New Scientist has a piece on re-assessing economics after the crash.
I’ve a half-baked idea here, that is, one the one hand, obvious, but I haven’t seen spelled out anywhere: that free-markets are prone to viruses.

Clearly some memes propagate despite the fact that they aren’t true: astrology; homeopathy etc., the memetic equivalent of viruses.
Much of free-market ideology is based upon application of darwinian ideas to economics.
Therefore, even if free-markets do evolve naturally under natural selection, not all market forces will be benign, there could be the free-market money equivalent of viruses. I’ll call these ‘benes’ (as in bean counter, slang for accountant).
These benes could be merely be specific memes to do with money - such as a speculative or panic rumor, or indirectly such as businesses based on memes e.g. horoscopes. But they could equally be financial instruments, business practices or business environments themselves that are attractive and therefore become widely used, but are damaging to the free market that creates them. (An example of the latter might be lobbying, where businesses such as Verisign, for example, protect a monopoly over .com domain names more effectively by seducing legislators than being competitive.) These are somewhat different from memes since they become much more like organisms, with a life of their own. In some cases, like the SWIFT transaction system or retail bank buildings, they arguably have a phenotype.
The idea that capitalism is prone to periodic viral infection through benes, seems like an obvious thing to investigate. It also creates a middle road between the doomsayers that claim that macro economics is dead and the libertarians who say that it would have been OK to let everything fail. The message: ‘Capitalism works overall, but be careful’. Just how careful, might be something that could be ascertained scientifically.

Chris Nedin writes about the analogy of evolution in a fitness landscape where fitness equates to climbing a mountain, and recommends turning the fitness landscape upside down:

“Adaptation is not climbing up Mt Improbable, it’s climbing down Pit Improbable! The pits are hard to find, but once in, it’s easier to go down than it is to back out, and if you adapt too far, you are trapped in a cul-de-sac with no way out when the environment changes.”

Although this makes sense, the very fact that we can flip the landscape shows that evolution requires a proper explanation in terms of physics, where the ‘pits’ are, perhaps, energy wells determined by the relationship between evolution and entropy.

The fitness landscape is a visual tool to help us understand eco-systems, rather like the rubber sheet visualization of gravity in General Relativity. Neither the geometry of space-time or fitness landscapes are actually stretchy 2D sheets in 3D space. But like gravity, which exists in curved 4D space, there may be a real geometry of evolutionary fitness landscapes.

The equivalent of ‘matter tells Spacetime how to curve, and Spacetime tells matter how to move’, would be something like:

‘organisms tell the fitness landscape how to curve and the fitness landscape tells organisms how to adapt’.

In that phrasing the fitness pits work best.

Now if only we knew the dimensions, let alone the geometry.

Link

John Cassidy has a great review of George Soros’ new book, ‘The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means‘.

Cassidy describes how Soros re-iterates his empirically derived theory of economics which explains why boom bust cycles necessarily happen in unregulated markets. The concept of inevitable instability is something rejected by the extreme free market view, based upon the monetarist economics of the Chicago School: Milton Friedman; Eugene Fama; Robert Lucas. They believed that free markets would always reach a stable equilibrium.

Nothing has defined the period of American hegemony from Reagan until now more than monetarism, which has transcended economics and morphed into the broader political ideology of libertarianism. The current financial crisis, with its massive-scale, state intervention, shows nothing other than the complete failure of monetarism and with it, libertarianism.

Soros has an economic theory that is an alternative to monetarism and explains why crashes happen, it is derived from experience and is not mathematically formalized. I know almost nothing about economics, but I know a bit about information theory, and it seems clear that Soros’ theory while possibly true is not needed, since the monetarist view surely contradicts some very basic laws of physics.

First, the background. Cassidy recaps how the Chicago school “had invented a new way of doing macroeconomics, known as the rational expectations approach, which enshrined in higher mathematics the stabilizing properties of unfettered markets… If in one period the economy gets out of sync, in the next period it jumps back to the “equilibrium” defined by the model.”

Cassidy goes on to show that “Soros had neither the inclination nor the technical ability to challenge the Chicago school’s formal arguments…What he does possess, however, is voluminous amounts of firsthand knowledge gained in the financial markets, together with a keen interest in formulating a theory on the basis of his observations.”

Soros developed the idea of Reflexivity, a “two-way feedback loop, between the participants’ views and the actual state of affairs.” He clarified reflexivity to critics who “claimed that I was belaboring the obvious, namely that the participants’ biased perceptions influence market prices. But the crux of reflexivity is not so obvious; it asserts that market prices can influence the fundamentals. The illusion that markets manage to be always right is caused by their ability to affect the fundamentals they are supposed to reflect.”

In other words, the instability in markets is due to the feedback loop founded on us seeing things slightly wrong and acting on these perceptions which in turn actually changes the reality, allows it to be perceived with different uncertainty again, and so on.

The Soros view requires human perception to create chaotic fluctuations, but there are many things that behave chaotically, from eco-systems to the weather. Over time, all these things exhibit both cyclical and unpredictable behavior regardless of perception.

