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Book Review: Antifragile

by Grace Kelly on December 12, 2012 · 1 comment

Every once in a while, a book comes out with ideas that are like fireworks. Nassim Nicholas Taleb’s book “Antifragile” is a explosion of life changing ideas. Taleb gains his prominence as one of the very few who predicted the banking collapse before it happened. He took a great deal of adverse social pressure until it actually happened.

Antifragility is the property where something benefits from risk, uncertainty, volatility, randomness, disorder and stressors. It is not resilience or robustness because that is just staying strong where antifragile actually gets better. Examples of antifragile from the book and from me are:

  1. Iron is tempered by fire into steel.
  2. Maximum weight lifting improves human muscle mass the fastest.
  3. Good computer system developers stress test their systems in every way.
  4. Venture capitalists make multiple small investments needing only one big win.
  5. Human Learning is best done dynamically not in rote ways.
  6. Mythologically a hydra gains more heads than it loses.
  7. Germs get more drug resistant if not totally killed off.
  8. Football games score the most per minute in the last two minutes of a game.
  9. Every plan crash is examined and used to make all flying safer.
  10. Nature and evolution recover and grow so well that people think there is nothing that nature cannot handle.

Even more significant is the idea that we can make things, people, ideas and human institutions more antifragile by reducing fragile characteristics. Anti-fragile resists the harm from errors, and then recovers and learns from errors. To see how revolutionary this idea is, just imagine a mother telling a child to embrace risk and just handle all the possibilities better.

And this is just the beginning, the best is after the fold.
In this discussion, antifragile is good, like a hulk superman who gets better at every fight. Fragile is bad, like a superhero who has every wound from previous battles and who fights worse each time.

Predictable Single Path vs Antifragile Ready for Anything

Even thinking that things are predictable makes us more fragile for we invest in that vision of the future and optimize for that single future. “Life is lived forward, but remembered backward.” We as humans are prone to single path thinking. Our human minds make up narratives to fit circumstances retroactively. Even a false narrative will make us feel better. Predictions are based on normal variations and the recent past which ignores a Hurricane Sandy. The author describes Hurricane Sandy events as Black Swan events. These are events that are so rare that no one anticipates them.

A very-smart corporate turkey is being fed for a thousand days by a butcher. A staff of analysts say that butchers love turkeys and the future looks brighter and hopeful with each passing day. The positive outlook has a greater statistical significance each day. The turkey assumes from the past that since there was no harm so far that there will be no harm in the future. Then butchering day comes!

So then how can we win as turkeys in this world, when we cannot know who is the butcher and when butchering day happens? Here is where Taleb’s book shines with practical suggestions.

1) Do less with grand theories more with tinkering/testing. Knowing the negative is very helpful. Every failure is information. A simple rule of thumb is better than a complex theory.  Knowing and being able to predict a pattern is more important than knowing the actual story behind the pattern.

2) Simple rules: Smaller is better. Slower is better. Older is better.  Anything that gone through volatility is more trustable that anything that has not. Explanation: Companies work better if they are able to make small errors that are easily fixable. The longer that something has existed the more likely that item, design, or institution will around for much much longer, no matter what you think of it. Think of wine, coffee, chairs and religions. Small can “squeeze” through, large never can.

3) Trust people who have skin in the game.
Be especially wary of people who will lose nothing if wrong. Be wary of a situation where benefits are small and visible and the side effects potentially severe and invisible, like testing a new drug. An agent moves risk to others, a hero takes risks on to oneself. CEOs have very little downside risk, hence no skin in the game.

4) Less is more and usually more effective. Be more likely to do omission instead of acting. Make actions small and reversible. Make small reversible errors to find the negative spaces.

5) Mastery is doing, not the study of doing. Learn from the best doers not the best theorists.

6) Create stressors if you don’t have them. Police do this by creating practice disaster events.

7) Create redundancies like Nature does. For me, Just-In-Time inventory is one of the most fragile creating choices. At the very least, a company ought to have the extra critical parts of anything that would shut down the business. Local is more anti-fragile. Think insurance and back up systems.

