Today I want to write about what I’m calling the “I did something fallacy”. If this has already been named please let me know! Also, this is not meant to be a direct criticism of Obama, that medal meme is very common and that is why I used it.

Anyways.

Essentially society, especially committees/groups, end up prioritizing actions that give the feeling of causing a change even if they may not. The feeling to do something trumps doing nothing about a looming threat or problem. And that action is deemed more adequate then it really is.

Terrorist attack in NYC. We need someone to blame and do something back to. Spend years hunting down and killing one man and leading to bombing a Doctors Without Borders hospital in the process. That surely won’t inspire more people to hate us…

Global warming? Let’s come up with carbon neutral accounting or plant trees. Cool I guess we’re done here even though many environmentalist would disagree. Carbon offsets, the popular climate change mitigation tactic, explained – Vox

Stock market crashing or inflation forecasted to go crazy, I need to do something! People often sell investments at a low point and buy when the price is high. Or they adopt strategies to protect themselves from a market crash without fully understanding the cost on long term returns. They often feel smarter because of their elaborate actions but undervalue the benefits of simplicity and inaction. What we think of as inaction is proper course of action in itself. You absolutely can add by subtracting.

The GDP is like Carbon Accounting

Another good example is also in data analytics. Analysts like myself embark on a project. Money and time is invested. We create some metrics to evaluate something like how good the economy is doing. What’s easy to count? Money! Why don’t we add up all the money spent and received for exporting goods to other countries minus what we import from other countries as some form of value-added country surplus. Boom we have what’s called the GDP (gross domestic product) and one common way to calculate it. A pretty reasonable metric that has become overvalued.

GDP values a Chevy Corvette more than a Ford Fusion because the Corvette costs more and requires more costly repairs but the benefit of a Fusion is higher because it’s a more functional car that has less service issues. (If you hate Ford Fusions for some reason substitute any $20K car produced in the US).

This isn’t even an unknown problem. The economist responsible for a lot of GDP measurements wrote back in 1934:

The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. […]

Simon Kuznets “Uses and Abuses of National Income Measurements” National Income, 1929-1932 | Title | FRASER | St. Louis Fed (stlouisfed.org) (also on wikipedia GDP article)

The danger is less creating the metric but more what’s happened as it’s grown into widespread adoption. GDP has been called the “world’s most powerful statistical indicator of national development and progress” and countless governments calculate it. The caveats have become accepted and forgotten because it is likely the “best” we can reasonably do.

First a symbol is created, GDP, with appropriate caveats. Practitioners use it because it is commonly accepted. Over time those caveats are accepted and forgotten. Then the metric mistakenly becomes what it represents. Countries by GDP: The Top 25 Economies in the World (investopedia.com)

To the practitioners, those using GDP in their analysis, the governments and countless others, I am not trying to say the symbol is bad but its limitations are too accepted. Same thing with the Dow Jones Industrial Average. Journalists love it because big numbers change, wow DJIA down 1000 points! Well adjusted for inflation that doesn’t really matter but for people who grew up hearing smaller numbers that sounds crazy. In 1982 that would have been the full DJIA but now it sits at 35,736.

The GDP problem is very similar to the problem of carbon offsets. Carbon offsets are likely more demonstrably worse.

The Improper Interpretations of Statistics

The same problem happens a lot with surveys and statistics. Someone, oftentimes a journalist or a less statistically inclined academic will say, it’s statistically significant that XYZ is true. They’ll use something like a 95% confidence interval to back up “significant” that assumes the experiment was random and a result that they got is so unlikely that is very likely true.

They may mention that every survey or questionnaire is biased by how the questions are asked, how the people doing the survey are chosen (and who responds), and that if 100 people ran the experiment 5 would be expected to have a significant result even if none exists. Practitioners need to create something to justify their practitioning and this caveat is present with everything they could reasonably do so it becomes ignored. Just like how COVID is starting to become accepted and eradication is not a common solution anymore.

I must note there has been a movement away from confidence intervals in the hypothesis testing community but I’m not sure how much this has impacted other disciplines. The fallacy of placing confidence in confidence intervals | SpringerLink

So what, how do we progress if everything sucks you say?

It is likely that everything we do has flaws.

