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Archive for the ‘food for thought’ Category

Does the particularly deep Italian crisis also depend on the fact that, according to studies by the OECD, Italian schools have slipped to the 40th place in the world?

Posted by StepTb su novembre 24, 2018

First of all the Italian “crisis” is not a crisis (even journalists stopped using this term), it’s a decline that started in the mid-to-late 1970s and that just suddenly accelerated its pace first after 1992 and then after the 2008 recession.

That said, the school system is a good proxy to understand how a whole country works.

Like I showed with data here, the Italian high school system is still one of the most demanding in the world, and at least for sure it’s like that if you go to a difficult high school like a Liceo Scientifico.
The average Italian student stays in class for more hours, studies more pages from more books, and spends many more hours on homework, compared to the world’s average, and is surpassed in those metrics only by a small bunch of countries like China and Singapore.
And yet, on international tests, Italian students are not regularly at the top. What’s going on there?
Easy answer: no efficiency. This is a reflection of how the whole Italian system works: just add more and more, instead of cutting down. Solve all problems by adding more. Adding taxes, adding bureaucracy, adding hours, adding people in places where you instead should cut all this stuff down.
Compare the Italian high schools with the Finnish or Japanese ones: students there study much less compared to almost every other developed country, but on average they perform much better.

If you have a bad equilibrium where let’s say 60% (group A) are productive, performing well and following the rules, while 40% (group B) are skipping work and not following rules, you DON’T fix anything if you ADD work and rules to THE WHOLE GROUP – The A group will just have an increased workload, and the B one will keep doing exactly what they’ve been doing until that point.
But this is how in Italy every decision maker has tried (and miserably failed) to “fix” things since the 1970s or so.
The obvious result of this is a wrong incentive system where you just squeeze and consume “A” citizens more every year.

For example, you’re never going to fix a leaking fiscal system by adding more taxes to everyone.
Two good ways to do it are
1. Forcing localities to be fiscally responsible and independent from central gov spending as much as possible
2. Forcing the average size of firms to increase
This way you’re correctly segmenting, identifying the bad segments, and forcing them to converge towards a higher standard.
We haven’t been doing any of this, instead every single government still to this day has worked in the total opposite direction, by trying to centralize even more public spending and by pandering to voters eulogizing how wonderful micro and small firms are.
What happens in the real world, in the meantime? Group A gets squeezed like a lemon with an overall tax increase, and that’s the solution to everything.

Schools work in the exact same way. No will to take the bad teachers, bad processes, and bad students, and invest most of your resources to make them good (and, if they don’t want to, just cut them down and make the social cost of their bad behavior remain mostly on their shoulders).
Instead, let’s add more hours, more subjects, more books, more homework, and hire more teachers (no matter how good they are), and things will magically be fixed.
Also, the school system is dramatically underfunded, and school workers have definitely a right to protest, but every time they do, the tone of their arguments implies money is needed to add more hours, more subjects, more books, more homework, more teachers…

Even more ironically, the first thing that happens when you try to “solve” problems this way, is that you increase internal inequality. By forcing “everyone” (which in practice means only group A, because they’ll be the only ones following what you tell them to do) to higher and higher standards every year, and at the same time avoiding to fix or crack down on group B, you end up pushing the good ones more and more away from the average. Just because you’re too afraid of being “unequal” by making distinctions, you instead end up producing exactly a spike in internal inequality – a world of excellence on one side and mediocrity on the other, nothing in between.

The second thing that happens, productivity of course slows down. If you suck up more and more time and resources from group A, they won’t have the time and resources to reach their full potential and benefit others.
If your priority is making life difficult for group A rather than leaving them breathe as much as possible and focusing most of your efforts on making group B more similar to group A, the system overall will stagnate because resources are misallocated.
Couple this with a strong demographic decline, and it’s exactly what has happened in Italy since the 1990s. The country has been basically stagnating for 30 years now.
And, once you have a long stagnation with a pie not growing, and a system that rewards the wrong cohorts (ex. shifting a larger and larger % of gdp into pensions – at the moment it’s 16% and the current government plans of pushing it up to 18% to not lose votes), the new generations have only two choices: giving up and just living a parasitic life consuming their family’s accumulated capital (15–29 year-olds NEET numbers are the worst of all OECD countries, with 26% not studying nor working; Turkey’s 28% seems the only worse one, but once you separate for gender, Turkey’s number is driven entirely by women at 41%, while in Italy men are at 25% and women 27%), or trying to support themselves and ending up living like slaves (check current entry level salaries, then add to the equation taxes and costs of living and you’ll see what I mean).

The third thing that happens, you obviously end up throwing out more and more “group A” people from the country. What’s the incentive for them to remain there and get treated this way?


See also: Why is Italy poorer and more underdeveloped than other European countries? (more in-depth about productivity and labor market issues)


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Why do most Croatians have their name ending with “Ch” (pronunciation)?

