MUST READ: HOW COMPLEX SYSTEMS FAIL
8 November 2009 by Cullen Roche
3 Comments
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Comments
a must read on how policy trumps evidence
David Nutt, professor of neuropsychopharmacology at Imperial College London, was chairman of the UK government’s Advisory Council on the Misuse of Drugs until he was dismissed last week by the UK home secretary
http://www.newscientist.com/article/dn18099-david-nutt-governments-should-get-real-on-drugs.html
This is very interesting.
Small government, low regulation. Reimplement Glass-Steagal, don’t let institutions get too big.
Complexity breeds instability.
Social + financial systems are even more complex than “power generation, heatlhcare etc.”). At least power generation can be designed to be stable or self-limiting. I’m not sure whether we can ever design society to be stable (ok maybe temporarily in a police state), as fear, greed etc. add to unstable feedback loops. Some attempts to mitigate feedback, like FDIC or the Fed put, only work for a while until people adapt (just like everyone drives faster in winter with AWD and anti-lock brakes then if they didn’t have them). The key question is what tools can we use to predict and profit from the breakdown in complex systems? I’ve been reading a bit of behavioural economics, but am not really sure how to apply to investing, maybe I just don’t have enough tools that would be available to professional investors (as well as the computing power to analyze and correlate all the data).