Thinking about "Thinking, Fast and Slow" by Daniel Kahneman

After briefly outlining the trajectory of his research with Amos Tversky, Daniel Kahneman drops this little nugget in the introduction to Thinking, Fast and Slow:

By and large, ...the idea that our minds are susceptible to systematic errors is now generally accepted.

The irony is that few minds ever confront themselves in the critical ways necessary to fully come to terms with this. Most of us are simply unaware of the kinds of cognitive biases and unconscious processes that shape how and what we think. What is doubly ironic is that we are overly confident in our beliefs, impressions, and preferences for no good reason. We seldom ask ourselves why we think what we do. Nor do we often consider the possibility that the conclusions we reach may be wrong and/or based on unfounded assumptions or unreliable information:

The confidence that individuals have in their beliefs depends mostly on the quality of the story they can tell about what they see, even if they see little. We often fail to allow for the possibility that evidence that should be critical to our judgement is missing—what we see is all there is.

I can assert without hyperbole that the world would be a much better place if more people seriously contemplated how our thought processes are riddled with systematic errors, or that the idea of the self (that there is a coherent and essential "I" in all of us that is the conscious author of our thoughts) is an illusion. The notion that humans are fundamentally free and rational agents has been dramatically undermined by the findings of cognitive psychology. As a result, economics has undergone somewhat of a revolution in light of our new understand of human behaviour. Now, behavioural economics is all the rage!

On a more personal level, accepting that our brains come loaded with biases can lead to better and more productive relationships and interactions. One of the main reasons I seek to learn about all the ways our intuitive reasoning fails us is so that I may be better equipped when I tell someone they are wrong on the internet. I readily admit that sometimes I just cannot help myself... (Wait, who is the "I" and "myself" in this sentence? Why should they be at odds and struggling for control? Just who is in charge here, anyway?)

So after seeing many references to Kahneman's work in other books, and seeing him in an episode of BBC Horizon called "How You Really Make Decisions", I finally picked up a copy of Thinking, Fast and Slow a few weeks ago at a used book store (hardcover in great condition). Better late than never, I guess.

And if this isn't a nearly perfect description of what it's like to be a "confident idiot" in a complex world, then I don't know what is:

A remarkable aspect of your mental life is that you are rarely stumped. True, you occasionally face a question such as 17 x 24 = ? to which no answer comes immediately to mind, but these dumbfounded moments are rare. The normal state of your mind that you have intuitive feelings and opinions about almost everything that comes your way. You like or dislike people long before you know much about them; you trust or distrust strangers without knowing why; you feel that an enterprise is bound to succeed without analyzing it. Whether you state them or not, you often have answers to questions that you do not completely understand, relying on evidence that you can neither explain or defend.

"Creating Freedom: The Lottery Of Birth" (2013): Not All Documentaries Are Created Equal, colon A Rope Of Sand

 "Creating Freedom: The Lottery Of Birth" (2013)
Directed by Raoul Martinez & Joshua van Praag

I downloaded this documentary after IMDb'ing Steven Pinker to see if he was in anything I hadn't already seen. I found Creating Freedom: The Lottery of Birth and saw that Daniel Dennett was also interviewed for the film. Too bad they're only featured for about three or four minutes in the doc just to say that humans are tribal and have evolved to trust their parents (and by extension, authority figures in general). Beyond that, there's little reason to give this documentary your time. Curiously, and despite the title, the real implications of the lottery of birth is scarcely explored. No, we do not choose the time, place, and to whom we are born. But the documentary makes only a passing reference to this rather obvious (though seldom recognized) fact before moving on to how none of this would matter if we were only able to overcome those nefarious social systems put in place to prevent us from being truly free... WAKE UP SHEEPLE!

If you already know a little about the human animal through the writings of smart people, this does not offer much in the way of anything new. The narration is a little over the top, and vaguely conspiratorial at times, what with references to shadowy Elites meeting in secret boardrooms trying to figure out why people are so hard to control in a democracy. The interviews with prominent scientists and other authors serve only to create a tenuous link between what we can reasonably say about what humans are actually like and the filmmaker's outlandish narrative about how society is organized to limit your freedom (as though there is such an attainable thing in the first place).

