Thinking: Keep It ADAPTIVE Stupid

Here’s the transcript of my talk to Nudgestock which was held a few weeks ago. I was hoping to do it in London where it’s normally held, but in the world of COVID it migrated online and acquired for itself an enormous audience. I was told that 20,000 people watched my session and something like 130,000 tuned in for some period of the 12 hours. It was a very high standard of presentations. The video should start at my presentation, but if there’s any issue, it starts at 02:21:44

Sam: Right now I’m really excited to introduce Nicholas Gruen who’s the CEO of Latera Economics. Nicholas will be sharing how the coronavirus exposed the necessity for adaptive thinking for a focus on effectiveness and not just efficiency – often a pragmatic perspective of where the practical might be the best response until proven dangerous. Nicholas will lead us today on his keynote Thinking: Keep It Adaptive Stupid. This will be a great crescendo from Chiara to Jason to Nicholas Gruen. Welcome to Nudgestock, Nicholas.

Nicholas: Thanks very much, Sam. Let’s get straight to it. This slide emphasises something I think many people don’t appreciate: Although they might think that the expertise that they’ve learned at university is about 80% of their job and 20% of it is adapting it to circumstances and executing. I’d suggest it’s the other way around.

Here are some words from Nassim Nicholas Taleb and Yaneer Bar-Yam. You’re familiar, I expect with Taleb, the author of the Black Swan. Yaneer Bar-Yam is a pioneer of complexity science. I quote:

The government relied at all stages on epidemiological models that were designed to show us roughly what happens given pre-selected parameters and choices.

What could possibly be wrong with that? Something that was right about it was that it did enable some people with the mantle of science to say this is serious. We could have an awful lot of deaths from this coronavirus. We really need to start taking it more seriously.

But there’s something else going on that I want to draw your attention to. If you like you can think of this idea of a hierarchy of knowledge. There you’ve got a particular hierarchy of sciences: the harder they are, the less ambiguous they are, in some ways the less complex they are, the higher they are on the hierarchy.

The great temptation there is the temptation to what I call “the God’s eye view”. Here’s another God’s eye view from the Middle Ages. One of the things that happens here is that the higher on that hierarchy you get, the more status we give you. The more, that is, we treat you like God. But we are not gods. Here’s a non-God—I’m sure he’s a God in a film world, but here’s somebody, a human being, who’s trying to get a God’s eye view and sometimes you just end up looking ridiculous. Continue reading

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Introducing a new author at ClubTroppo – Antonios Sarhanis

Some of you may have noticed a Twitter account called ‘Sarhanis‘. In any event, Antonios Sarhanis is its proprietor and we got to talking on Twitter and discovered that we shared various maladies. He’s interested in philosophy but pretty unimpressed with the way it’s handled at universities. His heritage is Greek, while mine isn’t – though my wife’s is. We arranged to meet for coffee which we’ve done a few times. He usually comes in his toga but sometimes in a barrel.

He barracks for Richmond (unlike me) but has grown a COVID beard (like me) though much more successfully. Indeed beards like his have not been seen since the great Ned Kelly lockdown of 1880 or thereabouts, not to mention the John Quiggin beard hoax which occurred years later.

I think Antonios (which is what he calls himself whenever he needs to distract attention from the barrel) is hoping to pick up one of our prizes for best posts – like Rooter – though the last person to drive rooter wearing a toga got it caught in the camshaft and had a very awkward interface with the mind/body problem (the body part of the problem proved the main sticking point). So, should any of this come to pass, I’ll be recommending he wear the barrel.

More concretely Antonios informs me that he is currently the CEO of the Australian research and development arm of Adnuntius, a global advertising technology platform. Antonios also has a strong interest in philosophy and linguistics that is coupled with a disinterested political predisposition that has him at home at Club Troppo. His first post is here.

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The Jester As King

King Lear and Cordelia’s Rejection

Welcome to Antonios Sarhani’s first post. I’ve got a brief post welcoming him aboard immediately above this post.

Nicholas Gruen

The ceremony and the circumlocutions of the kingly court is cut by the jester. As long as the jester commands no following, he is free to enjoy the privileges of court while breaking with protocol, ridiculing the courtiers, speaking that which ought not be spoken and, occasionally, even if by happenstance, uttering a truth or two.

