Wednesday, May 28, 2014

The value of natural assets

A recent paper in the Journal of the Association of Environmental and Resource Economists highlights some issues most finance professionals either do not understand or tend to forget. However, it falls short of describing how value emanates from a basket of interacting options on the underlying tangible stock of natural assets. Such frameworks have been available for decades, but business schools and finance professional tend to focus on how to better count today’s money rather than value tomorrow’s options. Machines are fully capable of counting money and it is unclear why industries such as finance and accounting employ so many people with inferior skills compared to computers.

However, “the strategic thinking” exhibited in the paper should also be approached with caution. Ever since humans arrived on the planet, they have been worrying about “running out of” natural resources. This is understandable from an accounting sense for non-renewables and from a management sense for renewables, the latter if optimized with well understood portfolio techniques provide growing and prosperous paths to the future. Such a thinking, however, is based on static assumptions on technology and human ingenuity. What environmental economists (and non-economists) do not fully appreciate is that technology discontinuities could substantially remove the concerns of previous regimes within very short time-spans. So, although it is certainly important to manage the stock of fish, forests, ground-water and other such resources, it is much more important to effect a leap in technology that could make such concerns go away. Current education systems provide skills heavily focused on the present but not the future. This is why the “singularity,” feared (or hoped for) by the “intelligentsia” may never arrive.

Although the paper does not address this, from a policy perspective, it is also important to prioritize – For example, fish, forest and ground-water could become the least of our concerns if an asteroid of measurable size heads our way. Although self-driving cars and phones that glow under water are laudable goals for the current technology leaders, they should realize that humans are imprisoned on a small planet in the midst of an unbelievable amount of space debris. It is a miracle that we have the opportunity to think about managing our forests better.

Tuesday, May 27, 2014

The data problem

It appears that the “data age” has arrived. Aided by century old Mathematics and latest technologies for the collection of large amounts of data, nearly everybody seems to be excited about the insights that are going to be revealed. Will data prove the existence of God? Will data tell us precisely when each of us will depart from this Earth?  Will data finally usher in the long feared “singularity?” Are data enough to create insights and make better decisions?

Economists and scientists have a checkered history in the use of data to prove what they believe. A hypothesis, once stated and believed, can always be proven with data. The man from France who made a strong case for wealth redistribution may have to now relook at the raw materials he used to build the leaning edifice. The listeners to the Satellite echoes and the finders of the ocean pings, who knew precisely where the metal bird fell and sank may now have to relook at the data they collected and analyzed. Analyzing data with preconceived expectations have proven to be dangerous in many fields – Medicine, Economics and High Energy Physics, included. Data have helped many careers and it has killed many others.

Data are not enough – Common-sense and logic are still important.

Friday, May 23, 2014

Reaching Type II

Over the ages, many have wondered if humans could transform into a Type II society. Different definitions exist for Type II society, one humans could aspire to, most of which are related to technological capabilities to harness and use energy. Although this forms the foundation of measurement, a more holistic approach will be to combine such metrics with the characteristics that are likely in such as civilization.

In the status-quo society, humans are such poor users of available energy, most waste time thinking about sustainable population rates and running out of fossil fuels and minerals. The most popular worry of humanity today – global warming – would be such a trivial matter in a Type II society with zero cost energy. With a nice example of controlled fusion in close quarters, the Sun, which produces many times more than what is currently consumed if humans could harness what reaches the surface through highly inefficient current technologies, it is ironic that humans have not progressed further on fusion.

One characteristic of type II societies will be a dearth of tactical issues – problems that consume inferior societies, never able to solve them strategically. Such issues include, in addition to directly energy related problems, other attributes such as death, taxes, wealth, ego, pain and all segmentation schemes – such as class, country, race, region, religion and physical characteristics. There will not be any needs in a Type II society – such as food, health and information – with zero cost energy comprehensively providing food on demand, the cure for death making health irrelevant and all information permeating through every thinking cell. In Type II societies, with aspirations to reach Type III in the future, biological systems may simply reduce to thinking machines, with little utility for any other noise. If the status-quo Mathematics is the right way to think about it, then, all thinking cells have to connect in a massive network able to self propel to the next level of imagination.

To assess if a Type I society such as humanity is showing promising signs of moving toward Type II, one may measure a percentage of the population who could imagine such an outcome. By any measure, humanity appears doomed as most of the 7 billion appear locked in their own little boxes and an embarrassingly high percentage still looking to satisfy basic needs. The rest spend most of their time worrying about death, taxes, ego, pain and segmentation as if these are the most important issues.

Tactics weigh down on humanity and it seems highly unlikely they could rise above it.

Tuesday, May 20, 2014

The elite racists

Racism has been in the air – some utterly stupid and others less so – some allowed themselves to be taped and others less so, some very rich and others less so, but most sharing the same characteristics. Racism is not about the words you utter but the actions you take.

I have seen racists before – brain surgeons, technologists and graduates of IV leagues who went down to South America to “study cultures.” They have been explicitly racists but it did not move a single muscle in the beast’s infrastructure, for it was expected and accepted. Graduates of the elite schools and rejects of the elite consulting firms, for they were not corrupt enough to land in jail – racism was not enough for them to rise to the top. They practiced racism all their lives but still, they could not become the one behind the white masks. They shunned anything beneath them as they portray – schools, consulting firms, investment banks – for if you are not from the one – gold coated and corrupt, you could not be accepted to the country club.

Racism, a highly sophisticated notion, is everywhere – not just in audio tapes and it is practiced by the best and the brightest of the world.