Posted by StepTb su ottobre 6, 2018

It’s one of the variations of a patronymic.

Slavic name suffixes – Wikipedia

“Many, if not most, Slavic last names are formed by adding possessive and other suffixes to given names and other words. Most Slavic surnames have suffixes which are found in varying degrees over the different nations.”

-ić -vić -ović -ič -vič -ovič -ich, -vich, -vych, -ovich, -owicz/-ewicz: Serbia, Croatia, Montenegro, Bosnia and Herzegovina, Slovenia, Belarus, Poland, Slovakia, Ukraine, Russia, Republic of Macedonia (rare), occasionally Bulgaria. Yugoslav ex.: Petrović, means Petar’s son. In Russia, where patronyms are used, a person may have two -(ov)ich names in a row; first the patronym, then the family name (see Shostakovich).”

For example, my surname literally means “Stephen’s Son”.

When you encounter a Slavic surname ending with -ch, it usually means it comes from territories where the main transliteration used was the Latin one, and it has remained written down that way since then.
You can typically find the same exact surname spelled with -ć, and it just means it was either originally written down with the “Slavic” spelling, or changed to it at some point.
Just like you can find it ending with -c, which is nothing more than the previous spelling “made easy” by losing the accent.

Originally, this type of surnames comes from the early Middle Ages. This can be called a Proto-Balto-Slavic “common” era, when Croats were also known as “Veneti/Veneði/Venethi/Venedi”.
The original ethno-linguistic group of the “Veneti” was from the Vistula region (south-eastern Poland and western Ukraine).

Balto-Slavic languages – Wikipedia
Vistula Veneti – Wikipedia

“The term [Vistula Veneti] has been used in modern times to distinguish the Veneti (as noted by Roman and Greek geographers), who lived on the Central European plains, from the Germanic and Sarmatian tribes around them, and other Veneti tribes elsewhere, such as the Adriatic Veneti (modern-day Veneto), the Veneti of Armorica, and the Paphlagonian Veneti (modern-day Paphlagonia).”

Lots of people in modern Croatia, Lithuania, Poland, Ukraine, Northeast Italy, etc. share this common Proto-Balto-Slavic root, and the long development process of their current languages has created a richness of variations of the same common basics.

The suffix -ch was written down this way when using the Latin alphabet.
The same exact sound becomes -ć with the split from Proto-Indo-European that gives birth to the Proto-Slavic common language, and goes then through many developments in the following centuries, creating the various modern Slavic languages.
The development and standardization of modern Croatian starts much later (17th century) after that first split, and doesn’t end until after Croatia’s independence from Yugoslavia.
From the same root/organizational system comes the Polish -cz (-vich becoming -wicz, -ich becoming -icz).

Thus you can find dozens of surnames that are just written in the same way they were written down back in the Middle Ages (-ch, -c or -ć, depending on the spelling used in their relative area). Others have been changed with subsequent wars and shifts of power. For example, it’s common in an area like Northeast Italy-Istria-Dalmatia (where the same territory has been under Venice, the Habsburgs, Austria-Hungary, Yugoslavia, and then Italy/Slovenia/Croatia) to find people from the same exact family who have changed from -ch to -ć, and/or vice versa from -ć back to -ch, depending on what was the last dominant language. Once Yugoslavia was formed, the surnames in -ch were made homogeneous to the already existing ones ending in -ć, while people from the same family who remained, say, in Trieste, kept the -ch. The surname and the sound are exactly the same, but they match the historical and/or dominant spelling forms of the relative area.

These spelling variations are quite common in all Slavic names and surnames (the most obvious cases being of course the transliterations in Latin from the languages that use Cyrillic).

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A person loves to socialize, but is too shy for that. Is s/he an introvert or an extrovert?

Posted by StepTb su luglio 6, 2018

One of the most common misconceptions people who have never studied psychology have.

Shyness is social inhibition. It has nothing to do with I/E personality preferences. In fact, when you break personality down using the Big5, shyness is related to the trait Neuroticism, not Introversion. Because it’s Neuroticism (feeling negative emotions strongly), and especially its facet Withdrawal (which is the one containing the subfacets of Anxiety, Self-consciousness and Vulnerability), that triggers the social inhibition mechanism.

If you feel a strong desire to be social and gregarious, but you can’t because you’re shy (=inhibited), you’re more likely to be an extravert.
Not all extraverts are born with superb social skills. But they’re better and faster at learning them because they value them much more in relation to their personal goals. Also, many of them are born with both high extraversion and high neuroticism, which causes mixed effects. Finally, even among the extraverts who are actually born with good social skills and are not naturally high in neuroticism, many are then repressed by environmental factors.

A good read: The H Factor of Personality

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What’s something wealthy people know that normal people should know?