8) Designing fragile parts can make a whole mechanism or whole institution antifragile.
Think fuses.

9) Bottom up is better than top down. Bottom up is the fight for success of little small parts, easily fixed and changed. Top Down is good as long as it is always right. However the errors are huge and institution threatening. Taleb actually makes the case that freedom is more important than peace.

10) React to signal not noise. Only look at very large changes in conditions not small ones. Otherwise you can get problems from intervening, causing unintended consequences. Information has a nasty property of hiding failures because of the great opportunities to cherry pick results. Detail gives us comfort when it should not. We react to change more than direction.

11) Have a surplus of options. Get out of debt. It would be better to live in a smaller house with no debt than a fancy house with a huge debt. Have multiple career options and a backup plan. Need and want less, then you are not susceptible. Avoid stupid risks like smoking. Use emotions to make one successful by transforming fear into prudence, pain into information, mistakes into initiation and desire into undertaking.

12) Avoid banking on the mean or the middle, instead build a bimodal strategy that builds for maximally safe and maximally speculativ
e. For example, in every economy the super rich have money to waste. Better yet instead of doing a single path analysis, do multiple path assessments. Taleb gives some great examples where one can win big with a 20% chance of winning as long as the winning is huge and one invests in multiple 20% big win chances. Asymmetrical relationships are key here. A 10% increase in New York Traffic does not cause a 10% slowdown, it causes total blockage.  Track payoffs not probabilities.

13) Variability matters as much as the average. Minnesota weather is a good example of that. If you plan for the average, you could never live in Minnesota.

14) Trust in real numbers not marketing.
We would consider a person who self-marketed the way that corporations do as a bore and probably deceptive. Then why do we accept this from corporations? Corollary is do not trust in the words of a person who is not free, like Lawrence of Arabia. Greed can be more than money, it can be greed for credentials.

Technical if you can go there

1) Antifragile – If you gain more than you lose by variability. This is where you want to be. If you graph a variable to its effects, the graph will be convex, like a smile.

Samples are exercise and finding shipwrecked treasure.

2) Fragile – If you lose more than you gain by variability. This is where you don’t want to be. If you graph a variable to its effects, the graph will be concave, like a frown.  

Samples are number of cars in traffic and storm loss.

The book is very readable for the non-technical with great stories. The book is layered so if you want to go technical you can. Taleb also goes into the technical modeling errors of portfolio theory showing that people think they are spreading risk when it may be a false illusion.

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Photo from Rochester Post Bulletin

Republican candidate for Minnesota’s First District Allen Quist has portrayed himself as a stickler for accuracy.” But when confronted with his inability to file a standard congressional financial disclosure form all candidates have to file, he blamed the government. Yet another paragon of personal responsibility.

But Quist hasn’t learned the lesson of stop digging. Quist’s massive ego will not let him admit his failure. So he’s gotten out his backhoe to continue digging. This is Quist on Monday:

[laughing] Very interesting question. I just filled it out today, the financial disclosure. Typical government form. I just filled it out and guess what: there’s no address in terms of where you send it [laughs]. No private business would operate that way. it’s typical bureaucracy. [laughs] I assure you, when I send out a fundraising letter, I have an address, you know, where you can send the money. So as soon as I find the address, in term of where I can send it, [laughing] it’s going to be sent.

This is seriously unbelievable. Just to remind folks, here’s the form. Click on the image to see a larger version in case you can’t quite find the address either.

But seriously, Quist isn’t done with this. He seems determined to this epic fail into a mountain of fail, SallyJo over at Bluestem Prairie has even more details that Quist still may not have turned in this paperwork.

Un effing Believable.

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Photo from Rochester Post Bulletin

We won’t have Allen Quist to kick around for much longer. The Republican’s candidate in Minnesota’s First Congressional District will be losing to Rep. Tim Walz in three weeks. But in the meantime, Quist keeps getting more comical. I noted last week how Quist failed to file financial disclosure paperwork back in May despite describing himself as a stickler for accuracy.” And details. Or something.

