Transcription
You can, uh, get a clear idea if you read history. You know the story of the, the, remember the story of Christ in the temple? Why did he, uh, fight the money changers? Who, why were there money changers in the temple? Because God of the temple did not like all these currencies. He didn't trust these currencies. He wanted the shekel of Tyre and, and now, current day in Phoenicia. Okay. Because they're the only reputable ones.
>> Yeah.
So he forced cities to, you know, they forced cities to compete [snorts] on who's going to have the most solid currency for the god to take it. And then money changers would change into that shekel of Tyre. I mean, governments have always debated currency. But yet, citizens had the choice between currencies.
>> Yeah.
Which currency to use? And what would God want? He would select the one that was the least debased. You don't understand random events. You can't predict what can happen, but you can pretty much tell how the random event would hit you. No, you know whether you're going to make from it, lose from it, make a lot, lose a lot. Okay? So, you try to position yourself in a way to benefit more than you would lose from a random event. Okay? Or to lose less than your neighbor from a random event. That's, that's the idea of asymmetry. It's pretty much like an option. What I call an option. An option, you make more on the upside than you would on the downside. And if you, in or in general, make more from a random event than you lose from it, then you're going to do very well in the long run, provided you make sure you're going to survive. That's the asymmetry that's present in contracts and options, stuff like that. That asymmetry becomes bad when you make the upside like Bob Rubin [snorts] and transfer the downside to someone else. And, and the easiest thing to transfer to the person to transfer to is the taxpayer, the anonymous taxpayer, you see. So that is an asymmetry. Okay, a bad asymmetry. But tinkering, uh, trial and error, it has a really a positive asymmetry. And you can, I showed an antifragile, and that's the main argument that trial and error will always outperform design simply because of that property that we're vastly more intelligent. We have an IQ of a thousand when we do trial and error, and it links to fragility. It's antifragile because fragility has the exact opposite attribute. You see, if I jump from 10 meters, I get, I'm harmed more than twice that if I jump from 5 meters, and more than 10 times if I jumped 1 meter.
>> Right?
And more than 100 times. So, so if that's concave, it means you don't like volatility. And if you're, uh, convex during that range, you like volatility. You'd rather have volatility. You'd rather have shocks. You'd rather have turmoil. So this is the idea of antifragile, which applies to both the physical system and anthropology. There are a couple of things we got to talk about, the Lindy effect, linked to fragility, like the test of time. Let me present the Lindy. Let me first say one property of the news that [snorts] that was that was that's not, you know, never existed before in history. Before 1940, where, or 1946, I think, when when families had a television set. So you have a small family now watching television, getting one-way information. Reading the New York Times, you don't go to a square, you don't get, okay. Before that period in time, people did not get the news from one source. They, it was like Facebook or Twitter. People traditionally were both conveyors and recipients of the news. So we're all involved in the news-making, you see. So you go to the barber, you get the news, you go, you transmit it, you, you tell the fisherman, you know, fisherman that you encounter, then you tell your barber, you bring back information to the barber. Was so, so news were, uh, um, something that was organically spread in society and it was nobody could control it, no as a source, okay? Before the 1940s, propaganda, New York Times, all that, all that era of television, and we broke out of it was Twitter and social media. So, and there's a concept called Lindy, and the news, the way you know it was organized during that period from 1946 to the election of 2016 was not Lindy. Lindy is a, uh, restaurant in New York that has cheesecake, and it was a Harvard cheesecake, and, and I spoke about it. I discussed it in Skin in the Game, and it had the great idea to go bust on the Tuesday, the very same day Skin in the Game was published, right after 60, 70 years. So Lindy was a restaurant where actors used to meet, and they discovered that plays that survived 200 days had 200 more days. Thousand days, a thousand more days. That discovers that rule. So you can classify things and whether they're Lindy or not. Now, Lindy tells you that technology, okay, is going to be, uh, uh, old technology will outlive short technology. New technologies not because new technologies are bad, but there will be more vulnerable new technologies to other newer technologies. There's something in blockchain, a concept of a transaction coupled with a commercial transaction coupled with a financial transaction that's entirely Lindy.
>> Yeah.
And that's, uh, the letter of credit, which itself was replicating something used in maritime commerce. In other words, they, the banking, okay, they devised a system by which you can, you trigger a currency, basically, the minute the you deliver the merchandise. Now you own, you go there with a mer, with merchandise, you come back with a currency. So mixing the physical transaction with a financial one, all in one. It's the same transaction. Coupling them is an old, very old thing. Government-issued currencies has not, never been Lindy. People, people don't realize, and you can, you can, you can, uh, get a clear idea if you read history. You know the story of the, the, remember the story of Christ in the temple? Why did he, uh, fight the money changers? Who, why were there money changers in the temple? Because God of the temple did not like all these currencies. He didn't trust these currencies. He wanted [snorts] the shekel of Tyre and, and now current day in Phoenicia. Okay. Because they're the only reputable ones.
>> Yeah.