Posted by StepTb su luglio 6, 2018

Basically, everything listed in The Millionaire Next Door, a mythbusting research into the actual habits of actual American millionaires.
All “normal” people should just buy it and read it – even if I’m quite sure that, no matter how many times they read it, most will not put those things into practice.

Three points in my opinion especially stand out:
1) Millionaires not only have a different view of money, time and wealth, but also marry people who have those same views; in fact, the wives of the researched male millionaires were often even more strategic and thrifty than them
2) Their kids don’t grow up spoiled, and are economically self-sufficient the moment they become adults; millionaires are driven by the idea of passing down their wealth, therefore they’ll give the next generation the necessary knowledge and tools to learn its value, manage it well, and avoid burning it
3) They couldn’t care less about playing the consumerism game, wasting their resources (including time) just to display high social status (hence the book’s title); that path makes you more dependent, not less

Most people don’t care about becoming millionaires, but most people care about being financially stable. Thus, applying the book’s principles just partially would already be enough… but too many don’t (and won’t) even do that.

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What are some other good books I might enjoy if I loved “Thinking, Fast and Slow” by Daniel Kahneman?

Posted by StepTb su giugno 22, 2018

Shorter, lighter reads: Predictably Irrational (revised)Free Market MadnessFreakonomics, and The Myth of the Rational Voter

Real-world applications, in organizations and public policy: NudgeExamples from Singapore, and Wiser

Applications to finance and investing: Beyond Greed and Fear, and Irrational Exhuberance

Less “pop” and more advanced, regarding decision-making: Rational Choice in an Uncertain World

On decision-making and counterintuition, but more pop: More Than You Know, and Think Twice

On political and religious tribalism: The Righteous Mind, and Going to Extremes

Historical perspective on how the field has evolved: Misbehaving


Related, on status-seeking and the human quest for personal satisfaction: Choosing the Right Pond

Related, on analysts and forecasters: Superforecasting

Related, a different perspective: Gut Feelings

Related, a biological approach: Behave (this one is comparable in size, scope and ambition as well)

Related, on human cooperation: The Evolution of Cooperation

Related, on decision-making using insights from Neuroscience, Economics and Psychology (academic/legit, not pop): Neuroeconomics

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What is your review of Thinking, Fast And Slow (book)?

Posted by StepTb su giugno 22, 2018

If we were to organize a top10 of the greatest non-fiction books of 2000–2020, I think Thinking, Fast and Slow should make it.

The book was published in 2011, but it’s already a classic, and has dramatically changed the debate in anything related to the social sciences.

It summarizes some of the most interesting insights from the last 50 years of research in cognitive and social psychology, and it makes self-evident how large their effects can be on other fields like economics and politics.

With one exception: the chapter on priming. I’m actually surprised Kahneman included that one, since in 2011 the ground the theory was resting on was already shaky.
Danny himself wrote an open letter about this and related issues just one year later, and confirmed including priming was a mistake in 2017.
Priming is still being cited and used by a large amount of people doing bad science and trying to become famous “pop psychology” figures, “influencers”, marketers, or politically influential activists by pumping up studies that are badly designed and/or failed to replicate. This is why it’s important to underline the mistake and instead make it clear that it’s not-reproducible pseudoscience. See hereherehere and here.
Even the very example made famous by the book, the “watching eye effect”, failed to replicate recently.

Conclusion: it’s a must-read, but skip the chapter on priming.

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If the Stanford prison experiment was fake, does it mean its findings are fake as well?

Posted by StepTb su giugno 22, 2018


Like many have already noted, in psychology it was widely known that the SPE was badly designed as an experiment – and its conclusions were not just unreliable, but it was unclear in any case what they even were.

But what in the popular culture are thought of being the SPE’s conclusions, are in fact the conclusions of the Milgram Experiment and its variations. Which have been successfully replicated.

Add to those Sheridan & King, and the Asch conformity experiment plus its variations, which all tap into very overlapping mechanisms and have been replicated as well.

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What is the fastest declining religion?

Posted by StepTb su giugno 22, 2018

At any point in history, any religion with the highest growth in incomes and wealth for its members will be the fastest declining one as well.

This is due to the combined effect of these trends:

  1. Religiosity is both heritable and strongly related to fertility.
  2. Wealth and income are negatively related to fertility.
  3. Religiosity is negatively related to urbanization.

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Which Eastern European countries have the best chances of surpassing Western European countries? (by economic development)

Posted by StepTb su giugno 16, 2018

In terms of GDP per capita, the best positioned is Estonia.

The country has, for now, made all the best possible choices it could have made regarding economic reforms and digitalization of the public and private sector, has a good education system, very low levels of crime, a lean and fast bureaucracy, a sustainable <8% pensions/GDP ratio, a healthy financial sector, citizens with a strong civic sense, and a culture that firmly and instinctively rejects bad populist (both leftist and conservative) policies disguised as “socially good”.