Now that Quist is aware that he was supposed to file this paperwork, he has another problem.

Quist said last Monday on his failure to file by claiming he had now filled out the form and was unsure where to send it since the address was not on the form.
(New Ulm Journal)

Here’s when you need to set down any beverage you might be drinking lest it come out your nose.

The address where congressional candidates are supposed to send their filings are on the first page of the form. Positioned at the bottom the page. Right there. In the middle. It’s even got a helpful box around it to highlight it.

Quist can’t comply with basic campaign paperwork yet believes he can navigate the Halls of Congress? Click on the image to see a larger version in case you can’t quite find the address either.

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Allen Quist: stickler for accuracy AND details

by The Big E on October 13, 2012 · 0 comments

Photo from Rochester Post Bulletin

Will Quist unleash the lion on his paperwork problems?

All congressional candidates are required to file a financial disclosure so any conflicts of interest are public knowledge. The threshold is low, $5,000 raised or spent. Minnesota First District Republican candidate Allen Quist hasn’t done this.

The ironic thing is that Quist said that he’s a stickler for accuracy in a MN-01 debate with Rep. Tim Walz (DFL-MN).

When Republican candidate Allen Quist clutched his pearls the other day and demanded an apology from his DFL opponent, Rep. Tim Walz, I rolled my eyes. In a MN-01 debate, Walz accused him of not supporting veterans because Quist said everything was on the table in regards to budget cuts. So obviously he had to revert to playing the victim and clutch at his pearls. But in the last paragraph of the story in the Mankato Free Press I was shocked to read this:
“The reason I’m here is to have the record set straight,” Quist said. “I’m a stickler for accuracy.”

What changes Quist’s inability to file basic campaign paperwork from ironic to humorous is that Quist’s deadline was five months ago.

U.S. House of Representatives candidates are required to file their form when they exceed $5,000 in campaign funds raised or spent during the race. The rules require the report be filed within 30 days of passing that threshold to become a “qualified” candidate or by May 15, which ever one is the later date. Additionally, “qualified” candidates must file no later than 30 days before any election the candidates will participate in, such as a primary. If candidates pass the threshold within the 30 days until an election, they are required to file immediately.

Quist announced his congressional bid in December of 2011. Between Jan. 1 and March 31, Quist raised $37,710 for his campaign, according to his FEC quarterly filings. The Office of the Clerk for the U.S. House of Representatives does not have a filing list for Quist in its data base for 2011 and 2012.
(New Ulm Journal)

Seriously. Who’s in charge of this clown show?

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UPDATE: Please read the comment (below) for an explanation from the Alexander campaign —

Former Republican Ian Alexander has a few problems with his campaign finance report. Alexander is running in the DFL Primary for the 59B seat vacated by Bobby Champion who is running to replace Sen. Linda Higgins. He faces Terra Cole and Ray Dehn next Tuesday, August 14, 2012.

Alexander says he raised $18,324 yet only has $4,908.84 left. What happened to the $13,415.16 that is unaccounted for? He says his campaign only spent $50. Unfortunately, the math doesn’t match. (Click on the image below to go to the report.)

This missing $13K+ most likely went for literature, mailings and fundraising. Its unlikely anyone donated the printing and mailing costs and his report does not indicate much of any In Kind contributions.

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Erik Paulsen’s “Pals”

by TwoPuttTommy on July 17, 2012 · 0 comments

First, I saw the tweet, to the right.  And I thought: “Yeah, ‘right.'”  Like, all the dough career politician Erik Paulsen (remember, Paulsen was selected to a Party Leadership Position in 2009) has been pullin’ out of W.D.C.; and his Spokestool is gonna claim that’s proof that folk “stand behind” him, here on the semi-frozen tundra??!?

