Three principles to overcome clouded judgment
Mindsets for creative destruction. Please stop judging filthy art. Understanding comes from letting go of control and changing your mind often. A tale of a missed opportunity.
Hello! Welcome to all new joiners on this flywheel!
This is the second episode of a loosely structured three-part series of philosophical reflections on What does a clear mind look like: Mindsets for creative destruction.
Welcome on cloud vertigo, where we look as further ahead as we can.
Last week we have started by addressing the need of clear mind from radical skepticism. Why? The world of images is here to fool us. Today as much as ever: hello AI! The consequences? We have no clue yet. There will be good news and bad news. So better be ready. How shall we deal with radical uncertainty?
The good starting point is what not to do. Avoid leading with prejudice. A great indirect example comes from art and why it should be allowed to stay filthy.
We need the unpleasant to stay true to what matters: ambiguity. But how to deal ambiguity? The art of changing your mind is subtle and strangely not in fashion!
An example story: my biggest financial missed opportunity. I failed the pitch of a lifetime. My mistake? Lack of clarity and goal alignment. All we are left with is radical detachment and some vague structural hunches...
Let's get to it !
David
Please stop judging filthy art
Radical uncertainty requires radical agnosticism.
A stunning read I picked up from last week’s Exponential View short morsels to appear smart at dinner parties by Azeem Azhar is Garth Greenwell’s why art should be allowed to stay filthy (The Yale Review).
Garth's essay is a superb refutation of the loudest moralizing voices dominant today. We all would like art _to be free and to mean something, yet…
The problem is that, in much of our discussion of art, we’ve made a mistake about what moral engagement is, and so what art’s role in it might be (In praise of filth).
He observes how among his students how the quest for meaning indistinctly turns into the thirst of judgment. Most of the time, we just seek to gain a place of righteousness from an artwork. We consume in order to emit a quick, dismissive and definitive verdict.
Groupthink further amplifies this compulsion. Prejudice - Garth claims - signals a sense of societal anxiety, a kind of paranoia about our own moral status. As if we had to prove our moral engagement by rushing to hold every artwork exemplarly accountable. What would others think of me if I don't take a strong stance on this is a forceful motor of availability cascades!
The consequence is that the moral valence of an artwork, whether positive or negative, must be immediately legible. Nothing possibly worse! The real world (like good art) is vastly imperscrutable. Serious judgements spring from a dense contextual account. Moral engagement is expensive and hard to come by.
To illustrate the point, his nuanced analysis of Roth’s Sabbath Theatre explores how a repugnant account of an unlikable character proves not just permissible, but worthwhile. Fuck the laudable ideologies, decries its hero.
The dilemma around the exemplar value of art is set aside. The value of Roth's work is precisely showing us the complexity of human experience with all its infirmity and impurity. By “letting the repellent in” we renew our effort to stay true to what matters. Ambiguity.
I am human, nothing human is foreign to me. Terence's humanism sums it up well. We would like to censor what does not make us feel at ease. It is a far better posture to stick close to it. It's not like we aren't made of the same stuff.
I especially embrace Garth's novelist posture.
My job is actively to resist coming to such judgment. Plausibly adequate verdicts may be a necessary feature of the real world, but they are never necessary in matters of art (In praise of filth).
But are they a necessary feature of the real world?
Understanding comes from letting go of control
In most cases, we are better off without definitive judgment. The novelist posture is about being open to outcomes. Understanding comes from letting go of control. The speculative posture is not about resisting any plausible judgment, but to refrain from definitive ones.
You may say: let art be art. AI, business ideas, technological shifts are not made of the same dreamy stuff. At worst, a novel might only hurt the conscience of its keen readers. A harmful technology may instead damage the unwilling public, inordinately and at scale. You may be right.
Occasionally, though, I wonder whether that is the case, whether we should not treat it all like the same farcical play. Reality is as ephemeral as it has ever been. We are currently rewriting the possibilities of collective imagination. The boundaries of the imaginary and real world are blurring fast. I feel that the burden of proof about any substantial difference between art and tech stands on you.