Tallinn is already the biggest innovative ecosystem in Eastern Europe in terms of investments volume and ROI on startups.
They really want you to bring money and businesses there, and have made things as attractive as they could from a bureaucratic and fiscal point of view.

The crucial problem Estonia faces is a dramatic brain drain – young professionals get a good education and formation, but then escape to some other place in Western Europe where the climate is less cold and salaries are high, no matter how smart and effective their own government is.

Other possible issues: geographic location, and small territorial size (but in an advanced digital economy, they can be both at least partially neutralized).

Give it time, though.
We’ve already had two examples of countries following similar patterns and strategies: Singapore and Israel. Look at where they both are now.
Also, many Western European countries seem to struggle quite a bit with heavy debt, aging population, absurd bureaucracy, and are not at the point where they should be in terms of digitalizing the economy and creating innovative ecosystems. The political direction is controlled by baby boomers, and they’re systematically averse to any possible loss of privileges and any status quo change. The majority of the wealth is in their hands, and is not getting invested where it should. The political currents on the rise are infected by far right and far left populists talking about rubbish instead of sound, rational reforms.

Estonia either didn’t start with or already solved those problems when it was time to first rebuild itself fast after 1991, and then to push itself hard to join the EU in 2004. They won’t likely face anything similar in the next decades, and they’re small, flexible and rational enough to potentially become an Eastern Europe’s equivalent of Singapore. Time will tell…

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What’s a better personality indicator test than the MBTI?

Posted by StepTb su giugno 5, 2018

The MBTI has four main problems:
1. The black-and-white dichothomy, which is enough to make it unscientific: a person scoring 49% on Extraversion will be classified as Introverted, and more similar to someone scoring 5%, while instead being basically identical to an Extravert who scored 51%.
2. The cognitive functions theory; this is absolute pseudoscience with no empiricism behind it whatsoever. But you can choose to ignore that whole part, like many do, and only read the result as a 4-dimension measure – that approach will actually lead to more accurate insights.
3. There is an industry behind it, that is interested in pushing it and promote it to make money.
4. The whole F/T dimension is bogus. First of all, it’s been proven by science that all our choices and decisions derive first from an emotional impulse, and there’s a process of rationalization after it that works to justify the impulse (this is why the scientific method is hard – you have to train yourself to go against human nature – and necessitates of peer reviews and communities). Which means that we’re all actually “F”. Second, the work of Kahneman and Tversky on the difference between intelligence and rationality is quite brilliant, and it would make sense to have a dimension for that, but that’s *not* what F/T measures, even if most of the people who score T will tell you otherwise to feel superior (while in reality a person scoring high in T can be completely irrational). Third, we now know (from research with the Big5 model) that feeling often/strongly positive emotions is associated with Extraversion, and feeling often/strongly negative emotions with Neuroticism. Thus, those two Big5 dimensions actually capture much better (and they do it twice more precisely, by separating them) what’s *really* going on in the F/T dimension. So you have “super feelers” (high E + high N) as well as “super stoics” (low E + low N), plus all the other possible combinations in the middle.

The Big5 solves 1 and 4, doesn’t have 2 and 3, and at the same time doesn’t sacrifice any of the “good” parts, because S/N gets captured by Openness, J/P by Conscientiousness, and E/I remains the same.
On the other hand, it has the annoying issue that the 5 dimensions were named with an obvious implicit value judgment. For example, why call it Agreeable/Disagreeable instead of Non-Confrontational/Confrontational? The name choice is clearly biased and quite irksome. But still, the scientific value of the test is definitely higher than MBTI’s.

Also, Kibeom Lee and Michael C. Ashton expanded the Big5 model with an additional dimension, H, which measures Honesty-Humility.
The only problem is they also rebranded Neuroticism as Emotionality, which is misleading.
With the additional H dimension, it’s also possible to identify narcissistic (low H, high E) and psychopathic (low H, low C, low N) tendencies.
One of their most interesting/useful findings is that high Agreeableness doesn’t actually predict high Honesty-Humility, which makes high A + low H people particularly deceitful and dangerous, since the high A works like a social mask hiding the low H.
I strongly recommend reading their book The H Factor of Personality for a breakdown of all the 6 dimensions and the research behind them.

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How can Peter Thiel reconcile his libertarianism with mimetic theory?

Posted by StepTb su maggio 29, 2018

It seems quite straightforward to me.

Girard’s position on Christianity derives from the fact that the more you emphasize the innocence of the scapegoat, the more difficult it becomes for people to fall into the trap of scapegoating.
So the Gospels were an especially important milestone in human cultural history because of their role in the unmasking of the mechanism.

