Tuesday, October 28, 2008

Why we have so much trouble seeing


(Columbia shuttle launch. / NASA )



The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. John Maynard Keynes

To understand how we “see things”, we need to realize that vision is not at all some kind of biological TV camera that simply projects its image where “we can view it carefully and without bias. The picture that forms has been so filtered, edited, and amended as to sometimes bear little relationship at all to what is before us. Our hopes, fears, mental models, stereotypes and prejudices intervene long before the image delivered to us has been formed – as surely as a political candidate’s own words have been replaced by many layers of handlers. And, worse, the intervention is itself as invisible to us, and hard to see, as our eyes’ own “blind spots” – which are effectively papered over with an extrapolation of the surroundings so that we are not burdened (or informed) by what is there.

In our evolution it was valuable to be able to discard the ten thousand leaves and, based solely on a little patch showing through here and there, to connect the dots and so perceive the dangerous animal behind them, and to do so with sufficient certainty that we would take immediate defensive action, even if sometimes over-reacting to shadows. The process is built into our hardware and is automatic and invisible. The process is accelerated if everyone else around us is screaming and running – we too see the beast, real or not.

Two features of our visual system contribute greatly to disagreements between humans to what is “obviously going on”.

One feature is a type of automatic “zoom” feature, which brings whatever we are contemplating at whatever scale to just fill our mental TV screen. Whether it is tying our shoe-lace, or contemplating global thermonuclear war, the subject occupies exactly one mental screen.

A second feature, adopted from our need to survive, is the way our eyes cause anything that is constant to fade from view, literally, so that we are able to detect quickly anything that is moving or changing or different.

These two features combine to make it startlingly easy to take some small disagreement between two people and have each person “blow it all out of proportion” and lose track entirely of how much in common they have, and all the good things they share. After cooling down, each wonders how that could possibly have occurred. This is a perfect example of a problem actually caused by the “features” of our visual system.

Another problem is the astounding impact of context on how “the exact same data” is seen on our mental TV screen.

Here’s one example, in which you should simply ignore the background and note that the two vertical red bars are exactly the same height. It is extremely hard to do, even after you print out the image and measure them and confirm it.


Below is an even stronger illusion.


The dark gray square at the top was made by simply cutting out a section of the "light" gray square in the "shadow", and pasting it up in the white background area.

Your eyes "auto-correct" it for you to account for the "shadow." You can’t stop them from doing this. I have yet to find anyone who can easily “see” that the two squares marked are the same shade of gray, even when they have confirmed that they are.

I know this seems hard to believe, so do this" print out the picture, get a pair of scissors, and cut out the square in the shadow and slide it over to the edge, where it magically "changes color" and becomes dark. As you slide over "the "shadow", the same square changes shade right in front of you.

This is just one of the thousands of things your perceptual system is doing to be "helpful" to you, including altering the way you perceive people around you, so that they fit your mental model of how things "should" be.

The same effect is at work if you're deep into depression, when your mind is "helpfully" coloring everything around you "depressing" before it shows it to you.

That's what makes prejudice or bias or depression so hard to detect and treat - they seem so "obvious" and "external" that you can't figure out that your eyes changed reality before they showed it to you. This realization that your mind can lie, convincingly, to you, is the first step in Cognitive Behavioral Therapy and overcoming depression.

So, our minds and eyes can be gripped with not just an image, but an attitude or mental model that is almost alive, that filters and twists and selects and changes everything around us to fit its own view and thereby survive. It fights back against our inroads, undoing our progress. No wonder earlier humans thought they had become “possessed” by a demon.

This, sadly, is not just something that occurred to ancient man, and we, being modern, are no longer subject to. These are the same bodies and visual systems that ancient man had, with all the pros and cons.

In modern terms, we are captive to mental models and feedback loops. The famous economist John Maynard Keynes, observed the same thing here (quoted in http://en.wikiquote.org/wiki/John_Maynard_Keynes )

The General Theory of Employment, Interest and Money (1935)


  • The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.
    • Preface
  • The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
    • Ch. 24 "Concluding Notes"

Sadly, we have not even exhausted the features of human perception that control us invisibly, intervening before we can see what they have done.

