Tag Archives: Nicolas Taleb

2015 Year in Review: Is the World Getting More Fragile?

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Through what lens do you understand the world’s hardest problems?

Arnold Kling’s posits that conservatives understand the world on an anarchy-civilization axis, liberals understand the world on a oppressor-victim axis, and libertarians understand the world on a coercion-freedom axis.

I find this model useful, and for much of my life I understood the world on the oppressor-victim axis; over the past few years, the coercion-freedom axis has also become a frame of common use.

2015, however, was the year when I more fully adopted a new axis: the fragile-antifragile axis.

In short, while I find Three Axis Model useful in understanding how others think, I find it out of synch with my own values (none of this an attack on Kling, he was only describing the dominant camps).

Moreover, I read two books this year (War! What is it Good For? [non-fiction] and Nexus [fiction]) that reenforced the notion that the traditional three axis viewpoints did not reflect how I approached the world’s hardest problems.

The Fragile-Antifragile Axis

Quite simply: things that make the world more fragile are bad, and things that make the world less fragile are good.

Nassim Taleb wrote a  about it. There’s a lot in that book I disagree with, but I think the thesis is roughly right.

The Issues at Hand 

The following things are making (or have the potential to make) the world much more fragile: climate change, AI, weapons of mass destruction, Donald Trump becoming president.

The following things don’t really affect the fragility of the world: domestic gun policy, reproductive rights, tinkering with tax policy.

Now, all of these issues are important, and I care about all of them. But when viewed through the fragile-antifragile axis, some or much more important than others.

Moreover, some of these issues (weapons of mass destruction) cause me to be open to supporting policies that I would not support if I only viewed the world through the liberal or libertarian axises.

How to Make the World Less Fragile? 

I previously spent a few months worth of free time creating a pitch deck for an existential risk venture fund, whereby success would be measured in reduction of existential (fragile) risk rather than profits. I pitched it to a few high net worth individuals but got nowhere. Perhaps I got rejected because this is a bad idea.

But this year has seen the rise of two anti-fragile funds: Open AI and the Gates energy fund.

Also, Elon Musk has plans to make humanity less fragile by colonizing Mars.

And when you consider the Paris climate treaty, a taxonomy of antifragile tactics begins to emerge: innovation (Gates), knowledge equity (Open AI), exit (Mars), and coordination (Paris).

Is the World Getting Less Fragile?

This seems difficult to quantify. On one hand, given the size of our population and the advanced nature of our technology, we can survive many things that would have wiped our ancestors out.

On the other hand, these very two conditions – the size of our population and the advanced nature of our technology – also increase fragility. In a world where it becomes easy to build a virus that wipes out the world, it’s pretty dicey to have billions of people out there walking around.

It’s interesting to think about what was the least fragile time in human history (1890s?).

If I Had to Bet

My guess is that exit is the best strategy to reduce fragility.

And while I appreciate Musk’s strategy (humans on mars), my guess is that exit will be achieved via robots (less fragile bodies) all over space (less fragile geography).

Though of course I’m not sure.

Anyways, that’s my reflection on 2015.

Dylan Matthews’ Education Policy is Fragile

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Dylan Matthews is a great writer. You should read his argument against equality of opportunity.

But in his most recent piece on education, he greatly overstates his case.

Dylan argues we should:

  1. Federalize education spending.
  2. Federalize standards and assessments.

Dylan gets three things wrong:

Federalism is Anti-Fragile

Dylan thinks it would be a good idea to federalize education spending and standards + assessments. The risks here are obvious: all are eggs are in one basket and we can’t experiment. I assume Dylan likes the idea of federalizing spending and standards because he thinks this will create more equitable spending and increase the rigor of our standards.

But just because this is what Obama would do does not mean it’s what the federal government would do, either now or in the future.

What if the federal government cut education spending by 20%? Of what if it banned the teaching of evolution? Or what if it banned the teaching of climate change?

Each of these is plausible.

The point is this: in a federalized education system, one bad federal government decision could really mess up education for all of our children.

It is fragile.

The Connection Between Funding and Outcomes is Hardly Air Tight

I recently wrote about how, once you correct for income, most states perform about the same on NAEP.

These states also happen to spend vastly different amounts of money on public education.

Dylan cites one study that shows a connection between spending and outcomes. It’s an interesting study but it’s hardly a slam dunk case.

Big picture, the connection between spending and outcomes is much murkier than Dylan indicates.