Then I saw the story, at Minnesota Public Radio News:

Campaign 2012
Minnesota candidates collect money from outside the state
by Catharine Richert, Minnesota Public Radio
July 16, 2012

ST. PAUL, Minn. – Just because you live in California, doesn’t mean you can’t help out one of Minnesota’s candidates for Congress.

According to the most recent round of campaign finance reports filed with the Federal Election Commission, contributors living as far away as Alaska are pumping hundreds of thousands of dollars into Minnesota’s congressional races.  (rest of story, here)

But the rest of the story didn’t talk about the guy who hauled home a whole bunch o’ dough; dough that his Spokestool infers shows a whole bunch o’ local support for his boss, career politician Erik Paulsen.

So, knowing how to look around a Federal Election Report, or two, or more, I figured I’d take a quick look.  Let’s look!

Paulsen’s election campaign committee is called “Friends Of Erik Paulsen”.  And what a bunch o’ swell pals does he got!!!  Link said “friends”, and you’ll see “July Quarterly” under Year 2012.  That’s the latest filing Paulsen’s Spokester was tweeting about.

Now, I didn’t take a whole lot of time, but I did go through the individual donors alphabetically, A thru D.  And the very first “friend” (a/k/a, “donor”) Paulsen has listed?

Debbie Ackerman, Wilmette, IL  $250  —  Employer: Twin Bridge Capital  Occupation:  Private Equity

First Maximum Cash Allowed “friend”?

Barb Anderson, St. Could, MN  $5,000  —  Employer: Homemaker  Occupation: Homemaker

All in all, of all the donors, er, ‘scuse me, “Friends of Erik Paulsen” with last names starting with A through D, there were 43 that I figure are in Minnesota’s 3rd Congressional District.  I counted 51 that weren’t inside the District.

And I noted that many of those outside the District, were REALLY outside of the District:  Illinios, Maryland, Wisconsin, Virginia, Arizona, Florida, California, New Mexico, Georgia, Pennsylvania, North Carolina, Texas, Louisiana, Maine, and New York were states I noted —  just in A through D.

Those 43 “friends” IN the District?  I tallied a total of $32,801, or about $763 per pal.  Outside the District?  $38,700, or about $759 per pal.

But, you know who Paulsen’s pals really, Really, REALLY are?  PACs.

In just the A section of named PACs, Paulsen hauled in $41,500.  Again, just from the A list….  and all of those pals PACs are from out of District AND out of state.

Again, what did career politician Erik Paulsen’s Spokestool say about Paulsen’s haul?

“#MN03 stands behind Erik Paulsen – raises a staggering $454K this quarter.”

In a way, that’s true – because us local yokels  ARE behind Paulsen, because he’s lookin’ at his pals that give him most of his money – and they ain’t from ’round here.

More analysis, later – stay tuned!

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MN Campaign Finance law Threat

by JeffStrate on September 21, 2011 · 0 comments

Brad Allen writes in MinnPost about today’s high profile attempt to overturn a new State campaign disclosure law.

Minnesota’s recent campaign finance law, which generated headlines – and headaches – for Minnesota companies during the 2010 gubernatorial campaign, will take center stage in a St. Louis courtroom today in a high-profile attempt to overturn the statute.
In a case, known as Swanson v. Minnesota Citizens for Life, lawyers will face off before the full 11-member bench on the Eighth Circuit Court of Appeals.
The issues before the court will focus on Minnesota’s ban on corporations making direct contributions to candidates and political parties and on the reporting and disclosure requirements the law imposes on corporate contributions to the independent committees that the statute allows

.

Here’s the link –
http://www.minnpost.com/bradal…

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One of the key players in the Republicans’ campaign to put marriage discrimination into the Minnesota Constitution is the National Organization for Marriage (NOM).  NOM has funneled millions upon millions into the marriage discrimination campaigns in other states.  They were dealt a setback last Thursday.  Apparently due the combination of the Republican government shutdown and the holiday weekend, nobody noticed.

The MN Campaign Finance Board ruled that they had to disclose their donors over $1,000.