If you're interested in the brain, read something like Steven Pinker's How The Mind Works, or even something with a narrower scope like Michael Gazzaniga's Who's In Charge?. For the psychology of the self, check out Bruce Hood's The Self Illusion. And to learn more about how and why individuals slip easily into roles they otherwise would never imagine they could (Milgram experiment, the Stanford Prison Experiment, Abu Ghraib, etc), pick up Philip Zimbardo's The Lucifer Effect. These are just a few titles off the top of my head, and could probably name a few more if I put in the effort, but these books are a good place for the uninitiated to start as any.

Currently Reading: "23 Things They Don't Tell You About Capitalism" by Ha-Joon Chang

I need only spend a few short minutes on the interwebs before I find another interesting book to add to my To Read list. Some how, some time ago, I stumbled upon some article on some website expressing something about how some people have become skeptical of free market capitalism in the wake of the recent financial crisis for some reason. This article mentioned the book 23 Things They Don't Tell You About Capitalism by Ha-Joon Chang. Predictably, I immediately opened up a new tab and went to Amazon to add the title to my wishlist. 

Continuing on the theme of economics, free market capitalism, and globalization, the time was right to pick up this book. So far, it has exceeded my expectations. Each myth-busting chapter is setup in such away that the assumptions and assertions of free market capitalists are succinctly (though not necessarily unfairly, in my opinion) presented, and then rather persuasively debunked using clear and engaging language and some real world examples.

The book deals with such neo-liberal ideological claims as:

• Running a company in the interest of increasing shareholder value incentivizes the company to perform well. (It doesn't, and it often results in short-term profit seeking measures that hurt a company's long term growth and lifespan.)
• Markets need to be free and they cannot be efficient and profitable where there is government interference. (There's no such thing as a 'free market', which is a primarily a political definition to begin with, and even the most liberal markets only appear that way because we take much of the 'ambient noise' of established rules for granted. This includes regulation surrounding environmental protection and child labour laws.)
• We live in a post-industrial age where manufacturing is relegated to less advanced economies such as China because there is simply less demand for manufactured goods in the West. (While jobs in manufacturing have certainly declined in places like the United States and Britain, this is mainly an artifact of greater productivity and the lower costs of manufacturing relative to the service industry, as well as outsourcing and other processes of de-industrialization.)

Perhaps my favourite example so far deals with the assumption that people are primarily motivated by self-interest and that social harmony and prosperity emerges from selfish individuals thinking only of themselves. These ideas are, at best, naive and misleading, and at worst they seek to bring out the worst in people. What motivates individuals is far more complex than objectivist Ayn Rand fanboys would care to admit, or even acknowledge. People do things for all sorts of other reasons than just money. We have a sense of duty to family, community, and country. We like to feel as though we contribute. We like to help and volunteer our time and resources. Of course, the most cynical of ideologues would say these 'reasons' ultimately boil down to self-seeking behaviour masquerading as some degree of altruism or selflessness.

Ha-Joon Chang goes on to explain how if people really were entirely self-seeking in their behaviour, the project that is human Civilization would simply grind to a halt. There would be so many cheaters out there that we'd spend all of our time trying to catch them and prevent ourselves from being cheated. Taking that old bumper sticker slogan from Adam Smith that "it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest" to its next logical step would result in a world that is not only unworkable, but also downright disturbing. 

23 Things... is the perfect little book to serve as a potent antidote for those who have imbibed the poison kool-aid that is neo-liberal economic ideology. The ideas that became fashionable in the 1980s have produced legions of academic and political followers that continue to shape our economic lives. Books like Ha-Joon Chang's should help to break the fever, though it is often the case that well reasoned arguments based on evidence are scarcely effective in the face of obstinate ideology. In any case, I have another book to add to my wishlist: Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by one Ha-Joon Chang.

It is also quickly becoming an inescapable fact that I will have to read Thomas Piketty's Capital In The Twenty-First Century.

Currently Reading: "The End Of The Free Market" by Ian Bremmer

Advocates of pure capitalism insist that the "invisible hand" must be allowed to work its magic - and that any effort by government to guide its actions can only burden markets and distort their natural operation. Others argue that [Adam Smith's] writings on morality and natural empathy suggest that Smith would reject much of the libertarian dogma justified in his name. In any case, pure capitalism has never existed in the real world, and only the most ideologically committed of economic anarchists believe that it should. Markets can't meet every human need, fear and greed ensure that markets will never work perfectly, and no market participant enjoys perfect information.