Although we’re a long way from kingly courts, in another sense we’re still stuck there. Mannered public behaviour and Overton windows bounding inter-elite discussion take the place of courtly protocol these days. Yet unlike the courtly days of yore, the jester can do more than just speak: in a democracy, the jester can be elected king.

Continue reading

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What works: getting to the land of ‘how’: Complete essay

Note, this essay was published in three parts in the Mandarin and is published in consolidated form (complete with its footnotes) here.

It is impossible to remember, until one gets in the country … that they care about their experiment more than about making things work.

John Maynard Keynes on Soviet Russia, to Lady Ottoline Morrell, May 2, 1928.[1]

Part One

I.         The land of ‘what’ and the land of ‘how’

From at least the years of the ‘third way’ in the 1990s under Blair and Clinton, we’ve been hearing what governments need to do to address our various social problems. Again and again, ‘thought leaders’ tell us what we must do – move beyond one-size-fits-all services to ‘joined up government’ to ensuring that programs do things ‘with’ people rather than ‘to’ them. Plausible as they are, these ideas have barely been tested. Because if they tell us what we have to do, we’ve scarcely learned how.

At the outset there seemed to be a seductive straightforwardness to getting to how. As Bill Clinton put it “nearly every problem has been solved by someone, somewhere”. The challenge was “to find out what works and scale it up”. For me these words stand as a creation myth of the problem I want to address. They even show us original sin, because if you pay close attention there it is! Clinton suggests we learn how to solve our problems by learning a ‘what’ – what works – and then scaling it.

Yet here we are nearly three decades on and despite numerous promising innovations in small scale programs, they all share the same fate. It’s hard to think of a single example of action to address social problems that’s started small and been ‘‘scaled’ as Clinton proposed. Yet despite endless inquiries into our failure to address social problems – for instance aboriginal or multi-generational disadvantage and endless restructurings and resettings of policy in response, we’ve never got far. Peter Shergold lamented the problem in 2005.[2] Yet despite a term as the nation’s chief public servant, he conceded in 2013 that the problem remains.[3]

This is the first installment of a three part essay which itself is part of a larger project. In this article I’ll set the stage showing the subtlety and depth of the problem. For, when it’s pointed out, we all understand that there’s a difference between ‘knowing what’ the rules of tennis or chess are and ‘knowing how’ to play. My claim is that in all kinds of ways we insensibly confuse the the two and so substitute ‘knowing what’ (or ‘knowing that’) and knowing-how. In this first part of this essay, I’ll show how this happens in our universities and the professions they teach. In the second, I’ll show how this occurs in government agencies and programs. The third part concludes with a look at recent initiatives like nudge units and What Works Centres that seek to foster greater ‘knowing how’ and innovation in government. The key to their success so far has been the way they bolt on to business-as-usual and, in so doing, improve it. This essay is written to try to articulate how they might envisage a more ambitious future.

II.         From the foundations to the commanding heights

Continue reading

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Markets as ‘causal spread’: How the early neoliberals anticipated embodied cognition – Michael Polanyi fragment

Here is the second fragment on early neoliberalism. The previous post being on Hayek, this one is on Michael Polanyi. Both built their approach to the world upon their abhorrence of the Soviet Union – which was unfashionable at the time. But where Hayek used his powerful refutation of central planning to take him where the argument could not reasonably stretch – to support laissez-faire – Polanyi was guilty of no such overreach.

Fragment One: Michael Polanyi and polycentrism

Like virtually all the important early neoliberals, Michael Polanyi was an émigré from central Europe. Polanyi’s training was in chemistry and from the early 1930s he became increasingly concerned at the idea that scientific development could be directed by the state – as the Soviet Union aspired to do and as Western left wing intellectuals urged upon the West. He began writing against this tendency at about the time Hayek was articulating his own thinking about the centrality of information to the functioning of the economic system. But Polanyi’s concept of polycentricity provides a way into the question of distributed knowledge that is more general and parsimonious than Hayek’s elaboration of the way in which markets harness distributed knowledge for economic good. 

Citing the image below in Figure 1 of a physical object made of straight rods and fastenings at the nodes, Polanyi asks us to imagine stressing it – as one would a model of a bridge – by nailing the top node to some fixture and hanging a weight from it as illustrated in Figure 2. 