In the very same fashion, the more you emphasize the uniqueness and centrality of the individual, the more difficult it becomes for people to fall into the trap of mimetic desire.
So probably Thiel thinks libertarianism is the best we currently have in politics to reach the goal of independent thought and differentiation at the individual level, in stark contrast to the nature of the dominant political currents, which instead seem to encourage and exploit various shades of mimesis and scapegoating.

Of course, this is also tied to a problem already noted by Girard himself, especially in Things Hidden Since the Foundation of the World: mimesis could very well be this powerful because it’s the easiest way to escape the problem of meaninglessness. So is it really feasible to someday reach a society that avoids it on a mass scale?

Some more Girard-inspired reflections on modern politics can be found in Psychopolitics, which expands on the observation that scapegoating doesn’t work as well anymore and therefore ‘traditional’ politics and its electorate are facing a crisis.

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Are conservative individuals more authoritarian-minded than liberal individuals?

Posted by StepTb su maggio 17, 2018

Any person can be “conservative” on any single issue, just like any person can be “liberal” on any single issue.
But let’s assume individuals can be classified as being “liberal” or “conservative”.
“Conservative” means you prefer the traditional way of how things have worked until the present moment, and you want to preserve it.
“Liberal” means you want to maximize liberty and freedom, and this goal takes priority over traditions if they’re an obstacle to it.

”Authoritarian” means you want a single, specific set of views, preferences, values, clothes or whatever to be forced on everyone else, with no room or tolerance for differences.

Therefore being a true “liberal” means being anti-authoritarian, since authoritarianism decreases (or opposes any increase of) liberty and freedom, instead of the opposite.
And having “conservative” preferences doesn’t tell us anything, because you could be an authoritarian conservative as well as a non-authoritarian one. Just like the terms “right” and “left” don’t tell us anything, because both preferences can be expressed through tolerant as well as intolerant means.

P.S. A super-professional visualization!

How the typical American mistakenly reads the political spectrum:


How the political spectrum is actually supposed to be read:

Hope this helps!

P.P.S. See also Why did Europe become so leftist and liberal?

P.P.P.S. A timeless, recommended read: The Open Society and Its Enemies

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Is Poland growing to be the next economic powerhouse of Europe?

Posted by StepTb su aprile 3, 2018

Poland and Slovakia have been absorbing the bigger chunk of the European industrial sector that has relocated or expanded in the Visegrád area; Poland has also worked extremely well on its internal reforms and, especially, has managed to build one of the current best education systems in the world, which positions the country to be the most likely of the Eastern region to successfully make the jump to the advanced tertiary sector in the next 10–20 years (the first one has been Estonia, but the size isn’t comparable).

Emigration from Poland started to explode in the late 1990s, and hit a peak with the 2008 recession. A lot of young Poles with a good command of English and an excellent human capital overall were not able to be absorbed by the national labor market, and went on to be successfully absorbed by other economies.

It seems reasonable to think Polish emigration rate should now start to decrease, since the system has fully recovered from the recession, and has kept growing and showing its strength and sustainability, unlike what has happened in other countries (ex. Italy), but it’s not happening, and the net migration rate is still negative.
Recent political shifts and turmoils have also impacted negatively on this possibility.

Unfortunately, even without considering the brain drain issue, there’s an even bigger problem: their current birth rate, which is one of the lowest in the world and also a bit of a puzzle, is not conducive to reaching the status of “next economic powerhouse” in the span of the current + the next generation in any case.
This doesn’t mean we couldn’t see the relative birth rate trend reverting, the emigration rate trend reverting, and that result happening in the long-run, though.

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Is the media overreacting to the incident with Facebook and Cambridge Analytica?

Posted by StepTb su marzo 28, 2018

Yes, and it’s easy to choose between yes and no: compare this media hysterical coverage about a data breach interesting 50 million users to the same media’s reaction to the actual Internet biggest data breach ever, the Yahoo! one:

Marissa Mayer says Yahoo still doesn’t know who was behind Web’s biggest breach

Every single Yahoo account was hacked – 3 billion in all…

Yahoo! data breaches – Wikipedia

Which was reported with quite a “normal” bad news tone, like “Yeah that was quite bad. Now here’s Tom with the weather”.

And did you see an Altaba stock crash after their public statement (Oct 2017)? No.

But we’re talking about a 60:1 ratio of hacked accounts (and actually, much more “hacked” in the Yahoo! case).
Do you see a 60:1 ratio in the coverage/reaction as well? No, and in fact it’s more something like 1:10.

Of course, it’s also easy to see why.
This time, the hype supports a story so many people desperately want to be true – we didn’t lose the election, it was STOLEN from us with a trick!
A bipartisan classic (sadly).

Despite next to zero proof behavioral microtargeting could reach similar results.

In general, people will always ignore the obvious when it comes to their own political bias.

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What is the Cambridge Analytica controversy regarding Facebook data?

