Category: Culture

Charlie Munger: Bad Morals Drive Out The Good

Charlie Munger on applying Gresham’s Law.

The idiotic ideas are all from the social science department and I would put economics in the social sciences department although it has some tinges of reality that remind you of arts and science.

In economics textbooks they teach you Gresham’s Law: Bad money drives out good. But we don’t have any bad money that amounts to anything. We don’t have any coins that are worth a lot, that have precious metals that you can melt down. Nobody cares what the melt-down value of the quarter is in relationship to the dime, so Gresham’s Law is a non-starter in the modern world. Bad money drives out good. But the new form of Gresham’s Law is ungodly important. The new form of Gresham’s Law is brought into play – in economic thought, anyway – in the savings and loans crisis, when it was perfectly obvious that bad lending drives out good. Think of how powerful that model is. Think of the disaster that it creates for everybody. You sit there in your little institution. All of the builders [are not good credits anymore], and you are in the business of lending money to builders. Unless you do the same idiotic thing [as] Joe Blow is doing down the street. Pete Johnson up the street wants to do something a little dumber and the thing just goes to a mighty tide. You’ve got to shrink the business that you love and maybe lay off the employees who have trusted you their careers and so forth or [make] a lot of dumb loans. At Berkshire Hathaway we try and let the place shrink. We never fire anybody, we tell them to go out and play golf. We sure as hell don’t want to make any dumb loans. But that is very hard to do if you sit in a leadership position in society with people you helped recruit, you meet their wives and children and so forth. The bad loans drive out the good.

It isn’t just bad loans. Bad morals drive out the good. If you want to run a check-cashing agency in [a] downtown big city, more than 100 percent of all the profit you could possibly earn can only be earned by flim-flamming people on the finance contracts. So if you aren’t willing to cheat people – basically minorities – more than 100 percent of the profit can’t be earned. Well, if you inherited the business or your idiot son-in-law is in it, you don’t know what else to do. This is what I would call an adult problem and most people solve it in the adult fashion: They learn to tolerate the cheating. But that is not the right answer to people who want to live a larger and better life. But it is a form of Greshem’s Law, the new Gresham’s Law. One that is not taught in economics courses and should be. It is a really serious problem and, of course, it relates deeply to what happened to create the economic crisis. All kinds of people who you would be glad to have marry into your family compared to what you are otherwise going to get did things that were very regrettable under these pressures from the new Gresham’s Law.

The Filter Bubble — What the Internet is Hiding From You

The Filter Bubble

Just “googling it” might not be such a great idea after all

The Filter Bubble, by Eli Pariser, puts forth an argument that we’re increasingly trapped inside an algorithm that filters our news based on what it thinks is best for us. In this case, IT is an algorithm.

Computers and the algorithms they run are increasingly aware of the things we seem to like. They learn from what we click on and tailor results so we get more of what we like and less of what we don’t like. The equivalent would be parents giving their kids only sugar because that’s what they seem to like. Only parents know better, so they feed their kids what they need first with a sprinkling of what they want. Algorithms don’t. This means that two people googling the same thing are likely to see different results.

The problem with this, Pariser argues, is that you’re not making a conscious choice to have your results filtered — it happens without your knowledge or consent. And that causes a whole host of issues, of which Pariser is primarily concerned with the social and political implications.

When technology’s job is to show you the world, it ends up sitting between you and reality, like a camera lens.

“If we want to know what the world really looks like,” Pariser writes, “we have to understand how filters shape and skew our view of it.” It’s useful to borrow from nutrition to illustrate this point:

Our bodies are programmed to consume fat and sugars because they’re rare in nature. Thus, when they come around, we should grab them. In the same way, we’re biologically programmed to be attentive to things that stimulate: content that is gross, violent, or sexual and that gossip which is humiliating, embarrassing, or offensive. If we’re not careful, we’re going to develop the psychological equivalent of obesity. We’ll find ourselves consuming content that is least beneficial for ourselves or society as a whole.

