## Friday, August 31, 2007

### Titanic risk & eco-morality: two excellent essays

I was recommended two articles that I found excellent.

First, Aaron told me about the text in the New York Times called
In Nature's Casino
by Michael Lewis. It is mostly about John Seo, a hedge-fund manager who was incredibly ready for the hurricane Katrina. The article is full of wisdom about risk management. For example, it mentions how PhDs often turn out to have naive opinions about the ideal strategies based on textbooks that often fail. You can't beat the market but it doesn't mean that the market is perfect.

Aaron has chosen one particular idea from the article. It is about risk estimates of very unlikely events and the Titanic plays a key role. Recall that Feynman has used the case of Challenger to show that when our experience is insufficient, we tend to underestimate the risk. But let's return to the Titanic. It had 16 chambers and they could normally be considered as independent. If you want the ship to sink, you must destroy many of them and it is just unlikely. However, they made a mistake and started to turn around which is why the ship finally sank: the chambers were no longer independent and the risk simply increased. The message is that even though many people think that action lowers the risk, it is more often the case that action increases risk.

Surprisingly, action is exactly what Lawrence Summers now recommends to Fannie Mae and Freddie Mac. As we agreed with Gene and others in the discussion about the credit crisis, the people who have made wrong decisions must burn themselves, otherwise the system will slowly lose its self-correction ability and get worse. This kind of development in the market is exactly the risk that the players should have expected and regulation in these mundane cases is counterproductive.

Back to the story about the Titanic. Those who know general relativity can confirm that if you want to have the longest possible life after you cross the black hole event horizon, you should stop your jets and do absolutely nothing: the geodesic is the longest path between two points in the spaces with Minkowski signature. Hysterical alarmists would fail both in the case of the Titanic as well as inside the black hole.

Brian has sent me another wise article.
Josie Appleton
argues in Spiked that eco-morality is a new brand of conservatism that is sucking the fun out of life. She compares this new kind of morality with other ethical standards. The main differences are that in the new system of ethics,
1. one is supposed to reduce her impact: the footprint is now counted everywhere; previous systems of morality wanted people to live more and better, whatever it meant
2. one doesn't care about the meaning of her actions because everything is counted in CO2 molecules: a flight to see sick relatives is equivalent to a flight to visit a prostitute
3. one doesn't have to make a choice: it is enough to blindly follow a list of instructions what to do with your washing machines and all other things.

Socially, eco-ethics is meant to define lives for consumers as well as missions for institutions. The institutions have recently started to massively embrace eco-ethics. Most politicians seem to prefer to have a simply describable goal to protect the flat Earth's climate over the difficult goal to represent their unpredictable electorate: they no longer have to worry about their democratic legitimacy. It is a more convenient topic than the war on terror because the approach to the latter is actually tested by actual events.

The real reason why Appleton wants everyone to discard eco-ethics is that it leads us to stop thinking about the purpose of our lives.

And that's the memo.

P.S. Did you know that ecology as a science was founded in 1895 by Mr Warming? :-) He should have changed his name. The name was the first bad sign for his new discipline. Today it seems that ecology as a science has started with Warming and it is ending with warming. ;-/