Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Tuesday, August 17, 2010

How Pascal's Wager Underpins Modern Consumerism

Pascal's Wager, I believe, is based on three principles, which to Pascal seemed logical, but I do not accept. They are

- Black and white choice
- Not possible to know the truth
- Self interest dictates our decision

Pascal's Wager was just possibly a tongue in cheek comment. He was famous for using satire and ridicule in his writing. But on the other hand, he was a convert to Christianity, and was reputed to be quite an angry and morose person, so... probably he meant it.

Pascal used his idea of the wager to convince people that they should believe in God. Ironically, it does not argue that God exists, just that you would be better off acting as though God exists. So he was really telling you to pretend you believe in God, even if you really don't. Or at least start by pretending you believe in God and one day maybe you will genuinely believe in God.

Pascal was interested in gambling, and he invented a primitive roulette wheel. Got into a lot of arguments about whether a vacuum could exist. He opposed the "Rationalism" argued by Rene Descartes. i.e. "any view appealing to reason as a source of knowledge or justification". In politics, this rationalism has led to something between "internationalism" and "realism".

I am beginning to remember why I stayed away from Philosophy courses at University. All these philosophical offshoots seem to be a jumble of ideas that do not follow logically. For example, I might disagree with Pascal's conclusion about the belief in God, and I am more inclined to Rationalism instead. But I don't really see that Rationalism is the opposite of Pascal's Wager, in that Pascal was simply using rational thought about belief in God. In politics, Rationalism apparently leads us to two views, Internationalism, (that I believe in) and Political Realism (which to me seem like just another offshoot of Pascal's Wager).

Internationalism holds that all nations of the Earth are more or less equal and should cooperate rather than try to dominate each other, Political Realism holds that national interest should take precedence over ideology.

Pascal wrote about his wager in the 1600's, and his idea is even more important today as the philosophical underpinning of all spam, lotteries, all propaganda, all consumer marketing, the "invisible hand of the free market" and all of George W. Bush's decisions.

Let's take spam for an example of Pascal's wager, from the point of view of the sucker who falls for it. You receive an email, let's say it is promising you a larger something. First, your mind is focused on a simple choice, which is limited to a binary on/off decision: to have a small one or a large one. Second, you have no way of knowing the truth of any of this: Can this product help you or not? Do you actually have a small one or not? You do not know. And third, your self interest is to be happy, and you are being told that happiness depends on answering this email. Like Pascal's wager about God, you are told you have nothing to lose by answering (money back guarantee), and everything to gain. If everybody was rational, no spam would ever get any replies. But if some people make decisions in the framework of Pascal's Wager, some people will reply.

The converse of Pascal's wager would be something like this.

- There are grey areas in any choice, and other alternatives to the two being presented.
- Ultimate truth may not be possible, but seeking the truth is a moral obligation.
- Self interest should not take precedence over truth.

If everyone made decisions according to the converse of Pascal's Wager, not only would it mean and end to spam, but possibly an end to free enterprise and consumerism as well. But of course, it is one thing to talk about denying self interest, and quite something else to do it.

Picture: That's a modern roulette wheel. Mathematically, you would do better at a roulette wheel than with a lottery ticket. (although in both the odds are that you lose)

Tuesday, June 1, 2010

There are Limits to Human Intelligence

"We have met the enemy and he is us" has got to be one of my favourite quotes of all time, by cartoonist Walt Kelly who drew the cartoon Pogo.

The meaning is that we are our own worst enemy, or that we do things that ultimately hurt ourselves. It's not like we set out to be our own worst enemy, we probably get there by degrees and through inattention or pure stupidity.

So here is an article "Human Failings Led to Oil Disaster" about how the oil spill in the Gulf of Mexico was likely caused by human error. And not just one error, but a series of errors that could be referred to as systemic human failure.

In the article is an analysis of typical failures, and mention is made of other large scale human failings, the Financial Meltdown of 2008, and the Three Mile Island nuclear accident. It's interesting that while one individual human error is hard to predict, it seems like large scale systemic human failure might be quite predictable.
"This isn’t just about oil. It’s a challenge for people living in an imponderably complex technical society."

New York Times
We had our own massive failure in Ontario back in 1997. Actually, like all massive human failures it started before 1997, but the whistle was blown and the plug was pulled in August 1997. Ontario Hydro, after a run of embarrassing accidents, and finding drug paraphernalia in the control rooms of their nuclear reactors, had called for an independent assessment of the situation, and was persuaded to shut down most of the nuclear power system indefinitely. The verdict, reduced to it's simplest form, was that normal Canadians could not be expected to run something as complicated and dangerous as a nuclear generating system safely.

http://www.ccnr.org/nucaware_hydroletter.html

http://www.encyclopediecanadienne.ca/index.cfm?PgNm=TCE&Params=M1ARTM0011388

The shutdown was huge, and cost Ontario taxpayers billions of dollars, and was more or less the end of nuclear power in Canada.