Posted by StepTb su marzo 28, 2018

The story‘s biggest takeaway is that, in the “wonderful” world of invasive, data-hungry social media and network effects, you’re only as smart, safe and in control of your data as *your weakest link* is, not as *you* are.

This goes against what we’ve been told over and over by both sm/data companies and public institutions about “make sure you keep your privacy settings in order and that’s it“.
It’s near-useless advice, because we’re not in control. But switching your point of view to adopt the correct one, in this case, implies going against the human deep instinct of believing you *are* in control (of your online persona, your data, your actions and their consequences…). It would be comparable to a paradigm shift– at least in the countries/cultures that score high on the individualism dimension, like the US, where the emphasis on the single person’s responsibility for anything that happens to him/her is deeply embedded and the automatic answer to all societal problems.
It also (together with many other stories in the recent past) flies against all the stuff we’ve been told about the greatly positive, progressive impact of digital democratization through social media.

Most sm users have yet to understand the degree to which they’re giving up control and the fact that you can’t know in advance how the data about you are going to be used, and even this big story will most likely have a limited impact on them – I doubt any change will come from the bottom-up, for the aforementioned reason (+ a layer of abstraction which makes the whole issue non-immediate to most).

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When will cryptocurrency holders realize that cryptocurrency is a scam?

Posted by StepTb su marzo 28, 2018

A bubble is not necessarily a scam, just something hyped and overvalued because of irrational exuberance and a relatively strong narrative behind it (the crypto narrative seems to fit very well the current climate – decline of trust in all kinds of institutions; pseudo-conspiracist bs a go-go everywhere online*; economic low growth, wage stagnation and increasing internal inequality in all the developed world; unsustainable levels of debt for either nations or households; long-term effects of austerity policies where they’ve been applied; widespread overvaluation of anything tech; etc).

Was the dot-com bubble a “scam”? No.
Were there scammers riding the wave and trying to make a buck? Yes.

To answer your question:

Nobody can say cryptos are a “scam” at the moment.

But basically everyone knows it’s a bubble. I’d say most holders have already realized that. They just hope to make money in it. But, in bubbles, late joiners typically don’t.

When will the hype stop? In terms of the aforementioned underlying climate changing, I don’t see the wave turning anytime soon, so the narrative is unlikely to lose force, but fads lose their excitement factor after a while nonetheless. If the narrative behind them maintains momentum, something new can easily come along and attention/excitement can easily change ship – that’s in the intrinsic nature of fads (and, in this case, I think we’re already seeing the 2017 excitement fading out, but there’s no equivalent substitute ready to catalyze it yet).

(*with the main one having been elegantly and succinctly debunked by Kevin Johnson on Quora, if you’re interested)

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What is the single most underrated trait a person can have?

Posted by StepTb su marzo 28, 2018

Historical perspective.

“A man lives not only his personal life, as an individual, but also, consciously or unconsciously, the life of his epoch and his contemporaries. He may regard the general, impersonal foundations of his existence as definitely settled and taken for granted, and be as far from assuming a critical attitude towards them as our good Hans Castorp really was; yet it is quite conceivable that he may none the less be vaguely conscious of the deficiencies of his epoch and find them prejudicial to his own moral well-being. All sorts of personal aims, hopes, ends, prospects, hover before the eyes of the individual, and out of these he derives the impulse to ambition and achievement. Now, if the life about him, if his own time seems, however outwardly stimulating, to be at bottom empty of such food for his aspirations; if he privately recognises it to be hopeless, viewless, helpless, opposing only a hollow silence to all the questions man puts, consciously or unconsciously, yet somehow puts, as to the final, absolute, and abstract meaning in all his efforts and activities; then, in such a case, a certain laming of the personality is bound to occur, the more inevitably the more upright the character in question; a sort of palsy, as it were, which may extend from his spiritual and moral over into his physical and organic part. In an age that affords no satisfying answer to the eternal question of ‘Why?’ ‘To what end?’ a man who is capable of achievement over and above the expected modicum must be equipped either with a moral remoteness and single-mindedness which is rare indeed and of heroic mould, or else with an exceptionally robust vitality. Hans Castorp had neither one nor the other of these; and thus he must be considered mediocre, though in an entirely honourable sense.”

– Thomas Mann, The Magic Mountain

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Why is Italy poorer and more underdeveloped than other European countries?

Posted by StepTb su dicembre 18, 2017

First of all, Italy is quite wealthy, it’s one of the 10 top economies in the world.

And not only that, but the Italian super-rich cohort keeps growing. In fact, it has just pushed the country to the world’s #8 for financial wealth, says a report by The Boston Consulting Group.

The problem is where all that wealth gets produced, and where all that wealth goes.

That’s why the country falls down to somewhere around #25-36 once you look at the GDP (PPP) per capita.

A small part of the country (the North, and not even all of it) produces >60% of the national GDP; at the same time, internal inequality has been steadily increasing for decades, with fewer and fewer people actually seeing that wealth because of internal dysfunctions in both the public and private sector.

