More change is happening, faster than ever before. Can we keep up? Or will we get left behind, obliterated by catastrophic risk in a world that shifts too quickly?
Brian, thanks for re-upping this essay. The lessons are always timely, and there are many.
First, information is power. The corollary to that is misinformation can shift power between parties/groups/adversaries
Second, when this information dynamic when accompanies speed, it looks like an OODA loop (Observe, Orient, Decide, Act) on steroids as the the OODA loop for trading has been “algorithmically” pre-determined and cannot account for the what appears to be “false” or “unanticipated” information/observations such as the case in the spoofing.
In a war/military context, speeding up the OODA loop confers a huge advantage in seating your foe. We are seeing this in the use of drones/UAVs in Ukraine and Gaza. The difference is that UAVs have a person controlling and observing throw the drone. In trading the algorithms are written and preset…that is where danger lies.
Finally, you mentioned risk being reduced. I think this is wrong. Risk cannot be created nor destroyed. It can be shifted between parties knowingly (insurance is a form of this) or unknowingly (as was the case in the Fisk example or the state debt you lead with). Risk can be transformed from financial to physical outcomes or vice versa (either for better or worse depending on context), risk can be known or it can be totally unknown but ever present.
In the latter, think about climate change. In the 1950s…even the 1970s…did we really know about climate change? Yes, there was some research, but it is being shown to be more complex, and working through weather events. Now that risk shifting is happening in ways that people see…rising insurance rates, inability to find insurers in various coastal areas, yet we continue building in the path of Hurricanes, keep failing to better insulate our buildings and infrastructure against “polar vortex” events because we think it cannot happen or won’t happen. Or it is “too expensive”…transforming financial risk into physical event risk.
That brings the final point…risk of often ignored or minimized…the “it cannot happen here” of Sinclair Lewis fame regarding Facism in the US.
So even if we know…we consciously make choices that transform risk in ways we do not think about.
Thanks for such thoughtful comments as always Paul. Would you say that risk can never be reduced? I find that intriguing as a philosophical viewpoint. Setting aside issues of epistemology and ignorance of outcomes, surely there are behaviors that, we can have reasonable confidence, will amplify or reduce the likelihood of an undesirable outcome. Just trying to understand what you mean when you say “risk cannot be created or destroyed.”
Brian, I have used this idea in the context of power system operation and control initially. The point of risk cannot be created or destroyed comes from the back and forth of policy makers and interested stakeholders. There is always a risk of a black out or a major loss of load on a power system. That is a physical event. The physical event has knock off financial and human consequences. We can transform the physical event risk into a financial consequence by taking actions to minimize the physical event risk, but then we hear that the financial cost of this is too high and leads to other consequences for those paying to guard against physical event risk…we have just transformed this into financial risk that is immediately realized, rather than a physical event risk with an unknown probability and unknown time of realization.
I would love to continue this off line if you like. I think it goes to limits on our knowledge and imagination of what can occur in the world.
I can see you may bring a different perspective to this as somebody who studies political dysfunction and dictatorships as I can see a place for discussing that in this context.
"The world now moves so fast that we can no longer understand it. Speed creates order and efficiency. But speed has also placed a ticking time bomb under the systems that govern our lives." A beautifully concise-precise capture Brian! Careful slow inclusive thinking-weighing-necessary for understanding is replaced by transactional-reactionary responses that lack any depth of understanding, leaving us too dumb for democracy, focusing on the cult of personalities. We don't focus on Bidens policies but his appearance of being weak. We look to strong men with the best slogans that tap into resentful sentiments rather than looking to understand what policies caused the grotesque inequality-unfairness that made so many resentful. Slow careful thinking is inefficient-shot cuts-superficial appearances rule the day. Efficiency-speed is the enemy of understanding-the enemy of man's search for meaning.
Brian, your essay conjures Michael Lewis’s book “The Flash Boys”.
The increasing speed of change is mathematical. New knowledge is built upon prior knowledge and its increase becomes log rhythmic rather than simply arithmetic as it was in the beginning.
Great explanation. I used to say that "Money was power in tangible form," but it's not even tangible in most cases in the modern world. Debit cards, electronic transfers, and the like are well on their way to abolishing physical money. Good or bad? You decide.
"The question is: are we smart enough as a species to harness that ecstasy without letting it destroy us?" Our history has us throwing technology out there and it is influencing us more than us shaping it to serve our needs- our higher priorities but serving our sense of instant gratification. The history of the automobile had us designing cities around private cars around the profits of big auto companies and big oil. We now try to make neighborhoods more livable more humane more sustainable but the damage to community is mostly irreversible. Reversing damage from the AI genie out of the bottle will be far harder. The AI genie can't be put back in the bottle. We will adjust and become less humane and more mechanistic. Less room for a stuttering Biden more room for smooth operators. Certainty and certitudes will capture us when the nature of the world is uncertainty.
Brian, thanks for re-upping this essay. The lessons are always timely, and there are many.
First, information is power. The corollary to that is misinformation can shift power between parties/groups/adversaries
Second, when this information dynamic when accompanies speed, it looks like an OODA loop (Observe, Orient, Decide, Act) on steroids as the the OODA loop for trading has been “algorithmically” pre-determined and cannot account for the what appears to be “false” or “unanticipated” information/observations such as the case in the spoofing.