Saturday, May 17, 2014

Arrested progress

As the world’s largest democracy breaks tradition from last name based idiocy, it has significant obstacles in front of it. Often high on pride but less to show for it, the country has been put on a back burner by its compassionate leaders who followed failed systems of the East, driving a population of over a billion to near desperation for long. Socialism coupled with corruption, is a potent cocktail that poisoned an entire society while a few erected 50 story homes at the heart of pain and tribulation. What could be more ironic than a country driven to the highest segregation of wealth by its “socialistic” leaders.

Now, it apparently breaks away from its secular roots, a step backward in time, but consistent with its tradition of paranoia bred from constant inundation of foreign invasion for centuries. A society that is arranged by class, neatly dimensioned in every conceivable direction – religion, caste, color, language and physical proportion – has elevated some who have preferences for religion, a concept that even modern societies find difficult to pull away from. With Gods aplenty in every slice of society even if nearly a third go to bed hungry, it has remained an enigma for anybody who is interested in societies.

Will the next leader rise to the present and pull the country out of its torturous past? It is a long shot.

Wednesday, May 14, 2014

Quantum consciousness

A recent paper from the University of Auckland claims, “a potential mechanism for the conscious brain to anticipate impending opportunities and threats to survival through massively parallel weak quantum measurement (MPWQM) induced by the combined effects of edge of chaos sensitivity and phase coherence sampling of brain states. It concludes that the underpinnings of this process emerged in single-celled eucaryotes in association with (a) excitability-induced sensitivity to electro-chemical perturbations in the milieu as an anticipatory sense organ and (b) cell-to-cell signaling necessary for critical phases in the life cycle.”

Although the paper is weak on evidence, it does open an interesting avenue for research. The coordinated hypothesis of evolutionary, biological and physical basis of consciousness may remain untestable but it is a satisfying thought experiment, at the very least. Those who live, may be assigning too much value to life and to consciousness but consciousness, one has to admit, has very nice properties to it. And, if it does merge into anticipation with such forecasts emanating from electro-chemical perturbations and cell-to-cell signaling at the fundamental level, it does make it more interesting to think about. More importantly, it may open new avenues to study societal consciousness, in higher order species. The complexity of the organism appears to be inversely correlated to societal consciousness with single cell organisms exhibiting highest competence. Massively parallel systems seem to require consistency at the elemental level to induce and sustain societal consciousness and this may be a subtle sign that if quantum effects are at play, they are unlikely to transfer to complex, non-uniform and non-modular systems.

Extrapolating from stable and uniform networked systems to complex organisms may be a mistake. However, it is, indeed, a good thought experiment.

Saturday, May 10, 2014

Cosmic blunder

Recent findings from Stanford University and the University of Chicago seem to confirm the “inflation theory.” Conformists are not deterred by the fact that the “signal” is much stronger than what would be forecasted by the theorists. Yet again, we have the classic case of “believe and prove,” and if the proof is a bit stronger, that is for the best. Institutions of higher learning should have higher standards - papers and the ever anticipated Nobel prizes cannot be the reason.

Cosmic inflation has fascinated many – academic and otherwise. Most students know that their education will be less valuable if they are allowed to “plug” something into an equation, just to make it work. But not for the best physicists of the day – if the data show that one drove from Chicago to Dallas in 6 hours, the “only explanation” has to be that she “inflated” through Southern Illinois, for the concept of time, space and the speed of the car are absolute. How is this any different from religious beliefs who academics tend to scorn. Why is it so difficult to believe that Christ simply rose from the cave and would return in the future. Is that belief any different from “cosmic inflation,” that is now proven albeit the effect is a bit “stronger than predicted.”

Physics is declining to a level comparable to religion. A hypothesis, once stated, will be proven with certainty – those still holding out for uncertainty, do it at their own peril. No Nobel prizes to follow.

Thursday, May 8, 2014


Recent research from McGill seems to prove the opposite to conventional wisdom – free radicals or oxidants – increase longevity, casting a long and dark shadow over the anti-oxidant industry. This is further proof that medical research is progressing backward looking to avoid incremental harm while missing out on substantial benefits. Humans, trained to see and analyze trees as a species, often miss the forest.

Biological systems present the ultimate tease to the shallow human brain, steeped in deterministic and engineering know-how – an unavoidable outcome of constant optimization in the presence of clear and simple objective functions. Sunrise signaled the beginning of the day and they knew they had less than ten hours to hunt, collect and compact within a territory that is well marked. They will start again the next if the nocturnal beings do not invade the cave. They could do this for over five thousand times, if they avoid strong animals and stronger plant toxins in their progress to certain  and unavoidable destiny. Stupidity and ego would force them to overshoot what was attainable, shrinking them to less than a few thousand in the narrow part of the bottleneck.

Humans were never equipped with the skills to understand themselves. They comprise systems of such non-linearity, their engineering brains never had any hope of discerning themselves. It is ironic that the ultimate knowledge that will fail the humans is understanding themselves.

Friday, May 2, 2014

The economics of a disaster

Ever since the metal tube vanished off the Asian skies, there has been a flurry of activities. The talking heads on the cable news network – some living in flight simulators for months, some parading an impressive array of “experts,” who repeat a few lines less adeptly than trained parrots, some worrying about black holes and others the lack of use of psychics in the search process, wolfs, jackals and green screen men – all came out ahead. The equipment manufacturers and service providers of search – sporting blue shrimp, whale and other such aquatic beings – all came out ahead. Those went looking for the black box and heard pings, here, there and nowhere – all came out ahead. The captains, admirals, security officials and their handlers – all came out ahead. Environmentalists, buoyed by sea garbage, found yet another cause to cry and shout, came out ahead. Politicians and leaders of countries – able to look and act like a leader and win bonus points from next year’s electorate, came out ahead. The engineers and data scientists who cut, diced and killed data to find the “final resting place,” came out ahead.

Was it incompetence or just merely for the show?  Who lost? The families of those lost in sea and the taxpayers who funded a grand show for nothing.