George III, this new one complains about Professor Eigen, who is a made-up guy personifying everything which is overbearing and repressive about eigenvectors, eigenspaces and eigenvalues. Here’s my favorite complaint:

He has restricted our freedom of movement by requiring us all to live in the same hyperplane, even though we cannot all fit in one.

Finally, the ending is really quite good for those of us who on the one hand remember our linear algebra and on the other hand sympathize with these vectors being denied their (linear) independence rights:

 In witness whereof we have signed our coordinates with respect to an appropriate orthonormal basis, and found them to constitute a triangular matrix with nonzero diagonal elements.
Categories: math

Online learning promotes passivity

Up til I took Andrew Ng’s online machine learning class last semester, I had two worries about the concept of online learning. First, I worried that the inability to ask questions would be a major problem. Second, I worried about the possibility of building up material. I could imagine learning a given thing online but the ability to sustain and build material over an entire semester seemed kind of unrealistic.

On the second point, I think I’m convinced. Andrew definitely taught us a real semester’s worth of stuff, and he built up a body of knowledge very well. I now communicate with my colleagues at work using the language he taught us, which is very cool.

On the first point about asking questions, however, I am even more convinced there’s a crucial problem.

I want to differentiate between two different kinds of questions to make my point. First, there’s the “I’m confused” type of question, where someone literally doesn’t get the point of something or doesn’t understand the notation or a step in an explanation.

One can imagine tackling this kind of question in various ways. For example, one can strive to be a really good teacher, which Andrew certainly is, or to explain things at a high level but shove the details into black boxes, which Andrew did quite a bit (somewhat to my disappointment, especially when linear algebra was involved). If neither of those two things is sufficient, and the class is really important and/or really common, one can imagine teaching a computer to anticipate confusion and to ask questions along the way to make sure the students are following, and to go back and explain things in a different way if not.

In other words, the first kind of “clarifying questions” can probably be dealt with by the online learning community over time.

But there’s a second kind, namely the kind of question where someone is not confused but rather asks a question for one of the following reasons:

  1. they want to know how a certain idea relates to something else they know about,
  2. they want to generalize something the teacher said,
  3. they want to argue against an approach or for another approach,
  4. they see a mistake, or
  5. they see an easier way to do something.

Almost by definition, the above kinds of questions aren’t anticipated by the teacher, but the fact that they are asked almost always improves the class, certainly for the student in question but also for the other students and the teacher.

For example, one semester I taught three sections of 18.03 (exhausting! and I was pregnant!), which is a calculus class at M.I.T., and I remember thinking that in every single class one of the students made a remark or asked a question that I learned something from. It got to the point that, the third time through the same material, I’d be waiting for someone to explain how I should be teaching it. I loved that the students there are so smart but also so engaged in learning.

And that’s what I’m worried about- the engagement. When you embark on an online class, the best you can hope for is that you learn something and that you don’t get hopelessly confused. And that’s cool, that you can learn something, for free, online. But what you can’t do is what I’m worried about, and that’s to get instant feedback and discussion about some idea you had in the categories above.

I’m definitely one of those people who asks questions of the second type, and although I may sometimes annoy my fellow students, I really feel like the active engagement I pursue by coming up with all sorts of crazy comments and ideas and questions is what made me capable of doing original and creative things. For me, the most important part of my education was that training whereby I got to ask questions in class and got smart teachers who liked me to do so and would talk to me about my ideas.

How can that possibly happen with online learning? I’m afraid it can’t, and I’m afraid we will be training people to receive information rather than to engage in creation.

I imagine that in 200 years, almost everyone will be taught online, hooked into the machine and pumped up with knowledge. It will be only the elites who will have access to real live people to teach them in person, where they will be taught not only the material but also how to argue against a point of view and to propose an alternate approach.

Fox News fabricates a part of Obama’s speech

This is a guest post by Michael Thaddeus.


When President Obama spoke at Lorain County Community College in Elyria, Ohio, on Wednesday, he said, “Somebody gave me an education. I wasn’t born with a silver spoon in my mouth. Michelle wasn’t. But somebody gave us a chance.” [Minute 9:24 on video.] He has made similar remarks numerous times, including as early as 2009.

But when smirking reporter Steve Doocy quoted the President to Mitt Romney on Fox News, he added three words: “Unlike some people, I wasn’t born with a silver spoon in my mouth.” [Minute 3:39 on video.]

