Category: Thinking

Eager to Be Wrong

“You know what Kipling said? Treat those two impostors just the same — success and failure. Of course, there’s going to be some failure in making the correct decisions. Nobody bats a thousand. I think it’s important to review your past stupidities so you are less likely to repeat them, but I’m not gnashing my teeth over it or suffering or enduring it. I regard it as perfectly normal to fail and make bad decisions. I think the tragedy in life is to be so timid that you don’t play hard enough so you have some reverses.”
— Charlie Munger

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When was the last time you said to yourself I hope I’m wrong and really meant it?

Have you ever really meant it?

Here’s the thing: In our search for truth we must realize, thinking along two tracks, that we’re frequently led to wrong solutions by the workings of our natural apparatus. Uncertainty is a very mentally demanding, and in a certain way, physically demanding process. The brain uses a lot of energy when it has to process conflicting information. To show yourself, try reading up on something contentious like the abortion debate, but with a completely open mind to either side (if you can). Pay attention as your brain starts twisting itself into a very uncomfortable state while you explore completely opposing sides of an argument.

This mental pain is called cognitive dissonance and it’s really not that much fun. Charlie Munger calls the process of resolving this dissonance doubt avoidance tendency – the tendency to resolve conflicting information as quickly as possible to return to physical and mental comfort. To get back to your happy zone.

Combine this tendency to resolve doubt with the well-known first conclusion bias (something Francis Bacon knew about long ago), and the logical conclusion is that we land on a lot of wrong answers and stay there because it’s easier.

Let that sink in. We don’t stay there because we’re correct, but because it’s physically easier. It’s a form of laziness.

Don’t believe me? Spend a single day asking yourself this simple question: Do I know this for sure, or have I simply landed on a comfortable spot?

You’ll be surprised how many things you do and believe just because it’s easy. You might not even know how you landed there. Don’t feel bad about it — it’s as natural as breathing. You were wired that way at birth.

But there is a way to attack this problem.

Munger has a dictum that he won’t allow himself to hold an opinion unless he knows the other side of the argument better than that side does. Such an unforgiving approach means that he’s not often wrong. (It sometimes takes many years to show, but posterity has rarely shown him to be way off.) It’s a tough, wise, and correct solution.

It’s still hard though, and doesn’t solve the energy expenditure problem. What can we tell ourselves to encourage ourselves to do that kind of work? The answer would be well-known to Darwin: Train yourself to be eager to be wrong.

Right to be Wrong

The advice isn’t simply to be open to being wrong, which you’ve probably been told to do your whole life. That’s nice, and correct in theory, but frequently turns into empty words on a page. Simply being open to being wrong allows you to keep the window cracked when confronted with disconfirming evidence — to say Well, I was open to it! and keep on with your old conclusion.

Eagerness implies something more. Eager implies that you actively hope there is real, true, disconfirming information proving you wrong. It implies you’d be more than glad to find it. It implies that you might even go looking for it. And most importantly, it implies that when you do find yourself in error, you don’t need to feel bad about it. You feel great about it! Imagine how much of the world this unlocks for you.

Why be so eager to prove yourself wrong? Well, do you want to be comfortable or find the truth? Do you want to say you understand the world or do you want to actually understand it? If you’re a truth seeker, you want reality the way it is, so you can live in harmony with it.

Feynman wanted reality. Darwin wanted reality. Einstein wanted reality. Even when they didn’t like it. The way to stand on the shoulders of giants is to start the day by telling yourself I can’t wait to correct my bad ideas, because then I’ll be one step closer to reality. 

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Post-script: Make sure you apply this advice to things that matter. As stated above, resolving uncertainty takes great energy. Don’t waste that energy on deciding whether Nike or Reebok sneakers are better. They’re both fine. Pick the ones that feel comfortable and move on. Save your deep introspection for the stuff that matters.

Incentives Gone Wrong: Cobras, Severed Hands, and Shea Butter

There’s a great little story on incentives which some of you may already know. The tale may be apocryphal, but it instructs so wonderfully that it’s worth a repeat.

“You must have the confidence to override people with more credentials than you whose cognition is impaired by incentive-caused bias or some similar psychological force that is obviously present. But there are also cases where you have to recognize that you have no wisdom to add— and that your best course is to trust some expert.”

— Charlie Munger

During British colonial rule of India, the government began to worry about the number of venomous cobras in Delhi, and so instituted a reward for every dead snake brought to officials. In a wonderful demonstration of the importance of second-order thinking, Indian citizens dutifully complied and began breeding venomous snakes to kill and bring to the British. By the time the experiment was over, the snake problem was worse than when it began. The Raj government had gotten exactly what it asked for.