Someone like me could point them out and be a giant naysayer. Those who do things accept those pitfalls because they have to. People need symbols in order to interpret complex things they can’t bother being experts in. The point I’m trying to make isn’t that we shouldn’t do things because everything sucks. We need to always remember why things suck when interpreting symbols.

Say you are a US citizen without any investments. Rather than allow your politicians to tell you how great the stock market is and therefore the economy maybe you should focus on your purchasing power and your income. And the same goes for politicians trying to understand their constituents. The really tough part is when no easily understandable and deterministic metric exists.

The point I am making is to understand fallacies, not to become too smitten by doing things. And sometimes accepting that it’s truly hard to know anything.

I think George Soros “The Alchemy of Finance” is a good read here. Many things we think are certain are more akin to fuzzy reasoning and alchemy. His reasoning approach is the most practical I’ve seen.

Further Reading/Tangents

I think all these ideas are loosely inspired by some philosophers I’ve been reading. Baudrillard in his criticism of symbolism. Essentially what happens is perceptions of reality become synthesized into various concepts and ideals. The Bohemian lifestyle, smoking is cool, what a successful family looks like, Instagram, etc. Over time these symbols become the focus and fetishized rather than what they are made to represent. In this post I started talking about symbolic gestures but the point extends to other things as well. A big example I like to use is Italian food. There’s this false notion of tradition and purity as essential to Italian cuisine yet pizza couldn’t exist as we know it if that was followed, tomatoes are not Italian.

It’s best to approach cuisine from the perspective of philosophy of why this exists and let that guide you with ingredients available to you. It’s dangerous when tradition burdens creation but can be a quite powerful opportunity when it does (see Massimo Bottura breaking from tradition. I enjoyed his Netflix special Mind of a Chef).

The Nordic Cookbook by Magnus Nilsson is a great book that really goes into this philosophy.

Ralph Boas Jr., the mathematician, also has disdain for unnecessary acronyms and excess symbolism (read some chapters in his “lion hunting” book — no it’s not really about literal lion hunting. This seems to be a shared belief by Richard Hamming the famous electrical engineer (famous to electrical engineers that is).

I’m beginning to get more interested in language. It’s the most common medium for sharing knowledge but is absolutely limited by the structure and words out there. Many people can’t express snow quite like the Inuit. Likely because they needed to express snow so much they got tired of using different words. When new concepts of thought emerge our language is not be equipped to handle them. Especially if the concepts are created by complicated philosophers. I’ve started to notice more how philosophers grovel at the limitations of language and study it.

Whitehead process reality has some other interesting points as well. As I interpret it inaction is an action, there is no reason the world must have this static background of objects and us. Something is making the world to continue to exist when we observe it. He starts his Process and Reality lectures by flat out redefining the English language for a variety of terms to better make his point.

Also interesting, he sees reality as full of hidden truths that we can only see by their effects but never their true form. Different disciplines show the effects stronger than others. This is somewhat related to the holographic principle in string theory.

Perhaps more relevant, Whiteheads criticism of education in “The Aims of Education“. Standardized curriculum is bad and necessary for standardized testing. Another metrics problem. School ratings aren’t all that and should be allowed to develop more organically by the actual teachers is a major point.

Solutions?

I don’t believe there are many good solutions to this problem. Symbolism is needed to help people understand complex ideas. Many people don’t care or don’t have the means to care (time, money, upbringing, aptitude). Very true with compound interest and financial planning.

A set of leaders that are conscience of this problem and can occasionally reflect and correct the ship is ideal. In the finance industry certain standards and protections are created for investors by the SEC but even those are more troubling than you may think. Especially the differing fiduciary standard. Just because something is called fiduciary doesn’t mean it is.

I think a benevolent dictator like Guido van Rossum – Wikipedia of Python can also be great. But how can you trust the dictator or the committee of leaders, the “Intelligentsia” as Noam Chomsky and many others would say. That is tough. Eventually they will grow to die, as in the case of the dictator, or abuse their power, in the case of government. For that I think a certain amount of anarchy and room for creation is needed in society. Widespread open immigration would be a helpful start to make things more competitive but maybe we need to think beyond governments as well.

It can be extra dangerous if the intelligentsia is able to squash discontent to such a degree they can’t lose. My hope is this is impossible over long stretches of time. All empires decay. But who knows how true that is.

The last thing I’ll say. Be cautious of those who construct your reality.