Last Uncertainty Wednesday, I wrote about how sample correlations are not meaningful under fat tails. Today I want to continue this line of argument in the specific context of the claimed relationship between country IQ and GDP. There is strong evidence that the distribution of GDP growth rates is in fact fat tailed. Why look at growth rates instead of absolute numbers? Because the whole argument has to be a dynamic one and not a static one. We can best see this from the following illustratio...

Last Uncertainty Wednesday, I wrote about how sample correlations are not meaningful under fat tails. Today I want to continue this line of argument in the specific context of the claimed relationship between country IQ and GDP. There is strong evidence that the distribution of GDP growth rates is in fact fat tailed. Why look at growth rates instead of absolute numbers? Because the whole argument has to be a dynamic one and not a static one. We can best see this from the following illustratio...

Today’s Uncertainty Wednesday revisits a favorite topic of mine: correlation. I first wrote about the importance of thinking about correlation in modeling over 10 years ago, long before starting the Uncertainty Wednesday series (the reference to Excel is a giveaway). I then had a three part series about spurious correlation which you can find here: part 1, part 2 and part 3. Here is the key introductory paragraph:Well, as you have seen from the posts on sample mean and sample variance, whenev...

Today’s Uncertainty Wednesday revisits a favorite topic of mine: correlation. I first wrote about the importance of thinking about correlation in modeling over 10 years ago, long before starting the Uncertainty Wednesday series (the reference to Excel is a giveaway). I then had a three part series about spurious correlation which you can find here: part 1, part 2 and part 3. Here is the key introductory paragraph:Well, as you have seen from the posts on sample mean and sample variance, whenev...

NOTE: Today’s excerpt from World After Capital continues the topic of Informational Freedom, discussing overreach in the patent system and offering prizes as an alternative mechanism. This is timely as the patent office has unfortunately issued new rules that will make it easier to obtain software patents undoing the tightening from prior Supreme Court decisions. While copyright limits our ability to share knowledge, patents limit our ability to use knowledge to create something. Much like ha...

NOTE: Today’s excerpt from World After Capital continues the topic of Informational Freedom, discussing overreach in the patent system and offering prizes as an alternative mechanism. This is timely as the patent office has unfortunately issued new rules that will make it easier to obtain software patents undoing the tightening from prior Supreme Court decisions. While copyright limits our ability to share knowledge, patents limit our ability to use knowledge to create something. Much like ha...

What does it mean to trust someone? Usually, that person (or company, or technology) can take actions that share a bunch of characteristics: the action has a material impact on us, we cannot directly observe the action or judge its consequences relative to alternatives at least until later, and we have an expectation that the other will act in a way that is primarily to our benefit as opposed to their own. One way to tell that trust was involved in a relationship is when we discover that the ...

What does it mean to trust someone? Usually, that person (or company, or technology) can take actions that share a bunch of characteristics: the action has a material impact on us, we cannot directly observe the action or judge its consequences relative to alternatives at least until later, and we have an expectation that the other will act in a way that is primarily to our benefit as opposed to their own. One way to tell that trust was involved in a relationship is when we discover that the ...

I was overly optimistic when I thought I could resume excerpts from World After Capital today. Turns out the next section is on privacy and it needs major editing. So while I am working on that, here is the talk I gave at Blockstack Berlin that summarizes my admittedly controversial view that privacy is incompatible with technological progress. We need strategies other than privacy to remain free in the digital age.

I was overly optimistic when I thought I could resume excerpts from World After Capital today. Turns out the next section is on privacy and it needs major editing. So while I am working on that, here is the talk I gave at Blockstack Berlin that summarizes my admittedly controversial view that privacy is incompatible with technological progress. We need strategies other than privacy to remain free in the digital age.

Senator Elizabeth Warren yesterday proposed a wealth tax. It is a way of dealing with the rising inequality issue that I also discuss in World After Capital. I propose a longer term way of getting to a similar place via demurrage, but I am supportive of a wealth tax. I believe it will have to be broad based though and include all large accumulations of wealth, including in trusts, foundations, endowments and all other pools that don’t have clear existing offsetting obligations (such as pensio...

Senator Elizabeth Warren yesterday proposed a wealth tax. It is a way of dealing with the rising inequality issue that I also discuss in World After Capital. I propose a longer term way of getting to a similar place via demurrage, but I am supportive of a wealth tax. I believe it will have to be broad based though and include all large accumulations of wealth, including in trusts, foundations, endowments and all other pools that don’t have clear existing offsetting obligations (such as pensio...

NOTE: I will resume posting excerpts from World After Capital next week. A couple of weeks ago I first tweeted about what gives people reasons for optimism and then wrote a post. Both of these were preparations for giving the opening keynote for the 2019 DLD conference. I will eventually put the slides online but in the meantime, here is the video from the talk

NOTE: I will resume posting excerpts from World After Capital next week. A couple of weeks ago I first tweeted about what gives people reasons for optimism and then wrote a post. Both of these were preparations for giving the opening keynote for the 2019 DLD conference. I will eventually put the slides online but in the meantime, here is the video from the talk

In today’s edition of Uncertainty Wednesday, we will look at how uncertainty in markets is highly dynamic. Something can be a sure thing for a while but not forever. There is a – potentially apocryphal – story about Ron Conway’s first fund: every single investment was a write off except for Google, which resulted in a 7x return for the fund as whole. Thus is the power outsized returns in a world of network effects and winner-take-all (or most) markets. One winner more than offsets many losers...

In today’s edition of Uncertainty Wednesday, we will look at how uncertainty in markets is highly dynamic. Something can be a sure thing for a while but not forever. There is a – potentially apocryphal – story about Ron Conway’s first fund: every single investment was a write off except for Google, which resulted in a 7x return for the fund as whole. Thus is the power outsized returns in a world of network effects and winner-take-all (or most) markets. One winner more than offsets many losers...

It is easy to feel pessimistic at the end of 2018. CO2 emissions are still climbing rapidly and reached an all time high in 2018, with severe weather events accelerating globally. Facebook and Twitter continue to be used for manipulation and their approaches to moderation are just as problematic. And the political response to all of this is largely one of chaos dominated by strongmen politicians, including the recent election of Bolsonaro in Brazil. So how can one stay optimistic? One way is ...

It is easy to feel pessimistic at the end of 2018. CO2 emissions are still climbing rapidly and reached an all time high in 2018, with severe weather events accelerating globally. Facebook and Twitter continue to be used for manipulation and their approaches to moderation are just as problematic. And the political response to all of this is largely one of chaos dominated by strongmen politicians, including the recent election of Bolsonaro in Brazil. So how can one stay optimistic? One way is ...

NOTE: Excerpts from World After Capital will resume next Monday We just returned from a wonderful week skiing. One of our family traditions is to all work together completing a puzzle. It’s a fun activity that involves a surprising amount of teamwork, such as finding pieces that belong in a part of the puzzle someone else is working on and trading off working on different areas. We had always picked 1,000 piece puzzles. This time we wound up buying a 3,000 piece puzzle. After all, how much ha...

NOTE: Excerpts from World After Capital will resume next Monday We just returned from a wonderful week skiing. One of our family traditions is to all work together completing a puzzle. It’s a fun activity that involves a surprising amount of teamwork, such as finding pieces that belong in a part of the puzzle someone else is working on and trading off working on different areas. We had always picked 1,000 piece puzzles. This time we wound up buying a 3,000 piece puzzle. After all, how much ha...