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There’s another story, much more perverse, from the Congolese massacre in the late 19th and early 20th century under Belgian rule — the period Joseph Conrad wrote about in Heart of Darkness. (Some of you might know the tale better as Apocalypse Now, which was a Vietnam retelling of Heart of Darkness.)

As the wickedly evil King Leopold II of Belgium forced the Congolese to produce rubber, he sent in his Force Publique to whip the natives into shape through genocidal murder. (Think of them as a Belgian Congo version of the Nazi’s SS.) Fearful that his soldiers would waste bullets hunting animals, Leopold ordered that the soldiers bring back the severed hands of dead Congolese as proof that they were enforcing the rubber decree. (Leopold himself never even visited his colony, although he did cause at least 10 million deaths.)

Given that Leopold’s quotas were impossible to meet, shortfalls were common. And with the incentives placed on Belgian soldiers, many decided they could get human hands more easily than meeting rubber quotas, while still conserving their ammo for hunting. An interesting result ensued, as described by Bertrand Russell in his book Freedom and Organisation, 1814-1914.

Each village was ordered by the authorities to collect and bring in a certain amount of rubber – as much as the men could collect and bring in by neglecting all work for their own maintenance. If they failed to bring the required amount, their women were taken away and kept as hostages in compounds or in the harems of government employees. If this method failed, native troops, many of them cannibals, were sent into the village to spread terror, if necessary by killing some of the men; but in order to prevent a waste of cartridges, they were ordered to bring one right hand for every cartridge used. If they missed, or used cartridges on big game, they cut off the hands of living people to make up the necessary number.

In fact, as Peter Forbath describes in his book The River Congo, the soldiers were paid explicitly on the number of hands they collected. So hands gained in demand.

The baskets of severed hands, set down at the feet of the European post commanders, became the symbol of the Congo Free State. … The collection of hands became an end in itself. Force Publique soldiers brought them to the stations in place of rubber; they even went out to harvest them instead of rubber… They became a sort of currency. They came to be used to make up for shortfalls in rubber quotas, to replace… the people who were demanded for the forced labour gangs; and the Force Publique soldiers were paid their bonuses on the basis of how many hands they collected.

Looking to bolster an economy of rubber, Leopold II got an economy of severed hands. Like the British Raj, he got exactly what he asked for.

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Joseph Heath describes another case of incentives gone wrong in his book Economics Without Illusions, citing the book Out of Poverty: And Into Something More Comfortable by John Stackhouse.

Stackhouse spent time in Ghana in the 1990s, and noticed that the “socially conscious” retailer The Body Shop was an enormous purchaser of shea nuts, which were produced in great quantities by Ghanians. The Body Shop used shea butter, produced from the nuts, to produce a variety of skin products, and as a part of its socially conscious mission, and its role in the Trade, Not Aid campaign, decided they were willing to pay above-market prices to Ghanian farmers, to the tune of an extra 50% on top of the going rate. And on top of that premium price, The Body Shop also decided to throw in a bonus payment for every kilogram of shea butter purchased, to be used for local development projects at the farmers’ discretion.

Thinking that the Body Shop’s early shea nut orders were a harbinger of a profitable boom, farmers began to rapidly up their production of shea butter. Stackhouse describes the result in his book:

A shea-nut rush was on, and neither the British chain nor the aid agencies were in a position to absorb the glut. In the first season, the northern villages, which normally produced two tonnes of shea butter a year, churned out twenty tonnes, nearly four times what the Body Shop wanted….Making matters worse, the Body Shop, after discovering it had overestimated the international market for shea products, quickly scaled back its orders for the next season. In Northern Ghana, it wasn’t long before shea butter prices plunged.

Unfortunately, in its desire to do good in a poor part of the world, the Body Shop created a situation which was worse than when they began: Massive resources went into shea butter production only to find that it was not needed, and the overproduction of nuts ended up being mostly worthless.

These three cases above, and many more, lead us to the conclusion that people follow incentives the way ants follow sugar. It’s imperative that we think very literally about the incentive systems we create. Remember that incentives are not only financial. Frequently it’s something else: prestige, freedom, time, titles, sex, power, admiration…all of these and many other things are powerful incentives. But if we’re not careful, we do the equivalent of creating an economy for severed hands.