Charles Schultz’s cartoon character Snoopy, lying atop his dog house one night, captured it perfectly as he mused:

Did you ever notice

That if you think about something at 2 AM

And then again at noon the next day

You get two different answers?

An equivalent morsel of wisdom from “Dennis the Menace” cartoon is this thought, as Dennis is in the corner being punished for his later mischief:

“How come dumb stuff seems so smart when you’re doing it?”

For better or worse, we are all caught up in an invisible current created by those around and near us, especially our peers. The resulting “group think” can often lead us all to the same wrong conclusion at once, and then sort of latch that thought in where none of us can escape “seeing it” as “obvious”.

This might not be so bad, but if we simultaneously interpret those who disagree as “enemies, out to destroy us”, we have a serious problem.

In any case, as we have all experienced, it is far easier to fall into mischief or sin or wrong ideas if the entire herd around us has already fallen into it.

This impact is remarkably strong, and well known to magicians. If only one person in an audience sees through your trick but no one else near them sees it, they will tend, strongly, to actually “un-see” what they “thought they saw” to reduce the discord.

Because all these effects take place before the images reach your mental TV screen, you can try all you want to be “unbiased” after that, with no impact. And usually, if charged with being biased or prejudiced, people react with anger and outrage, because they are trying to “be careful.” Sadly, they are carefully reasoning with distorted information.

One professor I had in Business School was involved in the design of the Pentagon’s War Room. He noted that, by the time the billions of pieces of information had been processed, filtered, summarized, tweaked, and massaged to make them fit in a one page summary, the conclusion was already built in by the system. Anyone would make the same conclusion, wrong or right, viewing that information. The War Room or central headquarters concept has a fatal flaw that way. How, for example, could General Motors executives not realize that people would switch to smaller cars when their financial pain rose? From the outside, it seems incredible.

Corporations and large organizations have a worse problem, that so far no one besides me seems to have noticed: What small facts or “dots” add up to, how they connect, depends on what scale you are operating on, not just on where you stand.

Here’s one of the classic pictures that illustrate the problem. View this image from normal viewing range, and then stand up, walk across the room, turn and look again.

The image above is from the 31 March 2007 issue of New Scientist and it is from a paper entitled 'Hybrid Images'

http://www.yoism.org/?q=node/141 has many more such images and illusions, as well as this delightful picture:


People who liked this post may like these as well:

Things we have to believe to see

Why men don't ask for directions

Pisa/OECD - Why our education stresses the wrong way of seeing

Failure is perhaps our most taboo subject (link to John Gall Systemantics)

Active strength through emergent synthesis

US - Economy of arrogance (and blindness)

Virtue drives the bottom line - secrets of high-reliability systems

High-Relability Organizations and asking for help

Secrets of High-Reliability Organizations (in depth, academic paper)

High-Reliability.org web site

Threat and Error Management - aviation and hospital safety

Failure is perhaps our most taboo subject (link to John Gall Systemantics)

Houston - we have another problem (on complexity and limits of one person's mind)

Institute of Medicine - Crossing the Quality Chasm and microsystems (small group teamwork)

Here's a few quotations from MIT Professor John Sterman's textbook "Business Dynamics".

Many advocate the development of systems thinking - the ability to see the world as a complex system, in which we understand that "you can't just do one thing" and that "everything is connected to everything else." (p4)

Such learning is difficult and rare because a variety of structural impediments thwart the feedback processes required for learning to be successful. (p5)

Quoting Lewis Thomas (1974):
When you are confronted by any complex social system, such as an urban center or a hamster, with things about it that you're dissatisfied with and anxious to fix, you cannot just step in and set about fixing things with much hope of helping. This realization is one of the sore discouragements of our century.... You cannot meddle with one part of a complex system from the outside without the almost certain risk of setting off disastrous events that you hadn't counted on in other, remote parts. If you want to fix something you are first obligated to understand ... the whole system ... Intervening is a way of causing trouble.


IN reality there are no side effects, there are just effects.