Consider for a moment where we are headed. If Google knows that I’m a democrat or republican they could now add a filter to my news to show me only the stories I’m predisposed to agree with. Based on their guess as to my education level, they may then tailor the article’s words and language to maximize its impact on me. In this world, I only see things I agree with and writing that I easily comprehend and that’s a problem. Google might know that I don’t read anything about Republican tax cuts or democratic spending so they might just filter those articles out. Reality, as I see it, becomes what the lens shows me.

“If you’re not paying for something, you’re not the customer; you’re the product being sold.”

— Andrew Lewis

When asked about the prospects for important but unpopular news, Media Lab’s Nicholas Negroponte smiled. On one end of the spectrum, he said is sycophantic personalization — “you’re so great and wonderful, and I’m going to tell you exactly what you want to hear.” On the other end is the parental approach: “I’m going to tell you this whether you want to hear this or not, because you need to know.” Currently, he argues, we’re headed in sycophantic direction.

Whether you believe the book’s conclusions are wholly convincing or not, it is worth thinking about. If nothing else, it is thought-provoking.

(If you want a search engine that won’t “track you” try DuckDuckGo.com)

David Foster Wallace: SNOOTlet

David Foster Wallace in Consider the Lobster:

A SNOOTlet is a little kid who’s wildly, precociously fluent in SWE—Standard Written English—(he is often, recall, the offspring of SNOOTs). Just about every class has a SNOOTlet, so I know you’ve seen them — these are the sorts of six-to-twelve-year-olds who use whom correctly and whose response to striking out in T-ball is to shout “How incalculably dreadful!” The elementary-school SNOOTlet is one of the earliest identifiable species of academic geekoid and is duly despised by his peers and praised by his teachers. These teachers usually don’t see the incredible amounts of punishment the SNOOTlet is receiving from his classmates, or if they do see it they blame the classmates and shake their heads sadly at the vicious and aribtrary cruelty of which children are capable.

Teachers who do this are dumb. The truth is that his peers’ punishment of the SNOOTlet is not arbitrary at all. There are important things at stake. Little kids in school are learning about Group-inclusion and -exclusion and about the respective rewards and penalties of same and about the use of dialect and syntax and slang as signals of affinity and inclusion. They’re learning about Discourse Communities. Little kids learn this stuff not in Language Arts or Social Studies but on the playgroun and the bus and at lunch. When his peers are ostracizing the SNOOTlet or giving him monstrous quadruple Wedgies or holding him down and taking turns spitting on him, there’s serious learning going on. Everybody here is learning except the little SNOOT—in fact, what the SNOOTlet is being punished for is precisely his failure to learn. And his Language Arts teacher — whose own Elementary Education training prizes “linguistic facility” as one of the “social skills” that ensure children’s “developmentally appropriate peer repport,” but who does not or cannot consider the possibility that linguistic facility might involve more than lapirdary SWE — is unable to see that her beloved SNOOTlet is actually deficient in Language Arts. He has only one dialect. He cannot alter his vocabulary, usage, or grammer, cannot use slang or vulgarity; and it’s these abilities that are really required for “peer rapport,” which is just a fancy academic term for being accepted by the second-most-important Group in the little kids life. If he is sufficiently clueless, it may take years and unbelievable amounts of punishment before the SNOOTlet learns that you need more than one dialect to get along in school.

The point is a little A+ SNOOTlet is actually in the same dialectal position as the class’s “slow” kid who can’t learn to stop using ain’t or bringed. Exactly the same position. One is punished in class, the other on the playground, but both are deficient in the same linguistic skill — viz., the ability to move between carious dialects and levels of “correctness,” the ability to communicate one way with peers and another way with teachers and another with family and another with T-ball coaches and so on.

Still curious? David Foster Wallace is the author of Infinite Jest, A Supposedly Fun Thing I’ll Never Do Again, Consider the Lobster and Other Essays, and The Pale King.