So he forced cities to, you know, they forced cities to compete on who's going to have the most solid currency for the god to take it, and then money changers would change into that shekel of Tyre. I mean, governments have always debased their currency, but yet citizens had the choice between currencies.
>> Yeah.
Use and what would God want? You would select the one that was the least debased. Well, you, you pointed out that one of the big things in history was separating the state from church. Uh, and some religions have done that and some haven't. Yes. Where they still combine them. But that was a major revolution. You know, render unto Caesar what is Caesar's. Um, and the interesting thing with crypto is we're trying to separate money from the state. And that transition, if it successfully happens, will probably be just as impactful and take quite a while to play out. It, it is, it is interesting because if you start having competition between cryptocurrencies, it would be the same competition as the one that prevailed in ancient times.
>> Between issuers because you know the, the, there was a state of, uh, in Asia Minor. This each king produced his or her own currency, and then you'd go by the one that was the least prone to debasement.
>> Right?
The one you could have faith in. In my opinion, it's good to have the competition, though, because it makes them antifragile. It exposes them to randomness and variation and makes them evolve.
>> Exactly. It's not till recently that you forced, you know, you can only conduct transactions in, uh, peso, dollar, and this and that. You got to convert. In the past, people picked the currency that was the most reliable for transactions.
>> Yeah.
Another, another point in, uh, asymmetry that you brought up, which I thought was, uh, very counterintuitive, at least for me, and completely changed the way I think about many important things in the world, is the minority rule. Um, I don't think that one's obvious at all. It's one of those things that maybe it's obvious in hindsight once you fully understand it, but I think the repercussions aren't obvious, and the fact that even is very stable, uh, outcome isn't very obvious. So I'd love for you to just go through the minority rule.
>> Okay. I discovered the minority rule one day. Um, ironically, I was trying to explain what a complex system was at a barbecue of a complex system institute. Okay? And, and that complex system have one attribute that, uh, you, at different scales, things behave differently. Okay? So, in other words, a collection of individuals don't behave like separate individuals. They behave as separate animals, really, separate animal, which is something that a lot of people don't understand in government today, is that if I understood the psychology of each person in this room, I can't predict the collective, how, how they will behave collectively. Okay? But nurses know that, or people know that from children, all right? You know, you can predict each child independently, you put them together, it's unpredictable. Okay? It's a different animal. So that's a concept of, of a complex system, trying to explain it. Okay. Well, I was hit, I was with the best example with a complex system because at that barbecue, there was, um, okay, there's, you know, we've had food, all right, and drinks, and, and [snorts] a delegation came from Jerusalem, and they were all Orthodox, right, bunch of people. So, a fellow showed up, um, you know, to say hello, and, and I felt embarrassed. I said, "Oh, I'm so sorry. We don't have kosher drinks." He looked at me. He said, "All drinks are kosher here." Said, "What?" He said, "Yeah, where'd you buy the drinks?" Here in Boston. Okay. They're all going to be kosher. What? I Googled the proportion of kosher eaters and drinkers in America. Point less than 0.3%. That's not a good day, right? On a religious holiday, 3%. Yet, close to 100% of drinks in America are kosher. Why? Why is that? So simply because the Jews run the world.
>> Sorry. No. [laughter] No. Because if it's
>> Do not quote me on, you're being filmed. You're being filmed.
It's because it's a very simple concept. If it's, if let's say I'm Coca-Cola, what are you going to have? Kosher Coca-Cola? Non-kosher Coca-Cola? All right. You're going to have different departments, different things, different trucks so you don't get mixed. And then, uh, uh, supermarkets will have different, uh, uh, you know, uh, uh, aisles. This is kosher aisle. What you got to do? You make them all kosher. Okay. Those who like me don't know the difference. Okay. Will drink Coca-Cola. I don't drink Coca-Cola. But, okay. So it so happened that when we looked at the bottom of the lemonade bottle, there was a sign saying it was kosher that only the kosher people know how to identify. Okay, so that's the minority rule. So if a Martian came from space and sampled food preferences, okay, he would say that Americans are 100% kosher in drinks. Okay, yet not 0.3%. So why there's an asymmetry? The kosher person will never drink non-kosher, but the non-kosher, you see, can drink kosher.
>> Yeah, that's the key. The minority. Exactly. That's minority rule. For the minority to control the majority, the minority has to be intransigent. They have to be absolutely unwilling to
>> Have to be unwilling to, to, to do that. So, for example, people didn't notice one thing about the preferences, marketing preferences. They don't understand. They look at marketing preferences of individuals and they make cars accordingly. Most Americans, at a time when when cars were, you know, still had stick shift, preferred stick shift. The majority, 75%. But most of them had a family member
>> Who didn't like stick shift,
>> Right?
So your family of five and one family member, at a time that people didn't have a lot of cars per household, one family member
>> Can drive. So what do you do? It's going to go
>> Yeah.
>> It's like if someone in the house has a peanut allergy or gluten allergy, house with no gluten or no peanuts. Uh, yeah.
>> So there's nothing wrong with accommodating the minority so long as you know it.
>> Right.