Those three words, “unlike some people,” were a complete fabrication. President Obama never said them or anything like them. The extra words make the President sound snide, as if he were mocking Romney.

Where did these extra words come from? Steve Doocy seemingly made them up out of whole cloth. Are reporters really supposed to do that?

What happened next? Philip Rucker at the Washington Post “reported” the story on Thursday, but he made no effort to check the fabricated quote against the primary sources, easily available online. Instead, he put Fox’s words directly into the mouth of President Obama. Are reporters really supposed to do that? I e-mailed him and the Post editors to request a correction, but he hasn’t answered, and guess what, the false quote is still there.

Update: the Washington Post has made a correction.

Then what happened? The New York Post devoted one of its two Friday editorials to slamming Obama for taunting Romney. They called him “cynical,” “misguided,” and “snotty.” Well, of course he sounded snotty! That’s because the Post used the snotty quote concocted by their colleagues at Fox News! Are newspapers really supposed to do that?

When I pointed this out to the editorial staff at the Post on Friday, they replied, “we’d be happy to consider running a letter to the editor on this subject, if you’d care to write one.” Great! But what’s the catch? “I couldn’t guarantee that we could run it.” What odds do you give me? Meanwhile, even though a prominent editorial in the Post is devoted to denouncing the President for saying something that he didn’t really say, there seem to be no plans for a correction or retraction.

So there you have it. One branch of the Murdoch empire concocts a snotty quote, supposedly from Barack Hussein Obama. Another branch vilifies him for supposedly saying the snotty thing that they themselves concocted. Meanwhile, the fabricated quote continues to reverberate in the echo chamber of the right-wing blogosphere. And thanks to the Washington Post, it will soon be as good as true.

Let’s grant that these three little words are a petty mendacity by the Iraq War standards to which we’ve become accustomed. And let’s grant that Obama’s speechwriters are shrewd and were hardly unaware of the contrast with Romney when they wrote the “silver spoon” line. Still, what makes Murdoch newspapers and TV stations think they can fabricate quotes, enclose them in quotation marks, attribute them to the President of the United States, and get away with it? It’s pretty shocking when you think about it.

Categories: Uncategorized

Occupy Wall Street isn’t dead

I went to New Jersey a couple of nights ago to talk about Occupy Wall Street and the Alternative Banking group to NJPPN, a network of politically aware and active citizens. They self-describe as non-partisan but there were quite a few NPR listeners in the audience, and in general they came across to me as very skeptical of the financial system. Or possibly they were just being polite.

One of the audience members expressed frustration that the Occupy movement has fizzled out. I guess I can understand why he may think so, because after Bloomberg cleared the Occupiers from Zuccotti Park it was obviously more difficult for people to know what the movement is up to. And what with the cold weather, many of the working groups, like Alternative Banking, were incubating ideas rather than staging street protests. Plus the movement is still less than a year old, and these things take some time to set up.

For him and for others like him, I’d like to point you to a few resources to which explain what Occupy has been up to and what it has in store:

More to come. The hoodies are being shipped as I type.

Categories: #OWS

What’s fair?

Lately I’ve been thinking about the concept of fairness and how our culture decides on what’s fair. I think lots of arguments I have with other people come down to the fact that we have fundamentally different opinions on what’s fair, so I think it’s useful to consider having that argument instead of whatever argument we were engaged in. By the way, this actually makes me like people more- it’s not that they are mean, selfish people, but that they have a different underlying theory of fairness that they are loyal to.

For example, I have met people who claim that the government should only be in charge of protecting ownership rights and prosecuting criminals and that it should stay out of every other realm. The question of how to help people out with student debt loans then is certainly moot until we first talk about whether government should “care” about helping people at all for any reason.

The question, stop, and frisk policy is an example of a policy that our local government has taken on that reflects our shared understanding of fairness; in this case, we care more about preventing crimes, so being fair to victims, then we do about the suspects of crimes.

Tax law is another issue where we, as a society, have decided what’s fair and made it into policy. The fact that these laws change drastically over time – the top tax rate of 70% just a few decades ago is a far cry from what we’ve been seeing recently – indicates that we also change our mind about what is fair depending on conditions.

