Crawl Across the Ocean

Saturday, July 31, 2010


The last time the global economic scorekeeping system ran into trouble because a few players were hoarding all the poker chips (the 1930's) so nobody else could bet, the only thing the folks in charge could come up with as a high enough priority to merit redistributing the chips more equitably was a World War.

This time around, our weapons are advanced enough that a war fought with the same intensity as World War II would probably bring about the collapse of our civilization - so the folks in charge will have to come up with some other solution. Or we could just have a feeble global economy indefinitely, I suppose.

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Thursday, July 29, 2010

Dunsmuir Bike Lane

I don't see much of the Burrard Bridge, but I do see Dunsmuir Street on a pretty regular basis and, in my opinion, the early verdict on the Dunsmuir Bike Lane would have to be that it is a success.

Aesthetically, the street is much improved by the presence of the lane, giving it an urban feel that it lacked before.

Functionally, I've had to adopt the habit of looking both ways as I cross the street, since it's common to see bikes travelling in either direction in the two-way bike lane on one-way (for cars) Dunsmuir. Traffic doesn't seem any different (from my viewpoint) than it did before. Fewer turns due to the right turn restrictions, and less weaving since there's only two lanes to weave in rather than three seems to be keeping traffic moving as well as it ever did.

I tried a google news search for the Dunsmuir Bike Lane and came up pretty much empty for anything more than a week or two after it opened, so it doesn't seem to be causing much in the way of ongoing angst for people.

Now the city just needs an equivalent North-South lane to connect Dunsumuir with the Burrard Bridge. Hornby seems like an obvious choice.

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Tuesday, July 27, 2010

61. The Evolution of Cooperation (part 1 of 2)

Note: This post is the sixty-first in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

The Evolution of Cooperation is the title of perhaps the most famous book on the Prisoner's Dilemma, and possibly Game Theory in general, ever written - by Robert Axelrod.

Reading it again, for the first time in a long time, I could see why it is so popular - it manages to cover a lot of ground with very clear, accessible prose.

The Evolution of Cooperation starts off by recounting a famous game theory tournament. Participants were invited to submit a strategy or 'rule' that would play a Prisoner's Dilemma against strategies submitted by other people. The strategies would be paired up against each other in turn and would play a repeated Prisoner's Dilemma against each other for a certain number of times. The goal was to achieve the highest possible point total, adding up across the matches against all the other strategies.

Recall that the nature of the Prisoner's Dilemma is such that, no matter what action your opponent takes, you will maximize your own total by defecting rather than cooperating. But by changing the situation from a single game to a repeated game, and by allowing participants to retain a memory of what happened before and by allowing them to clearly identify who they were playing against, the tournament introduced a strong signalling element into the Dilemma.

The tournament was won by the simplest strategy submitted, a strategy known as 'Tit For Tat.' Tit for Tat started off by cooperating (Axelrod refers to strategies that start by cooperating as 'nice' strategies), and then each round it just reacts to what the strategy it is matched up with did the previous round. If the strategy it is playing with defected on the last round, Tit for Tat defects this round, and if the strategy it is playing against cooperated on the last round, Tit for Tat cooperates this round.

After the results of the first tournament were published, a second one with more entries was held, but Tit for Tat again turned out to be the winner.

Strategies aren't fixed over time, and people might change their approach if they see another approach that is working better. Or those using a poor strategy might die out (or get fired) and be replaced by someone with a better strategy. Or some people may simply decide to try a new approach that they thought up. Through these sorts of mechanisms, the distribution of strategies, or rules, being used in the population can evolve over time.

An evolutionarily stable strategy is one that, even if everybody in a population is using it, can't be invaded by some other strategy designed to take advantage of it. Axelrod notes that a population where everybody defects is evolutionary stable because it is not possible for anyone playing any sort of cooperative strategy to invade (because they never meet anyone who will reciprocate their cooperation). But even a small cluster of cooperators can invade a much larger population of defectors if the conditions are right (because they will do well enough cooperating with each other to offset their poor results against the defectors).

But the converse is not true. A population where everybody plays a nice strategy like Tit for Tat can't be invaded by an 'Always Defect' strategy, because the Tit for Tats will do better playing each other than the 'Always Defect's will do playing with each other. This is a hopeful result (for those who like to see cooperation) since it suggests that a cooperative equilibrium is more stable than a defective one and that even a small group of cooperators can sometimes thrive in a sea of defectors.

