Sunday, November 18, 2018

The non-capitalistic Economist


A recent article in the Economist seems to imply that capitalism is responsible for industry concentration and associated loss in societal utility. Treating symptoms never cured diseases but perhaps economists are not aware of this phenomenon. There have not been free markets and free trade in any capitalistic societies - just the opposite. And existing laws are not sufficient to aggressively prosecute monopolies, a necessary condition. More recently, ignorant policy makers have been conducting "trade wars," and protecting their bunkers with "tall and strong," walls. The Economist has to understand that these are not ideas that emerged from capitalism.

It is not capitalism that is responsible for the ills witnessed in society. Ignorant policy makers who do not understand economics and the cunning ones, who have figured out how to take asymmetric risks - as they keep the gains and get bailed out when they lose are the cause. These two cohorts of people, likely less than 0.01% of society have been responsible for the apparent failure of the "free market system." The blame has to go to lack of consistent implementation of laws. Capitalism requires that everybody is treated the same, those who travel by private jets and those in the back of the bus. Capitalism requires incompetence to fail and any policy prescription that simply bails out failed gamblers is fraught with danger.

It is not capitalism that is failing but the semblance of the idea without consistent implementation. As the pendulum swings to the left, aided by an astonishing lack of understanding of the world on the right, it is likely we are in for motion sickness for a long time. It is important that economists develop a bit of right brain, for without it, they will continue to make the wrong conclusions.

(1) https://www.economist.com/leaders/2018/11/15/the-next-capitalist-revolution

Friday, November 9, 2018

Downstairs, upstairs

Recent finding (1) that the owners of the human gut may already have found a residence in the brain further reinforces the potency of the most successful biological entity in the universe. It has been known that the bacteria in the gut use nerve endings to influence human decisions and now they are placed directly in situ. This has implications for the diagnoses and treatment of a plethora of neurological diseases.

Most recently, it has been speculated that humans moving from one location to another get a completely new and custom microbiome in a matter of days. Now that it is possible that they can move across the "impenetrable," blood brain barrier, it portends a world returning to its original state in due course. They appear to have filled every nook and corner of life and they can make their hosts eat, die and disintegrate at will. But their presence in the brain of the most complex entity on Earth indicates that the design is nearing completion.

As we seek extra-terrestrials in nearby rock, ice and gas balls, it is important to remember that they may have arrived early and already conquered the blue planet.

https://www.sciencemag.org/news/2018/11/do-gut-bacteria-make-second-home-our-brains


Sunday, November 4, 2018

RIP, Kepler

The space telescope, Kepler, seems to have run out of fuel. Finding the existence of exo-planets has been interesting. On the other hand, statistics would have informed the physicists of the same. The more important question is, so what? Did anybody really think that the rock and water in the most uninteresting corner of the Milky Way is unique?. Granted, most people in the world think so but $700 million may be too high to prove irrationality exists.

Exo-planets have tickled the fantasy of the common woman and set the careers of some physicists on an exponential track. They look for transits and lately that has yielded the discovery of an exo-planet's moon. As academics pump out papers, they have to really come back to the fundamental question of so what?. Did anybody really think there was no moon out there for an exo-planet? I suspect some do but if you don't like religion, it is a very irrational expectation. The big brains at the space agency had drawn a line on the sand a few years ago - they will absolutely find ET by 2020. There are less than 1000 days left. But more importantly, does anybody think there is no biological activity outside the most irrelevant corner of a the most uninteresting galaxy?

A species that shows no redeeming qualities, is spending billions of $ to prove the obvious. Science needs direction - perhaps from philosophy. And, engineers and doctors have to understand that ideas are non-prescriptive.






Friday, November 2, 2018

Schrödinger's Bacterium

Biological entanglement (2) has been showing up in many places (1). Although conceptual without hard proof, it is symptomatic of the fact that there is something wrong with our understanding of the universe. There is ample evidence that the human brain represents a quantum field (3). And if so, using it as a conventional computer with logical processing is not optimum. It is as if humans strive to be rational in a universe without rationality. That behavior is unambiguously irrational.