The End Of The Free Market by Ian Bremmer

Those last points about why pure capitalism will never be able to operate perfectly in the real world (i.e. a giant ball of dirt floating in space inhabited by psychotic apes) seems so obvious as to be scarcely worth singling out for emphasis. Ignoring seemingly basic facts about reality is typical of extreme economic ideologies, whether they be utopian visions of anarcho-capitalism or communism. But hey, a man can dream, right?

With The Collapse Of Globalism still fresh in my memory, Bremmer's book is helping me understand the mechanics and goals of the kind of state capitalism that is practiced by some nations, particularly China. After the financial crisis of 2008/2009, we saw the rise of state intervention into the more 'free' economies of the West. This prompted some who were skeptical of global free markets to further question the ability of laissez-faire capitalism to provide sustainable growth, while bolstering their own position that the state should play a role in guiding economies to meet certain public and political goals.

I likes me some Ian Bremmer, and his G-Zero book greatly influenced how I've come to view international politics and the power of nation states to act and lead on the global stage. The End Of The Free Market is proving to be an equally enjoyable and informative read.

Currently Reading: "The Collapse Of Globalism" by John Ralston Saul

Global economics came to be presented as a tool to weaken government, discourage taxes both on corporations and on the top bracket of earners, force deregulation and, curiously enough, to strengthen private sector technocracies in large corporations to the disadvantage of real capitalists and entrepreneurs. That predilection for the large over the small meant that the Globalization movement would actively and quite naturally favour the limitation of real competition.

The Collapse Of Globalism and the Reinvention of the World, by John Ralston Saul

So I purchased this book probably seven or eight years ago and it has been sitting on my shelf unread ever since. That is, until I picked it up last night (after finishing that new Zodiac book). Why did I buy it? I didn't know who John Ralston Saul was then, and I sure don't know who he is now. I think I just liked the title and cover, and it looked like something a smart person should probably read. 

In all honesty, I don't feel I'm quite smart enough to be reading this now, let alone when it was first released. But I'm getting the gist here and there, about how economists and governments bought into the ideology and promise of globalized free markets and that accepting economics as the dominate force in shaping Civilization became viewed as an inevitability. 

I'm right there with you, Saul.

Apparently this book was reissued in 2009 after the financial crises with a new epilogue. I have the hardcover first edition, so I get to read it for the first time in the context of a prediction that appears to have later been vindicated.

For the record, I also have an unread copy of John Ralston Saul's "A Fair Country" -- it, too, has a rather attractive cover:

"Predictably Irrational" by Dan Ariely

Our irrational behaviors are neither random or senseless - they are systematic and predictable. We all make the same types of mistakes over and over, because of the basic wiring of our brains. So wouldn't it make sense to modify standard economics and move away from naive psychology, which often fails the test of reason, introspection, and - most important - empirical scrutiny?

Wouldn't economics make a lot more sense if it were based on how people actually behave, instead of how they should behave?

Predictably Irrational: The Hidden Forces That Shape Our Decisions, by Dan Ariely

Yes, Dan. It would make sense. Humans aren't nearly as rational as we tend to think we are, though we are fairly adept at rationalizing. People consistently make irrational choices. We are dishonest. We cheat and steal when given the opportunity, especially when we are a step or two removed from dealing with cash. We procrastinate and often discount or devalue the future at our peril. We are seduced by the powerful allure of FREE! We succumb to social pressures. Our experiences are modulated by our expectations of them. The placebo effect plays a much greater role in our lives than we ever could imagine. And so on...

And yet, standard economic theory would have it that humans are rational agents capable of acting in their own interest based on the best available information in the realm of the free market. If we mess up, "market forces" will correct the errors and set us back on the right path. To me, these ideas aren't just mistaken, but delusional. 

The reality is that humans are evolved creatures that come equipped with all sorts of cognitive biases and blind spots that serve to limit our ability to behave in an idealistically rational way. There is little room for freedom here. This is just another example of the disconnect between what we think the world is like (or wish it would be like), and what the world is really like. Ideology, unfortunately, often trumps a more evidence-based approach to understanding reality.