Based on the results of the tournaments, and the success of Tit for Tat, Axelrod offers the following suggested courses of action for doing well in a repeated Prisoner's Dilemma type situation:

1) Don't be envious

As we saw before, envy can transform an absolute gain into a relative loss and a positive sum situation into a zero-sum situation. A common theme throughout the book is the distinction between absolute gains, made possible by the non zero-sum nature of the Prisoner's Dilemma, and zero-sum situations where only relative gains are possible.

2) Don't be the first to defect

'Nice' rules which don't defect first, will do well when playing with each other. This means that 'Mean' rules which defect first, will end up with lower scores against 'nice' opponents than 'Nice' rules do.

3) Reciprocate both cooperation and defection

A failure to reciprocate cooperation leads to unnecessary defection on both sides. A failure to reciprocate defection (by defecting in return the next round) leads to being taken advantage of.

4)Don't Be Too Clever

Unlike in a zero-sum game where you don't want your opponent to have any advantage, in a Prisoner's Dilemma it is important that those who are willing to cooperate recognize that you are willing to cooperate as well. Tit for Tat is a simple rule that helps other rules understand what they are dealing with and act accordingly. And since the best plan when facing Tit for Tat is to cooperate, rules will generally cooperate when they figure out that is the rule their opponent is using.

* * *

Moving along, Chapter 4 shows that friendship is not necessary for cooperation to develop by recounting the story of the 'live and let live' system that developed in the trenches during World War I where enemy units would cooperate by not killing each other, while facing off with each other across the same piece of ground for months at a time.

Chapter 5 shows that even creatures with very limited intelligence (e.g. bacteria) can engage in cooperation in Prisoner's Dilemma type situations. It also theorizes that the cooperation born from Kin Selection (the notion that it makes sense for us to evolve so that we are willing to make sacrifices for those we share genes with) might have provided a foothold of cooperation that could have spread into the sort of reciprocal tit for tat cooperation that would extend across larger groups of people, regardless of whether they are related or not.

I'll cover the rest of 'The Evolution of Cooperation' and talk about some of the implications of the ideas covered in it in next week's post.

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Dog Bites Man

Actually, I've lived my whole life as a boy/man, and haven't been bitten by a dog yet. But a Neil Reynolds column that is a deliberate lie meant to deceive readers of the Globe and Mail into believing something that isn't true, I have seen. Many times.

Greg documents the latest, Reynolds suggesting that Canada shouldn't have a mandatory census because the Scandinavians don't, when anyone who's paying attention at all knows that if Canada wanted to adopt the Scandinavian system (where the government collects so much information on everyone that they don't *need* a census), Reynolds would be the first person fighting against it.

To be honest, given that the Globe and Mail continues to employ Neil Reynolds after years and years of every column of his being either an attempt at deception or hilariously bad advice, it's hard to take anything in the paper seriously, or believe that the editors really have any concern whatsoever for producing a publicly useful product as opposed to just selling papers.

Even if the Globe wanted to make the argument that Reynolds is useful in a George Castanza, do-the-opposite, sort of way, like a compass that always points South, surely they could just provide his advice on what (not to) do directly to policymakers, without taking up valuable newsprint and possibly temporarily fooling people who are reading the Globe for the first time, or those poor folks with an IQ under 50 who haven't yet figured out that they should ignore (or do the opposite of) everything Reynolds says.

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Saturday, July 24, 2010

A License to Print Money 2

Let me preface this by saying that I'm a fan of Paul Krugman. I've read most of his books, read almost everything at the Paul Krugman archive, and read all of his columns and blog posts since he started working for the NY Times. This blog even has a 'Krugman was right, I was wrong' tag that I use on occasion.

Another strand to this post is that, over time, I've generally come to the conclusion that the simplest way out of the current economic mess for the U.S. would be to print money and distribute an equal share to each citizen until they get a little bit of inflation and a reduced debt load for debtors.

So imagine my disappointment when I read this recent post by Paul Krugman where he said,
"So why not forget about open-market operations, and just drop the stuff from helicopters? Well, remember that at this point cash and short-term bonds are equivalent. So a helicopter drop is just like a temporary lump-sum tax cut. And we would expect people to save much or most of such a tax cut — all of it, if you believe in full Ricardian equivalence."

Both Tyler Cowan and Brad Delong immediately noted that this didn't make any sense, as did a vast number of commenters on the original post.

How disconnected from reality do you have to be to think that if you give money to people who don't currently have any, they wouldn't either spend some of it or pay down their debts with it?

What vision of America must you have to imagine that the only people in America that exist are people who, given a $5,000 cheque from the government, would save all of it and not spend a dime.

