Tag: books

A Non-Education, Market-based Approach to Certifying Ability, Conscientiousness and Conformity

Update: Bryan said it “seems plausible it could work for someone”–which is close to saying impossible, without doing exactly that. Not sure, but plausibly the most positive attitude toward an alternative educational approach.

Bryan Caplan’s The Case Against Education has persuaded me that a majority of the education premium is essentially really costly signaling of ability, conscientiousness and conformity, and that it’s reasonably good at this task since employers are willing to pay that premium.

This led me to consider how else one might certify these qualities in a non-educational/productive way. In Caplan’s book, he argues against the “IQ laundering” argument for education saying that the test tax really isn’t that high and that education is discriminatory as well and clearly employers are allowed to use credentials as hiring criteria. And essentially argues, that the education premium isn’t solely IQ laundering, but also filters for conscientiousness and conformity as well.

But IQ is a big part of the premium. And in the letter of the law, you are allowed to use IQ tests if it’s necessary to your business.

So here’s the pitch: start a professional services firm doing generalist work and hire anyone who scores above a quite high threshold on an IQ test or equivalent (for ease, just limit it to people who score 1600 on the SAT, this way you can brand the firm “1600”) and pay them whatever the current average starting salary of a college graduate is (perhaps even more than this). You’ll quickly filter for smart people who don’t have a college degrees. A large percentage of them will be recent high school graduates, but not all. Promise them the finest education imaginable—lessons from the real world.

In year 1, the work they do will largely be non-client facing, but you can promise clients high quality work at a fraction of the price compared to standard professional services firms. This will prove that they are conscientious enough to do professional quality work. Those who fail will have gotten paid to try and can always go back to the standard education system.

In year 2, give the now experienced staffer a raise to the average starting salary of recent graduate school graduate and put them into client facing scenarios. They’ll continue to learn and will build a network that would make any MBA envious. Their ability to navigate interpersonal situations should certify their ability further, and to a lesser extent conformity to workplace norms.

After year 2, most employees will likely choose to leave, but will have certified their ability and conscientiousness while earning an income rather than paying for education. They will not have certified conformity as much, but I think this trait is in declining demand among elite knowledge workers.

It’s pretty simple. Build a professional services firm, hire solely based on very high IQ, base salary solely on IQ, sell your services at a steep discount from those who are paying massive education premiums for similar talent, and ensure your employees and alumni are considered elite. You’ll have built a parallel certification system that takes advantages of market forces to avoid the pitfalls of other alternatives. It won’t take down the entire education system, but could work at the margin. Most importantly, you’ll have saved the world from wasting some of its smartest peoples’ time and effort.

Top Reads of 2017

These are the texts that caused view quakes or inspired/haunted me to the point where I had to recommend them.

Fiction

The End of Eddy by Edouard Louis

Picked up in Paris on a recommendation as a book that took France by storm. Absolutely gut wrenching, brutal and immiserating. Sort of like a French Hillbilly Elegy, if JD Vance were gay and had no extended family to intermittently rely on. Gave me insight strangely into a lot of rural, French (and maybe Western) culture and how inescapable it is for many. And a clearer idea on the “double consciousness” that those who escape have. My favorite novel since the equally, viscerally dark A Little Life.

Forest Dark by Nicole Krauss

It’s brilliant, like all of her work. Deep and generationally intertwined, about impermanence and eternity. Whatever all of her books are about—the power of narrative to tie people together across space and time. If you’re unfamiliar with Krauss, start with The History of Love—my favorite novel and one of the book I buy every time I see it, so I always have copies to give away.

The Chalk Artist by Allegra Goodman

Allegra Goodman is back to form, writing about tech and its discontents. I’ll always be a Cookbook Collector fanboy, but her latest book is more open about its loyalty to literature and education as a…shield, respite or solution to the modern world.

Nonfiction

Reasons and Persons by Derek Parfit

One line interpretation: focus on easy ways to maximize utility regardless of time, space and personal identity up to the point right before it makes you miserable. This interpretation inspired my Ethical Laffer Curve post.

I hesitate to say that this is the most important book I’ve ever read. But I have the impulse to say it. It’s certainly the most important book I read this year. Parfit makes the case for a utilitarianism that isn’t bound by time, space or personal identity. Parfit’s work is hard to summarize, but I’ll foolishly try: he makes the case that we are wrong to think of different people at the same time as fundamentally different as the same people at different times. Essentially that our past and future selves are as different from our present selves as other people. He then makes the case that if this is true, it affects utilitarian ethics substantially. In the same way that it is wrong to harm a different person, it becomes equally wrong to harm your future self (by smoking for example). I’m going to stop trying to summarize it because it’s a 400 page book of logical proofs and thought experiments.

We Were Eight Years in Power by Ta-Nehisi Coates

TC once praised another writer as having “courage to look dead-eyed at ideology and all its limitations without lapsing into nostalgia or cynicism” something he called “ice water vision” and wished that to be the quality he cultivated most. Me too. TC is one of the few writers/intellectuals I’ve had the privilege to watch develop because he was so open throughout his career at the Atlantic. If you haven’t followed him since the beginning, this is an absolute must. His most famous work, Between The World and Me is undeniably important, but WWEYIP is a better place to start.

