[FRIAM] Nautilus: Investing Is More Luck Than Talent

[Robert Wall]

This is just an exploratory thought piece to try in this forum ... please
skip if it seems, right off the bat, as being too thought-full ...  😴😊

Does *Pareto's Principle
<https://en.wikipedia.org/wiki/Pareto_principle> *(with
the attending, so-called Power Law <https://en.wikipedia.org/wiki/Power_law>)
provide good *moral* justification for an amped-up progressive tax strategy
or a reverse-discriminating set of rebalancing policies [e.g., changing the
probabilities for the "everyman"]?  And, is the argument one of *morality *or
one of *necessity*?  That's what this thread and the subject *Nautilus *article
intend to explore, especially with the events that will begin the next four
years tomorrow.

*Nautilus*:  Investing Is More Luck Than Talent
<http://nautil.us/issue/44/luck/investing-is-more-luck-than-talent?utm_source=Nautilus&utm_campaign=f5f998a451-EMAIL_CAMPAIGN_2017_01_18&utm_medium=email&utm_term=0_dc96ec7a9d-f5f998a451-56531089>
(January
19, 2017).

*The surprising message of the statistics of wealth distribution.*


*I returned and saw under the sun, that the race is not to the swift, nor
the battle to the strong, *
*neither yet bread to the wise, nor yet riches to men of understanding, nor
yet favor to men of skill, *
*but time and chance happeneth to them all.*  (Ecclesiastes 9:11)


[*an introductory aside*: As computational statisticians, we love our
simulations ... and our coin tosses.  😎 We are always mindful of *bias *...
as, say, apparent with the ever-widening wealth gap. Money, Money, Money
<https://www.youtube.com/watch?v=ETxmCCsMoD0> ...] 😊

[image: Inline image 1]


So, as described in the subject *Nautilus *article, Pareto's Principle,
descriptively seen so often in nature, seems to imply that the current
widening wealth gap is, well, "natural?"  Judging by its prevalence in most
all rich societies, it does seem so. However, remembering that this sorting
process works even with *fair *coin tosses in investments and gambling,
this process phenomenon with its biased outcomes seems to occur in many
places and on many levels ...

For example, we find this aspect of *luck in nature* elsewhere in
biological processes; from *Wikipedia *... *Chance and Necessity: Essay on
the Natural Philosophy of Modern Biology* is a 1970 book by Nobel Prize
winner Jacques Monod, interpreting the processes of evolution to show that
life is only the result of natural processes by "pure chance." The basic
tenet of this book is that systems in nature with molecular biology, such
as enzymatic biofeedback loops [*metabolisms*] can be explained without
having to invoke final causality [e.g., Intelligent Design].

Usually, relatively very few winners and many, many losers. Phenotypical
luck or luck in tectonic location?

According to the introduction the book's title was inspired by a line
attributed to Democritus <https://en.wikipedia.org/wiki/Democritus>,
"Everything existing in the universe is the fruit of chance and necessity."


But, is there a *necessity *to Pareto's Principle? To answer this I must
defer to my theoretical mathematician friends who so often look to Plato
for such answers. 🤔😊  My thought is that the necessity comes from a need
to, perhaps teleologically, react to it ... as the planet's only available
potential intelligent designers ... the purpose being, on some scale,
Darwinian-level survival.

And, this aspect of *fate by chance* is also reasoned in the
Pulitzer-winning* Guns, Germs, and Steel: The Fates of Human Societies is a
1997*, a transdisciplinary non-fiction book by Jared Diamond, professor of
geography and physiology at the University of California, Los Angeles
(UCLA).


The book attempts to explain why Eurasian civilizations (including North
Africa) have survived and conquered others, while arguing against the idea
that Eurasian hegemony is due to any form of Eurasian intellectual, moral,
or inherent genetic superiority. Diamond argues that the gaps in power and
technology between human societies originate primarily in environmental
differences, which are amplified by various positive feedback loops. When
cultural or genetic differences have favored Eurasians (for example,
written language or the development among Eurasians of resistance to
endemic diseases), he asserts that these advantages occurred because of the
influence of geography on societies and cultures (for example, by
facilitating commerce and trade between different cultures) and were not
inherent in the Eurasian genomes. [Wikipedia]


The luck of geography.  So then, should the more fortunate nations be more
progressively taxed?  Maybe we should ask Greece? Or see what Germany has
to say?  Followers of egalitarianism would argue yes. Followers of Ayn
Rand's capitalism or her Objectivism [like Speaker Paul Ryan] would argue
no. I think most of the rest of us fall somewhere in between; that is, not
sure. So, let's go on ...

*Is the (economic) game rigged* then, as Bernie Sanders and Elizabeth
Warren have insisted? Personally, I would say absolutely yes, and
*neoliberalism *is the underlying philosophy of the rigging process
<https://www.youtube.com/watch?v=z9wUGxgEFsw> [hear just the 1st 12
minutes, if you watch].  But, maybe this political ideology is just one
that is eventually spawned by a conspicuous need for moralistic or even
Randian justification, by the winners, for its resulting
destructiveness--as we so often hear, "wealth accumulation is based on hard
work and talent."  So, intelligent design?