Is rationality feasible? Observations in physics and financial markets provide tantalizing evidence that it is unlikely. However, humans with hard tactical horizons attempt to be rational as that appears to optimize utility. But does it? An unbiased optimization of a human being would point to early termination as that would minimize aggregate pain. But unsubstantiated future expectations of benefits flow - really speculation - keep them going beyond what could be best. This optimization problem is increasingly difficult to solve. As technology advances, it is possible that humans can arrest pain and replicate themselves with downloaded memory.

 In the context of entanglement, however, these prescriptive ideas do not work. If macro objects can entangle, they could free themselves from the limitation of the speed of light and transmit information across vast swaths of space time. Apparently, there is nothing that prevents it. If so, humans have been focusing on wrong technologies and ideas. The real problem to solve is entanglement with another that allows instant transfer of information. In a limited context, the 8 billion humans that team the planet, could be entangled, allowing better ideas and policies to be transmitted and received instantly.

If humans are entangled, they could fundamentally change the slope of progress. Currently, this is defined by a few, who do not have much understanding of anything. It is a possible future state in which your thoughts are entangled with the rest and in a chamber of progressive reinforcement, you could only go further. This is an apt future state in which humans move from determinism into probabilistic expectations.

Entangle with one another and you could go further.


(1) https://www.scientificamerican.com/article/schroedingers-bacterium-could-be-a-quantum-biology-milestone/
(2) http://www.scientificsense.com/2018/07/biological-entanglement.html
(3) https://bigthink.com/ideafeed/does-the-mind-play-dice-with-reason

Wednesday, October 31, 2018

Discontinuity

A world, largely governed by people from the last generation, is suffering from discontinuities in policy heuristics. A recent conversation (1) attempts to portray that media multitasking is a bad. What the contemporary researchers don't seem to understand is that the world has indeed changed in a step function fashion and anybody on the lower tier is at a distinct disadvantage to see beyond the horizon. Education systems that relied on rote memorization in Asia have already suffered a major setback as in the future world, it is likely that memory would be a commodity and the ability to memorize will carry no premium.

Memory has gotten humans far. The water hole and the lion's den were good things to remember. Till very recently, perhaps just a couple of decades, the ability to memorize had a huge premium. As such, educational reward systems are largely based on rote memorization. "Standardized tests," the gold standard for measuring potential, are largely based on the student's ability to memorize. Early metrics based on capabilities to memorize and traditional test scores seem to have no correlation with future success. For the emerging generation, success will be largely based on their ability to think and not memorize. In fact, it is likely that memorization capabilities will hinder the individual's creativity and as technology advances, driving the marginal cost of memory to zero, this will be the last thing humans would want to do.

It is a regime shift. The people in power do not have any idea what the next generation needs and they are making policies based on century old heuristics. For the emerging generation, this is the time to rise and take control of your own destiny. An ailing planet, heavily bombarded by extra-solar projectiles, is sick. As the biodiversity recedes in an environment driven by tactical utility maximization and materialism, we are fast approaching a binary outcome.

Go vote - it is likely too late but then, you could give it another try.


(1) https://news.stanford.edu/2018/10/25/decade-data-reveals-heavy-multitaskers-reduced-memory-psychologist-says/

Saturday, October 27, 2018

Dreamers

From inception, humans have been prone to dreaming, with and without full control of their faculties. Nightmares may have awakened them from short slumbers with distinct survival benefits in the African Savannah. Later, they dreamed of places beyond the horizon and kept walking to reach them. Over many generations, the journey took them to North Africa and into the Middle East. Later they will embark on separate one way trips to South Asia and China. Their dreams kept them going as if the world were flat and over the ice bridge into North America.

Humans would have been distinctly inferior without the ability of dreaming. Dreams allowed them to conceptualize without the constraints of a boring and agonizing real life. In dreams, they could fly, do magic and kill mighty beasts with their own weak hands. In dreams, they could challenge the village elder, run away from the clan and form her own. In dreams, they could create concoctions that could alleviate pain, enhance their brains and let them run faster than a Cheetah.

