Philosophers From The United States

"Asking science to explain life and vital matters is equivalent to asking a grammarian to explain poetry."

"It’s harder to say no when you really mean it."

"When we want to do something while unconsciously certain to fail, we seek advice so we can blame someone else for the failure."

"Procrastination is the soul rebelling against entrapment."

"Using, as an excuse, others’ failure of common sense is in itself a failure of common sense."

"In science you need to understand the world; in business you need others to misunderstand it."

"Academia is to knowledge what prostitution is to love."

"An idea starts to be interesting when you get scared of taking it to its logical conclusion."

"Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control)."

"Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab."

"Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence.” Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them."

"It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards."

"The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean."

"Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks — when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur... I shiver at the thought."

"This makes living in big cities invaluable because you increase the odds of serendipitous encounters — you gain exposure to the envelope of serendipity."

"Rank beliefs not according to their plausibility but by the harm they may cause."

"While in theory randomness is an intrinsic property, in practice, randomness is incomplete information."

"One cannot assert authority by accepting one's own fallibility. Simply, people need to be blinded by knowledge - we are made to follow leaders who can gather people together because the advantages of being in groups trump the disadvantages of being alone. It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers."

"The same past data can confirm a theory and its exact opposite! If you survive until tomorrow, it could mean that either a) you are more likely to be immortal or b) that you are closer to death."

"Forecasting by bureaucrats tends to be used for anxiety relief rather than for adequate policy making."

"Don't cross a river if it is four feet deep on average."

"Cumulative errors depend largely on the big surprises, the big opportunities. Not only do economic, financial, and political predictors miss them, but they are quite ashamed to say anything outlandish to their clients — and yet events, it turns out, are almost always outlandish."

"There is no effective difference between guessing a variable that is not random, but for which information is partial or deficient (...), and a random one (...). In this sense, guessing (what I don't know, but what someone else may know) and predicting (what has not taken place yet) are the same thing."

"Probability is a liberal art; it is a child of skepticism, not a tool for people with calculators on their belts to satisfy their desire to produce fancy calculations and certainties."

"The casino is the only human venture I know where the probabilities are known, Gaussian (i.e., bell-curve), and almost computable."

"Consider that the turkey's experience may have, rather than no value, a negative value. It learned from observation, as we are all advised to do (hey, after all, this is what is believed to be the scientific method). Its confidence increased as the number of friendly feedings grew, and it felt increasingly safe even though the slaughter was more and more imminent. Consider that the feeling of safety reached its maximum when the risk was at the highest!"

"We tend to use knowledge as therapy."

"But it remains the case that you know what is wrong with a lot more confidence than you know what is right."

"Categorizing is necessary for humans, but it becomes pathological when the category is seen as definitive, preventing people from considering the fuzziness of boundaries, let alone revising their categories."

"History is opaque. You see what comes out, not the script that produces events, [...] The generator of historical events is different from the events themselves, much as the minds of the gods cannot be read just by witnessing their deeds."

"It is remarkable how fast and how effectively you can construct a nationality with a flag, a few speeches, and a national anthem; to this day I avoid the label "Lebanese," preferring the less restrictive "Levantine" designation."

"If you want to get an idea of a friend's temperament, ethics, and personal elegance, you need to look at him under the tests of severe circumstances, not under the regular rosy glow of daily life. Can you assess the danger a criminal poses by examining only what he does on an ordinary day? Can we understand health without considering wild diseases and epidemics? Indeed the normal is often irrelevant."

"I disagree with the followers of Marx and those of Adam Smith: the reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or "incentives" for skill."

"[In] economics... you can disguise charlatanism under the weight of equations and nobody can catch you since there is no such thing as a controlled experiment. Now the spirit of such methods, called scientism by its detractors, continued into the discipline of finance as a few technicians thought their mathematical knowledge could lead them to understand markets. The practice of financial engineering came along with massive doses of pseudoscience. (page 115)"

"[E]conomics is a narrative discipline, and explanations are easy to fit retrospectively. (page 257)"

"[E]conomists are evaluated on how intelligent they sound, not on a scientific measure of their knowledge of reality. (page 85)"

"Wittgenstein's ruler: "Unless you have confidence in the ruler's reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler." (page 224)"

"We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract."

"Probability is not about the odds, but about the belief in the existence of an alternative outcome, cause, or motive."

"At no point during his ordeal did Nero think of himself as 72% alive and 28% dead."

"Even the fathers of statistical science forgot that a random series is bound to exhibit some pattern... Pearson was among the first scholars interested in creating artificial random number generators, tables one could use as inputs for... simulations (precursors of our Monte Carlo simulator). ...[T]hey did not want these tables to exhibit... regularity. Yet real randomness does not look random! ...A single random run is bound to exhibit some pattern ..."

"Professor Karl Pearson... devised the first test of nonrandomness... He examined millions of runs of what was called a Monte Carlo (the old name for a roulette wheel)... He discovered... the runs were not purely random. ...Philosophers of statistics call this the reference case problem to explain that there is no true attainable randomness in practice, only in theory."

"The information that a person derived some profit in the past... by itself, is neither meaningful nor relevant. We need to know the size of the population from which he came. If the initial population is 10,000 managers, I would ignore the results."

"Let us use 10,000 fictional investment managers... [O]nce a manager has a single bad year, he is thrown out of the sample. ...[T]oss a coin; heads and the manager will make $10,000 over the year, tails and he will lose $10,000. ...We have, in a fair game, 313 managers who made money five years in a row. ...[I]f we throw one of these ...into the real world we would get ...comments on his remarkable style, his incisive mind... His biographer will dwell on ...a great mind in the making. ...[S]hould he stop performing (...his odds ...have stayed at 50%) they would start ...finding fault with his dissipated lifestyle. They will find something he stopped doing, and attribute his failure... The truth ...he simply ran out of luck."

"Optimism, it is said, is predictive of success. ...It can also be predictive of failure. Optimistic people... take more risks as they are overconfident of the about the odds; those who win show up among the rich and famous, others fail and disappear from the analysis."

"[B]ecoming more rational, or not feeling the emotions of social slights, is not part of the human race... not with our current biology. There is no solace to be found from reasoning..."

"The major problem with inference... is that those whose profession it is to derive conclusions from data often fall into the trap faster and more confidently... The more data we have, the more likely we are to drown in it. For common wisdom... is to base... decision making on the following principle: It is very unlikely for someone to perform... well in a consistent fashion without doing something right. ...[I]f someone performed better... in the past then there is a great[er] chance of performing better than the crowd in the future... But... [a] small knowledge of probability can lead to worse results than no knowledge at all."

"I try to make money infrequently, as infrequently as possible simply because I believe that rare events are not fairly valued, and that the rarer the event, the more undervalued it will be in price."

"I always remind myself that what one observes is at best a combination of variance and returns, not just returns."

"A mistake is not something to be determined after the fact, but in the light of the information until that point."