Figures 1 and 2

To work out the configuration of Figure 2 ‘monocentrically’, a singular intelligence would need to calculate all the stresses between each rod, not just directly but also indirectly through all the other rods. This cognitive task would be immensely complicated. And here we are thinking of a simple object subject to well-understood forces. In fact, the object is a functioning polycentric order. That is, one only need stress it by hanging a weight from it as illustrated in Fig 2 and it becomes an analogue computer solving polycentrically what was so complex to solve monocentrically. Each of the elements of the object adjusts to the stress. None has the ‘full picture’ but the various parts of the object ‘calculate’ an efficient response to the stress.

A wide range of formalized polycentric problems of which the solutions lie beyond the power of exact calculation can be solved by a suitable method of approximation, which is of great interest to us as it represents a perfect paradigm of coordination by independent mutual adjustments. The method consists in dealing with one centre at a time while supposing the others to be fixed in relation to the rest, for that time.[1. Continue reading

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What works: getting to the land of ‘how’: Part Three

The Mandarin headed this part of the essay up with a picture of a woodpecker, which seems fair enough. But such ‘nuanced’ imagery, as we say these days is always off-brand here at Club Pony. Where too much directness is barely enough.

The final third part of this essay – cross-posted at The Mandarin, only here with footnotes.

New ways of institutionalising know-how

Given governments’ evident failure in rising to the challenges of the third way, it’s not surprising that there are various promising initiatives intended to pursue better know-how in government. They are usually thought of as part of the ‘innovation in government’ agenda. Their contribution both began, and remains incremental. This is unsurprising given that these initiatives must germinate and grow within a much larger incumbent system to which they must make themselves useful. My critique below is not offered in any spirit of disapproval – rather the opposite. Instead it pursues a fond hope that, with sufficient care to understand our situation and patient work to improve it, the initiatives we see before us are but acorns that might grow to a forest of oak trees over the next few decades.

Government innovation labs are a small, and so far relatively tokenistic nod towards the idea that innovation in government agencies cannot be specified in systematic ‘knowing what’ that might be imported from elsewhere, but must be won in the development of new ‘knowing how’. They house activities such as prototyping, human centred design and small scale experiment where failure is regarded as a normal and necessary foundation for working towards success. They have certainly led to some worthwhile new initiatives and improvements on old ones.[1]

Behavioural insights or ‘nudge’ units have also proliferated, receiving far more recognition and status than labs, perhaps because of their alignment with a new development in the academy – the import of psychological research into economics known as ‘behavioural economics’. One of their stocks-in-trade is A/B testing which was pioneered in early 20th century media and subsequently adopted far more widely. This is used to optimise outcomes from government communication such as tax arrears letters and SMS reminders. Continue reading

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What works: getting to the land of ‘how’: Part Two

Cross-posted from The Mandarin

In this second instalment of his three-part series, economist and forward thinker Nicholas Gruen explains more of why it is so important to understand the ‘how’ of getting things done.

From the commanding heights to everyday routines

The big public sector careers are built in the land of ‘what’ – that is in designing and administering policy in our social services systems in our capital cities. Meanwhile the land of ‘how’ is the land of ‘street-level bureaucrats’. It’s out in the sticks. And that’s inauspicious territory from which to build a public sector career. It’s a mark of how disconnected from the how those in the centre are that, as I’ve previously documented, they imagine that something like a market in ‘what works’ either already exists or will somehow construct itself around opportunities as they present themselves. And so, somehow, our complete failure to build even the rudiments of a system that might detect and then seek to expand what works wherever we find it goes unremarked. This is true of casual discussion, of senior bureaucratic and political leaders’ prepared speeches, in academic work and in the stream of independent reports every year or so including the recent comprehensive Thodey Review of the public service.

Of course, people understand the difference in principle between ‘knowing what’ and ‘knowing how’ when their attention is drawn to the distinction. But they’re generally unaware of the way ‘knowing what’ has come to substitute for knowing how throughout their world. Because organisations and systems can’t easily scrutinise their agents’ know-how, it is made legible to them via the proxy of knowing what. Employees’ credentials come to stand for their know-how. As entrepreneur and essayist Paul Graham has written, this process begins at school and most of the confusion between the two occurs insensibly:

For me, as for most students, the measurement of what I was learning completely dominated actual learning in college. … Getting a good grade in a class on x is so different from learning a lot about x that you have to choose one or the other, and you can’t blame students if they choose grades. Everyone judges them by their grades — graduate programs, employers, scholarships, even their own parents.[1] Continue reading

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