The Rational Optimist by Matt Ridley

I have no doubt that this book will provide a breath for fresh air for any history and futurology enthusiast. We live in a time that abounds with publications about the history of human civilization by renowned historians and activists, that almost always end on a cautionary (and even pessimistic) note about the future of humanity. I myself, having been exposed to similar veins of literature have grown accustomed to, and conditioned to believe that as a species, we must systemically reboot how we think about the environment, capitalism and foreign policy in order to maintain our relevance on this planet (if there is a planet left at all) into the distant future.

Ridley surveys all stages and facets of human civilization, including evolution, the advent of commercial activities, the industrial revolution, innovation and trade, and critically dissects the present state of foreign aid, climate change and the environment, as well as certain “fashionable” trends in social commentary. He nimbly and aptly maneuvers his way not only through different time periods (the book is for the most part, a chronological construct), but also through multi-disciplinary yet microscopic view of human behavior.

The premise of the book is this: there is plenty of proven data and historical evidence to suggest optimism about our species’ future survival and prosperity. Whilst cross-disciplinary, a good proportion of the book is dedicated to the discussion of commercial history in order to elucidate and rationalize certain evolutionary phenomena. For instance, Ridley claims that Malthus’ population theory was debunked when our ancestors demonstrated the ability to nimbly adjust our production (i.e. ebb and flow of specialization) and consumption behavior to reverse the effects of population explosion.

Ridley discusses Africa in the context of foreign aid and economic development. His diagnosis for advancing the African economy centers on: disempowering central governments and empowering women (the latter deserves a lengthy reaction on its own). By limiting the central government's authority, we pave the way for a system that protects property right and encourages entrepreneurship. Ridley cites the example of Zambia to demonstrate the potency of market forces: the aid that Zambia received since 1960, if invested in assets yielding a reasonable rate of return, would by now have given Zambians the income per head of $20,000 (equivalent to that of Portugal), as opposed to what it is currently, $500. Though illustrative and hypothetical, the example reinforces the power of market forces. Africa presents an infinite potential, not because the developed nations and stampede on their grounds and teach "them" "our" ways, but because Africa is at a vantage point where it can observe and selectively accept policies from history.

Ridley is unequivocally libertarian bent, and he is an open proponent of free trade and market-based foreign aid programs. He is a staunch believer of our ability to persevere even in the least welcoming survival conditions, and political and economic systems - because the history itself is our saga. He also draws our attention to the abundance of “pessimist” literature and likens such views to Hollywood’s blockbuster doomsday movies. Future is uncertain and any erudite scholar of human civilization is inclined to qualify his/her their statements with warning and caution to prepare us for the future. (After all, what harm can come out of precaution?) Ridley does not dispute the importance of foresight and preservation, he simply represents a bold and courageous school thought, that of a rational optimist.

"How America Lost Its Way"

http://online.wsj.com/article/SB10001424127887324798904578527552326836118.html

An insightful and controversial article by Niall Ferguson

Last Summer and Civilization: The West and the Rest by Niall Fergson

It took me longer than necessary to return to the blog. After not having written for a while, it just became a little awkward for me to resume blogging, and so I kept putting it off. Half a year of no blogging became a year, which became almost two years. However, with quite some time at my disposal until work starts at the end of June, and with the amount of thinking and learning I have been doing recently, I decided to shake off the slothfulness and get back into the habit of record keeping.

A lot has happened since my last post. Since then, I have traveled to two continents and five countries (Denmark, Germany, France, Peru and Chile). Seeing other corners of the world and learning and interacting with different peoples were not only eye-opening and educational, but those experiences also instilled a renewed sense of gratitude and added zest to my life. My recent trip to Peru was a particularly valuable experience which enabled me to witness a culture that is entirely different from my own, livelihoods that were unbeknownst to me, and a history that I was unfamiliar with.

Four years of college also came to an end (or I should say, the life after college has finally begun). Over the last two years at Penn, I have taken some challenging classes, attended interesting lectures by professors and guest speakers, become a leader, gained professional experience, expanded my professional network, and forged new invaluable friendships, as well as solidifying existing ones. As a lazy academic, I don't expect to miss schooling all that much for a while; however, saying goodbye to my friends, mentors and instructors was the most difficult part of graduation (commencement) for me. Yet, I am much looking forward to moving on, knowing that my old relationships and experiences will never cease to be part of my life.

I took a very interesting Anthropology seminar called Globalization and Health this past semester. The class discussed some of the important issues in global health and health intervention, drawing from a variety of ethnographic and historical writings, medical journals and ethical analyses. I found the class fascinating because culture, value and history become inseparable from public health in the global realm (versus local intervention). One of the salient issues throughout the semester was the benefactor-beneficiary relationship, which historically has been synonymous to the West-the Rest. Although we never reached a consensus on the justifications for health intervention, it seems as though most of us, as members of "Western" economics, had some type of moral obligation to intervene. Further, the haves' provision for the have-nots makes health intervention inevitably inseparable from (bio)politics.

Dr. Niall Ferguson's Civilization (BBC also produced a documentary series of the same title) provides a historical explanation for the "Western dominance" that characterizes the history of human civilization. He traces history, science and politics to unravel the course of events that led to the Western ascendancy, through a strictly objective and scholarly analysis. He argues that the West's historical dominance can be attributed to the six "killer applications" that the Rest lacked. These were namely: 1) Competition, 2) The scientific revolution, 3) The rule of law and representative government, 4) Modern medicine, 5) The consumer society, and 6) The work ethic.