Unanticipated side effects arise because we too often act as if cause and effect were always closely linked in time and space. (p 11)

Most of us do not appreciate the ubiquity and invisibility of mental models, instead believing naively that our senses reveal the world as it is (p16).

The development of systems thinking is a double-loop learning process in which we replace a reductionist, narrow, short-run static view of the world with a holistic, broad, long-term dynamic view and then redesign our processes and institutions accordingly. (p18)

Quoting Nobel Prize winner Herbert Simon (p26) : The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problem...

These studies led me to suggest that the observed dysfunction in dynamically complex settings arises from mis-perceptions of feedback. The mental models people use to guide their decisions are dynamically deficient. As discussed above, people generally adopt an event-based, open-loop view of causality, ignore feedback processes, fail to appreciate time delays between action and response in the reporting of information, ... (p27)

Further the experiments show the mis-perception of feedback are robust to experience, financial incentives, and the presence of market institutions... First our cognitive maps of the causal structure of systems are vastly simplified compared to the complexity of the systems themselves. Second, we are unable to infer correctly the dynamics of all but the simplest causal maps. (p27)

People tend to think in single-strand causal series and had difficulty in systems with side effects and multiple causal pathways (much less feedback loops.) (p28).

A fundamental principle of system dynamics states that the structure of the system gives rise to its behavior. However, people have a strong tendency to ... "blame the person rather than the system". We ... lose sight of how the structure of the system shaped our choices ... [which] diverts our attention from ... points where redesigning the system or governing policy can have a significant, sustained, beneficial effect on performance (Forrester 1969.). p29.

People cannot simulate mentally even the simplest possible feedback system, the first order linear positive feedback loop. (p29). Using more data points or graphing the data did not help, and mathematical training did not improve performance. ([p29). People suffer from overconfidence ... wishful thinking ... and the illusion of control... Memory is distorted by hindsight, the availability and salience of examples, and the desirability of outcomes.

The research convincingly shows that scientists and professionals, not only "ordinary" people, suffer from many of these judgmental biases. (p30). Experiments show the tendency to seek confirmation is robust in the face of training in logic, mathematics, and statistics. (p31).

We avoid publicly testing our hypotheses and beliefs and avoid threatening issues. Above all, defensive behavior involves covering up the defensiveness and making these issues undiscussable, even when all parties are aware they exist. (p32).

Defensive routines often yield group-think where members of a group mutually reinforce their current beliefs, suppress dissent, and seal themselves off from those with different views or possible disconfirming evidence. Defensive routines ensure that the mental models of team members remain ill formed, ambiguous, and hidden. Thus learning by groups can suffer even beyond the impediments to individual learning. (p33).

Virtual worlds are the only practical way to experience catastrophe in advance of the real thing. In an afternoon, one can gain years of simulated experience. (p35).

The use of virtual worlds in managerial tasks, where the simulation compresses into minutes or hours dynamics extending over years or decades, is more recent and less widely adopted. Yet these are precisely the settings where ... the stakes are highest. (p35).

Without the discipline and constraint imposed by the rigorous testing imposed by simulation, it becomes all too easy for mental models to be driven by ideology or unconscious bias. (p37).

System dynamics was designed specifically to overcome these limitations. ... As Wolstenholme (1990) argues, qualitative systems tools should be made widely available so that those with limited mathematical background can benefit from them. (p38).

Most important ... simulation becomes the main, and perhaps the only way you can discover for yourself how complex systems work. (38).


Sunday, October 26, 2008

On the "most important issue"




When you are confronted by any complex social system, such as an urban center or a hamster, with things about it that you're dissatisfied with and anxious to fix, you cannot just step in and set about fixing things with much hope of helping. This realization is one of the sore discouragements of our century.... You cannot meddle with one part of a complex system from the outside without the almost certain risk of setting off disastrous events that you hadn't counted on in other, remote parts. If you want to fix something you are first obligated to understand ... the whole system ... Intervening is a way of causing trouble. (Lewis Thomas, 1974)

An earlier post on "magic dice" showed an example where each
one of four dice could generally beat another one, and yet there
was no overall "best" one.

Strange as it seems, the concept "best" only really works where
things have a single dimension, such as cost, for comparison.