The Hard Thing About Hard Things by Ben Horowitz

This is the best business book I’ve read in a while—maybe ever. An admittedly low bar. Ben puts on display the cutting intelligence, compassion and ruthlessness that has made Andreesen Horowitz the greatest venture capital firm of all time. His intro below does better than I could.

Inadequate Equilibria by Eliezer Yudkowsky

This book is an interesting look at why certain markets or institutions fail, and how to recognize failures that YOU can see and fix or exploit (often the same thing). Unfortunately, half of the book is really inside baseball stuff about modest epistemology—but that can for the most part be safely skimmed. Suffice it to say: taking the outside view is often appropriate, but sometimes an individual can do better–the book is about recognizing those times.

Eliezer is a strange dude. He founded one of the world’s foremost AI safety research organizations, but then decided that unless humanity became more rational then his work there wouldn’t matter. So he set about to “raise the sanity water line”. What a fucking insane thing. Strangely, he seems to have succeeded somewhat—his ideas have permeated influential thinkers and think tanks, and MIRI continues to hum and help lead AI safety research.

Online Reads

Stubborn Attachments by Tyler Cowen

The polymath economist of Marginal Revolution fame turns his lens on…ethics, or something like it. He makes the case for economic growth as a moral good above almost all else—excepting certain inviolable rights. And argues for a social discount rate of 0. In the 8 months since I read it, I’ve concluded that the optimal discount rate is non-zero, but very close to zero. Based on this disagreement, but with a lot of respect for Cowen’s framework, I propose a Portfolio Theory for Effective Altruism as a way to think about efforts with different levels of certainty and time scales.

I rank this as his best work, followed by MR, and finally his Great Stagnation series–I wonder whether he would agree.

Update: I asked Tyler and he agrees with my ranking.

Definite optimism as human capital by Dan Wang

This piece theorizes about how optimism might be a driving force of innovation. As in, people literally being optimistic that things can change for the better drives productivity growth. He attacks our current productivity slowdown from multiple weird, creative angles.

Neuralink and the Brain’s Magical Future by Tim Urban

Tim Urban is the writer Elon Musk calls when he wants the world to understand him. If you haven’t read his Elon Musk series, start at the beginning and end with this one.

THE 2017 STRATECHERY YEAR IN REVIEW by Ben Thompson

I’m cheating a little bit because I’m letting him curate his top 5, but Ben Thompson is probably the smartest person writing about strategy and tech (fuck, business in any sense) today. Everything he writes is worth reading.

On an Ethical Laffer Curve

Note: I’m not concerned here with whether or not the Laffer Curve as originally intended is a useful idea or what the optimal marginal tax rate is.

I’ve always broadly believed that act utilitarianism was correct in its most demanding form. However, I rarely actually maximize utility impartially because, well, it’s really fucking demanding. Outside of being a vegetarian, Peter Singer would probably not approve of my lifestyle—I travel carbon-intensively a lot, donate way below 10% of my income to effective non-profits, and constantly waste time and money on anything that isn’t literally saving human lives.

Convinced that maximizing utility is correct, I went to one of the main sources for 20th century ethical thought, Derek Parfit, and his first work, Reasons and Persons. Having never really read analytical philosophy before, it was indeed slow going. I covered maybe only 5-15 pages of dense argumentation per day, and many days I was too intimidated to open it at all. After a month, I’m only through the first section of the book, on whether or not ethical systems are self-defeating.

BUT I have already had one view quake. My prior view was that there should be an unlimited focus on impartially maximizing utility.

  1. All people, all the time should do what would generate the best outcome.
  2. For people in the developed world, this would mean focusing 75% or more of their time and resources on altruistic endeavors, with an increasing percentage as your amount of time and resources increased.

One obvious problem with that is that even as someone who believes the above, I have never come close to that standard. The problem Parfit found with the above formulation is that if we could somehow convince (or more likely coerce) everyone to act to maximize utility, then a very large majority would be miserable and thus actually lower total utility.

Thus the Ethical Laffer Curve:

My new formulation:

  1. All people, all the time should do what would generate the best outcome.
  2. This means focusing as much of your time and resources as you can on maximizing utility, up to the point where that focus begins to decrease personal utility at a faster rate than total utility is increasing.

Some interesting points:

  • The X axis allows for some combination of personal preference. Person 1 may focus 95% of their time on utility maximization, Person 2 may focus on 30% of their time before hitting a negative return.
  • The Y axis allows for a lot of debate over what utility really is, although the boundaries seem defined as a slow, painful death and literally being Bill Gates—infinitely wealthy and pursuing work you find meaningful. It’s not clear that we need to precisely define utility in order to pursue such a varied utilitarianism as this model proposes.
  • People who think about utility maximization often leave out economic growth as an avenue for increasing total utility, but it is likely the most important (if pretty abstract) lever. That being said, most private sector jobs don’t increase GDP all that much. Entrepreneurs, technologists, engineers, consultants scaling innovations and financiers efficiently allocating capital should likely focus their time on driving productivity growth and donating their financial resources.