I’m not saying anything deep here- we all know that things change, and we no longer spend time watching slaves get killed in an arena, because it no longer jives with our concept of justice (although the NFL can sometimes seem a bit like that). I’m just trying to differentiate, and have other people agree to differentiate, between the rules we’ve constructed, in the form of policies and laws of the land, and the underlying and evolving moral decisions that we make as a community.

One more example, because I think it’s a good one for thinking about fairness and systems of rules (again not new). Imagine we have 100 people working on a farm, making their living, and we introduce a technology that allows 1 person to now do the work that 100 people did previously.

On the one hand it’s in some sense fair to keep one person on the farm, someone who is skilled enough to use this new tractor or whatever it is, and lay off the other 99 people.

But in a larger sense we still have the same output, so the same number of resources, and 99 people out of work means 99 people don’t have access to those resources, which doesn’t actually seem so fair. In the best of worlds (a world of textbook economic growth) those 99 people would go find new jobs in new fields and we wouldn’t have to worry about them. But what if those new jobs don’t exist, or exist only for the 23 people who have some other technical skills? This is when the rules we have created really matter, and our reasons for them need to be weighed and discussed.

Categories: musing

Are politicians failing our lobbyists? (Onion news)

Categories: rant

Powerpoint kills me from within my soul

If you are anything like me, the beginning of a meeting where there are powerpoint slides is physically painful. I’m a napper, too, so especially after lunch, the urge to put  my head on a conference table and start snoring is overwhelming.

Because I know what’s going to happen.

Namely, there’s gonna be waaaay too much stuff on each slide and there’s going to be a speaker who is really proud of their soul-wizening presentation.

My eyes glaze over when there are sub-bullets and small fonts, and especially when the slide is sectioned off into subslides.

Why is this allowed to happen?!

People. If there are more than three ideas in your slide, that’s too much. If there’s more than a title and three phrases, that’s too much. If any of your phrases is longer than the line and wraps around, that’s too long, and your font should be really big so everyone can read it.

My preference is to have exactly one phrase on each slide. Otherwise everyone in the room is reading shit the speaker hasn’t gotten to. Except for the people pretending not to be asleep, who are totally disengaged and/or praying to die.

Categories: rant

Reputational risk is insufficient for ratings agencies

I’ve had a few conversations recently with intelligent, informed people about the failure of the ratings agencies during the housing bubble to keep up standards on their ratings of CDO‘s. You can discuss all day whether it was individual ratings they got wrong (at the level of the MBS‘s) or whether it was the correlation of defaults they were underestimating. It was both. But in the end the fact is they sold AAA ratings.

Nobody really argues against that. What fascinates me, though, is that people sometimes still argue against the idea that the revenue model of ratings agencies, whereby the issuers of debt pay the ratings agencies for ratings, is fundamentally flawed.

Their explanation is something like this.

That system worked fine for a long time, because for a given rating they wouldn’t sacrifice their reputation on a ridiculous rating for some small-fry issuer. And the system would have continued to work fine except that the issuers became huge and the amount of money involved became too tempting and so they ended up whoring themselves. But there’s nothing fundamentally wrong with the incentive system, we just need to keep reputational risk the driving force.

What?? That’s argument kind of reminds me of the so-called dental insurance which pays for cleanings but when it comes to dental emergencies with root canals and surgeries you’re shit out of luck. That’s not insurance at all, in other words.

I see the need for ratings agencies – it’s a way of crowd sourcing due diligence, which makes sense, but only if we can trust the ratings agencies as an impartial third party. And I don’t want to seem like someone who doesn’t have faith in humanity, but my trust isn’t won by a system of perverse incentives that has already failed. Let’s just say I have hope for humanity but I also acknowledge our weaknesses.

And just to be clear, the new bond rating agency Kroll, which has been getting a lot of attention, also uses an issuer-pays revenue model. But I guess Egan-Jones doesn’t, it uses a subscription-based revenue model. I still prefer the concept of an open source ratings agency - I’ve been in touch with Marc Joffe, who is doing just that for sovereign debt, which I will talk more about in a separate post.

Categories: finance

Can clouds think?

Sometimes I have trouble falling asleep. Especially if I’m riled up thinking about the newest stealth bank bailout, or wondering how to model rare, fat-tailed events, I’ll toss and turn, unable to get these problems out of my head.