It's especially frustrating because it seems as though there is almost a conspiracy of silence around pretending that America's economic woes couldn't be solved by printing a little money. And when one of the few prominent people you can expect to be both knowledgable and a straight-shooter takes on the issue, he uncharacteristically dodges the question with half-truths and deception.

The jedi mind powers of the creditor class are powerful indeed.

Updated to add, if you are interested in more elaboration on my opinion that printing money is the solution to the U.S.' economic problems, this post does a good job summarizing my views on the topic.

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Wednesday, July 21, 2010

A Licence to Print Money

In light of recent debates over the political power and influence of the financial industry, I just thought I'd pass along a quote on the history of Siena, Italy - from the Lonely Planet travel guidebook,

"At the end of the 14th century, Siena came under the control of Milan's Visconti family, followed in the next century by the autocratic patrician Pandolfo Petrucci. Under Petrucci the city's fortunes improved somewhat until the Holy Roman Emperor Charles V conquered it in in 1555 after a two-year siege that left thousands of people dead. He handed the city over to Cosimo I de'Medici, who barred the inhabitants from operating banks and thus severely curtailed Siena's power."

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Tuesday, July 20, 2010

60. Signalling

Note: This post is the sixtieth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.


"Buying bread from a man in Brussels
He was six foot four and full of muscles
I said, 'Do you speak-a my language?'
He just smiled and gave me a vegemite sandwich"

In a world where everyone behaves the same way (e.g. the world of most economic models), being able to tell one person from another isn't all that useful. But as we saw a few posts back, and as common sense also indicates, people vary, with some people being more prone to cooperative behaviour than others.

If we imagine ourselves wandering around a world filled with a mix of those who are willing to cooperate with us, and those who will pretend to cooperate just to take advantage of us, then the importance of knowing who you can trust becomes obvious.

One way is to learn by experience. If you can remember who you've dealt with in the past, then you can shun those who've defected against you and only deal with people you've had successful dealings with before. But this still leaves a problem of what to do with people you are meeting for the first time, or people who you are dealing with in a new situation, or even people who defected on you before, but claim to have turned over a new leaf.

In these cases, we tend to look for signs that indicate we can trust someone. Maybe a common language or culture, or skin colour or alma mater, or a certain manner of dress or hairstyle, or a certain level of courteousness, or a certain credit score, or even a certain food choice (e.g. vegemite sandwich).

Thinking more generally, even someone's past behaviour could just be considered another type of signal to take into consideration.

Ideally, the signs that we look for will be hard to fake, since otherwise defectors might just try to pass themselves off as cooperators. Barring the use of memory altering technology, past experience with a person can be very hard to fake, which makes past experience with someone one of the best signals of their potential willingness to cooperate in the future.

Given a perfect ability to differentiate cooperators from defectors, even a group of cooperators as small as just 2 people could outperform a society full of defectors. But given a complete inability to differentiate cooperators from defectors, and lacking a way of keeping track of the results of prior dealings with people, then cooperators would become helpless against defectors - and the defectors will likely take advantage of the cooperators until eventually there are no cooperators left.

As we covered a while back, this distinction is what led David Gauthier to assume, in Morals By Agreement that people pursuing cooperation would be able to perfectly differentiate cooperators from defectors.

This is all pretty straightforward common sense, but as this series goes along and I talk more about how cooperative behaviour can evolve (or go extinct) in various circumstances, it will be useful to keep some basic points in mind, such as the importance of signalling cooperative intentions and remembering past interactions with people in sustaining cooperation.

* * *

A few other notes on the topic of signalling:

It's worth mentioning that signalling is only necessary when one party to a transaction has information that another party lacks (the information that will be signalled) so, from an economic perspective, situations requiring signalling are an example of one of the effects of asymmetric information , a topic which we discussed here a while back.

Of course, barring an ability to read minds or predict the future, you never really know for sure what the other person is going to do, so in that sense every transaction involves asymmetric information, which is a bit hard on economic theories which rely on the absence of asymmetric information as a key assumption.

* * *

Signalling problems can also be tied back to game theory via various 'signalling games' which investigate what messages might be sent and received between players under varying circumstances.

* * *

Some concepts related to the idea of signalling:

Cheap Talk - Signs that can be made with little effort and thus don't signify much. For example, if I ask you, 'Are you going to screw me over?' And you say, 'No', your answer would qualify as cheap talk, since it doesn't cost you much to make that statement. Or if cooperators tried to identify one another by wearing a yellow shirt, than anyone could wear a yellow shirt and pretend to be a cooperator. This notion is generally captured in the expression, 'actions speak louder than words' - since actions typically have a higher cost than words do.

