In his book, Loserthink, Scott Adams has a take on a capitalism similar to Rory Sutherland’s in the previous post (and Nassim Taleb). He also expands this to scientific discovery. (Bold added).
Luckily for us, the scientific method is more reliable than human certainty, and it allows for a lot of failure, so long as some things turn out to be right. Most experiments fail. Many published scientific papers turn out to be wrong, or at least imperfect. But you only need a small percentage of rightness in all of that science to move society forward. It doesn’t matter how many times science is wrong so long as sometimes it is right and the good stuff sticks around. To put it in sporting terms, no one cares how many fish you didn’t catch. They only care about the ones you did.
Capitalism is similar to both science and fishing in that it is largely a failure machine. Most startups fail, for example, and most companies eventually go out of business, one way or another. But while all that failing is happening, employees are getting paid, vendors are selling products and services to the doomed businesses while it lasts, and the economy chugs along. You only need a small percentage of companies to succeed in order to have a strong economy.
You might be tempted to think successful companies all have smart founders who see the world clearly, and that skill set is what helps them succeed. But the reality is that entrepreneurs are making educated guesses and talking themselves into a degree of certainty that the facts do not support. People buck the odds because they don’t believe those odds apply to their situations. And it’s a good thing this sort of irrationality exists, because otherwise people wouldn’t take risks and the economy would fall apart.
I’ll add that I think some founders talk themselves into a degree of certainty that the facts don’t support.
But, I also think lots of founders have a fundamentally different view on risks and failure than us average folks. They don’t mind either. They see the alternative — punching the clock for a boss — as worse. When they fail, they don’t take it personally. They learn and move on.
In his book, Alchemy, Rory Sutherland explains Nassim Taleb’s Anti-Fragile well in terms of free markets (bold added):
It is never-mentioned, slightly embarrassing but nevertheless essential facet of free market capitalism that it does not care about reasons — in fact it will often reward lucky idiots. You can be a certifiable lunatic with an IQ of 80, but if you stumble blindly on an underserved market niche at the right moment, you will be handsomely rewarded. Equally you can have all the MBAs money can buy and, if you launch your genius idea a year too late (or too early), you will fail.
To people who see intelligence as the highest virtue, this all seems hopelessly unmeritocratic, but that’s what makes markets so brilliant; they are happy to reward and fund the necessary, regardless of the quality of reasoning. Perhaps people don’t ‘deserve’ to be rewarded for being lucky, but a system that did not ensure the survival of lucky accidents would lose most of its value. Evolutionary progress, after all, is the product of lucky accidents. Similarly, a system of businesses that kept empty restaurants, say, open through subsidy, simply because there seemed to be some good reasons for their continued existence, would not lead to happy outcomes.
The theory is that free markets are principally about maximising efficiency, but in truth, free markets are not efficient at all. Admiring capitalism for its efficiency is like admiring Bob Dylan for his singing voice: it is to hold a healthy opinion for an entirely ridiculous reason. The market mechanism is loosely efficient, but the idea that efficiency is its main virtue is surely wrong, because competition is highly inefficient. Where I live I can buy groceries from about eight different places; I’m sure it would much more efficient if Waitrose, M&S, Lidl and the rest were merged into one huge ‘Great Grocery Hall of The People’.
The missing metric here is semi-random variation. Truly free markets trade efficiency for market-tested innovation that is heavily reliant on luck. The reason this inefficient process is necessary is because most of the achievements of consumer capitalism were never planned and are explicable only in retrospect, if at all.
As we inch closer to paying college athletes, maybe we can acknowledge that the college education the athletes receive is worthless.
Maybe that’s because they receive a different version of the education other enrolled students receive, or maybe because college education, in general, is worthless.
Or a little of both.
EconTalk with guest Susan Mayer debunking some conventional wisdom on silver policy bullets.
John Pranjic and Joey Cascio have been providing great, in-depth analysis of the recent USMNT and USYNT matches.
Here’s their latest, The Mirage of CONCACAF, on the USMNT v Cuba.
Listening to them will help you be able to pick up on small details that impact the game.
Just one example, they spend a good deal of time discussing how poor passing keeps the teams from playing out of the back — which is a style of play the coaches are trying to achieve.
But, they go further than just saying ‘poor passing’. They describe what was poor about it. Examples:
- A defender not receiving the ball across his body, which reduces his options for next pass from 3-4 to 1.
- A defender that takes too long to decide what to do after receiving the ball, letting pressure collapse leading to a hurried pass.
- A poorly aimed pass to the receiver’s near foot, which reduces his passing options and forces him to send it long, turning it over.
I don’t hear this level of analysis from announcers or the media.
This looks pretty cool:
But, I think this is still too top-down.
In my mind, it’s more about the USSF putting the right incentives in place and letting the regional and professional structure emerge from that.
That requires the USSF to see itself as the facilitator of competition rather than architects that believe they know what’s best.
The three basic incentives are:
- Solidarity payments
- Training compensation
The first incentive (pro/rel) encourages people to invest in clubs to earn their way to the top by putting the best team on the field.
The second and third incentives encourage people to invest in clubs that will search for, train and gain exposure for all talent, not just the talent that can afford to pay club fees. These clubs aren’t as interested in climbing the pro/rel ladder, as they are in spreading the game and giving kids a chance to learn it.
If you put these incentives in place in soccer in the U.S., you get a soccer landscape that looks more like Silicon Valley and less like Mussolini.
When I juggle the ball, players often ask, “can you teach me that?” Or, a parent might ask, “can you teach my child?”
I can teach games to play that will help you learn, if you play them. Lots. But, there’s only one person that can teach you to juggle: You.
Christian taught himself to juggle.
No amount of instruction on technique will make you any better at juggling. Only practice will.
That’s true of all soccer techniques.
One of my Twitter pals, recently posted:
It’s easy to forget #1 and #2 and overrate the importance of #3-#5.
Jason also posted:
US Soccer isn’t the only one that plays this game. This mirrors a common ploy used by coaches and clubs in pay-to-play soccer. Get enough kids and the law of averages says you will get a few that go on to bigger and better things.
Clubs and coaches claim those kids to attract even more who think the club can turn all their players into those successes.
Clubs can help. But, it’s good to remember that 95% of a player’s potential is determined by #1 and #2.