The dysfunctions are due to excessively high costs, excessively low productivity, family and personal relationships considered more important than skills when hiring and promoting, protectionist laws, and a distorted use of public resources. These problems found a weird vicious balance during the decades right after the economic boom, but the 1992 (both political and economic) crisis first and the 2007–2008 financial crisis later inflicted a fatal blow to the absurd system that was built up until then. Italians have yet to wake up to the fact that that system was absurd and that it needs to be forgotten, though. Unfortunately, it seems like it’s also impossible to make most of them understand the basic point that a country grows if its productivity does. For some reason, the argument gets constantly ignored or rejected by the public.

The 5 key reforms Italy needs ASAP are:
1. Making pensions sustainable (pensions/GDP is at 16%, and we’re projected to have a retired person for every working person by 2045)
2. Making the public sector efficient and accountable, and creating a federalist system (a real one, unlike the fake federal reforms that have blown up public debt for decades), to make regions (especially in the South, but also Rome) accountable and fiscally responsible
3. Cutting regressive taxes and bureaucracy (you can do this only after #1 and #2)
4. Increasing the private sector productivity by removing laws and subsidies that are artificially keeping unproductive firms alive and new, better competitors out of the market (you can do this only after #3)
5. Reforming the banking system, which is undercapitalized and unable to guarantee access to credit

The problem with productivity (#4) is concentrated in the small firms, which, unfortunately, occupy the vast majority of the Italian workforce (some sources say around 70%). It’s extremely difficult to do something about it, because too many voters are employed there, and too many of them prefer the status quo to a better possible future where they can be more productive and make more money.


Nobody is touching #5 because of rampant cronyism and corruption.
Some micro reforms have been done during Italy’s darkest hour, after the financial recession nearly made us collapse (2011), especially about #1. But it wasn’t enough.
Renzi tried to do something about #2, but it wasn’t enough, and his main idea (the referendum that didn’t pass) was going in the wrong direction in more than one sense.
The perfect moment to do all that was in the early 2000s, a stagnant but stable time when we had just joined the Euro and were enjoying low interest rates. But we lost a decade thanks to Berlusconi and his banana republic antics on one hand, and thanks to people obsessed by him 24/7 (rather than by those issues) on the other. Now it’s late. Anyone attempting to attack those points will lose the elections, because most Italians live with the dream that things could just go back to Eldorado (the 1980s, basically, when money was growing on trees), and, if they don’t, it’s because there’s some conspiracy going on (blame the EU, the Euro, the immigrants, the masons, the technocrats, Germany, CIA, politicians’ salaries, you name it – you can even find several examples in the other answers to this question here on Quora). They just can’t accept the fact that the world has changed and that’s what we should do as well, radically. Because we can’t afford to have an inefficient public sector anymore, we can’t afford to compete on low costs of labor anymore, and we can’t afford not to invest in innovation and not to jump to produce new things and leave behind the old models (non-innovative, non-meritocratic, family-run or relationship-based businesses and protected professions) anymore.

Until then, we’ll just keep stagnating and electing worse and worse demagogues promising us to go back to Eldorado through some silly or nasty slogan.
And, with a stagnating growth and a broken public sector, wealth will be shared with fewer and fewer people.
And young people with college degrees and work ethic will remain unemployed, or forced to compete like crazy for the few good jobs in the few productive centers, and to accept miserable wages to sustain the privileges accumulated by the Baby Boomers during the past crazy decades. Or forced to move out of the country, somewhere where they can be absorbed by the economy and be productive.

If you want to know more about the crazy policies that undermined the Italian public sector and distorted the social contract, I suggest two books: Il macigno and La lista della spesa.
If you want an overall analysis of the major problems of the Italian economy, then read I sette peccati capitali dell’economia Italiana.
All these three books were written by the economist Carlo Cottarelli, who got hired by the Government to help solving them, and then left the role once he realized nobody actually had any intention of applying his tips.

Two related videos, in English.

The first one focuses especially on the productivity problem of the Italian private sector and how it deliberately missed the IT train in the 1990s.

The second one explores three hypotheses to the question of “why has Italy stopped growing?”: 1. the size of the public sector, 2. the Euro, 3. the failed transition from an imitation to an innovation economy. Then it shows how some popular explanations (joining the Euro and having the wrong sectoral allocation) don’t hold once you scrutinize the data. The data show instead that the inequality of productivity and profits between exporting firms and firms oriented only to the local market has dramatically increased – with the first ones driving up the economy, and the second ones driving it down, since they should close and disappear, but they don’t because they’re protected by anti-competition laws and rules.
So the only possible solution should be to enable the reallocation of capital from the inefficient protected firms to the efficient and competitive ones, but it can’t be done because the large institutions (built during the imitation phase and useful back then but not now) have gained too much power to be dismantled, an excessive number of Italians are employed in the unproductive smaller firms plus are not willing to change anything of their situation, and, as a consequence, the political parties’ culture is generally anti-competition across the entire spectrum.
The other odd difference found is that, unlike in other developed countries, in the productive firms, management comes mostly from within the family who owns the business.