Talking about the necessity of adequate verdicts. Every so often, in common law, it's better for a certain court not to reach a verdict. When a matter is very entangled, each outcome could set a dangerous precedent. Sometimes, the judge might prefer the parties reach an out-of-court settlement. (recent example in corporate governance according to Matt Levine).
While I concede there may be differences, still why really do we bother with so much rushed judgement with respect to tech? It’s so daunting. So stupid. We don´t hear very often a public voice admitting ignorance. Similarly, I wonder whether it reflects an index of societal anxiety.
Personally, I find ignorance a very spontaneous experience. I prefer not to pause too long on what I know. I continuously move towards what I don’t know. A clear mind is always moving.
Knowledge needs a strike and an expiration date
The novelist's speculation brings to mind the investor's posture. He seeks understanding, not change. It is only a certain, however minimal, detachment from the subject matter of its story that turns a memoir into a novel.
You can imagine knowledge as akin to stock options. Options are non-binding and future-dated. A stock option gives the right (but not the obligation!) to a party to purchase a security at a given strike price on a future date. You can think of the strike price as a falsifiable condition á la Popper: some judgment has value as long as the strike state-of-affairs is not met. All swans are white, until you encounter a black one.
The concept of an expiration date is trickier, but intuitive. Theories have different explanatory power over a different time-frames. How much of our science will be valid in 10, 100, or 1000 years? This is a hard question to ask, but nevertheless a necessary one. We always forget about it. It can get very political with social sciences. The oldest trick in the book is to assume as natural (read: timeless) a politically-loaded view. Slavery was natural. Until it was abolished. Horses were necessary to civilization. Until they were no longer.
The state of affairs of social conventions is ever changing. Our judgments shall reflect that. There are some deeper paradigm shifts that have broader ripple effects. Their impact is wide-ranging and affects many other cultural or technological disposistions. Think of the advent of the printing press or the steam engine. A moving mind has naturally an edge, because it is structurally affine to the world.
The underlying analogy I am leveraging is that of combinatorial universe, where like lego blocks, some deeper ideas sit at the base of a tower. When the baseline technological conditions vary, the set of transformations one can bring about explodes. These broader rearrangements are the ones that we need to grasp early and follow with courage and conviction, no matter what they entail.
One last time, this view of the world may sound devoid of responsibilities. Are we saying that are we just to let the world happen without interference? If we spot a trend we should just ride the bandwagon further? Is then the case that our collective actions (and wishes!) do not matter the slightest? If the whole is made up of our individual actions, why wouldn’t they? Emerging behaviors are hard to discern. In particular they are impossible to grasp without a clear mind.
In the first part of this series, I have argued at large the broader uncertainty we are facing. The necessity of a skeptical moment needs to be fully accepted and explored. Now, we cautiously advance drafting a methodology for discovery.
I want a grant for academics that change their mind most often
Like rushing to judge art on its supposed morality, twisting our understanding to match our desires is delusional. The investor posture cultivates the learner's mindset. It features first and foremost intellectual honesty, analytical rigour and the ability of changing your mind often. Which professions, today, truly embrace the art of changing your mind?
Maybe often is not the right word. Frequency is an extrinsic quality. But what matters here is that it's a relative quality (often means different things to a butterfly and an elephant!). A lot of science is made so we change our mind infrequently, but accurately. This is functional to building on top of each other's theories and reaching consensus. However, it can be a recipe for disaster. We end up with ethics playing catch-up with technology.
Most of academics' discussion feels segmented and feudal. I like to pick up Taleb's point from the book Fooled by Randomness. Taleb contests that an expert is someone who has skin in the game. The greeks, since Aristotle, may have called this expertise phronesis. A plumber is an expert on plumbing, because it has seen countless many toilets. He's not a specialist of a certain worldview around toilets. She does not have a brand name tied around a particular tool he uses to unclog them. If she discovers a better method to do the job, she has every advantage to employ it, as long as it is cost-effective. Today, suprisingly true intellectual honesty is only found ... in the financial markets! Albeit, I mean in prop shops trading with their own capital.