There are systems which self regulate to stability like the temperature of a hot bowl of soup in a closed room, or anything which runs down. This is called the second law of thermodynamics - over time entropy never decreases.

There is, however, a massive difference between systems that are inherently stable or will run down and ones that are chaotic. The former are always closed systems and the latter are open systems.

The economy is not a closed, running down system. Energy (or more specifically negentropy) is poured into it from high energy sunlight, past (oil and coal) or present (meat and veg). It is converted by industrious, growing populations of humans into local pockets of order, like buildings and machines and a much larger amount of waste. The eco-systems that connect these pockets of order are always chaotic and unpredictable in an open system, from the turbulent flow comprising cascading arrays of whirlpools as a river flows over rocks, to the flow of promises, in the form of money, through corporations.

Soros’ ideas may or may not be true, but they are not necessary, there is no need for an observer, just like there is no needs for a designer in nature. The monetarist view is surely wrong, period, and on a fundamental level, since it seems to be based on the assumption that the economy is a closed system.

Efficient markets aren’t smooth just like the weather isn’t, and thunder storms are not caused by psychology, but by the natural effects of open systems. Similarly, market crashes are caused by the chaotic nature of open systems, and the maximum efficiency is the production of waste.

Monetarism is wrong a pseudo science driven by an American ideological form of capitalism best described by the Libertarian label. From Ayn Rand to Reaganomics the economic ideas supporting them are based on the same ideological wishful thinking as Lysenko’s Larmarckian genetics, an idea which starved Communist Russia.

I have finally put up some notes, about what I have been thinking about for a very long time, concerning Information Theory and Evolution.

Specifically:

How systems self-emerge and self-configure for information exchange from 0 to 1 to n bits.

How these systems necessarily culminate in the complexity and diversity of living things as a result of rules governing information theory, where natural selection is a specific case of the laws governing noisy information exchange between finite sized systems.

If anyone else is interested in this topic or has any questions, the notes are here, and I’d be happy to hear from you.

An interesting piece in Science Daily on the evolutionary aspects of humor.

On a related but different note, I have always wondered whether there was more to the familiar movie cliche where someone challenges a king’s authority and the room goes silent, then suddenly the king laughs and everyone follows. The object of laughter is let off the hook, in exchange for looking like he or she was joking - making a fake challenge. The cost of this back down is partial humiliation.

Perhaps the origins of humor are a back down mechanism in potential conflict situations, where one party offers a lack of aggression signal in exchange for humiliation, i.e. being laughed at. In game theory terms, it allows for battles to be won or drawn without physical violence, with the same rules as for conflict, but a lesser cost/benefit of losing or winning.

Obviously, this may just be one facet of humor, but since fighting is such a fundamental behavior common to almost all species, whereas joking is not, I would suspect humor is built upon more ubiquitous traits further down the behavior tree.

How to setup a cheap Infinite Disk system using S3 without having to use EC2.

I don’t normally post technical stuff on my blog, but I’m putting this up because I think it might help others.

Wists images are stored in the file system with filenames based upon a hash of their url (principally). This keeps the db small (overloading the directories is prevented by creating subdirectory structures based upon the first few letters of the hash (/b/c/bc267867 etc.)

We want to use Amazon for reliability and unlimited storage, but we need to couple the system to application logic (and our code isn’t multi-treaded), so a straightforward S3 use isn’t possible.

The problem with S3 at the moment is all to do with latency. We don’t want to have to manipulate and store wists thumbnails remotely on an EC2 instance, but if we do it locally then there will be a delay sending the images over the wire and storing them in S3. Furthermore, rsync or rsync style approaches are a real load problem for us so we have to do batch backups every hour based upon the age of files (in theory rsync should be lighter weight, in practice it is not for our particular use). We also use cache.wists.com via a CDN that pulls the images when they are there, using squid. We will keep this piece, because the CDN works out cheaper than S3, but it can’t readily be used as a backup service, however the method below does not depend on it.

Step 1. Setup a cron to call a shell script hourly, that backs up files to S3 that are more recent than 1hour, and deletes files that are older than 1 week (we will keep a weeks images as a buffer in case there is a failure).

Step 2. Point the CDN to S3 (instead of at Wists servers).

Step 3. Change application code so that all image requests are for local local versions, instead of directly from the CDN i.e. wists.com/images/foo (instead of from cache.wists.com at moment), the application logic will check to see if the exists, if not they try cache.wists.com and lastly show a placeholder as default if this in turn doesn’t exist.

This way all files newer than 1 week will be served live from wists and everything else from the CDN which will cache from the S3 backup.

Although this usage is perversely the reverse of the normal way a quid based CDN is used (i.e. CDN usually checks if file exists on each call, and then caches, if not) and this will result in higher webserver loads, the advantages of reliability and simple infinite storage outweigh the disadvantages in our instance.

Amazon S3 PHP Class Update - neurofuzzy, flash game development, rich internet applications, free source code - *alt.neurotica.fuzzy*

Tit for Tat is widely acknowledged as being the most successful strategy in game theory, that this is true is important since it directly affects big things - like foreign policy.