Where things are much more multi-dimensional, there often
is no "best", even though, taken two at a time, it is clear which
one is "better".

That is, a whole series of "betters" does not have to add up to
having a "best" at one end. Instead of a "stack" of betters, there
can be a necklace, or loop of "betters, as in the dice example.
The staircase below, by M.C. Escher, is such a loop.

Any 2 or 3 stairs next to each other make perfect sense, and yet,
somehow, the overall sense of "above" and "below" fails. The
"error" is extremely subtle and hard to point to.

Here's another example of such a loop: We know water flows "downhill",
right? Trace out the water flow as far as you can and find the lowest spot.







So in real life, even though you may be able to tell which
house / date / candidate / investment is "better" than
another, you may still not be able to conclude which one
is "best" because, in reality, there is no such thing as "best".

This partly explains why there is so much trouble picking
the "Most Important" problems to work on, even when the
problems are disconnected from each other.

Sadly, in the real world, the problems are more like parts
of a huge mobile, and even touching one to work on it shifts
all the others around crazily.

These interlocked problems do not yield to the typical
"scientific" approach of "divide and conquer". There is
no "most important part" of such a "system."

Like 200 holes in the bottom of the boat, there are
no "three best" to plug. Solving 3 of 200 doesn't
actually ward off disaster.



(Image above, Ascending and Descending, 1960 M.C. Escher )

Thursday, October 23, 2008

U.S. Suicide Rate Increases


October 21, 2008

According to Johns Hopkins School of Public Health,

U.S. Suicide Rate Increases

Largest Increase Seen in Middle-Aged White Women

The rate of suicide in the United States is increased for the first time in a decade, according to a new report from the Johns Hopkins Bloomberg School of Public Health’s Center for Injury Research and Policy. The increase in the overall suicide rate between 1999 and 2005 was due primarily to an increase in suicides among whites aged 40-64, with white middle-aged women experiencing the largest annual increase. Whereas the overall suicide rate rose 0.7 percent during this time period, the rate among middle-aged white men rose 2.7 percent annually and 3.9 percent among middle-aged women. By contrast, suicide in blacks decreased significantly over the study’s time period, and remained stable among Asian and Native Americans. The results are published online at the website of the American Journal of Preventive Medicine and will be published in the December print edition of the journal.

Monday, October 20, 2008

The illusion of consensus on deficit

image: from http://www.moillusions.com/
The two vertical red bars are the same height on the screen if you measure them with a ruler. "All" you have to do is ignore the the subway walls and just look at the two red bars. (or get a ruler, or move to the side and look across the screen.) Some illusions are so powerful they work even when you know they are working.

========================

The cartoon figure Dennis the Menace once wondered "How come dumb stuff seems so smart when you're doing it?"

It's a very insightful question we should not rush by.

I think what's missing here the most is a popular understanding of the power of fear and desire to distort one's thinking.

There are three errors related to that most popular human activity, yielding to temptation.

The first is the incredible power of desire to overcome reason and twist perception so that the reasons for doing what you want to do anyway seem solid and strong, and the reasons against it seem distant and weak.

The second is the remarkable ability of people to be unaware of the difference between how things look from the inside and how they look from the outside. In the same breath as condemning home-buyers and banks for going way too far into debt, the same people turn and suggest with a straight face that the solution is "obviously" for the country to go much further into debt.

There is zero realization that the sin they accuse the bankers of looked exactly the same to the bankers as this "consensus" of going a few more trillion in debt looks to politicians today. And the actions that make so much sense today will look as unfathomable as the homebuyers and hedge-fund's actions look to us today.

"How could they have been so stupid?" It's worth understanding exactly how they could have been so stupid, and why very bright people end up doing very dumb things.

And the third is the remarkable power of group-think to solidify an opinion in a closed room and decide that those who have a different opinion are enemies of all that is right and decent, again obviously. And, as everyone knows, once everyone around you is sinning, it is much harder not to fall in line with them yourself, especially if you wanted to all along.

Again, rationality comes up behind, making up and changing justifications on the fly to make the choice look sane and rational and even fair and balanced.