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Still Interested? Learn about one company that understood and harnessed incentives correctly, or re-read Munger’s discussion on incentive-caused bias in his famous speech on human psychology. Also, check out the Distorting Power of Incentives.

Paul Graham on Free Speech, Suburbia, Getting Rich, and Nerds

“I think a society in which people can do and say what they want will also tend to be one in which the most efficient solutions win.”

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Paul Graham is a programmer, writer, and investor. His 2004 anthology Hackers and Painters explores not only topics like where good ideas come from but also touches on social and cultural issues such as free speech, getting rich, and geek culture. Here are a few interesting tidbits worth pondering.

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Free Speech

I wonder how Graham thinks about this in the context of organizations. Ideas are the lifeblood of organizations but it seems to me that in certain workplaces “free speech” is not so free. The best ideas fall to politics, consensus, and pettiness. Suffering from such intellectual corruption dysfunctional behaviour results, which causes an ultimately self-correcting spiral into bankruptcy.

I think a society in which people can do and say what they want will also tend to be one in which the most efficient solutions win, rather than those sponsored by the most influential people. Authoritarian countries become corrupt; corrupt countries become poor; and poor countries are weak.

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Getting Rich

Graham illuminates how the industrial revolution changed the incentives from corruption to wealth creation as the primary vehicle to getting rich.

Once it became possible to get rich by creating wealth, society as a whole started to get richer very rapidly. Nearly everything we have was created by the middle class. Indeed, the other two classes have effectively disappeared in industrial societies, and their names been given to either end of the middle class. (In the original sense of the word, Bill Gates is middle class.)

But it was not till the Industrial Revolution that wealth creation definitively replaced corruption as the best way to get rich. In England, at least, corruption only became unfashionable (and in fact only started to be called “corruption”) when there started to be other, faster ways to get rich.

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Nerds

Highlighting the difference between the popular kids and nerds, Graham writes:

While the nerds were being trained to get the right answers, the popular kids were being trained to please.

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Suburbia

In exploring suburbia, Graham looks at how the environment encourages helicopter parenting.

Why do people move to suburbia? To have kids! So no wonder it seemed boring and sterile. The whole place was a giant nursery, an artificial town created explicitly for the purpose of breeding children.

Where I grew up, it felt as if there was nowhere to go, and nothing to do. This was no accident. Suburbs are deliberately designed to exclude the outside world, because it contains things that could endanger children.

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Still Curious?

All of the essays in Hackers & Painters: Big Ideas from the Computer Age are worth reading and thinking about.

Don’t Get “Should” Mixed Up with “Is”

The hardest truth to swallow is that the world isn’t really fair, and it isn’t a world you’d necessarily draw up from scratch. It’s not usually what you suppose it should be. None of what’s around us came about by grand design: From a spark many billion years ago, things evolved in a fairly undirected manner (as far as we can tell).

When the world doesn’t quite agree with our ideas, we often begin distorting our own cognition. We confuse should with is, and then complain or rationalize when reality shows we’ve gotten the wrong answer.

The history of Marxist political ideology is a pretty good example. It’s not unreasonable to think that the world should, in some cosmic sense, be a bit more egalitarian. We’re all born and we all die just the same — why should some among us enjoy the spoils while some among us wallow? Capitalism encourages that outcome to an extent, and it sometimes accidentally rewards behavior that is anti-social or simply not adding anything to the world. (A thousand derivatives traders and casino operators just cringed.)

The problem is that reality is way more complex than a simple fairness test would hope to show.

A really large-scale egalitarian society has never worked for a few interrelated reasons, chief among them that: groups don’t have power, people have power (raising the question, who specifically decides how to allocate society’s resources?); utopia doesn’t scale; market forces provide very effective carrots, sticks, and signals that directed egalitarianism lacks, among other reasons. Reaching for extreme levelness in outcomes has always been deeply problematic and always will be, because that’s how reality is constructed.

Inevitably when certain people who get into power run the experiment again, and it does not work as intended, its deepest acolytes return to first principles instead of acknowledging a flawed premise. Well, that wasn’t real Marxism. Yes the proposed system of economic distribution didn’t work, but that’s not our fault. It still should be this way. Things should be fairer. We just did it wrong. Let’s run it again!

Results like that show the brain performing some real acrobatics to keep its desired and cherished idea intact. The Greek statesman Demosthenes, living about 350 years before the birth of Christ, put it best by saying “What a man wishes, he also believes.” In other words, because we want it to be true, we make it so in our minds, evidence be damned.

We’re all subject to this bias from time to time.