The Minnesota Campaign Finance and Public Disclosure Board ruled last Thursday that major corporate donors related to the constitutional ban on same-sex marriage  must be disclosed. But Minnesota’s strong disclosure laws already reveal many prominent movers and shakers behind the seven-year battle the Minnesota Family Council has waged to get the amendment on the ballot next year. High-dollar contributors include the owner of a DVD-replicating business who has given large sums to Republican causes and the chairman of a sports apparel company that’s received $2 million in defense contracts. And even staffers of the Minnesota Family Council have kicked in big money.

The Minnesota Independent took a look at lobbying reports, campaign finance filings and foundation tax records and found a large amount of money coming from a handful of people. Lobbying reports don’t include the amount of money given to a particular lobbyist, only whether the donation was more than $500 per year. And campaign finance reports are limited to funds that went toward advertising, print or other electioneering communication and activity.
(Minnesota Independent)

Follow the link to MN Indy to read the list of some of the largest donors.  

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Pawlenty attempts to defend his fiscal record

by The Big E on April 22, 2011 · 1 comment

Former Minnesota Governor Tim Pawlenty attempted a very difficult, reality-defying political gymnastics maneuver on Nevada TV.  He appeared on Jon Ralston’s Face To Face to push his 2012 presidential campaign and defend his fiscal record as Governor.  Last week, Minneapolis Mayor RT Rybak called him a “fiscal failure.”

“The two years that end during my watch, which is this summer, is going to end in the black, in a surplus,” he said. “So my time in office is going to end in a surplus. The next projected deficit assumes a 27 percent increase in state spending two-year period a budget to two-year period over budget. That is ridiculous. It is outrageous. If they had just spend single-digit increases, not 27 percent, they wouldn’t even have a deficit. It’s a complete fiction. It is a government out of control on autopilot.”
(Politico)

You can watch the entire interview here.

Pawlenty’s position is indefensible.  He created a structural deficit by cutting taxes for the wealthiest Minnesotans and for corporations.  The richest 5% pay a lower percentage than the rest of us do.  Many corporations pay zero taxes.

The problem isn’t spending, but the fact that Pawlenty shrank our tax base so we will never bring in enough revenue to meet expenses no matter which limb we amputate each fiscal year.

Furthermore, his claim that single digit increases in spending would have provided a surplus is ridiculous.  He fails to account for the demographic changes in our state.  Thousands and thousands of seniors retired and need health insurance.  Thousands and thousands of new kids enrolled in our schools.

Pawlenty has always covered up our fiscal problems by raiding one-time money sources.  For example, we received $2.3 billion from President Obama’s economic stimulus plan.  The stimulus money was one of the main reasons we didn’t have a deficit in Pawlenty’s last fiscal year.

Pawlenty has always used accounting shifts to cover up deficits.  For example, he shifted payments to our schools into the future.  We’ll likely have to bond to pay our schools back for money they’ve already spent.  This is credit card fiscal policy.

Finally, last spring Pawlenty proposes bonding to pay for ongoing expenses.  Thankfully, it didn’t pass.  This is the fiscal equivalent of paying for your groceries and rent on the credit card.  This is completely insane and irresponsible fiscal management.

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Rep. Michele Bachmann (R-MN) may be facing financial penalties, an audit and possibly even legal action for her election finance screw-up.  I noted earlier that the FEC was looking into her last filing.  She is unable to account for 10% or around $1 million of the $13.2 she raised for reelection.

“It has come to the attention of the Federal Election Commission that you may have failed to file the above referenced report of contributions bundled by lobbyists/registrants and lobbyist/registrant PACs as required by the Federal Election Campaign Act,” wrote FEC assistant staff director Debbi Chacona to Bachmann on Feb. 17.

The cited “above report” references Bachmann’s year end report that covered between July and Dec. 31.
(Politico)

Politico goes on to report Bachmann may face “civil money penalties, an audit or legal enforcement action” if [she] fails to submit the lobbyist bundling report.

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