The rigging is, IMHO, of not doing anything about the unabated and
disproportionate flow of wealth to the top and, hence, giving rise to the
resulting, ever-skewing, descriptive Pareto distribution of wealth versus
population.  It certainly does seem like an increasing biasing of the
metaphorical *fair *coin [e.g., the busted "trickle down" metaphor of
President Ronald Reagan].

Going forward, maybe we need to think about this neoliberal meme as the
next four years, with a* President Donald Trump*, begin tomorrow  ... while
also remembering that *morality *is a human concept or "invention." Or is
it?  Or, does that even matter?!  Perhaps, morality is just a necessity ...
but what are its goals ... dare I say its "purpose?"  When did it emerge?
With consciousness?  How did it emerge?  By chance, as Monad and Democritus
would insist?

*Conjecture*: *It would seem that morality's human purpose is to check,
slow, or rebalance the effects of the Pareto phenomenon in social and
economic processes.*  Wealth has always been disproportionately
distributed. Surely, just like the "selfish gene," morality arose out of
self-interest; so it arose with prerequisite consciousness and *not
*necessarily
just with human consciousness [e.g., we see evidence of "morality" in other
primate social systems]. As a system model, neoliberalism is connected with
a positive feedback loop to morality and with a negative feedback loop to
social stability. I think that there is a tipping-point distribution of
wealth versus population
<https://www.bloomberg.com/view/articles/2014-02-04/is-inequality-approaching-a-tipping-point->
.

*Conclusion*: The above conjecture is borne up by chance and necessity.
The necessity is manifested by the need to rebalance the outcomes of the
game [e.g., wealth or opportunity] every now and then, in order to ensure
social stability. This just seems like a brain-dead conclusion that even
Warren Buffet and Bill Gates get. But will Trump?  Strong critics of
Hillary Clinton imply that she, like her husband, would surely have
strengthened the negative feedback effect of neoliberalism toward their own
self-interest and toward worsening social stability, IMHO.  The results of
the November election are a kind of testament to this conclusion. In an
unexpected way, we may have a *chance *with Trump to bring even more
*necessary *awareness to the aforementioned system model that has often
played out in human history and as recounted in Jared Diamond's book-length
essays.  Bernie-style revolution? Perhaps.

So, that is the idea of how *chance *and *necessity *fits here in "the
game.". Now, let's dig into this idea of *morality *a bit more and how it
fits in with the need for a different kind of evolution, not biological,
but *conscious evolution*:

This comment from a *Quora *article on this subject titled Is morality
merely a social construct or something more?
<https://www.quora.com/Is-morality-merely-a-social-construct-or-something-more>
is
notable:

Mindaugas Kuprionis <https://www.quora.com/profile/Mindaugas-Kuprionis>,
works at CERN

Written 17 Sep 2010
<https://www.quora.com/Is-morality-merely-a-social-construct-or-something-more/answer/Mindaugas-Kuprionis>


Just recently Edge.org <https://www.edge.org/>held a conference titled "The
New Science of Morality
<https://www.edge.org/event/the-new-science-of-morality>". Consensus
statement signed by several scholars (list below) was such:


1) Morality is a natural phenomenon and a cultural phenomenon

2) Many of the psychological building blocks of morality are innate

3) Moral judgments are often made intuitively, with little deliberation or
conscious weighing of evidence and alternatives

4) Conscious moral reasoning plays multiple roles in our moral lives

5) Moral judgments and values are often at odds with actual behavior

6) Many areas of the brain are recruited for moral cognition, yet there is
no "moral center" in the brain

7) Morality varies across individuals and cultures

8) Moral systems support human flourishing, to varying degrees  [aside-- so
morality may be akin to metabolic systems at the level of society
--regulating feedback loops of sorts]

[*aside*--  Fyodor Dostoyevsky's *Crime and Punishment *comes to mind.
Under this eight-point new science, how would we judge the "higher-purpose"
actions of Rodion Raskolnikov?]


So if it is true that there is no distributional *purpose *to l*uck *other
than a mechanistic, long-run, teleonomic
<https://en.wikipedia.org/wiki/Teleonomy> sorting mechanism of outcomes in
accordance with a Power Law, then should there be a *necessary*, periodic
re-sorting of the initial conditions now skewed by *chance *...  like with
a deck of cards before the next deal ...?  🤔  All poker players would
insist on no less.  Don't we all insist on a *fair *game?  It's an
interesting question, IMHO.
Yes, I know; lots to unpack here.  Sorry.  Nonetheless, I thought the
*Nautilus *article was quite thought-provoking as they always seem to be.
Cheers,

-Robert
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