In the financial world, many an investor has seen his investment go south only to complain about how unfair the damn world is, how things shouldn’t have gone that way — the CEO should have been more attentive, the creditors should have been more fair, competitors should have been more rational. It’s not supposed to go like this! Far from the investor’s mind is the thought that he simply misdiagnosed a complex situation with a range of outcomes, including bad ones. But reality is irreducibly complicated — it doesn’t ignore things just because you do. It isn’t supposed to be anything. It’s just hard.

This isn’t to be harsh. It’s just the way things are. It’s not about you. Nature just doesn’t care too much about your should.

This happens in relationships all the time. It’s almost an iron rule of life that marrying someone with the intent of changing them is not going to work. Who wants to be chiseled, molded, and nagged by their spouse? Who’s really been successful at that? Most of us seek acceptance, and when we don’t get it, we fight for our independence. That’s just human nature.

And yet how many divorces happen due to traits that were plainly present before the marriage began? Is a continuation of long-held traits the fault of the non-compliant spouse, or was there a willful misunderstanding from Day 1?

That’s not to say that a good spouse shouldn’t work to improve themselves. Of course they should. It is a recognition of the base rate that major improvements are not very common.

Think of the last major personality flaw you had that you actually shed for good. I’ll wait…

And so our lack of understanding human nature and of the complex reality leads us to bad results, frequently because we wish the world was another way. We think it ought to be another way, and we keep that conclusion even after the world shows us we’re wrong, leading to one mistake after another as we rationalize repeated errors with ought style thinking.

Start resolving to test yourself with the basic question: Do I believe this because I wish it was so, or because it actually is so? Have I acted in some way because I wish that action caused success, or because it actually does? If you can’t tell the difference, it’s likely to be wishful. And if you simply don’t know, then leave it at that: You don’t know. Resolve to find out the truth as best you can.

Instead of beating our heads against the wall, we should spend more time trying to understand the world as it is, and live accordingly. Or, in the brilliant words of Joseph Tussman:

“What the pupil must learn, if he learns anything at all, is that the world will do most of the work for you, provided you cooperate with it by identifying how it really works and aligning with those realities. If we do not let the world teach us, it teaches us a lesson.”

Still Interested? Check out some related posts:

The Powerful Predictor Behind Successful Relationships — When does a broken relationship start to go wrong? Whatever you’re thinking — an awkward conversation with your boss, the white lie you told about being busy that was discovered, the time you were supposed to be out with friends but were really somewhere else — you’re probably wrong.

Recognizing Our Flaws is The Beginning of Wisdom — “We are drunks looking for our lost keys under a lamppost not because that’s where we lost our keys but because that’s where the light is.”

How The Four Laws of Ecology Help You Solve Problems

Ecology is the study of relationships and processes linking living things to the physical and chemical environment. Exciting, right?

In the 1971 book The Closing Circle, Barry Commoner gives us a clear and understandable example of what ecology really means, while being one of the first to sound the alarm on the impending environmental crisis. (Although Rachel Caron’s Silent Spring certainly holds the mantle for implanting ecological thought into the popular consciousness.)

Commoner’s life was devoted to helping people see the benefits of ecological thinking:

Ecology has not yet explicitly developed the kind of cohesive, simplifying generalizations exemplified by, say, the laws of physics. Nevertheless there are a number of generalizations that are already evident in what we now know about the ecosphere and that can be organized into a kind of informal set of laws of ecology.

He goes on to lay out four basic and inescapable laws of ecology (which nicely complement Garett Hardin’s Three Filters). The principles describe a beautiful web of life on earth.

The Four Laws of Ecology

The First Law of Ecology: Everything Is Connected to Everything Else

It reflects the existence of the elaborate network of interconnections in the ecosphere: among different living organisms, and between populations, species, and individual organisms and their physicochemical surroundings.

The single fact that an ecosystem consists of multiple interconnected parts, which act on one another, has some surprising consequences. Our ability to picture the behavior of such systems has been helped considerably by the development, even more recent than ecology, of the science of cybernetics. We owe the basic concept, and the word itself, to the inventive mind of the late Norbert Wiener.

The word “cybernetics” derives from the Greek word for helmsman; it is concerned with cycles of events that steer, or govern, the behavior of a system. The helmsman is part of a system that also includes the compass, the rudder, and the ship, If the ship veers off the chosen compass course, the change shows up in the movement of the compass needle. Observed and interpreted by the helmsman this event determines a subsequent one: the helmsman turns the rudder, which swings the ship back to its original course. When this happens, the compass needle returns to its original, on-course position and the cycle is complete. If the helmsman turns the rudder too far in response to a small deflection of the compass needle, the excess swing of the ship shows up in the compass—which signals the helmsman to correct his overreaction by an opposite movement. Thus the operation of this cycle stabilizes the course of the ship.