Prompt for this post was the following
==========================================


The New York Times hs an article this morning

Deficit Rises, and Consensus is to let it Grow
Louis Uchitelle and Robert Pear
Excerpt:
Like water rushing over a river’s banks, the federal government’s rapidly mounting expenses are overwhelming the federal budget and increasing an already swollen deficit.

and

But the extra spending, a sore point in normal times, has been widely accepted on both sides of the political aisle as necessary to salvage the banking system and avert another Great Depression.

“Right now would not be the time to balance the budget,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan Washington group that normally pushes the opposite message.

Confronted with a hugely expensive economic crisis, Democratic and Republican lawmakers alike have elected to pay the bill mainly by borrowing money rather than cutting spending or raising taxes.
First, I noted that the vast majority of the comments on this article were very negative, so, like the bailout itself, it seems the consensus in Washington flies in the face of the concensus on Main Street.

I did comment myself, as follows:
The cartoon figure Dennis the Menace once wondered "How come dumb stuff seems so smart when you're doing it?"

Teenagers with their first credit card, families with their first great deal on a mortgage, hedge funds and even conservative banks with their soaring debt, all are so swayed by the temptation that they forget the bills will come due some day.

Regardless of the consensus on the issue, I would suggest that letting the debt out of the bag is less "river water over the banks" and more "water over-topping the earthen levee". God help us all.
and, later,

If more debt is acceptable, why not just borrow $3 trillion and give everyone $10,000?

I think that's a reasonable alternative to compare any other borrow-and-spend scheme to for pros and cons.

Sunday, October 19, 2008

Returning to what matters


October 19, 2008
New York Times
Op-Ed Columnist

The Downturn’s Upside

Your retirement savings are swirling through the drain of the market meltdown, your home isn’t worth what a Chihuahua’s doghouse was a year ago, and the United States may be facing the most severe recession since the Great Depression.

But cheer up, for this is a happy column! The economic misery is numbingly real, but it’s also true that a downturn isn’t uniformly bad and might even be good for you in several ways:

[snip]

Income doesn’t have much to do with happiness. Americans haven’t become any happier as they have prospered in the last half-century. And winning the lottery doesn’t make people happier in the long term.

This is called the Easterlin Paradox: Once they have met their basic needs, people don’t become happier as they become richer. In recent years, new research has undermined the Easterlin Paradox, yet it’s still true that happiness has less to do with money than with friendships and finding meaning in a cause larger than oneself.

“There’s pretty good evidence that money doesn’t matter much for how you feel moment to moment,” said Alan Krueger, a Princeton University economist who is conducting extensive research on happiness. “What seems to matter much more is having good friends and family, and time to spend on social activities.”

The big exception to all this is people who lose their jobs or homes, and the new president should act immediately to help them. Professor Krueger argues that for these people, the losses are greater than we have generally realized, for their losses are not only monetary but also the erosion of self-esteem and friendships as they are wrenched out of social networks that enrich their lives (and help them find new jobs). And for those who lose health insurance, a medical or dental problem is enormously stressful, even life-threatening.

[snip]

Tuesday, October 14, 2008

On education and the real world



In times when we watch our resume's burning up behind us, and education is a life-long experience, we should spend some time looking for skills with lasting value.

The area that seems most crucial to a shared prosperity relates to relationships, and how we get along and work together. Curiously, this area seems absent in most educational programs, as if it's obvious or something.

Most of our lives are spent dealing with one kind or another of relationships, from parents and siblings, to classmates, bosses, subordinates, peers, friends and lovers, community councils, etc.

I have yet to see an actual course in the K-12 curriculum anywhere on "relationships". For that matter, if there is a college or graduate course on "relationships", it has a very low profile.

Isn't that strange?

We have a huge emphasis on math and science, and yet, the average person has far more need of training in getting along and listening than they do for algebra and chemistry.

And yet, the invisible elephant in the room that is guiding our choices remains unidentified.

Colleges are now somewhat torn on the subject, requiring the dread "group work" of students who hate it, taught by faculty who don't understand it. Our businesses are failing from our inability to actually work together, but seem unable to address the problem.