Compare it to economists. When you don't have skin in the game, you are preaching or advocating. At best, you are selling a service. You are justifying your own existence with your theory, rather than the other way around. Expertise is another cup of tea.
The biggest financial mistake of my life
Let me go back to the story I have been on the hook for a while. Here is the first part of the story:
When I discovered Bitcoin, I went to my uncle. He's a technologically savvy IBM executive. He listened with patience, questioned the tech until he understood it. But then he dismissed the idea. There wasn’t any clear extrinsic use case. Overall, it sounded like a mindless speculation to him. Go back to your studies, he said, I will give you a Christmas present to make up for the wins. I like to think the swap was well-structured and that I had secured myself some synthetic exposure to Bitcoin’s upside. But then, by december, BTC peaked at 1124$. I discovered counterparty risk the hard way.
I had more luck later on with my father. Maybe I knew him better so I could tailor my pitch more exactly. Maybe he had me around for longer, so he had a bigger incentive in having me to shut up about it. Or I just had a more conclusive case. If you listened to me three months ago we'd be up 10x - is usually pretty convincing. Broadly speaking, I think he better understood how strongly I felt about it.
I was lucky. Many would claim this was a once in a generation lottery ticket. I don’t feel that way. I felt that from simple profound intuitive understanding ahead of time stemmed opportunity. Things get trickier when you ask whether that opportunity was a risk-adjusted opportunity. Probably not. But most common-sense financial modelling of risk is so rudimental that is practically worthless (with the exception of high frequency trading modelling).
What strikes me in the story is that my teenage self was questioned on his motives. Is this just for greed? What is the impact on society of all of this? I did not have the faintest idea. I dismissed the problem. I was wrong. I was underage and I did not have a penny to my name. My whys mattered deeply to my potential LPs.
My chain of reasoning was dry and straight-forward. This is interesting and valuable. Nobody is talking about it. People will talk about it. When - not if - this gets to the cover of the FT, demand will outpace supply. Hence, appreciation. Hence, possibly widespread adoption. A simple high-conviction contrarian opinion, nothing new, but a significant first-hand experience to have.
Decentralisation sounded good enough in itself. I cared about that “thing in itself”. Bitcoin is a viable solution to a trillion dollar problem. It just needed to be understood by more and more people. Furthermore, banks were not the exactly popular in Europe among teenagers after 2008. A little crypto anarchy won the idea some look-at-this-sweet-idealist sympathy. It worked. I got another great learning from the experience: always give your counterparty a chance to sound smarter than you.
I did not have a strike price or a date. My timeframe was just long-term. When you are early enough, the exit's timing is not a first order priority. What you need to worry about is timing your entry. Half of your job is showing up on time!
My mistake was that I was slow at pitching the idea around, slow to raise capital. To be to honest I was not even 18 and the crypto world was a zoo (dodging MtGox and choosing self-custody proved vital). But it did not feel that way.
A burst of decentralization in the financial industry just made sense. It sounded implausible in the medium-term, but it was highly needed on la onger timescale. An industry highly inefficient and centralized operationally, highly-regulated tied in km of red tape, made of highly asymmetrical relationships dependent on trusted third-parties... A technological solution (or rather a reframing of the problem) was suddenly available. How long until someone else noticed?
Since that day, I have been wondering what other industries does this playbook apply to. Once, while I was sitting in the auditorium of the Southbank Centre, the next one hit me. But this is a whole new story for another time...
In the next episode, we explore further this method of vague structural glimpses across decentralization, modular Chinese solar fields, Indian map-making and more…
Thanks for reading along! If you read until the end, please do share a comment by replying to this thread or by e-mailing me at david@cloudvertigo.xyz. Your feedback matters. Until the next time. Take care!