Luckily I have a husband who is kind enough to tell me his stories at moments like these. I really appreciate his ability to draw out a story. He starts out slowly, and gets slower. He ends up at such a leisurely pace that I get completely distracted from my work-a-day concerns simply wondering what he’ll say next, when he’ll say it, or if he’s just fallen asleep.

It’s not just the slowness of the stories that do the trick, either, it’s also the content. He’s the master of the boring relaxing, abstract, science-fictiony story with exactly one idea. He’s seriously considering starting a blog for his stories which he’d call `Stories that put my wife to sleep’. I honestly think it would work great for lots of people- a public service, really, especially if he made very very very boring podcasts.

It’s efficient too, he’s mentioned to me that he’s told me the same story sometimes 5 or more times but I can never last through to the point of understanding the plot, and it always seems new. I never know what’s going to happen next, if anything.

My favorite story, which I have probably heard 17 times, is the story of whether clouds can think. It’s unresolved, the answer, but it’s wonderful to imagine, very slowly, the decisions a cloud could make, things like very slight changes in its luminosity or which winds to take rides on or how high to fly.

Categories: musing

The Great Wealth Transfer, late 1900′s to early 2000′s (part 1)

When historians write about this era of U.S. history, how will it be described? I have a guess: “the Great Wealth Transfer” from the middle class to the wealthy. Let me explain why I say this.

There are lots of different parts to this story, but today I’ll concentrate on the housing wealth transfer.

We all know there was a housing bubble, that millions of people took out mortgages on dubious terms for houses that were already overpriced but that they were each counting on to go even higher. The way this was sold at the time, and even today is described, was as “home ownership for an expanded middle class.” But as Sue Waters from the Alt Banking group pointed out to me, these people didn’t get home ownership, they got debt ownership.

I know, it sounds a bit strange, but that’s just it, the language is important.

When people say they own their home, do they mean they don’t have a mortgage? Probably not. They probably mean they’re in the process of paying a mortgage, but they conflate the two concepts because they assume they will pay off the mortgage eventually. But in the meantime they don’t actually own their home, the bank does. The extent to which this is an important distinction is the extent to which it is likely that they will be able to pay off that mortgage some day in the future.

When you’ve stopped conflating home ownership with debt ownership, and you look back at the housing bubble, it’s a different picture. How many new home owners were there really? It’s not an easy question to answer, but it’s clear that there were way fewer than we thought- many of the mortgages had terms that were clearly very optimistically written. Nobody really thought it would work out well, but the system just kept growing and the optimism kept getting less reasonable. Meanwhile, bankers got extremely rich.

How did this all happen?

This is answered by asking an even larger question: how does the financial system make money? I claim a large part of it is by finding a group of people that are relatively naive and pushing risk to them. For example, the dot com bubble was created by getting normal people to invest in dumb new-fangled things – they were the pawns.

For the housing bubble, it was a bit more devious. One one end, systemic risk was pushed (into the future) to the taxpayers themselves through bailouts of the banks, AIG, Fannie, and Freddie. In other words, taxpayers didn’t know it at the time but they were getting more and more on the hook for losses as the banks and financial system took larger and larger bets on the direction of the housing market.

At the same time and at the other end of the mortgage contracts, the so-called “homeowners” who took on mortgages were the fall guys. As a whole, they signed up for debt (and the right to claim themselves as homeowners) and in return are now hopelessly underwater. The Obama administration, just like the Bush administration before it, is urging these people to do what they are morally compelled to do, namely pay off their unmanageable debts, while changing the laws for the big banks so they can get away with whatever they need to in order to ignore their outrageous undercapitalization.

To sum it up: we found a very large pool of people too naive to understand the risk they were taking on, we signed them up for that risk while painting them a beautiful picture of the American dream, and now we get to accuse them of being immoral for not being able to hold up their end of the contract. It was an amazing swindle.

To be continued in part 2, in which many of the same players who brokered the mortgages to the “new homeowners” are now buying up their foreclosed homes and renting them back.

Categories: finance

Get overpaid so people will listen to you

Have you read the recent article in the New York Times about how lower-status monkeys are less healthy and more stressed out than higher-status monkeys? Their gene expression actually responds to changes in social status. Does this resonate with your experiences with humans?