Common Knowledge - Something that everybody knows, and everybody knows that everybody knows, and everybody knows that everybody knows and everybody knows, and so on. The Stanford Encyclopedia of Philosophy provides an example:

"A proposition A is mutual knowledge among a set of agents if each agent knows that A. Mutual knowledge by itself implies nothing about what, if any, knowledge anyone attributes to anyone else. Suppose each student arrives for a class meeting knowing that the instructor will be late. That the instructor will be late is mutual knowledge, but each student might think only she knows the instructor will be late. However, if one of the students says openly 'Peter told me he will be late again,' then each student knows that each student knows that the instructor will be late, each student knows that each student knows that each student knows that the instructor will be late, and so on, ad infinitum. The announcement made the mutually known fact common knowledge among the students."

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Wednesday, July 14, 2010

Dark Age Ahead

The title, borrowed from one of Jane Jacobs' last books, seems appropriate for the topic of the Conservative government's incredibly stupid decision to make the long form of the census optional, rather than mandatory.

For those who don't know anything about sampling, the problem with making the long form of the census optional is that the results will be biased to overrepresent the sorts of people more likely to complete the census form, and underrepresent the sorts of people who are less likely to complete the form. This may not sound like a big deal, but it is. The census data is some of the best, most fundamental data available for all sorts of important analysis and research done in all areas of life (setting electoral boundaries, municipal planning for roads and schools, analysis of the impact of economic policies, etc. etc.)

Credit to Stephen Gordon for initially bringing this to my attention.

The Pundit's Guide has an excellent summary of some of the uses of the census data in Canadian Elections here.

It's depressing to have this great country governed by morons, especially when they received less than 40% of the votes in the last election.

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Tuesday, July 13, 2010

59. Defying Gravity

Note: This post is the fifty-ninth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs.

Imagine rain falling on the top of a mountain somewhere. And imagine that our goal is to have the drops of water travel as far downhill as possible. It seems the best approach might simply be to let each droplet, each molecule of water, take the path of least resistance - the downward seeking motivation from the pull of gravity on each molecule ensures that the optimal solution for maximizing the descent of the water is to remove all constraints on each drop of water. Any time you constrain a molecule from travelling in the most downward direction you are interfering with our goal of maximizing the descent of the drops.

Of course, there could be situations where the molecules would be better off working together. For instance, enough molecules together might carve a channel or wear away an obstacle. But any attempt to magnify this benefit by artificially concentrating water in one area represents an interference with the freedom of the molecules.

Individual molecules of water slide past one another fairly easily, and they are small enough to fit through a lot of holes and down a lot of passageways. But in other states (e.g. when frozen), the water molecules link together to form a larger structure. In the water molecules link together to form a larger block, then they could impede their progress down the hill any time they choose by forming a large enough block to get stopped by an obstacle on the downward path.

If we allow for an outside force - one with a perspective broader in space and time than the individual molecules - and one which can force the water molecules to do as it commands - then there are more possibilities. If the outside force wants to increase the final descent, the water could be channeled to a different side of the hill, one which offers a longer drop. If the outside force wants to impede the downward flow of the water, a dam could be built to build up a collection of water at a particular level.

Of course, the greater the potential descent of the water, the greater the potential energy that could be harnessed. And the greater the dam, the greater the store of energy, the greater the potential benefit from allowing some water to get through and resume its descent.

And finally, if we imagine two different outside forces, each with their own desires for the water, then the range of actions available to each outside force for either maximizing or preventing the descent of the water, must necessarily expand to include actions directed not directly at the water, but rather at, or in concert with, the other outside force.

So what does this have to do with ethics? I remember being advised by my Writing Instructors to resist the urge to explain, but I think that was meant to apply to fiction, not blogging.

Anyways, as I was imagining it, the pull of gravity on the water molecules represents their pursuit of their own self-interest. The Fundamental Theorems of Welfare Economics explain that, if you don't consider any of the many cases where the individual drops might need to work together, or they need to go uphill first in order to later go down somewhere else, or that there are places you just don't want to go down to, then it is optimal to just let the drops each follow their own path without interference.

The molecules working together represents cooperation, with economies of scale being one area where cooperation can further their self-interest. Linking the molecules together is bonds of sympathy. By linking themselves together the molecules can achieve things they are incapable of achieving if each molecule is pursuing its own interests.

The outside force represents the government. The government can push the self-interested actors out of a situation which is locally, but not globally optimal. It can restrain self-interested behaviour, but the more it does so, the greater the tension between the restraining force and the potential gain tempting each molecule to break free of the government's dam.