In quite a similar way, stabilizing cybernetic relations are built into an ecological cycle. Consider, for example, the fresh water ecological cycle: fish-organic waste-bacteria of decay inorganic products—algae—fish. Suppose that due to unusually warm summer weather there is a rapid growth of algae. This depletes the supply of inorganic nutrients so that two sectors of the cycle, algae and nutrients, are out of balance, but in opposite directions. The operation of the ecological cycle, like that of the ship, soon brings the situation back into balance. For the excess in algae increases the ease with which fish can feed on them; this reduces the algae population, increases fish waste production, and eventually leads to an increased level of nutrients when the waste decays. Thus, the levels of algae and nutrients tend to return to their original balanced position.

In such cybernetic systems the course is not maintained by rigid control, but flexibility. Thus the ship does not move unwaveringly on its path, but actually follows it in a wavelike motion that swings equally to both sides of the true course. The frequency of these swings depends on the relative speeds of the various steps in the cycle, such as the rate at which ships responds to the rudder.

Ecological systems exhibit similar cycles, although these are often obscured by the effects of daily or seasonal variations in weather and environmental agents.

[…]

The dynamic behavior of a cybernetic system—for example, the frequency of its natural oscillations, the speed with which it responds to external changes, and its overall rate of operation, depends on the relative rates of its constituent steps. In the ship system, the compass needle swings in fractions of a second; the helmsman’s reaction takes some seconds; the ship responds over a time of minutes. These different reaction times interact to produce, for example, the ship’s characteristic oscillation frequency around its true course.

[…]

Ecosystems differ considerably in their rate characteristics and therefore vary a great deal in the speed with which they react to changed situations or approach the point of collapse.

[…]

The amount of stress which an ecosystem can absorb before it is driven to collapse is also a result of its various interconnections and their relative speeds of response. The more complex the ecosystem, the more successfully it can resist a stress. … Most ecosystems are so complex that the cycles are not simple circular paths, but are crisscrossed with branches to form a network or a fabric of interconnections. Like a net, in which each knot is connected to others by several strands, such a fabric can resist collapse better than a simple, unbranched circle of threads—which if cut anywhere breaks down as a whole. Environmental pollution is often a sign that ecological links have been cut and that the ecosystem has been artificially simplified and made more vulnerable to stress and to final collapse.

The feedback characteristics of ecosystems result in amplification and intensification processes of considerable magnitude. For example, the fact that in food chains small organisms are eaten by bigger ones and the latter by still bigger ones inevitably results in the concentration of certain environmental constituents in the bodies of the largest organisms at the top of the food chain. Smaller organisms always exhibit much higher metabolic rates than larger ones, so that the amount of their food which is oxidized relative to the amount incorporated into the body of the organism is thereby greater. Consequently, an animal at the top of the food chain depends on the consumption of an enormously greater mass of the bodies of organisms lower down in the food chain. Therefore, any non-metabolized material present in the lower organisms of this chain will become concentrated in the body of the top one. …

All this results from a simple fact about ecosystems—everything is connected to everything else: the system is stabilized by its dynamic self-compensating properties; those same properties, if overstressed, can lead to a dramatic collapse; the complexity of the ecological network and its intrinsic rate of turnover determine how much it can be stressed, and for how long, without collapsing; the ecological network is an amplifier, so that a small perturbation in one network may have large, distant, long-delayed effects.

The Second Law of Ecology: Everything Must go Somewhere

This is, of course, simply a somewhat informal restatement of a basic law of physics—that matter is indestructible. Applied to ecology, the law emphasizes that in nature there is no such thing as “waste.” In every natural system, what is excreted by one organism as waste is taken up by another as food. Animals release carbon dioxide as a respiratory waste; this is an essential nutrient for green plants. Plants excrete oxygen, which is used by animals. Animal organic wastes nourish the bacteria of decay. Their wastes, inorganic materials such as nitrate, phosphate, and carbon dioxide, become algal nutrients.