They’re both must-watch, and probably the best ones on Youtube on the subject, if you’re interested in understanding the Italian economy.

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Why did Europe become so leftist and liberal?

Posted by StepTb su novembre 6, 2017

When will you Americans stop using the term “liberal” in the wrong way?

It’s quite sad to hear, especially since the US was founded as a liberal society.
The US, EU, and the rest of the modern developed nations are, thank God, all liberal societies, with a strong rule of law that exists to promote and protect individual liberty.

Then, within liberalism, there are different currents and schools of thought.
Social liberalism thinks that putting public money into the creation of safety nets and development programs is a better way to achieve the collective sum of individual liberties, because without a certain level of fairness in society, a random-born individual will have too high a probability of being unable to have choices and thus freedom. The debate among parties, here, is more on the effectiveness of specific solutions and resources allocations than on anything else.
Economic liberalism thinks the individual should be as free as possible to create wealth, and this will translate into a wealthier and freer society. Social liberalism advocates normally agree with this position, both in the US and in Europe. The whole debate on the best degree of economic freedom revolves around market failures and negative externalities. European countries are well aware of those points, and actually the debate in a lot of EU countries on how to best preserve economic liberalism is conducted in a more serious way than in the US, see for example Sweden’s fiscal policies for innovation and new businesses (How Sweden became the startup capital of Europe, Why does Sweden produce so many startups?), or Denmark’s labor market liberalizations, or anti-trust actions against big business giants.
(Your real-life average conservative is actually a mix of the two; for example, he thinks putting a lot of public money into military and defense is a good strategy to protect people’s freedom, and is ok with politicians doing it. So it comes down to a difference in allocation preferences.)
I’m making it brutally simplistic, but that’s how it is, basically. The differences are really small.
Take a look at China if you want to start to see some radical differences, not at the opposite party or at Europe.
I’m well aware politicians and media pundits want to create a climate of cultural war and polarization so they can manipulate your emotions and profit, but you shouldn’t play their game. That’s what a negative externality looks like.

Please educate yourself – consider that if you keep talking in those terms, when you’re doing it with someone coming from a European university or even just high school, you’re showing a lack of basic knowledge about Western history and/or a lack of critical thinking. Not a good signal to give, *especially* if you label yourself as a conservative. Conservatives should be the first ones to be interested in preserving historical knowledge.

See also:
– Human Freedom Index
– Index of Economic Freedom – Country Rankings
Year after year, these indexes keep showing a strong correlation between freedom and higher incomes, between democracy and freedom, between personal freedom and economic freedom.
Feel lucky and grateful to live in a liberal society where these are the common values.
Try to live for a couple of years in some of the countries scoring <5.5 if you think a less liberal society would be better.

P.S. A timeless, recommended read: The Open Society and Its Enemies

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Why do Americans work more than Europeans? Is there a cultural bias to live to work?

Posted by StepTb su ottobre 2, 2017

There are many countries with longer working hours than the US: Mexico, Korea, Greece, Chile, Russia, Latvia, Poland, Hungary, Israel, Estonia, Portugal, Iceland, Lithuania, Turkey, and Ireland.

Which countries work the longest hours?

With 1788 hours, US workers are just above the OECD average, which is 1770. So they’re not exceptional in this area.

Why then do Americans say they work so much more? Probably it’s just a cultural thing. Compared to other countries, Americans overwhelmingly believe everything in life depends just on hard work and not on luck, so they prefer to tell themselves and to people around them they work all the time.
Check the “Work-Luck Beliefs” map in the paper Culture and Institutions by Alesina & Giuliano.
When just the idea of “working hard” is so much linked to personal sense of worth and “social capital” compared to other places, you’re incentivized to signal to the rest of the world that you do work hard, and ironically it becomes even more important than *actually* working hard.

So you have this surreal situation where the average-working American thinks he’s the hardest worker in the world, and calls the extreme-working Mexican “lazy”, while instead Mexico tops the world’s chart.
Another seemingly bizarre thing is that nobody would ever call the average German “lazy”, but Germans are at the bottom of that chart, at 1363. How is it possible? Probably because they’re high in Conscientiousness but also strongly believe hard work *doesn’t* trump luck for life outcomes, unlike Americans. This combination makes you engineer a system where productivity gets maximized, instead of working hours, so you can have a more balanced overall life and at the same time feel like you work a lot. So you don’t waste time chatting and checking emails at work, you actually follow priorities. And then you also get to enjoy leisure/family/private time.

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