It does with me, and for us people I’d rephrase it this way: your concerns and ideas are given attention in direct relation to your status. Your stress levels rise as you realize your status is lower and your risks have grown.

Here are some examples from work. I’ve been disappointed to notice, time after time, that my ideas are considered important and innovative in direct proportion to how much they are paying me to have them. If I’m underpaid then nobody thinks I am all that smart; nevermind being a friggin’ volunteer (with some exceptions, but don’t stop me, I’m on a roll). This perversely makes me want to get overpaid just so I’ll get listened to.

Cuz why? Didn’t you ever notice that overpaid people’s ideas are about as good as anyone else’s but they are framed as pure brilliance? I have. It even works head-to-head: two people of different status come up with the same exact idea but the one who is more important was listened to and their idea championed. Oh yeah, I’ve seen it, and so have you (example: when I was at D.E. Shaw, we rated other people’s ideas with a “probability of success” in an effort to estimate their expected payouts; someone once showed me their idea, which was identical to one of Larry Summer’s ideas, but had come 2 years before and had scored about half as well. But my fried wasn’t an MD making $5 million per year so clearly his ideas weren’t as good!).

A similar thing happens with problems rather than ideas in a workplace. The worst examples of over-worked and under-appreciated situations clearly don’t happen at the top. For example, when I worked at MSCI, it seemed like the sales guys, who defined the top there, spent more time strutting around making sure each and every one of their efforts went appreciated than doing the actual efforts, whereas the lowly dev-ops guys, and the guys setting up the initial portfolios for the new clients, were treated as an afterthought, only noticed if something went wrong. They’d stay up all night fixing something, probably someone else’s mistake, and nobody would even thank them.

[It still seems so ironic that the most technical people there are also the least appreciated, since the product is essentially technical expertise. Or is it? Maybe I've got it wrong, and it's really about selling technical expertise in a package that makes people feel safe and pious. Maybe the black box we're selling doesn't even have to work.]

If you are thinking that everyone at MSCI is in finance and is thus overpaid and pampered, then you’ve got it wrong, it’s a brutal atmosphere, like much of finance. If you don’t believe me, read my friend Katya’s blog, Left with Balls, where she talks about the spell of Wall Street.

Taking one step back, this kind of thing strikes me as unfair and frustrating. The idea that the lowest-ranked also has to deal with ridiculous stress and chronic health problems does not jive with my inherent concept of justice. Although it does seem like a natural response to a system that’s already been created (as in, as a consequence of being frustrated because my ideas are ignored, I want to get overpaid to get listened to, so I’m joining in on the perverted game and furthering the system), it doesn’t seem like we’ve done a particularly good job setting up these systems.

For a country that putatively considers itself a democracy, we seem to have a tremendous amount of respect for a rat-race corporate hierarchy. Is that a contradiction? Or is the American dream actually to start a hierarchy and to sit at the top? Do other people identify with the guys on the bottom or the guy at the top? Or the guys in the middle clawing upwards?

Question: is it really impossible to listen to and evaluate ideas based on their merit? How about anonymous polling of  problems? It’s certainly technologically feasible, but we don’t do it.

Question: Is it really impossible to appreciate people who make things work behind the scenes? How about we ask people to sit with other people in entirely different departments in a rotation to witness what other people actually do? I really think that would help with the appreciation problem (but not if the technical people in your company are in India and the salesguys are in New York).

For the record, when I start a company I’ll do these things. Of course, I’ll be sitting up there at the top thinking what a great idea I had to do them.

Categories: rant

#OWS update: looking for UX help

April 14, 2012 Comments off

I’ve got three updates on Occupy, besides reminding people that the Alternative Banking Working Group meets every Sunday from 3-5pm at Columbia (room 1401 in the International Affairs Building at 118th and Amsterdam).

  1. has launched! This is a website set up by my friend David Sauvage, and it’s looking awesome and informative.
  2. The “find a Credit Union webapp” is looking for UX Designer help. I’ve written about this project before, but in a word we’re helping people figure out which credit unions they are eligible for, if any; the rules can get kind of tricky. We’ve got the basic ideas down but we’d love a thoughtful designer to come in, improve the user experience, and help create a appropriate Occupy look which also doesn’t scare away non-Occupy people.  We also have a development team from ThoughtWorks helping us out, but it would be very helpful to have a New York- based developer to maintain the knowledge. The eligibility rules based on address (but not necessarily on zipcode or borough) are particularly hard (or interesting, depending on how nerdy you are).
  3. Not a strictly Occupy issue but did you hear the Vermont Senate has voted to end Corporate Personhood (hat tip reader G. Jones)? Move to Amend has spearheaded this effort. I love their motto: End Corporate Rule, Legalize Democracy. Read about the Vermont vote here.
Categories: #OWS

Should we have a ratings agency for scientific theories?