A persistent effort to answer the question “Where does it go?” can yield a surprising amount of valuable information about an ecosystem. Consider, for example, the fate of a household item which contains mercury—a substance with serious environmental effects that have just recently surfaced. A dry-cell battery containing mercury is purchased, used to the point of exhaustion, and then “thrown out.” But where does it really go? First it is placed in a container of rubbish; this is collected and taken to an incinerator. Here the mercury is heated; this produces mercury vapor which is emitted by the incinerator stack, and mercury vapor is toxic. Mercury vapor is carried by the wind, eventually brought to earth in rain or snow. Entering a mountain lake, let us say, the mercury condenses and sinks to the bottom. Here it is acted on by bacteria which convert it to methyl mercury. This is soluble and taken up by fish; since it is not metabolized, the mercury accumulates in the organs and flesh of the fish. The fish is caught and eaten by a man and the mercury becomes deposited in his organs, where it might be harmful. And so on.

This is an effective way to trace out an ecological path. It is also an excellent way to counteract the prevalent notion that something which is regarded as useless simply “goes away” when it is discarded. Nothing “goes away”; it is simply transferred from place to place, converted from one molecular form to another, acting on the life processes of any organism in which it becomes, for a time, lodged. One of the chief reasons for the present environmental crisis is that great amounts of materials have been extracted from the earth, converted into new forms, and discharged into the environment without taking into account that “everything has to go somewhere.” The result, too often, is the accumulation of harmful amounts of material in places where, in nature, they do not belong.

The Third Law of Ecology: Nature Knows Best

In my experience this principle is likely to encounter considerable resistance, for it appears to contradict a deeply held idea about the unique competence of human beings. One of the most pervasive features of modern technology is the notion that it is intended to “improve on nature”—to provide food, clothing, shelter, and means of communication and expression which are superior to those available to man in nature. Stated baldly, the third law of ecology holds that any major man-made change in a natural system is likely to be detrimental to that system. This is a rather extreme claim; nevertheless I believe it has a good deal of merit if understood in a properly defined context.

I have found it useful to explain this principle by means of an analogy. Suppose you were to open the back of your watch, close your eyes, and poke a pencil into the exposed works. The almost certain result would be damage to the watch. Nevertheless, this result is not absolutely certain. There is some finite possibility that the watch was out of adjustment and that the random thrust of the pencil happened to make the precise change needed to improve it. However, this outcome is exceedingly improbable. The question at issue is: why? The answer is self-evident: there is a very considerable amount of what technologists now call “research and development” (or, more familiarly, “R & D”) behind the watch. This means that over the years numerous watchmakers, each taught by a predecessor, have tried out a huge variety of detailed arrangements of watch works, have discarded those that are not compatible with the over-all operation of the system and retained the better features. In effect, the watch mechanism, as it now exists, represents a very restricted selection, from among an enormous variety of possible arrangements of component parts, of a singular organization of the watch works. Any random change made in the watch is likely to fall into the very large class of inconsistent, or harmful, arrangements which have been tried out in past watch-making experience and discarded. One might say, as a law of watches, that “the watchmaker knows best,”

There is a close, and very meaningful, analogy in biological systems. It is possible to induce a certain range of random, inherited changes in a living thing by treating it with an agent, such as x-irradiation, that increases the frequency of mutations. Generally, exposure to x-rays increases the frequency of all mutations which have been observed, albeit very infrequently, in nature and can therefore be regarded as possible changes. What is significant, for our purpose, is the universal observation that when mutation frequency is enhanced by x-rays or other means, nearly all the mutations are harmful to the organisms and the great majority so damaging as to kill the organism before it is fully formed.

The Fourth Law of Ecology: There Is No Such Thing as a Free Lunch

In my experience, this idea has proven so illuminating for environmental problems that I have borrowed it from its original source, economics. The “law” derives from a story that economists like to tell about an oil-rich potentate who decided that his new wealth needed the guidance of economic science. Accordingly he ordered his advisers, on pain of death, to produce a set of volumes containing all the wisdom of economics. When the tomes arrived, the potentate was impatient and again issued an order—to reduce all the knowledge of economics to a single volume. The story goes on in this vein, as such stories will, until the advisers are required, if they are to survive, to reduce the totality of economic science to a single sentence. This is the origin of the “free lunch” law.

In ecology, as in economics, the law is intended to warn that every gain is won at some cost. In a way, this ecological law embodies the previous three laws. Because the global ecosystem is a connected whole, in which nothing can be gained or lost and which is not subject to over-all improvement, anything extracted from it by human effort must be replaced. Payment of this price cannot be avoided; it can only be delayed. The present environmental crisis is a warning that we have delayed nearly too long.