Ethics are the values that allow us to differentiate between when it is best to simply flow downwards and when we need to join with the other drops to better flow downwards, and when we need to join with the other molecules to prevent the downward flow. And when we need to work together to create an outside force capable of restraining us, when we need to fight against the outside force that is restraining us, and when we need to fight on behalf of our own outside force to take on a rival outside force.

Ethics represent the same breadth of vision across time and space that we earlier granted the outside force, but located within each molecule instead of in an outside force. With the right ethics in the molecules themselves, the power of decentralized decision making in each individual can be combined with the capacity for collective action, without sacrificing the benefits of either approach.

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Tuesday, July 06, 2010

58. Politics

Note: This post is the fifty-eighth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs.

Today's post is about Aristotle's 'Politics'

Normally, I shun abridged versions of all manner, but after making my way through the 300+ pages of what seemed like a single, long, rambling train of thought, I might make an exception for 'Politics' if I ever decide to read it again.

'Politics' is mostly an investigation into what makes the best form of government, with consideration for other proposals from thinkers who came before Aristotle, and a wealth of detailed consideration of everything from the difference between democracy and oligarchy to the proper age at which men and women should marry (37 and 18, respectively, in case you were wondering). But, as usual, I was reading it with an eye to comments that touch on the 'Systems of Survival' that Jane Jacobs identified.

It's clear from many passages that Aristotle regarded commerce and trade as corrupting and a morally inferior way of making a living:

"Of the two sorts of money-making one, as I have just said, is part of household management, the other is retail trade: the former necessary and honourable, the latter a kind of exchange which is justly censured; for it is unnatural, and a mode by which men gain from one another."

...However, he reserved his deepest scorn for the practice of lending at interest, continuing the previous passage...

"The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term usury, which means the birth of money from money because the offspring resembles the parent. Wherefore of all modes of making money this is the most unnatural."

Aristotle's distinction between natural and unnatural economics reminded me of the distinction John Michael Greer made between primary/secondary economies that operated on the basis of negative feedback, and a tertiary (financial) economy that operates on the basis of positive feedback.

Although he offers much criticism of Plato's Republic, Aristotle does mostly agree with Plato on the division of the city into guardian and commercial classes:

"But of these classes we should exclude from the citizen body (1) the mechanics, (2) the traders, (3) the husbandmen. Warriors, rulers, priests remain as eligible for citizenship."

Aristotle goes on to note that this is not a new distinction suggesting it still exists in Egypt and once existed in Italy and Crete, commenting that, "Most of the valuable rules of politics have been discovered over and over again in the course of history."

Aristotle, like virtually all the people whose work I have reviewed to date in this series, treats 'force and fraud' as a linked pair of attributes, relating to guardian activity (or posing a problem for commercial activity). For example at one point, Aristotle declares that, "Revolutions are effected in two ways, by force and by fraud."

One thing I found interesting was that Aristotle retained throughout the book the pair, 'honour and gain' as the two primary motivations of men:

"Such is the state of mind which creates revolutions. The motives for making them are the desire of gain and honour, or the fear of dishonour and loss."

or later,

"The whole of life is further divided into two parts, business and leisure, war and peace, and all actions into those which are necessary and useful, and those which are honourable. And the preference given to one or other part of the soul and its actions over the other; there must be war for the sake of peace, business for the sake of leisure, things useful and necessary for the sake of things honourable. ... For men must engage in business and go to war, but leisure and peace are better; they must do what is necessary and useful, but what is honourable is better."

I think in the back of my head, as I've been going through this series, I've imagined that the objectives of the guardian and commercial ethical systems could somehow be resolved along a single axis such that one could be made commensurate with the other in some fashion. But I've started to wonder if instead they might be completely distinct in the sense of each syndrome maximizing its own value (honour vs. material gain) rather than both aiming at a single goal (e.g. human welfare, the longevity of society, being fruitful and multiplicitous, what have you) but in different contexts.

Finally, just as an aside, it was interesting to see Aristotle suggest that,
"Communication with the sea is desirable for economic and military reasons; but the moral effects of sea-trade are bad. If the state has a marine, the port town should be at some distance from the city."

Of course, in Aristotle's time, this arrangement was how Athens worked, with the port of Piraeus at some distance. And then after Aristotle's time it was repeated with Rome having Ostia serve as its nearby (but not too nearby) port city. Aristotle doesn't really say what the bad moral effects of sea trade are, but given his disdain for trade as a morally shameful activity, its not surprising that he held this view.

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