Recently in my friend Peter Woit’s blog, he discussed the idea of establishing a ratings agency for physics. From his blog:

In this week’s Nature, Abraham Loeb, the chair of the Harvard astronomy department, has a column proposing the creation of a web-site that would act as a sort of “ratings agency”, implementing some mathematical model that would measure the health of various subfields of physics. This would provide young scientists with more objective information about what subfields are doing well and worth getting involved with, as opposed to those which are lingering on despite a lack of progress.

Abraham Loeb was proposing to describe the field of String Theory as a perfect example of a bubble. And it’s absolutely true that String Theory has provided finance with tons of brilliant young orphans who either got disillusioned with the field or simply couldn’t get a job after writing a Ph.D. or after a post-doc. It provides an extreme example of a mismatch between supply and demand.

Would a ratings agency for scientific theories help? I don’t think so.

The very basic reason, as Peter points out, is that it’s hard to evaluate scientific theories while they are unfolding. There are two underlying causes: first, people in a field are too invested to admit things aren’t working out, and second, by the nature of scientific research, things could not work out for some time but then eventually still work out. It’s not clear when to give up on a theory!

Ignoring those problems, imagine a “mathematical model” which tries to gauge the success of a field. What would the elemental quantities be that would signify success? Would it count the number of proven theorems? Crappy theorems are easy to prove. Would it count the the number of successful experiments? We could always take a successful experiment and change it ever so slightly to get another success. I can’t think of a quantitative way to measure a field that isn’t open for enormous manipulation (which would only happen if people actually cared about the ratings agency’s rating).

Of course the same might be said about financial ratings. It begs the question, why are ratings agencies useful at all?

In finance we have lots of people buying very similar products with very similar contracts. Sometimes these are even sold on exchanges and carry with them the exact same risk profiles. In such a situation it makes sense to assign someone to look into the underlying risks and report back to the community on how risky a product is.

I would claim that the situation is very different in science or math. People enter a field for all sorts of reasons, with all sorts of goals and situations. String Theory is an extreme case where it could be argued that it got such spin that a whole generation of physics students got sucked into the field by sheer momentum. Perhaps it would have been nice to have a trusted institution whose job it was to calm people down and point out the reality, but I’m not sure it would have helped that much with all the excitement, especially if there had been a model which counted theorems and such. People would just have said the model had never seen something this exciting.

Then there’s the issue of trusting the modeler. Right now ratings agencies have a terrible reputation because they are paid by the people they rate products for, and have been known to sell good ratings. I’m hoping we can do better in the future, but it’s hard (but not impossible!) to imagine gathering enough experts in finance to do it well and to have the product be trusted by the community.

What is the analogy for scientific theories? The problem with rating science is that, because of the depth of most fields, only the experts in the field themselves understand it well enough to even talk about it. So that problem of getting an informed and impartial view on the worthiness of a theory is super super hard, assuming it’s possible.

Finally, I’m not sure what the ratings agency would be in charge of warning people about. Even the financial ratings agencies don’t agree- some of them measure default risk and others measure expected loss through default, which can be two really different things (for example if you think the U.S. will technically default but will end up paying their debts).

In science, I guess you could try to measure the risk that “the theory won’t end up being useful” but it’s not even clear how you’d decide that even after the fact. Maybe you could forecast the number of jobs in the field for graduating Ph.D. students, and that would be helpful to grad students but would also not be the best metric of success for the field.

I’m not saying we shouldn’t have people talk about fields and whether fields are failing, because that’s hugely important. But I don’t think there’s a quantitative model there to be created that would help the conversation. Let’s start an open forum, or a wiki, with the goal of talking about the health of various fields of scientific endeavor and have a bunch of good questions about the field and people can each add their two cents.

Categories: finance, math

Get every new post delivered to your Inbox.

Join 974 other followers