In a war/military context, speeding up the OODA loop confers a huge advantage in seating your foe. We are seeing this in the use of drones/UAVs in Ukraine and Gaza. The difference is that UAVs have a person controlling and observing throw the drone. In trading the algorithms are written and preset…that is where danger lies.
Finally, you mentioned risk being reduced. I think this is wrong. Risk cannot be created nor destroyed. It can be shifted between parties knowingly (insurance is a form of this) or unknowingly (as was the case in the Fisk example or the state debt you lead with). Risk can be transformed from financial to physical outcomes or vice versa (either for better or worse depending on context), risk can be known or it can be totally unknown but ever present.
In the latter, think about climate change. In the 1950s…even the 1970s…did we really know about climate change? Yes, there was some research, but it is being shown to be more complex, and working through weather events. Now that risk shifting is happening in ways that people see…rising insurance rates, inability to find insurers in various coastal areas, yet we continue building in the path of Hurricanes, keep failing to better insulate our buildings and infrastructure against “polar vortex” events because we think it cannot happen or won’t happen. Or it is “too expensive”…transforming financial risk into physical event risk.
That brings the final point…risk of often ignored or minimized…the “it cannot happen here” of Sinclair Lewis fame regarding Facism in the US.
So even if we know…we consciously make choices that transform risk in ways we do not think about.
Thanks for such thoughtful comments as always Paul. Would you say that risk can never be reduced? I find that intriguing as a philosophical viewpoint. Setting aside issues of epistemology and ignorance of outcomes, surely there are behaviors that, we can have reasonable confidence, will amplify or reduce the likelihood of an undesirable outcome. Just trying to understand what you mean when you say “risk cannot be created or destroyed.”
Brian, I have used this idea in the context of power system operation and control initially. The point of risk cannot be created or destroyed comes from the back and forth of policy makers and interested stakeholders. There is always a risk of a black out or a major loss of load on a power system. That is a physical event. The physical event has knock off financial and human consequences. We can transform the physical event risk into a financial consequence by taking actions to minimize the physical event risk, but then we hear that the financial cost of this is too high and leads to other consequences for those paying to guard against physical event risk…we have just transformed this into financial risk that is immediately realized, rather than a physical event risk with an unknown probability and unknown time of realization.
I would love to continue this off line if you like. I think it goes to limits on our knowledge and imagination of what can occur in the world.
I can see you may bring a different perspective to this as somebody who studies political dysfunction and dictatorships as I can see a place for discussing that in this context.
Thanks. Well, that convinced me to sign up to paid. You have an interesting mind...
Thank you! Welcome. Lots of readers with interesting minds here - hope this is the first of many comments.
You won’t regret it……even at the speed of light.
"The world now moves so fast that we can no longer understand it. Speed creates order and efficiency. But speed has also placed a ticking time bomb under the systems that govern our lives." A beautifully concise-precise capture Brian! Careful slow inclusive thinking-weighing-necessary for understanding is replaced by transactional-reactionary responses that lack any depth of understanding, leaving us too dumb for democracy, focusing on the cult of personalities. We don't focus on Bidens policies but his appearance of being weak. We look to strong men with the best slogans that tap into resentful sentiments rather than looking to understand what policies caused the grotesque inequality-unfairness that made so many resentful. Slow careful thinking is inefficient-shot cuts-superficial appearances rule the day. Efficiency-speed is the enemy of understanding-the enemy of man's search for meaning.
short cuts not shot cuts lol
Scary and terrible stuff happening even without evil intent? Just scary and terrible!
Brian, your essay conjures Michael Lewis’s book “The Flash Boys”.
The increasing speed of change is mathematical. New knowledge is built upon prior knowledge and its increase becomes log rhythmic rather than simply arithmetic as it was in the beginning.
Great explanation. I used to say that "Money was power in tangible form," but it's not even tangible in most cases in the modern world. Debit cards, electronic transfers, and the like are well on their way to abolishing physical money. Good or bad? You decide.
Wow! Just wow!
excellent expose. thank you, brian. ur fan, j.
"The question is: are we smart enough as a species to harness that ecstasy without letting it destroy us?" Our history has us throwing technology out there and it is influencing us more than us shaping it to serve our needs- our higher priorities but serving our sense of instant gratification. The history of the automobile had us designing cities around private cars around the profits of big auto companies and big oil. We now try to make neighborhoods more livable more humane more sustainable but the damage to community is mostly irreversible. Reversing damage from the AI genie out of the bottle will be far harder. The AI genie can't be put back in the bottle. We will adjust and become less humane and more mechanistic. Less room for a stuttering Biden more room for smooth operators. Certainty and certitudes will capture us when the nature of the world is uncertainty.
"...evolution by creeps..."
pithy and accurate, Brian!
Mark Zuckerberg and Elon are 2 I instantly though of...the new Speed Merchants!
Once we all start speed-reading Reality...and act on our quickly formed notions of it?
'fast and loose' is considered a derogatory for a reason.