And yet, this is not a national priority. Why not? Usually, if we don't know something, like how to get to the moon, we can assemble people and figure it out.

Puzzling.

Some posts on educational directions of the US:

"Now What -- after the crash"

"OECD/PISA - Our education system should teach collaboration not competition"

The Road to Ruin

The Road to Error (illustrated)

"Why More Math and Science are Not the Answer"



On High Reliablity organizations, which are sobering. They try really really hard to not have accidents, and still don't succeed from time to time:

http://www.highreliability.org/

I'm sure the US military tries very hard to keep nuclear weapons under control. Even that intense level of attention isn't enough to do the job 100% of the time, illustrating John Gall's law that "complex systems simply find complex ways of failing."

"Honey, I lost the nuclear weapons"

The US National Institutes of Medicine on how much the social relations of the front-line teams matter when your job is to get reliability in hospital care:

Crossing the Quality Chasm and other links

Readers' Favorites


Sunday, October 12, 2008

In passing

Why do people interpret criticism as unpatriotic?

I got the same thing as a project manager, when I said "These are the major obstacles we'll need to address to succeed" and others said "Why do you hate this project? Why are you trying to kill it?"

Apparently to them, things are either perfect or perfectly wrong, so identifying an issue is seen as hateful not loving.

Is this the way your raise your children? Why do you hate them? Should our teachers give students A's when their work is shoddy? Should our doctors tell us we're fine when something is seriously wrong? Should we take a car back from a mechanic that still doesn't work and pay, lest we damage the mechanic's fragile sense of self worth?

We've seen where a world with no discipline goes, and it is not the promised land.

"Tough love" is a nuanced concept these days, apparently. Let's all pretend we're perfect is the theme, as we get further and further behind because we perfect our skill at pretending instead of our coping skills.

We never fix what's wrong because we keep on pretending nothing is wrong, and we "shoot the messengers" who keep trying to tell us something is seriously wrong. Until we pass "denial" there will be no recovery.

By most measures, the USA today has just about the worst population health of any industrialized nation, and we keep saying it's tops. Our students have the highest opinions of themselves, despite the fact that they score at the bottom, globally, and that the fantasy will not translate into jobs for them. They are preparing to be arrogant and useless.

How is this helpful or loving?

Friday, October 10, 2008

Reponse to Paul Krugman's: Moment of Truth (NYTimes Op Ed)




Quoting Wikipedia, as good as any for this purpose, "Cybernetics is a broad field of study, but the essential goal of cybernetics is to understand and define the functions and processes of systems that have goals, and that participate in circular, causal chains that move from action to sensing to comparison with desired goal, and again to action. Studies in cybernetics provide a means for examining the design and function of any system, including social systems such as business management and organizational learning, including for the purpose of making them more efficient and effective."

In a complex or white-water uncharted world, it is simply crucial that the cybernetic loop actually function. Errors or even sluggishness in observation, perception, correct parsing, admitting error, modifying mental models, and revising action are absolutely required.

These facts need a seat at the table. The "command and control" system needs to become, and very quickly, apolitical and based on cybernetics, not some form of politics that worked in 1900.

Some fraction, at least 5%, of the "bailout" should go into intensive and immediate public discussions of why our command and control system is so out of touch and what to do about it.

Behavior theory would argue that changing the few humans at the top will NOT alter the system, all by itself. We need an entire culture pressing, and demanding, for that loop to work, for government to be responsive to facts as well as to lobbies, fear, and greed. Nation rebuilding must start with that on the agenda.

This is a "paradigm shift", moving from lines of causality to loops of causality. It is huge and defies our linear intuition regarding where things break and where to push to fix them. When we see increasingly words like "spiral", "feedback", "in turn" our answer should no longer be "who could have known?"

I wrote a "gentle introduction to feedback" for those who want to pursue this thread.
http://newbricks.blogspot.com...

Tuesday, October 07, 2008

The Road to Ruin


I think we're standing way too close to the problem to see the root-causes here and address them.

We've leapt to the conclusion that this is some sort of financial problem as a cause, versus as a symptom, and are trying to put out the symptom without addressing the cause - sort of the definition of "quack medicine" -- and just as dangerous.