It seem clear that human beings have a capacity to harbour grudges over generations, and that these grudges tend to stem from retribution being aimed at the wrong person, or an innocent person who is a member of a perceived group through no choice of his or her own. This creates positive feedback, such that any person who has been a victim of mis-applied retribution is likely to feel injustice and seek revenge, which can also be mis-applied ad infinitum.

Tit for Tat models that I have seen imply perfect information flow, whereas the real world case of in-group/out-group mentality and grudges could be simply modelled by adding noise to the system.

I believe it would be simple to model this and to test whether it has any impact on the assumption that Tit for Tat is universally successful.

__________________________________

A very simple game theory model is based upon a game where two subjects are told some rules of co-operation and play multiple rounds of a game where there is a proportional reward for their choice to either Defect or Co-operate during each round.

This game can be seen at the 10th minute of the Documentary ‘Nice Guys Finish First’, here.

The rewards are based upon a points system: 3 points each for mutual co-operation, 2 points each for mutual defection and 4 points for the defector and one for the co-operator, where they don’t mutually agree to co-operate or defect.

This points system implies a benefit for the system as a whole, for mutual co-operation. (i.e. 6 points total vs. 5 or 4 for defections).

Matrix for two player (defect, co-operate)

– C — D –
C 3/3 1/4

D 4/1 2/2

This situation tends to lead to a Tit for Tat strategy for 2 players, over multiple rounds.

[Interestingly, it could be tied to the work expended in gaining a reward (energy burned to hunt vas energy gained from meat etc.) to create a thermodynamic model, and more generally an information theory model.]

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Experiment one
Introduce noise into the system with the intention of modeling real world situations where information flow is rarely perfect.

Extend the original game to include ‘noise’, i.e. where player A or B are given the reward as if their choices had been different, but still consistent with the rules governing their own choice (i.e. if they can’t see the other players rewards, it is impossible to tell that there is any ‘noise’ in the system.). For example choosing to mutually co-operate means that instead of being a 3 points each player game, it is either a 1 point/3 point (player A imagines this as 1 point/ 4 point) or 3 point 3 point game.

Plot the players strategies relative to different values between 0 and 1 for the noise probability, to see if there are any ‘phase changes’.

Experiment two
introduce a third player, where the noise, instead of being a background noise is noise from another player. i.e. sometimes the rewards/punishment are given to the wrong people via swapping. This is intended to mimick the real world situation where stereo-typing means that defection from one person is imagined to come from another leading to a grudge which when applied creates a feeling of injustice, and therefore incentive for retribution.

Setup:
3 players, each player plays the other two simultaneously.

The number of points that an oponent gets must be hidden (i.e. you can imply from your reward, what the other player has done).

A fuzzyness variable can be set to make a random number of games (a game is a single co-operate/defect choice) have their ‘circuit switched’, i.e. as player A, your reward for game A/B is actually based on game A/C without you knowing it.

My hunch is that you need to introduce a degree of altruism (i.e. co-operating after your opponent defects) to compensate for mistaken communication, and that the value of this altruism variable is non-linear.

Perhaps there is a critical upper and lower threshold where its effectiveness works, this being the range of values where tit for tat can be restored through forgiving, altruistic behaviour.

If an online poll based upon the experiments above were created, it could be tested.

Would climate change be a good measure for SETI searches for intelligent life.

It seems that long after the pyramids of Giza have crumbled and the last remnants of our civilizations are swallowed up by the galcial movements of plate tectonics, our single legacy will be our affect on the climate.

If another intelligent species evolves over time - then traces of this would be the most obvious clue that they had intelligent ancestors.

The time difference between us and animals that we evolved from which had similar intelligence to many long extinct species is 2 million years. This is out of a time period of higher life forms several hundred times longer.

We can see our impact on the climate on a scale of about a million years. Can we measure the climate on a scale of hundreds of millions of years? If so, would a sudden spike be as exciting evidence of non-human intelligent life as a radio signal from space, or are we really so special as to necessarily be the pinnacle of all of our forebears?

BBC NEWS | Science/Nature | Deep ice tells long climate story

There are a number of ideas why DNA is base 4, but it seems obvious that the principal reason is that it provides a very elegant redundancy mechanism built into the process of replication.

By being in base 4 DNA provides its own backup, which is very important in an environment which thrives on mutation in the long term but also needs to regulate mutation in the short term.

Given that the process of replication can be used as a method for performing calculations, I wonder if it could be abstracted in a non-parallel computing scenario such as a digital computer.

I hate having to deal with backups and bug fixes.

Quaternary system dna - PDF file

Kottke posts about: Bed Books, the revolutionary way to print books for comfortable reading in bed.”

As an avid bedtime reader (and pathalogically lazy person), I had been thinking about this for a while, and have a simpler solution that does not require reformatting the typeset of books, merely rebinding them.

The idea is to print sequential pages every other page until the end of the book, and then upside down every other page until the beginning again.
I.e, if there are a hundred pages, page 1 has page 51 upside down on the next page and page 2 the right way up on the 3rd etc.

That way you would only ever have to turn in bed once and you wouldn’t have to stand the book completely upright as with ‘BedBooks’.