Lest you feel these are all scientific, Commoner ends by referring you to classic literature:

A great deal about the interplay of the physical features of the environment and the creatures that inhabit it can be learned from Moby Dick.”

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Still Interested? Check these related posts out:

Garrett Hardin on the Three Filters Needed to Think About Problems — “The goal of these mental filters, then, is to understand reality by improving our ability to judge the statements of experts, promoters, and persuaders of all kinds.”

The Effect of Scale in Social Science, or Why Utopia Doesn’t Work — Why can’t a mouse be the size of an elephant? Weclome to the effect of scale on values.

Stop Crashing Planes: Charlie Munger’s Six-Element System

Before we get to Charlie Munger, let’s chat for a minute.

We’ve been noticing a problem lately that you might be familiar with or experiencing yourself: The search for wisdom not actually translating into consistently applied wisdom.

You read a book, love it, put it down. You read a set of articles, love them, put them down. You’re fired up. And then, a week later, the fire is gone. The learning didn’t make it through.

What the hell happened?

We’ve come to call this Transmission Loss, the gap between learning and execution.

The greater the loss, the less “yield” you’re actually getting from the things you learn. Transmission loss tends to be a lot lower in the most practical, repeatable areas of life: If you’re going to be a carpenter, you learn how to properly cut wood and that skill tends to stay with you. If you’re going to be a programmer, you never forget the concept of nested “If-then” statements. It’s as fundamental as breathing. If you’re a pilot, you go through routine maintenance of your skills using aircraft simulators. If you’re a surgeon, you constantly hone and improve the necessary mechanical skills to operate on your patients. These skills, and others like them, are “sticky” and “cumulative.” They’re brought up to fluency and then kept at a high level through repetitive practice. That’s why surgeons and pilots don’t kill many people, why a smart young high school student can build a program unimaginable to us 50 years ago, and why a carpenter doesn’t suddenly forget how to build a strong and stable shelf. The things you learn tend to stick to your ribs over time.

But in the “soft” sciences, the kind we often write about, learning doesn’t seem to be as sticky or as cumulative. “Experts” make the same mistakes as “novices.” We learn concepts from The Psychology of Human Misjudgment, or the power of compound interest, or the power of building seamless webs of trust, fall in love with them, and then continue to behave the same way we did before learning them.

Investors can be the worst at this: They learn about the dangers of leverage and then invest half their portfolio in debt-ridden high-fliers, or learn about the shortcomings of a metric like EBITDA, but go on using it merrily a week later. Many of us have known a general manager who claimed to love the teachings of Peter Drucker or Warren Bennis or whoever else, but carried on treating people with dictatorial zeal, shocked to see them unmotivated or unproductive. And how many compensation plans do we deal with that totally ignore the basics of human nature? Yet, I strongly suspect their creators were familiar with the concept and principles of personal incentives.

It seems that in these “softer” fields, our actions are much harder to match with our education. We don’t always think of it this way, but some of the “surprises” that befall people are the equivalent of a trained pilot pulling back on the stick and expecting the nose of the plane to dive down.

***

It’s tempting to think of the main difference between these skills as complexity. As in, investing money or managing sales people is more complex than flying an airplane or learning to play chess at a high level. That’s partially true and partially not true — flying a plane is obviously not a simple, easily learned task, but at least the laws of physics are invariant.

The largest difference I can see between those sticky, cumulative skills and the stuff that regresses easily is that the former have a clear set of fixed/knowable rules and a process for maintaining fluency, while the latter seemingly do not.

Once a pilot has learned the ins and outs of flying a 747, the probability of a mistake is exceedingly low, assuming he keeps up his practice and training.

There’s a strong element of If I do this, then that will happen, and that element tends to hold over time. The main risk is that your skills will attenuate over time, which can be solved by a skill maintenance/improvement routine like an aircraft simulator or an M&M conference for medical professionals. You must keep up with new knowledge, sure, but the new stuff tends to be additive, not revolutionary. The fundamentals of building a bridge don’t change a whole lot.

In the “human realm”, not only do we lack knowledge of the “rules” by which to operate, but we have no sense of how to stay at the top of our game. Consequently, the equivalent of the highly-trained pilots in the fields of investing, sociology research, business management, sales, economics, elementary education, PR/marketing, and many other soft fields crash the plane time and time again. Any casual reading of the news will provide plenty of examples.

So, if you’re a “softie” like most of us, how do you raise your standard? That’s where Munger comes in.