Like with a Laffer Curve, the debate is where the average and marginal “ethical tax rates” should be. It seems very apparent given the level of suffering in the world that the average rate is still too low, but that we’ve been steadily raising it—mostly through economic growth and the creation of international norms against war.

As for my ethical tax rate, I’m still certain mine is above my current contributions to utility maximization, but clearly not at Singer-esque rates.

How Much Should You Read?

I shoot to read about an hour a day. Falling short perhaps half of week days and often reading for multiple hours per weekend day. At any given time, I’m probably actively reading 5 books, with maybe an additional 5 cast aside. There are seemingly cultural and aesthetic reasons I endeavor to read this much, but really I read 7-10 hours per week, starting 20 books and finishing 5-10 per month because I currently believe:

  1. Reading books is the most efficient way to seem a lot smarter (both crystallized and fluid intelligence)
  2. There aren’t easy ways to separate seeming smart from being smart
  3. Being smart is beneficial in a knowledge economy
  4. So seeming smarter (than you are) is beneficial economically

If the above is true, then what is the optimal amount of reading a knowledge worker should do?

The largest returns will clearly go to someone who jumps from 0 books per month to 1 book per month. Carefully curated (acclaimed overviews of scientific fields, historical eras, groundbreaking economic texts, etc), 12 books a year would make you seem a whole lot smarter, able to make cross-disciplinary connections, and generally more engaged with the world. Choosing the initial 12 would also be quite easy to select because classic texts are relatively obvious.

Increasing your pace to 2-4 books per month will likely accelerate returns as you can more quickly build up a corpus of knowledge AND make connections between fields of knowledge faster. At 4 books per month (almost 50 books per year!) you will seem considerably smarter than you did before.

After perhaps 4 books per month, curation begins to be more challenging and in reality is difficult to sustain. I think this is the point of diminishing marginal returns and that each book over 4 increases “output” minimally.

I expect the economic returns of reading 2-4 books per month will be highest for people in client-facing or persuasive roles (sales, commercial banking, wealth management, business/corp development, fundraising, etc) and fields that value analytical horsepower (law, consulting, finance (IB, PE, HF) and tech/engineering), but should generally flow to any knowledge worker reading this much.

Ok, so read 2-4 books per month. Easy, right?

I’ll follow up with a post on approximating the economic return on reading, why people don’t read what seems to be the optimal amount, and whether I need to update my belief that the above argument is correct.

Nonfiction Read in Early 2017

And recommended now:

Our Mathematical Universe by Max Tegmark

This book will probably undercut a lot of what you think about the world–and a fair amount of it is unaccepted, bordering on speculative. BUT it covers the basics of cosmology all the way out to the mathematical universe hypothesis for which Tegmark is famous. Worth reading even if you doubt you’ll come away believing that the universe literally is math.

The LessWrong Quantum Physics Sequence

This series of articles explains quantum physics better than any book or textbook I’ve ever looked at on the topic. Just skip any math you don’t understand (that’s what I always do).

If you only read one in the sequence, read this one. It explains why most people are confused by QM and will probably convince you to read on. Even if it doesn’t, this will make you sound reasonably smart when discussing QM with anyone with advanced physics training (for 30ish seconds, then change the subject).

The Greatest Show on Earth by Richard Dawkins

Dawkins reminds readers of just how cool life and evolution really are. I think it’s worth taking an annual refresher in evolutionary biology, whether that’s reading Darwin or something along these lines.

Overcomplicated by Sam Arbesman 

I think this take on the limits of human’s ability to understand (and even further afield, control) complex, nonlinear systems like AI, large organizations, or god forbid, societies is…pretty sobering. Sam actually explained this work to me when we shared an Uber to Reagan Airport, and I’ve since referred AI startups to him in his role as scientist in residence at Lux Capital.

Economics Rules by Dani Rodrik

Shows you how to use models like an economist would. And also the limits of this approach.

The Complacent Class by Tyler Cowen 

Third in Cowen’s trilogy on what’s happening in/plaguing the American economy. I can’t tell if the trends he identifies are actually connected. Throughout I felt like dynamism was used non-rigorously and also that he waved away Baumol’s cost disease as an explanation for rising healthcare costs (he waved it away over email as well).

Stubborn Attachments by Tyler Cowen

The polymath economist turns his lens on…ethics, or something like it. Tries to make the case for economic growth as a moral good above almost all else. And argues for a social discount rate of 0. I tend to agree with his first major point, but am uncertain about how non-linearity affects the discount rate.

Deep Work by Cal Newport

Fairly standard productivity advice from someone quite productive at writing popular self-help books. I got off social media after following his advice to ask myself what each tool was helping me accomplish.

Stratechery by Ben Thompson

Possibly the smartest person writing on business today. The article linked is his core idea.