The cartoon series called "The Simpson's" was based on and around the operation of a nuclear power plant. Homer, pictured above, is the main character, and one of the all time stupidest characters to ever lead a normal life in a cartoon, was the employee in charge of the nuclear reactor's control panel. And for all his stupidity, Homer's behaviour was not really outside the bounds of what you might expect to see in normal people you see in the street, not to mention neighbours, friends, even relatives.

I think there are many more examples of these large scale mental breakdowns, but how about this small one. Back in 1961, people drove around without seatbelts or airbags, drunk out of their minds, with the kids rolling around loose in the back of the car. Today, drivers are sober (more often than not), the babies are in their restraining harnesses, and cars are huge "safe" SUV's with air bags and anti-lock brakes. But now the drivers are reading the newspaper or text messaging at 100 km/hr. Although on a personal scale, it proves that the saying from Pogo "We have met the enemy and he is us." is still as true as ever. As we develop ever more complex systems, the most serious problem to face mankind is plain old lack of brainpower.

Sunday, May 9, 2010

Zen and the Art of Traffic Gridlock

Most people think they know what gridlock is, but I want to go over it again because it happens to highlight one of the most important principles in civilization, and if we could solve gridlock, we could solve any human problem.

Lets start with the basics. In a crowded city, such as New York which happens to be laid out in a grid, traffic will occasionally come to a complete halt in a feedback chain reaction. Imagine a city block which has an intersection at each corner, when traffic is very heavy. Now imagine what happens at one of those intersections when the light turns red, but some cars are stuck in the intersection and cannot move forward or back. Now the cars with a green light cannot move either, because of the cars in the middle of the intersection blocking their progress. Immediately, more cars become blocked behind them, and if the line stretches back to their previous intersection, then that one also becomes blocked the same way, and the chain reaction will now occur in all four corners of the block. And with one city block completely stuck, neighbouring blocks will also get stuck the same way. That is what we call gridlock.

In principal, gridlock can happen in places other than a grid, I have seen pictures of gridlock even in a traffic roundabout, where a line of buses in the circle may block and exit to the roundabout, when they get stopped by slow traffic, and the feedback loop quickly travels back around the entire roundabout to lock it down solidly. These traffic jams are apparently very hard to break up.

The root cause of gridlock comes down to human nature. Each independent driver is trying to get through the traffic as quickly as possible. So they may make a decision which superficially may help them get a head a little further. But their decision blocks another driver, and the feedback from that eventually blocks the entire traffic flow for the whole city. The psychology of this is very interesting, because even if you explain to each driver how to act in order to ensure the free movement of traffic, they will continue to behave in such a way as to move themselves ahead of the rest, which gridlocks the traffic, where they themselves will be stuck for hours.

So if I may define the gridlock mentality as one where a person will make some small action to serve themselves. seemingly at the expense of only a few others, but the the effect on the others multiplies around in such a way that it brings down the whole system, including the original perpetrator.

The solution for gridlock is for drivers to not move ahead if doing so will block the cross flow of traffic. After all, the cross flow is not really competing with you. Those divers are not trying to get ahead of you, they are just going their own way, but need to cross your path to get there. You must not enter an intersection even on a green light, if there is no place for you on the other side. But it is hard to get everyone to understand this is the problem. In other words, moving ahead is not always wise if you want to keep moving ahead.

Politics, economics, and war also suffer from gridlock mentality. This is the kind of "self interest" that gives a temporary advantage to one person while starting the chain reaction that brings down the whole system for everyone. Think of the big banks, that get spooked by bad economic news, and withdraw their loans to protect their own interests, which shuts down those borrowers' businesses, which in turn lay off employees, who in turn withdraw their money from the banks, thus driving the banks out of business anyway. The circular chain reaction always comes back to the starting and then spreads further.

This gridlock mentality applies to a military occupation, where soldiers are torturing and killing innocent civilians to get information, the negative effect of which multiplies to more civilians turning against the occupiers until they finally have to give up. A small advantage one minute, torturing and killing happily to "stay safe". But the advantage in temporary security turns millions of people against the occupiers, and the war is lost. Terrorists are always trying to find ways to enhance the "gridlock" effect against the occupying forces.

The temptation to gridlock mentality is the fatal flaw of pure free market capitalism, just as lack of incentive is the fatal flaw of communism.

Two thousand years ago, a man appeared on Earth with the solution to gridlock. "Do unto others as you would have them do unto you". "love your neighbour and your enemy" and "let he who is without sin cast the first stone." Instead of listening to him, he was crucified by the very people who two thousand years later would invent gridlock and laissez faire capitalism.

One day, maybe all people will understand how their own innocent (but self serving) actions sometimes start a chain reaction that comes back to bite them in the rear end.

Pictures: A diagram of gridlock from Wikipedia, and a gridlocked traffic circle.