While some politicians have mastered the art of managing pressure and bullying, we seem to have very little to zero actual civil, grown-up discussion of what's gone wrong here. I would suggest this traces back directly to our cultural disdain for the skill of actually reasoning together and listening to each other, and of seeking dis-confirming evidence before betting the farm on a proposed solution.

We argue over whether this expert is better than that expert, and fail to wonder why, collectively, 300,000,000 people can't work together better to find solutions to common problems. It's as if we've given up on that approach, and I challenge that.

Abe Lincoln is reported to have said that if he had 10 minutes to chop down a tree, he'd spend the first 5 minutes sharpening his axe. Our "axe", our social problem-assessing and decision-making process, is clearly way too dull. Thousands of people saw this coming and they were dismissed, ignored, and trampled, with the results we see around us now.

This doesn't just affect the "financial" crisis, it affects how we react to global warming, pandemics, pollution, water shortages, urban crime, unemployment, health care, etc. It's CENTRAL to all of those.

And yet, how many people recall a required course, anywhere in their education from K-12 to PhD, in "relationships" or "working together" ?

Instead we get brilliant "quants" working alone, building models that need the air of peer review, and that take out our banks.

People - listen up. It doesn't matter what else we fix -- if we don't fix how we (don't) reason together on hard problems, we are done for by one of the other problems we ignored or worsened to solve this one.

We don't even know how to address the problem of what problem to address, and what to spend our scarce dollars attempting to accomplish.

But there is such an incredible void and vacuum in the area of actually reasoning together that almost any progress would have huge leverage on so many different fronts.

In the darkest night, even a single candle casts amazing light.

That's where we should be looking now -- at least some of us, and with some urgency and with great attention to starting a national dialog on this subject.

further reading: The Road to Error (illustrated)

Now what - contemplating the market crash


You say "Americans deserve to hear much more detail about how the candidates would reform the financial system to prevent another crisis like this one."

I think we desperately need to expand the frame in which "this problem" is perceived. That discussion should precede solutions within that frame.

For one thing, this cannot be isolated to be a "financial system" problem. It involves other economic and social systems, including trust, social decision-making, governance, jobs, social safety nets, education, attitudes towards expertise, sources of blindness in how humans see the world, etc.

They are all tangled. They cannot be solved "separately", or put into a priority order. If there are 200 holes in the bottom of the boat, addressing the "three most important ones" doesn't really cut it. Causes, effects, symptoms, are in tangled feedback loops.

Most of all, I don't think that 200 bright people can "solve" this while the rest of the country and world watches TV, or that it will be solved by voting to pick the best of the two solutions they come up with in some back room somewhere.

A billion people are willing to help. How can that work? THAT's the question we should be addressing.

— Raymond, Detroit



See also:

Failure is perhaps our most taboo subject (link to John Gall Systemantics)

Active strength through emergent synthesis

Why more math and science are not the answer.

OECD PISA - Our education system should teach collaboration not competition

US - Economy of arrogance (and blindness)

Virtue drives the bottom line - secrets of high-reliability systems

High-Relability Organizations and asking for help

Secrets of High-Reliability Organizations (in depth, academic paper)

High-Reliability.org web site

Threat and Error Management - aviation and hospital safety

Failure is perhaps our most taboo subject (link to John Gall Systemantics)

Houston - we have another problem (on complexity and limits of one person's mind)

Institute of Medicine - Crossing the Quality Chasm and microsystems (small group teamwork)

Pathways to Peace - beautiful slides and reflections to music on the value of virtues

You say "No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it."

T.S. Eliot, writing in the last Great Depression, in "Choruses from 'The Rock'", said it well.

"They constantly try to escape
From the darkness outside and within
By dreaming of systems so perfect that no one will need to be good.
But the man that is shall shadow
The man that pretends to be."

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MIT's John Sterman, in his book "System Dynamics - Systems Thinking and Modeling for a Complex World", describes how poor intuition is at predicting the behavior of "complex adaptive systems."

Books like Gene Franklin's textbook for control system engineering, "Feedback Control of Dynamic Systems" describe the universally applicable conditions for any system of any type to be stable, and I don't see them met or even discussed.