***

Charlie Munger addressed the problem in a 50th Reunion speech to his Harvard Law School Class in 1998. What he wanted to know was: How do we get the decision making skills of “broad scale” thinkers — managers, investors, lawyers, negotiators, leaders, politicians, economists, etc. — up to the ability of “narrow scale” thinkers like pilots, engineers, and surgeons?

He called it a Strict Six-Element System, pulled from pilot education. (Berkshire Hathaway owns the largest flight school in the world – FlightSafety International.)

Here it is:

1) His formal education is wide enough to cover practically everything useful in piloting.

2) His knowledge of practically everything needed by pilots is not taught just well enough to enable him to pass one test or two; instead, all of his knowledge is raised to practice-based fluency, even in handling two or three intertwined hazards at once.

3) Like any good algebraist, he is made to think sometimes in a forward fashion and sometimes in reverse; and so he learns when to concentrate mostly on what he wants to happen and also when to concentrate mostly on avoiding what he does not want to happen.

4) His training time is allocated among subjects so as to minimize damage from his later malfunctions; and so what is most important in his performance gets the most training coverage and is raised to the highest fluency levels.

5) “Checklist” routines are always mandatory for him

6) Even after original training he is forced into a special knowledge-maintenance routine: regular use of the aircraft simulator to prevent atrophy through long disuse of skills needed to cope with rare and important problems.

The need for this clearly correct six-element system, with its large demands in a narrow-scale field where stakes are high, is rooted in the deep structure of the human mind. Therefore, we must expect that the education we need for broad scale problem-solving will keep all these elements but with awesomely expanded coverage for each element. How could it be otherwise?

Charlie’s system for those of us in softer realms than piloting, rooted in the deep structure of the human mind, is to develop a multi-disciplinary synthesis and to use it regularly, thinking through problems forwards and backwards, applying mental checklists whenever possible. This means learning the truly important doctrines from the main disciplines and how to synthesize them. It’s only once we assimilate all the tools we need that we stop making so many mistakes.

The question of how is clearly the toughest one. Even if we have the will, what is the way? We would argue that practical worldly wisdom falls into a few major buckets — these act as the closest proxy of the fixed/knowable rules we discussed above:

  1. Numeracy. The ability to understand and think in numbers and properly quantify. This would included a basic understanding of statistics and its limitations, of probability thinking and its limitations, and basic numerical and quantitative thinking applied to the real world.
  2. Human nature. The ability to understand the true nature of the people around you, and of yourself, with heavy consideration given to human psychology.
  3. History. The knowledge of what’s come before you in the world.
  4. Natural science. An understanding of the physical world around us.
  5. Business. An understanding of commerce and finance, concepts we must all regularly deal with unless we plan to live in a monastery.
  6. Second-level thinking. The ability to think beyond the “first step” and think through consequences. And then what?

These six buckets have humongous areas of overlap, but we find them a useful way to group our various forms of knowledge and file them away. You may lump and organize in a different fashion. And of course, not included here are the narrow “technical” skills — how to write code, how to read an x-ray, and so on.

But most important is that we learn to file and synthesize with these buckets, because the world doesn’t respect artificial, if necessary, boundaries. Going back to our discussion above, it’s not just the fundamentals of bridge building that don’t change a whole lot: with “softer” concepts like human nature, business principles, lessons from history and quantitative filtering, the ideas are just as invariant.

That leads us to a basic prescription: Read broadly and constantly across the fundamental areas of worldly knowledge, and practice synthesizing with them on a daily basis. Don’t shy away from what you’re not familiar with, attack it instead. Use the buckets as a guide to figure out what you need more of. And as you develop an understanding of the world, constantly seek to file away and apply what you’ve learned, both directly and by studying others vicariously.

Munger is clear also on the importance of explaining things in the most fundamental way possible — it’s through the search for more and more fundamental explanations that we improve our filing system. If you’re using a concept from physics, attribute it to physics. If you’re using a concept from chemistry (say, runaway feedback), call it chemistry. If you’re using an economics concept like opportunity cost, file it that way. Cut through faddy, new-age terms and concepts wherever possible in a search for an older, more fundamental way of explaining something. (See: Every management book written in the past twenty years, at least.) Through the process of learning, reducing, filing, and applying, you’ll eventually feel like an amateur golfer who’s finally taken a few thousand good swings: Hey, this kinda feels comfortable!

It isn’t easy, it’s hard. It takes some will and some discipline. But don’t forget to give yourself a break. Don’t worry about achieving this overnight. Just get 5% better every year. That’s plenty to leave your old self in the dust.