Much later, they will segregate themselves into cohorts of dreamers and non-dreamers. The later variety is laser focused on few objectives and their goals are well defined in a few metrics. For them, dreams are impractical and inefficient. They make the world go around but it appears that they never dreamed of reasons of why it is so. And the former, with their heads in the cloud, keep dreaming with no apparent tactical utility. They move, dance, smile and ask questions. They dream of saving the world, Dolphins and Whales. They engage in such irrational acts as a start-up and later, crash and burn. They attempt to solve the unsolvable, travel to the unknown, die young and generally keep the population in check.

As the world micro-segments into countries, religions, languages and hierarchy, at the heart of it, there appears to be only two - dreamers and non-dreamers.


Tuesday, October 23, 2018

Wealth destroyers

Black boxes, Artificial Intelligence and FinTech - likely a deadly combination that is going to destroy a lot of wealth. We have seen this before - fresh graduates from business schools coupled with mathematicians and physicists, descending on Wall Street to make the world go around in the opposite direction. As they appear on TV after hours - mad and fast - to confuse and pillage small money, ascertaining where every stock is going and even the market, there are 20 million fat fingers across the world chasing the illusion. 

The theory underlying financial markets has been robust in spite of the recent confusion about "behavioral economics." New information moves markets and unless one has insider information, it is impossible to create alpha from fundamental or technical analyses. A lot of careers are made and destroyed on this false idea.  For some of us, theory still matters and it can be shown without any empirical uncertainty that alpha is a white elephant. If an adviser is demonstrating consistent alpha, one has to wonder where the information is coming from. The SEC has gotten a lot more sophisticated lately but a simple heuristic of alpha consistency will tell you that there is something wrong.

Business schools need to rethink their focus. Some even have classes in "trading," and that idea is utterly inconsistent with everything we know. In the presence of uncertainty, it is easy to make returns and lose them quickly. In spite of all the academic literature behind this, not many involved in "money management," really talk about alpha (only returns). Granted, a single factor model is woefully inadequate to measure risk but not considering risk in your returns, like the TV moguls do, is a prescription for disaster. The fact that conventional finance education and even the high-end certifications do not prepare the professionals adequately is symptomatic of education chasing trends and not sticking with what is known.

The financial industry appears to be dominated by engineers and accountants, the former unaware of economics and the later unaware of the fact that we have computers now to count money. Adding mathematicians and physicists on top of this already deadly combination can only result in tears. 

Friday, October 19, 2018

Oumuamua

Recent transit of cigar shaped Oumuamua that raised hopes of galactic panspermia (1) is a double edged sword. Hitching rides on stable objects over millennia appears plausible for robust life but the implications of such transference could be catastrophic for the blue planet. It is not the green men and women we have to worry about but deadly single cell organisms from another galaxy. If the space agency ever stops taking shots at everything near in an effort to prove life exists elsewhere, they may have enough resources to explore the extra-solar bodies that seem to frequent this quiet corner of the Milky way. There they may indeed find life but possibly of a different kind. The half a dozen plausible building blocks including Carbon and Silicon narrow the shape of life and that should allow profitable exploration.

Science may need to borrow from philosophy as it attempts to prove extra-terrestrial life. The fundamental question remains to be what qualifies as life. Even in the narrow context of Earth, we find entities that show dual properties of life and non-life, as we define it. It appears to indicate that life is a spectrum with entities spanning the full scope. The closer to non-life, the more robust they appear, possibly pointing to efficient panspermia of materials that are close to life but have not yet crossed the threshold. So, near life materials could be freeze-dried and transported over time and space and they could show biological activity with conditions that allow such transformation. The heuristics used by the agency to find life, such as the presence of water, are archaic and it is time to step out of the rooms without windows, surrounded by steel and electronics, and think clearly. It is likely that the most dominant life form in the universe is something that can easily transcend the life/non-life threshold at will and that provides infinite possibilities for spreading themselves. The ability of an organism to freeze-dry itself should be considered dominant for transference and the environment in the blue planet is not conducive to enhancing robustness.

A sitting duck in the meteor shooting gallery, the Earth should be counting down to the unavoidable catastrophic event. If that happens, it does not look like there is anything that could hitch a long ride to the next spot.


(1) http://www.sciencemag.org/news/2018/10/cometlike-objects-could-be-spreading-life-star-star-throughout-milky-way