50 States Allows for Experimentation and Innovation 

This is another reason federalism is important: fifty different spending patterns allows us to better test the connection between any given policy and student achievement.

So too with numerous other policies. Innovations like charter schools were pioneered by states and then other states adopted them often after watching the original pilots unfold over time.

Yes, the government can run pilot programs. But these pilots will always be connected to the federal political ecosystem, which is inherently far less diverse than the political ecosystems of the fifty states.

In Sum

I personally think that federalizing education spending and standards is a bad idea.

Yes, the federal government can and should use its education spending power to influence states, and I think a case can be made for opt-in national standards.

But having the federal government fully controlling the primary levers of public education would radically shift education in our country, I think for the worse.

Arguments for such a drastic overhaul should be couched in humility, a deep understanding of research, and a thorough exploration of the obvious objections.

I think Dylan failed to do this.

But I’m eager to hear his response. He’s a thoughtful person and talented writer, and perhaps he can make a more expanded case for having the federal government control education spending and standards.

Thiel, Cowen, Taleb, Options, Candler, Tiny Schools, Regulation

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micro school

I just read this transcript from Tyler Cowen’s interview of Peter Thiel.

I found myself not being able to fully evaluate many of the claims that were made. I don’t know if this is because Cowen and Thiel are simply operating from a much deeper knowledge based than myself, or because they were just being vague and non-linear. It is likely some combination of the two.

Anyways, I did agree with this from Thiel:

If you are starting a computer software company, that costs maybe $100,000, to get a new drug through the FDA, maybe on the order of a billion dollars or so. If the FDA were regulating video game technologies, and you had to do a double-blind study to make sure that the video games weren’t addictive, damaging to your brain, etc.

In short, there are some sectors, predominantly health and education, where over-regulation hinders innovation.

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I’m currently reading Black Swan and AntiFragile by . (HT Ethan Fletcher)

Taleb has so many strong opinions, some of which seem clearly false, that it makes hard to know which of his ideas to trust. But many of his ideas do seem insightful.

I was particularly drawn to his emphasis on options as being a model for how we should think about innovation. Basically, an option minimizes downside while maximizing upside, in that, for a price, you get the option to buy at a certain price without having to commit to buy at a certain price.

His point is that with innovation you similarly want to minimize downside risks while maximizing upside opportunity.

The VC sector basically works on this model: make a bunch of (relatively) small bets, all of which have very high upsides, and hope that one of them works.

In this sense, options are a way of incorporating intellectual humility into bets about the future.

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Recently, Matt Candler has been advocating for Tiny Schools.

One way to think about Tiny Schools is that they are just that: schools with not a lot of kids. An entrepreneur opens a Tiny School, educates some kids, and hopefully the school succeeds.

Another way to think about Tiny Schools is as options: an entrepreneur starts a schools with 15-20 kids and tries to get the model right. If the school doesn’t work, 15-20 kids get a subpar education experience for a few years. Not really the end of the world, though of course not ideal. If the school does work, then the entrepreneur can attempt to scale the model, either by opening more Tiny Schools or by converting the Tiny School into a Regular School.

In short, launching Tiny Schools minimizes downside risks (less kids, no need to buy a large facility) and maximizes upside potential (the schools that do well can then be scaled).

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What regulatory structure might allow for Tiny Schools to thrive?

One model is just to keep Tiny Schools private. This is fine, but requiring tuition inevitably limits who will be served.

Another model is to use public funding, but to make the regulatory model very thin.

I discussed this with Adam Hawf and landed at the following:

  • Market Size: A state would limit the amount of Tiny Schools that received public funds in any given year: perhaps 100 Tiny Schools with no more than 50 students each in any given year. This equates to roughly 5,000 students /  $50 million a year, assuming $10K in public funding per student. This limits the downside for taxpayers.
  • Entry: The application process would be a slimmed down version of a charter application. The entrepreneur would need to have a budget, brief description of the model, and a basic opening plan. 30 pages at most.
  • On-going Regulation: On-going regulations would be based on homeschooling regulations. Basic reporting on students served and finances, but very little oversight.
  • Back End Accountability: There would be no back end accountability. Zero testing requirements or anything of the sort. Rather, the license to operate a Tiny School would be a one time, four year license. Once the license expired, the operator would either need to apply to become a charter school or a private school. From there, the school would enter what ever accountability system the state used for the chosen sector.

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If even ten states adopted this model, at any time we’d have a 1,000 different Tiny School pilots going on around the country.

The downside would be very small.

The upside could be incredibly high.