>> Now, the interesting thing about the minority rule is that it seems to me that it's a norm rather than the exception in society, and about anything. See, the reason we have non-smoking spaces. Actually, I joked with a friend of mine, uh, one day, I had a French visitor when I was a student, and he came, you know, he met, I said, "Meet me in front of this restaurant and book a table." He couldn't find a non-smoking, uh, table. I told him, "Did you try the smoking one?" He said, "Yeah." Said, "Okay, go buy a pack of cigarettes and we'll go to the smoking section." He believed, he thought that, you know, you're forced to smoke in a smoking section. So, and we smoked to the smoking section to be there to play the game. So, but really, you have these asymmetries actually running our lives.
>> So, we live in a world that is actually structured around the preferences of radicals who won't compromise. It's not, it's not built around around the will of the majority. The will of the majority does apply in some cases, but in many more cases, it's the minority rule. And there are all kinds of other implications.
>> Yeah. I mean, ethics, for example, people have the illusion that society is getting more ethical because the, the majority is becoming more ethical.
>> No, no, no, no, no. It's minority rule. Another mistake made by Monsanto is that when introducing GMOs, all they thought that all it took was convincing 51% of consumers to have GMOs. Okay, they did not think it through properly because think about it. All you need is 3% of people who are absolutely against eating GMOs. All right? And then you're going to have a party here to celebrate the collapse of, say, Saudi barbaria. Say, okay, we have a party. All right? What do you do? You send a letter. Say, GMO, no GMO. You make everything non-GMO. You make everything organic. And the difference in price, when the difference in price is small, everybody switches to the one that the minority want, the choice of the minority. When the difference of price is large, then you may have two varieties. Like, for example, for meat, kosher meat and kosher stuff, it's much more cumbersome to have everything kosher.
>> Because it's more costly and it's complicated.
>> Right. So there's the evidence that Jews don't run the world.
>> Exactly. [laughter] But, but, but, but believe it or not, 100% of the meat you get, imported meat, in imported the lamb in the United States, about 100% is halal.
>> Because New Zealand exports. Okay. As the main exporter. What is it going to do? What if put it in ship to Malaysia? What if, what if Malaysia doesn't want, there's less demand? What are they going to dehalal it for, uh, you know, send it to the United States? So they made everything halal. So all their meat is, all their exports are halal. So at Christmas, I saw this Christmas, you halal was because I can detect, I read Arabic, halal meat, right? Yeah. So it was probably, you know, they produce it, and then we don't have to worry about merchandising about, uh, perishability and stuff like that, to make it, make everything halal. It's much simpler.
>> So the minority rule applies when the minority is not willing to compromise, when it's relatively distributed amongst the whole population. Like if they're off by themselves in a corner, then maybe you can service them just as a minority and leave.
>> Exactly. If you have a geographic diversity.
>> Okay.
>> Then you don't have minority rules, right? If you say the, the people who eat halal live in the neighborhood, people who eat kosher live in the neighborhood, have their own ecosystem, then then you'd have, you want to have minority rules. As you open up the country, then the minority rule will prevail about anything.
>> Yeah.
>> In conditional on the majority not being ticked off by it.
>> That's right.
>> Okay. That's in Europe, for example. Now, pretty much schools have to have halal meat, and you have a reaction. People didn't know. I mean, you should have done it in a more, uh, quiet way.
>> Surreptitious way. Yeah.
But because, uh, uh, uh, parents say, "No, I refuse, you know, to my child is halal." Okay. Now you have counter-reaction, just like the Christians in a, in a Roman world. The halal meat resembles all sacrificed meat in, in, in the Near East. Actually, you have to, you know, sacrifice the, the cow or, or the, the, the, the sheep in a certain way, and Christians would would never eat sacrificial meat. You know, in the old times, pagans would have sacrificial meat, and then there a lot of Christians would die of hunger in front of a table full of meat, just to show that they were Christian, and they would not eat sacrificial meat because for them, it's polluted. So you may have a counter-counter minority rule coming from somewhere, you see.
>> Yeah. I think for there are cases where the minorities themselves are, and minority here obviously, you know, what it means. It means a small group of people who are intransigent themselves, are very intolerant of maybe even the existence of the majority or the way the majority likes to function. So it does create a counter-reaction. So it's not that all revolutionaries, uh, you know, necessarily control the world. Very often they just get lynched or stamped out.
>> Exactly. So we have a thin balance here between majority rule and minority rule. And Tocqueville wanted to protect the minority from the majority. All right. Yeah.
>> And now we may have to do an inverse Tocqueville as well, to bring symmetry. Protect the majority from the minority.
>> Yeah. But it applies in crypto. For example, if, uh, imagine that, you know, something like, I don't know if I had to make up a number, like call it like 10 or 20% of the good developers in Silicon Valley are now working on crypto-related projects or at least dabbling on it. And if they all announce tomorrow that they're only going to work for companies that pay them in crypto, then pretty soon you would see every payroll system switch to also offering crypto.
>> That's true. If you're, if you're unconditional about getting or paying or receiving in crypto, you're, you install a minority rule.