I don't think that Dr. Ferguson's intention was to demonstrate Western superiority or to patronize the Rest. Rather, he praises the rapid economic development achieved by the Asian tigers, and the superior mathematical and scientific aptitude demonstrated by East Asian students. Additionally, Dr. Ferguson asserts that not only has the Rest been able to "download the killer applications" but countries such as China has also become an inalienable superpower in the global economy, ushering us into an age of cultural, economic and political collaboration between the West and the Rest. He cannot be more right on that point. However, some of his statements left me wondering and even slightly confused. For one, he concludes the book with: "Today, as then, the biggest threat to Western civilization is posed not by other civilizations, but by our own pusillanimity - and by the historical ignorance that feeds it." Perhaps it's just the phrasing, but this sentence almost draws a divide between Western and Rest-ern civilizations, which completely defeats the purpose of this wonderful book. I feel like "The biggest threat to human civilization is posed by our own pusillanimity - and by the historical ignorance that feeds it" would have done better justice to this book, for historical ignorance and cultural supremacism are destructive to the "West" and the "Rest" alike.

A Short Justin Wolfers and Liaquat Ahamed Interview

Are we in a lost decade? | Marketplace From American Public Media

'The Black Swan: The Impact of the Highly Improbable' by Nassim Nicholas Taleb

Taleb's 'The Black Swan' completely defies what Statistics has taught us about Normal Distribution (The Bell curve/Gaussian distribution).

We have been taught that in a sample of numerous (hundred and thousands) of observations, the largest number of observations tend to converge toward the "mean," with most outcomes lying near the mean (i.e. 95% in the range of -/+ two standard deviations from the mean). The Bell Curve model naturally emphasizes convergence to the mean and with this model, it is easy to dismiss the observations in the either end of the tails, as being uninfluential, highly improbable "outliers."

Taleb presents to the reader however, numerous examples of such "outlier" events that transformed our paradigms. His chapters contain not only examples of real people and past events, but also compelling analyses of how we (as well as scholars and doctors) rationalize outlier events and proves the logical fallacy of such behavior. People behave this way when they are fooled by confirmation error, the fallacy silent evidence, future blindness, retrospective distortion and many more logical fallacies.

His book is filled with inductive logic and a lot of vocabulary requires logical comprehension; for example, it took me ages to differentiate between scalable and non-scalable (If you have a non-scalable job, you are paid by the hour you work). And what about Mediocristan and Extremistan! (In Mediocristan, nothing is "scalable" and one single extreme observation cannot affect the sum of all values in the distribution. In Extremistan on the other hand, extreme occurrences cansignificantly affect statistical properties) It is also complete with colorful narratives and the author's ego, which made it a very entertaining read. I should probably read it at least once again though, in order to fully appreciate the epistemology and logic behind the colorful narratives.

Summer 2011 Reading List

....AND yet another academic year's over! Summer 2011 is going to be awesome and I'm really looking forward to my 9-week-long Equity Research internship! Hopefully I'll be able to squeeze in a few hours of reading (and sleep) while commuting. Once the internship's over, I plan to devote the remaining month to relaxing, travelling and reading!

As per last year, I picked out a few books that look interesting from dad's list and from my own personal selection(in no particular order):

1. 'The Black Swan: The Impact of the Highly Improbable)' - Nassim Nicholas Taleb

2. 'Security Analysis' - Graham and Dodd

3. 'Too Big to Fail' - Andrew Ross Sorkin

4. 'Outliers' - Malcolm Gladwell

5. 'Freefall: America, Free Markets and the Sinking of the World Economy' - Joseph Stiglitz

6. 'How Markets Fail: The Logic of Economic Calamities' - John Cassidy

7. 'The Power of Gold' - Peter Bernstein

8. 'Manias, Panics and Crashes: a history of financial crisis' - Charles P. Kindleberger

9. 'Lords of Finance: The Bankers who Broke the World' - Liaquat Ahamed

10. 'Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets' - Steven Drobny

11. 'Linchpin' - Seth Godin

Snoop by Sam Gosling

Gosling's 'Snoop' proposes to give an insight into what our personal spaces and possessions say about our personalities. It claims to turn every reader into a "super snooper," someone who is able to grasp the snoopee's nature by simply examining her bedroom. I too, was excited about becoming one and tried to fully master the art of "snooping." Unfortunately, the book only gives you a very limited snip-it of interpreting human psychology. It will take a lot of study and practice to become an expert "snooper."

Basically, Gosling's message is this: no matter how hard you try to camouflage and portray yourself as you wish to be portrayed, our identities are so strong that they will shine through no matter what. It is for this reason that Gosling teaches us not only how to interpret the most obvious signs such as organization but also clues of contrived display; for example, signs of hasty organization does not suggest that the person is conscientious by nature but he is merely trying to appear to be.

It is true that snooping only gives a relatively provincial knowledge of a person's characteristics. Nevertheless, it is still quite entertaining putting it into action and trying to determine the snoopee's openness, conscientiousness, neuroticism, extraversion and agreeableness based purely on observation.