The only thing that seems CLEAR to me is that a whole new feedback loop has been added, responding with almost certainly short-range horizons to events that used to be decoupled and now that will be coupled by that unpredictable response.

We are way past the point where well intentioned humans can follow their "insight" and improve things with that strategy.

I have a number of relevant quotes from Sterman's book on my weblog post on the credit crunch that I made in August, 2007: http://newbricks.blogspot.com/2007/08/credit-crunch-reaches-larger.html and this post I made in January, 2007 on Jay Forrester's Law of Unintended Consequences: http://newbricks.blogspot.com/2007/01/law-of-unintended-consequences.html

At risk of running on, I briefly quote that paper: The classic paper in this field is Jay Forrester's congressional testimony: "The Counterintutive Behavior of Social Systems", http://web.mit.edu/sdg/www/D-4468-2.Counterintuitive.pdf

Quoting the abstract: Society becomes frustrated as repeated attacks on deficiencies in social systems lead only to worse symptoms. Legislation is debated and passed with great hope, but many programs prove to be ineffective. Results are often far short of expectations Because dynamic behavior of social systems is not understood, government programs often cause exactly the reverse of desired results.

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Thursday, October 02, 2008

Reality-based Bailouts

I can imagine an economy in which there were no "banks" and businesses simply bought and sold shares in each other, or made loans to each other. That could work.

I cannot imagine an economy in which there were no underlying businesses, only banks lending (or not lending) money to each other.

The failure to realize which one is real and which one is an illusion will lead to ineffective strategies for national prosperity.

- rws

Wednesday, October 01, 2008

Loss of Trust on Wall Street and Main Street

(comment)

2008 12:35 pm

I think there is a more specific kind of "trust" that has been lost, not just banker's knowledge of individuals.

It is my clear impression, perhaps wrong, that decades ago there was a social norm of honesty and an ethic of hard work. Everyone didn't have an attorney who found loopholes, and people depended on having "a reputation" in the community, that they cared about, whether anyone was watching or not.

A man's record of honesty is what generated "trust" in the society, because he was, well, trustable.

These days it seems that the social norms have changed, and people in general certainly seem less "trustable" to keep their word, even when inconvenient or expensive to do so. Bankers do not trust other bankers. Countries sign treaties and then abandon them at the first inconvenience.

Some political advisors not only recommend dishonesty but seem to exult in their ability to be dishonest "successfully."

Political candiates seem willing to promise whatever suits them, or the crowd, at that moment, and seem to feel no obligation whatsoever to do what they promised before being elected. The idea seems strange that they should be, in any way, "held to" what they promised.

Without THAT kind of trust, no one is willing to make any sort of verbal deal with anyone else for anything. No politician is willing to give away X now in exchange for a promise from another politician to give back Y later. The promise, which used to be disaster to violate, now seems to have no weight at all.

Not too surprisingly, by discounting the past and wantonly disregarding the future, there is very little room left to negotiate in "this instant."

Maybe rich people never trusted each other, and they certainly never trusted poor people - but many poor people actually do trust each other, surprise. Many communities are places where neighbors don't lock their cars or their doors. [see note]

That worked. This doesn't.

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[note: - Michael Moore noted in one of his movies the amazing distinctions crossing the river from Detroit Michigan to Windsor Ontario, heading South. (check the map, yes, South.) In much of Windsor, people don't lock their houses. Moore interviewed one person and asked if they had ever been robbed. Yes, they had. So now do they lock their house? No, "it would just feel wrong." ]

Re Rescue the Rescue ( Friedman, NYTimes)

You say "No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it."

T.S. Eliot, writing in the last Great Depression, in "Choruses from 'The Rock'", said it well.

"They constantly try to escape
From the darkness outside and within
By dreaming of systems so perfect that no one will need to be good.
But the man that is shall shadow
The man that pretends to be."

It's worth reading the whole thing. There is a huge amount of content and reflection there.

"But you, have you built well,
that you now sit helpless in a ruined house?"

It is very hard to find the entire poem online, so here's a link to a copy in google books.
http://books.google.com...

— Raymond, Detroit